The air is stifling, the combination of high heat and humidity is intolerable, but what would happen if on top of all this, we didn’t have electricity for most of the day and couldn’t operate our air conditioners? We’d go crazy and lose all hope.
This is but a small part of what Lebanon’s residents have to contend with these days. See it and weep. See them and understand the meaning of the term “economic collapse.”
Elias Jiries is an accountant in Beirut, a city once called “the Paris of the Middle East.” Once a tourism, culture, business and finance center, today it is paralyzed. Jiries earns 250,000 Lebanese pounds a month. In 2019 this was equivalent to $1,600, enough to support his family. Today it’s worth just $160, due to massive inflation and loss in the value of the currency, which has depreciated by 90 percent in two years. Today he cannot even buy sufficient food, not to mention the long lines and nearly empty shelves in the supermarkets.
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Jiries also can’t buy gas for his car, which sits on the street collecting dust. The lines at the gas stations are miles long, and after waiting for hours people lose it, getting into loud arguments that sometimes end in blows or gunfire.
Don’t envy anyone who is ill, either. Pharmacies have run out of medicines and hospitals, having run out of anesthetics and painkillers, have stopped operating on patients. And if you have a savings account the banks won’t let you withdraw money, fearing a run on the banks.
Unemployment is rampant, inflation rages and the gross domestic product has plummeted by 40 percent. Foreign currency reserves are dwindling. Human beings aren’t made for this kind of chaos, and anyone who can is fleeing the country. Jiries is trying to go to Abu Dhabi.
There are many explanations for this collapse: a corrupt political system, the massive explosion in the Beirut port a year ago and the loss of tourists due to the coronavirus pandemic. But not even all of these factors combined can account for such a massive collapse.
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The explanation is different: it lies in the reckless, wasteful and irresponsible management of the state budget. Politicians had a field day with exorbitant expenses, deep subsidization of products and immense deficits which have turned Lebanon into a risky borrower that is not given any credit. In the absence of credit, businesses collapse, plants are closed, unemployment surges, exports grind to a halt and no foreign currency is left for buying raw materials.
Our own economic policies should be examined with these things in mind. Is it sufficiently responsible? Can it prevent any possibility of a Lebanese-style slide?
There are some who have no concerns whatsoever. These people are always in favor of increasing spending and deficits. Even now. They take their cue from President Joe Biden, who has just launched another $1.9 trillion aid package for the U.S. economy, which has recorded a record budget deficit.
The thing is, we’re not the United States. More precisely, we’re the opposite. The United States is a global power, to which everyone wants to lend money. We’re small potatoes, with a vulnerable economy, concerns about a global boycott (Ben & Jerry’s), threatened with annihilation while militarily and economically dependent on America. The sad truth is that the risks we face are more like Lebanon’s than like those facing the United States. This is why we must adopt a responsible policy that calls for a small and declining deficit.
The cabinet is scheduled to vote Sunday on a national budget. Finance Minister Avigdor Lieberman will propose a deficit target of 3.5 percent of GDP for 2022. This is a large and excessively risky deficit. Facing him will be “good” cabinet ministers, arguing the opposite.
They will support increasing spending and inflating the deficit. What interests them is how much more their own ministries will get. They are wrong. They are putting us in danger. They are entirely ignoring the bitter lesson of Lebanon.