The Return of the King – Will Posterity Follow?
The Jeddah Economic Forum (JED) took place in mid-March and featured economic speakers from Arab nations as well as major economic powers from around the world. The purpose of the forum was to review the economic progress of the Arab nations and chart a way forward that will continue economic progress in the region. The mood was somewhat somber given the upheaval and revolution ongoing throughout the much of the Arab world. However, the consensus was that the Kingdom of Saudi Arabia was a model of stability, excellence in financial management, and economic growth
Concurrent with the JED in Saudi Arabia there was the much anticipated ‘Return of the King’ from his long absence and the new economic stimulus package announced upon his return. These are the details of the Royal Decrees as reported in the Arab News:
1. A one –time cash payment of two-months salary to all government employees
2. A one-time cash stipend of two-months living expenses to all Saudi students on government scholarships.
3. Payment of SR2,000 (~ 600 USD) per month for job-seekers in the public and private sectors.
4. A SR250 billion (~ 80B USD) allocation for the construction of 500,000 homes.
5. A new minimum wage for government employees of SR 3,000
6. Raising the loan limit for real estate from SR 300,000 to SR 500,000.
7. A SR 16 billion allocation for new health care facilities
8. Raising the limit on loans for new private hospitals from SR 50M to SR 200M.
9. Creating 60,000 new military jobs.
10. Immediate promotion of all military officers waiting promotion to the next rank.
11. Payment of all financial dues to all military sectors.
12. Promoting Saudization of all private industry.
13. Creating 500 new jobs in the Commerce department to catch price manipulators.
14. The creation of a National Commission to combat corruption.
15. Instructing the media not to defame or criticize the Grand Mufti or Board of Senior Ulema.
16. A SR 300 million allocation for supporting the Ministry of Islamic Affairs.
17. A SR 200 million allocation for supporting the holy Quran Memorization Assoc.
18. SR 500 million for renovation of mosques.
19. SR 200 million for expanding the General Presidency of Scholarly Research and Ifta.
20. SR 200 million for the Commission of Promotion of Virtue and Prevention of Vice.
This was followed by a four-page color overlay in the Arab News, which featured a full –page panorama of the King superimposed on the Saudi Tower in Riyadh. The page had the following quotes:
1. “Allah knows that I always hold your dear to my heart” King Abdullah Bin Abdul Aziz Al Saud, King of the Kingdom of Saudi Arabia
2. “And is Allah is Witness, you reign over our Hearts”, People of the Kingdom of Saudi Arabia.
3. “You Promised and Delivered, Now is the time for the private sector to deliver on Saudizaton.” Alwaleed Bin Talal Bin Abdulaziz Alsaud, Chairman of the Board of Trustees of Alwaleed Bin Talal Foundation, Chairman of Kingdom Holding Company Chairman of Rotana Group.
This was followed by a featured editorial, which bemoaned the lack of response by the private sector in mirroring the wage and bonus decrees by the King.
Further on in the same issue was an article reviewing a panel discussion on Islamic Finance and the need to push its development in Universities.
Further analysis shows that in Saudi Arabia there are about 20 million people. Of that number about 4 million work and 3 million of those work for the government. In addition, about 6 million foreign workers fill other jobs from basic labor services to management in the Kingdom.
The solution envisioned to ensure economic growth is to have a majority ownership of all private companies by Saudis. Is this valid or just another form of central government planning?
The answer, which is unfortunate for the People of Saudi Arabia, is that there is no economic future for the citizens of the country. The current limited posterity, which filters down through the Royal family, is simply another form of Socialism. There is no free market. Prices and wages are manipulated. Capital accumulation is non-existent except for the dwindling oil reserves. The Saudi people have become used to living on the revenues of an oil extraction economy – it cannot continue – when the oil revenues decrease so will the Government jobs, the pay raises and the foreign investment. Without savings and capital investment there is no economic future for Saudi Arabia.
This is sad, it is inevitable, and has happened before. What is also sad is that in the United States the same thing is happening. The possibility of future economic growth is being lost due those who believe economic central planning can still work. Lost, due to Keynesian economists and politicians who believe that savings and investment do not matter, only Government spending and control and power.
Government has no answers -- and when people believe that Government and not they themselves are responsible for their future there is no future.