Tunisia Shows Degrowth In Action | Tunisia 6

I’m a bit of a broken record when it comes to Tunisia. I have been making the same argument on here since 2016, but people keep not listening. Considering the amount of damage the US has done to Tunisia’s neighborhood, and considering the value of Tunisia’s democratic experiment for the long term interests of the United States (going back to George Washington), the US and Europe should just be giving the country money. Not loans, not conditional, but just outright gifts in an attempt to keep its democracy going. It’s been about two years since I’ve made that argument, so with today’s video I trot it out again…

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Video Transcript after the jump…

Hey there. In recent weeks I have been doing a deep dive on Tunisia in an attempt to come up with something new and helpful to say. My last Tunisia videos were in the aftermath of the fall 2019 elections for the President and the Parliament. I was cautiously hopeful, but stressed how desperately the country needed real economic change and development. Instead the country got the Coronavirus catastrophe, economic shutdown, and even more acute financial distress.

Over the past year I have once again been blown away by the tenacity with which Tunisians have held on to their democratic experiment. In the face of repeated disappointment, and an economy that has actually shrunk in the ten years since the dictatorship, the Tunisian people have persevered. Long after every other post Arab Spring attempt at democracy has crashed and burned, Tunisia just keeps going. They have done this despite a region full of actors that want to crush democracy, and a rising dynamic of nostalgia for dictatorship within Tunisia itself. Tunisian democracy is a magnificent accomplishment.

Unfortunately, in my research I have yet to find much that’s new to say. But I do think it’s possible to use the Tunisian experience to derive a more general lesson. I think Tunisia illustrates the absolute centrality of economic growth if you want to consolidate democratic change. This next bit may seem like an exercise in straw man punching, but it’s not, there really is a school of thought that maintains that economic growth is the enemy.

DeGrowth is one of the environmental movement’s weirdest children. It takes the obvious point that the world and its resources are finite as its starting point. It’s true that if the logic of exponential economic growth continues forever, it’s possible to imagine the exhaustion of this world and its resources. The basic point makes sense to me. It’s just math really. Where I differ with degrowthers is defining where that limit is. I see the limit as being somewhere in the far sci Fi future after we have exhausted our massive capacities for technological and societal innovation. At some point after we have used up the last asteroid or something. DeGrowth people think we have already reached the limit. This idea has been pushed more and more heavily since the 1970s, even as world wide obesity has become a bigger problem than world wide famine, and we have moved from a world of peak oil to peak oil demand. Degrowthers have now latched on to climate change to make strenuous arguments for political action against the very idea of economic growth. To be clear, there is currently little danger of their recommendations being adopted. I often wonder whether the idea is getting more popular in Europe because it makes a virtue of that continent’s decade of near economic stagnation. Sort of an unholy marriage between pro austerity bankers and the most annoying of the holier than though hippies.

But just because the idea currently strikes most people as silly doesn’t mean it isn’t dangerous. I think it’s worth looking at real world examples of what degrowth looks like. As I documented recently, much of North Africa has experienced a decade without economic growth, but Libya and the Sahel have had war as well, which complicates things. One country in North Africa has been free, at peace and working hard to bring about a better system since 2011.

Tunisia illustrates DeGrowth in Action. According to these federal reserve figures, by 2019 Tunisia’s GDP had fallen to around 39 billion dollars from 44 Billion in 2010, the last full year of the dictatorship. Most see this as a cataclysmic failure of Tunisian democracy, but I suppose Degrowthers should be pleased and fascinated to see how it’s going . It’s interesting to note that there was still some economic growth until 2014, at which point Tunisian DeGrowth really set in. It seems pretty obvious to me that this was the result of the 2014 collapse in the oil price. Which highlights something really important about Tunisian development that I keep coming back to, and that more people need to recognize. Tunisia’s economic failure is not really Tunisia’s fault, like at all.

First off, their neighborhood is a disaster. The old Tunisian dictatorship sat fat and happy in between two oil rich countries. Tunisian democracy has not been so lucky. Libya was destroyed by NATO in 2011, and the international community continues to support different warring factions. It’s been a constant low level civil war, and it’s an absolute disgrace for the international community. Tunisia has to deal with refugees, spill over terror attacks and obviously has very little useful trade with Libya. To the West, Algeria is in better shape but it’s still a rotten oligarchy, reliant on oil prices that have been too low for comfort for five years now. And Algeria’s teetering oligarchy really doesn’t want a successful democracy next door either.

Beyond the chaos in the petro-neighbors, the most important factor in Tunisia’s economic decline is European stagnation. Europe takes the majority of Tunisia’s exports, and historically provided the most tourists for Tunisia’s beaches. But Europe has experienced a lost economic decade as well. Even the US and China, the twin dynamos of the world economy, had a relatively slow 2010s. Tunisia didn’t want DeGrowth, but DeGrowth is what it got.

I don’t want to exonerate Tunisia’s leaders here. Of course there is more that could or should have been done. There always is. But its important to emphasize just how difficult the situation has always been for Tunisia’s leadership. If the economic pie is always shrinking, of course people are going to be unhappy. And despite this near miraculous decade of democratic governance everybody in Tunisia is very unhappy.

The President and the Parliament can’t seem to work together. And the Tunisian public is wondering what exactly it is they have been fighting so hard for all these years if the reward is unemployment and the best option for educated young people is to leave the country. To make matters worse, as the pie shrinks, the International Monetary Fund and other international lenders keep demanding more austerity measures from the Tunisian government. It’s an incredibly vicious cycle. International Financial Institutions claim that people are still poor because the Tunisian government hasn’t followed their recommendations, but all their recommendations require austerity, which means taking more money away from Tunisian people. The pain is only supposed to be for the short term, but Tunisia has been on the IMF merry go round for over half a decade now, and so far it’s just pain.

Looking at the argument over reform, I am coming to the conclusion that all the critiques are probably right. Yes, the IMF is probably asking for impossible and harmful things. But Tunisia’s government and powerful labor unions are also probably standing in the way of reform as well. What a lot of the critics seem to be missing here is that Tunisia itself is not the main problem. The most saintly, perfect Tunisian government imaginable would have failed at economic reform under these conditions.

Who was going to pour in investment money if Tunisia miraculously woke up tomorrow with the societal trust and budget discipline of Switzerland? Libya, with its civil war? The European Union, which has spent the past decade nickle and diming its own members over financial crisis and now Covid recovery money? And what were these magical investment dollars going to be poured into? Building a hub for conflict tours of the Sahel? Providing services for an Algerian petro-state that seems to be on the brink of disappearing?

The whole reform conversation strikes me as being ridiculous, because there is no economic growth, and at the moment I see no credible story for how ther is going to be any economic growth. Entrepreneurs need a more transparent system, sure, but they also need something to do. In a country that has been stripped of all its traditional sources of economic growth, moving up the World Bank’s ease of doing business rankings might be nice, but it’s also kind of pointless.

The new openness and political discussion is magnificent, but Tunisian DeGrowth has driven those discussions in predictable directions. Politics without growth is a zero sum game, all about hanging on to what you have. When the economic pie is getting smaller, and there is nothing new to share out, of course nobody is willing to give anything up. Whether we are talking about labor unions, figures from the old regime, or the general public protesting to hold on to subsidies, this is the world of political possibility that we get from degrowth.

There is a lot that could be done better in Tunisia. But the Tunisian people have more than done their part. I don’t want to demonize the IMF either. I want to demonize the IMF’s funders. It is downright Kafkaesque that a country that has already sacrificed so much for democracy is being forced to the brink of default and maybe even restored dictatorship over a few handfuls of billions of dollars.

And that’s exactly the situation we are dealing with here. Respectable commentators are comparing Tunisia’s economic situation to Venezuela’s. That’s hyperbole, but not by much. The people are so frustrated that according to some polls, Abir Moussi’s PDL is the most popular party in the country. She wants to ban the second largest party, and is openly nostalgic for the old dictatorship. Tunisia has done extraordinarily well for a decade without economic growth. But I am pretty sure their new democracy can’t survive another decade like that.

DeGrowth isn’t just hard to implement in a democratic context, it’s actively harmful to democracy. Intellectuals trying to make virtue out of stagnation make it harder to consolidate democratic reform. Tunisia needs economic growth, and if it can’t do it itself, which it can’t, the NATO countries that blew up North Africa should be giving the country billions of dollars in grants, not loans.