Egypt's Revolution: Coming to an Economy Near You

It was a society in stagnation, if not decline. Despite ostensible stability, its young people faced a bleak future. While the rich grew richer and the national debt skyrocketed, the middle class tried to make ends meet and upward mobility fell. The governed felt increasingly disenfranchised as mass unemployment metastasised into a chronic illness.

This isn’t Tunisia, or Egypt – but the United States. In many ways Egypt and America couldn’t be more different. But the broad contours are just a little too similar for comfort. Consider the estimated youth employment rates of the following countries: Yemen, 40-50 per cent; Morocco, 30 per cent; Tunisia, 30 per cent; Egypt, 25 per cent. Youth unemployment rates are 10-40 per cent across Europe. And according to the U.S. Department of Labor, the youth unemployment rate in July 2010 was just over 19 per cent and as high as 33.4 per cent among certain ethnic groups. Clearly, Egypt isn’t the only one with an unemployment crisis.

What we’re witnessing is a malfunctioning of the global economy. At the root of the problem: dumb growth. Rather than reflecting enduring wealth creation, dumb growth reflects the transfer of wealth: from the poor to the rich, the young to the old.

And it’s only going to get worse before it gets better. Consider the threat of food, commodity and energy price spikes this year. Consider the costs of climate disruption. If it’s bad for the unemployed in the US, how bad is it for the more than 3 billion people living on less than $2 a day?

The US, and the world, needs to achieve a higher order of innovation: institutional innovation. It’s institutions, after all, that set the incentives that shape human achievement, and for far too many people, the economic establishment isn’t delivering the goods. For decades, real prosperity has been flat. Our current institutions simply transfer prosperity upward, to the richest 10 percent, 1 percent, 0.1 percent and so on. That’s why it’s never been more important for people to challenge the institutions of yesteryear.

All of which brings us back to Egypt. It’s hard to overstate just how unexpected a transformation is occurring in Egypt. Death, taxes and Hosni Mubarak – those were the three great certainties in modern Egypt.

But just underneath the surface, the tectonic pressures of dumb growth were steadily mounting. Bogus prosperity is like magma, filling the volcanic chamber of society: You can bottle it up for only so long. Today, the world’s gaze is fixed on the volcanic runoff: never-ending protests. But the fault lines underneath this explosion were laid decades ago – and they might just run across the globe.

(Umair Haque is the director of the Havas Media Lab and the author of “The New Capitalist Manifesto: Building a Disruptively Better Business.” He is the founder of Bubblegeneration, an agenda-setting advisory boutique that has shaped strategies across the media and consumer industries.)

© 2011 Harvard Business Publishing