Centennial of the entity: Do we collectively immigrate?

Since the outbreak of the financial crisis on October 17, 2019, the core of the public debate has been on how to dispose of the economic model, or the possibility of its continuation and reproduction. However, after the bombing of the port of Beirut on August 4, other ideas related to “Lebanon – the entity” emerged in terms of the purpose of its survival and the possibilities of its continuation. From that discussion, it turned out that the real purpose of what the French called the “Lebanese state” was to ensure the proper functioning, organization and care of the relationship between the sects and their monopolies within contemporary law. On the ground, for all Lebanese, the role of the State does not go beyond guaranteeing the minimum level of economic and social security that allows the entity to continue to carry out its role (see “The Lebanese model: the beginning and the end” ).

What adds to the increasingly dark image of the entity is the role of Lebanon within the global economic system: Lebanon is a marginal state. In this system, marginal production is characterized by low profits and wages, technological backwardness, and limited economic activity. In general, peripheral countries suffer unequal exchange, while their share in global value added is relatively small and disproportionate. The role of the fringe countries is to secure cheap labor and raw materials to the core countries that benefit from the high gains from the value added of consumer goods (see “Betting on China’s rise”).
And in this last point lies the great Lebanese paradox. Production in Lebanon receives small and disproportionate shares of the added value of world production, but labor in the Lebanese business cycle was not cheap, and Lebanon’s GDP per capita up to 2019 placed Lebanon among the middle-income economies. high, while the country lacked resources. Let us remember natural and its economic cycle does not focus on the production of any type of raw material.
This duality, the marginal state with average per capita income, is one of the main causes of imbalances in the Lebanese labor market.

Immigration is the price
This was not always the case. Although Lebanon has always been a marginal country in the world economic system, its income level did not increase until after Rafik Hariri headed the government in 1992. Hariri gradually increased the value of the Lebanese currency between 1992 and 1997, along with the increase in the level of dollarization, which led to Raise the level of income and consumption (see “Loss negotiation contract: standard of living for production”). The exchange rate of the lira was fixed by borrowing and using depositors’ money. This step has turned Lebanon into a consumer hotbed that is not financed by the export of any type of primary or manufactured products or natural resources. Lebanon attracted the necessary dollars by raising interest rates to levels much higher than global interest levels over a very long period, meaning that the Central Bank of Lebanon built one of the largest fraudulent “Ponzi” schemes in the world. the story (the Ponzi scheme is a pyramid scheme).
The ongoing emigration from the mid-1990s to today has been a prime price for this policy. Despite raising the standard of living, fixing the exchange rate coinciding with a high dollar means the gradual destruction of local production, which generates distortions in the labor market, a decrease in the need for qualified labor and an increase in income. job opportunities for unskilled labor. Therefore, the only solution for skilled workers is to emigrate to earn an income equivalent to the tax due to the relatively high income level in Lebanon. In practice, Lebanon, the fringe entity in the world economic system, has become a provider of skilled labor for the Gulf states and some African countries. This qualified workforce contributed to provide the entity with the necessary dollars to continue performing its work while maintaining a high standard of living in relation to the environment. A process of substitution and substitution of skilled labor for an unskilled foreign worker was carried out to meet the new needs of the labor market. While patterns of educational attainment differed between generations of Lebanese after the war, there was a shift toward university studies in general and toward specializations that meet the needs of service sectors in particular.

Collapse of the pyramid
When the Association of Banks announced the closure of all bank branches on Lebanese territory, the Lebanese fraudulent scheme ended. As has happened with all “Ponzi” schemes throughout history. Confidence that your money is there and will come back to you as you make a profit is the foundation for the success of any Ponzi scheme. What the Banking Association did was break that trust. Over time, it turned out that the amount of money that evaporated as a result of this fraudulent scheme amounted to $ 83 billion.

If you are not involved in the “Going East” or “Continuing West” project, immigration will ensure an income level parallel to pre-crisis levels.

What we have to understand is that the return of the Lebanese pound exchange rate to its previous state will not happen unless it is quickly secured, a huge sum equivalent to a large part of the financial mass that has evaporated. What can be collected through the IMF will be no more than a dose that conserves what remains of the residents’ consumption capacity. The most the Lebanese can hope for today is to have a program that will secure $ 10 billion in three years. This amount is not enough to keep the lira exchange rate to reach the level it was previously, nor is it enough to restore depositors’ confidence in banks. In plain terms, what can be gotten from the IMF program is not enough to revive the Lebanese “Ponzi” scheme. What the plan needs to come back to life cannot be provided by any country today in light of the state of the oil markets and the effects of the Corona virus on global economies.
Quite simply, what this means is that the income level Lebanese residents are used to will not return. Rather, your income level is likely to deteriorate further and depending on the course of management the collapse. Today, the skilled workers left in Lebanon (and they are the backbone of the middle class) will be the most affected by this reality. The main concern of this group will be the answer to the central question: Should we defect or wait until the situation improves?

Does your project deserve the sacrifice?
The answer begins with an improvement approach. Is there a possibility that the income level will return to the previous one? There is a three-part answer: The first part is that this is not possible if Lebanon continues to play its role within the global economic system, that is, a marginal country that exports skilled labor. The only way that Lebanese residents’ income increased within this role was by fixing the Lebanese pound exchange rate and dollarizing the economy, and supporting them through a fraudulent “Ponzi” scheme. It is impossible, today, or even after a while, to revive the scheme. Even if there are economic, political and social forces involved in a project aimed at ensuring the preservation of Lebanon’s existence under the umbrella of the global economic system, and working with all their strength and tools to reach the minimum level of its project.
The second part refers to the commitment to the regularity of Lebanon in a global system that can be formed and go from the role of “marginal country” to the role of “semi-marginal country”, with the implications of this transition in terms of an increase in its participation in the added value of production and the natural increase that will follow in the level of per capita income. . This project also has a front that has begun to form from some political forces, and the root of the project is to propose the slogan “Go East”. This front is not entirely clear yet and his project is still in embryonic stages. Taking into account that such a project is fraught with risks in the event that the course of international affairs is directed to the absence of changes in the global economic system or the formation of another system. The success of the project at the local level in this case means that Lebanon will be a marginal state within a single global system and isolated from it at the same time.
The third part of the answer: while awaiting the victory of one of the two projects and determining the location of the entity in the world, there will be no change in the income level of Lebanon’s residents.
Therefore, if you are not involved in one of the two projects and you have a direct interest in staying in Lebanon to help further your project, you will find the answer to be very easy: immigration will ensure an adequate income level parallel to the level pre-crisis, and will provide an opportunity for social progress for the family through the dollars that the immigrant sends. periodically.
As for those involved in one of the two projects, they will find that answering the immigration question is more difficult for them. Survival means a decrease in their standard of living (except for those who receive income in dollars), that is, sacrificing a lot for the good of a project, so the equation becomes how much do they believe in the project to sacrifice for him? Perhaps this question that corresponds to the first centenary of the entity.

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