“The Sin in Syria is Low Wages,” by Ehsani

The Sin in Syria is Low Wages
By Ehsani
for Syria Comment
October 17, 2010

My motivation for writing this essay is to offer a counter argument to an article that I read this morning by a fellow Syrian who lashed out at the Syrian private sector. The article is by Abu Fares, “The Syrian Private Sector: A Socioeconomic Farce,” which was posted on his website.  As regular readers of Syria Comment know, I have consistently and forcefully sided with the economic reform process in Syria.

Indeed, my only lament is that it is too little too late. I believe that the process has not been fast enough or radical enough. I am fully aware that my support for the reform process is not shared by a significant number of Syrians. This is not surprising. Change will produce new winners and losers. In this short essay, I will first list the winners and losers of the socialist era. I will then explain how the reform process has caught most Syrians off guard and unprepared for the changes that they must face. The failure of many Syrians to understand what needs to be fixed in order to assure the next generation a better life is causing many to blame the reform process and the private sector for the growing poverty and income disparity in our country. It has also brought growing anger at those leading and benefiting from the change.

The winners of the pre-reform system

The socialist experiment that dates back to the 1960’s was launched by confiscating private property, nationalizing industries and giving the state a dominant role in the economy. Moreover, the nationalist fever as well as the geopolitical considerations of the period demanded a policy of self-sufficiency and import substitution when it comes to production and the raw materials needed for this output. It was not difficult to see who the winners were likely to be in this system.

The growth of the public sector meant that the state would be the destination of first choice for young Syrians who did not necessarily have the education or skills that may have been required by a none-state employer. Since these public sector jobs were secure till retirement, it was not difficult to see how government jobs multiplied to exceed two million in number over the past three decades. The way these jobs were allocated usually had little to do with merit or qualifications. Indeed, they were largely dolled out by senior party and government officials for personal gain and to buy loyalty from underlings. Stories of of the occasional kickback paid to secure a key government job quickly gave way to persistent rumors of how nepotism and the selling of state position had become institutionalized over time.

The goal of staying independent and self-sufficient also produced its own winners. For almost forty years, the most coveted trophy of local manufacturers was to secure “himaye watanniye” or protection from imports for their products. The allure of this trophy also meant a huge source of income to senior party and government officials. Local manufacturers were more than happy to pay. One of my close friends was smart enough to start producing ketchup over 20 years ago. His business plan was simple. Pay whatever it takes to obtain the himaye wataniye for his product. Once he did, he flew to Germany (China was not in the game then) and bought the cheapest and most primitive production line available. A few months later, he had the Syrian market largely to himself. Imports of ketchup were not permitted. The Syrian consumer had little choice but to buy this third-rate product enriching my lucky (or smart) relative for close to a decade.

The local manufacturers not only benefited from a monopolistic business environment but also from ridiculously subsidized and cheap heating fuel (mazot), electricity and water. For decades, they enjoyed nearly free inputs for their production and no competition. If this were not enough, they sent their children to state schools and universities for free and paid almost no taxes.

Who were the losers of this system?

The vast resources that were used to subsidize the public sector could have been spent on infrastructure, health care, and export incentives. The average Syrian citizen has paid a very heavy price in the form of run down services and national infrastructure. What is more, Syria has few of the vigorous state institutions and private corporations that would have grown up in a properly competitive system with some measure of quality control and accountability.

The education system has also suffered. Rather than offering totally free education that has become unsustainable and cannot keep up with quality necessary for today’s demanding market, the state should be means-testing students and asking the wealthy to pay something. If not for elementary education and high school, at least for university.

Other obvious losers are Syrian consumers who have been forced to buy inferior local products for decades. They have subsidized local manufacturers, which are today uncompetitive for the most part and will soon collapse if they have not already been driven into bankruptcy.  University graduates in anything other than the schools of medicine and engineering were also losers.

Allow me to relate a personal story to make an important point. When I decided to study Economics in the UK in the late 1970’s, most of my parents’ friends and relatives were bewildered. “Why would you spend this much money on your son to study Economics?” they were often asked. What would he do with this degree? Will he Work as a teller at the local commercial bank of Syria when he returns? What would be his salary? Would it not make more sense if he simply joined his father’s business form now and saved you the money? Interestingly, all Syrian students of that era had to obtain what was referred to at the time as “taleb taht al-ishraf” or student under government supervision. With strict currency control in place, it was impossible for my parents to pay for my tuition unless I qualified. But, it was impossible to qualify as a student of Economics. You had to do either Engineering or medicine to obtain the government approval. Given that computer engineering was a new subject at the time, I enrolled myself in that department for one course and used a letter from the university that I was indeed taking part in their “engineering” school. The trick worked. I proceeded to earn my Economics degree and then my MBA from an Ivy League school in the U.S. When I arrived at the latter institution, I was greeted by the admission officer this way:

“Welcome, you are the first Syrian we have had here since 1964”. These words still ring in my ear some 27 years later. My relatives were correct though. There was nothing for me to do with my new degree in Syria.

The reform process:

I will spare the readers the history of the reform process or the geopolitical events that may have led to the possible delay in its implementation. What is important is that the train has departed the station. Reform began with the introduction of the private bank law back in 2003-2004.

The system of himaye wattaniye was slowly dismantled. Local manufacturers are no longer able to sell inferior products as quasi-monopolies. They now needed to compete with relentless regional producers who are mostly exempt from import duties thanks to the Arab free trade agreement. The recent opening to Turkey has added a new formidable competitor. The same can be said about imports from China. In sum, the local Syrian manufacturing base is now facing an onslaught that it is ill-prepared to face following years of protection and underinvestment. If this was not enough, government officials must have used their excel spreadsheets to figure out that the existing level of subsidies cannot possibly continue. The reduction and streamlining of some of these subsidies has dealt a further blow to the profitability of local producers.

The growth of the public sector has slowed down as government jobs have largely disappeared. The state sector has endured a hiring freeze for a number of years. Who is hiring now? Who are the winners in the new system? What are we to make of recent reports detailing the “incredible” and “shocking” salaries of the senior executives of the country’s new private banks?

These questions and more were posed by Abu Fares in his article, “The Syrian Private Sector: A Socioeconomic Farce”. Reading his post this morning inspired me to write this article.

To be sure, Abu Fares’ article makes for entertaining reading. It is hard to disagree with his negative portrayal of the current income disparity in Syria. However, his story is akin to taking a snapshot of a movie without watching its start, middle or end. What is noteworthy is that while Abu Fares lashes out against the rich, both the nouveau and old money, he conveniently omits any discussion of why the poor make a measly monthly salary of SYP 11,000 (US$ 234). Central to his article is the following question that he poses to his readers:

“Who in the hell gets paid a salary of $42,000 a month in Syria? While the average accountant’s monthly salary is $400 in the private sector, some accountants are making $20,000 and up”?

Since he did not attempt to answer his own question, I thought that I would give it a shot:

Those making a salary of $42,000 a month or $504,000 a year are the general managers of the country’s private banks. Is this an excessive salary? No. The compensation system of such banks is decided on by an independent board and the institution’s human resource department. Had any of the boards been able to recruit their managers for $4200 instead of $42,000, they would have gladly done so. The truth is that they cannot.

Syrian universities cannot produce qualified bank executives that can manage $1 billion balance sheets. Indeed, Syrian universities cannot even produce English speaking graduates that can take basic starting jobs at financial institutions. As a result, the boards of these banks have had to recruit their top managers from abroad. The only way such qualified individuals would choose to leave their existing jobs and come to Syria, which is under economic sanctions and presents them with a difficult and insecure working environment is if they are paid competitively. While Abufares and most Syrians may think $42,000 is outrageous, they are misinformed. Were they aware of the salaries earned by senior bankers in the rest of the world, they would not be shocked. Syria is slowly becoming part of the global economy again and that is good news. It is going to cause Syrians more than a few shocks.

To look at the problem in a different way, we should not be shocked at the bank manager who earns $42,000 a month but the accountant who goes home with only $400 at the end of the month and must face his family.  It is not the Four Seasons hotel and its prices that should dismay us but the fact that Damascus only has one 5-star hotel. Dubai has over 70. Similarly, it is not the $170,000 Beemer that should make us angry but the fact that so many Syrians must still ride “battered micro-buses with 9 sweaty (and stinking) passengers” who live below the poverty line.

Syria is slowly taking its place in the global market place. Rather than venting against the reformers and the private sector, people must direct their anger at the socialist planners whose ill-advised past policies had held back their country’s infrastructure, education, heath care, competitiveness, productivity, incomes and standards of living for way too long.

The days of getting an eternal government job by making a call to a senior party operative are over. The days of being employed in the public sector without a high school degree are gone. The times of stuffing consumers with inferior products by banning imports have disappeared. In order to get off that smelly bus you now need to learn English, have computer skills, learn credit analysis, and be proficient in new computer software, advertising, marketing and commercial law.

While on the subject, the Syrian public would do better to cease its attacks on Mr. Dardari and the reformers. Better that they embrace the changes underway and get on the train. The President would not have kept Mr. Dardari in this job had he not agreed and supported the spirit of the process underway. No reform process is perfect. I, for one, think that it has been, if anything, too slow. I wish the word “socialism” would be dropped from the constitution. I also wish that we would stop pretending to be half-pregnant with terms like “social market economy”.

I would be ecstatic if the government stopped supporting its 250 losing businesses and embark on a privatization drive. I wish Mr. Dardari would further reduce the subsidies (eliminate all that goes to the wealthy by means testing) and use the savings to spend money on education and export incentives. The reformers must also better articulate their message to the public by explaining the merits of the reform process and how the old system cannot possibly continue. They must show through a simple excel sheet analysis that state coffers will be drained if bread, fuel, sugar, electricity, rice and tea subsidies plus free education keep on being dolled out at the present pace. There is no free lunch. The more you spend on subsidies and inefficient businesses, the less you can spend on education, health care, infrastructure and export promotion.

The money to fund all these programs will have to come from somewhere. Printing money will be the last resort. As for the high price of real estate, reforms must address the speed of the “tanzeem” otherwise known as the process by which more land becomes zoned and prepared for residential use. In sum, while we all may have own criticisms of the process, the public must be made to unite around the fact that the general thrust of the reform policy is sound, appropriate and necessary.

It is time for the Syrian public to realize that rather than criticizing the new Syria, they must lament the old Syria which could not keep its promise of growth, higher incomes and rising standards of living. The days of quitting school and opening a “dekkane” or store and expecting to thrive and grow wealthy are over. It is now Carrefour, the new malls and international brands, Lafarge, the banks and the new expected leasing companies that will become the employers of choice for Syria’s youth. Syria needs to start graduating MBA’s and not only engineers and doctors. The best and brightest of the country ought to start to entertain thinking about careers in advertising, banking, leasing, commercial law and private equity and not just medicine. The $42,000 a month ought to work as an incentive rather than a source of frustration and anger.

The cancer of corruption

While Abufares and the Syrian public have the right to wonder about income disparities, they should direct some of their anger and frustration at Syria’s past economic mismanagement rather than present reforms.  The vast majority of Syrians who eek out an existence on pitiful salaries should not be seen as the norm. The most disturbing feature of the so-called socialist system has been the culture of corruption that it has created for us – a culture that will be very difficult to undo. The pitiful civil servant salaries have institutionalized official corruption to levels that are difficult to fathom.

The best example of such corruption can be seen in the scandal that has recently come to light in Aleppo in the area of real estate cooperatives. This article details the cancer that now plagues city officials. They abuse an archaic system far removed from the functioning of free markets to enrich their pockets and those of mid-level government officials to the tune of hundreds of millions. This cost is born by the average citizen. I encourage readers to go through the comments section of the article in order to understand the depth and seriousness of the problem. The prime minister has recently convened a meeting of his ministers to discuss the runaway prices of real estate and what to do about it. Regrettably, we are unlikely to see concrete actions taken to address this issue any time soon. It is disturbing to see the government paralyzed as it has watched the prices of real estate soar to stratospheric heights over the past 5 years. It has offered no explanation or solution. There is a lot that can and should be done. Untaxed empty apartments dot the country. Speculation in land is a national pastime. Tanzeem takes decades and the list goes on.

Taxes

The bank executive making $43,000 a month is subject to a 20% income tax. Bank profits are subject to 25% corporate income tax. Given that such income earners are subject to international standards of auditing and reporting, they are some of the few Syrians who pay their tax bills in full. The problem of not paying taxes lies outside the publicly listed companies. Not a single family owned business in Syria decided to list on the new stock exchange. This was a telling fact. Large family businesses in Syria pay an effective tax rate of something around 4% it is believed. The government keeps making noise about changing this fact and cracking down of tax cheats. They threaten hefty fines for none compliance but thus far they have done nothing. What is more disturbing is that the owners of such businesses send their children to university for free. They receive subsidized items just like those making $300 a month.

A way forward

1- The government must use tax policy to increase the opportunity cost of holding on to unused and none primary residential units. It must also use tax policy to slow land speculation. The fact that the Tanzeem moves at a snail’s pace means that new residential developments take decades to bring to the market.

2- For a country that has such expensive subsidies in place and a large unprofitable public sector that sucks up state resources, every unit of tax revenue is critical to bridge the funding gap. That the richest people in the country can get away with paying 4% in tax is shameful. But, wouldn’t you do it if you could? Is it possible for the government to enforce compliance to the above two suggestions when it pays its employees $300-400 a month? When a $400 a month employee shows up on the doorstep of a business tycoon that has a huge tax liability, what are the chances of ethics and honesty winning out over temptation and the desire to fatten one’s income? We all know the answer to this rhetorical question. This brings us to the third and most important suggestion for a way forward.

3- Syria will never put its economic house in order unless it makes a clean break from socialism. Introducing vague German economic terminology and saying that we are now a “social market economy” is not enough. For a country with such limited financial resources, our government has no business being in the business of making shoes, cloths, tires, bottled water, beer and 244 other constantly losing establishments. Every manager in charge of these inefficient businesses sees his job as a license to steal and plunder. All the money wasted in salaries and balancing the losses at year end is money that was stolen from one Syrian to pay another. In this case, the robbed Syrian is everyone who has no connections in the government or the Party. Those robbed include every hospital, university, school and road that has been starved for the lack of investment. The answer to Syria’s many problems is privatization. It is a taboo subject that the government is not educating its people about.

I am sure that my recommendation to privatize will elicit a number of passionate responses explaining how this cannot be done and accusing me of being heartless be of the many employees who will lose their jobs. Nonsense is my answer. The new buyers of these businesses will also need to employ people and will not rely on robots. They will most likely make a profit which will allow them to grow and invest further in the business. This will add to economic growth and end up employing more accountants, lawyers, advertising professionals etc. Once the government stops having to close the hole at these 250 businesses, it will have the funds to pay its tax collectors three or four times their current salaries. Once this is done, it will then be able to announce a strict and enforceable tax compliance drive. A well paid tax collector who accepts a bribe can be dealt with severely and publicly. The same goes for the business person offering the bribe.

Conclusion

Abu Fares should not attack the Syrian private sector, the senior bank executives, the ostentatious BMW drivers, or those sipping coffee at the Four-Seasons. He would do better to save his anger for the old economic habits that have squandered close to $15 billion on uneconomic irrigation projects that were carried out with no regard to return on capital criterion. He must lash out at a the corrupt and inefficient public sector that has wasted billions of scarce Dollars on uneconomic projects that has drained the state coffers of critical funding that could have gone to improve education, health care and infrastructure. That we can still stick our heads in the sand and think that these issues will somehow get solved with time is a travesty. The government must streamline and shed its vast wasteful assets. The government must address the rising cost of real estate and punish those who neglect to pay their taxes. It is high time that Syria adopted sound public policies and taxed people according to their earnings. The reform process is bound to cause much pain and offend our sense of fairness and equality, but their is no alternative. Syrians have unfairly been denied the opportunity to compete in the international marketplace and enjoy its fruits for too long.

Global Voices: Syria: Gap in Private Sector Salaries Disturbing
2010-10-15
By Yazan Badran

“Officially disclosed salaries in the Syrian private sector range from the minimum full-time wage of $125 to $42,000 a month”, Abu Fares lashes out on the Syrian private sector, and the disturbing imbalance in the wages it …

Comments (112)


Pages: [1] 2 3 » Show All

1. Majhool said:

I am not an expert but does it have to be the wrost in both? The worst socialistic model which was based on corruption, government monopoly on everything including education and confiscation of the private sector. And the worst market economy without a safety net and without sound planning of resources?

Can’t we develop an economy that:

1) promote sectors through direct financing (and not management) that produce jobs for the mass majority of the population
2) Promote (not through monopoly) sectors of the economy that sustains a stable society. i.e. educated populous, affordable food and housing.
3) Promote competitive advantage ( regional) in a number of sectors to secure foreign currency and keep up with the world.
4) Allow economic freedom in parallel with the above to those interested given that gains are effectively taxed

I am not convinced that it has to be either or.

Thumb up 0 Thumb down 0

October 18th, 2010, 3:11 am

 

2. abufares said:

Ehsani
Thank you for taking the time to lucidly criticize my decurtate article. While yours above is an elaborate economic analysis of what you consider an acceptable and unavoidable disparity in the economic reform movement mine was rather a down to earth and “a man on the inside” account.
We share “at least” one thing in common. We were both “students under supervision” in the late 70’s in the US where we pursued and obtained our post-graduate degrees.
I daresay that if you detected a sense of anger in my post it’s more because you haven’t been unfortunate to read my ramblings over the years. I’ve “lashed” out against almost everybody, including myself, at one time or another.
However, at one point you misquoted me, or shall I say you didn’t quote me fully. I did answer my own question: “These hard-to-find and honest accountants along with some private banks’ presidents are being paid up to $42,000 a month…” Just look a little further down my post and you will certainly find it.
What should be more surprising to you is the fact that I’m literally biting the hand that is paying my “salary”, my (by Syrian Standards) very high salary or contract to be more accurate. I am a part of this private sector, as an employer in my own firm (for over 2 decades) and as a consultant for “big” business over the last few years.
Among my more shameful memories is sitting on a board meeting for a new venture, a huge manufacturing plant in Syria, where the main topic of discussion was the hiring of Indian foremen and supervisors because qualified Syrians would not work for the pathetically low salaries the board members were willing to offer. The fact that this particular project went belly up after spending millions of dollars (mainly collected from investors) was as much a result of the government’s contradictory policies as it was through the self-destructiveness of the stakeholders themselves. Because they were making more profit importing the same product from China, Turkey or wherever they willingly sacrificed the investment and the few hundreds jobs.
I am a human being before and after being a professional. No one in Syria or abroad deserves a salary of $42,000 a month with the current state of the world. No one deserves $200 a month either. Too chimerical, I know! Human dignity and decency are far more important to me, and to many others I suppose, than laissez-faire, socialist or communist economic theories.
The Private Sector in Syria is CHEAP, very cheap. It is corrupt, immoral and culpable. The fact that the previous government controlled economy was bad does not give the private sector the right to be what it is today. What is so great about reform if the thieves were government employees before and are “entrepreneurs” today?
I beg you forgive my long comment. I am not arguing numbers and figures but rather a sense of right and wrong.
This is very WRONG and luckily for me (on a personal note) I’m stepping out soon. When in my neck of the wood please let me know, a glass of Arak does wonders in blurring the numbers and crystallizing the more important things in life 🙂

Thumb up 0 Thumb down 0

October 18th, 2010, 3:49 am

 

3. Bassel Hamwi said:

Dear Joshua,

I am delighted that SOMEONE has taken the time to answer the articles in the press. Unfortunately, we have not yet been able to create the proper institutions, such an Association of Banks, which can frame such an important discussion and provide analytical framework.

A discussion of the haves and have nots is a key one to be had. Not only on a Syrian level, but from a global perspective. What can we all do to bridge the income gap and help alleviate poverty and the role of the State and its institutions in the process is imperative. It is not sufficient to blame those who have a conspicuous income becasue they work for transparent insititutions with functioning checks and balances. I hope that the discussion will evolve further.

Best,

Bassel S. Hamwi

Thumb up 0 Thumb down 0

October 18th, 2010, 3:49 am

 

4. Alex said:

First, I want to express my admiration to both Abu Fares and Ehsani (in alphabetical order!) … “On the left”, Abu Fares perhaps the most popular Syrian blogger (anyone disagrees?) and “on the right” my good friend Ehsani, the most courageous, practical and convincing Syrian economics expert online.

Ehsani,

We discussed in the past many of the points that you raised here. By now you convinced us that some degree of privatization is necessary and that taxing real estate and removing subsidies for the rich are absolutely where we should start.

So I will focus on the spirit of Abu Fares’ post … the emotional aspects of that huge income gap that exists now and will continue to grow perhaps as the transition period towards a less socialist system progresses.

The government needs to communicate much more with its citizens. Last Ramadan I was watching Egyptian TV channel and was surprised to see a number of excellent Egyptian government ads that tried to explain to the viewers why new real estate taxes were introduced and why poor people will not really be affected much by those taxes … the ads were interesting and they were convincing.

Can the Syrian government do the same? … maybe place public service ads on TV to encourage the rich to be more considerate of the way they display their wealth in public places? and to explain why state owned businesses are being sold to private owners…

Communicating is essential. Although I can imagine how incompatible the idea of communicating (to get the prior approval?) with the people, with the old way of doing what the party’s leadership decides is right for the country.

Before we decide to move totally to the right, we need to somehow “ask the Syrian people” how far they want their country to move away from socialism. Proper opinion polls should be conducted instead of relying solely on the opinions of experts (from visiting western bankers, to Baath party representatives in government meetings) who advice decision makers on how and how far to reform.

I would only conduct opinion polls after few months of those ads that are supposed to try to explain to people why reforms are needed and what they can expect from them …

By the way, are you sure we can’t settle on being eventually “half pregnant”? .. aren’t we now (in transition) quarter pregnant?

What is socialist Sweden? fully pregnant? as pregnant as the United States?

Finally, a little personal story similar to yours: When I was planning to study architecture, my grand mother told me “no, we won’t accept that. Only a Doctor or an Engineer”

She convinced me. I studied Electrical Engineering instead.

And finally (part II) … the very impressive Ehsani and Abu Fares are both graduates of Syrian schools … those schools can’t be that bad!

Thumb up 0 Thumb down 0

October 18th, 2010, 4:36 am

 

5. why-discuss said:

I am not an expert, but living in Canada, i know that the tax system is key to a healthy country. Of course it is easier to tax a flat 4% than to go in the hassle of a complex tax system and a V.A.T
In order to get that into place, IT, i.e computer expertise, is the prerequisite. The advantages of computers is that it bypasses human intervention, therefore could eliminate the corruption inherent to a manual system.
Most institutions in Canada use computers, internet is spreading as fast as mobile phones.
I think there should be massive education in the computer fields at all levels of education and encouragement to use and develop computer systems and networks as well as investments in this field by private phone company and public works.
This is a necessity in order to any sustained modern development.
With a good tax system and a targeted VAT on ‘luxurious’ items, subsidies may be eliminated and low income citizens can benefit of a 0% tax as well as returns. High income citizens, consuming luxurious items, will have to pay more and get nothing from the government.
Maybe we can start by that …

Thumb up 0 Thumb down 0

October 18th, 2010, 9:48 am

 

6. 5 dancing shlomos said:

one of the sinful results of low wages in ???:

Life for an $11 Robbery
By ANTHONY PAPA

http://www.counterpunch.org/papa10152010.html

Thumb up 0 Thumb down 0

October 18th, 2010, 1:53 pm

 

7. Majhool said:

I think the communication aspect is crucial just like Alex pointed out.

However I think the big elephant in the room is the lack of checks and balances.

As for the wages issue, I was told by an owner of a chemical plant that he and other business owners cooperate in fixing the wages for each role in their industry making it impossible for an employee to change jobs for a better pay.

Thumb up 0 Thumb down 0

October 18th, 2010, 2:47 pm

 

8. ziad said:

I sort of agree with most what has been said here by all.
Ehsani and Abu Fares,

Ehsani looks at the situation from his perspectives and prescribes the right treatment and medicines and I agree with him. Abu Fares looks at it from his perspectives and tells us what wrong with the private sector.
The only thing I strongly disagree with is when Abu Fares says no one is worth $42,000/month especially at this time. If there is ever a time when superstars are needed, it is today. Why not pay peoples their worth?

Let me tell you my own personal story. My uncle, who in 1975 was in charge of water desalination with solar energy at Berkeley, wanted to go back and serve the old country. He was offered a maintenance position in Banyas because he had a mechanical engineering (he had both BS and MS from Berkeley). He ran as fast as he can out of there. Year later, he became a frequent lecturer in the gulf and he even went to Damascus few times to lecture there. After he retired, he built a unit that gives you 99.98% pure water and contracted with NASA to install it on the space shuttle to Mars. Do you think my uncle is worth $42,000/month in this climate and drought conditions?

I can give few examples of blindness (not just short sightedness) about the system and people in charge but I think it is a waste of time. We need to move forward and as Ehsani said, you want to attract global talent, you need to pay market price. Damsacus is the eighth most expensive real estate market in the world. If I get a job there, I want to be compensated accordingly. We need to let go of the mindsets that were entrenched in people in the last 30-40 years. I think the new regime is trying to do that but change is very hard to do and achieve. I believe they need to be more aggressive.

Alex,

I disagree with you about polling the people in Syria for many reasons. One of them is people are not taught critical thinking and were not allowed to even venture there. Second, what would happen if they said no to reforms? Again change is very to achieve and to allow people who have not had a say in any thing to decide if they want to change.

WD,

Canada and the United States had their taxation systems in place many years before they had them computerized. As Alex said, we need to educate the masses on the benefits of paying taxes

All,
This is a great discussion and the more we disagree and argue in a professional manner the better it is for our beloved Syria.

We need more people like this
http://www.nytimes.com/2010/10/18/books/18adonis.html

Thumb up 0 Thumb down 0

October 18th, 2010, 8:02 pm

 

9. Norman said:

It looks like taxation is the only way to correct inequality in income , I agree with Ehasani and others that people should be paid what they deserve and to keep the government out of this say , there is no employer who would pay an employee more than they can get out of that employee so apparently these people deserve it and actually people who are paid by salaries are probably , as Ehsani said , the only ones who are paying their fair share of taxes , The question is how to get the private businesses to pay their fair shares , i believe when India had the same problem collecting taxes it implemented a sale tax , other ways i see is what Ehsani said and i said many times before real estate taxes on any property after the primary resident , taxation for transfer of wealth and real estate to children and other family members to hide wealth , Estate tax after significant deduction and cooperation with other countries to honor Syrian laws and court orders , estimating taxes every 3 months certified by public accountant can help and make it easier for private businesses to pay ,

Lastly Syrians and others should be able to make as much as they can as long as they do not break the law and pay their taxes ,

Although there are many failing government owned projects , i am not ready for the government to sell these ventures , as i saw what happened in Russia , i would rather that the government allow the private sector to go into any business and even compete with the government venture so the government venture can be the safety net that provide for no profit if it has to keep the products available and affordable , with time more private venture will be there and government venture will close for lack of need ,good workers will migrate seeing the writing on the wall to the private sector for opportunity and security ,

Thumb up 0 Thumb down 0

October 18th, 2010, 10:47 pm

 

10. Majhool said:

Sales Tax is a consumption tax that in the context of developing countries usually replaces customs. Its also a regressive tax, i.e. The rich and the poor are equally impacted. Only income tax addresses the income gap between rich and poor. Taxing on wealth ( as apposed to income) is another way of the confiscation mentality that got us into this mess, for most syrians owning a house or two is their way of savings, i don’t see any merits for additional burdens on them unless investment opportunities are abundant . There is no escape from taxing on income, the government have to figure out a way to tax family business and big merchants.

Thumb up 0 Thumb down 0

October 18th, 2010, 11:22 pm

 

11. Alex said:

Dear Bassel,

Until the state manages to rectify the situation (somehow), … charity would do for now. Much more generosity should be expected from most of the leading Syrian Businessmen and businesswomen.

Frankly, most of what they do is about their egos … like attending glamorous galas where half their donations pay for the cost of the extravagant night’s celebration before the other half goes to charity …

Abu Fares is right in one thing … there is so much greed in the private sector. Obviously this is not limited to Syria, but we would like to hope that we in Syria can try to do something about it… Syria (the country and its people) hosted millions of Iraqi, Lebanese, Palestinian, Kurdish and Armenian refugees … Let the rich live up, everyday, to the same high standard set by their poorer countrymen.

For the sake of Syria’s stability, reforming the culture of greed and overinflated egos should go hand in hand with other economic reforms.

Thumb up 0 Thumb down 0

October 19th, 2010, 1:30 am

 

12. Alex said:

Ziad said:

Alex,

I disagree with you about polling the people in Syria for many reasons. One of them is people are not taught critical thinking and were not allowed to even venture there. Second, what would happen if they said no to reforms? Again change is very to achieve and to allow people who have not had a say in any thing to decide if they want to change.

Dear Ziad,

The results of those polls do not have to be public or binding. But if you find out that 90% of your people “strongly” disagree with removing subsidies for now … you know that you need to spend some public awareness time or money to educate the public before you announce the end of those subsidies.

It is a way to find out what is too risky and what is not as risky as expected.

There is a lot more that can be learned through scientific research of perceptions and attitudes.

Norman, Majhool

Sales in Syria are mostly cash … I wonder how seriously they can enforce a VAT

Taxing real estate (while exempting smaller dwellings) is good in many ways … you also want to move the money parked in real estate elsewhere .. hopefully to more constructive investments in Syria … not outside the country!

Thumb up 0 Thumb down 0

October 19th, 2010, 2:39 am

 

13. Alex said:

Off topic, but have to share with you

Thumb up 0 Thumb down 0

October 19th, 2010, 3:34 am

 

14. Jillian C. York said:

Abu Fares, I apologize for not commenting on your original piece at its place, and instead bringing my comment here –

I have to specifically call out the above commenter, Ziad, who said “The only thing I strongly disagree with is when Abu Fares says no one is worth $42,000/month especially at this time. If there is ever a time when superstars are needed, it is today. Why not pay peoples their worth?”

I’m an American who is paid within the bracket of that amount per year. In academia. And I get by just fine. The average in my city, one of the highest in the U.S., is $65,000/year. In fact, the President of the United States makes less than $42,000 a month (but not by much). And the cost of living in the U.S., with the exception of housing costs (which I realize are a big deal), is generally lower than in Syria.

Oh, and senior bankers in the U.S., which Ehsani mentioned? $540,000/year is indeed possible, but look at how all of our banks have gone belly up. Look at how many jobs have been lost. Is that really something to strive for?

Who on earth deserves $42,000 a month, an amount which could feed a small family in one of the wealthiest, most expensive countries on earth, nevermind a far less wealthy country somewhere else in the world? Who is possibly deserving of such a ludicrous salary? Whose work is possibly so taxing, so difficult, that he should be paid exponentially higher than every other human being on the planet?

My answer, like Abu Fares’s answer, is “no one.” Not in this world, not in this economy.

Thumb up 0 Thumb down 0

October 19th, 2010, 8:07 am

 

15. norman said:

To all of you ,
Communism failed and class warfare is not helpful , as long as people play by the rule , they should be able to make as much as they can , what i would say is ,
Please tell me where they went to school so i can send my kids there ,

Thumb up 0 Thumb down 0

October 19th, 2010, 8:36 am

 

16. EHSANI2 said:

Dear Jillian,

What makes you think that an employer would pay someone $42,000 a month when they can pay less?

The fact that your employer is able to hire you for that amount for a year is precisely what free markets are all about – let price match buyers and sellers of a product/service.

Let us assume that you are in charge of making Syrian public policy. How would you make it a legislation that stipulates that $42,000 a month is too high? Would you place a salary cap at Syrian banks? Would you issue a directive to their Boards that they cannot pay more than $5,000 a month? Let us assume you did that. What kind of quality would you get you think? Surely, the more experienced and able bankers will balk at such salaries. Instead, you will end up with third tier bankers who are now in charge of running a financial institution.

Let us now assume that you are a shareholder of one of these institutions. Would you agree to have the Board of this company pay $100,000 a month to a banking superstar that is likely to add significant amount to shareholder value? Banque Audi-Syria has a market capitalization (worth) of close to $350 million now. I now present you with two choices:

Hire a superstar for $100,000 a month that can double the bank’s worth over 5 years to $700 million or hire an inexperienced banker for $4,200 a month who would end up adding little to shareholder value or even make the bank lose its present $350 million market cap?

Take professional sport. Do you think that the Yankees, Lakers or Real Madrid are insane to pay what you consider ludicrous amounts to athletes? Just like Syrian banks, the executives in charge of making such decision are no fools. They make rationale business decisions. They would love to pay as little as possible to help their bottom line but when they do pay up, it’s because they know that the extra compensation they pay will help them add multiples more to their bottom line.

Dear Abu Fares,

I will be in Syria soon. Having a glass of Arak with you would be the highlight of that trip.

Thumb up 0 Thumb down 0

October 19th, 2010, 10:39 am

 

17. abufares said:

@Jilian
The fact that one organization, pays 2 of its current employees at a ratio of 336/1 only proves the extent of the prevailing “moral” corruption not only in that organization, in the country, in the world at large but with the concept of the Free Market Economy itself. Screw Communism and whatever failed historical experiments we had and still have to go through before we learn. How about simple Humanism???

A friend of mine earlier sent me this link:

http://www.nytimes.com/2010/10/17/business/17view.html?_r=3&partner=rss&emc=rss

as a token of support and I have to thank him 🙂

@Ehsani
I’m going to take you up on that. I really look forward to it.

Thumb up 0 Thumb down 0

October 19th, 2010, 11:10 am

 

18. EHSANI2 said:

Abu Fares,

One can argue that capitalism and free market economics is not “humane”. Let us stick to Syria for a moment. Was it not the case that the socialist experiment in Syria was predicated on the grounds that it was going to be more humane, closing the income inequalities of the past? Was it not supposed to be the solution to the evil landlords (iktaeiyeen) and capitalists (raasmaliyeen)? Forty years later, what were the results?

Yes, you got rid of those landlords and capitalists of that era. But, all you ended up with is that the people revolting against the old system being in a position to be the new landlord and capitalist of the new system.

http://www.aksalser.com/?page=view_news&id=84c941f43f58788fef2fb64ccadc26c2&ar=26686343

Thumb up 0 Thumb down 0

October 19th, 2010, 11:26 am

 

19. KA1 said:

We have this argument regularly around the kitchen table…How do you incentivize the Syrian workforce? If you paid them a fair wage (in comparison to Europe or the gulf), offered good work conditions, and provided leadership and career advancement training then they would be more likely to work. However, the culture does not promote working hard, it promotes making money. The two, working hard and making money, are not necessarily related and that is a cultural shift that must take place for the Syrian Economy to become viable.

Trickle down economics, as we have so clearly seen based on the Bush years, does not work. The economic impact of Syrian Entrepreneurs making 1000x more than their employees isn’t going to help drive the Syrian economy…instead we must work to create a highly skilled and educated middle class workforce. This is the key to a better future.

Thumb up 0 Thumb down 0

October 19th, 2010, 11:36 am

 

20. 5 dancing shlomos said:

#13

not enough time to watch (and no sound). looks to be lesley stahl, jewess and zioness, wandering through a part of palestine accompanied by brown shirted skin heads.

dont know what capitalism and free mkts mean in syria.

in america free mkt is a manipulated word like democracy. means nothing. free market is a rigged market for those in on the game. capitalism is not the same as business which has been a human activity for millenia.

capitalism has come to mean what is mine is mine what is yours is mine what i can steal is also mine,legally. what i lose is paid for by you via govts not me. note recent bailouts of swindlers, thieves, losers.

Thumb up 0 Thumb down 0

October 19th, 2010, 11:49 am

 

21. Alex said:

Dear Ehsani,

First, I am not for a salary cap. You are right, if you need to get the same quality executives that Dubai is attracting, you will need to pay what needs to be paid.

But I have a question. If “prices” (or salaries in this case) are purely determined by supply and demand … if the person who heads a bank in Damascus needs to be paid $42,000 per month because it is such a critical position and being compensated so generously is worth it in order to attract the smartest and most capable person out there, then … why is the job of President of the United States not priced accordingly? … is the head of a Bank’s branch in Syria handling a more sensitive job than the President of the Unites States?

Or take Mr. Dardari … why is he making much less than $42,000 a month? … he is in charge of Syria’s economic reforms, yet only paid a fraction of that Banker’s salary.

How can Syria and the United States attract capable candidates for highly critical jobs without having to pay $42,000 per month?

What I am trying to say is that it is perhaps fair to direct “anger” at bankers in general, and not only well paid Syrian private banking executives. The same way “the market” priced senior positions in politics in a reasonable way should potentially be doing the same in determining the compensation of star bankers… their jobs are surely not as critical as the job of Mr. Obama

Thumb up 0 Thumb down 0

October 19th, 2010, 11:56 am

 

22. norman said:

Alex,
There are jobs you take for money and jobs you take for power and prestige , Obama, Assad Dardary are jobs that get you power and prestige , for GOD sake i take these jobs for free , i would even pay to get one of them , second these are jobs paid by the tax payers so they have the right to set them while bankers jobs and other private jobs are no body’s business except the parties involved , The less the government interfere the less corruption there is ,

Thumb up 0 Thumb down 0

October 19th, 2010, 12:15 pm

 

23. EHSANI2 said:

Alex,

Those seeking the office of the President of the U.S. do not do it for the money. Mr. Bernanke is the current Fed Chairman. He can quit his job at the Fed and be paid millions. He does not do it because he has enjoyed being an academic at Princeton for all his life and now a public policy servant as Fed chair.

If you were a shareholder of JP Morgan, would you like to have Mr. Obama as your CEO or would you prefer to stick with Mr. Jamie Dimon? I think that I know the answer. Do you think Mr. Obama would be a better web designer than you? I know that if I were starting a company, I would hire you before I call him.

If the job of the U.S. President cannot attract the best candidates because of its low pay, I am sure that it would have been set higher. I would love to do Mr. Bernanke’s job by the way. Indeed, I would do it for free or as Norman just said I would pay $42,000 a month to do it. You can make this offer to the Federal Reserve Board on my behalf.

Thumb up 0 Thumb down 0

October 19th, 2010, 12:25 pm

 

24. 5 dancing shlomos said:

stick to syria.

in america politicians serve and will be rewarded.

clintons, grifters from arkansas, are now worth hundreds of millions. feinstein through her position has enriched herself and her crooked husband by hundreds of millions. just 2.

bernanke like greenspan, rubin before serve in govt to serve the elites and will be rewarded beyond their value to america. they have zero value to the bottom 99%.

shareholders at jp morgan, goldman sachs, citigroup are holding nothing without the manipulation of 2 administrations and well placed individuals.

the system is all crooked.

Thumb up 0 Thumb down 0

October 19th, 2010, 12:36 pm

 

25. EHSANI2 said:

5 dancing shlomos,

Every economic system in the world is tilted to the advantage of the powerful. Who do you think has been the biggest benefitiary from the economic boom in China? You guessed it – it is the higher echelons of the Communist party.

I doubt that Your sentiment about America are shared by Mr. Hamoui
http://investing.businessweek.com/research/stocks/private/person.asp?personId=30053254&privcapId=28973677&previousCapId=28973677&previousTitle=AdMob,%20Inc.

Thumb up 0 Thumb down 0

October 19th, 2010, 12:44 pm

 

26. 5 dancing shlomos said:

most would say salaries paid to athletes are insane and cannot be justified except by stupid owners most of whom make no money from their teams. they get hugh tax benefits/support.

european (maybe till recently) and asian ceos were paid far less than their american counterparts but were actually competent. many high paid american execs are /were incompetent. they simply took the money and bailed out with golden parachutes that they manipulated with an appointed board. nardelli, fiorina, worldcom, enron, etc, into the hundreds or thousands.

it is about fraud, deceit, lies, connections.

in america, a rigged and very dishonest system. very little on merit.

Thumb up 0 Thumb down 0

October 19th, 2010, 12:49 pm

 

27. 5 dancing shlomos said:

came across this. would not have paid much attention except for alex post at #13:

Lesley Stahl and the 7 pillars of conventional wisdom
By Joseph Glatzer | Mondoweiss | October 19, 2010

Lesley Stahl’s report from Sunday’s “60 Minutes” about the illegal Israeli colony “the City of David” is an unadulterated, albeit very sophisticated, piece of Peace Industry propaganda. It is a case study for how the media sets the “appropriate” parameters of debate according to “conventional wisdom” of “serious people”.

She starts off the show with a cute intro about the holiness of Jerusalem:

Jerusalem is one of the holiest cities on Earth, for Jews, for Muslims and for Christians. It is also one of the most difficult issues at the negotiating table as Palestinians and Israelis struggle to continue the peace talks.

Conventional Wisdom #1: the current discussions between various members of the Peace Industry are a sincere/heart warming/Hallmark channel effort for peace.

What’s the challenge Lesley?

“The challenge is how to divide the city between the two sides. Back in 2000, then-President Clinton came up with some parameters for how to do it: areas populated mostly by Jews would remain Israeli; those populated mostly by Arabs would become the new Palestinian capital. That meant that for the most part East Jerusalem would go to the Arabs.”

Convention Wisdom #2: The challenge to peace is dividing Jerusalem between Palestinians and Israelis, and Clinton’s 2000 plan was the reasonable way to solve this challenge.

Conventional Wisdom #3: Acquisition of territory by aggressive force and settling a civilian population in occupied territory are OK if the US backs you. Only those who are un-serious outsiders could possibly expect the Geneva Conventions to be enforced.

Throughout the segment, Palestinians of Jerusalem are referred to as “Arabs” except when it is in reference to the Palestinian state. What’s insidious about the report is that even when seemingly criticizing Israel, the criticisms are only around the edges and they only serve to reinforce Peace Industry propaganda.

This brings in Conventional Wisdom #4: Palestinians are “Arabs” until they are lifted up as Proud Palestinians upon peacefully negotiating their way to their glorious state of Palestine.

Another problem is an inconvenient truth: that biblical Jerusalem is not located in the western half of the city. It’s right under the densely populated Arab neighborhood of Silwan.

Silwan isn’t a Palestinian neighborhood, it’s an “Arab neighborhood”. Just like Baghdad, Beirut, and Amman are Arab neighborhoods. Who can tell the difference these days?

But, when referencing a future Palestinian state, Palestinians get to be called Palestinians:

Palestinian Jawad Siyam was born in this “very, very special place” and says he can trace his roots there back 930 years. He’s pessimistic about the Palestinians ever having their own state. “What will happen to this village if there’s a two-state solution?” Stahl asked

Conventional Wisdom #5: Palestinians have an ancient heritage in East Jerusalem. As far as West Jerusalem goes, that’s the Israeli side, and Palestinians have absolutely no claims or rights on that land.

Here’s another passage loaded with conventional wisdom and brainwashing:

The Arabs say it’s a provocative thing to do. Devout Jews Yonatan and Devorah Adler live in one of the houses El’Ad bought. El’Ad has raised tens of millions of dollars, half from the United States, and buys the homes on land the Palestinians claim for a future state.

Conventional Wisdom #6: Palestinian land isn’t really Palestinian land. It’s only a “claim” among many competing claims. To assert that one claim has more validity than another is “biased” and must never be spoken of.

Here’s Lesley Stahl talking to religious settlers living in the City of David colony:

“And yet, when you see those maps, it’s over in the Palestinian side,” Stahl pointed out.

“Yeah, well, maps are written on paper. This is written on our hearts,” he replied.

To the untrained eye, Stahl seems to be doing a good job of reflecting the insanity of the Zionist project. But take a second look. Criticism of Israel is allowed only if the underlying premise reinforces Peace Industry conventional wisdom. In this case it’s that East Jerusalem is the “Palestinian side” (the as yet uncolonized parts) and West Jerusalem is the Israeli side.

“The government pays for the gun guards?” Stahl asked.

“It’s tax money. It’s, I pay it. Everyone who is paying taxes is paying it,” Jawad Siyam replied.

“You pay taxes and that money goes to pay for the guards to guard the settlers,” she remarked.

“Yes, of course,” Jawad said.

“So you’re helping guard the settlers,” Stahl remarked.

“Yeah, I’m a fan of the settlers and the gun guards,” he replied sarcastically.

Another seemingly positive exchange which shows that Palestinians of Jerusalem pay for their own oppression through their taxes. But, look closer. Are the Palestinians Israeli citizens? Then why do they pay taxes to the Israeli government? Was there some sort of illegal unrecognized annexation of East Jerusalem? Not for “60 Minutes” to say.

The implication given is that Palestinians living under the Israeli government is the natural state of affairs. It’s timeless and just is. It would of course be biased to point out that East Jerusalem Palestinians have no political rights to vote in the governmen that they pay taxes to.

More he said/she said “journalism” comin atcha!

That feeling of Jewish encroachment has been heightened by the mayor of Jerusalem, Nir Barkat, who is doing all he can to make sure East Jerusalem remains under Israeli sovereignty. He wants to create a Bible-themed garden and turn it into a tourist park adjacent to the City of David. But as with the dig, the local Arabs see this as another attempt to gobble up their side of Jerusalem.

Remember, it’s “Jewish encroachment” not land theft by a government which happens to call itself the “Jewish State”. The legitimate “Jewish-ness” of that State behind the green line is thus reinforced, yet again.

“Local Arabs” “see” a plan to build a tourist park right on top of their heads as an attempt to “encroach” upon their rightful and legitimate part of Jerusalem (and only that part, shut up about the parts your grandparents were kicked out of). Who are these “local Arabs”? Are there also “local Jews”? Who knows if this is really a land grab.

“Building the mayor’s park requires demolishing 22 Arab homes in Silwan.”

Presumably “local” Arabs. Is there any context to the situation? Has the Israeli government demolished any Palestinian homes in the past? Not sure. Although it would be helpful in evaluating the validity of Israeli claims, context is biased so it mustn’t be spoken of. That would be taking a “side”.

“The mayor says that area is a slum in which the houses were built illegally and his plan will fix that. But the locals want to stay in their homes.” (pictures flash on the screen of Palestinian slums).

How did these areas get to be slums? Was it the result of extreme racism in allocating development funds for everything from trash collection to school buses? That’s a secret. Again with the “locals”. How local are they? Where are they locally from? Is this the locals’ indigenous “locale”? I told you I don’t know, stop asking me silly questions.

Here comes my favorite part:

“The European Union, the United Nations has criticized this plan to get rid of these 22 homes. Public opinion, especially while the peace talks are underway, is looking at this and saying you’re trying to get rid, move Arabs out of Jerusalem,” Stahl said.

Is this plan illegal? Is it a war crime? Has it been Israeli policy for decades? What does the law say? I don’t know about that, but all I know is the EU and the UN “criticized” the plan during “peace talks”.

“But that’s the way it looks. And my question is, why not wait until the peace talks are settled?” Stahl asked.

Is this really a plan to “move out the locals”, or is it just the way “it looks” to Lesley Stahl? This is clearly not a relevant question. The only relevant question here is: WHY CAN’T HE JUST WAIT!?

Asked what she meant by “why now,” Stahl said, “Because it’s on the table at the peace talks. That’s why now.”

Does this mean Lesley Stahl believes it’s best to wait to wait and steal more Palestinian land til Abu Mazen formally surrenders Silwan to Israel in the fake state solution? And here comes the money shot:

“Settlements have been a stumbling block in peace negotiations of the past. And what your organization is dedicated to doing could become the stumbling block again,” Stahl told Doron Spielman.

Conventional Wisdom #7: Settlements are the obstacle to peace. It’s nothing else. Not refugees’ unrealistic expectation to return, not discrimination against Palestinians inside Israel, and not babies born stillborn at checkpoints. The only obstacle to peace is a few religious crazies in Jerusalem screwing it up for everyone.

“We are looking, Lesley, to go down and uncover history,” he replied. “If coming back to my home after 3,000 years is a stumbling block to peace then I think that that is not a very good peace.”

If given the chance, a Palestinian would say, “If coming back to my home after 60 years is a stumbling block to peace then I think that that is not a very good peace.”

Why weren’t these dueling “rights of return” contrasted against each other? More importantly, why don’t I see the segment as a step forward for explaining the Palestinian plight, and why do I have to keep ruining the fun? I guess I’m just a hopeless cynic.

Thumb up 0 Thumb down 0

October 19th, 2010, 1:22 pm

 

28. Akbar Palace said:

5 Dancing Ahmads is upset at all the corruption

stick to syria.

in america politicians serve and will be rewarded.

clintons, grifters from arkansas, are now worth hundreds of millions. feinstein through her position has enriched herself and her crooked husband by hundreds of millions. just 2.

bernanke like greenspan, rubin before serve in govt to serve the elites and will be rewarded beyond their value to america. they have zero value to the bottom 99%.

shareholders at jp morgan, goldman sachs, citigroup are holding nothing without the manipulation of 2 administrations and well placed individuals.

the system is all crooked.

Dear 5 Dancing Ahmads,

What about President-for-Life Dr. Bashar? Is he “crooked”?

Syrian President Bashar Assad, 35, has married a Syrian woman who grew up in England, according to state-run news agencies yesterday. Asma Akhras, reportedly in her 20s, is the daughter of a Syrian doctor who practices in London. Assad’s father, Hafez, who died in June, had an estimated net worth of $2.3 billion.

http://www.forbes.com/2001/01/03/0103nsam.html

Thumb up 0 Thumb down 0

October 19th, 2010, 11:07 pm

 

29. Majhool said:

Speaking of education reform. Check out this video. It shows the beating of a private university president in Syria.

http://all4syria.info/content/view/33684/122/

Josh, isn’t this story worth a separate post on your blog, you know with Q & A and all?

Thumb up 0 Thumb down 0

October 20th, 2010, 12:15 am

 

30. Averroes said:

Alex,

Thanks for the post in #13. It is sad to watch fanatics that are so totally obsessed with their self-serving version of history, and their self-centered world view. It is sad to see a people reduced to utterly narcissistic worship of the tribe, because that’s ALL it is: worship of the people and worship of the history and wprship of the heritage, not of God anymore … not by a far cry.

On the other hand, and knowing that more and more Israelis are moving in that direction, and that it is more and more a direction that is sanctioned and promoted by the state, we (on the other side) are becoming more and more convinced of the justice of our cause, and that there will probably be no rational solution to this conflict. How can there be, when the other side has this extreme narcissism to feed?

I can see a future historian reading about the hastened “excavations” of those foolish settlers, smiling in sadness, and shaking his head in sorrow.

Thumb up 0 Thumb down 0

October 20th, 2010, 12:26 am

 

31. Averroes said:

Ehsani,

Thank you for the great effort. Here are a few ideas:

1. The government should put very strong constraints on cash handling. People still withdraw cash in sacks in Syrian banks every day. The use of cheques and other traceable means of payment should be enforced. A good level of automation is also needed with the banking system. This will enable the government to expose the state of all businesses, and thus receive much better tax revenue.

2. Privatization of the losing government businesses is a great idea, but it could have a backlash if people find themselves on the street suddenly. I think that an accelerated system of education can be put in place that would bring much of the existing manpower up to speed with new technologies. Say, one-week courses in two or three areas. This way the working people have a chance to shape up. This type of education can be made to be very efficient and very effective.

Thumb up 0 Thumb down 0

October 20th, 2010, 12:37 am

 

32. Global Voices in English » Syria: Who Gets Paid $42,000 a Month? said:

[…] of Abu Fares‘ post on Prof. Joshua Landis‘ Syria Comment. In a post titled, “The Sin in Syria is Low Wages“, Ehsani argues that while economic reforms will inevitably leave some people worse off, they […]

Thumb up 0 Thumb down 0

October 20th, 2010, 1:11 am

 

33. Alex said:

Ehsani and Norman

As I said … I am not against a market driven salary scale for senior bankers and accountants, but I was trying to explain why high priced Bankers and accountants are not usually liked in most cultures.

If I was offered that salary I would take it too … but I would give most of it to charity.

Averroes, 5 Dancing Shlomos

The clip I posted shows

1) Those Israeli settlers are lunatics who would drive the region to war one day, and no one is stopping them .. they are being spoiled more and more each day.

2) Israel does not “control” the US media … it has excessive degree of influence, but it does not “control” it

This clip on 60 minutes was quite balanced and quite reasonable … Did not go far enough, maybe, but it was not bad at all.

Thumb up 0 Thumb down 0

October 20th, 2010, 1:46 am

 

34. EHSANI2 said:

ALEX,

High Compensation is never looked at favorably by society. Companies do not pay employees based on a likeability criterion. Again, employers would love to pay as little as possible if they can get the talent they need. Banker and accountant pay is linked to performance. Not every banker is paid well. Senior and able ones are because they are worth it. If a less than able banker signs off on a credit application that goes sour, it will cost the institution a fortune. I would argue that no amount of money in compensation is enough if you go through the downside risks of making wrong decisions at the job. The same goes for the other parts of banking. A good trader at a bank is worth all the money that he makes. The same goes for an investment banker who brings in huge fee incomes. In 2007, a hedge fund manager got paid $3.5 BILLION a year. Is this too much? His investors were more than happy to pay him as he made as much as 590% for them. Were there a number of banker/traders who were overpaid and got away with murder during the past few years? Sure. The global system was at the risk of disintegration. The policymakers had to arrest the decline and do what it takes and in the process made mistakes and overlooked a number of critical issues when it came to punishing the industry. But, that was not the time. Had the global financial system been allowed to disintegrate, unemployment today would have been at 20% and not 9.6%. The same angry people who blame the policy makers for bailing out the bankers would have been asking why and how the government did nothing to stop the collapse that has caused many more to be unemployed. The 1930’s is a template that no sane policy maker ought to copy. Thankfully, the US Fed chair has written his PhD on the subject and with Rooseveltnian determination was able to save the global financial and economic system. Without him, the world economy and incomes would have perhaps collapsed.

Thumb up 0 Thumb down 0

October 20th, 2010, 9:32 am

 

35. DIBOS said:

Hell everyone,

I’ve been reading SC for some time now, and I found that the current discussion is rather intriguing, so I would like to submit my first contribution here. I would like you to look at the matter from another perspective, which you may find that it goes side by side with Ehsani’s perspective. To make myself clear, let me take Beyoncé as an example of a superstar. I think a star like Beyoncé earns millions in a world tour, and all that she has to do is singing, which most of us would do just for the fun of it. I say that three factors are at work here:
1. Qualifications: which hardly need any explaining! Qualifications for a banker are what you find in his resumé, in addition to his character, his ability of persuasion, his charisma… etc. And for Beyoncé, her talent, her voice, her physical appearance…etc. These qualifications are what draws the lines between what is acceptable for a certain job and what is not acceptable. So having these qualifications is a necessary condition to get a generously paid job, but it is not sufficient.
2. Risk taking: not all those who get the right qualifications get a job with a high salary, in the matter of fact only a small percentage of those get such a job. Let us notice for example that there are millions of wants-to-be artists who are inspired by Beyoncé or others and try to pursue a singing career and end-up broke, or even worth. So in other words, the more the gain is big, the more it is hard to get, which is hardly surprising.
3. Coincidence or luck: Which I don’t want to give much importance, and its effect is varied from one field to another. I don’t know for sure, but at some point Beyoncé got lucky to meet the right people who gave her the opportunity to show her talent.
Let me summarize: We live in world where competitiveness rules. Highly paid jobs are limited resources and lots of individuals are competing for these recourses. So you should be really good or really lucky to be at the top (good doesn’t mean necessarily good at what you are going to do, you could be good at convincing decision-making people of your qualities rather than having them). This is not a fair system, it is a system that works. In nature the same system led to the evolution of humans (No offense for those of you who still believe in the myth of creation).

PS: I have graduated from France, so pardon my French 🙂

Thumb up 0 Thumb down 0

October 20th, 2010, 11:44 am

 

36. EHSANI2 said:

Dear Abu Fares,

You wrote:

“The fact that one organization, pays 2 of its current employees at a ratio of 336/1 only proves the extent of the prevailing “moral” corruption not only in that organization, in the country, in the world at large but with the concept of the Free Market Economy itself”

Per my comment above, the Hedge Fund Manager who got paid $3.5 Billion a year ($292 million a month) ended up making a ratio of 6944/1 of the $42,000 a month that our poor Syrian bankers get paid.

Now, I am sure that I am going to send you to have a nice big glass of Arak:

The Hedge Fund Manger ended up making a ratio of 2333333/1 of that $125 a month that our poor Syrian laborer makes.

The title of my post becomes easier to understand.

Thumb up 0 Thumb down 0

October 20th, 2010, 12:02 pm

 

37. EHSANI2 said:

DIBOS

Contrary to common perception, it seems that France is capable of producing really good free-marketers. From my perspective at least, yours was a fine first contribution to SC. Please be back. I need all the support I can get.

Thumb up 0 Thumb down 0

October 20th, 2010, 12:32 pm

 

38. Why said:

Is it a coincidence that socialism and massive state control over the economy are correlated with tyranny and dictatorship while free markets are correlated with liberal democracies and individual freedoms?

I don’t think so.

It doesn’t take a political scientist or a historian to see the causation clearly.

Ehsani, your article, although a bit long and could have been a bit shorter, is a masterpiece. Thank you and please contribute more often!

Thumb up 0 Thumb down 0

October 20th, 2010, 12:36 pm

 

39. Alex said:

Dibos, welcome to SC! your French is much better than mine (and I’m a moderator), so please write whenever you feel like it. We are not picky here**

I agree with what you said, but add to it … perceptions and context (see below).

My friend Ehsani,

Those ratios reminded me of this wonderful experiment from 2007. It says a lot about compensation of super stars and how it can vary dramatically depending on the way you want to (or can) appreciate or not that super star’s talent.

http://www.washingtonpost.com/wp-dyn/content/article/2007/04/04/AR2007040401721.html

In Syria (the metro station), people do not understand or appreciate the value of that uniquely qualified character like the other people at the concert hall do… he made $32 at the station … he makes $100,000 in a concert hall… that gives you another crazy ratio … but for the same person’s income at two different settings.

_________________________________________________
** although you wrote: “… and end-up broke, or even worth”
It should be “worse” not “worth” … Tsk tsk tsk.

Thumb up 0 Thumb down 0

October 20th, 2010, 12:40 pm

 

40. jad said:

Here are my two cents about the subject, I’ll be rumbling a lot in this comment but I think that I have some good points somewhere in it 🙂

Ehsani,
Thank you for the interesting dialogue you are promoting through your disagreement with Abu Fares, who as he already state, was looking at the issue from a ‘humane’ point of view and not through your numbers, equations and financial theories.

-You did mention the real estate sector many times in your article and you are right to repeat it for its enormous importance in the future economy of Syria when you think of the percentage of Syrians working in the construction sector, the materials produced in supporting of this sector and the maintenance this sector needs in a country where agriculture is loosing it’s prominent place and slowly fading out because of environmental pollution, climate changes and managerial disasters, and where industry is still didn’t go beyond making house appliances and some expired traditional industry that already been stolen by the Chinese and Indians, and where ‘Ideas’ and ‘Creativity’ is somehow not encouraged and not supported on a national scale.

You pointed out your disagreement with the high price of the market; however, you supported the high salaries, which I find a bit strange since those two are connected together, if you are looking to raise the salaries, naturally, the real estate market will fly even more especially when you don’t have enough buildings and healthy urban layout to balance the market.

I support implementing a tax system on housing, which might work but only over less than 50% of Syria’s real estate market since as you know we have two markets for that sector, the open market and the hidden one meaning (the illegal growing settlements) which is growing everyday without any solutions on any level.
In Damascus the percentage of registered building are only 40% of the mass urbanized area and in Aleppo the same issue and if we go with proposing the Tax system I assure you that we will have a booming in those illegal settlements, so from my humble point of view I think the process of legalizing and adding the shadow market to the open one should go hand in hand with the proposed tax system, we can’t move anywhere ahead if we don’t at least start this process and add the massive billions of dollars worth of dead capitals to the existing one.
This important piece is the missing link in a country like Syria today; the importance of ‘Property law’ by legalizing and developing settlements is the key to accelerate the real estate market and nothing less than fixing this major problem will help.

You did touch on this point but from a different point of view than mine, you wrote:
“As for the high price of real estate, reforms must address the speed of the “tanzeem” otherwise known as the process by which more land becomes zoned and prepared for residential use.”
As far as I know, there supposed to be a Regional Growth Plan ready by now, I didn’t see it yet, so I can’t tell if it’s good or fast enough for the urban development of our cities, nevertheless, I support this step and I think that they are doing the right thing if they are doing it ‘RIGHT’ and working with the ‘RIGHT’ people/companies.

-As for the salaries of $43,000 a month, my question is what did they do to Syria not to their companies to deserve this salaries, where is their achievement on ground? Can I as Syrian citizen see that? Besides, do you think that the 20% income tax they are paying is fair? For me I don’t mind them getting even $100,000 if they are making something important to Syria and changing the lives of Syrians for better but at the same time I want them to be taxed at least 60% on their salaries.
I agree with you that the salary wage in Syria is a sin.

-You wrote:
“The best and brightest of the country ought to start to entertain thinking about careers in advertising, banking, leasing, commercial law and private equity and not just medicine.”
I think we both know by now that I disagree with you on concentrating your support to the ‘service sector’ in a country like Syria, I’m a big supporter of the real productive ones, the Industrial and the agricultural ones (in all and every application related to them) because those two I believe are the main sectors which build the nation wealth and not the service industry, so the disagreement continue 😉

Thumb up 0 Thumb down 0

October 20th, 2010, 12:49 pm

 

41. WHY said:

JAD

You said:
“As for the salaries of $43,000 a month, my question is what did they do to Syria not to their companies to deserve this salaries, where is their achievement on ground?”

Is Syria or you paying their salaries in order for you to expect an employee so much? What did you do to Syria that this person earning 42k a month didn’t do? You are using double standards here.

The same thing about wanting to tax 60%. What is the Syrian citizen getting in return for their tax that they are paying? Corruption and state tyranny? Majority of the budget goes to the military and security apparatus and not even a member of parliament has the right to ask where the money is going.

Last, the agricultural sector in all developed countries does not exceed 7-8% of GDP. In the most developed countries it doesn’t exceed 5% of GDP. The more the country develops, the less need for people in that country to work in agriculture. We have the technology to make land produce more while costing less for the supplier, which in the end benefits the consumer. We don’t need half of our population to be farmers or laborers. (The law that says half of members of parliament have to be farmers or laborers reinforces this).

Anyone attacking the private sector while justifying Statism is indirectly feeding tyranny and corruption. It took the the Soviet Union 70 years to realize. I hope it doesn’t take us that long, but we are almost there.

Thumb up 0 Thumb down 0

October 20th, 2010, 1:05 pm

 

42. EHSANI2 said:

WHY

First, you are correct. The post is too long, and I apologize.

You make really excellent points in all three of your comments, thank you.

Jad,

As WHY implied, as countries develop they move from dependency on agriculture to manufacturing and finally to services.

The median price of real estate does not reflect median incomes. In most countries, the ratio is around 3/1. Given the low median income in Syria, median home prices are too high as a result of the issues that I addressed and more (tanzeem, taxation, lack of alternative investments, hedge against inflation and possible future loss in currency value). Note my title. I believe that lower income salaries are too low. No argument on the illegal housing issue.

You seem to advocate a tax of 60% rather than 20%. I totally disagree. Once you ask someone to pay 60% taxes, they will find a way to shield their income. I can assure you that every bank manager will ask his employer (with head offices in Lebanon and Jordan for example) to agree to pay his salary in Beirut and Amman. The current 20% is the only tax that the government is actually collecting in full because it is transparent (thanks to international auditing standards of these banks). Indeed, my suggestion would be to go a step further:

All income in Syria should be taxed at 10%-15% given the low level of tax compliance. The only way the government can expect people to pay is if they lower the tax rate as close as possible to the 4% effective that they are paying today. I would bet you that the government will collect much more than it is doing currently. When you tax someone at 60%, you are asking him/her to work 7.2 months out of 12 for free. What you are advocating is that home-pay ought to be only 4.8 months of salary a year. The rest goes to a government that squanders your hard earned dollars on irrigation projects (please refer to Elie here) and other wasteful projects. No thanks.

As for my support of services versus manufacturing and agriculture:

First, where are Syria’s water resources to promote agriculture? Again, I will let Elie comment on this as he has done wonderful research on this subject. As for promoting manufacturing, where is the electricity capacity going to come from? How will you compete with Saudi (free interest loans and cheap electricity) or Turkey with advanced machinery investment, while both enjoy zero tariffs with Syria? Again, Damascus only has ONE real 5-Star hotel. Syria must promote tourism. This is where she enjoys differential advantage. The country is still severely lacking in the list of services that I mentioned. As economies develop and mature, it is natural that they develop their service industries along the way. This is not exclusive to Syria.

Thumb up 0 Thumb down 0

October 20th, 2010, 1:45 pm

 

43. jad said:

Why,
Your argument is interesting because you are looking at Syria as if it’s a private company with no right for anybody to question the salary of their colleague forgetting that Syria is a country with needs and obligations to its citizens. It’s also interesting how you are attacking tyrants and acting like one.

What double standards are you referring to?
I, like anybody else, have the right to ask what is the $43,000 is making for the whole, I’m not questioning that individual in his salary, I have no right, I’m asking him/her to think of its society and to pay back his duties to the whole through the appropriate tax that he, his poor relatives, his distant cousin’s daughter might need/use one day when he/she goes to the hospital and get treated for FREE or go to school and university also for FREE, that’s why I’m asking for 60% of that salary to be used for. If we want to build a country every pound the government can get is necessary,

“Majority of the budget goes to the military and security apparatus”
What are you arguing about here? Do you prefer Syria to be another Lebanon or Iraq? I totally support paying part of the budget for military and security reasons, as long as I walk in the street with my family in any Syrian city feeling safe and protected from the many internal or external threats we are surrounded with. This feeling of security is PRICELESS, that you are obviously not putting in your equation of money.

“The more the country develops, the less need for people in that country to work in agriculture.”
Apparently you dismissed ‘(in all and every application related to them)’ in my sentence and you looked at the term ‘agriculture’ as one meaning, forgetting that everything is related in a chain of industries and actions.

Lastly, you need to understand and respect that people have their own views and if some people don’t agree with capitalism and privatizing everything as you want that doesn’t make them communists and they have all the right to refuse your idea, so your job is to convince them.

Thumb up 0 Thumb down 0

October 20th, 2010, 2:14 pm

 

44. Nour said:

Ehsani2,

I think your argument is quite interesting, and not one I totally disagree with. What I do disagree with, however, is your insistence that Syria should focus only on services in developing its economy. I don’t see how you can possibly build a strong economy relying solely on the services sector, as the nation would not really be producing anything. Services in themselves do not create high-level, high-paying jobs. Moreover, services go hand-in-hand with increased production. That is, the more industry and agriculture you have, the more need you develop for services. While in every nation the majority of jobs are in the service sector, the backbone of every economy is actually production. All the advanced economies of the world rely heavily on their industrial and agricultural capacities, with services directly benefiting from the development of those sectors.

Thumb up 0 Thumb down 0

October 20th, 2010, 2:20 pm

 

45. Nour said:

Why,

I don’t know where you got that Syria spends the “majority of the budget” on military and security. Syria’s military spending is 5.9% of GDP, which is lower than many other countries, including “Israel” who spends 7.3% of GDP on military expenditures.

Thumb up 0 Thumb down 0

October 20th, 2010, 2:35 pm

 

46. EHSANI2 said:

Dear Nour,

Perhaps I did not make myself clear. I totally agree that building a manufacturing base which can earn hard currency through exports is critical. Indeed, I think that I suggested that the government offers exporters help through tax breaks and financial subsidies. Again, as Elie has said often, Syria should have done that instead of spending money on irrigation. It would have used the money it earns from exports to import its food needs. I am not advocating services over manufacturing. What I am saying is that Syria started with close to zero in service industries. As it goes from zero to positive, we must not be surprised. As late as 2004, we did not have a single private bank. Between the building of the Sheraton of Damascus in the 1970’s and the arrival of the Four Seasons, we did not have a single new 5-star hotel. The country did not have a stock market. As such service industries start and grow; we must not be dismayed that it is coming at the expense of something else. I see them offering a complimentary role to the other sectors of the economy.

Thumb up 0 Thumb down 0

October 20th, 2010, 2:55 pm

 

47. Majhool said:

I don’t understand what’s wrong with making 40+k a month. The great news is that the government is making 25% of that a month. not bad.

Ehsani,

Isn’t someone’s worth ultimately have to do with government policy. In the US bankers make make more money because they are allowed to take more risk (deregulation). Doctors in the US make more than their counterparts in Europe because how the health care system in the US is set up.

Should not the debate be centered around what this high salary is telling us about that sector in particular? a bubble maybe? an untapped revenue stream for the government?

Its the government job to controls bubbles and redirect incentive and regulation to protect the people. no?

Thumb up 0 Thumb down 0

October 20th, 2010, 3:05 pm

 

48. WHY said:

JAD:

You are changing what you said in your comment. In your first comment, you said:

“As for the salaries of $43,000 a month, my question is what did they do to Syria not to their companies to deserve this salaries, where is their achievement on ground?”

You make it a precondition for one to do something to the country proportional to their salary for them to deserve that salary. That is not the case! All citizens have the same national duties, whether rich or poor. The only difference between the rich and poor is the higher % of taxes they pay, in which they do pay a higher tax! But taxes are no preconditions, they are paid after one receives the salary, so by you coming back and saying:

“I’m asking him/her to think of its society and to pay back his duties to the whole through the appropriate tax…”

This is way different than your initial statement of: “my question is what did they do to Syria not to their companies to deserve this salaries, where is their achievement on ground?”

You are asking achievements on ground as preconditions, not taxes, but nice try.

Your comment about raising taxes to 60% came afterward, which I disagree for two main reason. The economic reason that Ehsani eloquently mentioned, and the political reason that I gave, which has to do with lack of transparency and prevalent corruption.

As for your points on military and security spending, I don’t buy the emotional argument. The country has over 15 security apparatus which are targeted against the citizens in order to protect the regime and to balance the power between the other apparatus. We haven’t seen a shot fired against Israel for over 35 years. On the other hand, even if we dedicate 100% of the budget on military spending, the military would not stand a chance. Elie has mentioned great points in his articles about that. Tell me Mr Jad, why aren’t members of parliament, who are suppose to be the representatives of the people, allowed to question how much is the budget of the military, and where the money in the military is going? You know why? because the money is going to the pockets of the corrupt officers and the politicians! It’s funny how you bring emotional arguments like “Do you want Syria to be another Iraq?” Let me remind you that Iraq used to spend more money on the military in order for them to oppress their people. Where they able to stop the havoc? No, in fact, the corrupt and tyrannical practices of the baath is part of the reason why there was so much hatred and blood spill in that country! There is no feeling of security within the people of Syria, surely not that people who think and want to see a freer country. That’s because feeling of security comes when you are able to think and speak freely, when you are able to engage with the government without continuous threats or corruption practices.

Last, I never accused you of being a communist. I respect your right to speak and would never ask you to not state your opinions just because I don’t agree with them. On the other hand, Am I, along with many others, allowed to state our opinions freely in Syria? I think the answer for that is obvious.

Please don’t confuse my harsh and direct criticism of your points as disrespect or that I am infringing on your basic rights. I am a fierce debtor by nature and would use that ferocity to fight for your right to speak!

Nour:

Military spending is unknown in Syria. Not even members of parliament have the right to find out. It was like the Syrian oil revenues from 80s until mid 90s, when that money used to go directly to the President’s palace without anyone finding out how much it was or where it was spent. It was not part of the budget.

Thumb up 0 Thumb down 0

October 20th, 2010, 3:16 pm

 

49. jad said:

Why,
It seems that you are trying hard to make a point out of nothing;
“You are asking achievements on ground as preconditions, not taxes, but nice try.”
Huh?! I’m not even trying, I didn’t put any precondition, I was merely asking what did they do on the ground to deserve the salary? If you know, please, enlighten us.

“Your comment about raising taxes to 60% came afterward, which I disagree for two main reason. ”
I pay 40% income tax and I’m nowhere near the 43k, what is your capitalism explanation of that?
When I’m asking for the 60% tax on the very high salary I wasn’t looking for it to be spend on corruption, I actually explained that it should be spend on education and health.

‘As for your points on military and security spending, I don’t buy the emotional argument.”
I wasn’t selling you any emotional argument so you don’t need to buy.
I was explaining the point that if we Syrians want to have some security in the middle of the ‘lovely’ neighbourhood we live in then a military budget is expected to exist to bring some security.
I wasn’t discussing freedom of speech in my comments because it wasn’t the subject.

“Tell me Mr Jad, why aren’t members of parliament, who are suppose to be the representatives of the people, allowed ….”
You tell me Mr. WHY, is there any one member of those represent you or me or any Syrian citizen’s best interest? They only represent themselves and their money and the Syrian citizen is the last thing on their minds, so you think they even care to even ask?

“On the other hand, Am I, along with many others, allowed to state our opinions freely in Syria?”
Again, I was writing somehow technical points to Ehsani so it wasn’t about the political freedom that you are asking about and I’m not sure what do you want.

“Please don’t confuse my harsh and direct criticism of your points as disrespect or that I am infringing on your basic rights. I am a fierce debtor by nature and would use that ferocity to fight for your right to speak!”
Point taken and the same comments back at you.

Thumb up 0 Thumb down 0

October 20th, 2010, 4:26 pm

 

50. Nour said:

Ehsani2,

Thanks for the explanation. I agree with your analysis.

Thumb up 0 Thumb down 0

October 20th, 2010, 5:15 pm

 

Pages: [1] 2 3 » Show All

Post a comment