Cutting the Pie

12.13.2005

Lebanon is re-learning the lesson that street protests alone do not create democracies and put countries on the path of economic growth – real reforms do. There are conflicting messages coming out of the country following the “Cedar Revolution” – on the one hand, there is a sense of excitement over becoming independent, and on the other hand, there is a feeling of bitterness that not much is being done in terms of policy creation.

“The elections ruined everything,” said 24-year-old Mourad who is studying for a masters in international affairs at the Lebanese American University.

“Everyone wanted a bigger slice of the pie. The slogans about national unity turned out to be hollow,” she said.

A similar message is relayed by a Belgrade-based think tank, which in its recent publication cited political battles and indecisiveness as a reason for slow reform in Serbia following the ousting of Milosevic. A key problem here, which the quote above captures well, is that many look to get a piece of the pie which they percieve to be fixed. But, as economists like Nobel Prize winner James Buchanan argue, the pie is not fixed – under good policies it can increase just as it can shrink under bad policies. The message – everyone can increase their wealth and it does not have to be at the expense of others. Market economies are not a zero-sum game.