Aren’t you tired of those who claim to love Jordan and Jordanians, while destroying the country’s potential and livelihood? I am. The examples of this “spoken” love are many. Every Ramadan, merchants say they will not raise prices but end up doing so anyway. The government says it wants to help the economy, but then cuts spending, raises energy prices, and carries out electricity blackouts without prior warning. Now banks (which have been enjoying a prolonged bonanza while the economy was teetering) are raising interest rates on credit while lowering interest rates on deposits despite the efforts of the Central bank, because they love Jordan so.
Let’s see what Adam Smith, the father of modern capitalism, said of all those great lovers. In his magnum opus, The Wealth of Nations, Adam Smith said, “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own self-interest. We address ourselves not to their humanity but to their self-love, and never talk to them of our own necessities, but of their advantages.”
So is self-interest good? Not really. Of dealers (middlemen and agents, who are merchants, governments, and banks) Smith said, “The interest of the dealers, however, in any particular branch of trade or manufactures, is always in some respects different from, and even opposite to, that of the public. To widen the market and to narrow the competition is always the interest of the dealers.” In other words, Smith said dealers love to restrict competition. Since the government is the ultimate monopoly, one can easily assert—based on simple observations of their activities in Jordan—that banks and merchants act, or even aspire to act, as monopolists through cartels, which used to be formal until the Competition Law of 2004 forbade them. Consequently, merchants and banks went into implicit collusions, committing acts that are illegal but hard to prove given Jordan’s “competent” bureaucracy and the rentierism mindset.
Why does Jordan need proper implementation of its competition legislation, which should apply to both commodity importers and banks? Adam Smith answered that “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” He also said that you cannot counteract such behavior, but he was wrong as far as the world is concerned. Yet, he may be correct in the case of Jordan, since anticompetitive practices seem to go on unhindered.
Why should the government assess its decision before claiming it does what it does for the love of the land? Adam Smith said, “The proposal of any new law or regulation of commerce which comes from this order, ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention. It comes from an order of men, whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it.” Yet, the government of Jordan issues one controversial economic decision after another—the majority of which are disastrously harmful to the economy—and then claims to be in love with the land with little time to think about anything else. Even when a certain prime minister issued a declaration a few months back that no new economic decision will be issued without a proper cost-benefit analysis, within days from his own decree, he issues a slew of decisions without proper evaluation. He only lived to regret those decisions hours later.
Such were the words of this great Scotsman almost 250 years ago. They were not spoken by my favorite economist, John Maynard Keynes 80 years ago, but by the master whom monetarists, classical, and neo classical economists’ admire. Yet, he was not speaking about Jordan. Or was he?
Someone once said that economic theory does not apply to Jordan, but whoever believes such claim is wrong. All theories apply to Jordan but none is properly implemented. There will come a day when all such lovers of the land finally admit they have hurt the economy and themselves in the process. I hope this realization does not hit suddenly, but gradually, through measured and enlightened steps.