I’m watching Egypt live on Al Jazeera. The noise is deafening. Emotions run high. For a moment in time, they are tasting liberty like they’ve never tasted. The joy must be profound. Like most people, I am happy to see Mubarak go. Peaceful protest worked. And in this moment, the future looks so bright. But I can’t help but wonder: what about the long-term prospects? I'm not so sure.
The future of Egypt depends on one thing: institutions. These are the rules of the game in a given country. Mubarak or no Mubarak, if the institutions remain -- or change for the worse -- not much else will change for the better. Competing factions are circling like vultures. These factions -- from Islamist zealots to government cronies and their supplicants -- aren’t hoping for the formation of good institutions. I’m not even sure the people are.
What are good institutions? Let me get wonky for a minute and appeal to the ideas of Nobel Laureate Douglass North. His work goes deep, but the idea of good institutions is simple: these are the rules (laws) and norms (customs) that tend to lower the cost of exchange and collaboration -- otherwise known as “transactions costs.” The extent to which Egypt can lower transaction costs is the extent to which they can enter a splendid new era
Unfortunately, democracy does not always make for good institutions. Indeed, we’ve treated it as a golden calf for too long. The people too can be tyrannical. And that’s rarely ever good.
What Egypt needs is not political jockeying to regrow the head of the beast that the people hacked off today.
What both Egypt and Tunisia need are new rules. And new rules that can unleash a new peace and prosperity can only be found very, very far in Egypt's past, and, of course, in the West. The people may not want a Western-style constitutional republic. To adopt one might seem like an indignity. But if they don’t get one, democracy alone is only likely to create more Mubaraks and more unrest.
Max Borders is a writer living in Austin. He blogs at Ideas Matter.