2024-04-30 21:30:13
Over the past two days, Libyan public opinion has been preoccupied with boycott campaigns launched by activists against chicken and egg products, and everyone is asking about the feasibility of this policy and whether it actually constitutes an economic solution to high prices.
The “Libya Eye” network asked Professor Dr. Omar Zarmouh, an academic and economic expert, about his opinion on this phenomenon, and about the solutions available to the government to control prices.
In his answer to the network’s questions, Dr. Zarmouh stressed that people should be free to act of their own will as long as the action is spontaneous and not under external or political direction, considering that dealing with the problem of high commodity prices in the Libyan market lies in “establishing the principle of competition” among merchants. Industrialists and service providers, so that the market is the one that determines the reasonable and fair price and prevents monopoly. If market mechanisms fail, the state’s role is to help the market work efficiently.
Dr. Zarmouh stressed his categorical rejection of the idea of the state imposing a “compulsory price” for goods, because that “destroys the economy,” as he described it. Compulsory pricing is difficult to monitor in practice and is a cause for administrative corruption, and may be accompanied by the spread of bribery when some merchants try to divert regulatory attention from them through Bribing the weak-minded.
Dr. Zarmouh said that the role of the state must be embodied in creating the conditions that make the market operate within a framework of competition and breaking abhorrent monopolies, and not in imposing a specific price for a commodity or a group of commodities. This is achieved by establishing laws and regulations that regulate the market and establish the principle of competition, as well as through… Economic policies (financial, monetary, trade, etc.) that must be discussed annually and then approved by issuing a budget law by the legislative authority.
He added: “In this context, I would like to recall Law No. (23) of 2010 regarding commercial activity, which adopted the principle of competition in its articles starting from Article 1282, and there is no exception to that except what was stipulated in Article 1284, which permitted the imposition of pricing for some goods by decision of the competent minister, which is A discretionary power that is valued to its extent and is not binding on anyone. Therefore, even in this last case, there is much to be said about the disadvantages of imposing a price, for example: (1) Who compensates the manufacturer or seller for his losses when the price eliminates any profit margins or exposes him to losses that might take him out of the market? (2) There is no guarantee that the commodity will reach the final consumer at its reduced price, and we have seen that the margin that is reduced in favor of the consumer is often seized by brokers and intermediaries, and then the final consumer is forced to buy the commodity at the market price and not at the discounted price (for example, cement, and some association goods Consumerism) and thus compulsory pricing loses its meaning. (3) Compulsory pricing creates an economic distortion in the market that makes it difficult to restore the market to its (natural) competitive position, especially if it causes a severe disease in souls that makes some see that their illegal work (seizing the profit margin) is a legitimate right for them.”
Regarding the mechanism of government intervention in the market, Dr. Zarmouh explained that it is represented by “monetary policy,” where the central bank must control the money supply by activating monetary policy tools such as controlling the size of deposits in commercial banks, and not expanding the printing of currency, pointing out that There are many tools that the Central Bank can employ if it wants.
Dr. Zarmouh said: “The Central Bank must maintain the stability of the exchange rate and abandon its current policy, which has created major turmoil in the market and affected prices.
According to Dr. Zarmouh, the Ministry of Finance must provide the budget at the minimum necessary for government spending, which achieves goals and spending efficiently, indicating that some consider this goal ideal, but nevertheless all state facilities must strive to achieve it.
Dr. Zarmouh was surprised that the level of public spending in Libya had reached the level it reached in the two years (2022-2023), especially with regard to expenditures carried out outside the budget. He said that the Libyan people are paying the price of smuggling, disguised unemployment, and mismanagement at home and abroad.
According to Dr. Zarmouh, the role of economic policy must be directed to combating price inflation, creating job opportunities and encouraging investment, which creates jobs and absorbs apparent and hidden unemployment.
Dr. Zarmouh concluded his speech by saying: “The principle of economic freedom must be firmly established among everyone and stipulated in the constitution, and that the competitive market is the one that determines prices, not the government, and this does not conflict with the people’s sheer will to boycott or refrain from buying any commodity if it rises.” its price or reduce the quantities of its purchases, as that is the law of demand in the world of economics.. Control is not by force and the economy operates with economic freedom and competition, otherwise it will be a (faltering economy) in which mismanagement, bribery and corruption are widespread, and we stress the principle of refusing to impose a specific price and allowing free competition. Whoever wants to boycott, let him boycott.”
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2024-04-30 21:30:13