Sunday, February 20, 2011

Market forces live: ArseDex

Thanks to reader Koranteng for this data point. You may recall this post about the market for thugs in Egyptian politics. Specifically, when the government needed arseholes to attack the protestors, it had to pay four times per capita GDP to get them.

In Libya this week, it is said that the government is using mercenaries recruited from its various allies' wars in sub-Saharan Africa as arseholes, and that it's paying $500 a day for their services. Libyan per capita GDP is $14,884 at purchasing-power parity, so the price of privatised violence is running at a premium of over one hundred times typical earnings. Clearly, either the regime has so much less real legitimacy, or the degree of brutality required and risk involved is that much higher. In fact, those options are both consistent, as a regime with less legitimacy would need to use more force and it does seem to be doing just that.

I made the point last time out that it's typical for mercenaries to be very highly paid relative to the countries in which they operate. This is clearly an important point here. It's also true that Gadhafi's Libya has often got other people to fight its battles for it - they exported Palestinians into a variety of different wars in the 1970s and 80s, notably sending PLO volunteers to prop up Idi Amin (you bet they didn't sign on for that). Later, in the 1990s, they trained and equipped fighters in the various West African civil wars (notably Charles Taylor - there's an arsehole for you). Now they're doing the opposite.

Of course, being an oil state, they can probably afford to keep hiring the arseholes.

However, here's something interesting from the Egyptian elections last year, from Reuters.
Rates for hiring a thug start at 800 Egyptian pounds ($140) and can reach 40,000 pounds depending on the assignment, according to a study printed by the independent Wafd newspaper.The study, by criminologist Refaat Abdel Hamid, said thugs hired to attack large groups or candidates cost 25,000 pounds a day. Those hired to resist the authorities cost 6,000.

"The price of thugs includes compensation for custody and hospitalisation," the study said. "Former and current ministers and the NDP party get special prices and discounts. Prices are hiked for businessmen and first-time candidates."

That suggests that in October 2010, your entry-level goon came in at about twice the rate Mubarak was paying at the height of the revolution. Interestingly, if you were looking for goons who would be willing to assault a crowd of rivals - the same mission the camel riders had - you'd have had to pay much, much more. Thirty times more, or perhaps there's a zero missing somewhere, in which case it would imply an even bigger price drop. Part of the difference might be explained by the NDP claiming mates' rates as a large customer of long standing, and one who could offer valuable side payments in the event of success.

But it's hard to think of any explanation why the NDP would have been paying less for thugs at the height of the revolution, when they would presumably have been in demand, and the party itself would have been desperate. Also, assuming the selling party could read the writing on the wall, they would surely have been likely to insist on payment in cash on the nail, rather than promises of future side-deals that would likely never be fulfilled. Perhaps the supply of potential thugs increased, but how? Was violence just a more salient possibility?

Or perhaps there was a radical shift in the supply curve between October and January. If the usual sources of goons were for some reason unavailable, and the recruiters were fishing in other ponds, it might be quite possible that wages would be dramatically lower and that the thugs would be much less effective. Of course, another way of saying that there was a radical shift in the supply curve for state violence is to say that there was a revolution.

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