What makes a state go berserk and how to ascertain of its sanity is one of the perennial questions that have been baffling thinkers and laypeople alike throughout history up to our days. Can a state be dumb? Absolutely! The Libyan state is a clear proof! Take for instance the latest whopper. When the windfall revenues from oil have increased suddenly and dramatically due to rise in oil prices what do you think the Libyan government would do with unexpected manna? It's put it in a conundrum over what to do with the money left after the big cats have lined their pockets -it appears there's still plenty to go around. So the government, as usual deficient in anything dealing with competence, instead of having figured by now (or at least took some time to figure out how best to spend it) how much it needs for its running budget and sundry and thus calibrating the amount of oil abstracted and exported to the market prices and the country's needs. No, it doesn't seem such a strategy exists yet. The oil and natural resources utilization policies seem to be left to the whims of whoever controls them -perhaps the oil companies. As to the "leader!" his way of dealing with vexing problems is to put his finger out of one of the flaps of his tent and feels which way the wind is blowing and thus wing out some asked for policies - it;'s the method he follows for everything else!- cooking some old and sloppy recipe he's dreamt of the night before. After 5-decades of oil abstraction and exportation, Libya has no sound oil and development policies to speak, except the more oil exported the better is! Consequently, instead of correlating the mining of the only natural resource the country has -beside the sand!- with the country's basic needs and its capacity to invest, the wacko's wisdom has determined the inexhaustibility of this resource and therefore has linked its use to: first to its demand on the world's market; and second, to his ability to produce more of it!
As far as economic policies are concerned? Like any hot air, it leaves only the stink of its passing. Almost non-existing. 37- years of fumbling around with badly understood and worst applied scraps of Western thought which so far have produced a big fat zero of economic activities. Still the mainstay of the economy is done by foreign companies and imported labor. Where are the 5.3 million people? Who knows what they do, beside running into each other to meet their social obligations, their main activities seem to consist in scratching their crutches and sitting on their butts playing cards and drinking tea? On top of that the government wants to reward them, for the perhaps the increased productivity during the Holy month of Ramadan despite reduction in work hours to five hours a day?- by distributing ad hoc some 200 LD for each wage-earner! This is part of the new thinking parroted by the wiz kids of business schools and their high-tech wizardry's advisers. Libya finally has caught up with the "supplied side economics" championed by no others except that old communicator of shining cities on the hills, Ronald Reagan (and his facsimile on the other side of the ocean: Margaret Tatcher) during the years when he was pursuing the "mad dog" of Libya! Reagan's optimism which had led him to encourage Americans to spend and be happy (borrowing as much as needed to bankrupt even an empire like the Soviet Union) was transposed into Libya in the form of "Beduin's generosity" at hands of the Colonel
Why a country like Libya follows economic policies that were designed for other types of economies? Pure consumerism and stupidity! No creative thinking. Importing solutions like anything else. Or just mimicking more mature economies? Libya in kicking off its what's by now cliche (the so-called 'Open Door policy' initiated by Sadat back when dictators literally kept the gates under lock) free-market bonanza by embarking on using an economic tool which had been invented for completely different purposes - to mitigate the excesses and aberrations of the not so hidden hand of the market and therefore it's a corrective measure and not be used as an adventure money or seed capital. Does this make any sense? Not really!
Policies of cutting taxes or returning money back from what's been collected -or borrowed as in the American case!- were part of reviving demand advised by the British economist M.. Keynes back in the '30's as a tool to fight recessions. The Keynesian model, as it's known, advises the government in times of recession, depression, slump, etc. to increase expenditure -even by borrowing- in order to revive the demand (consumption) and thus put the economy (production) back into high gears. The model was predicted on the assumption that revenues -from taxes- will rise as the economy recovers and thus pays back what has been borrowed and spent. This may work in an economy based on the production of goods and services -industrial- when it's in deep slumps by giving it a jumpstart. In a distributional economy such as the Libyan one, it's all different manner. Since there's no local production base to speak of, and thus there's also no need to do anything beside trying to invest in some productive sectors to found an economy. One may say, this is one step toward such a goal. Helping the consumer is a way of giving an arms shot to the economy. Maybe that would work in a normal society. Libya, by any stretch of the imagination is no normal. It's a purely consumer society with no expertise in anything except in the field of cursing their bad luck!
Now, if for any condition, the revenues have jumped dramatically and are beyond the government's capacity to manage, then the safest way is to cut back on oil production or invest the money preferably inside if not worldwide until the time one figures out what to do with the money. Giving 200 LD is the dumbest idea and smacks of old paternalism, pure and simple: first it's not going to solve the perennial problems of poverty; and second, it only increases consumption for a relatively short period of time and thus will benefit the producers of the goods and service consumed, usually industrial countries!
But the dumbness doesn't end with the state only, it stretches also to reach the opposition. True to a general fact, particularly acute in many Third World countries, the opposition is as good as the government it opposes. Thus, one hears so frequently on this site and others, them screaming day and night of how low are the salaries and how high is the cost of living. And their recommendations for the government, instead of wasting the money left and right, or giving it to charities to whoever shows up at Sirte, to give it to the people by increasing the wages. This could be taken in good faith. But what good money without an equal increase in the amounts of goods and services needed to meet those sums: it's basically like telling the government to print more money and distribute it to buy the same goods and services, and that will only lead to more inflation. Why the opposition does such a foolish thing? Well, political opportunism and amateurish handling of issues many have no clues to how they work in the real world!
The government may have listened to such criticisms and what did it do? Distribute money, cut work hours for Ramadan, and send a large swarms of preachers and councilors to all provinces to recite the Holy Book and guide the faithfuls back to the 'right path!' and who said that the role of the state is to promote and to protect the happiness of people in this life only, the despotic states takes care of its subjects from the cradle to eternity. In the 21st century the state has nothing to do except to vet and appoint preachers, sponsors religious festivals, and hold and reward religious indoctrination. What kind of state which gets into these murky areas of medivalistic concerns; and what kind of faithfuls are these who would accept such practices from the Big Brother, as to chose for them even their preachers, and not to mention advises those preachers on what to say and what not to do? Can such folks be trusted to be cognoscenti enough to tell the difference between God and Devil? Pablo Neruda put it much better: "All roads lead to the same point: to the communication of who we are."