It's not just incompetent government which hobbled the Egyptian economy, it was also a defective culture.

Egypt is saddled with a huge corrupt government bureaucracy, because many Egyptians view becoming a civil servant (rather than becoming a successful capitalist, for example) as the focus of their aspirations. This is rooted in past Egyptian envy of their British colonial overlords, which after independence made them view government positions as being the most prestigious.

Much of the Third World is like that, and I suspect it much predates the European colonial era. In the case of Egypt, the ancient culture had two power centers, the monarch and the priesthood. Business didn't count for diddly. Also, alas, in much of the Third World, a position in government is seen as a license to steal, and one's first duty is not to the people or the state but to one's own family, extended family, clan, friends, whatever. Everywhere we see the same mindset, even in places like France and NJ, which are regularly beset by corruption stings and scandals. The Third World also tends to like uniforms, and the prestige they bring, be they military, police, or even sanitation-worker uniforms.
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The first-loyalty-to-family thing is probably innate, intrinsic to the animal that underlies the human creature. Ethical leaders who wanted to break thru that have had, for the most part, to posit a Heavenly Father who mandates that we treat all people as our "brothers" and "sisters", a "human family". That doesn't always work. Then there is the attempt to forge a sense of kinship to a wider group, starting with the village or tribe and then extending outward to a nationstate, in which the basis of the state is the "people" (Volk, etc.) who are to be regarded as a kinship circle. That doesn't seem to work very well in the Third World, tho. There used to be empires in what is now the Third World, but they were personal rather than nationalist. And forget about aspirations to a transnational identity around anything but superstition/religion.
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Ethical leaders who do not resort to superstition have to appeal to reason, a very weak force in human affairs, or to fear, which can be a powerful restraint but not as powerful a positive incentive. People can shirk their responsibilities more readily than outrite defy a powerful government. And when the people lose their fear, what is left? Crowds in the street, daring the authority to clamp down.
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Democracy is supposed to unite these various strands of social unity and give everyone the feeling that they are part of something larger, in which they have a stake and a say, and thus to which they owe a duty of care. But we see how low participation rates can be in democracies, without compulsory voting. People who don't feel they had any say in the laws feel very little reason but fear to obey them, and that fear has to be justified by the expectation that they will be caught and punished if they disobey. The less credible that threat, the lower the level of voluntary compliance. The self-motivated person who does the right thing because his or her internal lites command it is a relative rarity, in every society. But perhaps a democracy has the best chance of bringing out that kind of behavior.

- posted by L. Craig Schoonmaker @ 10:50 PM