Monday, August 11, 2008

Libertarian solution to Iraq economy has failed (of course)

One of the goals of the invasion of Iraq was to shrink the government and let the Iraqis create a free enterprise paradise that would be a beacon to the rest of the Middle East. It's success would cause envy in the populations of the other Middle Eastern nations so that they would replace their authoritarian governments and create thriving democracies and free enterprise utopias. Remember that? That's why Jerry Bremer was staffing his Coalition Provisional Authority with his kiddie corps recruited for their ideology rather than their expertise through the American Enterprise Institute.

To implement all this, Bremer also disbanded the Iraqi Army, led the deBathification of the civil service, and canceled payment of all government pensions to retirees and their survivors. This essentially turned what remained of the government over to the Shiite parties, which they staffed with politicians and inexperienced relatives, all advised by Bremer's kiddie corps. Bremer also removed protective tariffs and import controls to allow cheap goods from nations such as China to enter Iraq, effectively wiping out what was left of the Iraqi free market. And of course, the previously socialized government of Iraq left no significant banking industry behind it.

The result was massive unemployment, with the only legal sources of employment being the government and the U.S. military. The population generally had no income, and the Sunnis were blocked from employment in the government by the Shiites. When the Iraqis looked around to find out who was to blame for the disaster that had befallen them, the answer was obvious. The American military was occupying Iraq and was the cause of all the disaster.

Combine this awareness with the fact that the American military had not taken control of the weapons left over from the Saddam military and the result was a no-brainer. Iraqis had to conduct an insurgency to remove the source of the problem. Since the Shiites had control of the government and support from their fellow Shiites in Iran and the Kurds were protected by the Americans and were already well-along in building an independent Kurdistan, the Sunnis were the logical insurgents. They were the group facing starvation and seeing no hope.

The Libertarian "solution" to the situation in Iraq (created in the first place by the idiotic invasion of Iraq pushed by the White House, the NeoConservatives, FOX News, and conservatives such as Bill Kristol to somehow solve earlier problems with Iraq) was unrealistic to begin with and has disastrously failed. That's the story told in the article Iraq Private Sector Falters; Rolls of Government Soar in the New York Times.
BAGHDAD — Hampered by years of violence, a decimated infrastructure, a lack of foreign investors and a flood of imports that undercut local businesses, Iraq’s private sector, particularly its small non-oil economy, has so far failed to flourish as its American patrons had hoped.

In its absence, the Iraqi government has been sustaining the economy the way it always has: by putting citizens on its payroll. Since 2005, according to federal budgets, the number of government employees has nearly doubled, to 2.3 million from 1.2 million.

The impetus is not only economic: In exchange for abandoning the insurgency that plunged the nation into civil war, many of the 100,000 members of civilian patrols known broadly as the Awakening movement have been promised jobs in the security forces or in reconstruction, though many Sunni Muslim members complain it is not happening quickly enough.
Is it any wonder that the current government of Iraq is demanding that the American government set an early fixed timetable for withdrawal of the military? The first step in the cure of any illness is to eliminate the source.

The American military in Iraq, besides the many other flaws it has for Iraqis, is the vector that has carried the disease of Libertarianism to ravage their country.

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