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To: WOSG; conservatism_IS_compassion

What I see as the future for Iraq is much brighter than before I heard about these ideas. I had been trying to form ideas of how best to distribute the oil wealth to minimise the danger of Iraq sliding back into tyranny because of government control over the oil. I am just conserned that, even though democracy is beeing rightfully founded, that it does not have enough foundation to stand on, one of wich is the bad state of the Iraqi economy. Although I know that there are a lot of entrepreunal Iraqis who run their private bussinesses, but it seems most of the factories and in fact most of the work force has been employed by the government, wich comes to little surprise having the main source of the wealth in the hands of the government, the oil. Most oil countries become so called rental states, that is as the revenue source is pretty independant of the population the government tends to become corrupt and undemocratic, most countries where oil is the main source of revenues are undemocratic, or on the road to tyranny like Venesuela.

The only real oil country I know of that is not undemocratic (though the same party has had power over most of last century) is Norway, and I beliewe that is mostly due to they tend to be very cheap, that is even though they have billions in revenues they don´t use it, but store it under their pillows, so to speak, that is most of it goes into big publicly owned pension accounts wich use it to invest and pay old people pension. The government is thus not free to use the oil revenues for wathewer purpose they see fit, and have to draw much of their revenues from peoples taxes, wich are I beliewe rather uncommon in many oil countries.

Saddam used the oil revenues to make his power more, mostly by buying his own people and divide and qonquer, putting people against each other, giving money hither and thither, to his own tribe to buy loalty, and to sunny muslim to buy their loalty and so on and so on. The worst thing that can happen is that there will be a new ruling class that will start pumbing money into their own communities to buy their loyalties. This happens in every country, elected officials or not, but is particularly dangerous in oil rich countries, wich seem to go toward dictatorship in the fight for the oil money.

So my conclusion is that special precautions have to be done to limit the politicians power over the oil revenues, of wich I would like to get Iraqi´s and others views on and criticism and opinions if could work, why not if not, and how to make them work. First a Government Petroleum Fund into wich all the oil ravenus must go will have to be founded, wich will have open and thorough accounting system that all Iraqis (and others) can look into openly, maybe through the internet. From this fund then all money the government needs for running the things it has been limited to do, and that limit must be so that the government is only responsible directly for running few things like the police, armed forces and judicial branch. Most other things must be privatized. I know that this will be difficult in a country where the wealth is as unevenly distributed as Iraq and people are used to having the government providing for their all daily needs, even food so the transition will be difficult and will have to be done little by little. So one of the main function of the Fund will be to help the poor people of Iraq to get back on its feet.

One of the things I noticed in last elections was how many of the parties described themselfs in one way or another as socialistic, that is they wanted the government to provide for the citizens, presumable with the oil ravenus, all promised they to keep everybody happy and prosporous, that is they were going to give everybody what they need, or think they need through big government projects, one of wich, like I saw in the agenda of some of the parties was to continue the oil for food project, thus keep the people still as beneficiars, essentially beggars, from the good politicians that are giving them the oil ravenus. We can obviosly see how dangerous that will be, having so much power in the hands of the politicians, that even the main food source is subject of their control.

Here in my country, Iceland, there is constant struggle between the right and left, weather we should be helping everyone the same like the left wants, or like we on the right side of the political spectrum want, focus our limited money into helping the poor, mainly so they can get back to their feet so they will not have to get help any more. We do this mostly by say someone looses his health and ability to work, he gets a certein amount of money in help, but if he can work a little, for every extra crown (our currency, krónur) he works himselfs in, the help is reduced by some ratio, usually half crown for every crown he works himself in, beyond a special amount. Thus there are more money left to help those that can not work anything, and as the money is not cut completely off when they start working again they can start working as much as their health allows them.

Similarly you could keep helping those that need food aid, but the help should be less and less in ratio to how much that particular family earns, that is for every dinar they earn beyond some minimum amount, the food aid should be decreased for like one/tenth of a dinars worth or something like that initially, but little by little that ratio should be made higher, so the program can be little by little fased out for most Iraqis. But most importantly it should be privatized. I guess that every family gets a voucher (is the system not still in effect, although the government has taken it over?) stating how much of wheat and milk powder and all the other things that are given through this program they are entitled to, wich they have to take to the distribution centers to collect the food. Those vouchers should be given out by the petroleum fund under strict distribution rules like I mentioned earlier, so the money for them newer goes directly through the government, as the fund will have an independant administration and pre made rules about how the money shall be spent.

First the food distribution centers must be closed, and all the government employees fired that work in them, or better yeat, they are to be privatized, sold to those that want to run them. Every one that has a shop will then be allowed to sell those products instead of such food aid vouchers, wich they can then use to buy more food from the distribution centers, or the government in some way, or turned in for hard cash, thus privatizing one step in the food program, distribution. Next step will have to be to allow the shops to buy those food items independantly, not through the government or the petroleum trust fund, wich will little by little draw itself out of buying directly for the money.

Similarly the government should not pay directly for schools, health care, running companys or anything else for that matter. People could get a loan from the fund, with small rates to pay for schools, and maybe a voucher directly for those that served in the armed forces to increase the incentive to serve. Those vouchers and loans will only be possible to use to buy education, by paying the schools, and they will have to be used by the schools to pay for everything, teachers wages, renovation of the school property and all that, and thus there will be a competition in education (a good school could have their rates higher than the voucher, so people would have to pay additionally from their own pocket) and thus the school would become independant from the government, although still, at least in the beginning, those that are owned by the government, publicly owned and maybe ruled by the a school board elected by the parents of those that are in that particular school for the younger kids, maybe by the students themselfs in others.

Similarly the Fund could pay for health insurance or into semi-private accounts for every Iraqi (maybe less for those that are earning more money than others) whose function it is to pay for health service directly, thus providing competition in the healt industry. Thus doctors and hospital staff would not be on the government payrole anymore, having to compete in providing the best service in the cheapest manner, although, due to the economic situation in Iraq, the money comes initially from the government, but in this way the officials have no way of dictating how it is spent, thus reducing the possibility of corruption. And in same way the Fund could pay, against maybe small payment from the individual into pension accounts that will be invested until they retire and into accounts from wich people will have to draw their money if they suddenly loose their source of income, thus giving incentives to work, and marry and found families and propably other things.

But one of the most fundamental thing so Iraqis can fullfill their potential and ancient role as the economic giant of their region (remember Babylon and its riches) is to recognise private property and reducing red tape and beurocratic barriers to buying land or getting your property recognised before the law, and to go into bussiness. The famous economist Hernando de Soto has started the Institute for Liberty and Democracy wich focuses on the lack of formal private property rights in most of the non-western world, resulting in powerty, corruption and crimes. His research on the situation in Egypt should be intriguing for Iraqis and others interested in the situation there.

One things a conservative society like Iraq can do is giving families the option of instead of sending their youngest kids to school for the money they get from the fund, they can use it to buy educational material and service maybe through the internet and thus essentially paying one of the parents, most often the woman (women?), if she fullfills some minimal education standards, has an internet connection in her home and something like that, for providing her kids, under certein age with the education they need.

This system could also help distribute revenues between the many levels of government. The 18 provinces of Iraq, and all the numerous city and town counsils around the country can not have their revenues directly from the oil, and it would be dangerous if they would get their revenues directly from the government, as the distribution would be unfair and unbalanced, based upon the political supporf the politicians get in each area. Instead they will have to have a small tax on each households income, weather their direct income or if they want the income they get from the petroleum Fund (wich as I stated earlier will be mostly evenly distributed based upon pre made rules), wich they would use to pay for their communal affairs, roads maybe and such. Thus Iraqis can see on their paycheck and tax sheet how well their politicians are doing, that is if they do not get good enough roads instead of how high the tax rate is, they can consider electing new officials.

Ps. Most of those thoughts I had written down before I heard about the ideas of Chalabi, but please comment on if the could work, better or worse than his, and or if you have better ideas.

5 posted on 03/01/2005 12:16:56 PM PST by Leifur (Time for regime change in Europe:
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To: Leifur
most of it goes into big publicly owned pension accounts wich use it to invest and pay old people pension. The government is thus not free to use the oil revenues for wathewer purpose they see fit, and have to draw much of their revenues from peoples taxes, wich are I beliewe rather uncommon in many oil countries.
I do think that funding a retirees' pension might be a prudent use of the money - but then, there is much to be said for the idea that that is elitist, and that if the money is for the people then the people are for the money - it's not up to you or me to decide whether the money is more needed for immediate needs or for long-term retirement benefits.

As the saying goes, "You get what you pay for." And for that reason it is exceedingly difficult to construct a welfare system which doesn't buy more poverty. America went too far in that direction with its "Great Society" program; even Reagan was not able completely to undo that Johnson Administration boondoggle. The Republican Congress was finally able to convince even President Clinton to reduce the provisions for welfare by requiring limits on the time the payments are made to a given person.

It was a revelation to some of the people on welfare, that they were supposed to exert themselves and earn their own keep! I don't know the details, but cutting the program reportedly produced far less distress than the socialists believed, and actually made some of them happier for having earned their own money.

6 posted on 03/01/2005 4:49:27 PM PST by conservatism_IS_compassion (The idea around which liberalism coheres is that NOTHING actually matters but PR.)
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