Friday, March 02, 2007

Property Rights, an Oil Trust & Iraq

From Austin Bay at TCS Daily:

The Iraqi government should consider two other economic reforms.

A logical follow-on is the establishment of an Iraqi "oil trust" program, similar to the one implemented by the state of Alaska where every qualified citizen gets a share of state oil revenues. An oil trust would put several hundred dollars a year into the pockets of every adult Iraqi -- that serves as an instant economic "fire-starter." The oil trust immediately invests everyone in the economic success of Iraq's new democratic government.

Clarifying and affirming individual property rights is another important reform. Peruvian economist Hernando De Soto's "Mystery of Capital" (published in 2000) argued that Egypt's poor have around $240 billion in "dead capital," most of it tied up in property that they cannot properly mortgage. De Soto said that individual property rights and a legal system that protected contracts would instantly energize Egypt's sclerotic economy.
These ideas are pretty exciting and something that I think more countries in places like Africa should enact - as more often than not, resources become more of a curse than a blessing (be they diamonds or oil). Those who know me know that I've been generally supportive of the War in Iraq. I've been somewhat puzzled by those who would have preferred stability and a false peace when it led to September 11th.

Iraq represents a new departure for the middle east and its economy represents quite a bright spot. To cut and run now would be disastrous sending the message to muslim extremists that they've won. In today's rabidly partisan climate when Americans tire of the attrition in Iraq and much of the rest of the world envies American power, I worry that Democrats and their would be international allies seek a political victory at a cost none of us can ultimately afford. It is encouraging however that the average American still wants to win in Iraq. In an Alison-in-Wonderland world, it feels like Americans are again left with the responsibility of defending the world when much of the world wishes they would fail.

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