Alan Reynolds

In "The Mouse That Roared," a 1959 Peter Sellers movie, the tiny country of Fenwick declares war on the United States in the hopes that it will quickly lose and then receive oodles of postwar aid. Replace Fenwick with Iraq, and you get a pretty good idea of what some people mean by "rebuilding" Iraq -- namely, a potentially endless transfer of funds from U.S. taxpayers to Iraq.

President Bush campaigned against "what's called nation building," yet nation re- building now appears to be the main rationale for keeping 116,000 U.S. soldiers in Iraq. What is ultimately required, however, is for Iraq to become economically self-sufficient. And that requires, above all, economic liberation -- getting the government out of meddling with peoples' lives except when it comes to protecting lives and property.

It seems fair for the United States to repair the damage caused by U.S. bombs. But too much help can be addictive and unhelpful. Like welfare, foreign aid can discourage productive effort and encouraging chronic dependency.

What Iraq needs most right now is not even democracy, desirable as that may be, but capitalism. Even Osama bin Laden dismissed Saddam Hussein as a "socialist apostate." And Iraq's foolish experiment with socialism even predates Saddam. A recent Congressional Research Service study notes that "government control of the economy tightened from one regime to the next;" adding that in 1989 Saddam "reimposed price controls, re-nationalized some state enterprises, and raised industrial and agricultural subsidies." Nearly everyone in Iraq thus became wholly dependent on a government with absolute and absolutely corrupting power.

Socialism was no more effective in Iraq than it was in, say, North Korea. Iraq's economy shrunk by half over the past three years, according to estimates from the World Bank. Average income in Iraq will be only about $450 to $600 per person by the end of this year, the World Bank estimates, down horrifically from $3,600 during the oil boom of 1980. Half the population is unemployed or barely employed, and the government employs 30 percent of those who do have jobs. Everyone gets a monthly food package, at a cost of $2 billion a year, thus discouraging many people from getting in the business of producing and distributing food, while discouraging others from bothering to work for their supper.

The idea of "rebuilding" Iraq is wrong. What Iraq was before the war does not need to be rebuilt. The old socialist Iraq needs to be completely demolished so a free economy can provide the means to prosperity. And not much hope should be placed on the U.S. occupation.

Alan Reynolds

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