Iraq: Ideas, Incentives and Institutions

Economist Reuven Brenner argues that distribution of national oil revenues among the Iraqi populace would contribute greatly to peace, freedom and prosperity in the region, and that this would be the case even if the country eventually split along ethnic or religious lines.

Ideas have long lives. Embodied in institutions, they outlive their usefulness – and bring about instability. Ideas, which were initially useful in fighting misgovernment by foreigners and which were a response to growing mistrust among the increased population within each European “tribe”, were transformed into deeds and institutions. These institutions sustain myths, create habits, which are then exported to other countries. Habits of thought slowly harden into character – with the origins of thoughts and events that set this sequence in motion, long forgotten.

Oil money sustains both dictatorships and much outdated institutions and character traits. This is why the crucial first step in achieving stability in the Middle East is to disperse the funds among people living within the now recognized borders, rather than let it flow through the hands of unaccountable and corrupt rulers and governments. Unless the people within the present Iraq borders are given such tangible stake in the future, “democracy” and “constitutions” will become nothing but empty promises and worthless pieces of paper, with the vast majority of people mired in poverty and ignorance.

2 thoughts on “Iraq: Ideas, Incentives and Institutions”

  1. Yeah, having “the people” get the oil money is working so well in Saudi Arabia and other places. Who does this character think will handle the distribution of the money? The Federation of Star Trek fame? The UN which is insisting that Iraq’s books on current and future oil dealings be audited by them, while still refusing to open its own oil-for-something-or-other books even to the Security Council? Santa Claus?

  2. Not sure the people of Saudi Arabia get much. Most of it goes to the 20,000 princes who then dole it out to cronies. And the government is very much in control of both the production and the distribution of money.

    What do you suggest instead ? Governments in those parts usually end up wasting the money in corrupt prestige projects and other personal schemes – Saddam and his sprawling palaces is no unique example – with the consequences we know.

    It can be done. It’s who does it that matters, it’s the transparency of the process. Which is another excellent side effect of such a system : it just requires transparency at every level.

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