Liquid Freedom

Noone, eh?

We discuss problems much more easily than we discuss solutions....

Cycloptichorn

I read this, went hmmm... it seems highly improbable to me that it would work, but I'd have to do a lot of research to say anything other than "it seems highly improbably to me that it would work."

Strangely enough, it seemed highly probable to me that a system like this one could work.

Worked in Alaska, after all. There are other examples worldwide of such systems in use.

Cycloptichorn

Despite superficial similarities, Iraq is not Alaska.

A plan like this might work in the future, but as a means of "pacifying" Iraq and turning it into a neo-conservative vision of an "ownership society" in the near run, it is wildly unrealistic.

What exactly about it would you say is 'wildly unrealistic?'

Certainly the oil is there to be sold. The revenue stream is already coming in. We have the ability to basically force the Iraqis to do this if we wish it. We have the funding and ability to subsidize the program for a few years if need be.

It would give people a reason to support the new Iraqi gov't; hundreds of dollars a year to a populace whose average income is less than $1500 American is no joke.

Cycloptichorn

As Joe said, a common fund doesn't jive well with the "ownership society" envisioned by this administration. Besides political barriers, my primary concern would be that such a system would necessarily include extensive public regulation and perhaps public ownership of Iraqi oil. This isn't bad per se for people that don't fully favor free markets, but ceding a high degree of control to the Iraqi state could generate severe power problems, not to mention the efficiency problems that often accompany public ownership.

In particular, state control of Iraqi oil would make Iraqis dependent upon a paternalistic state; a situation that mirrors all of the bad aspects of the previous food-for-oil program. Handing such power to the Iraqi state could easily foster totalitarianism, as everyone would rely on the central state for a large part of their wealth. On the other hand, if we administer this program from the outside -- effectively appropriating control of Iraqi oil from the Iraqis -- it creates serious sovereignty problems, and it would thus likely raise the ire of nationalists across the entire middle east. Alaska has no such problems.

If the object here is to give away a lot of money to the Iraqi people, then you're right: we can do that now, without any problems. Indeed, we wouldn't even need to tap into the Iraqi oil revenues: we could simply withdraw all of our troops and send a monthly $100 check, drawn on the US Treasury, to every man, woman, and child in Iraq. Given that the costs of the war are approaching $9 billion per month, that solution would be both cheaper and quicker than the current policy.*

If, on the other hand, the object of this plan is to end the insurgency and start Iraq on the road to a western-style democracy, then it is simply throwing money at a problem that is not amenable to a monetary solution. The insurgents may be fighting for a variety of reasons, but they aren't fighting for money. Instituting a plan to divide oil profits among the people would do little to address the fundamental reasons for Iraqi discontent.


*Iraq has a population of around 25 million. At $100 per person per month, the cost to the US government would be a paltry $2.5 billion, and thus would net a savings to the taxpayer of nearly $6.5 billion per month.

This is only half of the solution, of course.

The object is not to get currently fighting insurgents to lay down their arms (though that would be nice); it is to turn the Iraqi people AGAINST the insurgents by giving them a show of good faith.

It's not just about the money, people. There are many, many Iraqis and ME citizens who are convinced that the real reason we are there is to control one of the largest oil supplies in the world, and who can blame them? This would go a long way to dispelling that notion in the minds of the Iraqi people.

My real questions are: where is the money going to right now? Where is the oil money going to in the future? How does the current system benefit the Iraqi people in any way?

Cycloptichorn

The objective of the "Liquid Freedom" plan is practical acknowledgement of what is already claimed to be true: Iraqi oil revenues belong to the Iraqi people. It is also quite consistent with the original Plan Phase IV-"The Day After" (see General Tommy Frank's Book, "American Soldier", Chapter 10, "The Plan", pages 419-425).

I like this idea.

I recommend that each Iraqi voter in January be given one share of stock of NOCOI (i.e., National Oil Company of Iraq) by the Iraqi Provisional Government. I further recommend that until the insurgency is declared adequately controlled, the US loan NOCOI the money required to pay initial dividends, say $10 per month per share. Assuming 13 million Iraqi voters, that loan would grow at the rate of $1.56 billion per year. After the insurgency is declared adequately controlled, the NOCOI should be required to repay the loan over a 10 year period at the current 10-Year Treasury Note interest rate. Also, after the insurgency is declared adequately controlled, the individual NOCOI shares should be freely tradeable in an Iraqi or other stock market.

After the initial costs of reconstructing Iraqi infra structure are paid by NOCOI, I bet the value of NOCOI shares will increase rapidly to something like 100 times their initial annual dividend rate or $12,000. Also I bet the dividend will probably triple its initial value from $120 per year to $360 per year.

This doesn't put the Iraqi people on the dole like welfare checks do and thereby stifle or destroy incentives for them to improve themselves by virtue of their own efforts. This allows the Iraqi people to profit directly from work they do for operating, maintaining, or improving NOCOI; or for improving Iraqi infrastructure. Because NOCOI is already theoretically owned by the Iraqi people, this proposal simply recognizes that fact practically and not merely by platitude.