Who Should Own Iraq's Oil?
By Arnold Kling
Alex Tabarrok writes (it’s short, so I’ll quote the whole thing, except for links),
The U.S. is no longer pushing privatization of the Iraqi oil industry primarily because the Iraqi’s presently in control don’t want it privatized for “nationalistic” reasons. This is bad news for the Iraqi people. Even putting aside bold plans for returning the oil to the people it’s an important check on government that they must tax to spend. It’s hard enough to make the State respect the rights of the people even when it relies on them for its funding but when the people rely on the State for their funding its even worse. Call this the “no representation without taxation” principle.
I disagree that it would be better to force the Iraqi government to find tax revenue elsewhere. It is very difficult to create a tax collection system that works, with voluntary compliance. Also, I am not sure that the right size for the Iraqi government at this point is small. Iraq faces a major challenge maintaining security. In addition, I think that it may be important to have strong secular institutions to balance the power of religious figures. Finally, it would help to pay government workers enough so that they can be expected to act professionally, rather than requiring bribes to supplement their income.
For Discussion. What is your favorite article or book that is relevant to this issue?