The Benefits of Economic Freedom Require (guess what?) An Economy

In 2003, Iraq was turned into a nation of people with no jobs and no way to get jobs, no daily routine, and essentially nothing to lose. However, the existence of an occupying power, and a few fanatic demagogues filled the void for many of those newly directionless people, and what happenned next is pretty well known.  It should have been predictable


Let me take a stab at a rough division into sectors of economies in the modern world:

• Government proper - military, police, courts, postal service, tax collection, ...
• Government-industrial complex - i.e. most manufacturing in the USSR as well as in Saddam Hussein's Iraq, but should we also include road building and maintenance in the U.S.?
• Education - may well belong to some larger category - to be determined.
• Private goods-creation (industry but also building, restaurants, ...)
• The business of exchange of everything else
• The Primordial Soup, from which new political life forms are apt to emerge. The people with nothing to do and nothing to lose.

So you could say one factor in Iraq was that half or more of the population got thrown into the primordial soup overnight. A similar thing happened in post-Soviet Russia.

Iraq seems to have been approached with the simplistic idea that, with the help of the "invisible hand":


  Toppling the dictator ==>
          Freedom and Democracy ==>
                  Things will be "normal" like in the U.S.

Had our government instead done a sober analysis of the institutions that kept peoples' lives from falling apart, and tried to preserve their continuity (with improvements to be made over time), we would not have set up such a breeding ground for both plain criminality (first looting and trashing the infrastructure) and later, a multi-headed beast of a terrorist insurgency.

These institutions included "inefficient" state run industry (by the quotes I'm not asserting it was efficient, but compared to what? To nothing being manufactured, and people having no place to go to work?), which I gather the occupying forces tried to disband overnight, as well as the military, which was either disbanded or non-functional during the period when most of what was left of Iraq's infrastructure was destroyed, which made it far more difficult to bring back any sort of normal economic life, which in turn multiplied the number of people being dumped into the primordial soup.

The disbanding of the state industrial complex was done in the name of Free Marketism, but it took the Iraqis further away from the ideal of a humming society of people producing and exchanging goods.

"Free marketers" tend to be fixated on noninterference and nonparticipation by government to the point of overlooking the destruction of the closest thing to a market that there was, and leaving a chaotic vacuum, as happened in Iraq and Russia.  The Russia case is well described in Sale of the Century: Russia's Wild Ride from Communism to Capitalism.

[this is an update of a previous post]