TCS Daily

Order Plus Liberty

By John Downen - May 7, 2003 12:00 AM

Newsweek International editor Fareed Zakaria writes in his new book The Future of Freedom: "First, a government must be able to control the governed, then it must be able to control itself. Order plus liberty. These two forces will, in the long run, produce legitimate government, prosperity and liberal democracy."

Now that Saddam's regime is gone, the U.S. and Britain are faced with the task of rebuilding Iraq. And not just its roads and bridges. Iraq has little history of democracy, and nearly 50 years of tyranny and socialism have destroyed many aspects of civil society. Political cultures and social institutions are largely organic and rarely transplant well.

From barter to barley futures, commerce is a universal human activity. Given the proper environment, e.g. little or no governmental interference, markets will arise spontaneously in Iraq as individuals trade what they have for what they want. Providing Iraqis with a stable, predictable environment in which to conduct business and reap the rewards of their efforts could unleash long-suppressed productive energies.

Once the lights are back on and domestic order has been established, Iraq's best hope lies in the creation of a legal framework amenable to commerce and investment. The privatization of the country's assets is essential to success. The new legal system must be based on the rule of law, not the will of politicians. It must recognize and respect private property rights and free enterprise, and treat all individuals equally before the law. Applying the idea of homesteading, state-owned assets should be given to those who have been using them.

It is essential that Iraq's oil industry be privatized and competitive. Free money breeds corruption and kills initiative - Saudi Arabia is a prime example. Leaving oil in the hands of the government will only perpetuate the Iraqi people's subjection to and dependence on the state.

In rebuilding Iraq's government we should not simply replace pro-Saddam civil servants with anti-Saddam ones. Now is the time to dismantle the stifling socialist bureaucracy that kills progress. Drastically reducing the size of the Iraqi government - not just altering its loyalty - will do much to encourage recovery and growth.

It's folly to trust the United Nations with nation building. Its record elsewhere - for example in Cambodia, Haiti, Rwanda, Bosnia, and Kosovo - is shameful. This is an organization whose Human Rights Commission, including its chair, boasts six countries from Freedom House's list of the world's most repressive regimes. Clearly the U.N. is morally bankrupt. Let's stop pretending its blessing confers any moral legitimacy.

Only the naïve would trust government with economic development. What government can do is provide an environment that fosters individual initiative, enterprise, and investment, then get out of the way. The U.N. is antagonistic to free markets. Of course highly paid government bureaucrats prefer the prestige of central planning and administration. Free markets make such managers irrelevant, devolving power and decision making to individuals in the marketplace.

In general, economic freedom will do more to improve the lives and liberty of Iraqis than elections. For nearly a century Hong Kong was an English Crown Colony with an appointed governor. Singapore has an authoritarian regime. But both rank above the U.S. for economic freedom and enjoy among the highest standards of living in Asia as a result. And economic freedom inherently generates personal freedom, for the economy is simply human action in the material realm.

Private property and free markets check government power. Management guru Peter Drucker noted that private companies "create a power center...within society yet independent of the central government."

Economic progress in turn promotes the move from authoritarianism to liberty. Patrick Basham, of the Cato Institute's Center for Representative Government, recently argued that "democratization is much more likely to occur - and to take hold - in richer rather than in poorer nations. A higher standard of living breeds values that demand greater democracy.... [T]he realization of Iraq's democratic potential will depend more on the introduction of a free market economic system and its long-term positive influence on Iraqi political culture than on a United Nations-approved election."

Establishing free markets and private property, reducing the burden of government, then leaving Iraqis alone offers their best hope for a brighter, more prosperous future.

John C. Downen is the research associate at the Foundation for Research on Economics and the Environment (FREE), based in Bozeman, Montana.

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