Friday, January 2, 2004
Matthew Kaminski says we need to start moving faster in implementing free-market reforms in Iraq. Freer markets will go a long way to changing a society run by state-control kleptocrats.
OpinionJournal - The Hare Always Wins - Economic reform can't afford to wait
We have too many real-life cautionary tales, from the postwar Balkans to post-Soviet Russia, to ignore the risk. No amount of goodwill and cash can substitute for sound policies that lay the foundations for future growth. In successful transitions, speed has been the common denominator. The danger in Iraq is repeating the biggest mistake--yielding to gradualism.
Some of the people in charge in Iraq today know this well. America's economic point man is a former Polish finance minister, Marek Belka, now the director of economic development for the coalition authority. His main qualification is that he's done this before. During the 1990s, Mr. Belka was among those in Eastern Europe who implemented policies, often unpopular, that brought to life vibrant economies after five decades of communism. Iraq must similarly move from tyranny to democracy and from state control to a free market. Asked recently which country serves as the appropriate model, L. Paul Bremer, the U.S. regent, cited Poland, which "moved much more quickly toward elements of a robust private sector" than other formerly communist countries.
The recipe isn't complicated: End state price controls and limit subsidies, put in place a convertible currency and independent central bank, secure private property rights, open borders to trade and cut taxes. Delaying any of these reforms risks strengthening the interest groups opposed to freer competition...
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