Asymmetrical Information

I was thinking along these lines back when we first went into Iraq. The idea that making all Iraqis instantly wealthy would go a long way toward achieving our strategic objectives. Your drawbacks are not entirely negative.

- No record of who is an Iraqi. Buy some ID equipment and get everybody registered. It needs to be done anyway. A shot at oil wealth will provide incentive.

- No financial infrastructure. Again, oil wealth will be a good incentive for people to establish bank accounts.

- No taxation infrastructure. Ditto. Withhold taxes from the checks.

- It will function as a giant welfare system. True. But it will also be an outstanding method by which to jumpstart an economy. Think New Deal.

Not to mention the possibility that this could be a solution to the federalism issue.

In addition to the "fraud" by people flooding into the borders, the administration of such funds will be subject to loads of internal corruption, no?

And some of the welfare aspects could be alleviated by not paying people until they reach the age of 18 or 16 if married or some such. That reduces the incentive to have babies just to get more money, which has always been a losing proposition for both the family and the society, but as our welfare policies showed, people did it anyways.

Another disadvantage I can think of is that the system would lend itself to fraud as the money moves from the central collection point down towards the people who actually receive it. Electronic banking would alleviate this, so perhaps inmplementing electronic banking would be an unforeseen advantageous consequence.

- No record of who is an Iraqi. Buy some ID equipment and get everybody registered. It needs to be done anyway. A shot at oil wealth will provide incentive.

Er, and that gets around the problem how? Then, instead of people flooding across to get oil wealth, they'll flood across to get an ID card that entitles them to oil wealth.

- No financial infrastructure. Again, oil wealth will be a good incentive for people to establish bank accounts.

Not unless they trust the banks in the first place, which was the point.

- No taxation infrastructure. Ditto. Withhold taxes from the checks.

Well, that gives you an oil money-withholding infrastructure, not a tax infrastructure. (not that the lack of tax infrastructure is a bad thing...)

- It will function as a giant welfare system. True. But it will also be an outstanding method by which to jumpstart an economy. Think New Deal.

Yeah, the New Deal did so much, didn't? Snapped off that Great Depression in about a year or so, eh?

Didn't the original food rationing system in place before the war provide detailed id on everone in Iraq.

Remember, there was much discussion of how this system could be used to establish early elections but the Administration vetoed the idea.

Would these be non-tradable shares so you would not get the same results as they did in Russia where most people sold their oil shares for pennies on the dollar.

Randy, those are good points. I'd especially like to note that if bank accounts become incentivised, Iraqis will get over their dislike for banks. We'll see both the creation of banks and the creation of bank accounts.

Now, this is not to say that establishing a financial infrastructure will be easy. Obviously, some amount of regulation will be necessary to protect Iraqis from fraud banks and, of course, security becomes an issue whenever money transactions take place.

One the other hand, if there really is enough oil wealth to start handing it out to Iraqis, I assume there's enough to start funding the government entitities necessary for oversight of the process.

Not saying there won't be problems Person, just recognizing that there is a huge problem now, and that a "fair" distribution of oil wealth will be a large part of any non-violent solution. Iraq is still largely a tribal culture, and so a "fair" distribution is likely to be a tribal distribution.

Randy: Perhaps, but the responses you gave seemed to kind of miss the point of the problems Jane listed. For example, on the first one, if people can fake being Iraqis to get oil money, they can fake being Iraqis, to get ID's, to get oil money. I guess the only difference is you get somehow rook them into getting ID's, before they have any idea it will grant them access to free money (at the expense of those sucker prospectors that actually found the oil), but in that case we need to be vewy vewy quiet about the oil money so no one games the system. (or at least, not too many)

Jane,

Leaving aside the missing infrastructure that makes such a policy difficult to implement, I have always thought this was a great idea for natural resource rich but otherwise poor countries. Such a policy would be a great idea for other countries in the Gulf and countries like Bolivia, Venezuela, Nigeria, and Mexico. The idea is Georgist in nature- distribute land rent (oil profits) equally.

On the practical implementation, you might create a public oil company and distribute shares once to the existing population on an equal per capita basis. People could collect dividends and realize capital gains. However, one objection I have often encountered to this method implementation is that people would sell their shares for short-term gains and the oil profits would end up being concentrated in foreign or the wealthier and savvier domestic hands.

However, it easier for politicians and their partners to divert funds directly from oil profits than to have to distribute the profits and reclaim a portion through taxation. In others words, I think it a bit of a pipe dream.

Yancey: I agree with you. That's always been my complaint about a type of Georgist "Citizen's Dividend" paid from natural resource rents as a means of achieving social goals. Generally, the reason for poverty is that people shortsightedly squander their resources. Such an attitude would carry over to such a Dividend. If people could sell their dividend for a big chunk of change now, the same people as are poor would do so. (I see lots of commercials now advertising for people to sell their annuities/amortized inflows for a lump sum.) Even if bans against this were enforcible, it would be very paternalistic to do so.

Now, I still think Georgists are right on some very important issues, just that they overstate their conclusions. A Single Tax on land values, if trasnparently implemented, would have some tremendous benefits:

1) Significantly reduce the number of taxable events, allowing for much more saving, investment, and Pareto-optimal exchanges.

2) Prevent shifting taxes from tax cheats onto honest people. While I sympathize with those who protest specific taxes for moral reasons, I think they should have to do it in the open, so we can separate "I don't want to pay taxes because I want to line my pockets at the expense of other tax payers" from "I seriously object to this use of tax money."

When we first went into Iraq, I read quite a bit on this option. Besides Jane's points, another negative is that due to the culture in Iraq, most people, even the men, would not see the money. It would be handed over to tribal warlords, which would give them even more money to buy weapons.

Having said that, I am in favor of giving it a shot as a carrot. Only reasonably non-violent areas get a share. It would reward those who are playing by the rules and help foster economic growth in the Kurdish and southern areas of Iraq.

This certainly wouldn't be my 'A Plan.' But it's not like 'Plan Rumsfeld' has been an overwhelming success. Plus, it is exactly ONE more idea than most Democrats have had and, most importantly, IT WOULDN'T BE OUR MONEY.

Jane Galt: 1) There is no good record of who is an Iraqi, so people will flood across the border to get in on it.

You are kidding, right?

Before getting on to sniping about how this would be administered (banks, ID cards and the rest), let me reassure myself about exactly what this plan entails:

* Massive pots of cash
* Collected and accounted for by bureaucratic agencies
* Distributed by same according to their top-down, no doubt oh-so-rational plans
* Zero involvement or risk for the recipients of this largesse beyond some hazy "violence renouncement" or "giving everyone a stake" reasoning

Anyone else see a problem here? For a blog with libertarian sensibilities, I'm a little dismayed to not see the work "private" appear anywhere in this post or even the comments.

Oil money belongs to those who develop it and invest in it. Shoving it all into a pile and distributing it according to some honeypot scheme is just adding a new source of corruption to Iraq's many other woes.

How many are moving to Alaska?

Anyone else see a problem here? For a blog with libertarian sensibilities, I'm a little dismayed to not see the work "private" appear anywhere in this post or even the comments.

Oil money belongs to those who develop it and invest in it.

Valjean, in one of my posts I mentioned that distributing the oil money is stealing from those who develop it. I said:

"it will grant them access to free money (at the expense of those sucker prospectors that actually found the oil),"

So, I at least acknowledged this.

"...jumpstart the economy. Think New Deal."
Sorry, we've already had WWII.

Person, the developers pay someone for development rights; the proposal is that the Iraqis share equally in these payments.

Valjean, I always think of banks as being private entities, the way they are in the US. Government HAS to be involved at the top level because if the land belongs to the people, the government is the peoples' way of implementing and controlling develoopment rights. The Iraqis may not be in the habit of thinking that government is with the consent of the people and for the people and by the people, but they will have to shift to that mode of thinking sooner or later if their fledgling democracy is to survive.

Rex,
Thank you -- I think you made my point ... well, one of them. I was actually fairly careful to avoid the word "government" in my comments; my bigger concern is with the institutions with which they'll need to work. I absolutely agree there's a government role here. I was arguing against value extracted from oil -- be it profits, taxes, whatever -- being turned into a egalitarian candy store. The goodies could be handed out by bureaucrats of any stripe.

Person,
Yes, you did -- thanks. Noted.

I'm generally in favor of the war and all and I'm sure some would call me an imperialist for that opinion, but isn't this something that we should leave up to the Iraqis themselves?

I realize that it's darned unlikely any Iraqi government will ever voluntarily cede the power that comes with the oil revenues. However, I don't see that it would be appropriate for the US to impose a system on Iraq regardless of its merits.

I don't think its a valid criticism of the Bush admininstration as Professors Kerr/Reynolds have suggested. There was far to much suspicion over US intentions towards Iraqi oil to go about imposing an oil trust on the country. Its not our business.

What's wrong with the plan is that it is just an escapist fantasy. Appparently realistic policy options are just too grim for war supporters to contemplate.

Do the Alaska residents still get the oil checks?

I know that in Kuwait, every man, woman, and child is given $70,000 US dollars per year from the government, their share of oil sales. Not bad.

http://www.steveclemons.com/A-AlaskaFundIraq.htm

written in '03

Alaska Rev share still ongoing @ that time, to the tune of nearly U$D 8K/annually (per "family")

Alaskans are -- like the Kuwaitis and no doubt others -- still getting their checks.

Exactly why this windfall from natural resources is not being shared with residents of the other 49 states would no doubt be a matter of lively debate. If the crowd commenting here needs to be informed, how aware do you figure the general US populace is of this scheme? Perhaps they need a good catchphrase, like, say "bridge to nowhere."

All good grist while considering how the Iraqis would handle this kind of thing. Thanks Mark.

Valjean,

Most Americans are not aware of it, however, most Americans do not live in Alaska either. It is my understanding that the portion distributed to Alaskans is that portion of the licensing fees given to the state government. The federal government keeps all of its fees.

To clarify the last part. I am sure the state governments of Texas and Lousiana also get royalties and taxes from producers, but, as far as I know, they don't distribute any of the funds to individual citizens.

What's wrong with the plan is that it is just an escapist fantasy. Appparently realistic policy options are just too grim for war supporters to contemplate

Orin Kerr didn't support the war in Iraq. Jane did, as I recall, but in her post she makes it clear that there are lots of things wrong with the Orin's plan.

So who are these "war supporters" who find "realistic policy options" so "grim", and why are you whining about them in this thread?

How's about every Iraqi get one time share of stock in oil reserve. They can sell it at market price or keep it. I bet that in a few years, most Iraqi would sell their stock.

Dan, Jane Galt is the war supporter I had in mind. Possibly plans like this would be worth discussing for say Norway but in the case of Iraq they just indicate a severe detachment from reality.

More:

http://another-brilliant-idea.blogspot.com/2006/06/fixing-iraq-in-one-step.html

Dan, Jane Galt is the war supporter I had in mind. Possibly plans like this would be worth discussing for say Norway but in the case of Iraq they just indicate a severe detachment from reality.

Do please pay attention, James. I don't like wasting time talking to people who don't listen.

Jane was indeed a war supporter. But, as I noted, she thinks there are a lot of reasons why this plan wouldn't work. How is it "detached from reality" to think that an unworkable plan won't work?

Let me guess. You flame first, think second, right?

To tax on the trust unitholders , government may lose total control on the oil resource. Even the government could exert high tax rate, the performance of the oil field management team still cannot not be supervisored. Therefore, the side effects of a high tax rate would cause excess exploitation of the oil resource to sell on quantity and not on quality. Even worse, as the industry development of processing the oil resource, as a public good nature,will stop at its very raw startup stage, as to the capital limitation imposed on the high tax rate.

One possible way out is that the government, as the owner of the public resource good, can also partipate the trust organization. The role it can take could be the board member, and help the board to guarantee the oil field's sustainable development.

No record of who is an Iraqi. Buy some ID equipment and get everybody registered. It needs to be done anyway. A shot at oil wealth will provide incentive.

Er, and that gets around the problem how? Then, instead of people flooding across to get oil wealth, they'll flood across to get an ID card that entitles them to oil wealth.

---- so could the government sponsor a market to trade the ID, or regulate the ID?

Another disadvantage I can think of is that the system would lend itself to fraud as the money moves from the central collection point down towards the people who actually receive it. Electronic banking would alleviate this, so perhaps inmplementing electronic banking would be an unforeseen advantageous consequence.

------ An electronic market for ID?

Valjean,

Most Americans are not aware of it, however, most Americans do not live in Alaska either. It is my understanding that the portion distributed to Alaskans is that portion of the licensing fees given to the state government. The federal government keeps all of its fees.

----- The fees can be used to built the market for the ID to access or produce the ID

How did we distribute access ID?

And for the oil check, should we have another market?

Will the cost to get the access ID excessively raise the cost of the oil? Then the distribution of access ID should be coorodinated with the demand for the oil( reflected by price of oil check)?.

So then should there be two trading derivative market: one for ID, the other is for oil check?

Then comes the issue of the control of the "inflation" within the system due to the excessive or lack of liquidity?

So the government would have another role: to interefere in the market?

Or who would take the responsiblity to be the market maker?

If the electronic market is built, is the market maker necessary ?

If the above two market can be built, the government's board role i have mentioned previously could be relieved.

The goverement could regulate the oil production through interference in the control of the overall liquidity across the two markets.

ps: the same ideology can be checked on the income trust structure in Canada

Folks,

This is my idea -- originally proposed through my friend Lou Dolinar who got it onto Instapundit in the early weeks of the war -- back in 2003.

You can look it up by googling "lenny glynn" -- since I've had it posted on a wide variety of sites -- National Review Online, New Partisan, Tech central Station -- and many others.

The absolutely vital point is that ANY system that delivers oil revenues to the Iraqi people personally -- as an ownership right -- will be superior to a merely state-owned oil company or companies which become the target of every thieving, rent-seeking political party in the country.

The merely technical objections to this idea -- details of implementation -- pale in comparison to its benefits -- which would be to turn oil into a weapon to win this war.

Allbest,
Lenny Glynn

"people will flood across the border to get in on it. You are kidding, right?"

Actually, this has already happened. There are estimated to be hundreds of thousands of Iranians in Iraq. It's better than Iran if you want to work or start a business. And of course a couple of million Iraqi refugees have returned to their country.

Most of the violence is in Bagdhad and Anbar Province. That gets reported as if it were the whole story. And Iraq's economic problems are reported in comparison to Western countries. If you compare things to Middle Eastern countries the picture looks different.

I am an Alaskan and I just got my Permanent Fund dividend for $1,104. The dividend is a significant economic force for local business, educational, and retirement savings. I have always believed that a similar program for Iraqis would be instrumental in offering a sense of ownership and defense of a new state. In consideration of the concerns raised here, I think this is mostly minutia and process that can be addressed and solved by diligent government. I think that the Iraqis are capable of such government.

As someone who has worked on some of these fiscal issues on Iraq's oil, let me chip in my two cents' worth. First, the Kuwait dividend can be no greater (at August's peak oil prices) than $30k/capita if all of the profit over production cost were distributed. However, a lot of it goes into subsidized prices for food and gasoline and health care. The Emir's family gets its share and the net distribution to individuals is much lower, more like $12k/cap.

On Iraq, Saddam distributed some of the oil rent as cheap food and fuel - let's not go there. The current constitution in Iraq doe not explicitly endow anyone other than the state with property rights in oil or gas reserves, hence the various ideas for distributing the rent. Also, most of the populace has a cargo cult mentality with regard to what is achievable with the oil money. A full distribution of Iraq's oil rent at August's peak prices would net each person just under $1.5k annually, not a very good basis for universal prosperity, but better than a hole in the head (sorry). The oil trust is a stopgap that must transition to some property rights regime with regard to oil and gas resources if there is to be reasonable investment and production in the sector. This is only likely to happen when the price of oil falls to a much lower level and the government is unable to fund its basic operations. At that point they will (or at least the Kurds will) see the light and bring in people who know how to find and produce oil (for a cut of the profits). Until then, don't hold your breath. High oil prices have retarded reform of state-owned oil companies throughout the world.

As Donkatsu intimated, oil money is no panacea. Texas has done well by oil, but it has also had to weather some damned hard times. Not only did we see $10 a barrel oil in the eighties, but the savings and loan scandal caused a real estate crash that had million dollar homes in Houston unsaleable...at least if you wanted anything beyond a 50% loss. you cannot weather those hard times unless you are intimately familiar with the rewards you expect to reap as the cycle continues around.

The oil trust is a great idea in the respect that it offers transparency and attempts to pass state tax reciepts on oil and gas production directly to the citizens of the soveriegnty such as in Alaska. It is a horrible idea if the government is actually managing the properties that produce the profits to be paid to the citizens of the soveriegnty, such as any socialist country you wish to chose.

Iraq would be better served to have a public land grab such as the US had in areas such as Oklahoma which was the basis for the moniker Sooner.

At least this way they would provide the private property ownership to individuals who were creative, motivated, and go getters, whereas having beaurecrats assign it or worse yet, manage it would be a slow torturous death such as is going on in Russia at the moment.

I agree with Prospector. Some of the same objections were raised when the Alaska Permanent Fund Dividend program was initiated. None of them subsequently proved to have any merit. We (I'm also Alaskan) haven't been flooded by hoardes of lazy PFD-seekers, civil society hasn't been undermined, and Alaskans didn't suddenly start breeding like rabbits in order go get additional PFD checks.

What the program did accomplish was to:

(1) give the people a direct say in how their share of the oil wealth is spent. I may not need a bridge to nowhere or yet another social program. My daughter needed braces, though, and that's where I "voted" to spend my share of the oil wealth. Others have different needs and can similarly "vote" to have their share of the wealth go to charity, medical expenses, a college fund for their kids, or just for a vacation somewhere warmer than here.

(2) Keep all that money out of the hands of the politicians and make it unavailable to them as a source of power. This drives them absolutely bonkers. The holy grail of the oily politico up here is to somehow break into the permanent fund and use all that money to buy votes and pay for pet projects. The great thing about the annual dividend is that it unites both ends of the political spectrum (and the middle as well) against any attempt to squander the wealth.

Either, or both of these, effects could only be beneficial to Iraq. Jane's objections #1&2 are technical problems that can be overcome. As for objection #3; what better way to overcome the lack of revenue than to jump-start the economy with a massive injection of cash directly to people who can use it to buy goods and services or to start a new business?

Just as an FYI: The Alaska PFD is actually not paid directly out of oil revenues. A portion of the State's revenue has been placed in an investment account (now worth something like 35 or 40 billion $), and the dividend is paid annually out of the earnings of that account. I believe that the formula is something like 1/2 the earnings, after inflation-proofing, are divided up among the applicants.

For ID's, they had to do something to register voters. Why not make voting in an election how you get on the rolls?

As to corruption, or tribal leaders getting all the money and buying bullets with it, I don't know, but one thing that the state keeping and not distributing the oil money that is very bad is that it doesn't need to tax it's citizenry in order to fund govt operations. The big slogan at the beginning of the American Revolution was "No taxation without representation", and the opposite seems to be true too. It would be better if the govt had to tax in order to spend.

so the market electronically could be funded by government fees, and the balance of regulatory incentives would provided by market competition of competing fraud/embezzlement incentives?

To make sure the each Iraqi citizen gets their fair share, the U.S. Bureau of Indian Affairs should be put in charge of this program.

It is a horrible idea if the government is actually managing the properties that produce the profits to be paid to the citizens of the soveriegnty, such as any socialist country you wish to chose.

----

As to corruption, or tribal leaders getting all the money and buying bullets with it,

--- It may not be necessary to have market makers to maintian the operations of an electronic markets. Some agencies of the goverment can funcion as a fake central bank, and hold a portion of the trust reserves to regulate the market.

Is it possible to set up a pension fund for the non-tribal-leaders, and also put it up on the market? Then the third market! On the third market, there could be a bunch of competing fund with competitive pension plan. Then the non-tribal-leaders can vote!

A Trust Fund is a better idea than most alternatives.

0~3) 1/3 of the cash for the people, 1/3 for the central gov't, 1/3 for the provinces as determined by: voter registration and voting.
(you don't get cash w/o registering; and get less w/o voting)
1) The food ration cards plus voter registration and addresses, with a database of addresses helps identify Iraqis.
2) The distribution of the cash into a bank account of the voter's choice will increase the use, and trust, of banks. (and of bank frauds & problems, so some insurance needs to be prepared.)
3) The gov't should be ending food and gasoline subsidies, so that Iraqis pay world market prices. For better distribution.
4) A thriving free market economy, with women's rights to work, will certainly mean fewer babies in a few years.

Reasonable objections, but Oil Trust is better, far better, than a civil war for tribal control of the black gold.

Paying Iraqis to be voters should have been done by Bremer, with the ability of the Iraqis to change it.

It would be cheaper, easier and more peaceful to go the other way. Take the oil and the oil revenue away from Iraq completely. Let them return to harmless poverty and we won't need to worry about them developing WMD's or anything. Somalia is a Muslim country but nobody worries about them building WMD's. That's because they have no oil money and are poor.

It would have been cheaper for the US to leave Saddam in charge of the Iraqi people and just confiscate the oil fields. Some rebuilding of wells and pipelines would be required but still cheaper than the current war.

And the only objection would have come from Russia, an exporter of oil. The Chinese and Europeans would have been very respectful of the new source of their oil. And the Saudis would look around and be cautious too.

It's not to late to do this to Iran. Leave the mullahs in charge of the people, just take the oil fields and the uranium mines. Everybody gets a cut, no hard feelings except among the Iranians, and they'll be too poor to matter.

Sorry!How 'peaceful'?

The easiness to exploit oil would increase the capital liquidity flow globally. The result would be the inflation burden on the U.S., and excessive volatility over the overall open global trades.

Peaceful because it will be (would have been) over very quickly. The attempt to rule over Iraqis to impose democracy has proved to be very bloody.

How about the garden in the back of the house?

Convert the property of the oil field into the trust, and try to list on the global markets. Then not only U.S., perhaps someone in France also have great interest in it.

Ownership of the oil by a consortium of consuming countries would result in stable, low prices, not inflation.

Intersting..... may i know why?

---------It is a horrible idea if the government is actually managing the properties that produce the profits to be paid to the citizens of the soveriegnty, such as any socialist country you wish to chose.

I am just searching for the answer now..... hehe

Dan said:

"Jane was indeed a war supporter. But, as I noted, she thinks there are a lot of reasons why this plan wouldn't work. How is it "detached from reality" to think that an unworkable plan won't work?"

Jane Galt in fact likes the plan (which she incorrectly attributed to Orin Kerr). See here.

Her objections are detached from reality in that they overlook the basic "rearranging the deck chairs on the Titantic" nature of the plan considering current conditions in Iraq.

Right now the "Oil Trust" is being distributed in Iraq in the form of gasoline that is so cheap that it may not even pay for the cost of production. That cheap gasoline is then resold by the equivalent of ticket scalpers who wait in line and resell it for something closer to the market price to the general public. It is also smuggled out of the country and sold.

Distributing a check every month helps build a political will to raise the official price of gasoline inside Iraq and gives individuals and groups an incentive to turn in the people who blow up oil pipelines, since that keeps the checks low.

If it were up to me, I would issue the monthly checks only to Iraqis over the age of 65 as a kind of retirement system both to avoid the problems of encouraging sloth and welfare babies and to encourage people to be good to their granny.

Lucy,

Please review Saddam's government handling of Iraq's oil wealth. This handling by a socialist regime is not the exception it is the rule.

You may also wish to review oil production in the Soviet Union vs Russia's production now.

For the future, you may want to review Venezuala's current production versus what it will be in 10 or 20 years after Chavez's government takeover.

If you need it spelled out bit by bit, you might as well read "Wealth of Nations" by Adam Smith

ehhhhhh.................

Right now the "Oil Trust" is being distributed in Iraq in the form of gasoline that is so cheap that it may not even pay for the cost of production. That cheap gasoline is then resold by the equivalent of ticket scalpers who wait in line and resell it for something closer to the market price to the general public. It is also smuggled out of the country and sold.

- Do you mean a commodity futures market?

Distributing a check every month helps build a political will to raise the official price of gasoline inside Iraq and gives individuals and groups an incentive to turn in the people who blow up oil pipelines, since that keeps the checks low.

- SEO Seansonal Equity Offering equivalent?

If it were up to me, I would issue the monthly checks only to Iraqis over the age of 65 as a kind of retirement system both to avoid the problems of encouraging sloth and welfare babies and to encourage people to be good to their granny.

- do you mean put up an incentive option on the oil check as the compensation plan ?

The global integration of the oil commodity markets esp. derivative one is imperative. If the pricing system over the world could be streamlined, the information related to the global demand could be converged. The improved transparency on the listed price deteriorates the incentive for oil smuggling as mentioned. In addtion, it also gives a pretty better indicator of the overall oil demand status. For example, the price of an electronically traded oil commodity future is quite effectively to predict the price trend change of the its underlying oil price. The evidence can be further strenghthed by the Economic derivatives are over-the-counter products traded at the Chicago Mercantile Exchange (CME). The details can be checked at http://www.cob.niu.edu/faculty/m40txg1/blog/?cat=10

Another reason to support the globalization is that neither the local govenment nor the super power from a particluar nation can afford the burden to control the exploitation of the oil. As discussed, it seems that the goverment governance role over the oil production have a dilemma: if directly invovled into the industry production,its efficiency cannot be guaranteed as proved the historical evidence, such as the Suddam's records, etc. and etc.

Mark and Lucy,
The gasoline subsidies take up of only a small proportion of the government's net oil income. Ending subsidies takes political courage and legitimacy. That's why Suharto could not do it in Indonesia and stay in power - no one believed that he and his buddies would not just steal the extra cash. Maliki and his crew have neither courage nor legitimacy and the ruling Shi'ite clergy have no particular desire to see a functioning market economy - an alien graft on their rigid social organization. For most residents of a petrocracy, the subsidized food or fuel is the closest they ever come to receiving some tangible benefit from the oil and gas. As a side note, the ending of the Sadam era food subsidy packages encouraged Iraqui agriculture to reemerge, since crop prices were finally allowed to rise to something like a market clearing level.

I like the idea of distributing the oil checks to old people, though Iraq might quickly come to rival the Caucasus region in the proportion of the populace over 100, sort of like some wards in Chicago.

How can we let the Grannies keep the oil checks and enjoy its dividend, or let the Grannies sell their oil check or be inherited by some socially responsible persons but not cheated by the sloths?

I am thinking whether we should keep the trust forever listed. For example, the government only exert its tax on the trust unlised. Then any profits that everyone who would like to take it private would be redistributed.

Most Americans are not aware of it, however, most Americans do not live in Alaska either. It is my understanding that the portion distributed to Alaskans is that portion of the licensing fees given to the state government. The federal government keeps all of its fees.

Americans have paid for the development of Alaska oil production, through tax breaks and incentives given to energy corporations. That is why oil companies stopped pumping oil in places like Texas - it didn't pay. Why pump there when the U.S. govt will pay you to set up operations in a new place, like Prudhoe Bay, and everything you pump is pure profit?

It's just like Cheney privatizing the military and then hiring Halliburton (Kellogg, Brown & Root) at inflated prices to fight and run the wars. Shareholders (and deferred income recipients like Cheney) make fortunes off of the U.S. taxpayer.

Other suggestions?

Here's a novel approach: Let the Iraqis decide for themselves. It is their country after all.

But then they'd likely overturn the constitution that Bush forced on them, with all of Paul Bremer's privatization orders.

Watching you people decide how the iraqis should live is a real eye-opener. Talk about your authoritarians! You really have nerve saying that liberals are dictatorial. You sure have the Iraqis' lives all planned out, according to what you think is right.

As a side note, the ending of the Sadam era food subsidy packages encouraged Iraqui agriculture to reemerge, since crop prices were finally allowed to rise to something like a market clearing level.

-- O, Now I finally see. Perhaps we should let Iraqis have food first. In that Saddam is gone, the price of the food can go back to its market clearing level. So the subsidiary from government for oil price can be cut. As to the tax, also seems not so necessary. Just let the market take the power !!!

I'm big on #4 - plus on a related topic you would have a lot of potentially incitable jihadists with a lot of time and money on their hands - just like in Saudi.

Jack,

It is big news that they don't pump oil in Texas any longer.

As for your other point about us debating what the Iraqis should do, do you really mean that we can't discuss it? As far as I know, none of us really have the power to actually impose our ideas.

Which Americans, exactly, are going to run around Iraq with enough authority to implement any of this? Saddam Hussein, in jail, has more authority than any group of Yanks, even when backed by 140,000 troops.

You have five different armies, all fighting in various alliances which none of us understand. At least two of the armies are controlled, ultimately, by Saddam. even now while he is in jail.

The Iranians have a say in this.

Bani Sadr is not even likely to talk to anyone in the administration, much less any of us; and his army is one of the biggest.

Kurdistan would prefer no one from the southern provinces even come near their homes, much less negotiate.

The current prime minister is mainly worried that he has militia protection while the Yanks cut and run.

Not the environment you need to negotiate the finaries of oil deals. Suggest the conservatives stand back, let the civil war come to a conclusion, then perhaps someone over there might listen to you, but I doubt it.

I can't believe this post has this many comments without a single mention of the "curse of oil".

Any plan for Iraq's oil weath that doesn't distribute it wide and thin will create centres of power -- centres whose power and wealth do not derive from the consent or the productivity of the citizenry. When these centres are American oil or the House of Saud, this is considered a bonus. In Iraq ...

The universal distribution idea also begs the question of regionalisation - the Alaska isssue, I suppose. The Kurdish north has a little oil, the Sunni middle has no oil, the Shiite south has lots of oil. An even distribution would look to the shiites like taking their money away from them to give to sunnis, and they have no incentive to agree to anything of the sort. They would want an Alaska/Washington split of around 90%/10%, if that.
Within the regions, money would go by power; the militias would either take the money from the pre-distribution stack or collect it afterwards house by house. The scheme only makes any sense at all in a country with no resemblance at all to Iraq.

Randy: What was the state of the New Deal in 1938? It only took for years for that fraud to fail.

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