Free market reforms hurting Iraqi economy.

[DanS]

Who care about what currency they are using.

It's quite important to how you analyze what is happening.

What else would they spend their money on? Domestic goods and services.

You still don't get it dude. They spend their money that is denominated in dollars/Euros/whatever on imported goods. They spend their money that is denominated in Dinars on domestic goods. If they use Dinars to buy a Dollar, and then use it to import goods, then there are no fewer Dinars in circulation.

If the economy were becoming imbalanced because of too many imports, then the value of the Dinar would decline relative to the Dollar until you had balance. But it's not doing that right now. The value of the Dinar has stabilized at 1,300 Dinars/Dollar. It has been at that level since about 3 weeks after Baghdad fell.

As for how that impacts private domestic industry, presumably they are using some of those Dollars going overseas in order to upgrade machinery and the like so that they can compete with imports. The US will be providing some assistance to Iraqi industry (loans, etc.) for this purpose. That's really the answer to the problems of free markets--more free markets!

[Felch]

Originally posted by Imran Siddiqui

There is chaos in Iraq. In order for the free market to work, you need law and order.

So wait... there is chaos in Iraq, so we should close off imports and hope that domestic businesses will sprout up while chaos is around them?

I'm explaining to Kidicious why the free market isn't producing the expected results. If you believe that a free market can truly exist in a country without law and order, well, I don't know what to say. There's a difference between classical liberalism and anarchy, and the core difference is government protection of the structures that make the marketplace work - contract law, property rights, and so on.

You know this, unless law school has eaten away at your brain somehow. I trust this was just a misunderstanding.

[Velociryx]

Ahhh...I see. So the only time productivity improvements behave as you claim is when they're dubbed as being "important." And the rest of the time they....have no impact?



-=Vel=-

[Imran Siddiqui]

it more then likley will end up into an (anarcho)-communist style society, but it won't happen for a very long time (hundreds of years).

I dissagree. Government is getting bigger and more bureaucratic, not smaller. Any Communist system is going to be filled with a massive bureaucracy that employs a vast majority of workers.

[DanS]

I'm explaining to Kidicious why the free market isn't producing the expected results.

Actually, it is producing the expected results, which are fabulous. Baghdad markets are more active today than they have been for years.

[The Andy-Man]

Originally posted by Imran Siddiqui

it more then likley will end up into an (anarcho)-communist style society, but it won't happen for a very long time (hundreds of years).

I dissagree. Government is getting bigger and more bureaucratic, not smaller. Any Communist system is going to be filled with a massive bureaucracy that employs a vast majority of workers.

this is prolly for another topic, but remember, i said eveloution over hundreds of years. And the trend will be more likley in people controling big buissnes with there vote as a share holder. Govt as we know it now is alreading becoming and it oculd be said is subject to the whims of high finance.


but enough! back to iraq!

[Imran Siddiqui]

I trust this was just a misunderstanding.

I think this was... I assumed that you were agreeing with Kid that we should end imports into Iraq.

[Kidlicious]

Originally posted by Velociryx
Ahhh...I see. So the only time productivity improvements behave as you claim is when they're dubbed as being "important." And the rest of the time they....have no impact?



-=Vel=-

No. You just fail. Big F

[Kidlicious]

Originally posted by The Andy-Man
as much as i disagree with harsh free-marketeering, isn't it a bit soon to say the free market has failed iraq

Free market just can't do what they want to do there. There is evidence that it is failing, but really we don't need proof. There is no way that free markets will recover the economy. It isn't really free anyway since we are pumping money into it, but letting that money go straight out the window is just stupid neo-liberal crapola.

[MichaeltheGreat]

Originally posted by Kidicious
but letting that money go straight out the window is just stupid neo-liberal crapola.

So they should just pile it up and sit on it?

[Kidlicious]

Originally posted by MichaeltheGreat
So they should just pile it up and sit on it?

Come on MtG. You are too smart to follow dogma like the rest of these idiots. Use that brain of yours.

[MichaeltheGreat]

My karma ran over your dogma.

Right now, the Iraqis need (a) money, and (b) a wide variety of products they don't have the immediate capacity to produce, distribute and service.

Textiles and the like will fall back to local manufacture, once acute shortages are resolved.

Machine tools, equipment upgrades, and stuff that will drive domestic industry is the best short term use for foreign currency earnings, after immediate supply of basic consumer needs.

[Kidlicious]

Originally posted by MichaeltheGreat
My karma ran over your dogma.

Right now, the Iraqis need (a) money, and (b) a wide variety of products they don't have the immediate capacity to produce, distribute and service.

So import those, but what does that have to do with DVD players?

Originally posted by MichaeltheGreat
Textiles and the like will fall back to local manufacture, once acute shortages are resolved.

No way. They had tariffs on imports before. That maintained the local industry. Why do you think that removing those tariffs will support the same domestic industry?

Originally posted by MichaeltheGreat
Machine tools, equipment upgrades, and stuff that will drive domestic industry is the best short term use for foreign currency earnings, after immediate supply of basic consumer needs.

That's going to be a drop in the bucket. They need to get serious about putting people to work. They need to do everything they can. The better plan they have the less money we will have to pour into that place and the more likely that the whole situation will be a success.

[Sandman]

It is when that chaos also extends to economic paralyzation. There is no stable government in Iraq now, and that prevents buisnesses from running 'as usual'. When there is stability (which comes from bring the country out of chaos) then the government can begin to address the problems of all the people out of work because the bureaucracy has fallen and all the domestic businesses whose production has fallen due to the war and its aftermath.

The lack of stable government is partially a consequence of failures by the US. The half-hearted attempts to control the looting (to be fair, the looting itself was unexpected), the unsubtle and inept peacekeeping of the troops and failure to get electricity and water running reliably are all contributors to the general chaos, which could and should have been avoided.

Furthermore, the attitude that stability is somehow a stepping stone to getting businesses in is, in my view, misguided. Stability is an end in itself. Getting multi-nationals into Iraq is a goal that, should, quite frankly, be years, if not decades away. In the short term, corporations will bring only problems to Iraq.

The country won't fix itself. Claiming that Iraq's main problems can be tackled only when the country becomes stable is pointless, since it is these very problems which are causing the instability. Stop waiting for 'stability' and start fixing the country, regardless of the difficulty. I suspect that as long as the country remains in ruins, we will continue to hear cries of 'chaos', regardless of how puny the Iraqi resistance is.

[Imran Siddiqui]

I suspect that as long as the country remains in ruins, we will continue to hear cries of 'chaos', regardless of how puny the Iraqi resistance is.

When were we solely talking about Iraqi resistance . We are talking about the mess the country is in without any real leadership. There is a massive power vaccum, which tends to dampen business greatly. People from the government layed off, etc. The violence isn't the entire picture here.