I have to say, I'm a bit skeptical of the Oil Trust idea in Iraq. If I understand this Capitalism thing, it's pretty much based on the idea that money is bunk. It's not money that's valuable; it's value that can be represented by money. Milton Friedman finally put the capper on this; he finally proved that inflation (more money) doesn't do much for the economy, it's value that leads to money creation. Tax cuts are different from government money because it's not a hand-out; it's allowing people to keep the money they've earned by producing value.

The Iraq Oil Trust idea seems to be providing money for the valuable service of being a citizen. Frankly, that's not so very valuable, at least as I see it. Honestly, I'm not sure I like the idea of the government as trustee any better than I like the idea of government as CEO. It seems inevitable that the government will award some kind of weighting mechanism to their constituents, benefiting the majority or the powerful again. Which, as I recall, was the whole thing we didn't want happening.

What incentives is this going to provide? Lets look at citizenship as stock ownership where the stock isn't tradeable. Or would it provide an advantage to ethnic groups that reproduce more (I honestly don't know enough about Shiites or Sunnis to know one way or the other)?

Here's my thought, which is completely undoable for political reasons: privatize the oil fields, but only to companies not based in Iraq. No companies owned by foreign states. No Iraqi citizen can own shares in Iraqi oil fields for 15 years (or something). All fields must employ Iraqis for, say, 80% of the labor. No Russian, Iranian, Chinese, Venezuelan, or companies based in similar countries, and no American companies; I know, we're not like them, but really we can't afford to be seen as the "War for Oil", not that we'll ever convince the Left, in whatever case. But, the point of this is them, not us, so we'll take it. In the end, American oil companies are pretty good at their jobs; it's the Iraqis loss to exclude them, but what must be done, must be done. The point in the end is to get the profits of the country and out of reach of any of the factions (as much as possible). The UAE may be a good place to look for candidate companies. Any economy built around one single commodity is a serious problem. When the economy is based around trade and commerce instead, the oil industries will have a healthier place to come home to later. And, if the government has, perhaps, a 5% non-voting share in the fields, not for distribution but for government operating costs, they can keep taxes on the people low.

So many people forget that wealth does not come from natural resources but from economic freedoms. Look at Hong Kong and Singapore; they have no natural resources at all, the pinnacle of this proof, yet they are wealthy. It distresses me a little when George W. Bush says that Democracy will free the Middle East. It's not really true; it's Capitalism that will free the Middle East. Unfortunately, I don't get the impression that Capitalism is a big priority for the Important Actors. In all fairness, they're coming off of a Socialist regime, living in a region where even the "arch-conservative" regime in Iran is Socialist.

I'll have more thoughts on the peace-keeping abilities of Capitalism in my next post, but I'd like to propose this plan even if all I learn is why it's not a good idea. I like what Austin Bay's saying here, but I'm going to keep my skepticism about this.