Normally I don't respond to anything Ryan contributes, because he
doesn't understand binary economics or make any serious attempt to. He
also doesn't understand property or its political significance, is
therefore totally oblivious of the systemic causes of extreme
concentration of capital ownership and the ever-widening economic power
gap in the world. He spends most of his time trying to attack the
motives of others who don't see the world his way. I don't have time
for him or others who have closed their mind to the Just Third Way.
However, Ryan demonstrates that he has a hard time reading closely,
especially ideas outside of his narrow box. His posting contradicted
his support of the trickle-down Alaskan Dividend Plan as an alternative
for Iraq. His quoted source, without realizing it contained this
passage:
Ahmed Chalabi, a highly controversial figure in Iraqi
politics, believes the government should create a
national oil company that collects revenue from the
development and sale of the country’s oil and gas.
Every citizen would own one non-transferable share in
the company. The shares would pay dividends to
citizens, who in turn would pay taxes to the
government. “We would make the government reliant on
the people for its revenue, rather than having an
independent stream of revenue from the oil,” says
Sethna, Chalabi’s energy policy adviser. “The
government will be more responsive to the people, and
the people will feel that they have a stake in their
governance.”
Establishing a tax system in Iraq would be one way to
sidestep the contentious debates Alaska has faced
since it first created the Permanent Fund. Alaskans
pay no state income tax. Oil royalties fund most of
the state government; this money, for the most part,
does not come from the Permanent Fund or its earnings.
Instead, lawmakers can tap the fund’s investment.
earnings to pay for the business of government.
Compare the above with our proposal (http://www.cesj.org/thirdway/paradigmpapers/iraq-nationbuilding.htm)
It has been circulating long before America invaded Iraq in 2003. In a meeting in
his office on July 14, 2005, I asked in Senator George Allen, who previously
supported the Alaska Plan, to send our proposal to top Iraqi officials he knew,
as an alternative to the Alaska Plan, which was also previously supported by
Chalabi. Here's the binary economic proposal I'm told by the Senator's staff was
sent out, before we learned from the main editorial in the Wall Street Journal of
August 17th what appears to be a policy reversal by Chalabi:
Phases of
Implementation
PHASE 1: Transfer Free Oil Shares to Every Citizen of Iraq.
Denationalize
the oil fields of Iraq, as a catalyst for building a new "Just Third
Way" economy. Transfer the ownership and control of all oil reserves
and natural resources within the borders of Iraq from the Iraqi
National Oil Company to a newly formed, professionally managed, limited
liability joint stock corporation. All Iraqis would automatically
receive free, as a right of citizenship from birth to death, an equal
number of non-transferable shares in the new
corporation. All citizens would be guaranteed first-class shareholder
rights to the profits and voting control over the board of directors
and management of the new company. All profits except for operating
reserves would be paid out fully and periodically as dividends to each
shareholder.
To meet all costs and services of
government at the national, provincial and local levels, taxes on such
dividend incomes would be withheld by the corporation before
distributing the balance of dividends to each citizen. The shares of
those who die would be retired to the General Fund or redistributed to
new-borns, returning Iraqi exiles and newly naturalized citizens, who
would receive an equal number of shares as existing shareholders.
The
new corporation would encourage market forces in setting prices
throughout the economy by offering, through a competitive bidding
process, concessions and leases for exploration, drilling,
infrastructural engineering and construction, processing and marketing
oil and other natural resource activities. Preferential treatment would
be given to competitive operating companies that are broadly owned by
Iraqi citizens.
To lay the foundations for Iraq’s future
economy, new industrial, agricultural and commercial demonstration
projects (for example, using advanced alternative energy technologies
that produce power and water from sea water and waste), could be
launched and financed in ways that encourage wider share ownership
among Iraqi workers and other stakeholders.
Future
government revenues would then flow from the bottom-up from increasing
citizen incomes. This would make government more dependent economically
on its citizens, rather than perpetuating the previous top-down
dependency of the people on a political elite. A single rate of
taxation on all incomes above poverty levels would balance government
budgets, achieve greater accountability, transparency and democratic
participation in governance at all levels, and radically reduce future
risks of public sector corruption or future coups.
Personal
share accounts (like Individual Retirement Accounts in the U.S.) would
be set up within local banks for each worker and every citizen of Iraq
to accumulate income-producing capital assets, sheltered from any taxes
until assets or income are distributed for personal consumption. The
equity accumulation accounts would also be given the power to borrow
interest-free, non-recourse productive credit on behalf of the citizen.
This
"capital credit" would be used exclusively by citizens to purchase new
shares issued by new or growing Iraqi enterprises to finance the
expansion and modernization needs of a growing Iraqi economy. The debt
for purchasing the newly issued growth shares would be secured and
repaid by the projected dividends on those shares (as with leveraged
employee stock ownership plans in the U.S.).
Here's the relevant passage from Wall Street Journal article of August
17th:
The best suggestion we've heard for cutting this
Gordian knot
comes from the much-maligned Ahmed Chalabi, who is now Iraq's
deputy
prime minister with special responsibilities for oil and infrastructure
and has
emerged as a major constitutional broker. He has bucked some of his
Shiite and
Kurdish allies by insisting that ultimate control of Iraq's
natural wealth must remain
in the hands of the central government, while also suggesting constitutional
language that the wealth be owned by all Iraqis in "equal measure."
In other words, the oil would be managed by the central government in
the
interests of all Iraqis wherever they live, but not owned by it.
Mr. Chalabi hopes that the "equal measure" concept
will pave the way in practice for the creation of an oil trust, under
which
Iraqis would from birth have accounts established in their name.
Iraqis would
receive their full and equal share of oil revenue and the government
would have
to vote to tax it away. Mr. Chalabi sees this as a way of breaking
the
"oil curse" that has turned so many oil-rich nations into corrupt
tyrannies.
What does this prove? It shows that Ryan shoots from the hip and
doesn't see the confused and contradictory nature of his attempt at
refuting our initiatiative. I repeat, the Alaska so-called "dividend"
plan is "a trickle-down socialist approach". It does not give Alaskan
citizens private ownership of property in the form of individually
acquired equity shares. Our approach gives economic power to the
people. The approach Ryan seems to favor keeps the citizens in a
permanent position of dependency on the generosity and honesty of
policiticians and bureaucrats, who will do whatever they can to be
re-elected and that usually means giving money to special interest
groups they need to stay in power, and giving the people the
left-overs. That's why socialism eventually gets as corrupt as
monopoly capitalism.
Ryan doesn't get the point, and until he can refute in a civilized
maneer the logic of binary economics, I will continue to ignore him, as
so many others have in the past. You can bet that Ryan will not pass
my response on to the social credit elist.
Norm Kurland
William B. Ryan wrote:
[Kurland in his typical arrogance] Incidentally, do
you oppose our Oil-to-People proposal for Iraq
(http://www.cesj.org/thirdway/paradigmpapers/iraq-nationbuilding.htm)?
A similar proposal was endorsed (without attributing
it to us) in the lead editorial of the Wall Street
Journal on August 17th.
------------------------------------------
--------------------------------------------
It was not attributed to you for the simple reason it
is not original to you, nor is it "similar" to your
proposal, but is modeled after the program that was
always strongly opposed by the Kelsoists, including
yourself: the Alaska Permanent Fund, which you
disparaged as being "socialist" on the old Ownership
list. I believe it's still in the archives. I alert
you it so you might continue your purging.
This is from the on line edition of Arabiestrends:-
When Saddam Hussein’s regime crumbled in 2003, US
leaders talked about creating a trust fund that would
give Iraqis a share of their country’s oil wealth. The
concept has proven successful in the state of Alaska,
which has paid its residents an annual dividend for
more than 20 years now.
The $30 billion Alaska Permanent Fund, seeded with oil
royalties, is invested in stocks, bonds and real
estate worldwide. Some 600,000 Alaska residents
receive a portion of the investment earnings each
year, making the Alaska Permanent Fund one of the
world’s most unique state-run oil funds. (Last year,
every resident who lived in Alaska for at least a year
got a $919 check.) US conservatives and liberals alike
believed a similar fund in Iraq was one answer to the
war-torn country’s problems, a democratic way to share
Iraq’s oil wealth and pave a brighter future for its
citizens. “The [Iraqis], if they had access to that
money directly, as is the case in Alaska, could make
choices in their own lives,” said then-US Secretary of
State Colin Powell during a Senate committee hearing
in 2003.
But two years later, as the Iraq government drafts the
country’s new constitution, it remains uncertain
whether ordinary Iraqis will ever get their share of
the wealth. To be sure, the government is enmeshed in
the more urgent task of ending a bloody insurgency and
heading off civil war. Just protecting the officials
who oversee the world’s second-largest oil reserves
hasn’t been easy. In May, for instance, an official
from Iraq’s oil ministry was gunned down on the
streets of Baghdad. The government is also grappling
with how to rebuild the country, and that will largely
depend on how Iraqi leaders decide to spend the oil
revenue. Providing oil dividends to citizens seems far
off, yet without a long-range plan for the country’s
billions of dollars of oil revenue, short-term agendas
and corruption could nix the idea before it gets a
chance.
Iraqi leaders understand this and claim that they are
considering language for the new constitution that
makes it clear that Iraq’s natural resources belong to
the people, says Zaab Sethna, the energy policy
adviser for Iraqi Deputy Prime Minister Ahmed Chalabi,
the acting oil ministry director. This could pave the
way for an oil trust fund, Sethna says, adding that
“the question of distribution of oil proceeds to the
people would be dealt with by legislation once there
is a constitutionally elected parliament.”
Many countries have instituted funds to invest and
preserve revenue from the sale of natural resources.
Chile created the Copper Stabilization Fund to help
offset the effects of volatile copper prices on the
country’s currency and budget revenue. Kazakhstan,
Azerbaijan and Norway are among a number of oil-rich
countries with funds that help cover government
shortfalls or serve as rainy-day accounts when their
oil reserves run dry. Norway’s fund alone is valued at
a whopping $170 billion and has proved highly popular
among the country’s citizens. The Alaska Permanent
Fund, however, is unique because it distributes a
portion of the state’s oil wealth directly to its
citizens.
For many years, Alaska was viewed among Americans as a
backwater territory, a cold and inhospitable place
populated solely by bears and moose, Eskimos and
Indians, pioneers and social dropouts. The biggest
industries in the state were fishing and the military.
That all changed in 1967, however, when wildcatters
struck oil at Prudhoe Bay, which proved to be North
America’s most prolific oilfield. Two years later,
Alaska raised $900 million from the sale of oil
leases, and construction soon started on a
1,300-kilometer pipeline to move the crude to market.
Meantime, Alaska leaders discussed what to do with the
windfall.
Many recognized a common dilemma facing all oil-based
economies: greed. The sudden realization that the
Alaskan Arctic was drenched in oil had already
produced greedy ambitions and political pet projects.
Prior to the Prudhoe Bay oil discovery, Alaska had its
share of booms and busts, and many lawmakers in the
1970s agreed the oil boom needed to be managed with a
long-term approach. They included the people of Alaska
in their decisions.
In 1976 voters passed a constitutional amendment to
create an oil-wealth savings account, known as the
Alaska Permanent Fund. Six years later the state’s
residents were made Permanent Fund shareholders. Every
man, woman and child would receive an annual dividend.
Alaskans themselves would keep government in check and
prevent politicians from depleting the fund. And the
dividend program would inject cash into local
economies throughout the state as Alaskans spent their
dividends on everything from plane tickets to college
tuition to snowmobiles.
Operation hope. Fawaz K. Saraf, a structural engineer
in the US, has made it his hobby to advocate an Iraq
oil fund modeled after the Alaska Permanent Fund. In
1970, when he was 12, Saraf and his family left Iraq,
fleeing Saddam Hussein’s regime. In 2003, he visited
the country after the Iraq War, under the US Office of
Reconstruction and Humanitarian Assistance Program. “I
saw firsthand how the person on the street felt that
oil was not working for them,” he says. “The general
feeling was that their money was being stolen, that
the new people coming over there were taking the money
away.”
Iraq’s citizens are accustomed to people in power
spending the country’s oil wealth. Oil helped build
Saddam’s military; it paid for boondoggle projects.
And it was an ever-present symbol of the disparity
between leaders and citizens. Saraf points out that in
the 1980s, Iraq oil revenue totaled more than $100
billion. Yet, after two wars and economic sanctions,
the country has little show for it. All the more
reason, Saraf says, to create an oil fund that holds
government accountable.
There is no doubt that many Iraqis would love a cut of
the oil wealth. The average working Iraqi earns less
than $1,500 a year. Unemployment in some towns stands
at more than 70 percent. Some date farmers
(agriculture is Iraq’s second-largest industry) have
said they would use an oil dividend to buy farm
equipment and expand production. Other citizens have
talked about opening businesses if the country created
a dividend program.
Saraf believes a dividend would unite the country’s
diverse population, treating everybody equally and
giving them a stake in the oil industry. The
democratic approach would also hold government
accountable for how it spends the country’s oil
revenue, and some dividend advocates suggest that
could help quell the current violence. “When a
terrorist damages a pipeline, the people would realize
that it affects them.” However, it is unlikely Iraqis
will get an oil dividend in the near future; that will
be up to a constitutionally elected parliament to sort
out.
Ahmed Chalabi, a highly controversial figure in Iraqi
politics, believes the government should create a
national oil company that collects revenue from the
development and sale of the country’s oil and gas.
Every citizen would own one non-transferable share in
the company. The shares would pay dividends to
citizens, who in turn would pay taxes to the
government. “We would make the government reliant on
the people for its revenue, rather than having an
independent stream of revenue from the oil,” says
Sethna, Chalabi’s energy policy adviser. “The
government will be more responsive to the people, and
the people will feel that they have a stake in their
governance.”
Establishing a tax system in Iraq would be one way to
sidestep the contentious debates Alaska has faced
since it first created the Permanent Fund. Alaskans
pay no state income tax. Oil royalties fund most of
the state government; this money, for the most part,
does not come from the Permanent Fund or its earnings.
Instead, lawmakers can tap the fund’s investment
earnings to pay for the business of government.
Alaskans have grown accustomed to receiving a dividend
every year. To mess with the system or reduce the
value of the dividend is viewed as political suicide
among many lawmakers. Still, Alaska’s oilfields are in
decline, and the Permanent Fund may be needed to pay
for future budget shortfalls. Some argue that if
Alaska had an income tax, the state wouldn’t have to
draw from the Permanent Fund.
Peace dividends. Dave Rose owns an Alaska-based
capital management company and is a former director of
the Alaska Permanent Fund Corp., the state agency that
manages the oil fund. He helped spawn the idea of an
Iraq Permanent Fund two years ago when he proposed it
to US lawmakers. Now he hopes to get Iraqi leaders
interested in the concept. Still, while Rose believes
a dividend would be great for Iraqis, he says there
are more pressing issues Iraqi leaders must address.
“The social and political needs must be solved first
to avoid the fund being pillaged,” Rose says.
He believes leaders should set up government agencies
that can provide timely solutions to rebuilding Iraq.
Oil revenue could seed the agencies, which in turn
could buy bonds and make loans for development
projects. Alaska did the same thing around the time it
created the Permanent Fund. The state had a laundry
list of projects and pressing needs, so it used some
oil revenue to create agencies to tackle those issues.
The agencies, still operating today, include a housing
authority, a government development arm and a bond
bank.
Rose recently shared his thoughts with the Islamic
Center in Virginia. Some Iraqis who attended the
meeting were skeptical. They told him they believed
the country was too corrupt to manage its enormous oil
revenue. “I told them that in Alaska, greed is one of
the things we don’t like but that we have a lot of,”
Rose recalls. “I told them that we played greed to our
strength: we gave ourselves a dividend.”
-
--- Norman Kurland <thirdway@cesj.org> wrote:
Dear Ed,
[snipped]
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