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Wednesday, December 10, 2003

Globalizing Crony Capitalism

Let's see if I can recall ECON 101 market...competition...comparative advantage...efficiency...

You get the idea.

It's standard Republican dogma that if the government has to spend money, it ought to be as much like private enterprise as possible -- competitive bids for government contracts are essential, otherwise the result is inefficiency and waste.

Inefficiency and waste are real no-nos when one is dealing with tax revenues (or, as the President used to day, "YOUR MONEY").

Some libertarians equate taxes with theft and slavery, so this is kind of important to them, especially.

So, what do we make of the Bush administration's view on spending taxpayer money in Iraq? It's crony capitalism on a global scale.

The New York Times (registration required) had a significant story Tuesday, "U.S. Bars Iraq Contracts for Nations That Opposed War" that is being widely syndicated and discussed today.
The Pentagon has barred French, German and Russian companies from competing for $18.6 billion in contracts for the reconstruction of Iraq, saying the step "is necessary for the protection of the essential security interests of the United States."

The directive, which was issued by the deputy defense secretary, Paul D. Wolfowitz, represents perhaps the most substantive retaliation to date by the Bush administration against American allies who opposed its decision to go to war in Iraq.

Under the guidelines, which were issued on Friday but became public knowledge today, only companies from the United States, Iraq and 61 other countries designated as "coalition partners" will be allowed to bid on the contracts, which are financed by American taxpayers.
Particularly since Germany, France and Russia most recently voted with the US at the UN -- and the US continues to ask these states for their cooperation on Iraqi debt, NATO involvement, etc., this seems very petty and short-sighted.

Plus, as basic economic theory would suggest, it's quite inefficient and that means higher costs for taxpayers.

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