December 18, 2006

Double-Digit Growth and Reaganesque Tax Cuts Are Happening WHERE?

Filed under: Business Moves,Economy,Taxes & Government — Tom @ 11:39 am

From MSNBC/Newsweek (HT Instapundit), one of the world’s best-kept secrets, and yet another example of supply-side econ at work:

Civil war or not, Iraq has an economy, and—mother of all surprises—it’s doing remarkably well. Real estate is booming. Construction, retail and wholesale trade sectors are healthy, too, according to a report by Global Insight in London. The U.S. Chamber of Commerce reports 34,000 registered companies in Iraq, up from 8,000 three years ago. Sales of secondhand cars, televisions and mobile phones have all risen sharply. Estimates vary, but one from Global Insight puts GDP growth at 17 percent last year and projects 13 percent for 2006. The World Bank has it lower: at 4 percent this year. But, given all the attention paid to deteriorating security, the startling fact is that Iraq is growing at all.

….. Even so, there’s a vibrancy at the grass roots that is invisible in most international coverage of Iraq. Partly it’s the trickle-down effect. However it’s spent, whether on security or something else, money circulates. Nor are ordinary Iraqis themselves short on cash. After so many years of living under sanctions, with little to consume, many built up considerable nest eggs—which they are now spending. That’s boosted economic activity, particularly in retail. Imported goods have grown increasingly affordable, thanks to the elimination of tariffs and trade barriers. Salaries have gone up more than 100 percent since the fall of Saddam, and income-tax cuts (from 45 percent to just 15 percent) have put more cash in Iraqi pockets. “The U.S. wanted to create the conditions in which small-scale private enterprise could blossom,” says Jan Randolph, head of sovereign risk at Global Insight. “In a sense, they’ve succeeded.”

Iraq’s economic growth and optimism wouldn’t be so “startling” if it were reported more than once every, oh, 11 months or so.

….. Real-estate prices have risen several hundred percent, suggesting that Iraqis are more optimistic about the future than most Americans are.

That’s because they don’t have our media.

….. A government often accused of being no government at all has somehow managed to take its first steps to liberalize the highly centralized economy of the Saddam era. Iraq has a debt-relief deal with the IMF that requires Baghdad to end subsidies and open up its gas-import market.

….. But again, that’s the remarkable thing. In a business climate that is inhospitable, to say the least, companies like Iraqna are thriving. The withdrawal of a certain great power could drastically reduce the foreign money flow, and knock the crippled economy flat.

Someone please let John Murtha and Dennis Kucinich know that “cut and run” has consequences.

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3 Comments

  1. Talking to John Murtha and Dennis Kucinich will simply prove the old ‘use it of lose it’ saying is true. Neither has used their brain in years and no longer have one.

    Comment by Scrapiron — December 18, 2006 @ 12:24 pm

  2. I started reporting on Iraq’s in 2003. It is remarkable. Have you noticed there are few if any bank robberies anymore? THEY have security! Priorities, man. Now we need to explain that it’s the people who actually keep those banks running. lol.

    Comment by Rosemary — December 18, 2006 @ 3:36 pm

  3. #1, II just want the nutty soundbites that result. :–>

    #2, that’s funny about the banks.

    Comment by TBlumer — December 18, 2006 @ 3:44 pm

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