At the beginning of the Iraq occupation by the U.S., many Iraqis were thrown out of work. In their stead, the U.S. spent billions of dollars on no-bid contracts with well connected U.S. firms. These firms did not hire unemployed Iraqis. Instead, they flew in mercenaries from the U.S. to do work at $100,000 salaries, that the Iraqis would have been pleased to do for much less. Gainfully employed Iraqis rebuilding their country are much less likely to join the insurrection than those who are unemployed while non-citizens are paid exorbitant amounts to do the same work they are willing and able to do.
I wondered how obtuse Paul Bremer would have to be to not see the damage his policies were causing. Now that I have formulated Greenberg’s Law of Counterproductive Behavior, it came as no surprise when I read the explanation in the book The Shock Doctrine: The Rise of Disaster Capitalism.
In describing a conference held by the U.S. State Department in Baghdad in the early months of the occupation, author Naomi Klein focused on one of the main speakers [page 432].
One of the main speakers was Marek Belka, Poland’s former right-wing finance minister who worked under Bremer in Iraq for several months. According to an official State Department report on the gathering, Belka pounded the Iraqis with the message that they had to seize the moment of chaos to be “forceful” in pushing through policies that “would throw many people out of work.” The first lesson from Poland, Belka said, was that “unproductive state-owned enterprises should be sold off immediately without efforts to salvage then with public funds,” (He failed to mention that popular pressure had forced Solidarity to abandon plans for rapid privatization, saving Poland from a Russian-style meltdown.) His second lesson was even bolder. It was five months after the fall of Baghdad, and Iraq was in the midst of a humanitarian emergency. Unemployment was at 67 percent, malnutrition was rampant and the only thing holding off mass starvation was the fact that Iraqi households still received government-subsidized food and other essentials, just as they had under the UN-administered oil-for-food program during the sanctions period. Belka told the Iraqis that these market-distorting giveaways had to be scrapped immediately. “Develop the private sector, starting with the elimination of subsidies.” He stressed that these measures were “much more important and divisive than privatization.”3
3. Jane Mayer, “Contract Sport,” The New Yorker, February 16, 2004
According to Greenberg’s Law, what I thought was counterproductive behavior, was really not. I just had misunderstood what the players in this sport were trying to accomplish.
One of the failings of true believers in absolute free-markets is their failure to account for the passage of time. Even if you could argue that the people would be better off in the long run, they fail to account for the fact that people could starve to death while waiting. Unlike docile Americans, starving Iraqis didn’t just sit idle and slowly starve to death. They started fighting back.
The presentation by Belka explains why the Coalition Provisional Authority could believe that it was a good thing to throw so many people out of work and not subsidize them while unemployed. That does not explain why they hired U.S. Contractors and allowed them to hire foreigners instead of Iraqis. We’ll have to look for other ulterior motives. Perhaps it was plain old greed that motivated them. Greed is supposed to be good according to absolutist free market enthusiasts.
To think that George W. Bush wondered why they hated us.
