We have almost gotten used to what follows in the wake oil price spikes: silly politics, weird conspiracy theories and the mystery of what happens at the other end -- in the likes of Russia, Venezuela and the middle-Eastern states that rake in petrodollars by the billions.
For the most part, real economic progress has not been detected in these countries. The Economist of Nov. 12 examined the question again ("Recycling Petrodollars") with a moderately upbeat piece that suggests this time, with more experience, wiser investments will take place. Perhaps not, however, because it appears that most of the windfall revenues will continue to be directed by government (politicized) agencies.
This is why Charles Wolf's suggestion re Iraqi oil in today's WSJ is so refreshing. In "Shareholders Don't Shoot Each Other", the author argues that, "Privatizing Iraq's oil assets, and vesting all citizens with shares can provide incentive for every Iraqi -- including Sunnis, the insurgency's core -- to view commerce as a better path than violence. Ownership would provide 28 million citizens with a prospective increase in per-capita income of about $5,800, substantially raising their present income."
Iraqis could privatize their government oil monopoly -- and become traders and investors --and take a shot at peace and prosperity -- and leave their neighbors behind.
Wolf does not mention that the Iraqis had better do so quickly before their politics matures -- and prevents this sort of enlightened approach.