Paul Krugman

From his Times column today:

Last November the top economist at the Heritage Foundation was very optimistic about Iraq, saying Paul Bremer had just replaced "Saddam's soak-the-rich tax system" with a flat tax. "Few Americans would want to trade places with the people of Iraq," wrote the economist, Daniel Mitchell. "But come tax time next April, they may begin to wonder who's better off." Even when he wrote that, the insurgency in Iraq was visibly boiling over; by "tax time" last month, the situation was truly desperate.

Much has been written about the damage done by foreign policy ideologues who ignored the realities of Iraq, imagining that they could use the country to prove the truth of their military and political doctrines. Less has been said about how dreams of making Iraq a showpiece for free trade, supply-side tax policy and privatization — dreams that were equally oblivious to the country's realities — undermined the chances for a successful transition to democracy.

A number of people, including Jay Garner, the first U.S. administrator of Iraq, think that the Bush administration shunned early elections, which might have given legitimacy to a transitional government, so it could impose economic policies that no elected Iraqi government would have approved. Indeed, over the past year the Coalition Provisional Authority has slashed tariffs, flattened taxes and thrown Iraqi industry wide open to foreign investors — reinforcing the sense of many Iraqis that we came as occupiers, not liberators.

But it's the reliance on private contractors to carry out tasks usually performed by government workers that has really come back to haunt us.

Conservatives make a fetish out of privatization of government functions; after the 2002 elections, George Bush announced plans to privatize up to 850,000 federal jobs. At home, wary of a public backlash, he has moved slowly on that goal. But in Iraq, where there is little public or Congressional oversight, the administration has privatized everything in sight.

For example, the Pentagon has a well-established procurement office for gasoline. In Iraq, however, that job was subcontracted to Halliburton. The U.S. government has many experts in economic development and reform. But in Iraq, economic planning has been subcontracted — after a highly questionable bidding procedure — to BearingPoint, a consulting firm with close ties to Jeb Bush...