Monday, 31 March 2003

Save Iraqis - give them markets

John Blundell of the Institute of Economic Affairs says that Iraq needs the rule of law and functioning markets rather than international "aid". According to the Heritage Foundation's Index of Economic Freedom, countries that defend property rights and economic freedoms are the most prosperous. Hong Kong is number one and North Korea comes in last at 156. Let's hope that Clare Short is reading up on Adam Smith if she wants to help a post-war Iraq.

But what of Scotland? The Heritage Index puts the UK at number 9 (equal with Australia) in the economic freedom listing. John Blundell reckons that an independent Scotland would only make 60th spot in the freedom charts. Scottish nationalists are always pointing to the example of Ireland as a successful independent country of similar size to Scotland, but Ireland scores 5th on the freedom index. Ireland is prosperous, partly through EU subsidies, but mainly because its politicians are instinctively pro-business. The opposite applies in Scotland. All too many people discuss Scotland's economic prospects in terms of how much oil would accrue to an independent government or whether the Barnett squeeze will create a funding shortfall. The real question is how much economic freedom we have and whether property rights are recognised. That depends on our political culture, not on natural resources or subsidies from south of the border.