"The consequence is that in tranquil times public functions offer but few lures to ambition. In the United States those who engage in the perplexities of political life are persons of very moderate pretensions. The pursuit of wealth generally diverts men of great talents and strong passions from the pursuit of power; and it frequently happens that a man does not undertake to direct the fortunes of the state until he has shown himself incompetent to conduct his own." Government of the Democracy in America,Â Alexis de Tocqueville.
Economics isÂ central Sun Tzu's strategic analysis of positions. For example, we cannot understand terrorism of the Al Qaeda variety without understanding how terrorist acts pay for themselves as free advertising through the media. Nor can we understand how this terrorism is different from Hezbullah terrorism, which is financed by Iran. Any discussion of strategy without aÂ discussion of economic incentives is meaningless.
In the past, I have been hopeful about the program of spreading democracy
for the Middle East because traditionally, democracy frees people to pursue their own material interests rather than engage in sectarian battles.
However, there is a problem with this general view. WhenÂ oil wealth is owned by states, men of ambition and power will always be attracted to taking control of the state and the states assets rather than private concerns.Â Â It may well be that in nations where the primary source of wealth is state-controlled oil, democracy will always be fragile. As long as oil wealth is not privately controlled, there will be too much incentive for various groups to battle for government power by any means possible. In other words, democracy may be possible in countries such as Lebanon or Egypt, but nearly impossible in countries such as Iraq, Iran, Saudi Arabia, and even, because this is not a cultural issue, Argentina. In these countries, there are too many economic incentives for people of ambition to seize power and hold it.
In every country where the production of wealth is concentrated in the government, disctatorships may naturally arise. Since government cannot compete with private enterprise in normal business activities in a free economy, state control of business tends to die out in open societies,Â especially those open to trade. However,Â when economic productivity is derived chiefly from government control of natural resources,Â such asÂ oil, government incompetence in competion is no obstacle its ability to produce wealth.