Reflections on Time Preference in Iraqi Culture

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I
hesitate to bring this essay to the public, but on balance I hope
that it sheds some additional light on the matter of the cause of
freedom and its prospects on The Peninsula. I hope it is not taken
in the wrong way. It was Laurence Vance's review
of Mises's thoughts on Islamic culture
which persuaded me to
finally air this piece.

One
of the startling cultural differences that I experienced as a Texan
working in Iraq between June and November 2003 was the profoundly
high relative time preference of the Iraqis. Why is it this way
and how can it be changed?

Time
preference is the propensity to trade or not to trade present goods
for claims to future goods. High time preference is a reluctance
to make such trades, and low time preference is a willingness to
make such trades. Examples of such trades are: saving money for
your child's education (present good = money, future good = education),
buying a dishwasher (present good = money, future good = no manual
dishwashing), working overtime (present good = leisure, future good
= money income), and oral hygiene (present good = leisure, money
for toothbrush, etc., future good = complete set of teeth).

Time
preference is a ubiquitous element of human action, as provided
by the examples above, and as discussed by Mises.
As explicated by Mises,
and later, Hoppe,
this trading of present goods for future goods is the engine of
improvement of material well-being. Hoppe has
shown
that the very process of trading present goods for future
goods results in lowering the time preferences of both oneself and
others, resulting in a double spiral: a spiraling down of time preferences,
and a spiraling up of wealth — a process he rightly calls "civilization."

High
time preference behavior decivilizes, and low time preference behavior
civilizes, the society in which it is practiced. Instances of high
time preference behavior are to be condemned, for they hinder, halt,
or reverse the growth of the wealth of a nation. High time preference
behavior is an "excessive" valuing of present goods over
future goods, indicating a "gratification now" mindset,
a discounting of future goods and bads.

Some
Examples

My
experience in Iraq is limited to a window of 6 months, but I have
the advantage of having compared my experience with many fellow
Southrons.1 I was involved in the US government-sponsored
rebuilding efforts as an employee of a major American contractor.
I worked as a chemical engineer, helping to rebuild plants in an
LPG production chain in southern Iraq. Here are some high time preference
behaviors that were commonly observed:

The
inability or unwillingness to plan and schedule.
At many plant
sites, Iraqis have been asked to help construct schedules so that
material deliveries can be scheduled, labor needs can be coordinated
among plants, and projects can be cost-controlled. I know of no
instance in which a schedule has been produced by an Iraqi. There
has been no difference in propensity for schedule generation at
plants where good Iraqi-American relations exist and those where
less favorable relations exist (relations run the gamut from labor
riots and rock throwing to the giving of gifts, sharing of dinner,
and invitations to Iftar).

The
inability or unwillingness to promptly attend planned meetings.

On one occasion, I suggested a meeting to some of my Iraqi colleagues.
They agreed that we should meet to review the proposed location
of some new pumps, and that all relevant disciplines be represented
from the Iraqi side and the American side, a complement of about
15 people. I prepared a notice for the meeting, and asked the lead
Iraqi to set the time and place of the meeting. I gave each one
of the attendees a copy of the meeting notice. On the appointed
day, at the appointed time, three Iraqis showed up. They were unconcerned
that their colleagues were late. Within one hour, all attendees
finally arrived, and the meeting was begun. For the skeptical reader,
I must underscore my judgment that this instance, and many like
it, have nothing to do with passive resistance to an American presence,
but are an element of Iraqi culture also present in Iraqi-only meetings.

Poor
driving habits.
There are decidedly fewer cars in Iraq than
Kuwait, but their driving habits are quite similar. Excessive speed,
weaving in and out of lanes, straddling lane dividing lines, non-use
of seat belts and child restraints, and following closely are all
prevalent. The worst American teenage boy drivers behave better
than many Iraqi (and Kuwaiti) drivers.

Poor
dental hygiene.
While low Iraqi income (most Iraqi plant workers
earn between $60 and $120 per month) has been offered by some of
my colleagues as a reason for poor dental hygiene, I don't think
that claim holds. Some of the worst dental hygiene (visible food
particles, yellow matter, and tartar between and on teeth) has been
observed on the higher-paid Iraqis, who have cell phones and wristwatches
and other luxuries.

Poor
Safety Practices.
My environmental engineer roommate nearly
passed out when he learned of an Iraqi innovation: oil divers. These
intrepid (and stupid) men don scuba gear and swim in lakes or pools
of oil, working in the complete darkness of that fluid, fixing leaks
or recovering items. Lesser evils include the non-use of hardhats,
gloves, grinding shields, steel-toed boots, and safety glasses (new
sets of all of these sit a few hundred meters away in the plant
warehouse, dutifully requisitioned months ago by the likes of yours
truly); as well as dubious practices such as draining diesel, lube
oil, gasoline, propane, and other hydrocarbons directly onto the
ground. Again, for the skeptic, you might protest that Iraq is a
desert — there's no groundwater to contaminate, so what's the problem?
The problem is that there is groundwater, and most of the
refineries and chemical plants are on sabkha
geography, with nearby farms that use well-water for irrigation,
watering animals, and drinking. The engineers in these plants are
aware of the effects of their actions, but choose to discount the
long-term effects.

Some
Counter-Examples

While
all of these are true, there are also examples that countervail.

Islamic
Observances.
Islam is a religion of orthopraxy more than orthodoxy.
As such, the so-called Five Pillars of Islam are mainly actions.2
Prayers are performed daily five times, and most Iraqis cleave to
strict observance. The sacrifice of daylight fasting during Ramadan
is quite harsh in the desert climate — no drinking of water is allowed
— and this is also observed quite strictly by Iraqis. These and
other religious actions are indeed low time preference behaviors.
Unfortunately, these observances do not contribute to material well-being.
The future goods the actors seek are for the afterlife, while the
present goods they forgo are material. Hence, these practices, while
they may increase the spiritual wealth of Iraq, they do so at the
expense of its material wealth.

Shia
Khums.
Many Iraqis are Shia Muslims, and therefore submit to
an annual charitable tithe of 20% over and above the Zakat. This
is indeed a low time-preference behavior, to the extent that it
is practiced. I have been told by a few Iraqis that the Khums is
not widely observed in Iraq, but this may be due to current economic
circumstances, where excess wealth is rare.

Why
High Time Preferences?

The
most likely answers are the confluence of recent rule by an oppressive
dictator, the decade-long blockade of the country, and the uncertainties
associated with invasion and occupation by the US military.

Several
Iraqi friends of mine told tales of slowly selling all of their
appliances (first the microwave, then the dishwasher, finally the
refrigerator) and then the barest luxuries, like doors from their
homes. These sales were necessary to keep food on the table in the
face of stagnant nominal wages and skyrocketing consumer good prices.

Sabah
Noori, one of my best Iraqi friends, lamented that much of his life
was taken from him by conscription in the Iraqi army, instead of
applying and building his knowledge of chemical engineering.

Another
Iraqi friend had bittersweet feelings about the US invasion. He
detested Saddam Hussein, and was now happy to be able to complain
without fear of retaliation. He considered himself already an old
man, being 35, but he felt there was much hope for his children.

The
ongoing uncertainties of the political future of the country may
result in continuingly high time preferences, but the changes also
generated a feeling of hope among Iraqis. I fear that recent developments
in Iraq show that this hope is wearing thin, revealing impatience
and frustration with the US government and the US-appointed interim
government.

Are
Time Preferences Important?

It
has been suggested by colleagues and reviewers of this article that
there are many examples of cultures that, notwithstanding their
cultural backwardness (from our perspective), they get the job done.
And so it is that in, for instance, Trinidad and Mexico, I have
observed that chemical plant personnel "get on," and are
able to carry out their work despite their limin' and mañana
attitudes, respectively. However, they do so less ably than
their counterparts in countries whose work ethic is more capitalistic,
for lack of a better word, such as those I have observed in Japan,
Germany, Korea, and China.

High
time preference does not doom a society, but it does make economic
growth slower than otherwise. And, to the extent that growth can
influence ideology, there may be a sort of ideology
trap
whose escape depends, in part, on growth. Of course, ideology
is not entirely endogenous, and so there are other
ways. Nonetheless, lowering
time preferences is important.

Solutions

One
of the hopes for the growth of material wealth in Iraq is the adoption
of a lower time preference. How can this be accomplished? Security,
commerce, and friendship.

I
will not address security here. However, it is quite clear that
security of property and person result in fewer uncertainties, which
result in lower time preferences.

Commerce
will lower time preferences in many ways. First, the division of
labor will immediately increase wealth due to the Ricardian (or
should it be Millian?3) Law
of Association
. An increase of wealth, ceteris paribus, will
result in a lower time preference. Second, the emergence of new
businesses in Iraq means the emergence of new cost accounting, which
substitutes for collectivist plans that do not allow for rational
economic calculation, such as the UN Oil-for-Food Program.4
Third, these new businesses become constrained by business necessities,
such as creating and adhering to schedules. So, profit will provide
incentives to engage in low time preference behaviors. Fourth, commerce
includes goods such as satellite dishes (banned under the last regime),
VCD players, and the television programs that play on them. One
can hope that Muslim mores will help to act as a filter for the
worst that Hollywood has to offer, as it seems to do in Kuwait,
based on my 6 months of watching Kuwaiti television.

Friendship
with those in the West is just as important. It took lots of persuasion
to convince my colleague Abdul Khalik that not every single woman
in America sleeps around, but he finally believed me. Discussing
politics and religion and sports and family really builds bridges
(for instance, we can all agree that Test Cricket is absolutely
ridiculous). More friendship between Iraqis and Americans means
a lower likelihood that they will fear or distrust one another.
This means lower uncertainty, which means lower time preference.

To
the extent that culturally-ingrained practices of high time preference
can be overcome with better conditions and the ideology of liberalism,
I remain guardedly optimistic about the prospects for economic progress
in Iraq.

Notes

  1. My fellow
    workers hailed almost exclusively from the industry of the US
    Gulf Coast: Texas, Louisiana, Mississippi, Alabama, and Georgia.
    Whatever effect this may have on our collective judgment may be
    left to the discernment of the reader.
  2. They are:
    the declaration of faith, Salat (praying 5 times per day), Zakat
    (purification through alms-giving in the amount of 2.5%), Ramadan
    (the month of daylight fasting), and the Hajj (once-in-a-lifetime
    pilgrimage to Mecca).
  3. See Concepts
    of the Role of Intellectuals In Social Change Toward Laissez Faire
    ,
    page 59.
  4. Many who
    are not familiar with the economy of Iraq are not aware that the
    natural abundance of arable land and low labor costs should make
    Iraq a net exporter of food as well as oil, and that one reason
    for the underproduction of food in Iraq during the 1990′s was
    the lack of farm-related equipment. Indeed, the poor state of
    the farm equipment is matched by the poor state of all capital
    goods, including oil refinery and chemical plant equipment. This
    capital either fell into disrepair because new bearings or tires
    or bushings or other spare parts could not be bought, or replacements
    could not be bought, both due to the blockade. As an example,
    the ammonia-urea complex (in case you don’t know, urea is fertilizer,
    an important complementary good to farming) near Khor Az Zubair
    was having its compressor rotors refurbished in a Japanese shop
    when the blockade hit, and the rotors have been rusting in a warehouse
    at a wharf in Japan ever since, limiting the plant’s production
    considerably.

November
16, 2004

Gil
Guillory [send him mail]
is a chemical engineer in Houston.

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