Try as I might, I am having trouble finding staunch defenses of Iceland from the economists and think tanks responsible for the country going over the economic precipice a few months ago.  Iceland, as many people probably know, was a poster child of Milton Friedman of the University of Chicago and Michael Walker of the Fraser Institute, who developed and steered the policies that led to the disaster.  Friedman made a fateful (for Iceland) visit to the country in 1984, where he gave a lecture at the University of Iceland on “The Tyranny of the Status Quo”, in which he offered up the elixir of economic freedom and market triumphalism.  While there, he engaged in a highly influential television debate with socialist thinkers in which he very effectively belittled the direction of economic policy in the country. He became enamoured with the possibilities of policy change there, and soon became an important advisor to a group of young intellectuals in the Independence Party.  The Party took the lead in pushing the adoption of a radical program of monetarism, conservative fiscal policy, privatization, deregulation, corporate tax cuts, fisheries privatization, cuts to government enterprises and liberalization of currency and capital markets. The Heritage Institute in the United States and the Fraser Institute in Canada fell in love with the country, featuring it repeatedly as one of the most successful countries in the world in their Economic Freedom Indexes and reports.  In 2005, the Mount Pelerin Society, keepers of the Friedman and Hayek tradition and supported by many highly respected economists, devoted its 2005 annual conference to many learned presentations extolling the successes of Iceland.  Nary a negative word was heard other than the odd suggestion that more was needed.  Leading economists took turns belittling those few left in the discipline who remained skeptical and parading the triumph of their beliefs in the fashion of intolerant ideologues everywhere.

Alas, Iceland soon turned out to be a huge bust.  The collapse of its financial system in 2008 was accompanied by crippling unemployment, currency collapse, credit paralysis and the failure of the banking system.  It became a failed economy and an abject warning about the dangers of listening to the economics profession’s elites.  Today it is a basket case of immense proportions, stuck in a deep in recession, deeply in debt, and without any prospects for recovery.  Its failures are attributable to the economic policies embraced by the Independence Party and pedaled by Friedman and his disciples.  All of the policies confidently advocated by Friedman, the Pelerin Society and the Fraser Institute failed miserably.  In fact they wrecked the country.  As a real life social and economic experiment, Iceland has turned into a wrecking machine of the ideas the monetarists and neo-conservatives so confidently peddled throughout the last decade.

Perhaps more disconcertingly, the economists and policy wonks so deeply implicated in what has happened have become silent.  Not a word is heard from the Fraser Institute, the other right wing think tanks, and the university professors who had so much to say earlier.  Not a word is heard to indicate that any of them are paying attention to Iceland at all or care about what has happened.  There is no admission of responsibility and no acknowledgment of the policy failures that they played such a big part in.  Iceland and its wonderful people are now left to take responsibility alone. This must be a bitter pill for all the Icelanders who faithfully followed all they were told.  Iceland as a country had so much going for it.  It could have persevered as a small nation supported by active and progressive governments of a mild social democratic bent – a smaller version of Sweden if you like.  But it fell victim to a group of academic theoreticians full of arrogance and swagger but lacking common sense and basic social knowledge.  Nations, like people, need to watch out for snake oil salesmen.  And social engineers who think they know it all and want to remake society.

Pity the Icelanders.  They are on their own now.  I suspect that not many social engineers from outside will be welcomed any time soon.  Perhaps the Fraser Institute and all the economists who had so much wrong headed advice for Iceland are finally revealing a modicum of common sense by lying low and keeping quiet.  Hopefully they will not find another hapless victim soon.

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He following is a description of a book that has something important to say about the Fraser Institute and  similar so-called “Think Tanks”.  It is recommended reading.

Think your vote counts on issues that matter
most to you? Like global warming or health care? Well, think again.

In Not a Conspiracy Theory, How Business
Propaganda Hijacks Democracy (Key Porter, $22.95)
Donald Gutstein skilfully documents one of the
most important but least recognized political
developments in the last thirty years: the
prolonged propaganda campaigns mounted by
business to influence our opinions on fundamental
issues of social and political life. Think tanks
with impressive names and populist-sounding
agendas and staffed with credentialed researchers
with well-honed reputations churn out research
that purports to be both independent and free of
bias. But peel back the curtain and what do you
find? Big business with its big bucks and
anti-democratic agenda: maximizing and
maintaining profits no matter what. Independent
and free of bias? Not even close.

Gutstein explores the roots of corporate
propaganda in the United States and traces its
rise and influence across Canada. He documents
how corporate propaganda works, who funds it and
how it is marketed to the mainstream media …
usually without you ever knowing. For anyone who
worries that the propaganda machine has hijacked
the democratic process, Not a Conspiracy Theory is a must read.

Donald Gutstein taught in the school of
communication at Simon Fraser University and is
the author of three acclaimed but controversial
books: e.con: How the Internet Undermines
Democracy, The New Landlords and Vancouver Ltd.
He has studied the media for more than thirty
years, was co-director of Projected Censored and
NewsWatch Canada and has written articles for
print and online magazines such as Maclean’s,
Vancouver Magazine, The Tyee, Georgia Straight and Straight Goods.”