“Booming” probably isn’t the best adjective to use to describe the economy of a nation dealing with regular terrorist attacks, but nevertheless, Newsweek is expressing shock… shock that positive things might actually be occuring in Iraq.

Iraq has an economy, and—mother of all surprises—it’s doing remarkably well. Real estate is booming. Construction, retail and wholesale trade sectors are healthy, too, according to a report by Global Insight in London. The U.S. Chamber of Commerce reports 34,000 registered companies in Iraq, up from 8,000 three years ago. Sales of secondhand cars, televisions and mobile phones have all risen sharply. Estimates vary, but one from Global Insight puts GDP growth at 17 percent last year and projects 13 percent for 2006. The World Bank has it lower: at 4 percent this year. But, given all the attention paid to deteriorating security, the startling fact is that Iraq is growing at all.

Of course, MSM can’t even cover a growing economy here in the U.S., why on earth should we surprised at their shock of such a thing in Iraq?

There are many reasons the MSM isn’t eager to highlight the economic success in Iraq. For one, they might finally have to admit that Iraqis are actually better off now than they were under Saddam. A frightening admission, no doubt.

And second, the mechanics behind the successful Iraqi economy look very similar to another set of successful economic policies:

…there’s a vibrancy at the grass roots that is invisible in most international coverage of Iraq. Partly it’s the trickle-down effect. However it’s spent, whether on security or something else, money circulates. Nor are ordinary Iraqis themselves short on cash. After so many years of living under sanctions, with little to consume, many built up considerable nest eggs—which they are now spending. That’s boosted economic activity, particularly in retail. Imported goods have grown increasingly affordable, thanks to the elimination of tariffs and trade barriers. Salaries have gone up more than 100 percent since the fall of Saddam, and income-tax cuts (from 45 percent to just 15 percent) have put more cash in Iraqi pockets. “The U.S. wanted to create the conditions in which small-scale private enterprise could blossom,” says Jan Randolph, head of sovereign risk at Global Insight. “In a sense, they’ve succeeded.”

Income tax cuts? Trickle down effect? Say it ain’t so.