• Domestic Economy

    Primary Cause of Economic Woes

    Iran’s economic challenges are rooted in the decision-making system, so the one at the helm of the government need not be blamed. This was stated by Mohammad-Qoli Yousefi, professor of economics at Allameh Tabatabai University, in an article for the Persian daily Jahan-e Sanat. 

    A translation of the text follows: 

    Many governments have been in office over the past four decades, each of which tried to prepare the ground for the improvement of households’ economy but statistics show people’s living conditions have worsened over time. 

    One common belief in Iran is that statesmen can lead the way for the country’s economic improvement and clear the hurdles in the way of development. Proponents of this argument believe that Iran’s economic growth trajectory depends on a government that is brave enough to make tough decisions. But is it really possible to expect progress for an economy that is trapped by government decisions?

    Iran’s economic challenges are rooted in the decision-making system, so the one at the helm of the government need not be blamed. Although political parties and factions attribute problems to individuals, economic woes are mostly the upshot of the approach taken over the years. The decision-making system in Iran is centralized; it does not allow market mechanism to work properly. In this system, government decisions replace individual decisions and individual freedom is easily overshadowed by these decisions. 

    Economic challenges will persist as a result of the economic approach taken by governments even if our relations with the West and the US improve.

    Therefore, it is wishful thinking to expect challenges to get resolved once governments change; after all the top-down decision-making system in Iran is run by state organizations and the market has no place in such a system. 

    The centralized government system is the main fault of our economic system. Here, individuals and the private sector are not capable of making decisions freely and therefore even the best of governments won’t be able to produce good results. Economic reforms should be introduced to remove parallel powers, liberalize the decision-making system and replace government decisions with market mechanism. 

    Officials who attribute today’s problems to the policies of previous governments are trying to escape realities; poverty, despair, unemployment and lack of trust in statesmen are issues that cannot be concealed.

    Iran’s economic problems have remained unresolved for over four decades, but what is more evident in these years is the distrust of the people in the government. People used to support governments; they fought for national sovereignty, but now the government does not have the support of the people; only a handful of people who benefit from the current situation back the government. This group constitutes only 3% of the society, while 97% of the people are neither satisfied with the current situation nor have any hope for the future. 

    Over these years, the economic system has not worked, governments have failed to deliver, lost their social capital and distrust in the system has peaked.

    Evidently, Iran’s economy used to operate based on the quality of the performance of statesmen. In recent years, we have seen that the conditions have not improved; new governments have followed in the footsteps of the past governments which, in turn, led to a decline in their ability to tame inflation and unemployment, and overcome recession. As we speak, no official or government is able to control economic challenges; this means political and social crises will deepen.