A dynamic decision-making system has a reasonable logic behind its decisions and advances its policies based on that logic. On the opposite side are decision-making structures that react to all events and make changes in their system and change their decisions in the face of pressures, Morteza Afqeh, an economist and university professor, prefaced his write-up for the Persian-language daily Ta’adol with this note.
A translation of the text follows:
Whenever a decision is made regarding an increase in the salaries of a certain group (for example, social security organization’s pensioners), other groups also ask for a raise. The government usually gives in to these pressures, which have again produced the desired result.
The bill on adjusting the salaries of government employees and the members of Civil Servants Pension Organization and army retirees was submitted to the parliament; lawmakers approved an increase amounting to 9-10.05 million rials [about $27-30] to their [monthly] pensions.
But more important than decision-making is determining the resources from which the payments will be made. I predict that the government will use Iran’s frozen resources (once released) in foreign countries to finance this measure.
The government might seize the opportunity to reduce the economic tensions following recent political and social problems. In fact, government advisers might believe that recent protests are the outcome of economic problems, so the government aims to alleviate public dissatisfaction by giving in to the pay raise. I don’t think there is any other resource at the disposal of the government to increase salaries. The most frightening scenario is to finance this measure by borrowing from the central bank and printing money.
Bear in mind that borrowing from the central bank or the banking system is synonymous with imposing inflation on the country. The government has acted against its promises and all its media maneuvers, if it takes this course.
Wrong Perception
The government has always pledged that the independence of the central bank is vital and that it will not borrow money from the lender. I am one of the economists who believe that the root of high inflation is not necessarily the rise in money supply and that the government’s decisions in this regard won’t cool inflation.
No matter how hard the government tries to reduce the growth of money supply, it has failed to reduce inflation. This shows that the increase in the inflation rate has other reasons than the growth in money supply. It seems that the government should change its decision-making system rather than taking temporary decisions with the aim of influencing the public opinion. The government should pay attention to the improvement of the business environment and avoid taking actions that reduce economic stability.
When we review the government’s economic and strategic decision-making system, we’ll realize that the government of Ebrahim Raisi has failed to present a single, coherent approach regarding the economy over the past year.
Sadly, most of the government’s plans have been reactionary, meaning that a problem has emerged, protests took place and then the government made a decision. Here, the government had to increase the salaries of some social security retirees, as per the decision of the Supreme Labor Council [as the raise was paid by their own retirement funds and not that of the government]. Then other groups complained and the government, reactively, decided to increase their salaries.
This is while a well-developed decision-making system should predict the developments and take necessary measures in advance; when a decision is made, the system must refuse to change its course despite political and economic pressures. Such an approach is conspicuous by its absence in Iran’s decision-making system.
