Collective illusions are convictions and beliefs that are formed in social groups and can be observed in that group in a stark manner, Todd Rose, a professor at the Harvard Graduate School of Education, said.
They may be based on misinformation, misconceptions or personal experiences or even run counter to scientific and logical facts in some cases. A complex set of illusions caused by conformity bias distorts the way we see the world around us. The potential for collective delusions in societies are a wide range of characteristics, goals and relationships, including trust, success, social networks, in-group conformity, careers, aspirations, education and cultural norms that are being copied from others and turned into reality.
The subject of collective delusions, in other words, is the mutual misconceptions of many people about their society. Some of these delusions have existed in societies for thousands of years in different ways. Their characteristic today is that these collective delusions have spread even more, thanks to social networks and modern technology. Therefore, it can be said that collective delusions can be found everywhere from the lives we want to lead to the country we want to live in and the way we treat each other and even our expectations from educational institutions to the workplace, or the expectations of planners and managers of an economy to run an organization or a country. The most destructive result of delusions is when one generation’s beliefs become that of the next generation. There is a type of delusion in societies that is formed by Leviathan without providing requirements.
Esfandiar Jahangard, a member of Allameh Tabataba’i University’s Faculty of Economics, prefaced his article for the Persian daily Shargh with this note. The focus of his write-up was on the collective illusions formed by governments, which have become part of Iran’s economy, such that plan and budget laws of the country have given rise to collective illusions in Iran for years. A translation of the text follows:
Budget and Oil
Fixing the revenue system and cutting off the budget’s dependence on oil revenues have been one of the collective illusions of governments seeking to economize on public spending. It has been carried out many times without success, but has become a government illusion. It has been the Achilles’ heel of the economy at the time of oil boom and sanctions.
In general, Iran’s performance regarding budget and oil over more than a century shows that exogenous projects outside the approved government budget have not been successful. The continuation of this approach is an indication of inefficiency, which has created a collective illusion for the Iranian government; there is no will to realize this important goal whereas there are successful global experiences in this field.
Economic Growth
The next government illusion is to achieve economic growth as envisioned in five-year development plans, especially in recent years.
A small fraction of the growth envisioned by the development plans has been achieved since their coming into existence; that growth was mainly thanks to the injection of money.
In Iran, the goals of average annual economic growth of 8% have been included in most national documents through regulatory and legislative authorities in recent years, but it seems that the economic policymaker did not have an informed understanding of the economic growth target. According to the Rule of 70 [a calculation that determines how many years it takes for an investment to double in value based on a constant rate of return], if an economy annually grows by 1%, its per capita income should double in 70 years, and if this number reaches 2%, this time will be reduced by half, i.e., 35 years.
Now that 8% has been the goal of Iran’s development plans for many years, so the country’s per capita income should have doubled within less than two development plans [every seven or eight years], but statistics show something else.
Calculations show that if, for example, the economic growth goal of the six development plans after the revolution had been achieved, by March 2022, Iran’s gross domestic product should have been $1,450 billion at the constant prices of 2015.
According to official sources, Iran’s GDP stood at $448 billion then. This is an illusion of the government, which has been repeated in various plans and has not been realized. Not only has per capita income failed to double in seven or eight years, but also the country has registered a decline in per capita income, and this has reinforced the government’s collective illusion.
Productivity
The next illusion of governments is to provide economic growth through productivity, which is included in most development plans.
According to Paul Krugman, an American economist, productivity is not everything but in the long run, it is everything in an economy.
More than one-third of the economic growth in Iran’s development plans is targeted to be achieved through the growth of productivity. They are being included in the laws that require executive bodies and the armed forces to focus on productivity growth.
But in practice, this goal has not been achieved in several development plans and, even recently, in the annual budgets; some production factors have even registered negative growth in some years. The Productivity Index in Iran has decreased from 1.03 in 1989-90 to below 1 in recent years. This issue has become the government’s collective illusion.
Liquidity, Inflation Control
Containing liquidity and inflation is the next collective illusion. Inflation has stood up in relief in Iran’s economy since the 1970s; chronic double-digit inflation continues to plague the economy.
When a variable such as liquidity grows much more than the regulator’s target over years, it cannot be reduced overnight by changing a policy.
In other words, macroeconomic variables have inertia and they resist a significant change. Despite that, governments have always aimed to control the growth of liquidity in their development plans, but in practice, regardless of the goals of the plans, they have always fueled the growth of inflation, so they only sought to achieve single-digit inflation on paper.
The volume of liquidity has increased more than 3,000 times from 1988-89 to 2021-22 and the general price index has increased more than 830 times. These figures show that governments do not adhere to their goals and therefore the phenomenon of government collective illusion has prevailed in Iranian society.
The aforementioned norms generally reflect the collective consensus of past governments and were not formed based on republican beliefs. All in all, given the fact that a generation was born in Iran amid this type of planning and collective illusions, it is definitely assumed that this collective consensus of the governments is a reflection of something true and good that the people really want; but this is not true.
Many of these goals are completely arbitrary and we should be suspicious of goals that do not meet our requirements. Changing goals into illusions has existed for a long time. Of course, not because they weren’t right, but because either the policymaker didn’t believe in it, or the Iranian economic planning system didn’t make them doubt the practical limitations and requirements of reaching those goals.
In general, by looking into the development plan, we see these collective illusions repeatedly appearing in state documents. In this writing, I tried to select some of the gravest ones. I hope the government will stop employing this approach and carry out a more realistic and achievable plan without illusions, or the policymakers meet the requirements of the goals, now that the government is preparing the seventh five-year development plan.
