Economy, Business And Markets

Consensus Vital for Economic Progress

Consensus Vital  for Economic Progress
Consensus Vital  for Economic Progress

Politicians from different parties disagree on policies and economists also at times don’t see eye-to-eye. The diversity is what fuels debate and progress and, sometimes, regression.  

In Iran, however, the differences are wider and deep-rooted. Experts need consensus to wean the country’s economy away from a heavily state-controlled, oil-dependent one to an open market industry and service-based economy.

“But at this development level, we should not look for consensus among Iranian economists,” says former presidential advisor and economist, Saeed Laylaz, was quoted as saying by the Persian weekly magazine Tejarat-e Farda.

Politicians from the mainstream left and right wing parties in Europe do not differ so much in their policies compared to their Iranian counterparts. Not many in Britain or Germany question free market dynamism, they just defer on the level of government intervention and even that to a small degree.

In Iran, however, the rift between economists goes all the way down to economic principles. Until recently, conservative economists contended that inflation was good for the economy and spurred growth.

We are of course talking about double digit inflation, not 2.5%.

There are still voices in Iran that call for economic entrenchment and look at foreign investment as an assault on sovereignty. This is while moderates and reformists want open doors.

Laylaz believes each Iranian economist should be seen in the context of the economic class he or she is battling for. He insists that Iranian economists do not have an independent identity.

“So when someone advocates a policy, the question is who is going to profit from the policies. This was evident in Iran’s nuclear issue,” said Laylaz. “Some political, economic and social groups were against the removal of sanctions, because they stand to lose from their removal.” These groups profited greatly from sanctions and inflation.

Sanctions against Iran’s nuclear energy program are soon to be lifted. The relief comes in exchange for curbs on Iran’s nuclear energy program. Iran and the P5+1—Britain, China, France, Russia and the United States, plus Germany—reached an accord in July that put an end to the dispute over Tehran’s nuclear program.

The sanctions coupled with profligate government policies led to currency devaluation, runaway inflation and two years of recession that have left Iran with a multitude of economic challenges.

In Iran, one should be more concerned with conflicts of interest, rather than what economic school the policies emanate from.

This profiteering and difference of opinions stem from the gap between social classes.

“The flame of inequality burns hotter in Iran compared to Europe and the West, and this trend prevails in politics and economics,” Laylaz said.

“That’s why there is no consensus on curbing inflation.”

Development is the cure here. In the 1990s, certain conservative voices in Iranian media strongly advocated cutting non-oil exports. Now the stance has made a U-turn.

Except for a handful of critics, at present, most economists agree on diversifying Iran’s exports away from petroleum for reducing disparity between the social classes.

So, we should wait for time to remove the differences. Less economic reliance on oil and more experience with the current situation in Iran will help build consensus.