No Hope for the Future of Iran’s Economy – Part One
We’ve often heard that even if Iran’s economy starts on the path of reform and development today, there is still no hope for its future, and the notion of economic development should be abandoned. Some economists, in light of the recent protests in the country, have made very concerning statements about the future of Iran’s economy, exacerbating this hopelessness. Given this situation, the question arises: is there really no hope left for the country’s economy, and should we forever bid farewell to development and improvement?
The machinery of Iran’s economy has a strange and complex nature that simultaneously causes concern and amazement among economic experts and analysts. It’s such that an economist might never be able to accurately identify the various and often contradictory pillars of the country’s economy. However, to outline a vision for the economy, there is no choice but to understand this strange and unusual structure.
In this context, Iran Gate has decided to prepare a three-part series to address the underlying issues of Iran’s economy and the hopes and fears that exist in the hearts of citizens. The present report is the first part of this three-part series, which, given the ongoing protests in Iran, can provide a clearer perspective for the audience.
What is Economy?
In general, the economy is a complex field, and probably no economist will ever be able to fully master all the epistemological elements of this fascinating science. But in general, what is the economy, and why should we strive to understand it?
At first glance, this mechanism is supposed to provide the basic needs for individuals and society and ensure citizens’ lives. However, if we delve deeper, we will discover a deeper essence through which people strive to reveal their potential abilities and desires. Therefore, it is said that the economy is a collective effort to create meaning and explore the individual and social dimensions of a human being, where various stories unfold.
Moreover, in the mainstream economy, it is usually assumed that each person only gains utility from their own achievements, and there is no attention to the path of achieving that goal. However, on the other hand, behavioral research shows that there is a concept called transaction utility, which contradicts this assumption, and this utility can even be more prominent than achieving the goal itself.
The State of Iran’s Economic Machinery is Not Good
All the propositions mentioned in this article were raised to encourage the audience to look beyond mere numbers and economic statistics and strive to gain a deep understanding of what needs to be done. Certainly, in the past decade, Iran’s economic machinery has not been able to grow in line with the country’s population growth and citizens’ needs. However, the main problem might be that people cannot find a place for themselves in society. Currently, an Iranian youth faces a kind of crisis, unable to find their role in society.
If we look at the economic crisis from this perspective, the main goal of reforms is not to increase the size of the economic pie, but rather the governing body of the country should, considering the dimensions of a human being, provide a path for them to move towards flourishing. A significant part of a country’s people’s welfare stems from social and economic stability. When instability spreads in a country, individuals’ control over their surroundings and personal lives is severely weakened.
This decline in the level of control somehow damages individuals’ self-perception and injects a sense of helplessness into them, leading to a stream of self-blame among citizens. Additionally, these instabilities destroy the social fabric, creating a sense of loneliness, which signifies an economic crisis.
Attracting Foreign Investment is a Solution
Economic studies over a long period have shown that capital and labor have diminishing returns. The mentioned issue means that if an investment is to be made in a specific area, the first thousand dollars will yield a hundred dollars, the second thousand dollars seventy dollars, the third thousand dollars fifty dollars in one year, and similarly, subsequent thousand dollars will have diminishing income.
This law also applies to the concept of labor returns. If we apply this law to Iran’s economy, considering that a vast amount of the country’s capabilities remain potential and the level of investments is low compared to other countries, opening the doors to foreign investment and international cooperation in its early years can bring significant returns.
Of course, it should be noted that if a stable eight percent growth rate is achieved, even though it is a very high figure, Iran’s economy will have a hundred percent net growth over nine years.
Returning to the 1990s is Possible
Now, if we want to consolidate all the stated points, it must be said that if Iran embarks on the path of reforms, perhaps for a period of about five years, it will bear the cost to return to the early 1990s. However, embarking on the path of reforms, opening opportunities, and principled and meritocratic management can bring significant returns for the Iranian people at the outset. On the other hand, establishing stability in the country’s economy and removing negative expectations about the future will, in itself, lead to widespread reforms in the markets and smoother economic flow, which, in addition to economic growth, will bring more welfare to the people.
Ultimately, we must remember that after meeting basic human needs, people’s welfare and utility come from the course of life, hope for the future, achieving their goals and dreams, and experiencing positive changes in their lives, and their income figures may not be a good variable for the sense of happiness and prosperity of citizens.
- The Destination of an Economy Without Public Trust – Part Three
- Iran’s Economy is Bankrupt – Part Two
