Sunday, November 05, 2006

Not Many Hail Privatization

Living in a foreign land as an Iranian obliges one to answer questions asked by curious people and to think about his or her identity as an Iranian and Iran even more. Those who ask questions often do so with innocence of naivety and no matter how awkward the question is one can always appreciate their effort to reach out to understand.

As a student of economics I have been asked several times about the reasons behind under-development of Iran and its economic problems. I often find that the questions are posed by those who already have assumed Iran’s economic problems are caused by its political structure and its ruling elite, like any other inexperienced observer would do.

The inexperienced foreign observer presumes that Iranian public and intellectuals are all for economic development of country. Indeed it is a rational assumption, since he already has assumed Iranian public and intellectuals to be freedom loving peaceful people. Although it might be rational, it is a very wrong and a very unrealistic assumption.

It is wrong to assume that public hail privatization policies or trade open door approaches. It also is very wrong to assume that Iranian intellectuals are supportive of such policies and consider them necessary. In reality such policies have been criticized by the very same presumably freedom loving intellectuals in no uncertain terms. When to these one adds government bureaucrats who are unwilling to let go their grip on industries and manufacturing, one hardly could be surprised by slow progress in privatization in Iran.

If Bureaucrats argue that for the good of people government is the best available candidate for ownership of industries, intellectuals argue that any policy that results in creating an industrialist cast, who could become rich, is against social justice and is an act of robbing nation out of its treasures and resources. Ironically pro-revolution extensive nationalization of industries was planned by Mr. Ezzatollah Sahabi then a liberal member of government and later a famous member of opposition. Not surprisingly he was among the first to criticize President Rafsanjani’s plans to privatize Iran’s public sector.

The truth is that privatization and other economic reform policies in Iran have been advocated by a small group of technocrats and leadership. Such policies have been executed by a leadership working with a reluctant bureaucracy, facing severe criticism from intellectuals. The reality is that in most cases Iran’s intellectuals do not want a free market, do not advocate a free trade policy and do not demand Iran’s inclusion in World Trade Organization.


Ehsan said...

people/intellectuals/... all consider privatization as a way of "money laundry", so that government official relatives can receive huge amounts of money and spend them in the ways they want(!). few real private organizations get the chance to become big enough to compete with government, and even they can go down with only a change of law, which happens frequently in here. As a result, most private sector ones I know have so close relation with public sector that they actually have turned into parts of it!

without a healthy government, public sector can not be more than a puppet. on the other hand, without private sector the public sector becomes more powerful as a result of being the major vendor.

Ali said...

that might be true for the first group, but it could not be true for the rest of industries. government is the party who is supposed to recieve money to give up factories. Sometimes our people invent mechanisms, i doubt it very much. Public sector is too large in Iran.

Hamed said...

Thanks for your brilliant article. I also favor privatization. This can support competition and makes people work to survive. Also the private system will try to increase the profit, so will invent on research and development. Privatization also leads to distribution of power in the society and prevents the abuse of power that occurs in monopoly of the government.