Tuesday, July 31, 2007

Male Fans Fought and Got Banned

According to Fars News Agency during national women dragon boat racing male fans of Tehran team started an unpleasant exchange with the male fans of Gilan team. The exchange of words turned into an exchange of fists and a fight broke out between the fans of two teams. Thus Iran Canoe/Kayak & Water Ski Federation has banned men from attending women boat racing events. Photos are from Fars Agency website.

Sunday, July 29, 2007

Maximizing Utility or Profit

The other night I was walking with a group of old friends, all either recent graduates or future job candidates, as it is customary of such company the talk was of employment and academic job market in particular. It was interesting to notice the incentives of academic employers and those of industrial ones.

An industrial employer is more focused on a candidate's how-to-do knowledge. This is because the industrial employer is a profit maximizer and any potential job candidate is evaluated based on his/her abilities to create revenue or the value of his/her marginal productivity.

The academia does not run on profit and sometimes it is really hard to measure the value of marginal productivity of a job candidate. Here an academic employer is more concerned with marginal utility gained from working with a job candidate, thus I wonder if the decision to hire someone is less focused on productivity and is more on marginal utility.

This is only an idea but the question is that if academia hiring process is a utility maximization process or a profit maximizing one. I wonder if this could be investigated.

Friday, July 27, 2007

Thinking in the Average Terms

Reading the reports of the ongoing debate on fuel rationing in Iran, one can't help noticing the extensive use of average terms. Several members of government and parliament have suggested that since the rations are equal to average consumption it should suffice. This is a rather intriguing observation.

It is true that an average car owner with average characteristics would on average use 100 liters of gas in an average month. However this does not mean that in reality every car owner uses only 100 liters per any given month. Average terms hardly exist in reality. They are the sum of extremes divided by the number of events, individuals or cases.
For example If household A drives its car 100 miles per month and household B drives its car 600 miles per month, the average is 350 milers per month per household. Now if they receive gas rations for 350 miles household A has extra fuel and household B needs more fuel and there will be a black market.

In economics theory market demand functions are estimated to forecast the average demand for any given price and they are average in nature, since they are the sum of individual demands. At individual level demand function is derived from a utility maximizing behavior, based on this approach demand is different in summer from winter (and it indeed is in the case of fuel in Iran). It also is different because of income level and the price of other commodities.

An individual decides how much fuel he or she needs based on his or her income, other product prices, public transportation and etc, these parameters are unique for every individual and there is a large variance. The average approach to fuel market and consumer behavior is a misleading one.

Answering a reporter on TV President Ahmadinejad said that those who need more fuel should let government know. There are millions of consumers in this market in Iran and simply there is no signaling system for them to let government know that they need more than what is rationed. Signaling between consumers and producers happens in the market and it has been a market function, in the history of human kind no government had ever replaced the market. There are not enough computers.

Thursday, July 26, 2007

Something about Sharif University of Technology

There is a clip on YouTube.com:

It is about an evaluation of Sharif University of Technology (http://www.sharif.ir/en/) and it is interesting, although short. It already has sparked a passionate debate about patriotism of being such a good school. It is sad but true that some Iranians consider those who study abroad to be unpatriotic.
Photo is from ie.sharif.edu

Monday, July 23, 2007

USA Physics Team Returned Home

After securing two gold and three silver medals, USA Physics team left Iran for home. China became first, both medals and aggregate score wise, Russia second medal wise and Korea second aggregate score wise. USA team ranked third medal wise and fifth aggregate score wise. Iran Physics team became fifth medal wise and seventh aggregate score wise. Read more here:

The pic is from "Updates from the International Competition" weblog.

Academic Publication Necessary but Insufficient?

I wonder if someone out there has built a model for academic job market studying the relationship between the probabilities of
1. A job candidate receiving a campus visit
2. A job candidate receiving an academic offer
And the number of publications a job candidate has and the academic ranking of his or her graduate school. As a former academic job candidate it is my own personal experience that having publications, even in top ranking academic journals, is a necessary condition and not a sufficient one. And it seems the ranking of doctoral degree granting school is a sufficient condition, and thus it has more deterministic effect on a job candidate chances.
I wonder if there is any paper that studies this hypothesis.

Saturday, July 21, 2007

Paragliding In Kermanshah

These are photos of paragliders in Kermanshah, published by Persian BBC. Paragliding has been attracting an increasing number of fans in Iran for last 15 years. After Tehran, paragliding clubs have been forming across country. Kermanshah is a beautiful city on the edge of Zagros mountains. For more photos see: http://www.bbc.co.uk/persian/sport/story/2007/07/070719_sport-flying-pic.shtml

Friday, July 20, 2007

Independent on Iranian Motor Industry

Very Interesting reading:

Why the Iranian motor industry is really hotting up
Iran is becoming an automotive power, says Mark Piesing

The 30-year Iranian love affair with the Hillman Hunter – aka the Pakyan – may have been a butt of pub jokes in the UK, but the Iranian auto industry is actually the 16th largest in the world, producing one million buses, lorries and cars a year.....read more here:

* A friend forwarded this link, many thanks to Mr. A. Gazerani

Wednesday, July 18, 2007

An Unexpected Externality of Rationing Fuel

Any economist knows how delicate any discussion on externalities could become. Surprisingly there are always externalities that one does not notice at the moment of making a decision or implementing a policy. As time goes by one learns more about these externalities.

Couple of days ago Hamshahri daily, a conservative paper run by the municipality of Tehran, printed a story about an antique smuggling band. Iran Cultural Heritage Organization (ICHO) has pressed charges against its members and Crime Investigation Department detectives arrested a few suspects, who confessed and told the detectives that they would lead them to the location of the ring leader.

According to Hamshahri’s report Tehran Police Department wrote an official letter to ICHO stating that its officers were ready to make the arrests, if ICHO would provide them with gas for patrol cars. According to Hamshahri report the letter explicitly stated that the police could not carry out these arrests since it does not have the necessary fuel to make the trip to Northern provinces, where the ringleader was reported to be in hiding. Since ICHO is the suing party, if it wants the mission to continue it should provide the fuel.

ICHO has responded that it would gladly provide police with cars and hotel accommodation, but it could not provide them with gas, since it does not have enough rationing cards! Inspector Jarrahi told Hamshahri correspondent that taking the suspects with bus was ruled out because of the security concerns.

One wonders how many would have thought that rationing gas would have affected fighting crimes.

Tuesday, July 17, 2007

USA Physics Team in Isfahan

Interesting weblog it is written by USA Physics Team attending International Competition in Isfahan, Iran. I quote part of it from this post:

All is KHOB
"Our experience has been nothing short of wonderful. The organizers and everyone with whom we had interacted in general have been most welcoming, hospitable, and accommodating. (Many seem quite interested in the event and our team being here. Our team received the second loudest applause when on stage at the opening ceremony, after the home team, that is! "

Photos could be found here:

Monday, July 16, 2007

Elasticity and Fuel Smuggling

After rationing gas, many expected and suggested that Iranian government should allow distributing gas at market price to preempt forming a fuel black market. Instead government has maintained a firm line there will not be any gas at market price in Iran. In justifying this President Ahmadinegad has told the reporters that a higher gas price increases inflation and thus government will not consider this at all.

The incentive behind this policy is not hard to understand. Government has already committed to an unpopular policy by rationing gas; the only defense will be keeping gas prices low. The logic is simple: in order to keep the cake cheap, everyone has to have thinner slices, but the question is if this is the only cake on the market?

For decades many argued that demand for gas is inelastic in Iran. They have argued that as a necessity it must be made available at a cheap price to guarantee the social welfare of the society. In disagreement many economists and energy experts have argued that demand for gas is elastic and many consumers use gas to drive for pleasure and not out of sheer necessity.

The latter have offered evidence such as the price discrepancy of automobiles and the daily average of urban and rural trips to show that demand for fuel is indeed elastic and market approach to it is justified. Because of demand’s elasticity there are consumers who are willing to pay a price higher than nominal price. Of course this willingness is justifiable by the marginal utility gained from these extra liters.

Government decision not to supply any gas at market price has increased the real price of gas to infinity. This has provided many with an ample opportunity to create a black market, through smuggling, using extra ration cards or through individuals and businesses with larger than average allocations.

Iran’s notorious fuel smugglers, who used to smuggle out gas to Iran’s neighbors in Persian Gulf, are smuggling it in from these countries. According to a report by Shargh daily in Bandar Abbas, Iran’s major sea port, gas is found for 6000 Rls per liter or $2.4 per gallon. Fishermen told its reporter that some of the boats sell they gas rations on black market, because first it is less than what they need for a successful trip and second because they make more money this way. After all a secure income stream is preferable to a random one dependent on fishermen’s luck in fishing.

The truth is that markets exist with or without government’s consent. Certainly the motive behind government’s decision is a noble one. However not supplying fuel at market price does not eliminate its free market; it just makes that market a black one. The increased cost of supplying this market increases the market price of gas even more, intensifying the very same inflationary results that government is seeking to avoid.

Supplying fuel at market rate will eliminate the motive to cheat in rationing system and deprives smugglers from their market. It also minimizes the negative externalities of rationing gas. Already airliners are challenged by the increase in the demand for air travels, and hotel owners fear a large drop in the number of their guests, because of sharp decline of road trips. There seems to be no other options.

Saturday, July 14, 2007

Mirror of the Invisible World

Last night I went to see “Mirror of Invisible World” the play is remarkable in its success in creating an atmosphere similar to that of Haft Peykar. It also combines theatrical styles of different cultures in this tale of 7 princesses of 7 countries of ancient world. Indian princess danced with her troopers and Chinese princess used the shadows on a curtain to tell her story. The ending was magnificent with King Bahram saying farewell using a translation of original verses.

Friday, July 13, 2007

Accepting Mortgage Exchange in Iran

In a significant step Iran’s Grand Ayatollahs, Makarem Shirazi, Safi Golpaygani and Nouri Hamedani, as well as Grand Ayatollah Sistani, issued a Fatwa announcing that selling and buying mortgage loans are not against Islamic code. The significance of this step rests in the fact that according to Islamic law one could not collect excessive interests from a loan. Some use these codes to forbid receiving any interest at all. Iran does not have an official bond market, although its stock exchange market is the largest in the Middle East.

For decades thousands of Iranian consumers have relied on mortgage loans to purchase their residences. These loans on average have a much lower interest rate than market interest rate. Given the high appreciation rate for the properties in Iran these low rates loans guarantee a much higher real rate of return on property investments. Thus there is a high demand for such loans in the market.

Qualifying for a mortgage loan is usually a complicated process. Some receive these loans through their employers, some by offering several guarantors who would guarantee the payment of the loan and some receive such loans through connections and networking. When they receive their loans, finding a house or a condo that meet bank’s requirement’s is another odyssey. But those who recieve these loans have a low interest rate loan that guarantees a high yield.

Given the demand for housing and property investments in Iran it is only natural to see a mortgage exchange market being formed. Legalizing this market and considering its activities Islamic is a milestone in developing a bond market in Iran.

Should mortgage exchange market become official, then market can reach an equilibrium that signals the real interest rate. Given the growing housing markets in Iran and its neighboring countries one also could hope that this step helps the creation of a regional mortgage exchange market in the region.

Tuesday, July 10, 2007

Iran’s Management and Planning Organization to be Dissolved

Last night it was announced suddenly in Tehran that Iran’s Management and Planning Organization (MPO) is to be dissolved[1]. Iran’s Council for Administration Affairs, a body chaired by President Ahmadinegad, passed a motion last night to integrate MPO in Presidential Office as a directorate for Planning and Strategic Supervision, passing the direct supervision of MPO to the President.

This decision has surprised many in Iran, including Mr. Rahbar the first head of MPO in President Ahmadinegad’s administration, who told ISNA[2] that dissolving MPO was not part of agenda in Council for Administration Affairs meeting. Since MPO is in charge of drafting country’s annual budget and five years development plans the first questions asked were in regards to these functions. Mr. Borqaeyi current head of MPO told reporters today that the new directorate for Planning and Strategic Supervision would be drafting the new budget. Mr Borqaeyi himself will head the new office. There is no word yet about drafting the fifth five years development plans.

The decision also emphasizes that MPO functions and organizations must be transferred to the relevant executive bodies. This has already increased the influence of Cabinet and ministries in drafting annual budget, a task that MPO has been carrying out impartially since its establishment.

The decision to dissolve MPO is one of the series of decisions. Last year President Ahmadinegad ordered MPO provincial organizations to be incorporated in provincial governors’ offices. That decision transferred the planning process at the province level to the local authorities and ended the independence of local MPO offices from local governments. In objection to that decision Mr. Rahbar the head of MPO and two deputies resigned their positions.

Government and some members of parliament defend these steps by pointing out that achieving a small government is a goal of Iran’s 2020 vision. The critiques point out that it was for avoiding frictions between executive bodies and ministries that MPO was established in 1948.

In its history MPO has been known for its professionalism, scientific approach and impartiality. Ironically its experts were the first ones to warn Mohammad Reza Pahlavi against his economic policies in 1970’s, forecasting those policies would cause social instability. This earned them his wrath. These experts are not much loved these days either. They have criticized government economic policies and have warned against deviance from the path drawn by Iran’s 2020 vision.
[1] For writing this article I have benefited from Fars News Agency and Baztab websites.
[2] Iran Student News Agency

Friday, July 06, 2007

Iran National Cooking Competition

Say what you may, the food is great! There is a National Cooking Competition going on in the city of Zanjan. Here are some photos from Fars News Agency: http://www.farsnews.com/plarg.php?nn=M253185.jpg

Thursday, July 05, 2007

Washington Post on Hammihan

Iran Reformist Paper Shut Down _ Again
The Associated PressTuesday, July 3, 2007; 4:46 PM
TEHRAN, Iran -- Iran's leading reformist daily newspaper was ordered closed Tuesday, less than two months after it was allowed to resume publishing, the paper's manager said.
The daily Hammihan, or Compatriot, was banned in 2000 by the hard-line Iranian judiciary after it called for improving Iranian ties with the United States. It had resumed publishing for 42 days when it was again ordered closed, said manager Gholamhossein Karbaschi.... Read more here: http://www.washingtonpost.com/wp-dyn/content/article/2007/07/03/AR2007070301559.html

Venezuela to Sell Gasoline to Iran

Iran, Low on Gasoline, to Be Supplied by Venezuela

TEHRAN, July 3 — Venezuela agreed to sell Iran gasoline on Tuesday, less than a week after Iran unveiled a rationing program to limit its dependence on gasoline imports.
"The Iranian government has asked to buy gasoline from us, and we have accepted the request," Rafael Ramírez, Venezuela’s energy minister, told the newspaper Shargh. He declined to specify the quantity of gasoline Venezuela would sell to Iran or at what price...... Read More here:

Wednesday, July 04, 2007

Ham-Mihan Shut Down Again

According to news agencies and roozna.com Mr. Karabaschi was told that there had been some incomplete procedures in the judicial process and Ham-Mihan had crossed the line as before. In its new period of activity Ham-Mihan was published for 42 issues and it presented different sides’ arguments on several economic issues.

Monday, July 02, 2007

Columbia Journalism Review on Al-Alam

Columbia Journalism Review has a very interesting article by Alia Malek about Al-Alam Iran's TV broadcast in Arabic. Read it here:

Michael Hirsh's Interview with Mohsen Rezai

Washington Post:

Iran Has a Message. Are We Listening?
By Michael HirshSunday, July 1, 2007; Page B01

TEHRAN I found the general at the end of a winding road in the Alborz Mountains 150 miles north of Tehran. He was sitting placidly at a table laden with cherries, nectarines and other fruits. A stream flowed nearby. It was a pleasant and pastoral place to discuss an uncomfortable matter: the tension between Iran and the United States, and the looming possibility of war.

The general, Mohsen Rezai, is secretary of Iran's powerful Expediency Council. He's also the former commander of the Revolutionary Guards. He rarely speaks to foreign reporters -- especially Americans. I was surprised when, during a recent visit to Iran, I learned from one of Rezai's aides that he would be willing to meet me at his vacation villa in the mountains.... Read More here: http://www.washingtonpost.com/wp-dyn/content/article/2007/06/29/AR2007062902318.html

Is Iran-India Pipe Line Feasible?

From The Economic Times: CALGARY (CANADA): There is simply no other alternative to IPI for south Asia, and energy security of both India and Pakistan are under severe strain. The supply and demand picture fits in best for transporting Iranian gas through IPI to south Asia. Under-water pipeline from Qatar will be many times more expensive to build and maintain. Using oil instead of gas is at least twice more expensive, given the same equivalent of energy. Relying solely on US-India civilian nuclear deal will cost five times more ($35 billion for nuclear against $7 billion for Iranian gas) and produce one third energy equivalent only (25000 megawatt hr at least from 2 trillion cubic feet of gas per year compared to 8000 megawatt from 20 nuclear reactors)……Read More Here