Mr. Rafsanjani got to know that he is thoroughly associated with the catastrophe that Iran faces these days. The mullah cabal cannot run with the hare and hunt with the hounds. The Mullahcracy of Iran cannot wash their hands off this delicate crisis of their own incompetence and making by blaming their crony 'dimwit President.' Did he not know that since day one his country's 'President Kitchen cabinet' consisted of a 'pious butcher' and a tomato seller?! On top the kind of evil company that his country's President and his mentor Vilyat-e-Fiqah prefers, he wins not friends but global sanctions and retribution. 'Mullahcracy' of Iran will have an 'F' on every count of management and system of government.
Look at this picture: all the four countries that are allies of Iran have one thing in common 'a free fall of their currencies.' They are 'friends' who are experts in global instability and domestic selective totalitarianism. They collectively demonstrate strategy of comprehensive intransigence which is bound to lead to these unfortunate economic consequences. Sanctions and poor economic management, since beginning of this revolution, is the cause of incurable decay. There is a reason nations implode; Mr. Rafsanjani, you rightly pointed that it is the dreadful management and command. Let's look at the core members of Iran's council of Economic governance - the President gets his advice from a butcher and his tomato seller. Adam Smith is quoted to have said that 'Civil government is in reality instituted for the defence of the rich against the poor.' This maxim is particularly apt when the President of an oil-rich $750 billion economy talks shop with his neighbourhood butcher.
"For example, there is an honourable butcher in our neighbourhood who is aware of all the problems of the people and I also get important economic information from him, we have hardworking shopkeepers in our neighbourhood from whom I get important economic information because they are living among the people."
Mahmoud Ahmadinejad has said he keeps his finger on Iran's economic pulse by talking to his butcher. Ahmadinejad, the son of a conscientious blacksmith, has also referred to his local shopkeepers when addressing Iranian economic issues. Facing complaints about inflation, he told parliament in a budget speech that Iranians should pop around to his neighbourhood grocer to buy tomatoes where he said they were much cheaper than the soaring prices others were charging. It defies all logic as to why the President depends on the shopkeepers to devise his economic policies. Ideally, Iranian economy has to be run by a coterie of leading economists. At present, from his last few years of economic speeches, not much can be gleaned as to where he reverts for his economic policies other than his butcher and tomato seller who take leading roles on his board of economic governance.
Ahmadinejad of Garmsar, near Tehran, is an educated man; he took Iran's national university entrance exams (konkoor) to gain admission into Iran's top universities. His test score ranked him 132nd among over 400,000 participants that year, landing him at the prestigious Iran University of Science and Technology (IUST) as an undergraduate student of civil engineering. In 1997, he received his Ph.D in transportation engineering and planning from the Science and Technology University.
With a doctorate in engineering, one would have imagined he would be more obliging to include some economists to run his government, perhaps his rightist ideological underpinnings and leftists' economic ideals create a dichotomy that makes him feel far more comfortable in the proletariat company of butchers and tomato sellers. An economy is a function of meritocracy, incentive and hard work, all three are missing in Ayatollah's Iran. In 2007, 50 Iranian economists wrote a letter to President Mahmoud Ahmadinejad, criticizing price interventions to stabilize prices of goods, cement, and government services, as well as a decree issued by the High Labor Council and the Ministry of Labour proposing an increase of workers' salaries by 40%. Ahmadinejad publicly responded harshly to the letter and denounced the accusations. Ahmadinejad states he plans to create an "exemplary government for the people of the world" in Iran. He is a self-described "principalist"; that is, acting politically based on Islamic and revolutionary principles.
The President's Iran under the Ayatollahs is a country which they believe is described adequately by B. Mandeville: 'Thus every part was full of vice, yet the whole Mass was Paradise.' This philosophy is the cornerstone of state policies based on which the Mullahs' President lays down the blueprint of future Iran. His emphasis on economic policy is based on charity, giving away such as distributing free soup to the poor. His presidential campaign motto was, "It's possible and we can do it." (میشود و میتوانیم).
One of his goals was "putting the petroleum income on people's tables", referring to Iran's oil profits being distributed among the poor. The schism, within the spiritual politburo capitalist roaders' pistachio-trading Mullahs and capitalist free marketers' Ayatollahs, was wide open. Akbar Hashemi Rafsanjani, who is a capitalist, invoked the supreme leader, suggesting the leader was pained by the very slow pace of privatisation under Mr Ahmadinejad's government and in January 2007, Hossein Ali Montazeri harshly criticized Ahmadinejad and accused him of harming the country.
I was thinking that with all his common touch and triviality, he must have some knowledge of Economics. The reference to tomato prices is so authentic. The President is not alone when he tries to gauge Iranian economy inflation numbers through tomato vendors; even Prof Dave Wharton of Cornell University has an assignment for 101 courses where he uses tomatoes to make a freshman understand economy. This is one of the questions in his class:
Consider a constant-slope production possibilities' frontier with a vertical intercept of 40 potatoes and a horizontal intercept of 20 tomatoes. The opportunity cost of increasing tomato output from 10 to 11 is...
a. ½ potato
b. 2 potatoes
c. 1 potato
d. 4 potatoes
e. cannot be determined from the information given.
What if the President does not listen to the experts? It appears Iran should rejoice that the President and tomato vendors are inadvertently gauging inflation and production bottlenecks to come up with the answer to the above question that the opportunity cost of increasing tomato output from 10 to 11 is just the slope of PPF, which tells how many units of potatoes they need to give to increase their tomato production by 1 unit. I doubt that any other President would have come up with a more essential approach than listening to the shopkeepers. His understanding of street convenient economy has led to 35 billion $ worth of subsidies in this annual budget to cover shortages and measures of rationing and price controls.
Street economy always leads to easy solutions not the difficult ones. Iran, a huge oil producer, imports petroleum and subsidises it for its own populace. To saddle Iranian subsidised economy that is so reliant on global exports with universal sanctions for nuclear enrichment is a very poor choice. A heavily subsidised Iranian economy will not be able to sustain long-term sanctions. The tomato street vendors and butchers will naturally not tell him that planning of new refineries might have solved the problem in the long run. With a doctorate in transport engineering, he must be well aware of designing projects for maximum efficiency. A street fighter like the President and his council of butchers and tomato sellers need an effortless book to comprehend. The best suggestion would be Basic Economics: A Citizen's Guide to the Economy by Thomas Sowell, in which Sowell points out that "if one is truly interested in the well being of others, rather than in the excitement or a sense of moral superiority for ourselves," they must have an accurate knowledge of history and economics.
Economics is `the study of the use of scarce resources which have alternative uses.' A scarce resource, when distributed free, is negation of the basic concept of economy. This revolution will breathe only if stomachs are adequately filled at low subsidised costs, and transportation is complimentary; remove these two factors and chaos will break out, like it did in Tehran, the commencement of rationing was greeted with burning of petrol pumps. The President is well advised to immediately replace his council of economic governance with some saner heads and let the butchers and tomato sellers do what they do the best; leave the 'bazar' and the 'bazaris.' Iran needs to enter the global economy with a bang and get the respect it deserves as the fortress of civilisations. Iran should be member of BRIC's in the next decade. For that, 'butchers' need to be out and 'thinkers' need to be in.