Teaching Comparative

Economic policies 1

The global economic and financial crisis offers an opportunity to look at policy making in various political systems. We can ask questions about how the policy making process works; about what ideas are most influential; about which people and groups vie for influence in making policies; and about who seem to be the winners and the losers in the process.

Then we can put our comparative hats on and make some

• generalizations about economic policy making
• comparisons of the policy making process and the policies and
• evaluations of the effectiveness of the policies

The first example is Iran.

In September, an article ("Economics is for donkeys") in The New Statesman included these sentences, "The late Ayatollah Ruhollah Khomeini, leader of Iran's Islamic Revolution, was famously quoted as saying, 'Economics is for donkeys.' It is a maxim Ahmadinejad has mirrored assiduously, saying once that he prayed to the Almighty that he would never know anything about a subject he views as a tool of western domination."

That article went on to outline the economic and political mess in Iran. And that was when oil was at $70 a barrel.

Now come Ahmadinejad's new policy proposals. Has he learned any economics? Or is he still making it up as he goes along?

Iran Confronts an 'Economic Evolution'

"President Mahmoud Ahmadinejad has launched a sweeping economic restructuring plan that would end many of [consumer goods] subsidies within a couple of months. To blunt the blow of gasoline prices quadrupling and similar increases for other goods, he also proposes to give as much as $70 a month to poor Iranians.

"Ahmadinejad, a populist leader with a working-class background who came to power three years ago, is staking his political future on his ambitious plan, which threatens to alienate Iranians who have benefited from the subsidies. Known abroad for incendiary rhetoric and his defense of Iran's nuclear program, Ahmadinejad's domestic political standing relies more on his largely unfulfilled promises to use Iran's oil wealth to improve the lives of poor people...

"Ahmadinejad says his "economic evolution" plan will narrow the gap between rich and poor and eventually will help bring down inflation, which has risen to an annual rate of 24 percent, according to Iran's Central Bank.

"By opening up Iran's closed economy, making trade easier and promoting privatization, Ahmadinejad wants to turn the country into a regional powerhouse, echoing the economic transformation that China began three decades ago. Ahmadinejad says he will bring about similar changes in Iran in three years...

"Ahmadinejad says his plan will allow the government to save what it spends on subsidies and raise revenue through more aggressive taxation. 'Because of this plan, the main part of our dependency on oil price fluctuations will be cut,' the president said Tuesday on state television.

"Ahmadinejad's plan also serves his political agenda, analysts said. Iran's 1979 Islamic revolution brought to power Shiite clerics and their supporters, who relied on an unorthodox mix of capitalism and socialism in their attempts to make the economy less reliant on the West...

"[W]ealthy merchants who had backed the revolutionaries [in 1979] because the shah had threatened to break up their monopolies formed lucrative alliances with some of the new leaders.

"Ahmadinejad has succeeded in ousting several influential revolutionaries from Iran's small circle of decision-makers, but restructuring the economy would dismantle the system that provided the first generation of revolutionaries with power and money...

"Inflation is also on the mind of Iran's head of parliament, Ali Larijani, a leading opponent of Ahmadinejad. 'The parliament will not pass any bill that will increase inflation," he told state television in late November. "And the economic evolution plan is bound to cause more inflation.'..."

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Labels: economics, Iran, pedagogy, politics

posted by Ken Wedding @ 5:49 AM