January 2003 / No. 21

Economy

Red-tape Anathema

"The government should reform the regulations, which deny people their legal rights"

Economic expert Dr. Moussa Ghaninejad has openly criticized the bureaucracy governing state affairs while calling for privatization and competition. The following is the full text of an interview in which he comments on the above issues.

How do you see the status of government and private sector in national development?

The biggest blow the government has dealt to our country is creating a centralized economic system. It is highlighted in both public and private sectors, which has been extremely detrimental to our economy. Producers of the private sector are waiting for government help and it has ended in backwardness. The government is not tasked with helping the private sector but merely removing its barriers. Over the past 40-50 years, allocation of subsidies has had reverse results. In other words, an ailing industry has grown along with the economic policies thereby obstructing the natural growth of the national economy.

Imposing limits on the imports, rationing imports and allocating subsidies have added to the Iranian industry's vulnerability. How can such an industry expect more help? I advocate the private sector, which is not handicapped. Unfortunately Iran’s private sector has survived in name only. In my view, the government should streamline bureaucracy and reduce workforce and production expenses to pave the path for the private sector to grow under free and competitive conditions. Today's inefficient system will collapse sooner or later.

What can cause development in a free economic venue?

Competition is the engine of development. Competition should replace monopoly and freedom should replace obligation. Producers and consumers should be free to realize their potentials – to the benefit of the whole economy. In our countries current circumstances we cannot benefit from our opportunities. Everything is under government control and all it does is allocating subsidies. In such a situation, how are we to discover talents? Experts – like Adam Smith – compare economic activities to sport matches were talents are discovered in free circumstances – otherwise no success could be achieved. Currently we are utterly lost but we are determined to find our way. Our managers are appointed without examination – this is the problem with monopolistic systems. In brief, I can say that lack of free competition is the biggest problem of our economic system.

How do you tie development and planning management in our country?

Development cannot be planned. You find no developed country to have developed by planning. Planning for development amounts to a contradiction – since development is the work of the private sector. We have a centralized economic system and therefore it is planned. Since our view of an efficient economic system is a state-run economic sector, the planning system has been set up. This is not correct. The government should plan for itself by drafting its budget. People cannot interfere. The government should plan for some specific activities like establishing security, production of certain goods and safeguarding the people’s rights – but it should not decide on the type of goods to be produced in the country because it cannot distinguish what goods are helpful  and what goods are not. Therefore the government should plan for itself. Some economists advocating free market economy support the third and fourth national plans because we are deadlocked by our centralized economic system. The economic system should change and the government should cede economic affairs to the people. The best thing the government can do for economic development is changing the economic system.

Why have people expected the government to do the planning over the past decades?

A government-dominated ideology has ruled our nation for some 70 years. Traditional mentality and modern socialist ideology have married to create a mixed ideology influencing political and economic fields. That is why intellectuals are of the view that producers should cooperate rather than compete – meaning that the most corrupt economic system should be opted for. In other words we are encouraging producers to unite – instead of competing – to bring misery to the consumers. This is like telling two wrestlers to cooperate instead of fighting. Economy is a competition and you have to vie rather than cooperate – but we have not understood these economic values. Even though some officials have concluded that we have to change our centralized economic system into a free market economy to boost privatization, they do not act on their words. The government has had privatization on its agenda for 13 years and still no success has been achieved. We have to deal with this issue fundamentally and agree that centralized economic system is a venue for competition and not cooperation.

Is political development preferred to economic development in pushing ahead with these national objectives?

I believe that neither has any priority and they are two sides of the same coin. But we can say that in a modern society economic development is decisive. Economic mentalities and values are the final decision-makers therefore wrong economic values will create centralized economic system, which is doomed to failure even in political fields. I am critical of reformists for their inattention to free market economy. They should know that democracy and freedom are not possible without a free market. People cannot be critical of an economic system that is run by the government. Those who maintain that democracy and political development are more significant than economy are continuing with their radical mentality, results of which are evident. Despite criticisms, our reformist friends have overlooked important issues.

What do you think about new approach to our national economy?

We cannot expect the mentalities to change and such issues need time and cannot be resolved overnight. But our major problem at the moment is growing unemployment and low economic efficiency. Streamlining bureaucracy will pave the path for competition. In other words, even if people are not ideologically ready, their mentalities change when they enter venues of competition. For this purpose, we need to have a free market system. Therefore the government has to reduce its red tape. As a result some management posts would be eliminated but freer conditions would ensue. The government's red tape has created a stumbling block for the people. The government should reform the regulations, which deny people their legal rights. A clear example is the labor law, which has been vehemently criticized by laborers. Our law has been influenced by leftist socialists. Those involved in industrial affairs know very well what complicated stages should be gone through for having an agreement signed.