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Planning for Success or Failure? |
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Planning is necessary for government, even when it aims at
giving out its powers. However, formulating a five-year social, economic,
cultural and political development plan for the country is redundant. |
Dr. Mousa Ghaninejad is so renowned that he does not need
introduction. His inclinations toward the prominent, liberal German economist,
Von Kayek is quite known. The same tendency is evident throughout the
following interview about pathology of the Iranian economy during three
economic development plans.
In your opinion,
what should have been done by politicians during the three economic
development plans, which they failed to do or were not predicted in the said
plans?
We must see what the plan itself was and
whether thinking in terms of plans could be a solution to our problems or not.
Economic plans were to be implemented
since the early years after triumph of the Islamic Revolution, but the war
with Iraq and other problems, postponed the issue. What we saw as the First
Economic Development Plan in 1989 dated back to early 1980s. In 1989, however,
we were in economic distress. Budget deficit was over 50% while hidden deficit
was much more than that and per capita income had plummeted to about half of
the pre-revolution figure. During those ten years, average economic growth
rate was negative. In fact, we were facing a complete economic deadlock. I
mean the economic plan, which was complied since the early years after
revolution, was not meant to be an economic reform plan. It was an economic
plan modeled after other plans already implemented in our country as well as
developing countries. Those problems made our statesmen implement economic
reforms within the frame of that plan. Therefore, economic reforms are not
necessarily linked to planning and we can conduct economic reforms even in the
absence of economic plans. Economic reforms do not need planning, but at a
juncture, we came to realize the necessity of those reforms and it coincided
with the First Economic Development Plan.
The First Economic Development Plan
included allocation of resources by the government and planning for
reconstruction of a war-stricken economy. Anyway, economic reforms could have
been excluded from it. If they were included, it was due to necessities of
post-war society. Some of our colleagues believe that since our economy is
totally state-run, we need planning to get out of such conditions. They
believe in planning up to this limit and do not believe in allocation of
resources. The reality of our society is that three plans have been
implemented, each with 100-200 articles and many directives. This has made our
regulations more complicated. Whenever we make a plan, this is repeated and
constitutes one of the most important problems plaguing our economy. If laws
and regulations are to be efficient, they must be few. If there are many of
them, economy will lose dynamism. If we are to make new plans, we should plan
for reducing regulations. I can accept such planning while I do not believe in
allocation of resources and nor do my friends who were involved in compiling
previous plans. They maintain that since the government possesses many
resources, the plans should be made more rational.
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Economic reforms do not need planning, but at a juncture,
we came to realize the necessity of those reforms and it coincided with
the First Economic Development Plan. |
Can we conclude that the officials failed to allocate
resources during the said plans in an optimized manner?
I want to say that the main mistake made
by them was that they did not ask why the government should allocate
resources. The main issue, which is now being discussed in Majlis, is that we
went to extremes in terms of state-run government during past years, and at
present; we are doing the same with regard to privatization. The mistake is
that the government is not an opponent to rival with the private sector. The
private sector is composed of people. The government should serve the people,
in general, and the private sector, in particular. We must not say that this
should be allocated to the government and that should be allocated to the
people. This is an erroneous viewpoint. If most resources are being allocated
by the government, we must see how we can overcome this problem. This is the
main issue. The main effort should be made at pushing the government out of
the economy. The government may be allowed to undertake major tasks of the
state. The government can be active in economic affairs, meaning public goods
sector. The government is not currently active in this regard. Public goods
are topped by security; political, economic and social security.
The government has failed in
establishing economic security. Just look at remarks made by Judiciary chief,
Ayatollah Shahroudi, who noted that lack of economic security leads to capital
flight. He rightly called this as the main instance of economic corruption.
Where a judicial official comes up with such a precise economic analysis, our
economic analysts are not able to do that. The main reason for capital flight
is lack of security. Therefore, it is the government’s duty to establish
security. However, instead of doing that the government is producing worthless
goods.
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We went to
extremes in terms of state-run government during past years and, at
present; we are doing the same with regard to privatization. |
There are other fields where the
government has been at a loss. The government is exploiting the current
demarcation between the state-run and private sectors to expand its realm. For
example, officials believe that telecommunications is among public,
state-owned goods. This is not accepted in any part of the world. If the
private sector was involved in the field, the cost of, for example, expanding
cellphone network would have been much lower. Nowhere in the world, are
cellphones as expensive as in Iran. Official price of a single cellphone is
about 500 euros to 550 dollars and it is dealt in the open market for 800
euros. The price of a cellphone in the world is as low as one dollar. This
occurs because the government considers public goods as its own and exacts a
lot of tax on people.
After all these years, after formulation of three economic
development plans as well as the perspective plan, do you mean that our
executive is unable do distinguish the line between private and public
sectors? Or that border has been distinguished, but the government does not
want to pass over its resources?
Theoretically
yes. In practice, you can find no high-ranking politician or statesman to
defend this situation. All of them apparently support the private sector, even
the new government, but in practice, they act in the opposite. Why is the cost
of calling somebody in the United States 40 tomans per minute or less through
a private company, but calling Tehran costs 70 tomans per minute? Another
instance was net cafés which were run by people, but the government did not
let them work. Anything which is profitable is at the government’s hands. If,
for example, the private sector can reduce cost of public transportation, why
should it be state-run? There were useful proposals in the first, second and
third economic development plans including establishment of the Oil
Stabilization Fund. What happened to them? The law was breached and it was
done by the legislature, both the sixth and seventh parliaments. So, what is
the benefit of all these plans? Almost none of their positive points were
implemented. The Third Economic Development Plan had made way for changing
energy price, which was balked at by the sixth Majlis. On the contrary, those
parts, which pertained to increasing government’s powers and limiting people’s
latitude, were carried out. Many people say that the plans have had
achievements, but I say those achievements had nothing to do with the plans.
In fact, we may have witnessed more achievements in the absence of the plans.
Of course, I do not mean that the government should not have any plan at all.
The government does not have to compile an economic plan, but it can make
plans as for the budget.
You mean there is no need to develop the country within the
frame of five-year development plans?
No. They are
absolutely unnecessary. You can make five-year budget plans and they can also
be one-year or even six-month plans. This is good because such plans will show
that the government intends to forecast how to spend its revenues. However, we
went on with the same development plan that was left over from the past
regime. After the revolution, we expanded those plans to include economic,
political, social and cultural plans. Is it possible to come up with a new,
for example, cultural plan every five years? Can we change the culture every
five years? The main problem with economic plans is that they have been
watered down to figures and allocation of material resources. This has been
proved a failure throughout the whole world. Now we are compiling five-year
plans for cultural activities. I believe this is a big mistake.
What are your practical proposals? How can the government
limit its activities to public goods and give up other fields? Is that
possible in the absence of plans?
We can engage in a theoretical discussion to face the
realities. We have thus far made all kinds of plans; five-year plan, 20-year
perspective plan as well as general policies of the system. Back to your main
question about what we shall do, I am convinced that planning is necessary for
government, even when it aims at giving out its powers. However, formulating a
five-year social, economic, cultural and political development plan for the
country is redundant. It only increases the number of regulations and
exacerbates existing problems. What I propose is reviewing our attitudes about
a plan which is supported by the government; a plan which should not be drawn
up in the first place. It is not for the government to make plans for people,
but people should make plans for the government. This results from traditional
opposition between government and private sector, which is rooted in our
culture. Such attitudes should be rectified. I want to conclude that there is
a wrong line of thinking in our country making people believe that since
planning, per se, is good; it is also good in every instance. This is wrong.
Plans belong to decision-makers that make decisions about their own domains.
However, it is nonsense for an organization called "government" to make plans
for a "nation." Such planning will lead to chaos because it changes the rule
of the game and increases government’s economic clout. Therefore, if we are
against such planning, it does not mean that we favor chaos. It means that we
must make plans wherever they are needed. At the same time, there is no doubt
that the government should have plans for its activities. |
