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July 2013, No. 67


Economy

Much Time to Redress


Unemployment, inflation, poverty, and loss of employment opportunities have been among the kind of damage the society has sustained in recent years.


Dr. Hussein Raghfar

In recent years the low income population in the country has played a special part in the political competition among election candidates. Every candidate by promising to pay more cash subsidies would try to put greater emphasis on the issue in order to outdo rivals.

Different sectors of the country, including economic, social and cultural, during the activities of the ninth and tenth governments have sustained great damage the compensation of which in case of sound planning would be possible in the course of the next four governments and after that development plans of the country could be followed up.

During the ninth and tenth governments, generating employment and creating job opportunities had a reverse trend as plans for creating job opportunities stopped and were not implemented according to some forecasts. Instead due to implementation of some incorrect policies the number of unemployed in the country increased. Improvement of the status quo is not possible except trough the reform of the pillars which have been ruined in recent years.

Under the principlist government, we were witness to development of big economic monopolies which although founded during the "reconstruction era" (post-Iraq war period), it took momentum under the principlist government and reached its peak and continues to grip the society. Such monopolies during the mentioned period were as such that it confined and minimized the possibility of presence of capitals of the private sector. The barrier which was created by this trend for the presence of the private sector prevented innovation and entrepreneurship of the private sector and this marginalization of the private sector affected the economy.

To eliminate this monopoly and monopoly-seeking is one of the main and biggest challenges and problems of the next government and the governments to come. As long as this trend has not been halted and improved there would be no possibility for implementation of development plans in the country and improvement of the status quo.

Another legacy left by the incumbent government is concentration on the low income strata with an aim of attracting more votes. Now the candidates in the midst of the upcoming presidential elections are raising their slogans with awareness of the huge masses of the needy. The underprivileged masses in order to preserve and sustain the subsidies and receive monthly cash payments or increase the amount they receive now would vote for those who could maintain the trend. And this is the point where they would sustain serious economic and social damage.

Unemployment, inflation, poverty, and loss of employment opportunities have been among the kind of damage the society has sustained in recent years. The only way to counter this dilemma is through directing resources towards production and generation of employment which has otherwise been spent on cash payments. Continued allocation of cash subsidies could inflict irreparable damage on the country. Furthermore, continuation of the same trend is not possible. The next government as a first step should make a decision on the subsidy law and the process for its implementation and continuation. By drawing up a sound plan it should put an end to the cash payments and instead support the production sector with an aim of creating more job opportunities in order to check inflation and unemployment.

Rendering free medical care, education, and transportation to the needy and low income people was among recommendations that was presented as an alternative to cash payments to the entire community. The government by paying the least attention to this issue started to pay cash subsidies which resulted in higher inflation and unemployment, closure of factories and adding to the number of unemployed.

The next government should put its main focus on production and consider it the main axis for its activities and decision makings. Meanwhile, reduction of inflation is another priority of the next government which should be taken into account. One of the main ways for accomplishment of this goal is downsizing the government. The government is the main applicant in the country and by downsizing it a significant volume of demands would decrease in the society. Moreover, through reduction of costs and extravagant activities of the government the inflation could be checked. In addition to these programs, the government should make the foreign exchange rate and interest rate transparent in order to be responsive to the production sector.

 

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  July 2013
No. 67