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June 2018, No. 87


Q & A

Our Economy Serves Politics, Not the People!


Imanirad believes that conflict of interests exists in all countries and situations, but the question is whether the conditions are ripe to turn virtual state into an actual situation.


A senior economist says when the economy is run by people who do not believe in the free features and phenomenalization of the economy, the economy will be plagued by the spread of conflict of interests.

As an example, Dr. Morteza Imanirad cites the instrumentalist outlook about the economy and the fact that the economy is viewed as a subdivision of the larger political system.

Imanirad believes that conflict of interests exists in all countries and situations, but the question is whether the conditions are ripe to turn virtual state into an actual situation. According to him, several factors contribute to a growing conflict of interests. One is when people do not have a bright and promising perspective on their future. Second is when inefficient state institutions cannot keep their personnel satisfied and the third state is when people use public resources and facilities to serve their own personal interests. But even more important than these three factors are the shape and formation of some economies that continually lead to the disregard of public interests and pursuit of personal interests.

In the following interview, Imanirad speaks about the negative impact of conflict of interests on competitiveness. According to him, the priority of personal interests to the public interests will always reduce the efficiency of the economy as a whole; as this phenomenon becomes wider the economy and the competitiveness of the economy become weaker. But the problem gets worse when unfortunately governments pay attention to the effect rather than the cause and thus increase their involvement in the economy. But state sponsored economy itself is a source of corruption and augmentation of the conflict of interests, and this cycle of recurrence continues. 

When and in which economies does the conflict of interests occur?

The question that at what times does the conflict of interests takes shape or spreads differs from one country to another and from one individual to another. The crucial point is at what time this conflict turns into actual state from virtual state. The times and the circumstances in which the conflict of interests expands are very extensive, but I would like to mention a few of them.

First, when a country is stuck in a state of underdevelopment, and when the effects and fruits of development and progress of the society are not known and are not tangible or they do not exist, a person would lose his affinity to the society and think of his own interests. The tendency to use public resources for personal gains at a time when a person does not have a clear and promising perspective about the future is far more than the time when the prospects for the future of the country’s economy are clear. The second case is when government agencies have very low efficiency for numerous reasons, or they cannot adequately satisfy their staff. In this case, the misappropriation of public services for personal gains is widespread and the conflict of interests goes deeper and wider. The third mode is when some people with clear intentions and through the influence of authorities in state-run systems acquire information, resources, and facilities and use them for their own personal goals. These abuses are entirely deliberate and not subject to specific conditions. In some cases, the action becomes so prevalent that it is no more considered to be inappropriate, but rather described as a smart move.

Because when in the state system and in public service providers the salaries and benefits of the employees are not paid on the basis of meritocracy, individuals will meet their needs by using public facilities. Particularly in developing and backward countries, if for some reason they are lagging behind due to working in governmental organizations and are given lower ranks compared with their friends and acquaintances, they would tend to use public resources and facilities for personal gains. These are some of the conditions that create conflict of interests. But I have to mention another very important factor. The form and formation of some economies is continually leading to the overlooking of public interests and the pursuit of personal interests. In other words, there is a growing conflict of interests in economic formation.


We did not have modern knowledge to handle these issues; so we used traditional management methods for administering modern relations.


Of course, this section is not unrelated to the conditions and times described. When the economy is run by the people who do not believe in the free features and phenomenalization of the economy, the economy will be plagued by the spread of conflict of interests. An example is the instrumentalist outlook about the economy. In this view, the economy is seen as a subdivision of the larger political system. In addition to this, governments and establishments that seek broad plans and expand governmental organizations unwittingly provide the ground for the spread of conflict of interests in the country. The more the economy moves in the direction of freedom of action of economic activists, the more limited becomes the possibility of conflict of interests in state-owned systems. 

What is causing conflict of interest in Iran? What factors have prepared the ground for creation of this level of conflict of interests?

The same factors that I mentioned in reply to the above question are reasons for a conflict of interests in Iran. Most of the conditions mentioned in the previous question, unfortunately, exist in Iran. We have formulated the economy in a way that it serves politics more than the people. When these conditions unfold for the economy, it is natural that the economy is coupled with centralism and with control. In this situation, the economy is heavily politicized, and the result is an increase in conflict of interests. Aside from that, the basic needs of families during this period are not well provided. Healthy courses for generating incomes are blocked, unemployment rises, and all these factors create the platform for this conflict. When these reasons begin to work, they do not require them to continue, because these reasons are so strong that they do culture building, and hence the ruined culture becomes dominant. 

When we go into the root cause of our current economic problems, we find a conflict of interests. What is the share of the rules and regulations in creating this situation?

There are few issues in the Iranian economy that create this problem, and I think that until these issues are resolved, the issue of conflict between personal interests and the public interest would remain. This problem not only is not solved but gets bigger every day. When such a problem grows, it becomes a habit and certain cultural criteria are developed for that purpose. In other words, the growth and spread of corruption and the provision of personal benefits lead to the creation of norms in the economy, which, like an avalanche, gets bigger and bigger every day.

I will briefly explain these factors; first of all, the prospect of development in the country is not clear. The harder it becomes to realize this outlook the higher the desire to serve personal interests. Secondly, the Iranian economy has long entered the modern world. The government, the parliament, the market and other systems are of a modern character. In the aftermath of the revolution, we did not have modern knowledge to handle these issues; so we used traditional management methods for administering modern relations.

The same issue brought merit under question and there was a confrontation between skill and (religious) commitment. The collapse of these frontiers opened the way for using public interests to serve private gains. With the increasing opening of this way, the moral, religious and human sanctities collapsed easier, to the point where these relations overlooked social decency. Thirdly, part of the political and administrative power of the country became decentralized after the revolution, which made it impossible to establish strict rules and regulations to control working relations in public systems. Fourthly, the economic inefficiency and the economic line of thinking after the revolution made the market weaker and weaker every day. In contrast, the public sector grew bigger and bigger, making the scope of public goods, whether efficient or ineffective wider. The expansion of the public goods sector causes the enlargement of the public service providers, making the situation more attractive for taking advantage of these benefits. A few years ago, the World Bank conducted a study which showed that as governments become larger corruption in those countries becomes more widespread, and on the contrary, a stronger market would cause corruption to drop.

 

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  June 2018
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