Iran is not a poor nation. It is only that about 85 percent of its people are horribly poor, while five percent are wealthy. As sanctions ease, the gap – that should have narrowed – widens.
A long time ago, sociologist Max Weber suggested America owes its wealth to its Protestant ethics. Similarly, certain sociologists concluded that Islamic countries like Iran show economic inequality because of their religious values like Inshallah, the resigned shrug to fate.
I don’t think this is so simple, since, as Iqbal and Mirakhor argue in their book “Economic Development and Islamic Finance”, Islamic teachings are fully supportive of condemning practices like corruption and fraud that lead to economic inequality.
It is more likely that Iran’s income disparity comes from a mismanaged free market and corruptions.
Widespread nepotism, economic mismanagement, lack of government transparency, and a state-controlled economy result in price controls, inflation, subsidies and non-performing loans. This, in turn, hinders competition in the private sector and discourages “ordinary” Iranians from creating their own businesses.
The government and upper class monopolize oil and oil income, paying workers a meager salary. Result? The mass of poor Iranians find it difficult to break out of their ruts, propelling inter-generational poverty.
The minimum wage, set at 930 thousand tomans, feeds inflation and drives people to juggle two to three jobs to survive. According to the Statistical Center of Iran (SCI), most Iranians earn about $450 a month, barely enough to cover utilities and a one-room apartment in Tehran. Since there is only one major industry, there are limited number of jobs for workers to fill, so unemployment mushrooms. It leapt from 12.40 percent in the first Quarter of this year to 12.60 percent only seven months later, according to the business website Trading Economics. Desperate Iranians pack their bags for more promising countries.
According to the IMF, 53 percent of Iranians still live below the poverty line.
Sanctions may have lifted, allowing Iran to rejoin the global financial system, but increased revenue only seems to have made the rich richer and the poor poorer.
Dr. Majid Rafizadeh, president of the International American Council on the Middle East, relates that a primary school teacher who works part-time as a taxi driver, told him, “Since the sanctions have been lifted our life has become harder. The government is removing subsidies. For breakfast, we eat dried bread.”
Iran has always had its oil genie to bail it out from gutting situations, but, over the last three years, the price of oil has stagnated making the oil reserves worth significantly less.
Even if that were not the case, the flow of oil money only benefits the top ruling officials and the wealthy business class connected to it.
On top of everything else, the office of Irani Supreme Leader Ali Khamenei has been furtively exploiting Iran’s economy, in the name of privatization.
In his book “False Economy: A surprising Economic History of the World”, Alan Beattie, former economist of the Bank of England, suggests there’s no reason why Muslim societies can’t choose to become rich, along with other wealthier countries.
Similarly, there’s no reason why Iran needs to maintain its economic disparity.
Religion does not determine economics. Other distortions do.