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Sehaty Foreign Exchange


October 12, 1999

Right and wrong

The Iranian letter's section, which I stumbled upon serendipously not long ago, is one of the most interesting discussion fora with regards to Iran. I read Mr Khachaturian's nostalgic words which were unpretentious yet lyrical, like one of the symphonies of his composer namesake. I also read dAyi Hamid's confused confabulations ["Persian work ethics"]. One can not take the man seriously after seeing his picture and many have eloquently and strongly rebuked him. However I like to write a few words in support as well as refutation of dAyi Hamid.

First my rebuke. Iranians are not intrinsically lazy. We certainly do not have the Germanic, Protestant or the Japanese work ethics but neither does the majority of the world. In Spain and Italy for example people, in contrast with northern Europe and Japan, work to live rather than live to work. I encountered a certain chick inefficiency in my travels in Italy and Spain that one does not find in Britain for example. Yet the Italians have a higher income per capita than the British and live considerably better than their anglosaxon counterparts. I am sure most of you have shared my amazement of how aesthetically unpleasing and unpleasant the capital of the once mighty British empire is and how badly the British live. The protestant work ethics, in this simple example, seems not to have greatly advantaged the British.

dAyi Hamid gave the example of sugar production in Japan. It may be true that Japan produces more sugar than Iran does, but the Japanese soil is more fertile and its rainfall significantly higher than Iran's. Far from being efficient, the Japanese agricultural sector is a heavily subsidized cottage industry that survives on the strength of its political clout and representation within the government. The Japanese farmer will for many reasons, some but not all relating to the expense of land and labour, not be able to compete with his foreign counterparts. Context is essential for correct interpretation of statistics. Afterall if one places one's head in the oven and one's foot in the fridge, statistically the temperature is such that one should be very comfortable. I believe dAyi Hamid has missed this point.

dAyi Hamid's observation that very little gets done in Iran is true. The low levels of job statisfaction due to low pay and other stresses are the main culprits. Iranians in Australia, and I suspect America, are hardworking successful people. In my Persian upbringing it was always stressed to me that the opportunity to work hard towards a goal is not a chore but a previlidge.

Although I object to Hamid's tone he raises some points that we all know to be true. Zerangi is a badge of honour amongst Iranians. This is due to our history. Since the fall of the Safavids and the attack of Ashraf-i Afghan, the instability inherent in the Iranian life and politics has been a hinderance to the establishment of any semblance of a meritocracy. People rarely innovated to get ahead. Instead they merely redistributed the existing wealth by devious or violent means. No legal protection meant that long term investment was a folly and the surest way to wealth was dishonesty. So three atitudes developed in the Iranian psyche that still persist but I see them disappearing in my generation.

Firstly Iranians have what one may call the "tall poppy syndrome". In other words they have very little stomach for other Iranians' success. Whoever succeeds, they believe, has had undue favour in life arising from his high birth, clandestine relations to foreign powers or blind luck. If his success can not be explained in these terms then he must have been devious. And if all attempts of discrediting him fails then there is always the option of either dismissing him as arrogant (" Fekr Mikoneh Che Pokhieh) or to question his pedigry (Gedazadeh Shahzadeh Shodeh Brayeh Ma).

Not wanting success for your coethnics has bizaar implications. One is that some Iranians prefer, all thing being equal, to give opportunities to non-Iranians. In my travels to the US I visited some of the educational facilities around the East Coast. It was interesting to me that I was much better received by Iranian academics when they were not aware that I was Iranian, and the name gave the game away each time. Most of the older Iranians hide their success and wealth in order to shield themselves from other Iranians' avarice.

The second attitude is that to get ahead one needs to be devious. All Iranians aspire to be evil in some way but I am glad to say the vast majority fail miserably in fulfilling this silly aspiration. An Iranian may be capable of social security fraud or overselling his wares, but he is mostly incapable of the sort of malice that prompts some in our respective societies to mutilate after rape and assault after theft. However the sheer mass of these small time mischiefs such as queue jumping and shop lifting in the Iranian society creates the sort of entropy we are all so familiar with.

The third of these attitudes relates to defeatism. Most Iranians I know are capable and intelligent people. It is true that most Iranians have had to contend with the sort of racism that would be abhorent to the American psyche if applied to the blacks for example. We are stereotyped as violent, evil, dirty and fanatical. We are denied opportunities in politics and defense. Our loyalties are constantly questioned and so on. Most younger Iranians, having the vigour and the optimism of youth on their side, strive to be better than those around them in order to have equal opportunities. If one's path to advancement is blocked once or a million times, one still needs to try; for self-respect comes not from success but from the struggle to succeed. However it breaks my heart to see some older Iranians, once proud people, are now broken and are either bitter and isolated or have believed the assertions of those who do not wish them well.

Although some of the points dAyi Hamid raises are true, they are not the reason for Iran's poverty. To reduce Iran's economic failure to Iranians being "lazy and devious" smacks of Orientalism. There are many factors that determine a nation's wealth. I am not well versed in Economics but even I can think of myriads of reasons other than Iranian individual and intrinsic incompetence for Iran's dire conditions. Economic failure in Iran has everything to do with the system. The failure relates to all branches of the government.

The executive is inefficient and lacks the managerial skills needed for the running of a modern economy. Traditionally the tools of macroeconomic management are fiscal, monetary, income, prices and trade policies. The gross domestic product is a function of economic injections (goverment spending, investment, domestic consumption and exports) and leakages (taxes, savings and imports).

Discretionary fiscal policy is not available to the goverment of Iran. On the one hand almost none of the government revenue is from taxes. Its expenditure is also tied into defense, inefficient state insitutions and what masquarades as a welfare system. So that changes in the budget outcome are not deliberate expansionary or deflationary policies but are instead functions of the price of oil.

Monetary policy is also non-existant. The Islamic banking system does not allow interest rates so that the balance of savings and investment can not be adjusted by the Central Bank of Iran. The two tier foreign currency system is a farce that is only of use to those in the bazaar who can use the loopholes to exploit the system. No consistent incomes or prices policy is in effect in Iran. Its trade policy is highly protectionist and concentrates on the export of oil.

The judiciary is similarly inefficient. Clogged to the brim with "moral" cases and grossly underfunded, court cases take too long and strong laws protecting private property are absent. Add to that the various elements in the society who see themselves as above the law and there you have a very infertile ground for foreign investment. The legislature suffers from general malaise and spends most of its time in political point scoring to be much concerned with the economy. Then there are the revolutionary insitution whose rate of return on government investment is pitiful, who do not pay taxes and work on a system of favours. Much of that which needs to be done are taken for granted in other countries:

1-Political Reform: nothing will happen until the government is held accountable by a free people and their press. Furthermore to deny women and minority rights is to deprive Iran from her greatest assets.

2-Foreign Policy Reforms: we all know how the sanctions and the absence of tourism is hurting the Iranian economy. The inordinate expenses in defence and intelligence are also a burden born by those who choose to isolate themselve

3- Microeconomic reforms: a tax system that equitably spreads the burden is needed. Since incomes of the wealthy classes are too easily concealed, a goods and services tax with partial subsidies for essential goods may be the way.

Competition and privatization policy should move the assets of the inefficient state industries into the profit bearing private sector and provide the government with money for infrastructure reforms.

Deregulation of the banks are of utmost importance for the establishment of a viable financial sector. This is the most crucial as well as the hardest part of the reforms needed for economic growth.

Labour relations should also be streamlined and labour mobility should increase both inter-industrially and geographically. Finally the regulations hampering exporters need to be lifted with credit and insurance facilities provided for them.

4-Industrial and Infrastructure reform: the government needs to support sunrise industries in Iran. Iran is ripe for software enginnering, web authoring as well as handcrafted lifestyle items for the higher end of the market. Industry policy should provide subsidies as well as tax morotoriums for the first three years after establishment of such firms. Some of the infrastructure reforms have already been implimented under Rafsanjani.

5-Judicial and Legislative Reform: are important in two areas. One is the establishment of the rule of law and the other is legal reform. For those who say that all laws have to be legislated I like to say that this is not true in any country. There are two systems of laws in the world today. The Westminster Common Law (includes the US legal system) is based on precedance and the French Law is based on the Napoleonic Code. So beyond the constitution there is always a body of laws that are undemocratically determined. In Iran the equivilant is the Shariah (Shar') law.

Legal reform in Iran is easier than other muslim countries because the "Window of Ijtihad" is not closed in the Shia theology. Fiqh of Sunnies is already codified but Shia can change its Shar' in accordance with the times. There are five sources of Shar' and these are : the Koran (one needs: Sarf and Nahv, Maqamat and Tafseer), the Hadith (hadith as well as rejal), Ijma (Consensus), Qyas(inference) and Ijtihad(innovation).

I will not discuss the controversies regarding the interpretation of the Koran for obvious reason. However all muslim scholars agree that Hadith is fallible on two grounds: one is that the authenticity of hadiths can only be speculated on and the other is that Mohammad is human and not god. The basis of consensus is the idea expressed in the early muslim society that if all muslims believe some law to be permissable and it does not contravene the Koran then it must come to pass. This has been taken to mean that if the majority of Faqihs beleive in the veracity of a statement then it is true. However it can just as easily be seen as devine sanction for democracy. As for inference and innovation the four basic tools are aristotelian logic (manteq), scholastic philosophy (kalam), neoplatonic philosophy (Falsafeh) and mystic philosophy (irfan or ishraq).

As you can see this leaves quite a bit of room for the new laws to be agreed on that are modern and work towards the establishment of a civil society. However no serious effort to modernize and invogorate Shar' has occurred since Allameh Majlisi. Today sarv o nahv can be replaced with modern Arabic linguistic. Rejal supplemented by forensic profiling. Logic today is far more advanced than in the days of aristotle and philosophy has come a long way since Philo. Irfan is being organised logically by Iranian scholars. Computer databases make access to Koranic text and interpretation as well as Hadith much easier.

Today the Fiqh is devided into religious duty (Ibadaat), Contracts (Oghood), declaration (the word escapes me) and other (Ahkam). A modern classification into personal, social and economic affairs is needed. And the laws have to be re written for today. The number of camels of tax one needs to give to the goverment is no longer relevant. However it needs a courageous Ayatollah al-Ozma with an enormous command of the basic Fiqh sciences to be able to successfully achieve reforms. To be a modern republic, Iran need a modern commmon law beit in the tradition of our past laws.

Of course I know that most will write and say would it not be better if Iran is transformed into a secular western democracy. Well quite possibly but how likely is that? Also all such discussions are only of academic interest as for all intensive purposes few of us will be anything but good citizen of our adopted countries and do expend our energies in the advancement of common interests of all who have the same citizenships as ourselves beit Australian or American or other. Although we can advise our fellow Iranians, it is as outsiders who will not have to live under those conditions. For us to talk of reforms that will hurt the poor while we live comfortably in America or Australia is the realisation of "kenar e god neshasteh migeh lengesh kon". Anyhoot I await your vehement disagreements.

Arash Salardini

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