Rais Dana: Lack of Demand is Due to Mass Poverty

Continuing discussions and economic proposals from the government, on Tuesday, Mohammad Baqer Nobakht, the government spokesperson, announced that the government would submit the sixth development plan bill to the parliament with urgency. Mr. Nobakht also stated that in the remaining months until the end of the year, the government would take actions within the framework of a policy package to accelerate the exit from recession and increase economic growth. Radio Farda began a conversation with Fariborz Rais Dana, an economist in Tehran, asking for his opinion on the government's efforts to stimulate demand, including paying its debts to contractors: Fariborz Rais Dana: Yes, there is a lack of demand. But the lack of demand is due to the poverty of the masses. It is due to 5.7 million unemployed individuals. It is due to 2.5 to 3.5 million farmers facing drought and rising food prices. Mr. Rais Dana, of course, the discussion here is that the government cannot quickly eliminate this poverty, unemployment, and rising prices. The government says we will start from here. The government says it will start from the banks. It will start from financial capitalism. In my opinion, it is starting from the worst possible place. The fact that it is paying its contractor debts is to its own contractors. These are institutions. These are military institutions. They do not stimulate demand. That is my entire argument. Right now, a large number of workers are creditors. They have not received their salaries for eight, nine, or ten months and are going on strike. How can we find a solution to pay them? Because the government's belief is that if I feed the major capitalists, the economy will flourish through that. It has not happened so far and it will not happen in the future. Why? Because they do not have job-creating activities. The policies they propose are full of contradictions. On one hand, the government says, the president has said, the central bank governor has said, and the minister of economy has said that we want to increase demand through the expansion of credits, and then it says because I do not increase the reserve of powerful money, therefore it is not inflationary expansion. We are stuck here. Mr. Rais Dana, the government says, for example, investment must be made in the automotive industry so that this industry can get going, because part of the industry is also the automotive industry, and it hopes that after this nuclear agreement, foreign car manufacturers will come and invest. What is the problem? That it wants to issue participation bonds, which they have even given an Arabic name to... When they do this, you know that free market operations mean that when they issue bonds, they take money out of people's hands. This means it is a contractionary policy. Then they have an expansionary policy on the other side. They do not match. They cannot resolve the contradiction. On one side, they need money for investment, they go for bonds, and on the other side, liquidity in hands decreases, and then they go for opening credits. But regarding foreign investments, they calculate everything except for the understanding and intelligence of the foreign investor. Well, when the foreign investor comes here, they want cheap labor. But does the Iranian economy have the capacity to absorb this production? Right now, in the big cities of Iran, we are all suffocating. Where will these cars go? We do not have exports elsewhere. These investors have not committed to produce here, even with cheap labor, to send abroad and bring currency. They want to sell right here. They will not buy these worn-out cars to export. Their profit, which the president has confirmed and all have confirmed, is that they want to take their profit out immediately. I want to say that the set of policies leads nowhere. Well, in your opinion, where should the government start? First, it must clarify its strategy for the people. That we are an Islamic economy is still not a statement for the people. This policy that the government has is a structural adjustment policy. This strategy has created problems and its result is that it chooses these contradictory policies. I believe resources should come through taxes... through touching the legal framework to resources that have been obtained illegally and exclusively during the previous government and past governments. Mr. Rais Dana, in any case, for several decades, governments have tried to increase the tax revenues you mentioned, for example, but they have not been successful. In any case, the government is in a situation where both oil revenues have decreased and it has no tax income. You say you oppose this structural adjustment policy, you encourage the so-called growth with equitable distribution policy. But is the condition for the government provided? I do not know. This government is 37 and for several years that previous regime, every time we talked, they said the conditions are not ready. It is like when we wanted to discuss political freedoms. Whenever we wanted to, they said the atmosphere is like this now, and do you have a purpose and goal? Do not say it, do not say it. Now, whenever we want to talk, governments say the conditions are not right. We can implement our policy in this situation. The problem is that the situation is not democratized. The problem is that a certain group goes to the parliament, forms certain governments, and follows certain policies. Well, fundamental changes must occur. This work must start from somewhere. Whenever any government comes, it is either like Ahmadinejad's government, which does not want to enter this field at all, or another government says it is not expedient. In my opinion, yes. We did not say such an event would happen overnight. But there is no sign that this government will move towards more fundamental policies.