Rentier Economy is an Economy of Inequality

A rentier economy is also an economy of inequality. Rent is not only a result of inequality—in various forms—but also a cause of it. Chronic and rampant inflation, along with a sharp increase in unemployment in the absence of an effective income redistribution system, now more clearly displays the increasing inequality in income distribution. Inequality, and specifically the uneven distribution of income, manifests in various ways in today's Iranian society. The most superficial and outward reflection of this type of inequality between high and low-income groups, or what is referred to as 'the haves' and 'the have-nots,' can be seen in consumption inequality, lifestyle, and living standards, especially in large cities. The difference in standards, types, and quality of life is sometimes reflected in the geography of major cities, particularly in central Iran, namely Tehran. This difference can continue to the extent that we witness the existence of two distinct and even conflicting urban poles with different standards, types, and qualities of life, and incompatible cultures within a geographical area that is ostensibly called a city. This difference can also be observed in various regions of Iran, areas that are geographically distant from the center or are considered heterogeneous in terms of ethnicity, language, religion, or culture. Factors affecting income distribution in Iran are not solely economic but also include political, social, cultural, and economic factors. Since these factors operate as a system, they do so until the relationships among them are disrupted. Inequality is always reproduced, and class gaps widen. The specific conditions of each society cause the impact of each of these factors to vary relative to others. Among the aforementioned variables, some, such as gender, ethnicity, and religion, are independent variables, and thus cannot be fundamentally changed in the short term without altering the cultural and political structure. However, other variables, including those related to the distribution of political power or economic opportunities, health, and educational facilities, can be changed in the short term through legal, financial, or budgetary tools. However, it seems that until the fundamental and independent variables are transformed, even assuming changes in the variables that can be altered in the short term and become dependent variables, the progress of society towards a balanced distribution of economic opportunities, including income, will be reversible and will not be structurally sustainable. The upper income layers of current Iranian society are often not a continuation of the elite classes of pre-revolutionary Iran. Rather, this class is essentially a 'new class' that has gradually formed after the change of government, particularly after the end of the war. The formation of this class with new classes cannot be explained without reference to participation in state authority or an unequal share in political power and social status, as the share of these classes in national income before the revolution was not such that it could explain their current position in income distribution. Except for some market branches in the governance and political power, the families of clerics or new military personnel and current bureaucrats were not considered part of the upper classes during the Pahlavi regime, and their rise in social class hierarchy in the post-revolution period, within the existing mechanisms of the centralized state economy and the non-competitive private sector economy, was due to the use of rents. The uneven distribution of income has significant economic, political, cultural, and social consequences. With income inequality, wealth becomes concentrated among a small group. This can lead to a decrease in final demand for goods and services. Consequently, the need for investment also declines, and if investment decreases, unemployment rises. If the income redistribution system and the social security system cannot reduce inequality, the increase in unemployment combined with income and wealth inequality will expand the scope of poverty and class gaps. It is clear that with the increase in class gaps and the social marginalization of citizens, their opportunities for economic, political, and civil participation diminish. Naturally, a political system that lacks the participation of part of society loses public support and faces a legitimacy crisis. The consequence of this process will be the vulnerability of the political system, political instability, and a decrease in security. The consequences of reduced security include capital flight, brain drain, and the migration of entrepreneurs.