Government & Economists

There are some observations regarding the recent meeting held between the First Vice-President and economists. First of all, the meeting was titled "Ending Stagflation". While inflation has been a chronic disease of the Iranian economy during the past years, it should be clarified whether "stagnation" is the same as decline in production or what is referred to by developed countries as increase in unemployment. The recession in Iran is due to fall in oil revenue. There is a misconception here that needs to be corrected. In oil-dependent developing countries production grows rapidly when oil revenue is pumped into their economies while unemployment rate does not change significantly and vice-versa.

The importance of consulting economists
The initiative to hold regular meetings with economists is an important move by the government for a number of reasons. First, it is an indication of government's respect for expert and scientific views and determination to tackle problems using sound solutions. Secondly, the meetings do not seem to be just a show and looks like the government really intends to hear different views and ideas, although there may be some shortcomings as in any other initiatives in early stages that have to be dealt with. Thirdly, the invitees are selected based on their academic background not their political views. Last but not least, political, social and economic aspects have been separated.

Effective communication mechanism
But how to organize and run the meetings effectively? First and foremost, the scientific and academic background of the invitees should be carefully verified. In other words, they should believe in the principles of the science (here economics) they have studied. This is of prime importance as it seems there are still clouds of uncertainty in their atmosphere. Therefore, it is vital to invite those who have understood the very essence of economics and believe that it can help solve the issues. In the West, there are countries whose economic issues are solved through certain economic decisions. Such processes are defined by those who believe in it. A successful example is the case of countries that were affected by crisis in 1930s and redressed the situation using the said method. Although some may argue that their problems have been transmitted to other sectors, at least there is consensus over the benefits of applying science to solve issues.
The meetings should be attended by those who do not consider disagreement among economists as an obstacle otherwise the policymaker cannot be expected to accept their views. Such disagreement is also seen in developed countries but they do not stop developing a certain policy to tackle problems. It should be noted that sometimes disagreement arises from lack of knowledge on the issue. In such cases, those individuals should be excluded. But here, what is meant by disagreement is the differences of opinions on the timing of policy application and their expected impacts. For instance, one economist believes that taxation should be reduced or stopped. The other one would argue that this should be done after reforming institutions. This is not called disagreement over principles but timing. If the contributors to the meetings are highly qualified and well familiar with the principles of economics, 90% of views will support each other differing only on the timing of policy implementation and their expected results. The proof is the remarks made by some economists in the meetings claiming that some macro-economic principles are not applicable to the case of Iranian economy. How is it possible to invite an individual for his knowledge while he believes science cannot be applied to the realities of the country? This is not an appropriate claim. Based on the principles of the same economics, the current recession in Iran relates to the problems in supply side of which production is a function with labor force and capital being its components. Labor force impacts the industry. In case of Iran, the labor force is not efficient as it is the fruit of nepotism and favoritism; therefore, expected production as in developed countries cannot be achieved. This generates problems on the supply side while in the recent past, efforts were targeted to demand side. It is clear that functions and rules are the same but the variables inside differ not yielding the expected results.

Requirements
Given their academic and professional background, economists can only provide advice on theoretical concepts similar to what is lectured at universities. They may not be able to provide practical and executive solutions in light of their low involvement at operational level. To utilize their expertise in this regard, facts and figures should be provided to them well in advance so that formal analyses take over informal atmosphere prevailed in the meetings. This approach leads to more effective outcomes and helps the academics to identify economic bottlenecks by comparing the statistics. It is worthwhile to note that in the absence of facts and figures, no meaningful statistics on issues such as enterprise production trends, annual revenue and distribution trends in the Iranian economy or prices can be provided. Such a shortcoming would turn the meetings into mere lectures confined to ideas, theories and opinions presented in academic books. Therefore, it is a good idea to provide the invitees with required data and information on the status of industry, agriculture and revenue distribution beforehand.
As the meetings are usually attended by several top government officials, it is important to take specific measures regarding the timing and venue. It has been noted that sometimes the number of speakers exceeds the timeslots which affects the effectiveness of the meeting. Therefore, it is of prime importance to develop an organized agenda in which the timing is commensurate with the number of speakers.