[lbo-talk] Iran's Economic Change (was Russia's economy)

Yoshie Furuhashi critical.montages at gmail.com
Fri May 11 04:50:46 PDT 2007


On 5/10/07, andie nachgeborenen <andie_nachgeborenen at yahoo.com> wrote:
> It doesn't settle the issue of whether the current
> Russian or Iranian government are Good Things even if
> it is established, and with regard to Russia I do not
> dispute that it is true (with regard to Iran I do not
> know) that materially the citizens are better off than
> they were, say, ten years ago.

If you don't know, that's because you haven't cared about Iran enough to study it and have actually even ignored such information as has been made available here.

There are many books and articles by Iran Studies scholars that are worth reading. See, for instance, Djavad Salehi-Isfahani (a professor of economics at Virginia Polytechnic Institute & State University), "Revolution and Redistribution in Iran: Poverty and Inequality 25 Years Later," August 2006, <http://www.filebox.vt.edu/users/salehi/Iran_poverty_trend.pdf>. See, especially, "Table 7: Per Capita Income and Expenditures Per Day in 2004 Rials, 1974-2004" on p. 49, "Table 8: Poverty Lines, Consumer Price Index, and PPP Exchange Rates" on p. 50, and "Table 9: Poverty Rates" on p. 51. It is clear from Salehi-Isfahani's work as well as other studies* of social and economic change in Iran over the last three decades that the government of Iran, through its fiscal policy and public investment, has diminished poverty and raised the standard of living for working people.

In terms of GINI, the story is more mixed. Shortly before the revolution, near the end of the Shah's regime, GINI indexes for both urban and rural areas, as shown in "Figure 5: The Gini Index of Inequality of Household Expenditures, 1971-04" on p. 27, rose to all-time highs.

Between 1972 and 1977 the Gini index of inequality rose

from 0.4 to 0.5 in urban areas and from 0.37 to 0.44 in

rural areas. The Gini index declined immediately after the

Revolution, to about 0.4 for both rural and urban areas

(Behdad 1989, Nowshirvani and Clawson 1994), but rose

slightly in the 1980s. These changes in inequality mirror

the fall and rise in poverty in the 1980s discussed above.

According to household expenditures the period since the

end of the war with Iraq has been one of general stability

in inequality. Urban inequality which was higher than rural

inequality before the Revolution, has been generally below

rural inequality for the last twenty years. In contrast to the

oil boom of the 1970s, which brought greater inequality,

the latest oil-induced expansion of 2000-2004 did not

change the level of inequality; if anything it seems to have

lowered it. . . . Individual earnings also mark the rise

in inequality of earnings in the post reform period (after

1989) more sharply than household expenditures or

incomes. Signicantly, the higher inequality of earnings

in the post war year has been tempered effectively by

non-earned incomes, which appear to have had

an equalizing effect." (Djavad Salehi-Isfahani, "Revolution and

Redistribution in Iran: Poverty and Inequality 25 Years

Later," August 2006, pp. 26 and 34 <http://www.filebox.vt.edu/users/salehi/Iran_poverty_trend.pdf>).

In other words, after the reduction of inequality in the early phase of the revolution, neoliberal reforms began, with the Rafsanjani administration, which made the inequality of individual earnings rise sharply, and if the overall inequality has been stable despite that rise, it is only because of the redistributional impact of the government's expenditures on entitlements, social programs, and the like. The contours of these changes are important to understand.

Lastly, the period under discussion is basically the period when many nations, in the core as well as in the periphery, saw dramatic rises in inequality, most strikingly in the USA in the core and China in the periphery. We ought to recognize the power of Iran's working people to check the state (the power that workers of many other nations do not have) in the post-reform period, which, but for the fear of responses of workers and political instabilities they bring, would have gone further in the direction of liberalization. Even today, the levels of inequality and poverty in Iran compare favorably to those of Venezuela. In Venezuela, "The Gini coefficient was 0.45 during 2006. According to government statistics, the percentages of poor and extremely poor among Venezuelan population were 33.9% and 23.2%, respectively, in 2006. These high ratios are due primarily to lower real wages earned by employees, and high rates of un- and underemployment" ("Background Note: Venezuela," February 2007, <http://www.state.gov/r/pa/ei/bgn/35766.htm>).

* E.g,

<http://web.worldbank.org/external/default/main?pagePK=51187349&piPK=51189435&theSitePK=312943&menuPK=64187510&searchMenuPK=312984&theSitePK=312943&entityID=000090341_20041207102532&searchMenuPK=312984&theSitePK=312943> Primary Health Care and the Rural Poor in the Islamic Republic of Iran Amir Mehryar 2004

Abstract: Rural households in Iran have traditionally been the most disadvantaged segment of Iranian society, not only in terms of income and political power but also in accessing basic public services, including health. A major achievement of public policy in Iran over the past 20 years has been the improvement of rural health and the near elimination of health disparities between higher-income urban populations and the rural poor. For example, in 1974 the infant mortality rate was 120 and 62 per thousand live births for rural and urban areas, respectively. By 2000, however, both the level and the differential of infant mortality had declined considerably, to 30 for rural areas and 28 for urban ones.

-- Yoshie



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