The Plague of Iran’s Economy

Photo Source Tasnim News Agency | CC BY 2.0

The Iranian economy is mired in a deep recession. The real or productive sector of the economy is paralyzed, largely by out-of-control (and often illicit) imports that have replaced domestic production. Rent seeking, corruption and the looting of national resources is pervasive. Both unemployment and inflation are extremely high. National currency is on the verge of collapse, and financial resources of the country are disproportionately invested in unproductive or parasitic activities such as buying and selling of precious metals, foreign currencies, real estate, and the like.

What factors or forces have contributed to this wretched state of Iran’s economy?

Two major sets of culprits account for most of the economic disaster in Iran: one external, the other internal. External factors consist largely of the U.S.-sponsored economic sanctions. Internal factors are rooted primarily in the appalling mismanagement of Iran’s economy. Debilitating mismanagement and lack of a guiding macroeconomic plan are, in turn, rooted in President Rouhani’s and his advisors’ economic outlook or philosophy. According to this philosophy, economic affairs must be delegated to the “invisible hand” of the market mechanism: there is no role or room for the government to intervene, monitor or guide the economy. This irresponsible, out-of-date, and out-of-place doctrine is succinctly epitomized in the old aphorism that “The best government is…

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