Tyranny of numbers

I have long been thinking to write something in this blog about the confusion in Iran between criticizing policies and politicians.  If Ahmadinejad is bad, then every policy he implements must be bad (like subsidy reform) and if a president is good he can do no wrong (the wasteful $1.2 billion job creation program under Khatami).  Today, I opened an article in Al Monitor entitled, “Ahmadinejad Takes Parting Shot At Iranian Women,” and was much surprised to learn about the parting shot.  Apparently, the outgoing president has angered activist women by proposing a bill that would reduce the working hours for women to 36 hours per week while paying them for 44 hours, or if they work the full 44 hours, they get two additional paid days off per month. How will this hurt women? According to the article, “women’s rights activists believe this bill is another attempt by Ahmadinejad to dramatically reduce women’s participation in the workforce.”  I am not sure about the intention part but I do agree with the conclusion.  Most economists would argue that an attempt to raise hourly wages by reducing working hours while keeping pay constant would cause employers to favor men in hiring, which would hurt women’s employment.

It is a nice feeling to be in agreement on economic policy with “activists,” some of whom are my best friends, but this a new experience for me.  I have in the past argued along very similar lines that Iran’s labor law that requires establishments with 10 workers or more to offer separate eating facilities and a special room for women to feed their babies as inhibiting women’s employment.   And I have always got that look of disappointment from my feminist friends who probably muttered something like, “there he goes again with his neoliberal economics.”   In polite company even seeming hesitant to approve of raising the minimum wage or the poverty line to an arbitrary high level can shrink one’s circle of interesting friends.   So I have learned to be quiet or speak very carefully on matters labor economic.  I am so careful that even now I hesitate to agree with “women activists” about the negative impact of reducing working hours for women.  You never know when a “good president” might propose a similar policy, and suddenly I would be in the neoliberal dog house again (some good candidates recently proposed the government should pay Iranian women for housework, which ever so quietly I disapprove of).

Lest you think activists have become neoliberal, or that they are being inconsistent when they reject offering (not forcing) women to have more free time while advocating raising working conditions or the minimum wage, see it from their point of view: the object is not to evaluate the policy, but to put down a “bad politician.”

With this insight, I can now better understand the amazing critical commentary that Ahmadinejad’s subsidy reform has attracted (some of them in Al Monitor).  For example, in a recent piece in Al Monitor, Bijan Khajehpour puts subsidy reform as the first in a list of challenges faced by Iranian producers.  Seriously?  Two and a half years after energy prices were increased, during which prices of goods these businesses sell have increased by leaps and bounds while energy prices were the only things that did not, are they still suffering from paying for energy at prices well below what producers in other countries with healthy private sectors pay?

Again, if you think this is not making sense it is because you are stuck in analyzing policies, not politicians.  Applying a similar formidable logic, a recent article in the Persian weekly Tejarat Farda identified me as one of only two economists who supported president Ahmadinejad (the other actually works for him).  What was the evidence for this claim?  The fact that I have supported Ahmadinejad’s policy of replacing the environmentally destructive energy subsidies (most of which benefited the rich) with a flat cash transfer to everyone.  Needless to say that the program has had its serious faults, such as overestimation of the cash payout that caused a deficit and prolonged the program’s inflationary impact, or the price controls that prevented producers from adjusting to higher energy prices.  But then, in Iran, with so little economic expertise, examples of well intentioned policies that go badly are not scarce (recall the bungled exchange rate unification of 1990s under Rafsanjani, which started as good idea but caused a huge external debt crisis). Many years ago I presented estimates of poverty levels in Iran that showed, incidentally, poverty had declined during the first presidency of Mr. Rafsanjani.  A reformist economist attacked me for misleading the public, arguing that everyone knew that Mr. Rafsanjani’s structural adjustment program had hurt the poor and the economy!  That was when Rafsanjani was still a “bad president”; now that he no longer is seen that way by the country’s intellectual elite, it is ok to say that building roads and dams –economic growth– can reduce poverty.

Until we give up evaluating politicians and go for evaluating their policies, we will always be looking back and regretting the last politician we did not like.