The original English text was:
Today, Iran is at about the level of economic wealth that England was in 1880, Sweden in 1925 and China in 2000. Those countries have all become considerably richer since those dates, China alone near doubling in just 16 years. There is no reason why one of the oldest civilisations on the planet should not be one of the richest: all that is necessary is that Iran follow the correct economic policies that allow growth.
Adam Smith told us that “Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism, but peace, easy taxes, and a tolerable administration of justice: all the rest being brought about by the natural course of things.”
We might be a little more sophisticated in our language these days but the important point is that growth is not something which is caused by government policy. It can be prevented by it, most certainly, and there are certain things, like that administration of justice, which are necessary for it to occur. But economic growth is something that happens because people cooperate to make it happen, not because they are told how to do it nor that they must do it. Leave people the space and that natural desire for a better life can be allowed to, and will, work in growing the economy.
The performance of China over recent decades needs to be understood in these terms. Yes, there’s still a Communist Party claiming to control things, there’s still state owned industry and enterprises. But what has really happened is that said state, said Communist Party, has withdrawn from trying to manage swathes of the economy: and it is in those swathes where that control is absent that the growth has been occurring. The same can and will be true of any other economy. Relax the direct control and the planning and allow the green shoots of the market economy to grow up around it.
Whether one would prefer a high tax, high welfare, state of the Scandinavian social democracy kind, or the more minarchist vision of Hong Kong or Singapore, is a secondary question. For the thing those places have in common is that they score remarkably highly on the usual measures of economic freedom. Who may trade with whom, in what, how and where, is almost entirely unregulated in any manner in any of those places. That one system then taxes the resultant wealth to redistribute, the other does not, is that second order decision. There must be that economic freedom there for the wealth to be generated in the first place.
My and our best wishes for the New Year and my and our point in a nutshell. Nowruz will continue to get better and better into the future the more that economic freedom is allowed to exist.
Senior Fellow Adam Smith Institute, London.
This is in the Iranian New Year edition of Tejarat-e Farda, Iran’s most-circulated weekly magazine.
No, I have no idea why they asked me but…..