Iran’s Oppressive Economy and the Anti-Convergence Club

I wrote about Iran’s awful economic policy three years ago, but let’s revisit the issue now that it is back in the news.

But instead of citing Economic Freedom of the World to show Iran’s bad policy, let’s look this time at a visual from the Index of Economic Freedom.

The bottom line is that Iran is one of the world’s most-statist countries no matter which data source you peruse.

It ranks #169 (out of 176) in the Heritage IEF and an equally miserable #158 (out of 165) in the Fraser EFW.

To understand the consequences of big government in Iran, let’s look at this chart shared by David Frum.

As you can see, Portugal and Iran were economic peers back about 45 years ago. But Iran has stagnated while Portugal has enjoyed reasonably impressive growth.

Looks like we have another member of our Anti-Covergence Club.

And just in case the lesson isn’t obvious, let’s go to the long-run data from Economic Freedom of the World to see what explains why Portugal has grown and Iran has stagnated.

Lo and behold, Portugal dramatically improved its economic policy between 1975 and 2000 (more evidence for the “Washington Consensus“) while Iran’s mediocre score has trended even lower.

At the risk of stating the obvious, more economic liberty is the recipe for growth and prosperity.

Portugal certainly isn’t perfect, but having decent economic policy produces much better results than having awful economic policy.

I try to avoid commenting on foreign policy, but it certainly would be a good outcome if Iran’s awful government somehow wound up being replaced by something more reasonable. I don’t particularly care if the new government is pro-western, but I’d like it to be pro-Western Civilization.

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Image credit: David Stanley | CC BY 2.0.