Article: Part II Iran's Intellectual Holocaust - Eliminating Enterprise

In the late 70's, Iran and Spain shared several commonalities: (a) they both had struggling monarchies with a 30 year+ legacy of dictatorship, (b) they both had a gross national products of about $50 Bn, and (c) both had populations of about 40 Million. Here we are 30 years later, Spain is a vibrant democracy, with a population of still about 40 Million and a GNP of $1 Trillion. Iran on the other hand is Islamic Theocracy, a GNP of $118 Billion and roughly double the population. Spain has no natural resources to speak of. Iran has been sitting on one of the largest oil and gas reserves in the world. Spain hosted the Soccer world cup ('96), the Olympics ('92) ...and has visibly left behind its legacy of religious totalitarianism "the Inquisition" in the dark ages of the 13th century, and dictatorship in the 20th century. Iran on the other hand, simply rolled back the clocks some 600 years.

Or let's consider Dubai! From the dessert sand and virtually without resources, sitting opposite Iran on the mouth of the Persian Gulf, Dubai is emerging as a future trading and global financial capital. They will be filling a vital 'time void' in capital markets between Europe and East Asia. Close to $2 Trillion in daily transactions will be flowing through Dubai within a Decade. There will be a clock with Dubai's name on it in every financial market, major hotel lobby... Dubai today, almost 30 years after Iran's revolution has an audacious skyline - that puts Tehran to shame!

Normally capital markets are formed in regional centers near centers of indigenous production and industrial activity ... i.e. near centers of enterprise ...buyers and sellers, commodity producers and commodity buyers! Markets provide valuable tools for raising capital for new and existing corporations i.e. Industry! Markets are used to help manufacturers' hedge risk in purchasing commodities and/or help producers' hedge risk in selling commodities. I am sorry, but what industries are based in Dubai?! Nothing!!

Iran on the other had could have had a vast corporate infrastructure with a vibrant stock market. Iran could have established a vast commodity exchange to enable bulk transactions for its relatively larger 'agribusiness' (than say, Dubai) or huge mineral deposits (Copper, Oil, Uranium...). Iran also has a larger municipal and corporate base to support a bond market. But now Dubai will provide the financial infrastructure for all this. By the way, Central Asia needs a vibrant financial center to support the economies of the former soviet nations, as well as Afghanistan ...where warehousing and delivering a commodity to an Iranian market would be far more convenient and advantageous than a Soviet or Arab alternative.

Iran's current financial market transacts in one year the equivalent of less than 1 hour's trades in Chicago or New York. It's a joke. The Islamic Theocracy pretends to have done much - but the results are in fact shameful. Significant opportunities have been missed.

A study published last week, also claims that Iran's oil output has been dropping at a rate of 10-12% per year and that by 2015 Iran will become a net importer of Oil. There has been no diversification of revenues away from oil and there has been virtually no downstream industrial investment into oil derivatives (to speak of).

Many Iranians are familiar with the spectacle of Dubai. Almost everyone I have met has visited it. But Spain, perhaps, is a less well-traveled route. I happened to work in Spain in 1982 after the revolution and recently returned for another visit. The roads to the factory where I once worked, and the village where I stayed, are all paved now. The small village has become a cosmopolitan city with retailers that would be the envy of many large towns in the US. The transformation of Spain is remarkable. In museum after museum there is a constant reminder of Spain's darks ages of Christian Theocracy - where the Pope in Rome ruled the roost. Everything was controlled; all expression (Art, Literature, Music etc.) was censored and linked to religion. No one dared to challenge the power of the Church... like Iran today (where no one dares to challenge the power of the Supreme Leader (Khamenei)).

Amidst all the oppression however, the Church in Spain did build spectacular churches and monuments to their faith. Contrast that to Iran's current dark ages where besides shutting down newspapers, disqualifying tens of thousands of electoral candidates (taking a page out of the former Soviet Union's control systems) and controlling all levers of power, the Islamic theocracy has not built even one monument anyone in the world would bother to get on an airplane for ... to see! These Mullahs are not devoted to their religion at all. The religious garb is simply a costume to hide their real activity as a bunch of thieves without any sincere devotion to their religion... otherwise they would at least leave behind some monument to their faith and time in power.

In Iran, religious foundations (Bonyad's) now control virtually every basic industry...that the government has NOT already monopolized. Without government contacts and support it is virtually impossible to succeed in any enterprise in Iran. Iran's export revenues have in effect not changed in 30 years. Exports or oil, gas, pistachios and carpets still dominate. And the Mullahs control it all. They have their hands in all the cash. The Supreme Leader alone gets 1/7th of all the oil revenue (direct into his account).

Contrast this with Spain's evolving economic base. For sure the Spaniards have increased their base in tourism and agriculture. But new sectors like financial services and industrial production of cars, pharmaceuticals, and building materials are providing and increased share of exports and revenues. Spain has denationalized many state controlled sectors (the media being one of them). There is free and fair expression. There is free and fair competition - both on domestic and international levels. Foreign companies are investing in Spain and setting up manufacturing plants.

When General Franco died, after more than 40 years of dictatorship, he had put in place a careful plan of succession - which excluded the religious fanatics. Spaniards had after all experienced Christian theocracy. In contrast the Shah left a power vacuum and Iranians never really understood the potential consequences of granting total power to Khomieni and his successors.

Iran on the other hand, is facing increased isolation and careful controls are being placed globally on transactions with Iran.

Think about it, enterprise is fundamentally an intellectual pursuit. Free enterprise is linked to free expression. Development of business concepts requires creative freedom, and freedom of opportunity. Who, after all, is going to develop a business idea, if they cannot implement or express it freely?

When one man claims he has a monopoly on the truth or a monopoly on righteousness - and that his beliefs are absolute ...then there is no room for alternatives. There is no room for creativity. There is no room for change. There is no room for progress. There is no room for enterprise.

The consequences of totalitarianism are therefore simple to see. The consequences of political and religious control become very easy to gauge in economic and human terms.

Whether it is Kim Il Sung in North Korea, or Hitler in Germany or Khamenei in Iran, the bankrupt results of their state monopolies and totalitarianism are the same. Do not be fooled by the presence of minor retail trading in the bazaar or enterprise on a small scale. The Iran's Intellectual Holocaust is one of lost opportunities. A holocaust of what could have been!

For all of Kim Il Sung's rhetoric, it is a basic fact that the average height of North Koreans is a full one inch shorter than South Koreans.

Iran could be much, much more than it is today. A 30-year comparison to any other country confirms it.

In free societies with free expression there is free enterprise. Ideas live or die on their own merits. Those ideas that gain support and that eventually flourish; end up creating economic, social and political value. This process is vital to prosperity. The ability to continuously market and exploit good ideas is at the very heart of success. One of the key measures of future success is the rate of investment and incorporation of new ideas.

Think about it, elections are in themselves, a public investment in the selection of alternate ideas for governance. Continuous elections, force political parties and politicians to generate new ideas to gain votes. Vibrant alternatives are necessary. Diversity in politics...in anything is an asset not a liability. If everybody agreed with everyone then no body brings any added value. A challenge, a difference, a change is in itself value added - whether in politics or economics.

In an economic sphere, many leading companies measure the percentage of their revenues generated by products introduced in the past 5 years or less. Iran has had nothing new to show anyone in 30 years.

Controlled societies, controlled markets, controlled enterprise ... all suffer from the same predicament ... a lack of innovation, and a lack of enterprise ...followed by economic demise and ultimate death. It does not matter if its Communist Party control, or Religious Theocratic control ...control is control.

Creativity is a key to survival. Human beings have survived because of our innate ability to be flexible and integrate solutions to changing environments. Ask Brazil's Red Indians in the Amazon and their genetically identical Alaskan Eskimo cousins if they had to be creative in finding ways to survive as they progressed from the North Pole to the Amazon. Freedom to create or freedom of enterprise is fundamental requirement of survival. Controlled societies regress. Controlled societies lose out. Continuous integration of improvements wins out...always. Freedom of enterprise is the best way to guarantee high integration of change - and its resulting prosperity.

Iran has missed huge opportunities. This loss of entrepreneurial activity and Iran's economic demise is an "Intellectual Holocaust" perpetrated on the nation of Iran.