I wrote:
> how does this [Ahmadinejad's promising of benefits to the countryside] different from standard nationalist populism?
Yoshie Furuhashi wrote:
What's standard nationalist populism and who is practicing that nowadays?
Standard nationalist populism involves lots of promises for the "whole people" or the "little people" that are often not sustainable. I guess a bad example would be the APRA people in Peru (e.g., Alan García). I guess you could say that Chavez in Venezuela is also practicing something like that, but he has a big pot of oil revenues that he can did into to pay for his programs (as long as oil prices stay high). me:
> to what > extent will the 180% increase in expenditures in rural areas be > undermined by inflation?
Yoshie:
The IMF says that average CPI inflation was "hovering above 15 percent" in 2004/05 and that "[r]eflecting the impact of improved weather conditions on food prices, the price freeze on certain goods and services -- including on highly-subsidized petroleum products -- and some exchange rate appreciation, average inflation is expected to decline to 13 percent in 2005/06," though it expects the decline to be temporary and exhorts -- you guessed it! -- the government to bring it down into the single-digit range
if Ahmadinejad makes a lot of promises that aren't sustainable, for which he doesn't have revenues to pay for, it could cause excessive external debt and/or serious inflation. Perhaps we aren't seeing that yet. Price freezes unfortunately do not solve the problem of inflation. It just changes the form, creating shortages. (If there are ways to get rid of market ineffiiciencies, then controls can work without shortages, but I don't know if that works in Iran.) It's nice for Iranians that the government is subsidizing oil products, but that comes out of the government budget. In terms of long-term conservation and the avoidance of global warming, the opposite of subsidization seems needed. The IMF is horrible, but they're right that beyond (say) 15% inflation, there's no benefit to a country to have inflation. -- Jim Devine / "In the Soviet Union, capitalism triumphed over communism. In this country, capitalism triumphed over democracy." -- Fran Lebowitz
