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Comment | Urban Poverty in Iran: A Sea or a Mirage?

by DJAVAD SALEHI-ISFAHANI

05 Apr 2011 20:24Comments
Sizdah-Bedar-at-Mellat-Park-Tehran8.jpgInternational comparisons, domestic access to amenities belie claim of endemic urban poverty.

[ comment ] A recent article on Tehran Bureau, "Iran's Cities a Sea of Poverty", claims that as many as 55 percent of urban Iranians are poor. The article reports on an unpublished paper written by three "senior government researchers," and presented in a poster session of a conference, where at least a dozen other papers on poverty were presented but have been ignored because they reached less sensational conclusions. The fact that the reporter added the word "senior" to the account in the original news source shows how the ancient Iranian saying of "one crow, 40 crows" works in the cyber age. The study has been publicized on more than 100 Iranian news websites.

Why are we reading about the "sea of poverty" in urban Iran when more reliable sources (such as the World Bank and articles published in peer-reviewed journals) put Iran's poverty at less than 10 percent? Unfortunately, the topic has become highly politicized. There are those who think that the more poor people there are, the more likely they are to bring down the Islamic Republic, hastening the arrival of a flourishing democracy in Iran. But what if it is not deepening poverty but a rising middle class -- what Vali Nasr aptly calls "forces of fortune" -- that favors the growth of democracy? The poor in oil-rich countries are particularly prone to go for populist promises of redistribution over democracy, which they regard as a luxury that they cannot afford, and regard a free economy that goes with democracy as a risky game in which the odds do not favor them. It takes a prosperous middle class to have the will and the confidence to demand and work for democratic reforms.

If I had to choose between Egypt, with 20 percent of its population in poverty, and Tunisia, with a stronger middle class and a poverty rate of only 5 percent, as to which country is more likely to escape the populist trap of redistribution and choose the path of democratic reforms, I will put my money on Tunisia.

A serious answer to the question of whether, in terms of poverty, Iran is closer to Egypt or Tunisia requires measuring poverty using comparable thresholds. This is easily done using the international standard $2 per day per person poverty line (about $3 in 2009), with which the above rates have been calculated. With this line, Iran's poverty rate was about 6 percent in 2009 (3 percent in urban areas).

The paper that forms the basis of the Tehran Bureau post is actually telling a hopeful story if you read it in its entirety. The authors go beyond counting the poor to show how they live, and what they find may surprise you. Information in the same survey shows that the people they characterize as poor generally live in families with access to a wide variety of amenities and appliances. Consider the families who fall between the poverty line they have chosen -- about $13 per person per day, converted at the purchasing power parity exchange rate -- and the international standard of $3 per person per day (for more on Iran's poverty calculus see here). My analysis of the 2009 Expenditure and Income Survey that forms the basis of the paper in question reveals that these families all have access to publicly provided electricity and piped water, about 87 percent enjoy the luxury of natural gas piped into their homes (all until recently supplied at very low prices), 99 percent have refrigerators, 97 percent color televisions, 82 percent cell phones, 77 percent vacuum cleaners, 64 percent clothes washers, and 20 percent cars. If it does not make sense to you that these people should be called poor, you are not alone. Hundreds of millions of actually poor Chinese, Egyptians, Indians, and Pakistanis that have very few of these amenities would agree with you. This is the standard of living that most people would identify with the middle class and to which the world's poor aspires.

In the last two decades, thanks to their own efforts and government investments of oil money in health and education, the majority of Iranians who lived below the $2 poverty line have managed to pull themselves out of poverty. An implicit, and depressing, message of the "sea of poverty" thesis is that urban Iranians are so helpless that they sink deeper into poverty as their economy is injected with over $300 billion of oil revenues over five years. If that money was stolen, then what paid for millions of tons of imported sugar, tea, fruit, and meat that have hurt Iranian farmers, and what paid for the imports of tens of billions of dollars' worth of consumer goods from China that have paralyzed Iranian manufacturing?

I understand that the extent of poverty in Iran is a highly political subject, with Iranian reformists and many in the Western media heavily invested in the proposition of rising poverty, but it is important to bear in mind that a political cause that calls for greater participation of ordinary Iranians in determining their destinies cannot start by denying their achievements so far.

***

Homylafayette, author of the Tehran Bureau article, responds:

[ response ] I'd like to thank Dr. Salehi-Isfahani for taking the time to provide this counterpoint to my article.

The subject of poverty and the poverty line in Iran, a country that has benefited from a historic oil revenue windfall in the Ahmadinejad years, continues to interest readers and often provokes debate for various reasons, not the least of which is the deliberate secretiveness with which the Welfare Ministry has treated relevant statistics.

Dr. Salehi-Isfahani writes that my article "claims that as many as 55 percent of urban Iranians are poor." I make no such allegation, I simply relate the conclusions of a report presented at a conference organized by the national statistics organization of the Islamic Republic that was later found to have enough merit to be distributed on a CD put together by the organizers.

Dr. Salehi-Isfahani then faults my article for ignoring other papers "because they reached less sensational conclusions." There was no mustache-twirling conspiracy to ignore favorable reports. No other papers provided complete national extrapolations for poverty lines. As far as I know, two reports focused on the poverty lines in Mazandaran and Northern Khorasan provinces. Other papers dealing with poverty hardly drew rosy pictures of the situation in Iran and covered the worsening state of income distribution -- "The Bitter Taste of Poverty for Female Heads of Families," and so forth. Here are the titles of most of the dozen or so other reports that were about poverty (other topics closely resembled these):

"Evaluating Methods and Data for Measuring Poverty"
"Poverty Line in Mazandaran Province"
"Measuring the Effect of Changes in the Prices of Goods and Services on Poverty in Iran"
"Measuring Poverty and Inequality in Income Distribution of Households from 1999 to 2009"
"Poverty in Western Azerbaijan Province"
"Reviewing the Poverty Line in Northern Khorasan Province"
"Reviewing Effective Actions against Poverty (Employment, Subsidies, Education [...])"
"The Government's Policies to Alleviate Poverty and Distribute Income in a Just Manner"

Dr. Salehi-Isfahani then accused me of wrongly referring -- I assume for nefarious reasons -- to the authors of the report as "senior researchers." I was simply translating the term "arshad" (senior), as in "karshenaseh arshad" (senior expert or researcher), which was used in various outlets, including some controlled by the Islamic Republic or close to regime insiders. These included Khabar Online, ISNA, and Donyayeh Eghtesad.

Another semantic bone of contention appears to be the term "sea of poverty," which the good doctor believes is refuted by "more reliable sources." Whether the situation of poverty in the Islamic Republic would have been better described as a large pond or mountain lake is of course open to interpretation. I eagerly clicked on the link provided by Dr. Salehi-Isfahani for "articles published in peer-reviewed journals" that would definitively put to the rest the notion that poverty is a major problem in Iran. The link took me to one article, a 2009 report by Dr. Salehi-Isfahani himself. I do not mean to imply that he is not a reliable source (his article is well-researched and eloquent), but if he intends to present himself as a better source than the three Iranian researchers, he needs to provide more proof than his own article. I am sure that an experienced academic such as Dr. Salehi-Isfahani would agree with this.

His other reliable source that allegedly refutes the recent paper is the World Bank, which as far as I can ascertain has no updated statistics on poverty or the poverty line in Iran beyond the "international standard" of $2 to $3 dollars a day, which refers to absolute poverty anyway. I'd be delighted to read any other recent World Bank statistics if Dr. Salehi-Isfahani can provide them. Also, it is fair to say that this "international standard" for emerging countries is by no means universally accepted. I'm sure that Dr. Salehi-Isfahani can name a number of economists who question it, some of whom go so far as to accuse the World Bank of exploiting it to advance a neo-liberal world view in which free markets are supposedly alleviating poverty. I'll stay out of this fight and let real economists and academics like Dr. Salehi-Isfahani hash it out.

It is interesting to note, however, that in an interview conducted four years ago, then Welfare Minister Abdolreza Mesri, while defending the Ahmadinejad government's refusal to provide poverty statistics (which the law demanded), then fell back on this "international standard." He said that his government was providing nine million people with coupons in order to lift them above the standard, which was between $1 and $2 a day at the time. He suggested that these payments meant that absolute poverty was being eradicated in Iran.

He may very well have been right, but the question of absolute poverty is a different issue. And employing an international standard of $2 or $3 a day does not begin to provide an objective analysis of the situation in emerging countries that are far from homogenous. Iran is not Egypt is not Tunisia, and the $2 to $3 dollars a day will not provide you with the same purchasing power in the streets of Tehran, Cairo, or Tunis.

Unfortunately, as Dr. Salehi-Isfahani writes, the topic of poverty has become highly politicized. But he is perhaps somewhat guilty of this politicization himself when he asserts that my article follows the same line as reformists and western media who are "invested in the proposition of rising poverty" because they believe it will hasten democracy in the country. He clearly believes that a rising middle class will lead to democracy. This is an interesting debate but I take no sides in my article and challenge him to show any instance where I do.

Dr. Salehi-Isfahani mentions "over $300 billion of oil revenues over five years" of the Ahmadinejad administrations. He then asks, "If that money was stolen, then what paid for millions of tons of imported sugar, tea, fruit, and meat that have hurt Iranian farmers, and what paid for the imports of tens of billions of dollars' worth of consumer goods from China that have paralyzed Iranian manufacturing?" My article did not cover any embezzled money, but since the issue has been brought up, I will ask a question of my own. How is poverty being alleviated when Iranian farmers are being hurt by imports and Iran's manufacturing base is being paralyzed?

Beyond politics and "international standards" lie the everyday lives of millions of Iranians. Dr. Salehi-Isfahani and the World Bank may believe that you can be considered poor in Iran only if you make less than $90 a month. Others would disagree.

Copyright © 2011 Tehran Bureau

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