I have heard some astonishingly stupid statements from politicians over the years, but Iran’s former labor minister Hojjat Abdolmaleki has managed to distinguish himself with an economic theory that belongs in an asylum rather than a university. Abdolmaleki, who served under former President Ebrahim Raisi and is supposedly a professor of economics, appeared on Iranian state television to explain that the country’s economy has no serious problems once you disregard inflation. He actually declared, “Set high prices aside and you have no other economic problems… We have no problems, praised be God.”
Iran’s year-on-year inflation has reached an astonishing 89.8%, while the annual inflation measure climbed from 69.9% in August to 73.6% in September. Food prices are rising even faster, with some products such as cooking oil increasing more than 250% compared with a year earlier. Even rents, which recorded the smallest increase among the major household categories, rose more than 30%. What exactly does Abdolmaleki expect the Iranian people to do? Stop eating? Stop paying rent? Pretend their currency has not been destroyed? Perhaps he should explain to a mother who cannot afford food for her children that the economy is perfectly healthy once she ignores the fact that everything she needs has become unaffordable.
The stupidity becomes even more offensive when we examine what has actually happened to Iran’s economy. I recently wrote about the collapse of Iranian petroleum exports, which fell from approximately 230,000 barrels per day at the beginning of September to virtually ZERO under the American naval blockade. Vortexa estimated that 83 million barrels of Iranian crude were sitting aboard tankers, including 43 million barrels trapped west of the Strait of Hormuz. Iran has oil that it cannot freely sell, a government that depends upon petroleum revenue, and an economy desperately in need of foreign exchange. Yet this former minister believes inflation is the only problem worth discussing.
The rial has lost approximately 35% of its value against the dollar since July. That currency collapse makes imported medicine, machinery, food, and essential industrial supplies more expensive, further destroying the purchasing power of the population. The International Monetary Fund projects that Iran’s economy will contract 7.6% in 2026, while Iranian government figures showed GDP falling approximately 10% during the spring. Oil and gas production, manufacturing, trade, and services have all suffered. These are not imaginary problems that disappear because a politician decides to exclude them from his definition of economic distress. Iran is experiencing a contraction in productive activity while the cost of living is exploding, and the people are being crushed between the two.
Abdolmaleki previously claimed that the war and regional conditions accounted for less than 1% of rising prices. A country cannot lose access to its principal export revenues, experience severe currency depreciation, suffer disruptions to international trade, and somehow remain insulated from the consequences. Oil exports provide the foreign currency necessary to purchase imports and support domestic financial stability. When those revenues disappear, the government faces a growing shortage of hard currency while businesses struggle to obtain the supplies necessary to continue operating. The resulting pressure on the currency and prices is precisely what we are witnessing.
He has also dismissed the consequences of internet shutdowns, claiming that businesses could simply move to domestic platforms and that nobody had lost employment because of the disruptions. Anyone who has ever operated a business understands how absurd that statement is. A company cannot simply replace its customers, payment networks, suppliers, and established commercial relationships because some bureaucrat decides that an alternative platform exists. Commerce depends upon confidence and access to markets. Destroy those connections and businesses lose revenue, employees lose their livelihoods, and investment begins looking elsewhere.
Iranian citizens are now reporting delays of weeks and even months in receiving unemployment benefits. Some have described being unable to purchase food or service existing debts while waiting for payments from the government. Iran’s Social Security Organization has acknowledged enormous financing pressures, including a monthly pension shortfall of at least 170 trillion rials even if it collects all current contributions. Pensioners have protested over delayed payments, and workers in various industries have reported unpaid wages. These are people who have already lost their jobs or depend upon government benefits to survive. Their government cannot reliably meet its obligations, yet a former labor minister is telling them that everything is fine if they simply disregard prices.
I have explained repeatedly that inflation is one of the most destructive forces a government can unleash upon its own population because it destroys the purchasing power of savings and wages. People work their entire lives accumulating money only to discover that the government has destroyed its value. Inflation is particularly devastating to the poor and elderly because they have fewer assets capable of appreciating alongside rising prices. Those who own tangible assets may retain some protection, but the person dependent upon a fixed pension or modest salary watches their standard of living deteriorate with every increase. At inflation approaching 90%, prices would nearly double in a year if that pace persisted. No ordinary worker can plan for the future under such conditions.
This is the mentality that produces economic collapse. Politicians spend their careers manipulating statistics and making excuses rather than confronting the consequences of their own policies. When revenues disappear, they borrow or create more money. When the currency collapses, they blame speculators or foreign enemies. When inflation destroys purchasing power, they announce that everything would be wonderful if the public simply stopped complaining about prices. Abdolmaleki’s comments have been ridiculed across Iran’s political spectrum, including by conservatives who understand that such statements insult the intelligence of ordinary citizens.
Iran possesses enormous petroleum reserves, natural resources, and a population capable of building a productive economy. Yet the country has been driven into a financial crisis by decades of political mismanagement, sanctions, and now economic warfare that has devastated its export earnings. I have explained that the sovereign debt crisis throughout the Middle East becomes particularly severe when governments dependent upon petroleum revenue lose the ability to sell their resources. Their obligations do not disappear when the oil stops flowing. The government must still pay employees, support essential services, finance imports, and service its debts. Eventually the financial structure begins breaking down, and no amount of political propaganda can manufacture the capital required to sustain it.
The Iranian people deserve better than this insulting nonsense from men who have enjoyed positions of authority while ordinary families struggle to survive. An economics professor who believes the economy is healthy once inflation is removed from consideration has demonstrated that he understands absolutely NOTHING about economics. Inflation is the destruction of purchasing power, and purchasing power is fundamental to the standard of living of every citizen. When a government cannot preserve the value of its currency, provide economic stability, or meet its financial obligations, it has failed in its most basic responsibilities. Abdolmaleki may be able to disregard inflation from the comfort of a television studio, but the Iranian people must confront it every time they attempt to purchase food, pay rent, or provide for their families.