Lessons from Iran's Collapse

A recent book “King of Kings” by Scott Anderson about the Iranian Revolution and the story of hubris, delusion and catastrophic miscalculation by both The Shah of Iran and the Carter Administration which ultimately destroyed them both. As Iran collapsed and their oil production plummeted in 1979 inflation from the oil price increase resulted in worldwide inflation and the Federal Reserve under Paul Volker raised interest rates to 20% to quell the inflation resulting in a massive recession in the U.S. that caused oil patch banks in Texas to fail. The Shah had a dream since being educated in Switzerland, of developing Iran into a modern nation that would have a standard of living comparable to France and Great Britain in which he had spent a great deal of time. However, he wanted it all and he wanted it now and his modernization drove a society focused on a religious base of the sixteen hundreds too fast. The main opposition arose in the person of Ayatollah Khomeini and the Muslin faith which destroyed the Shah’s program. Their main objection was centered around the freedom that modernization was allowing women, from dress to education. In the end, the program collapsed into chaos, and now Saudi Arabia is trying the same program but on a slower pace. It will be interesting to see if it is successful.