Los Angeles has a lot of immigrants from Iran, many of whom came to the U.S. after the revolution kicked the Shah out of his office. The Los Angeles Times is therefore the paper that many of these immigrants read. Unfortunately it does not inform them, but it propagandizes against the Iranian system.

For proof see today's piece on just launched subsidy reform in Iran: Prices in Iran rise after lifting of subsidies

The austerity measures generate work stoppages and embolden the political opposition. Critics contend that the price increases hurt those with modest incomes while leaving the wealthy unscathed.

That short summary printed at the top of the story includes at least two big lies.

Economic austerity (used by the LAT writes because it just made Websters "word of the year"?), is shortly defined as:

a policy of deficit-cutting, lower spending, and a reduction in the amount of benefits and public services provided.

The subsidy reform in Iran will NOT cut the deficit Iran doesn't have. It will also NOT lower government spending and it will NOT reduce the amount of provided benefits and public service. There are zero austerity measures in Iran.

During the "imposed war" with Iraq Iran introduced subsidies for several products, energy, gasoline, flour, etc. Those subsidies proved to be hard to cut after the war and this has been a hot political issue in Iran for several decades.

The subsidies have led to some severe misallocations and waste of resources. For example: Gasoline a third of which Iran has to import at world market prices, was subsidized down to about 15% of the world market price. This had several bad effects. As private individual traffic by car was cheap, motors were just kept running and public transport got neglected. Early this month Tehran had to shut down because of heavy smog. Cheap gasoline was horded and smuggled out of the country to be sold elsewhere.

The Ahmadinejad government now finally managed to reform the system. Instead of subsidizing product prices, the government will subsidize people with lower income. In the first step of subsidy reform, 80% of the Iranian people got a monthly subsidy cash payment from the government. In a second step, which started this week, subsidies for gasoline and other raw energy products were reduced and will eventually, over five years, go down to zero. Prices for gasoline will thereby increase until they have reached world market prices.

Higher gasoline prices will of course effect many other prices as transport cost are a component of nearly all product prices. There will be nominal inflation from this move but this is not inflationary in the bad sense as peoples income also increases. In the terms of Austrian economics, there will be no real inflation at all as only the allocation of the money changes and the total money supply will not increase. Of course there will be quite a bit of turmoil in the local markets as people change their buying habits but in the end demand and supply will find a new balance.

So when the LA Times writes of "critics contend that the price increases hurt those with modest incomes while leaving the wealthy unscathed" this is very easy to debunk.

The wealthy in Iran will not get any income subsidy from the government and will have to pay higher prices. The people with modest income do get additional money from the government and will have to pay higher prices. Idealized their household balance sheet will expand on both sides but with the same balance result. In effect the opposite of the LAT "critics" say, unchallenged by LAT, will happen.

As the government changes the system simply from product subsidies to income subsidies its balance sheet does not change either. How can that be austerity?

But the whole LA Times article will let not you know this. There is zero mentioning of the direct government payments to the less wealthy people in it. None at all.

As for an "emboldening political opposition" that the LAT claims. There is no emboldening to see but a statement from irrelevant former politicians on an obscure website the LAT uses for picking quotes.

As professor of economics at Virginia Tech Djavad Salehi-Isfahani blogs from a visit in Tehran:

So far [Ahmadinejad] seems to have succeeded: day one of the implementation has gone by without panic buying or a serious incident. Patience and gradualism seems to have paid off.
…
In my view, it would be enough of an achievement for the current plan to succeed and Iran get rid of its vast energy subsidies, even with some inflation. That would prove the critics wrong and become a model for other countries that are looking for a way to wean their citizens off cheap energy.

Update:

Just to add for the fun of it. How does the LA Times endorsed "critics" assertions stand up in light of this World Bank(!) country report (pdf) on Iran?

Targeting the poor more accurately by the public transfers would help to reduce poverty. Half of the poor in Iran, about 4.5 million people, or 1.5 million households, benefit from social coverage by government social safety net programs, charity institutions, and other nonprofit organizations. Whereas this support is partly effective, it is not specifically targeted to the poor, and remains expensive. Extensive subsidies, including energy subsidies, and credit subsidies are excessively large, and their distribution is skewed toward the rich. Subsidies for bread and medicine, for example, are highly untargeted vis-à-vis the poor, and the richest decile of households benefits 12 times more from gasoline subsidies than the poorest decile.