Text of care Ik Divya and Monica Somandroiu.
Originally published in the Economist, January 24, 2011, 33-37, and January 31, 2011, 33-37.
The current crisis is a crisis rather than the State of the market. It was the annual Conference of the CADI's message and the Konrad Adenauer Foundation. The Conference was held in Bucharest, in September 27, 2010, in partnership with the Atlas Economic Research Foundation and the Institute for Economic Studies-Europe. The message comes in continuation of exposures made in annual Conference 2009-KAS MINA about causes and mechanisms of the crisis, and is supported by the results of the analyses published in the same year Roman libertarian scholar[1]s.
How do I create prerequisites for State crisis? The centralized system of representative democracy feeds a clientele, be it a strong class, be it for interest groups. Servicing this clientele increases unsustainable levels of public expenditure and creates a poor structure. Supracreditarea is only a special kind of public expense. Here the horizon of reading type election gave the political class tend to supraincuraja loans then have created the false appearance of profitability and have created the shaky financial pyramid. But should we consider the overall picture created by overcharging and suprareglementare. On the one hand, the level of public expenditure attracts a tax burden Why deploy economic activity on a less productive paths. On the other hand, the structure of public spending are complicated and bureaucratic apparatus becomes harder with new layers of regulations EC economic slow down and block the flow of innovation.
Social assistance creates an ideal pretext for overloading the market with taxes and regulations. For this reason substantial confronts States with budgetary imbalances citizens. Once in crisis, not only asistential State proves unable to jump-start the economy as gold-plating reduces the possibility of correcting market alocarile. But, at the same time, the budget receipts from pricinascaderii, and asistential State becomes unable to support disadvantaged. Conclusion: the social model is more vulnerable to the crisis. By contrast, the flexibility of an economy characterized by free initiative and relatively released from the burden of budgetary expenses assures the best performance in both aspects, and of the economy and the productivity of those disenfranchised. Economic recovery solutions are those based on the mechanism of free market, privatization, liberalizari, and dereglementari.
The foreign guests were Mr. Tom Palmer, Vice President for International Affairs of the Foundation for Economic Research Atlas, Washington D.C., Lothar Funk, a professor at the University of applied sciences in Düsseldorf, and Pierre Garello, Director of the Institute for economic studies-Europe and Professor of Economics at the University of Aix-en-Povence. Guests from Romania were Mr. Theodor Stolojan, a member of the European Parliament, Sever Voinescu, a member of the Romanian Parliament, Varujan Pambuccian, a member of the Romanian Parliament, Valentin Ionescu, former Minister of Privatization in 1997-1998 and Mr. Lucian Croitoru, Adviser to the Governor of the Central Bank and former Romanian representative at the IMF between 2003 and 2007. The moderators of the two panels were Mr. Valeriu Stoica, Professor of law at the University of Bucharest siDan Said, the Money Channel and Magazine columnist.
Next, we present excerpts from discussions within the Conference.
Valeriu Stoica: Model asistential birocratizeaza State discourages work, growing government deficits and nefinantate by those who do not work
As you know, the current economic crisis has many interpretations. Two of them are radically opposed. It's an interpretation according to which the witnessing the failure of capitalism. And it's another interpretation, according to which the failure of the State to assist the asistential. We at least, that we are here, we believe that the second is the correct explanation. Why failed State asistential? There are, I think, five State asistential effects produced them and explain the failure.
The first effect of the pervert asistential: i-has encouraged those who do not work. This conclusion is valid for all countries in which asistential State was seen as a solution. If we refer to Romania in the last 20 years, two figures are why here. They are also in the message, addressed to the President of the Parliament of Romania, after a few days. In 2004, in Romania there were 6 400 000 assisted. In a country with 20 million inhabitants, so that about 2 million Romanian citizens working in other countries, is an impressive figure. In 2008, after four years of Government, "liberal", after four years in which those who have governed, in doctrinal discourse, said the idea of the minimal State, came as the number of those to be assisted social 13, 9 million. We can talk about what happened in the pension system during this period. From 1990 until today, the number of pensioners has increased enormously, and only in 2008 pensions increased by 45%. I don't know another country that I had such a spectacular growth of pensions, by a simple decision of the Government. It would be also interesting to see that there are counties where pensioners on the case of disease and disability for touching a percentage impressive of all pensioners. For example, in Bihor County they are 30% of the total number. Examples may continue. Obviously such a policy encourages those who don't work.
The second effect of the pervert asistential: bureaucratization. And here I will give two figures. We say that the Communist State is the most totalitarian State bureaucrat. Well, in 1990, in Romania, a totalitarian State, it had 900 000 employees. From 1 January 2010, after 20 years of official policy by which has been encouraged by the market economy, and said the idea of the minimal State, had 1 400 000 employees. Thus, between 1990 and 2009, an increase of over 50% in the number of public sector employees.
The third effect: deterring those who pervert the work. The tax burden is growing in those who work. Those who pay taxes are suffocated, are discouraged to produce and many of them try to find alternative solutions be delving into the gray economy or in the underground economy, whether their capital migrand in other countries than Romania. From this point of view you have to look at moving the location of companies from Romania into Bulgaria.
The fourth effect: increasing nefinantate perverse deficits. How well it does, not only in Romania but throughout Europe, sovereign debt crisis is extremely serious and substantial States lost credibility as borrowers. Deficits to be financed, in need of credit. But, at least, in this period of crisis, States have lost substantial credibility as borrowers because those who give money, lenders have found substantial States are unable to produce required cuts to credits.
And, finally, a fifth effect, the effect of the four economic effects: Government by those who do not work. Substantial work in States in which no longer lead those who work and pay taxes. The explanation is obvious if we think the electoral mechanisms and programmes. For example, for 20 years in Romania, on the one hand is a simple technique refines the election: buying votes. On the other hand, it refines the electoral promises to the those who assisted, which in part are complied with, especially when the election is approaching maturity. These perverse effects lead to only one conclusion. Capitalism is not to blame for the current economic crisis. On the contrary. Ignoring the rules of functioning of capitalism, violating the rules of fair competition, deter those who work and who would be able to make a profit and profit reinvesteasca.
The solution, in my view, is simple. But as it's simpler, it's more difficult to apply. Must first, at political level, to change the meaning of the functioning of democracy so that those who work, produce and pay taxes and fees to have the decisive word in setting the policies of a country. I don't mean by this that those who need social assistance should not be supported, but it should be addressed as a compassionate to those who really need assistance. We need a new politics of solidarity to those who produce, pay taxes and fees.
Tom Palmer: asistential State is more vulnerable to the crisis
Address the topic of discussion today Recalling the important role enormously who played interventioniste policies in the onset of the financial crisis. It comes especially from those policies, which were designed or who explicitly aimed at improvement of the situation of the poor through State mechanisms. Remember the point of departure from the American policy. The State, through the Central Bank, from 2003 until 2004, has set the interest rates. This is a difficult thing to understand. Normally, when you pay the interest rates for bank loans, pay for that you borrow. But when interest rates are negative, the Bank that pays you for you to borrow. The consequence is that people will borrow a lot of money and encourage increasingly more debts. In addition, there is a social policy of the State to encourage the ownership of flats. Payment-deposit rates on Federal Housing Administration guarantee them dropped from 20%-where had been for 60 years-up to 3 percent in the first quarter of 2008 have reached even at 0%. The State has eliminated the distinction between renting and buying. Companies sponsored by the federal Government — Fannie Mae and Freddie Mac have received instruction on the part of Congress to provide mortgage financing for people with low income. Since 1996, 42% of all financing of mortgages had to be directed to people with an income below the average, and 12% to those charging less than 60% of average income. It was put into practice a systematic policy to subsidize the ownership of houses by people with incomes between the lowest and the less skilled. These are loans of "NINJA"-No Income, No Job, No Assets. Therefore, if you have no income, No Job, No assets or savings, the Federal Government guarantees the loan for a House. Basel 2 accords, by which the State guaranteed banks buying securities, were the first ingredient of financial crisis, thus spreading the damaging policies worldwide to ensure that the financial system is a giant castle of cards. We hear often that this crisis was caused by greed. But there is no reason to believe that people were more greedy in 2007 or in 2008 than they were in 1998 or 1988 or any other time. The cause of this crisis were the damaging policies, applied consistently through market intervention. Now pay the consequences.
If we look at the case of Romania, the unemployment rate, which before the crisis was now below 4%, 8% pass (although, frankly, I do not have great confidence in the statistics that made government agencies). Well, one way to increase the employment rate is to simplify the layoffs. It may seem surprising to some, but it's a very simple reasoning: reducing the cost of hiring staff. I've met with entrepreneurs, who have told me the huge cost of unnecessary things to do to dismiss someone. The solution is a more flexible labor market. I think this should be the first priority of the Government.
A second priority would be fiscal discipline. It's definitely in need of a serious plan to reduce spending. One way to respond to this proposal is moving public enterprises and public services, including the pension system from Romania, medical insurance system, railways, post, in the private sector. If they are privatized properly and with serious intentions, amid the freedom of markets, industries, consuming tax net can be turned into paying taxes net industries. This he succeeded Margaret Thatcher in the United Kingdom of Great Britain: it took the State enterprises consuming duties-British Airways, British Steel and turned them into profitable enterprises that pay taxes. Important in this regard would shift to a liberalized system of health insurance. Anyone who is worried sick as could be in the next 10 or 15 years you should be aware of the importance of medical professionals in this country. And I think the best solution would be a private sector for health care, for hospitals, clinics, which would be here in the country, and would ensure better medical services. Because the truth is that qualified physicians and medical personnel are choosing to leave Romania.
Chapter tax discipline, there are a few highlights. We could take the Greek model, whose consequences we are seeing now. The Greeks have increased expenditure on the public sector for the last five years from 42% to 51%. They engaged the State 100,000 people, and now they see the consequences. Another model for what not to do, just slightly less irresponsible is the United States. Tim Geithner has criticized the german Government, saying that "it takes a stronger growth of domestic demand", which translates to irresponsible spending that cannot be justified nor covered by the present and future resources. In my opinion, this is stupid. I would like to give just one example of the problems the current approach of the us Government, not before mentioning that I am a critic of both parties: the Bush administration is as iresponsabila in this regard as well as the Obama administration. The State has promoted the so-called stimulus spending in the form of an extension of the period of payment of unemployment compensatiei. This measure unemployment stimulates what just delay the transition. For example, a total I think it offers the german Government, which has established a far more wise to approach this problem. From the point of view of budgetary reductions of the two models, the american and the german, I think the model is much wiser for Romania.
To conclude, one of the priorities of the Romanian Government should be reducing the cost of employment and redundancy and relocation of several public services towards the private sector. I think voters will respect these priorities if they are explained as necessary steps for fiscal discipline and build their futures.
Lothar Funk: german Model of social market economy offers us lessons of sustainable economic growth
I like it for the first time after many years when people are no longer referred to Germany as the sick man of Europe. We propose to adopt an overview of Germany's experience with social market economy system, a scheme opposed by the State's model asistential. I see three stages of this large experience at the end of World War II until today: initial period of increasing prosperity along with the implementation of the system of social market economy the testing period of the system, in which we have been witnessing an increasing inflexibilizari of the market, as a result of a particular term on the insistent "social", and finally the economic recovery period, with more flexible markets.
I think the fact that we have a relatively well during the crisis is due to precisely measure in which he gave up the idea of the State of asistential. Two years ago, it was said that we get at this moment to have 5 million jobless rate. This did not take place because the German economy has become much more flexible than it was then. Unfortunately it lasted long enough to distinguish good from bad, but here Romania can draw some lessons. The Government of social democratic Chancellor Schröder has completed less than half of the necessary reforms, and to pressure from Mrs Merkel and the opposition Christian Democrats,. Subsequently, Mr. Schröder was removed from the leadership, and since then we have Christian-Democratic Government. This would be duplication of policy on economic comeback stage I remembered.
1950s-1960s Germany, is associated with prosperity and stability. I find it very interesting that after losing a war, this country has had economic growth rates of 8-9% for a decade and a half, much better results than the British, for example. That was the secret of this success? The secret must be sought in the social market economy model as implemented by Ludwig Erhard. It contained a limited State-because the State has allowed the free economic competition abstaining to intervene in the market, but in time, as acelati strong did not allow collective bargaining. It should be noted that in the absence of trade unionism were large salaries for that period. The model included an economic policy and the stability of inflation. A limited State means and an independent Central Bank and therefore able to maintain low inflation. Multi add here and a strategy for the development of export markets to compensate for a small home market sales, and a high level of human capital. There are also other factors. It is important, however, that Germany has always favored free markets. Germany has become the most free market, perhaps with the exception of Switzerland, in the 1950s. We obtained at that time, a comparative advantage in technology products manufacturing industry, moderate advantage we keep today.
The main idea was implemented, also called ordoliberalism, was that the State must guarantee certain rules of the game and their stability. This set of rules, or this framework of institutions shall contain: freedom of contract and free market-otherwise we could sustain the competition; maintaining constant set of regulations-otherwise it would be allowed to move resources from one place to another before it can produce; and a low level of inflation-otherwise the information on relative prices would be altered and would mislead traders.
Once implemented, the model of social erhardian market economy has drifted steadily towards State model asistential. New layers of regulations were added and increased fees. It is often suggested that the main problem was the unification of Germany. It is not true. Of course, the unification was a reason for the growth in government spending and further dilution of the initial idea of the legal framework of free competition. But already the social economy of late 70s had become inflexible, even if the problems were well hidden. Due to these escamotari in the 1980s, Japan has taken Germany as a model and we know she was okay. Economists keynesiana orientation influenced the way Germany late 70 's. I switched from a pension scheme based on bismarkiana-oriented status and a system of pay-as-you-go and electoral reasons, resources have been squandered. Subsidies for the benefit of organized groups and middle class-a class of powerful electoral-began an era of yshape. Fees have increased significantly and regulations have become oriented towards achieving objectives. In this way it has been "tested" in misrepresenting ordoliberal system. Generally politicians they came like a glove insistence on the term "social" in "social market economy". The exception is the Prime Minister, which Kohl beyond mistakes such as the anticipated retirement policy, took steps to reduce public spending and centralized assistance through the State. In the late 80 's, The Economist spoke of a "Decade of subperformantei" for West Germany and things continued this way for a long time.
2003 marks the beginning of the third stage in which it was switched to a lowering of costs and the flexibility of the labour market. Managed to diminish the power of the trade unions of employees to block the entry of cases of opportunities. The result was that in 2008, the total number of unemployed was 600,000 lower than in 2000, and today, in 2010, the number of beneficiaries of long-term unemployment is lower than 20 percent four years ago, when she was 5 million. And despite the economic crisis, the tendency of decreasing unemployment continue.
Returning to the market and the dismantling of the State asistential is recommended and another reason: nesustenabilitatea pension scheme to pay-as-you-go, and generally nesustenabilitatea State pensions. In Germany, women are 1.3 children, so the rate of replacement of generations is not touched, and if in the 1950s almost 6 employees a pension, now less than do a bit more than 3.
Returning to the market is actually returning to the set of institutions of social market economy or ordoliberalismului as it was originally designed by Erhard and not as it has been perverted in its implementation. Social market economy problem is terminologica: the term ' social ' open a loophole for potlatch, that class politics rushes to open and to use their own advantage, and subventionand strong electoral classes organized groups expressing interest and may well pay back favors. Erhard but warned that a system too "social" actually reach an antisocial system.
Pierre Garello: the public services to be outsourced market
I came to Romania on a regular basis since 1991 and I notice of course progress along these 20 years. Regardless of the crisis you have faced, facing other countries, but I say that only through the development and strengthening of freedom you will be able to continue down this road.
Indeed, the crisis started since 2007 because of a negative policy of housing, but beyond what we see, it's a crisis of the State asistential, which now turns into a huge crisis of sovereign debt. The crisis of 2007 might be nothing compared to the huge sovereign debt crisis that awaits us. Asistential State does not work. I tried this system for two centuries-the twentieth century was one of the asistential and does not work. Here in Romania, I often hear people say "Oh, you, the French, have a good system of health insurance. Does. The deficit of the social security system in France was last year's 20 billion euros. With a 20-billion-euro market could do many things for good health. France's public deficit was last year's 140 billion euros, while Romania's domestic product is 250 billion euros, which means that our deficit represents 66% of GDP, in 2009. In other words the State spends each week several billions of euros on financial markets.
The question is how much it can take this. At first, it seems wrong because they are extra money to lend to investment: use money to have growth in the future, and with that money you recover easily. But beyond the issue of the correctness of the State investment, what we see now is that money is not used for investment, but for potlatch. And when all the incentives to create new wealth and economic growth are virulently criticized, it will require more potlatch. In this direction we are moving.
How did we get to this point? One of the explanations is that people rely on economic theories wrong. The interpretation which it promotes at CADI circle is in my opinion the correct but it is residential. Even Nobel Laureates in economics is cheating, and it has gotten to this point because for a long time keynesist type economy dominated the scene. People believed that by spending more and packages of incentives from the State economy would be able to return. Now we know that this idea is wrong and we need to go back to the creation of well-being, through free market mechanism that channels the economic activity in an efficient and responsible way.
The solution, in my opinion, consists in a structural reform that have review Center idea of public service. Public services were defined differently. In fact, economists are talking primarily about public goods. From the point of view of pragmatic, placing the emphasis on the public goods problem is equivalent to the suggestion that if the State does not produce certain goods, then those will not be produced. Here the taxation system. Make a list of such goods is an empirical issue. Remembering what was once regaliana the function of Government: national defense, police, justice, and research subjects can be fundamental. Certainly not most of the ones you do State at present. For instance, training does not in this category, and no health care.
In theory there is no economic argument for a wide scope of services so as to become public, everywhere, in the 20th century. The economy is not the fault of nature, but of politics. In the common vocabulary, "public service" esteorice service that the majority, or from representatives consider that the majority of our needs to be insured by the State, or is supposed to be "State responsibility". As this definition is in the interests of the House of representatives, of course, the list becomes huge. Access to school for all, access to care, "minimal" health, access to postal services ' cheap ' or telephony, art, history, museums, theatres, parks, recreational spaces, cities, transport, sport, infrastructure, electricity, sanitation, flowers in green spaces, of National Day Fireworks, television channels, popular dances, encouraging a healthy diet, they all seem to many to be reasonably "State responsibility".
Unfortunately, democracy does not help us to check this list justetea. People who study public choice theory or logic of action of politicians, the way Parliament works and lobbying activities show how our democratic system is responsible for the tendency to make the list longer. Why? Because some people have strong interests to use the political mechanism to ensure benefits whose costs will be divided to many people. When the list gets long, however, and the bill payment for each payer gets long, so, ultimately, to extend the list of public services becomes paguboasa for all. People need to understand that they, not others, paying for those things. The State, he said, is that huge Bastiat illusion that it makes everyone believe that can live at the expense of others. This is true only for professionals, and political mechanisms for others, an illusion.
The reason that we are now in a crisis is that I tried the formula of a long lists of public services in the past 20 or 30 years. Politicians everywhere have tried to have a list of more extended services under their administration and have used all the means they had at their disposal to try to finance the things on the list. It was impossible to increase taxes when they tried, when inflation inflation was outlawed, have resorted to debt on financial markets.
If it's something to do, this is reducing the tax by transferring supply services today we call public market. This is difficult today because people are not aware of the cost of things. For instance, no one knows how much France pays each year for social security and unemployment contributions. Ask on the street, most respond 100-200 euros, when the truth is that an employer pays 400 or 500 euros. It is also important that people become aware that the State is not a good manufacturer, supplier and Distributor. There is no economic reason for which the State would be a good manufacturer, supplier, or Distributor. On the contrary, when there is no profit motive, when clients are in prison, the opposite is true. Relevant economic information is among private manufacturers. If we want to reduce the economic costs of providing a service, then his standing must benefit from these sources of information. Maintaining a long list of public services in the administration or "responsibility", cut connections with the information.
Specifically, the State could outsource market, to decentralize responsibility for schooling, public hospitals and all the services which I have mentioned earlier through public auctions. And to the extent that certain services should remain the responsibility of national policy, we are in favour of a system of vouchers. Voucher system state does not produce nor decide programs but only finances those who need to have access to a type of stuff, but both.
If you still insist on the idea of a political type, then I recommend the devolution. But when descentralizam decision making local policy leadership responsible, not solve, but add a problem, since we do not just have to add a new layer of administration. But if brings with it accountability, decentralisation and stimulate competition between regions and taxpayers can then compare how they managed the budget.
I think there is a need to re-invent and individual responsibility in our societies, and public services redistributia is definitely one thing that needs to be reviewed. The fact that some countries offer examples, looks like it may be. Germany, Ireland, Canada, Sweden is trying a comeback at market. There is a need to fundamentally revise the idea according to which the State, instead of having to deal with the rule of law, we should take care that each of us to be happy, to provide effective service to all.
Sever Voinescu: can we strengthen capitalism through European integration, through a justice reform and by removing the commercial role of State player on the market
The good news is that despite the crisis, capitalism works for two centuries at least. We cannot not recognise that there is another way to organize the economy in world history, which have produced more prosperity for more people. Capitalism in crisis yourself. Each time he was challenged, rattled, shaken by the crisis, capitalism was able to repuna on f and to remain the same efficient organisation of the economy and of society.
At least after the appearance of the famous books of Max Weber, there is room for plenty of discussion on the topic of ethical bases of capitalism. I'll tell you my point of view. Capitalism, I think is a value in itself, together with the rule of law and democracy. .. .If a vision a bit, in which platonica eventually capitalism as a way of organizing the economy, the rule of law as a way of organizing the judiciary and democracy as a way of organizing the political system, are facets of the same values, extremely important, which you might call the public good. In principle, the one without the other does not produce than ersatz-type solutions and illusions. I think this link between capitalism, the rule of law and democracy comes precisely from the fact that all confess a same theme. Romania probably illustrates best that, if a particular size of three goes bad, the others felt immediately this devolution. It's easy to see that a strengthening of the rule of law was a row of a time when the Romanian economy started to go well. And as well as any time to strengthen the democracy in Romania contributed a clear good-lansaj.
But though these three facets are, as I said, the axiological normally in a mature society, institutional they must be able to express himself differently. In Romania, this is not happening yet. From there a new sensitivity to the political economic turbulences. There is a very high sensitivity to economic politics. We are talking about phenomena like corruption, as well as politicising the Administration so that eventually prove links between the three dimensions of the guilty that we talked about. As you know, in Romania, people's reactions in front of institutional response are rather reticent. To ask why people prefer another type of arrangement from human to human, a kind of personal relationship and partnership, and less institutional one. These links as the ones put democracy, rule of law and capitalism in a bad light. But they are not the problem, but the fact that their institutions are not clearly separated.
Talk about ethics and remind you here of the book by Max Weber, and religious basis or, if you will, the religious form of expression of a particular ethical. It all says in Eastern Orthodox orthodox spirit of Europe is not conducive to capitalism. You say, seeing what's happening in Greece, seeing what happens in Romania, seeing what's happening in Russia, seeing what's happening in Bulgaria, seeing what's happening in much of the former Yugoslavian space, as it is the case. It is only possible in authentic capitalism-a Protestant religious paradigm? Max Weber is no moment does not say this. The genesis of capitalism really, comes on a Protestant ethic. But the formula is possible in belong to other contexts. Concerning the european context at the moment, I tell you that indeed, by this State's asistential illusions, capitalism has lost ground and in Western Europe, lost power traits inherited from Protestant thinking. However, there is a solid Christian theme of capitalism. The problem is that in our speech and our reporting to Christianity in ocultam those moments, those passages, those texts, those who propose teachings really a capitalist formula. For instance, there's a passage in a letter paulina, in Thesalonicieni, in which St. Paul conveys without quibble, the following rule: the one who doesn't want to work, not to eat. This is capitalism. The passage refers not to the one who is unable to work, but the one who doesn't want to work. Times, it's obvious, in my opinion, the model asistential is a model State in a kinky way, underground, neafirmat, but, undoubtedly, obviously urges towards nemunca. The figures that Mr. Professor Stoica gave them and confess that I was and I'm prepared to give them, are eloquent in it.
I would like to recall that in Romania, 20 years old, when we speak of capitalism, there are two spread prejudices too. The first says it's natural for Romania to pass through a wild phase of capitalism through a phase in which capitalism ignore any rules for that Department, we know that-marxista do? -When capitalism goes first through what Marx called ' primitive accumulation phase. In other words, we are urged by those who go before this prejudice to understand that it's a fatality or a question in the flesh, there must be time of the jungle and the moment of wildness in which some thrive at the expense of others. But expressing themselves and a second bias, which coexist with the first in a funny paradox. She says that, ultimately, capitalism is a kind of slightly more advanced socialism. I mean the purpose of capitalism must be the one to give up something after all. It's abnormal, it is said, as some work on the Boulevard in some cars, and others to go with trolleybus. There is obvious those riots go by trolley bus and there are often moments of guilt of those who go with special cars. Between these two visions, a vision of a normal phase of wild capitalism and a vision of a capitalism which is in fact a kind of socialism each country is actually the solution. And call with conservative mood, the prudence, to balance and to find the solution. Asistential State offers a middle solution, but maintain an arbitrary system.
I identify this arbitrary system at least two harmful factors that infests the ethical substrate of capitalism in Romania. The first is the perpetuation of a certain post-Communist civilizations, who's prone to abuse and corruption, to trick and a certain way of doing politics in this country. Second, I do not hesitate to say it was the role of the State in all these years. The State in the past 20 years, with behavior or arbitrary, it was for some, for others the plague inside. In general, from four in four years, was plague, became muma, for those for whom it has become inside, but there had been plague, to the exasperation of some, and some for which the State is always inside. Well, this type of manifestation State illegitimate made the idea of the competition, the idea of fair competition, which is the true foundation of capitalist ethics, to be utterly pervertita.
The State, through its actions and the way in which the State in the past 20 years, whether we are talking about a specific way of conducting large auctions, whether we're talking the way they express themselves as a legislator, whether we're talking the way they express themselves as the controller of the rules of the market, has led to serious ethical basis subrezirea of capitalism. There are many business people, not to say all, who are convinced that they can make a powerful capitalism in Romania, through its own strengths, through innovation and by working together. They say, in private discussions, as you always should be an administrative, judicial protection, politics. This is the effect of an expression or experiences these people had it constantly.
What is to be done? I think you have to try three ways to solidify the basis of ethics of capitalism in Romania. The first would be integration, integration, integration. Must be brought more EU money in Romania, because Europeans are chasing the money of the European institutions. Sure, it's debatable, but their performance in comparison with the rules of the roman State, and then are you are redistributing money Europeans believe they bring an improvement. The second solution: the State must cease to behave more like a solid player on the market, the State must be retained in its expression in the square for that distorts competition. Finally, the third solution is a serious reform in the justice system. We talk often about the strengthening of the justice system in the fight against corruption, we talk often about the strengthening of the justice system in the fight against tax evasion, to criminality. But there's a little talk about justice, extremely important. Is justice, justice in economic matters. A serious reform in this dimension, would lead to a quick settlement processes in this area. This type of reform would be to improve trust and enchanting eventually capitalism in Romania.
Theodor Stolojan: it needs labor market liberalization and a reformaa insurance systems and social
It was already discussed a lot in Romania, lately, about the fact that social costs exceed the possibilities that the economy currently has them. We have a milestone in resolving the problem, namely the concept of the european social market economy. This concept is inscribed in the Treaty of the European Union, but each country il made in different ways. Highlight of the conviction but laid the foundations of a market economy, Ludwig Erhard, who said the next thing: prosperity for all and prosperity through competition are inseparable parts of the same body. Prosperity for all is the goal of prosperity through competition is the means by which you reach your goal. So here is, who founded the concept of social market economy had very clear in mind the relationship between the two parts of the concept.
In Romania, we are today in a period when the economy moves towards a new equilibrium. And the main force is shrinking the public sector. We're not the only ones. Many European countries and in the other hand passes through such a situation. Obviously, this movement has a special impact on the labor market, a labour market but that Romania faced more unwelcome realities. We have the system of education, which, unfortunately, brings out the promotions of graduates, with different levels of education and which do not comply with the demand of the labour market. The phenomenon is already visible. We offer jobs and don't have the workforce with the knowledge and skills required by the jobs concerned. We have the phenomenon of globalization, which has greatly increased the vulnerability of workers, both from the point of view of the changes that occur through new technologies, as well as from the standpoint of social assistance can be granted to a State. When you get out of what is called global standards can no longer be competitive.
This balance that has to be between flexibility and security for employees is resolved differently from country to country and from stage to stage. We have serious problems in health care and retirement benefits, which, in fact, the formation of capitalui in Romania, which means capital investments, which means creating jobs. We're used to treat labor market through the labour code, which creates a framework for conflict between employers and trade unions, but the labor market is, in fact, a resultant which is reflected in many systems, including insurance schemes, medical insurance schemes, pension or housing market. A rigid housing market, such as in Romania, no help at all in what is called labor market flexibility. And we all know this.
I wish now I mean the insurance systems reforms and social assistance. What would it mean in the reform of medical insurance system? There are two main systems of social insurance in Romania, both major deficits: medical insurance and pension insurance. These deficits are rising amid the aging population and the increasing cost of medical care. In addition, certain that we have the negative effect of the departure of a part of the workforce. Secure mobility that is positive, but it has this negative effect for us. The idea is that any form of social assistance to be contingent on the formation of human capital. Aid and assistance-whether it's tuition, vaccines or recalificari-be given solely as a means for human capital formation.
At this point, the system of social work in Romania is topped. There are countries in Latin America which have already promoted a cash-transfer programmes where this social conditioning of human capital formation, in one way or another, in the short term or medium term and long term. I'll come back but the two insurance systems in Romania, which causes the biggest deficits and which, as I said today, franeaza capital formation in Romania. Pension I don't want to take up too much. There are already formulated a reform to be Marat to the end. It will correct the imbalances that exist, but will solve them, not because it has been proven that the system of pay-as-you-go is not economically viable. In the band 1 to 1, one of which is a contribution payer who is retired, the system is not economically viable. Not being economically viable, is not viable financially, although the possibility of expenditure deficit conceals this. Think of it as the average pension represents weight% of today's average salary, so if I wanted to make the system workable, should those that pay contribution today instead of 31.5 to pay weight%, what would we pull out completely from any judgment, I am not talking only comparative with other countries, but any judgment of efficiency for the private sector.
The decision on the size of the pension is a necessary policy decision, which must be based on resources and on resource allocation in the budget to cover the deficit. If we discuss health insa, here, unfortunately, we cannot say that today we have a clear conception about what we want to do in health. The current system is not only ineffective but neither accomplish its purpose. When I say that no, I understand that you do not provide services to those who are suffering need. And the fact that it is ineffective, any resources that do not uses them effectively. It is noteworthy that in public that decade closes, 2010, although it increased by four times the resources allocated to this area, the results are unsatisfactory. In fact, what this system lacks health insurance in Romania? Lacks competition and accountability. Does not have a correct system of incentives. As a consequence, we have today in Romania a total lack of concordance between the contribution to medical insurance system and the cost of medical services.
How do I solve this lack of State compliance today? Partly through transparent allocation of resources, and partly by hiding a lack of effective access to an important parts of the population to health care. We say that "the population is entitled to receive medical care when sick, so is human, so is the law." But, in fact, what happens? We have the ability to recognize that a good portion of the population cannot get access to medical systems that needs to be done well?
Do not get into the details of the ineficientei control the cost of medical services. Mention but perversity so-called partnership between public and private, that was created today in Romania, with bonuses given by suppliers of drugs to doctors to prescribe only certain drugs, and by shifting or concentrating heavy cases in the public system and moving those lightweight in the private system.
That solution is not perfect, but it's better than the current situation is the settlement of medical insurance system on the mechanisms of a market economy. The market creates a fair mechanism of incentives for all actors in the health system and also efficient. The mechanism must include insurers, health care providers, suppliers of medical equipment and medicines and the authority of the State, in the double-regulatory quality and allocation of resources.
What should be done? The first thing, the liberalisation of the market of medical insurance. Maintaining a single company, national medical insurance houses can not track the cost of medical services, in each medical unit, nor can watch the lifestyle of the person who is secure.
The second thing, the privatization of medical services units, with some stages: in stage one, keeping emergency hospitals, but not as I want those in the local area, an emergency hospital every seven municipalities.
Third thing: home insurance has become the basic element for forming resources expressed as sum, and not as a percentage of income. The fundamental difference is that the insurance company becomes the key to determine, depending on the cost of services, home insurance and more. No one has a free medical service to ensure that every health care provider has a cost that anyone must endure and have clearly seen cine support. The ideal is that people have the opportunity to choose both insurer and provider of healthcare services. At the same time, through dialogue with the insurance company, people need to meet certain risk categories and, consequently, to pay a higher or lower correlated with higher benefits or lower. But if the population wants a certain category of people to benefit from free medical assistance, and empowers the State, then the State has to provide in the first budget of health insurance for those who want to be in charge.
Finally, the fourth thing, introducing a new form of insurance against the risk of requiring medical care, long-term, to old age. Aging population plus the increase average duration of life, make this risk is becoming increasingly visible. In developed economies, it appreciates that 70% of the population, which has surpassed the retirement age, somewhere in the 1970s level, require long-term medical care. And obviously a public insurance system must respond to the demands of those who are still in the workforce, but now have insufficient income to pay the insurance premiums. The incentives are very clear: insurance companies, health care providers have the most powerful stimulant: profit. The profit incentive in terms of free competition will oblige both to maintain control on the costs of medical care, as well as to influence lifestyle.
Illustrate this idea with an episode in the history of personal. When I was hired at the World Bank, they sent me a paper in which they told me: ' Mr Stolojan, please do visit the medical annual. " And I, like any novel well-educated, I put it aside, and I forgot it. Over two months, I came up with a new paper, which announced that "If you do not do so in the following 30 days, you will have to rediscutam your first insurance". And I went and I made my annual visit. We do not exist to do so. The us is a total rupture between contribution and medical assistance.
Varujan Pambuccian: crisis late Socialist utopia attest
Very long ago, the Greeks tried to figure out why the background of fixed stars there are stars that moves. The Greeks tried to explain the movement of what were then called the planets and get predictions. The first model i owe him Ptolemy, which leave from two premises. The first was that the planets move on circles, uniformly, the second in those circles have Center near the center of the Earth. The model has given a good prediction for 50 years and was considered to be correct. After 50 years, the followers of Ptolemy have said "master of not how to be mistaken, the planets move on circles, but their moves on a circle, which in turn has its Center in the center of the Earth", so the model to give a good prediction. In the time of Copernicus, it was like some planets will have almost seven also epicicli. What he saw was that the Copernicus system so absurd and unnatural became natural, moving her Center.
I'm afraid that we're exactly in the same situation. Think in epicicli and try to rafinam a concept whose bankruptcy is evident. How this concept appeared? He appeared, I think, between Roosevelt, during the New Deal, which was a very wrong approach of the great depression, saved by the second world war, but remained in people's heads as the solution. It was, incidentally, the first time when politicians have understood that the table can buy votes. Like any normal absolute democracy mechanisms, through legislation, through the use of public money to buy votes. Roosevelt is the first time time of the welfare State, the start was buying votes.
This era is one in which the company and the economic game are engaged in a Ponzi scheme, which colapseaza when there are no resources for it. Today we are close to this edge. I have never once been close, in the ' 70s, but then another chance managed to refuel pyramid game. The story of the so-called Nixon Shock. It was the moment currency broke a limited resource and we have introduced a mechanism, which I consider artificial neeconomic: fiat currency. This is the second time, the insidious way in which arises from the corrupt politicians win votes, cumparandu them.
Buying votes is done with regulatory measures which, normeaza and alter what were natural rights manifested in contracts. These altered state were fixed in people's minds simply as "rights". Regardless of how the economy works, they are considered copyrighted.
The third time it comes from a different kind of politics. A policy apparently different from the partisan and that it is the policy of the unionist blocs dusa. They were reinforced in the 1950s and managed also to codify rights level things that were free of labor contract. The failure of such policies was seen in the early 1990s, when production was moved to China. Because, of course, when the market opens, in which you can optimize your operational costs, will do.
The fourth time contributing to this Ponzi scheme comes with corporate activity. Especially in the european space, but also in the american corporations have started, little by little, to resemble Socialist enterprises, that I think some of us may remember them. Today they have shareholders so divided, so diffused, so we can consider of the entire nation, meaning of anyone. Hardly anyone can say how large corporations get a President in that position because, more often than not, there in the back, not for economic reasons but also all kind of politics, a politics that is made with members of the Board and with a minimal intake of several shareholders who together represent a much smaller fraction than that which would give legitimacy to a politician. From this point of view, vote, today, politicians have more legitimacy than the leaders of corporations. Meanwhile, corporations are starting to make things that are not normal for a corporation and you pay every time you buy toothpaste, SOAP, shampoo and I do not know what else. Because we then pay all team building sites that corporations, all your corporate social responsibility-that corporations and of bollocks that unrelated to economic activity that corporations, but have a close connection with the maintenance of the power of the Board and those who become Presidents of those corporations. Just as you pay fees and taxes that we wasted today politicians, just as we pay every time we buy something, all of these mechanisms through which it holds in power the leaders of corporations. And this world, not only the political world has come to consume more than they produce and I might like it to be directed towards the end of her.
What we are living now, in my opinion, is the end of a political system, it is the end of socialism. For 70 years, mankind lives in socialism. There were several speeds, that's right. We lived socialism in the fifth speed; These were consumed quickly ended. Now we live in socialism first. Go slowly towards the end, but the end is inevitable because it consumes more resources than can allow. All those things are moving in debt that pays a generation not inside them, but whose payment is procrastinating. Now, we live a debt maturity in the last 70 years, to maintain power at various politicians, like keep it off to power various leaders of corporations, and to maintain the various Union leaders ' power. The bad part is that nobody knows how can I migrate from socialism back to capitalism, never experienced something so far nobody on Earth.
And it is hard to see how it could. Because people born, raised and educated in a system in which I know that anything would happen, any would do, no matter how badly it would perform, there's a State that will give always a helping hand, it's very hard to accept that the State disappears. And though maturity comes. It is possible that in two years, two years and a half, his witnessing the appearance of two types of States. The rule will be the State's corpse; There will be exceptional and the state-worm, ones that will be smart and know how to take advantage of this first time. -State corpse will be that you will continue this social system. In Romania we have a party that promises while lowering taxes and increasing taxes and social benefits and 20 000 euros of human fodder. This party occurred recently has 10% in polls. Such parties are trusted because there was hope that a chance of this system is still great. People vote on those politicians ii that promise more positive rights. If these politicians will come to power, people will expect to be enabled. And when they wake up in a situation when no one will be able to do will find that investment is most intelligent in the repressive system. In these States, we've called the corpse-States.
States-the worm will understand very quickly that there are areas where there will be state-corpse companies that could be interested to pay fees and taxes elsewhere. I don't think in the near future will be the struggle between State Yes on attracting investments. Rather, in the near future, the struggle will give tax resident. And I hope you take advantage of this. United Kingdom has low tax burden and it was found, in recent months, a departure tax residency in France there. Bulgaria is in the same position towards Romania today. We all respect for States who understand where things are going and know how to take advantage of favorable circumstances. I do not think, when things are falling, solidarity work. At least all of human history up to now has shown that it does not. I'd like to know how to take advantage of the moment and succeed to make this move of the paradigm.
I don't think adding epicicli world economy will succeed, by some miracle, to preserve the current system. Growth cannot take place in conditions in which the State has a monopoly which it has in most of the activities, is the main client and spends money as I think that politicians must do to win votes. Likely that the return to capitalism will be difficult, it will probably have intercalated dictatorships, but surely will be done because it's the only system in which there is a fair balance between what you spend and what. I think you should give up on adding epicicli before others because others will surely give up and you might like us to stick in a wrong paradigm.
Valentin Ionescu: privatization of public utilities prior Condition is the liberalisation of the market and the delineation of property rights
I'll address the issue of privatization of municipal services by making reference to three things: the liberalisation of the market, a clear delimitation of property rights and following a neutral tax effect.
In the process of privatization, the first prerequisite is to be observed that there is a market. If a market is not formed, the privatization of a company is a commercial failure. Abundant examples of this kind, and which operates at the level of the national economy, and those operating at local level. Remember the national operator, Romtelecom, which, at the date of privatization, in a non-liberalised system. It was an advantage that I wanted the operator who has bought this company. Only, when the company bought all the costs of privatization, in fact, have been transferred to the consumer. Because of that, that was a privatisation failure partly because it was made too early. When the market was liberalised, fixed telephone services have improved, rates have dropped, which until then were growing every year.
Another case with which I faced before privatization market to be formed was the situation of land improvements. Land reclamation is called in English. Land reclamation, land sauimbunatatirile refers to irrigation, draining, embankments-all such works are in the public interest and concern both the central Government and municipalities because we know what effects it can produce floods or alunecarile. There will be some high costs for all if you are not at the time of certain works. Market not being formed, privatization has been a failure. From a single move, it has distorted the privatisation process and people have formed of a misunderstood on the processes of privatization, since they incur costs that would have to bear.
Locally, the same thing happens with thermal energy sector. Some municipal services are liberalized, although they are subject to a process of control regulations and licensing-I refer to transport, garbage, water, public lighting or channeling. Heat, unfortunately, remained a non-liberalised sector. And as for non-liberalised sector heat is constantly produced and generated losses always rents towards others. Job seekers rents were very happy that this sector is not liberalised. A concrete example of searching for RADET Bucharest is 1606, probably whose recipients you are. Does not have an inventory of fixed assets either at the moment. KRISTOFFER knows precisely what he has as fixed assets but run things for the rehabilitation of pipelines. Therefore, we pay for it, but we don't know why we pay. At the same time, we are not able to opt for other energy services, although they might be cheaper. You might very well, because the technology for the past 15-20 years there has evolved a lot and you know very well that a House can be heated and otherwise, whether it is a House, a House, an apartment or yard. Therefore, I do not service constraint to remain trapped in consumer heating system. However it does not allow me to get out of the system than as a result of administrative procedures. The procedures difficult to do nothing but fuel for annuities and chetele at the same time in the system. Therefore, deregulation, market liberalisation is a prerequisite before a company to be privatized, otherwise we will do it for nothing.
A second condition that must be fulfilled before a smooth privatisation of a public service is to specify the property rights. Public-service modeling-the scales of efficiency that one follows a consumer welfare and operator-means assigning a cost that anyone must endure. And this allocation primarily depends on the specification of property rights. At the moment, Romanian law let not only in public property land or pipelines or installations, which might seem like natural monopolies, but also equipment, industrial plants, which to me seems a little anomalous. In this situation, one that takes over, as a public utility, meaning not just providing a service as such, but also ensuring the maintenance of infrastructure, supports some costs through investments, as well as through the charging system. Investment pick up a problem if we have an unclear delimitation or too wide to public property. Private operator will seek to deceive the consumer, as it will be in his advantage to leave the administrator to give the public reckoning. We have this situation to us, in Bucharest, where you know very well that there is no strict delimitation with respect to pipelines and we don't know where the pipes ends, what happens with pipes that crosses a building from a condominium etc. Here is the case of the same events talk for themselves, beef in Bucharest that works badly, but it works well in Ploiesti. Very clear delineation of the property by the law must be made before proceeding to privatize a company commercial.
The third condition, tintirea a neutral tax effect, keep charging. Pricing is influenced by the way you get challenged when it doesn't work very well in a market. It is often common for privatized because most public utilities are in public ownership, and then, under appearance, ends more contracts. Ends and a concession contract, can't have a contract delegating indirect and a number of other contracts accompanying the privatization contract generic. When a municipal utility is privatized, does not necessarily have to be kept in mind, but should be tested only decrease losses, because otherwise it will transfer the cost of privatization to the consumer. If you're trying to get a great income from privatization, then the investor who took over the company will seek to recover this investment through pricing. This is the risk. For this reason we say that the effect of the tax should be neutral.
There is another risk, the risk that many municipalities, many mayors and took him. Before that the market to be liberalized, and before you privatize have made loans to rehabilitate the system of thermal energy. It was a bad decision because the market being liberalized, one cannot know what consumers to count in future after liberalization. And then the investment that it may prove impossible to be recovered from the privatization of commercial companies concerned on a market that became a movement. But all these risks, and cover the cost through charging, consumer deception and I talked earlier can be avoided before privatisation are liberalizeaza and distinguish clearly the ownership of equipment and infrastructure elements.
Cccccccccc: amid a public speech drowned the noise continue playing politics class extraction of rents
I'll I mean the three themes. First of all, I will refer to the connection between external financing and social imperatives in Romania; the second theme is dedicated to the high level of populism; Thirdly, I will dedicate more time an idea related to noise.
Regarding the first topic, external financing and social imperatives, note that in Romania the last 20 years, there has been an attempt to maximise wrong a function of social production. Instead that incentives, including rules, legislation, remuneration, to be laid down so that his company evolve toward a maximization of income per capita, the structure of incentives was the Anglo-Saxon, "manipulated", so that what has been maximized over time has been the extraction of rents, which mentioned her and Mr. Valentin Ionescu.
This was done in a way that is fragmented, not happened continuously. Every time politicians have had a need for external financing, so often they promised reforms and adjustments necessary for financing and usually good. When external funding obtained under cover of these promises, sometimes some of the promises have not been fulfilled at all, sometimes have been partially fulfilled. External financing came under official forms, for example, from the International Monetary Fund, as well as under private forms just because the conclusion of agreements with the International Monetary Fund gave credibility. Held this process go as reform and stop after that; go again for money, stop again because social pressure brought them to those who were in power losses, in terms of votes. This has happened lately in the society and created a degree of resistance to what is a tougher reform, although it is required.
For this process to maximize rentelor is to blame, mainly class politics. In this process, of course, as Romania remained relatively low. Per capita income is not where it should be. We are too poor to produce sufficient domestic savings to finance economic growth around potential's Romania. Before the crisis, the potential was about 5%, and, after the crisis, it is presumably 2 and a maximum of 3%. As a result, Romania is dependent on external financing. I was addicted to the outside and the economic growth in Romania will depend on the company's capital to come from abroad. Yet capital coming in Romania are the official capital. But the private sector grows if private equity wine because they generally go in the private sector.
The second idea, the infusion of populism, is closely related to the first. Foreign capital will come under one condition: to maintain the coherence of the policies. Otherwise for fear they will stay away from us and we risk that in Romania, economic growth to be crawling, at very low levels. Today, Romania is in a position to able to resume economic growth if you make certain adjustments. There is also the risk of creating a vicious cycle, short, medium, now in Romania. If we are not able to make adjustments which lead to economic growth, we will have some deficits as a percentage of GDP. And though they have small deficits, will not enter the capital. And not having a share capital, we will not grow and this will perpetuate the relatively large deficits, and so on. It is a vicious cycle that we must avoid while you are operating adjustments.
However, for 20 years, I would say that in the past two years with fondness, politicians have promoted populism in Romania. The source of populism was added, in the last two to three years, say without worrying that wrong, it has added a great deal of press and here comes a big risk for Romania. Once this infusion of populism has touched or reach a critical threshold, resistance to reform will be so big that it would confiscate their future political political parties. And the Romanian people generally will seize the opportunity to fulfill an objective, namely to raise the standard of living. Infusion of populism is very dangerous because any adjustment will, after a rush of years of populism, will be rejected by the population and it will be very difficult to get.
And with this move to the third idea that I wanted to say to you today, the noise. In my opinion, against the backdrop of populismului, it's so much noise, that it became difficult for very many people, but I think for some analysts, to separate what is noise what is the trend, what is newsworthy, what is essential. And because of this one cannot understand how we can progress.
If we follow the dialogues taking place today in Romanian society note that are no longer considered decent to explain that, beyond the noise, which is essential for Romania, is that all efforts to be directed towards raising the living standards of citizens. You heard somewhere? Very peripheral. But it must be the ultimate objective of Romania. The fundamental objective of Romania is to convearga, in terms of living standards, the standard of living in the European Union. How did Romania and those who behaved make policies across this lens? Very inefficient, say, to be stylish. For example, during 2004-2008, to achieve the objective of increasing living standards, economic growth has been wrongly fueled by Romania and tax policies have created imbalances. The crisis which has hit Romania in the fourth quarter of 2008, the exogenous, meaning coming from the global crisis, it would have happened anyway, in Romania. Maybe not in the fourth quarter of 2008, but it happens anyway. Many things were unsustainable. At the level of economic growth potential is the main objective but about this there is no discussion in Romanian society. This is too bad because the company needs a catalyst.
I said that in the period 2004-2008, politicians have not understood that the main challenge was to convearga towards the standard of living in the European Union, namely to have a certain economic growth, while prezervau balances. Now the crisis has changed the developments and the main challenge, which again is the technique that is not, is that Romania to ensure fiscal sustainability over the medium term, while not affect economic growth. Say it's a challenge because it's not easy to achieve this. Things are fine, are very narrow traces, which should break with great accuracy.
How can it be ensured the sustainability of tax over the medium term, without obstructing the resumption of economic growth from the potential? Class politics must realize — and this is the second main message you convey in such a dialogue, which are intermediate goals on the road to the ultimate objective. In my opinion, there are two. The first is the objective of increasing the competitiveness of the economy. If we manage to incentives are structured so as to push the economy towards a higher level of competitiveness, we will do the world a claim raised for the Romanian products. The second intermediate goal is increasing the potential for economic growth in Romania. The crisis led to reduced to 2, maybe 3%. With such potential can't convergi towards the european standard of living. To ensure that the economy can grow and with 5, but if it has the potential to produce imbalances, which will turn back, will stop the growth. This happened in 2009, our fabulous growth of 7.1% in 2008, was suddenly transformed into an equally large decrease. The potential of Romania moved back.
How can the economic potential of the country increased? The competitiveness growth potential. Here are the factors that depend on Government and the factors that are not dependent on the Government. Those who don't depend directly on the Government, as well as technological innovations, changes should not be discussed here. They do not usually covered on medium-term policy, but merely the subject of a short-term policy. Factors in the Government's policies are the ones such as social insurance policy, policy on unemployment and labor market reform to which he named Mr. Stolojan. These are essential changes, which the Government must do. The speech of those who make economic policies and politicians but wrong ideas promotes, false or unclear policy purposes in terms of contribution to the social insurances and in terms of labor market reform. In my opinion, public discourse in Romania has taken a totally wrong direction. And what will result is an extremely high resistance to reforms really needed.
Therefore, the effort of those who deal with the kind of things with which we deal here, and we need to clarify what is noise and his separation from what is important. Because otherwise the audience, when you choose, vote or make decisions, will not be instructed on what is noise and what is the essence.
[1] Excerpts from the Conference "Mechanisms of the crisis" were published in the January 2010 issue of the Financial Market and the full text in the magazine Oeconomica, no. 2/2010. The texts of the collection "world crises. Explaining liberal ", published in the May 2009 issue of the magazine Idei in dialog, are available on www.cadi.ro.
