It is easy to devise an economic program: you ask the Germans what needs to be done for Croatian companies to become suppliers to German exporters in China. And that’s it!
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Written by: Miodrag Šajatović |
Sharing an ever-shrinking tax pie only leads to social unrest. Cutting makes sense only if there is a coherent state plan to increase GDP. And Croatian politicians do not want to deal with that homework. |
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When Prime Minister Jadranka Kosor announces a budget rebalancing, it is a sure sign that Finance Minister Ivan Šuker will soon set off into the world seeking new billions in loans so that he can then pretend to be important for the next few months and claim that everything is fine because, after all, pensions and salaries are being paid regularly. The rebalanced budget is necessary for Šuker because it convinces creditors that his government is serious, responsible, and will repay borrowed funds on time. Unfortunately for the ruling party, this folklore is increasingly difficult to sell at home. No matter how much the government tries to implement changes in budget items cosmetically, there is less and less maneuvering space. Coalition partners are becoming increasingly nervous, affected groups are becoming more aggressive (bankers, unions…), and the opposition is providing increasingly coherent proposals on what to do (the SDP’s work ‘How to Stabilize Public Finances’). In the coming weeks, fierce debates, protests, announcements of coalition breakups… all sorts of performances can be expected. And once again, the essence of the problem will not be discussed. Futile Work Political parties, both in power and in opposition, instead of exhausting themselves in more or less futile discussions about budget rebalancing, should focus on the more difficult but only correct task – how to radically increase gross domestic product. If growth rates in Croatia were four, five, or six percent today or tomorrow, all budget problems would be easier to solve. Reducing the budget gap by cutting costs or introducing new taxes is a miserable job. It is a punishment for past failures, but it is not a solution for the future. In political circles, it is taken for granted that reducing the budget gap would stimulate GDP growth. Yet no one has simulated what happens when balancing begins. From HDZ ministers and advisors, it has been shown countless times that it is impossible to expect a ‘change of head’. They refuse to do the homework where the budget would not be the pinnacle of thinking. Today, no society can succeed in a world where the real sector and the state do not work together with thoughtful strategies and policies to increase national wealth. Expecting something important to happen in the economy just because of the stabilization of public finances is naive. In this, the SDP is currently making the same mistake. In their work on stabilizing public finances, the SDP members present the correct thesis in the last slide that the prerequisite for everything is ‘economic growth, new employment, and productivity growth’. But when the button for the next slide is pressed in the presentation – it is absent. If the opposition wants to take power, it must provide voters with a completely convincing program on how it intends, if it comes to power, to pull the country out of recession and start creating conditions for sustainable growth and greater employment. No one will gain political points from cuts in these or those budget items. Votes can be gained from a coherent development strategy that will answer the questions posed by today’s global economy to any responsible leadership – and presented simply. Ask Merkel! Therefore, it should not be surprising that there are increasingly frequent initiatives to create a ‘third block’. No matter how much former President Stjepan Mesić refuses to enter active politics, as in the most recent case of unionist Vilim Ribić’s announcement of the establishment of a political party, the possibility should not be dismissed that he might respond to ‘numerous calls’ at the last moment. Of course, a coherent economic program would also be expected from him. If in the coming months (because after the rebalancing comes the budget for 2011) there is still only ‘grinding’ about which costs to cut, the IMF is inevitable. And the problem is that the IMF has never given any country coherent advice on how to develop. So, in that case – we are back to square one. Where is the solution? Perhaps it lies in some Croatian political leader going to Germany, where the growth rate has already exceeded two percent, and asking Angela Merkel what needs to be done for thousands of Croatian companies to become suppliers to German companies. Why? It has been shown that the German export industry raises the local GDP because it manages to export massively to China, where demand is growing at almost 10 percent. If Croatian companies cannot directly enter China, they could do so through Germany. What needs to be done for Croatian companies to start working for German exporters would be a completely convincing Croatian economic program. And we would no longer need rebalancing. |
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