If we understood correctly from the domestic press, the prestigious German economic institute IFO, at the behest of HDZ, seems to have tried to assist the new Croatian government with some of its economic and other advice. Although the title published in our domestic press partially deviates from the content of the proposals that the Germans sent to the new Croatian government, the title itself represents a school of thought in economics that requires a thorough reckoning and advice to everyone not to even attempt it.
No valley of tears is needed by Croatia nor will it help. No short-term, medium-term, or long-term struggles, suffering, tears, pain, or reductions, layoffs, cuts, or anything of the sort will help Croatia, and this so-called Reductionism must come to an end. Such a policy only leads to a decline in the standard of living and real purchasing power of the population, a decline in GDP, a decrease in aggregate demand, which reflects extremely poorly from a macroeconomic perspective, and particularly in a very strong, destructive, deflationary wave that destroys everything in its path, and countries that use this as the only or main guideline for economic policy fall into an ever-lower circle of Dante’s deflationary hell.
Greece is just one example of this, but it is not the only one. The shortsightedness of German policy, in which refugees are first accepted and invited in July only to be massively expelled from the country in January of the following year, is evident in their approach to Greece and in the document that the IFO Institute offered to HDZ: Greece is an excellent example where rigid German-Protestant reductionism cannot succeed and should not even be attempted, and Croatia should not blindly follow this.
Croatia needs a Silicon Valley of development and developmental measures. Croatia should become a combination of Hong Kong, Singapore, South Korea, and the American Silicon Valley (geographically a beautiful area in the bay near San Francisco where some of the largest American companies engaged in innovation and information technology are located). Croatian development should be based on the role of the Croatian economy as a highly diversified service sector that can and will be involved in all links of key global products and cycles of development and launching of world-class products and services.
