Cycling enthusiasts know what I mean: you are happily riding at full speed when, all of a sudden and out of nowhere, a stick finds its way between the spokes and the front fork. The bicycle stops as if it hit an invisible wall, while the rider is propelled forward, tumbling in the air and hitting the ground, crushed by its weight: another one bites the dust. This is precisely the kind of thing that happened to the world economy: out of nowhere, a microscopic THING sends the mighty world tumbling down.
Never before has the global economy crashed so suddenly and so deeply. Never before has the crash affected all major economic sectors and never before did they stop working almost simultaneously. Never before did tens of millions of people find themselves unemployed literally overnight. The 2008 – 2010 financial crisis looks like child’s play in comparison with what we are facing now.
As for Romania, the economic pandemic could not have come at a worse time: a budget deficit over the EU limit despite economic growth for the past four years, higher and higher public expenditure due to unrealistic growth of salaries in the
public sector, a (legal) promise for yet another 20% rise in pensions, a crucial election year, with both local and general elections. What else can go wrong?
Well, something even worse may loom in the future, if the people in power put the short-term electoral gain before the long-term economic rational reasoning. And the signs are not encouraging at all. So far, the government promised milk and honey for everyone: utility bill payments suspended; loans reimbursements postponed; taxes postponed too; financial aid and financial stimulus for various kinds of companies. Is it the right way to buy one’s way out of the current catastrophic situation? Honestly, I doubt it. Mind you, even the electricity companies need money to pay salaries and buy stuff to keep the critical infrastructure up and running. Where do they get cash from? The same goes for gas, for internet, for telephony. And even the dreaded banks, where to they get the money to bankroll the government’s social expenditure or to finance recovery projects?
History has shown us that the Romanian government – regardless its political color – is a pretty bad poker player and only sheer and undeserved luck has helped the country to pull through. Right now we are just beginning the game and we really do not know how long it is going to last. Despite not having a clear good hand, we are betting on it, while we don’t even have enough cash on the table. Nor do we have someone willing to lend us cheap money until we might get a straight flush or at least a full house. The Romanian government was betting on winning two rounds of elections – in June and November – no matter what. But so far the game is not going the Government’s way. It bet on early elections, while the Faith had “postponed elections” in its hand. It bet on a manageable deficit, and the Faith cleared out the table with “ANAF failed to collect money”. The Government bet on “give aid”, while the Faith cynically tabled a “no more money in the coffers” four of a kind. See what I mean?
So what has to be done in order to restart the economy? Needless to say, first of all we should leave the poker table. Second, we should look and learn from history. Thirdly, we should denounce the “do now-think later” logic that has so tragically marked the Romanian way of solving problems.
As the first one is obvious, let’s turn to history, which has taught us that the state should not plunge into the abyss alongside its subjects – citizens and companies alike – but stay out and throw us the rope so we can climb up and rise from the pit in which we have fallen. In this respect, I believe that the idea of the state buying stakes in private companies to capitalize them is silly. Living aside that the Romanian state’s managerial track record is nothing to be proud of, such a measure would open wide the gates for corruption, the final result being that the money would be spent on some carefully chosen companies that even in the best economic climate have delivered nothing else but losses.
Instead, the State should invest in major projects that will benefit the entire society and will
act as a catalyst for the whole economic chain. The state should not become a hysterical money spender just to give the impression of doing something, but a wise and choosy customer that buys only things that have potential to produce real and material wealth, goods and services that will help it grow and develop, and thus improve the citizens’ lives.
And, boy, we have so many badly needed things to do: to build the motorways: from Pitesti to Sibiu, from Ploiesti to Suceava, from Târgu Mures to Târgu Neamt, from Pitesti to Craiova and Oravita and from Oravita to Lugoj, from Drajna to Braila, Galati and Tulcea and from Brasov to Oradea. Let’s modernize the entire railway network and build high speed trains capable to link Bucharest to Budapest and Vienna and further beyond. Let’s modernize the crippling electricity network, let’s clean up the ecological mess and create vast natural parks, let’s invest in cutting-edge research and development facilities and in schools that belong in the 21st century, let’s invest in new and efficient projects, let’s build hospitals and fill them with state-of-the-art medical equipment, let’s build underground metro systems in major cities like Cluj, Iasi, Timisoara or Constanta, let’s cut the red tape and demolish the paper-based bureaucracy and embrace the digital administration of the state.
Let’s get back to work!