A political and economic perpetuum mobile

Aside from the already legendary medium-term Strategy, not even a sketch of an economic, social or other programme has been brought into Romanian public attention, although elections are nearing and the term “electoral offer” is uttered with increasing gravity.

Parties are yet to disclose their platforms, on which specialists, shrouded in a mystery bordering on the subversive, are allegedly working for the wealth of post-electoral Romania.

Of course, the transition period, by its very nature, demands a certain type of solutions, narrowing the spectrum of feasible alternatives and therefore the margin of ideological delimitation.

Of course, strictly specialised debates should not necessarily be vulgarised on prime-time TV, but some rumours would still vent through to us if, indeed, major political currents would clash, and economic alternatives would be fiercely debated.

The calm is only troubled by the noise of opinion polls, distancing speeches, support speeches, circumstantial mergers and adherence to the ideals of democracy and market economy.

In fact, public debate, especially at the top, has been stuck in these dusty terms in spite of (or perhaps due to) the ever more intense political agitation, and the biggest danger is that these economic programmes, which are invoked rather than spoken in a magical ritual designed to hypnotise the electorate, will remain an enigma even after the votes are counted, and the new cabinet is eventually installed.

Negotiations between parties, always designed to give birth to a broad coalition, are limited to “finding common points in our programmes,” but the mystery remains as to what those programmes are.

Still, even with the exception of the aforementioned Strategy, these are some news in the electoral landscape, even if limited to packaging – it is the doctrinal mix.

After the reverberating failure of the “social market economy,” a kind of consumer socialism, came the turn of social-liberalism. In any case, out of a 19th century domestic liberalism and a timorous socialism, the new current promises to become the most “centre” on the Romanian stage.

A two-way programme

The largest part of the public credibility earned by premier Isarescu owes to the medium-term strategy and to the permanently confirmed consistency in enforcing it.

Since the success of this Strategy, the appreciation of the European Union on one hand, and the economic stabilisation in the last few months on the other, is at least in part a matter of public relations, a matter of image, it would be ironic that this success should again be served as a political issue in the campaign for the Presidency or at least be ascribed by some party to itself.

In other words, the sympathy capital since the Isarescu cabinet came into office would confirm the positive nature of this programme and, again, tends to return, multiplied tenfold, on the political stage. The similarity with “ponzi games” is absolutely accidental, but it exists.

After it receives the support of the new President Isarescu or the Isarescu Cabinet, the medium-term Strategy will probably receive better treatment from the European Union, although textile exports will have settled down by then.

The fruits of steps taken by the Isarescu Cabinet will only become apparent in a number of months, not immediately, as it has been noted already that the explosion of Romanian textile exports this year, and the overall economic stabilisation these days which can only be observed but not contested, are the effects of the fiscal reform planned late last year.

For now, what can be observed if an inflation rate above expectations, which could not be held back even by a 10% limit on the energy price growth, whereas producers had argued for 30%. This attempt to limit inflation at the end of the year does nothing but put off further price growths and hampers restructuring in the energy industry.

Similarly, after ANRE refused this spring, for the same reason, some energy price growths, while introducing VAT on energy, the agency was forced in June to accept a hefty 34% increase.

Of course, a careful analysis of steps taken in the last few months can reveal some doubtless successes, but it must be said that the Strategy is being discussed rather than executed; it should not be taken as an axiom.

Turning it into an exclusively political fetish can only lead to bitter disappointments, because even a partial success can be viewed as a failure.

To connect the quality of an economic strategy to generally political considerations coming from the European Union and to a random growth in exports figures can compromise an essentially good solution, especially when negotiations with European bodies will inevitable be extended, and Romanian textiles will find themselves in less demand on European markets.

Of course, it may be that a careful analysis of the Strategy could lead to an equally grand enthusiasm, but it would be of an entirely different nature than being unconditionally embraced by politicians or broad masses of people (over 300,000).

Economic growth

With two hardened economists engaged in the year 2000 electoral episode, the discussion suddenly becomes more professional, but it is unlikely that the overall talk will go beyond the mixture of rudimentary slogans.

Social democrats will continue their chatter about Nordic countries, their social policy and spectacular growth, forgetful of the fact that these very Nordic counties have been forced to drop the “Swedish model” as their wealth started to lag behind economies that embraced the neo-liberal model. The centre-right will itself continue its staunch plea for market economy.

Between them, in the dead-on centre, the social-liberals will demand liberalism and socialism – two products in one, 10% off sticker price. Over all these, a wind of European integration and nothing but kind words about NATO. Minor economic policy issues are not discussed in the open.

The recent agreement between the Liberal Finance Minister and the Christian-Democrat Agriculture Minister on wheat subsidies could have spawned a correct confrontation on agricultural policies, had these policies existed in the first place, just as restructuring in the energy sector could have played the same role, the more so as the raw materials for comment has been supplied in ample amounts from neighbouring countries that happened to be one step ahead of us.

An obvious symptom of a disoriented Romanian politician in economic issues is the amalgam of ends and means. Let’s achieve economic growth, they say, let’s lower taxes, let’s increase exports, let’s stabilise inflation, in short, let’s bring good to everyone.

This is the potential value of the much touted Strategy, in the order it brings to the government mechanism. Some things are under the control of the Government or other authorities, whereas others are free variables. What matters is that the number of variable is not too much greater than the number of equations, a technocrats would say.

When the number of free variables is too small, as in a command economy, the optimisation of the system is an illusion, and when it is too big, the system is out of control. Hence the sophism of social-liberalism.

What is certain is that political discourse often confuses means available to officials (first of all, budget and legislation) with the ends, results, ideas. Inflation, for instance, cannot be lowered by emergency ordinance, but only by lowering domestic debt, balancing the budget, and even then it depends on the National Bank’s credibility.

Voters and programmes

In fact the cleavage of political discourse to the low public level of economic common sense has sufficient electoral justification.

The electorate does not need mechanisms of economic recovery, but recovery itself, not systems with more or less equations, but smaller prices. Therefore, the absence of strictly technocratic discourse in the public space is less objectionable.

What is objectionable is the lack, at least so far, of this discussion at the highest levels. In all countries that have taken a few steps toward transition, it was not the electorate that supported a programme or a strategy, but a group of economists well connected to the international medium, appreciated for their intrinsic value.