Výroky ke studentské meditaci …

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1 Výroky ke studentské meditaci …
Hayek: „Specifickou úlohou ekonomie je ukázat lidem, jak málo ve skutečnosti vědí o věcech, o kterých se domnívají, že je mohou řídit“ „Tvrdíme, že národ, který se snaží ,prodanit´ k prosperitě, je jako člověk, který stojí v kbelíku a snaží se sám sebe zvednout za rukojeť“ (Winston Churchill)

2 Frédéric Bastiat “Everyone wants to live at the expense of the state. They forget that the state lives at the expense of everyone.” "In the department of economy, an act, a habit, an institution, a law, gives birth not only to an effect, but to a series of effects. Of these effects, the first only is immediate; it manifests itself simultaneously with its cause - it is seen. The others unfold in succession - they are not seen: it is well for us, if they are foreseen. Between a good and a bad economist this constitutes the whole difference: the one takes account only of the visible effect; the other takes account of both the effects which are seen and those which it is necessary to foresee. Now this difference is enormous, for it almost always happens that when the immediate consequence is favourable, the ultimate consequences are fatal, and the converse. Hence it follows that the bad economist pursues a small present good, which will be followed by a great evil to come, while the true economist pursues a great good to come, at the risk of a small present evil"

3 Purpose of economic policies
macroeconomic intervention: anti-cyclical, stabilisation framework implementing government structural priorities geo-political priorities correcting market failures promoting political priorities (social welfare etc) combining, arbitrating or fine-tuning intervention instruments, held by various stakeholders (government, central bank, employers, trade-unions etc) protect market environment (as perceived by political representation)

4 Conventional wisdom governments are there to intervene to stabilize the economy governments are there to implement political priorities governments are there to promote economic growth governments are there to correct market failures

5 Assumptions As opposed to laissez-faire, economic policy is by definition about interventionism There is a great number of variants of the scope of intervention … … resulting in a more or less defensive or proactive approach to exercising the policies (intervention power)

6 V čem je problém … Národohospodářská rozhodnutí nemají měřitelné alternativy: nelze změřit nenastalou alternativu Lze změřit, že někdo zvýšil svůj užitek na úkor někoho jiného, avšak nelze změřit zda se užitek zvýšil všem Bohužel dokonce ani není shoda na tom, co je či má být oním měřitelným užitkem (HDP??...) Nelze vyhovět všem = neexistuje win-win řešení ... a navíc ... Když někdo získá, jiný ztrácí (sektorově, intertemporálně) Každé řešení má své náklady Optimální řešení je tudíž ryze subjektivní kategorií Vzhledem k tomu, že nelze vyhovět všem, je objektivně optimální řešení nedosažitelné a proto pracujeme ve světě řešení nejméně špatných Výsledné řešení (rozhodnutí) je ovliněno (určeno) politikou a tlakem lobby: opakujeme tvrzení, že hospodářská politika není apolitická

7 A také … Experimenty většinou nevycházejí, nebo jsou špatně interpretovány jejich výsledky Modely a modelování jsou užitečným pomocníkem pro disciplinování myšlení, jejich přeceňování však vede až k tragickým rozhodovacím chybám Konstantou je nebezpečí arogance politiky a populismu politiků, ignorování ověřených zkušeností (viz fiskální impuls k oživení ekonomiky) - empirii a teorii však nelze ignorovat (bude přednáška o fiskálních reformách) V historii tržní ekonomiky se ještě nenašla vláda která by uměla nedostatky trhu (pokud se shodneme na jejich vymezení) vyřešit Poznámka: řešením nebylo ani popření trhu jako takového, jak jsme se o tom sami bolestně přesvědčili … Řešením však není politikům hospodářskou politiku odebrat Své chyby má trh i vláda: které to jsou, je věcí debaty a politického názoru

8 Co se ovšem také může stát (memo: Bastiat)
Výsledkem vládních intervencí mohou být často (také) nepředvídatelné (a nezamýšlené) změny trhu. Cíle a koncepty vládních zásahů jsou často nedomyšlené, protože politikové nemají přesné znalosti o té části trhu, kterou chtějí nějakým způsobem regulovat. Řešením včerejších problémů zakládáme problémy zítřejší – toto si momentálně prožíváme v EU Vládní intervence nejsou zadarmo! Jsou realizovány z peněz daňových poplatníků, tedy nás všech. Samotný proces přesunovaní bohatství od jedné skupiny k druhé svádí k tzv. dobývání renty a potenciální korupci.

9 Examples for consideration 1
Scrappage schemes: Purpose: increase demand for new cars: provide growth incentive to car industry Assumption: segment of economy with lots of multiplication effects, large employer, get consumers go against the investment cycle (induced by crisis) Description of scheme: subsidy from state budget paid on new car purchases Who benefited: not only domestic, but also foreign car producers Who suffered the costs: all taxpayers Side effects: distortion to competitive environment, market signals Question for discussion: was that a useful scheme? Discuss the immediate effects, compared to systemic implications (costs).

10 Examples for consideration 2
Investment incentives: Purpose: promote investment, mostly (but not only) FDI, create jobs, instrument of „industrial“ policy (may also be calibrated regionally, sectorally …) Assumption: important to actively promote competitivity of economy, use a lot by all countries Description of scheme: various incentives provided to investor over a certain financial limit (tax holidays, subsidy to jobs created, providing all necessary infrastructure such as road, railway connection, water and electricity lines etc) Who benefits: all investors eligible by financial criterion Who suffers the costs: all taxpayers, non-eligible companies who are at clear market disadvantage, incidentally mostly domestic. Side effects: to some extent it is a scheme killer of small domestic enterprises, in addition it distorts the structural balance in economies (Slovakia and Czechs excessively dependent on highly cyclical car industry) Question for discussion: is that a useful scheme? Discuss the immediate effects, compared to systemic implications (costs).

11 Examples for consideration 3
Fiscal stimuli Purpose: compensate for output losses in crisis time Assumption: governments should actively play the anticyclical card of fiscal policies Description of scheme: implemented either through automatic fiscal stabilizers (what is that?) or discretionary fiscal policies, most often both, in many ways quite similar to the previous two (actually both could be seen as part of it) Who benefits: may have short-term cascade effects on many segments of economy Who suffers the costs: all taxpayers (current – via deficit - and future – via debt), private sector (crowding-out and cost effect of public deficit/debt on private investment) Side effects: over time loss of credibility of fiscal policy, implied increased cost of borrowing and, most of all, future pro-cyclical feature of fiscal policy = fiscal consolidation in times of stagnation/recession (as seen currently) Question for discussion: is that a viable policy instrument? Discuss the short-term effects as opposed to the medium and long term ones ….

12 Examples for consideration 4
School fees for university education Purpose: decrease the cost of university education to the state budget, other (but disputed) arguments: provide incentives to school and students Assumption (as officially stated): create a new financing stream to cover the needs and to improve the quality of education, create increased cost pressure on this segment of the educational system with the aim of increasing the quality, distribute more evenly the costs of getting university grades (“those who directly benefit should pay more”) – currently presumably distributed very unfairly Description of scheme: fees paid by students to cover a certain part (not all) of the costs of the education, technically various options exist … Who benefits: in the short run immediately taxpayers, in the longer run (perhaps) the entire society and economy (= benefits of better skilled population) Who suffers the costs: students Side effects: if not designed properly, may lead to various discriminatory distortions in access to education Question: what is your view of that? Do you find it fair to introduce school fees or do you stick to the assumption that education should be kept “free” (knowing however that “ there ain´t no such thing as a free lunch”

13 Examples for consideration 5
Deposit insurance schemes Purpose: protect the savings of depositors (currently up to 100 k euros equivalent) in case of bankruptcy of financial institutions Assumption: costs of bankruptcy should be primarily covered by shareholders, depositors should get better treatment because of information asymmetry Description of scheme: covers most of the deposit instruments as offered by banks and other financial institutions Who benefits: depositors Who suffers the costs: all depositors of all institutions (contribution of institutions to the Deposit Insurance Fund, calculated as proportion of the deposits they administer): cost transferred to the depositors themselves via increased fees Side effects: moral hazard: depositors less vigilant to the institutional risk, the chose their institution solely by conditions on deposits it offers, also counterproductive on the institution´s side (aggressive market practices in search of new deposit client, in limit approaching the prudential principles) Question: what is your view of that? Is it correct that institutions (governments or Deposit Insurance Schemes) take away from customers/consumers (individuals) an ever increasing share of market risk? Why should consumers not be allowed to assume their part of risk?

14 Other examples for consideration
Forex interventions by the central bank: when are they justified? Should monetary policies consider asset price development and how? How much (if at all) fiscal policy power should be taken away from governments in case of fiscal trouble? Is a higher economic growth (higher GDP increase) a viable option to eliminate the accumulated fiscal debt? How can a government support economic growth in a situation when the fiscal instrument is no more available (as it was so far)? And, actually, should governments exercise growth policies at all? If not, what functions for governments do we see in the future? When is a deficit of public budgets excessive, what are the criteria to evaluate it? Actually, is a deficit of public budgets an acceptable notion at all? What needs to be done further to the pension systems (beyond what has been introduced already) to make them sustainable in the long run? Optimal mix of fiscal reform elements (expenditure vs revenue) Is a fiscal union a solution to the Eurozone trouble? Is an early membership in the Eurozone still an option for us, given the structural weaknesses of our economy? Are there still benefits to be in? How do they compare to the benefits of remaining out? Co-ordination of fiscal policies was embodied in the SGP – why has it failed? And is the current fiscal pact sufficient to keep deficits and debts under control

15 Other examples for consideration
zdravotnické poplatky devizové intervence Konsolidovat veřejné finance i za cenu částečné ztráty outputu? Má měnová politika přihlížet k vývoji ceny aktiv a snažit se tento vývoj ovlivnit? Kdy je deficit veřejných rozpočtů nadměrný (a kdy už nikoliv)? Koordinace fiskálních politik EU: úspěch nebo neúspěch? Které argumenty hovoří ve prospěch urychlení našeho vstupu do eurozóny a které naopak indikují opatrnost? Změnila krize něco na výhledu našeho vstupu do eurozóny? Postačí vyšší tempo ekonomického růstu a nižší dynamika rozpočtových výdajů k tomu, aby se „sám“ vyřešil problém deficitů rozpočtu a veřejného dluhu?

16 Svět před Keynesem výkyvy hospodářského cyklu jsou zásahem “vyšší moci” státní výdaje zabezpečují pouze základní funkce státu (veřejné rozpočty však nejsou zdaleka vždy vyrovnané) neexistuje fiskální politika s cílem vyrovnávat výkyvy hospodářského cyklu a také mnohem nižsí daně, ale i mnohem vyšší cla měna navázána na drahý kov – přes krátkodobé výkyvy jsou ceny dlouhodobě pozoruhodně stabilní měnové kurzy pevně determinovány obsahem drahého kovu neexistují plovoucí kurzy, změny (např. v reakci na nerovnováhu OB a PB) devalvacemi či revalvacemi úrokové sazby vyplývají z nabídky a poptávky (po úvěrech) na finančních trzích a dlouho vlastně ani neexistovaly centrální banky v dnešním slova smyslu (jsou víceméně až výdobytkem 20. století)

17 Svět (resp. hospodářská politika) podle Keynese …
prioritním hospodářským cílem vlády je zabezpečení stabilního hospodářského růstu. Vláda má možnost i povinnost k tomu používat fiskální a měnovou politiku v době krize může vláda utrácet na dluh aby povzbudila ekonomiku, ale v době hospodářské konjunktury musí stat mít rozpočet v přebytku a dluhy vzniklé během krize splácet stabilita domácí cenové hladiny by měla mít přednost před stabilitou měnového kurzu

18 … a vulgární praktická aplikace Keynesiánské politiky a její důsledky
na rozpočtovém deficitu nezáleží, zadlužovat se lze téměř neomezeně reálnou hodnotu veřejného dluhu lze inflačně erodovat emisí peněz (závislost centrálního bankovnictví na vládě) praktická ukázka: “jsme přece zadluženi méně než je M. hranice 60%” Důsledky: ztráta důvěry veřejnosti ve stabilitu měny (bude přednáška o měnové politice) ztráta důvěry veřejnosti ve fiskální politiku, bobtnání státních dluhů do neúnosných výšek (bude přednáška o fiskální politice)

19 “Issues„ hospodářské politiky
Problém různých časových horizontů (vláda, centrální banka, finanční instituce, spotřebitelé ...) Problém přenášení nákladů Problém přenášení rizika Problém asymetrie informací (jejich zpoždění a nesymetrické rozložení) Problém emoce vs. Racionalita Problém dobývání renty

20 “Issues„ hospodářské politiky
Problém očekávání (očekávání jako hybný motor ekonomiky) Fenomén “vested interests“ Fenomén zakrývaných motivů Fenomén „kapka v moři“

21 Výchozí poznámky k problematice krizí

22 Hopes and reality „Spain is not Greece“ Elena Salgado, Spanish minister of finance 2/2010 „Portugal is not Greece“ The Economist 4/2010 „Greece is not Ireland“ George Papaconstantinos, Greek minister of finance, 11/2010 „Ireland is not Greece„ Brian Lenihan, Irish minister of finance, 11/2010 “Ireland is not Spain or Portugal” - Angel Gurria, general secretary OECD, 11/2010 “Spain is not Ireland or Portugal” - Elena Salgado, Spanish minister of finance, 11/2010 „Italy is not Spain” - Ed Parker, Fitch, 6/2012 “Spain is not Uganda” – Mariano Rajoy, Spanish prime minister, 6/2012 “Uganda does not intend to be like Spain” - Sam Kutesa, Ugandian minister of foreign affairs, 6/2012

23 The past and the future …
The Glass-Steagall Act from1933 consisted of 37 pages and has supported the financial stability of the US economy for over 70 years … The Dodd-Frank Act from 2010 consists of 848 pages, together with the related implementation regulation it represents several hundreds of documents with over pages …

24 Few questions we are dealing with … these are not minor issues, indeed
Is the eurozone capable of surviving? If yes, at what cost – and how will these costs distributed? What needs to be done (changed) for the euro to survive (institutions, policies …)? Are the decisions, taken recently, sufficient? Short term vs long term effects of decisions … Do we really need to be scared of the consequences if the euro collapses? If it does, how would that impact to global financial system, economies … If the eurozone remains heterogeneous (and it certainly does), who are the losers and who are the winners (and why is that, how did it occur?)

25 Just a few questions we are dealing with … ctd
Are politicians ready to embark on genuine changes? Most importantly, are voters ready to support genuine changes? … … meaning: are voters willing (yet) to subscribe to the principle of cross-boarder redistribution and solidarity ( far beyond the current state of play…) Are we all ready for a fiscal union? Is an EU economic government THE solution .. If yes, are we talking about a technocratic OR democratic governmental platform? Question: what is the difference between the two?

26 Just a few questions we are dealing with … ctd
Is the welfare state (EU – redistributive - social model) able to survive? In what form and with what content? Just have a look around the globe and try to compare … Actually, let's not be shy to ask even broader questions: is this not the sun set of market economies and is the future not linked to state interventionism? Are we ready to go, once again, the same road leading to the abyss? And why is it that some politicians (ironically some of them the most powerful in EU) are pushing towards the same mistakes, committed already by others in the past?? And, without willing to be provocative, what will now happen in/to France? If Hollande suggests (as he already did), that he wants a) the Eurobonds and b) to give priority to fiscal growth stimuli, what consequences may this lead to?

27 Just a few questions we are dealing with … ctd
Actually, is it not that the fiscal union has started to emerge de facto (through transfers of debt (provide example), interstate lending, fiscal rescue packages to banks etc …? And, by the way, when we talk about fiscal union in the eurozone (EU), what precisely do we have in mind? Is it having harmonised taxes, or a centralised (federal) budget with its own revenue and expenditure (on what?) .. What is actually needed in the fiscal field for the fiscal policy to be able to support the monetary union? And is it not, that by adopting an extensive scheme of redistribution, a harmonised welfare state across EU, actually new divergences will emerge (or the present ones will become more visible), implying even more transfers (redistribution)?

28 And finally, a few questions (all implied by the crisis) about ourselves and the euro (EU) …
Do we still see benefits of joining (which ones)? How valid is the argument that, actually, the eurozone is (and has always been) a kind of moving target? If it moves where it is supposed (and expected) to move, why should we care (or care more than before)? Can we ignore how open our economy is and how integrated it is with the EU, eurozone and Germany most specifically? Do we have the capacity to assess our own situation objectively?

29 And, broadly considering …
Are politicians (governments) ready to make the move towards fiscal (and political) union (= mutualising the costs) And, even more importantly, are voters (taxpayers) ready to make that step??