Economy of irresponsible subjects
Adelina Marini, May 22, 2009
Crises are very useful because they give a very good picture of global condition and of the separate world economies. In this regard it is no surprise that Eastern Europe appeared among the worst hit by the crisis. The reasons are many and are complex but one of them is that still mortgages are less than the consumer credits.
To be able to comprehend better the crisis in Eastern Europe we have to remember some very important mistake accumulations like, for example, the accession period for a large part of Eastern European countries. The mistake is double. On the one hand the EU was mislead by the idea that the unification of Europe is more important after the fall of the Berlin wall than the efforts that are necessary to achieve it. On the other hand, the countries that suffered a lot, trying to comply with all criteria, couldn't establish strong enough mechanisms that could have guaranteed their stability And they couldn't for one very simple reason, because they put efforts with the only idea: "once we get into the EU, things would be much easier". The EU is also to blame for this because it didn't deny such treatment.
Now the division among European economies is more than evident. And as couple of years ago Donald Rumsfeld, a little too early divided Europe into "old" and "new", now he's scaringly right.
Another reason is that Eastern European economies were used to think planningly, but not in the sense of having something well planned with all pluses and minuses, but in the sense of centralised. And, because of the great centralisation of every economic action and the lack of real economic subjects, now we have generations of people raised with the idea that there's always someone to take care of them. As important is another problem - that back then there was a much easier access to houses and loans with very low interest and that made of Bulgaria one of the countries with the biggest number of own houses per capita. And that is the reason why there are no responsible economic thoughts.
And that is because when you have many people living happily with the thought that they do not need to put any efforts because they have shelter and can live with less money or with the support from granny and her food from the village, you cannot rely on big economic activity and, even less, on serious effectiveness. Therefore, Bulgaria will go out of the crisis when the mortgages become more than the consumer credits. Only then economically responsible subjects will appear because they will be forced, so as to keep their homes, to work harder and more effectively.
And for those who, while reading these lines, would make the analogy with the US mortgage crisis I would say that this would be illogic because in the US a lot of people made mortgages just to resale with enormous profit. This could hardly happen in Bulgaria, or at least not soon enough.
What's unpleasant for Bulgaria and some other Eastern European countries is that anti-economic thinking exists in the education, otherwise there's not other explanation why politicians with the relevant education are keen on ignoring economic logic just for the sake of a second mandate. I would, therefore, ask the ruling parties that refuse to replan the budget before the elections, how would they deal with this budget if they happen to win a second mandate? In each case though, these are irresponsible economic actions with long-term politically-economic and social effect. And it's a pity in fact, that relatively mature politicians do not realise this. Even more pity is that the voters do not realise it either. And so until the next 5-year term ... sorry, 4-year term.