Thursday, July 9, 2009

Where is the success story? - Bulgaria after elections

No, I won't give a detailed analysis, only some impressions, especially because I'm not quite acquainted with Bulgaria's internal situation. (Although I had the chance to read a text from a local economist, predicting that even though the government tried to keep the surface of normality and suggested that the country has no problems resulting from the crisis, it was nothing else than mere electoral politics, an attempt to avoid greater losses at the polls.) But the story of elections in Bulgaria in the last decade is telling in a sense: the winner was never able to repeat its performance. Moreover not one of the strongest parties of the successive coalitions governing the Bulgaria slid into oblivion, (at this election this not altogether positive role fell on Simeon Saksokoburggotski's party, the former tsar of Bulgaria led a government between 2001 and 2005 and his party formed a coalition with the socialists and a Turkish minority party in 2005), while, with the sole exception of the socialists, always newly emerged parties prevailed. That kind of volatility is quite interesting in itself, given the fact that the EU membership would presuppose the existence of a consolidated democracy - at least in theory.

But the really striking phenomenon is that the electoral defeats of leading governing parties, following each other as almost being one of nature's laws, occurred during a decade of stable and steady economic growth. According to Eurostat figures in the last 10 years (beginning with 1999) the Bulgarian economy never experienced negative growth, the growth rate was only once under 4% and five times over 6%(!), in the last five years, the GDP reached a stunning 166% of the value of 1999 in 2009. Although the country remained the poorest in the EU, there are only a few other places where governments would have to face imminent defeat after so successful periods in terms of economic achievements.

And despite the "success story" (a Bulgarian blogger, whose site I've found quite incidentally expressed his pride over the fact that last year Bulgaria was the fastest growing country in the EU) no one was capable to win. Even though the country was on its way to become the new model economy, with low flat tax rate (10%) and low redistribution rate... Isn't it an obvious contradiction to the models and forecasts?

As mentioned earlier I can't give a convincing answer to the question arisen. Maybe the everlasting transition period is too long for many people (there is never a calm in the transformation, always new reforms and "reforms" have to be implemented, maybe even a decade of growth was not really raising the standard of living for the majority of the population, maybe corruption is unbearable, while the state - not least because of the lack of necessary resources due to the low taxation - is incapable to deliver justice, law and order - Bulgaria, according to various accounts is infected with maffia). And all of these are embedded into something specifically Bulgarian, as many of these can be identified in other countries - in the Baltics, or the high rate of corruption in Romania* - where it never had similar consequences in terms of the emergence of new saviors at every elections. But one conclusion is inevitable - the advocated model is not bringing its results as naturally as it is perceived by its promoters (and I can't refrain from some populism, its promoters with high salaries in comfortable offices and travel allowances), neither in terms of raising living standards, nor in market efficiency (are there anybody considering a high rate of criminality in the economy as a sign of an effective and efficient market?) nor as political success.** Once again, human society proved to be beyond the understanding of simple mathematical models...

* Paradoxically the Romanian case can prove the importance of corruption in the emergence of the investment and business-friendly image of a country. Although Romania was for a long time praised as a low tax rate country with simply tax system, in reality it consisted more then 150 different taxes, tolls, fees etc. to be paid by companies. But it was always possible to evade them with some bribery in the responsible government of local authority. Corruption was the only way to promote Romania as business friendly, and it worked.

** These assumptions were - although only partially - reinforced by the case of the Slovak government led by Mikulás Dzurinda. It lost an election amidst the "Slovak economic miracle" in 2006.

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