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Free Market Road Show 2013 | Krassen Stanchev
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AEC, KI a INESS v spolupráci s ďalšími partnermi organizovali medzinárodnú …

AEC, KI a INESS v spolupráci s ďalšími partnermi organizovali medzinárodnú
konferenciu v rámci Free Market Road Show 2013 na tému Šetriť alebo
nešetriť: Zachránia Európu len úsporné opatrenia?, ktorá sa konala dňa 7.
júna 2013 v Bratislave. Ďalšie súvisiace informácie nájdete na
www.konzervativizmus.sk


AEC, in cooperation with the Conservative Institute and INESS, and in
association with international partners organized the Free Market Road
Show 2013 in Bratislava on June 7, 2013. More information at
www.institute.sk.

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  • 1. Associate Professor, Dr. Krassen Stanchev Sofia University,CEO of KC2 LTD and Board Chairman of IME1Free Market Road Show -- Bratislava, 7-6-2013People spend lots of time taking,or trying to take,things from somebody else.P.J. Hill
  • 2. EU raises some principal issues What is “government”, who is “we”,what is “can” and what are the statisticalfictions? Government expenditures and economicgrowth Why the Transfer Union and how itrepeats the patterns of COMECON Government expenditures does notnecessarily indicate the entire “burden”of domestic and EU government.2Free Market Road Show -- Bratislava, 7-6-2013
  • 3. “The secret of taking money is thepromise to give money”.• This is the basic reason behind thegrowth of both EU and nationalgovernment.Free Market Road Show -- Bratislava, 7-6-2013 3
  • 4. Free Market Road Show -- Bratislava, 7-6-2013 4
  • 5. The Process and FactsSpending Taxes Deficit (surplus) Explicit Public DebtSpending is the key driver; especially the social transfersFigure 1. General government spending as % of GDPSource: Tanzi V., Schuknecht L. (2000), Public spending in 20th century, Cambridge University Press ; World Economic DatabaseFigure 2. Social spending (in-kind and in-cash spending) as % of GDPSource: Master theses on welfare state dynamics by: Magda Ciżkowicz, Jarosław Kantorowicz,Piotr Pękała, Wiktor Rak , Seweryn Szwarocki1913 1920 1937 1960 1980 1990 2000 2007France 17,0 27,6 29,0 34,6 46,1 49,8 51,6 52,3Germany 14,8 25,0 34,1 32,4 47,9 45,1 45,1 43,6Italy 17,1 30,1 31,1 30,1 42,1 53,4 46,2 47,9UK 12,7 26,2 30,0 32,2 43,0 39,9 39,0 44,2USA 7,5 12,1 19,7 27,0 31,4 32,8 34,5 36,61913 1920 1937 1960 1980 1990 2000 2007France 1,2 3,7 13,7 26,1 29,3 32,0 32,0Germany 21,1 30,4 27,6 31,8 28,9Italy 2,2 3,3 16,4 25,4 28,4 29,6 31,5*UK 7,1 10,5 15,3 22,9 24,7 26,3 29,9USA 8,6 9,7 18,1 18,4 19,6 21,45Leszek Balcerowicz: Berlin, Federal Ministry of Finance, December 7, 2011Free Market Road Show -- Bratislava, 7-6-2013
  • 6. Free Market Road Show -- Bratislava, 7-6-2013 6
  • 7. Entrenched (structural) ignoranceThe analogy with the COMECON…“RESTART THE EU BUDGET” of 2007Entranced ignorance of EU institutions, and politicians andservants:a. No-bankruptcy mentality – this is why lack of discipline andgrowth of expenditures;b. No institution to underwrite creditors-debtors agreement;c. Omni-present free-riding political expectations;d. Disregard to the rule of law in monetary and economic fields;e. Folk economics;f. False economy.Free Market Road Show -- Bratislava, 7-6-2013 7
  • 8. 8Free Market Road Show -- Bratislava, 7-6-2013
  • 9. What is not seen: calculating the cost ofgovernmentExpenditures +:Implicit government debts (costs of promises);Inflation tax;The costs of compliance;Time and recourses spent on indirect transfers;Same, but spent on preventing the direct and indirecttransfers to “others”;“Government substitution costs”;Crowding out effects;..?Free Market Road Show -- Bratislava, 7-6-2013 9
  • 10. EU FALSE ECONOMY AND ITS COSTSAdministrative and reporting costs of the EU for 1999-2009 – €1.3trillion;Compliance costs – last calculated in 2001 – €535 billion;Currently – roughly, €1,200 per capita (on average 75-80% ofdomestic regulation originated in the EU);Indirect transfers associated to public pension systems (7-8% ofGDP);Private security expenditures – not calculated (examples);Consumer costs of protection (€600 billion, see:Free riding on the welfare state – not calculated (examples sickleaves, jobs);Costs of the EU Commission – 1% of GDP (about €140 billion);Cost of EU energy policy - €100 billion a year;Costs (time tax) of competing for EU transfers.Free Market Road Show -- Bratislava, 7-6-2013 10