The irresponsible populism of free sanitation

At the end of last year, GERB announced its intention to initiate a program for free renovation of EPK blocks with more than 36 apartments. Today, a few months later, despite the obvious problems and the lack of quality planning, the program is a fact and is already in its initial stage. For a large part of the citizens, especially those who intend to benefit from it, this program seems like a relatively good idea – after all, who wouldn’t want free renovation? It is clear that any possible improvement in energy efficiency is a good thing for those who will receive it, because it leads to a serious reduction in heating bills. However, upon a deeper analysis of the specific program proposed by the government, it becomes abundantly clear that we have just an ill-considered act of irresponsible populism.

There's no free lunch even in renovations

The first thing to note right away is that this “free” renovation will be financed with a state loan of 1 billion leva, drawn from the Bulgarian Development Bank. Free renovation will be provided to those panel blocks whose residents are the first to organize and submit documents.

It is extremely clear that those who will repay the loan taken are the taxpayers. This is not private charity, but state redistribution. Since 2010, every year we have been noticing a state deficit, which instead of being balanced by the "right" government of GERB, RB and PF, will clearly be further inflated, with more and more loans.

And let's not forget the old saying "there's no such thing as a free lunch", especially when we're talking about government projects. There is no such thing as government charity. In reality, there is only a redistribution of finances from one part of the population to another. The same applies to this program. People who receive "free" sanitation become de facto consumers of tax money (i.e. "government") money taken from taxpayers who will not receive such sanitation.

In this way, citizens are practically encouraged to always rely on the state instead of striving to be financially independent. If you are financially independent and have managed to renovate your home with your own money, you will now have to pay for those who are not. This creates an extremely dangerous precedent. This precedent benefits the state (and especially populist political groups) because it subsidizes and motivates citizen dependence on it, which subsequently increases its power. The overall result for society, however, is an incentive for financial irresponsibility and a lack of personal initiative.

One of the arguments in defense of this program is that it is expected to create employment for small companies, which in itself should be a good thing. But is it really so? What is clear to us is that the companies with the best reputation and experience will not be prioritized, and the focus will be on increasing employment for some "small" companies, it is unclear which ones. In view of the numerous scandals surrounding individuals like Delyan Peevski in recent years, it is very doubtful what, and especially whose, companies will be hired. Our state institutions are generally known for their high levels of corruption, and therefore it is not at all clear whether the companies that will be hired are those that offer quality services or simply have good contacts.

What do citizens lose?

Here we come to the serious shortcomings of this program from the perspective of the citizens who will apply for it - they will have no control over which company will carry out the renovation of their homes. This decision is left entirely to the municipalities. This violates the key market mechanism of consumer sovereignty. In this case, the consumer must completely trust the judgment of some random government bureaucrat.

On top of that, through this grandiose intervention in the market for renovations, thermal insulation, etc., companies that provide such services are encouraged not to follow the signals of their customers and strive to improve the quality of their services as much as possible, but on the contrary – to lobby politicians and establish connections in the government. The quality of the services offered by a company is not so important when it can always secure public contracts. If state programs like this become routine, this will lead to neglect of consumers and more lobbying by the private sector, while at the same time increasing the risk of corruption in the state.

In addition, renovated residential buildings require maintenance. This “free” renovation is done with the idea of helping those citizens who otherwise cannot afford the renovation with their own funds, but this is a rather misunderstood “charity” (with other people’s money). How effective and durable a renovation will be depends on the ongoing maintenance of the respective residential building. But if the people who apply for this program cannot raise the funds to pay for the renovation themselves, what are the chances that they will be able to afford the necessary maintenance afterwards?

And even if we assume that they will have the necessary resources saved from lower heating bills, what is the guarantee that they will use this money for maintenance? None. On the contrary, this program even motivates future owners of renovated apartments to be irresponsible and hope that the state will take out another loan to renew their renovation.

It is abundantly clear what the political motivation behind such a program is. Local elections are approaching, and GERB is determined to win them at all costs. The price will of course not be paid by GERB or any state bureaucrat, but by taxpayers in the next few years. In this act of cheap populism, the current “right” government is no different from the BSP, which when in power before every election raises, or promises to raise, social benefits, pensions, etc.

A right-wing government is expected to be fiscally conservative and encourage financial independence and responsibility among citizens, not indiscriminate populism through grandiose state programs financed with loans, further deepening the hole in the budget. If this government continues in the same spirit with which it began its rule during the rest of its mandate, it will very quickly lose the right to be called the leading right-wing political force in Bulgaria.

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