Are we playing against ourselves when we give up economic freedoms? - Part I

The lack of a moral compass is a correctable evil. The ability of a person to develop and make mistakes, without this being accepted as his only and final state, helps us to develop as people and as individuals. In order to continue to develop, however, we must take risks and test our personal principles and decisions based on them. That is, we inevitably need to be allowed to develop and implement our choices, without this being dictated by someone else.

When a person lives his or her life, he or she invariably expresses certain values by his or her choices and habits. He or she becomes an institution of courage, an institution of kindness and care depending on the basic accumulation of actions and choices made in his or her life. The institutions of a country have the task of practicing and exercising the generally valid values for the people inhabiting a certain territory.

But why, if Bulgarian institutions have good intentions, do they fail to protect their citizens, fight corruption and create a favorable environment for the development of our economy? It is clear that small and medium-sized businesses are not developing, and even large companies are avoiding us. It is clear to everyone that even though it is a tax haven, large companies with resources do not want to have anything to do with our institutions?

Let's not get into conspiracy theories, but let's be reasonable. What should effective and fair institutions be like, and why does business become an accomplice in a crime against itself if it submits to their whims?

Government and administration should be decentralized and small in size. Why?

In this way, bureaucrats will be close to the people and the problems that they have agreed to give under the responsibility of the government. The needs of citizens will reach as information more quickly to those responsible for solving them. When the government inflates its administration and complicates it with all sorts of procedures and functions, solely and solely to increase its budget, and not to solve the problems in the real life of the people, what results is a senseless huge state company that exists in this form, not to solve more problems, but because it has specialized in increasing and spending its budget.

The benefits of decentralization

Why should the government be decentralized and broken down into small local governments? Because you can imagine that the problems in Smolyan region are quite different from the problems in Dobrudzhan, for example. Moreover, when citizens want to get better living conditions, they do not necessarily have to immigrate to Belgium, for example. If their profession allows them to change the city/region they live in – why not go and live from Varna to Burgas? If you make such a choice, Burgas obviously offers more pleasant living conditions for you. Or vice versa, if your business or profession requires more potential clients, why not move from Burgas to Varna, where you will get things that you value more in terms of your goals in life? The question is that the two cities, due to their location on the sea, will compete to create better living conditions and business development, because they need to be different from each other.

Another example: If for some reason the local government in Vidin reduces taxes to 2% or even announces a tax holiday for 10-15 years in certain sectors, this will attract many companies that would use cheaper labor, at a lower cost, than if, for example, Plovdiv inflates its budget and raises its local taxes and fees to 65% in order to maintain the culture of the city through the state apparatus. Of course, companies from Plovdiv and other cities will move to Vidin, which can use relatively unskilled labor, due to the specifics of the region, but in reality, over time, this will affect the district and there will be grounds for people to return or for young people to stay, who will improve the standard and bring development. This is a hypothetical situation, with made-up examples, but in reality, this is how competition between local governments works. Competition at the global level works in the same way.

In the current situation, local authorities do not have this toolkit with which to try to attract citizens or win companies. They aim to absorb certain funds from the state budget or from European programs, where in reality the reason for creating a project is not to improve the urban environment, but to "absorb" the funds for it. This leads to long repair activities of dubious quality in Stara Zagora, Sliven, Ruse, Sofia and a number of other Bulgarian cities, where repairs are made and then redone, and this process never stops, because in reality the people doing the repairs aim to "absorb" more funds, that is, to spend more money. This obviously leads to immorality and meaninglessness of the activities of the institutions and their partners, because the result of their activities, the quality of urban repairs, is doubtful or almost non-existent.

The bigger the country, the more it interferes

Another main reason why it is good to have a small government is that when it is a big player on the economic scene, it invariably begins to interfere in the decisions of economic agents. If the government is a small player, then it will not interfere in the game of others, but will ensure that it fulfills its own obligations. Often, when it comes to large corporations and companies, large governments decide to make laws that benefit them, due to corruption and personal interests, which stifles the game for small and medium-sized companies and enterprises. This is usually done under the pretext that large companies will open a huge number of jobs. However, the truth is that if the legislation does not favor them and does not play in their favor, small and medium-sized companies will create competition for large companies in the labor market and will accumulate a similar number of jobs, and perhaps even more, depending on the specialization of the economy.

For example, it is logical that when it comes to the production of a product such as wine, there are many small and private wineries that build their own brand and name. This is seen as an example in Spain, the USA, Australia, France and more and more. Mass-produced wine simply does not have these qualities of a masterfully made product, which is quoted with a high value and a distinctive name. This also applies to a number of other goods of the artisanal or region-specific type. By the same logic, Bulgarians are forced to give up many goods that can also have a Bulgarian brand and specialization. In the world there is pizza made in Italy, pizza made in New York and the like, the product does not have to be one of a kind, but rather specialized and specific to a specific area or region. Another example is when large companies use their connections and resources to use the power of the dealer of the cards on the table - the government - then all the other players are harmed because they have weaker hands that are agreed upon in advance.

Further evidence of the great evil of big government is the decision to reduce prestigious classes in cities, issued by the Ministry of Education, with the verification that business needs specific workers. This directly contradicts the constitution of our country, where Article 6 states:

1) All human beings are born free and equal in dignity and rights.

(2) All citizens are equal before the law. No restrictions on rights or privileges based on race, nationality, ethnicity, sex, origin, religion, education, beliefs, political affiliation, personal and social status or property status shall be permitted.

The directives issued for the allocation of the budget to schools by the Regional Inspectorates have the force of law, which actually limits the right of students to freely choose what exactly to study and how to develop professionally. These are rules of the system or the game, where even before you realize yourself in it, you have fewer or limited options for choice. This is like determining someone's future and placing them in certain conditions in advance, before he or she has made their choice. In this way, specific companies limit the rules of the game in advance and limit your moves in it. They avoid attracting you with better conditions, and they set you a path for choice in advance.

Bulgaria and the Index of Economic Freedom

The Index of Economic Freedom (Heritage Foundation) has set itself the task of explaining a person’s right to life through the prism of his or her economic freedom to realize himself or herself. The freer a person is to live in an economically free society, the freer he or she is to choose what to work for, consume, invest, and generally choose in relation to the reality surrounding him or her. The index has 12 pillars that take into account the quality of Private Property, Judicial Efficiency, Government Governance, Tax Burden, Government Spending, Fiscal Health of the Government, Business Freedom, Freedom to Work, Monetary Freedom, Trade Freedom, Investment Freedom, Financial Freedom. According to these 12 criteria, Bulgaria managed to collect an overall index (from 0 to 100) for 2019 of 69.0, coming closer to Botswana with 69.5 than to one of the freest countries in Europe, Switzerland – 81.9. The good news is that we are above the average of 60.9 for all 186 countries participating in the measurement, but the bad news is that we are far from the excellent ones (80-100).

One of the reasons for this is the agreement of free economic agents to give up their freedom in favor of the public sector. According to the latest data from the National Statistics Institute, out of 2.8 million employed persons, about 2.1 million people are in the private sector, and all the rest, over 671 thousand, are in the public sector. Every time you wonder what business to invent or what new service to offer, you should keep in mind all the “problems” that fall under the responsibility of the government, in which you will encounter resistance or a complete lack of opportunity for development. Now add all the businesses that are in the gray or real sector and also use the support of big government – there you will encounter the same pressure to refuse to develop a business with which to maximize your economic freedom and potential.

Here we must add that the public sector sabotages the game of people from the private sector with laziness and meaninglessness of task performance, or with behind-the-scenes and interference in the rules of the game. That is, when you work for someone or when you develop your own business, you are not only competing with people with similar knowledge and skills or similar goods and services, but you are competing with predetermined paths that are given to you as possible choices in your economic reality.

By surrendering our own goals, dreams, and desires, by limiting our economic choices, we become those people who are willing to accept predetermined criteria from others to measure our own happiness and status. In this way, we irrevocably lose our own choices, individuality, and opportunities to experience the abundance of the world in which we live.

Part 2 to follow

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