votes: Photo Vladimír Weiss WE HAVE TO USE THE CZECH EU Presidency to Fight Growing Protectionism 30 Leaders Magazine II 2009
An interview with Doc Ing Jiří Schwarz CSc Dean of the Faculty of Economics and Public Administration Leaders Magazine II 2009 31 You are lecturing courses in the field of history of economic theories and in the macroeconomics at the University of Economics in Prague What economic theory is your favorite I prefer non intervention economic theories Theories based on individual or company decision making and respecting the freedom of choice and the inviolability of private property Therefore I am more in favour of the Chicago and Austria schools than the Keynesian economy or its derivates I am however afraid that when someone’s ambition in the middle of the crisis is to influence the economic policy in a Central European country they are to a certain extent Keynesians Do you assume the world economic crisis is going to hit hard on domestic economy The economic crisis begun with the mortgage crisis in the United States and through the United Kingdom which is connected with American economy it moved to Europe The economic depression and downturn started to manifest in Western European countries in the second half of the last year The fourth quarter of 2008 showed a faltering economic activity in our significant business partner countries when the demand for Czech goods and services decreased One can be almost certain that the crisis will affect also our small open economy We can not avoid it due to its openness Yet I do not want to say that in our response to the crisis we should close our economy That would be a fatal mistake On the contrary we have to use the Czech EU Presidency to fight growing protectionism in the crisis period for instance the postponement of the opening of the Austrian labour market or the discriminatory declaration of the French president concerning the French production of cars abroad You became a member of the National Economic Council of the Czech Republic NERV Could you discuss what its primary goal is and what measures do you prepare The NERV is the consulting body of the Czech Government So it is not an executive body therefore I would not suggest we should have to take a vote on our recommendations and the majority would have to overprint the minority view The NERV’s members should settle on recommendations Not necessarily agree upon something please It means that even if any member were fundamentally opposed to a particular proposal it can still become an official recommendation of the NERV The member who does not agree with it has the right to present his official view in public Our work is based on competition of arguments and an agreement requires a thorough preparation of the draft material and consequently a well founded and critical discussion The members of the NERV can create an expert commission aimed at a particular problem analysis For instance I have founded the Expert Commission on the State Obligation Sale to Public I assume the outputs of this and other commissions should become the draft material for the NERV negotiation It follows the respectable recommendation that it can be submitted only on paper and has to be established on the indepth analysis So all this can be done by the NERV members and in addition to that with a large interest of the media And this is quite a lot at last After the completion of the material 7 Sets against the Crisis the NERV should deal with the evaluation of the efficiency of the governmental anticrisis measures Furthermore it will take part in the preparation of the Czech EU Presidency materials The European Commission called upon the EU member states to include actively their social partners into the social mitigation of the financial crisis impacts as well What is your opinion I am against the institutional negotiation of the government with the worker’s organizations and the trade unions Thus I am against the existence of the tripartite institution It does not however mean that I am against the social dialogue of employers with the trade unions or the trade unions with the government if the government institutions serve as the employer at the same time Without any doubt during the economic crisis both worker’s organizations and the trade unions have to work on the solutions of the crisis But the interests of the representatives of these institutions do not have to be identical The trade unions for instance can insist on the growth of salaries more than 4 percent per year as it happened to the Škoda Auto car company although there is a decline of demand in cars and parking lots for the new unsold cars in the neighbourhood of the car companies are filling in The trade unionists obviously want to preserve not only the increase of salaries but the rate of employment as well However in case of the decrease of demand it is rather impossible It is only possible provided that the government steps in and e g with the use of the so called scrapping money it tries to increase the demand for the unpurchaseable cars at the current prices by artificial means Consequently car purchases can really be re established at the existing prices and also the volume of car production can be re established as well This joke in the form of growing revenues of car companies and their subcontractors and growing wages of their managers and employees as well as of the managers of their subcontractors which all will be paid by the tax payers Among them there obviously are retired people women on maternity leave and minimal wage recipients Thus because of subsidies to the rich car companies whose pure revenues in past ten years exceeded 50 billion CZK it will not be possible to build hospitals rest homes or to repair roads from the public resources Therefore I perceive the institutionalized negotiation within the tripartite rather sceptically Its efficiency is very small because both businessmen and trade unions are naturally trying to extort from the government more than they have got so far The period of the economic crisis is really unsuitable for the implementation of such goals According to you what is the best possible prevention and elimination of the world crisis risks for the Czech Republic I would recommend our government to carry on in the reform direction so that the Czech Republic will become user friendly for domestic businesses attractive for foreign investors without having to entice them via high budgets costs investment impetus and pleasant for everyday life It requires a systematic approach by the perfection of our legislation leading towards more effective law enforcement further tax and administrative decrease and wider flexibility of the labour and construction laws During economic problems people take a look inside their wallets think over their income and costs and they may also change their behaviour A responsible government should behave similarly It should assess whether the budget and the costs are really so important that we can run into debts because of that Possibly we could satisfy some needs in other ways than with the help of public estates After all the growth of the deficit of public budgets up to 10 billion per year is paid by every Czech citizen it reaches 1,000 CZK on average This is 33 times more than the unpopular doctor’s fee of 30 CZK Therefore the pressure upon the effective spending of public resources and the budget discipline has to become the priority of the Czech government even during the crisis In this context is the date of the Czech Eurozone accession in 2012 still reasonable Not in 2012 but in 2013 yes If I am right the Czech government considers the year 2013 as the possible date of the Czech Eurozone accession and wants to deliver an opinion on this issue exactly at Autumn 2009 This year will not most probably will stick to the Maastricht criteria concerning the amount of the budget deficit I suppose the Maastricht criteria observation is an indication of a healthy economic growth and they should be respected independently from the political decision on the Eurozone accession Our exporters enjoy an amazing advantage of the floating course of the Czech Crown at present After all in the last three months our currency depreciated towards the Euro by almost 25 This is the most significant market export supporting stimulus which the government could not achieve by any other export supporting measures Thanks to it Czech goods can be sold on foreign markets at almost 25 smaller price than 3 months ago without any decrease in the revenues of domestic producers Thanks to the decrease of the Czech Crown our goods are more competitive Do you have time for your hobbies as you are a very busy man How do you relax Yes in any case I relax even during the economic crisis Regularly twice a week I spend one hour in a gym with a coach once a week I swim one kilometre in 28 minutes in breast stroke in a public swimming pool and when I happen to be free I play tennis Apart from that I started to learn French and I attend a lesson twice a week In winter I enjoy cross country skiing with one of my colleagues at Moldava in the Krušné Mountains yet I prefer downhill skiing During this season I have already spent 11 days on skis Moreover I spent one sunny day skating with my wife after twelve years at Lipno Besides I still have enough time for a dispute with one well known dandy who pretends he is a great expert in art while he cannot tell originals from fakes which he keeps selling with joy By Pavlína Holancová českou verzi naleznete na www leadersmagazine cz
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