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petek, 28 januarja, 2022

SD is a textbook example of unproductive concern for state money

By: Štefan Šumah

The case of the rise and fall of the medieval superpowers shows how easily wealth is wasted if used for unproductive purposes. Slovenia will receive large EU funds for recovery, and it only depends on the government (the government that will allocate these funds) how they will be spent and where they will go. Will the government that manages these funds behave like the Ottoman Empire and the Kingdom of Spain in the late Middle Ages, or like the Netherlands and England at the beginning of the new century? The main question in the upcoming elections will therefore be whether to entrust the vote to the insatiable KUL or to the moderate centre-right government with an understanding for the economy. SD is a textbook example of unproductive care for state money, 70 million for projects and zero for implementation, and at the same time, together with the Levica and LMŠ parties, it promises even more money to NGOs. The vote for KUL is thus a vote for the Ottoman and Spanish routes, and the vote for parties with an ear for the economy is the vote for the English and Dutch routes.

If we look a few hundred years back, we notice that after many years of dormancy or stagnation in the middle of the Middle Ages, significant GDP growth began. The main driver of growth at that time was agriculture, and mining, forestry and trade also began to make an important contribution to growth. Infectious diseases (more victims of the epidemic, less labour) and wars had a great impact on GDP at that time. Especially, the Ottoman Empire raised its GDP mainly by plunder, as more gold meant more wealth and more slaves more labour. Similarly, Spain raised its GDP by plundering its South American colonies at the beginning of the new century, and both countries had so much gold that it began to lose value, or, as the locals say, gold also succumbed to inflation. The similarity of the two countries is that they either accumulated wealth or invested in the unproductive sphere.

The head office has completely lost control of where, how, and whether wealth is being spent at all. Religious buildings, mansions and other buildings were built from part of the wealth, which were actually an end in themselves, and part was returned to new robbery exploits. The remaining wealth, however, accumulated in various treasuries as far as it was not spent for enjoyment and luxury. Unlike the then England and the Netherlands (also the robber colonial powers), wealth was not invested in trade and industrialisation of the then primitive production.

Ottoman Empire and Socialism

Between the years 1000 and 1500, gross domestic product barely doubled (from 210 billion to 430 billion US dollars). Over the next three hundred years, however, it tripled compared to 1500 ($ 1,800 – 1,200 billion). The Ottoman Empire and the Kingdom of Spain in this period (and also after 1800) actually remained in the same, predominantly agricultural country, and the remaining countries of continental Europe and England developed rapidly and industrialised. Their GDP growth was very low compared to other countries, or even stagnated in some periods, despite all the wealth they had accumulated over the centuries. And how long did the Ottoman Empire and the Kingdom of Spain prosper as superpowers? As long as there was something to steal, in short, they functioned as long as foreign money was available. And here, a comparison with socialism can immediately be drawn.

Even socialism only works as long as it can spend foreign money, and when it runs out, this system collapses on its own, only the army and police can save it from complete collapse. Of course, voters will decide for themselves and choose what they want. And that is why I would like to remind you, especially the older ones, who still remember the Yugoslav football league. At that time, officials of the Hajduk Football Club (which was one of the best clubs in the then I. state league) publicly boasted: “No one can pay as much as we can promise!” Does this remind you of one of Kul’s representatives when she talks about the thousands and thousands of apartments that her government would build?

Štefan Šumah is a researcher on corruption and behavioural economics at the research institute.


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