April 2009

Treća Internacionalna naučna konferencija

„EKONOMIJA INTEGRACIJA“ – ICEI 2013

Znanjem od recesije ka prosperitetu http://icei.epk.ba

Decembar 6.-7.2013. god. Hotel Tuzla – Tuzla, Bosna i Hercegovina

TREĆA INTERNACIONALNA NAUČNA KONFERENCIJA „EKONOMIJA INTEGRACIJA“

ZNANJEM OD RECESIJE KA PROSPERITETU

Treća Internacionalna naučna konferencija

„EKONOMIJA INTEGRACIJA“ – ICEI 2013

Znanjem od recesije ka prosperitetu http://icei.epk.ba

UNIVERZITET U TUZLI

EKONOMSKI FAKULTET EKONOMSKI FAKULTET

INTEGRATION OR ASSIMILATION:Whence the Private Sphere?

Doctor Professor, Joseph W.H. Lough

3. ICEI „Znanjem od recesije ka prosperitetu“, Tuzla, 6-7. 12. 2013.godine

Overview

Prvo, pusti me da zahvalim doktor profesor Safet Kozarević, Univerzitet u Tuzli, a Odjel za ekonomiju za ovu priliku da razgovara sa vama danas.

Pozdrav iz Sjedinjenih Država, sa Univerziteta u Kaliforniji, Berkeley, a iz Odjela za ekonomiju, dom sljedeći predsjednik US Federalnih rezervi, profesor Janet Yellen.

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3. ICEI „Znanjem od recesije ka prosperitetu“, Tuzla, 6-7. 12. 2013.godine

Overview

The Problem

Why capital does not flow “downhill” from wealthier to poorer economies

The private and the public spheres: why smaller government is not the solution

Solution: a strong, independent public sphere authorized to enact and enforce laws and regulations aimed at expanding wealth

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3. ICEI „Znanjem od recesije ka prosperitetu“, Tuzla, 6-7. 12. 2013.godine

The Problem

By 2000, Ninety Percent of Economies were experiencing Economic Growth

Bosnia and Herzegovina should among the economies experiencing growth

4Source: R Lucas, Lectures on Economic Growth (Cambridge: Harvard UP, 2004), p. 101

3. ICEI „Znanjem od recesije ka prosperitetu“, Tuzla, 6-7. 12. 2013.godine

The Problem

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Sluggish Growth throughout the former Yugoslavia

Factor Costs

Caeteris paribus– nearly a six-fold advantage for BiH over the US in

factor costs– nearly a thirty-eight fold advantage for BiH over the

EU in factor costs

Growth in 2012

COUNTRY GROWTH

Bosnia and Herzegovina -.07

Croatia -2.0

Slovenia -2.5

Macedonia -0.3

Serbia -1.7

Montenegro 0.5

EU 0.33

Factor Costs in BiH and US in DOLLARS(measured in average hourly wage)

BOSNIA AND HERZEGOVINA

UNITED STATES

$1.21 $7.25

Factor Costs in BiH and EU in Euros(measured in average hourly wage)

BOSNIA AND HERZEGOVINA

Eurozone

€0.62 €23.40

3. ICEI „Znanjem od recesije ka prosperitetu“, Tuzla, 6-7. 12. 2013.godine

Why isn’t capital flowing “downhill” from the relatively wealthy and costly US and EU to the relatively poor and inexpensive Bosnia and Herzegovina?

The Problem

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3. ICEI „Znanjem od recesije ka prosperitetu“, Tuzla, 6-7. 12. 2013.godine

Privatization/Deregulation

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Privatization and Deregulation: Not the Solution

Free markets flourish within the context of:– independent robust public institutions– universally enforced laws, rules and regulations

3. ICEI „Znanjem od recesije ka prosperitetu“, Tuzla, 6-7. 12. 2013.godine

Bloated public phere is not the cause of problem

Private interference in public institutions is cause of problem

Bloated Public Sphere

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3. ICEI „Znanjem od recesije ka prosperitetu“, Tuzla, 6-7. 12. 2013.godine

Economy = ekonomija = oikonomia = οἰκονομία =

οἶκος (household) + νόμος (laws)

prohibitive transaction costs

Management of private enterprise

Manager = despotes = δεσπότης

The Private Sphere

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3. ICEI „Znanjem od recesije ka prosperitetu“, Tuzla, 6-7. 12. 2013.godine

Market distortions introduced by private enterprise:– arbitrary, ad hoc rules, laws, and regulations– largest households (oligarchoi) dictate rules, laws,

and regulations to smaller households– largest households (oligarchoi) refuse to do

business with smaller households

Market distortions make sense for each private household that benefits from them

The Private Sphere

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3. ICEI „Znanjem od recesije ka prosperitetu“, Tuzla, 6-7. 12. 2013.godine

Public Sphere– competative bidding on contracts– competative, merit-based hiring– transportation and communication– independent courts empowered to enforce law– independent, public sources of information and

knowledge– political parties independent of wealth– fit, educated, healthy, secure workforce

Public Sphere

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3. ICEI „Znanjem od recesije ka prosperitetu“, Tuzla, 6-7. 12. 2013.godine

Who is harmed by a robust, independent public sphere?– the oligarchs and their political appointees– monopolies, quasi-monopolies, and cartels

Public Sphere

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3. ICEI „Znanjem od recesije ka prosperitetu“, Tuzla, 6-7. 12. 2013.godine

The myth of the bloated public sphere

Why is the public sphere bloated?

The public sphere is bloated and inefficient because of interference of the oligarchy.

Public Sphere

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3. ICEI „Znanjem od recesije ka prosperitetu“, Tuzla, 6-7. 12. 2013.godine

Why has capital failed to flow “downhill” from the wealthiest countries to the poorest;

even though Bosnia and Herzegovina enjoys between a 6-1 or 38-1 advantage over its American and EU competitors?

ANSWER: Distortions introduced and maintained by private enterprise.

Solution

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3. ICEI „Znanjem od recesije ka prosperitetu“, Tuzla, 6-7. 12. 2013.godine

What can we do?– FIRST, teach students and public that a robust

private enterprise depends on a robust and independent public sphere.

– SECOND, demand and support political candidates committed to eliminating corruption, patronage, and cronyism in government and monopoly, quasi-monopoly, and cartels in private enterprise.

– THIRD, reject patronage and cronyism at our academic institutions, administrative and academic.

Solution

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3. ICEI „Znanjem od recesije ka prosperitetu“, Tuzla, 6-7. 12. 2013.godine

Bosnia and Herzegovina will join the 90% of nations enjoying economic growth.

When they do so is up to us.

Will we rein in the oligarchs now, or will we wait until they have further destroyed BiH?

Will we strengthen our public institutions, or will we further weaken the only independent agent capable of standing up to the oligarchs?

The choice is yours.

CONCLUSION

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