Tuesday, July 09

Feedback from 'The Shocking Truth'

 

The purpose of my article was to highlight information which has been ignored by the Czech media. This seems to have been successful. Following Erik Best's decision to highlight it on his Facebook page, I was very pleasantly surprised when Patria Finance asked if it could be featured on their pages. I took it as a sign that people who know far more about economics than I, found the analysis to be worthy of consideration. As of now there have been nearly 5,000 views on the Patria page, as well as more than 2,000 on our own website. Then I was contacted by an internet news outlet I had not heard of before, Prvni zpravy with the same request.  Regular commentators there are Adam B. Bartos, Ladislav Jakl and Jiri Payne, and I never expected to find my words presented in such company, but at least this shows that freedom of speech, and willingness to debate, is thriving here.

Inevitably there have been comments, all of them welcome, and I would like to respond to some of them. I will paraphrase them and reply to each:

 

GDP doesn't measure economic health/cannot be compared across countries.

 

I am aware that there are various criticisms of the way GDP is calculated in different countries. However I think it is reasonable to assume that CZ/SK will use very similar methodologies (whereas a CZ - Ecuador comparison may be less reliable). But as to the way I used the data, well governments and central banks do this all the time. Indeed there is a widely quoted GDP figure for the EU, of which CZ/SK figures will be components, so why not compare those two components?

Slovakia is not really doing well

 

One critical commentator remarked that Czech GDP per capita is 10 % higher than Slovakia's. The data I provided show that it is actually only 6.2% higher in 2012, whereas in 2004, the gap was 38%. I do not present Slovakia as some kind of shining example. I recognise that unemployment is a big problem, and that corruption is on a similar level to here. The point is to ask whether the Czech recession is largely the result of external factors, or of decisions by Czech policy-makers. If the answer was the former, you would expect Slovak GDP to be worse than the Czech, since the Czech Republic has a number of advantages (including, according to Robert Holman, the decision not to join the euro).

Tesco is doing badly here only because it sells bad products

Why would Tesco consider that a strategy of selling uniquely bad quality fresh food to Czechs be a good idea in the first place? Why not try this on the Slovaks too, or the Poles for that matter?

Why did you spoil your analysis by jumping on the "corruption bandwagon"?

 

There is an interesting message being put about by some commentators, for example Adam B. Bartos, that the "fight against corruption" is some kind of trendy, empty slogan; also that Transparency International in particular is winding up the population to believe that Czech corruption is uniquely bad. The message seems to be 'go off to your chatas and stop worrying about corruption, it's normal."

Transparency International does not, and has never suggested that corruption in the Czech Republic is uniquely bad. It ranked the Czech Republic in 54th place in the world in its last survey, ahead of Slovakia (62), but behind Poland (41). That is a poor enough result to mean that significant  amounts of money are wasted or stolen which could be put to use more effectively. To take one example, it is widely reported that the cost per km of building a Czech motorway is suspiciously high - much higher than in Norway, according to one famous report. It follows that if the suspected kickbacks had been eliminated, we could have many more kilometres of open motorway at this time, bringing economic benefits to towns and regions, which raises GDP.

It's all the fault of the Necas government

 

The fault goes back much further, and is shared by many politicians and policy-makers. However Miroslav Kalousek does deserve special mention. This is the Finance Minister who, after the collapse of Lehmann Brothers, still wrote a budget for 2009 assuming annual GDP growth of 4.8%. The actual result was negative growth of -4.1%. This staggering and hugely damaging error of judgement and forecasting was almost entirely ignored by the media (apart from Erik Best), whereas in the UK, the US or Germany, the government would have fallen after such a performance. At the very least, one lesson is that every Minister should speak English well enough that they can listen to the BBC World Service, and keep up to date with global events which can affect the Czech economy. The general lack of comment on the specific data which I have presented, suggests that the Czech public is still generally not as economically aware as the public in other countries; and that in turn is a failure of journalism to inform and educate. This  explains why politicians here survive an economic performance that would bring down those in other countries; Bill Clinton famously discovered that in the US, "it's the economy, stupid". I hope my article has contributed to a situation where those in charge of the Czech economy are held to greater account.

Comments (1)

  • 1
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