Friday, June 11, 2010

Recent government measures reveal the degradation formula

During the slump the government is expected to spend less and target better. But does it have the necessary skills and intelligence to do that? Our political system has recently shown nothing but inefficiency, focusing only on cuts. A great deal of the burden lies on the middle class - the segment of our economy that has to support most of the costs running this nation. The wealthy elite advantages are left untouched; their millions are untaxed.
Cutting spending as well as raising taxes will definitely affect the economic growth in the long-term. There is no dream of prosperity for Romania at this moment; it’s science fiction.

I am not sure the recently taken measures are a safe method to pump up the economy, because having less money to spend, people become less confident and more insecure about their lives. (They acknowledge that the system is obviously going wrong but can do nothing.) Cutting spending is likely to cause more unemployment, especially in small companies. They will be no longer able to produce, expand or hire; always overwhelmed by the fear or even higher cuts and tax increases.

So, the challenge of our government is to find an intelligent way to combine reducing deficit with stimulating growth, smoothly and consistently. Unfortunately, most of our elected officials are only anxious about their own self-interests and don't care a bit about the future of the country. Their attitude is not only startling but also alarming, at a time when the nation requires competent leadership to pull us out of the recession.
They seem to have noticed that our economy tumbles down into a terrible abyss but the only solution they found is cutting wages and pensions to avoid hiking the flat tax and VAT (which is unavoidable, it’s only the next step, since the first solution will certainly not show any visible results).

Politicians have no idea how demoralizing and risky these measures are. The number of homeless people will increase, as well as suicides.
Here’s the formula I compiled to show which the future of our nation is in the years to come:

Cutting Wages -> Lower Consumption -> Layoffs -> Unemployment & Small Firms’ Bankruptcy -> Homelessness & Suicides -> Degradation of the Nation


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