The winners of the internal devaluation contest

ArmL > Evita Rumpe 28.06.2011. 23.11

Problēma ir ne tik daudz pensiju sistēmā, kā tajā apstāklī, ka Latvijā izejvielu cenu pieaugums tika pārnests uz patērētāja pleciem, tā vietā, lai hedžētos pret cenu svārstībām ar derivatīvu palīdzību.
Rezultāts ir tāds, ka vidusmēra pensionāra patēriņa grozu inflācija skāra relatīvi spēcīgāk. Ja kādam PSRS un pārejas laikos arī izdevās izveidot kādus uzkrājumus, tad, domājams, ka piedzīvotā devalvācija, banku sabrukumi, to visu noēda.
Līdz ar to, nepiekrītu raksta autoram, ka pensionāri būtu vinnētāji, jo ne jau naudu patērējam. Tas nenozīmē, ka problēma nepastāv.

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kreëstliv > loptik 25.06.2011. 14.32

Par paradigmas mainu – tas jau vesturiski nekas jauns nebutu. Ir jau gruti darit zinamu veletajiem un investiciju banku klientiem, ka visa vinu uzkrata nauda isteniba ir nevis nauda, bet elektroniski ieraksti vai nevertigi papirisi, kadel vertibas mazinasanu sakuma vienmer censas veikt pakapeniski. Manuprat, pasreizeja vaciesu pieeja sakt runat par restrukturizaciju, nevis gaidit, ka ta peksni pienaks, ir adekvata. Bet problema jau laikam ta, ka grieku papiri ir apdrosinati un parapdrosinati ar derivativiem nezin cik pakapes par summam, ko neviens nezina (nevelas teikt, jo BIS par to jau pirms krizes runaja, ka viss labi nebeigsies ar tiem apjomiem) – ka tada azartspele. Noteiktas aprindas ari arvien vairak tiek runats par to, ka vajag valutas vispareju piesaisti pie kaut ka vai ari daudz dazadotaku galveno valutu grozu. Iekseja ES ekonomiska parvaldiba ir mission impossible, valstis ir daudz par atskirigu, taja skaita – vertibas (un ne jau slinkums – stradigums, bet darba – briva laika verejums), ta ari izskatas no neveiksmigajiem centieniem kaut ko taja virziena darit. Pimco sefam te taisniba – tikai laika jautajums lidz Griekijas maksatnespejai. Manuprat, butu pareizi sis lietas beigsanos pasteidzinat ar hair cuts, lai nesanak, ka tie, kam tagad sie nevertigie papiri ir, tos iegulda produktivajos aktivos, bet par visiem neproduktivajiem – taja skaita – derivativiem (ES gadijuma ar ECB starpniecibu noperkot vai vienkarsi ar SVF naudam caur iemaksataju valstu budzetiem) – liks samaksat nodoklu maksatajiem (ari ar lielu inflacijas nodokli) velak, palielinot nevienlidzibu sabiedriba. Beigu beigas nonakam pie ta pasa – fon Bismarka pensiju sistemas, kur tiem, kam ir kaut kas vairak, var to meginet ieguldit produktivos aktivos un bernos (vinu izglitiba).

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loptik > loptik 25.06.2011. 16.26

Negribas te piespamot, bet es, personigi neredzu kaa no Griekijas problemam izriet inflacija. Varbut izriet zemaks eiro kurss, bet par ko visi Eiropaa butu sajusmaa. Neesmu dzirdejis, ka Griekijas papiri butu vajprataa parapdroshinati, ja butu – tas sen jau butu uzpeldejis. Un pec logikas ari nevajadzetu but, Griekija nav Lehman, kas pashi ar to nodarbojas, un Griekijas riski ir sen zinami… Tapec ar banku problemam Eiropaa gan jau tiks gala un savadak jebkursh scenarijs globalu inflaciju neizraisis, drizak deflaciju… Reali tiesham nav nekas jauns: viss ir kaa vienmer vesture: krajeji negrib inflaciju, paradnieki grib. Specigakais inflacijas lobijs ir pie mums biezhi citetie kreisie ekonomisti ASV, tachu pat ASV vinju pozicijas nav nemaz tik specigas. Vispar jau shadas “paradnieks negrib maksat, bet vinjam ir shaujamie” situacijas parasti vesturee atrisinaja ar kariem. Redzes kaa bus, bet mazai nomaljai valstinjai meginat apsteigt laiku un paredzet jaunu paradigmu parasti nerentejas, PSRS vesture to mums labi iemacija.

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kreëstliv > loptik 25.06.2011. 17.34

Griekiem vairs neder nekas, iznemot paradu nemaksasanu, pat, ja tas nozime, ka uzreiz naksies dzivot ar budzetu ar 0 deficitu, vislabak gan butu pienemt atpakal savu valutu un nodevalvet, un tad dzivot ar 0 budzeta deficitu. Tad vismaz butu vinu pasu lemums un varetu pardot savus aktivus – ostas utt., ja uzskatitu, ka vajag, lai nomaksatu izdevumus. Paradigmas maina var iestaties loti peksni, derivativu pietiekami daudz, lai tomer domatu par Lehman, kadel var saprast visu uztraukumu. Inflacija vienigais rezultats tai naudai, ko izdevusi ECB UN FED, tikai laika jautajums. Vai ta nebija Rogoff gramata, kur rakstits, ka atkal cilveki doma, ka soreiz bus savadak, lai gan drosi vien bus, jo vel nekad vesture nav bijis tik daudz no realas ekonomikas atkabinatas naudas. Vaciesi masveida iet produktivajos aktivos, ari zelta cenas celsanas tik ilgstosa perioda parasti neko labu neliecina. Piekritu Cerbula k-gam – krize nav parvareta, varbut tikai sakusies, dzive turpmak klus tikai interesantaka.

Latvijas maza valstina pasreiz darbojas ka resursu piegadatajs lielajam valstim – vai tie butu cilvekresursi vai dabas resursi vai parvertetu kreditu atmaksa. Resursu piegadatavas nav bezgaligas, bus kaut kad jaludz ES bagatajam valstim grantus Latvijas pensiju apmaksai. Ja ir velme sekot Satversmei un izveidot kaut ko citu, neka tikai resursu piegadataju valsti, tad jasak nopietni domat ar galvu.

Varbut LB darbiniekiem vajadzetu mazliet paspamot (un ne tikai portala makroekonomika, izmantojot anglicismus vai terminus, kuri vidusmera cilvekam neko nenozime), jo sanem loti lielas algas un ari pasu likumos rakstits, ka vajag macit cilvekus par ekonomikas norisem (nevis baidit). Ja salidzina ar Vaciju vai Lielbritaniju, Latvija katastrofali trukst ekonomikas jomas petnieciskas zurnalistikas, kas nebutu vienveidiga un uz banku lobiju versta. Bet var saprast, jo tikko kads megina – tiek nosaukts par pseidoekonomistu. Morala riska apstakli, kados darbojas Skandinavu bankas, bija tik butiski, ka ir bezatbildigi teikt, ka kreditu nemeji bija pasi vainigi. Tagad vairs nevar pateikt, kas krajejs, kas paradnieks, derivativi visu sistemu sajaukusi, inflaciju ar laiku visvairak gribes politiki.

PSRS nav nekada sakara ar te aprakstitajam paradigmas mainam, bet gan ar iedomu, ka soreiz (tirgus ekonomikas apstaklos) ekonomikas likumi darbosies savadak. Un tas, ka vaciesi saprot, ka darbojas vienmer vienadi, pavisam atklati izraisijis bezspecibas sajutu – nezinu, ka lietu atrisinat bez daudziem ekonomiskiem zaudejumiem, vinu ekonomikas politikas veidotajos. Var jau taisit dazadus karus – piemeram, elektroniskos karus, bet te varbut labak haircuts sakuma, ari latvijai vajadzigs noieta tirgus kaut vai tam pasam precem, ko sarazo, ieksejais tirgus ir sabrucis.

P.S. Iesaku tiesam vairak spamot un skaidrot LB poziciju ar vesturiskiem piemeriem, nevis baidot, citadi driz var sanakt, ka aizbrauks lielaka dala baidisanas uzklausitaji.

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kreëstliv > loptik 25.06.2011. 18.04

Gan Vacijas Prezidenta atkapsanas iemesls, gan Weber aiziesanas iemesls (ta tiek runats) bija tikai un vienigi Vacijas piekrisana glabt ES periferijas valstis, drukajot naudu to paradu segsanai, un iesaistot Vacijas nodoklu maksatajus tiesa veida.

Tas, kas beidzot butu vajadzigs, ir Latvijas krizes izmeklesana – kas isti notika, un kurs par to butu sodams, kadi bija alternativie risinajumi, to izmaksas, nevis talaka melosana un patiesibu slepsanas.

Man vairs nav laika vairak rakstit – bet pats pirms laba laika Jus labi uzrkastijat, ka tada Latvija ka valsts varetu izskatities tada Weber acis.

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kreëstliv > loptik 22.06.2011. 23.06

Emigracija nav mulkibas, ta ir skaudra realitate.

Tikai fondeta pensiju uzkrasanas sistema pie situacijas, kad sagaidams inflacijas periods, ir visai negudri. Inflacijas periods bus pailgs, jo janoinflacione loti lieli valstu paradi. Viss jaunais sen aizmirsts vecais – notiks atgriesanas pie vienkarsiem mehanismiems, pensijas finansejot no visparejiem ienakumiem (fon Bismarka veida), un investiciju bankieru profesija atkal klus garlaiciga un ne ipasi ienesigu. Tads varetu but rezultats, jo maksatnespejas risks daudzam valstim pasreiz paaugstinas, valstu obligacijas ieguldita pensiju fondu nauda diezin vai ir vairs tik drosa.

30% fleksibla dala – tas nedarbosies – ta butu politiska pasnaviba samazinat pensijas par 30%. Samazinasana par 10% bija pareizs lemums, ja bija velme izdabut cauri strauju deflaciju, bet jajauta ST, kas isti ir Satversme teikts par emigraciju, ja jau nebija tik butiski.

Man jau liekas, ka Vacijas socialas tirgus ekonomikas koncepciju veidoja tiesi tie, ko Latvija sauc par liberaliem – toreizejas Mont Pelerin Society biedri.

Man gan gribetos rakstu par loosers of internal devaluation un to, ka vini tiek gala/netiek gala ar situaciju, taja skaita par vinu stigmatizesanas meginajumiem un vai tas ir OK vai nav prieks merka sasniegsanas.

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daks_klave > besinger 22.06.2011. 20.33

Well…so,according to You, all “highly privately/corporatively EUR-indebted politicians and top level public servants” are corrupt. Please, could You provide basis for this reasoning?

Also, what about other EUR debtors, like families with mortgages?

Art

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besinger > besinger 22.06.2011. 22.05

Well, ask yourself a question: if you are a politician having unplayable loan which urgently needs restructuring; in which case would you get better conditions from your bank: if you promoted a) pro-debtor decisions (e.g. a standard Anglo-Saxon or Roman personal insolvency legislation), or b) pro-creditor decisions (e.g. a feudal “Debtor’s Tower” type legislation)?

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daks_klave > besinger 22.06.2011. 23.09

As I understand, in Your response You make point about politican with unpayable loan and perosnal bakruptcy legislation.

How this explains that all “highly privately/corporatively EUR-indebted politicians and top level public servants” are corrupt?
Furthermore, how this relates to “internal devaluation?”

Thanks.

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besinger > besinger 23.06.2011. 08.41

> How this explains that all “highly privately/corporatively EUR-indebted politicians and top level public servants” are corrupt?

The explanation is in your answer to my question (see above).

> Furthermore, how this relates to “internal devaluation?”

The answer is in my comment #1. Classical (external) devaluation would never hurt the majority of population, but only the “winners” (1-3) I mentioned.

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daks_klave > besinger 23.06.2011. 15.26

I see, for the first question You assume that all “highly privately/corporatively EUR-indebted politicians and top level public servants” prefer policy options (external/internal devaluation, bankruptcy legislation) which are optimal for them individually, regardless of what is best for the country. My opinion on these politicans and public servants is also very low, but I do not think we are yet there, I trust some part of them to put Latvia’s interests higher than their individual.

“Classical (external) devaluation would never hurt the majority of population, but only the “winners” (1-3) I mentioned.”
This is simply not true. At least in short to medium run, external devaluation hurts almost everyone, as all foreign goods and goods produced by using foreign raw materials, become more expensive. Of course, after devaluation country can introduce measures to force consumption shift to locally produced goods, but this will result in loss of consumer surplus, because if this was their optimal choice, they would consume local goods before devaluation. In essence, this hurts consumers and creditors, and benefits exporters in short to medium run – a bet that external devaluation will kick-start the exports.

IMHO,
Art

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besinger > besinger 24.06.2011. 08.37

> This is simply not true.

Of course it’s true! 1) Latvia’s government does not need to be passive as far as the demand creation is concerned, 2) Latvia does not need to be so unreasonably imports-dependent as it is now, and 3) a reorientation towards economic development can never be achieved if the wages/costs policy is not internationally competitive and people are leaving the country or dying.

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kreëstliv > besinger 25.06.2011. 14.37

Manuprat, Jus kaut ko jauciet kopa savos spriedumos – Anna Schwartz (monetaristu viena no pazistamakajam parstavem) bija pirma, kas, visam sim sakoties, pateica, ka Bernanke dara lielas mulkibas, jo printe naudu un nelauj investiciju bankam nobankrotet, jo funkcionejosai tirgus ekonomikai ir vajadzigs, lai ari tadi veidojumi varetu nobankrotet, Latvijas gadijuma analogs – nobankrotetu zviedru bankas. Bernanke tas laikam bija ka plikis, jo si kundze daudziem ir autoritate.

Visadi citadi – Latvija laikam ari dazadu politisku iemeslu del (lai no neizglitotiem veletajiem varetu savakt pec iespejas vairak balsu) tiek jaukti kopa jedzieni liberalisms, Soross, socialdemokrati utt. Piemeram, Vacijas socialo tirgus ekonomiku veidoja The Mont Pelerin Society biedri – vistirakie liberali, savukart tas, ko pasreiz dara ASV, nav nekas pat lidzigs liberalismam, tas mazliet robezojas ar nepratu – tiek printeta nauda pasreizejo izdevumu segsanai. Banku stutesanai tiek paklauta reala ekonomika.

Man bija tas gods pazit un macities no viena no viniem, kas piedalijas Vacijas socialas tirgus ekonomikas veidosana, pasreiz gan vins ir loti cienijamos gados, bet no vina staroja tada inteligence un gudriba, kadu laikam starp Latvijas standartu ekonomistiem vai ekonomikas politikas veidotajiem ar uguni meklet, tadi bija ari vina spriedumi. Ekonomikas politika saja zina ir vislabak pielidzama medicinai – katra no darbibam atstaj ietekmi, jazina, kadas zales iedarbosies, kadas izdaris pretejo. No si aspekta Zatlera izdaritais bija pilnigi pareizi – jo pasreizeja Latvijas realitate notiek noasinosana, ko jacensas apturet. Papildus ir korupcijas vezis, jo korupcija ir tada, kas dzili iesaknojas un dzen arvien jaunas metastazes, jo gruti izklut no korupcijas, papildus ta rada nekompetenci, jo visadi partiju ielikteni izraisa nepotismu. Vispirmam kartam butu jaaiziet un japajauta tiem cilvekiem, kas ir par vainu, kadel vini emigre – pirma atbilde drosi vien butu netaisniba, korupcija. No otras puses ir neskaidra Vienotibas darbiba – vadosu ierednu amatos tiek likti (nevis izveleti) bez darba peiredzes esosi, apsaubamu ekonomikas izglitibu (LU eknomikas politika vispar netiek macita) ieguvusi partijas parstavji, par ministru ari liels jautajums – Air Baltic problemu izzinosana man bija parsteigums, neviens attistitas valsts ekonomikas ministrs to nedaritu. Mani mac diezgan lielas saubas, vai Kampars un kompanjoni vispar saprot kaut ko no ekonomikas procesiem, vai kads uzticetu veikt aknu parstadisanu pardevejam, tad kadel tas tiek darits ar ekonomikas politiku, ir jautajums, uz ko Vienotibai vajadzetu sniegt atbildi. Tad nu ari nonakam pie ta, ka vienigais, ko vini dara, ir stasta mulkibas par prioritaram nozarem un dala naudu labveligi noskanotiem “uznemejiem” vai tiem, kas skalak kliedz, ka vajag nodoklu maksataju naudu, jo pasi ir nespejigi sava uznemuma saimniekot. Zatlera mediciniska izglitiba vispar saja ekonomikas joma varetu but prieksrociba, pirmais, kas vinam jadara – jaaptur asinosana, kaut vai dibinot savu partiju un aicinot iestaties visus, kas piekrit noteiktam pamatvertibam (neskirojot krievs, latvietis, ukrainis).

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kreëstliv > besinger 25.06.2011. 14.55

Pasreizeja Latvijas ekonomikas politika ir precizi tas pats, kas Rietumvacijas un Austrumvacijas ekonomiska apvienosana 90.tajos (nosakot kursu 1:1, Latvijas ekonomikas sagruvums un censanas uzturet ieprieksejo limeni, ir tiesi tas pats), kas no ta sanaca – man laikam nav papildus jastasta, jo ta bija Austrumvacijas depopulacija. Latvijas gadijuma tas tiek uzspiests ar stigmatizaciju – sakot, ka visi, kas si visa del zaude darbu ir vai nu alkoholiki vai vienkarsi negrib stradat, bet Griekija, ka vini visi irpasaules lielakie slinki un krapnieki. Paredzamas pasreizejas strategijas sekas (zinot Rietumvacijas un Austrumvacijas ekonomiskas apvienosanas rezultatu) vareja censties mazinat, nonemot nost nodoklus no algam un vismaz neaiztiekot minimalo algu (laujot notikt loti straujam deflacijas procesam privataja ekonomika), tacu tika izdarits pretejais, papildinot ar iepirkumu normam, kas verstas uz privato izspiesanu par labu publiskajiem iepirkumiem ar jauksanos darba tirgus, kadel ari rezultats ir pavisam likumsakarigs, jo sekas tika paatrinatas. Un tur nekada imigracija nepalidzes, ari Austrumvacija imigranti neturas.

Sada veida turpinot, tiks panakti attiecigi rezultati, ko vel pastiprinas Latvija pastavosa augsta korupcija – Latvija tiks pumpeta ieksa nauda nevajadzigas infrastrukturas taisisanai, ko nevienam nevajadzes, bet iegus dazi noteikta (piemeram, balta) saraksta naudas apguveji, Austrumvacijas gadijuma – pie daudz mazakiem korupcijas apmeriem (kadel var pienemt, ka tika celts godiga cela un it ka vajadziga infrastruktura, nevis a la Dienvidu tilts vai LNB) – pasreiz stav miljradiem verta infrastruktura, ko nevienam nevajag. Sliktakais scenarijs ir Afrikas veida ekonomika, kas nav pasuzturosa un kas partiek tikai no arejam palidzibas (ES analogs – strukturfondu) naudam, valdot lielai korupcijai (jo pati ieksa pumpeta nauda korupciju tikai vairo), un izkupot neatjaunojamiem (Latvijas koks ir atjaunojoss, bet ne jau 20 gados) dabas resursiem. Liekas, ka sis process ir pedejos menesos sacies, jo samazinas rupniecibas pasutijumu apjoms, arvien vairak uz celiem var redzet koku izvesanas masinas. Pensijas tad jau klust par otrsskirigu jautajumu.

Beigu beigas tas, ko pasreiz grieki dara Atenu galvenaja laukuma, ir labi – vini cinas pret bankam par labu realajai ekonomikai.

Bet saprotu Jusu nepatiku pret Latvija parstaveto zviedru banku ekspertiem – ari man medz izraisit dusmas un vinu spriedumi kaitinat – jo dazreiz vai nu nesparot (vai nevelas saprast, jo sim bankam tagad pavisam saprotami ir pavisam cits darbibas merkis) pasas primitivakas likumsakaribas starp inflaciju/eksportu/IKP utt. un mani personigi visvairak kaitina bezdarbnieku stigmatizacija. Un, protams, uz ieprieks manis mineta EKSPERTA fona, kura ekspertizi izmanto ari citas lielas ekonomikas, vinu ekonomiskas analizes ir komiskas. EKSPERTI (ar lielajiem burtiem) gan medz teikt ari vel vienu lietu – vienmer viss var noiet greizi, un taja bridi ir nepieciesams pienemt pareizus lemumus, tapat EKSPERTI medz teikt, ka nekad nekas nav 100%igi dross, piemeram, labs piemers ASV dolars.

P.S. Varetu rakstit ari angliski vai krieviski, bet cienas jautajums rakstit tas valsts valoda, par ko tiek spriests (datora problemu del nevaru rakstit ar mikstinajuma zimeme), jo citadi izskatas, ka runajam par neizdevusos eksperimentu, nevis noteiktas valsts (ar dazadu grumu un dazadu speju iedzivotajiem) tautsaimniecibu.
P.P.S. Man patik liberalas ekonomikas pieeja – ta, kas tiek pielietota Vacija un, ja kas, ari Zviedrija, ar socialistiem neko nevaretu iesakt (nenomeditas lacadas dalitaji vienmer ir nedaudz bistami), bet nekad nepiekritisu, ka vergu ekonomikas pieeja ir laba (vergu ekonomika ir ziedot realo ekonomiku par labu finansu tirgiem). Varbut vienkarsaka atbilde ir ta, ka naudas uzkrasanas funkcija ir parspileta un daudziem investiciju bankieriem bus jaiet macities darit kaut ko praktiskaku, iedzivotajiem labveligam ekonomikas produktivitates kapinajumam ir robeza, nevis ka problema ir liberalu/socialistu jautajuma.

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kreëstliv > besinger 25.06.2011. 15.35

Lai gan daudzos jautajumos Jums nepiekritu, patik, ka atrodas tadi, kas megina izkustinat udeni diki, un pateikt, ka varbut viss ir mazliet citadak, neka tas, ko censas ieskaidrot. Latvijas iedzivoatjiem beidzot ir jamacas domat, nevis tikai uzticeties labak gerbtajam, dailrunigak runajosajam vai vairak baidosajam. Diezin vai var krist vel zemak par dzivi saimnieciba ar barteru ka ir noticis daudzviet laukos, krist no bankiera uz sadu situaciju gan ir daudz sapigak.

Butu jacenas dzivot atbilstosi savam iespejam, pec iespejas naiznemoties (sliki parvalditam valstim normalos apstaklos ari gruti aiznemties, ja ir normala kartiba pasaules naudas sistema), bet ari neuznemoties maksat par lietam, ko nodoklu maksatajs nav terejis, laujot darboties automatiskajiem stabilizatoriem, un censoties taisit parpalikuma budzetu, lai to varetu izmantot slikta situacija (ja ir normala kartiba pasaules naudas sistema), un tas viss – pie adekvatas! monetaras politikas.

Ekonomika tapat ka medicina – svarigas pareizas mediciniskas darbibas un devas. Un tas, ka tiks naidotas sabiedribas grupas, izraisis tadas pasas sekas ka savstarpeji nesaderigu medikamentu izmantosana.

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daks_klave > Mēs esam daudz :) 21.06.2011. 17.04

Katuska,

I am afraid that as good as they may sound, Your proposed solutions cannot save the day.

1) When Latvia regained independence, as far as I know, the only viable alternative to current “pyramid scheme” pension system was leaving retirees without a santim – as there was no “pension fund” of assets transferred from former Soviet Union. As far as I see, at the time it was assumed that this system will not turn into pyramid, because:
– soon after uncertainty surrounding regaining of independence lessens, demography (birth-rate) will improve;
– privatisation of public sector owned companies and assets will allow to build basis for future pension spending, thus these companies will NOT be artificially bankrupted and sold for a sandwich to “right people”;
– government will when possible take aside funds for future pensions and duly care for them, thus government will NOT raid social budget to further overheat the economy;
– there will be no significant emigration of working age population, as it will be very hard for them to find acceptable permanent job outside Latvia;
– “invisible hand” of free market economy together with productive workforce generated by state-of-art education system will allow Latvia in next decades to significantly catch-up advanced economies.

I will not use the benefit of hindsight to judge the validity of these assumptions as seen then, two decades ago, but if You look at how many of them realized, You may come closer to understanding, why system which might had not be intended as “pyramid scheme” at the moment of creation has turned into one.

Some will say bad luck, oligarchs or external evils are to blame.
Some others might note that those very people who could have chosen to spend 10 minutes a day to educate themselves on political matters (in order to cast their vote for most appropriate candidates) or get involved in civic organisations, instead spent this time for “get-rich-now-no-matter-what-happens-later”. These others might also observe, that current situation is unfortunate yet fair outcome of past mistakes.
And then there are people in their 20s like me, who face ugly dilemma: atoning for the mistakes made by previous generation or saying good-bye to our motherland.

2) “Progressive pension system”, as described by You, will stimulate many working age people (i) to hide their true incomes (grey economy), (ii) abandon attempts to become top class professionals and earn large wage (thus also pay large taxes), as they will anyways get similar state pension to others and (iii) if it is a close call, to emigrate to a country with less redistributive policies.
Without getting deeper into drawbacks of redistributive policies, it is important to understand, that no tinkering with distribution of pension system funds will help, if those who pay in – working age population – perceive it as a “pyramid scheme they will never benefit from”.

========== IN BRIEF ==========

1) “Pyramid scheme” pension system was the only viable solution two decades ago, and it is close to impossible to change this system now as population is ageing rapidly, borders are open and public and private sector are both indebted.

2) “Progressive pension system” might be great in “healthy and balanced society”, where people care for those in need more than for their own fortune, et cetera et cetera. I am affraid society in Latvia is different, and tinkering with pension funding distribution won’t fix it.

IMHO,
Art

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RitvarsPavlovs > Mēs esam daudz :) 21.06.2011. 20.32

Katuška,

Isn’t Progressivism great? Just call a Ponzi scheme “a plan to serve”, and it will not collapse. Call central planners “servants”, and all their human limitations (lack of knowledge, self-interest, greed, stupidity) are gone. This clears a way to a healthy and balanced society, just like in Belarus. No wait… Like in Cuba! No, wait… Like in North Korea? Sure, North Korea is our model. They’ve done away with those dastardly capitalists “distributing incomes as the see fit”.

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Mēs esam daudz :) > Mēs esam daudz :) 22.06.2011. 13.57

With all due respect to commentators, verbose explanations of the past and negativism are Not essential parts of an intelligently advocated “change in thinking”. Latvija VAR. (punkts)

1) Reluctancy towards the word “scheme” stems from a common definition for it being “an underhand plot”. Admittedly, its not the only meaning, but it’s there and since the objective is an honest and transparent governing system- there should be no intrigue and nothing underhand about it.

2) Are not the recently accepted welfare ceilings a step towards progressivism? They, unfortunately, are temporary, should be bolder, and should also pertain to pensions. Each individual should be equal in the eyes of the law. In due time…

Tick, tock. Tick, tock…

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Dzintars > Una Grinberga 21.06.2011. 11.25

Some potential solutions that are easy to point at: Higher retirement age, immigration. Implementation? Don’t ask me…

More tricky issues: Soaring health costs – how to finance this?

For most people life as a pensioner right now is not very attractive and given the future age profile it won’t be attractive then either…

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anita_meistere > Una Grinberga 21.06.2011. 12.04

“For most people life as a pensioner right now is not very attractive”…you right. Latvian pensionar = beggar (if only you are not some kind of ex-banker with 4k pension). pensionars get well below subsistence wage. and those are not just some kind of virtual figures. You are extremely lucky to have something to eat and do not have communal serv. debt. This ir Latvian reality. Therefore any talks about cuting pensions are just become amoral. I can live in country, where roads are bad, taxes are hight etc. But i cannot wheere my parents literary die form lack of food or medical care.

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RitvarsPavlovs > Una Grinberga 21.06.2011. 20.16

Mr. Hansen,

“Some potential solutions that are easy to point at”

These “easy-to-point-at” solutions are of kick-the-can variety. Isn’t abolition of unfunded pensions just as easy to point at?

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Dzintars Kalniņš > Una Grinberga 28.06.2011. 18.16

Morten, a well written article. Especially your last point about pyramid scheme.

However, a bit disappointing is your reply in your comment about implementation of possible solutions…”don’t ask me”… In my opinion, we have too many scholar (or scholar ‘wannabes’) opinions and too little actual suggestions. Of course, there have been some good idease and they have not been implemented and that, obviously, is not in your hands.

Your article made me think about overall perspective of our so called ‘capitalist/industrial/consumer society’ not only in Latvia but in the whole world. If we look at the development of our western civilization, then our current society with its social security is rather new and it’s true beginning traces back to only mid 20th century (post second world war). Before that there has not been anything similar to the system that we know now and much of social security (old age and health support) was in the hands of each family, where children took care of their parents and earned most of the revenue for the family members. At that time, family values played an important role as stable family was the only means to survive. Of course, also work performed was much more human labor intense and all family members participated. Then, with the introduction of social security systems and mass production using cheap fossil fuels (oil) the need for strong family ties disappeared resulting in population growth and concentration of people in cosmopolitan cities. In addition, generation after generation have become more ‘lazy’ doing various virtual jobs sitting in high-rise office buildings. Social security system has allowed to decrease working years of people (in some developed countries young people choose to study and travel until they are 30 and expect to retire when they will be 50).
All of this seems a bit odd to me and not sustainable in long-run, I think that gradually we will have to return to a system/economy/society that is more labor intense and focused on steady production and accumulation of wealth. Also, failing pension system will stimulate that eventually we will see much more support from family members. In my opinion this is the only way forward – people will have to return back to their ‘roots’ and the western social security system is doomed to fail. I am not being pessimistic – quite contrary. Latvia is much more ready to be the ‘headliner’ in this movement back to the nature – we have so many unspoilt natural resources (agricultural land, forests, river, lakes and the sea) and it is just a matter of doing the right thing!
In order to implement this, the government really should enforce policies that stimulate small/medium enterprises, local farming incentives and accumulation rather spending. Latvia will never be a large producer of for global corporations and therefore it should engage available resources on sustainable agriculture and farming practices.

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Dzintars > janisholsteins 21.06.2011. 11.19

Good point!

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