Economy as a Tool, Not an Objective

Tomas Sedláček opened by asserting that people assume that constant growth is a right, but that our mentality must shift to focus on more long-term, sustainable growth. When people are outraged by temporary economic slowdowns, it speaks poorly of our belief in the long-term effectiveness of democracy and capitalism. He suggested that external threats such as terrorism and natural disasters damage economies less than “the internal barbarian,” such as reckless short-term growth. “We have one single bullet answer for everything and that is Growth!” He feared that with such a focus on growth, the mistakes of the past will be repeated. Steps must be taken to reduce national deficits. Politicians have become complacent by taking out loans to give the appearance of growth. He posited that strict guidelines should be introduced to prevent governments from increasing spending beyond their GDP growth. In this instance, regulation and freedom do not contradict each other.

 

Former Czech Prime Minister Mirek Topolánek suggested that the main threat to the economy is overregulation by the government. He believed that states have failed in their fundamental roles and should not assume more power. He referred to the recent economic crisis as a case study for the hate and criticism brought against bankers, but pointed out that government had supported them in their actions, and was equally to blame. “We should fear greed but it is the state that opens the door to greed by distorting the market.” He also lamented the decline of old capitalist values and the growth of negative values such as a welfare state and populism. The economy should be regulated by limited, simple and strictly-observed rules and maintain a sphere of influence separate from the state.

Peter Eigen shared the pessimist view on the government’s role in ameliorating the economy, but took a different approach to the question by suggesting that politics should reestablish its primacy over economics. “Good regulation is very selective and leaves a lot of freedom to the market,” but we have a current system of failing governance. We cannot take away power from politicians as this dismantles democracy; politicians must have the authority to protect and correct the market. States have lost their capacity to influence the economy, and the parochial interests of nation states prevent them from maintaining a long-term perspective. Consequently civil society should be enabled to become a real power on a par with the government and the private sector.

 

Peter Thum told the story of his company’s creation to demonstrate how, with the right intentions, business can be used as a tool to achieve societal aims. He took a more neutral position in the debate concerning the role which government should play in the economy, but pointed out the problems inherent in government and business being too close.

 

The panelists agreed that the economy is a tool and not an objective on its own but disagreed on the role of politics in the economy.