European Union member states in theory may not exceed 3 percent. fiscal deficit in relation to GDP. However, Donald Tusk announced on Monday that Defense expenses will not include this. These rules have already been loosened in the past, in Pandemia, and the head of the European Commission announced that she will now also propose the so -called escape clause. This, in turn, is associated with the war in Ukraine and the need to arma, especially in the face of the potential withdrawal from the US conflict, which under Donald Trump became a real possibility.
However, the loosening of the fiscal rules began last year – reminds Dr. Michał Możdżeń, a lecturer at the Krakow University of Economics and a specialist of the Polish economy network in an interview with Next.gazeta.pl. Already at that time, arms expenditure was excluded from the equation regarding the deficit, on the scale on which they increased after the full -day invasion of Russia to Ukraine. However, despite this, Poland was still covered by the excessive deficit procedure, which is why our diplomats pressed so that the reconstruction of the fiscal rules in the EU would go even further. – The purpose of this is to build a stronger European army – says Dr. Możdżeń. And he adds that for Poland it is a possibility of breathing, because if the reinforcement funds are excluded from the bill, more money can also be redirected to other purposes, such as education or healthcare. To put it simply – thanks to this change, Poland will not have to tighten the belt.
The European Union applied the shackles itself
In addition to maintaining a fiscal deficit below 3 percent. EU countries should maintain a public debt below 60 percent. GDP. This is the so -called convergence criteria. The first limit, as we already know, was celebrated in Pandemia. The second in the EU seems to be only a loose suggestion, taking into account that it is crossed by half of the member countries, and such France has over 112 percent. debt in relation to GDP. It is not surprising, therefore, that its president, Emmanuel Macron, calls and tries to convince the community that it is time to move away from those outdated and incompatible rules to this day.
Dr. Michał Możdżeń believes that convergence criteria are simply based on incorrect and ineffective, and even counter -theory. – Tusk's decision confirms that the public debt limit is maintained only nominally until a reasonable interest of the capitalist class appears. And it is to avoid war on your own territory and earn armor. During the war, nobody suddenly take care of the public debt – notes our interlocutor. And he adds that if it was really about the safety of the nation, not the interest of the capitalist class, the fiscal rules would be loose not only to strengthen the army (and by the way fill the pockets of arms concerns), but also to “fight with demographic collapse, Investmenting infrastructure, with dramatic deficits in healthcare and the risk of unemployment. ” However, this is not happening, and the fiscal rules have been kept for several decades, because this is the case for export capital. Limited demand in Europe allows them to profit from the export of industrial products.
Dr. Możdżeń points out that history has already shown many times that the approach to fiscal limits is arbitrary and selective, and they are observed only when it is on the hand of capital. As soon as it turns out that his hands are embarrassed, these rules are simply dismantled. Most often this happens in the case of a tangible problem – like war or the financial crisis of 2008, when Americans saved their banks with great transfers, regardless of public debt. However, when health protection declines, the state begins to have problems, but it is not accompanied by a “tangible crisis”, suddenly economic orthodoxy argues that high public debt is a threat to macroeconomic stability – says our interlocutor. Anyway, Poles know it well, threatening the public debt and the fall of the state because of this we have practice – only a year ago the famous public debt counter disappeared from the Dmowski roundabout.
Our interlocutor convinces – like Emmanuel Macron – that the limits that the EU imposed on itself are simply unnecessary. On the other hand, public debt does not need to be afraid, because numerous examples from around the world show that even when it reaches 120 percent. Relaced by GDP, the shaft does not fall through a ruined economy.
The selection of fiscal rules is a magnet for abuse
Dr. Możdżeń also believes that if the fiscal rules apply only selectively, when they are celebrated, there is a place to abuse. Disabling defense expenditure from the deficit creates several problems.
First of all, he earns, among others Foreign arms industry, mainly American and companies such as Lockheed Martin. It is with them that Europe will arm. Secondly, the secret to spending the spending of these funds also follows the removal of the expenditure on defense. – And this is already disturbing – says Dr. Możdżeń. Such expenses must be at least partially hidden, due to the fears of using them by the enemy.
– Armaments expenditure is a special and sensitive category. And how these funds will be spent on the representatives of the arms industry together with the representatives of the army and foreign entities – everyone is at least partly out of public control. And this creates a paradoxical and pathological, dangerous situation in which there is no control over huge expenses. Such situations could be avoided if you have given up EU fiscal rules at all – believes Dr. Możdżeń.
– Looking these rules has its good and ugly sides. Thanks to this, you do not need to tighten your belt, you can spend money freely on the reinforcements you need. The uglier side is that the rules that should be a thing of the past, for a considerable part of economists, still put a shadow over national governments, and are alleviated only in the event of a threat, which is also a threat to accumulated capital. Of course, in this way we will be able to defend citizens more effectively, but by the way we also defend capitalists whose companies can win a lot – says our interlocutor. We are emerging from this image of a world in which we can only do favorable fiscal activities for your fiscal activities when it also pays off to great business. And this happens just when Elon Musk ruled unofficially in the US, and Rafał Brzoska helps in Poland.
If not EU fiscal rules, then what?
If the rules regarding the fiscal deficit and public debt limit the possibilities of the state and can be abandoned, and then spend another dozens or hundreds of billions without any consequences (after all, Donald Tusk did not even stammers that loosening fiscal rules to rehew Poland, although he would negatively affect ours Economy), are there any other restrictions? Can the state spend and “print” money in any quantity, not afraid that it will lead to a crisis? Short answer: no, can't. Restrictions exist, but they have a completely different character than we have been told over the past decades. This is not a public debt – which is a financial tool that should be used, as you use the loan, and not avoid it – is a problem.
Dr. Możdżeń explains that contemporary economics distinguishes three factors that limit the amount of money that the government can spend and “print” before it leads to a tragedy. It should be noted here that Poland is an issuer of its own currency, so it can essentially release any number of zlotys to the market. It's just a matter of banking records. Therefore, the state disposes not only with taxes collected from taxes and profits from state -owned companies, because as long as we have a zloty, the central bank can create any amount for you. However, if it exaggerates, the economy may actually break down. Therefore, the Ministry of Finance, the Monetary Policy Council and the National Bank of Poland must make sure that one of the three things does not happen. This is a less algorithmic approach, because it is not about the same limits for each country, but rather on observing and responding to what is happening in the economy.
The first limitation is an excessive increase in inflation. Its high level can be deadly for the economy and its citizens. Banks, which are a bottleneck for the system, protect against excessive increase in prices due to “printing” – says Dr. Możdżeń. This, of course, can be circumvented during the pandemic, in a short time the Polish government pumped a few hundred billion zlotys into the system. Dr. Możdżeń emphasizes, however, that although it was enormous money, they did not have much influence on inflation. Yes, it was the highest in this period for 20 years, but it was primarily influenced by global, not domestic factors, i.e. pandemic, clogging of supply chains, and then the war in Ukraine and the resulting energy crisis. That is why not only Poland had an inflation problem, but the whole world.
The second restriction is taking debt in foreign currencies. This hit Greece indebted in euros, it was a problem in the PRL when we had a debt in dollars. Similar danger would threaten us if we were excessively indebted in dollars to buy American tanks. Then we take out a debt in a currency that we do not control, which in turn hinders its repayment. Poland's debt can be rolled by releasing further bonds for repayment, and for which there is currently enormous demand in connection with high interest rates (which means a large return on investment). We can't do the same with a debt in dollars. If the rate of the zloty breaks down, we will not be able to exchange enough zlotys for dollars, and the amount necessary to repay the debt in dollars could then be obtained only by exporting and selling our products for dollars. Argentina has such a problem now. However, Poland has a large supply here, just like with inflation, because the debt balance is balanced, explains Dr. Możdżeń. – In short, abroad hangs almost the same as we hang abroad – he adds. Now, in connection with expenses, Poland will probably have to increase its debt in foreign currencies, but Dr. Możdżeń is counting on some EU funding. Co -financing, of course, paid in euros, which will allow you to balance our foreign debt again.
The third thing that the authorities must watch over the “printing” are internal imbalances involving the change of income distribution. Simply put – the point is that the money will not go to the richest. Primarily wealthy people and various business entities invest in state bonds. They can spend a lot of money and if they trust the government, they know that the value of their savings will not fall through inflation, and maybe even increase if the interest rates are high. However, if the high interest rates persist for too long, then the money from the printing “overstates” interest on bonds paid mainly to the rich. As a result, capital is accumulated – that is, the rich become more richer, and the poor – the poorer. This, however, leads to social inequalities that are not beneficial to citizens.
– These three things should form the basis for a sustainable macroeconomic policy, whose fiscal policy is only a small clip – summed up Dr. Michał Możdżeń, lecturer at the University of Economics in Krakow and a specialist in the Polish network of economics.