Romania Insider
Romania from the outside: How much capitalism is too much?

Guest writer Leon Schnell wonders whether Romanians will ever embrace increased state control, given their sensitivity over the past. While he’s still outside the country, it’s time to ask some difficult questions.

I’ve often commented on the similarities between Romania and South Africa, but there are a few striking differences within each similarity as well.

Take, for instance, that Romania’s big watershed came in 1989, with Ceaușescu’s death. South Africa’s came in 1990 when Nelson Mandela was released from prison: four years later, the country’s first democratic elections were held. Romania’s transition required bloodshed, while in South Africa earlier bloodshed resulted in a peaceful – albeit tension-filled – transition to democracy.

Another major similarity, for me, is that both Romanians and South Africans appear deeply unhappy with both their government and their economy. Over 20 years on from both our watersheds, and the dream hasn’t materialized: politics and money is inextricably intertwined, and both are found lacking. As a result, significant numbers from both our countries are looking to emigrate – the significant difference is that Romanians are already in Europe, whereas South Africans are stranded on the southern tip of Africa.

Emigrating for South Africans is no easy task. Romanians have a degree of freedom of movement as a result of EU citizenship – even despite the UK contesting this – and all South Africa has is a distant memory of once being a part of the Commonwealth. Flight costs are huge, visa issues are difficult to overcome and there is little to no possibility of sourcing temporary work due to the previous two factors: for South Africans, it’s a huge investment to gamble.

A third and less serious similarity just came onto the television now: for absolutely no comprehensible reason, Romanian advertisements (in Romanian with no sub-titles – Cavit, Savex and Poiana) are currently playing. It’s on our CBS Reality channel as part of a satellite television bouquet, and my best guess is that the original channel is occasionally sourced directly from Romania.

Why am I laying out these points? It’s not because I want Romanians to feel sorry for South Africans, but rather because I do have a large degree of empathy with the anger, fear and apathy I see circulating in public discussions. This is useful, because while I’m not living in Romania yet I can at least understand a bit of the craziness that everybody bemoans.

The idea for this story really came about while commenting on Stuart Meikle’s article: ‘Real solutions for real problems and getting involved at the source of the migration flow’.

An argument that I started developing in my comments was that Romanian-owned businesses are ultimately better for Romania’s economy than foreign-owned businesses, as while both contribute to the economy through employment, foreign-owned businesses tend to extract profit from the country, and their ultimate sale to another company can result in the same.

When a commentator who usually disagrees with me posted a link to similar views on a socialist website, I had a bit of an ‘aha’ moment. Advocating increased state control in Romania must surely be on the same par as advocating a return to the racist ‘separate development’ (Apartheid) of South Africa’s racial groups. I’d be interested to hear Romanians’ views on socialism, and what the current ‘public’ consensus in the country is.

My personal view is that politicians need to play a stronger role in society than simply parading around in luxury cars, arguing endlessly in parliament and generally making patently incorrect decisions – stop me if this sounds familiar by the Romanian experience as well?

Business ownership is a major focus in South Africa, but the public interest certainly begins and ends in the ‘Black Economic Empowerment’ component – where the racial groups of the company’s owners, staff and even suppliers is recorded, audited and scored. In South Africa’s political landscape this drastic measure makes political sense because it seeks to counter the imbalances of the past, where white South Africans owned and ran everything in their separate little Universe.

In Romania, however, I don’t know to what degree people are questioning the ownership of their companies, and at exactly what price new investment is coming. Certainly, if Romania’s politicians are too willing to sign relaxed trade agreements with multinational companies in an effort to be seen to fully embrace capitalism and reject its communist roots – which I suspect may be likely – then it stands to potentially damage the country going forward.

I’m not in Romania so I cannot say that it is happening on a large scale, but recent news stories like this and this and this do show that it is something to keep an eye on.

My view is that developing countries need to tighten up on the flow of money within their economies, to ensure that the maximum amount is kept in circulation (where it can end up ultimately being paid as salaries and then returned into the economy) and that the least amount is exported outside of the borders or left languishing in bank accounts ... and thereby effectively lost to the economy.

Does that view make me a socialist? I certainly wouldn’t describe myself as that, and as far as I’m aware there is a huge gamut of economic and political philosophies: anybody advocating sensible restrictions on capitalism isn’t automatically a ‘dirty communist’, or calling for the return of food-stamps.

I personally would never want to see a situation where a government has any role in dictating what people must do with their lives and finances: rather, the government is there to level the playing field and optimize the chances of its citizens through the application of fair legal frameworks.

In Romania’s case, that could well mean favoring local companies with large tenders or acquisitions – what is lost on the ‘upfront’ profit (due to multinationals’ more favorable economies of scale) will definitely be made up in the long run by retaining all revenue within the country’s borders. My question, however, is this: is Romania ready for such a policy, and if not yet, will it ever be?

My guess is that it all depends on the government, and just how persuasive they are. Romania, just like South Africa, will need straight-shooters who the people can trust if they are to receive additional power: definitely not leaders who are corrupt or found to have been dishonest. The people will always follow if they feel they stand to benefit ... not just selected business tycoons I keep reading about from the outside, but on a national level.

Normal
Romania Insider
Romania from the outside: How much capitalism is too much?

Guest writer Leon Schnell wonders whether Romanians will ever embrace increased state control, given their sensitivity over the past. While he’s still outside the country, it’s time to ask some difficult questions.

I’ve often commented on the similarities between Romania and South Africa, but there are a few striking differences within each similarity as well.

Take, for instance, that Romania’s big watershed came in 1989, with Ceaușescu’s death. South Africa’s came in 1990 when Nelson Mandela was released from prison: four years later, the country’s first democratic elections were held. Romania’s transition required bloodshed, while in South Africa earlier bloodshed resulted in a peaceful – albeit tension-filled – transition to democracy.

Another major similarity, for me, is that both Romanians and South Africans appear deeply unhappy with both their government and their economy. Over 20 years on from both our watersheds, and the dream hasn’t materialized: politics and money is inextricably intertwined, and both are found lacking. As a result, significant numbers from both our countries are looking to emigrate – the significant difference is that Romanians are already in Europe, whereas South Africans are stranded on the southern tip of Africa.

Emigrating for South Africans is no easy task. Romanians have a degree of freedom of movement as a result of EU citizenship – even despite the UK contesting this – and all South Africa has is a distant memory of once being a part of the Commonwealth. Flight costs are huge, visa issues are difficult to overcome and there is little to no possibility of sourcing temporary work due to the previous two factors: for South Africans, it’s a huge investment to gamble.

A third and less serious similarity just came onto the television now: for absolutely no comprehensible reason, Romanian advertisements (in Romanian with no sub-titles – Cavit, Savex and Poiana) are currently playing. It’s on our CBS Reality channel as part of a satellite television bouquet, and my best guess is that the original channel is occasionally sourced directly from Romania.

Why am I laying out these points? It’s not because I want Romanians to feel sorry for South Africans, but rather because I do have a large degree of empathy with the anger, fear and apathy I see circulating in public discussions. This is useful, because while I’m not living in Romania yet I can at least understand a bit of the craziness that everybody bemoans.

The idea for this story really came about while commenting on Stuart Meikle’s article: ‘Real solutions for real problems and getting involved at the source of the migration flow’.

An argument that I started developing in my comments was that Romanian-owned businesses are ultimately better for Romania’s economy than foreign-owned businesses, as while both contribute to the economy through employment, foreign-owned businesses tend to extract profit from the country, and their ultimate sale to another company can result in the same.

When a commentator who usually disagrees with me posted a link to similar views on a socialist website, I had a bit of an ‘aha’ moment. Advocating increased state control in Romania must surely be on the same par as advocating a return to the racist ‘separate development’ (Apartheid) of South Africa’s racial groups. I’d be interested to hear Romanians’ views on socialism, and what the current ‘public’ consensus in the country is.

My personal view is that politicians need to play a stronger role in society than simply parading around in luxury cars, arguing endlessly in parliament and generally making patently incorrect decisions – stop me if this sounds familiar by the Romanian experience as well?

Business ownership is a major focus in South Africa, but the public interest certainly begins and ends in the ‘Black Economic Empowerment’ component – where the racial groups of the company’s owners, staff and even suppliers is recorded, audited and scored. In South Africa’s political landscape this drastic measure makes political sense because it seeks to counter the imbalances of the past, where white South Africans owned and ran everything in their separate little Universe.

In Romania, however, I don’t know to what degree people are questioning the ownership of their companies, and at exactly what price new investment is coming. Certainly, if Romania’s politicians are too willing to sign relaxed trade agreements with multinational companies in an effort to be seen to fully embrace capitalism and reject its communist roots – which I suspect may be likely – then it stands to potentially damage the country going forward.

I’m not in Romania so I cannot say that it is happening on a large scale, but recent news stories like this and this and this do show that it is something to keep an eye on.

My view is that developing countries need to tighten up on the flow of money within their economies, to ensure that the maximum amount is kept in circulation (where it can end up ultimately being paid as salaries and then returned into the economy) and that the least amount is exported outside of the borders or left languishing in bank accounts ... and thereby effectively lost to the economy.

Does that view make me a socialist? I certainly wouldn’t describe myself as that, and as far as I’m aware there is a huge gamut of economic and political philosophies: anybody advocating sensible restrictions on capitalism isn’t automatically a ‘dirty communist’, or calling for the return of food-stamps.

I personally would never want to see a situation where a government has any role in dictating what people must do with their lives and finances: rather, the government is there to level the playing field and optimize the chances of its citizens through the application of fair legal frameworks.

In Romania’s case, that could well mean favoring local companies with large tenders or acquisitions – what is lost on the ‘upfront’ profit (due to multinationals’ more favorable economies of scale) will definitely be made up in the long run by retaining all revenue within the country’s borders. My question, however, is this: is Romania ready for such a policy, and if not yet, will it ever be?

My guess is that it all depends on the government, and just how persuasive they are. Romania, just like South Africa, will need straight-shooters who the people can trust if they are to receive additional power: definitely not leaders who are corrupt or found to have been dishonest. The people will always follow if they feel they stand to benefit ... not just selected business tycoons I keep reading about from the outside, but on a national level.

Normal

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