O primeiro ciclo do Estado Novo, de 1928 a 1938, foi dominado pela ascensão e consolidação do poder pessoal de Salazar. Através da criação de um estado corporativo, Salazar acabou com o caos vigente durante a primeira república e reequilibrou as finanças públicas, num contexto de grandes dificuldades resultantes da crise mundial de 1929. O crescimento económico neste período foi muito lento (apenas 1.18% ao ano) o que exigiu um esforço extraordinário de poupança por parte de uma população pobre e impossibilitada de emigrar.
O período seguinte de 1938 a 1952, que podemos designar como o ciclo das grandes obras públicas, inspirado nas experiências Alemã e Italiana dos anos 30, acabou por ter resultados também modestos. Tal ficou a dever-se à morte prematura em 1943 do seu grande impulsionador Duarte Pacheco, e às dificuldades decorrentes da II Guerra Mundial. Assim este ciclo acabou por ter uma modesta taxa de crescimento anual de apenas 1.88%. No seu final assistiu-se mesmo ao regresso de fluxos emigratórios ao nível dos anos 20 (cerca de 30 mil pessoas por ano).
O ciclo final do Estado Novo, entre 1953 e 1973, iniciou-se já sob a influência do Plano Marshall, e da introdução dos Planos de Fomento. Para estes contribuiu uma nova geração de brilhantes e dedicados funcionários públicos (entre eles alguns, como Jacinto Nunes e Silva Lopes, que ainda hoje são a referência moral do verdadeiro espírito de serviço público). Apesar deste ciclo se concluir com o declínio do regime político, sob o ponto de vista económico foi provavelmente o ciclo de maior crescimento na história de Portugal, com uma média anual superior a 6%. Este resultado foi ainda mais extraordinário se tivermos em conta que as guerras coloniais começaram em 1961 e que a emigração massiva para a Europa atingiu o seu auge em 1970, quando mais de 180 mil portugueses emigraram.
Quando comparamos o crescimento económico anual dos ciclos do Estado Novo com o crescimento verificado nos ciclos do pós-25 de Abril (2.27% no ciclo de consolidação da democracia entre 1974 e 1985, 3.81% no segundo ciclo de grandes obras públicas entre 1985 e 1999, por vezes designado de Cavaquismo, e 1.53% no ciclo pós-Euro entre 1999 e 2008) não podemos deixar de constatar que Portugal é uma clara demonstração da regra que diz “trade is better than aid”. Na verdade, apesar das transferências financeiras recebidas da União Europeia durante os “roaring nineties” o crescimento neste período mal chegou a metade do verificado durante o período dos “golden sixties” quando ocorreu a liberalização da nossa economia após a adesão à EFTA.
Globalmente, ambos os regimes de capitalismo de estado em Portugal – autoritário de direita e democrático de esquerda – experimentaram exactamente a mesma taxa de crescimento nos seus primeiros 34 anos (2.6% ao ano). Este desempenho económico não pode ser considerado despiciendo, mas não foi certamente suficiente para assegurar uma recuperação significativa do atraso económico de Portugal quer em relação aos nossos vizinhos Espanhóis quer em relação aos países mais desenvolvidos da Europa.
A nosso ver, se não houvesse mais razões, esta seria suficiente para dizer que 80 anos de capitalismo de estado em Portugal já chegam. Agora chegou a altura de mudar de rumo em direcção a um novo sistema económico baseado no capitalismo de mercado. Contribuir para essa mudança é um dos principais objectivos do nosso blog.
Friday, 26 February 2010
Saturday, 13 February 2010
Um novo ciclo ou um novo regime político-económico para Portugal?
A recente tentativa falhada dos apoiantes do Primeiro Ministro Sócrates para controlar a comunicação social em Portugal tem tanto de grotesco que não pode deixar de ser equiparada às paranóias típicas dos regimes em fim de vida. Por exemplo o facto de ter podido nomear dois dos seus "muchachos" para administradores executivos de uma grande empresa onde o Estado apenas tem uns centavos investidos lembra-nos o império Romano quando o imperador Calígula nomeou para cônsul o seu cavalo favorito. Para nós a questão não está em saber se Sócrates sai amanhã, daqui a três ou a sete anos.
O que nos interessa é analisar se o novo ciclo será mais um, na sequência dos três ciclos pós-25 de Abril a que assisti pessoalmente, ou trará uma profunda transformação na sociedade portuguesa. Infelizmente o pessimismo e falta de ideias reinante entre nós faz com que as minhas expectativas não sejam muito elevadas. Porém, isso não significa necessariamente que uma mudança para melhor não possa acontecer nos tempos mais próximos.
Por exemplo, lembro-me de em Março de 1974 ao sair do ISE (hoje ISEG) pelo portão da Miguel Lupi ouvir um militar (general?) que aí vivia comentar que o golpe das Caldas tinha falhado. Como na antevéspera tinha assistido na TV à demonstração de vassalagem ao primeiro-ministro Professor Marcelo Caetano por parte da chamada brigada do reumático, senti-me pessimista e não imaginava que em breve estaria a caminhar livremente em direcção ao Estádio Primeiro de Maio, cheio de alegria e utopia sobre o futuro brilhante de Portugal no pós-25 de Abril.
No entanto, após alguns meses a trabalhar no movimento sindical, aprendi rápidamente que a natureza humana quando movida apenas pelo desejo de vingar os atropelos do regime deposto rapidamente volta a praticar as mesmas tropelias. As vitimas do passado transformam-se nos carrascos do presente. Sómente sistemas genuinos de democracia representativa e liberalismo constitucional conseguem evitar tais comportamentos.
Também no Outono de 1985, enquanto aguardava no hotel Solneve da Covilhã os resultados da votação no PRD e eles chegavam melhor do que esperavamos, reinava uma nova esperança em torno do novo partido. Um partido que não iria apenas encerrar o PREC mas também inroduzir uma nova ética política. Porém o tempo cedo se encarregaria de rápidamente me dar uma segunda lição sobre a natureza humana. Não basta criticar a ausência de valores éticos se não tivermos valores alternativos para promover. Valores baseados na igualdade de oportunidades e na liberdade humana de acordo com os ideais do iluminismo. Nessa altura também não antecipei que em breve se iniciaria um novo ciclo de crescimento económico baseado na promoção de obras públicas - habitualmente designado por Cavaquismo.
De igual modo, em 1995, quando ainda vivia em Londres, acompanhei à distância o ínicio do ciclo socialista que eu tomei como uma mera pausa no ciclo Cavaquista. De facto, quando regressei em 1998, mais velho e conservador, ainda fiz uma pequena diligência para voltar à política activa. Tentativa que imediatamente abandonei quando Marcelo Rebelo de Sousa se demitiu de lider do PSD e foi substituido por uma geração de ex-Jotas sem ideias próprias nem profissão. Jotas para quem a política fora apenas um trampolim usado pelos cábulas para obterem uma carreira profissional que nunca tentaram nem coseguiriam construir através do método tradicional de estudar e trabalhar afincadmente para ter sucesso na vida.
Quer o ciclo actual seja o último ou o penúltimo do regime de capitalismo de estado socialista e social democrata implantado com a III República, o que é importante é que o actual ciclo não venha a ser substituido por novo tipo de capitalismo de estado, seja ele de direita, esquerda, oligárquico, mafioso ou de qualquer outro tipo.
Após um século de instabilidade política e social que se seguiu às invasões Francesas e dos mais de 80 anos de capitalismo de estado que se seguiram à Primeira República o país precisa de virar esssa página menos feliz da sua história recente. Um futuro diferente só pode construir-se verdadeiramente na base de um novo regime assente no capitalismo de mercado, um dos seis pilares da felicidade humana que constituem o tema deste blog.
O que nos interessa é analisar se o novo ciclo será mais um, na sequência dos três ciclos pós-25 de Abril a que assisti pessoalmente, ou trará uma profunda transformação na sociedade portuguesa. Infelizmente o pessimismo e falta de ideias reinante entre nós faz com que as minhas expectativas não sejam muito elevadas. Porém, isso não significa necessariamente que uma mudança para melhor não possa acontecer nos tempos mais próximos.
Por exemplo, lembro-me de em Março de 1974 ao sair do ISE (hoje ISEG) pelo portão da Miguel Lupi ouvir um militar (general?) que aí vivia comentar que o golpe das Caldas tinha falhado. Como na antevéspera tinha assistido na TV à demonstração de vassalagem ao primeiro-ministro Professor Marcelo Caetano por parte da chamada brigada do reumático, senti-me pessimista e não imaginava que em breve estaria a caminhar livremente em direcção ao Estádio Primeiro de Maio, cheio de alegria e utopia sobre o futuro brilhante de Portugal no pós-25 de Abril.
No entanto, após alguns meses a trabalhar no movimento sindical, aprendi rápidamente que a natureza humana quando movida apenas pelo desejo de vingar os atropelos do regime deposto rapidamente volta a praticar as mesmas tropelias. As vitimas do passado transformam-se nos carrascos do presente. Sómente sistemas genuinos de democracia representativa e liberalismo constitucional conseguem evitar tais comportamentos.
Também no Outono de 1985, enquanto aguardava no hotel Solneve da Covilhã os resultados da votação no PRD e eles chegavam melhor do que esperavamos, reinava uma nova esperança em torno do novo partido. Um partido que não iria apenas encerrar o PREC mas também inroduzir uma nova ética política. Porém o tempo cedo se encarregaria de rápidamente me dar uma segunda lição sobre a natureza humana. Não basta criticar a ausência de valores éticos se não tivermos valores alternativos para promover. Valores baseados na igualdade de oportunidades e na liberdade humana de acordo com os ideais do iluminismo. Nessa altura também não antecipei que em breve se iniciaria um novo ciclo de crescimento económico baseado na promoção de obras públicas - habitualmente designado por Cavaquismo.
De igual modo, em 1995, quando ainda vivia em Londres, acompanhei à distância o ínicio do ciclo socialista que eu tomei como uma mera pausa no ciclo Cavaquista. De facto, quando regressei em 1998, mais velho e conservador, ainda fiz uma pequena diligência para voltar à política activa. Tentativa que imediatamente abandonei quando Marcelo Rebelo de Sousa se demitiu de lider do PSD e foi substituido por uma geração de ex-Jotas sem ideias próprias nem profissão. Jotas para quem a política fora apenas um trampolim usado pelos cábulas para obterem uma carreira profissional que nunca tentaram nem coseguiriam construir através do método tradicional de estudar e trabalhar afincadmente para ter sucesso na vida.
Quer o ciclo actual seja o último ou o penúltimo do regime de capitalismo de estado socialista e social democrata implantado com a III República, o que é importante é que o actual ciclo não venha a ser substituido por novo tipo de capitalismo de estado, seja ele de direita, esquerda, oligárquico, mafioso ou de qualquer outro tipo.
Após um século de instabilidade política e social que se seguiu às invasões Francesas e dos mais de 80 anos de capitalismo de estado que se seguiram à Primeira República o país precisa de virar esssa página menos feliz da sua história recente. Um futuro diferente só pode construir-se verdadeiramente na base de um novo regime assente no capitalismo de mercado, um dos seis pilares da felicidade humana que constituem o tema deste blog.
Friday, 12 February 2010
Is the Volcker rule enough to revamp the financial regulatory system?
Well-regulated financial markets are an essential part of market capitalism. Contrary to what people often think, efficient regulation means light regulation and not tight regulation. If proof were needed, we can look at the failure of Fannie Mae and Freddie Mac, despite being regulated by a dedicated team of more than 100 regulators which saw nothing coming. This clearly shows that heavy and complex regulation only adds bureaucracy - not efficiency. So, simple rules as the Volcker rule aimed at separating proprietary trading from commercial banking are most welcome.
However, as Volcker himself recognizes the rule is just one piece of a broader set of legal rules needed. So how far do we need to go? The answer to this question depends on how many of these problems we wish to tackle: 1) the moral hazard associated with the too big to fail issue, 2) the risks associated with the growth of the shadow banking system (made up of investment banks, private equity and hedge funds), and 3) the rise of casino-like financial markets. We have not included the bankers’ rock star-like compensation packages. This problem is part of a broader issue on compensation practices in corporate America that is undermining American capitalism and needs a separate treatment.
If we only want to tackle the first problem, then the Volcker rule together with similarly simple-minded competition and anti-trust rules aimed at breaking mammoth conglomerates such as Citigroup will be enough. For instance, such rules should limit deposit taking institutions from owning some types of businesses (in particular those belonging to the shadow banking system). Tighter limits on the use of leverage (well above the current BIS ratio) and restrictions on securitization should also be imposed so that banks return to their basic role in credit screening.
In relation to the shadow banking system, a first step could be the separation of investment banking from asset management so that investment banks can go back to their traditional business of underwriting and advisory work. That is, we should go beyond the old Glass-Steagall Act and separate commercial banking, investment banking and asset management. As a rule, it also seems to us that the potential for systemic risks originating in primary brokerage activities, private equity or hedge funds is better done through limits on leverage than through an increased level of disclosure about their portfolios.
Finally, the casino-like markets can be regulated in the same spirit we use to regulate conventional gambling casinos. We need rules to make sure that people do not bet money they cannot afford to lose. For instance, company treasurers willing to bet on exotic derivatives and structured products could be required to demonstrate that they have enough solvability and liquidity rather than knowledge about such complex products.
Overall, we only need a few basic rules to enforce an effective regulatory system.
However, as Volcker himself recognizes the rule is just one piece of a broader set of legal rules needed. So how far do we need to go? The answer to this question depends on how many of these problems we wish to tackle: 1) the moral hazard associated with the too big to fail issue, 2) the risks associated with the growth of the shadow banking system (made up of investment banks, private equity and hedge funds), and 3) the rise of casino-like financial markets. We have not included the bankers’ rock star-like compensation packages. This problem is part of a broader issue on compensation practices in corporate America that is undermining American capitalism and needs a separate treatment.
If we only want to tackle the first problem, then the Volcker rule together with similarly simple-minded competition and anti-trust rules aimed at breaking mammoth conglomerates such as Citigroup will be enough. For instance, such rules should limit deposit taking institutions from owning some types of businesses (in particular those belonging to the shadow banking system). Tighter limits on the use of leverage (well above the current BIS ratio) and restrictions on securitization should also be imposed so that banks return to their basic role in credit screening.
In relation to the shadow banking system, a first step could be the separation of investment banking from asset management so that investment banks can go back to their traditional business of underwriting and advisory work. That is, we should go beyond the old Glass-Steagall Act and separate commercial banking, investment banking and asset management. As a rule, it also seems to us that the potential for systemic risks originating in primary brokerage activities, private equity or hedge funds is better done through limits on leverage than through an increased level of disclosure about their portfolios.
Finally, the casino-like markets can be regulated in the same spirit we use to regulate conventional gambling casinos. We need rules to make sure that people do not bet money they cannot afford to lose. For instance, company treasurers willing to bet on exotic derivatives and structured products could be required to demonstrate that they have enough solvability and liquidity rather than knowledge about such complex products.
Overall, we only need a few basic rules to enforce an effective regulatory system.
Wednesday, 10 February 2010
How close are we getting to a market capitalism ideal?
The ideal of market capitalism is necessarily vague, but can be broadly defined as an economic system where individuals execute most of their economic transactions in competitive markets. It requires a reasonably atomistic distribution of economic resources and well-regulated markets. A few indicators come to mind on how to rank countries in accordance on how close they are to this ideal system. Among such indicators, we must include the share of large corporations and governments in GDP and some index of economic freedom. Traditionally we tend to identify the OECD member countries as representative of what we would call capitalist markets. However, when we scrutinize its members we find that only a few countries come near to the market capitalism ideal.
Take the case of the USA for instance. The USA would normally qualify under the share of government in GDP criteria (around 35%) and in terms of economic freedom (among the top ten in the Fraser Institute list). Nevertheless, its share of big business in GDP remained at around 50% throughout 1998 to 2004 as estimated by the SBA. Another interesting case is South Korea, which has the smallest weight of government in its economy (about 26% of GDP) but ranks very low in terms of economic liberty (32 in the Fraser list). Disregarding the share of big business criteria, which is difficult to obtain for most countries, we end up with just a handful of nations (Australia, Switzerland, Luxembourg and Ireland) that qualify for the status of close to the ideal of market capitalism.
Among the Western countries with a mixed economy system in the sense defined by the late Paul Samuelson we have two models of state capitalism that are worth considering - the Scandinavian and the Southern European types of state capitalism. There are many other types of state capitalism, ranging from democratic systems of big-business capitalism in Europe and North America to crony/oligarchic systems in Russia or dictatorial systems like in China, but these are of no concern to us in this post. We need to compare the performance of those two sets of countries against those closer to the market capitalism ideal to verify if there are substantial differences. Note that the Southern European system would be more interesting because it went through two distinct periods of about forty years each – an authoritarian right wing and another period of democratic socialism. However, we only have comparative data for the recent period where both groups had generally socialist governments.
Over the last 37 years, the real annual GDP growth in the market capitalism group ranged from 1.43% (Switzerland) to 4.71% (Ireland) against a range between 2.00% (Sweden) and 3.76% (Norway) for the Scandinavian state capitalism, and from 2.66% (Italy) to 3.61% (Portugal) for the Southern European system. Overall, with the exception of Switzerland, the growth of the market capitalism economies was faster than that of all economies under state capitalism. These growth rates were achieved by 80% of the Swiss working an average of 1702 hours per year and 55% of the Irish working 1966 hours, while among the Scandinavians 78% of the Swedes had to work 1570 hours and 74% of the Norwegians worked 1599 hours. In Southern Europe it took 53% of the Italians working 1870 hours, while 68% of the Portuguese worked 1917 hours. In terms of productivity growth, Switzerland is the odd case lagging substantially behind all the state capitalism countries. In terms of ranking, Ireland tops the league, followed by Luxembourg, Norway, Spain, Australia and Portugal. In terms of purchasing power relative to the OECD average, Ireland again improved the most (89.4%) between 1971 and 2008, followed by Norway (80.2%), Luxembourg (57.0%) and Portugal (23.2%). During the same period, Switzerland was the country that declined the most (30.1%), followed by Sweden with a decline of 14%.
Despite the exceptions of Switzerland and Norway, overall, the countries with a system closer to market capitalism outperformed both groups with a system of state capitalism. Nevertheless, definitive proof will require a more detailed study taking into account the fact that during this period, some of the countries have gone through several changes in relation to their pro-market stance. Equally, we have a few countries that benefited from exceptional shocks like the North Sea oil and gas in the case of Norway and the process of decolonization in the case of Portugal. For instance, if we look for periods where a major roll back on the weight of the state in the economy occurred we find that they took place in Ireland, Finland, Norway and Sweden during 1994-2000, in Australia during 1986-1988 and again in Norway during 2004-2006. Conversely, there were episodes of state build-up in Switzerland and Finland during 1990-1993.
Take the case of the USA for instance. The USA would normally qualify under the share of government in GDP criteria (around 35%) and in terms of economic freedom (among the top ten in the Fraser Institute list). Nevertheless, its share of big business in GDP remained at around 50% throughout 1998 to 2004 as estimated by the SBA. Another interesting case is South Korea, which has the smallest weight of government in its economy (about 26% of GDP) but ranks very low in terms of economic liberty (32 in the Fraser list). Disregarding the share of big business criteria, which is difficult to obtain for most countries, we end up with just a handful of nations (Australia, Switzerland, Luxembourg and Ireland) that qualify for the status of close to the ideal of market capitalism.
Among the Western countries with a mixed economy system in the sense defined by the late Paul Samuelson we have two models of state capitalism that are worth considering - the Scandinavian and the Southern European types of state capitalism. There are many other types of state capitalism, ranging from democratic systems of big-business capitalism in Europe and North America to crony/oligarchic systems in Russia or dictatorial systems like in China, but these are of no concern to us in this post. We need to compare the performance of those two sets of countries against those closer to the market capitalism ideal to verify if there are substantial differences. Note that the Southern European system would be more interesting because it went through two distinct periods of about forty years each – an authoritarian right wing and another period of democratic socialism. However, we only have comparative data for the recent period where both groups had generally socialist governments.
Over the last 37 years, the real annual GDP growth in the market capitalism group ranged from 1.43% (Switzerland) to 4.71% (Ireland) against a range between 2.00% (Sweden) and 3.76% (Norway) for the Scandinavian state capitalism, and from 2.66% (Italy) to 3.61% (Portugal) for the Southern European system. Overall, with the exception of Switzerland, the growth of the market capitalism economies was faster than that of all economies under state capitalism. These growth rates were achieved by 80% of the Swiss working an average of 1702 hours per year and 55% of the Irish working 1966 hours, while among the Scandinavians 78% of the Swedes had to work 1570 hours and 74% of the Norwegians worked 1599 hours. In Southern Europe it took 53% of the Italians working 1870 hours, while 68% of the Portuguese worked 1917 hours. In terms of productivity growth, Switzerland is the odd case lagging substantially behind all the state capitalism countries. In terms of ranking, Ireland tops the league, followed by Luxembourg, Norway, Spain, Australia and Portugal. In terms of purchasing power relative to the OECD average, Ireland again improved the most (89.4%) between 1971 and 2008, followed by Norway (80.2%), Luxembourg (57.0%) and Portugal (23.2%). During the same period, Switzerland was the country that declined the most (30.1%), followed by Sweden with a decline of 14%.
Despite the exceptions of Switzerland and Norway, overall, the countries with a system closer to market capitalism outperformed both groups with a system of state capitalism. Nevertheless, definitive proof will require a more detailed study taking into account the fact that during this period, some of the countries have gone through several changes in relation to their pro-market stance. Equally, we have a few countries that benefited from exceptional shocks like the North Sea oil and gas in the case of Norway and the process of decolonization in the case of Portugal. For instance, if we look for periods where a major roll back on the weight of the state in the economy occurred we find that they took place in Ireland, Finland, Norway and Sweden during 1994-2000, in Australia during 1986-1988 and again in Norway during 2004-2006. Conversely, there were episodes of state build-up in Switzerland and Finland during 1990-1993.
Friday, 5 February 2010
Why only six pillars?
No doubt, the happiness of humanity cannot depend only on six pillars. However, at the dawn of a new millennium, we selected only those that strike us as the most important means to promote human happiness. By focusing on the means rather than the ends, we left out some important values like peace, friendship, family bonds and a healthy body and soul, as these are simultaneously means and ends in the pursuit of joy by humankind.
The most controversial pillar that we have left out is religion. Because of its crucial role to secure compliance with moral values and to help us face death, it should have a prominent role. Yet, since religion is at variance with the scientific method and it is often used to fuel hate and extremism we cannot consider religion as an unequivocal pillar of human betterment.
We see the six pillars as sustaining an equal number of columns in the gate of human progress. We looked for such beautiful gates with an historical significance but all we could find to illustrate our approach were the stone archway at Yuling, in China, and Hadrian’s Gate in the Ancient City of Ephesus in Turkey. Neither is particularly well suited to show the many sides supported by each pillar (so, if you are keen on art and may help us find a more beautiful gate we will be obliged). We are looking to add to each column the many ratings appropriate to monitor the multi-faced nature of the columns supported by each pillar.
Each pillar will be the subject of future posts. For now we close this post with a simply note on their role. The first two – representative democracy and constitutional liberalism are essential to understand how to manage power for the benefit of all. The next pair – market capitalism and productive work – is the key to a prosperous economy. The last two – scientific method and enlightened virtues provide the foundation for a gratifying life that goes beyond the satisfaction of our material needs.
The most controversial pillar that we have left out is religion. Because of its crucial role to secure compliance with moral values and to help us face death, it should have a prominent role. Yet, since religion is at variance with the scientific method and it is often used to fuel hate and extremism we cannot consider religion as an unequivocal pillar of human betterment.
We see the six pillars as sustaining an equal number of columns in the gate of human progress. We looked for such beautiful gates with an historical significance but all we could find to illustrate our approach were the stone archway at Yuling, in China, and Hadrian’s Gate in the Ancient City of Ephesus in Turkey. Neither is particularly well suited to show the many sides supported by each pillar (so, if you are keen on art and may help us find a more beautiful gate we will be obliged). We are looking to add to each column the many ratings appropriate to monitor the multi-faced nature of the columns supported by each pillar.
Each pillar will be the subject of future posts. For now we close this post with a simply note on their role. The first two – representative democracy and constitutional liberalism are essential to understand how to manage power for the benefit of all. The next pair – market capitalism and productive work – is the key to a prosperous economy. The last two – scientific method and enlightened virtues provide the foundation for a gratifying life that goes beyond the satisfaction of our material needs.
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