In the context of the economic downturn, the government is now faced with a dilemma in terms of shaping interventionist, pre-election economic policy: continue subsidies to energy prices, continue to generate an increase in public debt, which is already historically high, and an increase in inflation or a lack of these subsidies and a decrease in inflation?
What will become the priority of the pre-election populist economic policy: energy price subsidies and an increase in inflation, or the lack of these subsidies and a decrease in inflation?
In a country where I operate under the government management of state interventionism based on an analysis of public sentiment and pre-election political marketing, a specific economic policy is conducted, known as a real policy mix, consisting of a mild fiscal policy (additional pensions, government subsidies to salaries of employees during a pandemic, subsidies). and benefits for citizens to reduce the effects of rising energy and fossil fuel prices, subsidies for the purchase of coal under the anti-climate and anti-ecological policy, etc.) and the tightening monetary policy of the central bank from October 2021. On the one hand, high inflation, which has been rising almost from the beginning of 2021 and was caused by the record-breaking use of money printing and subsidies to employee wages, to the operating costs of companies and enterprises that were in lockdowns, did not conduct economic activity, were in the economic crisis in 2020. Then, in order to limit the scale of the rapidly growing inflation, the central bank began raising interest rates from October 2021. This increased the cost of money borrowed by commercial banks. Credits have become more expensive, the creditworthiness of citizens and business entities has decreased, and the level of investments in various sectors and sectors of the economy is falling. Additionally, due to negligence of the government and limiting the development of renewable energy sources, the level of security and energy independence of the country is low. The increase in fossil fuel prices caused an energy crisis in the country due to the fact that key energy companies are state-owned companies and do not implement the pro-climate energy transformation, did not invest in the development of renewable and emission-free energy sources, the government has for years supported the development and vegetation of dirty combustion energy based on burning coal. This led to the situation that currently 3/4 of heat and electricity in Poland is generated from the combustion of fossil fuels, the prices of which have recently been rising rapidly. Energy companies operating as state-owned companies raise the prices of their refined petroleum products and electricity prices disproportionately much higher in relation to the increase in raw material prices on commodity exchanges, and even more so in relation to domestic raw material markets, domestic mines, from which they also purchase raw materials in the form of certain categories of fossil fuels. As citizens, through independent media and non-governmental organizations, signal their dissatisfaction with this kind of unreliable, anti-social, anti-climatic, anti-environmental, pro-crisis economic policy, the government ignoring the issue of increasing the debt of the state finance system and preparing for the parliamentary elections to be held in autumn 2023 introduces new subsidy programs for the purchase of fossil fuels. In this way, the government continues its policy of supporting dirty combustion energy, creates further pro-inflationary impulses in the economy and increases the indebtedness of the state's public finance system. In addition, due to the high risk of a deepening of the national energy crisis in the heating season, it allows municipalities to lift the previously introduced anti-smog regulations, and allows the sale of lignite for citizens to burn it in home-type furnaces. As a result, the exceptionally low quality of the air in Poland compared to Europe will worsen further and will have a negative impact on the health of citizens. I wonder why some citizens still support this type of economic policy conducted by the current government in Poland. Clearly there is a high level of relevance to government propaganda driven by government-controlled meanstream media in this regard. The above-mentioned problems may worsen if economic policy is conducted as it has been so far. The problem of the current energy crisis and the prospective climate crisis may worsen in the future. On the other hand, in the short-term, ad hoc perspective, the government is currently considering what should become the priority of the pre-election populist economic policy: subsidies to energy prices and an increase in inflation or the lack of these subsidies and a decrease in inflation?
In view of the above, I would like to address the following question to the Distinguished Community of Researchers and Scientists:
In the context of the economic downturn, the government is now faced with a dilemma in terms of shaping interventionist, pre-election economic policy: continue subsidies to energy prices, continue to generate an increase in public debt, which is already historically high, and an increase in inflation or a lack of these subsidies and a decrease in inflation?
What, in your opinion, should the economic policy be conducted in the face of the economic crisis, economic recession and possibly also stagflation in 2023?
What is your opinion on this topic?
And what is your opinion on this topic?
What do you think about this topic?
Please respond,
I invite you all to discuss,
Thank you very much,
Warm regards,
Dariusz Prokopowicz
As always, dear Dariusz Prokopowicz , you are raising a decisive question. With respect to the economic policies applied in Europe, I am in favor of no subsidies and falling inflation, but I do expect exactly the opposite.
The issue is always the same: the government or the market. There is no third solution.
There is simply no other choice than this: either to abstain from interference in the free play of the market, or to delegate the entire management of production and distribution to the government.
Either capitalism or socialism: there exists no middle way.
Ludwig von Mises
Dariusz Prokopowicz,
I am on the same concern stance with you on the topic and share very same perspective. Thanks for bringing forward your opinion sharing with us.
Though government when you/we talk about, which government?
We all have our own government/s, and economic downfall issue isn't binded down to one state or country, under one or any one government. Economy is a global trend and it is like the earth's water, impacts on entire earth, as it is impacting the global market, global stability, and so on global development/growth, causing/caused deflation. We have our government/s. My government UK, been on the forming/ reforming cabinet/government itself for the past months while planet earth is been falling, falling, to fell in the economic crises.
One thing we learn in this, no nation, state or county should entrust whole economic system in the government. Yes. I do hold government on the stake of responsibility, yes, can't let government to scape at all from responsibility of economic responsibility, I simultaneously, pull government of countries engage in economic to work stability and development.
Stephen I. Ternyik,
I suppose it's both, we cannot totally separate for varies of risks factors.you well know the risk factors, the danger are.
Socialsm? come on, it doesn't exists in tangible way. It's an abstract taken into communism you know that very well.
Per to capitalism , it is the fact matter, we have been living in it, my life time, we/I are/ am capitalist/s, undeniable fact.
Come on, let's look at Ruskins theory and I urge to be implemenedt with and alongside both Keynesian and post Keynesian- Cambridge economic theory.
I emphasize on at this moment Hayeks theory to be taken into. Invite the rich to Invest in our market, to create Ruskin's perspective economic system.
Regards
Fatema Miah
Furthermore, along the line to our conversation, I was against Brexit, a) on the one side and b) Eastern European countries EU been neglecting, I wasn't please about it on the other side. The Poland's rising up I admired Warsaw as such.
United Europe I can see be better again, and this time Eastern Europe to be included indiscriminately.
Anyway, politicians needs to come out of ego.
https://youtu.be/PgIiElL-AFw
Regards
Fatema Miah
Dear Fatema Miah , dear Dariusz Prokopowicz
The issue is always the same: the government or the market. There is no third solution, i.e. I have given a clear-cut answer to the question about intervention and inflation.
My analysis is mostly based on the insights of
https://en.wikipedia.org/wiki/J%C3%A1nos_Kornai
I.e. a mix of both systems is not possible.
——-—
Schumpeter’s work, his dynamic view of the entrepreneur and creative destruction has had a great impact on me. He indeed wrote a book, Capitalism, Socialism and Democracy, which intended to give a complex analysis of the two systems. But these two books, and a few others (e. g., some of Mises’s and Hayek’s works) are rather exceptional. A typical American textbook on economic systems is not written with the same ambition about capitalism with which I wrote about socialism. It doesn’t give you a general model of capitalism, including the characterization of the political, ideological, and social spheres.“ — János Kornai János Kornai, in "An Interview with János Kornai : Interviewed by Olivier Blanchard", Macroeconomic Dynamics, 1999
—————-
http://www.kornai-janos.hu/mem/english/excerpts/samples_from_the_whole_book.pdf
———————————-
Take my very critical comment (and warning) as a deep reflection of historical and personal experience,
based on the empirical observations of systems behavior and feedback reactions.
—————————— The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries.
Sir Winston Churchill
Stephen I. Ternyik, there is no third solution that's true.
One thing is certain economic system cannot let to only government only, be August it goes to bureaucratic system of each government and makes complex, reverts back to dark ages Aristocratic system, entice might of right, encourages desire of Conquest and Empire building.
On the other hand, government must be kept engaged into responsibility to r economy for the budget making law and implementation to prevent gross misconduct.
Yes, Macroeconomic Dynamics, I referred as earlier pointing Cambridge. Intervention is matter of responsibility. Thanks for adding the flow in the communication.
Regards
Fatema Miah
The inflation is the bigest problem in any ecomnomic, so the periorite now is facing it by monetry politic
Inflation is an economic term to describe rising prices. It occurs when people spend more money of the same amount of goods and services than one year ago. Always, there are winners and losers and inflation is no exception.
Inflation is soaring at rates not seen in a decade. Now the problem is a low economic growth. Stagflation is the main risk for the global economy. Monetary policy is usually far better to fight inflation and manage overall macroeconomic stability than fiscal policy. First, the governments need to stop inflation, because it has many negative effects like:
Less Purchasing Power: people Ican’t buy as many goods and services as you did before inflation.
Less Savings: “Inflation makes all of our income and savings less valuable,” says Todd Steen, professor of economics at Hope College in Holland, Michigan.
Given the current economic situation and the impending pre-election period, the government must carefully consider its interventionist economic policy. The priority should be to focus on measures that will stimulate the economy and create sustainable growth, while also taking into account the need to reduce inflation and public debt. To this end, the government should focus on measures such as increasing public investments in areas such as infrastructure, education, and healthcare, as well as providing targeted subsidies to businesses, industries, and individuals. Additionally, the government should pursue policies that reduce energy prices and promote the development of renewable energy sources, as this will help reduce inflation and create a more sustainable energy system in the long-term. Finally, the government should also consider measures to reduce public debt, such as reducing government spending and increasing taxes. Ultimately, the government must develop a comprehensive economic policy that takes into account both the short-term and long-term implications of its decisions.
I think, today the most important commitment is to bring down inflation.
I agree with Chicago Federal Reserve President Charles Evans:
"“Ultimately, inflation is the most important thing to get under control. That’s job-one,” Evans said during a live “Squawk on the Street” interview. “Price stability sets the stage for stronger growth in the future.”
Dear Dariusz
It is important to consider that in the short term the energy subsidy does not drive price increases, it already has an impact on most goods and services. It is called price control. The problem is postponed for the medium and long term, when price adjustments have to be made, because the government does not have the monetary resources to continue supporting the subsidy.
It is worth mentioning that inflation has an economic cost, but also a political one. Subsidies delay inflation.
Best regards
The economic policy priorities depend on the specific country and its economic situation. However, in general, it is better to avoid subsidies and focus on reducing inflation. According to an article on the World Economic Forum, energy price shocks have caused rising global inflation and tighter monetary conditions, slowing global growth. Sustained food shortages and high prices could send millions into acute food insecurity, heightening social unrest.
Dear Chuck:
i have a question, you know about a recent economic study that allows analyzing the direct relationship between energy prices subsidies and the increase in prices?; or in its indirect case because by reducing subsidies it has a direct impact on consumption, especially on food.
Best regards
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