The Chicken or the Egg

According the EU statistics, the Bulgarians are the most unhappy in Europe. Who can blame them? GDP per capita in 2011 stood at €5.200, about one fifth of the EU average, and light years after the world’s happiest country, Denmark, with a GDP/capita at €43.200. It’s a long way to Tipperary, as the song goes, and for transitional countries like Bulgaria to catch up with more innovative, productive and efficient ‘old’ (North-West) Europe is made so much more difficult by the fact that their own society and state appears to be in complete disarray at the moment.

After having stood in three different queues for three long hours, in the open sun measuring 35 degrees in the shadow to register my car (no shelter, nowhere to sit, nowhere to buy a bottle of water) and having been verbally abused by a civil servant for asking too many questions about how to fill in their non-comprehendible forms. And after having received a notice from the tax department in August, dated February, calling for me to pay a tax I already paid in April, there is this big question itching in the back of my head. Just like the success of a private company depend on its capability to maximize its internal resources and seize upon external opportunities to succeed in its business mission, isn’t it just the same for nation-states? If a state and society is not capable of transforming its internal resources (human, natural, infrastructure, etc.) into a model capable of delivering good schooling, health-care and the pursuit of happiness for its citizens, is it not failing in ‘its’ mission”? Of course it is! But while private enterprises go bust if they under-perform, nation-states can linger on, and on…

So are some states condemned to eternal failure in a world of fierce competition, relentless innovation and globalisation? Probably, if the nation-state doesn’t change the way it run its ‘business’, which for most countries in the Balkans will require them to adopt of some relatively new habits, norms and values. After 7 years as full Member of the European Union, what ‘European’ values have Bulgaria adopted? Not many.

No, the question on everybody’s mind in Bulgaria this summer (at least I hope so) is this – “After 25 years of experiments with democracy and the free market, is this is the best we can do?” Any taxi driver in Sofia will tell you the constraints to societal and economic development in the country, deeply embedded in a lethal mix of incompetence, greed, corruption, nepotism, brain-drain and a complete loss of civilized values (or in simple terms, the capacity and willingness to care for more than myself and my immediate family).

Let’s return to the car registration example. Today, public administration consists of civil servants who are neither ‘civil’ nor do they ‘serve’ the general public. Public administration represents the democratic system on a daily basis for the citizens, yet this is where democracy breaks down on the spot. In other, more mature societies, you as a citizen, get the feeling that the civil servants work ‘for’ you and the state institutions are organized to suit ‘you’, and not them. Car registration in most ‘old’ EU countries is now done electronically. No need to leave your home or work place, none of ‘your’ time is lost.

In Bulgaria, and most other countries in this part of the world, the public sector is no less than the extended arm of local, regional and nation government. Public administration is a job creation scheme for relatives and the political party faithful. As a consequence, nobody is hired based on competence or motivation. The staff member’s loyalty is not to the organization and performance is not measured towards a transparent job description, but by how well the staff member serves the patron who put him/her there. It’s a machine of corruption and blatant misuse of state funds. It’s the number one reason why people in Bulgaria are unhappy and why young people are leaving the country. The system is unfair and promotes misuse. Yet nobody seems to care, let alone do anything about it. Why? Money and power reinforce each other in a vicious circle, which destroys values such as dignity, transparency, respect, hard-work, trust, etc. Which democratic society can exist without these core values? None.

This summer, in the town of Veliko Turnovo, the head of the vehicle registration service (public agency) was arrested for taking out a “hands-off fee” from every company registering a commercial vehicle. This was a pure racketeering scheme, according to which only those vehicle owners who had paid the ‘fee’ would be let alone by the controlling organs. This is just one example, go ahead and ask the taxi driver about the other thousands and thousands of schemes to steal from the state, to steal from the citizens, to steal from our children. If you add it all up, you have a pattern of thinking or a cultural behaviour, and where you have a system you will have the values and norms to uphold such a system. But it’s a system based on short-term thinking and greed, built to serve the strong at the cost of the weak in society. In states where the law of the jungle prevails over the law among equals, there is no future.

By always looking inwards for new sources of income, rather than outwards, the system is inherently conservative and cannibalistic. It is a system incapable of creating new wealth. The system feeds off the small productive population (the few people that actually work) and private sector (the few enterprises that actually produce and sell services that the market wants), like a parasite. The ever expanding state and public sector keep their faces above water only by increasing taxes and regulations on the productive sector, and taking new credits to cover ever appearing new holes in the budget and feed themselves and their patrons, leading to mountains of debt for the next generation to pay back. (hence, we steal from our children as well)

On the other hand, an outward looking state and society is in tune with the realities of the world we live in, now based on the free flow and globalization of goods, ideas, funds and people. It’s a challenging and ever changing world we live in. To survive, let alone prosper, nation-states must invest wisely in its human resource and supportive infrastructure, work hard, be creative and innovative, seek consensus on the big questions, show tolerance and discipline, and make the public sector more effective and customer-oriented. For some countries, such as Bulgaria, where real poverty is just around the corner for a large portion of the population, where people have lost all faith in politicians and civil servants, where the talented youth are either leaving or thinking of leaving the country, the original question remains – what comes first, “the chicken or the egg?” Does the state and its extended arm of public administration change first, or society change first and put pressure on the state to alter its ways?

In my book, it is the task role of the state to ‘blink first’. Two main things need to happen for people’s lives in Bulgaria to improve. First, the state should be reduced by half in size, meaning everybody from the politicians to the civil servants at the local car registration agency, The performance of the remaining 50% should be measured towards detailed job descriptions. Their salaries should be increased, for them to make a decent living on the salary alone, and in order to fence off pressure to engage in old corrupt practices. As a public servant once told me: “Our salaries are low, BUT our profits are high”. This norm has to go in order for the new Bulgaria to emerge.

Second, bad behaviour must be punished. This means the judicial system must divorce itself from the executive branch of government, come clean and start sentencing corrupt officials, everybody from ministers to civil servants caught abusing power and misusing public funds, to extensive jail terms. As the joke goes – “In Bulgaria the bad guys don’t call their lawyers, they call their prosecutors!” Or as the more recent joke goes – “In Italy the maffia is in the State, while in Bulgaria the State is in the maffia!”.

Not until bad behaviour is punished will the abuser change his/her habits, this we all know from raising children. Not until the bad guys are penalised, will we know what the state recognizes as ‘right’ and ‘wrong’. Not until the political and business elite live by the same standards and laws as the rest of society will new modern and democratic norms and values find fertile ground in Bulgaria. State institutions and the civil servants will start to show some humility and humanity. People will then begin to appreciate and trust the state institutions again. It will be a slow and cumbersome process, full of trial and errors, but it is a path of deliberate change that has to be completed in order to make Bulgaria, state and society alike, fit for the 21st Century. So, go chicken, go!

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About Jakob Modéer

22 years of corporate and international investor experience as well as private sector development project management, consultancy in private sector policy and business advisory services, and direct consultancy to companies in South East Europe (and now a blogger on socio-economic issues)
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