Let’s take for instance as an example the temporary VAT reduction in the restaurant industry in Belgium. The Belgian government decided to temporarily reduce the VAT on food in restaurants from 21% to 12%. Assessments in terms of efficiency say that it was a bad decision since it costs the government tax revenue and there is no significant extra income through job creation, more consumption etc instead. However, one can also look at it from a different point of view. A liberal could argue that the reduction is definitely a good thing because it can lead to an increase in profit for businesses and/or reduced prices for consumers, regardless of decreases in tax revenue. A socialist might argue that a decrease in tax revenue is bad in itself because there is less money for the government to spend on welfare programs. Hence, the two evaluations relate to ideological presumptions namely the former being pro limited government and the latter pro redistribution.

When assessing the merit of certain policies, and looking at them how they impact people’s lives, it is unavoidable to talk about values that surpass technocratic evaluation in terms of efficiency. Of course there is something to be said the efficiency of policies. When the government levies taxes for funding social housing for poor families, it would outrageous if middle class people who can afford housing on the private market would be beneficiaries of such social housing policies. However, what matters here are the specific words ‘as well’. Efficiency as an evaluative value of policies always must be used in conjunction with other values because policies do affect the lives of real people in the real world. Some things are just not quantifiable.

Decades ago, Ludwig von Mises and Friedrich Hayek (and many others) explained the failures of planned economies. Their critique has never lost it relevance as the Chinese example (one of many) shows us today.

“The Even and Macpherson study finds that among whites males ages 16-24, each 10% increase in a federal or state minimum wage has decreased employment by 2.5%. For Hispanic males, the figure is 1.2%. “But among black males in this group, each 10% increase in the minimum wage has decreased employment by 6.5%.”

It is good to see that mainstream newspapers are beginning to talk commonsense now as well such as the Belgian quality newspaper De Tijd, which recommends Hayek’s Constitution of Liberty.

Leftist politicians in the Netherlands are already targeting the six liberal-arts colleges because they supposedly create a small elite of very good students while the bulk of the students at the universities are left behind because the Colleges are more costly (not only in terms of entrance fees but also in budgetary terms). It is very difficult to listen to these critiques and still believe in the credibility of the politicians voicing them. Since the democratization of higher education, there are more students that drop out, the value of degrees decreased and the over-bureaucratization of higher education institutions costs are so huge that money needs to be taken away from research and education initiatives and programs. The education policies of the left had a damaging impact on higher education in Europe. However it is true that more students are admitted at Europe’s mainly public universities, even mass class rooms have become too small, teaching quality went down, the quality of the degrees awarded as well and students are taking more than one master degree because so many graduate with the same degree that the need for differentiation is more than ever present. In Flanders for instance, students with two master degrees are becoming the norm and students with even three master degrees are no exception. Hence, students feel the need to spend one or two more years extra at university which not only costs them a lot of money but since education is funded by public money, it also costs more money to society.

The anti-social effects of the left’s policies are becoming painfully clear. It is time to turn the tide. What we need in Europe are smaller universities that have the possibility to select students, ask for higher tuition fees, a stimulating environment for private funding of universities and less strict government requirements for universities on how to spend their own money or endowments. Universities should strive for excellence. Excellence, contrary to what socialists and social-democrats believe and say, is not a dirty word. To excel as an individual is one of the best guarantees for having a better future. Advancing excellence in education is one of the best social policies for Europe’s youth.

Firstly, the text argues that we are in the worst economic and financial crisis since the Great Depression and that this is the result of unregulated business and finance. This is simply not true. Everyone, whether from the left or right, agrees that the crisis stems from a total collapse of the US housing market. Now, oddly enough, the US housing market has always been subject to government intervention and heavy regulation. At the moment of the bubble burst, the secondary market (where the problem started) was for more than 50% in hands of government created and sponsored institutes, namely Fannie Mae and Freddie Mac. It is ironic how these ‘companies’ were created by the government to encourage people – from lower social classes – to buy houses, houses they normally could not afford. Even more ironic is that Fannie Mae was created by president Roosevelt, who is praised in the article for redefining freedom as “freedom from want”. In addition to its housing policies, the American government kept the interest rate artificially low to encourage people to loan. It needs no explanation that such government interference is counterproductive, as we are experiencing now. Sure, there are managers and CEOs that made bad decisions but to explain the crisis we need to look at more institutional explanations, as the actions of certain individuals cannot explain what happened. And if we make an assessment of these actions, we must always bare in mind the incentives that drive people, incentives created by governments for instance.

Mr. Rigaut says that humans make errors and therefore we need regulation. Who makes up this regulation? Angels that come down from heaven to provide us with the perfect rules as the late Milton Friedman said? We all agree that people are driven by self-interest. Why would it change when people become politicians? Why is political self-interest considered as more virtuous than economic self-interest? Couldn’t it just be that the regulation that already existed for Fannie Mae and Freddie Mac was created out of self-interest? Let me give a few examples. Bush, who strongly supported homeownership policies in his first term had considerable support from Latinos, especially Cubans for his hard stance on the Cuban regime. He needed that support to get elected a second time and therefore supported homeownership policies that target lower social classes, classes mainly consisted of minorities such as Latinos. Another example, Fannie Mae and Freddie Mac contributed from 1989 to 2008 more than 4.800.000 dollar to election campaigns of more than 354 members of Congress. Moreover, several Congressmen had assets up to 1.7 million dollars in Fannie Mae or Freddie Mac, a few of them were even member of the House Financial Services Committee or the Senate Banking, Housing and Urban Affairs Committee. Could it not be that policies or regulations were drafted because politicians ‘owed’ something to Fannie Mae or Freddie Mac?

Secondly, the article says that Keynes was a liberal democrat. However that might be true, I very much doubt that it was really the case. Liberals take responsibility for their actions; Keynes’s economic theory prescribes the opposite. According to Keynes the government has to invest heavily in times of economic downturn to tackle high unemployment rates by for instance huge infrastructure works etc. He advocates deficit spending to finance such programs. This was the policy of almost all of the Western countries in the fifties and sixties with as a result that they accumulated a huge debt that was one of the causes of the economic crisis in the seventies. Burdening the next generation with the results of bad policies is not liberal, on the contrary. It took people such as Thatcher and Reagan with many unpopular reforms to get the state finances and economies back on track and thus as such, they laid the seeds down for the successful nineties.

The article mentions William Beveridge as the inventor of the welfare state and praises the moral superiority of that invention. Also this is not true. Bismarck invented the idea of the welfare state in the nineteenth century. He had two reasons for that. He needed healthy young men to recruit for his army and he wanted to make people so dependent on the state that they would not question its authority. So it is not a certain sudden emergence of good values among lawmakers that created the idea of the welfare state, it is rather the politics of war and the consolidation of unquestionable state authority that lay behind it. Beveridge indeed laid the basic plan down for the National Health Service. That is not a merit, nor a liberal achievement. Not only because of the moral implications (it would take us too far to go in depth about that) but because the NHS is widely recognized as inefficient, providing bad quality, long waiting lists,… Or is it liberal that some patients cannot buy the quantity of medicines they need because the NHS does not allow and therefore order their medicines in the US (!)? The UK has only a bit more than 200 physicians per 100.000 inhabitants, only Poland, Romania and Albania score worse in Europe. So much for free accessible health care for everyone?

Liberals believe that competition leads to lower prices and better quality. We believe that when it comes to clothes, food, cars (cf. Trabant) etc but when it comes to education and healthcare, suddenly this logic seems not to be applicable anymore. Then the state has to take control. Well, the state is also here not the solution. Everyone agrees that good education and good healthcare are crucial. However, liberals believe, or should believe that the market provides better quality and service than the state so that market forces are better suited to provide us with that. Of course some measures can be taken to make sure the poorest have access to these services by introducing vouchers but the fundamental idea here is that the government should not provide education nor healthcare.

But let’s get back to the fundamental argument Mr. Rigaut is making in his text. He argues that liberalism is freedom from want. This is a very fluid statement and can be used by anyone with any kind of ideology to justify their case. It is like the statement: your freedom stops where mine begins. These are empty words. Mr Rigaut uses the statement used by Roosevelt to say that people cannot be free when they are not educated so the government should make education free. If we use the same line of reasoning, we can say: people are not free when they have no clothes so the government should provide clothing. People are not free when they are not able to contact each other so the government should provide telecom services. People are not free when they cannot travel around so the government should provide public transport. People are not free if they don’t have electricity so the government should provide electricity. So actually, we can use the freedom-from-want argument to justify everything and renationalize the whole economy. These words are just hollow words used by socialists and social democrats and even people from the far right so that they can claim they are for freedom to and that only the state can guarantee that. The strength of liberalism has always been that it clearly defined the principles on which it is based. Unfortunately, the last decade and especially with the current crisis, liberal politicians and parties started to automatically taking over the terminology of mainly social democrats and tried to make it sound liberal or to give it a liberal meaning. It seems that liberals became afraid of their own ideology. Since its origins, liberalism stood for the right to life, liberty and property or in other words: the right to be master over its own body, the right to the pursuit of happiness without harming someone else. There are no compromises possible on these basic principles for a compromise would mean a victory for people who pretend to talk for freedom and a defeat for people who actually care about true freedom.

The anticipated elections of July 29, 2009 marked a turning point in Moldova. It is then when the four democratic parties (PLDM, PL, AMN and PDM) gained enough votes to form a coalition government under the name of the Alliance for European Integration. However, their majority in parliament was not large enough to be able to elect the president of the Republic without votes (8) from the communist party (PCRM), the party, led by Mr. Voronin, who ruled from 2001 until 2009 with an authoritarian style. The Moldovans had cried out for change earlier, after what was internationally recognized as rigged elections of April 5, 2009 but the communist party used brute force to control the protests. International reports of hundreds of protesters, mainly students, being mistreated and abused while they were in police custody have been compiled. A few young people even died because of excessive police violence. The opposition took democratic vengeance in July. Since then Moldova is in a latent political crisis because the communists boycotted the Alliance’s presidential candidate so that now again new elections need to be held in 2010. There are voices within the Alliance to change the constitution to be able to elect the president without the communists or to hold a referendum or both.

What is certain is that Moldova needs political stability and the sooner the better. Being the poorest country in Europe, it has been hit hard by the economic crisis. According to the IMF, state finances are very worrisome with a deficit of 11,9% of GDP for 2009. With such figures, it is not hard to imagine that the government has little extra money left for realizing its program. The average Moldovan – especially those who live outside the capital – has to struggle every day to survive and it looks like that is not going to improve soon. After more than eight years of communist rule this is a shocking observation. What PCRM has done is hardly more than using state power for crony politics to enrich itself and its members. It is no coincidence that Mr. Voronin and his son are the richest people of the country. Business investment was very low because of the chronic and widespread corruption and no serious protection of property rights or any real adherence to the rule of law in general.

When the Alliance for European Integration came to power, it started immediately with initiating changes. It began to improve the relations with Romania (which got under serious pressure during Voronin’s rule) and the EU, appointed new people in the judiciary and administration and secured extensive help from the international community and institutions to cope with the budgetary crisis and the development of the country. However, some decisions and statements by the Alliance’s leaders are met with great skepticism and rightly so.

A major source of skepticism is the often too pro Romania statements of some of the ruling Alliance’s members. Mr. Ghimpu who is acting president and Speaker of the Parliament is a welcome change compared to Voronin. His down to earth way of dealing with issues and his use of easy comprehensible language helps to reestablish citizen’s trust in politics. Mr. Ghimpu is on the other hand president of Partidul Liberal, an outspoken pro-Romania party that dreams out loud of reunification with Romania (Moldovans and Romanians speak the same language and share a rich common history and still have very strong cultural ties). His often too pro-Romania statements may alienate the linguistic minorities Moldova counts and which in total constitute of almost 25 % of the population (Ukrainians, Russians, Gagauzians, Bulgarians, etc). After the politics of polarization by the communists, Moldova needs the politics of reconciliation. The president of the country, whether acting or not, should be a person that unites all Moldovans. Mr. Ghimpu is someone who can very much play that role but he must put himself above his party’s interests and his own political ideas.

The main driving force behind the changes in Moldova so far is Prime Minister Filat, who is also leader of the Alliance’s largest party, PLDM. 2010 will be a crucial year for him. Whereas the last half of 2009 was more about damage control, 2010 is the year of improving and consolidating the Alliance’s strength and the initiation of more fundamental and often painful reforms. Mr. Filat can count on the good will of the international community but he has to deal more adequately with the corruption in his country in order to keep it. A good starting point would be to make an example of himself. Mr. Filat has a lot of assets in real estate, businesses and media. It would be a strong signal if he would make a more obvious choice between his political career and his business interests. The last thing Moldova could use now is a berlusconization of its politics.

Skepticism surrounds also the Democratic Party of Moldova. Its leader, Marian Lupu, is the Alliance’s presidential candidate. In his bid for the presidency, he is seeking support from Moscow. So far he is doing well but some wonder at what cost. His party signed a memorandum of cooperation with Putin’s party United Russia and it is hard to predict what the consequences of his visits to Moscow will be when he gets elected as President. For sure it is thanks to him that Moscow gives a 150 million dollar loan to Moldova (initially 500 million was promised to Mr. Voronin when he still was president) and they need every cent but again, at what cost? The conditions are unclear and people are wondering whether it is worth it to take money from Russia.

Lastly, one of the major threats to the Alliance may come from inside. AMN, the third liberal party and the smallest member of the Alliance is facing serious internal problems. The party went from 23% in 2005 to a little more than 7% now. Many in the party urge for a change but leader Urechean persists to stick to same path. He won internal elections just a few weeks ago but those elections were heavily contested and the losing opponent challenged them (unsuccessfully) in court. Meanwhile, support for Mr. Urechean is diminishing, especially within the youth organization of AMN and advocates for internal reform. Almost everyone, internal as well as external observers, expect AMN not to get enough votes to win seats in parliament in case of early elections. A deeply internally divided party is not something that the Alliance can deal with now. It needs strong unity to cope with Moldova’s problems and to always be one step ahead of the communists who can still count on a lot of support outside Chisinau.

2010 is a year of high hopes and expectations for Moldovans. Their leaders should be aware that it is all in their hands, blaming others will not suffice this year.

This is not the time for Romania to have a crisis. The worldwide economic crisis has hit the country very hard. According the rating company Moody’s, the predicted budget deficit will be 7,7 % of GDP while according to Standard&Poor’s the economic downturn this year will be 7,6%. These are alarming figures for the country with the lowest GDP per capita of the EU ($ 12.200, est. 2008) and even doing worse than countries such as Botswana ($ 13.900) or Gabon ($ 14.200). And yet, the ruling political class doesn’t seem able to reconcile and to put forward a decent anti-crisis program. It has so come so far that the government has no money left to pay the salaries of its employees and the pensions. The IMF lent 20 billion euro to cover these expenses.

What is happening now is more than an effect of the financial crisis. A government that is not able to pay the salaries of neither the civil servants nor the pensions is a government that has been under systematic mismanagement. Before the economic crisis, Romania had a growth rate of 7-8%. The fact that the government was unable to get the state finances healthier and make provisions for the future, is a sign of its incompetence. One can only hope that in the nearest future, politicians will be able to overcome political games and reconcile. First they must, together with the relevant EU structures, make an action plan to deal with the widespread corruption. This action plan must be binding and the EU must rigorously see to it that Romania will keep to its commitments. At the same time a comprehensive anti-crisis plan must be drawn out that aims at a conservative tax and spending policy, reforming the country’s administration and encouraging (foreign) investments. Romania has a lot of potential and investors are not blind for that. The corruption, political incompetence and instability is however discouraging entrepreneurs. It is up to the decision makers to overcome that. Time for a radical change.

1.    PDM forms coalition with the PCRM
Marian Lupu, the popular leader of the PDM was a prominent member of the communist party until recently he quitted the party. As the ex-speaker of parliament, he is well known amongst Moldovans, and also popular. When he announced that he would leave the PCRM for PDM, the three liberal parties reacted by saying that Mr. Lupu, is just a project of the communists to deceive the public. He would rejoin the PCRM or form a coalition with them when after the elections. Mr. Lupu has always denied that and said that he quitted the party because it promised so much but all these promises were not kept. He said that change has to come to the Moldovan society. Right before and after the elections, he said and still maintains he will not form a coalition with the communists. He is convinced however, that the communists should be involved in negotiations to get out of the political crisis and encourages talks with communist MPs that are democratic minded. Despite of the mediating and promising words of Mr. Lupu, some still have doubts about his true agenda. The next weeks will be crucial.

2.    PLDM-PL-PDM-AMN coalition, (part of) PCRM delivers votes for the new president
The most preferable scenario is that the four democratic parties form a coalition and negotiate with the PCRM to deliver votes for a new president. Within this scenario there are two possibilities. Firstly, the PCRM as a whole agrees on a consensus candidate and Mr. Voronin is faithful to his own statements after the elections that the communists are willing to provide stability for the country. Secondly, some MPs of PCRM that are democratic-minded could leave the PCRM for one of the four coalition parties. The latter are speculating on that and in the Moldovan press, the party leaders from PLDM, PL, PDM and AMN reportedly made statements about this. Serafim Urechean, party leader of AMN, said right after the elections that it will turn out that the opposition “has a lot of friends within the PCRM”. Political analysts support this idea because they say that Mr. Voronin’s position is threatened because of the bad election results. Many PCRM members are dissatisfied that the party has lost its power and they blame Mr. Voronin because he polarized the Moldovan society into “us” versus “them” camps. Those party members see a possibility now to join one of the opposition parties.

3.    PLDM-PL-PDM-AMN coalition, PCRM does not support coalition – deadlock – PCRM provokes new elections in 2010
The least preferable situation is that the PCRM does not support the coalition, there is an institutional deadlock and the PCRM provokes in that way new elections, to be held in 2010. According to constitutional law, snap elections may only be held once a year so there won’t be general elections anymore this year. This may give an advantage to the PCRM to exploit the crisis to their own benefit. They can go to the electorate next year and say that the liberal parties promised change but that they are not able to provide it. It is a big risk on the other hand because the voters might decide that the PCRM should have supported the coalition and that they only made the situation worse.
At the moment (the week after the elections) there are talks between PLDM, PL, PDM and AMN to come to a coalition agreement. The press report that these talks happen in a good atmosphere and there is much voluntarism amongst party leaders to come to a good agreement. Moldova needs such an agreement and urgently. It needs political stability again so that the political leaders can focus on economic and social development, reestablish the rule of law, maintain good relationships with its neighboring countries and Russia, find a solution for the Transnistrian conflict and move towards more European integration. If they do not succeed at this, it is very likely that Moldova will collapse and turn into a typical post-Soviet failed state. The voluntarism among the four parties is encouraging so let us that Moldova can join the club of democratic countries soon and that it can begin its long path to revival.

1: https://www.cia.gov/library/publications/the-world-factbook/rankorder/2004rank.html?countryName=Moldova&countryCode=md&regionCode=eu&rank=172#md
2: http://www.azi.md/en/story/4161