Individual Freedom and the Limits of Power

The American state of Wisconsin is small; it has six million residents. Last Thursday, the state legislature approved massive restrictions on public employee union activities, among them are limitations on collective bargaining rights and a requirement that members vote every year on whether or not to continue allowing the unions to represent them. Other American states like Ohio, Iowa, Indiana, Michigan, Idaho, Tennessee and Kansas are considering similar measures to limit public sector union activity. Before its adoption, the bill sparked harsh opposition from the American Left and provoked the largest demonstrations in Wisconsin since the Vietnam War. Scott Walker, Governor of Wisconsin, said that the measure “will save jobs, protect taxpayers, reform government, and help balance the budget.”

The world is small. Times are the same for us as they are for the Americans. We live through the same events. The difference is that the United States is prosperous and has a union membership of just one-third of its public employees and only 6.9 percent of private sector employees. Unions appeared at the time of the Industrial Revolution and their time has passed. Today, corporations themselves must motivate, educate and protect employees. Here in Romania, there are both employers and employees who don’t understand this reality; they will disappear through competition. An employer who exploits their partners is a fool. As an employer, it is in my interest to have a team of competent people, to organize their training, to send them to study here or abroad and to assure for them — not only through a salary package — living conditions that will bind them to the company. The success is the team’s, however small or large.

As I said, the new Labor Code is not perfect. It’s a half-measure. It maintains the intellectual fixations of the industrial era. Opposition politicians and those in power, should be aware that it is just a small step in a very long march toward prosperity. It may not have results if drastic reductions in employer and employee social contributions don’t immediately follow, in order to both free companies’ financial resources and to increase consumption by raising incomes. “How do we cover the deficit?” comes the furious racket of the populists. The answer is clear: increase the tax base. As I’ve said many times, 10 percent would represent a reasonable level and another step towards ending the crisis. Temporary deficits must be accepted. Refinancing can be provided chiefly through rapid and massive privatization of what still, unfortunately, remains property of the state. This is a cure for corruption too. I don’t hear anyone discussing concessions through customs auctions, for example.

Two weeks ago, at a forum on the Constitution organized by the Horia Rusu Foundation, I argued that as we gradually exit the crisis, we could introduce into the Constitution limits on the deficit, limits on the budget share in the GDP and limits on government debt-to-GDP ratio. These mean the limitation of executive power through basic law. They are conditions for economic freedom for individuals and corporations, and hence, conditions for prosperity. Adopting only one of these limits, on the deficit in this case, as I’ve heard recently, is at the very least dangerous for a developing country. It could work only in an advanced country, where politicians can’t mess up very much, such as Germany. Nothing is more harmful than partial limitation. This is valid not only for the limitation of government action, but also for the reforms we need in terms of currency, business freedom, education, health and pensions.

These thoughts on a coherent economic program, born of a Romanian reality in a globalized world, have haunted me for 20 years. In the meantime, much has changed, but much more remains the same. We must take the leap. American prosperity came to be through the defense of individual freedom and the limitation of power. It is the only acceptable model.