Thursday, October 27, 2011

How did Portugal get so much off the track


To find an explanation is not easy.   Many Portuguese and others have been giving warnings for years:  "It cannot continue like this".  In all modesty, my thoughts, and the thoughts of many other foreigners I have talked with, have long been one of wonderment.  "How can this function?".  The answer is now apparent:  It cannot.

Some explanations (and I only take negative aspects into consideration) that come to me are:

  • Politicians
    • Dishonesty, greed, nepotism and corruption
    • Stupidity
    • Lack of ideals
    • Pettiness
    • Keynes is considered a God
    • Two party system
    • Two much power
  • Local "government"
    • To many entities
      • Governos Civis
      • Municipalities
    • Two much local power for individuals
    • Too many incentives to make income that is contrary to the interests of the local citizens
    • Don't give a damn about life quality and the citizens
  • Powerful bureaucracy
    • Bureaucrats with extreme power and gleeful use of such power (sadists?)
    • Retirement in the fifties
    • Lifetime pensions equal to end salary
    • Lifetime health insurance beyond any possible for non public sector
    • Higher salaries than in private enterprise
    • No possibility to fire
    • No requirements for performance
    • No measurements of performance
    • Greed, nepotism and corruption
    • Too many top bureaucrats are politicians and are dismissed/admitted after elections depending on the ruling party
    • Absenteeism
    • No delegation
  • Strong left wing tendency in Portugal
    • Spending with no control
    • Blaming private enterprises painting them as the devil
    • Making life difficult for private enterprises
    • Creation of dead end welfare society run by the public sector
    • Taxation up to nearly 80% (of the money the companies have available to pay each employee)
    • Absurd protection of workers due to non liberal labor laws(difficult/impossible to fire or to demand people actually work)
    • Absurd protection of renters (no rent increases, nearly impossible to evict)
  • Appearance is the most important
    • No long term solutions
    • Dreadful priorities.  Children not important.  Schools not important.  Health system not important.
  • Always mending by using patch work short term solutions
    • No long term planning
    • No long term solution
    • More expensive in the long run
  • History
    • Only a democracy for a short time
      • No ability to compromise
      • Disregard for the minority
      • No understanding that certain areas need very long term solutions
      • Lack of social responsibility (every man for himself)
      • No understanding of democratic duties
    • Catholic Church
      • Don't question what you are told
      • No delegation of decisions.  Extreme hierarchic top heavy management structure
      • Extreme conservatism
      • Dictatorship would have been more difficult without the church
      • Values have permeated the Portuguese society for centuries
    • Dictatorship (includes the time of monarchy)
      • Independent thought forbidden
      • Political discussions forbidden
      • Public assembly forbidden
      • People do not protest much
      • People do not demand much
      • People believe/fear authorities
      • Portugal was frozen in time for a long time
      • Small groups owning the land (12 powerful families before the revolution)
    • Revolution
      • Confusion (for a few years after the revolution in 1974)
        • People taking university courses in one year
        • Abolishment of important social structures
        • Abolishment of nearly all education (after 12 year basic schooling) except superior. I.e. no more apprentices.
      • After the revolution the rich families came back.  They were no longer owner of all the land but in short period of time they plus a few new friends became owners of the capital.
      • Communist co-operatives (farming)
    • Many farms have become too small to be profitable due to splitting up for generations
      • Portugal does not even produce 50% of its needs for food
      • Farming is ineffective even though the land is fertile, there is lots of water (as opposed to contrary claims) and the climate is exceptional.
      • Farmers are uneducated
    • Social mobility
      • Class society
      • Little or no mobility
      • Effort and capability not rewarded
    • Education
      • Children as a group are given comparatively little importance
      • Still a large group of analfabets (they are dying off though)
      • Still a large group with only 4 years of school
      • According to PISA the Portuguese lower education (up to 12th grade) were among the worst in the OECD (only Greece worse!).  It is a little better now
      • A lack of alternatives to higher education
      • Quality of higher education too low (too many students and too many private dubious universities)
      • No regulation of output for certain professions.  E.g. too many architects...
      • To some accounts the worst teachers in the OECD with the least number of teaching hours and best paid.
    • Private sector
      • Old fashioned methods of management
      • Nepotism - lack of qualified managers/leaders
      • Managers with no social responsibilities or awareness
        • Greed
      • Always looking for the quick buck in the short term
      • Absurd property speculation
      • Absurd (and now gone) propensity to keep old fashioned industries (e.g. textile and mechanical)
    • Public sector
      • Too big
      • Too expensive
      • Too ineffective
      • Too much debt
      • Out of control
      • Out of control public companies
    • Public/private sector interconnections and common interests
      • To many private companies living off the public sector
      • To much movement of managers between private/public sectors (after each election!)
      • No regulation of capitalism
      • Destruction of the historic patrimony
      • Destruction of the landscape and life quality by out of control unplanned building
    • The people
      • Lack of common sense
        • Pollution
        • Lack of social responsibility
          • Littering
          • Vandalism
        • Destruction of environment
      • Materialism
        • There are more important things than the purely material - the knowledge of that used to be a Portuguese characteristic.  Now it is but forgotten
        • It is not all about having the nice clothes, the great car, the latest cell phone etc
      • Justice system
        • Broken down, two slow
        • Rich/well connected are impune
        • Too complicated 
        • Too many instances for appeals
      I could also mention many more, but I am running out of my daily word allowance.  Let me just mention one symptomatic occurrence.   There is no way to ignore globalization.  The room for manoeuvres for a state is much smaller than in the past.  The last 15 years has been a continuous financial crisis in Portugal.  In the same period there have been large global market fluctuations including two very large upturns.  They but moderated the problems felt in Portugal and were a true indicator of the serious problems, not really hidden, but in the open.  Portugal did not take advantage of the favorable times.  E.g. by lowering the debt and preparing for the next cycle.

      Now, one of the good aspects of capitalism is that the private sector will regulate itself under normal terms where the state creates the right conditions and insures capitalism does not become savage.  Bad companies will go broke - to avoid that,  unproductive workers tend to be eliminated and bad managers tend to be fired.  Companies that cannot compete, will not sell its products.  This is not so for the public sector and the major playground of politicians and bureaucrats.

      The well educated bureaucrats and politicians are to blame.  They ought be punished.  They knew, they know, they acted in the wrong. I suggest every single politician and every single bureaucrat manager having exercised functions the last 20 years be dismissed and replaced. Cut their pensions to one third.  It will cause some innocent victims - call them collateral damage - and they will be the minority.  For Portugal is at war for its survival.

      The public sector managers (bureaucrats) could be replaced by maybe 2000 German bureaucrats.  They are largely incorruptible, not entirely pleasant, but effective depending on their political mandate.   Give them the power to clean house.

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