Spiritual road to development

  • 2011-11-24
  • Interview by Linas Jegelevicius

She is a devoted Christian but preaches economic liberalism, claiming that the doctrines of Christianity and Liberalism supplement, not contradict each other. Being outspoken, forthright and meticulous about tiny facts that others skip, she chides the government with euphoric zest, and is a much sought-after commentator for most Lithuanian news outlets. Ausra Maldeikiene, economist, publicist, economics lecturer, author of economics textbooks, and prominent commentator, kindly agreed to answer The Baltic Times’ questions.

Since you were brought up in the resort town of Palanga, which forever has been entangled in severe competition with the sea-less resort of Druskininkai, in the south of Lithuania, let me ask you which resort, in your eyes, stands out better.
To answer the “eternal” question: which resort - Palanga or Druskininkai - is better, I would answer definitely Druskininkai; undoubtedly, is [better]. Just for one important reason: it well anticipates a person’s needs, which, unfortunately, Palanga, offering only a never-ending spree of carousing and debauching, does not. Vacation time is precious; however, my native Palanga, leisure quality-wise, can essentially offer only strolls on the seaside and in the Botanic Park - something that Mother Nature gives for gratis itself. Speaking of Druskininkai’s advantages, the resort indulges everyone with moderately-priced health promotion services, much precious silence, an abundance of splendid places and a much bigger variety of cultural events. All this gives an unchallengeable leadership to Druskininkai. Besides, Druskininkai’s infrastructure development, compared to Palanga, has been much more extensive and more scrupulously thought out.

If we were to go back to the beginning of 2008, before the crisis, what would you have done differently if you had been in the incumbent PM’s shoes back then?
I guess I cannot imagine this, as well as flying into space. Nevertheless, with the criticism over PM Kubilius’ actions then never ending, I believe that his attempt to set off the then-state budget was a positive stride on the whole. It is funny to listen to his opponents clamoring that Kubilius increased taxes back then. On the contrary, if we were to take a look at the whole, we would see that, for most people, taxes went down from 24 to 21 percent starting 2009. Speaking of taxes overall, there is something I still cannot grasp: why some people pay comparably large taxes, while others close to nothing. I did support Kubilius when he spearheaded legislation taxing persons working with the so-called business patents [certificates]. According to his initiated and the parliament-adopted legislative acts, these kinds of persons had to pay the social security tax as [do] all employed people. However, I strongly disapproved of his decision to decrease unemployment payouts which, like pensions, come from the same social security pool, which is being supported by all our social security premiums. The decision to slash the unemployment benefits was the same to me as the example of an insurance company which, for a ripped off roof during a hurricane, tries to cut the insurance payment by half, arguing that many people lost their roofs following the hurricane.

The state has to be responsible for taking care of its socially vulnerable residents. Here Estonia’s practice in 2008 is very valid to us. In Estonia, all residents, with the exception of retirees, pay the mandatory unemployment insurance premiums which, in August 2009, were raised from 2 to 2.8 percent for employers, and from 1 to 1.4 percent for employed and self-employed workers. The Estonian government explained the rise as a necessity arising from the continuous recession and a larger number of unemployment benefits receivers. Besides, unlike Lithuania, Estonia allows its unemployed residents to go for a job search abroad without cutting off their unemployment payouts.
From a larger perspective, the example shows that Estonia creates capitalism, which upon a crisis, strives to protect its workforce and values its human resources, supporting them in a 2008-like problem. Therefore, Estonia boasts of minimal emigration and a surplus state budget. The latter is partly due to the fact that Estonia has not taken on a pompous gigantic construction project like the Lithuanian Rulers’ Palace.

However, we cannot be too hard on Kubilius, the 2008 crisis management scriptwriter, just for one reason: the euro debt crisis-hit Greece has assumed the same austerity cuts we took on in late 2008... Basically, Lithuania paved the austerity way for other crisis-hit countries. Do you agree?
It is hard to answer this one-sidedly. The crisis was and still is being managed by drastic public sector worker salary cuts. Here is one fact: over the recent years Lithuanians’ incomes have gone down by 7 billion litas [2 billion euros], basically meaning that the crisis has been held in so far by inner devaluation of the national currency and a staggering emigration. Emigrants have helped to decrease joblessness rates in Lithuania, while steadily decreasing salaries allowed the export boost.
On the other hand, profits over the crisis years kept rising. For example, in 2010 alone, Lithuanian entrepreneurs raked in 4.6 billion litas more than in the previous year.

You completed post-graduate studies at Vilnius University Religious Studies Center, obtaining a masters degree. Are you really pious? To be honest, I thought you were liberal in your views. Can economic liberalism go together with religiousness?
I enrolled in these studies because the subject – religious studies – has always been very interesting to me. Unfortunately, I did not have the opportunity to enroll in this kind of study before. Yes, I am a practicing Catholic. However, let me stress this: I did not study the Catholic theology, but religious studies, which both taken together are linked, but are not the same. To the surprise of many, economic liberalism, with its cornerstones of private ownership and its gradual augmentation, does not absolutely contradict the social aspect of the Christian doctrine. Nevertheless, as Pope Benedict XVI points out in his enciclica “Caritas in Veritate” while describing the current times, “the exceptional focus on profit, which is pursued by inappropriate methods and whose goal is not universal wellbeing, does threaten with impoverishment.” The Pope rightly points out that, with the world getting richer, social injustice increases, while business and political representatives often behave unlawfully and in a corrupted manner.
In that sense, the Kubilius-led Conservatives, proclaiming representing a Christian and democratic power, as a matter of fact behave quite the contrary, declaring a priority of technocratic solutions over spiritual dimensions. The Conservatives ignore the Christian dimensions of love, solidarity, wellbeing and trust, repeating that it will be their focus after the economic recovery. Can the economic and political difficulties be overcome with value-less technocratic means? The answer is no, as the economy cannot be cured by only applying business logic to it.

It should rather be oriented to universal wellbeing, which should be of primal concern to a political party and coalition. Therefore, as the Pope rightly points out, any detachment of an economic activity from political responsibility and social factors does create many serious impediments in the state mechanism.

There is a popular belief that, entrepreneurship-wise, Protestantism is more encouraging to private business initiatives and implies that the future is in the hands of everyone. Catholicism stresses entrusting completely to God, and a better life perspective in the spiritual dimension after physical life. Do you find any rationale in this?
Indeed, Max Weber, the German sociologist and political economist, is famous for the theory claiming that Protestant ethics created capitalism. Nevertheless, religions impact on one or another economic model, or way of entrepreneurship, is rather indirect. Therefore, it is often rather difficult to point to any undeniable connections and
cohesions between religion and economics. In reality, the modern world is very complex, intertwining profit-focused entities with non-profit organizations. Whatever aspect we take, the Church’s social teaching admonishes that economics, along with all its branches, is a part of the multi-faceted complex human activity, which ought to be focused on spiritual revelation. From this standpoint, for a true Christian, not profit, but a human being, is the main objective and the quintessential essence of any human economic activity. And that is where Catholics and Protestants agree unwaveringly.

Less than 10 percent of Lithuanians are involved in private business, while the number in Western Europe is as high as 40 percent. Why do Lithuanians shun private business? Is risk-taking and working for yourself a Western, but not a Lithuanian characteristic?
To be honest, I am not aware of this kind of statistic. On the contrary, a 2008 EU survey showed that Lithuanians are among the nations with the highest level of private entrepreneurship.

Can you point out the biggest economic threats to Lithuania in the next 5 years?
I do not share those cataclysmic forecasts for our social security system, Sodra. I do not see any threat happening to it, unless the politicians will continue handing out pensioners’ and jobless people’s social security money to mothers, who still enjoy hefty maternity leave payouts. It seems to me emigration is the biggest problem that Lithuania is dealing with now and will face for a long time. If the emigration does not stop, the economy will develop very modestly, which means a lingering stagnation, ill-affecting the well-being of most people.

You are known as a tax specialist. What kind of taxes should be reviewed? What new ones should be introduced?
It is necessary to ensure that all pay taxes. Now we distribute tax money through the budget as much as Estonians, but differently from them, we collect less tax from GDP. That is where the budget hole turns up. We have to pursue better tax collection, at least as good as our nearest neighbors.  If we want smaller taxes, we have to be ready to pay for everything ourselves. The reality, however, is such that income is so low that people are not able to pay additionally for most services. In general, our tax system is plagued with irrationality and injustice.