Morality is a component of culture that changes – not always for the better – as a result of changes in the technological, political, social, family spheres, – writes Valentyn Lazeya, chief economist of the BNR in his book, recently published by the Publica publishing house – “The History of Morality of Monetary and Fiscal politicians”.

The author points out how the moral values ​​of the 19th century (the period of the heyday of the bourgeoisie) differ from the moral values ​​of the 20th century (the period of the heyday of the proletariat, both in Western democracies and communist dictatorships) and differ from the moral values ​​of the 21st century (the period of the boom of large corporations and global consumerism ).

A book is an event, regardless of whether you agree with the author’s point of view or not. It belongs to a category of books that rarely appears in a culture like ours, and I would compare it to another book that came out this year: Power and Progress: Our Millennial Struggle for Technology and Prosperity by Daron Acemoglu and Simon Johnson .

Changing morale affects how monetary and fiscal policy is designed and implemented

Morality, which changes from era to era, in turn affects how monetary and fiscal policy is designed and applied, Lazea says.

The book, the preface of which is signed by prof. Univ. Vol. Dr. Emilian M. Dobrescu, member of the Romanian Academy of Sciences, shows how the evolution (and involution) in the field of morality has left its mark on how it was conceived, formulated and applied.

“An exceptional work that managed to synthesize 150 years of economic history, where constant changes in morality radically affected monetary and fiscal policy. Valentyn Lazeya fantastically summarizes the long history of the evolution of the way of thinking of those who make decisions and the common man, also relying on the works of the most educated minds of the last century. The fascinating reading of the book gives you the feeling that you have read many treatises on history and economics at the same time, giving answers to many questions in the field of monetary and fiscal policy from an angle that has not been explored until now – from the angle of morality. “, – says Lucian Angel, former president of the Bucharest Stock Exchange

“An economist in search of moral guidelines in a world that seems to have lost them. This is the purpose of this short volume, in which Valentin Lazea delves into the economic and financial-monetary history of the last two centuries to understand how economic life changed when the absolute ethical values ​​preached by Kant ultimately proved to be completely undervalued. relativized in the hedonistic consumer society that dominates today. The arguments put forward to explain such developments are surprisingly diverse: from major political and social events to philosophical currents and social fashions, from scientific discoveries and technological inventions to a brief analysis of the defining moments of monetary and fiscal policy in different periods, with occasional references to religious beliefs and ideas. The book is interesting both for what it says about the world and for what it reveals about the beliefs of its author”, – characterizes the work of the chief economist of the BNR, Aurelian Dokia.

In turn, monetary and fiscal policies have a feedback loop, by means of which they influence the morality of the era, which, in turn, leaves an imprint on technological, political, social, family aspects, that is, on all human behavior.

In his book, Valentin Lazea divides the last 50 years into two sub-periods: the Cold War (1971-1990), which retains many of the characteristics of the previous era, respectively, the second globalization (1991-2021), the disintegration of which we will see unfolding before our eyes. “The morality of the whole period – at least in Western economies – is under the sign of limitless consumerism promoted by large corporations,” says Lazea.

Characteristics: consumer morality

Motto 1: “Consume, consume, consume…….in service”

Motto 2: “Everything belongs to us”

Motto 3: “Socialization of losses and privatization of gains”

From a technological point of view, says Valentin Lazea, this period is characterized by the fourth industrial revolution, the tip of which is informatics, which invades all spheres of professional and private life (with good and bad moments that follow). This might also have been the period of space exploration, so promising in the 60s, if they had not been sacrificed first on the altar of weapons and later on the altar of consumerism…..on Earth.

In the first stage, humanity continued to ruthlessly exploit natural resources, after which – starting in the 90s – the need to preserve them slowly makes its way into the public consciousness, heralding – perhaps – a future era that will be less consumerist.

What else Lazea says in his book “The Moral History of Monetary and Fiscal Policy”:

In many states, public spending exceeds 40% of GDP without a corresponding increase in budget revenues.

The internal policy of Western countries is aimed at the loyalty of their own electorate in every way (first in the face of the threat of the communist model, and later the Cold War for reasons of populism), so the welfare state is expanding.

In many countries, public spending reaches more than 40 percent of GDP without a corresponding increase in budget revenues, which puts pressure on the budget deficit and leads to a constant increase in public debt.

After 1991, in the period of the second globalization, once the communist threat was removed, the Western powers allowed the domestic political agenda to be covered by secondary topics (but with public impact) such as the culture wars.

In particular, Western left-wing politicians have come a long way in this wrong direction, and instead of demanding equality of economic opportunity, they turn their discourse towards privileging minorities (gender, religion, color, etc.), thus trying to correct centuries of injustice, but causing in this process the negative reaction of the majority.

In communist states, on the contrary, civil liberties were limited during the Cold War, until 1985, after which there was a short period of thaw, Gorbachev’s perestroika. But in Romania its consequences are almost not felt, because during this period the country was engaged in advance payment of foreign debt as a result of the second recognition of the country as insolvent in 1982.

The universal mantra is: “Consume, consume, consume… in service”

After the collapse of the communist system, triumphant consumerism is spreading across the planet, fueled by government policies, globalization, and the information revolution.

The universal mantra is: “Consume, consume, consume… in service.” If until the 1950s the typical American family had little to do with bank loans, after that time it was an anomaly not to have a multitude of loans, stimulated by aggressive marketing and advertising that made the man want products and services. he doesn’t really need it.

This mentality, along with its corollary, “We’re all due,” is becoming prevalent among Generation X (those born between 1965 and 1980) and Generation Y (“millennials,” those born between 1981 and 1996). Consumerism and entitlement have been less affected by baby boomers (those born between 1946 and 1964 who were educated in the difficult post-war times) and perhaps Generation Z (those born between 1997 and 2012 who began to have environmental awareness and less interest in material values).

The European Union (created in 1992 by transforming the European Economic Community) went the furthest down this path, delegating defense to the US, energy supplies to Russia, and manufacturing to China, a strategy that in retrospect looks benign but naive.

From a social point of view, developed countries try to cover the growing inequality not by offering equal opportunities, but by offering cheap loans even to those categories that did not fit into the banking risk profile, the so-called NINJA (No Income, No work or assets). Such an approach would become one of the causes of the subprime credit crisis of 2008-2009, along with the aggressive deregulation of the banking sector and the flourishing of speculative capitalism.

At the family level, the disintegration of the classic family has ended, and in many developed societies, single-parent families are becoming commonplace.

At the family level, in many developed societies, the classic family is completely disintegrating, single-parent families are becoming a common phenomenon with all the negative consequences for children’s education and psyche. Depression, alienation, loneliness are becoming diseases of the 21st century, which are aggravated by addiction to computer drugs and loss of interpersonal communication skills.

The public debt of developed nations would rise steadily from about 30% of GDP to almost 120% of GDP in 1971, the largest (and most continuous) increase in peacetime, raising questions about its sustainability.

In the period 2007-2013, approximately two-thirds of the increase in the public debt was due to the primary deficit (that is, the fact of the budget deficit after paying interest on the public debt).

The first sin is that the limitation of the budget deficit to 3 percent of GDP, stipulated by the Maastricht Treaty, has come to be considered by many European states as a normal, acceptable level, and not as a maximum that can be achieved in the weakest countries. years of the economic cycle. And when the deficit limit was violated, no state was punished for it.

After the 2020 Covid crisis, the budget deficit limit was suspended, and from 2024 the intention is to relax the rules even more, leaving each member state free to reduce their budget deficit and public debt at a pace they see fit (? !?).

It is not surprising that fiscally undisciplined states such as the EU’s southern flank and Romania applauded these relaxations, which only postpone fiscal adjustment. We are light years away from the fiscal discipline that prevailed in the world until 1939 (and in Romania until 1989).

In general, the monetary and fiscal policy of this period seems to be increasingly influenced by the political factor, in a constant search for votes. Thus, necessary measures are postponed and popular/populist measures gain more weight. Paying debt on time becomes (almost) optional, and the most serious symptom of this period of indiscipline is the socialization of losses and the capitalization of gains.

Economic reform without the moral reform that precedes it looks increasingly like a utopia, concludes Lazea.