​For years, we were constantly bombarded with warnings about the new era that humanity has entered, – writes Radu Krachun in his blog. And no one skimps on epithets or metaphors: the new international order, the movements of “tectonic plates”, the reshaping of electricity poles, the war for resources, etc.

Looking at all these statements by the leaders of public opinion in Romania, I cannot help but notice a certain passive/contemplative spirit that has characterized them over time. Because such changes, which leave an imprint on civilization, do not occur instantly. They take years, sometimes decades, to take effect, so preparations for new challenges are also made years or decades in advance. At least that’s what countries that want to stay relevant and have an important say in the global economy and politics do.

In anticipation of the huge demand for raw materials caused by economic development and the goal of becoming a regional power, China’s attack on Africa did not start last year, but for at least 15 years as a result of long-term planning and vision for the country’s development.

The growing appetite of the US and the EU to explore meteorites or other planets is also based on the expectation of a moment in decades when the Earth will be depleted of mineral resources or they will be under the control of rival states. . Also, in these assessments and long-term planning, we can also include a renewed interest in the Moon, including the participation of new players such as India, given that its geopolitical rival, China, began to acquire resources much earlier.

Of course, the list could be continued with examples related to investments in the development and mastery of artificial intelligence or programs to assess and limit the impact of climate change. The idea is that all of these initiatives are based on long-term assessments and then programs designed to achieve those goals decades from now.

I am not aware that Romania has had such a long-term program in the last 30 years to be followed with sanctity in order to fully bring it to a successful conclusion. For the most part, such long-term projects did not exist due to a lack of vision, and when they did exist, they failed or were only partially implemented.

Someone could cite as an example the accession to the EU. But let’s be honest, Romania entered the EU without being really prepared and later failed to meet the Union’s standards due to significant external pressure. Repeated failures to adhere to the course for entry into the euro zone are an accurate indicator of the inability to consistently follow a strict program, the goals of which are parameterized and not subject to subjective interpretations and decisions.

The main axes of the roads that were to pass through Romania were known for almost two decades. The status of Romania as an extreme country of NATO did not appear last year. And yet the road and port infrastructure developed terribly slowly. The enclavation and underdevelopment of Moldova, which have been observed for 20 years, did not generate any shock, and even more so a long-term development program.

The list is long, and the reason I mention all these failures is that today we are witnessing some programmatic actions that may be components of a long-term program, but have the sad purpose of increasing social polarization.

There are many elements that lead in this direction. Some are “natural” and others are born of wrong decisions that only exacerbate the consequences of the former.

One of the reasons is the rapid aging of the population and the inversion of the age pyramid with the approach of “decrees” on the retirement age. The explanation is as simple as possible. Estimates made by CFA Romania or obtained from academia show that Romanians’ stable incomes will decrease by around 60% after retirement. With such a decline and without a culture of savings, “decrees” will move to the bottom of the social scale, fueling the polarization of society.

Mandatory private pensions (Tier 2), introduced 15 years ago, were intended to compensate for this demographic and budgetary shock by providing a source of additional income to the public pension system. Unfortunately, mandatory private pensions were also a long-term program that was half-implemented, given that public contributions grew extremely slowly to reach only half of what was planned.

However, the social polarization caused by a public system that will come under enormous pressure in 8-10 years will be further exacerbated by recent decisions to exclude large occupational categories from contributing to their private pensions in order to benefit from a short-term wage supplement. The explanation is that all Tier 2 participants have a lower contribution to the state pension, the difference is 3.75% of the gross salary from which they contribute to the private pension. Construction, food industry and, more recently, IT workers received a “gift” in the form of a P2 contribution, leaving only a reduced state pension contribution. This will result in the current “gift” reducing their retirement incomes, given that the first two sectors are sectors with fairly modest salaries and therefore pensions. So, a new push for social polarization.

But the matter does not stop there. Fiscal management plays an important role in ensuring future social polarization, and I have several aspects in mind here.

First of all, it is worth noting that, unlike other countries, the fiscal regime in Romania does not in any way encourage long-term savings. Some financial products have ridiculous tax deductions (eg health insurance, voluntary pensions) while others have none at all (eg mortgages, life insurance, occupational pensions). Moreover, recently the issue of taxation of even interest on government bonds has been raised. In the words of Romanians, they are encouraged to save, but in practice, fiscal measures do not stimulate them. Without savings, their economic situation will inevitably deteriorate in old age.

Second, non-payment of taxes due to tax evasion has led and will lead to the enrichment of those who have the necessary tools to default on their obligations to the state. At the same time, the lack of budgetary resources to provide public services to an increasing number of people with low incomes will force them to accept inferior public services or turn to the private sector. For example, older people have to choose between poor health care or shouldering the costs associated with the private sector and declining living standards.

And if all these categories feed the “south” of social polarization, then who will feed the “north”? On the one hand, those who worked in the private sector as an employee or entrepreneur and had the income and wisdom needed to save/invest to ensure a decent retirement.

Another category will be represented by all those who held a privileged position in the public sector. And by that I mean those who had in-demand skills, such as doctors, I mean those who have limited skills but are wanted by the public system for other reasons, or those who benefit from positive discrimination through the lens of pension legislation .

The latter will be a category that will grow rapidly, given that not only does the legislation make them immune to the 60% reduction that will “benefit” the rest of the population after retirement, but also that the young ages at which they retire from the workforce, will cause a steady increase in their number in the coming decades, fueling the “North” of social polarization. Unfortunately, this “immunization” will be carried out at the expense of the state budget, and therefore is strained due to the increase in the number of “ordinary” pensioners.

Apart from the ethical aspects, which should not be ignored at all, growing social polarization risks increasing social tension and extreme political polarization.

So, this time it would be really nice to see this long-term “plan” fail due to a major change in direction.

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