Let this gentleman go back to banking and not get involved in the industry. Sikel has spoken and the macroeconomist grabs his head

01.04.2022 4:41 | Conversation

The government smiles that the state should speak and intervene. This is despite the fact that there is a crisis situation where the classical market mechanism fails. “And the government is also failing because it doesn’t have the necessary expertise to handle such situations,” longtime former CMKOS macroeconomist Jaroslav Šulc told ParlamentníListy.cz of the inaction. of Fiala in the face of the spectacular rise in fuel prices. According to him, the government is there to govern and help those who need it in a given situation. If Industry Minister Sikel does not understand this, he should go back to the bank and not get involved in the management of the Ministry of Industry.

Photo: Hans Stembera
The description: Gas station stand

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Should the Czech government have intervened in the rise in fuel prices, as it has done in most countries of the European Union? Or has it shown wisdom by its inaction, as Minister of Industry and Trade Jozef Síkela claims?

Regarding the fuel price crisis, I know that the price law has a special section for those cases where the government can intervene. She didn’t, only used one pass and looked for cartels. As far as I know, the investigation did not confirm this suspicion. Yesterday I bought gasoline, a liter for 44.90, so the comparison shows that compared to last year the price has increased by about ten crowns. I know that the prices of gasoline and diesel in the Czech Republic are significantly higher than in other countries where their governments regulate in one way or another.

But I understand Minister Sikel that he is neoliberal in a government that does not care that the state should speak and intervene. This is despite the fact that there is a crisis situation where the classical market mechanism fails. And the government fails by not having the expertise to handle such situations. And even if she did, she obviously didn’t want to.

So would you agree with Síkel’s predecessor in power, Karel Havlíček, that the government should have done something?

Karel Havlíček is my former colleague from the University of Finance and Administration, where we both headed the department, he the management, I the finance. He’s not a big liberal, but he’s an experienced economist, an experienced manager, so he knows that in some situations there’s no time for heroism and some lessons and dogmas have to be thrown away and rational.

In that case, how would you imagine the rational behavior of Fial’s cabinet and would you have any advice for the government on how to proceed?

It is useless to throw pearls at the pigs. That’s right. These people are protected by state intervention. When I sometimes listen to Mr. Skopeček, I understand that these people are brought up in a completely different way. They are not Keynesians, they are neoliberals who have a vision of the world, a vision of the economy, and behave accordingly. It’s like that. It is only a matter of time before their behavior proves so counterproductive that it provokes such resistance that the government may also be swept away. I can’t imagine the Czech government would survive what Macron did with the yellow vests. I really can’t imagine that. And it’s not far.

What do you think of Industry Minister Síkely’s statement that Czech motorists have driven up prices even more by buying petrol and diesel and that the government cannot afford to distribute money to someone who doesn’t need it?

As with all assertions there will be some ration here because by the time the media started speculating scared that the price of gasoline at forty is low that it may be at fifty or even sixty of course a Czech citizen who still remembers the queues of bananas. , this caused a trade panic. The panic buying lasted about three or four days before the house canisters filled up – hope no one slams it – and then the price went down.

In other words, I understand that the price met historical demand from savers who keep barrels of gasoline in their homes. Well, here we go. But it is certainly a mistake for the government to completely abandon the ability to regulate to the extent that it can do so without protest.

  • GPP
  • Minister of Industry and Trade

But by buying people in such large quantities, didn’t they confirm Minister Síkel’s opinion that they did not need help, because they had the money if they could afford this purchase?

To this I will first recall the classic communist joke of a Jewish rabbi arguing with a Marxist over whether or not there will be money under communism. They meditate and meditate until the Jewish rabbi says, “You know, I think it will be like today. Holt, someone will get them and someone won’t. So the statement that people today have two million crowns in savings is, of course, true. The second thing is the distribution of these savings by household groups. Yes, Minister Síkela is right to say that for 45 crowns of gasoline or diesel, the middle class and the richest drive a car, while the poor ride bicycles, public transport or walk. But such lump sum judgments, he said, simply don’t make sense and show that the person has no sense of economic reality in the necessary detail. Averages are misleading, it is important to get into the structure. Nobody wants that.

  • GPP
  • In permanent charge of the Ministry of Transport
  • Deputy Speaker of Parliament

He blamed his predecessor Havlíček, Minister of Industry, that the former government constantly repeats that Fial’s cabinet should help. But it is said to be a word that steals the original meaning, because the help, according to Havlíček et al. it simply means distributing money. So how can we help him not to give money, as Minister Sikel sees it?

Although fuel costs in the consumer basket are important, on the other hand, they are only significant for certain income groups, age groups, territorial groups, etc. There are big differences. Mr Havlíček is, of course, right, because we can, of course, reverse the question. What would happen if in 2020 and 2021 the government did not withdraw 826 billion crowns from the budget debt, which is the amount by which the state debt has increased in these two years to “help” or “help” bankrupt businesses, sole proprietors, teachers, health professionals, etc.? Government is simply governing and helping those in need in a given situation. And if Minister Sikela does not understand, he has chosen the wrong regime and the wrong president. Let him go back to the bank and not interfere in the management of the Ministry of Industry.

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author: Jiří Hronik

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