According to the news from the RTS website, the Ministry of Economy conducted an analysis of giving state money to private companies, and the results are more than excellent: donated state funds are returned fourfold in just 16 months.
This yield of 300% per year (400% for 16 months) is unusually high. Boss Jezda and Dafina can only cry for such a return, not to mention international investment funds – whose average return on capital was only 16% in the previous year. Even the most successful hedge fund in the world had a yield of 120% in 2020, which is an extremely bad result compared to the ingenious performance of this state program.
We can soon imagine thousands of investment fund managers, graduates of Ivy League faculties, waiting for a flight to Serbia at airports, getting vaccinated, but also learning some wisdom from experts from the Ministry of Economy at expensive seminars at the Sava Center. The young hopes of the world of finance for postgraduate studies will no longer go to New York or London, but to Belgrade, and instead of internships at McKinsey, Lloyd’s, Deutchebank or Nakamura, they will apply to the Ministry of Economy. Finance students around the world will study Serbian in their free time, which will become the most popular language at Duolingo, and the Faculty of Philology will open centers for testing Serbian language skills around the world.
How to quickly become the richest country in the world?
All this led me to propose an ingenious economic plan on how Serbia can skip Japan’s development path from decades of its rapid development and how to become the richest country in the world in just a few years. Namely, let’s set aside the largest part of the budget for these projects, let the state give money to private entrepreneurs and triple the invested money in a year. We don’t even have to save anything – there is capital on the world financial markets, Serbia borrows relatively cheaply – in March this year, we borrowed 12-year Eurobonds at an interest rate of 1.74%. If we borrow and then invest this money through the program of the Ministry of Economy (more precisely, we give it to private investors), we will have three times more in a year. One billion that we invest in this program brings us 3 billion in just one year, 10 billion brings 30, and so on. In just a few years, Serbia is becoming as developed as Germany – the minimum in the country is 1,000 euros, the same as the average pension, and the average salary already exceeds 2,000 euros. But there is no need for that – with such funds, Serbia is the first in the world to introduce universal basic income and only those who want to do so work.
A return to reality
If this scenario does not sound very realistic to you, maybe it is not up to you, but it is up to the mentioned study of the Ministry of Economy. First, we do not know anything about that study – we will not be able to look at and comment on the website of the Ministry, we do not know anything about the methodology that was used or about the data that were processed. If you have bad data, the results of the research will not be relevant to you either – while academics describe this with the words “garbage in, garbage out”, our people have a saying about what a pie cannot be made of. Poor methodology can serve as proof that the Earth is a flat plate – believe it or not, a few years ago I read a scientific paper published in one of our professional journals which claimed that the growth of VAT and income tax revenues has a positive impact on economic growth, which the authors proved by econometric methods. The problem lies in the fact that this falls into the domain of formal logic: it was not the growth of tax revenues that led to economic growth, but economic growth that led to the growth of tax revenues. Because first production, wages and consumption grow, and then tax revenues grow, and not the other way around. The article on RTS is disgusting and looks more like the transmission of a letter from the Ministry of Economy, slightly enriched with pictures from production halls, and it was inserted as an interlocutor and worker from the retraining program that has connections with subsidizing programs for private investors as well as hippos with ballet.
The appendix mentions that the study was done on a “representative sample” of such companies, but when the research done on the sample is presented, then it is stated how much the population of the entities from which the sample was taken, then how many entities are in the sample, what is the level of reliability and confidence interval. In addition, it is completely unclear why the survey was conducted on a sample, given that the news states that there were a total of 177 individual projects – sampling is done when the population is very large and cannot be covered by the survey (for example, if we survey public opinion on how people will vote in elections or how much is scrap in production in a pipe factory). Such a small number of projects means that there is no place for any sample here.
In other words, the results of this study (if conducted at all) would not be eaten by a dog with butter. Of course, this would not be the first time that government officials have invented data and studies when it suits them – let’s just remind ourselves of the genocide of unfortunate window washers in America or high-rise buildings that destroy birth rates. Having in mind those cases, as well as all the previously listed shortcomings that we could see even from such a scanty and unprofessional RTS report, we should act as if this study does not exist, until we see the whole thing in black and white, Talas reports.
