In order for the citizens of Serbia to get out of poverty, it is necessary for Serbia to do the same thing that Switzerland, Sweden, the USA and many other countries did before they became rich – to remove obstacles to its citizens.
When we talk about poverty reduction in Serbia, for many the first association is social policy and a kind of redistribution from those who have more to those who have less. Some will also pull the concept of minimum wage.
However, this is a delusion, and a potentially dangerous delusion that can “lock” Serbia in poverty, at the bottom of the European ladder. Fortunately, there is another approach.
From poverty to wealth – a change of perspective
The first logical question to ask is: if social policy, benefits for the poor and redistribution of wealth are not the solution to poverty, what is? And how should redistribution not be a priority at all? Aren’t the countries with the least poor the ones that put a lot of effort into redistribution and social benefits? Don’t the most humane companies have high minimum wages?
These are legitimate questions, but to some extent they turn things upside down and “build a house from the roof”. In poor countries, everyone is poor. In rich countries, some are poor and poverty is the exception rather than the rule. It often happens that in rich countries sometimes even those poor have a higher standard than the average for many less rich countries. And here the social enters the scene: a rich society directs part of its wealth, either through state programs or through private initiative, to help its poor until they get out of a disadvantaged position.
Viewed in this way, social policy plays a certain role in Serbia as well. There are people who need help urgently. But the problems in Serbia will not be solved by any social benefits, because we are talking about a country where a huge part of the citizens barely cover their basic needs. In Serbia, compared to developed countries, almost everyone is poor. And in order for Serbia to get out of its poverty, it is necessary to do things that other countries have led to wealth.
And that is why we have to look at things far beyond social policy and minimum wages. Our political elites, whether commentators, politicians or government officials, must focus on more efficient solutions, solutions that lift the whole society out of poverty like a tidal wave.
The solutions are already known, but they were not given importance
In the end, all countries were poor at some point. All the people in the world have been poor throughout history. Simply put, poverty is the starting point for all of humanity. Some get out of it faster and some slower.
Although hard to imagine today, only 150 years ago Sweden was one of the poorer countries in Europe. Sweden introduced most of its social projects in the 1960s and 1970s, when it was already among the three richest countries in the world. Even today, Sweden does not have a state-defined minimum wage. But wealth was not achieved socially. It was a consequence of enrichment in the meantime, through a business environment that encouraged entrepreneurship and private initiative in various spheres, from economy to philanthropy, and a state system that did not do much but took good care to protect the property of all, from peasants, through craftsmen and workers to entrepreneurs. And who made sure that contracts were respected and disputes were resolved efficiently.
What we call the rule of law and economic freedom.
Mental poverty and material wealth
The poor in Serbia are not just people who simply do not have the physical ability to get out of poverty due to disability or some unfortunate set of circumstances. There are millions of people in Serbia, often completely healthy and real, who do not earn enough for basic needs. Their salaries are very often below the level of social benefits they receive in rich countries. They often earn many times less than beggars in rich countries.
They don’t need social benefits. They will find a job for 3, 5 or 10 times higher salary in Switzerland, Germany, America, in any richer country.
The problem of these people, the vast majority of the poor in Serbia, is not that this country has a bad social policy, but that this country, with its bad rules of the game, prevents them from creating more, either through their own entrepreneurial work or work for someone else. In Serbia, everyone, from employers to workers, is prevented from creating more, primarily by the absence of the rule of law, but also by bad laws that cement misery by preventing people from starting or doing a business in an efficient way.
Serbia is not poor because minimum wages are low, Serbia is poor because even high wages are relatively low. But this is not a matter of good will of employers, but of the general inefficiency of the economy in Serbia.
This inefficiency does not occur because people in Serbia are stupid or lazy. Let us remind you, someone who works in Serbia for 300 euros will probably earn over 2,000 by simply moving 1,500 kilometers to the west. This inefficiency occurs because the Serbian economy – anyone who wants to do something in Serbia, from workers to entrepreneurs – carries with it an additional burden, in the form of bad laws, a judiciary that is slow, often biased, restrictive regulations, and even open control of the economy by the state through its owned enterprises.
There are many of these books, too many for just one text. Yes, we can talk about the Law on Foreign Exchange Business, which prevents Serbian IT from selling new products to the world market and employing tens of thousands of people with high salaries. We can talk about the fact that it is complicated to collect receivables from business partners, and thus make money and pay salaries on time. We can talk about the savagery of customs regulations and practices that hinder small entrepreneurs in Serbia. We can talk about tens of millions of euros that are lost due to bad regulations in the hospitality industry. We can also talk about billions of investments that never arrived, because foreign investors estimated that the rules in Serbia were bad, and domestic ones took their capital to safer environments.
All this can be talked about, but the point is that these restrictions are an important cause of poverty, and that social policy is not a tool to eliminate them. In order for the citizens of Serbia to get out of poverty, it is necessary for Serbia to do the same thing that Switzerland, Sweden, the USA and many other countries did before they became rich – to remove obstacles to its citizens. That is, to have economic freedom.
The role of politicians and intellectuals
These things are under our control. A politician who is aware of the problems and has the will, could remove them relatively easily. The problem is the lack of knowledge and will, and the lack of awareness of what really needs to change.
In order for politicians to do what is necessary to release the potential of citizens to create wealth for themselves and the world, it is necessary for change to start with intellectuals, the media, but also the business community, all of whom influence what politicians say. This change does not have to be too complicated. We only need to understand simple truths: the enrichment of the citizens of Serbia will not come from social benefits, but by removing obstacles to the creation of greater wealth.
As US President Calvin Coolidge once said: “It is more important to repeal bad laws than to pass good laws.” Otherwise, by building Sweden, we may end up with more and more of our citizens actually going to Sweden, Talas reports.
