Wednesday, 4 July 2012

The reforms that Portugal is still waiting for


The Portuguese Government rose to power a little more than a year ago. And with a clear mission ahead – to kick start and deploy a number of urgent and much needed political and economic reforms, the only way to actually step out of the current hazardous situation. A huge task – and one that takes long. Still, one year into the term, results are disappointing:

-                  - Public Administration reform – still too departments, many of them with blurred competences – still, a number of them have been identified and extinguished, so, that is a start. But still, there isn’t a clear individual performance system in place and no clear incentive to excel while working for the State; there are still too many people working directly for the State. Public Administration is still overburdening the economic with inefficient spend and bureaucracy

-           - Judicial reform – part of it is underway, with the new judicial map. But a simplification of judicial procedures is still to be put in place, resulting in too much bureaucracy, too much time for sentences to be applied and an impunity sentiment.

-                  -Corruption – nothing is being done on this area and there are disturbing signs that the current Government is actually following the same trend as previous ones

-            - Too much state in the economy – encouraging signs with  the privatization of several companies already listed, but 2 huge problems remain: 1) a number of too important and big companies still don’t have a clear profitability model that allows for their privatization and are overburdening the State deficit (namely transportation and hospitals); 2) obscure municipal companies still exist, without any clear purpose as to provide jobs for “party boys”

-                 - No clear economic strategy – that would integrate a number of other areas (namely education) and would drive hard choices, economy and employment.


When these areas are handled, then I can start talking about others – as, believe me, there is much to be done in terms of State efficiency in Portugal. But, by now, whoever is able to actually handle the 5 reforms I have listed above, will have my vote and confidence. I believe they are the areas we should now be focusing on.

Tuesday, 3 July 2012

Accountability

An internal audit conducted by the Portuguese Finance authorities unveiled that a number of high-ranked State managers didn't follow instructions, and didn't cut their own salaries, as mandated by the austerity program (that they are then actually enforcing). Finding this out is important, but lacks clear measures. It's not stated what will be done now - will those managers have to repay the State the abused funds, will they be fired? It is important to state the corrective and punitive measures and a specific time-frame from them - as it would happen in any private sector company. 

Monday, 2 July 2012

Education alignment with the marketplace

When East Germany fell, all of a sudden, hundreds of thousands (maybe millions) of Germans saw themselves without a job. Not the workers in the factories, but upper middle class. A shock! What happened there? The fact is that many of those persons had strong college studies - but in areas that didn't have a connection to the new marketplace. They were High German Professors, Philosophers, Communist Doctrine Historians,... that were employed by the State (who paid for their education) - but once the State fell down and stopped demanding their work, the new real market economy didn't need them.

Why am I pulling this over? Because we see a similar movement nowadays in Europe. Maybe not purely motivated by ideology, but still similar. States are funding or pushing forward a number of college courses, that the market is not absorbing. Look at the millions of young Europeans, searching for a job with a college degree - being it lawyer, history, sociology,... The marketplace, the companies don't need them all. The State doesn't need them all. That is the truth! One of the things that is needed is to clearly stop all this huge number of people - to stop them to start studying in these areas. And to do it not by barring someone from attending colleges but by stoping funding some courses and providing information on employment rates of the courses. And then, to actually better inform of alternative education or courses. Some of them college oriented (believe me, there is a huge demand for systems and computing engineers and that will only grow in the near future) others to professional courses.

Regulation of rating agencies is important...

... to ensure market transparency and ensure arbitrage. Especially when the market is dominated by agencies that have close shareholders ties between them. 

Tuesday, 26 June 2012

Consumption is taking a hit!

It was not unexpected. The level of tax increases, salary freezes, increasing unemployment rates, lower than anticipated exports growth - that generates a Consumption slowdown. Now, lets be completely frontal and say that the austerity is necessary, because it is. But, lets also face it - we are not doing enough on the State Spending side. We should refrain from increasing taxes now and focus on State efficiency - put the power back on private hands and cut down on State fats. Do you think we can do it? 

Tuesday, 12 June 2012

Strikes in Portuguese mass transit companies

I am sorry, but just let me burst out for a couple of seconds. Why are Portuguese people paying taxes to fund a company that is always on strike? Isn't there a Board to actually take a position on this and solve it? Come on! If CP is not working as it should, should we keep on funding it? Shouldn't we just let it go bankrupt? There probably is a better use to the money that is being spent in CP than financing trains that don't work because they are on strike!

Monday, 11 June 2012

Lender of last resort

When the banking system is not able to sustain itself per se, than, the State should intervene, lending money at more favourable rates than the market, to ensure the economy will not colapse - that is what the ECB and the European Union just did to the Spanish banking system. And that is good news, given the present situation.