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ANOTHER GREAT FREE MARKET STORY: SLOVAKIA (THEY DON’T WANT TO BAIL OUT GREECE, EITHER!)

Slovakia is the “other” and poorer half of the former Czechoslovakia.  The nation became independent through the peaceful efforts of both the Czechs and the Slovaks to do what the majority of the Slovaks wanted:  Independence.  (A. Lincoln, call your office!)  But it was not until the late 90s that it’s economic situation began to change in a powerful and favorable way.  Here is Der Spiegel’s take on it (liberal means libertarian):

[Richard] Sulik [head of the Freedom and Solidarity party and speaker of parliament] laid the foundations for his financial success with a chain of copy shops in the early 1990s. But it was only in 1998 that Slovakia’s transformation really picked up momentum. As a member of a young radical troop around the Finance Minister Ivan Miklos, Sulik helped to turn Slovakia into a particularly liberal European nation.

At the heart of the reforms was the “flat tax” policy which applied to business people as well as private individuals. In Slovakia everyone pays 19 percent tax, a low rate which had the economic impact of a stimulus package. Investors flocked to the country, which had been largely unknown until then.

Amazing!  Lower taxes caused stimulus of the economy!  Paul Krugman call your office!  But there’s more:

These days Samsung builds televisions at the base of the Tatra mountains, VW makes its Touareg there, Porsche builds Cayennes and Audi manufactures the Q7. The Korean car maker Kia invests in Zilina and Peugeot works in Trnava. In 2007 the economy grew by more than 10 percent. In January 2009 it joined the euro zone.  *  *  *  [Due to declines in the automobile industry, the nation’s economy declined by five percent]  But the government in Bratislava did not allow itself to be swayed from its liberal track: Instead of borrowing money for stimulus packages or raising taxes it chose to levy a strict savings programme on its population. It cut money for schools, hospitals and streets. In 2013 it should, once again, fulfil the Maastricht criteria. In the first quarter of 2011, the economy grew by about four percent.

Slovakia has troubles:  high unemployment and poor services due to an austerity budget to meet EU requirements to enter the euro-zone.  Hence, Slovakia is not in any way favorable to bail out Greece.  They feel like if they can pull itself by its bootstraps, Greece can, too.  The PM supports helping Greece but Richard Sulik does not.  And the PM needs his votes in parliament to carry the day.  It is not certain that Slovakia will go along.  Germany may not be able to pay its way out of this.

About Elwood Sanders

Elwood "Sandy" Sanders is a Hanover attorney who is an Appellate Procedure Consultant for Lantagne Legal Printing and has written ten scholarly legal articles. Sandy was also Virginia's first Appellate Defender and also helped bring curling in VA! (None of these titles imply any endorsement of Sanders’ views)

One Response to “ANOTHER GREAT FREE MARKET STORY: SLOVAKIA (THEY DON’T WANT TO BAIL OUT GREECE, EITHER!)”

  1. Jon Preslar says:

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Tom White Says:

Nothing is more conservative than a republican wanting to get their majority back. And nothing is more liberal than a republican WITH a majority.

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