Politics and Economics

Всяко преразпределение на богатство от страна на държава е начин да се вземат пари от работещи хора и да се дадат на неработещи/по-малко работещи хора.

Inflation

When your money loose its value. When money printing exceeds the speed of actual production.

Small inflation is healthy. Low inflation (deflations) would make people keep their cash. If you could by something cheaper in the future then you would wait. Too high inflation leads to products becoming too expensive for people.

Countries always want small inflation in their currency. Inflation -> more export than import = good. Export = stuff you sell, Import = stuff you buy. You want more sell than buy. If you currency is very expensive with no inflation, you will only import.

Inflation is a way government to take money from its citizens without them realizing it. A way to put money in the people who hold assets. Inflation comes from printing money and whoever gets this money becomes richer (usually government people).

In inflation everything becomes more expensive. Often people do not save cash, but rather buy mortgage. Money looses its value.

In period of deflation, or when money has lots of value, then go and invest and buy stuff.

Recession

Economic downturn. When businesses produce less, people buy less and money is staying in one place.

recession = drop in economical activity and results in reduced GDP.
inflation = increase in price of products, money looses their power. Measured in CPI.

Often low or too high inflation leads to recession.

The year is 2022. 2 years after COVID. We enter recession??? Weird how during covid we thought it was a crisis and we were in recession. However the true recession comes now, with super high inflation (15% in UK/EU), and it comes after all governments printed a bunch of money to "help" people. Macro economics is super weird and I am not sure how to build intuition for that.

Events

Jan 2022, Meta stock price crashes 50%.
US printed 2 trillion + dollars the most of all governments and the USD became more expensive. It became on par with the euro
When covid started stock market crashed but there was no big recession, compared to the one now in 2022.
now in 2022 stock market crashed even worse and there is big recession coming + inflation
in 2016/2017/2018 housing market was way cheaper than now and I was afraid to get into it (with parents money). Looking backwards that was a mistake. I don't know how but during this whole period of recession/pandemic/inflation housing market is still increasing
24 Feb 2022 Russia started War in Ukraine. Russia attacks in Europe, europe is weak, europe depends a lot on gas and petrol on Russia. Maybe this was indication you should buy dollars... 30% profit.
July 2022 Boris Johnson resigned. Liz Truss vs Sonak (communist dont know how got in Tori - said put max prices in supermarkets, ask the top 10% companies to increase their corporate taxes and things that is fair.)

Events in Bulgarian politics

2nd Aug new slujebno pravitelstvo given by president Radev - a bit pro russia and wants to get deal with Gazprom
7tth Aug DB wants to do pre election coalition with PP. PP said they will look in statistics and if they get more seats they will do the coalition -18 Aug PP and DB would not go to elections together
18 Aug Slavi Trifonov did not declare his net worth in KPKOPNI
2nd Oct election time

Printing money

In general, when governments print large amount of money it would be bad for you. This is a smooth way to steal from you. Indeed, the act of printing money benefits only those who would get large portions of the money. You are unlikely to be part of this portion, like most people. Therefore, printing money just makes the money you have less valuable and you should look for other places to store value.

Socialism vs Capitalism

Market demand should drive what type of market is better. Healthcare should be social, government should participate in that market because demand for health is distributed uniformly. Probability of rich and poor people get cancer is relatively the same. For sports cars market should be capitalism. P(rich person buys lambo) >> P(poor person buys lambo).

Markets where there should be government intervention:

healthcare
education?
war weapons

What should governments do?

protect borders
enforce laws equally
create laws
make business environment better
take care of poorest people? Maybe with small amount of taxes.
justice system
infrastructure? Not sure about this one. Building towns and roads can be done by private sector I think.

Should the government play any social part in people's life? The more responsibilities a government has, the less freedom individual people have. Therefore I think government should not do social politics at all. Social politics is a fancy term for taking money from the ones who have money to the ones who do not have money. That is the core of social politics. It takes money from those who work and gives it to those who don't.

When a company should go public?

Euro funds and government subsidiaries

Governments should not support businesses. During crisis, during economic upturn, whatever. Businesses should exist and make money only because their clients say so and buy their products Euro fund, 'obshtestveni prouchki' is just a way for the government to give money to their friends and family.

Investing

In your end lifetime, when you compute total networth accumulated through all years, it is likely most of the money you make would be from investments rather than from your work. Always have this in mind.

Look for opportunities when people are afraid to invest, do not invest when everybody is doing that. Now the stock markets have crashed by quite a bit (July 2022), I think I should put some money on this.

Housing market is crazy, peak after peak. It feels it slows down a bit and we might reach a downturn. For my personal finances I would have enough money to get in the market after 2-3 years. Let's see if there is a downturn...

European green deal

More bureucracy?

Thoughts on diversity and inclusion

People from the PRIDE are super innocent. I support most of their positions. Rights to get married and in general they just want to be accepted by the community. If they get these thing our society would only be net happier. This does not make other people unhappy. Adoption is another topic though. The life of the adopted kids could get worse. Straight couples should have priority when adopting in societies where gay people are still not accepted.

Should we support in-country made stuff?

Reform the justice system thoughts

from state to private prosecutors will lead to less corrupted prosecutors
judges have to be chosen by the state? The state enforces law after all. How to fix corrupted judges? Transparency. Live stream all judge decisions.
we need to give incentives for judges (chosen by the state) to give fair verdicts if high level politicians are being executed

Reform the pension scheme

receiving a pension should be volunatary act rather than mandatory one
if you want pension you pay national insurance taxes, if you don't you don't pay these
the pension system is broken because it has unlimited supply of income coming from regular insurance taxes. It does not need to be optimized and managed well because it cannot go bankrupt. The fear of failing and going bankrupt is what drives businesses and organizations to move forward. Death is inevitable in every meaningful life. We need to let the broken pension system to either die and build a new one or let it recover. But we need to put in on the free market with voluntary taxes. Then it will receive money only if it can assure the society that it will pay good pensions/provide good service for these taxes.

BBR (bg bank za razvitie)

Should that be privatized?

PP vs DB

PP are a bit left populists (e.g 'Use right instruments' for left ideas). However, they have strong leadership. DB match my political views the best among all parties but have weak leadership. Hristo Ivanov is a good politician but his best role in a party is to be an advisor rather than leader. He is a bit 'filosof'. I am happy he recently proposed wide coalition between them and PP and all the right centrist 'city' parties/community.

PP have shown several times that are good negotiators and able to group different peoples in one place. Is that true though? In the coalition of 4 parties BSP, PP, ITN, DB, BSP has been able to push for many of their leftist ideas. PP put a cap price on electricity in Jan 2022. THat's super weird move and I doubt they teach this stuff in Harvard Business School.

DB has been quite consistent with their promises to the people (except being in coalition with BSP). They have pushed for justice reform, e-government, low taxes and fighting against corruption. I am pleased with what they've done. I hope PP would agree to have pre-election coalition with them.

Are BSP less corrupted as of 2022?

It is very controversial to see PP, ITN and DB to agree to be in coalition with BSP. All these 3 parties have talked against BSP to some extend or another. Does that mean BSP are less corrupted now or political parties just need their votes and become corrupted as well? I think it is pretty hard to determine if a party is corrupted anyways. PP, ITN and DB do not most probably do not know if BSP is corrupted. They are for sure much less corrupted than 15 years ago when they were in power. What, I admire about BSP is that they have very consistent political views and have clearly identified them in the political and economical spectrum. I do not agree with their views but respect that they stay consistent. I am definitely not happy that they have seats in the government but what can we do?

Government 2nd Aug 2022.

New government by president Radev (3rd in the last year and a half). Tis one is a bit communist, pro-Russia and do not have all stars like Kiril and Asen. Seems not competent too. Radev made some really good moves with bringing Asen and Kiril and riding the protests wave in summer 2021. Now he seems to have deviated from this direction and is more pro-Russia. Like ITN it looks like everybody is fighting for themselves.

Rank Choice Voting System

This voting system is used when we need a clear winner (president or mayor elections). First Past the Post is not a a fair system. Even with balotage system, the 2nd round is not fair (although probably better than FPTP), e.g. elections for mayor in Sofia with Fandukova, Manolova, Boris Bonev and Da Bulgaria. The balotage had Fandukova vs Manolova, but with ranked choice we could have Bonev(or Da Bulgaria) vs Fandukova.

Each person votes by ranking the parties 1,2,3 etc.

If there is a mojaorty winner they win. If not the lowest candidate is removed and the votes of the people who voted for him are distributed to the other candidates (whoever was their second choice gets all the votes). This is repeated until there is a majority winner.

Questionier before voting

Every time you vote you need to fill in the answers of 3 questions that parties have answered. This is a way so that people know what they have voted for.

Industrial Policy

Idea: "Attempts to create competitive advantage through government direction and support"

Example of success: "Intentional industrial policies likely played a critical role in creating the modern South Korean economy." In the 20 years after 1973 South Korean real gdp per head rose by 349%.

“It is possible” that for the initial stages of industrialisation “government efforts had a significant role”

Another example: Under Xi Jinping and his “Made in China” project, the Chinese state has played an even more activist role in directing economic activity. The country now has a global monopoly in many industries. Subsidies have allowed firms to slash prices, putting foreign competitors out of business.

Problems:

subsidies allow the survival of inefficient firms, making the industries they are in less competitive. Firms may focus on securing subsidies, which removes resources from productive use.
Total factor productivity (the amount of output per unit of labour and capital) across China has probably fallen under Mr Xi.
helping one firm with subsidies tends to harm others.
misdirected transfer of public resources to large domestic and foreign firms

Example problem:

India’s “production-linked incentives” (pli) scheme, which pays manufacturers a sum for every unit produced (say mobile phones). Mobile exports soared. However imports soared too. Mayme producers were simply re-exporting phones via India to get another subsidy.

Homeland economics

Homeland economics is a response to four big shocks:

the 2008 financial crisis (finance)
Covid (pandemic, finance)
US China trade war (geopolitical)
Russia's invasion of Ukraine (geopolitical, energy)

leads to high subsidieries

"Industrial policy and protectionism could endanger trade, without making Western economies safer"

Children