REFORMS HEALTHY AND REFORMS DISEASED

2. REFORMS HEALTHY AND REFORMS DISEASED doc. Radim Valenčík, CSc. Ing. Jiří Šnajdar

3. REFORMS HEALTHY AND REFORMS DISEASED The recent progress in the Czech republic and other countries causessome apprehensions, in particular for following reasons: • Reforms, that would solve existing problems, are not successfully carried out. • Problems have tendency to accumulate and culminate. • Local problems interface with their global context. • A part of public has an idea, that the progress can not be influenced positively and can not be even eliminated striking cases of institutional structures failings.

4. REFORMS HEALTHY AND REFORMS DISEASED What mutual reasons have the problems of recent progress in the CZ and what is their global context. What role plays the phenomenon of structures, based on mutual cover of breaking of generally accepted principles. How to utilise the theory of games for analysis of structures, based on mutual cover of breaking of generally accepted principles and how to use the achieved results in practice. In our article we point out :

5. REFORMS HEALTHY AND REFORMS DISEASED For the general reason why the recent progress is so difficult (and has its analogy in some phases our civilisation passed through) we consider following : Necessity to orient the economical progress in the way to correspond with the character of education of the society. The base of economy must become productive services in the field of obtaining and keeping the human capital, where is basically inexhaustible growth scope, that is also permanently sustainable to the effect that not only does not burden environment but reduces by character of spectrum of satisfied needs the recent environmental burden.

6. REFORMS HEALTHY AND REFORMS DISEASED Different from post industrial economy of non-productive or restrictedly productive services with mass non-productive consumption and large positional investment it is about how to create conditions when the full progress of productive abilities of anyone will affect retrospectively the economic growth and social development as the most important productive power.

7. REFORMS HEALTHY AND REFORMS DISEASED Its production leads to steep and long-term increase of work productivity employed in other sectors and other sources. It gradually employs decisive amount of work, respectively human capital. It becomes a centre of accumulation process – production of education sector finds the use from essential part just only in this sector, where is also the centre of innovations. It enlarges in essential way the spectrum of human needs, which are more and more satisfied by production of education sector, it is about needs, satisfaction of which (also utility, incl. pleasure connected with this utility) relates immediately to development and preservation of human abilities, these are so called ability needs. In consequence with previous has the education sector decisive share in total production and in economic growth, its form determinates by the character of its production (i.e. production, which provides with educational and other services for developing and keeping the human abilities). Characteristics of society ´s education as the society, where the dominated sector is the sphere of services, connected with obtaining and keeping of human abilities (human capital):

8. REFORMS HEALTHY AND REFORMS DISEASED High productivity (“could be taken away from”) Complexity of financial world and its products The logic of development of structures based on cover of breaking of generally accepted principles (see further) The progressive and natural changes connected with constituting education of society (process similar to industrial revolution) were blocked because the society was under control of structures based on mutual cover of breaking of generally accepted principles in such an extent that never happened in the past reasons :

9. REFORMS HEALTHY AND REFORMS DISEASED Develop on the base of games type Tragedy of commons In the case when one player has caught the other one breaking generally accepted principles, he does not inform the others, but starts to blackmail the player and presses him to break generally accepted principles also in other events (and other games). The players breaking generally accepted principles mutually blackmail, cover and back up. . The relations of mutual blackmailing, covering and backing up infiltrate into different re-distribution systems and institutional structure. These relations lead to information asymmetry (players breaking rules usually know more and therefore are in advantage) and pre-determination of coalition creation in different re-distribution systems (systems where are creating and distributing means among players). Structures based on mutual cover of breaking of generally accepted principles :

10. REFORMS HEALTHY AND REFORMS DISEASED X2 Keeps Does not keep agreement agreement Keeps agreement 5 ; 5 1 ; 2 X1 Does not keep 10 ; 5 (4) 2 ; 2 agreement X1 and X2 are two players – one is a specific player, the other are all other players. Numbers represent pay matrix. Pay matrix of the game Tragedy of commons :

11. REFORMS HEALTHY AND REFORMS DISEASED • Influence of structures based on mutual cover of breaking of generally accepted principles is very effective as a result of two types of effects : • Lever effect, when chaining up of players of a structure (in scope of connections of mutual covering, blackmailing and backing up) works as a lever multiplying and transmitting the influence. • Synergy effect, when the appropriate influence breaks through influence of more players (some of them must not know about each other) at solution of specific social situation.

12. REFORMS HEALTHY AND REFORMS DISEASED In Annual report BIS 2010 is presented : „The question is rather than solid structure the system of free, mutually co-operating and permeable nets, which have money and/or influence and contacts at disposal. Besides concealed influence, asserting of influence and using of corruption it is possible to place among typical phenomenon also using of specialists (for example layers, tax and media experts). Those structures do not incline to evident physical violence. With their work is connected also to ensure the difficulty to seize by means of influencing of organs active in criminal procedures and law courts.

13. REFORMS HEALTHY AND REFORMS DISEASED Structures based on mutual cover of breaking of generally accepted principles have such a strong position in institutional social system, that they are able to influence acceptance of such reforms, which instead of solving problems in appropriate sphere of social life allow to transfer public means for the benefit of various lobbies. In subscription it is illustrated on some events in the CZ, the most significant is so called reform of pension system.

14. REFORMS HEALTHY AND REFORMS DISEASED Instead of real pension reform, which would motivate the extension of horizon of productive utilisation (which fulfils system of pension financing on the base of NDC), was carried out the reform, which opens the way for transferring of large means from pension system for the benefit of various lobbies. And this partly from existing system of pension reinsuring (3. pillar), this is about 230 billion CZK, partly also from running system (1.pillar), this is about up to 30 billion CZK annually. This, what succeeded the current government in enforcing word for word “with power of authority”, has some absurd parameters and in the time of expected loss at most of the financial assets and unpredictability of the progress on financial markets in this time misses any other logic, than just the logic of means transferring for the benefit of various lobbies (among others also will in radical way simplify to transfer means of Czech daughter companies of international banks for the benefit of mothers which are in difficult situation