From an Interview I Granted

Leisure time emerged as a social phenomenon in the twentieth century and mainly in the industrialized, rich, countries.

Workaholism - the blurring of boundaries between leisure time and time dedicated to work - is, therefore, simply harking back to the recent past. It is the inevitable outcome of a confluence of a few developments:

(1) Labour mobility increased. A farmer is attached to his land. His means of production are fixed. His markets are largely local. An industrial worker is attached to his factory. His means of production are fixed. Workers in the services or, more so, in the knowledge industries are attached only to their laptops. They are much more itinerant. They render their services to a host of geographically distributed "employers" in a variety of ways.

(2) The advent of the information and knowledge revolutions lessened the worker's dependence on a "brick and mortar" workplace and a "flesh and blood" employer. Cyberspace replaces real space and temporary or contractual work are preferred to tenure and corporate "loyalty".

Knowledge is not geography-dependent. It is portable and cheaply reproduced. The geographical locations of the participants in the economic interactions of this new age are transparent and immaterial.

(3) The mobility of goods and data (voice, visual, textual and other) increased exponentially. The twin revolutions of transportation and telecommunications reduced the world to a global village. Phenomena like commuting to work and globe-straddling multinationals were first made possible. The car, the airplane, facsimile messages, electronic mail, other forms of digital data, the Internet - demolished many physical and temporal barriers. Workers today often collaborate in virtual offices across continents and time zones. Flextime and work from home replaced commuting. The very concepts of "workplace" and "work" were rendered fluid, if not obsolete.

(4) The dissolution of the classic workplace is part of a larger and all-pervasive disintegration of other social structures, such as the nuclear family. Thus, while the choice of work-related venues and pursuits increased - the number of social alternatives to work declined.

The extended and nuclear family was denuded of most of its traditional functions. Most communities are tenuous and in constant flux. Work is the only refuge from an incoherent, fractious, and dysfunctional world. Society is anomic and work has become a route of escapism.

(5) The ideology of individualism is increasingly presented as a private case of capitalism and liberalism. People are encouraged to feel and behave as distinct, autonomous units. The metaphor of individuals as islands substituted for the perception of humans as cells in an organism. Malignant individualism replaced communitarianism. Pathological narcissism replaced self-love and empathy.

(6) The last few decades witnessed unprecedented successive rises in productivity and an expansion of world trade. New management techniques, improved production technologies, innovative inventory control methods, automatization, robotization, plant modernization, telecommunications (which facilitates more efficient transfers of information), even new design concepts - all helped bring workaholism about by placing economic values in the forefront. The Protestant work ethic ran amok. Instead of working in order to live - people began living in order to work.

Workaholics are rewarded with faster promotion and higher income. Workaholism is often - mistakenly - identified with entrepreneurship, ambition, and efficiency. Yet, really it is merely an addiction.

The absurd is that workaholism is a direct result of the culture of leisure.

As workers are made redundant by technology-driven productivity gains - they are encouraged to engage in leisure activities. Leisure substitutes for work. The historical demarcation between work and leisure is lost. Both are commended for their contribution to the economy. Work, like leisure, is less and less structured and rigid. Both work and leisure are often pursued from home and are often experienced as pleasurable.

The territorial separation between "work-place" and "home turf" is essentially eliminated.

Some people enjoy their work so much that it fulfils the functions normally reserved to leisure time. They are the workaholics. Others continue to hate work - but feel disorientated in the new leisure-rich environment. They are not taught to deal with too much free and unstructured time, with a lack of clearly delineated framework, without clear instructions as to what to do, when, with whom, and to what end.

The state, parents, educators, employers - all failed to train the population to cope with free time and with choice. Both types - the workaholic and the "normal" person baffled by too much leisure - end up sacrificing their leisure time to their work-related activities.

Alas, it takes workaholics to create, maintain and expand capitalism. People don't work or conduct business only because they are after the money. They enjoy their work or their business. They find pleasure in it. And this is the true meaning of capitalism: the abolition of the artificial distinction between work and leisure and the pursuit of both with the same zeal and satisfaction. Above all, the (increasing) liberty to do so whenever, wherever, with whomever you choose.

"In this digital age, the custodians of published works are at the center of a global copyright controversy that casts them as villains simply for doing their job: letting people borrow books for free."

It is amazing that the traditional archivists of human knowledge - the libraries - failed so spectacularly to ride the tiger of the Internet, that epitome and apex of knowledge creation and distribution. At first, libraries, the inertial repositories of printed matter, were overwhelmed by the rapid pace of technology and by the ephemeral and anarchic content it spawned. They were reduced to providing access to dull card catalogues and unimaginative collections of web links. The more daring added online exhibits and digitized collections. A typical library web site is still comprised of static representations of the library's physical assets and a few quasi-interactive services.

This tendency - by both publishers and libraries - to inadequately and inappropriately pour old wine into new vessels is what caused the recent furor over e-books.

The lending of e-books to patrons appears to be a natural extension of the classical role of libraries: physical book lending. Libraries sought also to extend their archival functions to e-books. But librarians failed to grasp the essential and substantive differences between the two formats. E-books can be easily, stealthily, and cheaply copied, for instance. The source of the e-book - scanned printed titles, or converted digital files - is immaterial and irrelevant. The minute a title becomes an e-book, copyright violations are a real and present danger. Moreover, e-books are not a tangible product. "Lending" an e-book - is tantamount to copying an e-book. In other words, e-books are not books at all. They are software products. Libraries have pioneered digital collections (as they have other information technologies throughout history) and are still the main promoters of e-publishing. But now they are at risk of becoming piracy portals.

Solutions are, appropriately, being borrowed from the software industry. NetLibrary has lately granted multiple user licences to a university library system. Such licences allow for unlimited access and are priced according to the number of the library's patrons, or the number of its reading devices and terminals. Another possibility is to implement the shareware model - a trial period followed by a purchase option or an expiration, a-la Rosetta's expiring e-book.

Distributor Baker & Taylor have unveiled at the recent ALA a prototype e-book distribution system jointly developed  by ibooks and Digital Owl. It will be sold to libraries by B&T's Informata division and Reciprocal.

The annual subscription for use of the digital library comprises "a catalog of digital content, brandable pages and web based tools for each participating library to customize for their patrons. Patrons of participating libraries will then be able to browse digital content online, or download and check out the content they are most interested in. Content may be checked out for an extended period of time set by each library, including checking out eBooks from home." Still, it seems that B&T's approach is heavily influenced by software licencing ("one copy one use").

But, there is an underlying, fundamental incompatibility between the Internet and the library. They are competitors. One vitiates the other. Free Internet access and e-book reading devices in libraries notwithstanding - the Internet, unless harnessed and integrated by libraries, threatens their very existence by depriving them of patrons. Libraries, in turn, threaten the budding software industry we, misleadingly, call "e-publishing".

There are major operational and philosophical differences between physical and virtual libraries. The former are based on the tried and proven technology of print. The latter on the chaos we know as cyberspace and on user-averse technologies developed by geeks and nerds, rather than by marketers, users, and librarians.

Physical libraries enjoy great advantages, not the least being their habit-forming head start (2,500 years of first mover advantage). Libraries are hubs of social interaction and entertainment (the way cinemas used to be). Libraries have catered to users' reference needs in reference centres for centuries (and, lately, through Selective Dissemination of Information, or SDI). The war is by no means decided. "Progress" may yet consist of the assimilation of hi-tech gadgets by lo-tech libraries. It may turn out to be convergence at its best, as librarians become computer savvy - and computer types create knowledge and disseminate it.

Large parts of the world today suffer from a severe liquidity crisis. The famed globalization of the capital markets seems to confine itself, ever more, to the richer parts, the more liquid exchanges, the more affluent geopolitical neighbourhoods. The fad of "emerging economies" has all but died out. Try telling the Macedonians about global capital markets: last year, the whole world invested 8 million USD in their poor country. Breadwinners earn 300 DM a month on average. Officially, in excess of one third of the workforce is unemployed. Small wonder that people do not pay their bills, employers do not pay salaries, the banking system has a marked tendency to crash every now and then and the average real default rate is 50%.

Illiquidity erodes the trust between the economic players. Such trust is a precondition to the existence of a thriving, modern economy. We all postpone the gratification of our desires: we save now and consume later, for instance or we sell goods or services and get paid a month later. Such postponement of gratification is at the heart of the economic machine of the new age. It cannot be achieved, however, if the players do not trust each other to fulfil their promises (to pay, for example). Alternatively, the state can instate an efficient court system, aided by active law enforcement agencies. Keeping promises can be imposed to counter the natural tendency to ignore them.

The countries in transition lack both: liquidity necessary to keep one's monetary word and the legal system to force him to do so if he reneges. Small wonder that solutions are actively being sought by all involved: the business community, the state, the courts and even by consumers.

In this article, we will describe a few of the global trends. The trends are global, the reaction is world-wide because the problem is global. Bouncing checks have become a household reality in places as rich as Israel, for instance. The mounting crisis in Southeast Asia foreshadows bankruptcies and delinquencies on a chilling scale.

The simplest method is to revert to a cash economy. Payments are accepted only in cash. This, naturally, slows the velocity of money-like products and diminishes their preponderance, obstructing the expansion of economic activity. An even more malignant variant is the barter economy. Goods and services are swapped on a no-cash basis. It is money that generates new value added (by facilitating the introduction of new technology, to mention but one function). In the absence of money, the economy stagnates, degenerates and, finally, collapses because of massive mismatches of supply and demand aggregates and of the types of goods and services on offer and demanded. Still, this system has the advantages of keeping the economic patient alive even following a massive liquidity haemorrhage. In the absence of barter economy, the economy might have ground to a complete halt and deteriorated to subsistence agriculture. But barter is like chemotherapy: it is good for a limited period of time and the side effects are, at times, worse than the disease.

In many countries (Georgia, to mention one) defaults are prevented by demanding prepayment for projected consumption. Let us take the consumption of electricity as an example: many heavy users and numerous households do not pay their bills at all. To disconnect the electricity is an effective punitive measure but it costs the electricity company a lot of money. The solution? Programmable Electronic Meters. The consumers buys a smart card (very similar to phone-cards). The card allows the buyer to use a certain amount of prepaid electricity and is rechargeable. The consumer pays in advance, electricity is not wasted, the electricity company is happy, the tariffs go down for all the users. Prepayment does have a contracting effect on the demand and usage of electricity - but this is welcome. It just means that people use electricity more efficiently.

A totally different tack is the verification approach. The person making the payment carries with him a card which confirms that he is creditworthy and will honour his obligations. Otherwise, the card also serves as an insurance policy: an entity, not connected to the transaction, guarantees the payment for a fee. This entity is financially viable and strong enough to be fully trusted by the recipient of the payment.

This market in credit guarantees is more developed in the USA (where credit cards have overtaken cash and personal checks as a mode of payment) than in Western Europe. But even in Europe there are credit card equivalents which are very widespread: the Eurocheck card, for instance, is really a credit card, though it usually comes with physical checks and guarantees only a limited amount. One must differentiate the functions of a debit card (with direct and immediate billing of a bank account following a transaction) from those of a credit card. The latter allows for the billing of the account to take place in a given day during the month following the month in which the transaction was effected or converts the payment into a series of instalments (within the credit limits of the cardholder as approved by his bank). But in both cases, the guarantee is there and is the most predominant feature of the system. Such cards seem like a perfect solution but they are not: the commissions charged by the card issuers are outrageous. Between 2 and 10 percent of the payment made go to the pockets of the card issuers. Cards get stolen, forged, lost, abused by their owners, expire. But with the advent of new technologies all these problems should be solved. Electronic POS (point of sale) cash registers, connected through networks of communication, check the card and verify its data: is it valid, is it presented by the lawful owner, was it stolen or lost, is the purchase within the limits of the approved credit and so on. Then, the billing proceeds automatically. Such devices will virtually eliminate fraud. The credit card companies will guarantee the payments which will be subject to residual crime.

Another fast developing solution is the smart card. These are cards similar to phone cards and they can be charged with money in the bank or through automatic teller machines. These cards (in wide use in Belgium, Austria, Germany and many other countries) contain an amount of money which is deducted from the cardholders account. The account is billed for every recharge. The card is the electronic (and smart) equivalent of cash and it can be read (=debited) by special teller machines in numerous businesses. When payment is made, the money stored in the card is reduced and the recipient of the payment stores the payment on magnetic media for later delivery to his bank (and crediting of his account).

A more primitive version exists in many countries in Eastern Europe: depositors receive checks exactly corresponding to the amount of money deposited in their account. These checks are as safe as the banks that issued them because they are fully convertible to cash. They are, really, paper "smart cards".

Credit cards and (more cheaply) smart cards are a way to restore confidence to a shattered, illiquid economy. Macedonia should consider them both seriously and encourage them through the appropriate legislation and assistance of the state. For Macedonia, the choice is to be liquid or, God forbid, to economically self-liquidate.

I have often accused Trajko Slaveski, Macedonia's Minister of Finance, of mismanaging the economy. But, you got to hand it to him: he has a great sense of humor. On Saturday, August 16, 2008, he visited Bitola and made these announcements, hereby copied faithfully from MIA and Nova Makedonija:

"Инфлацијата во земјава е под контрола, изјави викендов министерот за финансии Трајко Славески во Битола, одговарајќи на новинарски прашања.

The Minister later responded to my request for clarification (to his credit, he always does). Apparently, he was misquoted. What he did say is that cumulative inflation being 3.2% in January-July, it looked as though the target of 5.5-6% annual inflation in 2008 is well on its way to being met.

It's uncanny how the government of Macedonia - alone in the whole world - gets all its predictions right, courtesy of the ever-pliant Bureau of Statistics here.

Moreover, the Minister, aware of the abysmal ignorance of both journalists and citizenry, manipulates public opinion by comparing oranges to apples: inflation in the USA is not the government's doing. It is the fault of the Central Bank there (the Federal Reserve). Inflation in Macedonia, on the other hand, is, in large part, an outcome of the government's outpouring of populist generosity. Its unbridled and irresponsible spending led to a wage spiral in the private sector, for instance. It also failed to take steps to counter inflation imported from abroad through the prices of oil, electricity, raw materials, finished goods, and luxury items. Consequently, Macedonia's trade deficit is among the highest in the world (and in history) and jeopardizes the country's macroeconomic stability.

As for the impressive growth in GDP - it is far less impressive when we realize that the economies of all the countries in the region have grown more or less by the same percentage. The British have a saying: "The incoming tide lifts all boats". When the economy grows (unexceptionally), the government takes credit. When something goes wrong with the economy, it is never their fault, the global economy is to blame.

More to the point, the growth in GDP, like much else in Macedonia is, to a certain extent, a mirage. It is fuelled by rampant construction, government outlays gone amok, and remittances from Macedonian Gastarbeiters. The real sector is no doubt expanding, but is far from making a sizable or lasting contribution in terms of gross factors of production.

Finally, the Minister brags that the government's budget is in surplus. Let me get this straight: the government takes 42% of GDP in taxes and then spends some of it on churches and basketball halls and media campaigns and it thinks that this gross misallocation of scarce economic resources deserves praise. With its all-pervasive economic presence, the government has transformed itself into Macedonia's biggest employer and advertiser. The private sector is crowded and cowed. There is no economy to speak of. Foreign direct investment (FDI) - touted as the panacea to the country's economic problems only two years ago - is now no longer the top priority, maybe because Macedonia last year has again been ranked as the least attractive in the region. A pretty picture this is.

 

DONCEV

Sam you don't spend much time on small talk - straight to the point. But before I respond to the many issues you have raised, let me just say for the record what an absolute pleasure it is for me to be engaged in this dialogue with you. I seem to recall that the last guy who had an open dialogue with you ended up as Prime Minister of Macedonia. Judging from the tone of your opening remarks though, it would seem that at least as far as you're concerned Macedonia passed the crossroads of ten years ago only to hit a dead end!

The economy has certainly been mismanaged, but I don't think Trajko Slaveski is entirely to blame in this case. He is not in an enviable position. The previous two Ministers of Finance (Popovksi and Gruevski) were both in a much stronger position in the sense that they had no higher political authority who was considered as an authority in economics. Now by this I am in no way making a judgment on the actual competence of Popovski and Gruevski as Ministers of Finance or ignoring the fact that they too had political masters, but it is fair to say that they both had a much freer hand to manage (or indeed mismanage the economy) than what Slaveski has today.

Slaveski is not in a strong position as Minister in the sense that he has Zoran Stavreski above him (who is stronger politically and considers himself as a higher

You know the old saying that there are lies, damned lies and statistics! The Macedonian Bureau of Statistics and Trajko Slaveski can quote whatever figure on inflation they want, but the one thing they cannot manipulate are the prices people pay for their goods and services. The Macedonian consumer knows very well the prices he is paying for basic goods such as bread, milk, eggs, meat, rice and cooking oil, compared to the prices two years ago. Indeed the prices of almost all goods and services have gone up to various degrees, and in almost all cases they have been well into double digits. Add to this the expected astronomical rise in the prices of electricity and heating. Measured properly, Macedonia's inflation rate for 2008 would be at least 12%.

Three observations I want to make here. First, at various stages of this year, different Ministers have quoted different rates of inflation ranging from the above
mentioned 6% by Slaveski to 10% by Stavreski. It seems they can't even agree on the rate among themselves. Second, we have often heard the excuse throughout the year that inflation is high but it's imported. Macedonia has a fixed rate of exchange pegged to the Euro. This effectively means we import all our goods and services at a constant Euro rate. Thus by definition the inflationary effect from increased prices of imports cannot be higher in Macedonia than that in the Euro zone. The 2008 Euro zone overall inflation rate is only 4%. Third, for the first time in the last ten years, we now have negative real interest rates (interest rates minus inflation rate) of at least 3%. The savings and wealth of Macedonia's citizens is being eroded every day. As people realize this effect, they shift their savings to consumption which in Macedonia's case also leads to a direct increase in the trade deficit.

Therefore, I concur with you that inflation in Macedonia is in large part, an outcome of the government's outpouring of populist generosity, and unbridled and

I want to really expand on your final point. I think there is such a misconception among society at large (and in this regard I think the media in general have much to answer for) as to what the Budget actually represents. First of all, when you say that the government takes 42% of GDP in taxes, two things must be made clear. First, on average, 42% of the yearly income of every citizen goes to the government by way of all the direct and indirect taxes which exist in Macedonia. All these taxes are collected from the Private Sector in the economy. Second, it follows by definition that should the government choose to reduce its share of GDP to say 30% (by reducing the overall tax burden by 12%) the 12% reduction of the Government sector will result in a 12% increase in the Private Sector. The converse is true if the Government chooses to increase its share of GDP by raising the overall tax burden. This is in fact the "crowding out" effect you refer to. This is why it becomes almost laughable when Macedonian media report front page news that we have the lowest taxes in Europe.

From a macro economic point of view, the hundreds or thousands of individual taxes are only important insofar as they determine the overall tax burden on the Private Sector. (Of course individual taxes analyzed on a stand alone basis play an important role on the micro economic level of activity).

It thus becomes a real choice for society (through its elected leaders): Do we want a society which allocates a larger or smaller portion of the GDP of the country in the hands of the Government? And once that choice has been made, it then begs the second choice as to how we actually allocate the funds within the Budget itself? Do we spend it on churches, basketball halls and media campaigns as you say, or do we choose to build roads, schools and hospitals with the same funds? In this context, the self serving media campaigns of this Government (amounting to tens of millions of Euros) are in my opinion one of its
biggest sins.

A pretty picture indeed!