Clientelism and Inequality
There is a profound feeling of injustice rooted deep in the Bulgarian society. This can be clearly seen in international studies that cover topics such as trust in institutions and the rule of law. The same feeling of injustice is responsible for the widespread negative public perceptions towards Bulgarian entrepreneurs. The surveys of the National Statistical Institute (NSI) allow us to track such attitudes throughout different income groups. In recent years it is often the case that the feeling of injustice corelates with discussions regarding income inequality that usually put the blame on the free market.
Authors such as Joseph Stiglitz and Thomas Piketty were widely welcomed in Bulgaria, as they provided a somewhat intellectual background of the leading thesis that freedom in economic relations leads to income inequality, which at the end of the day ruins the society. A thesis, that is build on seemingly true observations – there is a substantial income inequality and there is a widespread feeling of injustice. However, this thesis contains a false precondition (that the free market is always present in modern societies) and a mistaken casual relation. There is no better proof of that than the Bulgarian case.
If one looks deeper into the results of the NSI questionnaires on social inclusion and living conditions and more specifically into the module on “wellbeing”, a clear relation can be found between income and happiness, but there’s also an overwhelming feeling of injustice, regardless of income levels. Poor people, as well as rich ones, are confident in their views that the Bulgarian society is not fair. Yes, higher income leads to a better life and to more happiness, but the feeling that something is wrong can be found in all income groups, and this social feeling is definitely within the realm of the concept of inequality. How is it that two groups within the same society with a sevenfold difference in their income (top 20 and bottom 20 percent of the households) share the same feeling of injustice?
The answer is to a large extent hidden in our understanding of inequality: is it inequality before the law, or simple income inequality? In addition to the separation of these two types of inequality, further nuance can be found in the question to what extend the inequality before the law (or the lack of rule of law) leads to “inexplicable” income disparities? This is the question that unites the different income groups in the society. The deep rooted feeling (anger) of injustice in Bulgaria is not to be found in income disparities between highly educated people and those with almost no education, or between the working people in the big city and the unemployed in the small village. No, the anger that is related to the income inequality is in practice anger towards inexplicable wealth. The latter is not inherent to the free market, but a clear sign of something that we the economist call “clientelism”. This term, quite symbolically, can be found in the Dictionary of the new words in the Bulgarian language from the end of the XX and the beginning of the XXI century, with the following meaning: “vicious occurrence in the governance and political life, that is related to patronage from those with political power over certain persons, that are benefiting (being privileged) from their support/influence“.
The inexplicable wealth that we have in Bulgaria, the one that leads to anger and the feeling of injustice, is not a product of the free market, but of its absence. Moreover, the inexplicable wealth for certain people usually creates obstacles to the opportunities for all the others. In all international rankings that include Bulgaria – be it studies of economic freedom or competitiveness; our country receives an extremely low rating for trust in institutions and rule of law, which is by far the biggest difference with the most developed western countries. This speaks for vicious relation between politics and business, for widespread corruption, for privileges, for obstacles and lack of competition. These are not features of the free market.
In fact, if we look at the biggest social and economic issues of the last years, we will inevitably encounter the state and its “clientele” – the recent failure of the bank of the political elite, corruption and debts in the energy market, broken state dominated healthcare system, a socialistic rail transport, abuse of public resources and addiction to EU funds. To search for a solution of these problems with progressive taxation or more redistribution, meaning more government, will be plain stupid – this will just pump up the clientele.
The exacerbation of the feeling of injustice suggests also attempts for it being captured by political interest, which are easily visible today. The leading motive of the clientele is blind condemnation of the free market and fine tuning of the fiscal illusions, which is the political (fiscal) interference in any private issue and leads to larger budget deficits. The falsity of this motive resulted in somewhat unexpected result – a sustainable crisis in the model of clientelism. The amplifying public pressure is (probably for the first time in our new history) not for more government spending, but for changes in the juridical system and fighting corruption at the top political level. This is a sign of change that goes way over the fudge for the bad market and the necessity to restrain freedom.