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Small Government Solutions for Bosnia & Herzegovina

In order to better demonstrate the superiority of freedom and free market solutions, we begin each issue by summarizing the outcomes of all too familiar conventional wisdom - big government socialist solutions, followed by the libertarian answers to big government.



Note: Some of the libertarian policies described below may sound radical, but they are indicators of decades of heavy socialism which created the nanny state government we have today. Therefore, most of the solutions introduced below are idealistic and cannot all be implemented at once but rather over time in order to take care of people who are heavily dependent on government.






Big Government principle: Keep introducing new social programs, raise taxes to finance them and provide more free services to the people.

Outcome: Average taxes in Bosnia & Herzegovina amount to over 50% of income of every working individual, proving the point that nothing which government provides is ever free. Large number of inefficient, inadequate, and seemingly free government programs paid for by every working man and woman in the country.

Libertarian Principle: Reduce the size of government, balance the budget, exercise fiscal responsibility, in order to keep taxes low (eliminate completely some taxes such as income tax and property tax), let individuals make their own personal choices and take care of their own needs!

Likely Outcome: History is a testament that governments spend money poorly. Only you as individual can best figure out your priorities and how to spend your money in the best most efficient way. By greatly reducing the size of government and being allowed to keep more fruits of their labor, taxpayers would have much more money to save and spend in free markets on things they really need. There is no reason why people shouldn't keep 80% or more of their earnings.



Social Security


Big Government principle: Support and expand the government-run social security, people have the right to more free government services. (in BiH these include retirement and disabled persons fund, healthcare, and unemployment fund)

Outcome: The government mandated retirement which is funded through 17% taxation is often paid late and the typical amount received is barely sufficient to feed the retirees and pay the utility bills. Retired government officials however enjoy pensions that are as 10 times as high as the average one. Current socialized medicine is of very poor quality and its workers are in frequent strikes, turning down patients who pay 12.5% of their earnings to this purpose. There is no competition in government-run healthcare so there is no incentive for improvement, meaning that doctors and hospitals will continue to deliver poor services. Working citizens pay 1.5% of their earnings to support those who are registered unemployed, thus supporting their laziness.

Libertarian Principle: Legalize competition by privatizing social security. Allow individuals the option to take care of their own retirement and choose their own doctors. Remove the incentive for laziness!

Likely Outcome: People would begin to stop depending upon government to deliver their failed social services. Many would choose an option of establishing their own retirement savings, sufficient enough to take care of their needs. Legalizing of competition in medicine would allow people to get healthcare services from doctors and hospitals of their choosing, making hospitals and doctors compete for patients and thus improve their services, something government run hospitals never had to worry under the current monopoly system. Government mandated unemployment fund of 1.5% of individual's gross monthly pay is not a big portion of one's earning, but there is no reason to keep subsidizing unemployed individuals, since it punishes productive individuals and rewards the nonproductive ones. Having no unemployment benefits would certainly help cut unemployment as unemployed individuals would have more incentive to search for and find jobs.





Big Government principle: Support the government-run free education system.

Outcome: Education in Bosnia and Herzegovina is a giant inefficient and poorly led state monopoly, heavily politicized by the major nationalistic political parties. Government determines and regulates what subjects students are to learn and what learning materials to use. Parents and students cannot choose schools and teachers of their liking. Teachers have no flexibility in teaching methods and must follow government rules and regulations on how to teach their students. Finally, schools and teachers have no incentive for improvement, since their employment is guaranteed by the government which forces its citizens to finance this gigantic monopoly.

Libertarian Principle: Legalize competition in education through introduction of vouchers, allow parents to opt out of government public education system by choosing the best education that free market can offer!

Likely Outcome: Introduction of vouchers would encourage parents to consider the free market solutions to educate their children, the demand which would result in increase in number of private schools. This would result in elimination of state education monopoly and creation of a viable free market competition in education. Schools would be forced to innovate and provide best education possible, or lose students to other better and cheaper schools. Sudden improvement in quality, price, and choice, such is the character of a free market!



Minimum Wage


Big Government principle: Help the workers at the bottom earn higher, more reasonable salaries, keep supporting and increasing the established minimum wage.

Outcome: Current minimum wage (year 2009) is 1.75KM/hour in Federation of BiH and 325KM/month in Republic of Srpska. As a result, the under-skilled workers are having difficult time of finding jobs since their skills don't qualify them to be paid the minimum wage. Employers simply cannot afford to pay the under-skilled workers the minimum wage amount. Employment of such workers is often unregistered causing them to lose any employment benefits. Government spends enormous amounts of resources in order to make businesses comply with the minimum wage law. Therefore the well intended minimum wage ends up discriminating against those it was designed to protect, as well as hurting all taxpayers.

Libertarian Principle: Abolish the minimum wage!

Likely Outcome: Much higher employment rate of low skilled workers. It would be far easier for the non-skilled or low skilled worker to compete for a job, since he could accept a lower salary then the more qualified worker who does require higher salary. By eliminating the minimum wage law, the libertarian free labor market approach would also save tons of money to taxpayers by no longer having to hire the enforcement agents that used to police businesses for compliance to this law.



Price Control


Big Government principle: Impose price control laws in order to keep prices stable and reasonable.

Outcome: Reduction in quality and choices, emergence of discrimination, shortages, and black markets.

Libertarian Principle: Abolish price controls, let the free market determine prices of goods and services!

Likely Outcome: Plenty of choices of all goods and services, including the good quality ones, no shortages, no black markets, and no discrimination, and finally no money being spent on ridiculous regulations which are impossible to enforce.



Farm and Business Subsidies


Big Government principle: Subsidize certain businesses and industries to help them stay in business. Support “Buy Bosnian and Herzegovinian/Buy Local” campaigns.

Outcome: Prices of local goods we buy seem compatible to the imported substitutes, however we still pay higher prices because of hidden cost through taxes we pay to support subsidies to our companies and help them stay competitive. Subsidies provide competitive advantages and encourage local businesses not to innovate and to keep providing lower quality products and services. Subsidized exports benefit people of countries which buy those products.

Libertarian Principle: Level the field for all industries, businesses, and interest groups, no subsidies to anyone!

Likely Outcome: No subsidies will force local businesses to adapt and improve their productivity and cut operating costs, in order to supply competitive prices and quality goods and services. Isn't it wonderful that Croatian taxpayers pay a portion of price we pay for their dairy products? The moment they realize this and stop their subsidies, their dairy businesses will lose their competitive advantage and will be crushed by our local farmers. Either way, the consumer of Bosnia and Herzegovina is the winner in both cases.



Free Trade


Big Government principle: Support managed trade, exercise protectionism, impose high tariffs on imports, all in order to protect local businesses and create jobs.

Outcome: High short term profitability and big local market share of our country's businesses. However, it also means low competitiveness in the international markets, loss of jobs, and long term doom of our local businesses in question, due to the lack incentive for advancement and innovation. Interference with free market forces creates supply and demand anomalies and disruptions. As described in “Farm and Business Subsidies” section above, protectionism creates additional costs to producers and consumers.

Libertarian Principle: Keep the trade free from government interference, no industry protectionism, keep the tariffs on imports low or completely eliminate them!

Likely Outcome: Consumers benefit from lower prices and better quality of local goods and services, compatible to their counterpart imports. With time and effort, free trade enables local businesses to become more competitive on the international marketplace and gain international market share, creating more new jobs in the process.



Freedom of Speech


Big Government principle: Censor obscene and immoral words, images, and actions. Criminalize aggressive speech in order to protect those it is directed against. Criminalize all speech that criticizes and challenges governments' authority.

Outcome: Government is free to grant, regulate, and repeal individual's basic freedom of speech and expression right, thus turning it into a privilege and turning itself into a tyranny. Individuals are afraid to express their true feelings for the fear of being ostracized. The kind of speech and expression that government fears the most is that which criticizes government. By stomping the offenders, the survival and continuity of government, no matter how tyrannical it may seem, is ensured.

Libertarian Principle: Protect the natural right of freedom of thought and expression, no matter how bizarre, hateful, or illogical. Any attempts by the government or any special interest groups to criminalize free speech is to be fought aggressively and defeated!

Likely Outcome: Country of free people where each individual is free to decide what to think, say, publish, broadcast, hear, and to watch. Responsible government, open to criticism and scrutiny by the people.

Use of Drugs (not a major issue for discussion in BiH as almost everyone agrees that it is the government's job to keep drugs off the street, not libertarians though)

Big Government principle: Wage war on drug dissemination and drug use.

Outcome: Criminalization of bad habits such as drug use labels drug addicts as criminals who are put in jails for their addiction instead being treated as sick people. High rate of theft related crime, committed in order to acquire money for expensive drugs. High costs of running prisons and low standard of living conditions in prisons due to increase in number of prison population.

Libertarian Principle: Legalize the use of drugs, let individuals make their own choices and take responsibility regarding their personal habits and things they put in their bodies!

Likely Outcome: Much less theft and other violent crime as the drugs become cheaper and widely available. Many more drug addicts seeking medical treatments for their addictions rather than wasting their lives and ending up in jails. Much smaller prison population, better living conditions of inmates, fewer revolts and hunger strikes.





Big Government principle: Regulate inappropriate personal behavior, keep prostitution illegal.

Outcome: The country spends a lot of money and other resources on fighting prostitution without producing any significant results. There is no effective way of fighting the spread of sexually transmitted infectious diseases, mainly due to criminalization of prostitution.

Libertarian Principle: Legalize the prostitution, there should be no law preventing any acts between consenting adults!

Likely Outcome: Legalization and treating prostitution like a business would help fight sexually transmitted infectious diseases, and taxing it would generate revenue for the government.

Gun Laws (not a major issue in BiH, but a significant one for libertarians and thus must be mentioned)

Big Government principle: Regulate and discourage the possession of firearms by private individuals in order to keep the society safe.

Outcome: Getting a firearm in Bosnia and Herzegovina legally is relatively difficult, due to rigorous process of acquiring a mandated license. Illegal possession of firearms is high. People wishing to possess but not having firearms due to discouragement policies are not capable of defending their lives and property. Crime rate is relatively high as criminals are left virtually unchallenged and most crimes remain unresolved.

Libertarian Principle: Government should stay out of individuals' basic right of self defense, deregulate the possession of firearms!

Likely Outcome: Crime would drop dramatically as people gain the means to fight back and defend their lives and property.





Big Government principle: Enact and enforce laws and regulations that force individuals to share the burden of paying for the environmental damage of the real polluters.

Outcome: No incentive for the biggest country's polluters (government, factories, businesses) to stop damaging the environment. Socialist solution of imposing environmental taxation policies on the shoulders of the consumer will shift the burden away from those who are really responsible.

Libertarian Principle: Protect the environment through respect of private property, the rule of law, and punishing the big and small polluters directly!

Likely Outcome: Big businesses polluting the environment would have to pay for damages they create. This will act as an incentive for learning to operate in more environmentally friendly fashion. Small polluters such as individuals would also be taken care of within the law and prosecuted for any deliberate and significant pollution they create.



Foreign Policy


Big Government principle: Interfere into politics of other nations. Blindly and without a serious debate accept and fulfill the imposed conditions of the European Union and the United Nations in hope of acceptance in EU and NATO membership.

Outcome: Sour relationships with neighboring countries due to our meddling into their own internal affairs. Loss of large portions of our national sovereignty to European Union, without even questioning the merits of any EU policies. Huge increase in taxes required for fulfillment of our EU obligations. Future endangerment of our armed forces in UN and NATO mandated peacekeeping missions, for the fulfillment of foreign agendas that do not suit our own national interests.

Libertarian Principle: Mind our own business, protect our national sovereignty, friendship and trade with our neighbors and EU, alliance with none!

Likely Outcome: Increased friendship and trade with our neighbors. Gradual entrance in EU for the purpose of free trade, peace, stability, and friendship exchange. No political alliance with EU nor NATO membership. Preservation of national sovereignty, allowing the people of our country to decide and make their own future for themselves and their future generations, not to be decided by some EU bureaucrats from far away lands with no understanding of our culturally rich and diverse nation.

Language/Vaš Jezik

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