Bogdan C. Enache

Political scientist, former business journalist, book reviewer; interested in politics, economics and the art of living

Romania’s “Sonderweg” to Illiberal Democracy

In German historiography, there is a current of thought dating to the 19th century regarding a “special path” (Sonderweg) of political development in Germany or German settled areas. Its first incarnation was a positive one, underlying the German aptitude for social reform and development in the absence of dangerous pressures. After WW2, it became a way of explaining the rise of Nazism and retconning it as inevitable, thus making the leap from theory to tool for self-blame. This article argues that Romania is undergoing its own Sonderweg to illiberalism, based on local specificities of a political and structural nature. More

Inflation Surpassing Populism

Bogdan C. Enache

In a Europe locked-in below-target inflation, for the most part, one country basically surpasses all others. Romania managed to almost triple its inflation rate one month into the New Year, after a brief – and unique period in the last quarter century or so – when the headline figure was actually negative. What’s behind this astonishing success, or not such a success after all? More

How the Latest Trump Tariffs Will Affect Romania

Bogdan C. Enache

On March 1st, US President Donald Trump announced that his administration will unilaterally introduce new tariffs on steel and aluminum imports in the United States of America. Officially motivated by national security concerns under the World Trade Organisation (WTO) rules, the announcement follows a similar decision to unilaterally introduce new tariffs on imported solar panels and washing machines, for reasons of unfair competition, taken at the end of January. Along with pressures for a redrawing of the North-American Free Trade Agreement (NAFTA) with Mexico and Canada and the retreat from the Trans-Pacific Partnership (TPP), the decision constitutes the most palpable expression to date of the United States’ new protectionist trade policy, to which Donald Trump alluded to since he was campaigning on an “America first” platform for the White House back in 2016. But unlike the solar panels and washing machines tariffs of a month and a half ago, which targeted primarily Chinese, South Korean and other Asian economies, the new steel and aluminum tariffs risk triggering a full-scale trade war with the European Union’s – still – 28 nations trade bloc, Romania included. More

The Bear Stearns of Romania

Bogdan C. Enache

Despite a lot of public rhetoric and noisy politics, the Romanian episode of the recent Great Financial Crisis has not been adequately chronicled to date.True, in Romania, a country with a low – but increasing – financialization rate by Western standards, there has not been any Lehman Brothers-style bankruptcy in the local banking industry. However, despite repeated public statements made, since the beginning of the Crisis, by Mugur Isărescu and other officials at the National Bank of Romania (BNR), that the Romanian financial system is crisis-proofed, there has actually been a Bear Stearns-type of failure not long after the global panic spread into the country as well. More

Can Trade Wars Be Good for the Economy?

Bogdan C. Enache

With the world economic community focused on US President Donald Trump’s acrobatics of escalating and deescalating trade battles, the question naturally arises if there’s actually any truth to his two-part statement, or tweet, that “trade wars are good, and easy to win”. Indeed, protectionism is an economic policy older than the science of Economics itself, but according to the classical theory of Smith and Ricardo it is just the oldest folly in the history of Economics. Modern neoclassical Economics incorporates and strongly validates the Smithian and Ricardian condemnation of protectionism, allowing deviations from it only in some exceptional and clearly specified situations. The explanation neoclassical Economics offers for the persistence of protectionism as a policy has changed however, replacing folly with a rational public choice theory of concentrated benefits for the beneficiaries and dispersed costs for those harmed. But is protectionism and its long history really just a folly? More

The Euro’s Italian Job

Bogdan C. Enache

Although part of the euro sovereign debt crisis that triggered a double-dip Eurozone recession in 2012 and turned control of public spending – or austerity – into a reverse-keynesian precept for calming the market’s animal spirits, Italy’s conundrum is quite different from that of Greece, Spain, Ireland or Portugal with which the country is often grouped together by financial analysts. More

An International Auction for Romanian Wild Brown Bears

Bogdan C. Enache

In late August 2017, the Romanian Government, through the Ministry for the Environment, decided to allow the shooting of 140 brown bears in the Carpathian Mountains as an administrative measure to curb the bear population in the country, which in some areas is threatening peasant livestock and even the safety of town dwellers. Although the Government backpedalled on its decision in the face of strong pressure from the public and conservationist groups – who accused it of giving in to the hunting industry’s lobby and spurious bear population statistics –, ultimately reaffirming its ban on the trophy hunting of bears and other protected species in the country, it is worth reflecting on how economics can balance public and private interests in the management and conservation of wildlife. More

The Emerging Frontier of the Bucharest Stock Market

Bogdan C. Enache

Since 2016, The Bucharest Stock Exchange (Bursa de Valori București - BVB) is actively seeking official recognition of emerging market status from the world’s leading providers of stock market services. In fall last year, for instance, BVB entered FTSE Russel’s “Watchlist”, the London Stock Exchange’s research and rating agency shortlist of potential emerging markets, while also being under the consideration of S&P, MSCI and Stoxx. More

A Turkish Scenario for the Romanian Economy?

Bogdan C. Enache

Since the Social Democratic Party’s (PSD) ascent to power in 2012, which was sealed by the 2016 Romanian parliamentary and local elections, some commentators and opposition leaders have compared the actions of Social Democratic leaders – such as former PM Victor Ponta or party chairman and Chamber of Deputies President Liviu Dragnea – not only with those of their peers in Hungary and Poland, but also to those of Turkish President Recep Tayyip Erdogan. More

Populism, Bank Tax Edition

Bogdan C. Enache

The Romanian government has approved, almost overnight, through an Emergency Government Ordinance, a new bank tax. The idea of imposing a special tax on banks is an old one and tends to resurface during times of financial crises. Thus, the bank tax was floated around by the Left and radical Left in the West, when the 2007/2008 Crisis began, from where it was most eagerly adopted and put into practice mainly by Eastern Europe’s Right-wing populists. The Crisis which began in 2007/2008 is now over and even the governments that have instituted a special bank levy, like the Hungarian and Polish governments, have now reduced it or plan to eliminate it. This is a first indication of how ill-thought and ill-advised this late decision of the Romanian Government to institute its own special bank tax really is. More

New Developmentalism, Old Ideas

Bogdan C. Enache

The so-called anti-austerity backlash in Romania, led by the now defunct unnatural alliance between the National Liberal Party (PNL) and the Social Democratic Party (PSD) of eight years ago, has kept the Romanian public on the edge and can even be credited with electoral success, but its actual anti-austerity policies are quite hard to pin down. Despite a lot of angry rhetoric, until 2015 the USL (Social-Liberal Union) government’s fiscal policy basically followed, with minor tweaks, the 2010 much maligned austerity measures put in place after an external financing agreement with international financial institutions. The 2015 tax cuts were basically a Trump-style “neoliberal” supply-side fiscal stimulus that the most leftish, non-PSD aligned, commenters criticized as the climax of post-communist Social-Democratic hypocrisy, surpassing in scale even the 2005 introduction of the flat income tax. It is only in the last year or two that the PSD government has actually strayed from more or less orthodox, even if sometimes ill-timed, fiscal policies, by adopting an ill-designed bank-assets tax, as well as a turnover tax for the energy and telecommunication companies, in order to finance a growing deficit ahead of a major electoral year. Nevertheless, there is actually a heterogeneous group of both Social-Democratic as well as National-Liberal economists that claims to propose a radically different, heterodox, set of economic policies and which has gained considerable influence over policymaking. More

Mihail Manoilescu – Beyond Taboos and Clichés

Bogdan C. Enache

Outside Brazil and Romania, Mihail Manoilescu is essentially a forgotten economist, and, even in the latter, when his name is mentioned he is generally taught as a trade or protectionist theorist, although he is a development, growth, trade and industrial planning theorist rolled into one. In the end, he was essentially an implicit macroeconomic theorist at a time when macroeconomics was just being established. What little was assimilated from him by post-war Anglo-Saxon economics happened indirectly and almost by chance, through out-of-the-Paul Samuelson-mainstream economists who – maybe because of his tainted ideological stands, or because of Romania’s fall into obscurity after the establishment of the communist regime – rarely mentioned his name, such as Paul Rosenstein-Rodan’s theory of development traps or Ráoul Prebisch’s theory of commodity dependency cycles, despite the fact that in the 1930s he commanded enormous intellectual and policy influence. Back then, he was as a sort of intellectual icon for the Geneva institutions’ group of less developed economies – the League of Nations’ nascent IMF/World Bank/WTO of the era – against the political economy orthodoxy of the day as well as a regular speaker at Davos-style conferences organised by the far right regimes of António de Oliveira Salazar, Benito Mussolini and also that of Adolf Hitler. More