On Tuesday, the government extended the compensation scheme for companies affected by coronary heart disease and came under fire from BI economics professor Gisle Natvik. Although the government was praised for toughening the scheme and making it more efficient for small businesses, he said. He told DN that once again the ranchers are the ones who get the best out of the scheme.
– When subsidies are warranted, it should be to protect the income of small business owners, not to insure farm owners, which is something monetary support does in practice, he said.
Natvik criticized, among other things, the scheme not having requirements for reduced rent to receive compensation and that large sums of money went to large real estate companies, which he believed should incur greater losses in times of crisis because they have more opportunities than small ones. Companies to raise money in times of recession.
Billionaire heir Anders Bochart reacts to the whole thing. Together with his father, Arthur Bochart, 72, he became the largest Norwegian developer in the mountains and has a taxable fortune of NOK 1.43 billion. in a Reader posts in DN He advocates for plantation owners, real estate companies and other creditors, and does so by attacking Natvik’s professional basis for criticizing the facility over the compensation plan. “Far from reality,” wrote Bouchart.
I don’t know academic culture, but I thought maybe you should raise the flag and try to stick to science, research, and economic theory, and be careful in thinking, constructing, and making hypotheses without academic justification.
– But does he really do it, see and build?
– Yes, I want to say it. It does not refer to any history or research. I mean he’s trying to predict or anticipate the effects, and that’s probably fine, but then you have to know the correct assumptions and take them as a starting point.
They want equal treatment for young and old
Natvik was particularly critical of the fact that the subsidies companies receive to cover unavoidable fixed costs mainly benefit farm owners. This is because the biggest fixed cost for most small businesses now affected by the new restrictions is rent.
Bouchart thinks Synsing says that many players pay rent to farm owners based on their turnover, not on a fixed transition basis. In such cases, the income of the farm owners will be further affected by the shutdown.
– How many people pay the rent based on the turnover rate?
– I don’t have numbers for that. There are no statistics on this, because most people want to keep their lease contracts confidential. So I don’t know if there are any researchers or information centers that have identified it. So this assumption is based on my industry knowledge.
– Do you think so too?
– Yes, you are absolutely right. But I, who am directly attacked and influenced by Natvik’s statements and the reality we face, think I have the right to think of it as more of a professional and completely untouched.
Natvik says that his argument follows economic logic and basic principles of support measures in a market economy, not empirical data:
Geisel Natvik. (Photo: BI)
The argument, in short, is this. It is difficult to secure wage income in the markets. Therefore, the state must secure it. As a rule, capital income in the capital markets can be diversified through joint ownership. Therefore, the state should not insure it. In principle, says Natvik, support from companies should only be provided for efficiency reasons, not insurance reasons, and adds:
This is not about morality or justice, but efficiency.
Natvik points out that small companies often have poor access to the capital market, while large companies often have good access to the capital market. Therefore, as a rule, support is more justified for small companies, based on sober efficiency considerations, the professor believes.
– In addition, we have motivational effects. If the benefits of risking are private, while society covers the losses, we get very strong incentives to take the risk.
social respiratory system
Bouchart himself believes it is right and reasonable for society as a whole to act as a respirator for food, tourism and culture, which are now affected by the shutdown, as long as it is the state that imposes a business ban.
– Natvik’s point is most likely that the Corona support provided by the government will go indirectly to the owners of farms instead of these companies specifically?
Yes, but everyone is part of an economic ecosystem. What Natvik takes care of is the little ones. But adults have to fend for themselves. Where is the justice in that? Why is there no equal treatment? Farm owners are also indirectly affected by the fact that some tenants are not allowed to work. Is it totally inconceivable that they get some of their losses out of this framework, asks Bouchart.
The professor thinks it’s a good question whether the shutdown is fundamentally different from the other major shocks and says he understands the argument, but doesn’t agree with the conclusion.
– Shutting down is probably bad policy, he suggests, that’s outside of my purview, so I only have a few opinions to contribute here. But it is not unusual to provide compensation for sub-optimal crisis policies, as far as I know. However, if politicians can direct support for businesses that have been closed, I’m very optimistic about that, says Natvik. (Conditions)Copyright Dagens Næringsliv AS and/or our suppliers. We would like you to share our cases using a link that leads directly to our pages. All or part of the Content may not be copied or otherwise used with written permission or as permitted by law. For additional terms look here.
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