January the 10th, 2023 - Croatian unicorns have been rightfully praised for continuing to not only grow but to truly blossom in an environment which can hardly be called encouraging. Despite an unfavourable business climate and with corruption still causing significant issues, Croatia deserves praise.

As Poslovni Dnevnik/Josipa Ban writes, some of the most highly regarded countries in the world have become aware over the last few decades that the well-being of every nation, as well as their security, depend on STEM achievements,'' explains Boris Podobnik, professor of economics and vice dean for research at ZŠEM, a researcher at the Center for Polymer Studies at the University of Boston, and professor of mathematics at the University of Rijeka.

That's all well and good being said, but precisely how do STEM disciplines affect equality or inequality? Podobnik was further motivated to ask this question by economist Joseph Stiglitz, who stated in his book "The Price of Profit" that a rather small portion of companies actually control entire economic sectors and contribute to the dizzying growth of inequality.

"Although it's clear that today it's STEM fields that drive innovation in the economy and in social relations, we aren't yet fully aware of the extent to which STEM education quantitatively contributes to economic inequality and how STEM and non-STEM companies behave during an economic crisis or in a pandemic,'' points out Podobnik, who together with his colleagues - Marina Dabic, Dorian Wild and Tiziana Di Matteo - investigated the impact of STEM on the growth of wealth at the level of individuals and companies.

They also analysed the operations of STEM companies during the global coronavirus pandemic in a scientific paper entitled: "The impact of STEM on the growth of wealth at different levels, from individuals to companies and countries: The operations of STEM companies during the pandemic in different markets".

"At the company level, we've shown that inequality in STEM companies is greater than it is in non-STEM companies, and this is also true for individuals," Podobnik revealed when discussing the results of the research.

What does the Forbes list say?

They came to their results by analysing companies included in the American S&P 500 and the German and French DAX and CAC40. As for individuals, they analysed the Forbes list of the richest people in the world.

That list, Podobnik says, that is, those included in it, reveals yet another rather interesting fact. It turns out that in Data Science, formal education no longer plays an important role, as evidenced by Bill Gates and Mark Zuckerberg, who went to STEM college, but didn't finish it. Despite this, researchers still treated them as STEM graduates.

"Today, if you solve a big problem in data science, and you don't have a formal education, you'll be accepted not only in every American company, but you'll also be easily appointed as a lecturer at elite faculties. This is valid only in Data Science, not in physics or economics, and it's still a warning and a threat to the education system," points out Podobnik.

The analysis of STEM companies' operations during the coronavirus pandemic also showcases some very interesting results. It proves that American companies from the STEM field, which are included in the S&P 500, have shown better results than non-STEM companies both in times of expansion and during the pandemic.

We can explain this, Podobnik points out, by the fact that STEM companies have better chances in the long run because it is precisely innovations that push the economy forward. "And we naturally associate innovation more with STEM," he adds. However, such results haven't been shown by the analysed European companies. For example, the analysis shows that STEM companies included in the German DAX index in the period of economic expansion don't show better results than non-STEM companies.

"This is probably because America is an attractor for real STEM high-tech companies, while Europe isn't. Can you think of any large European company that is at the level of Google, Tesla, Microsoft, Intel, Netflix, or Amazon?'' asks Podobnik. Indeed, Europe today doesn't have a single technology company that can compete with any one of those from the USA, or even with those based in China. This is the case, explains the professor, because America has about twenty times more venture capital per capita than there is in the whole of the EU. In addition, the USA has stronger universities, so it shouldn't really be surprising that all great innovations come from there.

"Europe prefers mediocrity a little bit too much, and here the average is looked at too much, there's therefore no room for rare events that give way to great technological innovations in the same way that has been done in companies that we've all heard of by now. There are very few highly innovative companies based in the EU, and that's why there is little difference between STEM and non-STEM companies here," points out Podobnik.

Croatian unicorns are therefore quite miraculous indeed...

In such an environment, Croatian unicorns and some of what has been happening over more recent years with numerous domestic companies is actually a real miracle, Podobnik notes, because despite the bad business environment, high levels of corruption and a generall poor attitude towards entrepreneurship, there are two wildly successful Croatian unicorns. "For comparison, Denmark and Italy don't have a single one," he notes.

So, even though research shows that STEM contributes to the growth of inequality, the fact remains that technological development, which is mostly based on STEM disciplines, is unstoppable anyway. The pursuit of equality will not stop this development, and the fruits will be reaped by those who do decide to invest in STEM innovations.

"Society must be the one to deal with equality, it just needs to have the right measure to do so. Too much equality leaves no room for the innovation of those who actually are geniuses. However, what is ideal or optimal inequality remains a big unknown," says Podobnik, noting that complete equality of everything is characteristic of communism, a model that proved to be astonishingly economically ineffective. On the completely different side is absolute libertarianism, which does not need the state at all - two wings on the same bird.

"Both extremes are bad ideas, meaning that the optimum lies somewhere in between the two. But the question of all questions is where that optimum is. Society, therefore, takes from the more successful and gives to the less successful, but the question is how much is optimal, that is, how much can you take from the more successful, without destroying the space for innovation of the most successful and most ingenious?'' Professor Podobnik warns.

Here in Europe, on the other hand, he believes, we definitely haven't been able to find that optimum. "Europe has gone too far in the direction of socialism, where the emphasis is placed only on equality and on trying to achieve a good life for everyone. European societies are too standardised, and the more restrictions there are, the less space there is for the degrees of freedom that are essential for new technological innovations to come about.

Europe has clearly not found the right balance between taking care of the majority of people and taking care of those who are indeed the most inventive, whose inventions would keep Europe in the world as a place of wealth and technological progress. Today, we all know that due to the policy of excessive taxes and regulations, the EU is rapidly falling behind America and China. So, did we need the war in Ukraine to decide to produce our own chips? Taiwan can do it, but the EU can't!? That's pretty poor," he warns.

Europe, and therefore Croatia, remains the guardian of old, outdated industries

And while Europe, the custodian of old and heavy industry, is lagging behind thanks to its policies, China, much like America, has long understood what will be the key to economic growth and development. China, points out Podobnik, has targeted students in STEM fields more and more over recent decades.

"Back in 2013, 40 percent of students in China graduated with a STEM degree, twice as many as in the US. This is probably one of the main reasons why China was able to surpass the US in terms of GDP measured by purchasing power parity some five years ago,'' Podobnik explained.

For more, make sure to check out our business section.

The author of the following text, prof. Dr. Boris Podobnik, Vice-Dean for Science and Head of Business Analytics at ZSEM, is one of the most cited Croatian scientists. This prominent Croatian scientist is also a professor of physics at the Faculty of Civil Engineering at the University of Rijeka. He is an expert in interdisciplinary science, network theory, game theory, migration and corruption.

As Index/prof. Dr. Boris Podobnik writes on the 10th of February, 2020, a number of Croats are delighted when HDZ loses the elections and is replaced by SDP, and a similar number of Croats look forward to anything of the opposite. If one looks at how Croatia's GDP has changed with who was in power, it can be seen that Croatia sank steadily regardless of which of the two parties headed the country.

For some, personal worldview may mean something to them, whether they watch reports about Bleiburg or Tito, but there are those among us, both leftists and right-wingers, and those who are somewhere in between, for whom arguments over Tito and Bleiburg are far more important than whether we're among the more successful or worst countries in EU will ever be. If either of these parties must continue to rule, is there any chance of them being forced to change?

The prominent Croatian scientist then goes on to showcase just how the Croatian public can finally manage to rid itself of the chains of both HDZ and SDP.

1. Encouraging private enterprise, economic freedom and innovation throughout society

The main reason for Croatia's undeniable decline - more precisely the setbacks and lagging when compared to other countries - is that the whole world is in the mode of capitalism and private enterprise, and our SDP and HDZ governments are building policies that favour the public and state sectors, as if there were still communist regimes in the world (read Europe). Preferring the public sector to the private sector in the face of globalisation and private enterprise is as smart a choice as, for example, insisting on tango dancing because you're a passionate Latino lover - while the orchestra plays the waltz.

And that is exactly how the Croatian economy is. A shaky state that is forcing the public sector, with its high levels of corruption and stifling private initiative, to be doomed to fail, again, because the world is in the mode of capitalism.

Of course, there are thriving public sectors in the world, but only in societies with a low tolerance for corruption, such as the developed Western democracies, especially the Nordic countries or in Asia, in Singapore. In these countries, the public sector is also based on the principles of the private sector: good workers and professionals are valued, and wages are at least partly linked to work performance. This is not necessarily in conflict with the existence of a union; in the Swedish public sector, unions negotiate wages, but in a completely decentralised manner. This means that the salaries of the professors are not decided by the union pharaohs, but are negotiated at the national, regional and educational levels.

This allows good professors to directly choose better pay and better working conditions. But this level of civilisation is science-fiction for both Croatian politicians and for Croatian trade unionists. Who will organise such key economic institutions that will be resistant to elections and blackmail on both sides? It's clear to us that wherever HDZ or SDP are, the grass doesn't grow when it comes to quality staff. It happens, but rarely. And when it does, these people are drowned in a sea of ​​fools with certain Croatian party memberships.

I can say to my friends that Chinese Communists would be happy to follow and develop Mao Tse-Tung Communism, but they realised that introducing a free market and copying the West, especially America, was a necessary prerequisite for faster economic growth, convergence towards the West, and keeping up with it.

Unfortunately, what the Chinese Communists managed to understand is not understood by the Croatian leftists, nor is it by the right-wingers, because they love the public sector and uhljebism more than their wives (or husbands). On the contrary, they would constantly expand the public sector because that is what membership is looking for, and it is precisely the membership that chooses the president of the party.

Our platform, more precisely the Third Way, must insist on economic freedoms and private enterprise, not on state intervention, because there are currently too many non-experts and economic analfabets in the state apparatus, who lead firms which only know how to accumulate losses and ultimately lead the state to ruin. If we don't alter, the Greek scenario is inevitable - it's only a matter of time. It is true that the Greeks didn't have King Tomislav and Prince Domagoj, but they did give Aristotle, Archimedes, and a plethora of minds who created our civilisation, but these minds didn't leave Greece with generations of people who would prevent the Greek economic collapse. So let us try.

2. Replacing party staff with professionals

In connection with the first objective, the deregulation of the state and economic freedoms, unlike the party duopoly, we must demand that state-owned firms and agencies be run not by party people, but by the best personnel to be found either in Croatia or abroad.

There is nothing more stupid than when you hear from the mouths of HDZ or SDP politicians that they're setting up their people to do the job because that's a prerequisite for running the business well. Why does the head of SDP and the head of the water supply and sewer system need to be someone who is left-wing? Because the faeces wouldn't flow properly if the company wasn't headed by a left-leaning person, a man of a particular worldview? These jokers are Croatian politicians.

Croatia Airlines has been failing for years because they're politically fit rather than actually capable. I experience a mild stroke every time I see that our national airline has astronomical losses in a country visited by 20 million tourists each year! Well, did everyone arrive on horses, on camels, or did they just arrive on foot? We, as a platform, must insist that state-owned companies have the most capable of candidates, be they Croats, Finns or Swedes, and regardless of their political orientation.

They clearly must then have higher salaries than the prime minister because the prime minister is a political function, in contrast to heads of state-owned firms who must be professionals. Then the Croatian prime minister must grumble that he has a lower salary than the heads of state-owned firms, but that shouldn't be a problem for him if he's truly patriotic and uncorrupted.

It is better for any of our state-owned companies to have a foreign professional at the head than someone who speaks excellent Croatian but is absolutely nothing of an expert in the field. Language is not important for running a state-owned company because the only thing that matters is that the state-owned company doesn't accumulate losses. If state-owned firms generally don't accumulate losses, the state as a whole will not follow the Greek scenario, and this scenario is likely if the firms are led by the HDZ-SDP duopoly.

Contrary to what the new president Milanovic thinks, former Prime Minister Oreskovic (at least in my opinion) was the most capable prime minister because, although he did not speak brilliant Croatian, he didn't allow for any uhljebljivanje, which is why they hated him in HDZ and in SDP as well. So, I take my hat off to him.

3. Improving the position of the private sector versus the public and the state

In Croatia, you often hear, especially from the heads of public sector unions, that "salaries in public services are lagging behind salaries in the private sector". This is total nonsense and a misunderstanding of the economy, and in economics and finance, what is riskier has to bear a higher yield, and so stocks in an unpredictable market are riskier than government bonds, and they therefore have to bear a higher yield.

If jobs in the private sector are much riskier than jobs in public services, and they are because let's say it's easier to lose your job and the work is more stressful, then salaries in the private sector must necessarily be higher than salaries in public services, which I wrote about in a scientific paper article with my colleague Vukovic. In feudalism, the peasants were serfs, and if one rebelled for example because they eat less frequently than the feudal lords, then he'd be dismembered or decapitated.

But today, when feudalism is no longer in effect, that layer of society is no longer obliged to serve on a specific part of the land owned by feudal lords, and disenfranchised private-sector workers are allowed to go west, where it's better for them.

Public sector workers can claim greater rights, often rights that those in the private sector can only dream of, but there are fewer and fewer private sector workers who should be guaranteed these rights because, owing to such things, private sector workers are increasingly leaving their jobs and heading to the West, where not only do they have higher wages, but indeed more rights, and this is not negligible for workers.

If we don't work on a significant increase in wages in the private sector, people will constantly be fleeing to the west. Today in the EU, patriotism is out of fashion and when it's out of fashion, why live in Croatia as a worker? It's nice to go to Germany or Austria because you can live there in a more dignified and better way.

To stop people leaving to go to the West, the Third Way platform must educate the public that wages in the private sector must be higher than in the public sector.

I don't see massive transitions from the public to the private sector, but I know quite a few people in the private sector who would be happy to settle for the public sector. That the private sector is at greater risk is economic nonsense and must change, otherwise we will just experience an unprecedented exodus of people from the private sector.

4. Radical reforms that will transform Croatia into Switzerland, not Moldova

Radical economic and social reforms must be sought because talking about becoming Switzerland or one of the richest EU countries, as they know so well how to do during election campaigns, without actually carrying out serious reforms - only economically illiterate person can suggest.

A successful society like that of the Swiss is a well-placed pyramid where if you're smarter and more successful, the higher up you are. In Croatia, thanks to corruption and nepotism, only the stupid and the incompetent are at the very top. There is absolutely nothing worse for an employee than his superior being completely ignorant or even a notorious idiot. Unfortunately for Croatia, in the past decades, thanks to HDZ and SDP to a greater extent, the state apparatus has accumulated a sea of ​​incompetent party cadres who couldn't get a fair job through the proper process, but only with the help of a party membership card or because of nepotism.

On the contrary, there is also nepotism in the form of political strife, which is also seen in the emergence of young politicians who ascend into parties and any state legal and political bodies simply because they are someone's spouse, son or daughter, uncle or cousin, or son or daughter-in-law.

As both major parties base their political activities on uhljebljivanje, it just doesn't occur to them to reduce the number of uhljebs, because uhljebs and those who are about to become uhljebs are their members, and it determines not only the party president, but also the prime minister.

If the country has that thirty-year title of ''uhljeb capital'' then how can we expect to reach the level of Switzerland, Singapore or some other civilised country with a bunch of unnecessary people in the state apparatus? Clearly, the incompetent and the corrupt cannot be monitored, they're so incompetent that they cannot even be repaired because they're the cancer of society, and in medicine - that means surgical removal.

True, we're not doctors, and the state is not a human body, so we approach the malignant tumor of society as surgeons who also cut the surrounding healthy tissue "just in case," but what we can and must do is "cut off," say, 30 percent of the worst.

5. A corrupt state prefers inclined quasi-entrepreneurs and punishes the capable ones

In a democracy, you get power if you have a majority, and there aren't enough HDZ and SDP members enough to constitute a government. On top of that, there isn't enough money for everyone to live well.

First, these people get who I call "dreamers of corruption" on their side, which are those who don't benefit from corruption because they're not in a corrupt quagmire, but would be happy to be in one if given the opportunity. They're often not enough to make up a majority either, so the corrupt authorities are constantly attracting quasi-entrepreneurs, giving them jobs within the state. Such quasi-entrepreneurs survive on the market mainly through business with the state, and thus become advocates of the status quo because they fear change.

Both the left and the right have their "own" entrepreneurs, but the right probably has more of them. Quasi-entrepreneurs, those who, for example, don't pay their workers, enter the ruling party smoothly, so that the government, or the state, helps them with pre-bankruptcy settlements, or tax exemptions. In doing so, the corrupt state constantly wants to increase the number of such dependent businesses, and it wants to increase them in such a way as to assimilate them like Star Trek's Borg, making it difficult for honest businesses to do business.

Eventually what happens is that honest businessmen die out and go extinct and the only ones who remain are the ones the left-wingers rightly call exploiters. These are individuals for whom workers are slaves to harass, threaten, and not pay.

But the problem for leftists is that they don't see the iron boot of the state, which makes the business climate unfavourable to free enterprise. When businesses are small, there are very few new jobs and few job choices for workers. The worker is not, then, a "sought commodity" and therefore cannot negotiate for a higher salary and choose employers so that he goes to the one who gives him better pay and working conditions. Even worse is when the private sector starts hiring people the party key - when the duopoly gives jobs to the private sector, then in turn, they ask them to hire a relative or party-mate and put them in a high position. This only exists with huge firms.

This is an advanced economic metastasis that needs radical therapy. Therapy is certainly not some new stud of "professional overseers of corruption", but a drastic reduction in state influence in all walks of life of citizens. A tumor is not treated with chamomile, a tumor is ripped out.

But if both SDP and HDZ have amassed a large number of people on their side, how can we, the minority that wants to create a ''Switzerland'', make a change? If they're prone to radical change by the minority, is there any chance of change? Yes, because fortunately HDZ and SDP don't like each other despite their enormous level of similarity and therefore need smaller parties for power. If we, as a bloc, collect at least ten percent of the assembly, those who don't want change will have to implement it, because without this new bloc, they will not be in power.

Are we ashamed of sinking and wanting a rich, not poor Croatia? In Croatia, the left-right conflict is no longer important, but "are you ashamed of failing or not"? If you're not too ashamed, stick with the HDZ-SDP duopoly because they're not for change, because their own membership is more dear to them than their country is. If you are ashamed, there is a third option that is for a strong private sector, but also for a strong public sector, which is not a hindrance but a service to the private sector. It is so in the west, but it isn't in Croatia at the moment.

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