For the third time, Wiener Städtische hosted the Free Market Road Show Vienna at the Ringturm. In between the diverse opportunities for networking and lively discussions with our distinguished speakers, the participants had the chance to enjoy Vienna from the 20th floor of the Ringturm.
Public vs. private insurance in Austria
The first panel was dedicated to the insurance industry in Austria. Moderated by Susanne Kondziolka-Bloch. Manfred Bartalszky noted that Austria's public pension system is not sustainable. One of the problems is the rapidly changing demographic structure, with people getting older, living much longer in retirement, but with fewer people in the workforce to support them.
"In the 1950s, six employees supported one retiree, compared to three employees today. "
He emphasized that Wiener Städtische has developed proposals to improve people's willingness to take out private insurance.
Bartalszky warned that people are getting used to subsidies like those distributed during Corona and more recently to alleviate inflation-induced poverty. If the government pays anyway, why should they worry, he asks. Therefore, a tax reduction for insurance products is the answer, as people would most easily accept it.
Agreeing with Bartalszky's analysis, Thomas Url added that his institute is monitoring the development of the public pension and health care systems. He predicted that the number of people in the workforce will fall dramatically over the next 40 years as more people work part-time.
"It is essential that we counteract this and make full-time work more attractive."
The retirement age is gradually being raised, but for people to work longer, we need a good healthcare system.
This led to the next issue that has received a lot of media attention: the shortage of nurses in the Austrian healthcare system. But Url emphasized that the staff shortage is a general problem. The healthcare system cannot wait for robots to take over, but he hopes that other industries will be able to automate certain jobs and "send" their people. However, this is only one side of the issue, with the second one being: the system may not be suffering from a shortage of doctors but from an overload of work. People have the right to ask for a second opinion, and this creates double work and double costs. Therefore, he proposes a patient contribution to this development.
Christian Eltner, explained that the insurance industry in Austria is positioned as a partner of the state; there is no question of a complete takeover. The public system is basically stable, it just needs better financing. Large sums of money are spent on pensions that could also be spent on healthcare or education. Like it or not, the pension system we have now will continue to exist. The only question is whether there will be enough money to guarantee a certain standard of living. And that can be provided by private insurance. And insurance companies are stable partners. In the past, unlike the banks that "had" to be bailed out, the insurance companies didn't need to.
The biggest challenges for the economy: inflation, labor shortages, Brexit, regulation
The second panel of the FMRS Vienna welcomed three distinguished speakers, namely Terry Anker, Lawson Bader and Richard Teather, with Barbara Kolm as moderator.
Terry Anker opened the discussion by describing a new phenomenon: "access to capital is not a problem," he noted, "but access to labor is," highlighting the decline in labor force participation among young people, especially those in their 20s in the United States. The cultural shift regarding work and work ethics has an impact on productivity and, in general, on finding good employers. Moreover, the pandemic has had a huge impact on this, he added. A decade of low interest rates has flooded the markets with capital. Thus, without access to the necessary labor, capital is useless.
Prompted by the recent developments in the banking sector worldwide, namely the failure of Sillicon Valley Bank and Credit Suisse, Richard Teather explained what led to the collapse of these big giants.
"Half the problems in the world are caused by governments trying to solve a problem they created in the first place."
When you think about it, it's simple. For example, the inflation we now face is due to excessive government spending and low interest rates, while the labor crisis can be explained by the huge stimulus given by governments during the pandemic. As a tax specialist, he went on to explain the role of the tax system, which is currently wealth-killing and therefore needs to be reformed. Later, Teather finished by explaining whyBrexit is a missed opportunity for the UK.
Lawson Bader continued by introduction introducing the audience to the growing administrative state. He fears that big government is the biggest obstacle to entrepreneurship and growth. In the US, the federal regulatory code has grown from eight pages in the 1920s to between 85,000 and 95,000 pages today. In other words, not only there are more regulations, but there is more detail in the regulations. Sadly, getting rid of a big administrative state is not easy. The most important thing is to make young people aware of the opportunities in entrepreneurship and to encourage them to pursue entrepreneurial careers. Governments must also refrain from any action that stifles innovation, he stressed.
During an extensive Q&A session, the conversation was very engaging with participants of all ages and backgrounds, and far from being pessimistic, optimism was expressed based on the human ability to evolve and adapt.
The AEC’s fundamental goal is to promote a free, responsible and prosperous society. Through education and improving public understanding of key economic questions, the AEC promotes the idea of a free market economy and the ideal of a free society.