In the first part of this article, I described some of the adverse incentives resulting from a social welfare system. Then I argued that according to Simon Kuznets' famous paradigm, increasing inequality is hardly evitable when a country enters a growth trajectory (as Georgia did in 2003), and I reasoned that it is at least an ambivalent (not to say questionable) policy for Georgia, at its current state of development, to fight inequality by social welfare measures. In this vein, the article seemed to advocate that Georgia might better follow the “Asian” approach of “develop first, redistribute later”.

When thinking of “market distortions” we typically imagine government regulations, taxes, and subsidies that prevent market mechanisms from achieving an optimal outcome. For example, if you pay $100 for a 30-minute taxi ride (as is the case in many European capitals), you can easily relate it to a government regulation requiring all taxi drivers to be licensed (at a very high cost). In the absence of such a requirement, many more drivers would be able to enter the taxi driving profession, increasing supply and reducing prices.

One day in my village, I saw our neighbors carrying TV sets, refrigerators, parabolic antennas, and washing machines out of their house. Soon I found out that they were hiding all that stuff from the Social Service Agency (SSA) that was about to check eligibility for social benefits. Later, when I spoke with some other villagers, it turned out that some families had even sold their cows to become eligible for social assistance.

Since the outbreaks of the Asian financial crisis in the late 1900s and the global financial turmoil in 2007, assessing the strengths and weaknesses of a financial sector based on a set of financial indicators has become increasingly important.

On May 22, ISET hosted Mamuka Khazaradze, Chairman of the Supervisory Board of TBC Bank, who talked about the story of his success in business, particularly the establishment of TBC (Tbilisi Business Center) Bank in Georgia.