The Czech deficit budget culture after 2015: origins, accompanying phenomena, policy recommendations

The thesis deals with the development of Czech public finances after 2015, focusing on the causes and consequences of persistent deficit budgetary policy. The aim is to identify the origins of the Czech deficit budgetary culture, describe its economic impacts, and draw policy recommendations. The chosen method is praxeology with its catalactic and economic-historical subset, taking into account the analysis of data from 2005–2025, supplemented by comparative approaches and trend assessments within the two economic cycles that the period covers. The theoretical part demonstrates that fiscal short-sightedness and deficient budgetary discipline stem primarily from laws, tendencies toward rent-seeking and status-seeking, efforts to streamline the market mechanism, which the work identifies as misguided, and changes in the social rate of time preference under the weight of an aging population. The findings confirm the structural nature of budget deficits, which are reinforced by fiscal short-sightedness, public sector expansion, and constant pressure on the expenditure side of the budget, especially in the social and health sectors during periods of high inflation. Deficits were further fueled by a wage tax cut. The growth of the public sector is driven by personnel expansion, which displaces employment in productive sectors of the economy; after 2015, the public sector employed approximately 85,000 full-time equivalent workers. Deficits are further fueled by efforts to centrally plan the economy, with increasing state intervention in the market limiting the scope for entrepreneurial discovery. The implication is the need for seemingly simple institutional reform of fiscal policy with the aim of freeing up resources for economic growth. Economic policy recommendations are formulated in the spirit of reducing fiscal inflation, freeing up workers for the private sector, and strengthening market signals by limiting direct state participation in market processes. Overall, the recommendation is to reduce the influence of the state in order to support growth, and this recommendation appears to be the best possible option alongside other choices, such as increasing taxes or reducing social and health spending. The theoretical contribution lies in linking the institutional aspects of budgetary decision-making with regard to individual behavior, describing the impact of voter aging on the budgetary process, and offering a contemporary view of the theory of entrepreneurial discovery with an overlap into the phenomena of social learning and the socially extended mind. The work thus contributes to the discussion on the degree of central control of economic activity and on improving the position of the knowledge growth process enabled by a decentralized market. In addition, it offers a comprehensive contemporary snapshot of the circumstances surrounding the Czech budgetary process in the period under review.