We humans are status-obsessed, and whatever economic system is in place, there will always, but always, be those people who'll go flat out to use (indeed even abuse) that system to gain a higher place for themselves in the pecking order.
This was as visible in Poland under communism as it is today in a free-market democracy. The difference was that under communism, the average Kowalski had, say, 20% of what the average Briton then possessed, while the communist apparatchik had 40%; today the average Kowalski now owns 70% of the wealth possessed by the average Brit, while those who've done well from Poland's economic transformation are now several time wealthier than the average Brit.
Say what you like about communism, but it did actually produce a more egalitarian society. And while the bonzowie didn't have to stand in queues to buy bread or shop for meat at stores with nothing but Japanese sausages (nagye haki), they were poor in comparison with the exploited capitalist workers of the Western World. Both relatively and absolutely.
But in our hierarchy-obsessed societies - from North Korea to the USA, what's more important than just having is having more than the next person.
Western Europe has thankfully moved away from abject, life-threatening poverty. There is a safety net; the only question - facing governments in all democratic countries - is how comfortable a safety net can be afforded from tax income without creating unsustainable debt.
And so - to student SGH's point:
"I would argue this paragraph could more revolve around the question whether the system or the people are to blame. Your standpoint depends on where you think a human's fate lies. Either you believe an individual's prosperity lies in their hands, or you believe it is that state that should secure the framework for an individual's success."The difference between Poland under communism and Poland today shows where that balance lies. The system can either hold everyone back (as it did between 1945 and 1989) or let the harder-working element of the population thrive (as it has done since 1990). And since 1990, the less hard-working feel hard done by. "My neighbour now has a Mercedes. He must be thieving/cheating." No possibility that the neighbour works a 10-hour day and six-day week.
Back in 1989, Poland was, along with Japan, the most equal society on earth, using the Gini coefficient that compares income distribution between the richest and poorest in any society. It's just that Poland was a lower-income country then, while Japan was near the top of the trajectory of its post-war economic miracle.
Is everyone being equally poor better than some people being inordinately richer than the masses? Populist politicians would like the masses to think that. But this is merely their answer (as driven, capable human beings) to the question of how they should find themselves a higher place in the pecking order. "Vote for me, I'll reduce the distance between you and the rich man" is a beguiling message. "In return you give me power and social status".
Yet as we have seen the world over these past 100 years, populist redistributionism makes economies shrink. Wealth-creators, driven by vision, passion, courage, sheer hard work - and big egos - will go elsewhere to realise themselves. In a free-market society, they do this by creating wealth, rather than rising to the top of the heap some other way. Imagine a Bill Gates or Steve Jobs born, educated and trapped in 1980s USSR. How would they have got on? My guess is they would have upped sticks and left rather than striven to become local party secretaries. Should the business environment become too hostile to the wealth-creators, they will move to where it is more benign. them.
So the price Poland has to pay for becoming a materially wealthier society is greater inequality. The poorer quintile's income doubles, but the richest quintile's income rises twenty-fold. The poor are no longer starving - they have access to the staples that keep body and soul together - but they are aware of the fact that they are not living in villas nor driving Porsche Cayennes nor holidaying in the Caribbean.
A system in which the successful are allowed to succeed, unhindered by the politics of envy, needs to be tempered by mechanisms that prevent the poor from falling too far behind. Scandinavia is a shining example. Scandinavian society works, and produces happier people; the state sector is efficient, so citizens don't mind paying high taxes, because they can see their money being put to good use. Tax money burnt on an inefficient public administration creates resentment among taxpayers.
Inequality is rising across the developed world; as Poland becomes a richer nation, so its richer folk become richer still, as we are seeing happening in America and Britain, and as Thomas Piketty has made a name writing about.
What policy responses can be used to slow the growth of unsustainable inequality? The less-driven should be helped by improved access to education - at all levels, by more nuanced macroeconomic tools, by adverts for glittery things on the TV and on billboards. Yet we live in an age of deficit and debt, and governments - having overspent in the past now have to focus on reigniting economic growth and getting the budget out of the red.
I am convinced that as a whole, the Polish population is more driven than the comfy societies of Western Europe, where prosperity (much of it inherited) is a given for the majority. Poland is still a country na dorobku ('on the make', 'working one's way up'). Poland: Determination.
The system does need continual reform. Continual, bottom-up improvement, Toyota-style, kaizen. Kicking out the jams. Bureaucracy that adds no value, nor protects value, must be eliminated. Identifying the friction that makes the business or doing business more complicated than it should be.
But while wealth-creation in Poland is still being stultified by unnecessary friction created by an inefficient state - what should happen to that wealth once it has been created? Should it be taken away from the wealth-creator and redistributed to all the clients who vote for a redistributionist economic model?
Here we see the responsibility of those who have made it to give something back to society. Once they've got bored of swanking around town in the latest four-wheel drive limo and holidaying in the most exotic locations, once their villas no longer give them the satisfaction of showing them off to impress acquaintances - then they realise that engagement in philanthropic activities places them even higher up the pecking order. As we get richer we owe an increasing duty of care towards those unable to compete in the free market. Whether the rich chose to support educational or healthcare charities (from the Bill and Melinda Gates Foundation going back to Andrew Carnegie), American billionaires have pointed the way - use the fruits of what they have earned to help humanity along on its road from barbarism towards civilisation.
If the rich want to avoid the hubris of populist revolution (cf. France, Russia, China), they will need to see - in their own self-interest - the need to share their blessings with the less well-off. Soft power. Helping other human beings realise the most of their potential. The rich - by way of enlightened self-interest - will need to work out how to modify the current political-economic system - the best mankind has ever had - to make it more sustainable. Otherwise the politics of envy might yet come to destroy it.
This time two years ago:
Llanbedrog beach
This time four years ago:
The Accursed Soldiers - a short story
This time five years ago:
Driving impressions of the Toyota Yaris
[The car continues to be totally, 100% faultless five years on.]
This time seven years ago:
Poland's dry summer
This time eight years ago:
The UK's wettest summer ever
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8 comments:
Well written
I haven't finished watching this yet but wonder if you and others have seen it - a film about the situation in Greece and the Troika
https://www.youtube.com/watch?v=BLB3uu1IXM0
Maybe once when I've finished watching I'll be able to comment on the above post, best, A
apropos - http://www.theguardian.com/business/2015/jul/28/greek-crisis-brussels-rejects-yanis-varoufakist-claims-troika
(1)
We humans are status-obsessed, and whatever economic system is in place, there will always, but always, be those people who'll go flat out to use (indeed even abuse) that system to gain a higher place for themselves in the pecking order. - the same is true for callous corporations...
But in our hierarchy-obsessed societies - from North Korea to the USA, what's more important than just having is having more than the next person. - right on, yet there's a question what humans do to have more than other people. Either they strive to be better off or they drag their competitors down to their own level. While the former is typical for Western societies, the latter is too often witnessed in Poland. If you envy a fellow man's wealth, instead for working hard to reach the same level, you wish on them they grow poor.
how comfortable a safety net can be afforded from tax income without creating unsustainable debt - much depends on how the society perceives loafers. In Scandinavian countries very few citizens shied away from working, hence the welfare system had high proceeds and low expenditures so it was fairly efficient. In Greece the majority wanted to take, the minority toiled away to give, hence it all collapsed...
"My neighbour now has a Mercedes. He must be thieving/cheating." No possibility that the neighbour works a 10-hour day and six-day week. - this is a questions about preferences in life. One person prefers to work 60 hours a week and grow richer, someone else will be happy working no more than 40 hours a week, but will do without more wealth. It is just important to keep in mind you can't have a cake and eat it.
(2)
Is everyone being equally poor better than some people being inordinately richer than the masses? - in all horrific attempts of building an egalitarian society there was always the privileged ruling class and the gap between the ruling elite and the overwhelming appallingly poor majority was bigger than in market economy. Probably only Władysław Gomułka was the only example of country leader living modestly while being at the height of power.
The poor are no longer starving - they have access to the staples that keep body and soul together - but they are aware of the fact that they are not living in villas nor driving Porsche Cayennes nor holidaying in the Caribbean. - it's the pure psychology, people are sensitive to relative rather than absolute level of wealth. Benchmarks within their reach shape their perception of how well-off they are.
as Poland becomes a richer nation, so its richer folk become richer still, as we are seeing happening in America and Britain - I'd argue comparison between Poland and the USA is out of place. In Poland you still can move up the social ladder. In the USA if you are born in one social class, you'll pop off as a member of the social class. Friends who visited or lived in the USA in unison say this is the "survival of the fittest" land. If you are young, healthly, resourceful, you might thrive there.
Once they've got bored of swanking around town in the latest four-wheel drive limo and holidaying in the most exotic locations, once their villas no longer give them the satisfaction of showing them off to impress acquaintances - then they realise that engagement in philanthropic activities places them even higher up the pecking order. - not yet that stage of social development... Besides in Anglo-Saxon countries helping the disadvantaged is a part of building social status. In Poland, not yet...
Very well written and interesting. Thank you.
@ Student SGH:
" the same is true for callous corporations..."
This is my point. Whatever the system, there will be the thrusting few who will game the system to their own advantage. The only answer is to civilise them into feeling more dowartoścowani when they behave well. In Britain, this is through awards such as knighthoods and OBEs :-)
"what humans do to have more than other people. Either they strive to be better off or they drag their competitors down to their own level. While the former is typical for Western societies, the latter is too often witnessed in Poland. If you envy a fellow man's wealth, instead for working hard to reach the same level, you wish on them they grow poor." It was like that in pre-Thatcher Britain. "An American worker, seeing a rich man in his Cadillac, says - 'one day, I'll have a car like that'. The British worker, seeing a rich man in his Rolls-Royce, says - 'one day, I'll see to it that he no longer has that car.' Times change.
how comfortable a safety net can be afforded from tax income without creating unsustainable debt - much depends on how the society perceives loafers. In Scandinavian countries very few citizens shied away from working, hence the welfare system had high proceeds and low expenditures so it was fairly efficient. In Greece the majority wanted to take, the minority toiled away to give, hence it all collapsed...
It occurred to me seeing an elderly woman carrying a heavy bundle of firewood from the forest to her small house in midwinter, that there's no such word as 'mańana' at -26C. I believe there's a geographic factor behind the capacity for hard work.
One person prefers to work 60 hours a week and grow richer, someone else will be happy working no more than 40 hours a week, but will do without more wealth. It is just important to keep in mind you can't have a cake and eat it.
The trick is to find the right balance. But it is the right balance between millions of citizens that determines the economic vector which that society is on.
"Is everyone being equally poor better than some people being inordinately richer than the masses? - in all horrific attempts of building an egalitarian society there was always the privileged ruling class and the gap between the ruling elite and the overwhelming appallingly poor majority was bigger than in market economy. Probably only Władysław Gomułka was the only example of country leader living modestly while being at the height of power."
My communist aunt had a chauffeur-driven Volga, access to consumer goods most Poles would dream about and lots of travel (albeit mainly to communist countries). But despite her high rank in the apparatus, she was poorer than the average British professional at that time (1960s-80s). The gap between Poland's rulers and the masses may have been big, but in absolute terms the nomenklatura was nowhere near as well off as people with the same drive living in the West.
"it's the pure psychology, people are sensitive to relative rather than absolute level of wealth. Benchmarks within their reach shape their perception of how well-off they are." Totally agree.
"I'd argue comparison between Poland and the USA is out of place. In Poland you still can move up the social ladder. In the USA if you are born in one social class, you'll pop off as a member of the social class. Friends who visited or lived in the USA in unison say this is the "survival of the fittest" land. If you are young, healthly, resourceful, you might thrive there."
You have a point here. Social mobility in the US has ground to a halt in recent decades. The American Dream of rags-to-riches has become just that - a dream.
"in Anglo-Saxon countries helping the disadvantaged is a part of building social status. In Poland, not yet..." Quite. The average Brit is statistically three times wealthier than the average Pole, yet the average Brit gives ten times more to charity.
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