Poland in ruins

A big thank you to Student SGH for pointing me towards Polska w ruinie, a Facebook site mocking the assertion by opposition politicians that Poland is in ruins. Poland is clearly not in ruins.

As I got off the bus this morning and boarded a town-bound train at W-wa Okęcie, gazing down at it all from the brand-new pedestrian walkway, it occurred to me that for all my moaning and complaining about the tardiness of the S2/S79 construction works, things are finally coming right for Poland. The walkway still has to reach the station, but it crosses the main road.

I remember when this was all fields...

...back in 2009. Polska w ruinie.

I looked at the cranes on the horizon, all the way from Wola via Śródmieście all the way down south towards Mokotów and Służewiec. This isn't EU hand-out money - these are private investors expressing their faith that Poland's economy will continue to grow at a handsome clip.

It would be a shame to flush all this down the toilet by voting for an ideologically-motivated party with little interest in economic matters, willing to sacrifice the economic gains of the past quarter-century out of political spite. [I recall talking to the vice-president of a state-owned enterprise who'd been installed by PiS after its 2005 election victory. I asked about the tasks ahead of him. He said "I've got a couple of years to get rid of all the communists working here". Commercial goals were of little interest to him.]

Populist politicians the world over tend to convince those who are less determined, less hard-working, weaker of will, that it wasn't their fault they preferred to goof off rather than study for their exams, or that their work-rate was lower than that of their more successful colleagues, or that they preferred to spend money on immediate pleasures rather than save. No, it's the fault of a global conspiracy of evil people to do them down. "Vote for me, and I'll take money from the rich man in taxes, and give it to you in benefits." And this process has the side-effect of totally screwing up the economy. Just look at Venezuela. Politically motivated, economically hapless. And look at Ukraine - richer than Poland in 1990 in terms of GDP per capita - now a basket case because of 25 years of bad government. And Argentina - in 1900, the world's fourth-richest economy, today merely an emerging economy. Bad macroeconomic management by elected governments.

Poland has done well, yet it's economic success has tended to be patchy. Poland's big cities have done well, Warsaw the best. Take a look at this map of Europe's regions - here. (A big thank you to Paddisław Wędrowniczek for digging this one out.) This picture dates back to 2011. Since then, Poland's economy continued to grow faster than the rest of the EU, so the picture showing the catch-up process is even more pronounced when the data is extended up to the second quarter of 2015.

So back in 2011, Warsaw's residents are better off than people living in most UK regions - only Inner London, Berkshire, Buckinghamshire, Milton Keynes, Edinburgh and Aberdeen are better off. (This is in terms of purchasing power - living costs are much lower in Warsaw, in particular housing, public transport and education.) Poznań and Wrocław were looking good too - and we can see the effect that KGHM, Poland's copper-mining powerhouse, has had on the Legnicko-Głogowski region.

The current Polish government has had a lot of good luck, it has made some good macroeconomic decisions, it has largely avoided taking bad ones, but it has failed to drive the reform process at the pace required to spread the fruits of a quarter-century of economic boom more evenly. This complacency now threatens the government in the forthcoming parliamentary elections, set for Sunday 25 October.

The idea that a 'right-wing' government will redistribute wealth by taxing retailers (all of them - foreign or Polish-owned, selling food, clothes, furniture etc.) on turnover rather than on profits is laughable. It will only serve to decrease wealth and lead to job losses. In Hungary, ideologically motivated tampering with macroeconomic issues resulted in the closure of shops on a Sunday. The result - the destruction of 3,000 jobs since March. A Sunday-trading ban would hit Poland - a much larger economy - even harder.

Messing about with the macroeconomic levers sends all the wrong signals to foreign investors, who - like it or not - create vast numbers of jobs and put billions of zlotys into Poles' wallets. Silly policies such as 're-polonising the banks', arbitrary changes in the way certain sectors are taxed, bringing down the retirement age or closing shops on Sundays are all messages to foreign investors - "don't bother coming here to create jobs".

I am worried that at the elections, ideology will take the upper hand over economic pragmatism, that an ill-judged assault on 'foreign capital', 'exploiters of the ordinary Pole', will actually have the opposite of the intended effect - due to the economic illiteracy of an ill-chosen government. I'd like to be able to look at this post in years to come and say 'I got it wrong'.

Either in that PiS took office and steered clear of making ideologically motivated economic policy mistakes - or that by some miracle they didn't win the election.

This time three years ago:
Penrhos - a bit of North Wales that's forever Poland

This time four years ago:
On motivation - and being motivated