Friday, 8 January 2016

Globalisation and its part in PiS's return to power

Six months ago, I'd not have given the scene below a second thought. That's just the way it is. A Thai restaurant embedded into the very structure of the Polish Teatr Narodowy - the national theatre.

But today? I mean, does Thailand's national theatre have on its premises a restaurant called Pol-Pol offering authentic Polish cuisine? Does Poland's new Minister of Culture and National Heritage have a view on this? Has the director of the National Theatre had a wyzwanie na dywanik from Minister Gliński to explain this? Of course, I jest.

A Thai restaurant in such a spot is testament to Poland's cosmopolitan openness thus far. It bears witness to all those Poles who've spent their holidays in the Far East and returned with a taste for the exotic. It's not just expensive South East Asian restaurants in Warsaw. All over Poland, Poles are becoming more adventurous in their tastes, straying ever-wider outside their traditional schabowy with zaśmieżana kapusta and ziemniaki z koperkiem. In the smallest town, you're far more likely to find pizza and/or kebab than a place offering traditional bigos.

Globalisation is a fact of life. I've seen it creeping up upon us ever since the 1960s. American shows on our TV; French yogurts delivered by our milkman; Japanese transistor radios and toys from Hong Kong. Since the opening up of China to the West, more and more factories moved to the Far East; Western factory workers lost their jobs as their neighbours working in the services sector suddenly became able to afford things once out of their price range. Deregulation and liberalisation - winners and losers.

Anti-globalists of the right tend to play on fears of the other. Foreigners, people of different races, cultures. Diversity is a problem for the right.

Marine Le Pen has spelt it out - "Globalisation is a barbarity." Her villains are multinationals, which use "slaves to manufacture things to sell to the rich world's unemployed." Globalisation is also tending to homogenise the planet; we all wear similar brands, go to the same movies, eat at the same fast-food chains.

But then there are multinationals and multinationals. Some do things that any small business can do - brew beer for example. Brewed without passion, by accountants, homogenised by focus groups from different markets, bereft of character, the products of multinational brewers are in all honesty something we can all of us live without.

But life-saving cancer drugs or safe, efficient jet airliners or complex electronic gadgets like smartphones are not something that can be cobbled together in a garage. When it comes to certain categories of product, globalisation cannot be replaced.

Poland has generally done well out of globalisation, doing things cheaper for other countries. Manufacturing, shared services and business process outsourcing, even research and development. But it's still doing things for other countries. But then no country can do it all by itself. Poland's aviation industry is booming - but Poland makes no aircraft other than gliders and ultra-lights. Poland makes parts for Boeing, for Airbus, for Bombardier, for Alenia. Poland does make helicopters - but for AgustaWestland and Sikorsky.

On the day that the government published its proposals for imposing a turnover tax on foreign-owned supermarkets, it's worth asking: cannot Poland do things for itself? Is Poland condemned to be nothing more than a low labour-cost destination for foreign investment? [One answer of course is innovation - Polish start-ups have the potential to challenge in areas such as Internet of Things, 3D printing, healthcare apps, advanced construction materials and synthetic biology, to name a few areas.]

Let's compare two larger EU economies - France and the UK. France defends its national industries and what it perceives to be its national interests. The state intervened when Pepsi wanted to buy Danone. When French corporates invest in other countries, their businesses use French vehicles, French banks, French law firms and French accountants.

Britain has, critics argue, sold its family silver and along with it, its soul. Rolls-Royce Motors, Bentley, Jaguar, Cadbury's, the Financial Times, British Oxygen, Pilkington Glass - all foreign owned. And, critics say, when the new owner buys the brand, they chop British jobs and shift them abroad (look at Cadbury's). And avoid UK corporation tax (look at Cadbury's).

Yet, all in all, the UK has stronger economic growth (2.4% compared to France's 1.1%), lower unemployment (5.2% and falling, compared to France's 10.6% and rising) and attracts more foreign investment than France (over twice as much in 2015). And in 2014, the UK overtook France to be the world's fifth-largest economy (see link below).

But the French would say, "we have our pride". The British, their price. Britain has globalised better than France. It has rolled with the punches and adapted to the new world rather than maintain a Canute-like battle against inevitability. There are losers - but the anti-globalisation parties, Labour under Corbyn and UKIP, are doing poorly. David Cameron's government understands the nature of globalisation, and has focused on projecting 'soft power', which it does well. 'Like us', Britain asks of the world. 'Like us', rather than 'fear us'.

Here in Poland, PO lost the election because it ran out of drive, it failed to explain what the real issues were, and because it failed to regulate globalisation better. Too many foreign investors using tax dodges like transfer pricing to reduce taxable profits by shifting them via invoices for fictitious services to subsidiaries located in tax havens. Too many foreign investors underpaid their Polish employees. There were winners (former BZ WBK CEO, now development minister Mateusz Morawiecki who we learned today earned 33.5m zł since 2004) but there were many sore losers.

 In Poland, the losers have been bought with promises of greater social benefits and a bit of nationalist flag-waving, into voting for party keen on imposing its rather awkward worldview on the rest of the country. But where is PiS's strategy for dealing with the forces of globalisation, that bring both benefit and woe to people across the developed world?

The real winner in all of this is Putin - who's leveraging anti-globalisation instincts, on both the left and right, to sow division and discord between the West, between countries, between communities. Divide and conquer - we must stay vigilant and stand united.

The answer lies not in knee-jerk legislation but in careful regulation of corporates that wield power globally, based on detailed analysis of the issues. Regulation carried out by conscientious specialists, well remunerated by the state, hired for their experience and expertise - not on the basis of party loyalty.

This time last year:
UK overtakes France as the world's fifth-largest economy

This time five years ago:
Wetlands winter meltdown

This time six years ago:
Winter's walk to work

This time seven years ago:
Winter drivetime, Jeziorki North

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