Critique of Cynical Reason

15. 3. 2017

If we considered the election promises of political parties as the predictor of the future economic policy, we could safely assume that Poland would become another “sick man of Europe.” The only difference being that Poland is not a member of the eurozone and therefore could not hope for any bailouts.

Polish political parties decided to bribe the voters. And they do it unashamedly and without any responsibility for their words. PiS, very likely winner of the elections, promised 500 zł for each second and subsequent child, free medicines and a reduction in the retirement age (the Left proclaims the same). PO and PiS wanted to introduce a minimum wage of 12 zł/hour, but the Left trumped them up with 15 zł/hour. The proposed ways to find the necessary funds include improving the tax collection system, a banking tax, or simply printing the money (this is how the Left wants to support housing). The promises of PiS and the United Left (separately) amount to 100 billion zł, more than one third of the Polish entire budget for 2014. Among the six parties with chances of making it to Parliament only two—the Civic Platform and the new, economically liberal .Nowoczesna of Ryszard Petru—presented more or less credible calculations on the revenue side. And only .Nowoczesna proposed any reductions in expenditure.

A characteristic feature of party programs was their total inconsistency. The Left wanted to ban evicting tenants “to nowhere” and at the same time to develop the construction of rental housing, not recognizing the fact that if the landlords are not protected, they will have to compensate for the increased risk with raising rents. The Civic Platform announced the elimination of the so-called junk contracts by imposing social security payments on such contracts and in the same breath combined it with reducing the “grey economy,” where a large part of remunerations (also of highly skilled professionals) is paid outside the official economy without paying taxes, which means that these two solutions are mutually exclusive. The Left—because of the coalition of the Green Party with Democratic Left Alliance, supported by the traditional electorate of the coalmining Silesia—was forced to write in its program that the future of energy in Poland lay in supporting both Polish coal and renewable energy sources. Even the most interesting economic proposal of this campaign, that is PO promising to merge income tax with pension, disability and health premiums, as well as calculating the new tax in terms of households and the number of children, could be treated seriously, if it had been at least signaled slightly earlier, for example in the exposé of Ewa Kopacz. Put forward after eight years in power, on the eve of elections which PO is probably going to lose, poorly explained and misunderstood—also, it seems, by the Prime Minister herself—it was just another empty slogan.

Together with the multibillion promises in the party programs were offered often quite reasonable partial solutions concerning particular areas, such as deregulation or promoting innovation policy. Still, it is hard to detect in them any overall ideas or priorities. Party programs resemble lists of wishes which politicians assume their voters to have, enriched by expert jargon. If party programs are anything to go by, problems of every social group can be resolved separately, as if they were completely independent of each other. Or as if they were independent of the budget. This follows both from the logic of the political program, addressed to a specific group and its needs, as well as from the peculiar character of Polish politics, where voters can at the same time demand increasing expenditure and reducing taxes, liquidating group privileges and early retirement for coalminers. Consequently, the election program becomes a festival of irresponsibility. In their chase after headline-grabbing issues the media do not fulfil their controlling function and there is no audience interested in such a control. Despite the 26 years of independence, Polish society and Polish state are separate entities.

The language of election promises has become completely divorced from economic reality. Communication based on the party program is treated exclusively in terms of a propaganda game. What is the point in debating, if the subject of the debate is not treated seriously by anyone? We can safely assume that regardless of who governs, very little will change in economic policy after the elections. The government’s room to maneuver in the economy is small, limited on the one hand by the reality of functioning within the EU structures and the global economy, and on the other by legally defined expenditure, following legislative acts, which since 2010 account for roughly 75% of all expenditure. Even the most irresponsible governments have to reckon with financial markets, a limited ability to incur new debts, the constitutional 55% constraint on public debt and above all the necessity of supporting economic growth, without which painful spending cuts would become necessary.

A Paradigm Shift

Once it was “catching up with the West” and now it is the “middle income trap” that dominates in the debates, party programs and economic texts. The middle income trap is the risk of running out of simple engines of growth combined with increasing wages, leading to decreasing competitiveness, without a simultaneous transition of the economy to a stage allowing more advanced branches of the economy to flourish. In a word, the key to protecting us from this trap is innovation: stimulated from above by the government or from below by business. The irony is that specific proposals of most parties only bring the Polish economy closer to this trap. Increasing wages without increasing productivity lead to the loss of competitiveness and the fulfilment of the prospects which we so much want to avoid: a slowing growth or even a stagnation, as it happened in the countries of Southern Europe.

One of the reasons behind the party populism is the unquestionable growth of prosperity. Inequalities in Poland are getting smaller. Mainly thanks to EU funds, not only cities, but also rural areas are growing, the countryside is the largest beneficiary of Poland’s joining the EU. Wages have started to grow, while unemployment is falling. Polish economic development is based on stronger domestic demand, exports are still competitive, inflation is below the goals set by the NBP, the budget deficit is reduced, freeing Poland from the EU’s excessive deficit procedure, which until this year limited the possibilities of increasing expenditure by the government.

But there is a sense that although the situation has changed for the better, the benefits have been unevenly distributed. After a period of stabilization and investment, Poland is entering an era of consumption. Relatively low wages (the median income for 2012 was 3115 zł) in relation to the cost of living, as well as to the EU standard of living, are making Polish society increasingly impatient. Today’s economic populism is the price for the crisis, which placed economic issues in the center of debate, but which has not really affected Poland in any significant way.

In the period of transition—thanks to the dominant neoliberal narrative with such keywords as the market, competition, and privatization—there was an effective language for overcoming particular expectations of interest groups in the name of the common good and the abstract justice of the free market rewarding the effective and punishing the maladapted. It was also an effective way of drawing the post-Communist periphery into the global circulation of capital, knowledge, and labor, benefiting both the periphery and the center—but at the same time enforcing a socially costly adaptive transformation. The belief in the market was, at least for some Poles, a very attractive alternative to the literally and metaphorically bankrupt state. Despite the 26 years of sovereignty, saying that “the state will do something” still sounds like a joke in Poland. The free market ideology never allowed you to win elections, but it contributed an element of balance, “economic rationality,” usually represented by the minister of finance, but also by a large majority of the elites, not only business and financial ones. The last election campaign, besides saying goodbye to the neoliberal ideology, also meant the ultimate death of the “party of reforms,” present from the start of the Polish transition. This phrase was used in an interview for the Rzeczpospolita daily in 2013 by Bronisław Komorowski, then still the President. “The party of reform” meant a non-partisan consensus of a group of responsible politicians who considered it their primary task to carry out changes they saw as necessary for Poland. After 2007, the Civic Platform largely discredited the idea of reforms. The Prime Minister Donald Tusk, as well as his closest associates, believed this idea to be a recipe for losing elections, a romantic whim of intellectuals ready to build a barricade and then to burn on it in the name of higher causes. PO, the ruling party, considered its own lack of ideology as a virtue, protecting Poland against the dangerous PiS.

The Deficit of Will and Ideas

Polish political parties are unable—intellectually and in terms of leadership—of presenting the voters with a serious and comprehensive offer; of proposing a credible way of improving their lives through a change in the functioning of public services and administration. There is an overwhelming sense that the political class serves only its own interests. In this context, promises made during the election campaign on the one hand attempt to satisfy the increased appetite for justice and on the other hand are disqualified as unreliable. We are dealing here with a classical inflation mechanism known from monetary theory: if promises are not credible, you need more of them, which leads to their further devaluation. Satisfying the demands of the most influential interest groups will not lead to a greater prosperity of the entire society.

Economic liberalism and the “party of reforms” were not replaced by new ideas or groupings able to give a new direction to the necessary changes. The remedy for the growing disillusionment of the voters is seen by the parties in what is most readily available for them—other people’s money from the common coffers.

The Poles do not believe in the promises of politicians, only one third of respondents in a survey for Newsweek after the presidential elections said that President Andrzej Duda would fulfil his pre-election announcements. Marek Góra, one of the authors of the pension reform in Poland, says that “politicians who do not keep their promises are better, because they do less damage.” Perhaps in the context of real economy this statement is true. But the growing cynicism of politicians and public opinion has other consequences, namely the declining trust in politics as such and the growing popularity of anti-systemic movements. The voters want people who believe in something, who will at last do what they promised, instead of explaining that they hands are tied. Even if the price would turn out to be high.

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