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Poland votes for change… or does it?

The convincing win by the anti-leftist coalition in Poland’s elections would seem to be one in the eye for the statist left.

However the perils of the left/right labels are on prominent display here: Civic Platform Party is clearly on the side of the angels in most ways, being pro-market, pro-privatisation and generally in favour of liberty and a smaller state (though sadly they seem to think the €uro is actually a good idea).

Yet the senior partner in the winning team, the Law and Justice Party are really old style paleo-conservative statists, comparable to various European Christian Democrat parties. Although the Law and Justice Party are perhaps a bit more reactionary and stasis oriented than most Christian Democrats (and as a result no great fans of free-markets), at least that right-stasis orientation gives them a healthy euro-scepticism.

It will be interesting to see how this coalition manages to square its various circles or even holds together at all.

32 comments to Poland votes for change… or does it?

  • I don’t think we’re justified in expecting change for the better anywhere in the world, least of all Europe, in the foreseeable future.

    The things discussed in political philosophy circles is so far away from the mainstream that the meaning of “free market” in theory and in the mainstream is rather different.

    I don’t think we are right in expecting that the usual democratic process will output authentic liberalism or libertarianism, in the next 10-15-20 years. Maybe it’s just me, but that’s how things are looking.

  • Michael Farris

    Yes, the labels right and left in Poland tend to have their own meaning, the further right a party’s self-identification, the more liable they are to tax and spend sloganeering. Law and justice prevealed this time by appealing to retirees with small pensions who are wary of newfangled economic ideas and who vote in larger proportion than proudly apathetic younger voters.
    Also, in Poland the Euro is part of free market ideology. The zloty has often been problematic and sometimes been eclipsed by foreign currencies (in the 80′s dollars had more prestige and amounted to a local alternate currency) and most people just aren’t that attached to it. Preserving the zloty will be a tough sell.

    It’s also standard election practice in Poland to vote whoever’s in power out – no ruling party has been reelected in the last 16 years. This has generally made good sense and in broad terms I’ve agreed with all the election results (though I would prefered the civic platform coming first this time). I think it also helps keep corruption at merely bad (rather than apalling) levels since no party has the time to create the kind of patronage structures that so debase political life in some countries.

    But don’t count out the leftist social democratic alliance, this post communist party is fiscally moderate (arguably more so than law and justice) and did better than most folks expected, getting around 10 per cent of the vote (their predecesors were thrown completely out of parliament). They have more party discipline than most groupings and if law and justice is as corrupt as most Polish political parties (I have no reasont to suspect they aren’t) then they could bounce back.

    Finally, a Polish eurosceptic isn’t eurosceptic in the British sense but compares maybe with a British euro-agnostic. Don’t get your hopes up anytime soon about a wave (or a ripple) of anti-EU feeling in Poland. Most Poles regard EU membership as a measure of increased national prestige.

  • Luniversal

    Democracy is young in Poland– they don’t yet realise what a farce it is, so they keep swinging the pendulum of so-called choice in the same way that the Brits used to do.

    Nowadays we have one party in power for thirteen years (Tories 1951-64), eighteen years (ditto, 1979-97) or maybe twelve or more (Labour, 1997- ), while almost half the electorate can’t give a stuff either way.

    Another sign of our hardening arteries is the length of time people occupy Number Ten. We have had only three PMs in the past 26 years. No wonder the party dogfight is so empty and dreary.

    As usual, De Havilland prangs on takeoff by getting his definitions wrong and then misapplying them from the States to Poland. Paleoconservatives are not as statist as the neocons who in America are gung-ho for the pork barrel, massive military spending and curbs on liberty (‘Homeland Security’) which paleos such as Pat Buchanan oppose. They even flirt with restoring the draft, the ultimate form of slavery. Neocons from Irving Kristol onward have spoken approvingly of the welfare state as part of their strategy of benign deceit of the poor dim masses, learned at the foot of Leo Strauss. Paleos have far more in common with libertarians (though not with that strange hybrid, the liberventionist).

  • Jacob

    Also, in Poland the Euro is part of free market ideology. The zloty has often been problematic and sometimes been eclipsed by foreign currencies ….. Preserving the zloty will be a tough sell.

    Get used to it Perry. The Euro isn’t a bad idea. It is a good idea. Especially if compared to some funny zloti, lei or pesetas and liretas.

    It might yet collapse, but so far it’s reasonably managed, and is a good thing.
    As far as I’m concerned they could also adopt the dollar as their legal tender. It makes sense for a small country not to bother with maintaining a propietary currency.

  • …paleos such as Pat Buchanan oppose…

    And as usual, you miss the point completely. That many neo-conservatives in the USA are very keen in Big Government is completely irrelevent to what I wrote, which you might note was abouit Poland. Paleos in the USA like Buchanan oppose certain forms of statism but not because they disapprove of statism…folks like Buchanan are very keen on the sort of statism that gets into your bedroom and decides what you can do and also the kind which protects ‘essenial’ industries from those nasty Godless foreigners… all of which describes The Law and Justice Party rather well, who are stridently Catholic and quite protectionist, just like your good buddy Pat.

    The Civic Platform are closer to what could be described as ‘neo-conservative’ in US terms, though I would just call them ‘conservative’, but they are quite a different beast to Law and Justice, hence the need for diferent terms rather than the crude left/right shtick. I understand the terms just fine and probably understand the context better than you do, so stick to what you know, whatever that is.

  • Get used to it Perry. The Euro isn’t a bad idea. It is a good idea. Especially if compared to some funny zloti, lei or pesetas and liretas.

    And I look forward to you now coming up with the supporting argument why having the same interest rate in, say, Germany, Italy, Sweden… and Poland is a ‘good idea’.

    Of course if by “not a bad idea” you mean it will hasten the time when of the rotten system implodes due to the lack of equalisation mechanisms, well, I guess we agree after all…

  • Robert Alderson

    Having the same interest rate in Poland and Spain is not necessarily any worse an idea than having the same interest rate in California and Maine (or for that matter Ecuador.)

    In the Polish context support for the Euro is about taking a step in a more free market direction. The European project is not an ideal free market model but it more desirable than hankering after the communist, statist past.

    When Britons or Germans ask the question; who can manage our currency better ourselves or Brussels? Their answer is likely to be different than the answer of a Pole.

  • Poland and Spain is not necessarily any worse an idea than having the same interest rate in California and Maine (or for that matter Ecuador.)

    Really??? You think that Ecuador’s economic cycle is pretty much part and parcel of the one in the USA??? And capital and labour, that can move from between Maine and Equador just as well as it can move between Maine and California, can it? And they speak the same language, have similar legal systems and have comperable labour mobility between California and Equador or Gdansk and Paris do they? Argentina tried to in effect dollarize and it was a disaster because (surprise, surprise) the Argentine economy is not the US economy and has quite different dynamics and cycles.

    The European project is not an ideal free market model but it more desirable than hankering after the communist, statist past.

    But Law and Justice do not hanker after a Communist past, they hanker after a semi-mythical statist Catholic conservative past in which Polish industry was competitive with those of France and Britain and Germany and should be protected from those nasty market forces.

  • Robert Alderson

    Maybe I misexpressed myself. I wasn’t trying to say that Ecuador’s economic cycle is in tune with the US cycle; certainly capital and labour do not flow freely. My point is that they have adopted the US dollar as their currency – despite the very obvious economic mismatch between the two economies.

    I only wanted to say that Poland, Germany, Spain etc. having the same currency is not so bad when you remember that the manufacturing centers of the American mid-West, dotcommers of Silicon Valley and the Farm Belt all use the same currency.

    The point about Law and Justice hankering after a semi-mythical past rather than a communist one is well taken.

  • Euan Gray

    It doesn’t matter what language you speak. The free mobility of capital and labour are the important things, and whatever its many faults the EU does at least facilitate that.

    The EU is, no doubt, an overly centralising and dirigiste institution, not immune to corruption and incompetence. On the other hand, it prevents Britain slipping back to the over-unionised 1970s by imposing – even though we’re outside the Euro – a measure of economic discipline that wouldn’t necessarily happen otherwise. The Euro keeps the Italian economy – the fourth largest in Europe – in some measure of sanity, as can be seen by the pain it causes as Rome tries to bend the rules. If France and Germany would manage to stick to the rules, they too would be compelled to reform their sclerotic welfare economies and would improve. For the former communist states, the EU and the freedom of trade and capital it both encourages and requires are godsends.

    The EU has many rotten aspects, but it is not all bad.

    As to Luniversal’s point, I suspect it is connected to the well-known tendency of certain types of libertarian to assume that what applies in America will necessarily apply to everyone else, which is simply not true.

    EG

  • when you remember that the manufacturing centers of the American mid-West, dotcommers of Silicon Valley and the Farm Belt all use the same currency.

    But labour and capital are indeed flowing fully and freely between those places. Equador may indeed have made the right SHORT TERM choice to dollarize (just as in Argentina pegging to the dollar made sence when it was initially done… but as Argentina proved, when the initial crisis is stabalised by stable money, they then need to uncouple or face intolerable strains… an option you do not get if you simply join the Euro.

  • Jacob

    “Argentina tried to in effect dollarize and it was a disaster because (surprise, surprise)…”

    Because, – surprise, surprise – the government was unable to maintain fiscal balance, and abstain from huge deficits. When you give up a responsible management, and run big deficits, having your own currency and the ability to print money lets you mask and postpone the inevitable crash for some time.

    It’s not the pegging to the dollar that undid the Argentine economy, but the ineptness of it’s policies. Pegging to the dollar or Euro is a strong incentive toward fiscal responsibility, curbing expenditure, and maintaining low deficits. This alone makes pegging desirable. Desirable but not foolproof.

  • Robert Alderson

    Ecuador has done more than simply peg its currency to the dollar at 1:1 as Argentina, Brazil and doubtless other countries have done in the past and will do in the future. They abolished their own currency back in 1998. As a sovereign nation they could, of course, reestablish a national currency but what they have done goes further than mere pegging.

    (Incidentally, I traveled to Argentina for business in 2002 after the collapse. The dollar, the peso, bills linked to debt issues for the IMF and bills issued by provincial governments were all in circulation. Each different variant of the peso had a slightly different exchange rate, merchants would accept one variant but give change in another.The rates of exchange I got for my USD varied by as much as 50%. You cannot imagine the difficulties I had filling in the expense forms demanded by my bureaucratic multinational!)

    As for the comparison between the Euro area and the US dollar area (excluding Ecuador etc.). I think it is valid. True, there is not yet complete freedom of labour and capital movement throughout the EU although it is very close to total freedom and the remaining restrictions (on labour from the Eastern countries or on land purchases in Eastern Europe) are pretty small, scheduled for removal and not too difficult to evade. By the time Poland has the real chance to join the Euro those restrictions will have gone.

    There are arguments to be made against the Euro. Foremost amongst them is the argument for national independence and self determination. The economies of the Euro zone are broadly as integrated as the economies of the United States. The various states seem to have accepted that the benefits of easier trade and lower transaction costs outweight the benefits of having their own currencies. On this, purely economic basis, Europe is as suitable for a common currency as the US.

  • Adam

    Poland is in quite a different situation than Britain with respect to whether EU-integration is a good idea. Poland has been dominated or outright occupied by Russia for centuries, and EU-integration is to some degree a hedge against possible renewed Russian imperialism. The EU has its faults (as any reader of Samizdata is well aware), but it’s a hell of a lot better than the Soviet Union, or even Czarist Russia.

  • Michael Farris

    Adam, agreed. From the Polish point of view there’s very little downside to the EU or Euro. And I haven’t seen any arguments put forward here that would be liable to change anyone’s mind.
    The feeling I get talking to people is that if it turns out to be a bad idea, Poland can always quit. After staring down Moscow (and Moscow blinking) Brussels just isn’t very scary.

  • Jacob

    Brussels just isn’t very scary.

    Definitely.
    Foolish, ridiculous, grotesque, loathsome, but not scary and not murderous.

  • Jacob: you forgot expensive. It is bloody expensive that is for sure.

  • Paul Marks

    There should be no such thing as “the” interest rate. Interest rates should be set (like any other price) by the party that is offering money and the party that is buying it (by promising to pay it back at a later date plus a certain rate of interest).

    Efforts by government to reduce interest rates by issuing more credit lead to malinvestment, distortion of the capital structure and a boom-bust cycle.

    This is also true of government backed private financial institutions who try and finance investment via credit bubbles rather than real savings.

    Investment must be based on savings (real savings – not notional ones). If not one’s own, then someone else’s savings (that one has borrowed).

    However, it is better that there are many different fiat currencies rather than just one (a Euro or, worst of all, a World currency). This is because, with many currencies, people can choose to use the one that is least inflated – least distorting.

    Even with legal tender laws the fact that the country next door has a stronger currency is some sort of disinsentive for Central Banks to pump the credit bubble still further.

    It is not very good (allowing people to choose, via contract, what they wished to use as money would be better – rather than the orders [fiats] of fiat money), but it is better than a Europe wide currency that can be inflated and inflated till the whole system comes crashing down.

  • Euan Gray

    It is bloody expensive that is for sure.

    More expensive than protectionist policy between the independent states?

    EG

  • Jacob

    “It is not very good (allowing people to choose, via contract, what they wished to use as money would be better – rather than the orders [fiats] of fiat money), but it is better than a Europe wide currency that can be inflated and inflated till the whole system comes crashing down.”

    Until now it was the pesetas, the liretas and the drahmas that were inflated till the system crashed…
    The Euro seems to be managed pretty well, that is: held steady, and the EU Central Bank, being free from political pressure, seems do be run competently.

  • But no one is answering the question of why is the one-size-fits-all Europe wide interest rate a good thing?

  • Euan Gray

    But no one is answering the question of why is the one-size-fits-all Europe wide interest rate a good thing?

    For the same reason the one-size-fits-all American federal interest rate is a good thing (i.e. that within a single currency a single base lending rate is a good and practical idea);

    Because it imposes fiscal discipline and inflation control (or would if people obeyed the rules) on a continent not lately noted for prudence in state finances;

    Because in general terms so far it seems to be working, and pragmatic real world outcomes are rather more important than theoretical considerations;

    Because if you want to you can still lend at any rate you want (good luck trying to borrow your capital at a lower rate, though);

    What Jacob said.

    EG

  • And yet labour is NOT as mobile as in the USA for both linguistic, cultural, and regulatory reasons, and neither is capital as mobile as the USA, in spite of a common currency, so it is not comparable at all.

    And so that brings me back to interest rates… and that also assumes long term freedom from political interference for the European Central Bank, and it would be a brave man who is sanguine about that.

  • Euan Gray

    And yet labour is NOT as mobile as in the USA for both linguistic, cultural, and regulatory reasons

    No, but one has to start somewhere.

    There is no de jure common European language, but English is emerging as the de facto “Euro-language,” however much certain Gauls may object. There is no common European culture, but then there is no common American culture other than in the broadest sense. How important are these things? Does the fact that your client in Berlin comes from a more dirigiste culture than your employer in London, and doesn’t speak the same native language, actually impede trade to any great extent? If so, then surely international free trade could never be as successful as touted since it would be hampered by cultural and linguistic barriers. If it would not hamper free international trade, why would it hamper trade within the EU?

    Regulation is another matter, and few would deny that there is too much petty regulation in Europe. However, that is a concrete and defined problem in contrast to the more nebulous culture and language questions.

    neither is capital as mobile as the USA, in spite of a common currency

    But it is more mobile than before the introduction of the Euro, is it not? And since the Euro has only been in official use for 4 years, it is perhaps a little early to condemn it as a failure.

    It’s unreasonable to expect things to change overnight. Apart from the petty regulation problem, it’s hard to see how in any tangible sense the mobility of labour and capital, and indeed the economic discipline, of the EU states is worse now.

    that also assumes long term freedom from political interference for the European Central Bank, and it would be a brave man who is sanguine about that

    But being realistic, how brave does one need to be to suppose that the American federal reserve will remain free from political interference? Given the huge budget deficit and the supposed coming problems of the welfare system, is not political interference just as likely there? If not, why not, and why do the same considerations not apply to the ECB?

    EG

  • Anna

    but then there is no common American culture other than in the broadest sense.

    I guess you never been to the USA, huh? And if you did, you must have had your eyes and ears closed.

  • Euan Gray

    I guess you never been to the USA, huh? And if you did, you must have had your eyes and ears closed.

    Of course, American cultural homogeneity ranging from the Arkansas redneck to the Bostonian sophisticate via the mid-western farmer is legendary.

    Part of America’s strength has historically been that it is a melting point of numerous often radically different cultures, and thus it has been and is a diverse multicultural (in the good sense of the word) civilisation. There is not so much of a narrowly defined “American” culture, but in the broader sense there is a culture generally based on the ideas of self-reliance and the individual & community as being more important than the state. In such a circumstance, the emergence of a clearly identifiable homogeneous culture is almost by definition impossible in anything but the broadest terms.

    EG

  • Euan Gray

    I guess you never been to the USA, huh? And if you did, you must have had your eyes and ears closed.

    Of course, American cultural homogeneity ranging from the Arkansas redneck to the Bostonian sophisticate via the mid-western farmer is legendary.

    Part of America’s strength has historically been that it is a melting point of numerous often radically different cultures, and thus it has been and is a diverse multicultural (in the good sense of the word) civilisation. There is not so much of a narrowly defined “American” culture, but in the broader sense there is a culture generally based on the ideas of self-reliance and the individual & community as being more important than the state. In such a circumstance, the emergence of a clearly identifiable homogeneous culture is almost by definition impossible in anything but the broadest terms.

    EG

  • Michael Farris

    “English is emerging as the de facto “Euro-language,”

    But this is for a pretty restricted range of activities and it doesn’t significantly reduce movement of people. It might seem that everyone in Denmark speaks fluent English but that doesn’t mean that knowing English is enough to live and work there. Some jobs in large international firms or some kinds of unskilled labor might not require much in the way of Danish language skills, but the jobs in the middle all do.
    So language still can be a barrier to large scale movement of people in Europe (I don’t think that’s a bad thing) though I’m in favor of no barriers for those that do choose to move (and adapt to new local conditions).

  • Jacob

    “that also assumes long term freedom from political interference for the European Central Bank, and it would be a brave man who is sanguine about that..”

    Since the EU Central bank is a supra-national body, it is difficult for politicians in each separate country to exert influence on it, especially as the interests of the various national politicians might be contradicting.
    The EU Central bank is less succeptible to political influence than a national bank because it is removed, or isolated from national politics.

  • Euan Gray

    It might seem that everyone in Denmark speaks fluent English but that doesn’t mean that knowing English is enough to live and work there

    Of course not, and it doesn’t have to be, and it probably never will be.

    If you want to work in Paris, learn French. If you work in Paris and want to deal with a client in Prague, learn English. It is not the case that English will, should or perhaps even could become the actual official language of Europe, but rather that it can and likely will become the second language of everyone for whom it is not the first – it will be the de facto official language. One waits to see if it will be adopted in Scotland, of course.

    I recently attended meetings with a Franco-Italian potential client in Paris. Around the table were British, French, Italian, Dutch, Belgian and Norwegian people. The meetings were held in English, minuted in English, discussing specifications which are written only in English and a standard French contract which is written only in English despite these being issued by a French state-owned concern. Language is increasingly NOT a barrier, as English spreads.

    Of course, if you want to live in a non-Anglophone country, you do need to learn the local language. Perhaps not so much for business, depending on what your business is, but for everyday life. It will probably always be so, I suspect.

    EG

  • Enough currency talk. No country should have a fiat currency. We should all be trading in free-market currencies.

    Also, de Havilland is right. These left-right labels are awful. Whenever a libertarian-esque group makes the news, the ignorant newsmen don’t know how to describe them. They usually get grouped as extreme rightists, but that makes very little sense. I say we all work to promote left-right-up-down as the main labels. Civic Platform is a center-up party.

    http://www.lalumo.com/

  • I wonder what you think the long-term effects of this election have been.