TCS Daily


Addictive Politics

By Meelis Kitsing - May 30, 2003 12:00 AM

One need not be the Devil's Advocate to see increasing apathy toward official politics in Central and Eastern Europe. A look at the percentages of populations taking part in the recent referendums on joining the European Union, seen as the grand goal of the last decade, tells its own story: 46 percent in Hungary, 52 percent in Slovakia, 60 percent in Slovenia and 64 percent in Lithuania.

Long gone are the times of "extraordinary politics," the period of rapid reforms described by Leszek Balcerowicz, former finance minister and current president of Central Bank of Poland, in his book "Socialism, Capitalism and Transformation." It was a grand time when masses gave their principled support to a handful of reformers and most people were willing to bear the costs of achieving the promised ideals. Newcomers exploited the sudden window of opportunity by implementing radical reforms in a political vacuum created by the Schumpeterian creative destruction. This "shock and awe" strategy wiped out the old boy networks from the socialist era and many interest groups who might have blocked the reforms.

However, new interests emerged; some old groups regained their footing and newcomers in politics gradually became old-timers, aiming to preserve the status quo and minimize risks to their freshly accumulated political capital. In a recent article on investment issues ("The WTO after Seattle," edited by Jeffrey J. Schott, 2000), Georgetown University professor Theodore Moran gives an example of Italian car manufacturer Fiat as one multinational that has entered the Polish market and now lobbies actively to protect its "first mover" advantage by preserving protectionist policies and to delay entrance into the EU. Such changing dynamics contributed to the new ethos of policymaking that wanted no more shocks, but therapy. Reforms were slowed down; some fundamental reforms were left for the distant future. Hence, it is not surprising that for most candidate countries membership in the Union means further liberalization of their economies.

Most importantly, the reformers' orientation toward therapy created its own unintended diseases. Politics became addictive to its heavy users. In this sense, politics and drugs share many common features. A small number of people consume and sell them actively every day. Heavy users in particular depend on this consumption for escaping reality. Many have tried them at least once and consider occasional use - say once every four years - recreational. Many have not experienced them at all.

Therefore, it is not surprising that nothing extraordinary is left in the politics of Central and Eastern Europe. Instead, it has become boring and dull, full of routine nitty-gritty that most ordinary people fail to comprehend. It is not only that political heavy users fail to see real problems by being "high" all the time, but this political addiction is often corruptive if not criminal. Heavy users' self-serving pursuits facilitate massive rent-seeking, which slows down the reform process and imposes costs on society.

Furthermore, the actions of politicians have become a self-fulfilling prophecy, as most countries of Central and Eastern Europe have not yet developed a mature network of independent think tanks and non-governmental organizations, a crucial element of civil society, which would provide constant monitoring of the political process and feedback to politicians. Reliance on biased sources of feedback is reminiscent of the anecdote written by Kenneth Rogoff, chief economist of International Monetary Fund, in the Economist (August 2, 2002): "A general once told his weather-forecasting team, 'I appreciate being informed that your forecasts are no better than random, but please keep sending them on, as the army needs your predictions for planning purposes.'" Hence, it is not surprising that in many countries, for the shock of newly established elites, protest parties gain a large share of voter support, completely new parties come to power, and former communists see a rise in their popularity.

In this environment of pork-barrel politics, in which the advancement of public purpose is defined as a function of narrow-minded special interests and feedback on public policy often politically biased, a broader picture on the de facto status of reform process is needed. That is what the Institute for Economic and Social Reforms (INEKO) in Slovakia aims to provide by rating the economic and social changes in Czech Republic, Hungary, Poland and Slovakia in cooperation with research institutes and experts.

Four times a year, INEKO prepares a list of 20 to 30 policy changes in each country. The group of experts, consisting of journalists, analysts, academics and business people, will evaluate the policy changes by quality and importance to society. INEKO, with its partners, also writes a summary of the essence of policy changes in non-technical language that should be understandable for everybody.

The current quarterly comparison of the Czech Republic, Poland and Slovakia shows weakest approval of policy reforms by experts in Poland and the highest rate in Slovakia, with the Czech Republic scoring somewhere in between. As Hungary has been rated only twice, it is not included in the chart.

The years 2001 and 2002 have seen a steady decline in the approval of the reform process, with ups and downs in all three countries. For instance, Slovakia, where the approval has been measured for longest time, started in the beginning of 2000 with "absolute approval" of reforms, which faded away in the subsequent quarters by falling to the borderline criteria of "approval despite minor defects," "approval despite significant defects" and "minor disapproval."

The last quarter of 2002 saw a significant increase in the approval ratings of reforms in Czech Republic and Slovakia. This change can be explained by the historic Copenhagen Summit of the EU, at which applicant countries received the invitation to join the club. However, Poland's approval ratings fell to the record low "moderate disapproval" in the same quarter; a drop in rating well explained by the public's reluctance to further liberalization as outlined above.

Slovakia's recent enthusiasm for political reforms can be explained by the reign of authoritarian Prime Minister Vladimir Meciar throughout the 1990s, which postponed the start of EU membership negotiations for political reasons. After Meciar's fall, new leaders found it easier to get wide support for the reforms. However, once the costs and the length of the reform process became clearer, the support started to wane. This, in turn, forced politicians to make short-term popular decisions in order to maintain power.

As suggested by the experiences of Poland and Czech Republic, the trade-off exists between short-term decisions that ease the pain of some specific interest groups for a while and the long-term decisions that improve the overall welfare. The crisis of the Czech Republic's unreformed banking sector in the second half of the 1990s and Poland's hassle with farmers, who make up 25 percent of its work force, is the proof in the pudding.

Therapy that distributes the pain from one body part to the whole body over the long term is not effective - it hampers the movements of the body as a whole. All things considered, an amputation might be in order.
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