TCS Daily

Poland's Party Time

By Alejandro A. Chafuen - October 26, 2005 12:00 AM

This Sunday's election result in the race for the Polish presidency will have a strong impact in Europe -- especially if it can help boost momentum for bureaucratic reform and free-market economics. After winning the first round of the presidential balloting, Donald Tusk, of the free-market Civic Platform party, lost in the runoff. His party came in close second in the parliamentary election with a 15 percent flat tax proposal as one of its main messages. But despite the loss, free-market supporters can take some comfort in his showing.

Many of the voters who in the end chose Lech Kaczynski of the conservative but pro-social welfare Law and Justice Party (which also won the parliamentary election), prefer Civic Platform's economic proposals. But they distrust their leaders. The parties waged a bitter war of words during the election campaign. An outsider observer, like me, even with strong local connections and allies, has trouble understanding why they fought so much. Their divisions seem less than those between the right and left of the Republican and Democratic parties.

Free-market champions, especially those who represent an older generation, dislike Civic Platform's commitment to the European Union. Part of the opposition to the EU is based on a healthy anti "Brussels-Bureaucracy" stance, but part is fed by a strong Polish nationalistic spirit. One can understand why many Poles are weary of foreign powers, even if they are "European." They have suffered invasions by the Swedes, the Turks, the Germans and the Russians. The human rights abuses of the Nazis and Soviet Russia are still fresh on their minds.

The Poles also confront a "Warsaw bureaucracy" which is stifling. Driving through its countryside, Poland's roads reminded me more of driving through corrupt Latin America than modern Europe. The country's labor laws also impose more burdens than those in other dynamic European countries. They are even more costly than the fascist era labor regulations that still plague my native Argentina. No wonder than the younger generations were willing to consider Civic Platform's EU and pro free-market stance.

Regardless of the election outcome, there is no doubt that Poland needs economic reform. Unemployment is running at 18 percent, and in most of the rural regions, it is double that. High and extremely cumbersome regulatory frameworks are an efficient way to strangle an economy. They also create a black market making it more difficult to collect taxes. The budget deficit in Poland is approaching 7 percent of the GDP, more than twice the deficit we face in the United States. But Poland's gap, unlike the one we face at home, is not exacerbated by wars or natural disasters. Corruption and the inefficiencies it creates, is one of the real culprits.

The battle against corruption needs collaboration between both leading parties. Economic freedom is the biggest deterrent of corruption, but true freedom requires a rule of law. The Law and Justice party is keenly aware of that. Due to corruption, privatization has a bad name in many parts of the world. Poland is no exception. Privatization becomes plundering when it is just an instrument to transfer the ownership of a company from the state to a local or foreign crony.

Law and Justice announced that it will name Kazimierz Marcinkiewicz as prime minister. The left portrays him as a neo-liberal, pro-globalization Catholic. It should not be difficult for him to find common ground with the economists of Civic Platform. One of the most influential religious figures, Father Tadeusz Rydzyk, during a prime time radio broadcast, stated that "the more private property, the more freedom; the more freedom the more private property." His support for Law and Justice is not an attack on economic reform.

Both parties need each other and they will need to find a consensus. And for that, there is a need for a language which can be used in all areas of the country: language as such used by Civic Platform, which focuses on economics, but which is nurtured by the language of Law and Justice, which is mindful of the traditions and heritage that enabled Poland to contribute so much to Western civilization. Working toward a consensus could be another great Polish gift to freedom.

The author is a Member of the Advisory Board of the Polish American Foundation for Economic Research (PAFERE).


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