Analysis 15/2017: Morawiecki’s exposé: declarations and reality
Synthesis:
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In his exposé, Prime Minister Mateusz Morawiecki (PMM) repeated many theses proclaimed for the last two years; some of them are wrong and contradict the experiences of other countries; others, while right, stands in clear contradiction with the actual actions of the government.
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It is a mistake to attribute the economic successes of Germany or Korea to their industrial policy - there were other success factors in these countries, and their industrial policies not only did not help, but even were slowing down the development. It is a dangerous idea for ministerial officials with taxpayers’ money to decide who and where will build drones or electric cars.
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An equally wrong and dangerous idea is the idea of an "entrepreneurial state". The state, giving preference to state-owned enterprises in its purchases, thus limits the possibility of development for private companies. At the same time, state-owned companies operating in sectors such as energy, where they are protected from competition, transfer high costs of their operations to clients, thus limiting the competitiveness of the entire economy.
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Although the declarations of need for better quality of law and higher investments point in the right direction, they stand in sharp contrast with the actual actions of the PiS government. It breaks records in overproduction of bills, and at the same time it takes over control over the judiciary. These chaotic changes in the law result in increased uncertainty of entrepreneurs who limit investments - in 3Q 2017 they were lower than 2 years ago, when PiS took power.
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The contradiction between declarations and actual actions can also be seen at the level of sectoral policies. PMM talks about modernization of agriculture – and at the same time the government, prohibiting land trade, binds de facto farmers to the land, blocking the development of large, efficient farms. PMM also talks about the fight against smog, while government policy has already led to losses for the owners of wind farms, thus blocking their further investments.
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Summing up the first two years of PiS’ rule, PMM neglects the positive effects of the very good business conditions at our main trading partners, which result in higher tax revenues and a further decline in unemployment (which is a continuation of the trend initiated by the PO-PSL government). In this way, he falsely attributes all the merits to himself.
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It is difficult to understand the attitude of PMM to foreign investors. On the one hand, as the deputy prime minister, he boasted of attracting new foreign investors, on the other hand, he regards their profits as exploitation. One can hardly demand that foreign companies invest in Poland now and do not expect profits later. These investments are important for the Polish economy, because they are connected with the inflow of new technologies, which profits Polish companies as well. Also, thanks to foreign investors, the income of Poles has been growing - since 1995, when comparable data appeared, foreign revenues have increased by PLN 58 billion, and Poles by PLN 980 billion, which is one of the best results among post-socialist countries.
Full analysis by FOR aviliable below in Polish.
Contanct with the authors:
Aleksander Łaszek, chief economist
e-mail: aleksander.laszek@for.org.pl
Rafał Trzeciakowski, economist
e-mail: rafal.trzeciakowski@for.org.pl
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