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Analysis Last Updated: Apr 24th, 2007 - 01:42:30

The dramatic suffering of Leszek Balcerowicz
By Anthony Newkirk
Online Journal Contributing Writer

Apr 24, 2007, 01:39

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Built in the early 1950s as the Soviet Union�s �gift� to Poland, the Palace of Culture and Science dominates the Warsaw skyline. Many adult Poles associate this Orwellian behemoth with crude state propaganda. While America�s commercial media have more subtle influences on public perceptions, crude propaganda does make its appearance every so often. An example is a recent column in the Washington Post about Poland and free market reform.

In the American mainstream press, radicalism normally has a bad reputation. But Washington Post business columnist Steven Pearlstein broke the mold earlier this month when he praised Leszek Balcerowicz as an �economic revolutionary� who �brought capitalism back� to Poland as finance minister in the 1990s and head of Poland�s central bank until last December. [1] The American-trained economist Balcerowicz champions privatization. It is true that Pearlstein�s article is an editorial but if it was the only source of information about Balcerowicz that Washington Post readers had, it would come as no surprise if they think that Balcerowicz is a �genuine hero.� But the reality is much more complicated.

True, Balcerowicz had the �courage� to end price and wage controls in the early 1990s and this led to some of the �strongest growth� in Europe minus devastating shock therapy. But there have been negative consequences. Over the past decade, joblessness has hovered between 15 and 20 percent. Nearly one-fifth of Poles live under the official poverty line. Last year, the Ministry of Labour estimated that 660,000 people have left the country in search of work (the population is 38 million; the workforce is 17 million). And this is mild free market reform. [2]

True, Balcerowicz did initiate a shift away from state management to private ownership but it has not been a �turnaround.� Pearlstein ignores certain facts:

  • Most of Poland�s heavy industry remains under state ownership.

  • While the ruling Law and Justice Party officially opposes Balcerowicz�s Euro-friendly policies, President Lech Kaczyński approved the merger of two Polish banks owned by Italy�s UniCredito last year.

  • Former Communists and Solidarity members dominate partisan politics. Former President Aleksander Kwaśniewski of the Democratic Left Alliance was a Communist government minister in the 1980s; the current ruling Kaczyński twins (Lech and Jarosław, who is prime minister) were in Solidarity.

  • It emerged during a bribery scandal a few years ago that members of the Kwaśniewski administration may have illegally profited from privatization.

  • Many politicians are linked to endemic corruption, such as former economy minister Jacek Piechota and semi-private oil retailing giant PKN Orlen. [3]

Pearlstein hails Balcerowicz as an intrepid foe of �communism.� But this is a ploy to deflect attention from thornier issues about Balcerowicz�s record and his views on democracy, which sound like those of a Soviet-era commissar.

In a 2000 PBS interview, Balcerowicz said that since a reformer must convince people that change is inevitable, �they need a large amount of change . . . even if they do not like it . . .� In a 2004 interview with Business Week, Balcerowicz uttered an unmistakably Leninist dictum: �There can be no radical reform without hardship.�� Continuing in this vein, Balcerowicz said during a speech given at the Cato Institute earlier this month that �[i]f you have to suffer, it is better to suffer in a dramatic way� (the argument that the �libertarian� Cato Institute was unaware of Balcerowicz�s authoritarian opinions is ludicrous since he spoke at other Cato-sponsored events in the past). [4]

Balcerowicz prides himself on disliking what he calls �populism.� Last summer, he refused to appear before a parliamentary committee investigating privatizations in Poland�s banking industry since 1989. In a prepared statement, Balcerowicz indicated that �I have decided not to take part in establishing this dangerous constitutional precedent [of testifying before parliament] and thus will not appear before the investigating committee.� Evidently, the notion of transparency risks the central bank�s �independence.� [5]

Pearlstein employs the buoyant free-market rhetoric that pervades the mainstream press. For instance, in reference to protests against labor law reform in France last year, the Wall Street Journal observed that �the expectation of permanent employment for any worker is usually a bad idea.� Coverage of the Paris events by the New York Times mixed optimism about innovative market reforms and apprehension about opposition to them. The Newspaper of Record saw recalcitrant and selfish �students� motivated by a �knee-jerk defense of . . . job security� who stood in the way of �constructive talks� with the government. Although noting that the government eventually withdrew the bill, the focus of attention was on acts of street violence. [6] Thus, Pearlstein does not write without precedent.

All political economies that rely on coercion are tyrannical. No amount of propaganda or speeches at pseudo-intellectual conferences can change that. Nor can they disregard the proposed �anti-missile shield� in Central Europe, Polish contributions to the defense of the Middle East, Warsaw�s purchase of extravagant weapons systems -- and who will pay for all of it. [7] Why didn�t Mr. Pearlstein convey Balcerowicz�s opinion on that subject? Does Dr. Balcerowicz even have an opinion on that subject?


[1] Steven Pearlstein, �Poland�s Economic Revolutionary,� Washington Post, 11 April, 2007, D01.

[2] Maciej Bukowski, ed. Employment in Poland 2005 (Warszawa: Ministry of Economy and Labour -- Department of Economic Analyses and Forecasts, 2005), 21-46; PAP, �Jobless rate falls to lowest level in nearly six years,�� Warsaw Voice, 25 October, 2006; ��Polish employers having trouble finding workers,�� ibid., 23 October, 2006; �Poland,�� The World Factbook, updated 17 April 2007.

[3] Jonathan Gage, �Privatization of Biggest Properties Is Planned to Bolster Growth: Poland Aims to Catch an Economic Wave,� International Herald Tribune, 4 February, 1997; �Rywingate Report Adopted,� Warsaw Voice, 29 September, 2004; Andrzej Kraśnicki Jr. & Ireneusz Dańko, �Jacek Piechota zamieszany w aferę paliwową?� Gazeta Wyborcza, 23 August, 2006; Mark Landler, �Poland Averts Clash With Europe Over Italian Bank Deal,� New York Times, 6 April, 2006, C6.

[4] Leszek Balcerowicz, interview on Commanding Heights, PBS TV, 12 November, 2000; Special Report, �Leszek Balcerowicz,� BusinessWeek Online, 7 July, 2004; Balcerowicz, �The Economics and Ethics of the Welfare State.� Audio recording. The Cato Institute, 10 April, 2007.

[5] Andrej Jonas, ��From the Editor,�� Warsaw Voice, 8 March, 2005; Balcerowicz, ��Statement of 9 September 2006, National Bank of Poland,� 9 September, 2006.

[6] �Laboring the Point,� Wall Street Journal (Europe ed.), 28 March, 2006, 17; Elaine Sciolino, �French Students Step Up Protests Against New Job Law,� New York Times, 15 March, 2006, A3; �France�s Misguided Protesters,� ibid., 27 March, 2006; Craig S. Smith, �Chirac Offers Labor Law Compromise; Protestors Reject It,� ibid., 1 April, 2006, A3; Sciolino, �France Drops Labor Law That Led to Protests,� ibid., 10 April, 2006.

[7] Politicians give tentative �yes� to U.S. anti-missile shield in Poland,� Warsaw Voice, 13 February, 2007; �U.S. official in Poland to discuss anti-missile shield,� ibid., 21 March, 2007; �Government wants Polish troops to remain in Iraq through 2007,� ibid., 20 December, 2006; Marcin G�rka, �Korpus już w Afganistanie,� Gazeta Wyborcza, (Szczecin ed.), 25 January, 2007; Lockheed Martin and Poland Sign Offset Agreement Valued at More than $6 billion,� Lockheed Martin, 18 April, 2003; Problems with delivery of F-16s to Poland,� Warsaw Voice, 9 November, 2006; �Poland to buy aerial drones from U.S.,� ibid., 2 August, 2006.

� 2007 Anthony Newkirk

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