REVIEW #4: Economic Costs of Populism – Poland Should Learn from Greek Mistakes

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Populism is a costly thing in politics. Takis S. Pappas (2010) once wrote: “ask any early PASOK nostalgic in Greece today about that party’s greatest achievement and the answer you will most likely get is that it offered ordinary Greeks better lives”. Pappas wrote about Andreas Papandreou’s first government which back in 1981 won elections in Greece. It was the initial step towards the Greek crisis in the late 2000s.

Populists often talk about improving lives of ordinary people. But the primary goal of populist politicians is to capture (or rather to “buy”) political support, win elections or keep political power. Therefore, they do not use tools necessary to bring long-term prosperity to the people but rather take advantage of whatever can guarantee them short-term political gains. It usually involves showing their active involvement in economic management and can be done through redistribution, welfare state expansions, or politicized control over key institutors and businesses (e.g. through state ownership). There are also other non-economic forms of populism and some of them are mentioned in other articles in this volume. Therefore the primary focus of this article is on economic populism i.e. this type of economic program which sacrifices medium and long-term economic growth and stability of the economy for the sake of short-term political gains. This is thus how economic populism shall be understood in this context.

Post-election economic populism by the new Law and Justice government has a negative impact on stability and growth of the Polish economy. Moreover, it is also further damaging quality of the Polish politics. Polish case can be compared with Greece where almost forty years of populist policies led to a substantial and long-lasting recession. Populist bidding not only devastated Greek economy and led to a fall of income of the Greek people but it also damaged the politics. The current developments show how hard it is to escape the populist trap. Therefore, Greek experiences should constitute a lesson for Poland and other European countries.

Populism Damages Polish Politics and Economics

The elections held in the late 2015 have brought substantial change in the structure of the Polish parliament. After eight years in power, Civic Platform (PO) lost to the main opposition party Law and Justice (PiS), led by Jarosław Kaczyński. Earlier in 2015 Bronisław Komorowski, incumbent president supported by PO, lost elections to Andrzej Duda nominated by J. Kaczynski and PiS. For the first time since Poland’s 1989 transition to democracy, one party won an absolute majority and formed the government without the need for a coalition partner.

Poland has achieved great success since the fall of the communist regime and transformation. For more than two decades average economic growth reached 4% a year, faster than other countries of Central and Eastern Europe. Per capita income increased from 29% of its German equivalent in 1992 to 55% in 2014. Nevertheless, despite relatively good economic performance, the PO-led coalition lost the elections. One of the major reasons was growing populism among the key political parties including the winning Law and Justice. This populism damages Polish politics and economy and poses a threat to the pace and stability of growth in Poland. Of course, populism was present in Poland before 2015. Nevertheless, what we observe now is another peak in populist rhetoric, promises and slogans which may push Poland into what we can call the “populist trap”.

The pre-election campaign was full of costly promises. The majority of these promises (after taking into considerations new promised public revenues) would have substantially increased public debt if fulfilled. Moreover, the majority of politicians promised higher salaries administered by the government (for example through higher minimum wage) and not based on the productivity growth.

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Marek Tatala
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