Polish PM Morawiecki’s Declarations Versus Reality

The Chancellery of the Prime Minister: PM Morawiecki's expose || Public domain via Wikimedia Commons

In his first parliamentary speech as a prime minister Mateusz Morawiecki (PMM) repeated many theses of the government officials which have been repeated for the last two years. Some of them are wrong and contradict the experiences of other countries. Others, while right, stand in clear contradiction with the actual actions of the Polish government.

Firstly, it is a mistake to attribute the economic successes of Germany or South 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, who use the taxpayers’ money, to decide who and where will build drones or electric cars.

An equally wrong and dangerous idea is the concept of ​​an “entrepreneurial state”. The state by giving the privileges to the state-owned enterprises (SOEs) limits the possibility of development for private companies. At the same time, SOEs operating in sectors such as energy, where they are protected from competition, transfer higher costs of their operations to clients, thus limiting the competitiveness of the entire economy.

Secondly, although the declarations of a need for better quality of law and higher investments point in the right direction, they stand in a sharp contrast with the actual actions of the PiS government. PiS breaks records in overproduction of legislations, and at the same time it is taking control over the judiciary. These chaotic changes in the legal system result in increased uncertainty of entrepreneurs, who limit investments – in 3Q 2017 they were lower than 2 years ago, when PiS took power.

The contradiction between declarations and actual actions can also be seen at the level of sectoral policies. PMM talks about modernization of agriculture but at the same time the government, by 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 the wind farms, thus blocking their further investments.

In the summary of the first two years of PiS’ rule PMM neglected the positive effects of the very good business conditions of our main trading partners, which supported higher tax revenues and a further decline in unemployment (which is a continuation of the trend initiated by the previous PO-PSL government). In this way, he falsely attributes all the merits to himself and his government.

It is difficult to understand the attitude of PMM toward 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 is beneficial for the Polish companies as well. Also, thanks to the foreign investors, the income of Poles has been growing – since 1995, when first comparable data appeared, foreign revenues have increased by PLN 58 billion, and revenues of Poles by PLN 980 billion, which is one of the best results among the post-socialist countries.

Full analysis of the Prime Minister Mateusz Morawiecki’s first parliamentary speech is available at FOR’s website (in Polish)

Rafal Trzeciakowski