An interesting email just arrived from Poland:
I was reading Poland’s major weekly publication “Wprost” (roughly translated “Direct”) and took note of their selection for the 2008 Person of the Year, the Polish Premier Donald Tusk. In an interview, he was asked an interesting question (I am translating from Polish):
Interviewer: “In the fight with the financial crisis, are you a Keynesian or a Friedmanite?”
Prime Minister Tusk: “The problem with these theories is that they serve well in thought, but they don’t serve well in practice. If I had to identify myself with someone, at this time it would have to be with Friedrich von Hayek who, talking about the business cycle, highlighted the fact that every artificial boom caused by the expansion of credit by banks works in the end against itself. Today in the philosophy of operating American financial institutions there are too many footprints of the Keynesian tradition of regulation, such as intervention for achieving – in effect – only temporary results.”
{ 23 comments }
Donald Tusk is a good guy. Whenever I travel to Poland, I follow the activities of PO closely. They’re willing to deregulate and detax the economy in a meaningful way. If PO could succeed with its plans for Poland, Poland could be competing with Singapore and Hong Kong as an economic and financial powerhouse of freedom.
Good to see someone with those values being honored, hopefully it will open up the eyes of others in Poland and elsewhere.
At least a few people have their wits about them.
Others don’t…I just read an article tonight from a New Zealand source entitled “Meltdown drives new gold rush.” http://www.stuff.co.nz/4841364a13.html
One of the first things of interest that comes up is this:
“No one disputes that too much credit and easy money are among the biggest culprits behind the financial crisis.”
Then the subject of the gold standard comes up and of course the person objecting to a gold standard is a “professor of finance and economics” from Victoria University. Get a load of some of these economic “pearls” of wisdom… *sarcasm*
I quote:
- Roger Bowden, professor of finance and economics at Victoria University, is “astonished that anyone would seriously contemplate returning to the gold standard”.- (oh the horror, how medieval)
-Bowden said the expansion of credit had nothing to do with the lack of a gold, or any other standard, against which to measure money. “Expansion of credit and money supply are two quite different things. You could have a rhubarb standard, but it won’t make a lot of difference. In fact, I could see an almost infinite creation of credit on zero money supply.”-
(somehow he hasn’t fully grasped how having a gold standard with 100% reserve banking would stop the reckless practice of whisking money out of thin air and thus expanding the money supply..maybe what he’s aiming at is 0% fractional reserve banking????)
-”The Bretton Woods agreement [which helped re-establish the gold standard in post-war years] was not a particularly good idea even in its day, and we have moved a long way past that in terms of economic policy setting,” he said. It would mean money supply would fluctuate with the discoveries of gold.
“I would very much prefer to have Alan Bollard running policy within set parameters than be subject to the whims and discoveries of geologists, and the fluctuations in the price of gold as industrial demand changes,” he said. – (I’m assuming Bollard must be the Bernanke of New Zealand…yes I know that’s a mean thing to say
)
Governments did not yet have exit strategies in place to deal with policy measures such as guarantees on bank and other deposits.
“There will still be many problems to work through, but I don’t see them arising from money supply.”
-Bowden said concerns for a return to a gold or other standard to place limits on new credit creation were probably fuelled by the US government selling bonds to the US Federal Reserve, which paid for it by crediting government books.
“That is, in effect, creating new money which the US government is spending,” he said. That would be a worry if inflation was a concern. But that was not the situation now. -
Well folks, there you have it. Don’t worry about inflation. Not.
Just like the Poles cracked the secret codes of the Germans in World War II maybe they can crack open the counterfeiting operations of the central banks around the world by speaking the truth.
The secret code of the counterfeiters is worldwide monetary hegemony and the Führer is the unConstitutional coup in the United States.
I live and Poland and I have seen live the press conference when they announced the “cut spending” policy. It was quite uplifting after being inundated with news about “bailouts” and “stimulus” from USA and Western Europe. The part when Donald Tusk said that “banks are supposed to give loans, not take them”, and that he isn’t going to listen to their “so called experts” was hilarious.
Pardon, but I live in Poland, and Donald Tusk is no Hayekian whatsoever. He’s a politician, and nothing more. He can say stuff like that for Wprost, cause Wprost is a right-wing publication, that probably would like such a statement.
Don’t get fooled, he’s no Ron Paul.
Although Tusk’s party – PO – claims to be liberal (in economic sense) in fact is quite socliberal (more soc economically). When Tusks says something he just says something, with his government usually doing the opposite. Whatever he says it doesn’t really matter.
His only agenda seems to be rule long enough to get elected for presidency and get Poland incorporated into EUSR in this process. And, of course, please his shady principals who catapulted him to current position.
Obviously, it’s time to bomb Poland!
Perhaps the US and Russia will sign a pact to divide Poland up between them.
I would like to point out to Stan Kwiatkowski and Maciej Miasik that the reason Prime Minister Tusk’s government has been unable to implement much of his party’s platform is that the President, Lech Kaczynski, has pledged no cooperation and has threatened to veto any bill cutting taxes or privatizing companies. The PO’s majority in Parliament is insufficient to negate a presidential veto, and I suspect that Tusk – and most Poles – are waiting for his ascension to the presidency at which time he will be able to accomplish much of what he set out to do.
A politician who talks a good game but does the opposite, promising liberty in good time once the conditions line up — this sounds oddly familiar!
Of course he is no Ron Paul. Donald Tusk is a mainstream politician and the quote is pretty damn impressive for someone who actually runs the country. This is not just talk for “Wprost†(which lost all credibility as a right-wing publication by supporting PiS, the conservative-socialist opposition), because he in fact is pursuing a policy of budget cuts instead of “stimulating†the economy in reaction to the crisis. Besides it’s hard to treat voicing support for austrian economics as a PR stunt. Granted, on many other issues he has a lot to learn. Up till now he has been extremely moderate. It is difficult to say whether he simply doesn’t intend to reform much or is he in fact framing the coming reforms (perhaps when his party wins the presidency) in a manner which will be acceptable to the public and therefore successful. One way or the other, it is still pleasure to listen to him in contrast to the rest of the meaningful politicians. Well… and he did finally abolish the draft.
Yeah, well I actually agree that it’s really cool to see anybody say what Hayek said on the subject. For most journalists it’s Keynes and Krugman vs. Friedman and Hayek.
The quote is very good indeed as a way to say: wait! Stop! It’s not a choice between bailing out and cutting interest rates!
I don’t think that he actually would do it the Hayekian way, even if it was for him to decide. He is but a politician.
@Jeffrey
I do hope, that it won’t end the way it did in the US! Oh, shouldn’t be using the word “hope” then, should I.
Donald Tusk is a criminal!
He and his fellow criminals from his current party PO (Civic Platform) and all it’s former incarnations (AWS, UW, KL-D) are responsible for the most of the bad law in Poland.
Anyone calling Tusk a liberal is clearly out of his mind.
Tusk has never done anything even remotly close to liberty.
Adam Twardowski suggesting that everything bad in Poland comes from our president is unwilling to cooperate with criminals. Well guess what. The last tax decrease was done by our president’s mother party PiS, which Tusk and his fellows opposed. To top it, one of the first thing they did was to plan a tax increase in year 2010.
I thank our president for opposing this kind of “liberal” policy, although it’s official he is a socialist.
The problem with Tusk’s lack of changes is not that KaczyÅ„ski is blocking them, but the fact that PO isn’t interested in making any serious changes. Definitely they don’t want any changes that could lower their ratings (most liberal economic moves would lead to this, that’s the nature of Polish constituency) and they also like the status quo because this what they (and their powerful supporters) know best and use to their advantage.
If you compare PO and PiS actual programs – not those declared but what they actually do when ruling – you will see that they don’t differ that much. PO uses more free market rhetoric but this is only because those parties need to “differ beautifully”. Again, if you analyze Tusk’s and his friends long political careers you will discover that they are just a bunch of statists in liberal disguise.
The Prime Minister Donald Tusk plays an economic liberal. His government have lowered income taxe rates and stopped there. Unfortunately, Polish politicians love slogans, but fail to implement much needed reforms.
Ironically, the most economically liberal power was the last Communist government with Minister Mieczysław Wilczek, a successful entrepreneur and inventor, steering the economy wheel towards freedom in 1989. The next administrations, espacially including Prof. Leszek Balcerowicz as the Minister of Finance, introduced many changes, some for better, some for worse. Many things went bad, especially due to actions of post-Commie cronies and former secret agents-turned-businessmen, corruption, privatization mistakes or the lack of privatization etc.
Now Poland is ranked 82nd in the Heritage Foundation’s Index of Economic Freedom. If Tusk and his men were able to change it by whittling down the stiffling bureaucratic influence on economy, one should relish such an accomplishment, but it still remains in dreams and in words. The reality is very bitter and the average gross monthly salary wanders around 800 US $ (1 US $ = 3.5564 PLN).
Anyone else notice that Tusk committed the old “good in theory, bad in practice” canard?
What foolishness. If something is bad in practice is must also be bad in theory…
Well, \i know nothing about Poland.
But I live in Romania, which is another former comunist country, recently joining EU.
Here, although nobody speaks about austrian economics, the government has actually cut spending, the central bank refuses to lower the interest rate, and the population is invited to save more, and not spend more by all the politicians.
I dont have any high regards for romanian politicians, but ad least they are not complete fools.
Stefan Guta: Here, although nobody speaks about austrian economics, the government has actually cut spending, the central bank refuses to lower the interest rate, and the population is invited to save more, and not spend more by all the politicians.”
That’s impressive! Can some of those pols come over to the US and run for office? How are the citizens taking this?
Yeah, Donald Tusk privately is probably pro-free-market, however, don’t think he implements any free market solutions in Polish economy, he does NOT! Sadly, his cabinet is as etatistic as all Polish governments so far.
I am 35 manager in one of the foreign corporations in Poland. We all here were very, very positive initially on PO winning the election. Now we see that there is a structural problem with every party which is impovered. It is time for young professionals with internatioanl experience to change it.
1.They promised flat PIT below 20% – no delivery.
Correction to Mr Laskowski entry – current PIT decrease was prepared by the former ruling part, and PO did not change it att all (I mean PO should go much further along with their promises)
2. PO did not collect ca18 bln PLN of money avaiable from EU in 2008. There is new kind of corporate defaults in Poland (however not often) -because of EU money overexpectations. Companies prepared a budget on money from EU, which did not come here.
Only young smart and well paid proffesionals can change the apparatchiks mentality
In Slovakia, the contemporary Prime Minister Robert Fico as a former communist has proven to meet all attributes of the typical follower of the Soviet-era style:
- corrupt practices in public offers
- attacking private press for any critism or ‘anti-government or anti-slovak ideology’
- populistic blue-sky talk on social and public subjects
- discrediting market principles and private property on every occasion
- taking control of public television and broadcasting
- planning future cooperation with Russia in railroads and gas industry
That guy, our Prime Minister, has no respect for any economic law, strictly speaking, for economics at all.
One of the first actions declared for lowering the crisis impact was indirect tax cuts for workforce. All business press was shocked.
I’m glad to see the Czechs as the leaders of the European Union for this half-year. It is going to be very interesting in the next months as we witness the clash of socialists of France & Germany and the former communist countries in Central Europe, where ‘effective regulation’ is an at once entertaining and sad collocation.
After 20 years of so called “communism collapse” in Poland we have:
1. No roads.
2. No middle class (only less than 3% of tax payers earns more than 85 000 PLN ->20 000 EUR a year).
3.We have one of the most expensive internet in EU.
4.One of the lowest factor of value added scientist research in EU (next to Albania).
5.No effective eduction system ( a teacher is paid ca 300-400 EUR net monthly)
Donald Tusk did not fulfill any of his election promises. As soon as the his goverment started to rule “experts” claimed that existing tax system is the best.
I don’t think we will have liberal economy in Poland in the near future.
Main goverment activity is to cover up the affairs discovered during the previous cadence. Having a control over the justice system facilitates “rehabilitation” of people arrested for corruption.
Ruling style went back to soviet era with enormous propaganda being imposed. Everyday statistics give certain people in Civic Platform ~50% support. The same percentage is against Law and Justice president. How many of them are actually true? Nobody knows.
Political statistics are a regular subject to jokes.
After Law and Justice goverment reduced pensions of former secret police employees Donald Tusk’s policy was to award them high pensions again. They obviously deserve them, some of them they worked so hard torturing members of Solidarity or Polish Home Army in prisons.
Cancelling some of the important energy projects like one involving building of the liquid methane port uncovers the plan of keeping our country as some sort of russian satellite with all the gas being imported from there.
Also the goverment is trying to please the developers by stopping the property residents enfranchisement. According the legislation people who were allocated in the apartments during communism are allowed to buy the apartment for symbolic price. Also the piece of land underneath can be claimed by all the apartment owners, so they cannot be thrown out of there. (Ownership of the apartment does not secure the residence on the same way as land owning).
This law was claimed invalid and there are few months left to register for full ownership. Some of the apartment management teams are advised to torpedo any claims even if the law still applies.
Many signs uncover the real face of Donald Tusk’s goverment with corrupted politicians and businessmen network trying to secure another portion of valuable assets to share.
Health systems seems to be the next victim of greed.
The Soviet regime is laughing from its grave.
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