Polish government against foreign capital

Mr Kaczyński, the leader of the ruling party, has announced previously aforementioned campaign of his government against foreign investors in Poland

We are dealing with colonial activities of foreign companies, which do not respect moral and legal rules of the country

The crusade against foreign capital has been announced on the conference “Responsibility for entrepreneurs in Poland” in Toruń. Kaczyński along with economic super minister, Mr Morawiecki, has announced new order for enterpreneurs — where “responsibility for the country comes first, ahead of freedom and entrepreneurship. According to the newly announced policy of the ruling party — “economic freedoms of private ownership cannot be put before responsibilities for the country” (state first, individual second).

Kaczynski: First, the state, then freedom and the market

The policy is well known as is resurrects the imbalance between the state and an individual known from the communist’s era. The policy today is equally dangerous, as impossible to implement. The newly announced policy most likely will make it to the long list of economic plans which would never materialize - as government’s xenophobic ambitions have to be balanced with hard economic reality.

The hard reality is that economy of Poland almost entirely depends on foreign investments and on their export of sub-components manufactured and assembled in Eastern Europe. Polish foreign investors are in fact the engine of Polish economic growth and export. Foreign investors are also the agent of change and vast investment - with an ever increasing number of offices and factories being opened in Poland every year, as well as modern standards and practices of efficiency.

The ambitions of Mr Kaczyński, a 60 year old leader of the ruling party (PiS — Law and Justice) — can be sold as entertainment for the masses willing to pay 100 zlotys a ticket in Toruń — for the conference where new plans were announced. The working class of the rest of the country can only hope that his declarations have been made as part of just another political announcement — only addressed to those willing pay the price for a meaningless show. Otherwise, if declarations are followed by any meaningful actions, the overall costs to a society can be much larger.

During infamous conference Kaczynski has said that the responsibility of entrepreneurs is associated with “obligations to the community”, which he and his government will enforce. According to Mr Kaczynski, and quite possibly few other hard core supporters sharing this view — the responsibility of the state is to provide some sort of arbitrary balanced growth to the whole society. The political view of state actually enforcing balanced growth instead of merely enabling it — is entirely dangerous. Reducing business just to a function of providing growth expected by the society puts liberal economy in reverse.

Kaczynski is wrong. The interest of state do not stand first ahead of interests of individuals. The individuals created state to efficiently enforce their rights of liberty to organise and express themselves freely, as well as to protect their rights, however the rights came first, the interest of government to protect them on behalf of individuals — came second. Modern state is just an organised way of exercising security and liberty equally by everyone, instead of people having to execrcise them individually using walls and guns. Therefore a concept of state is secondary to the human rights that people always protected and executed.

Whereas disregard and contempt for human rights have resulted in barbarous acts which have outraged the conscience of mankind, and the advent of a world in which human beings shall enjoy freedom of speech and belief and freedom from fear and want has been proclaimed as the highest aspiration of the common people

Concept of modern state with the modern regulations and institutions have been created by people to exercise those regulations is just an economically efficient way of delivering the protection of individual rights and freedoms. You cannot imagine a state where rights of individual not to incriminate themselves are violated, even though the society might benefit from obliging criminals to testify truth even against themselves — on government’s way to solve crimes effectively.

Having said that explanation of Mr Kaczyński twisted logic, where state rights stand on top of human rights, require rewinding back through history and a small background check of the previous economic record Mr Kaczynski delivered — when he enjoyed the role of prime minister the previous time. Mr Kaczynski and his ruling party in fact are the very people responsible and participating in one political form of power for the last 27 years of Poland’s economic transformation. For Mr Kaczyński to say that we all the suddent the country needs to negate all the rules of liberal economy is baffling — given that he and his twin brother participated in creating the modern state of post soviet Poland, also called the Third Republic.

As Mr Kaczyński is now enjoying the second time his party raised to the power, it is worth noting that his “moral and cultural revolution” is a second attempt of rebuilding the Third Republic into something he himself calls the Fourth Republic. However during the current governemtn he has raised over 32 thousand pages of new legislation in 2016 alone, many of which have been questioned by European Commission, United Nations and Amnesty International — as brutally violating democratic separation of powers, and many also directly violating human rights. Leaving legality of new legislation aside, only the rapid and vast inflation of new regulations destabilises the legal system and also brings lot of red tape to Polish businesses.

As many economists have suggested, the poor quality, as well as vast quantity of new legislation alone — are one of the factors driving native Polish enterprise away from country shores. Perhaps the brightest evidence of how effective the current political option really is in driving Polish capital away from the country, would be not only in dramatic statistical numbers for the 2016, but also in one significant example that looks back at previous time Mr Kaczyński held the top power in the country. During previous time in office of his Law and Justice party, the richest Polish Businessman back then — Mr Kulczyk — publicly declared relocating holding of his companies away from Poland to Luxemburg — once Mr Kaczynski reaches country’s top office.

Kulczyk kept his word and proved Kaczyński’s limit of any political power over regulating business, and also one more thing. Kulczyk proves that in fact it is up to society to decide which business flourish and which fade away, and not politicians. Ultimately however it is still an unilateral decision of every entrepreneur which services to offer and on what terms, regardless of the state’s opinion or preference. It is unknown what was the economic cost of relocating of the Kulczyk Holding from Poland to Luxembourg really was — but this cost alone could be a blow to Polish economy.

When Mr Kaczynski formed his government for the first time, Kulczyk and thousands of other most prominent entrepreneurs proved that the business are in fact in position to provide concessions to countries in respect which countries will host their businesses, not the other way round. Now, it seems like Mr Kaczyński hasn’t learned the lesson and therofore the story of economic revolution seems to be happening again. The levels of domestic investments reported by statistical office — claim that the first year of Mr Kaczyński in power again brought the lowest indicator of new investments the country has seen during last decade. This ultimately proves that no state should or is truly in a position of providing concessions for running multi-national businesses.

There is a business lesson still to be learned. As the world at large provides lots of economic freedom and mobility of capital, it is a right of everyone to have their own possessions managed however they prefer and ultimately whenever they prefer. The society does not hold upper hand to let entrepreneurs run their businesses in a given country, but it’s the entrepreneurs who decide how to innovate and create growth — in effect let society use their private possessions for a specific price in specific regions of the world. It is entirely false to claim that enterpreneurs have any special obligations to society, as ultimately everyone has a right not to invest and not to participate in any economy of their choice.

In a multinational world a mission against foreign capital is a mission against business as a whole. Providing concessions to foreign investors, or investing in general under the terms that benefit state first — is a entirely suicidal mission from its very beginning.