Sunday, 7 February 2010

Ukraine, shock doctrine

Following the discussion on Polish winter, I report the gas bill has arrived.
Period: 20 November 2009 – 19 January 2010
Gas used: 628 cubic metres (just 21 metres more than in the same period a year earlier)
Amount payable: 1111,70 PLN (after adjustments 900 PLN apportioned to heating, the rest to water boiling and cooking)
Usable space heated: around 120 square metres.
Is it really a lot? My father counted up the costs of heating a 60 square metre flat five years ago and he worked out heating a two times bigger house costs after five years (meanwhile gas price and other charges rose) costs only fifty per cent more.

The winter doesn’t seem to break its back soon, the harsh weather may also put many Ukrainians off going to the polling stations today, when a run-off in presidential elections is held. I pondered upon those elections, as I still remember (finally I’m old enough to remember something) the Orange revolution in 2004 and kept track of some current news from Poland’s eastern neighbour and I came to a simple conclusion: Ukraine has not grown into democracy yet. And I’m not sure whether it will ever grow. Heritage of the past has left its mark on its people and it is being passed on to next generations.

To back my theory I see two key reasons why the country got where it now is. Firstly, its elites. People pinned hopes in them over five years ago, expected a big change. Meanwhile in a country with poor institutions a change is beneficial for a small group, the rest might feel disadvantaged. The elites soon relished on power and privileges and began to embroil in spats within their structures (note the same happened in Poland in early nineties within Solidarity structures). In a poorly developed countries being in power means access to privileges and money, or to put it simply, corrupts the governors. In highly developed countries and mature democracies it is a distinction, a proof of social trust, a position which crowns one’s accomplishments and career. Being elected means not a chance to establish oneself in a cushy job, but a public service. It seems to me this is why deputies, ministers and other people holding high positions in state administration should take those offices for reasons other than financial, i.e. social status, fulfilling one’s ambitions, prestige, going down in history, etc. In Ukraine, the premises were different.

The second cause are the people. Firstly shaped by seventy years within Soviet Union, secondly lost and often unable find their ways around independence. They wanted democracy and liberty, but those were not the politicians that made them hanker after the advantages of the previous system. It was the economic crisis that heavily hit the country. The misery is best illustrated by figures of economic growth (over minus twenty per cent year-on-year in 1Q 2009) and depreciation of hryvnia. If people can’t make ends meet, they’re more interested in bread-and-butter issues than in free speech. Crises usually are the times when populists’ popularity grows. Remember that Hitler was elected in the time when Germany was in the doldrums.

I thought reading the passage (pages 171 – 184, English edition) about transition in Poland in Naomi Klein’s Shock Doctrine would unveil some conspiracy theories, facts kept in the dark, give some food for thought. None of the above. A reader unfamiliar with history of Poland in 1980s will find there a timeline and overview of the most important political events that led up to the collapse of communism in Poland.

Mrs Klein drew a parallel between political changes in Latin American countries and in Poland. Her point that the shift to democracy was prompted by decaying economy is quite right. I personally think the regime decided to share responsibility for the country in the moment of ultimate collapse. The regimes which had ruled Poland for forty five years of real socialism had indeed been mismanaging economy and the breakdown was inevitable. Our situation was different than the one in South America. Those countries were not, like Poland, in Soviet sphere of influence. The last opportunity to reform Polish economy painlessly was wasted in the middle 1970, when the extensive growth of socialist economy reached its limits. Then problems were exacerbating. In first years, until 1979, authorities managed to cover them up, then they became too clear to be unseen. The change, however, was not possible, as I claim until 1985 or 1986 when the communism in Soviet Union showed first signs of thawing out, but at that time Polish economy was in a harsh decline plus social indifference thwarted possible reforms.

Was Poland in a great position to accept the shock therapy? It’s hard to say now, the worse the state of our economy was, the more painful bringing it back to order must have been. But watch out now. Poland was crippled by what influenced the situation of Ukraine. The transition, aimed at liberalisation and privatisation was not focused on institutions. Had the rules of the game been clearer and more transparent, we wouldn’t speak now about fortunes springing within a few weeks and about abrupt impoverishment. Poor institutions are, as I observed one of major causes of growing inequality. Milton Friedman, in his declining years said he had been wrong. The major reform that should have been carried out in post-socialist economies was creation of sound institutions. With good institutions established, privatisation wouldn’t have been so slated these days.

Somewhat interesting is the comment on the attitude of Mrs Thatcher and Mr Reagan towards Solidarity. This movement, in its line extremely leftist would be clamped down on in Great Britain or United States under their rule. In 1980 and 1981 Solidarity wanted to turn Poland into democratic socialist country, based on collective property and governed by workers and trade unions. How Poland changed ten years later was far cry from this vision. Actually I see linking Solidarity from early eighties and its contribution to economic changes misplaced. What the movement fought for and what was put into practice was political liberalisation.

Is the entire book worth reading? I haven’t got a clue. My lame excuse for not reading it now is that this year’s winter break is so short…


Island1 said...

"finally I’m old enough to remember something"

Great comment :)

Michael Dembinski said...

Gas used, Dec '09- Jan '10: 1,236m3

Gas bill for the period: 1,996.93zł

Size of house: 238m2.

Well, I can cope with this size of bill; the aesthetic beauty of this winter makes the extra 662zł (compared to bill for same period last year) extrememly good value for money. Money saved by not using the car so much.