Sunday, 27 February 2011

'Business school' versus 'School of economics'

In practice, I have actually parted company with my school, although in theory I'll do it when I pass my Master's exam. Formally I'm still a student, and both as a student and as a would-be graduate (a diploma from the Warsaw School of Economics is a recognised 'brand') I should be interested in the strategy of WSE (PL: SGH), thus the direction in which it is drifting.

Recent years have brought significant changes in the workings of my university. Most of them have been brought about by an obligation to implement the so-called Bologna system. The biggest revolution to take place under the new system was the shift towards two-tier studies. Each student now has to no choice, but to take a three-year BA course and then, if they wish to continue their education, a two-year MA course. This has replaced the previous cycle of five-year MA studies, which left the decision to take a Bachelor's exam at students' discretion. The shift necessitated changes in the curricula. In the old system studies lasted five years, now they last three plus two years. This indeed equates to five, but the new system lacks continuity, as studies have to be split into two separate cycles and new curricula for each cycle have had to be drawn up.

Proponents of the shift (not those from Poland, but EU officials and scholars) pointed out the Bologna system would bring benefits to students. As it now transpires, its introduction was to the benefit of the overwhelming, problem-piling-up bureaucractic machinery and students are not key beneficiaries of the Bologna system. Since the introduction of the new system in 2006, when I began my studies, SGH has pressed on with two curriculum reforms. Both have come in for harsh criticism for cutting down on number of course hours allocated for "core" courses (intermediate macro- and microeconomics, advanced economics, statistics, econometrics, mathematics) and "not strictly economic" courses (sociology, economic history). The most ardent opponents of the reshaped curricula even cried out against SGH turning into a "vocational school" and retaining the word "economics" in its English name only.

In the West we have two different types of universities:
1) business schools,
2) schools of economics.
And they must not be mistaken for each other!

Let's look at the top bar at "The Economist's" main page.

This is not a coincidence that 'economics' and 'business' have separate sections.

The difference between the two is quite simple. Economics is about understanding people's and companies' behaviours on the marketplace and functioning of economies and it is a social science. Business in turn is simply about making money. The two are strongly tied-up with each other, yet the latter is just a part of the former.

This assertion leads us to another conclusion. It takes much more to educate a good economist than a good businessman. In fact a 'vocational school' would suffice to churn out graduates who would pursue their careers in 'business'. They should have all competencies and skills that would allow them to generate money for their corporations and, consequently, for themselves. A graduate of a business school can work in a consultancy firm, as accountant, auditor, product manager, at a bank, they can successfully run a company. In many of the jobs listed above they would outperform graduates of economics, but think about a business school graduate analysing financial markets, working in a central bank (remember the former president of Polish central bank, ridiculed for his diploma from an 'inferior US business school'?), as an economist at a bank or drafting a pension system reform. All those tasks require a graduate of economics, equipped not only with essential knowledge, but also taught to understand all complex phenomena that take place in the economy, taught to analyse and track causations and, above all, able to shape their own opinions independently. In the context of independence the word 'business' has to be stressed. Being in business involves money-related tie-ups and conflicts of interests that jeopardise an economist's independence. But bear in mind that only business, but also politics might pose a threat to an economist's independence.

Nevertheless, the education of an economist needs to be much broader that the one of a business school student. Courses such as sociology, economics of development, economic history, economic policy have to be run and taken by students. Being an economist requires broader horizons and open mind. The style of teaching should differ. Students of economics should be encouraged to discuss; during such discussions various opinions should clash, substantive arguments backed by examples and calculations should be traded. Analytical skills should be developed, students should be taught to discern possible impacts of some factors on other ones. A few useful rules should be instilled, such as recently quoted one that in economics you can prove a theory if you can't disprove it. And a grasp of psychology is essential when analysing the mechanics of economies and financial markets! Business students, in turn, can crack case studies, learn how to manage people, run companies, foist stuff upon customers and develop other skills requisite for making money.

I don't wish to denigrate students and graduates of business schools. They're just a different breed and are not cut out for some jobs. As a rich man I would not hesitate to take on a business graduate to run my company (but remember the currency-option botch-up from early 2009), but they would not be allowed to manage my personal finances.

And having said that I can't stress strongly enough there is no clear dividing line between business and economics. At my job I am somewhere in between; I try to make the most of my knowledge in economics, but the job has a tilt at the 'business', which means my career path might have to be reassessed...

Coming back to the issue of SGH, I'd like them to settle on 'school of economics' model. Maybe this is not what the market, ruled by money, needs most, but this what next generations will surely need. Moreover, 'business school' means taking a path of least resistance, while SGH with at least some of its excellent staff, is capable of aiming much higher. May it stay the Warsaw School of Economics, not in name only!

Sunday, 20 February 2011

The art of manipulation honed to the limits

The contract with our current Internet provider (Play Online) expires soon. Their service generally sucks. Connection speeds are comparable to those standard in Belarus and my shoddy modem stops trasferring data whenever it feels like. Wrangling with customer service of P4 is a big ordeal, so the decision to give up on them was an easy one. We don't know yet what company will our new provider be (only mobile internet is comes into play), but we have already taken steps to break up with Play Online. We send them a letter in which we noticed them we wanted to terminate the contract on its expiration date. In response we received a missive in an electronic form, scan of its print below. Watch out for the underlined words and phrases.

Now a small exercice in translation. A word which crops up four times in the missive, not accidentally, is , it doesn't have a short equivalent in English, so I decided to do it into Eglish as 'as much as'. Slightly stilted, if you have better suggestions, please let me know.

Ref. no. 2723****

Dear Sir,

We confirm the reception of your letter dated 2 February 2011 regarding the cancellation of services provided by P4 sp. z o.o.

On this occasion we are glad to thank Sir for the current cooperation and by the same token for placing trust in our company.

Especially for Sir we prepared an offer "RePlay Online Great with a discount" without a modem. As part of this bargain we offer you a discount of 10 PLN for the whole contractual period what adds up to a saving of as much as 120 PLN. The monthly allowance under this contract is as much as 5 gigabytes and the contract length is only 12 months.

There is also a possibility to prolong the contract for 18 months, under a modem plan. Under "RePlay Online for Christmas" special offer, the monthly charge for first four months will amount to mere 1 PLN. The monthly allowance under this plan is as much as 5 gigabytes. After the discount period ends, the monthly charge will be mere 45 PLN.

We will be pleased, if you get in touch with our Customer Service at the number *500 (call only from  mobiles in Play) in order to learn about the details of the offer and to place an order. The order will be effected by courrier free of charge.

If your decision is upheld, we inform that the Contract for the number +48791****** will be terminated on 9 April 2011, after the cancellation period, defined in paragraph 14 point 5 of P4 Terms of Telecommunication Services for Subscribers, expires. The current Play Online number will be transferred to Play Online pre-paid service, in which the service account may be topped up only when necessary. When the new plan is activated, Sir will receive as much as 1 gigabyte of data transfer to be used up within 30 days.

Yours sincerely,

Anna M****

Now some essential remarks.

1. Our letter was dated 26 January 2011. Why the hell did they change the date? Never mind that.

2. Especially for Sir (specjalnie dla Pana) is nothing but a barefaced lie. The same plan is offered to any customer who wishes to prolong their contract.

3. The contract set out 1 April 2011 as expiration date, so why did they discretionally prolong it by eight days? But to make up for this they gave 1 gigabyte as a farewell gift, so this can be forgiven.

Now let's get to the core of what I'm drivng at.
The word (as much as) was used four times.
The word tylko (only) was used once.
The word zaledwie (mere(ly)) was used two times.

Back in August 2007 I did my first job as telemarketer for another mobile operator. I went through some trainings and realised the importance of these seemingly unimportant words. A human beign feels a natural need to make a good deal. By using those words hard-sellers persuade their clients victims they do so, although the deal in fact is not a big bargain. Believe us, you'll pay so little and we'll give you so much. How can you turn down such a great offer?

That job was a big nuisance, but with hindsight proved to be a very valuable experience. Now I'm very sensitive to all kinds of manipulations I am exposed to and can make wiser and well-thought-out consumer decisions and I don't fall for all the twaddle I'm being said. And after all I sometimes sympathise with those poor people who sometimes call me to sell a product or a service and try to make me believe I can strike a great deal.

Thursday, 17 February 2011

"Politics, Economy, Society" two years on...

Gosh, that's been a lot of time. And on other hand it feels like it was yesterday when I returned home and on the spur of the moment set up my account on blogger and twenty minutes later clicked the 'PUBLISH POST' button for the first time.

Much has changed since then. The day I began running this blog economy was in the middle of its worst post-war crisis, I was a third-year student with unsettling career prospects and quite good command of English. Today economies of many countries are back thriving, I am a would-be graduate of SGH, have an almost dreamt-up job (it would be truly dreamt-up, if it wasn't for the owner), I have worked on my English and pledge to soldier on.

When it comes to the downsides, a significant one is posting frequency. My sluggishness made itself felt in late May 2010, when I decided to suspend blogging for two weeks to press on with exam period and job-seeking duties. Then since July 2010 I have posted only once a week. I tried to break away from this "ultra-predictable" pattern in January 2011, but now it seems it will be hard to revert to the satisfactory rate of ten posts a month. The only way out are short, up-to-the-point (no more than 20 sentences) postings over the working week and longer posts on Saturday or Sunday.

PS. Don't think I wrote it at midnight, as the footnote suggests. The post was written last Sunday and scheduled to come out today :)

Last year, short before the first anniversary I put in a visit meter. Around 17 February 2010 it read around 2,500 visits. At that time I said I would be happy to see 10,000 by the end of the second year of blogging. The meter hit 10,000 on 17 January 2011. Now I set a target of total 20,000 visits by the end of the third year, if I keep up doing what I do, it should be met. Compared to some outstanding blogs in Polish-English blogosphere, which recorded over 250,000 visits (20 east), over 1,000,000 visits (Polandian, turning three today), or can boast around 9,000 visits each month (W-wa Jeziorki), my figures look poorly, but given my motto "the last thing I need is publicity" I am glad to have small audience who appreciate my job. After all it could not be any other, as the language barrier takes its toll on the blog.

At the end I would only like to thank all commentators, your contributions add much value to this blog and other blog-keepers and site-owners whose pages link to "Politics, Economy, Society".

Saturday, 12 February 2011

The ship that weathered the storm is sinking?

No longer than a month ago I extolled Polish economy for its resilience in the context of the first interest rate hike in the current cycle of monetary tightening, but over the course of last two week I mulled over the issue, took it apart and now I feel like taking back what I wrote then, although I cannot deny I did believe what I wrote was true and reflected my opinions.

What prompted my recent change of heart was a market analysis. I observed the performance of Warsaw Stock Exchange blee chip index (WIG20) and compared it with performance of other major indices (German DAX, US S&P 500, Japaness Nikkei 225). All the foreign indices this year hit their many months' highs repeatedly, whereas Polish WIG20 barely climbed to 2,809 points, peaked there and retreated. Polish stock market's relative performance has been very poor in the last weeks and this seems to be a distrurbing signal.

Stock market performance is one of Leading Economic Indicators, what in simple words means its changes herald changes in the whole economy. It has to be said stock market performance is not unfailing and if "Wall Street predicted nine out of five recessions after WWII", signals it sends might be misleading. But if we look at recent happenings in a broader context, Warsaw Stock Exchange does not have to be wrong this time.

Please note that performance of stock market is correlated not with GDP but with the pace of GDP growth. Economy may contract, but if the contraction is not as deep than in the previous quarter, stock prices should rise. This rule works also the other way round - if economy grows, but not as fast as earlier, stock prices should decline. To be precise, stock market should precede real economy by one or two quarters, although in the recent crisis there was no lag (rebound in 1Q2009 and peak in 3Q2007).

Let's have a look at some facts.

1. A lion's share of the turnover on the Warsaw stock market is generated by foreign investors and speculators. They generally buy the most liquid stocks and therefore their interest focuses on securities that make up the WIG20. Their decisions are generally based on their perceptions of prospects of Polish economy. Buying stocks is actually about buying future, as all present information are already incleded in a price. So if speculators and investors are optimistic about Poland, they buy Polish stocks; when they turn pesimistic, they dispose of Polish securities. If their perception of Poland worsens, it is not because they have it in for Polish stocks, but because something might be amiss with Poland. What is happening now is not a reprise of speculative sell-off of Polish currency and assets from early 2009, when market sentiment was overtly negative, now it has only fallen back.

2. Why? One reason are the proposed changes in the pension system. Regardless of what I think of it (I am in two minds about it, I will try to present a subjective evaluation of those changes before they take effect), the motives behind the government's decision to transfer a part of pension contribution from private-run pension funds to state-run pay-as-you-go social security system are clear. The government did not concede private pension funds are too expensive and too ineffective (as they in fact are!) are did not wish to save poor citizen's pensions from being squandered by greedy fund managers. Polish state gripped that money to curb the increase of outright public debt and swept the problem of its obligations towards future pensioners under the carpet. It does not mean I fully disagree with their decision, but this time a drowing man was desperately trying to catch a straw. The move also reflects upon the pitiful state of Polish public finances and interminable shortage of money in the system, which results from years of mismanagement.

3. What could have scared the investors and speculators away? If the government seizes the money, situation in Poland must be quite bad. Private sector fares well, but if things keep getting worse it will have to bear more and more burdens and so the consumers will. Higher taxes will impinge on lower investments and consumption and thus will hamper GDP growth...

4. Another factor is connected directly with mechanics of capital markets. Pension funds every months have bought stock on the market to their portfolios. After the reform, if they get less money, they will buy fewer stocks, what consequently will weaken the demand side on the market. Without demand from pension funds rates of return on the market will be lower. This assumption could have deterred some market participants.

5. Many economists say the best year in the current business cycle will be 2011. Growth will be stimulated mainly by investments, in a large part financed from EU funds and aimed at EURO 2012 preparation. Poland has reached its limits as a free-rider - it fared well during the crisis, but the current pace of growth is unsustainable without structural reforms.

6. Rising interest rates also might negatively affect the economy, but with inflation as the overriding target, we have no choice, but to accept monetary tightening.

7. Appreciating zloty may harm our exports and contribute to the slowdown in pace of GDP growth. If interest rates disparity increases (quite probably, as in the Eurozone and in the USA interest rates are said to be kept near-zero to sustain the recovery), carry traders will do their job and no central bank interventions will help. Only a shift in market sentiment towards Poland can bring Polish exporters relief.

Neverthelss Polish GDP should be on the rise for the next three years, if only nothing unexpected happens, but we should be prepared that the growth will be sluggish (2% - 3% p.a.) rather than robust. Warsaw stock market might be already discounting these information. In turn German economy proves its perfection - our Western neighbours have turned around their public finances and they proved again their economy stayed competitive. Over the last decades competitiveness was the crucial performance driver. Here we can take leaf out of German's book. On the other hand I would not wish Poland to follow the example of the USA. Their stock market is soaring just becuase the US central bank is carrying out quanitative easing to buoy up US economy, what in simple words means guys from FED are printing money, economy still is in the doldrums and speculators borrow money at 0.25% and drive prices of equities and commodities up.

Paradoxically, even if Poland underperforms in comparison to other countries in the coming years, it may give it a soft landing. Other economies, affected by asset price bubbles (if nothing changes in terms of regulations and monetary policy they are bound to inflate, but not in Poland, Polish economy will suffer from rising food, petrol and gas prices) will go through another, even more severe financial downturn and Poland, if run wisely, might be again the only green country on the economic map of Europe.

Saturday, 5 February 2011


Hard to put it into words what I feel in one of turning points of my life. I suppose I would even have problems defining my emotions, and, disturbingly, they are rather sparse, though they should not.

On Wednesdat I took my last exam at SGH, to be precise this was the penultimate exam, since I still have to take my Master's exam, due... probably in late spring, bereaucracy permitting. My last two exams taken this week were both rough rides, however I hope for the best and contend that I will have gone through my studies without a single re-sit.

On Monday I start my first permanent job (formally I will have a three-month probationary period and then, if both parties agree, will it be a permanent job). This does not actually mean delving into a totally different world. I have had two encounters with the corporate world before and I cannot confess to feel anything like a "stage-fright", but I do feel a bit self-concious though.

The transition might be the right moment for some summaries. To put it possibly briefly, I have drawn up two lists of things I will miss and I will not miss after parting with SGH.


1. Day-to-day contact with peers. Truth be told my colleagues will be a bit or much older than me. From my past experience I know I can get along with older colleagues very well, but they are a sort of a different breed, they have different problems, pastime activities, interests, priorities in life, usually they have a different point of view because they have their own families and obligations it entails.

2. Clever, awe-inspiring lecturers, just to name a few:
dr Bogusław Czarny, who taught me basic micro- and macroeconomics, inspired to think independently, form my own opinions and who stressed the importance of the overriding rule in economics, that an assertion is true when it cannot be disproved, not when it can be proved,
prof. Marek Garbicz, for his breathtaking lectures, sense of humour and open mind,
prof. Maria Podgórska, for her patience, consistency and the fact she did not confine just to teach econometrics and mathematics in finance and insurance, but also wanted to instil in us integrity and made us aware how important in life it was,
mgr Sławomira Rajkowska, my best German teacher ever, unfortunately she stood in for our lecturer just for one term, but the progress I made (without much effort) was unbelievable. Had my Deutsch been that good today...
mgr Aneta Piwko, my best English teacher ever. If all teachers had such excellent command of English, passion and drive to teach, Germans would not stack up against Poles in terms of English skills.
prof. Sławiński... Here words are very unnecessary. Who experienced the pleasure of attending his lectures knows what I mean. The rest may only regret.
dr Piotr Mielus, the supervisor of my MA thesis and an outstanding practitioner.

3. Casual clothes. From next week will fit for weekends, holidays and cult dress-down Fridays. I actually like formal outfits so this one should be taken with a pinch of salt.

4. Commuting in non-peak hours. Lovely it was to get from or to Warsaw within fifty minutes in the middle of the day or in the evening when streets were already unclogged. My new recipe for avoiding traffic jams will be trains, so the journey between home and the office should take around an hour.

5. Job fairs, event, meeting famous people who visited SGH and other events. First two and a half years abounded in such events. Later the crisis came, companies cut their promotion budgets and I ran out of disposable pens.

6. Privileges. Not that soon. I will pick up my diploma some three months after the final MA exam, so I until then will I make the most of my ticket concession and other measurable benefits of being a student. The new world will compensate me for this by giving perks.

7. Unfettered speculation on stock exchange. From now I will not be able to do a real-time trading plus I will have several trading restrictions. This does not mean I will pull back from the stock market at all; the speculator will become a mid-term investor.


1. The overwhelming mess, bad communication between authorities and students and general disinformation.

2. Ignorance and laziness of lecturers. I do not even wish to comment. The list of admired lecturers was short. The list of big let-downs from the whole course of my studies would be much longer...

3. Workings of the student office (dziekanat), its surly personnel, quiant decisions (deleting completed courses from track record of studies, informing me about my Bachelor's exam the day before in the evening)...

4. To boot bad organisation, doing everything at eleventh hour...

5. Appaling use of English, which was ridiculed on this blog repeatedly.

6. Broken down central heating when outside it was -15C or unopenable windows and lack of curtains or blinds when outside temperature hit +30C

7. Lectures at 19:00 for day-time students (prevalent, alas).

Immersing in the corporate world will not only mean I will be self-supporting, but also will bring new challenges and real learning opportunities. In the coming months I expect to work harder and learn more than within four and a half years of my studies.

Hitherto I have not observed any sympthoms of depresja magisterska, (graduates afflicted with this malady are down in the dumps because the carefree period of studies is drawing to a close and they are in for forty years of work), but the worst might be still to come.

The last thing I can mention is the higher education system reform passed yesterday by the lower house of the Polish parliament. The new law is intended to curb two pathologies that plague Polish universities. Firstly, it imposes limits on number of jobs scholars can take. Secondly, it introduces tuition fees for students who take their second studies. From what I have observed, both steps will do Polish universities only good. At least in this respect the current government can be credited with a good job.