Katastrofa prywatyzacji emerytur w Polsce - book review

Sixteen million Poles being contributors to the social security system have four working days left to choose, whether a fraction (roughly one-seventh) of their contribution will stay in the state-run pay-as-you-go (PAYG) social security fund (requires no action) or be diverted into private-run pension funds (requires submission of declaration), participation to which will be since now discretionary (couldn’t I have stretched the sentence out even more?). So far less than one million Poles declared the will to have 2.92% of their before-tax salaries to be transferred to private-run pension funds under the public social security system. The interest in the last days when the choice is possible has been growing exponentially and it is estimated the number of participants of the second pillar of the pension system will exceed one million, still far cry from government’s estimations from 2013 which assumed almost twenty percent (or three million people) would plump for pension funds.

I have already made a choice and anyone who has been carefully reading this blog would easily guess what my decision has been. In discussions with my friends and colleagues I have openly admitted which option I had chosen, elucidated reasons and have not encouraged anyone to change their mind. I actually favour the government’s idea to let people decide what the uses to their contributions to the system will be. To a few persons I mentioned the book I had recently read. Some of them, mindful of my general free-market and liberal orientation, were kind of perplexed to hear me speaking highly about the book written by a leftist economist, the most avid critic of pension reform in Poland, professor Leokadia Oręziak.

The situation with a man whose opinions are well-shaped is that in 99% of cases you cannot easily categorise them as 100% liberal or 100% socialist (simplifying the issue to distinction between two main undercurrents). I cannot claim to be a pure liberal, nor to be a pure socialist, I simply lean towards common sense and put faith in ideas that stand to reason. Sometimes ideas which might appear liberal in fact are not. The concept is brilliantly illustrated in the book by highlighting the paradox of neo-liberal doctrine backing the power of unregulated market and positing cutting back on inefficient and evil government. The same doctrine when it comes to private-run pension funds does not hold back from asking the evil government for ensuring participation in private-run pension funds would be mandatory, i.e. the bad state must coerce the citizens to pay financial institutions for managing their pension accounts. I learnt many times liberal doctrine assumes a man should be responsible for their deeds and should be given autonomy to decide about themselves, while the socialist doctrine assumes people not necessarily know what is best for them, therefore the government should take care of them and decide what is good for citizens and for this purpose seize more of their income in form of taxes. The outcome of the reasoning is that obligatory payments to private-run pension funds under the public pension system is a manifestation of socialism. This has been long ago said by independent liberals from Centrum im. Adama Smitha.

“Who benefits from this [existence of pension funds]?” (Komu to służy?) is a tad populist question frequently posed by the opponents of pension funds. The book casts a new light on that matter. It does not take a genius to discover none of the developed countries coerced their citizens to pay pension contributions to private-run pension funds being a part of public social security system. Of course saving for pension is wide-spread there, but is not compulsory. People look after their future pension on their own or via employer-run pension plans. Almost all countries which implemented obligatory pension funds have in common that they went through a debt crisis and were relieved of some of their sovereign debts. Such was also the case with Poland. One other common feature is that the debt relief was combined with assistance of the IMF and the World Bank and was subject to following requirements imposed by these institutions. For me, from the perspective of financial services sector, it is quite natural a creditor has a distressed creditor on a string. Now the last question to ask is whether the IMF and the World Bank are doing a huge bail-out job disinterestedly. If you believe when zillions are at stake any action can be disinterested, then the fact the list of developing economies which struggled debt crisis and were aided by the IMF and the World Bank and the list of countries which adopted the pension system in shape similar to that implemented in Poland in 1999 is just a coincidence!

Mrs Oręziak in the second part of her book cracks down on common myths on private-run pension funds advocates of pension funds spread to persuade people to superiority of capital pillar over state-run PAYG system. She debunks these myths (I also dissected most of them along the way) in a way intelligible for an ordinary reader. This part of the book is particularly worthwhile, albeit personally I would rearrange some passages from the argumentation and leave out others.

Although our views on the flop of the public pension system managed by private entities generally concur, I disagree with some of the notions Mrs Oręziak points out.

I personally doubt the government is a good guarantor of future retirement benefits. It only has different tools to dupe citizens, if in need, and by nature is less greedy and less costly. Besides, you cannot compare a pay-as-you-go system in which money collected in form of contributions from the employed flows to retirees as their benefits to a system in which payments are invested in financial assets, as returns on each of them depend on different factors.

I cannot agree if Poland had held on to defined benefit system, instead of shifting to defined contribution system, future pensions would have been higher. You cannot circumvent the proportion between the employed and retirees; you can only change the apportionment of income between the two groups. Poland needed the pension reform in 1990s, but it would have been sufficient to deeply reform state-run social security system to ensure it is balanced in the horizon of many decades but inclusion of private fund managers to the system was needed like a hole in the head.

It should not be taken for granted that the government will bring citizens a higher pension than risky financial market. The amount of pension in the perspective of decades will be the same from either source, because both financial markets and public finances are tightly tied to a country’s economy and pace of its growth. The only difference is that returns of pension funds are more volatile than increment of benefit from the social security – somebody who relies on pension funds is exposed to a timing risk (i.e. the risk that prices of assets in which a pension fund invested drop shortly before someone pensions off).

I also do not share the view the discretionary participation to pension funds, to which the government encourages, through system of tax deductions, is detrimental. The governments of almost all countries are not capable of providing their citizens with high pension benefits and it does not hurt to put in incentives for employees to save on their own. The different story is that the institutions which offer such financial services are usually far too costly and inefficient, so faced with a choice, I would never sign up for such plan. I am in the luck to have sufficient financial knowledge to look after my finances on my own.

To recap, the book, although I would not praise it without reservations, deserves two merits. Firstly, it is written in a simple, clear language, which is of paramount importance if laymen are to make up readership. It clearly presents causations in economic reasoning, therefore a reader finds it easy to follow and comprehend why something works or does not work. Secondly, the book is very factual. It contains more footnotes than pages so that reader can easily verify accuracy and integrity of the book’s content, which given the scale of controversies surrounding the topic, add a lot of value to the publication.

Restraint (powściągliwość, umiar)

The fortnight before the exam, the subsequent easing-off, the trip to Germany, the last weeks before job change – quite many head-on collisions with reality along the way. Haven’t come burnt and bruised out of them, however the recent two months have made me ponder upon true virtues of relationships with other people, when they are worth, when and how to foster them, what to appreciate in people and what kind of relationships to avoid.

One conclusion comes to the fore of my considerations; I have more and more respect for those who keep their distance towards the world and are adequately reserved towards other people. I particularly have a high regard for individuals who:

- keep a low profile,

- keep a cool head,

- are hardly ever thrown off balance, no matter how cards are stacked against them,

- do not raise their voice,

- do not bear a grudge,

- do not take umbrage,

- hold back from overly showing their emotions,

- refrain from profusely speaking about their private lives and sharing their predicaments with everyone around,

- do not wash their dirty linen in public,

- are not moody and hardly ever let other people know something is eating them,

- rarely boast about their achievements,

- do not flaunt nor show off their wealth or earnings,

- dress modestly,

- do not share every step they take on facebook,

- know where boundaries which should not be overstepped are,

- are humble,

- know what they are worth and do not strain to prove it to everyone around,

- do not judge the book by the cover,

- do not feel happy to see misery of someone they dislike,

- can find a common tongue with someone with who they are worlds apart,

- do not take for granted everything they are told,

- are assertive,

- have a moral spine,

- have courage to defend true values,

- do not pretend to be someone else than they really are,

- do not take liberties with other people, unless they are their close friends,

- are to some extent reserved towards other people

and on top of them are sympathetic, amicable, helpful, balanced, open and frank.

I hold dear the set of traits above and have the luck to have gotten to know more than a few people who fit the profile. I am pursuing to adopt all of them.

Back to relationships – I have began to strongly appreciate people who keep their distance when we first meet and at the beginning of the relationship, whatever the character of it is. The tentative approach to another man in a country of mistrust is quite natural, moreover getting too familiar with one another might actually spoil the phase of proper shaping the relationship. As people get to know each other better and if they are on the same wavelength, the distance between them will naturally shorten anyway. The pace at which it happens depends on many factors, but my experience has taught me, the longer it takes, the stronger and more durable the bond between people becomes.

There are several people you have several sorts of social relationships with – relatives, partners (spouses / girlfriends / boyfriends), close friends, acquaintances, workmates. I believe depending on the character of the relationship one should dose up the distance between them and the other person, because it… helps foster relationships. Maybe it sounds silly, but if I discern someone gives me more trust than to other people, our relationship is more likely to strengthen. I suppose many people have the need to be exceptional, be the one, be one of the only few, be the trusted ones and they feel the should pay back the same and so is their friendship reinforced. The precious restraint seems essential to let people recognise the true value of the relationship between them.

Tomorrow (over a week in advance of my last day at work) I’m staging a farewell gathering at work (which simply means I bring cakes, other sweats, beverages and folks show up to wish me good luck). This can serve as a good example. Over my four-year stint I was involved in several tasks reaching well beyond my job description; this also helped me developed a wide network of contacts with, as I counted, over two hundred fellow employees. Firstly, those who I had encountered incidentally, have not been informed about my departure. Secondly, those with who I wanted to share the blend of joy and sadness surrounding the job change, have been invited to the farewell. Thirdly, some of the invited, on account of the distance between us will not show up. Fourthly, the very symbolic moment of saying goodbye will speak volumes about the character of our relationships – with some females there will be kisses and hugs, with other women only hugs, with some men patting on the shoulders, with some workmates handshakes, some will be spared even a handshake. And fifthly, the closest workmates who I can call friends will deserve a more private, symbolic ‘goodbye’ which will mean only we will no longer work together.

Strange posting, isn’t it? Holds water?

Another divide line in the Polish society

Poles excel at finding divisive issues to argue about. Was imposition of martial law legitimate? Was the Smolensk crash an assassination or a tragic accident? Was colonel Kuklinski a hero or a traitor? What does the rainbow on Plac Zbawiciela symbolise and should it stay there?

The most recent area of disputes among public figures and ordinary people is the controversial decision of head of one of Warsaw’s hospitals who declined to perform an abortion to a woman whose child was bound to be born grossly disfigured and die soon after birth from severe deformations (it happened last Wednesday) and who did not refer her to another doctor who would terminate the pregnancy (as set forth in the doctor profession law). The story has been succinctly recapped by BBC, yet the short write-up focuses only on facts and does not broach a wide spectrum of dilemmas involved.

Clearly, there is a conflict between Catholic Church teachings and official legislation. For Catholics, life is indefeasible since the moment of conception until natural death and this precept cannot be compromised in any situation. The Polish law, passed in 1990s and until recently serving as example of give-and-take in lawmaking, allows for abortion in clearly specified situations, when pregnancy is the aftermath or rape, incest, life of mother is at serious risk or when child’s defects are abject and incurable. Actually the short list of exceptions to general prohibition of pregnancy termination covers situations when lesser of two evils has to be chosen. The law also states a doctor whose beliefs do not permit them to get involved in some forms of treatment (e.g. performing an abortion), is allowed to refuse to grant a patient’s request, but is obliged to refer the patient to another doctor. This provision also clashes with the Church teachings, according to which a doctor who abides by the law becomes an accomplice. No wonder strong is the line of defence of the professor who draws a comparison to a pharmacy assistant who refuses to sell a poison to a would-be suicider, but refers him to another pharmacy round the corner. On the other hand, the pregnant woman was bestowed a free will and the doctor’s role could have been to persuade her not to have an abortion, but he should have been confined to a firm refusal.

The ever-lasting problem with assessment of abortion, in-vitro and other similar issues is whether an embryo is a child or not. Once you take a stand on this issue, your perception of the problem is easily (not an apposite word) tackled. If you think an embryo is already a human being, an abortion will be a murder. If you see an embryo as a bunch of cells unable to function on its own that can develop into a human being inside a woman’s body, your approach will be more liberal…

The provision under which doctors can decline to engage in some forms of treatment is called ‘the conscience clause’. Oddly enough, professor Chazan is most often accused of lack of conscience in his demeanour. He does not deny his aspiration was not to commit a sin and to prevent a woman (whose beliefs could have been different from his and who was legitimate to have an abortion under the statutory law) from committing the same sin. He also owns up to being in violation of law. His rules do matter, but in his pursuit of moral superiority he failed to fulfil each doctor’s obligation of care to the patient’s welfare. Each situation when pregnancy is the effect or rape or incest, or as in that case, the child would be born dead or with deformations or other afflictions resulting in immediate death is difficult. To reiterate, the choice is between the lesser of two evils. Some women would definitely prefer to give birth to a child with mangled skull, undeveloped brain, lacking nose and with dangling eye (press articles describe such obnoxiously the child) and keep it company in its suffering until natural death. Some women would prefer not to go through the trauma of prolonged watching their child’s anguish or spare it the suffering. Technically, the delivery was to be accelerated and the child would die naturally during it, or shortly thereafter…

The interesting paradox is that a fundamentalist Catholic’s conscience reaches as far as refusal to carry out an abortion, is some cases comes up a referral to a hospice or psychological care centre. There is much bitter truth in accusation that life-defenders are interested in defending the life between conception and birth. What happens later or what happens to a matter, not to mention the intercourse by which a woman got pregnant is beyond the scope of their interest. The child is to come to this world and who is going to bring it up, whether it will have proper care, a normal family whether it will have guaranteed means for subsistence, who it will grow into, etc. The Catholic doctrine thus fosters values and ideas and gives little care about humans, their feelings, suffering.

There are several other, more down-to-earth questions that deserve to be asked when looking into the scandal…

Why did the woman who wanted to have an abortion, turn to the hospital in charge of which professor Chazan was and why, after being turned away, did not she seek help with any other hospital? This question, though asked frequently, is a kind of pointless, as each and every public hospital should provide the woman with medical service she is legally entitled to have and the ‘conscience clause’ can be invoked by specific doctors, not institutions.

Is the timing of the breakout of the scandal accidental? Is it a coincidence it was publicised shortly after several doctors and students of medicine signed so-called declaration of faith, surrounded by controversies?

Is it the coincidence the lawyer who represents the woman is Mr Dubieniecki, the ex-son-in-law of the late president Kaczyński? Is he just grabbing the opportunity to put in an appearance in the media, to boot in complete opposition to his ex-wife’s uncle?

Mr Chazan’s decision to break the law conflicting with his beliefs was an example of civil disobedience. A big pity he is inconsistent in his deeds to refuses be disobedient all the way to reckon with a punishment. As a man of honour he would submit his resignation and suffer consequences, including paying a penalty imposed on the hospital he ran from his own pocket.

Reaction of the church and Catholic journalists speaks volumes about their attitude towards humankind. Professor Chazan has been made a martyr, is depicted as a victim, while suffering and feelings of the mother of the defected child are far in the background. The doctor who has saved the life is a persecuted while the moralists do not give a damn about the prolonged ordeal of the woman and her unborn child. While reading internet forums, one can see commentators almost unanimously take side of the woman. Again we see a growing dissonance between official statistics saying 90% of population of Poland are Roman Catholics and beliefs of majority of commentators (not necessarily on leftist / liberal forums) who think Mr Chazan is a cruel, unsympathetic bastard.

The disparity between Church’s official teachings and folks’ personal beliefs is unsurprising. The Church has not moved with the times and some points in its doctrine are inhuman. I doubt the Church will ever change its stance on abortion, but I believe in 100 years in-vitro will be accepted by the Church, just in the same way as other medical discoveries have been embraced by the Church, with considerable delay. Cross my heart, I recognise the problem the Church has with in-vitro insemination, but do not understand the evil of in-vitro. If people want to give their love to children, but for some medical reasons cannot have them, why should the medicine be prohibited from helping them?

Formally, Poland is a secular country. In practice, fundamentalist Catholics are growing in power. There is nothing wrong about high percentage of deeply religious people. The reason for concern is that they attempt to impose their beliefs on other people, with little respect to their autonomy. Unjustified withdrawal from the performance of ‘Golgota Picnic’ in Poznań in the wake of protests is one of the examples. The play was staged in theatres or other closed buildings and no one was compelled to buy tickets and see the performance, but defenders of morality wanted to prevent visitors from entering theatres… Another illustration is a ludicrous objection of a priest from Warsaw against putting up figurines of bull and bear (associated with symbols of demand and supply on stock market) outside the edifice of the Warsaw Stock Exchange who interprets bull and bear as pagan symbols. The more hilarious, although absolutely serious, hence absurdly scary, instance is a protest against Sunday yoga classes in Poznań…

The constitution of Poland guarantees its citizens freedom of religion, beliefs and autonomy of individuals. I hold those values dear and I do respect views of dissenters. I do understand someone might think yoga is a demonic set of exercises enslaving people and pushing them straight on the road into Satan’s arms. But they should understand other individuals might have a different opinion and the constitution guarantees them the right to attend the classes they want… And oddly enough, the louder the lunatics bleat they are persecuted, the more they meddle into not their businesses… How come?

Flea market, Piaseczno

Learnt from a local newspaper last Saturday that a flea market would be held each Saturday between 10 a.m. and 2 p.m. in Piaseczno bazaar site. Being kind of fond of such events (my bygone best friend and I used to visit Bazar na Kole, the biggest flea market in Warsaw quite frequently, but since our friendship loosened and then broke off I do not feel like travelling to the other end of the capital on weekend mornings) I promptly jumped on the bike and ventured there. Before setting off from home, I grabbed the camera, but did not notice the device was suspiciously light. Indeed, after transferring photos from the trip to Germany to my laptop, with a view not to use the camera for a while, I had taken out the battery and forgot to put it in. I realised my oversight as I pitched up to the marketplace and tried to turn the camera on, unsuccessfully.

Quite eagerly, with complete and working photographic equipment, I decided to repeat the trip yesterday. To the right, flea market site – town bazaar in Piaseczno (targowisko miejskie w Piasecznie). The area, next to Radom line railway tracks, by ul. Jana Pawła II is a tad dilapidated. Looking at the pic, one could judge it was taken in 1990s, in times Polish capitalism was fledging. Indeed, you could sense the time stopped there twenty years ago… Little has changed in that part of Piaseczno since my childhood.

To the right – the only avenue in the flea market. Tuesdays and Fridays are market days here and the place is damn busy, as many older locals, shunning supermarkets, prefer to buy food produces from local farmers. On other days the area is desolated. Yesterday there were much fewer buyers and sellers than a week earlier. Maybe the commencement of holiday season and weather conditions (warmer, more humid air) lowered the number of visitors…

My inhibitions again held me back from taking photos of particulars stalls and goods put up for sale. My respect for fellow men’s privacy is stronger that willingness to document the sight of flea market for posterity. The range of goods than could be bought on the flea market covered: worn-out clothes and footwear, obsolete consumer electronics, computer games, films on DVD and CHS cassettes, music CDs, cutlery, tableware, tools, spare parts for cars, naff paintings, small pieces of furniture, much outdated newspapers and… books. I have nothing against exchange of books, especially if one wants to find a new owner for their tacky thrillers or romances, but several people were selling decent, brand new books their children had received as awards at the end of school year. Such disrespect for written word with the nation is inexcusable! And those were citizens whose offspring had passed with flying colours!

To the right – a bonus for me. A coal train heading up towards Okęcie on the electrified northbound track of the Radom line. Wagons are being hauled by two locos and their speed is much higher that the pace of trundle on Siekierki line. The photo was taken on 5 July 2014 at 11:05. Quite probably the same set of carriages, hauled by one loco only, was snapped by Michael some time later…

From the economic perspective the flea market should increase the social welfare. If a marketplace where goods can change hands is organised, it means:

- people who want to dispose of superfluous stuff can more easily get rid of it and earn some little money (and they are better off),

- people who need some stuff, not necessarily new, but cheap, or no longer available as brand new in traditional shops, can at reasonable prices buy it (and they are better off).

Supply and demand thus go up, resources in the allocated more efficiently, utility of specific market players and rises, so everyone is better off.

Entrance to the site for buyers is for free, the sellers (who are individuals, not entrepreneurs) in order to be permitted to trade, have to pay a stall charge (placowe / opłata targowa) of mere 1 PLN. Oddly enough for many the single zloty was more than daily takings from the sale and for most the single zloty was just a fraction of cost of fuel their vehicles had to consume to transport a bulk of goods to the flea market. Nevertheless, the whole initiative is not about making money. It is about pleasure; the concept is vague, you either get the feel of it, or explaining will not help…