Decluttering

The post is inspired by a press article on the new profession in Poland (not only), which by all accounts is a response to growing demand for such services - to solve the chicken and egg dilemma.

In late 2023, when my girlfriend was moving in to my place, I had to rationalise the content of my flat. I rearranged the space, got rid of some stuff, bought boxes and racks to fit the remaining items into smaller space. Recently, after her flat has been sublet, the second stage of the process came up and some or our stuff had to end up in my basement, assorted into cardboard boxes.

The exercise prompted me to rethink if I really need the things I possess, especially how often I use them. I am a minimalist and I think twice before purchasing an item, hence the room for improvement was limited.

Now a quick guide what to do with stuff useless for you. Get rid of it by:
1. Selling it for a tiny fraction of a new item's market value (a buyer will also benefit it), or
2. Donating it (at best via śmieciarka facebook groups, eschew the OLX oddam za darmo classifieds) or to an organisation which collect specific sort of stuff, or
3. Just throw away, ensuring it will be recycled.

If you don't feel up to the above or have no idea how to get about it, professionals dealing with decluttering are there to step in. As these experts claim, people get too attached to their belongings, usually acquired on the spur of the moment. Useless stuff is frequently bought to relieve sadness or spontaneously, because one spotted an item which took their fancy. Frequently humans believe having something at hand will prompt them to use it, but time proves them wrong. According to statistics, young mothers are the group in most need of decluttering, however theories why hoard stuff vary. The most commonplace one is that given their overload with duties and scarcity of time, they are most prone to impulse shopping.

Experts in decluttering warn what I have done, i.e. sorting stuff, packing them into boxes or organisers, does not solve the problem. It definitely facilitates finding an item somebody is looking for, but the excess stuff still occupies space in their place. Beware then!

The last valid remark is you need to want to get decluttered. Buying decluttering services as a gift to somebody whose place is cluttered is a waste of money. A person afflicted should really want to tackle the problem of superfluous belongings and take the primary responsibility in solving it. A professional will only wisely assist in it, hence at the end I would dare to doubt if rates with lower range of PLN 200 per hour of such assistance are worth that much.

Off to the seaside next weekend. A follow-up in two weeks.

The handicapped generation

Ran across the link to this kind of outdated article on my friend’s wall on facebook. Read it twice and I am of the opinion this piece should be an obligatory read for most today’s parents who bring up their offspring to become… Why do they call the future adults zombie creatures?

It is not a secret that gap between people born in 1970s and 1980s is far bigger than the gap between the latter and born in 1990s. I can say nothing about differences between people born in 1990s and those born in 2000s since I lack sample to make such comparison. This abyss between people of nearly the same age is not just the effect of growing up in different economic and technological environment, but is an element of a deeper social change. In big cities childhood in late PRL or in years of nascent capitalism differed much from today’s pattern of childhood, moreover communication was not facilitated by the Internet and mobile devices; yet these differences make up just the tip of the iceberg.

How sensitive children are is a clear consequence of how parents raise them. An average child is told on every step dangers loom all around. Imagine you are told not to stroke an animal since it may bite you or bacteria from its fur may jump into you… Imagine you are instructed to wear a helmet protecting your limbs, otherwise learning to ride a two-wheel bike you will get bruised… Imagine you are prevented from taking a mountain-hiking trip or a canoe trip, because for a few days you would live without electricity, sleep in a tent and wash yourself in cold water…

Parents’ attempts to assure comfort to their children and to save them from harm at any price at the end of the day do more harm than good. Childhood by definition ought to be the most carefree period in life. But childhood and youth are the period of learning and experiencing, also learning from one’s own mistakes which usually do not kill a child, but make them stronger and wiser. If children are to manage on their own in their early adulthood they need to be taught to take decisions and responsibility for them.

Today’s parents who do everything for and instead of their children not only fail to teach them taking decisions and responsibility, but also deprive their offspring of the carefree element of their early years. There is a built-in pressure to meet parents’ expectations instead of enjoying childhood the way a child wants. Yet a contemporary child would not want to enjoy it the way I did it over twenty years ago, since patterns of pastime activities have changed. Go to any housing estate and look out for children aged less than 10 running around or riding bikes nearly without parents’ care. Such was the reality in mid-1990s!

While today, parents want to spare their children as much strain as possible and bring them up to become frail adults, shying away from hardships or becoming so-called kidults. Pains, suffering, defeats, eating humble pie, etc. are the elements of brutal life. Children should rather be supported in coping with them, rather than shielded from them…

The article dwells on the appalling fitness of Polish children. I stick to my theory that today’s children’s life expectancy will be lower than today’s middle-aged people’s. The first and foremost reason is that children move too little, spending too much time staring at smartphone. The second cause is less straightforward, namely physical activity is, I argue, over-coordinated, not spontaneous. Parents sign up their offspring for horse-riding classes, swimming lessons, tennis lessons, etc. which in essence is commendable, yet takes away the element of spontaneity… I wonder how many parents signing their children up for various classes ask if their offspring really want to attend them and how many do it because of the peer pressure or to fulfil their own ambitions.

On top of this an average child of well-off educated parents gets what they want without even asking. Such behaviours among parents have been witnessed more than ten years ago, hence we already see young adults claiming they deserve to get something, but offering nothing or little in return. If children think they are exceptional and the world should treat them as a hub of the universe, the fault lies with their parents…

The advent of social media and the culture of sharing one’s life with others via them has changed motives which drive people’s activities. Author of the article incites his audience to ask a question whether youngsters do things for themselves of to impress other people. The quintessence of leading a happy life is doing things for one’s own pleasure. I see nothing wrong in sharing with other people things done for one’s own pleasure (and do it occasionally, may facebook fellows know I’m having fun), yet if impressing others becomes a primary motivation for choosing what to do in free time, a person falling victim to such way of thinking will sooner or later get hurt.

Such reasoning leads to dangerous conclusion, namely the measure of how much a youngster is worth is how much appreciation they receive. Number of likes under a person’s post on facebook becomes a benchmark of who’s more trendy, cool or… valuable…

The author also points up helplessness of youngsters in simple situations. Sewing in a ripped button, mending a leaking tap, changing a light bulb for many young people, not taught to cope with such tasks at home, have become insurmountable problems. This is horrifying, yet I have witnessed situations when youngsters were helpless staring at an overloaded rubbish bin, not coming up with a solution that emptying it (throwing away rubbish) would help…

This is also a matter of widespread consumerism. In the economy propelled by disposable items which once wear out or break down are replaced by brand-new ones. Though socialist economy was bound to collapse and had built-in depravity, it taught people resourcefulness. If you could not come by brand-new stuff, you had to seek ways to repair the old one, plus oddly enough, what was manufactured, though technically obsolete was much more durable. In today’s capitalism once a customer buys a new item, its vendor already plans how to attract the customer again (planned obsolescence is one of the tools). In the economy of shortage, with supply falling short of demand, a vendor was bending down backwards to keep the customer away from it for many years, so that insufficient supply of goods was less visible.

There is no use in protecting children from life’s hardships. The later they face up to them, the more painful the head-on collision with brutality will be.

Criticise children wisely, get them accustomed to criticism. Balance stick and carrot in upbringing. Praise when due, but teach to draw conclusions from judgmental remarks instead of taking umbrage with the world.

As the author points out towards the end of his essay (quite long, I once read for an average Pole a text longer than four A4 pages is too long to absorb, while the one on which I base my today’s post is six A4 pages long), not learning to overcome problems leads to mental diseases in early adulthood. Statistics quoted by the author of the percentage of students prone to depression, neurosis and other mental problems is horrifying. If those number are true, they illustrate the price paid for flying away from the golden cage of carefree childhood…

BTW, what’s the English for pierdoła? None of the translations found on the spot online renders properly the context in which the word was used in the title of the article…

Poles aged 30 – portrayed, but accurately?

From time to time journalists of Gazeta.pl (online flank of Agora S.A., one of the most influential, leftist-liberal, media holdings in Poland) come up with series of articles dwelling on social problems. Quite recently two of them encouraged readers of the portal, aged near 30, to share with wider audience how their dwellings looked and what their material status in terms of housing conditions was. I usually keep track of such series with some does of curiosity, but that time I impatiently waited for each consecutive article, then read each of them with bated breath and avidly followed record-long comment threads…

The larger project run in attempt to paint a collective portrait of generation of 30-year-old Poles began by posing a question why people born in early 1980s are reluctant to have children. In the next step journalists resolved to find out where and how those people live and how the finance their housing needs.

The first article is a string of brief stories which paint a bitter-sweet picture…

Kaśka, aged 32, and her husband co-rent a room in a bigger flat. It’s cheaper and more practical, yet at times inconvenient. Their salaries would suffice to rent a tiny flat in a shanty town, but they prefer a 20-metre room in a flat shared with other people. Tensions sometimes appear, but when they are in need, they may count on their flatmates. In the meantime they put aside money to have equity and get mortgage on more favourable conditions. As for now, no bank finds them creditworthy. Purchase of property with cash – out of reach.

Błażej, aged 30, lives with his girlfriend in her 42 sqm flat (probably inherited or bought by her parents, photo suggests it’s located in Służew, part of Mokotów district, Warsaw). Given his girlfriend’s and his earnings, they wouldn’t be capable to service any mortgage debt, nor to rent any flat. Their aspirations have been fulfilled. Probably hadn’t it been for the windfall (his girlfriend’s own flat), they would live with parents…

Agata, aged 31, and her husband live in a mortgaged flat. Shortly after getting married they lived in a rented flat, then when a child’s birth was imminent, they took out a loan. Month by month, they move closer towards “full ownership” of their flat.

Piotrek, aged 30, and his wife, with some support of their parents and bank financing, bought a 70 sqm on city fringes. In his view this was a fair trade-off between location and size. Debt burden is not excessive and the flat would be spacious enough when children are born.

Anka, aged 29, is also one of those better-off. Since she was 20 she lived in flats inherited after family, currently she and her husband live in a house built on a plot donated to them by husband’s parents. She’d be damned if she dared to complain about her housing conditions.

The stories above bring a moderate dose of optimism. All character manage, some better, some worse, but are satisfied with what the have and keep cheerful. When you begin to read next sent in pieces, smile is immediately wiped off you face…

Sferyczna, single woman, aged 30. Lives in Warsaw, but hails from provincial Poland. Worked for a while abroad, but has not managed to save any money. Currently rents a tiny room in a tiny flat and estimates is 5 years will be eligible for a mortgage. Interestingly, she claims to earn more than peanuts and still she declares she can afford very little…

Karolina, aged 31, and Marcin, aged 36, have one child and live in an old flat that could do with a comprehensive refurbishment. Mortgage is a huge burden for them, each unplanned expenditure or a second child would blow over their budget. Loan instalments make up more than half of their income – this speaks for itself…

Next piece contains two contrary opinions. Rafał, aged 31, and his wife wonder whether only grumblers are around. He wants his voice to be audible. Instead of grumbling his wife and he toil away up to 60 hours per week, have built a house and bring up two daughters. Not a word about any mortgage, but he mentions his father who runs a prosperous company. Despite having little spare time, he claims he is happy and encourages to sheer hard work, which, as he believes is a key to the door of financial and personal success.

Marek, aged 27, has co-rented a flat since coming to Warsaw 5 years ago. With his earnings, little more than 2,000 PLN after tax, he can only afford to rent a small flat and pay maintenance charges, this all sets him back some 1,500 PLN – after this he has 600 PLN to spend on food, travels, clothes, entertainment??? He sees future in anything, but bright colours – with his earnings he stands no chance to get a mortgage and own any property…

Need something upbeat, don’t continue reading… A 30-year-old single woman has just bought her own flat. The mortgage and refurbishment loans have both 23-year repayment schedules, but her own flat is a step forward after years of renting and sinking money to landlord’s pocket. Living conditions are pretty dire, but glimmers of hope bring about smile on her face. In a few months the flat will be finished. As for now, she saves on everything, including food and scrapes along, to service debt timely…

Another confession, written by a 29-year-old man. He works in a public sector, is employed for a finite period and earns minimum wage. No chance to move out of parents’ house, even to rent anything. No prospects of becoming self-supporting, of raising family, no feeling of stability. He’s angry with those who stigmatise his peers who keep living with parents. In fact many of them do this not out of fear of taking responsibility for their lives, of facing adulthood, etc., but they stick to their parents for purely financial reasons. When earning 1,500 PLN after tax, attempt to taste independence is like being thrown at the deep end… Hopes for future… None… just prospects of barely getting by…

Not yet miserable? Carry on! A 31-year-old single woman has a single-bedroom mortgaged flat, but she and her daughter live with her parents. The graduate of Polish studies and Journalism, since finishing school changed jobs many times. Each was supposed to have been temporary, before she found something more desirable. In 2010, with support of her parents and a bank she bought a flat. Soon after she was offered a new job, left the previous, well-paid one, and eventually was left out in the cold, because the new employer changed its mind. Never jobless, she had next temporary, poorly-paid jobs which allowed her to pay bills and mortgage instalments. A year after it turned out she was pregnant with a man who turned out to be too irresponsible to fulfil role of a father. To make ends meet, she moved to her parents and lets her flat to repay the mortgage… She wipes every night and slowly is losing hope for a better tomorrow…

Let’s face it – those letters have been picked out of several sent in to Gazeta.pl’s editorial room. The picture of the generation which emerges is a matter of who and on the basis of what criteria chooses which letters to publish.

More interesting are plentiful comment threads under the articles, counting several hundred entries. Comments can be divided into a few categories…

Predictably, quite a few commentators trot out the “young, educated, from big cities” myth – they argue the depicted misery bears a truthful testimony how in fact the “Green Island” looks like and what the youngsters got from the party they had voted for. How long before people realise politicians’ influence on people’s everyday is much smaller than they claim? Misery of many young people can’t be put down to “feckless rule of losers and traitors”, while if the biggest oppositional party came to power, it wouldn’t turn Poland into a land of milk and honey. Society and economy are driven by actions of millions of individuals, not by decisions and deeds of few politicians. They don’t have power to heal the country and, on the other side, have little power to screw things up. If I were to be malicious, I could say between 2005 and 2007 property prices in Poland soared by almost 100%, hence becoming less affordable.

Some commentators point out those stories do not hold water – why somebody takes out a loan and than changes a job, for a worse-paid one, how some of mortgage instalments calculations match with what somebody has left at their discretion, etc.? Some even claim the stories sound so incredulously that they appear concocted.

The more ruthless advise authors of the letter who take pity on themselves to blame themselves, not the rest of the world. Who made them choose dead-end studies? Who precluded them from working harder? Who told them to change jobs several times?

Other group indicate young Poles have over-inflated expectations regarding consumption and earnings, while it takes time to grow into wealth. The only way to consume more than you can afford to is living beyond means, which means living with a ball and chain in form of debts and praying luck streak doesn’t cease, as then the frail wealth collapses.

For my part – I have no right to complain… I’m better of in comparison to some 99% of my peers. I don’t live in my own flat, but this is only my choice – I can afford to rent or take out a mortgage, but since there’s no pressure to move out I keep living in my parents’ house (and give them little money each month) and put aside some 70% of my salary. I earn very decently and have prospects of even higher earnings, but on the other hand at the back of my hand there’s a seed of uncertainty – my employer knows how to send adrenaline rising and having seen people being fired (with 1-day notice and generous severance packages) I realise no matter how committed I am, one I day I can have an inadvertent slip-up or my employer may change strategy and back out of business segment I work at, resulting in my job contract being terminated. I have job contract for indefinite period and well-above national average salary, but in return am offered no stability. I don’t go mad with the awareness each day might be the last day of my work only because I don’t have to provide for a family and have no debts to settle.

I’m also far from sharing opinions of those telling those unhappy people to blame only themselves. Success, not only financial, is a combination of many factors, including parentage (if your parents are wealthy, you’re better off at the start), skills (many are inborn I believe, you may develop them or not, but if you really lack a specific skill, developing it won’t get you far), hard work (inborn skills without hard work are useless) and luck… Every day I happen to realise where I am now and what I do is just a stroke of fate… Of course I can’t pronounce it’s prudent to take dead-end studies in political sciences, change jobs frequently, or get pregnant with an immature man, but in some cases people are inarguably out of luck and telling them to blame themselves proves only lack of empathy. Not everyone has a chance to be born in the capital city, in well-off family, to have educated parents. Most people have it up-hill and in Poland I can’t honestly say others have it downhill.

I recently calculated, with my above-average earnings and possibility to put aside most of my salary, if I was to start saving from scratch now, I’d have to save for 6 years to buy an average 50 sqm flat in Warsaw, assuming property prices stayed unchanged. Some time ago I read an average Pole would have to save for 11 years their whole salary to buy such flat. Imagine this – live with your parents for 11 years, let them feed you, don’t buy clothes, cosmetics, don’t go out, don’t travel and after 11 years you can buy a flat for cash. If your parents can’t support you financially you can only take out a huge burden on your back and pray nothing goes wrong along the way. How young Poles live is an aftermath of still steep, in comparison to earnings, property prices in Poland. As many market specialist claim, only increased supply of dwellings could help solve this problem – this can be achieved in form of public-private partnerships – local governments building in partnership with property developers council flats for rent. But for this you need a proper legal framework and wise and honest people to run such schemes. Out of reach, just like own flat for an average Pole turning 30…

Apologies in advance for taking a break from blogging next week. I’m holidaying… At last :-)

Good enough

One of the recent issues of “Polityka” contained an article which dwelled on the shift in young Poles’ attitude towards life. The new stance, put across in two simple English words “good enough”, is a comprehensive response to all pursuits which used to determine hierarchy of goals in older Poles’ lives. Career, materials goods, outperforming others and all that stuff that deluded people in the first twenty years past the downfall of socialism in Poland.

Now, as one generation have walked the path of bending over backwards to excel in private and professional life, the next one draw conclusions from their struggle. Sick of the rat race, they ease up and tackle things pragmatically. ‘Do as much as you have to’ and nothing more. Keep level with the others, pulling out at all stops will not be rewarded, so why bother? If standing out involves more stress, the balance is tipped towards chill-out.

Don’t resist your parents. Times of generation gap are long over. These days parents easily find a common tongue with their offspring and even support them in their pursuit of being ‘good enough’. Have they learnt from their mistakes and wish to spare their children futile efforts? Is everything in order? Since centuries each new generation challenged the patterns and lifestyle taken after ancestors. In the second decade of the twenty-first century this ever-lasting process ceased…

Give up on your lofty ideals? The world’s abhorrent and you won’t change it. There’s too much stuff out of place and you’re out of tool to mend it. Your power is diminutive in comparison to complexity of all problems, so don’t take it on the chin, there’s no use. If you can’t change something, conform to it. Relax and take the path of least resistance, you’ll be better off by holding back from taking any action, if you’d attain nothing anyway…

Just be nice – if you don’t feel like being nice to somebody, pretend to be nice. Messing with someone you don’t like doesn’t pay off. This leads to duplicity, but this is how many well-brought-up youngsters behave these days. If you talk to them, they can make an excellent impression on you, but deep down they might think you’re an arsehole. Well, keeping up appearances simply bears fruit, so why not pretending?

Worry as little as possible. Bring a problem to your mind the moment you have to tackle it, not beforehand. Generally try to make your life stress-free…

What’s my take on it? There’s something tempting in being easy-going, yet I’d never fully indulge in such attitude. I’m just finishing a mentally and physically debilitating weekend (catching up with household and garden chores, running errands in town, plus picking up my grandfather from the hospital), while most of my friends have been enjoying two days of at least moderate rest. I could have also given a shit about it all, tell my parents to toil away despite their tiredness, leave lots of stuff undone, tell my grandmother to hire somebody to tidy up her flat if she doesn’t feel up to, tell my father to pick up his father from the hospital on his own and cut down my activities to the bare minimum of issues that affect only me and are important only to me. My conscience tells me I can’t embrace it. Young people should be brought up in cognisance of dark sides of life – taken to hospices, hospitals, poor districts and towns, they should know the taste of depravity, for the very sake of appreciating what they have. And being ‘good enough’ somehow doesn’t square with my concept…

Next posting bound to crop up after the next weekend (heading to Olsztyn for a friend’s wedding).

Between the generations

Not uneventful weekend comes to a close. Suntan is itching the skin, temperatures stay unrelentingly high, the blog reminds about the duty of weekly dose of writing for posterity (number of comments under recent posts and google stats imply the interest in my blogging diminishes, as my lust for thoughts-sharing does). Nevertheless, I promised myself and some other people to soldier on. If the weekend is about recharging batteries, blogging can be a part of it, even if it means staring at computer screen.

Over the week there's little time for posting (I'll try to change it when days get shorter), as most of the time is filled by work; and the post is dedicated to work-life balance. The concept, growing on popularity over the last decade, became an inspiration for Gazeta Wyborcza journalist, then the link to the article was spread on facebook, through which I've found it. I've read it, read it over, taken the trouble to go through the thread of over 300 comments and I'm still left with ambiguous feelings.

The article sets out two different types of approach to work, represented, in the author's view, by two generations which clash at workplace. The author call them respectively: 'Generation X' and 'Generation Y'. Here comes the first trap - these names are misnomers. My English-speaking readers probably are familiar with sociological concepts of Generation X and Generation Y known in the Western Culture. Polish society, until 1989 shaped in the shadow of being a part of Soviet bloc, couldn't evolve as Western societies did, so these names can't apply to Poles. Maybe for that reason the author decided to redefine Generations X and Y. Brief description below:

Generation X:
- loyal,
- available for employers in their free time,
- often think that Y's are simply lazy,
- tend to work overtime and keep late hours in offices, because they want to show their commitment.

Generation Y:
- private life is more important than work,
- work mustn't collide with pastime activities - go to the gym in the morning and can't knock on at 8:00 a.m. - don't take this job,
- work is just means that leads to the end (making the most of life),
- during job interviews openly express their expectations about earnings and perks,
- prefer flexible working hours,
- fail to accept rules set by corporations,
- prefer task-based working time, rather than nine-to-five jobs.

I told about the article some of my colleagues from the office, they read it and the next day we had a short discussion during the lunch. They also ended up in two minds about what the perfect approach to work is. None of us opted directly for X nor Y, we all could discern downsides of each approach.

If you are 'X' you risk a lot. You spend a lot of time at work and little having fun. There's a shortage of time to spend recharging batteries. If work fills your time, you have less time for hobbies, for family, friends, your life begins to be empty. To fill it in, you can either break away from the treadmill or work even more and more (until you drop). Staying longer at work and working overtime (often without being paid for it) is another plague - employees are on every beck and call of an employer, ready to give up their private plans to work more.

If you are 'Y', your expectations and inflated and you should after all learn some humility. Life is not only bread and butter, but you have to earn a livelihood somehow. Coming to a job interview with exorbitant demands gives an instatnt impression that a candidate can only take and refuses to give. An 'Y' employee can be unreliable, flexible working hours may mean they will show up at work late, go home when it's convenient for them. If you drill down into comments to the article, you'll surely read lots of stories of people who encuntered typical 'Y' employees and spoke anything, but highly about them.

All things considered in our assessment of two approaches, we've leant towards 'X'. My colleauges appreciate the importance of private life, but during our talk they looked back on good time in banking (years 2002 - 2008) when salaries were high, bonuses were sky-high, deals were pulled off one after another, companies were queuing up for loans, banks were foisting loans upon companies and... they worked 60 hours per week. They said this was the price to pay for opportunity to develop and earn a lot of money. There must be a trade-off. Either you choose to work eight hours a day and knock off, earn less, don't get promotions and have more free time, or you work more and climb the leader of career. You just can't have the cake and eat it. I was also advised to make best use of those years before I get married, as the best time to learn is when one doesn't have much obligations. So what's the definition of making the most of life: having fun or working twelve hours a day? I work around up to nien and a hlaf, but only if the task require to do so, if not, I knock off at time - no need to show my manager my dedication by staying longer than necessary.

And we've come up with an explanation why with time approach to work has changed. Those people who come under "generation X' grew up some time ago, experienced austerity of late PRL, atmosphere of early capitalism and, the overacrhing point, unlike 'generation Y' weren't spoilt by abundance. Xs' parents didn't give them everything they wanted, but they had to earn it with their own sheer hard work. Ys in their childhood, teenage years and as student would usually receive everything from their parents and this has spoilt them.

Personally I have to admit, unlike my peers, I'd also rather identify with 'X' concept. The 'Y' approach smacks of selfishness and complacency. Young people who enter job markets with inflated expectations are in a way similar to trade unionists - both appear to me as spongers...

Next posting, providing no sunstroke along the way will be rather 'light' (less serious) and spiked with photoes

Different interests, different views

There are few things as beneficial for public intercourse as an open and constructive debate, therefore I was glad to read a series of articles on Polish pension system written by more or less eminent experts and published in the latest issues of “Polityka”. The string of polemics has been triggered by the article I have mentioned repeatedly. In response to this, Jeremi Mordasewicz from Polish Employers’ Association wrote and had published another article, presenting an opposing view. In his feature, Mr Mordasewicz did not refute Prof. Oręziak’s arguments against pension funds but laid out his own ones on the advantages of OFE. Finally, last week “Polityka” printed a third article, by dr. Agnieszka Chłoń-Domińczak from my school, in which she debunks myths concerning pension system, allegedly spread by Prof. Oręziak.

Now it is time for me to crack down on those myths once again or maybe gainsay the rebuttals. There’s no time to lose, so let’s set out.

Myth #1: Developed countries have not decided to create pension funds with obligatory participation.
A.C-D.: Pension systems in most developed countries are quite complex and have pension schemes run by employers as their core.
Comment: Indeed, the systems in those countries function in a totally different way. In Anglo-Saxon countries those, whose benefits are not provided under such schemes have to fend for themselves on their own, like freelancers do. Moreover, an employer-run pension scheme has a tremendous edge over a Polish pension fund. It is small and flexible, what means that if it manages 10 million rather than 10 billion dollars, zlotys or any other currency it can easily adjust its portfolio to changing market conditions. Polish pension funds are in this comparisons like a bull in a china shop – whenever it makes a move everything around quakes. Another issue is how the future pensioners can influence the way their money is managed and if they have a variety of institutions where they can save, unlike in Poland, where we have 15 similar funds and the choice is illusory.

Myth #2: The only reason why the Social Insurance Fund is indebted is that it finances pension funds.
A.C-D.: Here Mrs Chłoń-Domińczak enumerates factors and decisions that have contributed to shortfall of money is the state-run fund.
Comment: I reread the article and didn’t find this “myth”. Puzzling…

Myth #3: The OFE-based system results in constantly growing public debt, what poses a threat to economic security of Poland
A.C-D.: As the projection prepared by European Commission says… …Poland will the country where the social costs of ageing will be the lowest.
Comment: Europe is far behind us in terms of social expenditures. In autumn 2008 I saw an advert of an investment fund, which went the following: “Stock indices fell by 50%, other funds lost even 60%, we lost only 30%”. Should an investor who has lost “only” 30% be happy, if he could earn 4% at the same time.
The biggest problem that the goal of the reform was to take the burden of providing pension benefits from the state. Under this lame system the state is still responsible for 80 per cent of the benefit, either in form of contributions to ZUS, or as the issuant of government bonds. The system should not rely on state at all and money should work on the market only. Because this is more risky, obligatory participation has to abandoned and the responsibility transferred to citizens. They know better, believe me. And if they don’t know, as Robert Gwiazdowski wrote, there’s a plenty of food on rubbish dumps. I also see a lot of bread and rolls scattered on the streets, so can we really speak about poverty if people throw away so much food?

Myth #4: State does not have to pay interest on the debt of ZUS, hence these payments will not generate budget outgoings.
A.C-D. The obligations undertaken by ZUS will have to be settled sooner or later.
Comment: It’s true: what is kept on accounts in ZUS are just book records, not real money. This Ponzi Scheme will sooner or later collapse, but issuing more bonds, when there’s no money in the budget is ridiculous and generates additional costs.

Myth #5: The state has to cut spending on health care, education, police, orphanages to finance OFE
A.C-D. (and me): What does one thing has to do with the other?

Myth #6: The current situation of public finances is more important than the stability of pension system.
A.C-D.: These priorities cannot stand at odds. The latter cannot be done at expense of the former.
Comment: The system which generates growing public debt will not increase our financial stability. The lower the debt is, the more stable Poland will be perceived and the lower the costs of debt service will be. Remember that higher public debts results in higher yields on government securities and this exacerbates country’s situation and hits taxpayers’ wallets. Prof. Marek Góra put forward that pension obligation should not be included in public debt. Thus we will not exceed the threshold of 60% (public debt to GDP ratio). This a creative accounting in essence, to make it worse this is allowed by EU regulations which leave the method of public debt calculation at states’ discretion (appallingly). And this creative accounting would allow the Polish state to issue more and more bonds.

Myth #7: Pension funds invest most of its assets in gilts so it is better to leave that money in ZUS.
A.C-D.: Gives a true explanation that bondholders will sooner get their payouts and pensioners who trusted ZUS will pay them their benefits one day.
Comment: But if pension funds can influence the price of bonds, this works badly in both ways round. If the yields are higher, pensioners will get more, but taxpayers will also pay more. If the yields are lower, pensioners will get less, but taxpayers will pay less. Only those who run the system will get their remuneration regardless of investment results.

Myth #8: Pension funds will squander financial assets of future pensioners by investing them abroad if they will be allowed to do so.
A.C-D.: As the past results show, Polish pension funds performed better than in other countries and this year they earned…
Comment: Firstly, the perform as the stock market does, for stock exchanges 2009 was an exceptionally good year, so pension funds could report good returns. Secondly, they cannot hedge the currency risk, since they are not allowed to invest in derivatives!!! Thirdly, since when financial markets guarantee high profits? All experts, not labour economists, like Mr Góra or Mrs Chłoń-Domińczak will tell you fundamentals play a minor role. Stockbrokers and bank dealers and other practitioners (I’m talking about those with academic degrees with at least PhD) will tell you financial markets are a big casino and are hardly ever driven by any rational premises. That is why I don’t want to blame a few managers for losses and be given the freedom to blame myself, not regulators who told me how to waste my money.

Should I be proud?

My school has announced on its website two professors from Warsaw School of Economics had been appointed as members of Monetary Policy Council. My university employs a lot of outstanding experts in monetary policy, like professor Krzysztof Rybiński, but for no apparent reason the current president decided to pick some of his buddies and once again set personal relationships above competencies. The previous president also for no apparent reasons designated renowned specialists – Andrzej Sławiński, Andrzej Wojtyna and Dariusz Filar.

Some time ago I evaluated competencies of Zyta Gilowska, there’s nothing I can add about her. None of fellow students with whom I discussed the nomination of Mr Glapiński and we our views simply square – he lacks knowledge, but is a close friend of Mr Kaczyński and no one else would have appointed him. He will have to learn a lot.

When it comes to Mr Kaźmierczak, the matter is a bit more complex. His field of academic research overlaps the issues of monetary policy, but there’s one significant fact about him that might have been seen as a merit by Mr Kaczyński. The new member of monetary authorities has never been a reputable figure among economists. His opinions are not appreciated, few people heard about him. He publishes in Gnash Dziennik, a newspaper of Father Rydzyk’s empire. I may be biased against him, as his dovish views are totally dissimilar to mine. He doesn’t see inflation above target as a danger for economy, it’s even conducive to economic growth as he says.

Inflation, contrary to what he advocates has to be handled carefully. It hazardously easily spirals out of control. As soon as it gets noticeable for customers, their inflationary expectations rise, so they hold out for pay rises and then when they get it, the economy is on the verge of a slippery slope.

In Poland a relatively tight monetary policy prior to the crisis helped our country avert a financial meltdown. Monetary authorities, mostly Mr Balcerowicz, who was a governor of central bank at the time were harshly criticised for the policy they had pursued. Unlike some other countries.

As professor John B. Taylor (the author of famous Taylor rule) points out in his latest interview for “Polityka”, one of the main causes of the financial crisis were too low interest rates. He also blames central banks and government for inapposite responses and openly condemns monetary policy run by Alan Greenspan and Ben Bernanke. This short interview might be helpful in understanding the origins and mechanics of what has been called the worst recession since the Great Depression.

Articles, opinion, views

At the beginning of the current year I initiated a new “secular tradition” – I began placing links to the articles I find of note in my profile on facebook, leaving room for comments to the readers and reducing my role to suggesting something would make a good read.

Today, exceptionally, I’ll do it on the blog. This time notable articles for Polish readers. Those to which I’m linking today prove best the true pluralism of press and that every opinion, not necessarily from the mainstream may break through.

Firstly, two articles for the readers interested in the problems and evaluation of Polish transition from central-planned to market economy. One voice for, another against, both make a good summary of the current public debate on the reforms implemented by Balcerowicz.

And secondly, the article “Zlikwidować OFE” (EN: Let’s scrap the pension funds”) by prof. Oręziak from my school, so maybe once again flogging a dead horse. This issue will have be raised repeatedly, until the problem is solved, because our reform does not appear to be the great success, as its authors claim.

This problem has been tackled earlier, click the label ‘OFE’ or ‘pension system’ to read my previous posts. They form a coherent series of features in which I pounce on the Polish pension system and suggest changes.

The article is not available online (why?), you have to buy a paper issue of this week’s “Polityka” to read it. I’ll comment on some diagnoses and proposals it contains.

“Most developed countries have given up on an idea to create pension funds with obligatory participation. They did it for two reasons: firstly they were reluctant to take away loads of money from public sector, secondly they didn’t want to expose future pensioners to the risks of financial crises and inflation.” The second argument is flawed, the state sector doesn’t really protect the money well, but the first one lays bare the bleak truth – public finances lose on the pension deal and if the public sector loses, the taxpayers will sooner or later have to pay for it.

“The OFE-based system continually generates growing public debt”. Sad, but true, the current government identified this perpetual flaw, but the influential economists have torn the politicians to pieces. The soundest proposal of labour and social policy ministry was to forbid investments in government bonds. Now pension funds are obliged to invest at least sixty per cent of the assets they manage in gilts. My views of public debt are quite extreme – I would welcome a balanced deficit. Firstly, because state should be lean, secondly, because it should not support financial markets. Offering government bonds to the market means offering to investors theoretically risk-free securities at taxpayers’ cost – if my neighbour buys government bonds and the interest is paid from my taxes it’s an unfair redistribution. Financial markets and governments (and monetary authorities) should have as little in common as possible.

One of the goals of the pension system reform was to take away the responsibility for pension benefits from the state. And the outcome is a travesty. The government bonds make up sixty per cent of pension funds’ portfolios. Moreover, state has to pay interest on this debt, unlike in patchy ZUS. So the main entity responsible for providing benefits remained the same, only the costs are higher. Once because of the interest mentioned above and later because of remuneration for fund managers. This is the next pathology, from January 2010 its scale was reduced by half. No regulations that would link management fees to investment results have not been put forward.

Mrs Oręziak slates the idea to allow pension funds to invest money in risky securities and lift the limitation in their investment policies. This move is right when it is accompanied by giving more freedom to future pensioners. They should, like in Sweden, have a big choice of institutions where they could save money for pension. They should include banks, insurance companies, various investment funds. Under such conditions they choice of ways of saving would offer many alternatives and would enforce competition based on (real!) free market rules. Under such a system the current pension funds with their effectiveness and costs would be wiped out!

And the last proposal, namely to transfer the money kept currently in pension funds to ZUS. It’s not the right solution. ZUS is not a quick fix, this ponzi scheme will sooner or later collapse under the burden of demographic changes. Let’s face the truth – the state will not be able to provide us with a decent pension benefit. If so, may it give us the freedom to save on our own, we know better what to do with our money.

In the last sentence, Mrs Oręziak brings up the burning issue of the expert who speak about pension system reforms in the media. One of these persons is Prof. Marek Góra, also from my school. He’s the main architect of the reform and keeps digging his heels in and defending the reform. He has some reasons, not only creator’s honour, but also a cushy job in ING pension company’s supervisory board. A conflict of interest?

Demography is only one side of coin, though it prompted changes in pension system. The overall idea of new system was good, only the solutions put into practice are lame. The bigger problems are the laziness of Poles, whose retirement age is the lowest in the EU and the untouchable – miners, policemen and also pension fund managers and shareholders… Instead of doing millions of Poles out of their hard-gained money, deprive the privileged groups of undeserved advantages!

UPDATE, 31 January 2010. a brilliant post on the same topic by Robert Gwiazdowski (in Polish)