Nie robię za darmo

Back as a fourth-year student I brought to your attention the topic of unpaid internships and expressed my displeasure with HR policies allowing to hire young people without paying them at all. As a student, I never condescended to take an unpaid internship, despite understanding employers’ rationale (or excuses) behind such despicable practices. Time has gone by, my career has moved on, I am no longer eligible for an internship, but keep in mind days when I was on a lookout for gaining first job experience and hence sympathise with current students, often coerced to work for a mere “thank you”.

I was more than pleased to find out somebody has finally decided to draw a line at offering students and graduates unpaid internships. Nie robię tego za darmo (I don’t do it for free) is a project launched by one of Poznan-based NGOs, Wspieramy Wielkich Jutra (Supporting the Future Leaders, to convey the meaning) foundation that has gained extensive media coverage in week following the campaign commencement on 20 September. Originators of the venture have broached an important social problem that affects each year thousands of young people in Poland.

For some of you this may sound like a leftist twaddle, but unpaid internships are a nefarious form of labour exploitation (campaigners call it slavery), taking advantage of natural weakness of inexperienced youngsters (no one has been born with a CV full of previous positions) in corporations’ pursuit of higher profits. I do not advocate going to another extreme and meeting excessive pay requirements some graduates have, as it is obvious a freshman will not add huge value to a company, but it is a matter of straightforward decency to pay an intern at least token “peanuts” allowing them to subsist in a city they work (during my last internship, 3 years ago, I earned 2,200 PLN before tax monthly and such salary seems reasonable). If you argue an intern does not add value to your business, what is the point in hiring them at all? If you argue an intern requires attention and teaching such person utilizes the company’s resources, I remind you in free-market economy in order to reap profits you need to invest and every kind of business expansion carrier a risk – the same applies to money spent on human capital. Not every such investment will pay you back.

If the points above do not seem convincing, let’s refer to the economic concept of negative selection. In simple words it implies better candidates for interns will choose paid internships, while those too poor to be offered paid internships will come to you and you will get leftovers.

OK, so they will come anyway, better or worse, yet suitable to do some simple tasks. You might point out the market functions in such way, so if there is a demand even for unpaid internships, why not coming up with supply? The reasoning is akin to noticing a loophole in law – if you can circumvent a regulation and go unpunished, why not benefiting from it? It all boils down to ethics, the moral spine you have or only claim to have. Any company that takes on interns for free and claims its commitment to CSR lies through its teeth! Get it? If not, use the last resort analogy. If someone pays you a visit, do you offer them something to drink or eat, or not, because they do not ask you? Just as offering a beverage or snack to a guest is a matter of good manners, paying an intern is a matter of decency.

Tens of companies, including the biggest Polish firms and multinational corporations have swiftly supported the initiative. The circle of commendable employers covers, according to press reports, inter alia: Orange, Danone, ArcelorMittal, Deloitte, General Electric, Leroy Merlin, PKN Orlen, Bank Pekao, PwC, PGNiG, PZU, Toyota and Whirlpool. The code of ethics has been written in one-page long “Polish Internship Quality Framework”, a document which sets out requirements an internship with a civilised employer has to meet. The key assumptions are:

1) each internship lasting at least 1 month MUST be paid and governed by a written contract,

2) each internship should have an agenda / plan setting forth duties of an intern and skills they are to acquire or develop

3) each intern should have a supervisor who will be responsible for overseeing and lending a helping help to an intern,

4) each intern should receive feedback at the end of their stint and written confirmation of completing the internship.

I must say my last internship fulfilled all the criteria above, thanks to this both my employer and I benefited from it.

Points above address other pathologies affecting how internships are organised. We must not confine the problem to the mere aspect of remuneration, since what an intern does at work is of paramount importance as well. The initiative is also intended to crack down on internships consisting in brewing coffee, copying documents, or sorting pieces of paper in files. But these pathologies in turn stem from another ludicrous arrangement, which fortunately was not in force at my university when I was a student, i.e. that internship is obligatory for every student and every student needs to get a credit for it in order to get a degree. I hold the view students are adults, aware of how the labour market functions, who realise what factors are appreciated by employers and who know the value of experience when looking for the first serious job. If somebody wants to gain experience, they will take matters into their hands anyway. If somebody is reluctant to have an internship, their choice – what is the point in two parties to internship agreement having to put up with each other?

Noteworthy is also the story of intern working in the City who participated in summer programme run by Bank of America Merill Lynch. The 21-year-old student was paid 2,700 pounds a month for his job, but did not endure 70 hours of continuous working without a break… So while in Poland the case is whether interns are paid at all, in the UK problems youngsters overreaching themselves in the chase of jobs in the never-sleeping financial industry, have become an issue.

The banker’s role, from a bank employee’s standpoint and in Poland

My brother Marek e-mailed me with his observations about my last post, pointing out the importance of the banking sector to the entrepreneur. Indeed - such a valid point that it will make a separate post.

Instead of posting a drawn-out comment in response to Michael’s insightful post, I decided to dedicate a separate note to his text, making references to each paragraph and put his reasoning into the context of Polish banking sector, far younger than those established in Western economies. Beware though, the picture presented is biased, inevitably, when written from a bank employee’s perspective. A for starters, a valid point – I don’t feel I’m a banker, I’m only a bank employee – just an in a 5-year-old Polish joke, there difference between bankier and bankowiec is roughly the same as difference between rentier and rencista… There are no bankers in Poland, there are banks and their representatives who do exert influence on how businesses are run.

Looking in stereotypes, the British believe the Germans have got it right. Their Landesbanks provide a capital lifeline to small and medium-sized family-owned businesses for generations. They know their clients personally (often having a banker sitting on the firm's supervisory board). When the firm needs money to buy another production line because it's just won a new order in South America, the bank looks at the firm's track record and says "by all means".

Is this really true the British envy the Germans how their banking system functions? In Poland such relationships simply cannot exist, because civilised banking sector emerged only after 1989 and had to be developed from scratch. It has grown out of the teething phase quite quickly, as Polish banks have been sold to foreign investors, who have contributed with their know-how of doing banking business.

Deals in which there is a too profound relationship and a client smell a rat to me. Whenever I see a transaction in which someone from a bank knows too well a company, it heralds troubles, if it goes through… The proper distance between a bank and a company increases… bank’s safety…

In the UK, the banks have done away with personal relationship managers and have outsourced the loan decisions to a call-centre in Bangalore, which mechanically ticks the boxes and says 'no', just in case. Online banking has many positive facets for the consumer, but for the small business it has killed off the personal nature of the banking relationship. "Lend to the man, not to the asset" was the golden rule for Mr Mainwaring and his generation of bank managers, who knew their customers, but this is no longer the case. Today, UK banks talk of 'relationship banking' as if it were a new discovery; the truth is they lost it long ago and are now trying to rebuild it on the basis of call-centres, internet banking and algorithms that replace loan decisions.

As a rule – the bigger the Customer is, the more personalised the relationship must be. And whenever you speak of a relationship manager, you should have in mind somebody who knows its customer inside out and fosters its interests, not just foists upon them services they don’t need only to get a bonus. But personalised relationships do cost money, so probably the cost-to-benefit analysis has led many banks to give upon the relationship model. Let’s face it – does an average individual or small company need a dedicated employee who knows them and their needs well? Such approach costs and this cost will be passed on to a client, often reluctant to incur additional expenses. The question one needs to answer is whether a customer prefers and individual approach or low cost of banking services. Cost savings are also the driver of automated loan decisions – in assessing creditworthiness of a small business, one of many millions in the country, a well-designed system will beat a not infallible human. Another advantage of a score-based loan decision system is its quickness – within a few minutes you know whether you are eligible for a loan or not. Of course, again, the bigger the business, the more complex the credit analysis and the less reliable simple algorithms based on questions are cut-off points are. Plus an important note – in Poland credit risk management cannot be outsourced, so whenever you apply for a loan in a Polish bank, be sure it is not farmed out to Bangalore.

Now that the economy is on the rebound, British banks have only got worse in this respect. Want to borrow money to buy a house on a rising market? Why certainly! Mortgage lending is back to 2008 levels. Want to borrow money to expand your small business...? Ooh... That's a bit difficult... We'll need to send someone over to check your business in person, but that costs us money, so we won't bother, so to save time, our answer is no. Bank lending to business is 30%-40% down on 2008 levels (depending on sectors and regions).

The rationale behind such stance is as follows: for housing loans, a bank has a tangible collateral and very strong incentive for the debtor not to lose the roof over their head. For small business the risk profile is far worse. I don’t know how law in terms of creditor protection in the United Kingdom exactly works, in particular I’m not familiar with issues of owners’ liability for their business’ debts. A small company might easily wind down in a few days, owners may go away or tell their venture didn’t work out, having pumped out cash beforehand and the bank is left out in the cold… Oddly enough, in Poland mortgage lending has been curbed, while SME lending also, but not to such extent…

What's it like in Poland? Banks have generally tended to say 'no' from the outset (that lack-of-trust issue again), so Polish entrepreneurs have just got used to financing growth out of saved earnings. Over the economic slow-down (no recession here, remember!), Polish entrepreneurs drew in their horns and sat on their cash, tempting politicians to tax it or somehow put it to better use.

Rightly discerned, it all boils down to mistrust. Banks are too wary to lend to small firms, which are risky businesses, less transparent and more shaky and corporate clients. The other story is when you criticise banking sector’s mistrust, you should keep in mind a bank collects money from depositors and has to return the money to them, no matter of its borrowers settle their debts or not. Banks’ restraint in lending is also a form of prudent management of someone else’s money. As a depositor I also must trust my bank that it doesn’t engage in risky lending.

Poles, like Brits, look across to Germany's Landesbanks as the ideal model for small- and medium-size businesses, yet another reason (along with apprenticeships, a high social regard for engineers and manufacturing industry) why the German economy weathers the storms well (and can still afford to bail out the lazy southern Europeans).

I would also add focus on competitiveness. This praise of the German economy is quite surprising when made by someone who support liberal economic agenda of the Conservative Party.

Ethics in banking? Polish bankers are nowhere nearly as well paid as their British counterparts. The result is that here in Poland, people have no problem inviting bankers to dinner parties, saying 'hello' to them in the street, or generally treating them as fellow human beings.

What earnings have to do with ethics? Ethics is about conduct, not about salaries – one could even point out someone who earns less is more encouraged to behave unethically in pursuit of quick wealth.

Still, banking sector employees in Poland earn well above national average. It just the gap between average salary in the national economy and in the banking sector that is much smaller than in the UK. A relationship manager for corporate clients in Poland earns on average between 10 and 15 thousand PLN per month before tax (some three times more than average salary in the national economy), plus it gets numerous perks (company car, phone, etc.) and discretionary bonuses for meeting sales targets – unlike in Anglo-Saxon banks, bonuses are not contractually guaranteed. Still, although quite wealthy, Polish banking employees are ordinary people, unlike their spoilt counterparts from the City or Wall Street.

The Polish banking sector is generally in sound shape, but still has much to learn about working closely with the entrepreneur for the benefit of the economy at large.

And the essential thing on both sides is empathy – the bank needs to understand the entrepreneur and the other way round – banks have status of ‘public trust institution’ and no matter how ludicrously it sounds, their primary goal is to ensure the safety of funds entrusted with them, this can be achieved by cautious risk management…

Warsaw’s Southern bypass – the last update

… which I must frankly pledge has gone partly outdated, given the rapid pace of finishing works. Last Sunday I ventured to “inspect” the construction site by bike, making most of the clement weather (above +20C, cloudless skies), while I felt under the skin this could be the last such weekend. For no apparent reason since early August I had an inexplicable inkling that hot summer would swiftly give way to gloomy and chilly autumn. Looking at the weather forecasts for the next week, my predictions seem to prove right. Albeit today, the weather’s not ghastly – it’s gloomy and imminent autumn is felt in the air, but it’s pretty warm – above +15C. Back to the core – last week the topic of pension reform outshined the recent progress of Warsaw bypass construction and posting coverage was scheduled for this week. But keeping in mind how quickly the landscape of S2 construction evolves, I had to retake the trip today, this time by bus, to take a few more snaps for the update.

According to recent rumours from Skyscrapercity forum, the last section of S2, linking junction W-wa Południe and junction Puławska is bound to be opened on Monday, 16 September. Given the accompanying bureaucracy-related formalities which are unlikely to be handled within one day, I predict the opening will ensue later this coming week.

My workmates and parents have rebuked me over the enthusiasm over the opening. I’m delighted to see the piece of work completed at last, despite all the bad publicity surrounding it. The works on bypass construction kicked off in 2009, a year earlier than building A2 motorway between Łódź and Warsaw started and the latter was opened in June last year, while the former is still unfinished. The whole venture was divided into two sub-projects: section Konotopa – W-wa Południe (formerly Lotnisko) with Bilfinger Berger as lead contractor and section called Elka (for the sake of its L-letter shape) from Marynarska junction to Puławska junction, with Porr (formerly Teerag-Asdag) as lead contractor. The former was scheduled to be opened in August 2012, the latter in April 2012… This was the theory – the last moment when those deadlines seemed realistic was spring 2011, then hopes for seeing the road finished in 2012 were dashed. In practice: section between Marynarska and W-wa Okęcie junctions was opened on 14 June 2013, section between Konotopa and al. Krakowska was opened on 31 July 2013, section between al. Krakowska and Okęcie junctions was opened on 6 September 2013 and the last 2-kilometre-long stretch, awaits opening.

The biggest puzzle about the whole stuff is the eneven pace of works – for many months it was appallingly slothful, several obstacles prevented the contractor from starting out works in many places, sluggishness of construction crew was inexcusable. And around spring 2013, when advancements of works was reaching 80%, a sudden spurt of mobilisation ensued. The same happened on A2 motorway construction site in spring 2012, but it could be put down to Euro 2012 deadline. This time construction was far behind schedule, so what spurred the devil-may-care builders on accelerating? Was this the Gdaka to have had an hand in it, by using the well-checked stick and carrot approach?

The long-behind-schedule completion is not the only blemish of the venture. The bigger ones are the absurdities accompanying it – expressways lead to: fence of an office building at the northern end of S79, cabbage field on the southern end of it. I can’t understand the decision to desist from building the tunnel carrying the traffic from ul. Puławska beneath the unfinished roundabout on Puławska junction, but somehow approve of laughable turnaround traffic arrangement at the eastern end of S2. Actually the fact all junctions have been built to fit future needs is positive, what wipes the smile off my face is that the roads will probably not be extended for years. S7 from W-wa Południe to Grójec might be, if everything goes smoothly, completed by 2020, some time later I expect the rest of the S2 bypass to be extended eastwards, N-S route might be never extended… May the huge junctions with roads ending in the middle of the fields not become the monument of the one-off large spurt of infrastructure spending in Poland… I seriously fear lack of adequate funds might almost bring to a halt infrastructure projects which are vital for moving Poland ahead.

Coming to the photo coverage… To the right – the eastern end of the motorway / expressway  linking Warsaw and Lisbon, last week, the day after the top layer of asphalt (SMA) has been laid, it was still sticky.

To the right – same turnaround in the distance, captured today. Over the past week lanes have been marked out and signage has been put up. The turnaround is a really rare peculiarity, but given all circumstances, there’s a method in this madness…

Last Sunday, I cycle down the viaducts over ul. Puławska. Machines and workers were getting ready for laying the SMA on the unopened section of the expressway.

Some one mile towards the west, I approached the basin (wanna) to behold the whole W-wa Południe was utterly finished, with the top layer of tarmac laid and lanes painted. Just cut the ribbon and let elated drivers enjoy the trip!

Then I cycled further in the direction of Al. Krakowska to finally saw the bypass “under the traffic” (pod ruchem) – it was the third day vehicles were forced to turn onto slip road towards Marynarska junction.

Today, despite Sunday, clearance works on Puławska junction and around it were in overdrive. Machines and workers are hurrying to complete the contract. Lane-marking lines have been painted. Traffic lights are operational, but turned off, the site needs tidying up…

Judging by the signage, Sandomierz must be one of more important places on the map of Poland. Or maybe the signage is putting the place on the map? Traffic signage on all junctions of the bypass, hailed abysmal, has been subject of harsh criticism…

And for the very end, two photos from the viaduct carrying ul. Poloneza over the bypass. The first to the west, towards Radom railway tracks and W-wa Południe junction. Crews in the distance are clearing up the road – preparations for the opening under way.

Roads running towards ul. Puławska also look completed. The very viaduct is another example of several absurdities packed into one development…

Pension reform takes shape

4 September 2013 might go down in the history as the day when privatisation of social security management was effectively dismantled…

Last Wednesday the government unveiled a draft of proposed changes in the pension system. The proposal is a combinations of two out of three variants presented to the public in late June. In brief, the fundamental changes are:

- 51.5% of assets amassed in pension funds will be transferred to state-run social security fund – this portion represents treasury securities currently held by the pension funds, which will be cancelled upon the transfer; thus the borrowing needs of the government and “overt” public debt will decrease and its contingent liabilities towards future pensioners will increase, on the other hard, the government will lose a strategic creditor, who could step in when other institutions were reluctant to buy new issues of government debt,

- private-run pension funds will be prohibited from buying securities bearing sovereign credit risk of Poland, i.e. treasury bonds and debt securities guaranteed by the government – this move increases risk profile of the pension funds,

- other assets amassed in the pension funds will stay intact (for the time being…),

- Poles will have three months from the date the new pension law comes into effect, to decide, whether to transfer 2.92% out of 19.52% of gross salary to private-run pension funds, or to transfer the whole pension contribution to the state-run social security system; those who do not bother to submit the declaration, will have the whole contribution automatically transferred to state-run pillar of the system; the decision will be irrevocable,

- assets from pension funds will be moved in ten tranches to the state-run fund over ten years prior to retirement,

- internal benchmark (setting minimum required rate of return) and investment limits are to be lifted,

- fees charged by the pension fund managers are to be slashed by 50% and capped on such level.

Markets’ reaction was predictably revengeful – on Wednesday and Thursday:

- share prices on Warsaw Stock Exchange plummeted – on Wednesday WIG20, index constituting of 20 blue chips, dropped by 2.5%, on Thursday it closed over 4.5% below Wednesday’s close, hitting intra-day low of over –6.0%, on Friday it rebounded by over 2.5%,

- zloty depreciated slightly against major currencies,

- yields on Polish government bonds rose sharply, with yields on 10Y securities reaching 5.0%, much more than 3.6% at the peak of bygone rally on Polish treasury securities…

The government’s representatives said they had predicted the turmoil and Poland would not lose on the rise of debt service costs, as 85% of borrowing needs for 2013 had already been financed at much lower cost.

I personally can also boast about predicting the little market crash. Unlike in 2011, when the crash after US sovereign rating downgrade was more severe, I sold out of almost all of my stock holdings and bought back much of them at almost 10% lower prices, when panic on the market was reaching its height. The stock market might stay volatile, but given the current economic recovery, if stock prices keep going down, this will only create an even bigger ‘buy’ opportunity. In the mid-term I believe I will personally benefit from the impact of the reform on the stock market. Fundamental value of a company does not depend on obligatory participation in private-run pension funds. Market pundits might tell you pension funds will not generate additional demand that used to drive stock prices up, but it is no reason to worry. From now they will stop inflating valuations of companies artificially and I find it a favourable change for the capital market. Remember, every bubble has to burst sooner or later. It has not swollen yet, however, if status quo was retained, demographic changes (increasing outflows from and decreasing inflows to pension funds) would exert downward pressure on stock prices anyway. So that unpleasant moment has been brought forward and its magnitude lessened.

Actors on the political arena in unison hold the view pension system needs a reform, but their assessment of government’s plan vary:

- Leszek Miller, president of SLD pledged to support the government in winding down the reform engineered by Mr. Buzek and Mr. Balcerowicz, therefore the ruling coalition faces no risk of the new law being voted down in the parliament, even though it cannot reckon on support from Civic Platform’s conservative flank – the key outsider / dissenter, not yet ousted from the party, Jarosław Gowin announced he would not cast a vote in favour of the reform,

- PiS politicians, who for a long time have called for freedom to choose whether to participate in private-run part of social security system, when the government pursues the project they have long advocated, refer to a (true) reasoning the government pursues the reform only to loosen the tightness on public finances, not out of care for future pensioners – the matter of the foremost rationale is clear, but if the government implements the vital part of their agenda and they try to oppose it, it means pursuit of power and making politics in more important for them than welfare of Poland,

- Janusz Palikot called for deeming the assets in pension funds owned by Poles and giving them the right to handle them at their discretion…

Media coverage was somewhat biased. Key headline were crying out “SKOK NA KASĘ” (literally: “gripping / seizing the money”), so audience of such news could have been convinced the government is about to steal their savings, while from the legal point of view the government is just relocating means within public finance system and takes them over not from private owner, but from private manager. Imagine a state-owned motorway which until now has been administered by a private manager and paid an administration fee for road maintenance. Is moving the motorway under government’s administration and depriving the private company of its fee a nationalisation? Oddly enough, there are economists, including a renowned chief economist of Credit Agricole Polska, who say the change is neutral for future pensioners. And Moody’s rating agency in its comment issued on Friday also presents a balanced picture of the reform. I must say pension funds managers’ lobby is powerful and effective in crying out its outrage at depriving them of state-secured huge revenues. May it exercise its right to run an informational campaign encouraging citizens to stay in pension funds and showing benefits of such decision. If it happens, do expect to have it dissected on this blog.

Now baffled citizens have a dilemma what to do with their future pension contributions. I do not feel entitled to advise to what to do. If you favour interest of your state (i.e. fellow taxpayers) and following ethical principles in business (the government should not guarantee income to privileged companies), you probably should have your whole pension contribution transferred to state-run social security system. If you believe in superiority of private management (that should have its investment restrictions and government guarantees for minimum pension benefit lifted) and discern pension funds keep assets, not just book records, you should have part of your contribution transferred to private-run pension funds.

To be sincere with you, I have not taken the decision yet. What the government presented recently is just a draft of proposed reform, lacking important details that can impact my decision. Only after I read the new law, I will be properly informed to make any judgement. The key issue for me will be probably the level of fees pension fund managers would be allowed charge. I recently took the opportunity to summarise the pension account allocated to me and learnt on 19 July 2013 (date is not incidental, as I used to be a “member” of Polsat OFE, taken over by PKO Bankowy OFE and 19 July was a merger completion date), after 3 years of paying contributions, market value of settlement units allocated to me was 104.10 PLN (or some 2%) higher than sum of my contributions (now, after yield on Polish government bonds have gone up and stocks lost a few percent of their value I fear the balance of this account dropped below the amount of contributions paid). The worst savings account in the worst bank would fetch a higher return, even after taxes! In the meantime, sum of load fees only was 175.71 PLN. I cannot count in management fee, as it is included in settlement unit valuation, but it seems gain for my future pension would have been at least three times higher, had it not been for the exorbitant fees… The far too high fees are the key factor contributing to built-in efficiency of pension funds. Even if underlying assets bring the desired rate of return, in the long-run exceeding pace of economic growth, management costs will eat up the excess return, making the whole fuss not worthwhile…

"I knew it..."

How many times have you heard this? How many times have you happened to say this, to someone else (probably in the wake of them screwing something up) or to yourself? I begin to observe there is a distinct sense of anticipation built in a human mind – quite often when something is about to go wrong, despite no portent, nor any material evidence signalling it, a man is able to predict it…

Yesterday I drove up ul. Rzymowskiego towards intersection with Al. Wilanowska where it extends into ul. Wołoska. The road was virtually empty. I moved on the right lane and in the wing mirror saw the middle lane was empty. I thought this was safe situation in case something bad happened. For no apparent reason I grabbed the steering wheel with both hands (I have a condemnable habit of keeping only my felt hand on it, while the right is on the gear lever or rests) and as I was passing al. Wilanowska by, an idiot in silver Auris cut in from al. Wilanowska a few metres in front of me. I swerved abruptly in split second, bracing myself for an impact that at such speed could make me lose control over the vehicle, but eventually it ended up with only a close call. Had it not been for the gut feeling I’d had some two or three seconds before, I could have not avoided a serious accident – it wouldn’t have ended up on written-off cars, as I drove some 60 kmph, the Auris driver some 20 – 30 kmph. I was scared out of my wits, but next two or three seconds after the fact, when the reckless motorist was already behind me.

I decided to examine the whole situation:

I have a habit of controlling situation on the road in rear-view and wing mirrors, so I would have known of the free lane to the left anyway.

I usually have a laid-back position behind the wheel, unless I drive fast – efficacy of one-hand steering is far inferior to what can be achieved when the steering wheel is kept with both hands in “ten to two” position – it would have taken precious milliseconds to move the hand and the swerve manoeuvre would in its first stage have been made with just one hand…

Try to estimate the probability that an idiot, having red light, but green arrow, turns right, as if they had green light…

Most of you would say anticipation in this example can be put down to experience in driving. There’s a principle of limited trust to other road users. Each motorist should pre-empt other motorists’ actions and be prepared for the worst-case scenario. Thousands of miles covered influence your imagination and sensitise you to a specific kind of drivers, not those aggressive, speeding and self-confident, but those who infrequently sit behind the wheel, hold on to it fearfully and despite driving slowly, they dither, behave inconsiderately and unpredictably.

This was not the first time I averted an accident thanks to my intuition, but this happened in other realms of life. Many times my intuition has failed me. Many times I thought I should refrain from pursuing a specific plan, as the aftermaths would be dire. Each time, with some dread, I ignored those gut feelings, and never regretted it, as the bad fate has not left its mark on me.

A few nights ago I had a dream. Its content was more than absurd, but such dreams are not a rare occurrence with me. I was invited (why?) for opening of one of the main streets in Piaseczno, which recently underwent a refurbishment. For some reasons the roadside pavements were meant to adorned with lit grave candles and I was asked to light them. While doing my job, I accidentally dropped one of matchsticks into my shoe. I thought nothing happened, but before long my left shoe and sock began to smoulder. I tried to cover it with my jacket to cut off oxygen and thus put out fire, but it didn’t help. Actually there was no fire – there were just red sparks on my shoe and socks which on account of high temperature got stuck to my foot and it burnt mercilessly. I began to nervously hop about and beg people for a bucket of water. Finally somebody brought a bowl of water. I put my foot there and felt immediate relief. Then I tried to take off my footwear and sock. They came off together with the outer layer of my skin… Then I woke up, scared and soaking with sweat…

Then I checked the possible meaning of the dream (once this proved a worthwhile guidance). This time interpretations were disparate, but none upbeat. They said seeing a man aflame means loss of a dear person, but it precisely referred to seeing someone else in fire. Burning oneself means being close to take a decision that will destroy me. And I even recognised what it would be in my case. As a down-to-earth person, should I be guided by absurdly improbable dreams? Is the fate issuing a warning through the subconscious?

Or is it simply about my worn-out theory stating that misfortunate events strike out of the blue when me don’t expect them, and when we expect them, we take steps to prevents them. So assuming I’m aware of potential consequences of my decision, can I manage the course of events to avoid the destruction?

Depose her or not?

The underground, divided into two separate sections since 29 June was opened last Friday, 9 days before original deadline. The decision the two stations located in the hub of the capital would be opened on Friday was announced on Monday and accidentally coincided with another important piece of news.

Last Monday it was proclaimed the number of valid signatures collected was sufficient to call the referendum. Now the fate of mayor lies in voters’ hands. Thus, the campaign has started out. The communiqués in the underground on Thursday and Friday smacked of success propaganda. The tone in which a speaker informed the passengers of the success of getting ahead of the schedule was repulsive and infuriating. I looked at fellow passengers’ faces and felt I was not the only one holding such view.

Is the just called referendum a political move or an essential step taken to improve the way capital is governed? Probably the answer is ‘both’, however with a tilt at the former. The current mayor had several slip-ups, which spoilt her image rather than had real influence on how the capital is run, but also made several errors, some of which are hard to be forgiven.

What I remember and hold against her? Increasing the number of clerks in the town hall, bonuses and pay rises for them, ignorance in terms of the simple things that affect city inhabitants (e.g. how much a single ticket costs), badly organised implementation of new rubbish collection law. And that complacency, conceit and smugness she and her henchmen exude every day.

Which situations will I remember? Her refusal to purchase an entrance ticket for 5 PLN, her statements irate drivers sitting in traffic jam on detour of the flooded tunnel along the river should enjoy beautiful sights, the ludicrous page showing what was done since the beginning of her first term in 2006 – the map is full of spots, such as “building an individual waterworks link to a building located… for 65 thousand zlotys”.

What I cannot understand? How, despite ticket price hikes, proceeds from public transport fares diminished? Laffer curve worked in practice? I am in two minds about rising prices of public transport – the value for money in terms of 90-day ticket is still damn good, but how come a 20-minutes ticket costs the equivalent of petrol used to drive 7 kilometres in town (if you drive on your own, take three passengers and same money is enough to drive 28 kilometres – from one end of the capital to the other).

What I can say to defend her – really a lot has been done in the capital since the beginning of her first term, the stride made is noticeable. The city has caught up on development that was really overdue… Lack of proper co-ordination is the other story… Only the one who does nothing does not make mistakes… In 2010 voters elected her almost unanimously, as the first term was indeed fine. Only later she fell into the same trap of complacency as her party did…

I am registered beyond the borders of capital, so even if wanted, I would not have the right to vote. If I could, I would definitely go, but cannot tell you in which rectangle I would put a cross. The party is shooting itself in a foot by discouraging citizens from participation in the referendum which is a vital instrument in democracy. If somebody thinks the mayor should stay, they should go and vote against ousting her. They probably think urging on boycotting the referendum is a better strategy as the low turnout will make it invalid. Guys, this is a dead-end street. The true virtue will defend itself (in fact here you cannot talk about a true virtue, so a drowning man tries to catch a straw), so whoever thinks she should hold the office until the end of the term, do not stay at home!

What will the referendum change? My guess is nothing, it will just serve as a barometer of support for the mayor and her party. The more probable scenario is that she is deposed. Then the prime minister will likely appoint a caretaker mayor to run the city until local election scheduled in autumn 2014.

No matter what you think of it, follow my short reasoning. You cannot have your flat refurbished without letting in painters and having to endure a few days of total mess (or spending more time doing it on your own and falling flat on you face at the end). Similarly, you cannot enjoy the pleasure of using modernised infrastructure without enduring inconveniences beforehand. In other words, each improvement requires some sacrifice… Therefore I put up with inconveniences patiently.

I somehow sense the summer won’t last long, autumn will come this year soon and will be chilly, wet and gloom. Take delight in wonderful weather until it flies past.

Priorities in life

Second half of August. Still warm and sunny, but after prolonged drought trees begin to shed their leaves, nights are getting longer, evening and morning are getting colder. Imminent onset of autumn brings out reflective moods, thoughts of time inexorably passing by. Seasons of the year change and with each next such cycle each of us a year older, one year closer to departure, has one year fewer to make the most of our lives…

On 1 August I got a text message. An university friend invited me for a party thrown on occasion of her 26th birthday. Many of us after passing by the quarter-of-century milestone avowed to desist from fulsome celebrations. These were naturally jokes, we are far from being and feeling old, but one’s 20s are the times when you no longer want to be older to get more independence, freedom, etc. The best years, that are said to be the period of studies, are gone and so many of my peers, although they still feel young, would appreciate a chance to rejuvenate themselves… Coming back to the main thread, I was delighted to get the opportunity to meet up with some of fellow students and to… maybe meet some new people. From what I noticed, with time such opportunities may become rare, especially if you have a specific circle of friends that seldom extends beyond them and if your life begins to revolve around work… The party was scheduled, conveniently for me, for Saturday evening, but on the preceding Wednesday the friend decided to bring it forward for Friday evening. Not a favourable coincidence. Had that day a rough ride at work that went on despite Friday late afternoon and continued, for me, until after seven p.m., when I could hand over the job to another team, whose members were supposed to finish it, and knock off. Tired, hungry and anything, but freshened up I turned up home twenty minutes after eight p.m., barely escaping an impending rainstorm. An opportunity missed. A friend who, for the same reasons, also could not make it on Friday promised to meet the party host when pressure in her office eases up, but… well, it won’t be the same.

What I’m getting at is that life after graduation has grown in some monotony and funnily enough, amount of spare time has shrunk since then. Just look at the history of this blog – in summer of 2010 when I began the first full-time job with my current employer, posting frequency declinde to reach the bare minimum of one post per week (such frequency, on average, allows to call your blog “regularly run”). Weekly timetables changing each semester, new courses and lecturers, every-day opportunities to get familiar with someone or something new are, in their pre-2011 intensity, thing of the past. Each day begins to look the same – knocking on at 8 a.m, leaving office between 4:30 p.m. and 7 p.m., each day roughly the same faces (I should be thankful to my employer for its methods of accelerating staff turnover ;-)), one of a few routes to and from work. Don’t get me wrong – I’m not complaining. I do draw a lot of satisfaction from my work, get on well with my workmates (feeling of being the odd one has waned a bit), the job is financially rewarding and despite some drawbacks, the bottom line is without doubt positive. The monotony has crept in and it can’t be helped. If you say changing a job might be an option, I will refute by saying “not really” – I’d meet new people, face new challenges, immerse in new corporate culture, etc., but after a few months the problem could revert and even exacerbate, if I felt the decision had not been right.

The real issue is that, like many people of my age, I utilise nearly 100% of my bountiful energy at work. This means I’m motivated, flexible, energising – each employer would appreciate such employee, before they burn out. From my standpoint such risk doesn’t threaten me, but in a few years, who knows? The rest of my energy I offload by cycling and swimming regularly and doing household chores that require more physical effort. This has commendable side effects, as I’m fitter than as a student (despite starting to use a car every day), and should be kept up no matter what future holds, but is not a sustainable way to ensure mental balance in the long-run. To be truly happy in life, you can’t live for pleasure or for money, you can’t live for yourself, you have to live for the others… Focusing on work is not sustainable, especially if your employer doesn’t offer you stability. Job loss hence does not have to be confined to loss of salary and financial hardship or blank hole in your CV, for someone whose commitment (not mistake it for a drama of workaholics, these are two different problems) to work is excessive, mental shock might be more painful…

The only real option is pairing up and raising a family. At some stage bonds with friends naturally loosen up when they get married, go abroad, become preoccupied with their carriers. Personal life should have a priority, professional life is essential, should give satisfaction and pleasure, be the source of income, but should not occupy the top position on the list of priorities…

Just signed up for the level 2 of the exam. The exam is traditionally scheduled for the first Saturday of June, my self-study is planned to kick off with the end of summer holidays. Nine months spent learning. A friend (incidentally the same who failed to come to the party on account of burning the midnight oil at work) said it would do me good, as I would have a goal to pursue. I argued this coin had the other side, as this goal is too specific and set in time, so that there is little beyond it. I can take the exam, a few weeks after learn to have passed it, maybe get a pay rise. And then what? The third level? Next some nine months spent swotting up? If I do well, again passed. Then what? Earning a charter? Getting a promotion? More money? More authority? More respect? And on the sidelines what? Life slipping through my fingers, feeling of time passing by more and more quickly – turning 30 soon and apart from professional success anything else?

I’m not trying to debase the importance of development and education. Such career path is chosen by many young people who deliberately put back raising families until they turn 30, reach financial stability etc. Some do this successfully, some fail and suffer. It’s not that I claim one idea for life is right, while the other wrong. It’s not about passing judgements, it’s only about weighing up pros and cons, before it’s too late, to avoid regretting.

“Polityka” in July printed an article on singles and their loneliness. My Soulmate (my workmate, aged 38, married woman) upon reading this said I was on the path on become one from the most pitiful group of singles… Young (below 30 or even 35) singles have been accepted by the society and postponing the moment of tying the knot is natural these days; reasons to worry crop up when you turn 35. The group is said to be most pitiful, as one of their representatives, woman aged 38, TV producer, claims even her rubbish are pitiful. Key conclusions from that part of the article are:

1) most of older (>35) singles in fact don’t look for a partner or their search is doom to fail, as their expectations towards idealised second half are too exorbitant,

2) they have been convinced by their nearest and dearest they deserve someone exceptional,

(my comment: the two together entrap them, in a certain age it’s no use in “cherry picking”, as cherries are long in relationships are few of them return to “secondary market”, they can only go after “leftovers”)

3) one fourth of well-educated women from big cities are not in a relationship and fill in the emptiness by working like dogs,

4) the demand for a self-confident, motivated, excessively committed to their employer single has been created by contemporary capitalism, which apart from letting singles earn well and bringing them on unfettered consumption, produced hollow employees who might easily get lost in critical situation and whose value for the company might diminish rapidly,

5) being in a relationship increases resistance to stress and reduces risk of burnout and becoming a workaholic, because living for another person gives sense of life…

Of course as one day your company may fire you, your personal life may also shutter unexpectedly. Bereavements, divorces and other misfortunate events happen and so what – life’s about taking risks. You may say having a happy personal life without good job, decent money, wealth, feeling secure is worth little, but having all things people bend over backwards to chase and grab, and having no personal life, is then worth nothing…

How many times can the delusions be shattered? Over the last two years, how many times did it seemed this gloom was coming to an end? How many times did I think the orange glow on eastern sky signalled those were the last moments of darkness before the dawn? Each time the glow darkened and there was no sunrise. There were intimations of daybreak, the was some dim light in the night, but the sun has not come up. After each such dashed hope there is a period of withdrawal that lasts some 4 months (in more serious cases it takes longer to recover). Then ensues a revival. If you don’t try, you won’t succeed. Happiness is in your hands, if this time and next time it doesn’t work out, you can’t lose your heart…

"Katastrofa emerytalna..." - book review

Imagine an economic system 18^th-century liberal economist Adam Smith called for. Imagine a state which serves only as a night watchman, i.e. secures law and order, sets regulations and enforces observances of law and leaves all other aspects of social and economic life in hands of citizens and the invisible hand of free market. A mind-bending picture? No wonder, post-WW2 societies have become so accustomed to governments’ interferences into social and economic interactions that any attempt to whittle down the scope of government’s tasks would trigger hue and cry among spoilt populace…

Despite this, still there are niche associations that advocate idea of lean state and returning to traditions of classical economics. The most important such organisation in Poland is Centrum im. Adama Smitha, headed currently by Mr Robert Gwiazdowski. This ultra-liberal think tank which espouses ideas of lean state, low taxes and deregulation, from the very beginning of the pension reform in late 1990s was against compulsory participation in private-run pension funds… The profound justification of the think-tank’s stance is comprehensively explicated in a book released last year, titled “Katastrofa emerytalna i jak się chronić się przed jej skutkami”, literally: “The pension calamity and how to shun its aftermaths”.

Bemused? You thought if the free-market campaigner, Mr Balcerowicz fiercely defends private entities facilitating the pension reform, each free market believer should support private-run pension funds? Well, life’s a bit more complicated. And Mr Gwiazdowski can tell you why!

What’s your first association when you think of free market and capitalism. Words that come first to my mind are freedom and responsibility, but because those two rarely go together these days, Mr Gwiazdowski claims an average citizen when he thinks of capitalism has in mind huge investment banks, too big to fail, bailed out by governments in 2008 and free market is for him a game similar to tossing a coin: head – I win, tails – you lose. In fact this is how the economies work now and, as Mr Gwiazdowski rightly notices, those to blame are politicians, who have given financial sector freedom, but have failed to require responsibility in return. The current economic system is a blend of free market mechanisms and socialism, an upshot of decades of attempts of combining security citizens want from the government with market mechanisms which in economic theory should allocates resources most efficiently. Mr Gwiazdowski claims as you cannot mix up water and fire, there is no point in building in market mechanisms to socialist solutions. Such actions only lead to expansion of socialism and its further distortions… Conclusion? If a society requires a certain level of security from the state, the state should provide them with such “bare minimum” in the most simple way and refrain from improving anything by harnessing free market mechanisms or private sector.

At least for this very reason privatisation part of pension system in Poland was doomed to fail from the very beginning. If at the end of the day how high the pensions will be depend, apart from demographic trends and labour ratio, on general performance of the Polish economy as it underlies both stock market performance and solvency of government as sovereign debt issuer, does it make sense to put in private sector entities and entrust (and pay) them managing assets whose value in the long term will not rise much above GDP growth rate? And after all, is it possible and fair to encumber one generation with a burden of paying for current pensioners’ benefits and at the same time saving for their own pensions, if the only beneficiary of such shift would be the last generation living on earth and knowing about the oncoming doomsday?

For all those less familiar with pension system and its origins, Mr Gwiazdowski delineates a chronicle of insurance and social security schemes. This introduction helps a reader realise the pension system has a form of insurance protecting from the risk of old age and disability to work. Shift towards obligatory pension savings is an experiment then…

Mr Gwiazdowski points out the Polish pension system is full of absurdities and generally has a built-in inability to generate decent pension benefits. Ludicrous are the workings of state-run ZUS, that costs each year taxpayers over three billion zlotys, or 3 percent of paid contributions (compared to 3.5% charged by private pension funds). If you are curious what the load of money is spent on, Mr Gwiazdowski quotes a list of tasks of the ZUS that occupies several pages of the book – the purpose of author was not to bore a reader to death by enumerating what the social security system administrator has to do, but to give the feeling of how bloated the state sector is. Given the multitude of tasks ZUS must carry out, hundreds of clerks the institutions employs should not sit on their hands! Some of the tasks are truly ridiculous and expenses incurred for them totalled to billions of zlotys, such as the system for administering the pension reform which inter alia serviced transfers to pension funds and calculated so called kapitał początkowy (starter capital), an imaginary amount of paid contributions which then influenced pension amount.

Pension funds and their defenders are given a proper belting. Stability of safety of the private-run part of the pension system is called into question. Look just at the numbers, more up-to-date, from the government’s recent review. If assets under management totalled to 270 billion zloty at the end of 2012, and aggregate equity + guarantee fund totalled to 4.5 billion zloty, it means on average the safety valve covers 1.7% of assets amassed in pension funds. Lehman Brothers just ahead of its collapse had lower leverage! In the meantime owners of pension fund management companies paid out 4.2 billion zloty in dividends. In fact profits have been sucked out of Poland and in case something goes wrong, the private pension fund manager loses its equity (3.4 billion zloty, the rest is in the guarantee fund), liquidates the profit-making business and its responsibility ends. Responsibility for benefit payments rests then with the state or, let’s face it, taxpayers. Profits – privatised, losses – socialised! Please note with time the ratio of pension fund managers’ equity to assets under management will only rise, as assets will grow faster than equity, each year depleted by generous dividend payouts.

Pension fund supporters have a separate chapter dedicated to them (“Wojna o OFE…”). Their ferocity is best described by sentence “Profesor Balcerowicz zachowywał się, jakby OFE były najważniejszą rzeczą na świecie, a poza OFE życie na istniało w ogóle” (Professor Balcerowicz acted, as if pension funds were the most important thing in the universe and life without them did not exist). In all developed countries private institutions do not run obligatory pension schemes and life goes on despite this, but this is not the case. I recommend reading of this chapter, as Mr Gwiazdowski does in it what I called for – quotes specific statements of OFE defenders and then disproves them. Instead of shouting with angry face and talking of distortions and manipulations just like Mr Balcerowicz does, Mr Gwiazdowski puts under microscope each single myth on pension system and debunks it. You an argue with his reasoning, but can’t deny him precision and clarity.

The final question Mr Gwiazdowski asks is – if pension funds are as good as their defenders assert, why is participation to them obligatory? The true virtue will always defend itself! In fact Mr Balcerowicz, who refuses to give people freedom whether to choose to rely on state-run social security system, or to trust private sector asset managers, treats people like idiots (barany), not the government.

In the last chapters the author lays out the concept of the ‘civic pension’, a pension scheme similar to the one in Canada. The ideal pension system in Mr Gwiazdowski’s opinion should be as simple as possible – not to generate unnecessary costs for taxpayers, guarantee subsistence allowance, leaving any initiative to save for or insure against pension in citizens’ hands, and… be funded directly from taxes… Then he casually muses about workings of the state and advises how to save for pension on our own.

For my part, the book is:

- deftly and brightly written (I noticed some complication of Mr Gwiazdowski’s blog posts),
- could do with some more thorough editing, as spelling and other minor, easily discernible errors have not been eliminated,
- biased, but this not an academic publication, but expresses private judgments of its author (probably therefore strikes a chord with me),
- thought-provoking and compels a reader to think over how a variety of pension system solutions work, what their advantages and drawbacks are and which of them can be eliminated.

All in all – a recommended read, particularly less than a month before final settlement on the shape of pension system in Poland.

Pension funds – awaiting the resolution

Low season is reaching its nadir. Summer, that according to long-term forecasts issued in May was supposed to end in June, brings weather ideal for those holidaying and not enviable for those having to work. In the meantime, far in the background, the government runs consultancies on the future of pension system in Poland. The temperature of public discourse is not as hot as in the last days of June, when variants of pension system turnaround were unveiled, yet at some moments emotions are running high.

Last Tuesday Jacek Żakowski invited for his radio interview in TOK FM prof. Leokadia Oręziak – probably the most avid academic critic of private-run pension funds. Her view of the issue is more or less the total contradiction of what Mr Balcerowicz advocates. Whoever wants to acquaint with the problem, can read the transcript, I will only take the liberty of pointing your attention to comment thread. In the last weeks I began to observe a shift in Poles’ view of pension system reform. In brief – Poles badly assess performance of private-run pension funds and costs (including charged fees) they generate, but discern superiority of pension funds over state-run social security fund (the lesser of two evils). The superiority consist in the fact pension funds are a pool of real assets, while the social security fund has no money, just a book record. Commentators frequently argue whether the assets in pension funds belong to them or not, quoting manifold arguments to underpin their assertions, some resort to insults to prove their supremacy :)

I particularly liked one comment (not remember where I read it) in which someone aptly noticed those who now are trying to capitalise on demonising pension funds and urge on scrapping them might in a few months end up is management or supervisory boards of newly created state-run institutions managing assets taken over from pension funds…

Some time ago I mentioned my futile attempt to check correctness of calculation of returns fetched by two pillars of the pension system. Last week the ministry of finance responded to accusations of Komitet Obywatelski Bezpieczeństwa Emerytalnego (literally: Civic Committee of Pension Security, abbr. KOBE) regarding wrong methodology in government’s calculations. The whole, 35-page-long response is available here. Whoever wishes to drill down into its, good luck, I see some more productive activities for Sunday summer afternoon, but one day I will probably revert to that document. So far the Civic Committee has not issued any announcement after the government’s counter-report. I leave the assessment up to you and can only bring two statements to your attention:

1) “prof. Marek Góra (...) Pytany, czy weryfikował obliczenia rządu i obrońców OFE, odpowiada, że nie. - Wyliczenia przygotowali znakomici ekonomiści, którzy nie mogą się mylić. Ministerstwo Finansów nie ma takich ekspertów” – these words have wound me up. There are no infallible people, even the most outstanding economists can be wrong and blindly trusting somebody on account of their impeccable academic credentials is appalling!

2) “Wyniki przedstawione w opracowaniu pokazują jak wrażliwe są one na przyjęty zestaw założeń „upraszczających"; w szczególności dowodzą, że w zależności od formułowanej hipotezy możliwy jest taki dobór mierników efektywności, aby wnioski z ich zastosowania przemawiały na korzyść OFE lub I filaru w ZUS” – this is what the whole dispute is all about and why it might never cease. Given multitude of variables and simplifying assumptions one has to make, there is plenty of room for manipulation. Tack on the pressure for reaching a specific outcome (the government wants to prove superiority of ZUS, while pension fund defenders will seek to prove superiority of OFE – look at KOBE’s webpage – am I only one who has impression their goal is to save pension funds, not the benefit of future pensioners?) and you will realise dashed are the hopes for finding impartial calculations…

Meg - the first decade gone by

Some two weeks ago I was scoffed at, by my somewhat older female workmates, for sticking to my almost six-years-old, always reliable, Nokia 3110 Classic and not upgrading to an all-the-rage smartphone / iPhone or whatever else a modern corpo-lemming needs to swank. I refuted their half-jocose, half-serious remarks with a question how long their previous devices worked before packing up. Unsurprisingly, one said her previous smartphone had cracked after hitting table surface after being dropped from the height of 20 centimetres, the other’s iPhone had broken down after a few months from purchase, helpless technicians hadn’t known how to fix it and eventually she’d had it replaced under warranty with another shitty iPhone which even doesn’t have a removable battery. Since early 2008 when I purchased my Nokia, it has never let me down. A few times over that time it crashed and I had to turn it off and on, a few times it lost signal and needed a restart, but except for those minor incidents, the handset worked like a clockwork and nothing seems to indicate its end is near. Of course given its age it can conk out any time, but if it happens, I’ll have a justification to buy a better device, probably a low-end smartphone.

The other story is that they also asked me how I can live without access to internet in my mobile phone. Well, the real life is offline and may it stay so. I don’t keep track of the ever-accelerating world and don’t follow my friends on facebook incessantly and don’t miss it. It’s simply healthier not to be in a debilitating state of continuous partial attention… Is it something worth missing out on?

How I’ve used my phone and why I’ve not upgraded to a state-of-the-art device is the essence of my policy towards consumer durables. I generally:

- buy only brand new stuff,

- choose items of good quality, with as many features as I need to have (why paying for gadgets I won’t use?),

- take care of the stuff so that they serve me longer than their built-in obsolescence,

- get rid of them and replace with new when their wear and tear justifies it.

Such should be also the way of handling probably the most expensive consumer durable – a car…

As a matter of principle I wouldn’t buy a used car. Supply of used cars in Poland is limited by low number of sold new cars (many of which serve as company cars which doesn’t bring a good testimony of their condition after a few years of use), so used cars come to Poland from its western neighbours. Given how much I heard and read of crooks trading in used cars, I’d never buy one. Well-maintained used cars are:

- either not for sale, because due to price homogeneity market values them almost at the par with their rickety counterparts, hence owners to well-maintained cars have no motivation to sell them,

- if they are sold, the new owner will be someone from family or friends of an old car owner or a car trader, which brings about negative selection…

With a brand new car you get the producer’s warranty, new technologies and clean history of the vehicle. It does depreciate over the first years rapidly, but why should you care if you plan to keep that car going for 10 – 15 years? You use the car properly, have it serviced at regular intervals, parts which wear out and engine oil are changed when due and the car should serve you for 10 – 15 years. Then comes the moment when each, even the best car, becomes less reliable or simply requires more money sunk to keep it going. Even if repairs are not expensive, you need to take the trouble to find a cheaper spare part, pick it up and have it replaced. So after all there comes the moment to part company with the old car without regrets and buy a brand new car that should serve you years. Provided in the era of built-on obsolescence the newly produced car are that durable... Time will tell…

The reason why I write it all is that today is the 10th anniversary of the day when my car was purchased. As a young driver I’ve been in the luck of having my first car neither purely brand-new (not recommendable for beginners behind the wheel), nor purely used. My parents signed it over to me two years ago when my father decided he wanted a new car. Probably hadn’t it been for my need (a proper word, maybe I should write ‘whim’) to have a car, he would’ve driven it for some time more, but given the circumstances, the choice was obvious…

After 10 years the car still looks well and holds up well. Engine and transmission are in superb condition, bodywork and some of auxiliary elements signify their wear and tear (although there is no trace of rust!). To the right – snapped on 18 June 2013 after a wash and some polishing ;) Maybe not like driven out of showroom, but as for a decade-old vehicle, looks splendidly.

The car:

- has never had a collision on the road, although has scratches and one repaired dent after too close meeting with objects other than other vehicles,

- has never broken down on the road to the extent it had to be towed away to a garage on a trailer and never has it failed to start,

- has always been serviced by Renault dealership’s garage (a bit more expensive, but as long as you prove you know the onions and keep tabs on mechanics, they won’t rip you off) and most of the time parked in a garage,

- when I was behind the wheel endured temperatures (thermometer readings) from –24C (cold start, not just driving out of garage into such temperature) to +36C and tomorrow the latter record stands a chance of being tomorrow, when heat wave that has come over Poland is about to reach its zenith),

- over 10 years had 6 breakdowns of auxiliary elements (in a French car inevitable), out of which 3 over the 3rd year of usage and 2 over the last year (total cost of unplanned repairs over the last year: slightly less than 500 PLN) and 2 minor breakdowns of engine / transmission – related elements (cost of repair below 1,000 PLN each time),

- at the moment has a mileage of 59,693 kilometres.

The odometer reading is the effect of simply using the car only when necessary. As I counted, the car had 13 longer trips (> 100 kilometres to a destination) which contributed to some 10,000 kilometres of mileage, the rest driven near Warsaw. My general principles are:

- if the distance to cover is too short to let the engine heat up, there’s no point in starting it – engine and other elements wear out most before working temperatures is reached (for the same reason I don’t understand why people cherish low-mileage car from someone who used it only on short distances – what’s the percentage of mileage driven with warm engine?),

- in Warsaw, unless justified, the car should be left by the nearest underground station and then public transport should be taken,

- when weather permits and I don’t go to work, I use a bicycle…

The plan now is to use the car as long as it is reliable. Given its age, frequent breakdowns may begin to plague before long, but I hope to enjoy at least two years of problem-free usage. And then – option one is another car for years, but preferable is the second option – a company car. Even if I had to pay for petrol from my own pocket, it would spare me depreciation, servicing, repairs, insurance and other car-related expenses, which at the end of the day are… money down the drain.