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Poland's economic experiment based on Thomas Piketty

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Re: Poland's economic experiment based on Thomas Piketty

#41

Earlier quoted context omitted.

On the other hand, borrowing in a foreign currency risks being ruined by exchange rates if the currency collapses. As happened to businesses in many Asian countries not that long ago. Also: Iceland.

Only if you peg your own currency. If your neighbor devaluates their currency, your will naturally devaluate yours.

Yes but the example given was Iceland where the opposite happened: debt (and more importantly interest payments) was denominated in a currency that appreciated against the currency where the revenue to pay the debt was being generated.

Re: Poland's economic experiment based on Thomas Piketty

#42

Earlier quoted context omitted.

Inflation is a tax on wealth but not income (which rises with inflation.) As such it’s a progressive tax since wealth is so unequally distributed. Close to two decades of low inflation in the US and Western Europe has greatly increased inequality. Hyperinflation is destructive and must be avoided but there’s a strong progressive case for increasing the 2% inflation targeted by most central banks.

5% of the value held in the bank account of a poor person is worth more to that person than 5% in the account of a wealthy person, even if the absolute amount is less. Inflation is one of the most regressive taxes.

For less well off people the effect of inflation matters far more in terms of cash flow - pay and expenses - than cash holdings.

Re: Poland's economic experiment based on Thomas Piketty

#43
post #37
post #25

Earlier quoted context omitted.

They're national socialists. They don't like aliens, want to be in control of everything they deem important and are perfectly willing to break the rule of law for the good of society. They gave everyone with more than one child free money. They also call everything 'national' instead of 'public'. They think that the EU is a hindrance and an enemy, as if Putin didn't exist (that the part I can't understand the most.)

Why bring up Putin? It is possible to be in NATO but not the EU.

Because there's no third option. It's either the EU or Russia; there's no independent in-between possible. NATO won't help with a self-inflicted economic and geographic squeeze.

Re: Poland's economic experiment based on Thomas Piketty

#44

> That means a pause in privatization, which Morawiecki says contributed up to 14 billion zlotys a year to the budget, a preference for domestic over foreign borrowing (the share of Poland's debt owned by foreigners is down to 50 percent from about 60 percent three years ago) and a reliance on state enterprises to increase investment because private companies are too small and not boldly expansionist enough to provid…

Domestic borrowing is a guarantee of inflation, because the incentive to dilute the debt is too great to not use.

Japan has incredibly high levels of domestic borrowing, but has long suffered deflation. What factors make Japan the exception?

Re: Poland's economic experiment based on Thomas Piketty

#45
post #25
post #10

Earlier quoted context omitted.

And conservatism. It is hard to categorize them easly, but they don't seem to be center of political scene in my opinon.

They're national socialists. They don't like aliens, want to be in control of everything they deem important and are perfectly willing to break the rule of law for the good of society. They gave everyone with more than one child free money. They also call everything 'national' instead of 'public'. They think that the EU is a hindrance and an enemy, as if Putin didn't exist (that the part I can't understand the most.)

You're parroting an extremely twisted line touted by some media sources. You must realize how absurd it is to call them national socialists given the accepted meaning of that term. It's actually quite clownish.

W.r.t. aliens, that's nonsense. Even the article mentions Ukrainian immigration. For the record, Poland took in what were effectively ~1 million Ukrainian refugees and immigrants because of, you know, that war still being waged by Russia that the West keeps forgetting about. Germany and other Western countries didn't take in any Ukrainians. Poland refused to take in migrants during the migrant crisis for a number of reasons, including: refusal to acquiesce to Merkel's dictates after having she had utterly bungled that affair (most migrants aren't even Syrian refugees); migrants who had arrived in Poland and elsewhere eventually left and moved to Germany or Sweden anyway; Poland is largely homogeneous and having witnessed cultural-religious friction in the West decided not to subject itself to that experiment esp. given the precarious geopolitical place the country occupies; Poland diverts significant funds to efforts on Syrian soil to help Syrians on the ground; Poland is already in the Schengen zone and so what's this business with no aliens?

> perfectly willing to break the rule of law for the good of society

The current judiciary is full of law-breaking and less than savory people with ties to the old Communist establishment. That whole affair with the Tribunal (a Communist invention instituted by Jaruzelski during martial law to protect Communists, basically) is more complex. Every party had put its own candidates in and the previous ruling party, the Civic Platform, just before office, had exploited incoherent and unsatisfiable laws to create a situation that could only be resolved it seems the way it had been. Needless to say, it is far more complex than the way you claim it is. There is a general problem with Polish laws looking like Swiss cheese and issues with the Polish constitution. And even if it were the case that the rule of law was being violated for "the good of society", then perhaps there's a problem with the system if it needs to be violated to make necessary changes?

> They gave everyone with more than one child free money.

Not everyone agrees with that policy, but what is so wrong with it that you had to mention it as if it were an evil thing? The goal is to help slow or counteract the negative birth rate of the country. Europe in general is facing serious demographic issues. "Importing" large numbers of people from totally different cultures is not a great solution (see Germany, France).

> They also call everything 'national' instead of 'public'.

No, they don't. And when they do, so what? That's how state-owned institutions and programs are often labelled in Poland and elsewhere outside the US. The National Theatre, the Polish National Opera, the National Institute of Remembrance. What a silly grievance.

> They think that the EU is a hindrance and an enemy, as if Putin didn't exist (that the part I can't understand the most.)

They don't have issues with the European Union as such. They have issues with some ways the EU operates today and the way it relates to the countries of the former Eastern bloc. And who do you think makes up a good chunk of "Poland's owners" in this article? Hint: they're on the other side of "the river" and they own 80% of the Polish media. The current party, if you'll recall, signed the Lisbon Treaty in 2007. And w.r.t., Putin, Poland, and this party, are more keenly aware of the threat Putin poses than anyone, hence being one of very few countries actually meeting NATO defense quotas, hence trying to increase NATO presence in the region, hence pushing for the Three Seas Initiative with American support, hence previous attempts at installing a missile shield. The EU has done little to counter Putin. The West shows little solidarity with the countries most threatened by Putin. For example, Germany continues to carry on with its backroom deals and gas pipelines circumventing Poland, even though it would be cheaper to run the pipeline through Poland instead of through the Baltic.

So, I really have no idea what you're talking about.

Re: Poland's economic experiment based on Thomas Piketty

#46

Earlier quoted context omitted.

Exactly! And inflation is just another form of taxes.

Inflation is a tax on wealth but not income (which rises with inflation.) As such it’s a progressive tax since wealth is so unequally distributed. Close to two decades of low inflation in the US and Western Europe has greatly increased inequality. Hyperinflation is destructive and must be avoided but there’s a strong progressive case for increasing the 2% inflation targeted by most central banks.

> Inflation is a tax on wealth but not income (which rises with inflation.)

Not really. Inflation is a tax on those who don't have access to inflation-adjusted returns. If inflation is steady, wealth isn't taxed.

But unexpectedly increasing inflation is a tax on wealth.

Re: Poland's economic experiment based on Thomas Piketty

#47
post #2

> That has meant a negative household saving rate, compared with Germany's 10 percent of disposable income. Isn't it because majority of Germans rent and majority of Poles buy?

Probably because Germans earn 3x as much. https://en.wikipedia.org/wiki/List_of_European_countries_by_...

Re: Poland's economic experiment based on Thomas Piketty

#48

Earlier quoted context omitted.

> renting is better to society as a whole. Care to explain? I would say that widespread renting is actually quite terrible. It means that property is kept in the hands of class of landowners (and when wealth is concentrated, this also tends to concentrate power); that instead of investing one's income, renters are basically paying off the owner's mortgage; that generally, people prefer to own, and so widespread renti…

> Care to explain? Sure! Caveat: please ignore taxes, emotional value and a few other country-specific details. When you're buying a home, you're doing 3 independent things: 1) Borrowing money (optional) 2) Making a capital investment into an illiquid, immovable asset 3) Renting an asset that you own to yourself for you own usage Give how much little money you have (compared to a company) and how your earnings and sp…

If you're borrowing at a fixed interest rate (or buying outright), you're also locking in price for housing against future rent increases.. and, currently in CA, against uncontrolled property tax increases too.

It doesn't really prevent you from moving to another job, one could always rent out the owned property and rent in your new location. (Though if the area you own in has crashed in prices that's a more difficult proposition...)

Re: Poland's economic experiment based on Thomas Piketty

#49
post #48

Earlier quoted context omitted.

> Care to explain? Sure! Caveat: please ignore taxes, emotional value and a few other country-specific details. When you're buying a home, you're doing 3 independent things: 1) Borrowing money (optional) 2) Making a capital investment into an illiquid, immovable asset 3) Renting an asset that you own to yourself for you own usage Give how much little money you have (compared to a company) and how your earnings and sp…

If you're borrowing at a fixed interest rate (or buying outright), you're also locking in price for housing against future rent increases.. and, currently in CA, against uncontrolled property tax increases too. It doesn't really prevent you from moving to another job, one could always rent out the owned property and rent in your new location. (Though if the area you own in has crashed in prices that's a more difficul…

> If you're borrowing at a fixed interest rate (or buying outright), you're also locking in price for housing against future rent increases.. and, currently in CA, against uncontrolled property tax increases too.

Again, that's irrelevant from a financial perspective. The rates are priced to account for the risk of increase, and in this case the markets are liquid and competitive enough to allow correct market pricing.

> It doesn't really prevent you from moving to another job, one could always rent out the owned property and rent in your new location. (Though if the area you own in has crashed in prices that's a more difficult proposition...)

There is a large overhead cost to renting out, which is significantly higher than the overhead cost of renting a home. Renting out is essentially a part-time job.

Re: Poland's economic experiment based on Thomas Piketty

#50

> That means a pause in privatization, which Morawiecki says contributed up to 14 billion zlotys a year to the budget, a preference for domestic over foreign borrowing (the share of Poland's debt owned by foreigners is down to 50 percent from about 60 percent three years ago) and a reliance on state enterprises to increase investment because private companies are too small and not boldly expansionist enough to provid…

> Sad to read this. Most LatAm leftist governments tried the same formula over the past 2 decades, with disastrous consequences.

Korea, Taiwan, Japan and china tried it with spectacular results. Also, latin america is a especial situation because they are within the US sphere of influence. Their economic situation is far more complex because of it.

> exactly like the one in Argentina and Brazil.

Brazil and especially argentina's financial problems were a result of international borrowing, not domestic borrowing.

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