Polish elections and German hegemony

The large rightwing party in Poland with a distinctly nationalist edge, the Law and Justice (PiS), won last Sunday's (Oct 25) election with enough seats to give them a majority in Parliament without coalition partners (A conservative enigma 10/31/2015):

Jaroslaw Kaczynski, the veteran leader of Poland’s right-wing Law and Justice party (PiS), is the architect of that success. His party came first with 37.6% of the vote, giving it 235 out of 460 seats in the lower chamber of parliament (the Sejm) and the first independent majority in post-communist Poland. The centrist Civic Platform (PO) party, in power since 2007, finished with 24.1% of the vote. As PiS savours its victory, people at home and abroad are wondering where its ideological heart lies.

There is a lot of imaginative falderol written about "populism of the left and right," particularly in ill-informed American press articles about European politics.

But Alex Duval Smith describes the PiS' economic policies this way (Polish election: Law and Justice wins over third of vote in first results The Guardian 10/27/2015):

The party favours a sharp rise in public spending and a larger state role in the economy. It also wants the central bank to launch a cheap lending programme worth 350bn złoty (£59bn) over six years to support growth – an idea that some see as undermining the bank’s independence.

Kaczyński’s party revealed plans to reap new revenues from next year with a tax on banks’ assets, and there were also signs it was confident of sufficient informal support in parliament from other parties to make changes to Poland’s constitution.

“Many party leaders have talked of wanting deeper change in Poland, so, if we want to deliver that, changes to the constitution are vital,” the party’s spokesman on economic affairs, Zbigniew Kuźmiuk, said on Monday.

That in itself sounds like a sensible kind of policy difference from neoliberal dogma, whatever their other policy positions.

Marcin Goettig and Agnieszka Barteczko report for Reuters on the PiS policies (Poland's Eurosceptics win outright majority in parliament 10/27/2015):

The socially conservative PiS has promised to increase state control over Poland's $535 billion economy, the biggest in central and eastern Europe, and to tax banks and stop privatization.

Its opposition to accepting migrants fleeing war in the Middle East and Africa is likely to set it on a collision course with its key European Union allies.

The incumbent centrist Civic Platform won 138 seats, while the anti-establishment Kukiz'15 party secured 42 seats, the pro-market liberal Nowoczesna 28, and the agrarian PSL 16.

Two leftist parties failed to pass the election threshold, meaning leftists will have no representation in the legislature for the first time since 1989.

Law and Justice also wants to lower the retirement age and boost economic growth to 5 percent through fiscal and monetary stimulus. It rejects adoption of the euro single currency any time soon.

PiS's pledges also include raising public spending by over 2 percent of GDP and at the same time keeping the fiscal deficit below the 3 percent EU ceiling.

"Law and Justice faces a huge responsibility," said Andrzej Rychard, sociologist at the Polish Academy of Sciences. "Some of these promises may prove difficult to keep." [my emphasis]

Given the nightmare trap the euro has become for countries like Greece, Ireland, Italy, Portugal and Greece, staying out of the eurozone is a smart move.

They also note, "The president, Andrzej Duda, was also elected in May on a PiS ticket, giving the PiS a clean sweep of the main elected offices." PiS also has a majority in the upper house.

From at least a superficial view, the PiS does seem to be operating with some mix of left/Keynesian and rightwing, xenophobic policies. If the center-left social-democratic parties can't make their way back to Keynesian, pro-labor platforms and campaigns, the xenophobic right in other countries could benefit from advocating a combination of policies like those of the PiS.

Reuters describes the PiS as a "Euroskeptic" party. Before this year, "Euroskeptic" tended to be used to describe nationalist critics who wanted to weaken or abolish the EU, while left critics looking for democratic reforms and stimulus policies within the EU were called "Eurocritical."

But after Germany's humiliation of Greece in 2015, those distinctions are blurring. Merkel's eurozone policies are untenable. And the Greek negotiations this year showed that unless a country is willing to risk leaving the eurozone, fundamental departures from Merkel's austerity policies and the restrictive treaties that embody them will remain a dim prospect.

Timothy Garton Ash also notes this combination in Poland has survived worse than this shift to conservatism. Don’t despair The Guardian 10/26/2015):

PiS represents a large part of Polish society: patriotic, Catholic, conservative inhabitants of small towns and villages, especially in the poorer east and south-east of the country; people who don’t feel they have benefited from the transition to market democracy. It promises a strong state to protect them from the cold winds of economic and social liberalism. It is rightwing in culture, religion, sexual morality (no abortion or in vitro fertilisation), xenophobia (no Muslim refugees please, we’re Polish) and nationalism, but almost leftwing in its economic and social promises to the poor and left-behind. (Orbán conjures something of the same mixture in Hungary.) Simplifying greatly, there are two Polands, and this time this one won. [my emphpasis]

But grim news for Germany's hegemonic position in the EU and especially the eurozone may be good news for eurozone citizens currently suffering the German-imposed austerity policies. Daniel Gros in this Center for European Policy Studies commentary, The End of German Hegemony 10/16/2015, offers this perspective:

[F]rom a soft-power perspective, the mere fact that people believe Germany is strong bolsters the country’s status and strategic position. But it will not be long before people begin to notice that the main driver of that perception – that Germany’s economy continued to grow, while most other eurozone economies experienced a prolonged recession – represents an exceptional circumstance, one that will soon disappear.

In 12 of the last 20 years, Germany’s growth rate been lower than the average of the other three large eurozone countries (France, Italy, and Spain). Although German growth surged ahead during the post-crisis period, as the graph shows, the International Monetary Fund predicts that it will fall back below that three-country average – and far below the eurozone average, which includes the smaller high-growth countries of Central and Eastern Europe – within five years.

(The article notes that an "earlier version" of this piece appeared as The End of German Hegemony Project Syndicate 10/15/2015.)

Gros lists the aging population as one of Germany's long-term problems. But I've learned to be wary of this claim. Stated in isolation, it functions as an ideological justification for neoliberal austerity policies like cutting pensions and raising the retirement age.

And Gros is basically expressing support for the foolish chronic-austerity policies advocated by Merkel's government. Germany's current growth issues could be effectively addressed, and much of the immediate problems of the eurozone ameliorated (but not solved), by Germany pursuing a sensible stimulus policies and higher wages at home. German wage growth has lagged seriously behind productivity growth for years now, which is why the complaints of German "wage dumping" are justified. It's part of the way Merkel's government - and the red/green coalition that preceded Merkel - have been squeezing advantages out of the eurozone at the cost of doing serious damage to their supposed eurozone "partners."