Morawiecki's American Success

Morawiecki held meetings with two of the Trump administration’s Cabinet Secretaries (Rick Perry, Energy and Wilbur Ross, Commerce), President Trump’s International Economic Affairs Adviser, Kenneth Juster, and the head of America’s central bank, The Federal Reserve, Janet Yellen. By all accounts he handled himself with aplomb with these American counterparts. He also did public meetings at AEI, the Heritage Foundation (and the Kennedy School at Harvard in Boston later in the week) and did a stellar interview on CNN- the best interview anyone from dobra zmiana has given to the international press thus far.

But it was in the on-record public meetings where Morawiecki separated himself from his Polish political and ministerial peers. After watching his performance (most notably at AEI) it is demonstrably proven to be imperative that when there is an opportunity to express what Polish interests are, in an intellectually challenging and high-level international setting, that he must be dispatched to do so.

The American Enterprise Institute was founded in 1938 to advocate for free market capitalism, limited government, private enterprise, individual liberty, and political accountability after the disastrous interventions by the big government left during the Depression of the 1930’s. For many decades, AEI was a purist voice dedicated to its core mission but in recent years its free market capitalist zeitgeist evolved into a strong advocacy for globalist free markets. The current core philosophy of the institute shuns populism and nationalism in favor of globally oriented best practice governance- which sensibly does embrace free markets as the greatest guarantor of freedom and prosperity, at least in theory. The prevailing belief, and one common among the establishment right, is that open borders, allowing people and capital to flow freely from country to country, is the best framework to deliver the positive free market capitalist outcomes for which they advocate. The pitfalls of these theories, which we are seeing in the EU and USA (migrant crises, abuse of social welfare, “race to the bottom” on labor costs hurting native workers, large scale cronyism by the global financial sector to name a few) of which Morawiecki has rightfully been critical of, are all but ignored by AEI fellows these days.

It is also important to note that both Anne Applebaum and her husband, disgraced former Foreign Minister and noted Octopus aficionado, Radoslaw Sikorski, have deep ties to AEI with Sikorski even serving as a full-time “resident” fellow and acting as Executive Director of the “New Atlantic Initiative” from 2002- 2005. It was rumored that this prestigious fellowship was secured with a well-timed donation from Mrs. Applebaum’s father, Harvey Applebaum, a law partner and wealthy DC energy lobbyist and pioneer of energy sector lobbying. This fellowship was supposed to build Mr. Sikorski’s bona fides as an intellectual, though most of those who knew him in DC, have told this journalist, that his intellect was less than impressive then and evolved little in his time there and since. Apparently not only Poles recognize how shallow Mr. Sikorski is.

Given the philosophical attitude and long standing political ties of AEI, it was clear that this was not going to be an overly friendly room to Mr. Morawiecki, his views, and the government he represents. In fact, the moderator of the panel (entitled: “Cooperation in Turbulent Times”) which Morawiecki joined after his opening remarks, was one Dalibor Rohac. A simple Google search yields many results of articles and editorials Rohac has penned highly critical of the new Polish government and his active spreading of the disinformation talking points of Mrs. Applebaum and Mr. Sikorski. Two of these columns have appeared in the Wall Street Journal in recent months.

Despite what he was up against, Morawiecki calmly and with discipline in idea and point, laid out the economic and political priorities of his ministry and the Polish government. By preaching the real precepts of democracy and accurately demonstrating the legitimacy of the PiS mandate (along with many points about the complicated and oft-misunderstood post-1989 history) he did not allow those who were looking for an in to attack to get what they were looking for. It was a masterful performance. The coup de grace was when Rohac, with no context to justify the segue, asked a question about EU relations framed by relations with EC head Donald Tusk. The question wreaked of a desperation to try and weaken the performance of the invited foreign guest. One could close their eyes and hear Mrs. Applebaum delivering the question in her shrill, pedantic, and condescending tone.

I encourage all to visit the AEI website and watch Minister Morawiecki’s performance from Monday April 3rd. To date, it is the single best on-record public meeting that any member of this Polish government has given in the United States. All the other ministers and deputies should be compelled to watch it so they can learn how to deliver intelligent, incisive talking points to Western audiences of intellectuals and those who remain critical, with or without justification.

Morawiecki certainly proved himself up to the challenge of defending Poland abroad. And Poles should be proud of the job he did. This is a task that does not fall into his core mandate as it is one that resides with other branches of government but there has been a shortage of quality voices who can elucidate complicated themes in English for Western audiences, and hence not much in the way of positive results. It has also been epidemic among the dobra zmiana cohort to have hordes of different members of this government come to Washington (and NYC and Chicago to a lesser degree) to have meetings which ultimately waste the time of those they meet with (too many Sejm Posels, Senators, deputy ministers, and third string advisers that do not speak English or lack an actionable agenda beyond getting a photo they can tweet) and it is not only NOT having a positive effect, but it is also hurting Polish political capital at the expense of RP. When Poland needs real help the doors may not be as readily opened because of the lack of respect for the time of those who have great domestic responsibilities.

When sending emissaries to Washington, only the best should be allowed to coordinate robust meeting schedules. This should be limited to Morawiecki, Anders, Macierewicz, and Duda; and only with the leanest of delegations (President Duda, the most warm and likeable figure in the entire government, sadly has a traveling staff that is especially large in size and arrogance). These determinations of who should come when should be left to Ambassador Piotr Wilczek, who is doing a phenomenal job in his new post as the ranking Pole in the USA. He is building high quality and high level relationships on behalf of Poland all over Washington and he is proving to be the best of MSZ, which undoubtedly owes to his lack of experience in the foreign service.

What is disheartening right now when evaluating Morawiecki’s current political position is that domestically, as of late, too many across the Polish government are working to undermine him and his reform efforts as he builds political strength on merit. In the classic Polish political style, there is a political turf war occurring behind the scenes with many ministries and offices actively trying to weaken each other. To the apparatchik class of game players, a strong and effective Morawiecki makes them personally and politically weaker and hinders their designs on further accumulation of political power or preservation of their existing position. This mentality and dynamic is incredibly damaging to Poland and its potential future success. Morawiecki certainly has accumulated the most impactful portfolio of responsibilities and oversight in this government given the “tucking in” of the Finance Ministry and Treasury into the Ministry of Development. This makes him the Economics Minister in the truest sense which is a necessary step to reform sclerotic and corrupt legacy systems. He also understands the economic situation and has a vision on how to deliver these necessary reforms (which for the record, not all of his prescriptions are ones with which I agree). His management experience and competence suggest that he is acting in good faith- not in his political or financial self-interest as so many others in Polish politics have acted. Morawiecki’s intellectual character, competence, non-arrogance, expertise, and integrity have the other ministers nervous. This lack of team oriented cohesion is disastrous for Poland. These opposing internal forces will weaken Poland by opposing good policy/reform while pushing bad policy and attempting to stifle reform. There are several recent, current, and on-going examples of this.

Recently both the heads of the Warsaw Stock Exchange and PZU were let go, Malgorzata Zaleska and Michal Krupinski, respectively. They were both installed in these state-overseen entities in political deals when the government was formed. They are loyalists of the Justice Minister, Zbigniew Ziobro and his ability to place his people was no doubt in exchange for his allegiance to PiS and the guarantee of his Solidarna Polska voting bloc in the Sejm. Zaleska, with no real international market and investment experience (an academic economist and a notoriously lower-than-mediocre one who has yet to build a career on merit) was a glaring example of the wrong person for the wrong job and truly a “political” hire. The WSE is too important an institution for the effective functioning of Polish capital markets to be left to apparatchiks. This has never been more true than after the OFE pension nationalization which reduced liquidity in equity markets dramatically (which is the ability for an investor to enter and exit the market with ease by pairing off as buyers and sellers of stocks). The person they had tapped to replace her was the former Deloitte board member Rafal Antczak. (N.B. I know Antczak and he used to be a contributor to this magazine.) Antczak is one of the most knowledgeable macro and micro economic, investment and trade, and tax policy specialists in Poland. And of course, as most high level business people with international knowledge are prone to be, has been a supporter of Morawiecki (if even a little leery, as I am, of some of the more socialistic and protectionist tenets of the Morawiecki Plan and greater vision). This common sense driven loyalty based on ideas and offered in good faith for the good of Poland and its economy was enough for Ziobro and/or his loyalists throughout government to block Antczak’s appointment. This is a disaster for the WSE as well as a serious problem for the Polish economy. Antczak was the ideal candidate in Poland for the job and it was only Polish patriotism that encouraged him to leave the private sector for this quasi-public entity. But political short termism and selfishness scuttled this sensible nomination.

With Antczak shot down by whatever invective was used against him (Russian agent? Balcerowicz disciple? Former commie? Prefers Pilsner to Zywiec?) by economically remedial, self-interested, bad-faith-acting, solipsists there was but one positive outcome. This episode brought into focus other loyalists in the state-owned sector who were up to no good. The head of PZU, Michal Krupinski, was fired. All the reasons I am sure are all not yet out but the salary he and his complicit board paid him should be enough reason, as well as publicly taking credit for the “repolonization” of the Unicredit stake in PKO which was orchestrated by Morawiecki and others. Zaleska and Krupinski are poster children for why state owned enterprises should all be privatized (another point I am not fully aligned with Morawiecki on even as I express strong respect for him in this article).

The other on-going example of bad policy being foisted upon Poland by those who should top out their governmental service careers in public libraries is the recently passed bill “Pharmacies for Pharmacists”. This is one of the worst pieces of sector specific regulatory legislation I have ever seen anywhere this side of Zimbabwe. It puts wide restrictions on pharmacy ownership. It introduces regulations on who can own pharmacies (only licensed Polish pharmacists, and new licensure in general is too frequently allocated based on politics), how many pharmacies can be owned, and where they can be located (to reduce competition for existing locations). This is all based on random factors determined by bureaucrats, who always have less wisdom than the market in situations like this. This level of anti-competition will have the effect of reducing choice, raising prices, reducing innovation to drug distribution, hurting patients/the public health service/taxpayers, destroying jobs, reducing investment, and kicking out foreign capital that Poland sorely needs. The internationally owned pharmacy segment is under 10% so most of the harmed pharmacy businesses will be Polish and many of the smaller players will have their growth capped- these are the market participants capable of generating the largest job creation. The international players in the market will likely take up massive lawsuits against the government. I have heard a class will come together when the bill passes that will sue for 10bn Euros. Should they win their suit proving an illegal action (by both EU and international standards) there could even be trade sanctions levied against Poland. This kind of GDP destruction does not help keep promises about “pro-growth” policies nor does furthering the isolation of Poland in global markets serve to help the economy. It will only lead to the global investor class having less and less faith in Polish rule of law as it relates to building and owning assets in Poland, and creating jobs.

Morawiecki (along with Jaroslaw Gowin, Minister of Higher Education and Science) recognizes Poland needs less regulation (and less of the attendant paperwork) and more investment, not the other way around which is what this bill galvanizes. Many ministers and posels and KPRM writ large support this bill which was put forward in the Sejm by Waldemar Buda based on legislation proposed by the Ministry of Health which is led by Konstanty Radziwill (who recently suggested the ministry should have more say in women’s choices on whether to deliver their babies by caesarean section or not). The deputy minister in charge of pharmacies, Krzysztof Landa, resigned this past week. Landa, as was well known and highlighted when he was appointed last year, received funding for a foundation he ran in recent years before joining the government to serve fellow Poles. It turns out the funders were big multinational healthcare companies and the optic of a conflict of interest persisted as he went into public “service.” When asked about this last year he developed amnesia and could not recall the donors. His resignation, in my cynical view, was forced ahead of this passage to give this horrible bill one less factor for which to castigate it when it is signed into law.

A bill like this is indicative of the short sighted and bad policy that too many of the failed apparatchik ministers want to pass. This bill was so bad it was already defeated once a few months ago. But in trying again to pass it, with Morawiecki speaking out against it, opposition to him is more a defining motive to many than the core of the bill. It will also no doubt help a few of the rent-seeking pharmacy concerns with strong relationships in the Ministry of Health which is business as usual in ministries unless they can be truly reformed. This is a microcosm of everything that Morawiecki is fighting against in bad policy action and in trying to reform and make a better Poland. The resistance to his agenda is further proof that he remains dobra zmiana’s last great hope to take Poland to the next stage of successful societal and economic evolution and why I for one am now behind him all the way.