Economic Lessons from Poland

 

In the midst of our Great Recession, while most countries have been following Keynesian prescriptions, Poland has taken a different tack.  As economist John Lott discusses, during the last fiscal year Poland lowered government spending by 6 percent.  Meanwhile, the U.S. increased government spending by 18 percent.

While U.S. growth over the past year has been stagnant–at about 1.6%–Poland’s has soared–by about 4.2%.

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  1. Profile Photo Inactive
    @DavidWilliamson

    This would explain why many Polish plumbers have left the UK and gone back home.

    Does this mean Keynes was wrong? No doubt Mr Obama will explain it all in his lecture, later.

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    @tabularasa

    But if they’d increased spending by 18 percent, their growth rate would have been 20 percent (and think of all the jobs saved and created). [This is known as Krugmanism]

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    @TheKingPrawn

    I believe this fits firmly in the “duh” category.

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    @ByronHoratio

    Very glad to hear. I’m a a Polophile…Polephile? Despite its sad history, it is a decent and clear-headed nation.

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    @DocJay

    You are forgetting to add the floating zloty to your theories.

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    @MelFoil

    I’ve been on the Keynesian diet–eat more pork chops, more butter cookies, and more ice cream to “fuel my fat-burning furnace”–but it didn’t work. I might’ve purchased the wrong kind of ice cream. I’ll have to ask Paul Krugman and see what I did wrong.

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    @Yeahok

    So that is what Pat Sajak has been doing.

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    @RobertLux

    Another reason to try to move to Poland . . . oh, and the country has an unusually high number of unusually attractive (and demure) women . . .

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    @EThompson

    Solidarnosc!

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    @JosephEagar
    David Williamson: This would explain why many Polish plumbers have left the UK and gone back home.

    Does this mean Keynes was wrong? No doubt Mr Obama will explain it all in his lecture, later. ยท 6 hours ago

    I’m not sure we should make a big deal out of this, since I don’t think Poland is a model we want to emulate. Poland experienced a capital inflow in 2011, which made cutting spending much easier.

    The problem with cutting spending during a capital boom is the capital boom bails the government out (think Clinton’s surpluses during the Internet bubble, when high growth dependent on a growing trade deficit balanced the budget). This lets the government avoid painful, but vital, structural reforms–tax reform, union reform, entitlement reform, etc. We want real structural reform, not temporary surpluses.

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