Poland should be a much more effective country. First step to increase state capacity public expenditure appears to be rationalised. Without this, we will not be able to improvement and face the challenges of the 21st century.
Usually the surroundings of the independency Day are a time of reflection on Poland and its past and future. Again we saw discussions about polarization, historical politics, but besides about the economy. According to many forecasts, Poland faces a bright future – an effective economical transformation has created the foundations for the unchangeable improvement of our country. This advancement can be lost if we accept a bad policy. Unfortunately, we frequently overlook the crucial aspect – state capacity, i.e. the ability of the State to fulfil its objectives.
Watching the past of Poland, both the First Republic, the Second Republic of Poland and the contemporary one, it is hard not to get the impression that this is simply a origin that we lack. And the Republic of Poland did not conform to the changes in the world; it was not created in time for an efficient administration and army. The results we know – Poland disappeared from the map for 123 years. The Second Polish Republic faced major challenges of integration and security. This time, the private sector proved besides weak and the state besides strong, which weakened marketplace incentives.
Also now, the III Polish Republic has to meet hard tasks: energy transformation, expansion of the army, and in the background there is simply a demographic crisis and an expanding cost of surviving for pensioners. Adding money is risky – next year the government deficit is expected to amount to 6.1% of GDP. Contrary to the popular tautology on the Internet, a advanced deficit is not affirmative – it increases the hazard of inflation and displaces private investment. Poland needs to rationalise spending. Poland needs state capital!
What is state capacity?
This concept seems to play an increasingly crucial function in mainstream – this is not unusual due to the fact that Western countries can increasingly feel its shortages. In American Bestseller Plenty {C:$00FFFF} Abundance) Ezra Klein and Derek Thompson note that discussions in the United States focus on 2 utmost views: the expansion of the state on the left and the simplification on the right. Unfortunately, this is why we frequently neglect to announcement the key origin for improvement – precisely state capacity.
Looking for a definition state capacity, it is easy to encounter those offered by scientists: political scientists, economical historians and improvement economists. They usually mention to it as ‘the ability of the State to collect taxes, to legislate and to supply public services’. How Samuel Hammond noted before, it is hard to realize this abstract concept, but it is easy to imagine examples. This economist cited Alberta’s history– a Canadian state that was struggling with the plague of rats. Authorities decided to deal with it – services and society were active in the fight against rodents. What were the results? Alberta has been a rat-free region for over 70 years.
Similar examples are more, besides on economical grounds – 1 of the most interesting ones is the question of fiscal consolidation, or simplification of public debt. Examples of model consolidation frequently include Canada and Sweden. In these cases, due to the origin and dedication of politicians and the trust of citizens, hard reforms have been carried out. These countries have succeeded in importantly reducing public spending and improving its efficiency.
Because that's what people are fighting for. state capacity – State efficiency. expanding public spending does not necessarily lead to a crucial improvement in public services, which the Americans powerfully believe. There has been more public backing for wellness and higher education all year for the Atlantic, but there is no improvement. In this case, the problem is overfocusing on financing request for these services in the absence of improvement of supply.
It is noted that state capacity goes beyond the debate "more or little states?". However, it is hard not to get the impression that the reforms leading us to increase state capacity with a advanced likelihood of reducing public spending as % of GDP. As the global Monetary Fund notes, state spending has increased importantly worldwide, but their efficiency deteriorates and rigid expenditure, specified as pensions, is frequently charged with budgets.
What about this Poland?
Whether we want to or not, Poland besides needs to change its approach and realize the function of state capacity. The state has increased importantly in relation to GDP– next year the ratio of public spending to GDP will be 50.6% for Poland. It is worth noting that it will be 48.4% in Denmark and 48.8% in Sweden. However, it is hard to see a real improvement in the quality of public services. The second largest government deficit in the European Union is due to increase in expenditure - next year it is expected to scope 6.1% of GDP. The story is that increased defence spending has led to this situation. As I showed with Marcin Zieliński, if all expenditure, but for defence and debt service, were equal in relation to GDP, as in 2015, the deficit in this year would be 0.8% of GDP. That's a large difference.
Under the current conditions, we request to prioritise the country. We can't anticipate her to take care of everything, and as a result, nothing good. The most apparent examples of inefficiency are pension and social expenditure. Both the Coalition government on October 15 and the erstwhile 1 like to put patches on the pension strategy like the celebrated thirteen or widow's pension alternatively of carrying out major reforms. To sustain economical development, we request an increase in the retirement age, but the government is afraid to discuss it. The 500/800+ program has a limited impact on demography, while backing from it goes to the richest. Under specified conditions, it seems essential to consider whether more than PLN 60 billion can be spent better, for example by directing them to the most deprived.
When Sweden carried out its fiscal consolidation in the 1990s, it was decided to privatise and increase competition in public services – an education voucher was introduced in education. This could be an inspiring direction for us too. The function of private education has been increasing for any time, which may increase educational inequalities in Poland. Redirecting part of the expenditure from 800+ to the implementation of specified a programme may have a affirmative effect on their elimination. As the example of Sweden shows, competition in this marketplace is beneficial for students, especially for those in a worse situation.
Much could be exchanged, but 1 must be reconciled with 1 thing – Poland should be a much more effective country. First step to increase state capacity public expenditure appears to be rationalised. Without this, we will not be able to improvement and face the challenges of the 21st century.
