There are two ways to experience anything: from inside the frame or from outside the frame. Both ways of experiencing the world are useful, and one is often misused.
In Liberty, Stephen Cox cited a funny quip from William Hazlitt who long ago said that Englishmen had but one thought while attending the opera -- "I am at the opera."
Let's run with that example. Suppose it's a good opera with a dramatic plot, great music, and good singing. If your mind is filled with "hey, I'm at the opera!" then you might be an idiot. If you aren't an idiot, at least you are missing something. I think that even "hey, look at the tits on that soprano!" is better than "I am at the opera."
"I am at the opera," is an example of experiencing life from outside the frame. The protagonist has ceased to be a protagonist and has become an actor for an audience that sits in his head and admires his act. Today, the outside-the-frame perspective is the one most often abused. It fits the cheap irony that chases its own tail in popular culture, and it fits the shallow consumerism ("hey, I have an iPhone!") that gets people up in the morning.
But sometimes the outside-the-frame perspective can be a marvel. Consider Groucho Marx cheating to the camera. Or consider this: I was once in an old, colonial-era hotel on the banks of the Orinoco reading Rabelais in Old French under the influence of a strong hallucinogen, and I thought to myself, "hey, I'm in an old, colonial-era hotel on the banks of the Orinoco reading Rabelais in Old French under the influence of a strong hallucinogen." Now that was a rewarding experience in both ways. Giggling madly at Rabelais with the Orinoco flowing by was a delight, and just thinking about what a strange thing I was doing was another, different delight.
Sure, for a moment I had ceased to be a protagonist and had become an actor for an audience that sat in my head and admired my act, but (forgive me for saying so) it was a good act and worth stopping to admire; whereas almost anyone can buy an opera ticket, and sometimes they give them away.
Thursday, December 06, 2007
Friday, November 16, 2007
Poor making choices, or making poor choices?
A recent article reports on some results from surveying very poor people in Udaipur, where 65% of the men are underweight and more than half are anaemic. (The Economist April 28, 2007; http://www.economist.com/finance/displaystory.cfm?story_id=E1_JDRDDQR.) The survey reveals that if these people spent less on cigarettes, alcohol, and festivals, they could eat 30% more.
To the Economist's writer, the obvious conclusion to be drawn from this is that the poor make bad choices. I think another conclusion is available and would evince more respect for the choices that the poor make. And I am not alone. I asked my wife, Lisa, what most folks would think about this survey. "That the poor make poor choices," she said. Then I asked her what she thought. "That they like a smoke, a cocktail, and a party, like anyone else" she replied. I think she's right.
A hungry man who buys cigarettes knows damned well that he could buy some rice instead. Does his choice, so long as it only directly affects him, not define what is good and useful?
This story reminds me of an argument that I make about bullfighting. Opponents of the spectacle ("art form," I would say) suppose that it is immoral to take an animal's life for "sport." Except when these opponents are vegetarians, they see a bright line between slaughter for bullfighting and slaughter for food. I tell them that they are grossly materialistic, because they will kill an animal to satisfy an appetite for meat, but they condemn killing it for loftier, aesthetic values.
But the busybodies always think they know what is valuable: Meat is valuable, even to a fat-assed consumer. The beauty of the bullfight is not valuable. Food is more valuable to the poor than are cocktails, parties, and tobacco, even though the poor prove by being hungry while smoking, drinking, and attending festivals that man does not live by bread alone.
Saturday, September 15, 2007
The Freedom To Think Like An Ignorant Slob
The host tells a caller to shut up.
The host hangs up on a caller whose views he dislikes.
The host hangs up on a caller who bores him.
The host refuses to take a call from a man who wants to talk about the civil liberties.
An association of bloggers promotes an effective boycott of Big Talk.
An association of bloggers promotes an effective boycott of commercial sponsors of Big Talk.
The sponsors of Big Talk tell the radio station to stop talking about civil liberties or lose their sponsorship.
A woman who doesn’t like what the Big Talk host says invades the studio and shoots him dead.
Now which of these examples implicates Constitutional, First-Amendment freedom of speech? Trick question. The correct answer is, none. Why is that? These examples don’t implicate First-Amendment rights, because the First Amendment does not protect you from being told to shut up or even from being made to shut up, except in special circumstances.
The special circumstances are clearly stated in the Constitution: “Congress shall make no law … abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the government for a redress of grievances.” There you go. Any laws being passed or enforced in my examples? No. In other words, any state action involved? No. Therefore, no infringement of free-speech rights.
The popular image of the “marketplace of ideas” is apt. You can bring your ideas to the marketplace and find no takers. You can even bring your ideas to the marketplace and get pummeled to death. That would be a crime but not an infringement of the First Amendment, unless the pummeler were a cop or a congressman.
That seems simple to me. But the simple fact that the Bill of Rights, and much else in our Constitution, limits government powers is lost on the ignorant slobs who now appear to constitute a majority of the polity. Why do so few Americans know this? It’s basic and important information about our government. It's not some kind of legal technicality; the entire Bill of Rights is about limiting government powers, not about limiting private powers or corporate powers. And the Bill of Rights is, or was, an important part of the American identity. As the authoritative Wikipedia puts it, “The Bill of Rights plays a central role in American law and government, and remains a fundamental symbol of the freedoms and culture of the nation.”
A USA Today article (http://www.usatoday.com/news/nation/2007-01-23-free-speech-battles_x.htm) reports that hundreds of blogging activists promoted a boycott of Disney-owned radio station, KSFO-AM in
Ignorance on this topic goes far and wide. How far? Again and again, I hear on the radio and read in the press that the (presumably and sometimes explicitly Constitutional) right to free speech should protect us from various forms of speech itself. You can't hang up on me or tell me to shut up, or refuse to take my call, or strongly disagree with me, or tell me I'm an idiot for thinking what I think, or boycott the Dixie Chicks, or withdraw your sponsorship, because that would infringe somebody's right to free speech. I think that these sloppy arguments are sneaking up on the ultimate idiocy: the assertion that to protect the victims of these "infringements", well, there ought to be a law.
Do I have to draw you a picture?
Monday, August 27, 2007
Worse Than Bad In Africa
Governments cause high inflation: Their thieving and redistribution get out of whack. So they print too much money.
High inflation is bad. It brings all sorts of discomforts. You can't use money to store wealth. Credit is all but impossible to give or get. Fears of financial insecurity cause popular upheavals.
But the governments that cause inflation can, and usually do, make it worse. They try to impose price controls and currency controls. When they do, goods flee the country and the markets go empty. It happens fast, and I'm going to tell you exactly how.
In 1983, Bénin in West Africa had high inflation, price controls, and currency controls. I lived next door in Togo. It had the same currency but not price controls, and it had an unregulated black market for money changing. In the "street of banks," the money changers walked around with fat rolls of banknotes and were proud to call Togo "Africa's Little Switzerland."
The markets of Togo's big, coastal city, Lomé, were overflowing with goods -- meat; fish; vegetables; a little girl selling only shoestrings, another selling only chocolate bars; eggs; live animals; pharmaceuticals sold on a platter in the open air next to hand axes and coconuts; second-hand clothes from Europe and the United States that the locals called "dead yovo clothes," because they couldn't imagine live white people giving such precious things away; batteries; bolts of cloth; furniture; spices; palm butter; Chinese mosquito repellent; electric fans; and charcoal. You could buy anything really.
I visited Cotonou in the neighboring Marxist El Dorado of Bénin (formerly The Kingdom of Dahomey). Bénin should be the same as Togo. It has the same tribes, languages, colonial history, geography (including approximate size and topography), and weather. But in Cotonou, the market was pitifully empty. There was just nothing to buy. I, being used to Togo, assumed that there was a holiday, or a coup d'état, or a plague that emptied the market. I began to ask questions of the bereft market people and ended up conducting a little investigation on both sides of the border between Togo and Bénin.
I learned about the Marxist government in Bénin and the inflation and weak currency and price controls. But why would that empty the markets?
The market people knew why. The key to prosperity and wealth (until everything ran out and the government abandoned Marxism in the late 80s) was to buy goods in Bénin at the official prices and smuggle them out of the country. If you bought goods, you smuggled them to Togo to sell at market rates. Then you went back to Bénin where you might buy more goods at the official prices to smuggle out of the country and, if you were well connected, you might change the West African currency (CFA) for US dollars or French francs at the official rate. And back to Togo you went with goods for the market and hard currency for the street of banks.
Some people got rich this way. Eventually they had to risk their skins to do it, after the government of Bénin closed the borders. But not before there were almost no more hard currency or goods in Bénin.
Variants of this story have played out all over the world at various times, famously in Germany and Brazil, and now in Zimbabwe where inflation is "illegal," the government is printing Z$200,000 notes, and the people are suffering severe shortages of food, fuel, and medicine.
Let's hope (against hope) that Mugabe is the last hyper-idiot of hyperinflation.
High inflation is bad. It brings all sorts of discomforts. You can't use money to store wealth. Credit is all but impossible to give or get. Fears of financial insecurity cause popular upheavals.
But the governments that cause inflation can, and usually do, make it worse. They try to impose price controls and currency controls. When they do, goods flee the country and the markets go empty. It happens fast, and I'm going to tell you exactly how.
In 1983, Bénin in West Africa had high inflation, price controls, and currency controls. I lived next door in Togo. It had the same currency but not price controls, and it had an unregulated black market for money changing. In the "street of banks," the money changers walked around with fat rolls of banknotes and were proud to call Togo "Africa's Little Switzerland."
The markets of Togo's big, coastal city, Lomé, were overflowing with goods -- meat; fish; vegetables; a little girl selling only shoestrings, another selling only chocolate bars; eggs; live animals; pharmaceuticals sold on a platter in the open air next to hand axes and coconuts; second-hand clothes from Europe and the United States that the locals called "dead yovo clothes," because they couldn't imagine live white people giving such precious things away; batteries; bolts of cloth; furniture; spices; palm butter; Chinese mosquito repellent; electric fans; and charcoal. You could buy anything really.
I visited Cotonou in the neighboring Marxist El Dorado of Bénin (formerly The Kingdom of Dahomey). Bénin should be the same as Togo. It has the same tribes, languages, colonial history, geography (including approximate size and topography), and weather. But in Cotonou, the market was pitifully empty. There was just nothing to buy. I, being used to Togo, assumed that there was a holiday, or a coup d'état, or a plague that emptied the market. I began to ask questions of the bereft market people and ended up conducting a little investigation on both sides of the border between Togo and Bénin.
I learned about the Marxist government in Bénin and the inflation and weak currency and price controls. But why would that empty the markets?
The market people knew why. The key to prosperity and wealth (until everything ran out and the government abandoned Marxism in the late 80s) was to buy goods in Bénin at the official prices and smuggle them out of the country. If you bought goods, you smuggled them to Togo to sell at market rates. Then you went back to Bénin where you might buy more goods at the official prices to smuggle out of the country and, if you were well connected, you might change the West African currency (CFA) for US dollars or French francs at the official rate. And back to Togo you went with goods for the market and hard currency for the street of banks.
Some people got rich this way. Eventually they had to risk their skins to do it, after the government of Bénin closed the borders. But not before there were almost no more hard currency or goods in Bénin.
Variants of this story have played out all over the world at various times, famously in Germany and Brazil, and now in Zimbabwe where inflation is "illegal," the government is printing Z$200,000 notes, and the people are suffering severe shortages of food, fuel, and medicine.
Let's hope (against hope) that Mugabe is the last hyper-idiot of hyperinflation.
CSI Pyrenees: Frenchy The Bear
Some of you may be eager for the latest news of the Slovenian bears in the French Pyrenees. The news is good or bad depending on who hears it, but everyone will agree that it's odd.
In 2006, the French government released a Slovenian brown bear named "Franska" (or "Frenchy" in Slovenian) in the French Pyrenees. Some shepherds were angry and raised hell.
The same year Palouma, another imported bear was found dead at the foot of a cliff. The Greens thought the circumstances suspicious. The shepherds applauded her death.
Now, in August of 2007, Franska died. An investigation and autopsy revealed that:
1 She was old. Franska was supposed to be a sexy, young female. Her job was to breed more bears. But in fact, she was way beyond breeding age. A Slovenian fraud perpetrated on the French? One thing is sure; she didn't die of old age.
2 She had been shot in the derriere by a shotgun, but that was not the cause of death either, because--
3 She was hit by a truck while crossing the road and killed instantly.
"What a joy and what a relief for the keepers of livestock!" said the president of the Association for the Preservation of Pyreneean Heritage of the High Pyrenees.
"Such sad news.... We will immediately ask the government that she be replaced," said the president of the Association of Bear Country.
In 2006, the French government released a Slovenian brown bear named "Franska" (or "Frenchy" in Slovenian) in the French Pyrenees. Some shepherds were angry and raised hell.
The same year Palouma, another imported bear was found dead at the foot of a cliff. The Greens thought the circumstances suspicious. The shepherds applauded her death.
Now, in August of 2007, Franska died. An investigation and autopsy revealed that:
1 She was old. Franska was supposed to be a sexy, young female. Her job was to breed more bears. But in fact, she was way beyond breeding age. A Slovenian fraud perpetrated on the French? One thing is sure; she didn't die of old age.
2 She had been shot in the derriere by a shotgun, but that was not the cause of death either, because--
3 She was hit by a truck while crossing the road and killed instantly.
"What a joy and what a relief for the keepers of livestock!" said the president of the Association for the Preservation of Pyreneean Heritage of the High Pyrenees.
"Such sad news.... We will immediately ask the government that she be replaced," said the president of the Association of Bear Country.
Tuesday, August 14, 2007
Palouma the Bear, Fallen For France
This year, the French government released five brown bears from Slovenia in the French Pyrenees mountains. Some Pyreneean shepherds, an endangered species, got angry. As I reported in an earlier Reflection, the French government was forced to release the bears at secret times and places to avoid disruption.
Battle lines have been drawn. According to Reuters, pro and anti-bear graffiti is a common sight along roadsides in the Pyrenees, a region where bears were once common.
In August, hikers found Palouma, one of the Slovenian bears, dead at the foot of a cliff. A wide-ranging investigation into her death has begun. Here are some of the headlines translated from the French press:
--Death of Slovenian bear Palouma probably accidental
--Palouma's death resuscitates debate over Pyreneean bears
--Death of Palouma: "No possibility excluded"
--Pyrenees: the death of a bear
--Palouma, will she be replaced?
--Palouma's autopsy: Nothing suspicious found
--Palouma, fallen for France
A representative of a green party in France says that if Palouma was chased off the cliff then, "it's murder, pure and simple."
Speaking of murder, I was surprised to learn that the tiny number of beleaguered brown bears in France kill about 300 sheep and cattle per year. But wait! Not so fast! These official statistics are wrong, says AVES France (the Association de Protection des Espèces Menacées). According to AVES, whenever a herder claims that a lamb, kid, or calf was killed by a bear, the government gives him the benefit of the doubt and pays an indemnity, hence the inflated statistics. http://www.aves.asso.fr/article.php3?id_article=288.
Senior French songster, Renaud, just released a musical homage to Palouma entitled "Rouge Sang." (Yes, he's one of those one-name guys. No, I'm not making this up.)
Passions among the shepherds have not cooled either. Following a violent demonstration, some of them were recently convicted of crimes and given suspended prison sentences as long as four months.
As the French say, "A suivre..."
Battle lines have been drawn. According to Reuters, pro and anti-bear graffiti is a common sight along roadsides in the Pyrenees, a region where bears were once common.
In August, hikers found Palouma, one of the Slovenian bears, dead at the foot of a cliff. A wide-ranging investigation into her death has begun. Here are some of the headlines translated from the French press:
--Death of Slovenian bear Palouma probably accidental
--Palouma's death resuscitates debate over Pyreneean bears
--Death of Palouma: "No possibility excluded"
--Pyrenees: the death of a bear
--Palouma, will she be replaced?
--Palouma's autopsy: Nothing suspicious found
--Palouma, fallen for France
A representative of a green party in France says that if Palouma was chased off the cliff then, "it's murder, pure and simple."
Speaking of murder, I was surprised to learn that the tiny number of beleaguered brown bears in France kill about 300 sheep and cattle per year. But wait! Not so fast! These official statistics are wrong, says AVES France (the Association de Protection des Espèces Menacées). According to AVES, whenever a herder claims that a lamb, kid, or calf was killed by a bear, the government gives him the benefit of the doubt and pays an indemnity, hence the inflated statistics. http://www.aves.asso.fr/article.php3?id_article=288.
Senior French songster, Renaud, just released a musical homage to Palouma entitled "Rouge Sang." (Yes, he's one of those one-name guys. No, I'm not making this up.)
Passions among the shepherds have not cooled either. Following a violent demonstration, some of them were recently convicted of crimes and given suspended prison sentences as long as four months.
As the French say, "A suivre..."
Monday, August 13, 2007
Racism and Fine Merlot
Last week, I drank with a racist.
At a cocktail reception for Harvard lawyers, she told my friend, an Hispanic lawyer, that retiring Hispanic judges should arrange whenever possible for an Hispanic successor. I gently asked her was that not a sort of racism? She made the usual arguments for affirmative action and for proportional representation of her ethnic (or linguistic?) group in the professions. I suggested that the process might taint the reputations of its beneficiaries. To that, she violently agreed. It was just awful how white professionals assumed that brown ones got their positions through affirmative action.
She appeared to be a bright person, so I was surprised that she stepped so swiftly and willingly into my logical trap. (It certainly wasn't original.) Maybe she is not old enough to remember a time when anyone dared challenge affirmative action in polite society. In any case, I waited for the other shoe to drop. I enjoy doing that -- smiling quietly until my opponent in rhetoric begins to make my own arguments for me. She obligingly backpedaled and told me that she did not advocate promoting people who aren't perfectly qualified. I heartily agreed with the sentiment and poured her another glass of Merlot. The wine was good.
Then I asked her if faced with a couple of qualified candidates, one Hispanic and one white and clearly better qualified, what would she do? After long hesitation, "Hire the white guy," she said. So we agreed; no affirmative action, right? Well, no. But she couldn't tell me why not.
Feeling that her side needed bolstering, I guess, she attacked with a dull, ugly weapon: "What do you know about it? What's your ethnic background?" That 'argument' was so pitiful that I again waited for the other shoe to drop, but she waited me out. So I asked in return, "If I'm Hispanic, you will agree with me more thoroughly?" "No," again.
She looked a little deflated, and I wanted to help. "How's this for affirmative action:" I asked, "the old white judge naturally finds a younger white guy to succeed him. There's a better qualified Hispanic candidate, and the judge isn't exactly prejudiced; he just knows and likes the white guy, a nascent good ol' boy." That enthused her. It happens all the time; it drives her mad.
I drank with a racist, and it wasn't so bad.
At a cocktail reception for Harvard lawyers, she told my friend, an Hispanic lawyer, that retiring Hispanic judges should arrange whenever possible for an Hispanic successor. I gently asked her was that not a sort of racism? She made the usual arguments for affirmative action and for proportional representation of her ethnic (or linguistic?) group in the professions. I suggested that the process might taint the reputations of its beneficiaries. To that, she violently agreed. It was just awful how white professionals assumed that brown ones got their positions through affirmative action.
She appeared to be a bright person, so I was surprised that she stepped so swiftly and willingly into my logical trap. (It certainly wasn't original.) Maybe she is not old enough to remember a time when anyone dared challenge affirmative action in polite society. In any case, I waited for the other shoe to drop. I enjoy doing that -- smiling quietly until my opponent in rhetoric begins to make my own arguments for me. She obligingly backpedaled and told me that she did not advocate promoting people who aren't perfectly qualified. I heartily agreed with the sentiment and poured her another glass of Merlot. The wine was good.
Then I asked her if faced with a couple of qualified candidates, one Hispanic and one white and clearly better qualified, what would she do? After long hesitation, "Hire the white guy," she said. So we agreed; no affirmative action, right? Well, no. But she couldn't tell me why not.
Feeling that her side needed bolstering, I guess, she attacked with a dull, ugly weapon: "What do you know about it? What's your ethnic background?" That 'argument' was so pitiful that I again waited for the other shoe to drop, but she waited me out. So I asked in return, "If I'm Hispanic, you will agree with me more thoroughly?" "No," again.
She looked a little deflated, and I wanted to help. "How's this for affirmative action:" I asked, "the old white judge naturally finds a younger white guy to succeed him. There's a better qualified Hispanic candidate, and the judge isn't exactly prejudiced; he just knows and likes the white guy, a nascent good ol' boy." That enthused her. It happens all the time; it drives her mad.
I drank with a racist, and it wasn't so bad.
Thursday, February 01, 2007
In The Carcass of Communism
March 2006
Dwarfing their chairs and stools in the broad hallways of the Polish ministry of finance sat fat, old women with moustaches. Each of them edged into the halls from the great office doors as though escaping from the office in slow motion. They nibbled on little cakes, gently gossiped, and sipped sweet tea all day long. They did nothing else. I mean no work at all, ever. They made no pretense even.
It took me a long time to get used to them. It was best to pretend that they simply were not there. I once begged the secretary of a high-ranking bureaucrat to help me send a fax to the World Bank. I couldn’t operate the fax machine. It was an important communication. The finance minister himself cared about what I was doing. The secretary was friendly about it, but my request was risible. She laughed at me. She would not work.
I wondered why, in a country with so many comely young women, were these old hallway fixtures so ugly.
Polish men told me (and my experience did not contradict them) that older Polish women were hideous and fat with black hairs coming out of unlikely places. Young Polish women were blonde and beautiful. The men had a theory that these old and young women were of two different races. The young ones never had a chance to get old, because the old ones killed and ate them. And that’s why the old ones got so fat. I suppose it did have something to do with their diet. I digress.
When I moved temporarily from Paris to Warsaw in 1994, it was like moving backwards and sideways in time. Backwards because everything seemed to have been built before 1960. Sideways because all of these old buildings strove for a dated futurism. Communism had frozen Poland in the past. But it was a past that worshipped socialist progress and the socialist future. The government directed what little bit of energy, economic growth, and foreign aid that Poland could muster into futuristic projects. Their ideas about the future itself (at least as expressed in their buildings and trams) were stuck in the first half of the last century in the form of socialist realism.
By the way, foreign aid to the East Block from capitalist countries, mostly the United States, helped sustain communism. According to my Polish friends, a lot of foreign aid came to Poland in the 1970s. The communists used it for big capital projects.
How disgusting that the soviet rulers and their puppets, given the chance, decided what every city and building would look like! It’s such a shame, because the Poles were not very good communists at heart. Maybe they wanted to make beautiful things that looked nothing like socialist realism. Maybe they are making such beautiful things now; I haven’t been there for more than ten years. But in 1994 they were saddled with nearly a half century of officially constructed blight, and they were just waking from a long nightmare.
The place was dreary and gray. Everything seemed to be covered by a fine layer of oil. Smooth, old metal parts of heroic fabrication, lightly greased – that was the character of Warsaw.
I was really shocked to learn that Warsaw was termed the Little Paris of the East Block. In the communist years, wealthy Russians loved to vacation in Warsaw. It was, according to my Polish friends, a great escape from the gloom of Russia. To myself I thought, my God, how could anyone survive in a place gloomier than Warsaw, in a place so gloomy that Warsaw was their City of Light? Moscow must have been hell.
The streets of the Polish capital were absurdly wide, and sooty buildings in disrepair squatted across whole blocks. I lived in one such building. Everything in my small, furnished apartment was old, cheap, and worn. The water was rusty. I was paying a fortune by Polish standards. This was Warsaw’s version of upper-middle class living.
On a certain date in the late fall (practically a national holiday), the city turned on the heat, centrally supplied in the form of steam. That’s right; they had some kind of central steam factory. When it broke or ran out of fuel, everyone froze. The city did not turn on the heat when winter arrived early and did not delay the heat when winter arrived late or for warm spells. Once the heat was on, it was on until spring. It wasn’t metered. Nobody paid for it directly. The radiators blasted their moist heat. Windows all over the city were wide open to moderate the temperature. Often, the first day of officially distributed heat was delayed for financial reasons. People liked to grouse about that.
It’s funny how central steam seems so absurd to me, but I rarely think twice about central electricity. If our own state were less socialistic, I suppose central electricity would also seem absurd. Each house or neighborhood would make its own electricity. One might buy it from competing companies. We get used the absurdities of central control.
When I talk to friends about limited government, they often scoff and cite road building as an example of how my logic goes too far. They say in mocking tones, “I suppose you think private companies should build the roads.” They think that they have reduced my arguments ad absurdum. Yet there is nothing absurd about private roads. They are common and are usually of excellent quality.
Near the top of a steep road that I often climb by bicycle, I always get a laugh. There’s a sign that reads, “Caution: end of county-maintained road.” The county wants to avoid any responsibility or liability for the private road beyond the sign. Yes, should you venture beyond this sign, you will see the horror, the abomination of a private road. In fact the county road is rough and cracked, the private road smooth and beautiful. So I laugh every time.
The trams were a good example of Warsaw’s greasy character. They were all of futuristic-looking burnished metal and oily. You could acquire a sad affection for the trams. They ran, slowly and cheaply. I took the tram to work at the ministry of finance.
I reported directly to the finance minister who reported directly to the prime minister. All of the work at the entire ministry was performed by about 25 people, although it employed hundreds.
It seems that communism and the command economy had led to this: out of 100 people, 100 had a job and five worked.
Of the 20 who did anything in the ministry of finance, only two were over 25 years old. One of them was the minister himself. The post-communist government drew him from academia. He was like the professor, and all the 20-somethings were like his students.
The other older person who did any work was a crusty apparatchik who was ready for anything. I liked him. I think he liked me too, because he introduced me to his beautiful 16 year old daughter. With a wink, he sent me off on lunch dates with her. She was formal and shy. But she certainly was eager to improve her English. “It is just for English,” she would defensively say. We became friends once she realized that I was not going to court her at the behest of her father.
I asked some of the young workers about all the worthless employees, particularly the old ladies in the halls. They told me that most people, after working under the communist regime for more than seven or eight years could not be reformed. They were hopeless and would have to be carried along for the duration. You couldn’t fire them. That might be unfair and would certainly cause riots and strikes. Inflation would chip away at their incomes. They would become bitter and remain lazy.
I met the president of the biggest Polish bank. He looked to be about 22 years old.
From all I saw in Poland, I conclude that, after the great Solidarity movement and the fall of the Wall, there was a revolution affecting the people at very top of major governmental and government-controlled institutions. They were largely replaced with newly-minted college graduates. The rest of the hierarchy was a sinecure.
So these young men and women, fresh out of college, some of them just 19 years old, were remaking Poland. I was supposed to help them by giving little courses on financial markets and by hanging about and lending a hand. By happy coincidence, they were gearing up to offer open-market government bonds for the first time since before World War II. I knew about bonds.
But the Poles were burdened not just by the legacy of their communist governments but by their new government too. The director of the international department, for whom I worked, was smart and hard-working. He was also paralyzed by political fear. In one of the first, big, post-communist privatizations, the government set the initial public offering price of a bank at a level that turned out to be less than one-tenth of what the market would have paid. It was a scandal causing some very highly placed heads to roll. I believe that the director was terrified. He did not want to make any decisions that might expose him to an accusation of corruption.
The bond issue that I was helping with illustrated the point. Nobody wanted to choose the investment bank to underwrite the offering; the power to choose implied the power to accept bribes. So, unable to reject unlikely candidates, the ministry received and reviewed an excessive number of detailed proposals from investment banks to act as investment advisor and lead manager of the issue. Then the whole decision-making process rotted in a large selection committee with members from several areas of government, business, and academia. Nobody could decide anything, and nobody could be blamed for the eventual decision.
Even the simple, obvious, necessary decision to hire bond counsel to represent Poland proved almost impossible to make. I wrote memos strongly recommending this step. The US treasury department, also assisting Poland, wrote extensive letters supporting my recommendation. The director just asked for more memoranda. He passed them up the chain of command (and it didn’t go much higher). Consequently, when I left Poland, this essential but petty decision was sitting on the desk of the minister of finance who objected that it was not sufficiently important a decision for him to make.
The bond issue made my lessons especially relevant to the bright, young bureaucrats. They were used to thinking about capitalism and markets in abstract, academic terms. When they thought about financial markets in the real world, in Poland, it was too much even for their supple, young minds. In particular, they could not believe that some concept called, “the market” would set the prices for the bonds. They wanted to know who really set the prices. I would explain the market mechanism again and again. They would nod and agree. Yes, they told me. They understood all about it – supply and demand, market information incorporated in the price, allocation of resources efficiently made through the free choices of millions of people. But who really set the prices? Was it the SEC or the World Bank or maybe the European Community? Or would the Polish government have to set the prices? And who were the secret beneficiaries of the rigged bond issuances?
I feared for the ministry of finance. I feared for Poland.
My little report on what I did in the fall of 1994 is pretty dreary.
Command economies make for odd behavior: Old women paid to drink tea. Windows wide open, the heat on full blast. Powerful men in business suits walking around the ministry of finance carrying their own private rolls of toilet paper for the bathrooms. 22 year olds running vast banking empires. High officials unable to make obvious, simple decisions.
And yet recent history has obviated my pessimism. I was wrong.
The bond issue was a big hit. And now for years, Poland has been the darling of the post-communist economies. Poland has experienced rapid, though sporadic, economic growth despite its government’s failure to privatize very large state-owned companies. The growth, of course, has been in sectors where smaller companies were privatized and in new sectors of activity.
Poland’s total exports increased more than 30% in the first nine months of 2004.[1] From 1991 to 2005, Poland’s GDP grew an average 4% annually. Poland’s rapid growth has been persistent. For example, in 2005, Poland’s industrial product grew 9.2%.[2]
Poland joined NATO in 1999.
From the CIA’s fact book on Poland:[3] Life expectancy at birth is now above 74 years. The literacy rate is 99.8%. Exports to the EU are surging. GDP, adjusted for inflation, grew 3.3% in 2005. Unemployment is now high (which I consider to be a great achievement of liberalization and an ingredient of rapid economic growth). And I believe that someday, mature Polish women will be beautiful.
The obvious lessons from Poland are that some freedom and capitalism are better than none. The less obvious lesson is that very incomplete and corrupt liberalization can still make huge differences in lives and economies. The forces of freedom and capitalism are not hothouse flowers. They will grow in a little dirt between the cracks. They will flourish in a vacant lot. They will set up great forests in a land that demolishes most of its state structure. The Poles, like most humans, seem to be natural capitalists. God bless them.
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