Murray Rothbard's Impact On Poland

Poland always had warm open arms for the great free market economist Murray Rothard. He visited the country for a week in 1986, before the Berlin Wall fell and before the collapse of the Soviet Union.

At the time, he wrote:

In March 1986, I spent a fascinating week at a conference at a hotel in Mrogowo, in the lake country of northern Poland (formerly East Prussia). The conference, a broad-ranging symposium on "Economics and Social Change," was hosted by the Institute of Sociology at the University of Warsaw, and sponsored by a group of English conservative and free-market scholars.

Even though economically, as one of the Western participants noted, Poland is a "giant slum," its countryside, small towns, and cities in evident and grim decay, this gallant nation is intellectually the freest in the Eastern bloc. There is no other country in the Soviet orbit at which a conference of this sort could possibly be held.

Rothbard would be proud to know that the Poles took to heart what he must have told them during that week, about the importance and beauty of free markets, and that they must have also taken to heart his writings and those of other great free market economists.

Here's Peter Schiff writing today, more than 20 years later, on the progress the Poles have made:

Last summer, I was invited to speak at the Economic Forum in Krynica, a resort town in Southern Poland. I was amazed at the level of economic activity and civic spirit that was on display throughout the country. I also was fairly surprised that my economic views, which are routinely ridiculed at home, have much wider support among the Polish economic officials who presented at the conference.

This common sense understanding was showcased in an opinion piece published this week in the Financial Times by Polish Finance Minister Jacek Rostowski. Contrary to the public flogging of the free market currently underway in Washington, under the auspices of the Financial Crisis Inquiry Commission, Rostowski explains how governments caused the Crash of 2008 by removing the necessary element of fear from the markets. He states that this was symptomatic of the "deep Keynesian project," in which governments over the last half century have looked to smooth the economic cycle through periodic floods of monetary expansion and government spending. I couldn't have said it better myself.

A product of the Solidarity movement that opposed the Polish Communist Party in the 1980's, Mr. Rostowski, like many of his colleagues in the current Polish Administration, is intimately familiar with the hazards of central economic planning. He has seen this movie before, and he knows how it ends.

Instead, Poland has enacted economic policies that are informed by a belief in Austrian School (read: free market) economics. After the downfall of the Communists in 1989, Rostowski was part of a group that called for "shock therapy": the rapid privatization of state-owned enterprises and the dismantling of price and currency controls.

In 2007, the center-libertarian Civic Platform party was put in power, with Rostowski as Finance Minister. Along with Prime Minister Donald Tusk, he has continued the process of transforming Poland into a laissez-faire paradise. Not accidentally, Poland is the only EU member state that showed positive GDP growth in 2009, at 1.9%. Also its public debt, at roughly 55% of GDP, compares favorably with its neighbors - and with the United States.

A top priority of their administration was reduction of the income tax. The previous system, with three-tiers of 19%, 30%, and 40%, has been reduced to two tiers: 18% and 32%. In addition, the system's minimal use of deductions and credits makes it radically simpler than the U.S. income tax.