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You're reading: Romney got his facts wrong on Polish economy, government role

Republican presidential challenger Mitt Romney hailed Poland's economy Tuesday as something akin to a Republican dream: a place of small government, individual empowerment and free enterprise.

While it’s true that
Poland is one of Europe’s fastest-growing economies and boasts dynamic
entrepreneurs, Romney’s depiction of Poland as a place of small
government is debatable. Even 23 years after throwing off a communist
command economy, the Polish government continues to have a strong
presence in people’s lives: it gives women $300 for each baby they have,
doubling that sum for poor families; it fully funds state university
educations; and it guarantees health care to all its 38 million
citizens.

And while Poland’s economic growth has certainly been
impressive in recent years, this is partly the result of economic
redistribution in the form of subsidies that have been flowing in from
the European Union since it joined the bloc in 2004.

“Rather than
heeding the false promise of a government-dominated economy, Poland
sought to stimulate innovation, attract investment, expand trade, and
live within its means,” Romney said in a speech in Warsaw. “Your success
today is a reminder that the principles of free enterprise can propel
an economy and transform a society.”

His comments appeared to be
an indirect criticism of President Barack Obama’s handling of the
economy as it struggles to recover from one of the worst recessions in
decades.

Romney hasn’t yet described his own economic program in
detail, but he has generally advocated lower taxes, free markets, less
regulation and balancing the federal budget. He has also been highly
critical of the government economic stimulus program under which Obama
poured money into the economy in an effort to revive it from a deep
recession.

He criticizes the new U.S. federal law aimed at
increasing the number of people with health insurance, saying such
policy decisions shouldn’t be dictated by Washington, but left up to
individual states.

In Warsaw, Romney heaped praise on Poland,
saying that it “empowered the individual, lifted the heavy hand of
government, and became the fastest-growing economy in all of Europe.”

Poland
is indeed one of the fastest growing economies in Europe, with growth
of 4.3 percent last year and projected growth of around 3 percent this
year — enviable numbers in an ailing Europe where some countries are in
recession and many others are stagnant. Business people have also taken
to capitalism, with small and medium businesses flourishing around the
country.

But the government’s role is bigger than in the U.S.
According to International Monetary Fund statistics, total government
expenditure as a percentage of GDP was about 44 percent last year —
compared to 41 percent in the United States.

Romney is on target
when he notes that Poland has been living within its means — more or
less, anyway. Last year, for example, state debt was 55 percent of GDP,
making Warsaw look virtuous compared to many other European countries —
or even the United States, whose debt was 103 percent of GDP, according
to the IMF.

The government of Prime Minister Donald Tusk is
struggling to bring down debt further, mindful of the predicament that
Greece and other countries are now in, and recent cost-cutting reforms
have won the praises of the rating agencies.

But his depiction of
Poland as a haven for innovation and investment is certainly
exaggerated. Just attend a meeting of the U.S. Chamber of Commerce in
Warsaw or another business group, and the complaints are many: red tape
makes it hard to start new businesses, a rigid labor code makes it
difficult to fire ineffective employees, corruption and a slow court
system can make it hard to enforce contracts.

Some also say that
while their companies benefit from a skilled work force, the legacy of
communism is still felt in a fear of risk-taking that hurts innovation.

Most
Americans would also not trade in their standard of living for
Poland’s. Growth has been dynamic in part because the country started
off from such a low point after throwing off communism. Romney did not
mention that unemployment is 12.4 percent or that wages are low. GDP per
capita last year in Poland was $20,600 compared to $49,000 in the U.S.,
according to U.S. government data.

_____

Gera is AP’s chief correspondent in Poland and has covered the country since 2004.

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