FACT CHECK: Romney on Polish economy, gov't role

AP News
Posted: Jul 31, 2012 6:21 PM
FACT CHECK: Romney on Polish economy, gov't 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.