Less populism and less government spending according to Leszek Balcerowicz are the key factors of overcoming the crisis

Less populism and less government spending according to Leszek Balcerowicz are the key factors of overcoming the crisis

Leszek Balcerowicz (polish economist, former Vice-prime-minister and Minister of Finance and ex-Chairman of the National Bank of Poland) shared his views about the global economic crisis during the Diplomatic club in Kyiv, July 9th, 2009, which was organized by Arseniy Yatsenyuk Foundation “Open Ukraine” and Viktor Pinchuk Foundation. Arseniy Yatsenyuk moderated the meeting.

Mr. Balcerowicz explained, that this crisis is not the first one, and it became global because it has come from the USA --  the country with the biggest share in the world economy. He reminded, that there were other depressions in different countries, but those didn’t influence the global economy due to the small share of those countries in the world economical processes.

To his mind, other reasons that led to the crisis were unsustainable and risky financial policies along with exaggerated spending. “The housing boom in Spain, Britain and Ireland amplified the rate of spending and loaning. Spending too much in good times multiplies the losses during the bad times”, added Mr. Balcerowicz.

To Mr. Balcerowicz’s opinion the increased production and decreased budget deficit  should replace social and fiscal populism in order overcome the crisis. “Majority of the electorate should avoid the so-called Santa Clauses in politics who promise to spend a lot of money for social needs”,- emphasized Leszek Balcerowicz.

Talking about the influence of politics on economics, Leshek Balcerowicz said, that “if policies are correct the noise is disregarded by the matters; and public opinion supports good policies”. To his mind democracy is an insurance for the good policies, but still there should be some work done with public opinion.
 
Arseniy Yatsenyuk, member of the Ukrainian Parliament, founder of the Open Ukraine Foundation, added at the meeting of the Diplomatic club that another reason of the global crisis is the fact that the real sector of economics was serving the banks, and not vice versa: “It’s a paradox when bank with one thousand employees earns hundred times more than a company with millions of employees which produces billions of dollars worth amount of goods”. Mr. Yatsenyuk mentioned, that Ukraine should rely on itself, at the same time “Ukrainian and world politics should get rid of the populistic Santa Clauses”.

The Diplomatic club meeting was attended by Eyvhen Marchuk, Advisor to the President of Ukraine on Euro-Atlantic integration, members of the Parliament  Iryna Akimova, Iryna Heraschenko and Yuri Miroshnichenko, Deputy Minister of Foreign Affairs Kostiantyn Eliseev, Advisor to Prime-Minister on the international investments Vladyslav Kaskiv, Deputy Minister of Economy Valeriy Piatnytsky and other governmental representatives, businessmen, former ministers of foreign affairs, diplomats, independent experts.