Wednesday, November 30, 2011

Misleading information in the media on EU tax harmonization (in Polish)

I have just read an article in the Polish Gazeta Wyborcza on "Takie same stawki podatków w Unii? Zbyteczne" (The same tax rates in the EU? Not needed), which provides a sweet example of media misinformation.

First, the title of the article is not congruent with its content: one of the surveyed economists (in fact, Dr Ozog is not an economist, but a tax lawyer) is in favor of harmonizing tax bases within the EU and introducing a range of tax rates for CIT, ie a minimum and a maximum tax rate allowed. This is as close to tax harmonization as it can possibly get, short of having the same CIT rate for everyone.

Second, the way the article is written makes it really hard to understand Ozog's views: it first says that she is against one CIT rate for everyone, but then at the end adds that "it could be useful to think about introducing ranges", which goes against the main message coming from the text. Readers are left believing that there is something wrong with harmonizing taxes.

Third and finally, the article only asks for opinion two selected economists, without trying to talk to someone, who has strong arguments in favor of tax harmonization. Biased selection biases the results.

On the whole, the title of the article should have read something like "Tax Harmonization in Europe? A qualified yes for harmonizing bases and minimum tax rates", which would have fit the content much better. Otherwise, it is a great article!:-)

Tuesday, November 29, 2011

A remarkable speech by the Polish MFA Radek Sikorski in Berlin

Radek Sikorski's speech in Berlin is a bombshell - I have hardly read anything more powerful ever before coming from a Polish Minister of Foreign Affairs or a Polish policy maker. This is a true tour de force, which is likely to earn its place in the Polish and European history.

I agree with Sikorski's whole message, except on taxes, which I believe--like in most other areas--should also be harmonized within the EU.

Monday, November 28, 2011

"2021: The New Europe" by Niall Ferguson

Niall Ferguson, my favorite historican, peers into the future of Europe, now in its critical moment.

The bottom line: the euro is still circulating, the euro zone is replaced by the United States of Europe, UK is no longer in the EU, unlike Poland, which stayed and adopted the euro (and is led by Prime Minister Radek Sikorski), with the accession of the six remaining former Yugoslav states—Bosnia, Croatia, Kosovo, Macedonia, Montenegro and Serbia—total membership in the U.S.E. rose to 28 (29 with the separation of Flanders and Wallonia); in 2021 the euro is being used by more countries than before the crisis.

Euro Area Is Coming to an End?

Peter Boone and Simon Johnson, a former IMF Chief Economist, have just published an op-ed on Bloomberg, which predicts that the "euro area is coming to an end" (although, unlike the title of the article, no doubt imposed by the editors, the authors merely say that the euro zone is likely to change its membership, not collapse as a whole. Talking about misleading information..).

I agree with the risks, but still believe that a concerted action by the ECB/EC/IMF can save the euro zone. It is becoming increasingly difficult, but is still possible.

Wednesday, November 23, 2011

Why China will dominate the world sooner than we expect

Arvind Subramanian wrote an excellent book on "Eclipse. Living in the Shadow of China’s Economic Dominance", which is available in electronic form for free, where he argues that, contrary to common belief, China's economic dominance is much closer to become a reality than we expect. That includes the renminbi's takeover of the dollar as the world's reserve currency in the next decade or so. He discusses what impact these changes would have on the global economy.

A good review of the book is

Workshop in Seville on "Investigating Industrial and Innovation policies for Growth"

On November 2-3, 2011, I participated in an international workshop on "Investigating Industrial and Innovation policies for Growth: Contrasting experts views" organized by the European Commision's IPTS in Seville, Spain.

I spoke on "The 10 billion euro question': how to most effectively support innovation in Poland". The slides are

Monday, November 21, 2011

Belka in Financial Times on two-speed Europe

Marek Belka, Governor of the Polish central bank, published a very interesting op-ed in Financial Times (November 17) on "Europe cannot endure a rift between ins and outs". He argues for further European integration and reforms, both of which I strongly support.

His bottom line is the following:

"Now that the eurozone has approved greater financial firepower, it should effect debt restructuring for Greece and take measures to prevent spillover to other countries. Fiscal and financial supervision needs to be exercised as much as possible at the European level. It cannot be left as an almost exclusively national competence. Tough macroeconomic policies are crucial. Improving competitiveness may prove extremely difficult with rigid employment procedures, high costs of production and onerous taxation. Europe has to boost the quality of its export products and services compared with what Asia can offer. Non-eurozone countries have shown exemplary policies in all these fields. In the interests of EU cohesion, but also as regards their own economic objectives, euro members would be foolish to allow new barriers to grow between the eurozone and those outside. Eurozone strategies for higher growth and stability are welcome. They are far more likely to succeed if they embrace the whole EU"

U.S.-Central Europe Strategy Forum in Prague

On October 26-27, I spoke on a panel on "The EU After Greece: Toward a Two-Tiered Europe?" during a conference organized by the DC-based Center for European Policy Analysis (CEPA), where I published my two recent papers on New Europe's Golden Age and on the Warsaw Consensus, the new growth model for New Europe.

More info from CEPA's website:

"CEPA convened the third meeting of The U.S.-Central Europe Strategy Forum in Prague, Czech Republic. The Forum brought together a wide range of policy experts from both sides of the Atlantic, along with numerous mid-level policy professionals and leading authorities on U.S.-Central European relations, for a sustained dialogue on the state of America’s relations with its allies in the region."

Doing Business 2012 launch in Warsaw and Riga

On November 20 and 21, 2011, I presented the new World Bank's "Doing Business 2012" report in Poland and Latvia.

The Latvian Doing Business launch was particularly memorable, given that Latvia was included in this year's Top 10, global's ten best performing countries in regulatory reforms, and that at the press conference I was flanked by the Prime Minister Dombrovskis, minister of finance and minister of economy.

Pictures from the Warsaw and Riga presentations are here and here. There is also a video from the press conference in Riga.

Sunday, November 6, 2011

New books read in the last month

As always, ranking starts from * to ***.

1. Adapt: Why Success Always Starts with Failure by Tim Harford (May 10, 2011)***

2. Civilization: The West and the Rest by Niall Ferguson (2011)***

3. „Trans” by Manuela Gretkowska*

4. „Koźmiński Reaktywacja”, group authorship***

5. “Zgred” by Rafal Ziemkiewicz**

6. “Swiat do przerobki. Spekulanci, bankruci, giganci i ich rywale” by Witold M. Orlowski***