The stupidity of free-market chic ... in Eastern Europe; how American economics is hurting Polish capitalism.

• Author: Rowe, Jonathan

The Stupidity of Free-Market Chic . . . . . . in Eastern Europe

A visitor arrives at the Warsaw airport with well-formed expectations, and at first Poland doesn't disappoint. The customs agent is dressed in an army-suplus-style uniform too big around the waist, and the clutter behind the baggage claim counter brings to mind the office at a refrigerator repair shop. The general ambience resembles a Worcester, Massachusetts airfield circa 1957.

The outskirts of Warsaw offer more along this line. Weathered old folks, like peasants in elementary social studies texts, pedal ancient bicycles along the main road. There are cabbage fields and nondescript structures where in America the shopping centers and Burger Kings would be. A power plant belches smoke in the distance, and everything seems tired and gray like an old house going to seed.

It's easy to see how visiting journalists, traversing the route from airport to Holiday Inn and going on to the offices of politicians and intellectuals, could imbibe this view. In truth, the sorry state of the East Bloc was always a little comforting to Americans, especially when their own economic problems were getting out of hand.

On this particular trip, however, our host drove a little further, to a town called Milanowek about 20 miles outside Warsaw. I was there at the invitation of an American environmentalist and small businessman named Hank Ryan, who has initiated a sister cities program between Milanowek and his own hometown of Winstead, Connecticut. A former country retreat for wealthy Warsawites, Milanowek today is a combination suburb and small factory town, with truck (actually horse) farms on the fringe. It is quite comfortable by Polish standards. But it has no sewers and many dirt roads, plus a huge debt that the old communist government left behind. To an American, it seems a hamlet that time passed by.

A week in Milanowek hardly qualifies me as an expert on Poland. But what I saw there suggests some significant gaps in the press reports coming back to the American public. For one thing, Poland has a lot of private entrepreneurs. They didn't spring up overnight, like the farmers' markets in Warsaw that the press has been doting on as the harbingers of a Capitalist Spring. Many did quite well under the communists. But they kept quiet for the most part, giving rise to a kind of reverse Potemkin Village effect in which things seemed poorer than they actually were.

Now these entrepreneurs face a new challenge: the measures designed--at the urging of American economists--to thrust Poland headlong into a free-market economy. So confident in their theoretical models and their top-down prescriptions, these economists don't seem to know or care very much about the entrepreneurs who actually comprise the market they purport to create.

The second point is more elusive but no less important: Economics has become virtually the only lens through which we view developments in the former East Bloc. There's a great deal about Poland, and especially a town like Milanowek, that doesn't show up in the GNP. Family ties are strong. People eat at home, their foods often grown locally. There is not much packaging, litter, or waste. People still read. Boom boxes don't disrupt the parks. Shopping malls haven't replaced the traditional town center, which reinforces a sense of social cohesion and community.

There are no billboards, no neon, no carry-out; the shops are marked only by nondescript signs. Despite myself, I felt at first restless and deprived. No place to go for coffee and a bagel, not even a Hershey bar. As the days passed, I began to feel unburdened and relaxed. If time stopped in the fifties in Poland, the a town like this is the good side.

To a Western economist, though, such things look like poverty and underdevelopment; when people sit around the family dinner table instead of going to McDonald's and a movie, there is no cash transaction, little for the GNP. Yet the family dinner table represents a kind of cohesion that Americans are groping to recover. In some ways, Poland is ahead for being behind.

This is true in the political realm as well. Poles share a memory of suffering and oppression that has helped them tolerate hard economic measures with relatively little wailing and self-pity. Under the free market crash program, they have endured a drop in purchasing power of somewhere between 30 and 40 percent. In the U.S., by contrast, wealthy Americans have conniptions at the possibility of a tax increase of some 2 or 3 percent. Their idea of a sacrifice is a capital gains tax cut.

This may sound patronizing, but at least some Poles think about these things, and wonder just how much of the American model they actually want. "Most people in Poland don't realize that they have very good things apart from the political and economic problems," says Andrzej Moes, Milanowek entreprenuer and chairman of the newly elected town council. "We are not so spoiled by industry, commerce, and technology. We have more calm living." What strikes an American is how little our economics has to offer in terms of social cohesion, beyond the rudiments of stoking up the GNP machine. (It is not clear how American economists qualify even on that limited ground these days.) Questions such as what makes a town livable, what makes families close--we might well be seeking advice from the residents of Milanowek, rather than them seeking it from us. "Poles have a chance to ask basic questions that we stopped asking long ago," says Andrew Golebiowski, director of the Polish Municipal Training Programs for Sister Cities International.

Lifestyles of the rich and Polish

Most of the homes in Milanowek lie behind heavy gates. This is tradition, but that the gates are often closed shows, I was told, a growing concern about crime. Poland's free-market tonic has brought rising prices and--for the first time in memory--unemployment. (Previously, everyone had jobs, though many didn't have work.) One widow in Milanowek keeps a stun gun on her kitchen table.

Such precautions seem a bit exaggerated even for a visitor from New York City. Milanowek is a quiet and almost idyllic place. Tree-shaded streets ramble towards the town center, where people go to shop or catch the train. Elderly couples, as well as mothers and children, pedal along on fat-tired bikes, net shopping bags over the handlebars.

Until recently, the shop buildings belonged to the state, so...