Nowa Prawica Wolna Europa, the fourth political option in Polish polls for the European elections, is either deceiving or extremely incompetent in economic matters.
Nowa Prawica published a picture that gets a lot of attention from Poles on Facebook. However, it is misinformation worthy of Fox News:
The per capita (per person) GDP of Poland (using
constant zlotys) in 2003 was 23570zl and was 34758zl in 2013, representing an
increase of 47%. Constant zlotys are
used in order to compare revenues across years when inflation changes prices
(and the value of those revenues). As
such, the revenues of 2003 and 2013 cited above are comparable. The reason for the discrepancy between the 47%
increase in purchasing power and the picture shared on Facebook lies in the measure
of price increase.
The choice of goods by Nowa Prawica Wolna Europa is quite interesting for highlighting its
intellectual dishonesty. Whereas prices
of the average weighted basket of goods raised by 32% between 2013 and 2003
(the consumer price index went from 128 to 169 for that period), the value of goods
selected by Nowa Prawica Wolna Europa
rose by 85%, 93%, 127%, 93%, 150% and 94% for an average of 107%, far above the
actual intellectually honest and representative value of 32%.
Item
|
2003 price
|
2013 price
|
Price increase
|
Bread (bochenek)
|
1,30zl
|
2,40zl
|
85%
|
Liter of milk
|
1,40zl
|
2,70zl
|
93%
|
Beef (kg)
|
11zl
|
25zl
|
127%
|
Oil price
|
2,80zl
|
5,40zl
|
93%
|
City transport ticket
|
1,40zl
|
3,50zl
|
150%
|
Apartment (m2)
|
2071zl
|
4019zl
|
94%
|
Average of Nowa Prawica items
|
107%
|
||
Consumer Price Index
|
32%
|
This intellectual gaffe is worrisome:
either Nowa Prawica Wolna Europa takes blatant lying as an acceptable form of
political communication, or Nowa Prawica Wolna Europa just doesn’t understand the very basics of economics and is scaringly incompetent. Either scenario is
scary.
Data
The values used for this analysis come from
the IMF (WEO April 2014) who in turns gets their data from GUS/NBP.
Reply to some comments:
Some have questioned my use of the word lie - this is a valid criticism. I updated the title and a small part of my article to reflect this. Strictly speaking, Nowa Prawica didn't lie - rather, they deceived.
Some have asserted that the most important goods were picked by Nowa Prawica. Yes, the selected goods were important - but the people at GUS know that as well. This is why they weight baskets of consumer goods based on the actual consumption of that basket of goods. The Polish basket of consumer goods looks very different from the American one or the Chinese one. This is why the weight given to the price of an apartment is lower than the weight given to the price of a loaf of bread or a pair of shoes. This is why the price of passenger transport by air is less important to the Consumer Price Index than bread and cereals.
I feel that some people really wanted to say that the poor cannot afford what they buy the most. The price of footwear has dropped by 49%, clothing by 40%, household appliances by 8%, and communications by 10%. This is not even considering prices that grew slower than the inflation rate. A (very!) detailed of prices that rose and fell is available as an Excel download (data from Eurostat).
Poland is getting wealthier. No amount of bad analysis can deny that fact. Anyone trying to deny that has to refute heaps of evidence, including a Gini coefficient (measure of inequality - the lower, the more equal) that dropped from 35,9 in 2004 to 32,73 in 2011 and a real per capita GDP that increased by 47%.
My argumentation shall not be understood as unconditional support for Polish public policies or the European Union. Valid criticism directed at either can be made. However, what Nowa Prawica published is deceitful, tendencious and lowers the quality of public debate.
Reply to some comments:
Some have questioned my use of the word lie - this is a valid criticism. I updated the title and a small part of my article to reflect this. Strictly speaking, Nowa Prawica didn't lie - rather, they deceived.
Some have asserted that the most important goods were picked by Nowa Prawica. Yes, the selected goods were important - but the people at GUS know that as well. This is why they weight baskets of consumer goods based on the actual consumption of that basket of goods. The Polish basket of consumer goods looks very different from the American one or the Chinese one. This is why the weight given to the price of an apartment is lower than the weight given to the price of a loaf of bread or a pair of shoes. This is why the price of passenger transport by air is less important to the Consumer Price Index than bread and cereals.
I feel that some people really wanted to say that the poor cannot afford what they buy the most. The price of footwear has dropped by 49%, clothing by 40%, household appliances by 8%, and communications by 10%. This is not even considering prices that grew slower than the inflation rate. A (very!) detailed of prices that rose and fell is available as an Excel download (data from Eurostat).
Poland is getting wealthier. No amount of bad analysis can deny that fact. Anyone trying to deny that has to refute heaps of evidence, including a Gini coefficient (measure of inequality - the lower, the more equal) that dropped from 35,9 in 2004 to 32,73 in 2011 and a real per capita GDP that increased by 47%.
My argumentation shall not be understood as unconditional support for Polish public policies or the European Union. Valid criticism directed at either can be made. However, what Nowa Prawica published is deceitful, tendencious and lowers the quality of public debate.
They are dishonest because? Because they choose the most important goods? I'm sure that price of laptops per kbite went down, but you can't eat them. And one question: Who composes officially measured baskets - uninterested angels?
ReplyDeleteBruno, many thanks for the work you've done here!
ReplyDeleteDo you have access to the composition of consumer goods basket used by GUS? Could you please describe it here?
Why compare consumer price increase against GDP in order to ascertain purchasing power?
ReplyDeletewho wrote this article is a lying or misinformed person. propaganda.
ReplyDeleteMarcin, I am not very familiar with GUS due to my limited Polish. GUS has published a lengthy (502 pages) document on price measurements which does include, on the last page (!), the composition of the Polish basket of goods as compared to the EU one: http://stat.gov.pl/cps/rde/xbcr/gus/CH_ceny_w_gospodarce_narodowej_2012.pdf
ReplyDeleteFor a shorter and more user-friendly example of basket composing, the UK's Office for National Statistics updates its basket of goods and publishes an annual report at: http://www.ons.gov.uk/ons/guide-method/user-guidance/prices/cpi-and-rpi/cpi-and-rpi-basket-of-goods-and-services/index.html
OF course they did not show full basket of goods, nor they claim they did. These goods are well-chosen basic products. According to GUS data the most significant drop of prices was in telecommunications and other high-tech, but they more or less confirm this data. Second matted why should anyone trust GUS? I don't. For example when calculating the average income, they have data from companies that hire 10 and more people. This is only 40% of the whole market. And the 40% is chosen in a biased way.
ReplyDelete