special edition
BUSINESSWOMAN companies operating at the supra-national level, often registered in tax havens, indicate losses and fail to pay taxes in the countries where they operate while still using the infrastructure for which somebody had to pay in the first place. We are thus facing a civilisation clash ‒ due to moving from an industrial to post-industrial civilisation, the institutional solutions and other vehicles commonly applied in socio-economic policies increasingly often prove ill-matched to the new economy standards. This triggers cultural regression, or the lock-in effect as described in the literature on the subject matter. It means being locked inside certain system frameworks, along with specific priorities, solutions and tools adopted throughout decision-making processes, which create a barrier to development. Practically speaking, the tools which have proven effective in fostering socio-economic development in the industrial civilisation are still used despite their limited, and continually decreasing, efficiency. In a nutshell, “the New” is paving its way to reality, while “the Old” is locking in and fighting back. Is “the Old” going to survive? Progress is not to be stopped. There is no point in combating such phenomena as uberisation, as they are caused by new technologies and technological advancement. What has begun cannot be undone. Under the conditions of new economy, traditional solutions and tools not only appear ineffective but also increase the risk of erroneous socio-economic decisions being made at various institutional levels. PM
How could this problem be solved? We should introduce such systems that would foster the most socially advantageous use of the potential created by new technologies. Slowing down technological advancement is certainly not an option, since it brings a huge potential for the labour market, society and the economy as a whole. The lack of institutional solutions that would be adequate for new processes appears the most problematic, with the old institutional systems not being receptive enough. Fortunately, this will definitely change and has already begun to evolve. For instance, let us take the crowdfunding, which is likely to take precedence over banks in the financing of certain investments. Obviously, banks will still grant major loans, but crowdfunding may prove useful in financing loans, business interests, etc. PM
While speaking of crowdfunding, we should be aware of certain risks when it comes to corporate financing. Namely, banks are capable of verifying every fact, along with analysing various risks of investments, whereas the crowdfunding option fails to do so. Indeed! This is why institutions willing to benefit from crowdfunding should provide appropriate legal protection, and oblige all entities joining their venture to ensure their own legal protection. If any institutional solutions of a general character are introduced, they should counteract various abuses. This should act as an incentive for the emergence of new institutions handling new transactions, including crowdfunding. PM
of the civilisation crisis. The legal system seems to evolve in the wrong direction. Lawyers seek to keep up with the reality which is changing at a break-neck speed. It’s like “chasing the rabbit.” The new regulations are developed in a hurry. Members of Parliament, flooded with bills, can hardly read through all the prospective legislation and often vote for regulatory amendments without actually knowing their content. All this leads to the inflation and erosion of law, or legal relaxation. What we get is a legal maze where one finds it easy to hide. This gives rise to legal manipulations, for example, in the field of fiscal law and VAT regulations. Actually, fiscal law has come to resemble a poorly stitched and frequently leaking patchwork. We should bear in mind that the collapse of some nations began with the violation of laws. Creating an increasing number of regulations stands for treating the symptoms, rather than causes. This matter has been brought to our attention by Prof. Ewa Łętowska, a leading Polish law expert. Her opinions on this issue can be found in numerous interviews available on-line, like for example PTE Bulletin 2015, No. 1 – “The Quality of Law.”
IT IS NOT A MATTER OF A NEGATIVE ECONOMIC IMPACT BUT RATHER OF CERTAIN
civilisation frictions.
What laws should then be enacted? First of all, the regulatory relaxation should be stopped. To this end, some countries have introduced a rule according to which a new legal act can be passed on condition that a previous act (or acts) is repealed. It is of utmost importance to develop strong and transparent, as well as non-evadable legal frameworks. The legal maze provides no solution, as the making and interpretation of laws are two different things. Actually, the interpretation of legal regulations, including especially fiscal ones, is often the bane of entrepreneurs’ lives. One and the same provision on taxes is frequently interpreted in a different way by various Tax Offices. This poses a major problem, given that an entrepreneur, acting on a long-term basis and taking investment-related decisions, needs legal transparency. The lack of transparent laws discourages entrepreneurs from investing their funds. PM
Apart from the civilisation crisis and legal erosion, do you see any other major challenges for the global economy? The current demographic situation seems to pose a major difficulty, but there are also other issues, such as a glut economy or overliquidity traps. PM
Let us now focus on demographic trends which currently receive much attention. The demographic policy ‒ or, more accurately, the population policy ‒ is not a domain favoured by politicians. The world of politics lives under the terror of a four-year election cycle. If certain decisions do not bear fruit in that period, they are hardly seen by politicians as worth making. This was the case with the Polish PM
It therefore seems that the law cannot keep up with the reality. What’s the point of introducing a given act of law if it may as well prove outdated soon after its vacatio legis? As you said, the progress is not to be stopped. The quality of law enacting and enforcement is definitely a challenging issue, which gets additionally complicated in the face
PM
polish market
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