How good are "good news from the East"?

[occuserpens]

Reading the article /1/ attentively, we find out that new E.European economies experience respectable GDP growth - 4-9%. However, what really makes Spiegel happy is that there is no significant labor migration from the E.Europe to the West. That is, the ghost of "the Polish plumber", the feared competitor for the W.European workers - has not materialized. Yes, it is quite understandable that Spiegel authors hardly care about anything else, but this is not consistent economic analysis.

First question is, how beneficial is EU expansion for the new members? We know that post-Soviet countries starting from Belarus and pre-orangist Ukraine also show decent growth numbers. Marion Kraske and Jan Puhl do not have much to say about this critical issue.

Next, we have no way to know how healthy and sustainable is this economic growth. Yes, any growth is better than recession, but what sectors of economy drive the boom, what about deficits? For example, we know that Russian economic growth is not healthy because it is driven by oil and gas production, not by manufacturing and services. In Germany itself, Eastern region turned into a huge investment and welfare black hole. In the US, economy is driven mostly by unsustainable housing boom and cheap credit. Meanwhile, huge budget and trade deficits pose a real threat for American and global economy. With this in mind, we need to know what is really going on in new EU members in more details.

In fact, Kraske and Puhl acknowledge the skills drain from the East. Also, construction jobs they are talking about are poorly paid. But what about the structure of job market, good high paid jobs? How serious is social inequality, the gap between the poor and the rich? What about recent history, we know that anti-Communist revolutions were followed by deep recessions? No answers again, just "good news from the East".

Finally, when it comes to illegal immigration, this article turns into crude propaganda. The authors present illegal immigration as something almost positive! However, law enforcement aside, low skilled immigration discourages technological progress, puts pressure on social services, drives wages down, creates ethnic tensions. As French riots show all too painfully, legalization of low skilled migration does not resolve the long term problems, it still remains a ticking social bomb.

No, these "good news from the East" are really not good enough to prove that EU expansion is a success not only for neoliberal ideologues and local oligarchs.

1. Spiegel. Marion Kraske, Jan Puhl. Poland is the New Germany

The idea was appalling to many in the West. Eastern European countries joining the EU would mean a flood of cheap labor. But the wave of economic refugees never came. Instead, hundreds of thousands of Ukrainians and Russians are picking up work in booming Eastern Europe.

Csaba and János are just two of several hundred thousand from the Ukraine, Russia, Belarus, Moldavia, Romania and Bulgaria eking out a living in the new European Union states. The overwhelming majority of them are day laborers -- poverty having pushed them across the borders into the new boom economies of Eastern Europe. Sixteen years since the Iron Curtain disintegrated, the new kids on the EU block are now experiencing growth rates of between 4 and 9 percent.

Prior to 1989 and in the turbulent phase that followed in the 1990s, those moving west seeking prosperity were predominantly Hungarians, Poles, Czechs and Slovaks. Many in the western media predicted a veritable flood of immigrants from these very countries once they had joined the EU on May 1, 2004. And yet, according to estimates of the German Institute of Economic Research, in the year following Eastern Europe's accession, the number of those entering Western Europe was a mere 100,000 to 150,000 -- far fewer than had been feared.

There is a genuine labor shortage, as the Polish construction industry warned only recently. Skilled workers are in high demand. Many of them now work in Ireland, Great Britain or Scandinavia -- legally and for decent wages.

The people of the Ukraine and Belarus would also benefit from their employment gaining legal status. Up to now, they have had to live with the constant fear of exposure.