Poland Prospered Using The Free Market While Ukraine Did The Opposite And Got Opposite Results

See A Lesson for America in Poland's Rise and Ukraine's Fall by Phil Gramm And Michael Solon. From today's WSJ. Excerpt:

"Ukraine has largely squandered its economic potential with pervasive corruption, statist cronyism and government control. With budget deficits as high as 14.4% of GDP, hyperinflation and an underground economy approaching 50% of all economic activity, Ukraine's economy since 1992 has grown about one-fifth as much as the economy of its smaller neighbor Belarus. The per capita income of Ukraine, in U.S. dollar equivalence, has grown to only $3,900 in 2013 from a base of $1,570 in 1990. 

Today, the whole world is painfully aware that Ukraine's economic failure has endangered its freedom and independence, and forced it to courageously fight for both.

By most conventional measures, Ukraine should be a wealthy country. It has world-class agricultural land, it is rich in hydrocarbons and mineral resources, and it possesses a well-educated labor force. Yet Ukraine remains poor, because while successful Central European nations have replaced their central-planning institutions with market-based reforms, Ukraine has never been able to break the crippling chains of collectivism. Only now is Ukraine seriously attempting to limit government, control spending, stop the growth of its national debt, and stabilize the value of its currency.

These are reforms that Poland instituted almost a quarter of a century ago, and dramatically transforming its economy. By employing free-market principles and unleashing the genius of its people, Poland has triggered an economic triumph as per capita GDP, in U.S. dollar equivalence, soared to more than $13,432 by 2013 from $1,683 in 1990. Today Poland is the fastest-growing economy in Europe. Its economic success and democratic reforms have earned it European Union membership, and Poland's once fleeting sovereignty is now anchored in NATO." 

"The Balcerowicz Plan was built around permitting state firms to go bankrupt, banning deficit financing, and maintaining a sound currency. It ended artificially low interest rate loans for state firms, opened up international trade and instituted currency convertibility. 

His plan was signed into law on December 31, 1989 and within days, inflation—which had reached an annual rate of 17,000%—started to plummet. Poland pegged the value of the zloty to the dollar, permitting redenomination of the zloty five years later by crossing out four zeros. Once the reforms were in place, goods started showing up first in the trunks of cars, then in street stands, in small shops and ultimately in large stores. A miracle transition was under way and the rest is history."