June 2024

“Begin challenging your own assumptions. Your assumptions are your windows on the world. Scrub them off every once in a while, or the light won’t come in.” -Alan Alda

As you may know, one of the things my wife and I like to do is travel the world together. Eastern Europe is wonderful this time of year. We just returned from my most recent research trip abroad. It was not yet real warm there, which was good since air conditioning in most public buildings and hotels is minimal. We are talking about Hungary, the Czech Republic, Slovakia, and places like that. I was not sure what to expect since all these countries were, in recent history, a part of the Soviet Union and under communist rule. It was surprising and refreshing to find thriving economies with people who are very enterprising and of great work ethic. They were all excited to be living in a free world where they could be rewarded for their efforts and labors.

Compared to many of the countries of Western Europe, I was surprised to find that so many people spoke great English, some better than me. We mostly traveled by bus, and I had a chance to see many vehicles on the road, some great European brands that we are all familiar with and many German cars. I found out that the Czech Republic is a major manufacturer of these vehicles. There were also many European brands I did not recognize as well as cars from Japan and Korea. Noticeably missing were cars and trucks from the United States of America. The only American vehicles we saw were Teslas and three Fords. When I inquired about this, they explained unapologetically that they have a tax on American vehicles. (No tariffs here, I whisper to myself sarcastically). They were blunt in telling me that this was to protect their own manufacturing industry in the European Union.

While we did not see a lot of American vehicles, there certainly were many other American companies present. There was no shortage of iPhones to be seen, using applications we are all familiar with like Google and Google Maps. We saw numerous KFC restaurants, sometimes right across the street from each other, and McDonald's, which seem to be much nicer than the McDonald's restaurants we have here in America. With high minimum wages in that part of the world, there were seldom any workers greeting people or taking orders. Most of these types of restaurants are completely automated with kiosks taking your order. Think self-checkout to the extreme.

The American Dream is alive and well in Eastern Europe. My biggest takeaway in talking to the people of Poland and the neighboring countries was that they are enthusiastically happy to be free of the shackles of communism and to have a hand to play in their own futures. Everybody we met either remembers living under the communist regime or they have parents who do. It is fresh in their minds.

The work ethic was prominent and obvious as the local citizens were eager to work, to earn our business, and to build a future for themselves. When discussing what those futures might look like they talked about the ability to start their own businesses, to work hard, maybe with more than one job since they were young, so they could own their home. Ownership of property was something that had been taken away from them.

The older generation talked about work having meaning again with a reward and an incentive. Our guide pointed out a factory that under communism had over 200 employees. That is to say, 200 people showed up because they were required. However, there was not enough work, so they mostly stood around doing meaningless tasks to fill their day to receive a meaningless stipend of a paycheck. There was no incentive to produce more products. Many of the parts they needed came from other factories that were similarly disincentivized. That factory has now been privatized. A group of families purchased it from the new government after they were free, and they have modernized it. It currently employs around 25 employees, but it is a thriving business with real manufacturing output. They produce more in a month than they used to produce in a year under the communist government.

Examples like this were abundant if one was willing to ask around. We learned about the legal battle many citizens were forced to go through to try to get their property back. Under communism, everything was owned by the government. Their homes, businesses, real estate, factories, and farms were all confiscated. As these countries regained their freedom and autonomy, the citizens had to go to the court to prove that they were the rightful owners of property they were no longer in possession of. Many of the records that had been housed in “safe places” had been destroyed. In one area of “old town” in a Slovakian city, amongst the scenic square with historic buildings and bustling commerce, was a building that was neglected and run down. The family who “owns it” has not been able to prove to the courts that it was theirs, so it sits empty to this day as they try to find the proof they need.

When families were reunited with their property, they often had to bring in the courts to help remove the squatters or others who had claimed the space. Some had been occupied by communist party officials who moved out; however, the places were still generally quite run down as nobody had any incentive to maintain them.

It is no wonder people in these countries, young and old, show such enthusiasm for their freedom. They are keenly aware of what is happening just over the border in the Ukraine, and how if the Ukrainians fall, they could be next. They remember the low wages and shopping in stores with very little product on the shelves. That makes sense; nobody had incentive to make products or even stock shelves to make more sales, since they wouldn’t profit anyway.

It was refreshing to see people who were excited about liberty, eager to work, and not victims.

Have a super day!

Sincerely,

Brien Krank

Financial Advisor, RJFS

Senior Portfolio Manager

Managing Partner – Collins and Krank

Hear me on the radio Wednesday mornings from 7:35 to 7:55 on 1100am The Flag and 970am WDAY.

Opinions expressed are those of Brien Krank or of the author in the attached articles and not necessarily those of Raymond James. All opinions are as of this date and are subject to change without notice. Raymond James is not affiliated with Nick Murray or First Trust.