A short article in The Economist
Rarely does the English language press spend much time on Hungary. So Hungarian journalists and politicians tend to give undue weight to anything written about the country in reputable English language newspapers and magazines. If in a long article about some shady arms deal to Afghanistan appears in The New York Times in which Hungary is mentioned along with practically all other Eastern European countries, at least two dozen articles appear on the subject and the prime minister launches an investigation. Yesterday Hungary was singled out for criticism in a short article that appeared in The Economist entitled "A Magyar mess." It began: "Financial markets are jumpy about several east European countries. One of the more vulnerable is Hungary, notorious for its budget and current-account deficits. Once the local wonder child, Hungary is limping, its government outmanoeuvred by the opposition, its economy sclerotic and its population resentful." In Hungary, in brief, Chicken Little is triumphant, the sky is falling.
Indeed, there is a totally fatalistic public attitude even, or perhaps especially, in left-liberal intellectual circles. Everybody seems to be convinced that there is no way for the MSZP to win the elections in 2010, which is bad enough. But the real tragedy, in this view, is that the Fidesz will receive more than two-thirds of the the parliamentary seats and then this surely will be the end of Hungarian democracy. They envisage such changes in the constitution that would morph the current parliamentary system into a presidential type of democracy which in Hungary could lead to a destruction of the rule of law as it exists today. They already see Viktor Orbán moving over to the strengthened position of president, and then God help us!
Then there are those, also among the supporters of the MSZP, who think that perhaps the best chance for the party would be the resignation of Ferenc Gyurcsány. These people naively think that Viktor Orbán and Fidesz would be more cooperative without this thorn in Orbán’s side. Didn’t Orbán and his party say that they refuse to engage in any conversation with a liar? Perhaps if Gyurcsány disappeared from the political scene members of Fidesz wouldn’t leave the room when the prime minister speaks. There would be dialogue. There would be cooperation. I don’t think that it is necessary to emphasize that this is an absolutely wrong assumption. Nothing would change. Orbán’s appetite would only increase. With a lame and grey politician, like Péter Kiss for example, the MSZP would have even less of a chance for victory.
Now there is a new twist. A young but influential MSZP politician, Attila Mesterházy, came out with the idea that perhaps the best thing for MSZP would be to get rid of SZDSZ. If János Kóka threatens to quit the coalition if his party can’t achieve its original aims, especially in the questions of health care, then why doesn’t the MSZP say: "Fine! Go! Empty the ministerial seats, give back the car keys!" Admittedly, then MSZP would have to form a minority government. Mesterházy rather optimistically predicted that this new situation wouldn’t be problematic at all. SZDSZ would support the government from the outside. SZDSZ politicians very rightly countered: how can Mesterházy be so sure that this would be the case. Katalin Szili also liked this idea. Gyurcsány, on the other hand, outright rejected it.
Meanwhile, all the former presidents of the National Bank, a number of former ministers of finance, and many, many economists are suggesting draconian economic cuts that would be political suicide. The government cannot take away pensions, child support, the three-year government subsidy after each baby, and I could continue. Yes, it would be advisable to lower taxes but how when, as The Economist points out, "some 20% of workers pay four-fifths of income tax." And Hungarian society is not heavily skewed between the haves and have-nots.
Of course, the government could do a number of things before they take away pensions. The most important problem to address is the black economy. Does that mean targeting the tax-free status of those who allegedly earn only the minimum wage–all 1.2 million of them? That’s a blunt instrument that could hurt the truly poor without identifying those who are gaming the system. According to The Economist the black economy may account for 18% of GDP. I think this is probably a low figure. But, even assuming The Economist’s guess, just think how much more viable the Hungarian economy would be if all income were reported. Tax enforcement is never popular, but it’s almost always effective. Here I am, the small business classic tax evader: "Janos is going to jail for tax evasion. Oops! I’d better record these profits." And all of a sudden the coffers start to swell.
In addition to enforcing individual tax collection, Hungary would be wise to reduce the business tax rate from its temporary 20% back to its original 16%. But let’s be realistic, this is not enough. Politics is still the deal breaker. As The Economist said: "Hungary’s politicians are doing what they do best: squabbling for short-term advantage, while leaving structural problems untouched." An excellent cartoon appeared in today’s Népszava which depicts the situation very well. There is a little boat. Written on its side: Magyarország. At one end of the boat which is sinking, half drowning there is the captain, Ferenc Gyurcsány. At the other end, high up of the sinking boat there is Viktor Orbán in triumphant mood. The title: Az előny (Leading).
Meanwhile let me quote a short comment on the Economist article, obviously written by a right-wing Hungarian. Isn’t it nice to see the world in such simple terms? I didn’t correct the fellow’s English:
"There are some half-truth in your articles, as it is usual. First $2. This vote is not about $2 or not, but against a government, recruited among old communists and close friends and which illegible, couldn’t tell truth either to their supporters, achieved criminal-diplomacy and corruption and the prime minister is mentally instable. The well over than 50% voted against lies, the unlimited corruption and undemocratic way of administration."
Simple, isn’t it? Get rid of the mad prime minister, get rid of the communists, get rid of those who conduct "criminal diplomacy," and bring in democracy as this fellow and many like him envisage it. And all the problems would be solved.