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Political correctness in Hungary

January 31, 2009 13 comments

Hungarians don't believe in political correctness. They think that it is just one of those crazy American ideas. Not only is political correctness a ridiculous concept, it is also a dishonest practice. Through it leading members of society, intellectuals, politicians, force their own standards on others. More than that, it constitutes censorship. After all, there is such a thing as freedom of speech and by forcing people not to say certain things people are being restricted. How ridiculous that in the United States a coach got into trouble because he said something "innocent" about black players. In Hungary no such thing can happen. There was the case of a coach who announced after an African soccer team beat the Hungarians that it was a shame that such a thing could happen when these people not long ago were still up in the trees. No problem, it was just a turn of phrase. He didn't mean any harm.

Well, the first serious consequence of a transgression of political correctness may have taken place yesterday. The police chief of Miskolc, Albert Pásztor, gave a press conference (http://tinyurl.com/amhl4q) that is shocking to someone, like myself, who is accustomed to political correctness and who thinks that following the rules of PC might even have a beneficial effect on societal attitudes. The press conference was held in order to inform the public of the activities of the police force in the city. They investigated x number of murders, y number of thefts, z number of bank robberies, and so on. Why the police chief felt compelled to deliver a tirade against the Gypsy population of the city is a mystery to me, but he explained that one ought to tell the "truth." And the truth is that Gypsy children were responsible for eight attacks against elderly people (purse snatchings) and against youngsters with cell phones. He wanted to warn these people to look out for those Gypsies who might attack them the next time they step out on the street. "Many of those darling little Gypsy kids become ruthless criminals." But that wasn't enough. He continued: "We can state with certain assurance that all the robberies committed in public places are done by Gypsies. The truth is that Hungarians [meaning non-Gypsies] will perhaps rob a bank or a gas station, but all others are committed by them [the Gypsies]."

Well, even that would have been more than American public opinion would tolerate but what followed was off the charts. In Miskolc there is a hilly area (Avas) in which there are many large apartment buildings erected during the Kádár regime. From the police chief's speech it is clear that some Gypsy families purchased apartments in these complexes. In the police chief's opinion "these people don't even want to live in a place like that. They don't have any need for such apartments. It doesn't even occur to them that eventually the mortgage must be paid or that they will have to share with their neighbors the common expenses. It doesn't occur to them that here they have to conduct themselves in conformity with their surroundings…. Living together with them simply doesn't work. That's all." These were the closing sentences of his so-called press conference.

Well, this time the reaction was immediate. Tibor Draskovics, minister of justice also in charge of the police force, instructed József Bencze, chief of police of the country, to relieve Pásztor of his duties. As soon as the news of Pásztor's dismissal reached Miskolc, the whole city was outraged. The mayor is socialist, but he stood by the police chief, and all members of the city council followed suit. The people of Miskolc began organizing a demonstration against the dismissal of Pásztor. They demand the dismissal or resignation of Draskovics and Bencze instead. The socialist mayor went so far as to plan a trip to Budapest in order to convince Draskovics to change his mind. The socialist member of parliament from Miskolc is also on the side of Pásztor and against Draskovics. The MSZP caucus of the County of Borsod (Miskolc is the county seat) told the police chief to ignore the decision. Just go back to work on Monday as if nothing had happened. The socialist parliamentary member was certain that "by Monday night everything will be taken care of. If Tibor Draskovics wants to remain in his post he has no other choice" but to rescind his decision.

Albert Pásztor's supporters even include Attila Lakatos, the Gypsy "vajda" of the county. The vajda once had an important position in the Gypsy community, acting more or less as a judge. Whether today he speaks in anyone's name I really don't know. However, Lakatos announced that Pásztor is no racist. He was just telling the truth. The head of the Gypsy self-government of Mezőkövesd also stands by Pásztor. As for Draskovics, it is clear to me that he should not retreat, but apparently the minister is not very popular in socialist circles although he is a confidant of Ferenc Gyurcsány. Thus, Gyurcsány will be in a difficult position. On the one hand there might be an uprising within the party while his sense of justice is on the side of Draskovics.

This is apparently not the first racist statement of the Miskolc police chief. Last September he talked about the impossibility of integrating Gypsies into the mainstream. At another discussion he claimed that Gypsies are forcing out Hungarians from certain parts of Miskolc and that should not be permitted. But the police chief is quite popular because the crime rate in Miskolc has decreased by 30% since he took office. He even received on August 20th last year one of the highest orders of the Hungarian Republic. So this is where we stand now. A rather unfortunate situation at the time of heightened tensions between Gypsies and non-Gypsies.

The solid support behind Pásztor is telling. There is no difference between right or left when it comes to their opinion of the Gypsies. Socialist or Fidesz makes no difference. They want the head of the man who wouldn't tolerate this racist talk, and they stand solidly behind the man who told the "truth."

An analysis of the Hungarian radical right

January 30, 2009 5 comments

I just read a provocative piece in Élet és Irodalom (ÉS) by a "political analyst" whose name was inadvertently omitted by the designers of the Internet edition. The unnamed author sets out to challenge the accepted view of Hungarian right-wing groups. I present his/her argument here not because I embrace it but because I think that here and there it could sharpen our discourse.

The right and even the extreme right likes to call the ideology of these groups "national radicalism"–that is, allegedly a mixture of bourgeois radicalism and a Hungarian version of the narodnik ideology. Well, to my mind this is like mixing oil and water and claiming it is a natural blend; here I thoroughly agree with the author. Bourgeois radicalism (polgári radikalizmus) was basically a modern liberal ideology with very few adherents at the beginning of the twentieth century in contrast to Hungarian "populism," fashionable in the 1930s. The former group was an urban phenomenon while the latter wanted to build a society based on Hungarian peasant culture. So, according to the analyst, this self-definition is self-contradictory. After all, we are talking about two diametrically opposed intellectual trends.

People on the left refer to these right-wing groups by various names: fascist, neo-Nazi, neo-Arrow Cross (újnyílas, Hungarist), racists, anti-Semites, or just plain extremists. Although these labels may float in political discourse, they are not suitable for sorting out this rather heterogeneous mass.  These labels lump all the groups together and don't recognize the differences in their ideologies. The  extreme right groups that came into being after 2000 vary greatly in outlook and ideology. There are some–the militants–who exhibit antidemocratic tendencies, but there are others who strive for parliamentary representation.

What do these groups have in common? The author finds a common thread in a "distorted conservatism" (torz konzervativizmus). Their conservatism is a rigid, dogmatic way of looking at the past: "everything is wrong that's new." Central to their thinking are the "national traditions and national values" that, according to them, are "the core of national existence." The problem is that the national traditions they find so important don't seem to be part of today's society. As a result, a recurring theme is a lament over the disappearance of these traditions. The nation has become degenerate, it has discarded its values and its traditions and has instead become a victim to the manipulations of the consumer society. Today's Hungarians have become the unconscious slaves of capitalism and multinational corporations. The family is especially hard hit by these developments. People refuse to get married or refuse to have children, people leave the church, and instead of order there is anarchy.

The most important task of these extreme right-wing groups is to put an end to all this. They want to bring back Hungarian traditions and values and reintroduce a rigorous moral upbringing for Hungarian children. Most importantly, they want a "national awakening" from which groups considered to be alien would be excluded. Alien groups could be foreigners, Gypsies, Jews, homosexuals. The problem with all this, even from the point of view of those who expound it, is that "the existence of cultural values depends on their acceptance." Well, that's a problem; traditional Hungarian values are not uppermost in most people's minds. The extreme right, according to our author, solved the problem. Basically they elevated cultural or societal values to the status of ethical norms that exist independent of acceptance. Once Hungarian society turned away from these norms the nation fell into decline and decay.

It is difficult to place a theory of "value crisis" at the center of a political program, and therefore they resort to vague generalizations: "dissemination of education based on national values," or "care and respect of traditions." Because they don't find suitable political examples in the past, most of their traditions are "cultural." And since most of these "cultural traditions" are unknown in Hungary, they try to "revive" them or just "invent" them. One such invention seems to be a Hungarian martial art dubbed "Baranta"; another is a ball game known as "Turul." Yet another rather odd "tradition": placing somber primitive crosses on public squares at Christmas time.

This antimodernist outlook and the praise of traditionalist society reminds the author of Muslim radicals, the Taliban, and American fundamentalists who target abortion clinics. It is a well-known fact that the Hungarian extreme right sympathizes with the Palestinian cause. Only a couple of days ago there was a fairly large crowd demonstrating against Israel because of Gaza. Some of this can be explained by their anti-semitism, but it is also an expression of their instinctive sympathy toward a traditionalist society. Some groups, like Jobbik, are drawn to Iran, perhaps for historical reasons (the Hungarians and the Persians were "neighbors" at one point in their history) and also because they are attracted to an authoritarian form of government.

And finally, our author points to a resemblance between the Hungarian extreme right and Muslim societies and Hamas. Members of the Hungarian Guard are tied together not only by political beliefs;  they also form a "community." They spend their free time together, they organize all sorts of communal happenings, and they help each other in time of need. "Politics and private life are not separate. Even friendships are formed within the movement." They have been diligently building a social network and a cultural community. Hence they can be compared to some of the Mideast terrorist organizations (for example, Hamas). The author adds that the Guard isn't functioning yet at that level, but they look upon these organizations as models, and the Hungarian extreme right uses some of their methods. Our author concludes that it is a mistake to call "today's radical right" Nazi or Hungarist although there might be some who sympathize with the Nazis or Szálasi. They are not historically grounded. Rather, they are part of what might be called social networking gone bad.

Or perhaps they're modeling the Mormons. Whatever one may think of their theology, they're not a fringe element within American politics. Harry Reid, the U.S. Senate majority leader, is a Mormon.

Point counterpoint.

Gyurcsány package?

January 29, 2009 5 comments

Parliament met in extraordinary session, the prime minister spoke, and members of the Fidesz caucus didn't walk out. Gyurcsány made a forty-five-minute speech. Although we don't know the details of the plan, it seems that after consultation with leading economists, financiers, and businessmen, the government came up with a stimulus plan that aims to be revenue neutral. Two areas are off limits. First, the current structure of the pension plan will not change. Not only are oldsters an MSZP stronghold, but even in the population at large only about 10-15% of people surveyed suggested taking anything away from the pensioners. The government also doesn't want to touch the current practice of giving new mothers 70% of their earlier pay for two years. They are afraid of the criticism that they are not patriotic enough and aren't trying to increase the low birth rate. (Mind you, so far this program hasn't managed to boost the numbers of new little Hungarians.)

The focus of the plan is tax reform. The government will reduce personal income tax, business tax, payroll taxes, and social security. In addition, they will rescind an extraordinary tax paid by businesses and certain affluent individuals that was introduced a few years ago because of the sad state of the treasury. The government thinks that all these changes will amount to a loss of 1,000 billion forints in government revenue. So how can it offset this loss? The idea is to increase rates of certain categories of the value added tax and to try once again to introduce property tax. The introduction of a property tax is badly needed in Hungary because tax evaders often hide their wealth in real estate. There are all those tales about the "poor" entrepreneur who claims that he has such a modest income that he pays no taxes while he lives in a very expensive new house and also owns a fantastic summer place. The problem with introducing taxation on property is that it was about a month ago that the Constitutional Court deemed "luxury tax" (basically property tax) unconstitutional. According to the Constitutional Court the legislation provided no legal redress against the authorities' assessment. Moreover, it made no provisions for the current financial situation of the inhabitants. In plain language, let's assume that an older couple with two modest pensions are the owners of a valuable house they inherited from their parents. The property tax on a valuable piece of property might be as high as the couple's monthly income. Earlier the government tried to introduce a general property tax but it failed in parliament. I remember that Károly Herényi, leader of the MDF caucus, and he wasn't alone, proclaimed that the very idea of property tax is preposterous because it is effectively double taxation, and that's illegal. (A similar campaign has been waged against the capital gains tax in the U.S., so far to no avail.)

There would be one other change. Wealthier people would receive less child support, and in all instances the amount of child support would be added to people's taxable income. In addition, Gyurcsány mentioned a smaller parliament, a very popular suggestion, and fewer officials in fewer local governments. Of course, he knows as well as everybody else that without Fidesz's support these changes in parliament and administration will not materialize. If I were Gyurcsány, I would prepare proposals and submit them to parliament even knowing that Fidesz will not support them. At least this would make clear to the public which party refuses to spend less on running the country.

Fidesz's speaker, Tibor Navracsics, didn't really talk about the economic crisis and its possible remedies but kept repeating that Gyurcsány and the government should resign. Meanwhile Fidesz politicians refuse to reveal their own plans. Some people claim that in fact they have no plans. I disagree. I think that they have plans that are even more onerous than the ones the current government is planning to introduce. For example, I'm sure that Viktor Orbán and his team wouldn't hesitate to touch pensions. After all, his supporters are not the pensioners. Orbán made reference to that in his speech to young political scientists that leaked out a few months ago and that caused a serious erosion in Fidesz support. In it he made clear that he would include the thirteenth month pay in the amount received for twelve months and would peg pension increases only to inflation and not to the growth of real wages of the active population. Considering that between 1998 and 2002 when inflation was substantial the amount of child support didn't go up at all, I'm certain that Orbán and his team would not hesitate to save some money here too. So, all in all, Orbán doesn't want anyone to know the bitter truth. After Balatonőszöd he no longer can do what he did in 1998: promise the world and then not fulfill most of his promises. (The exception was the abolition of the ridiculously low tuition fees that Bokros introduced.) So it's best to be quiet. Very quiet as long as possible, and perhaps Fidesz supporters will believe in the magic touch of their leader who will be able to fix everything overnight. Unfortunately, Hungarians seem to believe in fairy godmothers–or in this case fairy godfathers.

Fidesz and the European Union

January 28, 2009 1 comment

In the last two or three days the news has been full of two new Fidesz initiatives. The first was actually a warmed-up idea: to dissolve parliament and hold national elections on the same day that the country will vote on Hungarian delegates to the European Parliament. Fidesz had planned to introduce this proposal tomorrow, during an extraordinary session of parliament convened specifically to discuss the economic crisis. But it was moved forward: Tibor Navracsics announced the Fidesz proposal on the very day when half of Europe's leaders gathered in Budapest to discuss the question of the Nabucco project. Well timed, according to communication experts: the Hungarian public will not talk about the country's success in taking the initiative in a European project aimed at solving the continent's reliance on Russian gas. Rather, the media will be full of news about the fate of the Gyurcsány government.

One internet newspaper, Hírszerző, well known for its editors' intense dislike of the prime minister, is already speculating about the date of the Gyurcsány's government departure: two weeks and gone forever. Every time I read something like that I can't get over the political ineptitude of some of the Hungarian journalists and political analysts. After all, it is clear that neither MDF nor SZDSZ would be stupid enough to support Fidesz in this endeavor. Indeed, the proposal is already dead in the water: SZDSZ announced that they wouldn't even vote to bring the Fidesz suggestion to the floor tomorrow. Ibolya Dávid said that MDF would vote for the dissolution of parliament if Fidesz would reveal the party's plans for handling the economic crisis. Of course, we know what that means. Fidesz has no plans or, if it does, it doesn't divulge them. The typically impertinent Fidesz answer came swiftly enough: perhaps Ibolya Dávid should pay attention to what's going on in the country instead of galavanting all over the world.

The second stone that was thrown in the water was new: Fidesz decided to make a frontal attack on Hungary's membership in the European Union. Yesterday there was a Fidesz gathering in Miskolc. This is a yearly affair dubbed "Talks about the Future." The main speaker was Tibor Navracsics, head of the Fidesz parliamentary delegation; Mrs. Pelcz neé Ildikó Gál, a native of Miskolc and one of the four deputies of Viktor Orbán, also spoke. There was no question that both quite openly questioned Hungary's membership in the EU. MTI reported it, and Magyar Nemzet gave a fairly detailed description of the two speeches. According to the MTI report Navracsics announced that there are many people who question the advantages of the membership "and thus we are in a situation in which we will have to reevaluate many things, including our membership" in the organization. That is clear enough. Mrs. Pelcz added that "Hungary is unequivocally the loser in the deal." According to Navracsics, "many believed that at last we will be a European country" but instead there is an economic crisis, a recession, massive unemployment. It seems that all this happened because Hungary is part of the European Union.

Well, let's start with the obvious question. What does it mean that one should reevaluate Hungary's membership in the European Union? There is no such option as renegotiating the terms of membership. There is only one choice: to stay or to leave. And I assume to give back all the billions of forints Hungary received from the EU. But then what does Navracsics mean? Why did he, who undoubtedly knows better, utter such drivel? The only thing I can think of is that this is once again an attempt to bring the far right that is virulently anti-Union under the Fidesz tent. But this doesn't make a lot of sense because it was only recently that Viktor Orbán talked about the European Union and transatlantic connections in glowing terms. Fidesz considers the forthcoming EU elections vital. They want to show their party's strength by wiping MSZP off the face of the earth. But if the EU is harmful to Hungary, why bother?

Well, it seems that Navracsics thought the better of it and the very next day tried to explain the whole thing away. He didn't mean to reevaluate Hungary's membership in the European Union. Instead, "one ought to think through whether Hungary in the last five years has managed to use the opportunities offered by the membership." This, of course, was not what he said. If this had been his clear intent,   why did László Csaba, the economist close to Fidesz who was present at the meeting, say: "it is decidedly better to be inside of the European Union than outside its gates."

The Navraciscs statement seems to have been part of a Fidesz trial balloon. After all, Mrs. Pelcz was at the meeting to lend ammunition to the position, and earlier László Varga, another deputy chairman of the party, made a similar very critical remark about Hungary's membership in the EU. But the balloon didn't exactly soar.

And that's nothing. Today it was reported that the EU will contribute 250 million euros toward the cost of the Nabucco project. That must hurt.

Sensationalism in Hungary

January 27, 2009 Comments off

On January 24 MTV's evening news announced that five nine-year-old boys raped a girl of the same age. It happened sometime last fall in the city of Szeged. It was after school hours on a playground next to a children's elementary school. Children whose parents work often remain at school where they can do their homework for the next day or can play and do sports under the supervision of a teacher. At five or six o'clock the parents come and fetch them.

One could ask how it was possible that the teacher didn't notice something unusual on that playground. The answer was that apparently under one of the swings there was a little plastic house (picture below) where the kids hid and where apparently these precocious little boys managed to rape a little girl. Another question: if this crime happened several months ago why it is only now that suddenly the whole country is full of this dreadful story? Colonel Szilvána Tuczakov, spokesman for the police in Csongrád County, mysteriously announced that "the police had investigated the case, questioned the children and their parents but no steps were taken because the children were all too young." It was also mentioned that the case was handed over to the Office of Child Services (gyámhivatal). Question marks multiplied in my head. Why now? Was there a crime that couldn't be prosecuted because of the young age of the delinquents? What does the department of social services have to do with the case?

In no time the electronic and written media were full of the story. The police spokeswoman tried to be tight-mouthed, but soon enough the journalists managed to find out in which Szeged elementary school the events must have taken place. They immediately questioned the assistant principal who again didn't say much except that "it is terrible what can be heard about the school but that's not what happened." Too bad that she was not more open because the story got fancier and fancier. One of the local politicians was also questioned and, although he didn't know anything official, he was ready to answer questions. Inaccurately.

Well, the ombudsman couldn't remain quiet under the circumstances, so he also put his two cents worth in. Again, not knowing the first thing about the case, he immediately took it for granted that a rape had occurred and that the "perpetrators were victims too because they were just imitating adults. The real criminals were the adults." He was sure that the "children must have seen something," most likely on the computer, video or television. It is so fashionable to accuse the media or the internet. The ombudsman decided that he was also an expert about physiology and sexual development and announced that "at such an age the sexual drive cannot be so strong and therefore it is necessary to find out what example they followed." Again without knowing anything about the details he immediately accused the teacher of negligence because she left the children unattended. He added that the children might be taken away from their parents and put under state protection.

Meanwhile a regional paper, Kisalföld, at the other end of the country seemed to have the most accurate information that they published on the very same day. The paper's reporter seemed to know that the teacher was innocent because "the children hid" from her. At last that paper, quoting an official in Szeged, mentioned that "it is not likely that rape occurred." After all, we are talking about nine year olds. A judge dealing with criminal cases mentioned that "this is an absolutely unique case." No wonder.

It seems that nobody read Kisalföld because all the big dailies kept repeating the rape story. Yesterday morning on Nap-kelte there were already questions posed by Zsolt Németh, a criminologist, about whether an actual rape had taken place. He blamed the police for not giving accurate information about the case. The same evening József Orosz in Kontra, a political radio program, inquired from a very knowledgeable child psychologist about the physical aspects of the question. That is, whether a nine-year-old boy could possibly have an erection or could ejaculate. The answer was an unhesitating no. That was something nobody had bothered to ask before. There were also rumors circulating that all five boys were Gypsies who had transferred to this particular school from a nearby "roma" school. As it turned out, that wasn't so.

What happened I'm sure is what happens all the time (even before the era of television and computers and without the need for bad examples). As children become curious about each other's anatomy they are willing to show their private parts to each other. Most likely something like that happened here, apparently with the consent of the girl. The whole thing couldn't have lasted long because by the teacher discovered the children in the little enclosure in the playground everybody was fully clad. See the crime scene here.Crime scene

By yesterday at last the principal decided to speak and announced that "there was no sexual assault. The children were just playing." The principal added that the girl was a willing participant in the game. The media managed to make a big deal from something "that every child does." According to her the police shouldn't have spoken of "sexual assault." Medical examination proved that no sexual act had occurred. However, according to the criminal code even touching sex organs constitutes rape in the legal sense. Oh, that criminal code. It is getting to be more and more interesting.

Another economic gathering in Budapest and a surprising poll

January 25, 2009 Comments off

Today there was another economic summit lasting four hours. If I remember correctly, this is the third giant gathering of politicians, businessmen, and representatives of employees that has taken place since mid-October 2008 as a result of the economic crisis. Critics of the government claim that these meetings are a colossal waste of time. Why doesn't the government just sit down and come up with a plan? For one thing, if the government did that, its critics would then complain about the government's "reform dictatorship." One must keep in mind that the word "refom" has a very bad ring in Hungary. Hungarians came to the conclusion, based on long years of experience going back to the Kádár regime, that "reform" is code for the introduction of an austerity program. The history of Hungarian economic development for decades has seen wild fluctuations–relative prosperity financed largely by foreign loans followed by the urgent need to "tighten the belt." And although living standards for the most part have risen over this time period, people feel that they are doing nothing else but "making sacrifices." Thus when about two weeks ago Ferenc Gyurcsány mentioned reforms, one of the better political commentators in Hungary said that if he were the prime minister he wouldn't utter the word "reform."

There is some truth in this, especially since the healthcare reform was such a flop and the results of the referendum so devastating that the government immediately stopped all plans to introduce any new reforms.The SZDSZ's abandonment of the coalition was allegedly an answer to this "cowardly" running away from changing the economic and social structure of Hungary inherited from the Kádár regime. Yes, perhaps it was cowardly and too hasty a retreat and I understand SZDSZ's frustration, but the liberals must realize that the fiasco that was the referendum was mostly their doing.

Under duress, with the world economic crisis weighing on Hungary, the government is returning to the challenge of reform. This time Ferenc Gyurcsány is trying to up the ante; he referred to the government's plans as "more than reforms." He envisages something of a paradigm shift. He talked about "a model change, a new national, societal, and economic strategy." Details are not known except that it will be "a set of comprehensive changes in taxation, in employment policy, and social welfare." The only specific announcement was that no new budget is necessary, though they will have to tweak some of the numbers.

So how will the Hungarian model change? Most likely we will find out more on Tuesday when parliament convenes for an extraordinary session. (The official opening of the spring session is February 18.) There have been leaks and rumors about some of the items. One might be lowering personal income tax rates and raising sales tax on certain items (most likely, at least in part, the classic sin tax). But if tax rates are taken down, the number of taxpayers must increase. There are a number of different scenarios under which this could be accomplished. It is almost certain that able bodied people who are on the welfare rolls will have to work in local government jobs (legally) for their keep. These jobs would include low-level health care and education positions as well as the standard maintenance work. (This, of course, may interfere with their lucrative off-the-books income.)

Ferenc Gyurcsány promised to bring before parliament all necessary legislative proposals by July 1. (Not exactly the Obama timetable.) He said that some of the new proposals could become effective as early as September 1 while the rest will launch on January 1, 2010.

He may actually have the wind at his back. There is a brand new Szonda Ipsos poll concerning "reforms." It seems that the economic crisis has frightened people into supporting change. Eighty percent of the people consider reforms "important or outright indispensable." Ninety-three percent would like to see a smaller parliament, 86% want to see changes in party financing. Sixty-eight percent would like to see fewer local governments with fewer employees. (I must add that this is only wishful thinking because to change the law one needs a two-thirds majority and Fidesz will never vote together with the other three parties.) More than half of the people think that there must be pension reform. (It is not clear what they mean here, but people currently get pensions at an early age and can continue to work while still collecting a fairly generous pension.) Fifty-one percent are ready to support increasing sales tax (presumably targeted, otherwise it's a regressive tax) while lowering personal and business tax. Moreover, 51% would support child support only for families in lower income brackets. Thirty-eight percent would agree to freeze wages in the public sector. Fourteen percent are ready to freeze pensions. Sixty-one percent of MSZP sympathizers think that the future of the country is more important than their own income while 54% of Fidesz supporters think that helping the country under the circumstances is not their responsibility. When the question was posed whether they are ready to make material sacrifices in order for the country to survive these hard times, 39% answered in the affirmative, while 27% thought that the majority of the people are not willing to sacrifice. Although these results are clearly skewed in the "not in my backyard" direction, they may nonetheless help the government's efforts to introduce reform legislation.

A new Bokros “package”: Not likely

January 24, 2009 16 comments

Lajos Bokros is one of the leading economists in Hungary. He was minister of finance from March 1, 1995, to February 29, 1996, when he resigned. Apparently he had threatened to resign before; every time his advice was not taken his inclination was to step down. Just to give an idea of his mercurial temperament: in 1990 it took him only two months as a member of parliament to be fed up with politics. He resigned.

A brief summary of his career: He was born in Budapest in 1954. He studied at the Karl Marx University of Economics, graduating in 1978. Two years later, in 1980, he received his Ph.D. and became a research fellow at the Financial Research Institute of the Hungarian Ministry of Finance, where he served as Chief of the Public Finance Division in 1986. From 1987 he was Deputy General Manager and then from 1989, Managing Director of the Hungarian National Bank. In the first half of the 1990s his positions included Chairman and CEO of the Budapest Bank, Chairman of the Budapest Stock Exchange, and Director of the State Property Agency. After his short stint as minister of finance he worked for the International Bank of Reconstruction and Development (World Bank) and currently is a professor at the Central European University attached to the Department of Public Policy. In addition to his administrative duties he teaches one course: Macroeconomics and Public Finance.

The country's economic situation was disastrous in 1995. But Prime Minister Gyula Horn was loath to introduce an austerity program of the magnitude that seemed necessary. For eight months he did nothing while his first minister of finance, László Békesi, proclaimed the end of the world every second day. Hungary had fallen into the abyss, he said, but he couldn't convince Horn to allow him to introduce the necessary changes. He therefore resigned in January 1995, though his resignation took effect only on March 1. Meanwhile for two solid months Horn interviewed prospective candidates for the post, including Zsigmond Járai, later Viktor Orbán's minister of finance of decidedly right-wing political views. At last Lajos Bokros was named on March 1 and twelve days later came the cold shower: an unprecedentedly severe austerity program later to be known as the "Bokros package."

What was the situation at the time Lajos Bokros took over? From 1990 to 1993 the GDP had shrunk by more than 20%, industrial production by 35%, and agricultural production by 40%. Consumption that had already dropped prior to 1990 further shrank by 10%. In 1994 the value of real wages was 22-23% less than in 1989. Unemployment was 2% in 1990; by 1993 it was 13%. Between 1990 and 1994 1.4 million jobs disappeared. Inflation was more than 25%.

Bokros achieved what seemed to be a miracle: by 1997-98 the Hungarian economy was on the right track. The greatest beneficiary of this was Viktor Orbán and his government that took over the reins of government that year. Perhaps one day I will detail the remedies Bokros used, some of which turned out to be unconstitutional and had to be withdrawn. Among other things, social services were curtailed and public outcry was great.

Bokros has for some time been trying to sell a second "Bokros package," but there doesn't seem to be taker at the moment. His latest laundry list was published last Thursday in Élet és Irodalom. It is a lengthy essay of about 30 typed pages. The suggestions, perhaps economically sound, are politically unacceptable. No government can possibly follow Bokros's advice. Even if Gyurcsány and his economic team were willing to listen to Lajos Bokros, the fact is that today's political situation is in no way comparable to that in 1994-1996. Then the government had more than a 75% majority in parliament. The right-wing parties–Christian Democrats, MDF, and Smallholders–were weak and ineffectual. Fidesz was the smallest party and barely got into parliament. Orbán and his friends were not quite sure whether they were a liberal or a conservative party. Today they are very strong and their attitude has hardened. They refuse to cooperate with the government in anything, and they certainly would do their utmost to torpedo each and every one of Bokros's latest ideas.

Let's see what Bokros suggests. (1) Compulsory private insurers in healthcare. If you recall the Fidesz-initiated referendum killed that already. (2) Competition among healthcare facilities. (3) Every person over eighteen years must pay health insurance. Right now students and pensioners do not. (4) Change in pension policies that would include individual record keeping of amounts paid. (5) No more thirteenth month pension or salary. (5) Fewer but bigger schools because small village schools cannot provide high quality education. (6) Instead of 77 accredited colleges and universities, keep only 20-25 institutions. Close the rest. (7) These institutions would have governing boards. (8) Competition among high schools. (8) Four to five villages should share one local governmental structure. (9) Widen the number of taxpayers. (10) Taxes should be paid even on minimal wages. They should pay a tax rate of least 10%. (11) Exceptions should be abolished. (12) Real estate taxes based on value. (13) Abolish EVA, a simplified taxation system for freelancers with a lower rate. (14) Abolish the tax free status of small businessmen.

I'm sure that some of his suggestions would do a world of good for the Hungarian economy but I can't see how Bokros's ideas could possibly be introduced. The opposition would launch another referendum,  and hundreds of petitions would be sent to the Constitutional Court that, given its composition, would undoubtedly kill half of the proposals.

The Gyurcsány government, confronted with the country's own economic problems, compounded by the world economic crisis, will have to do something. But it can't try to shore up the budget by collecting health insurance from pensioners and students. Or, unless it wants to commit political suicide, by abolishing the thirteenth month pay of all public employees and 3.5 million pensioners. Or by introducing private health insurers when once a couple with the help of Fidesz managed to get more than 200,000 signatures to hold a referendum against the introduction of private insurers. The Constitutional Court only recently announced that real estate taxes based on property values are unconstitutional. So what are we left with? It seems to me that Bokros, whose policies were so instrumental in righting the economy in the mid 1990s, can no longer offer realistic proposals to the government under very different political circumstances.

Hungary in turmoil

January 22, 2009 6 comments

The executive orders President Obama can issue without the advice and consent of Congress highlight an efficiency in the American system of government. Of course, the system has its drawbacks, never more evident than in the last months of the Nixon administration. Then we sighed and sighed: the country could have moved beyond this political crisis so much faster in a parliamentary system. It would have been highly unlikely that parliament would have given a vote of confidence to Prime Minister Nixon. The whole thing could have been over in no time as opposed to the months of agony.

But the parliamentary system can sometimes stand in the way of change. In Hungary it is especially cumbersome because of critical issues that require a two-thirds majority to sign into law. Perhaps behind the introduction and acceptance of these parliamentary rules was a certain naiveté that prevailed at the time of the regime change in 1989 and 1990. As long as there was a common enemy, the communist one-party system, the opposition seemed to be a pretty solid bloc. Yes, there were differences, everybody knew that. SZDSZ supported capitalism while MDF warmed up an old idea from the 1930s that tried to find a third road between capitalism and socialism. SZDSZ said there was "no third road." But otherwise, their hatred of the Kádár regime was stronger than their dislike of each other.

Once the old regime disappeared, cracks appeared in the wall of the opposition. Furthermore, fissures appeared within the parties themselves. This was especially true of MDF that together with the Smallholders and the Christian Democrats formed a coalition. Within two years there appeared a radical, anticapitalist, anti-western, and antisemitic faction within MDF that threatened the very existence of the party. Moreover, the more liberal conservative prime minister was reluctant to get rid of István Csurka, a playwright who was leading the radicals. He was reluctant because he was afraid, not without reason, that the majority of the party faithful would follow Csurka. Apparently at one point he called the membership of MDF a "terrible lot." Eventually Csurka was removed but MDF was in ruin.

Meanwhile MSZP, which had a very poor showing at the 1990 elections, was gaining in the polls because the Kádár regime looked better and better as the economic situation deteriorated. One and a half million people lost their jobs. SZDSZ, MSZP and, yes, Fidesz formed a bloc on the liberal left while MDF, the Christian Democrats, Smallholders and the radical MIÉP gathered on the right. The antagonism between the two sides intensified as years went by even as alliances shifted–most notably, of course, as Fidesz moved from left to right. Since 2002, when Fidesz unexpectedly lost the elections, there has been open warfare.

Gyurcsány has tried several times to engage Orbán in dialogue but Orbán steadfastly refuses. He wants to distance himself from any policy that brings hardship to the Hungarian people and wants to place the burden of the economic crisis on the shoulders of the current government. Fidesz has a two-pronged attack–to oppose every austerity measure and to demand tax cuts. Who wouldn't vote for someone whose platform was to put more money into the pockets of every Hungarian? (Well, perhaps not those of the prime minister.)

And then there's the drivel directed against the IMF loan. The latest attack comes from István Balsai, minister of justice in the Antall government now a Fidesz member, according to whom the decision to apply for and then accept the IMF and ECB loans needed parliamentary approval. Of course, it didn't. Moreover, can you imagine what could have happened while parliament discussed the necessity and conditions of the loan? Hungary could have gone belly up. Balsai's latest is that the government might have to sell the Holy Crown, the Parliament, and the Paks Atomic Plant because these are all collateral for the loan. Apparently that is utter nonsense.

As for the government's answers to the crisis, there is a lot of criticism and not only from opposition quarters. Lately more and more people, even friends of the government, complain about the lack of a comprehensive plan. The problem is that in extraordinary times ordinary planning breaks down. It's easy to plan a vacation, somewhat more difficult to plan a wedding. But how does one plan an economic program when the pieces keep moving? Just think of the way the American rescue plan TARP (Troubled Assets Relief Program) has kept shifting; there's just no solid ground under it. We can only hope it's not sitting atop quicksand or a fault line.

We have another five days before the extraordinary session of parliament convenes to discuss the crisis. MSZP has already prepared a program, the details of which are still not known. As far as I know SZDSZ and MDF have also submitted proposals. That leaves Fidesz. We will see what happens in the next few days.

Obama in Hungary

January 21, 2009 6 comments

Yesterday was the inauguration of Barack Obama as the 44th president of the United States. Americans were captivated. But what was the Hungarian reaction to this "historic moment"? Let's start with Americans living in Hungary who gathered on Szabadság tér (Freedom Square). Those who would like to see a few minutes of the celebration should visit http://index.hu/video/2009/01/21/obamapesten/?p=0 Then there was a reception given at the U.S. Embassy where Ambassador April Foley, a Bush appointee, was so moved that she could hardly finish her speech. Video here: http://nol.hu/kulfold/april_foley_megkonnyezte_obama_beiktatasat_-_video The liberal papers (Népszabadság, Népszava) were sympathetic, Magyar Nemzet acted as if there were no such thing as an inauguration in Washington, while Magyar Hírlap decided to be bold and tell exactly how they feel both about the United States and its new president.

The official Hungarian response was predictable. Both Kinga Göncz, the foreign minister, and András Simonyi, the former Hungarian ambassador to Washington, are hopeful that American-Hungarian relations in the future will be even stronger under the new administration. Of course, the high-level personal American-Hungarian link that some Hungarians were counting on didn't pan out. A few months ago when Hillary Clinton was still ahead in the polls there were people in Hungary who were already rejoicing because they were sure that if Hillary Clinton became president she would appoint Richard Holbrooke as secretary of state. Holbrooke's wife, Kati Marton, is of Hungarian origin. In fact, their wedding took place in Budapest at the bride's request. Well, Richard Holbrooke will not be a cabinet member, but he may still play an important role under Secretary of State Hillary Clinton.

In liberal circles there are people who complain that no Hungarian television station reported from Washington during the inauguration ceremonies. Apparently some really moronic program aired on MTV (the national public television station) while the inauguration was taking place. I hoped that ATV might broadcast at least parts of the inauguration because ATV specializes in political coverage. But no, there was nothing and in this evening's news they even managed to misreport the details of the fluffed presidential oath. It was Chief Justice Roberts who reordered the wording of the oath. Instead of "I will faithfully execute the office …" he prompted, "I will execute the office … faithfully." Obama immediately realized the mistake, smiled slightly, and began reciting the version specified in the constitution. However, most likely out of politeness, he corrected himself and followed Robertson's wording. Now what happened in Hungary? First of all, only those could watch the ceremony who knew English and most of the people at first blush got mixed up and thought that Obama was so nervous that he couldn't even repeat those thirty-two simple words. Not terribly surprising because Hungarians don't know the oath as well as Americans do. But other Hungarian speakers whose English is less fluent were not that lucky and this morning almost all internet papers blamed Obama for the alleged mistake. Bad enough. But this evening what do I hear in ATV's evening news? "Some legal experts" think that the presidential oath was invalid because of the slightly different wording. So does the United States have no president? I assume that is their learned opinion. ATV mercifully refused to divulge who these so-called legal experts are.

I left Magyar Hírlap for last. I mentioned at the beginning that Magyar Nemzet decided to act as if they had never heard of Barack Obama or the inauguration. That was the safest course of action. In the past the paper has taken a decidedly anti-American stance, but there is a change in the policy of Fidesz, and Viktor Orbán actually expressed his misgivings about the paper's attitude. Especially since only about two weeks ago Orbán for the first time in the longest time decided to write a very pro-American article in the same paper. Well, Magyar Hírlap had no such compunctions. They decided to publish an editorial written by László Szentesi Zöldi who is in charge of the paper's foreign news. Szentesi Zöldi began his career at MTV, moved on to Duna TV, from there to Magyar Nemzet, and finally to Magyar Hírlap. A steady move from liberal to the far right. The headline is telling: "Poor Obama." He complains about the fuss over a black man becoming president of the United States. Not  a big deal. And that Lincoln Bible. After all, Lincoln had household slaves like everyone else. Is he talking about Lincoln, the poor lawyer from Illinois, or perhaps confusing him with Jefferson? Then he spends a little time on Lincoln's belief that slaves should be resettled in Africa. Nothing new. That was a widespread belief in those days in the United States. The difference was that it was he who abolished slavery. And, he continues, these are the facts but nowadays nobody cares a whit in America about facts. Only illusions. It seems that Obama's only novelty is the color of his skin. He is not black, he is a mulatto. He has had a privileged life. What does he know about ghettos? There he was dancing at inaugural balls from where one cannot see the misery of New Orleans or even that of the man on the street. He is just as much an elitist as his predecessors: a successful and rich man who just recently fell into politics. What will the Americans think when the president has to say something on the black and white issue? Let's say he has to say something in a case similar to that of O. J. Simpson? "You cannot love the Black Panthers and the Ku-Klux-Klan at the same time."

Well, I don't have to tell you how distorted this description of Barack and Michelle Obama is. Both came from poor families, and thanks to their intelligence and their parents' or grandparents' sacrifice they managed to get into the best colleges and universities of the land. And both worked in black sections of Chicago as community organizers. Obama wouldn't know what's going on in the ghettos?

And the final atrocity: "The trouble is that the world has no time for experimentation. They didn't invite us to the inaugural balls, only from the outside, through the frozen-in window could we watch the colorful dancers.

Miserable times?

January 19, 2009 4 comments

Today to spice things up I'm going to interlace a few quotations from Warren Buffett, probably the least materialistic billionaire on the planet, with my summary of EU economic forecasts. Let me start with one that encapsulates so many of my vents: "The smarter the journalists are, the better off society is. For to a degree, people read the press to inform themselves–and the better the teacher, the better the student body."

I'm coming to the conclusion that Hungarian journalists use adjectives to describe the state of the economy or politics that are seldom used in English. In English-language media one is hard pressed to find adjectives like "deplorable," "lamentable," or "miserable" when describing the current economic crisis (though Warren Buffett, who is not prone to using trite adjectives, said that the U.S. is in the midst of an economic Pearl Harbor). I actually looked around on Google News and found no equivalent to describe the European Union's latest prognosis for its member economies in 2009.

Yet this is exactly how Népszava introduced the latest figures. Actually, the prognosis is not as bad as I had imagined. Of course, economic prognoses are not very reliable, particularly in volatile markets. Again, let me quote Warren Buffett; just substitute economic forecasters for stock forecasters: "The only value of stock forecasters is to make fortune tellers look good." The upshot is that for the eurozone they predict an average decline in GDP of 1.9% while for the non-euro countries 1.8%. They project that Hungary's GDP will decline by 1.6%, though the Hungarian government thinks that this figure is too optimistic. The prediction for 2010 is even better: a growth of 1.0%. This is what Népszava considers to be "deplorable, miserable, lamentable," take your pick. The fact is that although a recession is never pleasant, one ought not to exaggerate its effects by predicting "lamentable" or "miserable" times. Yes, they will be difficult but not miserable. The 2009 projections, for what they're worth, are worse for Germany and the U.K. (-2.3% and -2.8%).

Why are the economists of the European Union in Brussels so optimistic? First of all, they hope that accelerated government expenditures and growing investments will help the situation. In addition they think that lower inflation rates may stimulate consumption. (Yes, but think back to Econ 101: if you think that prices tomorrow are going to be cheaper than prices today, you'll hold off on your purchases.) According to the explanation attached to the predictions, "the different governments last August reported certain investments that will lessen the drop of GDP by 0.75%." Still the picture is grim, especially when it comes to unemployment. (Don't forget that unemployment is a lagging economic indicator, usually not righting itself until a few quarters after the economy does). They figure the loss of 3.5 million jobs. The predicted average unemployment figures will be 8.7% in the EU as a whole;  within the eurozone it will be even higher, 9.25%. Moreover, although there might be some economic recovery in 2010 they expect even higher unemployment figures for that year. Inflation, on the other hand, will moderate. In 2008 the inflation rate in the EU was 3.7% (in the eurozone only 3.3%) while for 2009 they figure 1.2% (in the eurozone 1.0%).

As for Hungary, unemployment will grow by 2.0% this year and by 0.4% next. That means an unemployment rate of 8.8% in 2009 and and 9.1% in 2010. Inflation this year will be 2.8% and next year 2.2%. These figures are higher than what the government predicts. Miserable? Lamentable? Well, it's not ideal, but I would refrain from using such adjectives. They don't do much for the soul, especially when the Hungarian figures, all in all, are not even that bad. They may get worse and then what? Journalists will have to come up with a new set of death spiral adjectives. And, to quote Buffett again, "Let blockheads read what blockheads wrote."

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