Ordinary Hungarians aren’t thrilled with capitalism

One of the most frequent criticisms of the current Hungarian government is that its spokesmen are unable to explain to the people the necessity and the consequences of the reforms. According to the critics, even those who are sympathetic to the goverment, their communication skills are dismal. Politicians, especially the socialists, have agreed that the fault lies with them and have apologized profusely.

Personally I find the explanations given by the government cogent and easily understandable. There is no lack of information: one can find it in newspapers and on the radio, television and the internet. Moreover, judging from the call-in programs, I am not alone. Some of the better educated people seem to understand the basic principles that govern a modern capitalist economy. I suspect, however, that the overwhelming majority of the people do not understand it, especially those who are less educated. One must keep in mind that in the Kádár regime only about 40% of the population finished high school, only 10% finished college, and the rest–50%–completed only eight grades. One cannot expect these people to understand the connections between national debt and liquidity, supply and demand, the budget deficit and the euro, revenues and expenditures, or employment and inflation.

Moreover, capitalism is not part of the mindset of most Hungarians. After all, even people who are between the ages of 35 and 40 spent their formative years in a country where there was no personal income tax until 1988, the price of many products was fixed, and–if there were price changes–they were initiated by the party and government. Rents were kept low, energy was cheap and wasted, no one checked what doctors did and did not do, drugs were not very good but dirt cheap. Culture was also heavily subsidized. The government and party had only one important consideration: living standards had to go up because they didn’t want to have a second 1956. And indeed, the living standards went up and up, but at what price? The country borrowed heavily and eventually was close to bankruptcy. The socialist paradise, modest but secure, was falling apart.

And suddenly here is this Ferenc Gurcsány and his team who want to teach modern economic principles to ordinary Hungarians. I’m not at all surprised that they don’t understand. Any of it. Moreover, it is not in their interest, at least in the short run, to understand it. Who wants to pay more for natural gas (which, by the way, is still lower than the price MOL pays for it, the balance comes from government subsidies), who wants to pay tuition at the universities, however modest? Who wants to pay health insurance when until now it was unnecessary since no one asked whether you were insured or not? It is very, very difficult to explain all this. The ordinary Hungarian knows that in the Kádár regime the world didn’t collapse when he didn’t have to pay tuition, medical co-payment, more for energy. And why now? Gyurcsány can talk and talk about modern Hungary, personal responsibility, order. The ordinary citizen doesn’t care. He hates it all.

This blog was inspired by a caller to "Megbeszéljük!" (Let’s talk it over) on Klub Rádió. The reporter today was Ferenc Vicsek. The caller responded to every economic observation: "It doesn’t matter." "But what about the national debt?" asked Vicsek. The caller: "It doesn’t matter!" Those who know Hungarian should listen to it here: http://www.klubradio.hu/index.php?id=33%23c ( January 14, parts 2 and 3). It takes a bit time to download the whole segment, so be patient.

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Do you not think it brutally ironic that you have charged Gyurcsány, a direct descendant of the Communists, with teaching economics to Hungarians?
So sad yet so funny.

New World Order

The “irony” (if that is the right word) or maybe the “absurdity” of the situation is that Gyurcsany needs to take the mantle because the “conservatives” (i.e.-FIDESZ) have come to the same conclusion as this blog that Hungarians don’t understand or want capitalism, and as such these “conservatives” have adopted a convenient warmed over soft socialist platform where Hungarians can have their cake (free social services, large Government subsidies) and eat it too. It is sad, that someone like Varangy son enamoured with the idea of FIDESZ cannot get these guys to talk honestly about anything really impacting the country’s future. For a current American analogy, look at Mitt Romney (except unlike Viktor, he has actually once upon a time, accomplished something at least in the private sector).

After decrying the state of education during the Kádár years, you conclude: “One cannot expect these people to understand the connections between national debt and liquidity, supply and demand, the budget deficit and the euro, revenues and expenditures, or employment and inflation” Are there any countries in the world where more than a small proportion of the population really understand the significance of these issues? And if they did, would that stop them voting for the party that they feel keeps the bills down or the mortgage repayments low? I don’t have the relevant statistics, but my vague impression is that Hungary today seems to be experiencing an explosion of interest in studying economics. There is even a Gazdasági Rádió, economics magazines like HVG are on every news rack – people actually seem interested in this dry, anachronistically empirical “science” which so rarely provides satisfactory answers. (or is that just me who feels this way?) My point is there seems to be far more interest in the subject and time spent on it than in many countries. I am not so sure that this will lead to a more prosperous or happy Hungary. An army of economists, or even broader… Read more »
New World Order

The problem is not so much ignorance of modern economic concepts and the functioning of capitalism, but rather that Hungarians (it seems to me) are particularly risk adverse and by nature pessimistic. In certain other CEE countries (Romania and Poland in particular come to mind), there is a far greater willingness to take risk, and to see the changes that have occurred in these societies as an opportunity to be grasped not as a threat to one’s existence(Look at the number of small businesses that have emerged in these countries as compared to Hu.). In Hungary, the feeling is that the changes to the status quo are too risky and should be avoided (SEE FIDESZ’s economic policies across the board-which are sadly “conservative” in so much as they harken back to the policies of the socialist policies of the 1980s).