Ferenc Gyurcsány’s speech in parliament

Everybody was, of course, curious what Ferenc Gyurcsány would say in parliament after a pretty disastrous year politically and, to a lesser extent, economically. Could he say something that might help boost his government’s popularity and restore the trust of his party’s electorate? Almost everybody was sure that he was not going to touch on the referendum and he didn’t. Not a word. Last year commentators complained that the speech was too long. This time everybody commented on how short it was. My golly, shorter than Orbán’s? Indeed, the speech lasted barely half an hour. The commentators (political scientists, hmmmm) on the right, most notably István Stumpf who, with the title of minister, used to run Orbán’s office and therefore cannot be called an independent observer, saw a Gyurcsány practically beaten already, someone who is afraid of his own shadow. According to Stumpf, Gyurcsány was outright meek, which is not his style. He followed very closely his prepared text. Again, not his wont. Of course, the same Stumpf would have criticized Gyurcsány if he were too confident, too loud, if he composed his speech only in his head. The fact is that by now the two camps see the world entirely differently. He was being criticized both for what he said and what he didn’t say.

One thing is sure. Gyurcsány was much more careful in outlining his plans for the future. In the past he liked to have a laundry list of what the government planned to accomplish in the next year: 100 steps, 48 points, for example. Most of the people following Hungarian politics in the last few years will remember these announcements. (Let’s not go back to the original sin: Péter Medgyessy’s 100 days and then the extra 100 days when the government started to spread the goodies which led to the present situation and to Gyurcsány’s problems.) He also tried to show more empathy toward those who suffered economically in the last year and a half. The prime minister in the past was not known for expressing such sentiments. One has the feeling that he basically believes that the austerity program cannot be avoided and, considering how urgently the government had to lower the deficit, it is a miracle that real wages went down only 4-5%. Most likely he tells himself: "Why on earth are they complaining when we really didn’t touch the relatively generous social benefits?" Moreover, I have the feeling that he is convinced that this situation is temporary and for a better future a short period of austerity can be handled easily. Things will get better. I think it was in his speech at Balatonőszöd that, when his fellow party members brought up that there might be demonstrations, Gyurcsány answered: "And what? Eventually they will go home." Of course, he was right, but it didn’t go over too well when this remark leaked out.

In any case, I had the feeling that Gyurcsány has learned from his mistakes. He admitted that the past year was "unspeakably difficult" and thanked the Hungarian people for their patience and assistance. He promised a "more peaceful year" with fewer changes. A kind of consolidation period. If he was promising anything it was a much more prosperous 2009. He then came up with his big gun: his government is intent on creating a substantial middle class by giving a larger segment of society "property." How? By putting some of the successful state-owned companies on the stock exchange. A certain percentage of their shares could be bought by Hungarian citizens for very little money. Basically way under par. In exchange the future owner of these allotted shares would have to agree not to sell them for a number of years. The details are not known yet, although I gathered from the president of the Budapest Stock Exchange (BUX) that negotiations concerning such a move have been under way for some time. The president of BUX has for years been talking about nothing else but the necessity of such a step. He pointed out yesterday, after the speech, that the most successful companies currently on the exchange, MOL (oil and gas), Richter (pharmaceuticals), and OTP (banking), were all originally completely state owned companies which became really profitable after their listing on the exchange. After the speech Gyurcsány gave a long interview to Sándor Friderikusz in which he expanded a bit on the theme. Of course, he is not talking about losers like MÁV or BKV. Who would ever think of buying shares in those? He optimistically predicted that perhaps two million families would think about such a financial venture and perhaps half a million would actually take advantage of the offer.

Political commentators are less enthusiastic about the scheme than economists. I’m not at all surprised. Most Hungarian political commentators know next to nothing about economics. The more sophisticated ones immediately discovered the similarity of Gyurcsány’s scheme to that of Margaret Thatcher. Apparently, before Thatcher’s plan only 4 percent of the British public had any money invested in the stock market. After a massive government campaign, over 23 percent! Whether that can be achieved in Hungary or not is questionable given the Hungarian people’s distrust of the market. If you suggest that it would be a good idea to help the economy by investing and at the same time perhaps getting a much better return on their money than they would if they just kept it in the bank, the answer is an immediate and horrified "no." They look upon investing in equities as no better than a lottery. Whether the Hungarian public could be convinced that in the long run this can be a very advantagous financial transaction, I don’t know. But certainly it is worth a try.

What is the opposition’s reaction? The Fidesz claims that Gyurcsány stole their ideas, except that this is an inferior version of their efforts on the behalf of the middle class. (This is not quite the case because the Fidesz government tried to create a fairly thin wealthy class and through them hoped for a trickle down effect.) In any case, that was Tibor Navracsics’s first reaction. Today I heard one of the Fidesz experts on economics. The only thing he could say was: "there are many burning questions today which are much more important." So basically even he couldn’t say that it was a bad idea. It was just not the right time. Ibolya Dávid is supportive because MDF considers itself the party of the middle class and believes that the middle class’s burden is far too great at the moment. Moreover, the MDF for years has been urging the government to take the state owned companies public. If anyone is interested in Gyurcsány’s speech and the reactions one can visit to the homepage of the Hungarian parliament where in good quality video one can see and hear the whole thing. Here is the link: http://tinyurl.com/2k66xp

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About time the masses were realistically asked to take part in the stock exchange. This could be a great way to stop the petty economic arguments (tax cuts + public spending) offered by some. In the Uk when Thatcher first introduced these ideas (with British Gas first I think and British Telecom following), no one had any idea how it would change the entrenched outlook of the unions and the left – who harked back to a non-existent model of the welfare state. Almost universally there was the clamour that Thatcher was “selling the family silver” or “pawning the Crown Jewels” to buy votes. The end result though was that a reasonable percentage of the electorate become interested in keeping an eye on wider economic issues, not just the price of tea and milk. For the long term this could offer the promise that the wingeing of those that wish to buy back former state assets will be drowned out by those that have bought into the privatised sector. In the schizophrenia that seems to affect FIDESZ economics, their supporters will be torn between buying into the privatisation or not. If they do, then how could they vote for FIDESZ… Read more »

Who are you and what have you done with my former nemesis known as Vándorló?