Reconsidering Hungarian welfare policy?

After twenty years of ever growing dissatisfaction with the welfare system as it was developed at the time of the change of regime, a few tentative voices can be heard that question the current practice of doling out monthly cash welfare payments without knowing how much people actually need and how much they are getting from a variety of uncoordinated sources.

I wouldn't be surprised if the impetus for taking a second look at the current system came after Zsolt Szepessy, mayor of Monok, took things into his own hands and announced that as of January 1, 2010, sixty percent of the cash allotment to welfare recipients in the village of Monok will be given in form of a debit card (called "szociális kártya") which will be good only for the purchase of food.

The reaction to this announcement was immediate. The first objections were voiced by constitutional lawyers who were certain that the whole idea is unconstitutional and condemned the "discriminatory" nature of the introduction of such a card. I gave a fairly detailed account of the controversy on July 9, 2009, in a piece entitled "Government assistance and family support in Hungary." These legal experts were then joined by sociologists involved with the problems of people living in poverty (in Hungarian these people live in "mélyszegénység," or in "deep poverty.") The most influential person in this group is Zsuzsa Ferge, a sociologist and defender of the poor. If I understand her right, the only problem with the current welfare program is that not enough money is spent on the project.

On the other side there is Erzsébet Pusztai, a physician by training, who for a number of years has been involved in constructing a viable social policy for her party, MDF. She in theory doesn't object to the introduction of a "social card" that is very similar to the food stamp program that has been in existence for about forty years in the United States, but, Pusztai says, such a program cannot be introduced in individual localities. It must be universal and the "debit card" must be accepted in all stores in the country.

Not long ago I wrote an article in Hungarian supporting Pusztai's ideas. A few days later I had the opportunity to explain the American system in "Hetes Stúdió" (Weekly Studio), a Saturday afternoon political program on Klub Rádió. Yet I'm sure that those who objected to the plan were not convinced. In fact, Júlia Lévai, a fellow contributor to, made it quite clear that she thought my idea was unfair and unworkable.

However, I see some hopeful signs that influential people have begun to realize that something went very wrong with the whole concept of the Hungarian welfare system. Iván Vitányi, the wise old theoretician of MSZP, wrote a piece in the December issue of Mozgó Világ (unfortunately still not available on line). In it he quoted the famous Hungarian historian, Gyula Szekfű, who once described the Hungarian situation between the two world wars as "somewhere we lost our way." Yes, Vitányi said, something went very wrong with the Hungarian welfare system in the last twenty years.

György Csepeli, a social psychologist, continues on the same theme in the December 29 issue of Népszabadság. He agrees that yes, "somewhere we lost our way," although he is aware that there are many people who think that everything is okay as it is. One needs only more care, more instruction, and last but not least, more money; otherwise, everything is fine. Csepeli in the last few years came to the conclusion that the above described position is incorrect. There is something fundamentally wrong with the system.

Hungarian welfare payments are distributed through many channels, independently from each other, without any knowledge of what the other welfare agencies are doing. The result is total chaos. It is impossible even to guess who gets what from whom. Moreover, according to Csepeli who has been studying the problem for a number of years, often people receive assistance who aren't eligible. Most importantly, there is no central government concept about what the final goal of the assistance is. Surely assistance should be administered only for a limited time during which attempts should be made to reintegrate the individual into the work force. Of course, there are permanently disabled or totally unemployable people, but they should form an entirely different category. Recipients should not all be lumped together in one indistinguishable mass.

The result, says Csepeli, is "right in front of our eyes." More than half of the people who theoretically could be employed have "no legal jobs." The number of those who live in poverty instead of decreasing is growing. "The culture of povery is reproduced from generation to generation." And he adds a very important observation, although it is possible that it is too obliquely put for most readers to comprehend, that "the societal solidarity is converging toward zero." In plain language, people who are producing the money that ends up in the welfare system are fed up.

As for those who live in poverty, no one has any idea about their numbers. There is no database on the basis of which assistance could be given in a rational manner. But all this is not enough, says Csepeli, and he comes up with an idea that I found very attractive. In giving assistance there must be a "contract" between the giver and the taker. This contract should spell out the rights and duties of the recipient.

At first glance this idea might seem strange, but in fact the American assistance program also contains a contractual arrangement although perhaps it is not spelled out fully. I checked Connecticut's Department of Social Services in search of cash and voucher assistance. Two categories are key. The first is "Temporary Family Assistance" which gives cash assistance for basic and special needs, designed to move recipients into employment and toward self-sufficency. They are also eligible to receive medical assistance, child care, and food stamp assistance. Temporary Assistance Program takes care of families for 21 months.

The second program is called "Safety Net." This program offers vouchers, not cash. It is for families who have exhausted their 21 months of Temporary Assistance and are not eligible for an extension because they have not made a good faith effort to obtain and maintain employment. Safety Net services provide the family with basic needs such as food, shelter, and clothing, as well as offering counseling to help remove barriers to employment. Generally, Safety Net services are available for no more than 18 months.

Surely, although the Department of Social Servies doesn't make any mention of a contract, the contractual arrangement is present. If the recipient "has not made a good faith effort," then no more cash payments. The Department will try to do its best to assist the recipient to find employment or will remove obstacles but he will have to make an effort.

Nothing like that exists in Hungary and the result is devastating. It's time to sit down and think the whole thing through. Csepeli finishes his article by claiming that the idea of a "social card" wouldn't have surfaced "in a rational, logical, and practical welfare system." I don't understand his aversion, especially because it would have the added benefit of limiting the use of cash, which is a real problem in Hungary.

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The issue is a very fundamental one of basic human rights for the poor. Wealthy countries have moved away from narrow versions of negative liberty, whereby to quote Anatole France “everyone has an equal right to dine at the Ritz or to sleep under a bridge”, and has embraced social rights. We need to argue for the principle that either a state guarantees everyone the opportunities to work for an income that enables them to live with a semblance of human dignity, or ought to provide compensation in terms of guaranteeing a basic standard of living (as major EU members like the UK, France and Germany do through their income support schemes). If a state forces the poor to use a separate means of payment it institutionalizes a form of direct discrimination against those people on class grounds. If one were to substitute the word class for the word race, or the word poor for the word Roma we would see easily how morally repugnant and frankly fundamentally uncivilized tokens, and vouchers that stigmatize are. Obviously you may say that in the United States this all works wonderfully. And though participation in the labor force among the working age population… Read more »