What is the program of Fidesz for Hungarian recovery?

Fidesz politicians are pretty well forbidden to say anything. By now the slip-ups of Mihály Varga and László Mádi have resulted in a total blackout of news about Fidesz's plans for the future. While a week ago the Christian Democrat Kálmán Nagy, a physician, represented Fidesz-KDNP at a roundtable discussion (Voks, ATV) on the different parties' plans for changes in the healthcare system, this Monday no one from Fidesz or its surrogate showed up for a discussion of strategies to boost employment. Perhaps Kálmán Nagy's performance convinced the party that it is better to send nobody than to send a man who cannot say anything and who only looks up at the ceiling and rolls his eyes while his face clearly betrays his disgust at every suggestion of his fellow parliamentarians.

The only exception to this blackout is Viktor Orbán himself who yesterday had a meeting with the top officials of the Vállalkozók Országos Szövetsége (National Alliance of Entrepreneurs). The background is that VOSZ had formulated a list of six changes that the top Hungarian businessmen would like to see implemented if and when Fidesz wins the elections. They were demands that for the most part Orbán could gladly agree to.

Most commentators, including Mihály Kupa, minister of finance for a while during the Antall government, were pleased to hear that Orbán's "promises were moderate" at this forum. Almost all his proposals included a timetable that is far into the future; changes will be gradual. Taxation on companies will be lowered over the course of four years "to the level of the region." One needed the help of a tax expert to find out what that level is. The Hungarian level is pretty high, 39.5%, but that includes payroll taxes as well. In Slovakia it is 30%, in Poland 37%, and in the Czech Republic 35%. If one takes an average of these countries that would mean a loss of 1,400-1,700 billion forints in tax revenue.

Fidesz also promises to lower the personal income tax to the desired regional level in six years. In some countries there is a flat tax: in Slovakia 19%, in the Czech Republic 15%, and in Romania 16%. In Poland and Hungary there is a progressive income tax; from 18% to 32% in Poland and 18% to 36% in Hungary. About 90% of Hungarian wage earners pay 18%. Looking at the above figures that means very little change from the current practice.

He repeated his promise to create one million new jobs in ten years, a promise that according to most people will be impossible to fulfill. As Károly Herényi (MDF) noted at the above mentioned roundtable discussion, at the moment there are about 100,000 positions that cannot be filled because there are no skilled workers to fill them. The representative of MSZP pointed out that it is not clear what this one million new jobs actually means. Some 200,000 jobs a year change hands: some jobs disappear while others are created. Some people retire, others start their careers as wage earners. Does he want to create 100,000 jobs a year in addition?

Could Fidesz possibly be thinking in terms of direct state-created jobs? There was one sentence that raised my curiosity: "In 2011 professional and regional companies with state participation will be established." I'm trying to give meaning to this mysterious sentence but no coherent picture emerges in my head. Does this mean the establishment of private/public joint companies? Why would it be necessary to establish such companies? Who would be willing to be in partnership with the Hungarian state? I wouldn't. Just think of the fate of the French company in partnership with the city of Pécs. How could the state dictate the level of employment to these companies? Where would the money necessary to invest in such partnerships come from? The whole thing is muddled, most likely because Viktor Orbán wants it to be muddled.

As far as the European Union is concerned Orbán said a couple of interesting things. At the moment the subsidies received from the EU can be used only to finance public projects. Orbán, most likely to the delight of the Hungarian businessmen present, said something about changing the rules of the game. Half of the convergence money would go "into the economy." In plain language, rich friends of the government would benefit. A perfect opportunity to "win friends and influence people." Fidesz tried that earlier on a much more modest scale. They gave money to friends and relatives within the framework of the Széchenyi Plan. A perfect hotbed of corruption and graft. Moreover, only Hungarian companies, he continued, would receive subsidies under the changed rules. The question is whether the EU would ever allow such use of the convergence money. I hope that Brussels will say no to this devilish plan.

Another interesting suggestion was that Hungary would exercise protectionism "in line with the European practice." As far as I know there is no European practice of protectionism, at least not on paper. It is perhaps just an empty promise, something these hungry Hungarian businessmen wanted to hear.

As for the introduction of the euro, as opposed to Gordon Bajnai who pretty well predicted a change in currency by 2014, Orbán mentioned no date. In fact, Zsigmond Járai, Orbán's former minister of finance and chairman of the Hungarian National Bank, today announced that "Hungary is not mature enough for the introduction of the euro."

So these were the main points of Viktor Orbán's speech yesterday afternoon. This morning Járai said something entirely different. He made it clear that they were his own opinions even though "there is some overlapping" between his ideas and those of Fidesz. As opposed to Orbán, Járai announced that within a week of taking office the government should announce "drastic tax cuts." If Járai thinks that a drastic tax cut will create jobs and lower unemployment, I think he is wrong. But I doubt that Járai will have the opportunity to put his ideas into practice. José Manuel Barroso made it quite clear to Orbán that the deficit projections couldn't be altered. Therefore Járai's call for a drastic tax cut will most likely be unceremoniously dropped.

What role will Járai have in a Fidesz administration if there is one? Perhaps he will have a seat on a committee entrusted with economic factfinding. According to Orbán "the goal of the committee will be the complete examination of the economy." This commission, headed by Mihály Varga, will be set up soon and its establishment "will close one of the gravest periods of the Hungarian economy." The future, on the other hand, will be bright. The newly-created Fidesz economy, said Orbán, "will think with a Hungarian mind, will build on Hungarian resources, and will use a Hungarian workforce." Mind you, at the end he added that Hungary still needs the multinational companies that help the country along. How important are they? Very. They employ 35% of the private sector workforce, produce 60% of the GDP and 65% of the country's exports. Another figure is also telling. The productivity of the multi-national companies in Hungary is eleven times higher than that of the Hungarian middle-size companies to which Orbán just offered "protectionism." He ought not to alienate foreign investors because the results might be disastrous. 

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Eva: “Could Fidesz possibly be thinking in terms of direct state-created jobs? There was one sentence that raised my curiosity: “In 2011 professional and regional companies with state participation will be established.” I’m trying to give meaning to this mysterious sentence but no coherent picture emerges in my head. Does this mean the establishment of private/public joint companies? Why would it be necessary to establish such companies? Who would be willing to be in partnership with the Hungarian state? I wouldn’t. Just think of the fate of the French company in partnership with the city of Pécs. How could the state dictate the level of employment to these companies? Where would the money necessary to invest in such partnerships come from? The whole thing is muddled, most likely because Viktor Orbán wants it to be muddled.”
How would this differ from the government-private partnership in the case of GM and others, in the US?
To be clear, I am not for this kind of partnerships anywhere…

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