The new Hungarian government’s communication skills

Most people can't understand what happened to the famous Fidesz communication skills. What happened to the "parrot commando"? How is it possible that the well-oiled communication machinery of the party has practically ground to a halt? Some commentators are convinced that "the communication confusion" is actually planned. Well, if it is, the strategy is more successful internally than abroad; the financial markets didn't appreciate the cacophony emanating from Budapest.

The interesting thing is that in spite of the very serious consequences of "bad communication," Fidesz leaders don't seem to learn from their mistakes. Most likely they don't even think that they were mistakes. Take Lajos Kósa, for example. He refuses to admit that his reference to the country's dire financial situation that may result in bankruptcy was a dreadful mistake with very serious ramifications. An international panic ensued, but in the last three months Kósa repeated several times that he was "just telling the truth."

I was astonished to hear this morning that Kósa still persists with this fable. Because I can't imagine that he would without authorization stick to his story, I suspect that this babel of voices coming from leading Fidesz politicians is not just communication gone wrong. I am more and more convinced that Viktor Orbán has some plan which is just not clear to us. Of course, I might overestimate the Fidesz strategy that worked like clockwork in the past. It is very possible that governing is a different cup of tea. One thing is sure. The messages are all over the place. György Matolcsy talked about a tight budget and bowing to the demands of the European Union while László Kövér claimed that austerity was the wrong answer to the country's ills.

It was only a few days ago that György Matolcsy at last uttered the words that investors were waiting for–that Hungary will do everything in its power to keep the deficit under 3% in 2011. This morning Lajos Kósa came out swinging against the international financial markets, maintaining that they are built on lies. As for the exchange rate, it is no more than "one gigantic game." According to Kósa the strengthening of the Swiss franc against the euro is not the fault of the Hungarian politicians. Of course, this is true, but Kósa neglected to mention the weakening of the forint against the euro. Viktor Orbán also claimed that the forint's exchange rate is not affected by internal developments. Anyone who would like to read a cogent explanation of what has happened to the forint since Viktor Orbán became prime minister should visit Ferenc Gyurcsány's first article of a series in galamus.hu.

The prime minister gave a speech in parliament in which he seemed on the surface to back up Matolcsy. Analysts in London had written that it was all well and good that Matolcsy promised a tight budget for this year and the next, but they really didn't believe him because he had said so many different things at different times. They wanted to hear these words from Viktor Orbán himself. To tell you the truth, I didn't think that Viktor Orbán would ever reaffirm Matolcsy's words, but today in parliament he did. Or did he? Here he is on his way to the podium today to deliver his spin on the government's economic policy.Orban in parliament 10-09-13

Let's recap what he said. He was very firm on this year's 3.8% deficit, but when it came to 2011 he simply said that "he would suggest no more than 3%." Knowing the very sloppy Hungarian media reporting, I suspect that few people will notice this interesting choice of words. I already checked Népszabadság's article on Orbán's speech and the word "suggest/javasol" couldn't be found. The same thing happened after Matolcsy's announcement about the government's decision to stick with the promised numbers. Most of the reports, including the foreign language ones, forgot to mention that Matolcsy set "conditions" to such a low deficit for next year. I was my usual critical self in this blog: I not only mentioned all five conditions but emphasized their possible significance for the future.

Today Orbán may have uttered the critical numbers, but he did not backpedal on his basic economic message. Yes, there will be a very tight budget in the next two years, but his "economic policy will not be based on speculation, indebtedness, and austerity." It will spawn an economy that will create jobs.

Orbán knows that the government will have to introduce an austerity program although naturally it will never be called that. So he has to explain why Hungary will face a couple of difficult years. Allegedly it is not because of the inherent problems in the Hungarian economy but because "we have no reason to believe that the world economic crisis is over." That's why, he said, "we must count on further fluctuation in the value of the forint." This is an attempt to blame outside forces for the austerity program that must come if Hungary wants to remain solvent.

He continued: "Adjusting our steps to the movements of the international markets is important, but the last 100 days proved that this is not the number one solution and especially it cannot be the final goal. Adjustment, compliance is necessary but the world economy is just 'one of the important' conditions. That's why we will attempt to improve the competitiveness of the Hungarian economy through our own resources." I might ask why, if Hungary is so self-reliant, it is accepting EU funding to improve the competitiveness of the Hungarian economy through the Széchenyi plan.

In any event, it seems to me that Orbán's "on the one hand on the other hand, them against us" speech lends credence to the hypothesis that the verbal confusion is all planned and that double talk is still the order of the day. 

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Mark
Guest
“As for the exchange rate, it is no more than “one gigantic game.” According to Kósa the strengthening of the Swiss franc against the euro is not the fault of the Hungarian politicians. Of course, this is true, but Kósa neglected to mention the weakening of the forint against the euro. Viktor Orbán also claimed that the forint’s exchange rate is not affected by internal developments. Anyone who would like to read a cogent explanation of what has happened to the forint since Viktor Orbán became prime minister should visit Ferenc Gyurcsány’s first article of a series in galamus.hu.” I’ve quoted such a large chunk of the text because everyone quoted in here is really playing the blame game, instead of offering any serious contribution to discussion about economic policy. Fundamentally, HUF is seriously overvalued – way too overvalued if the economy is to produce sustainable growth and jobs. Everyone however knows were say HUF to fall to its equilibrium exchange rate with the Euro, the result would be a disaster for those households and businesses who have borrowed in CHF – and which would also cause problems for the public debt. The debate here ought to be about how… Read more »
Paul Haynes
Guest

Mark – where do you think the “equilibrium exchange rate with the Euro” is? And if the forint falls against the Euro, does it usually fall against Sterling by the same amount?

Mark
Guest
Paul Haynes: ” where do you think the “equilibrium exchange rate with the Euro” is?” It is very difficult to say exactly – somewhere between HUF 340 and HUF 370. This sounds fairly shocking, though it is worth mentioning that I am not the only person who has come to conclusions of this order – when the higher of these two figures was put to Péter Róna in a newspaper interview earlier in the summer his printed reaction suggested he didn’t think this figure was outrageous. Paul Haynes: “And if the forint falls against the Euro, does it usually fall against Sterling by the same amount?” That depends on the relative weakness or strength of Sterling to the Euro, and since the Euro was introduced that has fluctuated. Sterling had an especially bad time of it in 2009, and was probably slightly undervalued, though with the impact of the Greek crisis on the Euro we have seen a slight correction. On the other hand Sterling was strong for much of the earlier part of this decade. I suppose it depends on whether you think the UK economy will outperform the Eurozone economy and/or whether the policies of the UK government… Read more »
cba
Guest
Éva: Perhaps you were right first time with the comment that you “might overestimate the Fidesz strategy… It is very possible that governing is a different cup of tea.” I have it from a very good source , for example, that the Orbán announcement backing the 2008 referendum was not seriously discussed within the party at any point, and came as a total shock to the entire Fidesz leadership. Playing fast and loose is possible in when opposition in this country, when the international dimension is negligible. While in the wilderness, Fidesz MPs simply developed a now entrenched habit of shooting their mouths off without fear of any significant consequences, international or otherwise. Fidesz attempted to tighten their communications up earlier this year: you probably already know that most or all of their MPs’ mobile phone numbers were changed and centralised in the spring, making it far more difficult for any off-message statements to reach the press. Fidesz is stalling for time before the local elections, of course, but to give this issue a further international perspective, Orbán would never ever allow a PR chief to wield the power that Alistair Campbell did in the New Labour era, even assuming… Read more »
Mark
Guest

cba: “And if it looks like confusion, sounds like confusion, and is causing confusion, then it probably is.”
Quite. But it may not be communication confusion. After all if a government doesn’t know what it is doing, it’s communication is unlikely to be coherent. And this seems to me to be what is happening. In fact I think this news item really demonstrates the extent of the hole the government have dug for themselves:
http://index.hu/gazdasag/magyar/2010/09/14/zarszamadas/

Passing Stranger
Guest

In my experience, people tend to overestimate the ability of governments to control events, and underestimate the sheer stupidities politicians are capable of. Undoubtably true of communications as well.

Pásztor Szilárd
Guest

Most “analysts” and people fail to mention the basic reason behind the Forint’s current vulnerability and volatility. And it is government debt. High govt debt means high exposure, and together with Hungary’s steadily decreasing economic growth it sends the message “we’re vulnerable”. So we are indeed.
How was govt debt in 2002 when the first Orbán govt handed the country over to Medgyessy and MSZMP? 56%.
How is it now? Over 80%.
Who were in power during these 8 years?

Paul Haynes
Guest

Szilárd, much as I admire your determination to come on here and defend Orbán at all costs, I wish it was matched by an equal ability to argue about the issues under discussion, and not just constantly resort to blaming the MSZP for everything.

Paul Haynes
Guest
Mark – thank you for your reply. At first I was quite relieved – then I remembered we were talking Euros! I translated your figures into Ft to the £ (at the current £-Euro exchange rate) and got a shock. They work out at between 400 Ft to 440 Ft to the £ – more or less where the forint was 10 years ago. For the foreign holiday maker this is good news, but for those of us with money tied up in bricks and mortar in Hungary, this is a nightmare. Our flat cost 15m Ft six years ago (virtually all my redundancy!) and its value has probably failed to even keep up with inflation (British, never mind Hungarian), but with the forint dropping to this sort of level, we could be looking at losing thousands (of pounds). And if I find this depressing with a ‘mere’ 15m Ft invested, how much worse for those who have invested serious money in Hungary over the last few years? And, talking of Hungarian inflation, another question for you, if you don’t mind? It’s long puzzled me how an economy such as Hungary’s copes with such high inflation. When I first visited… Read more »
Mark
Guest
Paul Haynes: “And, talking of Hungarian inflation, another question for you, if you don’t mind? It’s long puzzled me how an economy such as Hungary’s copes with such high inflation.” The answer is that it doesn’t cope very well. Wage and price inflation has exceeded that in those countries which are Hungary’s principal markets (the Eurozone, but especially Germany and Austria) and this has fed a decline in overall competitiveness. This phenomenon affects most CEE economies as the following Eurostat table shows (and Hungary is by no means the worst of the current offenders – indeed you will notice that for all of the talk about Slovak-style reforms providing the route to an economic miracle the underlying situation in that country is worse than in Hungary, and this will eventually feed through into its headline economic performance): http://epp.eurostat.ec.europa.eu/tgm/table.do?tab=table&init=1&plugin=1&language=en&pcode=tsdec330 What has been happening is that Hungary has been progressively pricing itself out of its markets. At the same time a number of characteristics of the economy have kept inflation high – a highly segmented, if not polarized labour market, in which wage settlements for insiders seem divorced from the dire employment situation, because of the way this polarization reproduces extreme labour… Read more »
Mark
Guest

Paul Haynes: “And, if we can’t afford to live in Hungary, how on earth does the average Hungarian manage?”
I wish that more people asked this question, because there is an assumption in mainstream debate that welfare spending and pensions can be slashed almost without consequence. You would sometimes think that the desire of people to protect what they have was some kind of pathology, the way that some often talk about social and economic issues. While very many in Budapest are deeply frustrated by the economic situation and their lack of prospects, the situation in ex-industrial and some rural areas is nothing short of a social catastrophe. There are some deep-seated and hard economic realities, but there are some people who really can’t afford to pay any more. Their voices, however, are never heard in public debate. One might hope that rather than awarding massive tax cuts to the rich minority, a future government might expect those that can to contribute a fair share of the cost of putting the economy on its feet.

Pásztor Szilárd
Guest

@Paul Haynes: do you, by the slightest chance, have anything to say about the numbers I mentioned?

Pásztor Szilárd
Guest

Mark: you are mixing things up again. You talk about “tax cuts to the rich” instead of “tax cuts to the ACTIVE” which would be the correct wording.
Sigh, it means something different, yes. That’s the main idea.

Gábor
Guest

Dear Szilárd, I’m sure you earn more than 230000 HUF per month therefore the 16% flat-tax will be a significant easing of your unbearable burden and you are indeed very active in the discussion here. However, allow me to remind you that the average wage in Hungary is somwhere around 200000 HUF and one can safely assume the median wage being even lower, making the introduction of a 16% flat-tax effectively a tax hike to the majority of the working population. (The inflection point is somewhere around the above mentioned 230000 HUF.) The conclusion I would draw is that people not earning enough to being benefited by the flat tax are not ACTIVE in your opinion which is an outright reactionary point of view. Nothing quite surprising from such an adamant Fidesz fan.

Passing Stranger
Guest

@Gabor. I doubt we’ll see this flat tax put into action. It won’t make Orban very popular. He might as well tell his core voters he wants to eat their babies.

Mark
Guest

Passing Stranger: ” I doubt we’ll see this flat tax put into action. It won’t make Orban very popular. He might as well tell his core voters he wants to eat their babies.”
I wonder. The problem is that taxation specialists are among the richest third of the income distribution who will benefit the most, and consequently none of the discussion reflects the basic facts of what the majority earn.
I can imagine that the government will not realize the tax rise they are foisting on the majority until it happens. In the UK something similar has happened twice – once with local government taxation to Margaret Thatcher, and the other with a headling income tax cut that was actually an increase in the taxation of low earners under Gordon Brown. The fact that neither of them are no Prime Minister is not unconnected to their taxation changes. I’m sure that FIDESZ is more than capable of walking into the trap, especially as their supporters show such blissful ignorance of the actual nature of the proposals, and seem to want to deny their impact agressively whenever this is pointed out. But then that is more their problem, than mine …..

Passing Stranger
Guest

@Mark. What they will do is introduce a tax reform, call it a flat tax, but it will not actually be a flat tax. It will probably be higher than 16 % with a reference to the crisis, and be combined with numerous stealth taxes. What surprises me is that theo pposition is not loudly framing the flat tax as a tax hike. If they started doing so now, then it will be too late for Fidesz to change the impression later on.
In fact, this should have been the MSzP’s central message during their local election campaign.

Pásztor Szilárd
Guest

@Gábor: what you say has no relevance, not even for my case. Yes I’d benefit from flat tax as today I’m taxed to death, the single highest among the countries in Europe. Who can blame me for supporting flat tax?
But what’s more important than that: it simply favors the working population. Most people here seem to ignore the simple fact that Hungary’s economy suffers most from the extremely high proportion of inactive people. Introducing flat tax would send the message “we favor the active” which is exactly what Orbán and his government has always been doing. Support middle class and support those who are willing to work and help themselves.

Passing Stranger
Guest
@ Pasztor. “what you say has no relevance, not even for my case. Yes I’d benefit from flat tax as today I’m taxed to death, the single highest among the countries in Europe. Who can blame me for supporting flat tax?” It is clear that your own greed and personal benefit it more important to you than the interests of the overwhelming majority of working Hungarians. You constantly have ‘patriotism’ and ‘nation’on your lips but in reality you expect normal working Hungarians – to fund your middle class lifestyle. That is the main message you are sending. These people aren’t inactive: they have busy jobs but lower salaries than you have. Don’t teachers work? Or busdrivers? Or factory workers? In fact you will be sending the opposite message: to people on the very lowest incomes, it will be more lucrative to cash benefits, than to work. It is true that there are too many inactive Hungarians, but there are more productive ways of tackling this. Reform the disability pension system, have everyone re-examined. Change free childcare and other expensive freebies into means-tested systems. Get women to work so they can be ‘active’ in the labour force instead of keeping them… Read more »
Mark
Guest

Pásztor Szilárd: “Support middle class and support those who are willing to work and help themselves.”
These two things are not the same things. Hungary’s middle class, like Italy’s is not the same as those in the liberal, market-based cultures in north-western Europe. In countries that rely on relatively low wages to catch up, and with governments committed to “christian democratic” politics “support for the middle class” has meant using prefererntial state subsidies to create a middle class. This is what happened in Italy in the 1950s, and is really what the Orbán goverment did between 1998 and 2002. The result is a middle class which is dependent on state redistribution, and clientelism, and which is hostile to notions of competition and merit.
Promoting economic independence is, however, a very good idea indeed. But that needs jobs and jobs for people who live in poor eastern Hungarian villages with no or little transport, among others. It isn’t the same thing as one “class” trying to invert the class war policies of the Rákosi era to secure for a small group of people state subsidies and low taxes at the expense of the majority.

Pásztor Szilárd
Guest

@Passing Stranger: I refuse your malicious comment of me being greedy simply for not wanting to finance a large amount of inactives with my own tax. Yes it is very important to re-examine disability pensions and such to decrease the number of inactives.
But at the same time taxes must be SIGNIFICANTLY cut because working population is suppressed to death. And a 16% flat tax doesn’t hit those with lower incomes, it just favors them less, despite what your manipulative rambling suggests.
Your comments repeatedly show that you do not live here and in general have no clue of what is going on in this country and why.
@Mark: wrong, middle class was not supported by state subsidies during Orbán’s first governance, they were simply given more opportunities to emerge on their own. These two radically differ!

Pásztor Szilárd
Guest

@Passing Stranger: BTW, what do you think about the MSZP having increased the government debt from 56% to 80% during their reign, something the consequences of which you now blame on Fidesz?

Mark
Guest

Pásztor Szilárd: “And a 16% flat tax doesn’t hit those with lower incomes, it just favors them less”
I have to say, I really enjoyed this comment. I knew before I saw it that Szilárd was a propagandist, but he seems to have turned to self-caricature, after all, this could have walked almost directly off the pages of George Orwell.
Pásztor Szilárd: “wrong, middle class was not supported by state subsidies during Orbán’s first governance, they were simply given more opportunities to emerge on their own.”
I greatly enjoyed this too. Whaever next – I suppose we’ll be seeing Szilárd argue that the government are not really subsidizing MÁV, but just giving it opportunities to appear to balance its books on its own!

Passing Stranger
Guest
“@BTW, what do you think about the MSZP having increased the government debt from 56% to 80% during their reign, something the consequences of which you now blame on Fidesz?” You are barking up the wrong tree. I really have very little sympathy for the MSzP and the hole in their wallet. The problem is, is that Fidesz doesn’t have any answers to solve these problems. A 16 % flat tax is only likely to increase debt, certainly if state spending is not reduced. Anyway, you are hardly one to justifiably complain about people avoiding questions. You still have not explained just exactly how a teacher, a bus or train driver or a factory worker are ‘inactive’. Of course a 16 % flat rate does hit them if they previously paid no tax. Imagine yourself paying an extra 10 % or so. That is how these people will feel. In fact these teachers will also be funding ‘inactives’. They will also be funding your 30% or so tax break. Trust me, they will not like you for it, or your vezer. In fact you will still be supporting the real ‘inactives’ because benefits are usually not taxed. Or will they… Read more »
Pásztor Szilárd
Guest

@Passing Stranger: “The problem is, is that Fidesz doesn’t have any answers to solve these problems”
Wrong. Fidesz has a definite answer and it is cutting taxes. The problem is that the EU is using us as an example country where no debt higher than the one agreed on with the Bajnai government is accepted. This is something most EU members don’t accomplish! How on earth should a government induce economic growth with its hands tied? The EU wants austerity and anti-Fidesz propagandists (as everyone here, but let me remind you, you’re still a small minority) want it too. You are laughing at the new government that is struggling with the circumstances forced upon it.
How do you think a bus driver or a factory worker pays no tax? Do you know who pays no tax? Do you even have the slightest idea of what the Hungarian tax system looks like today?
I’m not hanging on to flat tax anyway – I’m hanging on to a significant tax cut.

Paul Haynes
Guest
“@Paul Haynes: do you, by the slightest chance, have anything to say about the numbers I mentioned?” Sorry, Szilárd, I missed this comment and then it took me a while to work out what you meant. My answer (and note I AM answering your question, something you frequently fail to do) is that I don’t have anything much to say about two numbers quoted by a poster on a forum, but not supported by any sources – especially when I have no idea of their context or what other numbers and facts apply. To explain what I mean, I’ll give you two examples from British politics (something I do know a little more about). Under the Labour governments of the 70s, inflation was extreme, reaching (I believe) 25% at one stage, and yet it was ‘only’ 8% at the time Thatcher took over in 79. And it soon rose again under her government. So, we therefore have a situation where a Tory supporter could post statements, quite accurately, attacking Labour for years of high inflation, but where Labour supporters, equally accurately, could claim that Thatcher was unable to maintain the ‘low’ inflation rate she inherited from Labour. Both posts are… Read more »
Paul Haynes
Guest
Mark – again, thanks for your replies. This has been a most informative thread. Moving from inflation to tax and income, I have some further questions (not just for Mark, I’d be glad to hear from anyone who can enlighten me): Firstly, a simple one – what exactly is the Hungarian income (etc) tax situation at the moment? And what changes are Fidesz proposing? (I should know the answer to the first question, but questioning my family-in-law on this subject has resulted in utter confusion!) Secondly, a more general question about income: Our Debrecen flat is in a block of 12, so I am fairly well informed of the jobs, lifestyle, etc of several of our neighbours – and also of how much they pay for their flats. Some have well paid jobs and/or two incomes, so presumably have few problems paying the mortgage, etc. But several of these families are on quite low incomes, with only the husband in work, and yet they not only seem to live quite comfortably, but can afford to run a car and have the occasional holiday. Two specific examples: One neighbour is a driver/mechanic in the army, his wife is still on maternity… Read more »
Passing Stranger
Guest
Other EU countries indeed have higher deficits than Hungary (not: debts). They are not meeting 3% of GDP standard they themselves have set in the Stability and Growth pact on the Euro, and one day, I suspect, the eurozone will pay dearly for it. You would be right about double standards if this was a discussion about Hungary entering the eurozone. However, this is about Hungary’s ability to borrow. The difference with Hungary is that they they are not borrowing massively from the IMF. Hungary is not being treated differently as far as I am aware from Greece. What does not help Hungary’s case is that Orban several times mentioned ‘restructuring’ of loans and hinted at the possibility of not paying them back. Obviously that cannot be tolerated. I’d love to tell my bank I won’t pay back my mortgage, but somehow I think I would be laughed at. Nor do Lajos Kosa’s remarks help very much when trying to negotiate terms. I don’t think Papandreou was so arrogant when dealing with the IMF. When negotiating it is not usually a clever tactic to insult your partner. If you want more lenient terms, this is not the way to get… Read more »
Passing Stranger
Guest

how on earth did a comment I posted elsewhere appear here? Eva there is something wrong with your blog, i have seen this happen several times.

Gábor
Guest

PÁsztor Szilárd: We can safely assume your definition of “active” in economic terms doesn’t realy on elemnts like having a job, working regularly for a salary/contracted income etc. even not in case of people in “productive” sectors (according to KSH data in most sectors of the economy average salary is lower than 230000 HUF, leading to a tax hike for these people). Being active means earning more than this 230000 HUF and having the subjective feeling of being taxed to death. What I’m really curious about after such a defintion and after experiencing Szilárd’s firm belief in Fidesz’s policies and action how could he reconcile it with the fact that the flat tax will be the most benefitial to those greedy bankers who are the primiary target of Fidesz at the moment? (The salaries are the highest in the financial sector.) Do these bankers deserve such a reward?
Apart from such demagogic questions what do you think about the idea of nationalizing the private pension system? If the Fidesz will do it they will spend savings of the active population (active even according to your reactionary defintion) on inactive pesnioners today.

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