Conservative economists on Hungary’s prospects

It was exactly a year ago that I wrote about the “József Eötvös Group,” organized by a number of conservative economists and legal scholars. In the choice of its name, the group honors József Eötvös (1813-1871), who was minister of education in 1848 and again between 1867 and 1871. Eötvös, along with Ferenc Deák and István Széchenyi, is one of the few admirable nineteenth-century Hungarian politicians whose moderating influence was eventually overshadowed by nationalist politicians with little wisdom.

Eötvös was a writer of some renown who joined the turbulent political life of the 1840s. One of his political aims was the reform of the inhuman conditions of Hungarian prisons. He also worked on the theoretical foundations of a future Hungarian parliamentary system and made sure that it became part of the program of the opposition. He served briefly as minister of education in the Batthyány government (March-October 1848). When, after the Compromise of 1867, he became minister of education again, he was at last able to put his ideas into practice. In the first few months parliament passed his bill for the emancipation of the Jews. A short while later, he completed a reform of the Hungarian school system. Finally, the Nationality Law of 1868 became the law of the land, which was a liberal document at the time.

Robert A. Kann in his monumental book A History of the Habsburg Empire, 1526-1918, called Eötvös an enlightened man and added that “had Eötvös’s and Deák’s spirit prevailed, the Hungarian treatment of national groups might not have been inferior to that administered by the Austrian authorities.” Today we would call him a liberal conservative. He is a perfect fit for those liberal-conservative intellectuals who want to offer an alternative to Viktor Orbán’s populism. Interestingly, liberal members of MSZP turned to Ferenc Deák as their idol and established the Ferenc Deák Circle. The two groups are not that far apart ideologically.

The Eötvös Group holds regular open meetings on defined topics. A year ago, when I reported on one of the group’s meetings, the theme was the nature of Viktor Orbán’s system. The key speaker was András Körösényi, a political scientist, who described Fidesz’s world as a political system based on Viktor Orbán’s “oligarchic interests.” It doesn’t really matter where Orbán’s critics come from: their ideas are quite similar. For instance, the liberal Bálint Magyar describes the same phenomenon as a mafia state.

Source: index.hu

This time the topic was the sorry state of the Hungarian economy. While the government is in the midst of a campaign to sell the idea that the economy is booming, the two economists who delivered lectures at the meeting, Tamás Mellár and László Csaba, painted a different, quite grim picture.

It is perhaps telling that while a year ago only a handful of people were interested in the group’s lectures and discussions, this time the place was packed. In fact, extra chairs had to be added, and even then some people had to stand.

Tamás Mellár told his audience that ever since the 1970s for every 1% in economic growth 2.5% of funding has been needed. Thus, between 2001 and 2010, a 17% economic growth required 34% in additional funding. The situation became worse between 2010 and 2015 when, to achieve 10% economic growth, the country needed 35% in additional resources. Most of this came from the European Union, but some of the money came from the nationalization of the private pension plans, loans, and depletion of some of the foreign currency reserves of the Hungarian National Bank. That cannot go on, Mellár declared.

What does Mellár suggest after the removal of the Orbán government? As far as economic measures are concerned, a new government will have to abolish the flat tax introduced by the Orbán government and replace it with a progressive income tax. He would also introduce a wealth or equity tax on the total value of personal assets over a certain limit, which would be one possible way of recapturing some of the public wealth stolen by Orbán’s oligarchs. Instead of forced industrialization, the government should pay attention to new technologies, new business solutions, education, and research. But in order to see any change, Hungarians must break out of the apathy that currently exists in the country. “Now there is no Russian pressure anymore. This time we ourselves caused all this trouble, and we must be the ones who get us out of it.”

Although the government’s predictions for next year are optimistic, László Csaba sees little hope for the expected great economic growth. Interest rates in the United States will most likely rise, and who knows what Donald Trump will be up to. Meanwhile, there is the refugee crisis, populism, low economic growth in Europe, the Russian-Ukrainian conflict, slowing emerging markets, and unpredictable oil prices. One cannot count on European Union subsidies forever. Hungary must rely on itself.

He is convinced that “without comprehensive reform of the education system there is no hope.” The government should leave higher education alone. Instead of constantly reorganizing colleges and universities, the government should concentrate on kindergartens and elementary schools because these are the crucial years where students’ futures are decided. As far as the government’s economic predictions promising high growth are concerned, “they are completely unfounded.” Hungarian GDP at the moment, calculated in U.S. dollars, still hasn’t reached its 2008 level. This is worrisome even if it includes the fact that the forint is now weaker against the dollar. “We don’t have enough capital, we don’t have enough manpower, we spend too little on research and development, and the external environment is not favorable. In fact, the only increase we can expect is an increase in debt.” As for the government propaganda regarding recent tax reductions, it is a sham because for each tax cut there are many new increases elsewhere. “There is a feeling of hopelessness in the country.” He concluded his talk with a Seneca quotation: “If one does not know to which port one is sailing, no wind is favorable.”

Still, there are some hopeful signs. The Momentum Movement’s introductory meeting was filled with interested people. The young organizers urged the audience to ask them questions about their political plans. On the very first day the activists gathered 10,000 signatures of the mandatory 138,000 and by now they reached almost 40,000. People have been standing in line to add their names to the list. The government seems to be taken aback; they didn’t expect such an enthusiastic reception to an anti-Olympics drive. Therefore, attacks on the group began in earnest in the many government-financed newspapers and internet news sites. Since the topic of the Eötvös Group’s next gathering will be “Do we need an Olympics?” pestisrácok naturally discovered a close connection between the learned economists and the young political hopefuls, which apparently does exist. All in all, one can see some early signs of a societal awakening.

January 22, 2017
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Joe Simon
Guest

Re: Colleen Bell encore

The US Ambassador implicitly passed judgement on you at HS.
She has expressed a balanced and professional opinion of Viktor Orbán and Hungary, compared to your querulous, pathological views dished up here every time. Yes, pathetic is the word.

petofi
Guest

Joe,

You’re English is quite good. I hope the basement-boys give you a bonus for it.

By the way, there is no ‘balanced …opinion of VO’, just as there is no balanced opinion of Trump. Both are charlatans and obnoxious narcissists. Their respective countries will suffer greatly.

FreeWheeling
Guest

Such a naive interpretation Joe. You’ll not in the same interview she said that she plans to run for office. Like a lot of younger political appointees, they try to use that as a step towards running for office in the USA or make professional connections so that they can get a paycheck down the road or trade up for a better appointment. Every so often Many of these appointees won’t try to rock the boat and play it safe in the expectations that their connections will help their progress. Hence, there’s no benefit in that political calculus to being forthcoming. In her particular case, she us hoping that the money she spent on her “tuition” to get this ambassadorship will help towards her getting a California State Assembly seat.

Roderick Beck
Guest

The truth is the truth. Orbán has undermined the foundations of Hungarian democracy and weakened its economic potential. PS: I know members of the US embassy. No one has a high opinion of Orbán Viktor.

Observer
Guest
Fidesnik Joe So, you have the gall to clamor for a balanced opinion on Orban? Why, have you EVER seen/ heard a balanced view in the Fidesz/Hungarian public media, where – mountains of mud tanks of venom have been poured in character assassination campaigns launched against everyone/anyone Orban doesn’t like, e.g. from earlier tirades against C.Bell or the US to Soros to Hadházi to migrants to the Gyurcany’s amortization campaign. – the state media on its doubled budget, dozen+ channels and country wide coverage was (illegaly) turned into Orban’s mouthpiece, – 95% of print media/copies is Fidesz owned or subjugated (after the Nepszabadsag destruction affair), – all private radio and TV stations, including those not owned by Orban stooges, are praising Orban or repeating state MTI news, and – every other outlet and form are used for praising Orban, e.g. the current “Hungary is growing stronger” campaign, “Hungary of the popular Victor Orban” that is, according to the brochure distributed. Add the bald faced lies about “700 000 new workplaces since 2010, most of them in the private sector” !?. Against this state size, brazen and ruthless propaganda machine we are trying to put some bits on the other side… Read more »
Observer
Guest

Sorry,

– all private radio and TV stations, including those not owned by Orban stooges, are praising Orban or repeating state MTI news, ATV, Hir TV excluded,

webber
Guest

All those stations are owned by Orban stooges, except for ATV, Hir TV, and RTL.
All radio stations, without exception, are controlled by Fideszniks.

bimbi
Guest

Webber @ 7:27 a.m.
Even Klub Radio?

Member

Yes, via Solomon Köves.

webber
Guest

ATV is turning more and more pro.Fidesz. Two days ago they ran a report about the fantastic achievements of Fidesz diplomacy in the US.

Ferenc
Guest

Some remarks and questions to the post:
1.there seems to be a gap between funding and economic growth, is it possible that this difference is in reality black money sucked out of the official economy?
if so (and I don’t know, therefore my questionmarks), that could mean:
2001-10: funding +34% against economy +17% => black money +17%?
2010-15: funding +35% against economy +10% => black money +25%?
2.”for each tax cut there are many new increases elsewhere”, seems very reasonable, but didn’t read nor heard about any specific, anybody know any such?
3.NOlimpia: I heard (directly) about people working for the Hungarian state, who are favouring the referendum request, but are afraid to sign for reasons of possible consequences for their work (off course no official pressure on them, but they feel such anyway…..). Their further thinking is that their own one signature will not matter now and they expect to be able to vote later in the real referendum.

Ferenc
Guest

OT, regarding propaganda campaigns:
I have experienced last year’s referendum campaign (those terrible blue billboards, which made me actively following Hungarian matters) and it’s aftermath (the 98% campaign).
Now the “Magyarorszag Erosodik” (abbreviation ME) is running with first adverts, now an ‘information’ folder, and who knows what they have in stock for later on.
All of these seem to me pretty pathetic and take more time, money, thinking from the OV/Fidesz government than real their policies.
I’m very curious about their previous campaigns: can anybody here name those and give possible links to more info?

petofi
Guest

Present topic aside, time for a dose of reality: read William E Connoly on, “Trump, Putin and the Big Lie Scenario”.

webber
Guest

excellent.

Istvan
Guest
Yes Petofi that was a very good essay, and I totally agreed with this statement “the democratic Left ( in the USA) needs to identify more young leaders who are charismatic in noble ways and who can inspire large constituencies as they counter the ugly appeal of Trumpian charisma.” But I would expand it to include those conservatives who still believe in democracy too. Bernie Sanders is 75 years old and the bulk of the leadership of the democratic left or right are over the hill. I would argue that Republican politicians on the right, like Marco Rubio who is 45 years old have completely collapsed their values of American democracy in favor of pushing forward parts of their agenda by now supporting Trump. Trump is virtually the same age as myself and reflects it too. But Americans don’t understand the big lie technique used in our own history, so they don’t get it in the contemporary context. So for example to get war authorization powers to increase our military involvement in Vietnam President (Johnson) of the USA allowed the Gulf of Tonkin incident to be presented as fact when much of it was a big lie as proven when… Read more »
Guest

From the info on Eötvös in wiki he must have been a great person!
And rather OT:
His son was Eötvös Loránd, a well known physicist who “proved” (showed experimentally) the equivalence of inertial and gravitational mass as a base for Einstein’s general relativity theory …
His name also lives on!

webber
Guest

OT, but perhaps useful for Hungarians and Americans alike:
https://www.facebook.com/timothy.david.snyder/posts/1206636702716110

wrfree
Guest

Webber.. OT? You jest. Everything talked about in here revolves around Snyder’s axis of thoughts. Thx for the post.

wrfree
Guest

And to add. I hope Joey S up there takes the time to envelope himself in some reading that ain’t propaganda.

Margot
Guest

Thank you Webber, for this link!

bimbi
Guest

Unfortunately, any discussion of “economics” immediately plunges us into what is now called “alternative facts”, or as we better know them in Hungary “government lies”. Campaigning for the 2018 elections (still nominally 15 months away) has already started (widespread Vona/Gyurcsany ads) and now the Minister of Propaganda, (aka Alternative Facts), has circulated to Hungarian households a glossy 16-page brochure headlined (with upward-pointing arrows) “Magyarország Erősödik”. Each page contains some (unsupported and unqualified) statement on how much better things are (although the, doubtless, substantial increases in the bank balances of Orbán, Rógán, Matolcsy, Lázár, Tiborcz and Mészáros are not specifically detailed). Yet all this is belied by the statement above:

“Hungarian GDP at the moment, calculated in U.S. dollars, still hasn’t reached its 2008 level”

And this despite the billions of Euros (~ € 30,000,000,000?) pumped into the government’s coffers by the EU. The shamelessness of this criminal organization leaves one breathless, but maybe “Magyarország Erősödik” only refers to the government’s collection of private armies…?

bimbi
Guest

The brochure “Magyarország Erősödik” also invites recipients to remain in tough “with us” by submitting name, address, e-mail address and mobile and land line number. No doubt there will be a deluge of “alternative facts” from now right up to the election, and all at tax payers’ expense.

bimbi
Guest

2nd line: “touch”, not “tough” – sorry.

vomart huli
Guest

I am afraid as the daughter of a Holocaust survivor.

Roderick Beck
Guest

Their analysis sounds credible. Would love to see an English translation of the speech.

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