Half time: 2006-2008 (II)

As promised, let's review the Gyurcsány government's failures. First, there was the ill-fated plan to build a separate, modern government complex to which all the ministries would have moved. In theory, the idea was good. At the moment ministries are housed in old, inefficient buildings in downtown Pest. These buildings were not erected to house ministries or any kind of offices. Some of them were luxury apartments built in the late nineteenth century. Heating is very expensive because of the high ceilings. The rooms are too big for individual offices. Communication among ministries is cumbersome. By contrast, the proposed complex would have had a smaller footprint and maintenance would have been less costly. But the proposed construction, introduced in the middle of an austerity program, became a prime target for the opposition. And that wasn't the only problem: inadequate preparation, charges of corruption, professional criticism about the projected costs, all led to scrapping the project. It surely added to the government's woes.

The other very serious failure was the reform of the health care system. From the beginning there was friction between the coalition partners: they had entirely different concepts of the future of Hungarian health care. The final shape of the compromise bill was less than satisfactory. It is not at all sure whether the new health care system would have functioned properly. However, we will never know the answer to this question: the referendum put an end to the whole thing. We are more or less back to square one except for those few changes that survived the Fidesz onslaught on healthcare reform. Again, the coalition partners lost their heads and didn't know how to handle the situation. At the beginning they acted as if they didn't take the referendum seriously, but half way through they began to campaign against the three "yeas" and urged their people to go and vote. That was, in retrospect, a mistake. There should have been better data available about the electorate's willingness to go and vote. Today we know that the only hope was that not enough people would bother to vote. In this case the same thing would have happened as in December 2005 when the referendum on the dual citizenship of Hungarians in neighboring countries failed. And in this respect, SZDSZ committed the worst errors: posters urged people to "say no to socialism!" This in a country where obviously socialism doesn't have a bad ring! On the contrary.

Despite these government failures, there is no economic or social crisis in Hungary. One can, however, talk about a political crisis. There are many reasons for this development. Gyurcsány's reforms, his whole approach emphasizing personal responsibility, were basically alien to the majority of Hungarians. The party that seemed united during the campaign quickly became fragmented as its popularity dwindled. After each meeting of the party leaders, some anonymous sources talked to the press and often without any foundation let their imagination wander. They talked about the dissatisfaction inside certain circles with the prime minister and his policies. They speculated who would take Gyurcsány's place. One also ought to mention the friction between MSZP and SZDSZ. One event sticks in my mind: after an extreme right atrocity Gyurcsány talked about the neo-Nazi danger at a press conference. At the same event, five minutes later, Mátyás Eörsi, then head of the SZDSZ parliamentary delegation, got up and announced that there was no such danger. The opposition was delighted. In general, SZDSZ leaders kept threatening the government to withdraw from the coalition months before the actual break. If the MSZP and Gyurcsány don't do this or that, they are leaving. While this was going on in government circles, Fidesz was absolutely united. Not a hint of criticism of the head of the party.

Thus we have arrived at another source of the government's poor showing: its opposition. For the first time in Hungarian history we have a party that József Debreczeni calls a "populist-fundamentalist force" that uses mostly extraparliamentary tools: leading masses to the streets, manipulating the electorate and news, using referendums and the threat of referendums to paralyze the work of the government and parliament. Politicians of the left and center, left-liberal intellectuals, even the media simply don't know how to combat this powerful force.

However, I see some change in the last month or so. The change didn't come because the government spokesmen suddenly became so clever or because the dwindling left-liberal media all of a sudden found its voice. No, it all began with Viktor Orbán's colossal mistake when his chat with the young political scientists became a bit too relaxed. Orbán said immediately after the contents of the speech became public that he didn't mind that the speech leaked out. By now I'm sure he does mind it. Very much. Two polls have come out with very similar results: Fidesz has lost a sizable voting bloc. A five or six percent loss in one month is serious business. Today we learned that Medián conducted another poll, this time specifically asking people what they thought of the speech and Orbán's new austerity program. An overwhelming majority has a very negative reaction to practically everything Orbán proposed from "freezing pensions" to "stopping investments and road construction." Well over 60% of them said no to this new austerity program that "will be very painful for very many people." And now there is Gyurcsány who says: "Thank you very much for all your sacrifices in the last two years. They were not in vain. From here on there is no need for more sacrifice. From here on the road will lead to a better life." Which plan will be more popular?

József Debreczeni wrote a piece lately with the title  "Joseph Leopold II or Gyurcsány in half time?" Who was Joseph Leopold II? Well, there was a Joseph II and there was his brother Leopold II. Both were sons of Maria Theresa. Joseph II ruled for ten years; he was full of fantastic plans for reforming his whole empire, including Hungary. In order not to have his hands tied by the Hungarian consitution he never allowed himself to be crowned, an act that would have obliged him to swear allegiance to the Hungarian constitution. Ten years later, on his deathbed, he withdrew all his reforms. A crushing defeat. Then came Leopold II who in two years managed to patch up things with the Hungarian nobility and even succeeded in introducing some of his brother's reforms.

Debreczeni brought up Joseph II because a lot of Gyurcsány's critics compared him to Joseph II and predicted his failure just as the overzealous Joseph failed at the end of the eighteenth century. But as Debreczeni says, the comparison is not quite apt. Gyurcsány governed in a constitutional manner unlike Joseph. Moreover, Gyurcsány most likely has two more years and after Joseph came Leopold. Surely, Orbán knows that (even if he wasn't thinking of Joseph and Leopold because his historical knowledge is limited to high-school history) and that's why he wants those elections right away. Politics is full of surprises. We will see.

Comments

[NWO]

Eva-

Without question, from a policy perspective, the failure of health care reform has been both the biggest failure and disappointment of this Government. This failure is reflective of a larger problem both within the governing party and within the society at large, and that is fear of real financial and social reform. Both the Government and the public, at large, have shown themselves to be inherently conservative, and as such committed to the status quo (despite-oddly enough- being unsatisfied with the current status quo). On taxes, much of the public is really hapy with the current system that allows for a lot of quasi-legal loopholes and where cheating is not considered a bad thing.

In a larger sense, Gyurcsany's primary failing was that he was less than candid in fully explaining what needed to happen in Hungary. He understands what still needs to be done, but most of his Party does not understand and does not want to hear the truth. As such, he has still never set out for the public properly the case for reform, and he still is less than fully honest with the public about what the real short term and long term implications of not reforming are. For this type of frankness, one needs to listen to Simor or even more so Bokros. When the "truth" came out in Gyurcsany's infamous speech, the reaction was harsh (because he had not been brave enough to tell the public the truth from the begining) and much of his credibility was lost. There is no doubt that the tactics of FIDESZ have also poisened the well, but this to a large extent must be expected (it is rare that parties will find a grand compromise in the interest of the country-see Ireland in the 1980s).

Finally, though it really has little impact in Hungary, I would also mention that Hungarian foreign policy has been largely ineffectual under this Government. Speaking to people in Brussels, they have been disappointed with Hungary and its relatively negligible impact in the EU. The Commisssion expected the Czechs and Poles to be difficult and not co-operative, but they expected the Hungarians to be a much more positive and forceful participant in EU discussions. The problems in Brussls started by making a horrible choice of Kovacs as the Commissioner representing Hu. He was judged incompetent to be responsible for Energy Policy, and is seen as a purely political appointment. On other fronts, the U.S. has also been very disappointed with Hu., because largely of its inconsistent positions on various issues and in particular on how it has played the piepline politics. This is in part why Bush has refused to meet Gyurcsany in Washington this Spring. On the Russian front, I am more sympathetic to Hungary's real politic energy strategy and trying to win over the Russians and secure for themselves a better deal on gas imports. Nevertheless, I sense there is no larger strategic vision for the country, and instead all foreign policy actions have been largely short term tactical moves.

[Adrian]

NWO,

"On taxes, much of the public is really hapy with the current system that allows for a lot of quasi-legal loopholes and where cheating is not considered a bad thing."

I think that what has been achieved in this area is already remarkable. It would be interesting to know what proportion of the the deficit reduction has been acheived simply by increased collection of taxes. I am delighted to hear of acquaintances (holiday home and yacht in Croatia) having to hold off buying a home for their adult children because the taxman might ask where the money came from.

I am however still completely astonished how every Hungarian I know - including my wife, who has listened to me rattling on about this for years - thinks it's foolish not to cheat the taxman. There is a massive public education campaign to be realised here - the necessary link between public services and taxation. I don't think Gyurcsány can be blamed for not making the case adequately, unlike in the UK there is no popular knowledge of economics, but there is tremendous cynicism. Firstly, he wouldn't be understood; secondly, he wouldn't be believed.

Having said that, it seems that a campaign is underway. Yesterday, a 24 page pamphlet came through the letter box, full of interestingly presented statistics about the government's program. It has a full page graphic on the first and last pages of a referee's arm showing a "fair play" card. The message is "Köszönjük a tistességesen adózók nevében! 200 000-rel több TB-jarulékfizető, Igazságosabb közteherviselés". This is beyond the limit of my Hungarian, but I think it translates as "we thank, in the name of honest taxpayers, the 200,000 more health insurance payers, it's a more fairly shared burden"

The pamphlet is Called "új Magyarország", I hope so.

[Eva S. Balogh]

NWO: "On taxes, much of the public is really hapy with the current system that allows for a lot of quasi-legal loopholes and where cheating is not considered a bad thing."

May not be so. Did you see the Marketing Centrum's latest findings (today's Népszabadság) about the necessity of reforms? It is encouraging. People start to realize that those loopholes hurt them too.

[Eva S. Balogh]

NWO: "For this type of frankness, one needs to listen to Simor or even more so Bokros."

We will have quite a discussion about Bokros in the future because I began to be disenchanted with him months ago, and by now, I can hardly listen to him. In today's blog I will explain why.

[kincs]

It is interesting that the public is coming around to the idea of reforms after the leak of Orbán's plans for the economy. Apparently, 74 percent of Fidesz supporters think some kind of reform is necessary.
At the same time, as Eva said above "An overwhelming majority has a very negative reaction to practically everything Orbán proposed from 'freezing pensions' to 'stopping investments and road construction'. Well over 60% of them said no to this new austerity program that 'will be very painful for very many people'."
It seems that people are in favour of reform, so long as it doesn’t cost them anything.
With Orbán having said that reforms are acceptable, even necessary, and with the poll showing that most people favour reforms, conditions have never been better for an open social debate on economic policy.

[Eva S. Balogh]

Kincs: "With Orbán having said that reforms are acceptable, even necessary, and with the poll showing that most people favour reforms, conditions have never been better for an open social debate on economic policy."

Agreed. It seems though that change of attitude will not help Fidesz. The party just lost more than half a million voters in May. See Szonda Ipsos poll in Népszabadság.

[Adrian]

More happy taxpayers:

"In 2005, the number of small partnerships declaring a taxable income was 125,000, while in 2007 some 273,000 partnerships were ready to pay taxes. The corresponding figures for freelancers was 111,000 in 2005 and 241,000 in 2007, a definite sign that fewer businesses were hiding their incomes."

http://english.mti.hu/default.asp?menu=1&theme=2&cat=25&newsid=253323

[Eva S. Balogh]

Adrian: "More happy taxpayers: "In 2005, the number of small partnerships declaring a taxable income was 125,000, while in 2007 some 273,000 partnerships were ready to pay taxes. The corresponding figures for freelancers was 111,000 in 2005 and 241,000 in 2007, a definite sign that fewer businesses were hiding their incomes."

So, it's working. By the way, the reception on the Internet of Friderikusz's program was very bad, but even then it was clear to me that the economists were not too kind to Gyurcsány. There were three of them against one, and Gy. could barely put in a word edgewise.

[College Term Papers]

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