Confusion and noise in SZDSZ

Within a week's time three SZDSZ politicians have spoken in three different voices. First there was Gábor Fodor, the head of the party, who in his response to Ferenc Gyurcsány's speech in parliament pretty well promised cooperation with the government. People who keep fingers crossed for some understanding between the two parties were relieved. Then came István Szent-Iványi, currently SZDSZ member of the European Parliament and the foreign policy expert of the party, who declared that "Gyurcsány is not the right person to lead the country out of the crisis." And he repeated Fidesz's favorite accusation that the prime minister is discredited. When pressed by Olga Kálmán today whom he would consider more suitable, Szent-Iványi couldn't come up with a name. When pressed again he came up with the shopworn idea of "a government of experts." I couldn't believe my ears.

But perhaps the most bizarre was an interview with János Kóka on György Bolgár's talk show this afternoon. János Kóka's answers are simple. (Apparently he learned the value of simple answers from Ronald Reagan!)  The answers are indeed very simple on paper: let 150-200 thousand public servants go, close about 50 universities, and reduce the number of hospitals by half. Simple, isn't it? It didn't matter how hard Bolgár pressed Kóka about the details, no creditable answer came from the man. Kóka kept repeating that if one wanted to know more about the details of SZDSZ's plan one ought to read his article in yesterday's Népszabadság. Well, I did.

I found even the title troubling: "The state itself is the problem." Well, that sounds familiar, doesn't it. As if János Kóka has been spending his days studying the life and political career of President Reagan! This is an interesting observation in the middle of a crisis that began in the United States at least in part because the state didn't pay enough attention to the financial world. Admittedly, his emphasis is not on regulation but on the size of government and its nefarious role in income redistribution. His plans, if you can call them plans, are simple enough. Everything ought to begin anew, says Kóka. One ought to forget about the past. Policy makers should start with a tabula rasa. First and foremost, Hungary should immediately introduce a flat tax. Calculations about how this would affect the budget or the deficit are not offered. The government should simply declare that from here on they would demand only 40% of people's income in the form of taxes and therefore it would have to reduce expenses. Drastically. Ten per cent. Less money for education, for healthcare, for social services, for pensions, for research, for agriculture, for the academy. But presumably more money in the pockets of citizens who, according to the mantra, spend more wisely and less wastefully than does government. I am not ruling out the possibility of a healthy debate about a flat tax sometime in the future. But now, when there's going to be a greater than normal need for a governmental safety net as the world markets implode, this debate on overhauling the tax structure seems singularly ill timed.

In the first few paragraphs Kóka outlined the sins of MSZP and Fidesz in promising heaven and earth before the elections. Very true. But when it comes to Péter Medgyessy's extravagant promises of a 50% raise in the wages of public employees, tax-free low income wages, and the thirteenth-month pension, Kóka was unwilling to take any of the blame. After all, SZDSZ was only the junior party in the coalition government. Another interesting observation from Kóka is that "the crisis didn't arrive in Hungary in the fall of 2008 but years before that." How many years before? After all, Kóka was minister of the economy between 2004 and 2007 and during that time he proclaimed that "the economy of Hungary is roaring." Another memorable pronouncement: "Hungary is the Pannon puma." Or: "Germany and France can be envious of Hungary." Kóka didn't seem to realize the depth of the crisis when he was in charge.

It is not at all becoming from the second man of SZDSZ to copy Fidesz's rather cheap attack on the government that "last fall we had to run, ahead of Pakistan and Ukraine, to the IMF." Moreover, it seems that Kóka thinks that the credit Hungary received from the IMF, World Bank, and EU Central Bank was the cause of the financial world's loss of trust in Hungary. And finally he comes up with a rather dubious historical comparison. The atmosphere of today is akin to that at the end of the 1980s. Everybody knew then that things couldn't go on in the same old way, but people were convinced that the Soviet Union would live on for at least another twenty years. "There was a small minority that was capable of moving the masses." Soon enough came the change of regime. Of course, the members of this small minority were those who later established SZDSZ. Kóka is convinced that "the minority is here again." "Perhaps their numbers haven't yet reached a critical mass, but their numbers grow day by day." Oh, how optimistic. The truth is that SZDSZ has a shrinking base.

A lot of people felt compelled to write comments on Kóka's article. The one I liked best was "The appropriate title would read: 'Kóka himself is the problem.' "

Comments

[Mark]

""The state itself is the problem." Well, that sounds familiar, doesn't it. ..... This is an interesting observation in the middle of a crisis that began in the United States at least in part because the state didn't pay enough attention to the financial world. Admittedly, his emphasis is not on regulation but on the size of government and its nefarious role in income redistribution."

This is an important parallel, not particularly as a means of analyzing the proposals of a second-rate politician like Kóka, but because the "market good", "state bad" philosophy informs all of the so-called "reform" programmes. It isn't just the SZDSZ but all those economists - the Bokros's, the Simor's, the Reformszövetség, those like Csaba close to FIDESZ, and the government too (though at least they, mindful that they will take the blame, are at least aware of some the short-term consequences). They seem to assume that cutting back the size of the state will somehow automatically ignite the fires of economic growth.

While I'm sure that many of the reforms they suggest would improve the functioning of some state services, and shape of welfare state that is sustainable over the longer-term, I've yet to see a coherent account from anyone of how cutting the size of the state will automatically improve either competitiveness or growth (after all has anyone noticed how high the Scandinavian countries score in international competitiveness league tables?). And in the current economic climate the idea that huge cuts in expenditure will create renewed prosperity are quite frankly laughable. I suspect that the explanations of how rest on the idea that the state distorts activity, while the market will always assure perfect outcomes. It is amazing after what has happened in the broader global economy that proposals from what is, frankly, little more than a free market "cargo cult" are treated so uncritically in Hungary.