If you were Hungarian in this time of economic crisis, you might start listening to politicians who complain that “the notion of social service and the common good have faded out of the vocabulary” and who promise to stop the “compulsory private pension fund” and “cancel tax allowances provided for multinational companies.” Those quotations come from the program of the extreme-right Movement for a Better Hungary, or Jobbik, which surprisingly won near 15 percent of the vote in the June 7 elections to the European Parliament.
This is unfortunate, because Jobbik also operates a paramilitary organization called the Hungarian Guard and proposes to abolish abortion, re-establish the death penalty and create a special police unit to deal with “gypsy delinquency.” Jobbik denies accusations of racism or anti-Semitism, but if you’re looking for a time machine back to the bad old days of virulent European nationalism, look no further than Jobbik’s platform. The party wants to ban “unjustified sterilization” (to produce as many Hungarians as possible) and to establish a Memorial Day on June 4 to mourn the territories lost in the post-World War I Treaty of Trianon, signed on that day in 1920.
Jobbik appears to have profited not only from the worldwide recession, which has hit Hungary especially hard, but also from the international response to Hungary’s problems. Last October, investors decided to stop buying the country’s bonds. Hungary was not in default, but “the market” felt that, given the worsening economic climate, the government might have trouble paying in the future. So Hungary turned to the International Monetary Fund (IMF), the European Union (EU) and the World Bank. They arranged a line of credit in exchange for “austerity measures,” which means cuts in things investors want cut. This, in turn, means social programs because, to paraphrase Kurt Vonnegut, the rich are highly averse to leakage.
The goal was to make investors feel better. As IMF official James Morsink said, Hungary “needs to provide reassurance to the people who hold the debt–or are potentially going to finance the debt–that it will be able to meet its future obligations.” Fiscal stimulus to counter the deepening recession was inappropriate for Hungary because it would “make investors lose confidence,” according to Morsink.
So the Hungarian government–led by Prime Minister Gordon Bajnai, a beleaguered caretaker Socialist technocrat–is implementing cuts to sick pay, pensions, public-sector salaries and child allowances, as well as reorganizing the tax code to increase the regressive value-added tax (while lowering it on some food items). The government has also cut payroll taxes and income taxes and established a “luxury” property tax (which one tax expert has said will affect 20 percent of homes). Some corporate taxes have also been cut.
Western news media have either ignored the situation or suggested, “It’s about time.” The Wall Street Journal ran a piece (featuring the obligatory disability pensioner who could work) about how dysfunctional Hungary’s finances were. A “pension glut” was to blame, the Journal said. A helpful chart pointed out that Hungary spends 10 percent of its GDP on pensions (just think of all those old people who could work!) but did not point out that this is by no means remarkable. The United Kingdom, for instance, spent more than 11 percent of its GDP on pensions in 2006, according to Eurostat.