How Hungary handles problems worth watching


Based on U.S. government priorities one might think nothing much was happening in the world besides the ongoing conflicts with Islamic jihadists and Iran’s possibly related desire to enrich uranium. But other issues turn out to be just as or more important to other parts of the world. Take Hungary.

It is tempting to view current demonstrations in the Hungarian capital of Budapest cynically. Prime Minister Ferenc Gyurscany admitted that he lied continuously to the Hungarian people? Get over it! Politicians around the world lie to the people all the time. What’s so outrageous about lying in Budapest?

According to Marian Tupy, central Europe analyst at the libertarian Cato Institute, the story is a little more intricate. He thinks it is possible that the prime minister himself leaked a tape of a private meeting with Socialist parliament members in which Gyurscany said, among other things, “No European country has been as boneheaded as we have. … Plainly, we lied throughout the last year and a half, two years.”

Tupy said the lies had to do with the health of the economy, the size of the government deficit (about 10 percent of gross domestic product) and Hungarian economic growth, which has been slower than the government had claimed.

Why might the prime minister have leaked the tape? Perhaps to create the impression that he is the only one capable, finally, of admitting to unpleasant truths, thus defusing opposition to a reform program he hopes will turn the economy around over time. He is cutting government spending, laying off a few government employees and raising taxes.

He would do better to cut taxes and cut spending, but then he’s a Socialist. He rules in coalition with a liberal — European liberal, meaning pro-free-market, quasi-libertarian — party to prevent the right-wing populist party Fidesz, headed by Victor Orban, from coming to power. In elections in April the Socialists got 43 percent and Fidesz got 42 percent. Most of those demonstrating last week were Fidesz supporters who believe if the government hadn’t lied earlier about how poorly the economy was doing, their party would have won.

All the central European countries who threw off communism after the Berlin Wall fell are having trouble moving toward capitalism. The socialists in Hungary have tried to help it along with government spending, but as Margaret Thatcher used to put it, they have a typical socialist problem: They’ve run out of other people’s money to spend. Now they want to cut spending modestly.

Fidesz’s program, which is socially conservative but not free-market oriented, would probably not be much better and might be worse. Assuming the protests settle down rather than escalate, it will be interesting to see how this fledgling democracy handles these problems.