Friday, January 07, 2011

Hungary leapfrogs to authoritarianism

Hungary has long been known as one of the countries that openly defied the Stalinist brutality and inhumanity that was imposed on it by Moscow after WW2, and having one of the first set of gutless mice who scurried off when Mikhail Gorbachev told the Soviet satellite countries that it wouldn't intervene if their regimes faced overthrow by popular acclaim.

Since then it has reformed, opened up its economy, joined the European Union and NATO, and made huge strides towards being an independent relatively liberal open country, with a vibrant civil society, embracing freedom. The old cliche that the price of liberty is eternal vigilance is only too true, as the coalition government of Fidesz-KDNP is proving too well.

The 2010 Hungarian election saw a collapse in popularity for the Hungarian Socialist Party, which despite its name (and being the partial inheritor of the old communist Socialist Workers Party), has helped lead many free market reforms in Hungary for some years.  The communist element left very early to form a tiny hardline party that has never done well.  The socialists had been in government in coalition since 2002.  However, the biggest blow to the socialists was in 2006, not long after the last elections, when a recording was released of the socialist Prime Minister, Ferenc Gyurcsány, openly saying his party had lied to win the election.  Mass protests erupted.  The government remained tainted and stank for the next four years, voters never forgave the socialists.  The 2010 election saw the socialist vote collapse from 42% to just under 17% of the vote.  Those votes had to go somewhere.

As a result, two opposition parties did comparatively well, Fidesz and Jobbik.

Fidesz has had a laudable history as one of Hungary's first independent political parties, being pro-freedom, anti-communist and youth oriented.  However, its electoral success was more limited as parties flourished after the end of one-party rule, so that it had a respectable 7% of the vote in 1994.  Then the party transformed into a conservative party, adding the name Hungarian Civic Party to its name.  It adopted an approach of social conservatism and greater nationalism, and grew to 28% support in 1998.   In 2010 it won the greatest plurality with nearly 53% of the vote, up from 43% (the socialists had been governing in coalition with the Alliance of Free Democrats, a liberal free market party).

Whilst Fidesz could govern in its own right with 262 out of 386 seats, it had campaigned jointly with the Jobbik party.

Jobbik (or Movement for a Better Hungary) was originally set up as Christian oriented conservative party, with strong nationalist credentials (although distinctly non-racial, rather culturally nationalist).  It was sceptical of EU accession.  The 2006 protests gave it a perfect platform to campaign on, as it simply said the communists are still in charge (given the socialists lied).  Jobbik claimed the electronic media was on the side of the government, so that it was ostracised unfairly.  It claimed crime was on the rise and needed to be addressed.  It developed a manifesto opposing free market capitalism, social liberalism and multiculturalism.  It promoted granting citizenship to Hungarians who live outside Hungary.  It was "very nearly" fascist, in that it avoided anti-semitism, anti-Roma and other such language, but was strongly pro-Hungarian.  It got just under 17% of the vote.

So Hungary elected a conservative government, with an ultra-conservative coalition partner.  It has sought to radically change the Hungarian state, and one of the early controversial moves has been the creation of a new media law.  This law creates a media regulator which judges whether TV and radio stations, and newspapers have provided "balanced coverage", and can fine or shut down those deemed to have failed.   The Prime Minister has evasively said this is "just like" other European countries.  It's not.  It is state control of the dissemination of debate and opinion, and it is unacceptable.

If that wasn't enough, the government has found a new way to address Hungary's public debt.  It is confiscating the private pensions of citizens (or rather saying "hand them over to the state or get no pension at all").   The current Hungarian system has some parallels to Roger Douglas's compulsory retirement savings account idea, although it retains a significant public sector component.

All Hungarians are required to put 8% of their salary into a private pension fund of their choice, another 1.5% is effectively taxed to pay for current state pensions.  Employers were also expected to make a contribution, with pensions received being a combination of private and state funded pensions.  Now it is being confiscated, and mixed messages are being given as to whether receipts will reflect contributions or not, the strong suspicion is that this is easy money.  The government has said it is about dealing with the budget deficit, a deficit not caused by people saving, but by overspending.  However, the same government is increasing state pensions and increasing maternity leave.

"Though the accounts are not linked to any underlying assets, an individual’s pension entitlement is tied to the sum recorded in that account, giving earners an incentive to contribute more. But the government’s most recent statements suggest the individual accounts will be no more than a regular statement of the value of the pensions contributors can expect to receive, with no relationship to contributions made."

In other words, a money grab. Unadulterated theft on behalf of the state. 

The EU has lodged protests about the media law, but not the state theft (which is unsurprising).  Given Bulgaria, Poland and Ireland have all embarked on related confiscations of pension funds to cover short term overspending, and the EU strongly supports state confiscation of private property, why be surprised?

The media law should be scrapped, and private pensions should be sacrosanct.  Indeed the only safe policy is to keep it completely out of state hands altogether.

Bear in mind that in New Zealand, the equivalent is a pay as you go pension, that promises you absolutely nothing, that pays nothing if you die before you retire, and bears absolutely no relationship to what you pay the state.  So no need to worry about state theft of your pension in New Zealand, it is simply par for the course as it is exactly what happens to anyone paying above the average amount in tax or dying before age 65!

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