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Hungary, land of promises

June 15th, 2011

Hungary has grown accustomed to overspending and over-borrowing, and its political parties have fed the population a diet of unrealistic welfare promises. But the leading conservative commentator believes the present government has chosen a new path.

The seeds were already planted by Gyula Horn’s Socialist-Liberal government from 1994 to1998, writes Gábor Borókai, editor-in-chief of the weekly Heti Valasz.

As a result of the collapse of the communist régime, about 1 million people were released from the active work force and started living on welfare. The Socialist PM also promised substantial hikes in pensions.  For a while all this could be financed from privatization revenues, but a ticking time-bomb was built into the system.

The Socialist Party became extremely popular among the growing number of voters who received various forms of welfare payments. Without their support no party had any chance of victory. During election time Hungary became the land of promises. True, Fidesz was able to form a conservative government in 1998, but four years later the Socialist Party could regain power with the slogan: “More money to the people!”

And then they ruled for eight years. In order to create the illusion of development and growth, the state budget, enterprises and private households all borrowed excessively, especially in foreign currencies. The system collapsed in the end under the vast weight of its debts, the country was almost buried under the debris.

Now we have begun again, almost from scratch, to reconstruct the country. The government is trying to convince people that to feel secure, labour has to regain its former prestige, and to convince employers that labour is the key to prosperity. More work results in a bigger salary, just as in any other normal country. This was the reason for introducing the flat tax, and for promoting  public work programs to replace welfare benefits, contends the editor-in-chief of Heti Válasz.

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