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Should the government promote equality or performance?

May 16th, 2012

A left-wing analyst suggests that by subsidising the middle classes, the Hungarian government is going against the grain of current trends in Western economic policies. A conservative philosopher, on the other hand, argues that society must acknowledge merit if it wants to encourage performance.

In Népszabadság, Miklós Hargitay claims that Hungary’s flat tax system, along with severe cuts in welfare spending, will deepen the crisis, for these are the very elements that caused the crisis in the first place. When Communism collapsed and Western Capitalism remained without a competitor, employees’ bargaining power suddenly declined, and as a result, real incomes have stagnated over the past two decades. Meanwhile, the richest strata of the population have enjoyed increasing tax cuts. Both public finances and household budgets borrowed more and more in order to maintain their levels of spending. The ensuing credit bubble eventually exploded and now countries have begun to realise that increasing inequality and stagnating incomes will never produce sustainable growth. Hargitai suggests this is precisely what the outcome of the French and Greek elections reflects, and that is the deeper reason behind a new, more left-leaning Western economic philosophy. He believes Hungary’s right-wing government is moving in the opposite direction and warns about the possible “frightful” consequences.

In Heti Válasz, philosopher András Lánczi argues against egalitarianism, calling it a remnant of the Communist era, when it was believed that a nuclear physicist should barely earn more than a street cleaner.

In the Western world, he argues, performance and merit are prioritised, while in Hungary any such attempt “is drowned under a flood of left-wing opinions originating in the decades of Communism.” Lánczi warns that the debate is about the essence of Capitalism, and without Capitalism no sustainable increase in living standards is possible. “If merit is not duly acknowledged, there will be no performance,” he concludes.

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