The following is the official declaration of the 15 well-known Hungarian economists who answered the call of Tamás Mellár, a retired professor of economics at the University of Pécs and a member of parliament since 2018, to formulate their solutions to the crisis. I introduced all of them in my post titled “Viktor Orbán’s response to the economic crisis falls far short” a few days ago.
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An economic and social crisis is unfolding in Hungary. The economic measures proposed by the Hungarian government are insufficient to address the economic crisis and do not even attempt to address emerging social issues. At the time of a national crisis, as economists and responsible citizens, we believe it is important to express our concerns and encourage the government to take stronger steps.
We believe that our government can successfully manage the crisis only if it has the trust of citizens and employers, if we have broad agreement on shared goals, and if we are convinced that our sacrifices are necessary, equitable, and commensurate with our objectives. The measures publicized by the Hungarian government do not point in this direction and are not going to generate broad agreement and trust. A sense of solidarity among members of our society must be an important element in building this trust. However, this program does not ask the more fortunate members of our society to contribute to our response to the crisis.
Among other problems, we are concerned that:
- The government’s economic response does not clearly define its goals and the tools that are proposed to accomplish these goals — many key details are not available. This not only limits our ability to provide an evaluation of the government’s response but also maintains harmful uncertainty among Hungarian workers and employers.
- The government wishes to cover most of the costs of its response from reallocating resources within the budget, by taxing companies, and by taking resources from local governments. This means that the government is failing to provide necessary additional resources to improve our economic outlook and at the same time it is damaging the trust of Hungarians in its intentions. Taking resources from local governments endangers delivery of crucial services at the time of this unprecedented crisis.
- It appears that the government either does not realize or does not acknowledge the severity of the crisis, and as a consequence is unwilling to provide the additional financial resources that are needed to save the Hungarian economy. The government and the Hungarian National Bank have published projections for the budget deficit and economic growth that are obviously unrealistic and demonstrate that our decision makers are out of touch with reality. These projections not only damage their credibility but are also harmful because they make it impossible to provide an appropriate economic stimulus from much more substantial spending increases. The sources of spending that have been publicized are not enough to meaningfully cushion our economy from the 5-10% recession projected by expert analyses in Hungary and abroad.
- The government has offered no solutions to the problems of Hungarians who are losing their jobs at unprecedented rates and are facing a dire situation. The idea of a “work-based” society pushed by the government and further reliance on workfare are misleading and inappropriate in the current situation.
We propose that the Hungarian government take the following steps:
- The full implementation of a program under which the government guarantees workers’ wages based on policies implemented in Germany.
- The replacement of income losses that cannot be addressed by guaranteeing wages through transfer programs.
- The extension of unemployment insurance, the increase of cash assistance to families, and an expansion of transfers to individuals who are unable to work.
- The provision of substantial financial support to local governments and non-governmental organizations who carry out crucial work at this time of crisis and who are able to offer direct and personalized help to those most in need.
- The involvement of the more fortunate members of our society, making sure that the idea of solidarity is central to our economic response. A reduction in non-essential spending along with a substantial increase in government spending overall, as an increasing budget deficit should not hinder effective government action.
Péter Ákos Bod
Mária Zita Petschnig