Two days ago, Portfolio reported that the government’s highly touted bailout package isn’t working. Was this a shock? Surely not, as well-known Hungarian economists predicted 10 days ago. State aid for people who can keep their jobs only with reduced hours was far too stingy. In addition, the process to receive the aid was, in good Hungarian fashion, extremely bureaucratic, conceivably taking months.
The government was hoping that the large multinational companies, at least, would have a strong enough financial base to retain their employees on a part-time basis. Even so, Péter Szijjártó, minister of foreign affairs and trade, assured the multinational firms, in writing, that the Hungarian state would prepare a rescue and stimulus package that would assure their financial survival for the next few months. Once the details of the rescue package became public, the Hungarian affiliates of the foreign companies expressed their disappointment at the inadequacy of the package. They were also facing mounting pressure from company headquarters to cut costs. The Hungarian government was apparently warned last week that preparations for employee layoffs were underway. The leaked story was most likely correct because the government today announced a revision of the original rescue plan, which excluded many economic sectors from the Kurzarbeit program.
The revised package was announced by László György, undersecretary in charge of economic strategy and regulation at the ministry of technology and innovation. He is not exactly a star Hungarian economist, but he has the right credentials to be a high government official in László Palkovics’s newly established ministry. He was an economic analyst at the Századvég Economic Research Co. and the Századvég Political School between 2012 and 2015, when he was promoted to chief economist, a job he held until 2018. In addition, in his spare time he was director of the Pallas Athene Domus Mentis Foundation, one of those strange foundations György Matolcsy, chairman of the central bank, established from all the money the bank amassed over the years. Since 2017, he has been an associate professor at the János Neumann University in Kecskemét, another brainchild of the bank chairman.
I dwelt so much on the background of László György because I found his curriculum vitae a fascinating example of the kind of person, without any major professional accomplishments, who ends up in key positions in the Orbán administration. What one needs is stints at Századvég, the Pallas Athene Foundation, and János Neumann University, and, voilà, the next step is being in charge of the economic strategy of the Hungarian government. Meanwhile, the opinions of seasoned and experienced economists are ignored. I have the sneaking suspicion that the administration is full of László György types, whose entire adult life has been spent in a Fidesz bubble and, in György’s case, steeped in Matolcsy’s “unorthodox” economic ideas.
The bank chairman, by the way, said just today that Hungary is at the gateway of becoming a European little tiger as a result of the corona pandemic. The health crisis is opening the way for Hungary to become a second Singapore in Europe. Well, that will be a challenge. Singapore consistently ranks as the freest economy in the world and among the least corrupt, with an education system that is considered by many to be the best in the world. The Orbán government is utterly incapable of leading the country on that journey. For Hungary to transform itself into a free, transparent economy with a highly educated population would require, at a bare minimum, a change of government.
Today László György announced that, after all, workers can receive a wage supplement as long as they work at least two hours a day. He also said that the government is now going to simplify the cumbersome bureaucratic application process. Although the Hungarian Chamber of Commerce demanded support for all economic sectors, György talked only about “expanding the range of beneficiaries.” Hungarian employees whose work hours have been cut back were told that on a government website the application for assistance can be filled out “quickly and simply.” I went there and failed to find the application form. Businesses can apply for a two-year loan to retain jobs for nine months with an interest rate of only 0.1%.
However reluctantly, Viktor Orbán is modifying his cherished and totally wrong economic philosophy of a “work-based society.” It can’t be maintained even during normal economic times, and it is deadly during an economic crisis.
Every time the Orbán government needs a boost, like today, Nézőpont Intézet publishes a poll that shows that Fidesz is more popular than ever and that the opposition has become weaker. But the truth is that Viktor Orbán has never had to battle a real economic crisis, and he may buckle under its weight.