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Tuesday, April 15, 2008

Good news (and bad) from Hungary

Two pieces of good news from Hungary:
1. The extremist neoliberal SZDSZ party (who have less than 2% popular support, but 100% support from foreign capital) is to leave the governing coalition at the end of the month. As RSM Williams would have said; 'Oh dear, how sad, never mind.'
2. The opposition has collected the requisite number of signatures to trigger a referendum on the government's shocking proposals to privatise health care. Another humiliatating defeat for beleagured Prime Minister Ferenc Gyurcsany (above), is on the way, unless he drops the plans.

And one piece of bad news:
The Indie reports
"The British bus and rail operator Arriva said it had entered the Hungary and Slovakia markets for the first time with a £25m acquisiton. The company which now operates in 12 countries across Europe, said the purchase of 80% of Hungary's Interbus Invest would help it to capitalise on the privatisation of the country's regional bus sector."
Hungary had one of the best integrated, publicly owned public transport systems in the world, as anyone who has spent any time in the country would testify. It’s tragic to see them following the British example and privatise it.


Anonymous said...

Two out of three ain't bad but it's a shame about the buses though. When I was in Hungary, about four years ago, I was very impressed by the public transport.

Rob said...

Will the opposition be able to stop the bus privatisation by way of a referendum?
Perhaps a campaign is needed?

Anonymous said...

The Hungarian public transportation system doesn't come close to covering its own costs, and with the government facing the highest budget deficits of any EU country, the prospect of privatization should only shock the naive. The opinions of outsiders who benefit from the public transportation system while on holiday (who naturally don't bear the costs of supporting the system through oppressive taxes) who also scorn the government's decision to lessen their cost burden aren't very important. It's just not worth it to further push an entire nation into bankruptcy in order to provide cheap transport to its richest demographic (the residents of Budapest) or to impress British tourists who drop by every four years or so.

Neil Clark said...

anoymous: don't you think cutting second back on miitary spending should come before destroying public transport? Or how about getting trying to get the rich pay their fair share of taxes?

Anonymous said...

But Neil, military spending has been cut back drastically since we were a Russian satellite/Communist dictatorship. In fact, military spending was only 1.2% of Hungary's GDP in 2007. Of all NATO nations, only Luxembourg and Belgium spent a lesser percentage, though probably an overall higher dollar amount (since their economies, for sure Belgium's, are larger).

Do you really think 1.2% of GDP is totally out of line? Come on, we're a NATO freeloader! I will admit however that the 1.2% is oddly spent. Around 2000-2001, the government decided to upgrade its fighter defenses, and so shopped around for something to replace its outdated Russian-built equipment. Instead of buying used F-16 (that would have worked easily with surrounding allies) they opted for new Swedish fighters, which seemed at the time, an odd choice. Hopefully it will never matter.

As for Hungarian taxation - believe me, aside from governmental leaders and those who earn through government contracts, Hungarian citizens (both rich and poor) are subject to very high rate of overall taxation by standard even in Europe. Look at the payroll, sales, and income taxes percentages in Hungary and compare with any nation you wish. To top it all off, levying property taxes on homes values at more than HUF 20 million are being mulled over by the government. That's going to hit the middle and upper classes quite hard, as well as anyone in the working class who have committed the crime of choosing a modest home in an area where property values have gone way up. Now if you have a contact and/or relative in the property assessor's office who will value your HUF 40 million home at 19 million, you have nothing at all to worry about, but as for the rest of us...

Our corporate taxes are indeed low (something like 16%), but our workers are generally poorly educated/prepared for 21st century economies. That fact, taken with the additional fact that foreign investment is, at times, a zero-sum game, means that we have to be competitive with our neighbors if we want to keep the internationals here. If we kicked them out, who would replace them? We're quite proud that we build cars (Suzukis in Esztergom, Audis in Gyor) that even those in the west pay to own. There is no national capability to put together cars like that at a competitive price without Japanese or German technical help and leadership, and unemployment would skyrocket in those towns if those factories were shuttered.

So in sum, we have cut way back on military spending and we pay high taxes. I think the problem is somewhere else, and I truly suspect government corruption and incompetence it at the root of it. Privatization is not a solution for everything, but in the case of our inter- and intra- city bus systems, I'd vote for it, and I would put up with paying market prices for a service when I would use it, instead of paying high taxes which may or may not go towards something valuable.

Robert O.