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Hungary's Pitfalls of Progress
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17407 |
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CURRENT ISSUES
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| Issue
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1 / 1990 |
1,797 Words |
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Ivan Volgyes
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Action is the scarcest commodity in Hungary today. The people of Hungary have been asked to endure incredible sacrifice during the last decade. They are living the ninth year of the "seven lean years" with no end in sight, and their endurance has reached its limits. Any government that expects to be considered "legitimate" must have a program that will lead the nation on the road to economic progress within the immediate future.
But herein lies the problem for Hungary. For Hungary's rapid economic transformation toward a better future based on a modern economy resists quick solutions; such transformation will be slow and painful, resulting in lower levels of living for the majority of the citizens. Regardless of which leadership takes the helm, there are no quick fixes to cure the patient.
Part of the trouble lies in the fact that there are no models for the transformation of a communist, statist, centrally planned and regulated system, affiliated with and reliant on COMECON, into a modern, free-market based economic system integrated into the world economy. The obstacles are enormous even in Hungary, where there has existed for several decades an economy that has loosened many of the traditional, communist bonds and created a sort of mixed economy. Even here, the transformation must attack all elements that have hitherto been the pillars of the traditional system.
In order to be successful, a government must abolish restrictions on private property, "create" individual and "social" owners for state corporations without transferring that ownership to the entrenched managerial class of the party's choosing, and allow supply and demand to set all prices and wages. Additionally, the government must loosen the bonds of the economic bureaucracies by abolishing the requirements for their superfluous existence and permitting the closure of unprofitable enterprises. Consequently, they must deal with the resulting unemployment and break off the unprofitable relations with COMECON. Only from there can Hungary integrate its economy with the West. Needless to say, Hungary's vulnerability to the forces of the international market would increase dramatically as huge price increases and inflation wreck what is left of its contemporary economy.
At The Edge
The litany of "musts" in the transformation could go on and on, and there is very little that can be done immediately, especially if one considers that all these tasks must be accomplished while the government repays to the United States some $18 billion in loans that had largely been squandered by Janos Kadar and company. No government could pull this off successfully; no government is likely to completely try. The only hope for any government attempting to change the economy is to continue a relatively expedient policy of change, trying to deal with dislocations from the perspective of hope. Only the infusion of large-scale Western capital can provide the cushion to soften the landing of such a transformation.
Hence, whatever government comes to power must be prepared to be ousted when it cannot fix the economic wagon of the state in a relatively quick period of time. Viewed from this perspective, it is clear that only a "grand coalition" could be successful to weather the storm. For when a grand coalition is actually installed in power, it has a greater luxury of action than
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