WIIW The Vienna Institute for International Economic Studies - Wiener Institut für Internationale Wirtschaftsvergleiche

The initial shock about the outcome of the US elections is subsiding and the focus of the international debate is now on the policies to be expected from President-elect Trump. Will he follow up on the promises he made during his election campaign? In this moment of uncertainty it may be useful to look at two examples of populist governments – Poland and Hungary.

Trump’s victory – what can we learn from Hungary’s experience with populism?

by Sándor Richter

Hungarian citizens have six years of experience living under a populist politician’s rule. Viktor Orbán’s incoming government in 2010 promised, among others, 5-7% economic growth annually, the elimination of corruption and the creation of one million new jobs in the business sector within ten years.

For years now Hungarians read the government’s favourite slogan ‘Hungary performs better’ on giant posters all over the country. The government certainly knows that citizens are better at reading these posters than looking at statistical data. The actual growth performance of the country is far from the promised figures, despite the enormous annual capital injections arriving from the EU. Cumulative growth in the past six years has been lagging behind its regional peers: it was 10.1% in Hungary versus 17.4% in Slovakia and 18.8% in Poland. Corruption is officially non-existent, while companies of the ‘plumber of the nation’ (the PM’s childhood buddy) and his son-in-law are regularly winning the public procurement call for bids in which they participate. In order to fulfil the ‘one million jobs’ promise in the business sector, close to 600,000 new jobs will have to be created within the remaining less than four years of the original ten. Positive changes in the labour market were observed, but this was partly due to the increasing number of participants in public works programmes (175,000 additional persons) and to additional commuters working abroad. Both contributed to improving the employment data in Hungary. Meanwhile, an estimated 300,000 or more mostly young and skilled people left Hungary for working abroad, and that was certainly not part of the employment plan. Some important statistical indicators of the overall economic performance have indeed improved over the past years, but claiming the same for the performance of the Hungarian government itself would be an outright exaggeration: Hungary’s position in the international competitiveness ranking of the World Economic Forum deteriorated by six notches only this year, to rank 69, the worst ever result achieved by the country. Looking at the detailed ranking, Hungary’s assessment was devastating concerning the institutional system (place 114); in this field policy instability, corruption, tax regulations, inadequately educated work force, inefficient government bureaucracy and insufficient capacity to innovate were mentioned as the main problems.

Despite all this, the number of supporters of Viktor Orbán’s Fidesz party has hardly diminished over the past years. Completely controlled public media, private media in ‘government-friendly’ hands and professionally masterminded open or disguised government manoeuvres to minimise the impact of the few remaining independent newspapers, radio and television broadcasts help maintain Orbán’s rule. The rage of the losers in Orbán’s Hungary is cunningly channelled by these media against a broad range of carefully selected public enemies, lately migrants and refugees, investment banker and philanthropist George Soros, ‘Brussels’ alias the EU, and government-critical NGOs; earlier the former socialist-liberal PM Ferenc Gyurcsány. 

It is no surprise that Mr Orbán openly supported Donald Trump’s presidency already long before the US elections and that he was one of the first politicians in the world to congratulate him. Certainly, Hungary can by no means be compared to the United States in any sense, but the similarities between the populism of the two politicians are remarkable, such as the hostile attitude towards refugees and migrants, disdain of political correctness, admiration for Putin, esteem of traditional male and female roles, downplaying violence against women, relying on the fears and negative emotions of one’s supporters to mobilise them against political opponents.  A very important difference, however, is that Trump – it is to be hoped – will not be able to exercise a similarly tight control over the US media as is the case in Orbán’s Hungary.

All in all, US citizens have – beyond many others – one crucial advantage over the citizens of Hungary: perhaps in four, but at the latest in eight years Trump’s presidency will be over. In this respect, Hungarians are not so lucky.

‘Bread and Circuses’: Poland no longer the ‘People’s Republic’, but likely to become the ‘Populist Republic’ pretty soon ...

by Wisława Niemczyk

Over a year ago, Jarosław Kaczyński’s ‘Law and Justice’ Party won the presidential and then the parliamentary elections. The victory was partly due to a very low electoral turnout. But the lavish economic promises, open rejection of the idea of accepting Muslim refugees from the Middle East, and wholesale condemnation of corrupt economic and cultural ‘liberalism’ ascribed, unfairly, to the conservatives (in power since 2007) were important as well. So was the support of the Catholic Church.

The policy conducted since then has had several basic components. Its ‘bread’ component, solemnly promised during the election campaign, includes programmes already implemented (of which the introduction of a system of truly generous handouts to families with children is most significant, followed by a higher statutory minimum wage). Some programmes are still waiting for the legislation and implementation (among others the lowering of the retirement age and the increase of the tax-free threshold for personal taxation).

In themselves, some elements of the ‘bread’ agenda make good social and even economic sense – even if for the die-hard economic liberals these are manifestations of irresponsible economic populism. Clearly, the ‘bread’ agenda reforms solidify the popular support to the present government. What is less palatable about them is related to the accompanying nationalistic overtones. Thus, the programmes are trumpeted as addressing the essential needs of the Polish families, ‘long neglected by the un-patriotic liberal (or left-leaning) elites’. Moreover, it is implied that the increasing budgetary expenditure is to be covered out of the filthy profits made by ‘them’ – the foreign-owned banks and supermarket chains which parasite on our nation ...

The deafening nationalistic propaganda, strengthened by the intensified invocation of the ‘traditional Polish-Catholic values’, permeates all other spheres of the official state policy – from culture, to public education, public health services (with an attempted ban on abortion and in-vitro fertilisation), justice, public order, defence and even foreign affairs. The authorities, openly hostile to Russia, do not conceal their enmity towards the EU institutions and have managed to antagonise Poland’s most important foreign partners (Germany and France).

The government, which has fully subdued the public media and parts of the judiciary system (its public prosecution branch), does not shy away from staging public games with the leading opposition politicians (including the former PM Donald Tusk) accused of cooked-up wrongdoings, or even crimes (the latter should include Tusk’s complicity in the ‘assassination’ of former State President Lech Kaczyński, the twin brother of the Poland’s current ‘Leader’).

The nationalistic agenda has been combined with unmasked and repeated breaches of the Constitution. Effective ‘neutralisation’ of the Constitutional Tribunal is backed by the argument that ‘People’s Will stands above the Law’. That, of course, is the prescription for a system that ignores the law – and eventually the people’s will as well.

It may take some time, possibly quite long, before the government is no longer in a position to deliver ‘cookies’ to the populace. But by that time it may already have become irremovable by democratic means – and still capable of running public spectacles staging ‘enemies of the nation’. There is little doubt (so far) that the US Constitution will be respected under President Trump and that outcomes of future US elections are open. In the case of Poland things do not seem that obvious, at least in a medium-term perspective. However, it the long run one must remain optimistic. Throughout their history the Poles have victoriously resisted very many, even much nastier, misfortunes. Eventually, they will cope also with the current one.