I will return to the above mentioned question later, but first I want to focus our attention on one particular article that was part of this intense media campaign of criticism towards this small country of ten million, which produces less than .1% of the world’s GDP. The article I am referring to is the one carried by Reuters on January 13, which made its way to other news outlets, suggesting that
Hungary should be just as accommodating in dealing with the IMF, because it would be better for them, given how good it’s been for neighboring . Romania
“It may irk Hungarians who have always regarded themselves as superior to their poorer neighbours to the east, but
Romania may have lessons to teach as it seeks a rescue from the EU and IMF. Budapest
By sticking to the terms of a similar programme,
has managed to put its once troubled economy back on the path to growth.” Bucharest
This approach to criticizing
was not chosen by accident given the history of these neighbors, which created many ill feelings between the two people. Hungary
There are many reasons why I wanted to bring this article up. The most important reason to do so was the surprising way in which the news was received in
. I speak Romanian as well as Hungarian fluently so I had the opportunity to observe the reaction of Romanians on forums in regards to Romania ’s standoff with the EU and the IMF. Generally, whenever Hungarians or Hungary are mentioned on Romanian news outlets, the reaction of the public is generally heavily negative and extremely hostile. This should come as no surprise, given that in Romanian schools, there is for decades now a practice of vilifying and ilegitimizing the presence of the ethnic Hungarian minority of 1.4 million people living in Transylvania for over a thousand years now. They go as far as engaging in heavy distortions of the region’s history for this purpose. Hungary
To my surprise, while in much of the rest of the western world, I found judging by the reactions of people on forums dealing with this subject, most people bought into the propaganda campaign that was unleashed, and now most who have been exposed to this propaganda, indeed believe that Hungary is now some sort of a fascist-totalitarian state, the reaction of people in Romania, where one would always expect public opinion to be heavily negative towards Hungarians, was about 90% positive.
So how can this be? The answer is simple.
’s policy of bowing their head to the IMF and other global players did not do them much good. It is not only that people are tired of the harsh austerity measures that the IMF has imposed on them, which in my view was actually not even entirely necessary, which led to this sudden outburst of appreciation of Romanians towards Hungarians and their courage to stand up and fight. It is also the realization of what these measures are actually doing to their country’s long-term health and their frustration with their political elites who behaved in a manner that was too docile and servile. Romania
While the article that praised
Romania’s servility argued that is now on solid ground economically, the reality is very different. One of the greatest dangers to Romania ’s long term economic and social stability is its demographic situation. The country lost about 25% of its potential workforce to immigration in the past two decades. A great deal of blame for this can be allocated to 20 years of post communist leadership deficiencies. The role of the IMF in the past years to continue this trend for the present and the future cannot be ignored however. Romania needed an avenue for economic growth, in order to stem the tide of the worker exodus. In order to save themselves they even need to find a way to start attracting their young people back. At present, they no longer have to worry about the shrinking of their workforce as a result of immigration alone. Their potential workforce started shrinking due to demographic imbalances, by more than 1% per year. At this rate, if we add the possibility that the potential workforce will also shrink by 1% or more per year due to migration, Romania will be facing serious consequences by as soon as 2025, and by 2040, it is hard to see how Romania will even be able to still exist as a state, unless they can change direction drastically, because between 2030 and 2040, the rate of loss of their potential workforce due to demographic realities will double from about 100,000 people per year currently to over 200,000 per year. This problem if further compounded by the fact that when they are losing their potentially productive population to immigration, they are also loosing their potentially reproductive population as well. Romania
The quantity of potential workers is not the only problem that was created by
’s inability to produce better leadership, and now by some flawed, or what some may argue are ill willed policies pushed by the IMF. Cuts made to education, means that Romania is on its way of falling behind in providing increasingly necessary skills to its current and future workforce. Its workforce is also likely to become increasingly less healthy, because the IMF demands that the country which has the lowest per capita GDP, and also spends the least on health care as a percentage of GDP in the EU, cut even more. Romania
Aside from causing permanent damage to its workforce the policy of extreme austerity that the Romanian government was forced to accept, and is now praised for by the western media is also destroying its ability to catch up on infrastructure. To attract serious investors, a country needs to provide solid physical human and legal infrastructure, as well an efficient governing system.
sorely needed to provide solid improvements in all these categories, and in part due to IMF austerity pledges they were able to provide improvements in none of these categories, and their time to make it happen is limited because of the demographic problem I already mentioned. Romania
The IMF also demanded that this year
should privatize many of their state run companies (there are very few still left to be privatized). Among the companies that the IMF wants to see privatized, energy and mining assets go to the top of their list. Many of these companies are actually profitable, and they increase the government’s revenue stream. There are also many that are far from being profitable, and they require subsidies to stay afloat, such as the country’s railway lines. If privatized, the country’s railway system might once again become profitable. The cost however will be that ticket prices, industrial transport prices will likely rise significantly, making it hard for people and goods to move around. Privatization will also likely mean that many lines will be cut out of service, meaning that some parts of the country will inevitably become economical dead zones. On balance, I believe that the subsidies are cheaper than the results of privatization. Romania
As the energy and mining companies will be completely privatized, and the energy market deregulated in
, people will have to cope with having to pay market prices for their heating in the winter, as well as for their electricity throughout the year. That might sound like a reasonable idea to most, but most do not know that average wages in Romania are less than 1/3 the EU average. Life will become even more unbearable, and more people will be compelled to immigrate. When the IMF demands this of countries with high birth rates, it may not seem like such a big problem. But Romania ’s current birth rate is 1.3 per woman (2.1 is replacement rate). Romania
Romanians sense this, even if many cannot quantify it, and as a result they started taking to the streets to protest, ironically just a few days after Reuters decided to use them as an example that would be a humiliating blow to
. The protests in Hungary are still ongoing despite the cold weather, and the government is already starting to backtrack on some of its policies of appeasing the IMF. Romania
So given that Hungary has now decided to bow to pressure and begin the negotiations between slave and master with the IMF and the EU, thanks to all the financial, political and propaganda pressure that has been exerted on this small country, perhaps it is true that they should take lessons from Romania. Not necessarily the lessons that western media and their sponsors would like Hungarians to learn, but perhaps the lessons that they can learn by looking at the true consequences of allowing one self to fall in the hands of these institutions. Looking at the side effects that IMF policies had in
Romania, it is clear that can reach this level of economic “stability” without their help. In other words, the consequences of turning one’s back on these predators are not much worse than bowing one’s head. The difference is that by turning one’s back there is also an opportunity to make the slavers suffer. Hungary
There are also many lessons that the rest of us westerners can learn from what has happened with the
affair in the past few months. The most obvious lesson is that any attempt to break the current hegemony of global finance over us will be met with vicious reprisals, as was the case with Hungary . The Hungarian government did since 2010, what most occupy supporters could only dream their governments would dare to do. They decided that as part of their economic restructuring, meant to deal with the new post 2008 economic realities, they will not ride the poor and the middle class exclusively. They imposed a levy on the banking sector, and also demanded that they take some loss on the predatory FX loans they not only offered but effectively pushed people to take, with the consent of the previous Hungarian government. Hungary
Given the stance of the Hungarian government on just how hard they will accept to ride the poor in order to exempt the banks, one would think that center and left leaning elites and media in the west would be supportive of this government. Just as surprising as the positive response was on the part of ordinarily Hungarian despising Romanians, it is equally surprising where the most vicious attacks on
came from. Hillary Clinton, Paul Krugman, the EU’s socialists, and most center and left leaning media outlets were at the forefront of the effort to paint Hungary as a totalitarian state. Unfortunately, from what I saw on the internet, most who were exposed to this barrage of distortions believed it, and even refuse it seems to take into consideration the feelings expressed by large segments of the Hungarian population, which thinks that these attacks on them are unfair (100,000 Hungarians took to the streets a week ago to support the government and denounce the IMF and EU). They instead chose to focus on a few Hungarian eccentrics, who figured out easily that it is more hip and cool to be dissident eccentrics than just eccentrics, and therefore support wholeheartedly the campaign to drag Hungary through mud, in order to make them bow their head to global financial interests. The lesson that needs to be learned for the average occupy protester and their supporters is that when push comes to shove, they have no allies within the ranks of the established elites. Those who declared any support are mainly doing so knowing full well that the movement will not lead to change that they have to end up supporting as a result of new political realities as was the case in Hungary . Hungary
The lesson that we need to learn from the treatment on behalf of our elites of the good slave versus the bad slave is that we all can consider ourselves to be slaves given that change will not be tolerated, regardless of where the political winds will blow.
is like I said, a relatively insignificant country, yet by trying to gain more control of their finances through recent reforms, the reaction was enormous. If they cannot allow such a small country, on the periphery of western society, to stray into a different direction, can we really believe that change within western society on a broad front will ever be tolerated? Hungary
Change is necessary at this point as I already pointed out in previous blogs, as well as in my book. It is necessary not for idealistic reasons, but for logical pragmatic economic reasons, yet change is something we no longer tolerate, despite us becoming a far more tolerant society in many other ways, especially on social issues. When change is no longer possible, it means that we have become brittle, and we will be smashed to dust in the face of our challenges. Or perhaps I am wrong about all this, and the Hungarian state really has become totalitarian, and the Hungarian people are just not up to speed yet.