Petőcz Kálmán (szerk.): National Populism and Slovak - Hungarian Relations in Slovakia 2006-2009 (Somorja, 2009)
Zsolt Gál: Argentina on the Danube - Populist Economic Policy as the Biggest Enemy of Sustainable Economic Growth
Zsolt Gál As long as there is continuously high demand for populist policies, emergence of a party with a populist agenda is merely a matter of time; like in economy, demand in politics will always create its supply. The key to understanding populism is to understand demand on the part of voters, popularity of offered slogans, programs, solutions and pseudo-solutions. As long as there is demand for populism, there will be supply of populism. The principal question therefore is why economic populism is so much in demand among voters or why voters continuously vote for populist parties. There are two plausible explanations that are alternative to one another but do not exclude each other:- Voters are rational in the sense of rational egoism, i.e. they want to snatch as many government-disbursed advantages as possible. Since most voters in Hungary as well as in Slovakia are those who are financed by the government (i.e. their income originates in the state budget), they selfishly tend to vote for parties that promise to increase public expenditures, which leads to fiscal expansion.- Voters are irrational in terms of a significant share of their views, values, convictions and concepts that are not rational from the viewpoint of mainstream economy. In other words, they believe economic myths, they believe the opposite of what economic science has proven; based on these erroneous believes and false convictions, they subsequently vote for populists who repeatedly advertise the same myths voters want to hear. Let me first explain the first hypothesis, i.e. rational egoism of the majority of people who existentially depend on the state budget. Using the example of Swedish economy, Assar Lindbeck pointed out a dangerous trend of the deteriorating ratio of those whose income originates from the market and those whose income depends on the state budget. The former group of ‘marketfinanced’ comprised all people employed in the private sector; the latter group comprised all people financed by the former group, i.e. pensioners, the unemployed, public sector employees and people who are temporarily outside the labour market and live off various welfare benefits (e.g. people on parental leave, people collecting sickness benefits but also those employed in various labour market programs). While in 1960 Sweden had 0.4 government-financed persons per each person employed in the private sector, by 1995 their number increased to 1.8 (Lindbeck, 1998, p. 9). Naturally, this implies the necessity of high tax and contribution burden by which Lindbeck partially explained why Sweden’s rate of redistribution is among the highest in the world. Hungarian economist János Komái pointed out that the ratio of those who “live off the state budget” to those who “live off the market” was even worse in Hungary in 1993 (1.65 to 1) than 202
