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 3rd stage. Great scarcity, galloping inflation that often turns to hyperinflation and obvious overvaluation of the national currency causes a massive withdrawal of capital from the country and causes demonetarization of national economy. The already exorbitant budgetary deficit deepens even further because continuously high budgetary expenditures are suddenly combined with declining tax revenues. The government grows desperate and decides to cut expenditures and devalue the national currency, which leads to a substantial drop in real wages. This usually causes an abrupt political change, such as a violent toppling of the government. 4th stage. An austerity stabilization package put through by the new government (usually with assistance from the IMF) leads to significant cuts in expenditures, a further decline in real wages compared to when the populist cycle started. To make matters worse, wages tend to remain at low levels for an extensive period of time because the capital has lost confidence in the national economy and investments stagnate. Since there are differences between CEE and Latin American countries, there are several significant differences between the natures of populism in both regions as well. They stem mostly from the fact that CEE countries (except for Poland) are substantially smaller, their economies are more open and they are members of various integration groupings (particularly the European Union) or at least strove for full-fledged membership in these groupings during the transition period. Therefore, it has been virtually impossible or at least very difficult for them to apply a whole range of tools of Latin American populism such as controlling monetary policy or mounting political pressure on the central bank, controlling foreign exchange rates and flows, protecting the domestic market, meddling and distorting pricing, etc. Because of that, populism is manifested mostly through expansive fiscal policy. Also, the population is not as heterogeneous in CEE countries in terms of ethnic or income disparities; last but not least, big domestic landowners and industrial tycoons were naturally non-existent affér the fall of communism, which is why populist politicians were not urged to fight them. Another, rather seeming, difference is that CEE countries in the final stage of the populist cycle usually managed to avoid total economic collapse, hyperinflation, disintegration of the financial system, fall of the national currency and eventual violent toppling of the government; however, that was not because such a scenario would be improbable in this region but rather due to the fact that the political elite (in the nick of time but still) managed to adopt inevitable measures aimed at avoiding a total breakdown (i.e. stabilization packages in 1995 and 2008-09 in Hungary and in 186
