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- Populists’ other favourite tools include furthering state ownership (either via introducing nationalization or postponing privatization, often under the pretext of protecting ‘national interests’) and controlling prices, currency’s exchange rate and financial flows; however, due to already mentioned limitations, CEE countries cannot apply them as often and to as great an extent as it was or is the case in ‘traditional’ Latin American countries.

Another hallmark of populist economic policy is that populists who are considered ‘soft’ from the political viewpoint are able to ruin economy just as efficiently as ‘hard’ populists. The only difference between them is that ‘soft’ populists do not tend to destabilize basic institutions of liberal democracy unlike ‘hard’ populists who may thus undermine the democratic system of government (Smilov - Krastev, 2008, p. 9).7 A good example may be served by the coalition of socialists and free democrats that ruled in Hungary between 2002 and 2006. The Hungarian Socialist Party that was the dominant ruling party during this period certainly does not belong to ‘hard’ populists in terms of threatening liberal democracy in the country; still, it was very ‘effective’ in bringing the economy on the verge of collapse by completely ignoring fundamental economic rules.

László Csaba recently pointed out a new kind of macroeconomic populism, using the example of new EU member states, particularly Baltic countries, Romania and Bulgaria. Csaba observes that these countries did not post high budgetary deficits or ballooning public debts after the turn of the millennium but they failed to keep private consumption on leash; the loan boom that ensued was accompanied by unsustainable, sometimes vast deficits on the current account of the balance of payments (reaching 15-22% of GDP) and caused overheating of economy. In other words, populism did not show on the expenditure side but rather on the revenue side of these countries’ budgetary policies, mostly because governments failed as regulators.8 While these countries’ economic development and economic policies rather resemble countries of East and Southeast Asia before the Asian financial crisis (1997-1998), there are also certain parallels with western countries before the contemporary economic crisis. But as I already foreshadowed, populism in Hungary and Slovakia resembles especially the ‘classic’ Latin American model and therefore examining the new kind of macroeconomic populism shall not be the goal of the present study.

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