The UK Left and Brexit

by car05 Thu Aug 27th, 2015 at 02:37:04 PM EST

Many on the UK left seem caught in the middle between escaping from an EU that, after the treatment of the Greeks, looks like an instrument of torture, and the gloomy prospects for the politics of an unreformed UK state...

The long-awaited in-out referendum on the UK's continued membership of the European Union (EU) is coming soon, in 2016 or 2017. But it isn't clear what, if any, clear options exist within a morass of unpredictable consequences and a rapidly growing uncertainty at the heart of a European project increasingly dominated by a single, politically rootless German state.
EU reform and the left.
Those of us on the left, seeking more genuinely internationalist outcomes, might place faith in the prospect of a reformed EU. Perhaps this would entail a wholly improved and empowered European parliament, which would either involve a diminution of national sovereignty or a decrease in inter-governmental decision-making. It might involve a newly remoulded European commission, dedicated to developing new forms of actual co-operation across Europe, rather than simply pushing for liberalisation and strange policy minutia which barely flirts with regulating a fairly destructive consumer economy.
It should be noted that realistic chances of such reforms to parliament or commission happening appear to be exceptionally remote, and that the commission appears to lack both the drive and resources to engineer a form of internationalist social enterprise as many of us would perhaps like to see. Despite the presence of some fairly underdeveloped countries and regions on Europe's south-eastern borders, we are unlikely to see pan-international development strategies along the lines of a Marshall Plan.
Instead, given that fundamental institutional reform is such a remote and unpopular prospect, a pro-reform stance would perhaps require a more explicit political union of Eurozone countries in order to engineer pan-European Keynesian economics in the core EU federation. It holds out the prospect of Eurobonds, and increasing fiscal union, with political structures which would increasingly cement the Eurozone states into an inseparable federation.
Of course, with the UK unlikely to adopt the Euro in any case, this would not be an option which the UK could seriously engage with or promote, even if it were to continue its reluctant and grudging acceptance of EU membership. If the Eurozone were to allow a Keynesian approach to deficit spending, it would require the amendment of treaties extending back, at least, to the 1992 Maastricht Treaty. Once again, one is forced to conclude that such a development appears unlikely.

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What I think is uniquely frustrating in 2015, is that there are these huge transfers going on from the richer to poorer countries in the EU; but with hugely inequitable results... And if it all falls apart at some stage, the opportunity for any kind of solidarity might be even harder.

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Hungary and the perils of 'upward mobility'

by car05 Tue Jan 7th, 2014 at 09:51:05 AM EST

Some time in the middle of last year, political theorist József Böröcz wrote a blog post regarding the direction of Hungarian society, and it was pretty powerful stuff.

Arguably, Hungary is showing some powerful symptoms of a fascist transformation. Special thanks for that to the elites--both the right wing and the middle (there is of course no "left" visible in politics in Hungary)--that managed the transformation from a somewhat bureaucratic and perhaps a bit boring, upwardly mobile state socialist society, producing, at its peak, food for twice its population, with better-than-expected scores on the quality of life, culture, health, etc., engaged, at the time of the collapse of state socialism, in bold and extremely creative experimentation in many areas of social and economic life to a small, insignificant, desperate, self-hating, xenophobic, classist, racist, sexist, ageist snake pit with widening social inequalities.

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Hungarian 'socialism' - Neil Clark on the lighter side of Orban

by car05 Wed Nov 6th, 2013 at 02:11:40 PM EST

Article here by Neil Clark looks at Viktor Orban's approach to nationalisation and public ownership.

In this country, the government has imposed a cut of over 20% in energy bills - a 10% reduction came into force in January, a further 11.1% cut will be implemented in November. It is also drafting a bill that would ban utility companies from paying dividends to shareholders. The aim of the government is to return natural monopolies to the public sector, to operate on a non-profit basis. "We must once and for all bring an end to the era where energy providers can ride roughshod over people," the country's leader declared.

Fidesz contends that there were 15 price increases in gas bills during the period 2002-10, when they were in opposition, and that urgent action was essential to ensure cheaper energy bills for households and businesses. Hungarian politicians have sneered at Orbán's populist stance on energy, but the government's policies have brought relief to ordinary people and made everyday life more bearable in a country where around 20% of the household budget was going on gas bills.

There is also the recent renationalisation of Dunaferr, a steel plant in the industrial city of Dunaujvaros and the renationalisation of the river freight company.

So what does all this mean?

Firstly, it should emphasise that Fidesz have identified the actual centre of politics in Hungary - that most people are responsive to forms of social democracy - and that Fidesz needs at least some of the working class to turn out for them next year.

Secondly, it would be wrong to equate nationalisation with socialisation: if Fidesz are going for 100% state capture, we'd expect them to nationalise more things. Creating a not-for-profit company doesn't mean that certain favoured individuals won't stand to gain in the form of large salaries and sinecures.

Thirdly, and this is perhaps harder to stomach, by doing this, Fidesz are strategically encircling and outmaneuvering the mainstream left in what is, frankly, a bit of a genius move. When combined with their increasingly invasive use of public media, Fidesz are obviously aiming for the jugular.

Interested what people think.

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Flat Tax Hungary: Born of Tension and Division

by car05 Wed Oct 10th, 2012 at 09:15:45 AM EST

As readers of European Tribune would know, a European Transaction Tax is seen as enabling progressive taxation and undermining speculation. The new French government has also implemented progressive tax measures, in order to ensure that the most vulnerable bear less of the cost of austerity. We can question the underlying cause of all cutbacks, and the best way to address the ongoing crisis, but the concept of the richest paying their fair share seems to be part of a growing consensus, and it's getting some of us quite flustered.

Based mainly in the UK, the Tax Justice Network has set the pace by conducting a number of investigations and highlighting various personal and corporate loopholes, many of which have been seized upon by MPs and have gained wider recognition in the media. In his unofficial role as Taxfinder-General, accountant Richard Murphy has opened up numerous fronts in the ongoing struggle to ensure that the richest 1% pay something like their fair share. Tax fans are especially aroused by the prospect of his forthcoming tome, 'The Joy Of Tax.' The Tax Justice Network has also been documenting an 'informal empire' of British tax havens. They have highlighted the way the way in which these havens exist in a semi-official capacity, as establishment options, whereby the heavily minted are able to squirrel their wealth away from scrutiny.

It remains to be seen whether this will result in high-profile changes to the law, or whether in the future it will be possible to claw back some of that money for the commonwealth. Yet with all this going on elsewhere, Hungary appears to stand conspicuously against the trend.

This is not going to be one of those articles which castigates the devilish Viktor Orban for destroying democracy and imposing a brutally regressive tax system. Of course, the latter is exactly what he has done, with income tax reduced to a flat level of 16%, resulting in a shortfall covered by a plethora of mini-taxes on consumption, bank withdrawals, mobile phone calls and a massive 27.5% VAT on most basic items. The question here, is how Fidesz commanded any popular support at all for such a move, despite the opposition of most people with some form of basic economic knowledge, and the change resulting in little or no gain for the majority of people.

What is it about the Hungarian economy, which made a flat tax system such an appealing prospect to some people? Initially, the ruling Fidesz party argued that setting taxes so low would increase the collection of taxes, as people increasingly opted into the system, rather than seeking to work in the black or grey economy. We've heard almost nothing about the success of the flat tax in increasing collection rates, but it would appear that no great increase in collection has occurred. This is possibly related to the fact that employees do not choose to work informally. The process is almost entirely driven by the employer, who would perhaps prefer to maintain the easy savings from having illegitimate payments at their current level.

The other possibility is that the government is indulging in trickle-down economics, expecting a massive tax break for the richest to percolate into the economy in the form of new luxury cars and all of the other consumer items which are expected to reheat a stalled economy. Of course, many such items would be imports. And in the absence of functioning property or employment markets, it is very doubtful whether the extra money has fed into the Hungarian economy. I suspect much of it may have found its way to Switzerland, either invested in gold or in holidays in the Alps. Fidesz also promised a wealth ceiling in addition to a flat tax - a rate of 80% on all earnings in the top 2% or so. More than two years later, this has failed to materialise.

Probably though, we would need to move away from looking at practical explanations to understand what has been going on here.

Firstly, the link between paying taxes and using public services has been rendered tenuous. The common perception is that income tax is literally stolen by politicians, especially those politicians that one didn't vote for. The condition of public services, with Hungarian teachers and nurses among the worst paid in the EU, and deplorable levels of social security, are not linked in the public imagination to the failure to pay tax. This is despite a fairly persistent campaign by former PM Ferenc Gyurcsany, who attempted to spell out the implications of tax-dodging. A campaign which was, in a tragicomic twist, farcically undermined by the smell of sleaze and embezzlement which emanated from many members of his government.

Secondly, there is little trust in the rule of law. Not only does this infer that taxes are likely to be stolen. It also means that people do not trust that tax evasion will be fairly investigated and that authorities could catch real culprits. In their last spell in office, Fidesz set up a number of offices in order to enable prosecution of tax evasion, which were promptly closed down when the Socialist-Liberal coalition won in 2002. It looks as if Fidesz aren't going to bother again. This has deep implications. It acknowledges that the rich in Hungary are literally a 'law unto themselves' - that they are beyond the power of redress.

Finally, among the younger people in Hungary who have so far failed to board a one-way flight to the UK, Ireland or Germany, there is a deep ideological prejudice against tax. It is here that the cultural influence of the United States and an individualist mindset can be seen. It is almost inconceivable that a progressive tax system, were it introduced, would approach the levels of Scandinavian democracies, and a top rate of anything above 40% appears extreme - even immoral. There are many on the left now who aspire to a 'Scandinavian' system, but who would recoil from Scandinavian tax rates. There is also a perception amongst some on the 'liberal left' that public services can be delivered privately, even from the point of funding. Gyurcsany's last 'social-liberal' government had well-developed plans to obliterate the current system of social insurance, in an attempt to introduce an Americanised system of healthcare. For opposition to the current government, many people don't know quite where to look.

It is very unlikely that in the near future Hungary's economy will begin to look like that of Norway or Sweden. Its role on the semi-periphery of Europe's financial and economic thoroughfares, its multiple dependencies on external debt and its increasingly segregated populations; all of these make for limited room for manouevre. Hungary does provide a taste of what the alternative to tax justice could be like. Hungary's position is arguably better than many of its neighbours to the East and South, yet it is undoubtably trapped in a cycle of public service dysfunction, political malfeasance, economic cleavage and shrinking prospects of improvement. Adoption of a flat-rate tax system may be, more than anything, indicative - a rotten symbol of a state in an increasingly precarious condition.

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Erzsébet Szalai The indiscreet charm of dictatorship - translation

by car05 Wed Mar 28th, 2012 at 03:45:41 AM EST

Hi, Posting this in its entirety... hope it is of interest. First published in English in Tribune (http://www.tribunemagazine.co.uk/)

Back in the late 1980s in communist Hungary, two power groups dreamt of the emergence of a local bourgeoisie, of an authentic class based on ownership, in a free and independent Hungary. These groups, consisting of the technocracy of the late-communist, Kadar era, and the thin layer of liberal intellectuals, also wanted to encourage the inflow of foreign capital, and considered this even more important than supporting the birth of the Hungarian bourgeoisie. Ever since then, Hungarian public policy has uncertainly hovered between the interests of foreign and domestic capital in contorted attempts to simulate the textbook models of free-market capitalism.

The forces of Hungarian big capital, having stabilized their position by the middle of the 2000s, came to actively resent the privileges of foreign capital. With multinational companies benefiting from development subsidies, tax breaks and general assistance from the state, it is hardly surprising that foreign capital has benefited at the expense of the Hungarian bourgeoisie, among others.

Just as adolescent children are embarrassed by their unhip parents, the capitalist offspring of the liberal intellectual class were to become frustrated with their mentors. One of the renowned representatives of domestic business interests, Tamás Kolosi, even accused the 'transition's intellectuals' of being the main obstacle in the evolution of structural reforms, designed to consolidate a neo-liberal client state. Meanwhile, Hungarian big business and the late-communist technocracy had been in conflict for some time, beginning during Péter Medgyessy's Socialist-led coalition government, which took office in 2002. Medgyessy, in accordance with his election promises, began a process of transition towards a comprehensive welfare state. The decisive factor in Medgyessy's failure was the abandonment of the Hungarian Socialist Party (MSZP) by the domestic bourgeoisie - which had serious financial and political consequences. His successor, Ferenc Gyurcsany, was to depend on the backing of big business throughout his troubled period in office.

During the twenty years following the political transition, more than one and a half million jobs have been lost in Hungary. The combined weight of inward investment (FDI) and domestic business has been unable to retrieve these jobs. They have even accelerated the decline by their activities. Upon winning in 2010, Viktor Orbán and his team soon understood that Hungarian big capital remains unable to set the wheels of the domestic economy in motion, despite the decisive factor that nationalist rhetoric, and support from domestic business, played in their electoral victory.

For Hungary, the possibility of independent political and economic activity has practically ended because of the dismantling of the national economy: the foreign and the domestic owned sectors of the economy are separated. Even the dominant domestically owned sector fails to make a vertical unit. For example, Audi and Ericsson have nothing to do with each other from the aspect of production. Thus the opportunity for an independent economic policy - which would involve the dominant sectors pulling along the others on a demand-side basis- belongs to the world of illusions.
This is why Orbán's evolving dictatorial system cannot exclusively represent the Hungarian wealthy classes; it is perhaps better to regard it as a system built (and being built) by those espousing a 'vision of a raising a great nation,' led by a holy, God-given objective. It's a system based on using all means necessary, especially centralisation, but also including covert and forceful measures, against opposing social forces. The new system is authoritarian and legalistic, largely depending on social inertia and hierarchy for low-level compliance, but capable of violent suppression.

However, all of this is only enough for the country to stay on the semi-periphery - or perhaps not even that. As the Latin American experience of the 1980s tells us, local culture dries out, even dies out, stranded on the periphery and semi-periphery. We can see the new political leaders have even accelerated this process, by alienating Hungary from the rest of Europe. The so-called national government and its interest groups think it's high time to not only break with the technocracy of late communism, but also the social sciences which address the internal reality of Hungarian society, as well as the total elimination of transition-era intellectuals from public life.

Instead of urging co-operation between Eastern European countries, and common action based on equality so that they will be able to commonly voice interests in international forums, Viktor Orban wants to be the leader of these countries. Instead of cooperation he favours competition.

Kurt Lewin writes of three main modes of organising society. The first one is the democratic one; its essence is that the decisions are made together, by consent of the members of the society or the community. These decisions are implemented by social stakeholders together, based on free will. The second one is laissez faire; this, apparently, is the empire of total freedom and free competition. In fact, with free competition, the weaker is always oppressed by the stronger, as the stronger tend to take a larger and larger share. In this model, the weaker become, sooner or later, absolutely defenceless. Then they start longing for a leader able to restore power and security.

This is how the third model, dictatorship, is generally born. The leader does not only promise the restoration of the people's financial security but of their self-image and identity, as well.

This is exactly the core of the process that has been going on during the previous two decades in Hungary. With the transition, the elementary security of wide social groups faded away, and their identities were torn to pieces. And the leader, Viktor Órban, having got into power in 2010, connected exactly to these feelings in his electoral propaganda: he promised order, discipline and safety. He promised that us as Hungarians, can finally join together in a big, united and victorious nation. And whilst the contrary of all of this is evident, the realisation of the fallacy is in vain - the fantasies and desires of so many people remain.

All of this is also strengthened by external circumstances. In the era of new capitalism which has evolved since the 1970s, the era of globalization, those countries that have generally been successful and able to develop, have been those whose leaders have been able to filter the impacts of globalization. And these have been either political dictatorships (e.g. China) or strongly autocratic systems (e.g. Russia), proving that concentration of political power goes very well along with a 'free' market economy. This is a very dangerous experience and example for the world - especially for small countries like Hungary that are vulnerable, from a geo-political and economic perspective. However, the current political leadership, in its total lack of self-reflection, is obviously set to follow the example of these countries, even as EU membership confirms inertia and exclusion, rather than violence, as the most usual form of oppression.

The only question is when - or if - our society will wake up.

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