Figures like Tucker Carlson have hailed Hungarian premier Viktor Orbán for marrying cultural conservatism with protectionist economic measures. Yet for all his demagogic attacks on finance, Orbán's policies have favored local oligarchs and sharply increased social inequality — pointing to the hollowness of his American fans' own "pro-worker conservatism."
On December 10, 2020, Gladden Pappin, professor of political theory at the Catholic-affiliated University of Dallas, tweeted about his meeting with Hungarian families minister Katalin Novák. Pappin’s tweet praised Hungary’s family policies, aimed at reversing demographic decline in a country with birth rates among the lowest in Europe. Minister Novák also happens to be the vice-chair of prime minister Viktor Orbán’s Fidesz party. Pappin’s enthusiasm might seem unusual at first glance. After all, in his three consecutive terms since 2010, Orbán has more often made headlines by putting the small post-socialist country at the forefront of the global radical right than on account of his economic policies.
The same week, the Texas Monthly ran a piece on Pappin, characterizing him as a proponent of reshaping the Republican Party to become more accommodating of working-class demands and public spending. Outside the classroom, Pappin is also the deputy editor of American Affairs, a journal known for its call for the US right to mount an “economic populist” turn with more industrial policy, employee protections, and higher taxes.
Pappin is not the only American Affairs editor to have recently expressed fascination for Orbán’s Hungary. Around the time of his visit to that country, editor in chief Julius Krein appeared on a panel hosted by Budapest’s Mathias Corvinus Collegium, a government-funded educational institution and think tank. In his talk, Krein praised the Hungarian right for not falling for the Reaganite small-state libertarianism that he saw as the biggest obstacle to introducing “economic populist” policies under Donald Trump.
Pappin was also not the first prominent self-identified “pro-worker conservative” to praise Orbán’s family policy: in 2019, Fox News’s Tucker Carlson discussed the generous family support schemes introduced in Hungary to incentivize childbirth for married couples. Patrick Deneen, conservative political theorist and author of the widely read Why Liberalism Failed expressed similar views after a private meeting with Orbán during his 2019 visit to Budapest.
Yet while they praise Hungary as a conservative country that still cares for its average citizens, the Orbán regime contradicts their claims in key areas. The new family-support schemes, the signature social policies of the Orbán era, are deliberately designed to exclude low-income families. This is ensured by making most support for families with children accessible only in the form of tax benefits and state-subsidized commercial loans and mortgages. Such financial products are only available through commercial banks that apply the usual creditworthiness criteria, excluding low earners; and in truth, mortgages can only be used for buying homes of a size out of reach for most families in need. Meanwhile, the amount of the universal in-cash family benefit has remained unchanged since 2008. These measures have clearly disadvantaged the working poor and the unemployed, including the overwhelming majority of the Roma, who make up approximately 8 percent of Hungary’s population.
These policies stand in stark contrast with Mitt Romney’s recently proposed Family Security Act, promising universal direct monthly payments and benefiting families regardless of employment status. Nonetheless, in his recently published article in the New York Post, Pappin still advocated for this bill with a reference to Hungarian family policies. This persistent admiration seems all the stranger if we consider that he would not have had to look too far from Hungary to find a country where child support is available to low-income families, too. In 2016, Poland’s populist right-wing Law and Justice Party (PiS) — a close Orbán ally — introduced a new universal family allowance scheme that has successfully decreased child poverty, despite its otherwise problematic record on issues like women’s rights.
Pappin, Krein, Deneen, and Carlson exemplify a recently growing interest in Orbán’s Hungary among a particular group of American conservatives. These men count among the “post-liberals,” a loose intellectual and political movement ranging from columnist Rod Dreher to Congressmen Josh Hawley and Marco Rubio. What ultimately connects them is their critical stance toward “liberal identity politics” and establishment Republicans’ free-market orthodoxy — an approach presented as a rejection of liberalism both in culture and economics.
While many such figures have hailed Steve Bannon’s “economic populism,” the Trump presidency disappointed them with its continuation of corporate tax cuts and lack of substantive engagement with working-class economic concerns. To them, Hungary may seem like the post-liberal utopia: Orbán’s much-vaunted crackdown on “political correctness,” strict immigration policies, and attacks on secularism and minority rights have been combined with what from the other side of the Atlantic might seem like a pro-worker, left-leaning economic agenda. Arguably, not all “pro-worker” Republicans have a favorable view of Orbán: key figures in this current, such as Michael Lind and Oren Cass have so far entirely refrained from publicly praising Orbán. While Marco Rubio has signed a public letter expressing concern for the state of Hungarian democracy, according to Hungarian media, Fidesz campaign managers were allowed to get an insider view of his 2016 Senate campaign during their field trip.
This favorable view of Orbán, however, provides anything but an accurate reflection of Hungary’s political reality, where the exclusionary logic behind family policies is not a bug but a feature of the government’s economic agenda. Generous support for domestic oligarchs, in the name of supporting domestic ownership in strategic sectors, makes “Orbanomics” more interventionist than conventional Reaganite policy would prescribe. But it has mostly remained committed to the neoliberal economic credo. Yet while the regime’s dismal record on rule of law, media freedom, and corruption has been widely discussed in the American press, the myth of its anti-neoliberal economics has persisted.
The Reality of Orbanomics
After the transition to a market economy, textbook-style economic orthodoxy reigned supreme across the Eastern Bloc. The social-democratic and liberal coalition that governed Hungary prior to 2010 wholeheartedly embraced market fundamentalism: the prime minister at the time, Ferenc Gyurcsány, was even characterized as Hungary’s Tony Blair. The comparison stood the test of time surprisingly well, inasmuch as both New Labour and the reformist Hungarian Socialist Party have successfully alienated their working-class constituents for decades to come.
Compared to them, Orbán’s emphasis on economic sovereignty and staunch critique of the IMF and international capital could be mistaken for a turn away from neoliberalism. His government introduced strict financial regulation and managed to reduce financial vulnerability by restructuring public debt, so that it is today held mostly in domestic instead of foreign currency. Government members themselves have also flirted with the idea of a left-leaning, statist economic policy: in 2012, then minister of finance and current central bank governor György Matolcsy described Hungarian economic policy as “Keynesian,” while state secretary for economic strategy László György often refers to Hungary as a developmental state.
This image has dominated the reception of Hungary’s economic policies among American post-liberals, too: in Cristopher Caldwell’s 2019 Claremont Review portrait essay, Orbán is depicted as a fierce commander, aided by radical economic policies, as he successfully does battle against the will of international investors and unelected bureaucrats.
However, Orbán’s political role models provide a more authentic characterization of his economics. While his predecessor was a fan of Blair, Orbán’s true sympathies lie with Margaret Thatcher. He was among the few foreign heads of state from outside the Commonwealth to appear at her 2013 funeral, and still cites the “Iron Lady” frequently in his speeches. His government also provides generous funding to the Danube Institute, a neoconservative Budapest-based think tank, led by none other than former Thatcher speechwriter John O’Sullivan. The notion of Thatcherism has been employed by the likes of social anthropologist Kristóf Szombati to explain Orbán’s neoliberal social policy regime, officially named a “workfare society”:
Orbán adopted Thatcher’s view that the best means to reinvigorate an ailing economy — besides exercising fiscal restraint — is to unleash the creative power of private enterprise through the reduction of taxes and incentives for productive investment, and to extract the maximum amount of labor from the workforce by drastically reducing unemployment benefits, stigmatizing and punishing idleness, and rewarding those who take up work in low-wage sectors of the economy.
In the name of restoring the “dignity of work” and policing “welfare scroungers,” an early social policy measure of the Fidesz government cut the recipiency period for unemployment benefits to three months — the shortest in the European Union. Eligibility has not been extended in response to the COVID-19 shock, either. In addition, the new constitution passed by the Fidesz parliamentary supermajority in 2011 left out previous references to social rights. So, it should be no surprise that despite his popularity among post-liberals, Orbán’s American idols don’t come from their ranks. Rather, his premiership has seen the inauguration of statues of both Ronald Reagan and George Bush Sr at a central square in Budapest.
In some aspects, Hungarian economic policy since 2010 has followed the recipe of Reaganite orthodoxy much more closely than it did in the preceding decade. Fidesz has introduced a flat income tax (including a tax on the minimum wage) and the lowest effective tax rate in Europe for multinationals, who are assisted by generous special tax breaks, too. As a result, several major German manufacturers have enjoyed state subsidies in Hungary far greater, per worker, than in their own country — contradicting Orbán’s fierce rhetorical attacks on international capital.
Although the Orbán regime has sharply criticized the preceding social democrats’ austerity measures, since 2010 his own tax cuts and fiscal “prudence” have virtually maintained an austerian approach. While post-liberals have simultaneously praised Orbán and nudged Republicans to embrace public expenditure, social and educational spending as a share of GDP has decreased in Hungary since 2010. While the government propaganda speaks only of success, overall inflation-adjusted wage growth in the last ten years was not particularly impressive in regional and European comparison, while public sector wages have lost much of their real value.
According to political economist Gábor Scheiring, this amounts to nothing less than a perverse system of welfare for the wealthy:
The government not only slashed social spending, but it also did so in a highly unequal way, redistributing resources to high-income earners. Between 2009 and 2017, the social component of individual incomes — for example, benefits, pensions, allowances — declined dramatically for the bottom income deciles, and increased considerably for the top income deciles.
Indeed, despite American Affairs editor Krein’s claims, Hungary is not a great example of a strong state. Rather, as noted by Marxist social critic G. M. Tamas, among others, Fidesz has deconstructed the country’s administrative capacity, while the deteriorating quality of public provision has driven the middle class increasingly to opt for private services, particularly for health care and education.
In Why Liberalism Failed, Deneen draws heavily from socialist theorist Karl Polanyi to lament the destruction of social bonds by unrestrained market forces. But employment relations under Orbán stand in stark contrast to the visions of pro-worker US conservatives. Besides the tax cuts, the accumulation regime since 2010 has been built upon wage restraint and the repression of workers’ self-organization. The new labor code passed in 2012 hollowed out the institutions of tripartite wage bargaining, effectively outlawed strikes in the public sector, and is overall said to be one of the most employer-friendly in Europe. In 2019, the parliament also passed the infamous “slave law,” which secured employers’ authority over the allocation of overtime and holidays. In response, the country saw a sustained wave of protest by trade unions. Unsurprisingly, Hungary lags behind almost all EU members in terms of labor rights: according to the 2020 Global Rights Index published by the International Trade Union Confederation, workers’ rights in Hungary are violated on a regular basis, leaving the country in the same group with South Africa and Russia.
As a consequence of these policies, during the last eleven years of Orbán government Hungary has seen income inequality skyrocket even as it has decreased in neighboring countries. While the absolute level of inequality is yet to reach that of the English-speaking world, it is concerning that Hungary has the lowest level of social mobility across all developed countries: according to a 2018 OECD study, currently it would take a low-income family seven (!) generations to reach the average income level.
Government officials usually explain the frequent interventions favoring their cronies as moves to pursue “economic sovereignty,” putting emphasis on the need to keep strategic sectors like banking and energy in domestic ownership and the goal of creating globally competitive, Hungarian-owned enterprises. While this argument could entice post-liberals demanding large-scale industrial policy, more than a decade of development policy under Fidesz has not produced any success story comparable to those of countries like South Korea. Despite claims that Hungary is creating a new developmental state — and Orbán’s allusion to the success of Singapore in his infamous 2014 speech on illiberal democracy — there is no evidence that Hungary has been moving up global value chains.
Meanwhile, rent-seeking cronies have amassed enormous fortunes in low-value-added sectors like construction and agriculture, which also happen to receive the most investment and subsidies from EU funds. While Hungary has enjoyed high growth rates in the last few years, it is lagging behind most regional economies with similar profiles. Overall, the promises of industrial policy are emptied out by the fact that domestic small- and medium-sized enterprises face higher effective tax rates than multinationals. Disinvestment in human capital formation in general, and education in particular, is hardly the usual way to build comparative advantage, either.
The Pilgrimage to Budapest
At a time when pundits around the world have announced the end of neoliberalism in response to unprecedented COVID-19 crisis mitigation efforts, illiberal Hungary should serve as a cautionary tale. As the last decade of the country shows, free market orthodoxy and punitive welfare arrangements can be swiftly combined with targeted economic interventions without actually giving way to a Keynesian, activist policy regime that would aim primarily at increasing the living standards of workers. Despite the occasional rhetorical gestures, Fidesz is no friend of Hungarian workers, and its pursuit of “economic sovereignty” mostly boils down to attempts at subsidizing local oligarchs.
Orbán apologists are not factually wrong in asserting that his core constituency is primarily made up of the economically insecure. According to a recent study, support for Fidesz is inversely related to income, with the underclass thinking most favorably of the party. However, just like in Trump’s America, these voters threw their support behind a government from which they have received little material benefit. As Gábor Scheiring puts it, in Hungary, “authoritarian practices are used to bolster the enrichment of the elite, while authoritarian populist discourses are used to make the redistribution of resources from the bottom to the top more palatable for the masses.”
Aside from Boris Johnson and Benjamin Netanyahu, few politicians currently in office have received more applause from the American right than Viktor Orbán. However, in light of the actual policies of the regime, pro-worker post-liberals’ love of Orbán does not amount to more than wishful thinking. It was not by accident that Orbán took up the role of true heir of Reagan at the National Conservatism conference in Rome in February 2020. To him and his allies, the approval of prominent American conservatives with pro-worker sympathies helps whitewash their image. But when the stakes are high, their affinities will always be with big-business Republicans and old-school Tories. Post-liberals may criticize Western Marxists’ hypocritical support for the repressive regimes of the former Eastern Bloc. But their failure to acknowledge the realities Orbanomics condemns them to a similar fate.
However, some American Orbán apologists may not be making the pilgrimage to Budapest out of a naive misunderstanding but because the regime’s real appeal lies in its cultural conservatism, not the pro-worker economic measures they so hail. In this, they would not be so unlike Steve Bannon: despite his carefully cultivated image as the American right’s ultimate “economic populist,” he did not care to put too much effort into putting his ideas into practice once he arrived at the White House. As told by Joshua Green, “he tried for only ‘a couple of days’ to build support internally for tax hikes on multimillionaires,” instead devoting his energies to mobilizing anti-immigrant sentiment and building the Mexican border wall.
More thoughtful Orbán fans like Sohrab Ahmari from the New York Post have rightly acknowledged that Hungarian social and economic policies “don’t make the country popular among progressives,” while others such as Rod Dreher have always emphasized Orbán’s commitment to Christian values. Indeed, with measures ranging from building a border fence to abolishing gender studies departments and outlawing adoption by same-sex couples, Orbán has delivered much more culture war than economic change. The sincerity of post-liberal conservatives’ adherence to a solidaristic economy has been put into question before. Now, their attitude toward Orbán’s Hungary is a test of their true commitments.
This post was originally published on Jacobin.