Rule of Law?

In the last post I've mentioned the efforts of the Romanian government to reduce budget spending, besides other attempts, in the judiciary system as well. Today the judegs fought back, or one can phrase it otherwise: the rule of law was upheld. The Court of Appeal in Bucureşti decided that the Ministry of Finance is obliged to pay for the judges of the Supreme Court every element of their payment as it was established by the respective law. Among others the 50% additional payments as special allowance for the stress, they should bear in the courtrooms. The decision is final and irrevocable, with no room left for further appeals.

The story is rather absurd, one can not easily dismiss the feeling that one court decided in favor of the other eying the implications of its decision regarding their own earnings. As the idea of not paying a decent sum for judges - in order not to make the common people furious about their income - instead disguise it with such rabulistic methods similarly belongs to the field of absurd. And at last there is the government's idea not to amend specifically the respective legal framework, instead implement a law on the budget, clearly contradicting the provisions of other legal acts in force, that way triggering an uncertainty in the structures of the state, it is also part of an absurd story. Not that it is really important, but maybe gives some insight into ECE's realities.

Detruisez l'Autriche-Hongrie - reloaded?

Indivudal states - as entities and historical individualities - are not eternal ones. A significant part of the world's and Europe's sovereign entities are relatively newly established, and many of the seemingly resilient ones went through phases in the last hundred years when their existence and/or sovereignity was in doubt. It is quite clear in the Eastern part of the EU, where every new member state didn't exist 150 years ago (or at least not in their present form and as sovereign states - for example Hungary or Romania), many of them was established as independent nations after the WWI but ceased to exist between 1939 and 1944, while others emerged as new "powers" of the region. The realignment of ECE happend again in 1945-1947 and after 1989.

The important point is that the present configuration of this part of the continent is not necesserily an eternal, given one sanctioned by thousands of years of history, or a divine action: it is a reasult of the collapse of greater frameworks of states, empires and would be nation states. Those who are familiar with the region's history will almost automaticly associate to violence, war, armed attacks on neighbours after reading such an introduction, especially after the rise of extrem rightist (and extreme nationalist) forces at the election for the European Parliament. But my only concern was to highlight that states can collapse, fail and be dissolved due to the circumstances. Some of them is simply collapsing, as its institutions can not control its territory, others' endgame begins at the fringes, with the loss of efficiency of the state administration and with the emergence of alternative powers at the local or regional level, others simply implode due to their incapacity to fulfil its tasks and responsibilities towards its subjects, and these factors can coincide with each other. But, although in many times a kind of external impact - in the form of war, crisis, presure from a great power etc. - plays an important role in it, the internal incapacity (impotency) of the state is almost never lacking among the factors behind such developments. And - as it is a lesson from these events - even the largest and seemingly quite stable formations can be dissolved very rapidly, at an astonishing pace.

Maybe we can see similar processes at the fringes of the EU today. Countries, struck by the crisis, without room for manouvre and having lost a significant part of their state revenues, compelled to follow prescriptions of great creditors who rushed to their aid and bailed out them, are in more and more dire situation, as they are forced to cut down their public services. The budget cuts in Latvia are affecting the public instruction system, the health care (for example certain surgeries will only be available for clients of foreign helth insurance systems from the autumn, as the Latvian helath care will cease to finance those for Latvian citizens), maybe the police, the judiciary system. In this case it is the result of accross the board budget cuts, but other examples exist in Romania or Hungary as well. In the latter the state financing available for hospitals was reduced significantly and only the reduction of their services could lead to some balnce in the expenses and revenues. (Meanwhile the cuts in the contributions of employers and employees to the health care budget will significantly worsen the financial situation of the health insurance system.) In Romania the lack of funds is almost everywhere, but it surfaces quite sporadically, either in regional or in sectoral terms. According to press reports one county tribunal will be closed in August due to the lack of financing, the salary of judges will be cut with 1/3 of it (in a country where - accoding to the EU's assessment - corruption is in full bloom, and the state is incapable to act against this phenomenon decisively), in many cities there is not enough money to open the schools in September etc. Although the government insists that they will provide at least the necessary basic financing, it is far from being certain, especially as Romania has to comply with the conditions of the IMF and the EU in order to receive the individual tranches of its huge loan.

Not that it would be exclusively a fault of the external world. The Latvian government is desperatly defending a currency peg from an eventual devaluation (and from this perspective salary cuts in the public sector are lying on the road to "internal devaluation"), the Romanian is caught between electoral promises last fall, an uneasy coalition of "social democrats" and "conservative liberals", an alliance for Romania('s wealth), really aimed to divide the resources of corruption among them, and between the coming presidential elections, while in both countries the "econimc miracle" of the last years was "financed" with low taxes and growing consumption - based on loans and loans and loans, leaving no buffer for a case of crisis.

But the most worrying development is concerning the future of the EU. The predictions - forecasting problems in the coherence of the eurozone - are not ceasing, while the handling of the crisis highlighted the deficiencies of the inter-governmental approach in times of crisis. The reluctance of the Germans to develop a real common perception of the crisis, to allow European institutions to act independently (although those never has shown much willingness to act that way) although comprehensible, was certainly not benefitial. And as Wolfgang Munchau points out: after the Constitutional Court's decision on the Lisbon Treaty everything will be even more complicated. Even in the field of common economic policy. Not to speak of facing the real problems, the incapability of ECE in the long run to dael with its underlying social problems and with the impact of the demographic trends without a common social policy. But if the slow dissolution of the East will continue it could easily reach to the heart of the union itself.

Where is the success story? - Bulgaria after elections

No, I won't give a detailed analysis, only some impressions, especially because I'm not quite acquainted with Bulgaria's internal situation. (Although I had the chance to read a text from a local economist, predicting that even though the government tried to keep the surface of normality and suggested that the country has no problems resulting from the crisis, it was nothing else than mere electoral politics, an attempt to avoid greater losses at the polls.) But the story of elections in Bulgaria in the last decade is telling in a sense: the winner was never able to repeat its performance. Moreover not one of the strongest parties of the successive coalitions governing the Bulgaria slid into oblivion, (at this election this not altogether positive role fell on Simeon Saksokoburggotski's party, the former tsar of Bulgaria led a government between 2001 and 2005 and his party formed a coalition with the socialists and a Turkish minority party in 2005), while, with the sole exception of the socialists, always newly emerged parties prevailed. That kind of volatility is quite interesting in itself, given the fact that the EU membership would presuppose the existence of a consolidated democracy - at least in theory.

But the really striking phenomenon is that the electoral defeats of leading governing parties, following each other as almost being one of nature's laws, occurred during a decade of stable and steady economic growth. According to Eurostat figures in the last 10 years (beginning with 1999) the Bulgarian economy never experienced negative growth, the growth rate was only once under 4% and five times over 6%(!), in the last five years, the GDP reached a stunning 166% of the value of 1999 in 2009. Although the country remained the poorest in the EU, there are only a few other places where governments would have to face imminent defeat after so successful periods in terms of economic achievements.

And despite the "success story" (a Bulgarian blogger, whose site I've found quite incidentally expressed his pride over the fact that last year Bulgaria was the fastest growing country in the EU) no one was capable to win. Even though the country was on its way to become the new model economy, with low flat tax rate (10%) and low redistribution rate... Isn't it an obvious contradiction to the models and forecasts?

As mentioned earlier I can't give a convincing answer to the question arisen. Maybe the everlasting transition period is too long for many people (there is never a calm in the transformation, always new reforms and "reforms" have to be implemented, maybe even a decade of growth was not really raising the standard of living for the majority of the population, maybe corruption is unbearable, while the state - not least because of the lack of necessary resources due to the low taxation - is incapable to deliver justice, law and order - Bulgaria, according to various accounts is infected with maffia). And all of these are embedded into something specifically Bulgarian, as many of these can be identified in other countries - in the Baltics, or the high rate of corruption in Romania* - where it never had similar consequences in terms of the emergence of new saviors at every elections. But one conclusion is inevitable - the advocated model is not bringing its results as naturally as it is perceived by its promoters (and I can't refrain from some populism, its promoters with high salaries in comfortable offices and travel allowances), neither in terms of raising living standards, nor in market efficiency (are there anybody considering a high rate of criminality in the economy as a sign of an effective and efficient market?) nor as political success.** Once again, human society proved to be beyond the understanding of simple mathematical models...

* Paradoxically the Romanian case can prove the importance of corruption in the emergence of the investment and business-friendly image of a country. Although Romania was for a long time praised as a low tax rate country with simply tax system, in reality it consisted more then 150 different taxes, tolls, fees etc. to be paid by companies. But it was always possible to evade them with some bribery in the responsible government of local authority. Corruption was the only way to promote Romania as business friendly, and it worked.

** These assumptions were - although only partially - reinforced by the case of the Slovak government led by Mikulás Dzurinda. It lost an election amidst the "Slovak economic miracle" in 2006.

The Markets, oh the Markets!

Last week the Hungarian governemnt achieved a great "victory", the parliament passed a bill on the taxes and tax system in next year, modifying the structure of taxes, with cuts in the personal income taxes and the social security contributions and hikes in VAT, introducing a new property tax etc. It laid the foundations of the next budget and it made the ministers quite proud of their production. Moreover, the government was 75 days old and it gave an opportunity for the prime minister and the finance minister to give interviews on the progress made by this new, brave body fighting the crisis so effectively. (One should ask, why is a prime minister, who is admittedly not seeking political career after his term will expire, so keen on making pr, but I really don't know. Maybe he is afraid of the possibility that his parliamentary majority will collapse, but I would doubt that it is the proper way to fight it. And PR-interviews - especially in the Hungarian case, where the "questions", due to the tragic quality of journalists and journalism, seem as if they would have been prepared by the Prime Minister's press secretary - are not only boring, but unconvincing, without any originality.)

Anyway, the finance minister and his boss pointed out that their success is signalled by the markets as well. The strengthening of the forint is a sign of the returning trust. I understand, that sometimes those who are in political positions, feel the necessity (and sometimes they are even compelled) to make stupid statements, in order to gain popularity, portray themselves as capable individuals etc. But this government is supposedly an expert one, the finance minister arrived from Deloitte. I don't really think that he has no idea of the current situation: there is no credible sign of an individual assessing of the forint and its movements against the dollar and euro were and are driven by fears regarding the state of affairs in other countries (most notably in the USA and in the eurozone) and by mere speculation, the so-called carry-trade. Or, with other words: the current movements are the result of a very high interest rate of the Hungarian National Bank and the willingnes of the so-called investors to see green shoots everywhere. Nothing specifically Hungarian, as everyone can see, who compares the movements of the currencies from Poland, Hungary, the Czech Republic, the first one and the latter being considered as more stable economies than Hungary.

But the really frightening probability is, that the minister can be convinced of his truth. Not necessarily because in this case he and his government tries to please actors, who do not really care about its activity, but because sometimes it shows a quite simplistic obsession with the idea of the efficient markets. Well, it is a viable econimic theory, that was capable to make tolerable predictions for decades, but in the light of the recent events even those, who were not aware of its problems are ready to admit that at least some refining would be needed. And as a perspective of the human society, it is rather frightening, as it tries to reduce its complexity in one single indicator: market price.

Moreover, as in the last few weeks I had an opportunity to glance at many products (analyses etc.) from market actors (due to some kind people dealing with economics or the economy, with quite different views) and as a result I'm increasingly convinced that those are less complex than it would be necessary in times of economic turbulances. Not that they would be useless, but they use only a limited range of indicators and data and sometimes too obsessed with the mathematical models, instead of leaving some room for the good old intutition. Although predictions based on the mathematics and market conventions turned out be very risky nowadays.

But this is not the only problem with the Hungarian government's actions. As they are keen to please "markets" and consider as the sign of the success of this efforts the strengtheing of the forint, they are slowly giving up the advantages brought by the rapid depreciation of the national currency and its relative stability in the last two months. The competivity (what they are seeking with tax cuts in a dire budgetary situation, therefore compensating it with budget cuts, equally hurting consumption as the tax cuts are inspiring it) gained suddenly and unintentionally (the eternal comparison, Slovakia was behind Hungary in terms of labor costs at the beginning of the year, although the "experts", among them the minister himself, always complained that Hungary lost its competivity regarding cheap labor to Slovakia, and it was a reason behind tax cuts and social spending cut proposals) are now trickling away. Even though there is some reason behind it - reducing the debt burden of those, who are indebted in foreign currency -, it is at the same time simply the mirror image of the much despised politics of pleasing inactive voters with financial transfers through the social security system. It is very much an attempt to satisfy middle-class rent-seeking, placing the complete burden of adjustment on the shoulders of those, who are living from sthe social security systems. and even though there are many inactive people, who would be capable to work, the lion's share of this group is composed by pensioners and by those, whoe are really living on a subsistance level, without any hope for a decent work. This politics is not seeking the just distribution of the burdens of the crisis, it tries to privilege a group, that bear some responsibility for the situation of the country, as they were ready to take a huge debt burden, many times with repayment rates higher than the half of their otherwise not too large income. And as it is clearly hurting the long term perspectives of the country (Hungary abandoned even the moderate room it acquired through this strengthening of the forint in terms of monetary policy, as the HNB is focusing on the debt level and not on the exchange rate yielding advantages, therefore it is not ready to lower interest rates), either as an economy, or as a society, it is equally problematic, as the rent-seeking of the inactive groups.

The other privileged group will be the entrepreneurs. The tax cuts are aimed to ensure they lasting competivity through making labor cheaper. Although personally I don't think that eternally lowering labor costs through abandoning every public service is a viable strategy of growing welfare and standards of living, this time I would only point out that - as I argued some posts earlier - without a growth of the capital in the economy it is clearly a hidden state subsidy for non-competitive companies (the state subsidizing even negative marginal products of the newly employed labor with renouncing some state incomes), and as usual in those cases it will probably bring only more private profit from public money. It is possible, that in the long run it will really bring some raise in employment rates, but I'm doubtful regarding its effectivity, at least its effectivity imagined by the minister. But it is another story...

(Oh, and meanhwile flagellant exceptionalism surfaced in Romania. A well known blogger counted 13 factors of Romania being affacted worst by the crisis. :) Maybe my next post will cover this funny topic.)

Why do statistical offices exist?

My preferred Romanian politician, Mr. Băsescu swung into action today again. At a conference entitled "The Future of Social Change: 1989-2009: Visions and Perspectives after 20 Years of Transition" he vigorously attaced the lazy and populist Romanian politicians as - according to him - Romania is in danger to become a country of peoples depending on social assistance. Mr. Băsescu - who recently began to play safe on economic issues, he even contradicted the optimistic forecasts of the Chair of the National Bank and predicted a lasting contraction of the economy - interpreted the facts quite peculiarly. It is probably true (I havn't checked it, I only rely on other data) that a half of the country's nominal population receive regular social assistance in the form of some payments. (It is actually more than half of the real population, as millions are working abroad.) But the alleged reasons for it - populist politicians, except Mr. Băsescu himself, of course, buying votes with social transfers - is a gross oversimplification of the social processes of the transition period.

According to official data the number of employed people in Romania, a country with a nominal population of 22 million, and a real one somewhere between 19 and 21 million, is at around 4,6 - 4,8 million. (Just a slight comparison: in Hungary, a country of 10 million, where the official rate of employment is not higher than 55-56% the sheer number is 3,7-3,8 million.) Moreover the ratio of active people and those who receive pensions - either regular or so-called agricultural ones* - is below 1, at around 0,98. That means: less than one working Romanian bears the burden of providing one inactive with some kind of benefits. It is usually not considered to be a healthy and sustainable situation. (It is true that the financial transfers of guest workers make this picture less disastrous, but as it is unofficial the state can not lift its responsibilities using it as a pretext, nor enjoy some decent income from it.)

The phenomenon was a result of the transition itself, when - not only in Romania, but in many other ECE countries - the suddenly rising unemployment was "cured" by allowing people to escape into the pension systems, momentarily relieving the states from the discontent of its citizens, but in the long run causing ever growing demands on the social systems. But even retrospectively it is not clear whether this treatment was a complete failure or more logical than it seems. In many cases (Hungary, Poland, Romania, Slovakia) the respective economies never really regained the lost workplaces (in Hungary the volumen is 1 million!) and even though outmigration was a factor rapidly depleting the reservoir of unemployed people in some cases (Romania, Poland, Slovakia) the rate of unemployment remained high. (Romania was seemingly an exception, but with the huge number of pensioners it is only a statistical trick.) The FDI focused policies were not capable to ensure a low level of unemployment in two decades and with the crisis hitting ECE and undermining the former economic model it is not clear whether the nearest future will bring further opportunities.

The situation is aggravated by the fact, that Romania experienced a long period of sustained high inflation and the wages remained relatively low in order to achieve competivity. The former led to a rapid loss of real value of social payments, the latter led to the necessity to rein in state income - due to lower taxes - to give a bit more to the "ordinary people". (It was also a core element of a perceived competivity advantage, although personally I consider this argumentation dubious.) Nevertheless, state income remained low not allowing to raise social spendings, but at the same time personal income was not growing rapidly as well (except in the last two years, but it was a result of overheated economic growth, tightening labor market, therefore unsustainable, and even with this rapid rise average wages remained the lowest in ECE, except Bulgaria, somewhere around 250-300 euros a month. Therefore it is not surprising that not only pensioners but other social groups need state assistance for various reasons. (For example some subsidy or support to the natural gas consumption, that can amount in winter months higher than the monthly income of a family.)

But, not denying the role of populist politics, in Romania and in other ECE countries, the main factor behind the extended social provisions - and their limited effectivity as well - is the process of transformation itself. There is no better example for it than Romania, with its large poverty stricken social sectors, shabby infrastructure (a source of balanced budgets in recent years was the lack of investment in those areas) lifting costs of social services and low wages in order to ensure competivity. From this perspective, Mr. Băsescu was not right, rather he completely missed the point: it is not a a shame but a necessity to be a nation of socially assisted people and the only option to alter the situation is to get rid of every kind of social responsibility of the state. (Even minimal ones, as for example average pensions are not higher than 100-150 euros per month, not a huge amount for decent living, but a real burden on a state household determined to lift every tax from enterprises.) But even in this case there would be a half of the population left without the necessary means for a subsistance.

* In Romania two pension systems exist, the regular one and the so-called agricultural. The latter is composed by people earlier working in agriculture during the communist era and paying contributions into a separate system.

Crisis, but more than one? - Hungary

Well, on the one hand it is clear that at the moment the sense of crisis is receding (or only has receded?), "risk appetite" is growing, everyone is looking and seeing "green shoots" even though the data on real economy is at leats controversial and for more sober observers not really promising. (Just one example: the most prestigeous economic news and analysis website www.portfolio.hu published a news yesterday with the title: Incredibly good news from the real estate market in the USA. In reality although in a m-o-m comparison the data showed growth the level of new construction works was only the half of the same indicator a year ago and only at about a fifth three years ago. It suggests that there is a long way to a recovery and a similar GDP level...) But with the present mood hysteria is not so dominant as it was some weeks ago and it also means that there is not really much to write about. As if normality has been returned ...

Otherwise - at the field of politics - spectacular events happened, but they can hardly be called critical, except in Hungary. For the superficial eye a strong correlation between crisis and the astonishing appearance of a strong and neo-fascist party (in the sense the concept is used by Roger Griffin) and the collapse of the center-left governing or majority parties would be obvious. But to treat the phenomenon in a so simplistic way would be misleading and a self-delusion. It's rather a sign of a more profound problem - if one whises, crisis - the huge divides in a country and in a society, accentuated by an economic and social model that was - as it is clear after two decades - incapable to bridge this gap and give at least hope for a fifth or quarter of the country. Incapable, although the model was once implemeted in a very servile way and later with more reluctance as well, in order to cushion the measures. The consequence: means relying only on market and imagining the solution of social problems in a market oriented way failed to deliver the opportunities for well defined geographical regions, quite the contrary, it led to a deepening difference between those areas and the more developed regions of the country. For example as in the early '90s the per capita GDP of the Northern Hungarian county Borsod was at almost 75% of the national level, today it is well under the 50% percent treshold, although investment in a material sense was not scarce in the last decade.

If one would like to sum up this process from a point of view of social history (or historical sociology?) it is quite similar to the process of spreading of capitalism into rural communities, at least in Hungary. The emergence of a capitalist economy in the 19th century was hardly a singular act, rather a long process, starting from certain centers and slowly diffusing into the countryside. Not only in a geographical sense, but in a social one as well. Even if one can detect a kind of enterprise or entrepreneurship in distant villages it is many times confined to individuals or a small fraction of the population. Meanwhile other models of the integration of localities in a capitalist market (world market) emerged and prevailed, like a strong cooperativist movement, wich were capable to preserve (though in many times in a transformed way) the earlier methods of running a local community and at the same time integrate this community as a whole into the broader framwork of a market. The socialst solution for this problem was surprisingly (or unsurprisingly?) similar. Integrate the rural communities around a heterogenous company, dealing with agricultural and some kind of industrial production and using extensively the labor of the villages in this process, while allowing some leeway for the individuals around their homesteads and imitating a kind of self-governance in this company (cooperative).

But after the change of regime - due to the reemergence of some political forces who's program contained the total restoration of agricultural property to those who owned it before the collectivization and due to ideological opposition to the socialist cooperatives as remnants of a failed system and compromised political power, a new model emerged, based on the gradual concentration of the landed property in the hands of a few who were capable to use state funds for investment in machinery, therefore reducing the demand for labor, and in remote areas even this kind of restructuring fell off, leaving there small communities with ageing populations and urban immigrants from the lower social strata at the fringes of capitalism, many of them belonging to the elargest ethnic minority, the rroma. (In many communities money is scarcely used, credit is given by the shopkeeper in forms of listed debts, work or commodities used as payment etc.) And in the last decades there was no sign of market mechanisms intruding in this space and transforming it... There is still a living memory of a rural countryside with opportunities and regular work and a sobering experience of present-day realities. (One can list other problems, unskilled workforce or people with obsolte skills, uneducated population, lack if iniciatives, ideas, capital etc.)

Quite telling is the fact, that under such circumstances no ideas of more active state policies were promoted, only the private initiative was emphasized and recently it took shape in the idea to implement the "bank for the poor" in some form, but not with state intervention, based solely on the finacial means provided by some charitable businessmen. And meanwhile public works are condemned as useless... Those are the regions, where radical opposition of the system as foreign and alien to Hungary scored good results and in some cases even electoral victory, revealing a more specifically Hungarian crisis, that is accentuated by the global one.

(P.S. It is no consolation that I fairly well foretold this political outcome, at least the collapse of the majority parties. Also I'm not relieved by the fact that I've found someone from Latvia who shares my concerns that the present policies can only lead to the abolishment of the state...;) )

Reminiscences of Ancient Syria? - turncoat economics

It is always flattering when economists regularly expressing their views publicly and supposedly with high authority support one's ideas, even if only unconsciously as they very probably never ever learnt of those. Therefore it is highly understandable if I was very proud of my smart ideas hearing that such an excellent economist as László Csaba (not to be confused with Csaba László, former minister of finance), professor at the Central European University and someone who is not only regularly sought by the media as expert but who also accepts this role and attends different TV and radio shows and gives interviews almost every week, echoed some of my thoughts. The opportunity was provided by the presentation of his new book(s?)"Crisis in Economics?" and in this task he was sided by another renowned expert, Péter Ákos Bod, former chairman of the Hungarian National Bank.

According to Csaba's opinion the crisis brought with it a wave of self-fulfilling pessimism and the real task would be to fight these jinxs as everyone knows that the crisis will have an end. Regarding the fate of economics as a science he didn't dare to make a judgement whether it is in crisis or not, but listed the problems and challenges economists are obliged to encounter. The presumption of absolute rationalism of actors, the capability of the markets for self-correction and the position of the economists as omniscient technicians of the societey, so willingly embraced by many, will certainly be doubted. He can even imagine that the present crisis will be a starting point for a paradigm shift as well. He denied that the road of the ECE countries towards convergence would be identical differing only in the starting points and maybe in their speed. In these assumptions and presumptions he was supported by Mr. Bod.


I won't say that such a set of ideas could not be consistent. But recalling Mr. Csaba's public performance from the last few monthes this book is a complete U-turn. (Just a short collection from the first few pages of a googled list, unfortunately in Hungarian.) He was convinced even in this February that the crisis is not an economic one, rather a financial, he prophesized that there won't be significant contraction. Moreover, he belonged (and still belongs) to the group of economists self-puffedly sitting in a studio and expressing their opinions peremptorily, never expressing reservations regarding its validity, never allowing that other views could have at least some minor relevance. As for the content of those views and proposals, Mr. Csaba never ever expressed something different from mainstream neoliberal ideas, he was always a champion of a smaller state sector, lower taxes and lower social spendings and among his arguments, clearly thought to be irresistible, always hinted to the example of states like Slovakia or Romania. (At least for me it is quite different from the idea of every ECE country having its own path towards convergence, even though in this case Mr. Csaba only wanted to fend off the opinion that the present crisis started outside Hungary and not inside.) To sum up: Mr. Csaba was not only always convinced of his own superiority as an expert, but he havn't got the slightes doubt regarding the mainstream model of economic policy and models and he proved to so overconfident that he dismised the idea of a world economic crisis even three and a half months ago, and attributed the situation in Hungary solely to the faults of its governments.

Everyone has the right to change his opinion. But it would be more credible if he would have been able to spell out some words expressing his sorry over his failure as economist in the recent past, describing clearly the points he reconsidered and not posing continously as the greatest ever Hungarian economists. It would have been made the book even more credible, as one can hardly believe that a serious work (not simply seeking easy publicity and money with a trendy topic) on such an important and complex topic could have been finished in three months (as Mr. Csaba held the opposite view that time) with all the necessary thorough editorial work as well.

I wouldn't waste any words of substance on Mr. Bod whose only considerable contribution to economics was his proverbial and long remered role played at negotiations with taxi drivers blocading the country in 1990, when he was more eager to satisfy his "biological necessities" than to bring the negotiations to a reassuring end, and who is a well-embededd member of the chorus of economists suddenly discovering themselves as non-neoliberals and meanwhile promoting the idea of a low tax, low redistribution, small-state economic model.

Update, 5. 8. 2009.: I have to admit, that I was not entirely fair with Mr. Csaba, but I was only following his public appearances and presumed that he is formulating the same opinion in his scientific texts as well. Now it turned out that he called for attention to the so called new populisms in the flat-tax economies (among them Slovakia), a phenomenon he characterized the politicians willingness to please the entrepreneurs with everything (low taxes, deregulation etc.) and making a fetish from the growth in a paper presented at a conference in March 2008. But as soon as he appeared in a radio or TV studio (and he made it fairly often, in almost every second week) he suddenly forgot about his scientific results and was like a robot, always repeting that Hungary has to cut taxes, spending as Slovakia and our regional competitors made earlier. So, the conclusion: he is not necessarily silly, he is simply mean and unprincipled, in his role as public commentator simply following political aims.