Response to MIT Professor Daron Acemoglu’s call for Hungary and Poland to be excluded from the European Union.
In an article published a couple of weeks ago on Handelsblatt, MIT economics professor Daron Acemoglu urged the European Union to “exclude” Hungary – and Poland. Driven by the generally accepted principle of the plurality of opinions in international media, I requested an opportunity to respond, which I unfortunately did not receive.
Hungary is a democracy. According to recent research by an EU institution, Hungarians are the people who feel the freest in Europe today. Not only is this a result of their freedom-loving tradition, but they can still remember the period of state socialist oppression and its economic policy blunders, which they have no desire to bring back, even while managing a crisis. But it is not only through economic policy that we seek to preserve economic freedom: If Professor Acemoglu were to personally visit Hungary, he would find, for example, that there are more opposition newspapers than pro-government ones on offer at any newsstand, while one of the two most-watched television channels is entirely foreign-owned. In our country, freedom of speech is greater than in many countries to the west of us.
Hungary is not only a democracy, but also a country that is working to make its economy more democratic and its growth more inclusive. Hungarian institutions and measures ensure widespread, harmonious economic growth, which is why they have earned considerable trust. Under Viktor Orbán's government, Hungary has successfully responded since 2010 to one of the major global challenges of our time: rising inequality. It has created an economic policy that implemented, for example, a financial transaction tax to redistribute income from the beneficiaries of economic globalization — the top 1 percent— to the local casualties of global redistribution, the working middle class families and the businesses that provide them with employment.
The essential element of Orbanomics is that it recognizes achievement, work, knowledge, and entrepreneurship. This is reflected in the world's highest (as a share of GDP) family support system, in the 21 percent reduction in the overall tax burden of a medium-sized company over 11 years according to World Bank statistics and in the single-digit corporate tax rate of 9 percent. This is how economic policy can simultaneously be both pro-labour and pro-business, and how it can be effective in the fight against poverty. Viktor Orbán's economic policy has been an effective response to the problem that elsewhere led to Brexit or the election of Donald Trump. In the US, GDP doubled in 40 years, while average income barely increased. No wonder so many have become disillusioned by mainstream (economic) policy.
As a result of the Orbán-led crisis management that began in 2010, the trend in Hungary has been reversed. The poorest have gained the most, according to Branko Milanovic's calculations, while international crisis management has only helped the rich to regain what they had lost. Although Milanovic's data ends with 2015, this is also the year when the largest net real and minimum wage increases in the last century of Hungarian history began to be realised (between 2015 and 2022, an expected increase of 60 percent for the former, and 68 percent for the latter).
A good indicator of the growth in opportunities is the fact that Hungarian labour income has proved to be the most crisis-resilient in Europe, according to Eurostat. Hungary has seen its way out of crisis, not through bailouts and unconditional income, but by boosting investment. The Hungarian case is a good example for how the inclusive socio-economic model — which the country had already built up before the epidemic by achieving total employment — is indeed crisis-proof.
Inclusive growth in Hungary has been demonstrated by the WEF index, Branko Milanovic's calculations and the World Bank report, as well as by EU inequality and poverty statistics – details of which can be found in this paper. Professor Acemoglu, to whom we owe the dissemination of the concepts of inclusive institutions and growth, is now expressing a political opinion based on the distortions of opinion articles, rather than on scientific analysis.
The situation is very similar to that of 10 years ago when Hungary's unorthodox, austerity-rejecting crisis management came under heavy criticism from international organizations. Political attacks were launched against the country for economic policy reasons, often using the slogans of democracy, liberalism, and the rule of law for political gain.
Just as history has validated unconventional Hungarian economic crisis management — which international organizations are already recommending to troubled countries — we are confident that time will prove us right on other issues as well. Hungary made a fundamental contribution to peace and stability in Europe when it protected Europe's borders from mass illegal migration six years ago. While Viktor Orbán and Hungary were the targets of undeserved attacks and much criticism, the discourse of European politicians in recent weeks evokes the Hungarian Prime Minister’s statements and rationale.
Hungary is a stable member of the EU, a democracy that not only participates, but also takes the initiative in debates on the future of Europe. And polls show that Hungarians' support for the EU is much higher than in most EU countries.
It is only a matter of time before it will be recognized that Hungary meets the generally accepted definition of democracy in all respects — it is only in our values and views on the European project that we differ. In contrast to the ultimatums and dictates from the Western elite, Hungary will always be a supporter of dialogue regarding a common future.
We sincerely hope that our open letter will reach Professor Acemoglu, having not even attempted to publish on Project Syndicate (where the first version of his open letter was published), following Prime Minister Orbán's earlier failed attempt.
We have sent Professor Acemoglu a copy of our book, which shows how Hungary has successfully responded on the nation-state level to global economic challenges through Orbán's economic policies. And we continue to follow Professor Acemoglu’s inspiring work in economics and economic policy with great respect and interest. In his political opinions, we expect to see the high level of thoroughness and prudence which characterize his professional work.