Robin Hood and the Hungarian government

During his State of Nation address, the Prime Minister posed rhetorical questions: how can Hungary afford to provide the most generous family support in Europe? How can it afford to reduce utility costs? And how can it afford to pay 13th and 14th month pensions? How can it afford new factories, the reconstruction of historic buildings in Budapest and entire city districts? And how can it afford the Hungarian Village Programme, student loans, worker loans, and a fixed 3% interest rate for first-time homebuyers?

And he immediately gave the answer: "From what indeed? Well, between 2010 and 2025, we took a total of 14,956 billion forints from three economic sectors: banks, energy companies, and retail chains, using various methods. 14,956 billion forints! And according to our plans, we will take another 1,922 billion forints in 2026."

I immediately imagined the government, like Robin Hood's merry band deep in Sherwood Forest, fleecing the greedy banks, energy companies, and retail chains disguised as monks, and then returning the money to the poor people from whom it had been extorted as taxes.

I was horrified to think what would have become of the hard-working Hungarian people if the government had not seized and then returned this huge sum. After all, Hungarians still lag far behind the rest of the European Union in terms of various living standards indicators, even with Robin Hood-style subsidies, and we are now being overtaken by countries that were behind us when we joined the EU.

But let's not fool ourselves.

The confiscated money was not actually taken from our robed friends under various legal pretexts; it was taken from the people, which made the goods and services they purchased more expensive.

And while the government is determined to put a stop to imports of cheap Ukrainian and South American agricultural products in order to save small domestic producers from bankruptcy, it imposes world-record high VAT, trade taxes, and other fees on food sold domestically. That is why many people find it more worthwhile to shop in neighbouring countries, often at one of the stores belonging to the same retail chain, from which the government collects the 'extra profit tax', citing excessive markups.

What's more, nearly a tenth of the huge sum taken away by the government went not to the people and small domestic businesses, but to large multinational companies. Initially, large German automotive companies were the main beneficiaries, but later the largest sums were given to Chinese and South Korean battery manufacturers.

These subsidies are essentially granted unconditionally and are unlikely ever to pay off for the national economy. In the long term, however, they increase the vulnerability of the Hungarian economy and damage the environment.

Furthermore,

rather than encouraging the growth of knowledge-based, innovative sectors, they have maintained an employment model based on semi-skilled labour which has already reached its performance limits.

The government's goal is to create at least 300,000 new jobs, ensuring that every working-age Hungarian has employment opportunities at home. However, domestic companies already need to employ more than 100,000 foreign workers due to the demand for labour. At the same time, the supply of skilled labour capable of generating high added value is lower than the demand for it, and below optimal levels. However, even this is being eroded by the appeal of better-paid jobs abroad.

It is true that, during negotiations with employees and employers this year, the government achieved a double-digit increase in the minimum wage. This was despite the fact that the overall performance of the economy – which fell well short of the predicted take-off – only just avoided a contraction. This will also have consequences, as prices will certainly rise in the service sector, where productivity growth is generally lower than in manufacturing. This is because the strengthening of the forint only has an indirect effect on the price of services.

In the novel, Robin Hood was delighted by the return of Richard the Lionheart because it meant that he no longer had to act like a bandit to ensure fair distribution of money. However, in real life, Hungary's economy does not need a Robin Hood-style government, but rather a competitive economy that functions fairly.

Cover image (for illustration purposes only): Getty Images