The Magyar Revolt Against Europe's Socialist Superstate

For many years Hungarian president Viktor Orban has been a thorn in the side of the EU for his, let us say, idiosyncratic insistence to ignore its diktats at every opportunity. This is not to say that we are particularly fond of Orban’s policies or political style, although the mere fact that he goes on the nerves of the bureaucrats in Brussels is of course a major plus.

In one respect Orban proved especially irksome to the ruling classes in Brussels and the rest of Europe: he interfered in the formal “independence” of Hungary’s central bank, and he actually made the banks pay up for the mortgage lending disaster. The latter move was clearly populist and has the obvious drawback of giving people the impression that they bear no personal responsibility for their actions. On the other hand, the banks did make it appear to their customers that taking out Swiss franc denominated mortgage and consumer loans was a virtually risk-free affair, and many financially not overly sophisticated people fell into the trap thus laid for them. Consider the following sub-prime mortgage loan ad Austria’s Raiffeisenbank ran in Hungary in 2007:

 

We don’t care about your income! NINJA loans, Hungarian style.

 

Orban rightly concluded that taking on the banks was going to be a vote winner for him. Not surprisingly, a vociferous campaign denouncing him as a tinpot dictator was launched almost immediately. So even though we don’t particularly like Orban and his policies – and Hungary’s extreme nationalism on the coattails of which he is riding – the fact that the Western press descended on him like a pack of vultures should trigger everybody’sSpidey-sense.

 

Viktor-OrbanViktor Orban, wearing his Brussels frown

Photo credit: AFP

 

It should be pointed out though that Orban has in fact instituted numerous more than just dubious policies (as is mentioned below, he has inter alia limited press freedom and curbed the independence of the judiciary. It seems possible that the eurocrats are actually envious). Orban went to the EU summit in Riga this week, in the process providing us with something to write about.

 

The Dictator and the Grand-Duke

EU president Jean-Claude Juncker actually seems to have a sense of humor. As the AFP reports:

 

The right-wing Orban has angered and infuriated his European Union peers for years, carrying out sweeping constitutional and institutional changes that critics say have curbed press freedom and judicial authority.

“Hello, dictator,” Juncker was overheard to say to Orban in front of the press at the EU-Eastern Partnership summit in Latvia.

Orban replied: “Hello Grand Duke,” a reference to Juncker’s native Luxembourg, known as the Grand Duchy even though it is one of the smallest countries in the world.”

[…]

Juncker also chided Greek Prime Minister Alexis Tsipras for his dress sense, with the left-winger declining to wear a tie as usual.

The dictator jibe from Juncker recalled a bitter row caused by US Republican Senator John McCain who labelled Orban a “neofascist dictator” in December last year. Orban called McCain’s remarks an “attack on national independence”.

 

(emphasis added)

If John McCain really thinks Orban is a “neo-fascist dictator”, he should actually like him. After all, he’s not shying away from supporting extremist nationalists elsewhere in the world (Ukraine comes to mind). As to Tsipras refusing to wear a tie, it seems to us that the modern-day technocrat uniforms are both boring and uncomfortable. We much prefer the gaudy get-ups of 16th century feudal rulers.

 

baroque-costumes-10216th century late medieval fashion

Image credit: Kaspar Braun &  Friedrich Schneider via world4.eu

 

renaissance-costumes-clothing-013The get-ups of 16th century nobles in Germany and Burgundy

Image credit: Kaspar Braun &  Friedrich Schneider via world4.eu

 

Instead we are getting this nowadays:

 

boring as hellModern-day eurocrats wearing their uniforms – boring as hell.

Photo credit: Mariano Rajoy Brey

 

Is there actually a point to all of this? It is true that Orban isn’t overly worried about democratic sensibilities and his policies are actually creating a potentially dangerous situation. Consider that a party well to the right of Orban’s Fidesz, the neo-Nazi Jobbik party, enjoys huge support in Hungary. It is the type of radical organization that might well end up winning an election in the next economic crisis. There can be no doubt that there will be another crisis, conceivably an even bigger one than last one, given that central banks have blown yet another huge asset and capital misallocation bubble with their policies.

The danger of adopting legislation that is restricting individual liberty under some pretext (usually it is presented as a “trade-off” intended to provide better “security”) is that even if today’s ruling establishment doesn’t abuse the legislation, there might be completely different rulers in place tomorrow, and they will then find that the road to dictatorship has already been paved by their predecessors – making it much easier to take the next steps. As we have previously pointed out, this is precisely the situation the Nazis found themselves in when they won the German parliamentary elections in 1932/1933. The democratic governments of the Weimar Republic had issued so many emergency decrees that by the time Hitler came to power, he needed just one more piece of legislation to establish his autocratic regime so firmly that it could no longer be challenged by anyone.

 

Hello dictatorThe “Dictator” and the “Grand Duke” meet in Riga

Photo credit: Janek Skarzynski / AFP

 

The Importance of Economic Freedom

However, Orban is also what one might term a strong supporter of the subsidiarity principle. In other words, he is set dead against the creeping trend toward ever more centralization the EU has set into motion. When the predecessor organization EC was established in the 1950s, its founders merely wished to recreate the free Europe that was in place prior to the world wars, before fascism and socialism destroyed it. They wanted to bring back free trade and free movement of people and capital.

They certainly didn’t intend to create a giant bureaucracy that would one day decree how many liters of water may pass through a shower-head every minute, or that would release a 1,000 pages long set of regulations on the making of a cheese that is only produced in three small villages in the French Alps, or that would one day ban incandescent light bulbs and force everybody to install the type of lighting usually found only in morgues.

Let us not forget, not too long ago, there wasn’t even such a thing as a passport. It was regarded as perfectly natural that people could travel wherever they liked to go. Incidentally, free travel strikes us a fundamental human right. As Nick Gambriuno points out here, things have obviously changed quite a bit in this area:

 

“In order to travel, you need a passport. In order to get a passport, you need a government’s blessing. Travel is treated as if it’s a privilege. You need to ask for permission. Any government can restrict or revoke your passport for whatever reason it wants. When that happens, you can’t travel internationally. It’s like being under house arrest. It’s a powerful lever of control.”

 

(emphasis added)

So much for the idea that the world is “more free today than it has ever been”. It certainly isn’t. The EU, which is so critical of Orban’s policies, is itself a case in point. It has long abandoned its founding principles and has become a bureaucratic Leviathan. Today it is well on its way to becoming what we call a “socialist superstate”. On the plus side, it does support certain fundamental individual liberties – but at the same time, it is becoming an ever greater enemy of economic freedom, in spite of the intentions of its founders. Its member state governments curtail economic freedom primarily in two ways: by adopting ever more regulations restricting free enterprise (many of which are enacted on the supra-national level in Brussels) and by imposing taxes that would have medieval feudal rulers blanching in shame.

However, as Ludwig von Mises has pointed out, there can actually be no true freedom without economic freedom:

 

Unfortunately many of our contemporaries fail to realize what a radical change in the moral conditions of man, the rise of statism, the substitution of government omnipotence for the market economy, is bound to bring about. They are deluded by the idea that there prevails a clear cut dualism in the affairs of man, that there is on the one side a sphere of economic activities and on the other side a field of activities that are considered as non-economic. Between these two fields there is, they think, no close connection. The freedom that socialism abolishes is “only” the economic freedom, while freedom in all other matters remains unimpaired. However, these two spheres are not independent of each other as this doctrine assumes. Human beings do not float in ethereal regions. Everything that a man does must necessarily in some way or other affect the economic or material sphere and requires his power to interfere with this sphere. In order to subsist, he must toil and have the opportunity to deal with some material tangible goods.

[…]

The freedom that the market economy grants to the individual is not merely “economic” as distinguished from some other kind of freedom. It implies the freedom to determine also all those issues which are considered as moral, spiritual, and intellectual.

[…]

Whoever wants freedom of conscience must abhor socialism. Of course, freedom enables a man not only to do the good things but also to do the wrong things. But no moral value can be ascribed to an action, however good, that has been performed under the pressure of an omnipotent government.”

 

(emphasis added)

 

ludwig-von-misesLudwig von Mises realized that economic freedom is an indispensable pillar of individual liberty. The differentiation that has been drawn between “economic” and “non-economic” liberty is a sham – both are interdependent.

Photo via mises.ca

 

Conclusion

Ultimately we have to be critical of both the dictator’s and the grand duke’s policies. They are oppressive in what superficially appear to be different spheres of life, but in reality these spheres of life are interdependent. Their jocular banter shouldn’t distract from the fact that these people are members of a ruling class that is continually telling us what we may or may not do and how much tribute we must pay to it, backed up by the State’s apparatus of compulsion and coercion. As George Reismann once pointed out:

 

“Under laissez-faire capitalism, the state consists essentially just of a police force, law courts, and a national defense establishment, which deter and combat those who initiate the use of physical force. And nothing more.”

 

This is just about the degree of government one should find acceptable if one believes one has to have a government at all (in view of the fact that governments historically tend to arrogate ever more power to themselves regardless of how small they start out, a stateless society is probably preferable).

Obviously, both Orban’s Hungary and Juncker’s EU are proverbial light-years removed from this ideal state of affairs.

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