national populism and slovak – hungarian relations in - MEK

Zsolt GálNational Populism and Slovak – Hungarian Relations in Slovakia 2006 – 2009. Forum Minority Research Institute Šamorín – Somorja, 20093 rd stage. Great scarcity, galloping inflation that often turns to hyperinflationand obvious overvaluation of the national currency causes a massivewithdrawal of capital from the country and causes demonetarizationof national economy. The already exorbitant budgetary deficit deepenseven further because continuously high budgetary expenditures are suddenlycombined with declining tax revenues. The government growsdesperate and decides to cut expenditures and devalue the national currency,which leads to a substantial drop in real wages. This usually causesan abrupt political change, such as a violent toppling of the government.4 th stage. An austerity stabilization package put through by the new government(usually with assistance from the IMF) leads to significant cutsin expenditures, a further decline in real wages compared to when thepopulist cycle started. To make matters worse, wages tend to remain atlow levels for an extensive period of time because the capital has lostconfidence in the national economy and investments stagnate.Since there are differences between CEE and Latin American countries,there are several significant differences between the natures of populism inboth regions as well. They stem mostly from the fact that CEE countries(except for Poland) are substantially smaller, their economies are more openand they are members of various integration groupings (particularly theEuropean Union) or at least strove for full-fledged membership in thesegroupings during the transition period. Therefore, it has been virtually impossibleor at least very difficult for them to apply a whole range of tools ofLatin American populism such as controlling monetary policy or mountingpolitical pressure on the central bank, controlling foreign exchange rates andflows, protecting the domestic market, meddling and distorting pricing, etc.Because of that, populism is manifested mostly through expansive fiscal policy.Also, the population is not as heterogeneous in CEE countries in termsof ethnic or income disparities; last but not least, big domestic landownersand industrial tycoons were naturally non-existent after the fall of communism,which is why populist politicians were not urged to fight them.Another, rather seeming, difference is that CEE countries in the finalstage of the populist cycle usually managed to avoid total economic collapse,hyperinflation, disintegration of the financial system, fall of thenational currency and eventual violent toppling of the government; however,that was not because such a scenario would be improbable in this regionbut rather due to the fact that the political elite (in the nick of time butstill) managed to adopt inevitable measures aimed at avoiding a total breakdown(i.e. stabilization packages in 1995 and 2008-09 in Hungary and in186