New Hungarian Economic Philosophy to Improve Households’ Financial Situation

Novoszáth, Péter (2018) New Hungarian Economic Philosophy to Improve Households’ Financial Situation. POLGÁRI SZEMLE: GAZDASÁGI ÉS TÁRSADALMI FOLYÓIRAT, 14 (Spec.). pp. 47-66. ISSN 1786-6553

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Abstract

As a result of the neoliberal economic philosophical doctrines that spread in the 1980s, decreasing attention was paid by researchers and other experts in the European Union to developments in households’ financial position and consumption in boosting economic growth. This is despite the fact that the examples set by the increasingly faster growing countries, especially India, China, Brazil, Mexico and South Africa, seem to markedly confirm that developments in incomes and household consumption have an increasing role in the acceleration of economic growth. As globalization and the 2008 economic crisis undermined the financial position of households in the European Union, and thus also in Hungary, and a growing part of the population was thrust into increasingly deeper poverty, so people started to become once again aware of the actual consequences of deterioration in households’ financial position on developments in economic growth. Having recognised all this, the Hungarian government fundamentally altered Hungarian economic policy. Tax hikes were replaced by tax cuts, and previous high taxes were replaced by tax credits to facilitate households’ position. In contrast to the previous austerity packages, actions were taken with the primary aim to increase the income left with households. This is also the purpose of the utility cost cut procedure. In this framework, long-term changes were performed with the aim to allow the government ensure public services in the field of waste water management, drinking water, natural gas and electricity supply, district heating, waste incineration and mass catering on a non-profit basis, in order to increase the income retained by the population rather than the profit made by public service providers. This article presents the theoretical background to this economic philosophy and the most important social effects of the adopted actions.

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