Europe faces an existential demographic challenge just as pressing as climate change. The United Nations predicts that EU member states will experience population decline by 2050. The impact is already evident in Eastern and South-Eastern Europe, where, according to Eurostat, 10 EU member states experienced an absolute population decline in 2018. The equivalent of small cities is disappearing every year.
A growing number of countries are responding to this demographic crisis with a series of interventions and incentives. Hungary is a particularly interesting example.
But here’s the thing. Mention Hungary and what Galbraith called “Conventional Wisdom” by default, the “President Orban” – end of discussion.
This is foolish. It distracts us from the possibility that the Hungarian model has lessons and insights for other EU member states and for the United Kingdom, where the projections of the Office of National Statistics (ONS) population make reading very bleak.
The consequences of falling populations – low birth rates, rural decline and emigration of educated young adults – are profoundly negative for any economy. They include a contraction in the tax base and the workforce. It also leads to a loss of intellectual capital, which in turn decreases our ability for future economic development. This is a big deal. Population aging also increases dependency rates, which drags young people’s economic productivity.
The Croatian EU Presidency has put the fight against the decline of the European population at the top of the agenda. The Financial Times he recently reported that “Croatia is asking the EU to evaluate a range of family-friendly policies. . . while looking for ways to reverse eerie birth rates. “
These are the magic words: “family policies”. Because much depends on how we view pregnancy and how we are “pushed”, politically or ideologically, towards a particular vision of this.
That wise man, Rabbi Jonathan Sacks, reminds us that the way we view children’s education is really important and that not all families are equal in terms of their impact on the well-being and growth of children.
A Hungarian political culture considers motherhood, motherhood and parenting intrinsically satisfactory and must be nurtured and supported by tax and labor market policies. This will give very different demographic results to more “awake” societies, such as caricature marriages, and the responsibilities and commitments that derive from having children, in some way limiting.
The Hungarian economy has gone through a torrid banking and economic crisis. The recovery has been impressive since 2010, with GDP growth of between 4 and 5%, low inflation and unemployment of around 3%. The debt-to-GDP ratio has now dropped to around 70%, with a balanced budget economy, as well as an external one.
What is even more impressive, however, is his focus on supporting marriage, the family and family formation. About five percent of its strong growth – double the EU average – is earmarked for “family-friendly” incentives.
In other words, inextricably linked to stabilization and economic recovery is a political philosophy, a culture, which embraces marriage, family and children both as a factor that favors economic growth and as the ultimate goal of the economy. And all of this is now incorporated into its constitution.
Hungarian tax support to encourage marriage and family training is extremely practical. Women who have four children are exempt from personal income tax. Each married couple is entitled to an interest-free loan of € 30,000, where the mother is between 18 and 40 years old and expects a child. There are subsidized loans, with interest rates limited to three percent for married couples who build and buy their home. In addition, there are grants to encourage grandparents to take care of their grandchildren and grants of € 7,500 also to help buy a larger family car. There are childcare places to help women get back to work.
Therefore, the policy focus is not only on reversing population decline, now an EU imperative. It is not about “natalism”. It is an expression of a deeper political and moral philosophy that seeks to allow women and young couples, if they wish, to marry and enjoy the experience of raising their family.
Whatever you think of Orban, these policies are working. Marriage is at a record high and the birth rate is on the rise. It is too early to say that they have been successful. But it’s a start.
Listening to the Hungarian minister for family and young people, Katalin Novak (pictured), it is difficult not to be impressed. Woman with three young children, she is an economist, highly qualified and expert in European politics. It is also an eloquent supporter of a “family economy”. He insists that designating five percent of annual GDP growth in marriage, parent-led family and child care is not an “economic expense” – it is the single most important and productive investment that a country can make.
The deconstruction of the family erodes the social capital and requires interventions to mitigate the damage caused by the breakdown of the marriage, as well as the mental and emotional health problems that may arise.
Hungarian policies don’t go with the grain of the EU’s liberal mentality. This mental stance was what Roger Scruton complained of as the oppressively illiberal “New Europe” – and would have known something or two about freedom, given the risks he ran in supporting political freedom in Eastern Europe under Soviet communism.
Now Europe is facing the crisis and it may be that Hungary has at least part of the solution, offering policies that were once absolutely an integral part of Adenaeur’s Christian democracy, as well as the “Old Europe” in which Scruton writes The Paris report: a Europe we can believe in.
God, marriage, family and children. There is an authenticity of Hungarian politics that speaks to Europe in these ancient and fundamental times.