Why I am banking on a central banker as Hungary’s “savior” PM

I got some grief from commenters when I wrote a few weeks back that I thought the odds of an “expert” government coming in to power were higher than most so-called “experts” seemed to believe. While my argument probably overstated the odds of such a “non-political” cabinet resulting from a regularly-scheduled election, over the past few days I think I’ve been rather spectacularly vindicated on the general issue of whether Hungary’s next government will be led by one of another of the country’s professional political-types. And now I am going to double-down on my bet and tell you who I think the next PM is likely to be, and whether this person’s rise to power would be a good thing.

Even before the resignation bombshell that Ferenc Gyurcsány dropped on Saturday, there has been quite a bit of speculation on who might replace him, aside from Viktor Orbán, who in a proper election would probably have little difficulty easing back into the prime minister’s office. But since Saturday, there has been a regular blizzard of “trial balloons” involving potential candidates. Here are among those that have floated up and quickly popped:

• Péter Kiss: A lot of deep-red Socialists probably think it would be great to promote the consummate political operator now running the Prime Minister’s office (chancellery) to the top job itself. But he’d be about as much of a break with the Socialists’ failed tenure as Constantine Chernenko was a breath of post-Brezhnev fresh air. Just the fact that people have seriously mentioned him as a PM shows how deep Hungary’s political dysfunction is.
• Imre Szekeres: A useless party hack.
• József Graf: Ditto, and he even looks a bit like Chernenko.
• Gordon Bajnai: A primary reason Gyurcsány needs to go is that he’s a guy who got rich milking the system in the awkward position of trying to tell middle-class voters not to depend on state handouts. Ditto for Bajnai.
• Lajos Bokros: If I had the chance to vote for someone to be given the task of pulling Hungary out of its current mess I would probably vote for Bokros, because he’s already fixed the country once when it got into a mess almost exactly like today’s, and once told me something at a cocktail party that was so funny I almost spit up my drink. But I don’t vote in Hungary, and apparently no one who actually does thinks like me.
• László Békési: A co-author of the report recently put out by the “Reform Alliance” group calling for significant cuts in government spending, Békési is, like Bokros, a former finance minister with lots of experience dealing with the sorts of post-communist adjustment problems Hungary is dealing with. Unfortunately, one of those stints as finance minister was all the way back before Hungary became post-communist, which makes it hard to picture him putting some spring back in the country’s step, while a lot of MSZPers think he’s too post-communist for the job.
• Ferenc Glatz: A former president of the Hungarian Academy of Sciences in theory sounds like an uncontroversial choice, but Glatz apparently made too many Socialist enemies due to his role in the Reform Alliance.
• Tamás Mészáros: Having the dean of Budapest’s prestigious Corvinus University step in to save the day sounds like a great idea, but Mészáros apparently has said no thanks.

Then we have the central bankers.

While current Hungarian National Bank (MNB) president András Simor has taken himself out of contention – supposedly there is some very bad blood with Gyurcsány and the current PM’s party – the two biggest balloons that haven’t yet popped are Simor’s deputy Judit Király and former MNB chief György Surányi. As I write this, it is looking increasingly likely that Surányi, a commercial bank executive who presided over the MNB during two turbulent terms in 1990-1991 and again in 1995-2001, is the favorite.

Over the past few days Surányi has been making the rounds among the parties and has studiously avoided commenting to the press on the issue, probably the best indication that he expects to get the nod. Though some have said he will only agree to serve if he has broad backing, at least tacit support from Fidesz, and carte blanche to appoint a finance and economic team of his choosing, demands that would seem hard to satisfy.

The question of whether Surányi or someone like him is voted in is different from the question of whether such an appointment would be a good thing. As a matter of principle, I hate it when democratic societies end up handing over their politics to “non-political” leaders, whether military officers or technocrats like Surányi, for it is the surest sign that the normal democratic systems have failed. But in Hungary’s case it is now obvious that politics as usual have failed, at least in terms of putting the country on a “family budget” that is even remotely sustainable.

So what might a person like Surányi do that a politician can’t? To answer that, I’ll trot out probably the most famous line ever used by a central banker to describe his role. As the former US Federal Reserve Chairman William McChesney Martin put it, his job was to “to take away the punch bowl just as the party gets going,” by which he meant raising interest rates just when the economy is at its most active, to prevent excessive inflation. In other words, a successful central banker is trained to make unpopular decisions and to ignore people when they complain, or roughly the reverse of what makes for a successful politician. Which, unfortunately, is exactly what Hungary’s next prime minister needs to do – especially given that the one that is almost certain to follow them (i.e. Orbán) is already waiting by the punch bowl, pitcher in hand.