- The Washington Times - Thursday, November 2, 2006

Central Europe is in turmoil. Some blame the fast pace of free market reforms and claim that capitalism cannot help but leave many people behind. In fact, Central Europeans are more prosperous than ever before and capitalism continues to enjoy public support.

An important, though overlooked, reason for the political instability in the region is the people’s disenchantment with their corrupt ruling elites.

In the last few weeks, Hungary faced violent street protests as Prime Minister Ferenc Gyurcsany admitted to lying to the public about the state of the economy prior to the elections. The Kaczynski twins who ran Poland since last October have lost their parliamentary majority and may be heading for early elections. The stability of the Slovak government came at a high price — a coalition with Jan Slota’s ultra-nationalists. And, four months after their elections, the Czechs have no government at all.

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The European left is ecstatic. A year ago, Central Europe’s robust growth seemed to threaten the moribund “social model” in Western Europe. Today, Central Europe is a laughing stock. None would dare to suggest that the French should emulate countries led by a coterie of xenophobes, racists and anti-Semites. Moreover, the left feels that it can place the rise of the unsavory characters like Mr. Slota at the door of global capitalism.

Writing in the New Statesman, for example, Roger Boyes opined, “The Hungarian unrest has echoes across eastern Europe. From Poland to Bulgaria, from Slovakia to deep in the Balkans, there is a surly resistance to globalization, to the crushing power of international markets. Increasingly, it is the far right that exploits this most deftly.”

That may be wishful thinking. One of the biggest surveys of public opinion in Central Europe ever conducted did not find much “surly resistance” to capitalism. In 2003, the Gallup Organization asked over 12,000 people in the EU accession countries to agree or disagree with the following statements: “The state intervenes too much in our lives,” “Free competition is the best guarantee for economic prosperity,” and “Economic growth must be a priority, even if it affects the environment.” All three statements were supported by the majority or, in the case of the last question, a plurality of the respondents in all four countries.

Similarly, a mere two months before his defeat in the Slovak elections, Mikulas Dzurinda’s flat tax reform was supported by 58 percent of the citizens. His partial privatization of the pension system enjoyed support of 53 percent of the public, and his reduction of the welfare state was supported by 47 percent of the public, with 46 percent opposed.

It is unlikely that recent events in Central Europe represent a crisis for capitalism. The real GDP growth rate in the Czech and Slovak republics was 6.1 percent last year. Hungary grew at 4.1 percent and Poland at 3.4 percent. Unemployment fell in all countries except Hungary. Incomes per person rose by 28 percent in the Czech Republic, 44 percent in Slovakia, 46 percent in Poland and 49 percent in Hungary between 1995 and 2004. In contrast, incomes in the eurozone rose by 17 percent. Central Europe has lower child mortality, longer life expectancy, more physicians and higher school enrollment than it did under communism. The region is converging with the West.

In fact, it was anti-corruption that played a vital part in bringing the Polish and the Slovak populists to power. Similarly, the Civic Democrats won the Czech elections by attacking corruption under their Social Democratic opponents. The Corruption Perception Index, which is published by the German NGO Transparency International, shows that corruption remains a serious problem in Central Europe. The CPI is measured on a scale from 0 to 10, with higher numbers indicating less corruption. Between 1998 and 2005, the CPI fell from 4.8 to 4.3 in the Czech Republic and from 4.6 to 3.4 in Poland. It remained 5 in Hungary and rose from 3.9 to 4.3 in Slovakia. In contrast, it was 7.6 in the United States in 2005 and 9.7 in Iceland — the world’s least corrupt country.

The collapse of communism brought greater freedom to the people of Central Europe, but also greater responsibility. Capitalism, they were told, rewards thrift, self-reliance and hard work. It does. Unfortunately, far too many well-connected and politically powerful people in the post-communist countries have made their fortunes in a corrupt way. Corruption scandals have already claimed the scalps of the Czech Prime Minister Stanislav Gross and the Polish Prime Minister Leszek Miller. Dozens of government ministers in the region were dismissed or resigned because of financial misdemeanors, but few ended up in jail.

Today, politics in Central Europe is still a sure road to riches. The people have the right to expect service, rather than self-enrichment, from their leaders. Populist parties in the region were given power primarily to clean up government corruption, not to usher a new era of leftist economic policies.

Marian L. Tupy is a policy analyst at the Cato Institute’s Project on Global Economic Liberty. He is the author of a forthcoming Cato study “The Rise of Populist Parties in Central Europe: Big Government, Corruption and the Threat to Liberalism.”

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