Last Thursday the Wall Street Journal published an interesting opinion piece by György Kopits, a member of the Hungarian National Bank’s monetary council, and a faculty member at Central European University. In it, Kopits argues that a recent move by parliament to enact a law mandating spending caps and other better fiscal housekeeping methods is a much more important – and positive – development than people think.
Here’s the money quote:
The potential usefulness of the fiscal responsibility law for Hungary cannot be overstated. Beyond addressing the immediate concern about the present budgetary imbalance, it sets a clear, forward-looking context for tackling the restructuring of social security, taxation and local government finances — much needed in view of Hungary’s worsening demographics and structural rigidities.
While I am still a little dubious that such a law can keep this and future governments from engaging in further bouts of what he calls “fiscal alcoholism” it’s an informative and compelling article, and is very much worth a read.