Magazine | August 27, 2018, Issue

Born in Hungary

Hungary’s Orbán (Leonhard Foeger / Reuters)
What Budapest’s pro-natalist policies can teach social conservatives

From dubbing refugees from North Africa and the Middle East “Muslim invaders” to proclaiming Hungary a Christian homeland, Hungarian prime minister Viktor Orban is prominent mainly for his brand of right-wing populist nationalism. Yet behind the vitriol that defines Orban in the Western press is a government embarked on what may end up being the biggest natalist policy experiment in modern history — an experiment that is redefining the possibilities for modern social con­servatism. Can government policies coax people to have more babies? We’re about to find out.

Demographic transition — the shift from having many children per woman to just a few — is normally something hoped for in a developing country as a signal of improvements in employment opportunities and infant mortality. Yet across the developed world, birth rates have continued to fall and now dip significantly below replacement levels. It’s a phenomenon that is particularly acute in the former Communist countries of Central and Eastern Europe for reasons that are somewhat mysterious, but it has been exacerbated by emigration to richer parts of Europe. In Hungary’s case, a country of 9.8 million has lost approximately 1 million people since its population peaked in 1980.

Speaking at the World Congress of Families in Budapest last year, Orban unveiled an “action plan” for goosing Hungary’s birth rate of 1.5 children per woman to 2.1, the normal replacement rate, by 2030, thus turning the demo­graphic tide. “Europe, our common homeland, is losing out in the population competition between great civilizations,” he told the audience of Christian con­servatives. “Fewer and fewer marriages are producing fewer and fewer children, and the population is therefore aging and declining.”

Using social policy to promote families is by no means a new pre­occupation for Orban, and for the most part his plan builds on reforms that he has steadily rolled out during his previous two terms. In his first term, his govern­ment introduced a generous maternity-leave program that provides up to three years of leave with the first six months paid. Flat cash stipends and a generous per-child tax allowance have been added for mothers who choose not to return to work, to compensate them and encourage larger families. This year has been declared the “Year of the Family,” with Hungary’s Ministry of Human Capacities planning to bolster virtually every aspect of its pro-family regime, in part through new initiatives such as allowing mothers with two children to write down their student loans, and a program to build nurseries across the country — all in accordance with Orban’s Trump-like call to “make families strong again.”

The most radical of these policies is the Family Housing Support Program, known by its Hungarian abbreviation “CSOK.” A de facto “three-child policy,” CSOK has since 2016 provided married couples who have a third child with up to 10 million   Hungarian forint, or $37,000, to be used towards newly constructed homes, along with prefer­ential loans and exemptions from value-added taxes. Unsurprisingly, the influx of cheap credit from CSOK has caused a property boom across Hungary, with housing starts more than doubling and real-estate prices soaring more than 20 percent in inflation-adjusted terms. The program was ex­panded in 2018, with the introduction of simplified applications, the extension of benefits to the purchase of used dwellings, and the inclusion of families returning from abroad.

All told, Hungary now spends just under 5 percent of its GDP on family benefits — four times its defense spending — and largely in the form of direct cash transfers. The 10 million–forint question is whether any of this spending will prove seminal, or whether in the end paying people to have babies amounts to pushing on a string.

While China’s one-child policy showed that governments are more than capable of crushing fertility rates, the evidence of their ability to raise them is at best mixed. In an attempt to fill their own demo­graphic gully, Australia introduced a $5,000 “baby bonus” in 2001, payable upon the birth of a child. “Have one for mum, one for dad, and one for the country,” is how then-treasurer Peter Costello famously put it. Years later, Costello took credit for causing a minor baby boom, the so-called “baby-bonus generation.” Yet at the cost of roughly $126,000 per extra child born, the program was ultimately discontinued.

Asia’s experience with natalist policy hasn’t been any better. In 2017, Singa­pore’s birth rate reached a seven-year low of 1.16 despite $10,000 cash bonuses for families that have three or more children. And a decade after Japan adopted a bundle of fertility-friendly reforms, birth rates have ticked up only slightly, from 1.37 births per woman to 1.46. At a loss, the notoriously closed society is now looking to launch a major new guest-worker program, de­signed to address labor shortages.

The decision to have a child turns out to be an incredibly complex one, mediated by labor markets, friends and family, and the broader cultural zeitgeist. It’s not obviously responsive to carrots or sticks, at least not on their own.

That Russia appears to be the exception that proves the rule is re­vealing. Like Hungary, Russia ex­perienced plummet­ing birth rates after the end of the Soviet Union and the economic collapse that ensued. Yet following the introduction of the so-called maternity-capital program in 2007, Russian birth rates have shot up from 1.3 births per woman in 2006 to 1.75 in 2016 — a rate not seen in the country since 1991, and the highest in Eastern Europe.

Much like CSOK, Russia’s program provides a substantial one-time voucher of around $7,200 for a second or subsequent child — an impressive sum of money in Russia — that must be spent on housing, the child’s education, or the mother’s pension. In 2017, Russian president Vladimir Putin announced a plan to spend an additional 500 billion rubles ($8 billion) on programs to encourage childbirth, including mort­gage subsidies and a universal child allowance of $180 per month for the first 18 months following a child’s birth.

It shouldn’t come as a total surprise that housing is an important considera­tion in fertility decisions. Kids take up space. Yet in America, where surveys indicate a widening gap between desired and actual fertility, the preference for big families often takes a back seat to living in increasingly expensive metro areas. For American conservatives who are reluctant to create new subsidies for home ownership, expanding the housing stock in major cities through land-use deregulation could be a market-friendly natalist policy in disguise. Call it the “supply-side” approach to family policy.

A focus on housing is not the only thing Hungary and Russia have in common. In addition to providing the incentive, leaders in both countries have made having children in traditional family structures a salient cultural issue, presenting it either as a duty to the nation or as an integral part of Christian faith. That is, having children is explicitly construed as a noble pursuit in and of itself, with an intrinsic benefit that compensates for the non-market value that families — and mothers in particular — help to create. In an extreme case, the birth rate in Georgia appears to have spiked after 2008 simply due to a pledge made by Ilia II, the Patriach of the Georgian Orthodox Church, to personally baptize the third child of any married couple.

Nearby, Poland’s ruling Law and Justice (PiS) party has taken notice. Though controversial, PiS came to power in 2015 in part by moderating its Catholic nationalism into a set of widely popular policies inspired by Catholic social doctrine. The most important of these has been the Family 500+ program, a 500-zloty ($140) per-month child allowance that families receive, tax free, for their second or subsequent child. That repre­sents around 40 percent of Poland’s minimum wage and is nearly as generous as the United States’ $2,000 per-child tax credit, of which low-income households can claim only a fraction.

According to the World Bank, the 500+ program has all but eliminated extreme child poverty in Poland, and a recent analysis by economist Lyman Stone suggests that it may even have had a significant effect on birth rates, if more a bump than a boom. Time will tell whether the early positive trends will continue, but there is reason for optimism. Unlike Singapore or Japan’s technocratic prerogatives, the social teaching behind the policy — society’s obligation to promote families and the flourishing of children — is an ethical duty.

Who would have guessed that a constellation of formerly atheistic, Communist countries would become the vanguard of the family? After all, the Bolsheviks believed that the nuclear family was at best a transitive social arrangement on our path to communal utopia. But in truth, the former Com­munist countries have always had a complicated view of the family. Mao strongly encouraged women to have children in the ’50s and ’60s — you were a “hero mother” if you had four — resulting in the population boom that the regime later felt it had to control. Abortion was banned under Stalin in favor of his own natalist scheme. And Hungary’s strong maternity policy dates back to 1960s socialist laxity regarding the importance of work. In short, the impulse to social perfectionism can often cut in both directions, de­pending on the spirit of the times.

George Orwell was perhaps on to something when he posited a family resemblance between Catholic national­ism and the Soviet ideology. Both rejected the commodification of core human relationships such as caring for a child. And both grasped the meta­physical importance of telos, whether in the arc of history or the role of the so-called natural family. Of course, the danger in teleological thinking, now as then, is in its potential to justify subordinating the individual in the name of an elusive end state that never comes.

Nonetheless, American social con­servatives have a lot to learn from Eastern Europe’s experience with family policy. Despite conservative successes on the Supreme Court, progressive cultural ascendancy — from the crystallization of gay marriage and abortion rights to the ubiquity of race and gender politics — has left many traditionalists feeling beleaguered, without an agenda, and pining for a monastic life off the grid.

Meanwhile, though the jury is still out on Hungary’s birth rate, between 2010 and 2016 marriage rates increased 46 percent after declining over the previous decade.

Official statistics clearly show, in a trend that predated Orban, that reported abortions have dropped by more than a quarter over the same period, reaching historic lows. Is it so unreasonable to think that generous financial support and the cultural celebration of new mothers and their children had some­thing to do with it?

With Trump’s presidency creating political disequilibrium where es­tablished party coalitions once stood, America’s social conservatives — from working-class families to cultural Catholics — have a roadmap for re­newed relevance.

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