BUDAPEST, Hungary — An hour’s drive from the capital, across the flat and frozen Hungarian plain, the small town of Halásztelek is noisy with construction work as builders put the finishing touches on new single-story houses. They look like a 1950s American suburb that was dropped in the middle of Central Europe, but their humble appearance belies great ambition.

This sleepy town is the testing ground of a generous new benefits program created by Viktor Orban’s Fidesz government to win over millennial couples. But it comes with one condition: that they produce children and reverse Hungary’s demographic collapse.

In their brand-new home, Zsannett Koscis, 28, and her husband, Tomas, 31, dandle their infant son, Vencel, while praising the largesse of the government. As beneficiaries of Orban’s CSOK program, they received a tax-free, non-repayable grant to build their home, as well as generous tax allowances and child-related benefits that allowed Zsannett to give up her work as an office administrator to stay at home and raise their son.

“We claimed the highest amount, which means that we committed to raise three children,” said Tomas. “We wanted a big family, but it was this support which made it possible, and we have 10 years to fulfil this commitment.”

Orban features most often in Western commentary not just for his stern stance on migration from outside Europe but also as a cautionary tale of the continent’s slide away from liberal democracy into soft authoritarianism through his consolidation of judicial power and control of most of the country’s media into the hands of party allies. Opposition activists and parties are not silenced, as in a true dictatorship, but rather crowded out by government-funded media outlets supportive of Orban’s rule. He adheres to the letter of democracy — free and fair elections, a free press — while stacking the decks in his own favor. This delicate dance appears to be working. Increasingly, especially since winning more than two-thirds of seats in Parliament in Hungary’s election last April, he appears to be Europe’s most popular political leader.

The Hungarian leader now aims to expand his brand of populist politics to the rest of the continent, seeking allies to win control of Europe’s political institutions and reshape the European Union in his own image. Underlying his political success is a raft of policies some call “Orbanomics,” a set of redistributive strategies that shield middle-class Hungarian voters from the pressures of unrestrained capitalism, and which, to American eyes, seem almost socialist in generosity.

CSOK, which launched in 2016, is a prime example. Under the program, families who commit to having three children are given a government grant to buy or build a new house equivalent to up to twice the annual average income. Generous welfare payments make it viable for one parent to leave the workforce and stay at home with the children, while carefully targeted tax allowances mean that a family with three children no longer pays income tax at all. Finally, the expansion of free nurseries around the country allows women to re-enter the workforce without denting their income through childcare costs, in contrast to much of Western Europe.

“What we would like to do in Hungary is to give the freedom of choice, the opportunity to choose between staying a long time at home with the children, taking care of them, or going back to work,” Hungarian State Secretary for Families Katalina Novak told VICE News. “These are, I would say, the main pillars of our family support system.”

This blend of soft authoritarianism and benevolent paternalism may be an outlier in the European Union, but in Hungary it has deep roots. In its thousand-year history, Hungary has been a liberal democracy for less than 30 years. Under Communism, the atypically liberal concessions made to popular opinion by the country’s leadership — minimal censorship and political repression, free travel to the West, a restrained version of market capitalism — were termed “Goulash Communism,” as a marker of the country’s unique political settlement.

It is perhaps fair to say Hungary is now experimenting with “Goulash democracy,” where voters accede to Orban’s consolidation of power and are in turn sheltered from the storms of the free market capitalism by high living standards and generous state support. Like many socialist and social-democratic parties in Europe, Hungary’s previous government adhered to free market orthodoxies and paid a heavy price.

Orban is reaping benefits by out-socializing the socialists, said Dorottya Zsikra, a professor of sociology at the Hungarian Academy of Sciences.

“Fidesz did much more developing nurseries than under previous socialist liberal governments. You would expect the socialist government to invest in nurseries, which they did not do.”

But the Fidesz government’s focus on enhancing the security of middle-class families has had the unexpected outcome of widening disparities of wealth between the poorest sections of society and the middle classes, said Zsikra.

“The major problem here is that Fidesz and the Orban governments do not decrease social inequalities through social policies, but rather they contribute to the increase of inequalities through the means of welfare and social policies,” she said.

In recent years, Orban has established himself on the world stage as a leading voice against immigration, refusing to accept migrants and refugees from the Third World, particularly Islamic nations, at a time when the liberal states of Western Europe struggle to find a solution to the crisis.

It’s no surprise, then, that his family policies at home are also aimed at resisting the perceived threat of demographic decline posed by immigration. National Consultation on Family Policies questionnaires are directly framed in these terms: “Do you want migrants to come into your country from other cultures? Or rather, would you like to have better family policies to have more Hungarian children born?”

Novak, Hungary’s state secretary for families, is unabashed on this point. “It is about our future. It means if we will last as Hungarians, as Hungary or cease to exist," adding "many Western states, let's say in the European Union, also choose [migration] — even if they don't say so, but they do choose it — as a solution for the problem of the labour market for the problem of the maintaining of the pension system… And in Hungary, we think that that should not be a solution for the demographic challenges."

“Social policy and family policy are important in terms of legitimizing the illiberal road Orban is building for us in Hungary.”

As Europe’s liberal democracies contend with widespread popular dissatisfaction, and populist parties aligning with Orban’s “illiberal democracy” grow in strength, Hungary presents perhaps one possible picture of the continent’s political future: a semi-authoritarian interventionist state raising living standards and eroding the liberal consensus politicians once saw as the end of history.

And as long as the living is good, there’s little reason for Hungarian voters to support the protests aimed at unsettling Orban’s rule, said Zsikra. “Social policy and family policy are important in terms of legitimizing the illiberal road Orban is building for us in Hungary.” Similar policies are now being introduced by Poland’s illiberal Catholic Law and Justice government, and explored by Italy’s populist governing coalition.

In a September 2018 speech in which Orban outlined his political vision. “Calmly, and with restraint and composure, we must say that the generation of the ’90s is arriving to replace the generation of ’68,” he stated to adoring crowds. “In European politics, it is the turn of the anti-communist generation, which has Christian convictions and commitment to the nation. Thirty years ago we thought that Europe was our future. Today we believe that we are Europe’s future.”

Back in Halásztelek, bouncing Vencel on his lap, Tomas noted his satisfaction with the new Hungarian model: “We supported the present government before this allowance too. This help has just confirmed this view, and we will support this government in the future, with all their faults.”

This segment originally aired January 23, 2019, on VICE News Tonight on HBO.