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Where Do I See a Problem Now?

English Pages, 3. 10. 2008

Many thanks for the invitation to this beautiful part of your great country and for honoring me with the Barry Goldwater Award for Liberty. Barry Goldwater is a name I esteem very much, a name I was aware of already in the sixties when he was alive, in the dark communist days. In the former Czechoslovakia, he was considered an arch enemy of the rosy era of building a communist paradise.

When I looked at the list of the past award holders – my heroes Milton Friedman, Margaret Thatcher and Ronald Reagan among them – I was really impressed. I only hope to deserve being included in such a distinguished group of great champions of liberty.

As some of you may know, this is not my first visit to Phoenix and to the Barry Goldwater Institute. I was here in November 1997 and since that time I have, now on the wall in the Office of the President of the Czech Republic, the Goldwater Medal for Economic Freedom. I got it when being on a tour in the U.S. lobbying for the American support for the entry of my country into the North Atlantic Alliance. We succeeded and the Czech Republic has now been a member of NATO for almost ten years. We have had opportunity to prove that we are a reliable partner of the U.S. and other democracies in several difficult missions all over the world. We share the same values and have similar motivations to defend them when necessary. In my speech here eleven years ago I said that: “for me, the transatlantic community was never connected solely with one past enemy. It was based on ideas, not on enemies.” And I added that “the alliance is the military expression of Western civilization.” There is no need to change these formulations now.

When I was here for the first time, it was eight years after the fall of communism. We were still fully involved in – what we used to call – the transformation era. The institutions of the communist system were already replaced by institutions of standard parliamentary democracy and market-economy, but the new system was still young, fragile and vulnerable. Revolutionary changes were over, and a less spectacular evolutionary process firmly under way.

Now, it is almost 19 years after our Velvet Revolution. We can proudly say that the radical transition from communism to free society is already part of history and that we – in the Czech Republic – live in a normal, free and democratic country. 

We learnt a lot during the communist era and we learnt some interesting additional lessons after it came to an end. Because of decades of communism, freedom is – for us – not something given, something received when being born, something self-evident. We had to fight for it and it gave us a special sensitivity to all kinds of erosions, violations and potential threats that freedom has to face. That is probably the main reason for my so strong opposition to the recent developments in Europe connected with the accelerated formation of a supranational bureaucratic European structure called European Union and this is why I so strongly criticize current environmentalism.  

First a few comments on the lessons we learnt during our transformation process. Some of them have a general validity. We understood that:

– it is necessary to have a clear vision of where to go. Our goal was very Barry Goldwaterian: capitalism, liberty, free markets, democracy, which means no excessive welfare system, no positive discrimination, no political correctness, no dictate of cultural elites, etc.;

political democracy and market economy can’t be exported or imported, they must come from the inside, from the country itself, by means of activities of people who live there. In this respect the role of armies and/or of clever and good-minded advisers and consultants is very limited;

the role of foreign aid is almost negligible. This statement of mine is based on many experiences, but we have an almost controlled experiment next-door – East Germany with enormous financial transfers from West Germany, compared to no such transfers for the Czech Republic. The achievements of both countries in the same period were and are very similar;

- systemic change is an evolutionary process, not a planned exercise, masterminded by omnipotent politicians;

- the speed of change is crucial, otherwise the resistance of various pressure groups with rent-seeking ambitions will block any movement forwards.

Communism is over, at least in my country. We will hopefully never need these lessons again but we face other threats to our freedom now. As I said, one of them is connected with Europe, or with the EU, to be precise, the other with environmentalism.

Let me mention our experience with the EU first. I am afraid that the American understanding of the European integration process is not only very incomplete, but often wrong. What I usually see or hear here when it comes to the EU is an unstructured, unanalytical and to some respect almost naive pro-integrationist argumentation. It bothers me, because I consider the marching towards an “ever-closer” Europe (which is one of the leading slogans now) a mistaken ambition. If I am not wrong, the unification process in your country which started more than two centuries ago was not based on a formula of an “ever-closer America”, or an “ever-closer Union”, but – to quote your Constitution – on a “more perfect Union”, with an emphasis on the separation of powers and on checks and balances designed to protect freedom and democracy against the tyranny of the majority and of the government. This is not the case in Europe now.

The undergoing changes, the shift from intergovernmentalism to supranationalism as well as the shift from liberalizing and removing all kinds of protectionist barriers to a massive introduction of regulation and harmonization from above, represent a non-negligible threat to our freedom.

The EU’s welfare system, the EU’s protectionism, the EU’s legal and regulatory burdens on business, the EU’s quasi-„competition policy“, the EU’s pension and health care systems, the European single currency arrangements, etc. are very real. They result in the loosing of democracy in favor of pan-European bureaucratic institutions located in Brussels that tend to restrain freedom, democracy and democratic accountability, not to speak about economic efficiency, entrepreneurship and competition. Compared to that, the Washington D.C. is a libertarian city. The EU gradually becomes the embodiment of postdemocracy, which is something the free people should never accept.

It brings me to environmentalism. In the last couple of years, this ideology – and the intentionally created panic about global warming – turned into the most dangerous vehicle for advocating large scale government interventionism, for suppressing human freedom and human progress and prosperity.

I am frustrated that it has not been sufficiently challenged both inside and especially outside of climatology. Many people have doubts about it but remain publicly more or less silent. We keep hearing one-sided propaganda regarding the greenhouse hypothesis, but do not hear serious counter-arguments. And not only in the field of climatology. 

There is a specific role to play for economists and other social scientists. We should talk about the inexhaustibility of resources, including energy resources, on condition they are rationally used, which means with the help of undistorted prices and well-defined property rights. We should produce persuasive studies about the costs and benefits of the currently proposed “green” measures and policies. We should prepare well-articulated and even to non-specialists understandable articles about the very complicated relationship between different time horizons (discussed in the economic theory by means of discounting). We should return to the elementary economic argumentation about the rational risk aversion (which would help us to reject the fundamentalist precautionary principle, used by the environmentalists), and to the discussion of the positive role of the markets, prices, property rights and of the tragic consequences of the unavoidable government failure connected with the ambitions to control global climate. 

What especially bothers me is the fact that the whole game is already in the hands of people who are not interested in ideas and rational arguments:

– it is in the hands of a group of climatologists (and other related scientists) who are highly motivated to look in one direction only because a large number of academic careers has in the last couple of years evolved around the idea of man-made global warming;

– it is in the hands of politicians who maximize the number of votes they seek to get from the electorate on the basis of whatever idea they could profit from. And the idea of man-made global warming is very seductive and politically promising and expedient. That is the reason why it is loved by politicians; 

– it is also – as a consequence of political decisions – in the hands of bureaucrats of national and more often of international institutions who try to maximize their budgets and years of careers regardless the costs, truth and rationality. The role of international institutions, especially of the UN, is decisive; 

– it is, finally, in the hands of rent-seeking businesspeople who are – given the existing policies – interested in the amount of subsidies they are receiving and look for all possible ways to escape the standard functioning of free markets. An entire industry has developed around the funds the firms are getting from the government.

We have to keep repeating the basic questions of the current climate change debate:

1) Do we live in an era of a statistically significant, non-cyclical global climate change? And is – or will – this climate change be so big that we will really feel it and suffer from it?

2) If there is a climate change, is it dominantly man-made? Is it the result of the CO2 emissions and of human economic activity?

3) Should a moderate temperature increase bother us more than many other pressing problems we face and should it receive our extraordinary attention at the expense of other competing problems? Are current attempts to mitigate global warming the best allocation of our scarce resources?

4) If we want to change the climate, can it be done? And what will be the consequences of such ambitions of ours?

My answer to these questions is basically NO. I myself, of course, do not aspire to measure the global temperature (if there is anything like that at all), nor to estimate the relative importance of factors which affect it. This is not the area of my comparative advantages. But I do possess enough evidence to reject the allegations of contemporary environmentalists, that these questions have already been answered with a consensual “yes” and that there is an unchallenged scientific consensus about this. To declare that is morally and intellectually deceptive.  We know – with certainty – one thing. The consequences of climate changes – if there are any – will be solved, like any other changes and challenges in the past, by the market and human ingenuity, not by government masterminding. They will be solved by technology, by growing wealth, by human adjustment, mobility and flexibility, not by government regulation and taxation, not by a new version of central planning.

I am convinced that fighting for freedom and free markets remains the issue of the day. We may be, some of us, oversensitive in this respect but I am sure it is – in principle – not about our personal oversensitivity but about the real dangers we see around us when our eyes are wide open and not blinded by political correctness. In the moment of the fall of communism, almost 19 years ago, I did not expect to experience such devastating attacks on our freedom and such intensity and extensity of government intervention into my own life as I face now. 

What I am saying may look like a pessimistic conclusion. It is not. It is just a wake-up call. To make a change, but I mean a real “change”, not the one discussed in American presidential campaign, we mustn’t be silent, or just happy with the world of modern electronic gadgets, of internet and cable television, of easy and cheap long-distance flights, of holidays in the Caribbean or on the French Riviera, etc. We should not accept putting various manipulative ambitions ahead of freedom and free markets. We should not become helpless victims of new progressive “isms” and of political correctness.  We should stand up for our good old beliefs and convictions. I suppose that is the motivation behind the Barry Goldwater Award. If so, thank you once again for giving me the opportunity to be here with you tonight.

Václav Klaus, speech at the Barry Goldwater Twentieth Anniversary Celebration, The Arizona Biltmore, Phoenix, Arizona, 2. October 2008


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