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Czech Republic – 20 Years After the Fall of Communism

English Pages, 26. 11. 2009

It’s a real pleasure and honor to be here on the occasion of my official visit to your beautiful, interesting and dynamic country. This is not my first visit in Sao Paulo. I had a speech in the Liberal institute here, in Sao Paulo, in 1994, to my great regret I was not able to find the title of my speech but it was – undoubtedly – about our radical transition from communism to a free society which was in its crucial moments at that time.

Let me start by saying that I had very friendly and productive talks with President Lula da Silva yesterday and let me assure you that Brazil has a good friend in the Czech Republic. We are well aware of the fact that Brazil – as the first Latin American country – recognized Czechoslovakia in December 1918 and that Brazil – at various times of history – has become home to many thousands of Czech people, among them also the ancestors of President Juscelino Kubitschek de Oliveira, the founder of the City of Brasília. 

I left the Czech Republic just a week ago, the morning after our National Day when we celebrated the fall of communism which occurred exactly twenty years ago. It motivates me to say something about it. 

Twenty years ago, in our so called Velvet Revolution, we got rid of communism and started to build a free and democratic society and a market economy. The transformation of the whole society was not an easy process. It was not an act, it was not an overnight regime change, it was not a political coup d’état. It was a radical, very deep and fundamental systemic change, in which we opened up and liberalized both our political system and our economy. We also opened the borders to the rest of the world.

We were able to achieve it relatively very successfully because we understood that

1. the change must be radical, comprehensive, far-reaching and that its main elements must be done together and at one moment. I used to say that we needed a critical mass of transformation measures immediately at the beginning when there was a strong political support for the sometimes painful changes;

2. partial, slow and gradual measures have no chance to succeed

3. the necessary liberalization, deregulation and privatization of the whole economic system brings costs that are – especially in the short or medium run – not negligible. However, the faster these steps are done, the smaller the costs;

4. the social aspects of the transition are important. We introduced a rational and very cautious social policy, but by avoiding rapid inflation (or hyperinflation) we maintained social stability;

5. in our part of the world the political and economic changes must go together. Our experience confirms that the changes in both fields, political and economic, reinforce one another;

Where are we now, after twenty years? We have become a normal European country, a country that is facing the same problems other European countries are facing, not specific, post-communist ones. This is already a great achievement. I will touch upon three of the current European problems here on this academic occasion but their choice is not accidental. I choose the problems which bother me: the development of the European integration, the ambitions of the environmentalist doctrine of global warming, and the consequences of the current financial and economic crisis. 

Let me start with Europe, or perhaps more accurately, with the European Union. It is not the same. 

Originally, in the 1950’s, the leading idea behind the European integration was to friendly cooperate, instead of making wars, to liberalize, to open-up, to remove all kinds of barriers at the borders of European countries, to enable free movement of goods and services but also of people and ideas around the European continent. It was a positive concept for most of Europeans and should have a chance to continue and be promoted by all of those who have liberal (in European terminology), that is not statist or nationalistic, world-view or personal philosophy. 

To my great regret, this is not the dominant idea or concept now. The situation begun to change in the 1980’s and the decisive breakthrough came with the so called Maastricht Treaty in December 1991. By that time, integration had turned into unification, liberalization into centralization of decision making, into harmonization of rules and legislation, into the strengthening of European institutions at the expense of institutions in member states, into post-democracy. Freedom, democracy and democratic accountability, not to speak about economic efficiency, entrepreneurship and competitiveness have been weakened. Democratic deficit has been created and keeps growing.

The almost ten years old European dispute about the European Constitution and about the Lisbon Treaty, which probably ended two weeks ago when I signed it, was the dispute between those who wanted to go ahead with this freedom and prosperity endangering process and those who wanted to interrupt it.  This is the way we, who spent most of our life in a very authoritative and oppressive communist regime, feel it. 

My second topic is the doctrine of global warming and its victorious march through Europe and the world. It deserves to be called a doctrine, because science is something else. I do not have the time now to discuss the ideology of environmentalism and global warming, or its scientific or climatologic aspects. Allow me to refer to a book of mine which has been published already in 12 languages (among others also in Spanish, but to my great regret not in Portuguese), under the title Blue Planet in Green Shackles. Its message is outlined in the subtitle of the book which asks: What is Endangered: Climate or Freedom? My answer is simple: It is freedom that is endangered. The climate is ok. 

There are many relevant arguments supporting this position. To summarize them shortly, I want to start by saying that I am not at all convinced that we witness a unique, unprecedented, large and man-made global warming. On the contrary, the available evidence tells me that:

1. The warming is not global. It materializes only in the cold, but not in tropical regions, in dry, not wet areas, in the winter, not in the summer, and during the nights, not during the days;

2. The warming is not large. The global average temperature increase in the last century was only 0.74 °C. 

3. The warming is not unique and unprecedented. That’s a fact and the IPCC Report in 2000 that was trying to argue otherwise was subject to disastrous critique.

4. The mild warming we experience is also not dominantly man-made or CO2-made. There are many other factors permanently influencing the temperature and climate. 

For all of these reasons, I don’t think that radical, human freedom and prosperity endangering measures and policies that are proposed and in more and more countries implemented are necessary. I am against the Copenhagen conference. We do not need new rules telling us how to live, what to do, how to behave, what to consume, what to eat, or how to travel. All we need is letting human adaptation, human flexibility, technical progress and free markets go ahead unhampered. What we need is freedom.

The third topic I would like to mention here is the current, hopefully already retreating financial and economic crisis. 

It came as a surprise for the economists, for the politicians, as well as for the public. Almost nobody expected it, because almost everyone shared the belief in the omnipotence of central banks and governments to control the macroeconomy and in the feasibility, rationality and productiveness of microeconomic regulation, especially in financial and banking sectors.  

This belief has not proved to be correct. The economists slowly began to understand the causes of this crisis, which was a consequence of a combination of failures. On the macroeconomic side, it becomes more and more accepted that the origin of the crisis was connected with the unprecedented build-up of imbalances in the world economy, with the unusually long period of low real interest rates and excessive money supply and with political playing with the mortgages. On the microeconomic side, it became clear that the existing partial and very imperfect regulation distorted the rational behavior of banks and financial institutions and motivated them to look for ways to escape it by means of the so called “financial innovations.” 

To sum it up, the crisis was not the result of a market failure or of any inherent deficiency of capitalism. It was a government failure, resulting from the immodest ambitions to insensitively intervene in such a complex system as society and economy. 

One last remark. After briefly mentioning the end of communism, I touched upon three topics: European integration, the environmentalist doctrine of global warming, and the current financial and economic crisis. This is not an accidental conglomerate of topics. Looking more closely at them, we can conclude that it is in fact one topic and its various manifestations. Communism was a utopia to ruthlessly mastermind human society. Current efforts to artificially unify Europe, to fight climate, as well as to fight the crisis belong to the same category. And this is the message I want to leave here.

In a few minutes, I’ll be awarded honorary doctorate of your university. I take it as a personal award – reflecting my contribution to the Czech, European and worldwide debates about political and economic issues of the current world – and as a friendly gesture towards my country, the Czech Republic, I have the pleasure to represent here today. It is a great honor for me.

Václav Klaus, Fundacao Armando Alvares Penteado, Sao Paulo, 25. 11. 2009


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