Europe, environmentalism and the current economic crisis: a contrarian view

A speech from Vaclav Klaus, President of the Czech Republic, speaking in Paris:

I would like, first of all, to express my sincere thanks for giving me the opportunity to be here in your beautiful city this morning and to be able to address this distinguished audience. To say that is not just a usual declaration of courtesy or politeness belonging to such occasions. It is different. In the last almost twenty years after the fall of communism, I have made hundreds of speeches and lectures almost all over the world. Not many of them here. If I am not wrong, my last speech in Paris was in July 2003 a few blocks away, in the Automobile Club at Place de la Concorde.

My wife says that it is because I don't speak French. Maybe it's true but it may also be because I am choosing wrong topics or that my views are politically incorrect. This is certainly true when I speak about Europe and the European Union, and especially when I criticize the currently dominant European ideology I call Europeism. I am afraid that – in the last couple of years – this loosely structured, rather heterogeneous, not coherently described, formulated, analyzed and defended "conglomerate of ideas" has achieved an enormous strength and that it influences our thinking, our policies, our way of life more than we are aware of.

The main aspects of Europeism, as I see them, can be summarized in the following way:

- the belief in social market economy, and the demonization of free markets;

- the reliance on civil society, on NGOs, on social partnership, on corporatism, instead of classical parliamentary democracy;

- the aiming at social constructivism as a result of the disbelief in spontaneous evolution of human society;

- indifference towards the nation state and blind faith in internationalism;

- the promotion of the supranationalist model of European integration, not its intergovernmental model.

Everyone who follows the French political, philosophical, economic, or sociological discourse knows that my position (which means my strong disagreement with this doctrine) goes directly against the politically correct stances in France and, what is probably even more serious, against the deeply rooted and centuries old views of the French intelligencia. With all my affection for France, this country is for me more Colbert than Bastiat, more Fourier and Saint-Simon than Say and Turgot, more Sartre than Aron. There is, therefore, no surprise that I am not regularly invited to speak here.

The issue of Europe and of its future has stayed with me since the fall of communism in spite of other topical issues. It is not surprising. The undergoing weakening of democracy and of free markets on the European continent, connected with the European unification process, is a threatening phenomenon especially for someone who spent most of his life in a very authoritative and oppressive communist regime. I consider, therefore, the marching towards an ever-closer Europe (which is one of the crucial tenets of Europeism) a mistaken project. This ambition was the main building block of the European Constitution and it remains without substantial change in its new version, in the Lisbon Treaty.

The gradual shift from liberalizing and removing all kinds of barriers towards a massive introduction of regulation and harmonization from above, the ever-expanding, overgenerous welfare system, the innovative, and more sophisticated forms of protectionism, the continuously growing legal and regulatory burdens on business, the markets undermining quasicompetition policies, the Single Currency arrangements, are all very real. They weaken and restrain freedom, democracy and democratic accountability, not to speak about economic efficiency, entrepreneurship and competitiveness.

The Czech EU Presidency slogan "Europe without barriers" attempts to bring the original ambitions of European integration – the liberalization, the opening-up, the getting rid of barriers and of protectionism – back to our agenda. And rightly so, because this is more than needed.

I consistently speak about it because I do care about Europe. For me, and my country, the EU membership has never had any alternative, but saying that does not imply that we are willing to accept the dogma that the forms and the methods of the EU institutional arrangements don't have alternatives. To take one as sacrosanct, as the only permitted and politically correct one, is unacceptable. The right of the people to say "yes" or "no" to the European Constitution or to the Lisbon Treaty or to any other similar document should be considered sacred. This right represents the genuine substance (and meaning) of Europe. The attacks on those who dare say "no" to the attempts to accelerate the deepening of the EU, which is the essence and aim of the Lisbon Treaty, are attacks against the true nature of Europe.

Having said that, let me turn to two other issues=2 0I consider significant. I see another big problem in environmentalism and in its currently most aggressive form –global warming alarmism. This ideology has gradually turned into the most efficient vehicle for advocating extensive government intervention into all fields of life and for suppressing human freedom and economic prosperity.

I am frustrated that this ideology has not been sufficiently challenged both inside and outside of climatology. We keep hearing one-sided propaganda, but do not hear serious counter-arguments. It is also evident that the debate should go beyond climatology. We should not accept dividing human beings into climatologists and the uninformed, and rather naive rest of us. The global warming debate is a complex issue and climatology is only a part of it.

There is in this debate a special role for the economic profession, because we have developed a scientific sub-discipline called „the economics of global warming". The economists should come up with their arguments 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. They should supply us with comprehensive studies about the costs and benefits of the currently proposed "green" measures and policies. They should prepare – even to non-specialists understandable – arguments about the very complicated relationship between different time horizons (discussed in the economic theory by means o f discounting) . They should return to the elementary economic argumentation about the rational risk aversion (which would help to undermine the fuzzy and fundamentalist precautionary principle, used by the environmentalists) , and they should bring back the discussions about the positive role of markets, prices, property rights and about the tragic consequences of the unavoidable government failure connected with ambitions to do such things as controlling global climate.

The third issue, I would like to mention here today, is the current financial and economic crisis. I recently spent three full days discussing this topic at the World Economic Forum in Davos and my feeling is that the rationality and the economic science have been suppressed or forgotten. The very unpleasant, day by day deeper economic crisis should be accepted as a standard economic phenomenon, as an unavoidable consequence and hence a "just" price we have to pay for the long-term playing with the market by the politicians. Their attempts to blame the market, instead of themselves, are unacceptable and should be resolutely rejected. Their activities, aiming at "reforming" the economic system, are all very doubtful and I as said in Davos: I am getting more afraid of these reforms than of the crisis itself.

Looking for ways out, we should – to use an analogy – strictly differentiate between fighting the fire and drafting fire protection legislation. We have to concentrate on the first task now; the second one can be=2 0done gradually, without haste and panic. A large increase in the scope of financial regulation, as is being proposed these days, will only prolong the recession.

Aggregate demand needs strengthening. One traditional way to do this is to increase government spending, mostly on public infrastructure projects, on condition these are available. It would be much more helpful, however, to initiate a radical reduction of all kinds of restrictions on private initiatives introduced in the last half a century during the era of the brave new world of the "social and ecological market economy". The best thing to do right now would be to temporarily weaken, if not permanently repeal, various labour, environmental, social, health and other "standards", because they block human activity more than anything else.

In the moment of the fall of communism, almost 20 years ago, I did not expect to experience such a degree of government intervention into my own life as I face now. I am, therefore, convinced that fighting for freedom and free markets remains the task 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. It is about the real dangers we see around us. I tried to talk about some of them this morning.

Václav Klaus, Foreign Policy Lecture Series, Foreign Policy France, Ledoyen Restaurant, Paris, 11 February 2009