Submitted by Claudio Gras via Acting-Man blog
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Interview with Václav Klaus
“The best environment for man is the environment of
liberty.”
Václav Klaus
Former president of the Czech
Republic and strong defender of the ideas of classical liberalism,
Professor Václav Klaus
Photo via
collective-evolution.com
Liberty...
... is a fundamental human right; it is the cornerstone of our
existence. But liberty is under attack from all directions, whether
through higher state control or individuals themselves. Liberty is
in search for its protector.
We were given the opportunity to talk to a vanguard of liberty,
former President of the Czech Republic, Prof. Ing. Václav Klaus.
Mr. Klaus shares with us how he embraced the values of classic
liberalism and free markets while growing up under communism and
the challenges he faced. Of course, we were eager to hear his
account on the peaceful split of Czechoslovakia which took place
during his years as Prime Minister and also about the transition of
the currency system, which was successfully initiated at the same
time.
We were keen to find out his stance on the situation in Greece
and if a potential exit of countries like Greece from the Euro zone
would be really such a disaster. We are happy to share with you the
thoughts and perspectives of a man who says about himself that he “
never intended to be a politician or office-seeker”. His
motivation was to establish the rules of a market economy after the
fall of communism but he never wanted to plan its outcome. Mr.
Klaus has valued and protected the ideas of liberty and freedom for
many years to this day.
* * *
Claudio Grass, Global Gold: Mr. Klaus, it’s a
great honor and pleasure to be here and have this opportunity to
interview one of the key shapers of the Czech Republic as it is
today. The first time I actually saw you speak in person was at the
“Gottfried von Haberler-Conference” last year, where you rightfully
criticized a Canadian politician or diplomat after his speech due
to his strong pro-government position, which you disproved using
classical liberal arguments.
Can you tell us how you came in contact with classic liberalism
and when you became a proponent of the free market and the Austrian
School of Economics, especially as you were living under communism.
I expect that literature was not widely available. Could you please
elaborate on that?
Václav Klaus: The reason why I started following
the concept of the free market was, I would say, communism. The
system was irrational and based on something else, on the opposite
of free markets, freedom and pluralistic democracy. So, it was
relatively easy to see that attempts to mastermind the economy from
above were basically wrong. I was helped by very carefully studying
economic science.
The Austrian School of Economics, the Chicago School of
Economics and public choice school gave me more arguments than
other schools of economic thought. I had the chance in the 1960s to
work in the Czechoslovakian Academy of Science, in the Institution
of Economics, where I was supposed to study and criticize
non-Marxist economic theories because that was the objective at the
time. So I used the time to study non-Marxist economics but didn’t
criticize it. On the contrary, I accepted it fully.
Global Gold:I would like to dive into some aspects
of the recent history of the Czech Republic, from which I think
there is a lot to learn. Czechoslovakia was dissolved in 1993. Do
you think it can be seen as an example of how states can be
dissolved in a peaceful manner and new smaller units of government
can be created? Can you give us your insight into why the
dissolution happened and why it was so peaceful?
Václav Klaus:I was born in Czechoslovakia and I
took the country – with its defined borders – for granted. It never
came to my mind that the country would be dissolved. Communism, of
course, prohibited all serious discussions, including the issues of
nations, nationality, federation, nation-states and so on. Such a
debate did not exist. After the fall of communism everything was
suddenly possible.
We, the Czechs, discovered that Slovakia did not just want the
end of communism, which was our aim; they also wanted their own
sovereign nation-state. We were surprised by it and I must say it
took us two years to understand how it went and how it can move
forward. I had one special position. I spent all my holidays in
Slovakia because my wife is a Slovak. I knew Slovakia better than
most of the Czechs and I understood that Slovakia wanted to be
alone.
After the parliamentary election in 1992, we started to
negotiate with the Slovaks either to stay in a common state or to
separate. They accepted the second solution. And my task as prime
minister at the time was to make the separation as friendly, as
smoothly and rapidly as possible. In more or less six months, we
were able to sign 25 intergovernmental treaties between the Czech
Republic and Slovakia and we divided everything peacefully and
friendly. On the 1st of January 1993 the country was divided.
The Czech and Slovak Republics after
the peaceful break-up
Global Gold:An interesting aspect is the
transition of the currency system. Do you think that we can learn
something from the currency transition that Czechoslovakia went
through for countries such as Greece and their potential exit from
the Eurozone?
Václav
Klaus: Definitely! This experience was very useful
in many respects. The people in Catalonia, Scotland, Quebec, and
Flanders have been coming to me in the last twenty years, asking me
what to do. I didn’t want to be the proponent of separatism. That
was not my position. I have not been traveling all over the world
recommending the split of countries. I only understood that a
division of a country is useful when the old arrangements could not
function efficiently.
On the other hand, I am absolutely sure that our experience is a
good example that the friendly split is possible, that it’s not a
tragedy, that it’s not a disaster and that it does not create big
economic losses. In our case, the economic losses were practically
impossible to measure because we were also in the first years after
the fall of communism. The split was not a controlled
experiment.
To quantitatively measure how much we lost was impossible. As an
economist and former econometrician I know that it is a useless
exercise to try to give quantitative data to that. Nevertheless, we
understood one important thing which is also relevant for the
current Euro: that it’s very easy to divide the currency. For the
Czechs and Slovaks, it was practically a non-issue. When the
currency was divided, life went on without any problem.
There really was no drama. To say that the exit of countries
like Greece from the Eurozone would be a disaster is complete
nonsense. It is wishful thinking, or even propaganda. I have to
laugh when some Europeans keep telling me “look how deeply the
Greek and European economies are intertwined”. The Greek economy
represents around 2% of Europe’s GDP. Meanwhile, the Slovak economy
was 1/3 of the Czechoslovak economy and the interconnections were
much deeper and bigger.
Global Gold:Going back to the topic of currencies,
you are a strong opponent of the Euro. Similarly to Switzerland,
the Czech central bank recently introduced a price limit on the
Euro, effectively tying the Czech Crown to the Euro. What are your
thoughts on the actions of the central bank? Is this a creeping
introduction of the Euro in the Czech Republic?
Václav
Klaus: I don’t consider the intervention of the
Czech National Bank (CNB) in November 2013 as paving the way for
the introduction of the Euro. The CNB tried to intervene because of
their feeling that the Czech economy is going down and that small
inflation could become deflation soon. It was a standard
macroeconomic argument. But I disagree with it totally.
Czech National Bank
Photo via svobodnenoviny.eu
Global Gold:We have another question concerning
the Czech Republic. You oversaw the privatization process where
state assets were sold after the collapse of the communist system.
Can you give us an insight into how the process worked and how do
you judge its success? The main question I am asking myself is if a
company is operating under communism, how do I fairly value such
companies to be sold to the public?
Václav
Klaus: That’s exactly the issue. All Western
advisors who came here, including some Nobel Prize winners, were
very much against our privatization methods. They were telling us
“you should make standard privatizations, using all the textbooks
of the theory of finance”. You are almost the first to raise this
question: how to value the price of those companies? In reality, we
tried to avoid this issue as much as possible. That was our trick.
We used several privatization methods in parallel. We also used
standard privatization which involved selling the firm to a foreign
owner; in some cases it was a Czech owner.
But the specificity of our privatization process was the
so-called “voucher privatization”. We didn’t know economically
meaningful values of enterprises. In addition to it, we had to
privatize in a situation where the Czech economic agents (the Czech
citizens) didn’t have any capital prepared for privatization. So,
we created a very unique and very special privatization method,
which was called “voucher privatization”, or “coupon
privatization”.
We wanted to give a chance to the citizens of the country to buy
the privatized firms. It was not applied to the whole economy, just
one fourth of it. We transformed the state-owned companies into
joint-stock companies. Czech citizens were offered to buy the
so-called vouchers (which became the investment money). We issued
voucher booklets and sold those vouchers to the people of the
country (over 18 years old). We sold them and did not give them
away. That would be wrong. It was done in countries like Russia,
where the vouchers were given to the public.
We sold the vouchers, but not at the price of the correctly or
incorrectly estimated values of those enterprises. We chose a price
equivalent to an average week salary in the country, which meant
that it was not for free. But at the same time it was not something
unacceptable to the majority of the people. Then we started a very
sophisticated buying and selling process of shares for vouchers,
which was fully computerized. It was one of the biggest
computerized games in the history of mankind. 8 million people
participated.
In the first round of buying we discovered excess demand for
some shares, and an excess supply for some other. Then came the
second round where we changed the prices. It took four rounds to
find an equilibrium. It was done twice in a total time frame of
three years. Another point is that we were not interested in
getting a lot of money for the government from the privatization
process, as opposed to standard privatizations all over the world.
We wanted something else. We wanted to find private owners.
Czech booklet with privatization
vouchers from the early 90s.
That was our aim, which was misunderstood by all the
sophisticated experts coming from business schools in America and
elsewhere. They were suggesting we should maximize the amount of
money coming from privatization; that was not our aim. Our aim was
to privatize the whole economy, not just to get more money for a
company X or company Y. This processes is better described in the
book: “The Great Rebirth: Lessons from the History of Capitalism
over Communism”, where I wrote a chapter titled “The Spirit and the
main contours of Czech (or Czechoslovak) Post-Communist
Transformation”
Global Gold:How do you think EU membership has
negatively impacted the Czech Republic, for example in terms of
economic performance? You have previously suggested the creation of
an “Organization of European States”. What would differentiate it
from the EU?
Václav
Klaus: The European integration process which
started as an attempt to build a friendly and cooperating community
of nations has been transformed into a totally different construct,
into the European Union. This shift is, for me, the main problem.
Europe needed liberalization, deregulation and elimination of all
kinds of barriers among its member states to do business, to trade
and carry out investments. I am for integration, but I am very much
against unification. That is the substance of my criticism. The
crucial point when it was twisted, was the Maastricht Treaty in
1992, which changed the name, as well as the acronyms. To move from
the community of nations to the unity of people is, for me, the
main problem.
Global Gold:While we were corresponding prior to
this interview you mentioned that you had just come back from
Geneva and you explained how socialist the university professors
there are. I totally agree with this view. When I am in Western
Europe and talk to people I really have the feeling that they are
socialists, especially the more educated they are, the more
dependent they are on the state and so the more socialist they
become. Do you see “hotspots” of socialism in Europe? Do you think
that Eastern Europeans might be more free market-oriented than the
rest of Europe taking into consideration they just recently came
out of communism?
Václav
Klaus: I must make a correction. When you speak
about Central and Eastern Europe, it’s not true that we “just came
out of communism”. We came out of communism 25 years ago and this
is in the history of our modern statehood the longest,
uninterrupted peaceful period. There are generations which really
do not understand communism anymore in our part of the world. But
your point is good. My generation learned a lot from living in
communism. It was a lost time in many respects, but it was a time
where you could learn a lot. I always argue that my eyes were
“sharpened” by living in communism.
Warsaw pact logo: the right-most
flag was that of the Czechoslovak Socialist Republic (
?eskoslovenská socialistická republika)
Global Gold:And what parallels do you see between
Western Europe and the communism you lived under?
Václav
Klaus:I don’t want to look for easy analogies. In
our part of the world it is very difficult to say that Brussels is
similar to the former communist Moscow. But when I look at the
political, economic and social system in the European Union I see
many similarities. I would have never expected that there will be
so much regulation and so much state power as there is now. I would
have never expected that the people would believe so much in the
state and not in the market.
I would have never believed that after the fall of communism,
government failure would be so underestimated vis-à-vis market
failure. We enjoy much more freedom in comparison to our past, but
at the same time, when I compare my expectations to the current
reality, I see something that I call the expectation-reality gap.
In other words, I expected that I would be living in a much freer
society than I do now.
Global Gold:We believe there is a massive power
shift underway from the West to the East, whether economically,
militarily, etc.. Do you see this power shift as well? We get the
feeling that most of the West is unaware or blind towards the fact
that this paradigm shift is underway; they are still concentrated
on the West. What is your opinion on that?
Václav Klaus:Definitely. I think that many people,
especially in Europe still live in a nirvana of self-satisfaction
and do not consider that the European economy has been stagnating
for a very long time, whereas the rest of the world has been moving
upward. We tragically underestimate this fact. I am absolutely
shocked that the European politicians, business people, and
intellectuals don’t take this issue seriously.
Global Gold:This brings us to the “Charlie Hebdo”
attack in France that I wanted to ask you about. What do you
believe is the root cause of what happened? Do you think that this
tragedy will be misused by the political elites to further
circumvent individual liberty in Europe by using more control and
every possible excuse for security reasons to watch every step of
the citizens?
Photo credit: fmh
Václav
Klaus:We experienced it in 2001 in America and it
had very negative repercussions for us in Europe. I am afraid there
will be a new wave of attempts to limit our personal freedom due to
the so-called fighting of terrorism. I think it is wrong to
concentrate on the tragic event in Paris. At the same day of the
Paris attacks an estimated 2000 people were killed by terrorists in
Nigeria. But in Paris, of course, it was closer to us. We should
look for the reasons behind what happened here and there. I am
afraid that the main reason is twofold.
One of them is the erroneous idea of multiculturalism which is
destroying our societies and the other is a parallel-going concept,
the doctrine of universalism. The fall of communism allowed for a
sort of ideological vacuum, which was very rapidly filled by the
export of democracy and of our concept of human rights from the
West to the rest of the world. And this is a totally wrong idea. It
created many unsuccessful wars and destabilized countries in the
Middle East, Africa, Asia, and elsewhere. The export of
Western-style democracy and of new universalism created a reaction.
This reaction came with another form of universalism, with
Islamism. Those are twin brothers, I would say. Multiculturalism
and the doctrine of universalism are for me the roots of
terrorism.
Global Gold:From your answer I think it is fair to
say that the “foreign policy” of the West in general has failed, to
a great extent. Now, I would like to move to the issue of global
warming, which you consider an “irrational ideology”. Could you
further explain to our readers what you mean by that, why you stand
against this campaign and what impact this campaign has on free
market principles in your view?
Václav
Klaus:Eight years ago I wrote a book about the
nonsense of global warming, titled “Blue Planet in Green Shackles”
with subtitle “What is Endangered: Climate or Freedom?” My answer
was and is: Freedom is endangered! The climate is o.k. The book was
surprisingly translated into twenty languages, including Japanese,
Arabic, Chinese, Indonesian, for readers are all over the world. I
simply don’t believe in the doctrine of global warming.
I am not a climatologist but I am an economist who worked as a
statistician and econometrician for 15 years. I know something
about the computer models used by the climatologists because they
are structurally very similar to the econometric models. I know how
easy it is to play with the parameters and how easy it is to get
the results you want to get. This doctrine is basically not a
doctrine from natural sciences about climate, but rather a doctrine
about man and society. The greens and environmentalists are
introducing the old collectivist ideas to “control and regulate”
and un-free society under new banners.
Actual satellite temperature
measures compared to the “predictions” of IPCC sanctioned climate
models. The gap is widening ever more.
There has been zero global warming in the last 18 years and two
months.
Global Gold:Another question, at Global Gold, as I
mentioned before, we store gold outside the banking system. For us,
gold is not a trading instrument; it’s basically a monetary
insurance, a hedge against the central banks and their policy at
the moment. So I would like to ask you if you personally hold gold
and if so, why do you hold gold?
Václav
Klaus:I don’t hold gold. I must say, we are still
a young country, in some respect. After four decades of communism
we didn’t have any capital, any funds which would be meaningful to
invest into different commodities. Plus, as a politician who did
all the drastic measures in the country, including privatization, I
would never dare to invest my own money. So I simply forgot that
issue and I kept all my money in the banking system, without trying
to do anything specific, I’d say. But this is specifically
connected with my political career.
Global Gold:How can we as individuals regain
liberty? If there is one key message you would like to convey to
our readers what would it be?
Václav Klaus:We have to fight for liberty
permanently, every day, all over the world, in every country. I
think it is necessary to have different ways, like your company’s
publications, to communicate our views, in this respect. Free press
and free speech are fundamental issues. I know that they are
restricted in many places in the current world we live in. I am
glad that I could have such a fair debate here with you because I
know that in some publications in Europe, to criticize the European
Union is almost impossible. I see how I’m losing contact with some
newspapers, journals and journalists because of my sharp criticism
of the situation in the European Union plus now, the situation in
Ukraine.
Criticize the European socialist super-state and you become
persona non grata
Global Gold:That is absurd. We heard that because
of your stance on Ukraine that CATO, supposedly a free market think
tank, has severed its relationship with you after you were named a
Distinguished Senior Fellow there two years ago?
Václav
Klaus:I think that “supposedly” is a good term. In
the past I would say it was a free market think tank. I am not sure
now. I’m very angry with the misinterpretation of the situation in
Ukraine and with the fact that this is done in a way I did not
expect to live through again. This is like the communist propaganda
which I experienced for fifty years of my life. That is why I’m
very sensitive, maybe over-sensitive to this issue.
Global Gold:Thank you very much Mr. Klaus for this
opportunity to speak with you and to have your insight into so many
issues.
* * *
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Outlook Report on
www.globalgold.ch
Mr. Václav Klaus is a renowned academic and economist, but his
worldwide reputation comes from his strong advocacy of liberalism
and free market economics as well as his leading role in the
peaceful split of Czechoslovakia and the formation of the
independent Czech Republic in 1993.
Mr. Klaus remained focused on his academic career in Prague
until he ventured into politics in 1989 when he became Federal
Minister of Finance of the Czechoslovak federation. It is worth
mentioning that Mr. Klaus never joined a political party until he
became chairman of the then strongest political entity, the Civic
Forum, in 1990. Soon later he co-founded the Civic Democratic Party
and remained its chairman until 2002. During that time, he won the
1992 parliamentary elections and became Prime Minister of the Czech
Republic. In this capacity, he led the historic peaceful separation
of the Czechoslovak federation.
In 2003 he was elected President of the Czech Republic, a
position he held until March 2013. He then focused on building the
Vaclav Klaus Institute, a liberal-conservative
think tank. Mr. Klaus has many publications and received numerous
international awards and honorary doctorates in recognition of his
historic role in the peaceful split of the Czechoslovak federation
and his advocacy of liberalism.