Tuesday, 12 March 2013

Václav Klaus on the present European leaders: "Their way of thinking is based on an almost communist type of reasoning"

Yesterday, now former Czech President, Václav Klaus again reminded us about what is wrong with the present European Union:
As I said, I see the important part of the problem in the European economic and social system itself. It is more than evident that the overregulated economy, additionally constrained by a heavy load of social and environmental requirements, operating in a paternalistic welfare state atmosphere, cannot grow. This burden is too heavy and the incentives to a productive work are too weak. If Europe wants to restart its economic development, it has to undertake a fundamental transformation, a systemic change, something we had to do 20 years ago in our part of Europe.
The other part of the problem is the European integration model. The excessive and unnatural centralization, harmonization, standardization and unification of the European continent based on the concept of “an ever-closer Union” is another obstacle.
These complex issues deserve to be discussed from many perspectives, but it is evident that they found their “climax” in the attempt to monetarily unify the whole continent. This was the moment when the marginal costs of the European integration project started to visibly exceed its benefits. This evident failure, and it is appropriate to call it a failure, was inevitable, was expected, and was well understood by many of us in advance. Its consequences – especially for economically weaker European countries which were used to undergo unpleasant, but much needed and unavoidable adjustment-bringing devaluations of their currencies repeatedly in the past – were well-known in advance as well. All economists who deserve to be called economists were aware of the fact that Greece and some other countries were doomed to fail having been imprisoned in such a system. History gives us similar examples. --
Let’s not be misled. When discussing the current European problems, it is wrong to concentrate on the achievements or failures of individual countries, e.g. on Greece or any other country in the European South. Greece did not bring about the current European problem, Greece is the victim of the Eurozone system of one currency. The system is a problem.Greece made just one tragic error – to enter the Eurozone. Everything else was its usual behavior, which I – and we all – don’t have a right to criticize.
Greece’s degree of economic efficiency or inefficiency and its propensity to live with a sovereign debt was or should have been well-known to anyone. Letting Greeceleave the Eurozone – in an organized way – would be the beginning of a long journey of this country to a healthy economic future. I have no ambitions to change Greece, I want to change the EU institutional arrangements. The Greeks hopefully already understood that “one size does not fit all” and I only wish the same would be understood by leading EU politicians. I don’t see it, however.
Their way of thinking is based on an almost communist type of reasoning: economic laws do not exist, politics may dictate economics. People like me were raised in an era when such a mode of thinking was dominant in communist countries of Central and Eastern Europe. Some of us dared to express our disagreement with it already in the past. We were considered enemies then, we are considered enemies now again.
Read the entire speech at the Cato Institute here

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