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The Threats to Liberty in the 21st Century By Dr. Václav Klaus President of the Czech Republic On May 6, 2006, the Foundation for Economic Education had the honor of presenting the 2006 Adam Smith Award for Excellence in Free-Market Education to two great champions of the free society: Dr. Walter E. Williams and President Václav Klaus of the Czech Republic. The following are the unabridged addresses by Dr. Williams and President Klaus delivered at the Adam Smith Award Ceremony at FEE’s headquarters in Irvington-on-Hudson, New York. It is a great honor for me to receive the Adam Smith Award and especially to receive it from the Foundation for Economic Education. It is such a privilege to have one’s name connected with the almost sacred name of Adam Smith. Thank you very much! Adam Smith will always be acknowledged and admired as the founding father of economics, of this extremely important and powerful social science that I respect and humbly follow. Since the time I discovered it more than four decades ago, the discipline of economics has given me a clear compass, a guiding principle, a very useful and productive way of looking at the world around me. Applicable to everyday life, economics shaped the way I think. It literally opened my eyes. Adam Smith gave us something more than just a pure science. He viewed economics as an integral part of moral philosophy, and by doing so he provided us with muchneeded arguments against those who don’t want to understand us and who see us only as merciless, almost inhuman, robot-like utility maximizers. For Adam Smith and for us, economics is a very human science. We believe it is more human, more man-oriented than the moralistic preaching of politically correct, progressive public intellectuals who claim to be better than we are. More than that, Adam Smith explained not only the morality, but also the efficiency of markets and, consequently, the immorality and inefficiency of government intervention. His famous concept of the Invisible Hand, as well as his explanation of the widely dispersed benefits that come from pursuing narrow private interests are of absolutely crucial importance. May I also suggest that Adam Smith was the spiritual founding father of the Foundation for Economic Education, which I consider one of the most important classical liberal institutions not only in the United States of America but in the whole world. I was extremely influenced and enriched by FEE and by reading—now for more than 10 years—The Freeman: Ideas on Liberty. This publication is irreplaceable in my own library at home. I can assure you I read it very carefully, I use it, and I often quote it in my own writings and speeches. The recent commemorative issue of The Freeman gave me the opportunity to read classic articles from the early years. I was fascinated by their quality and timeliness. What an honor to receive this award from FEE! Six years ago, I myself founded a think tank in Prague, the Center for Economics and Politics (CEP), which has been trying to promote the same ideas as FEE promotes here in the United States. A few months ago we were privileged to have FEE’s President and my good friend, Richard Ebeling, as our speaker and listen to his very interesting and in many respects canonical lecture. I am afraid I will not be that canonical this evening. There is nothing I can say that you don’t already know or—with only a slight exaggeration—that I did not learn from your publications. It is important to emphasize that today, at the beginning of the 21st century, the threats to liberty are the same as confronted by Adam Smith 250 years ago or to the founders of FEE more than half a century ago. The current threats to liberty may wear different “hats,” or better hide their real nature; they may be more sophisticated than before. Due to the high degree of interconnectedness of the whole world those threats may more easily move from one place to another, but in principle they remain the same. As a life-long student of economics I always try to follow its laws and principles. One of the most important of them is the law of comparative advantage formulated by one of Adam Smith’s pupils, the famous 19th-century political economist David Ricardo. I have three comparative advantages here tonight: My living under communism for most of my life My personal active involvement in dismantling the communist system and in building a free society in my country My recent frustration with the situation in Europe, especially with the developments in the European Union Some of you may be surprised that I consider my life under communism a comparative advantage and not a disadvantage. It was definitely not an advantage in regard to my personal happiness or my material well-being. But I do believe it helped me to understand what liberty really means and is all about. To use an analogy, you do not understand what health means when you are healthy. To take liberty for granted is similarly dangerous. Not to have it for such a long time, and it was a long time, has made our eyes sharper, and our sensitivity to its endangerment greater. My understanding of liberty and its preconditions was reinforced by my involvement in the radical transformation of the political, economic, and social systems in my country in the years after the fall of communism. It was not possible to get rid of the old communist institutions and at the same time to wait for the gradual evolution of new institutions and the behavioral patterns they require. This would have been too slow and too costly. We learned that the institutions of a free society had to be built and cultivated. We succeeded in liberalizing our country. But in recent years we went through a rather complicated process of approaching and finally joining the European Union. The European Union is an institution—and FEE clearly understands this—where liberty does not serve as the guiding principle. To my great regret we have been moving once again towards a less free and more controlled and regulated economy and society as a whole. It is due to this personal experience that I do not see a real threat to liberty in global warming. I don’t see it in the depletion of oil resources; noise pollution; bird flu; and definitely not in insufficient government funding for public schools. I see the real threat to liberty, as always, in ideas. I see the threat in policies based on these ideas. I see the threat in human behavior influenced, motivated, and justified by those ideas and policies. The ideas and government policies I fear are the same ones that were feared and criticized long ago by Adam Smith. The substance of such ideas and policies are claims and presuppositions that following private self-interest is always wrong, that people are not rational and not moral and should be controlled, guided, and made better by the anointed who know what is good for the rest of us. Thus the rulers acting in the public interest must restrain freedom in favor of higher values and goals they choose to set. We lived in such a system in the past, but I see its many symptoms again in Europe today, and probably, dare I say, in this country as well. And finally, there is another danger: the emergence of nonideological but very aggressive “isms,” which are really quite new. Let me at least name them: We all care about human rights, but I am afraid of “human rightism.” We all want to have a healthy environment, but I see the danger in environmentalism. To put it politically correctly, I admire the second gender, but I fear feminism. We all are enriched by other cultures, but not by multiculturalism. I am aware of the importance of voluntary associations, but I fear NGOism. In The Theory of Moral Sentiments, published in 1759, Adam Smith tried to understand those who seek to restrain our liberty. He wrote that they want to “arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chessboard.” They do not consider that the “pieces upon the chessboard have no other principle of motion besides that which the hand impresses upon them; but that, in the great ‘chessboard’ of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might choose to impress upon it.” I see the current all-embracing legislation influenced by the powerful special-interest groups representing the new “isms” to be a real danger to the liberty of all of us. There is no other way for us to preserve liberty than going back to classical liberalism, than going back to the ideas of Adam Smith and to the Foundation for Economic Education. President Václav Klaus is Europe’s premier political advocate of classical liberalism and economic freedom. Born in Prague in 1941, he earned his Ph.D. from the University of Economics in Prague, and also studied in Italy and the United States. His discovery of the writings of Ludwig von Mises, Friedrich Hayek, and Milton Friedman changed forever the way he looked at the world. Following the Velvet Revolution of 1989, which ended communist rule in Czechoslovakia, Dr. Klaus served as the minister of finance and then prime minister from 1992 to 1997. During that time he guided one of the most successful transformations from Soviet-style socialism to a vibrant market economy. In February 2003 Václav Klaus was elected the President of the Czech Republic. In this role he continues to be an eloquent and uncompromising voice for liberty and a staunch critic of growing centralized power and control in the European Union. We are very privileged to present President Klaus the 2006 Adam Smith Award for Excellence in Free-Market Education.