WEBVTT NOTE The Quest for a Property-Based, Misesian Economics 1 00:00:00.000 --> 00:00:09.000 Thank you, the organizers, for having me. Thank you, Lew Rockwell, for being a great inspiration for me. 2 00:00:09.000 --> 00:00:25.000 Let me start by a little piece of geography. As you heard, I come from Prague, the Czech Republic, which is, which for many of you, I guess, 3 00:00:25.000 --> 00:00:37.880 has a similar exotic place as is Iowa for me, so Prague at least geographically is more 4 00:00:37.880 --> 00:00:46.760 western than Vienna, and by the way those two great cities are not that far away from 5 00:00:46.760 --> 00:00:54.280 each other, it's some 200 miles, so our at least geographical proximity to the Austrian 6 00:00:54.280 --> 00:01:04.680 Austrian School and the origin of the Austrian School as, you know, useful in our today's 7 00:01:04.680 --> 00:01:11.060 effort to revive the school because we can claim that we used to be part of it and we 8 00:01:11.060 --> 00:01:15.880 are part of it again. 9 00:01:15.880 --> 00:01:23.840 This morning when Robert Hicks mentioned that one of his books is coming up in Czech language 10 00:01:23.840 --> 00:01:39.840 Some of you laughed a little bit, which I don't know exactly why, but I hope I will do my best to show you that the Czech Republic is actually a very miraculous country. 11 00:01:39.840 --> 00:01:47.840 I'll start with something which always makes a student interested in it. 12 00:01:47.840 --> 00:02:06.840 In my country, beer is cheaper than water, I don't know how, because you start up with water, you put some stuff in it, and it gets cheaper. 13 00:02:06.840 --> 00:02:21.840 So, as you can see, there is not only room for a research program in anarchy, as Edward Stringham mentioned, but, you know, this calls for explanation too. 14 00:02:21.840 --> 00:02:31.840 And from this you can derive the whole body of economics because if beer is cheaper than water 15 00:02:31.840 --> 00:02:39.840 and you use the first sentence of every economics textbook saying that people respond to incentives 16 00:02:39.840 --> 00:02:50.840 you can nicely show that it is not a coincidence that Czech people are number one drinkers of beer measured on per capita basis. 17 00:02:50.840 --> 00:03:00.840 Better than Germans and other countries, we are always happy to be better than them. 18 00:03:00.840 --> 00:03:19.840 But this is still not all. Not only economics is alive in my country, now also the Austrian School is a respected school of thought, 19 00:03:19.840 --> 00:03:25.840 and a lot of respected way of approaching economic phenomenon. 20 00:03:25.840 --> 00:03:34.840 And this is so because of this institution, Ludwig von Mises Institute. 21 00:03:34.840 --> 00:03:41.840 It is exactly ten years this year when I came here as a student at that time, 22 00:03:41.840 --> 00:03:45.840 attending the summer university. 23 00:03:45.840 --> 00:04:01.840 And that experience, that event, completely changed my life as I learned here how to fight for an ideal and how and why to care about ideas. 24 00:04:01.840 --> 00:04:13.840 And since then, step by step, this investment of Ludwig von Mises Institute into myself and a couple of my colleagues 25 00:04:13.840 --> 00:04:25.840 can be called responsible for the Austrian school revival in Prague and the whole of Central Europe and perhaps Europe. 26 00:04:25.840 --> 00:04:42.840 I'll give you a couple of examples in which my country is very special and in which Austrian school made it to where it is in these days. 27 00:04:42.840 --> 00:04:53.840 As Jeff mentioned, I translated Murray Rothbard's Power and Market, this is the Czech version, 28 00:04:53.840 --> 00:05:03.840 under the name Economics of State Interventionism together with Rothbard's paper on utility and welfare economics. 29 00:05:03.840 --> 00:05:13.840 And this book now is our textbook for a master course in Economics of State Interventionism which I teach. 30 00:05:13.840 --> 00:05:20.840 It is an obligatory course and hundreds of students have to read the book. 31 00:05:20.840 --> 00:05:34.840 Just this semester, this spring 2006, I have in my class 230 students, and all of them had to read Murray Rothbard, 32 00:05:34.840 --> 00:05:47.840 which I guess doesn't make sure that there will be 230 Austrians in the summer. 33 00:05:47.840 --> 00:06:02.840 However, at least some of them will, or all of them will learn about the ideas and many of them will become followers of or sympathizers with the Austrian School. 34 00:06:02.840 --> 00:06:32.800 We also, last year, published the Czech version of Man Economy and State, in Czech it's called Principles of Economics, to make it a real alternative to the other principles books, and it is again widely read by students, and we have now, after one year, have a second print of that book. 35 00:06:32.840 --> 00:06:44.080 This year, in two months, Human Action will appear in Czech, and we'll have in Prague 36 00:06:44.080 --> 00:06:51.280 Von Paul helping us to book launch Human Action. 37 00:06:51.280 --> 00:06:59.240 And again, it will not just be a new book published, the book will be widely read by 38 00:06:59.240 --> 00:07:09.340 by Students, because we do not only work in a think tank, the Liberani Institute, but 39 00:07:09.340 --> 00:07:19.080 we also control part of the Praxe School of Economics, which is the biggest economic school 40 00:07:19.080 --> 00:07:28.680 of the country, with some 3,000 students entering the school every year, and we control one 41 00:07:28.680 --> 00:07:43.680 are fifth of it, so some 600 students are under our direct control and, you know, we realize that this is a real asset. 42 00:07:43.680 --> 00:07:54.680 So, for example, those 600 people in the first semester of their undergraduate studies, they have to read Henry Hazlitt's economics in one lesson. 43 00:07:54.680 --> 00:08:02.680 and then it goes on and on through Mises, to Rothbard and other Austrians. 44 00:08:05.680 --> 00:08:12.680 Not only us are responsible for teaching Austrian ideas, 45 00:08:12.680 --> 00:08:26.680 but I invite everybody from the Austrian circles from around the world to come to Prague as a visiting professor 46 00:08:26.680 --> 00:08:34.680 to teach the course on Austrian economics, both theory or applications. 47 00:08:34.680 --> 00:08:43.680 We had people such as Samuel Bostaff, we had Guido Hiltsman, we had Richard Abbeleinck, 48 00:08:43.680 --> 00:08:51.680 we will have Robert Hicks in a month to be in Prague with us for two weeks, delivering the whole course for hundreds of students. 49 00:08:53.680 --> 00:09:03.680 A few more things I want to mention before presenting my paper on Misesian economics. 50 00:09:04.680 --> 00:09:16.680 One of the events of the year in Austrian Economics is our annual conference called 51 00:09:16.680 --> 00:09:23.680 Pra-Conference on Political Economy, organized for the first time last year and in a month 52 00:09:23.680 --> 00:09:51.680 The 2006 conference with three named lectures, two after people from the Austrian School whose lives were connected to Prague, namely Friedrich von Wieser, who taught in Prague before leaving to Vienna to take over Carl Menger's chair. 53 00:09:51.680 --> 00:10:03.280 And the other man with Austrian School connection is Franz Schuhele. Franz Schuhele to whom 54 00:10:03.280 --> 00:10:10.600 Mises makes references in Human Action and other words. Franz Schuhele who wrote a book 55 00:10:10.600 --> 00:10:18.280 on ordinal utility and actually Mises took it from him and then the whole of mainstream 56 00:10:18.280 --> 00:10:26.480 Economics took it from Mises. This Franz Schuhele being of Czech origin is completely forgotten 57 00:10:26.480 --> 00:10:36.760 in my country and this is our attempt to tell to the world that not only beer can be drank 58 00:10:36.760 --> 00:10:45.040 in Prague but also we have some spiritual values to adhere to. And this year Robert 59 00:10:45.040 --> 00:10:51.040 Dr. Hicks is having one of those lectures and the second is given by Jesus Huerta de Soto 60 00:10:51.040 --> 00:10:55.040 whose book on banking and business cycle just appeared in English. 61 00:10:55.040 --> 00:11:03.040 So great people and hundreds of students of Austrian school, not only from the Czech Republic 62 00:11:03.040 --> 00:11:14.040 but mostly from Central Europe or Europe in general with numerous American attendees as well. 63 00:11:14.040 --> 00:11:34.040 Through this conference I try to do what the Mises Institute did for me, bring the ideas, have events to which people can come and meet the heroes of the school and start working in the tradition. 64 00:11:34.040 --> 00:11:41.740 For some of our Central and Eastern European friends, it is a little too costly to come to Auburn, 65 00:11:41.740 --> 00:11:47.440 so if I can substitute what the Mises Institute is doing here and do the same thing, 66 00:11:47.440 --> 00:12:00.940 or at least try to do the same thing in the heart of Europe, I guess, we can only benefit from it. 67 00:12:00.940 --> 00:12:11.440 We also have an Austrian-English referee journal called New Perspectives on Political Economy, 68 00:12:11.440 --> 00:12:24.440 to which some of you already contributed, and our biggest project that is about to materialize within a month 69 00:12:24.440 --> 00:12:33.720 will be a European publishing house focusing on Austrian economics called Bohemian Academic Press. 70 00:12:33.720 --> 00:12:50.600 So I guess it's a way how we can give a platform for European Austrian scholars to publish their work through us. 71 00:12:50.600 --> 00:13:04.600 Nothing of the above mentioned would not be possible and would not have happened without the afford of people from the Mises Institute 72 00:13:04.600 --> 00:13:15.600 and without, of course, Mises's great contribution to economic science and his inspiring work. 73 00:13:15.600 --> 00:13:32.600 However, not only my personal life and professional career changed, there were other changes as a result of Misesian scholarship as well. 74 00:13:32.600 --> 00:13:45.100 After the collapse of socialism one and a half decades ago, a general belief prevailed that socialism did not deliver, 75 00:13:45.100 --> 00:13:55.100 and no one better than Ludwig von Mises explained that it could not deliver prosperity comparable to western standards. 76 00:13:55.100 --> 00:14:07.100 Socialist planners simply were not able to do their homework and were not able to hide this blatant failure before the eyes of the masses anymore. 77 00:14:07.100 --> 00:14:18.100 Some sort of transition toward capitalism was therefore suggested and implemented in many countries, such as my own, the Czech Republic. 78 00:14:18.100 --> 00:14:24.100 Some prices were set free, some sectors privatized. 79 00:14:24.100 --> 00:14:35.100 After many years of socialist economic chaos, economic structure was given a chance to become meaningful, to get real. 80 00:14:35.100 --> 00:14:43.100 In the field of economic theory, we could witness an analogical development. 81 00:14:43.100 --> 00:14:50.660 It was hardly possible anymore to claim that Russia will soon outperform the United States, 82 00:14:50.660 --> 00:14:58.660 with some celebrating leading economists outrageously have claimed for many years. 83 00:14:58.660 --> 00:15:05.920 A complete economic disaster of socialist planning and millions of people in poverty 84 00:15:05.920 --> 00:15:12.500 send them a subtle signal that there might be something wrong with their models. 85 00:15:12.500 --> 00:15:17.500 and the whole way they approach economic phenomena. 86 00:15:17.500 --> 00:15:25.500 Hence, with the collapse of socialism, economists saw a challenge and wanted to get real too, 87 00:15:25.500 --> 00:15:34.500 to provide a scientific argument for possible real world transition strategies toward capitalism 88 00:15:34.500 --> 00:15:41.500 or more importantly different visions of the end states, different capitalisms. 89 00:15:41.500 --> 00:15:49.500 New schools emerged and felt confident to provide answers to the problem of the day. 90 00:15:49.500 --> 00:15:56.500 They do not solve the problem whether capitalism is better than socialism or not. 91 00:15:56.500 --> 00:16:05.500 They propose activism from within, that is, in the name of capitalism, for capitalism. 92 00:16:05.500 --> 00:16:18.500 Rising from the ashes of the original comparative economics, which loses its sense with the end of socialist experiment, there is nothing to compare to capitalism. 93 00:16:18.500 --> 00:16:34.500 We can read about new comparative economics coming from Harvard, whose aim is to choose the best capitalism, an optimal mix of disorder and dictatorship for the people. 94 00:16:34.500 --> 00:16:50.500 At the University of Chicago, we can witness how the New Chicago School, quote, identifies alternatives as additional tools for a more effective activism. 95 00:16:50.500 --> 00:17:05.500 The hope is that a state can do more. The government must weigh the costs against the benefits and select the mode that regulates most effectively. 96 00:17:05.500 --> 00:17:11.500 Or if people make systematically bad decisions, quote, 97 00:17:11.500 --> 00:17:24.500 Then we should be less willing to grant white freedom to adults to make unaided decisions involving the comparison of current benefit and future costs." 98 00:17:24.500 --> 00:17:33.500 This is how a scheme of state-for-saving system, which they call de-biasing people's behavior through governmental action, 99 00:17:33.500 --> 00:17:42.000 Within a capitalist framework is justified by an increasingly popular behavioral law and economics. 100 00:17:42.000 --> 00:17:52.000 Shortly, economists do not want to be merely armchair theoreticians in Steve Medemma's work 101 00:17:52.000 --> 00:17:59.000 as someone who knows a thousand ways to make love, but doesn't know any girls. 102 00:18:03.500 --> 00:18:21.500 To continue this analogy with the collapse of socialism, the Russian muzhik, socialism, does not pretend anymore to be more beautiful than a girl, capitalism, and economists do not pretend anymore to know how to generate his beauty. 103 00:18:21.500 --> 00:18:32.500 Economists now focus exclusively on girls, capitalisms, though they often do not have lost their ambitions to impose their beauty standards. 104 00:18:32.500 --> 00:18:40.500 They still want to plan, fine-tune the economy or mimic the market. 105 00:18:40.500 --> 00:18:50.500 Their arguments for state activism still exist, and to find them is the major task of those who cherish free markets. 106 00:18:50.500 --> 00:18:59.980 Now how? Rather than following the spirit of the day and jump on the bandwagon to introduce 107 00:18:59.980 --> 00:19:07.780 once again new economics, a brand new modern school of thought with a new suggestion how 108 00:19:07.780 --> 00:19:15.260 to tackle new burning social problems, I would rather suggest to go back to the wisdom of 109 00:19:15.260 --> 00:19:23.100 of those who are not surprised by the tragic failure of Communism or Keynesianism or interventionism 110 00:19:23.100 --> 00:19:29.780 for that matter, who spend their lives trying to integrate economic science into a coherent 111 00:19:29.780 --> 00:19:37.020 body of knowledge rather than divide it into hyper-specialized disconnected pieces, who 112 00:19:37.020 --> 00:20:00.020 You have kept emphasizing that scientists of law and economics are connected through the concept of property without which social order becomes meaningless, namely to the ideas of the giants of the Austrian School with Ludwig von Mises as its dean. 113 00:20:00.020 --> 00:20:14.020 By the way, Austrian Law and Economics is together with Exploration of Anarchy, another neglected research program that has to be developed in detail. 114 00:20:14.020 --> 00:20:31.020 Ludwig von Mises was a man who famously gave us in his liberalism a one word summary of what is the only workable system of human cooperation in a society based on the division of labor. 115 00:20:31.020 --> 00:20:36.020 Such a single word would have to read property. 116 00:20:36.020 --> 00:20:44.020 Socialism was alternately based on the neglect of property, abolition of the private property of the means of production. 117 00:20:44.020 --> 00:20:56.020 Once socialism as a doctrine is fortunately dead, all countries that want to return to capitalism have to start respecting the property rights. 118 00:20:56.020 --> 00:21:10.020 Unfortunately, it is not what is happening in those countries, and again, my country, the Czech Republic, can be mentioned as one example of such a situation. 119 00:21:10.020 --> 00:21:24.020 The reason is both practical economic policies of so-called capitalist countries, 120 00:21:24.020 --> 00:21:41.020 And more importantly, most of so-called free market economists could be called capitalist or free market only when compared to the reality of Soviet socialism and Marxian economics. 121 00:21:41.020 --> 00:21:58.020 However, when judged against the benchmark of property Mises so clearly set forth, we would have to call both policies and their intellectual bodyguards, socialists or interventionists, at best. 122 00:21:58.020 --> 00:22:13.020 Take first a few examples of how generally accepted strongest intellectual proponents of free markets treat property, law and economics school and public choice school. 123 00:22:13.020 --> 00:22:23.020 Richard Posner, who is believed, together with Ronald Coase, to bring property back to economics, came up with, 124 00:22:23.020 --> 00:22:31.020 quote, the most ambitious theoretical aspect of the economic approach to law, 125 00:22:31.020 --> 00:22:44.020 The proposal of a unified economic theory of law in which laws function is understood to be to facilitate the operation of free markets." 126 00:22:44.020 --> 00:23:00.320 Because it is necessary, it is necessary allegedly, in the name of markets to manipulate the limits of property rights in order to get an optimal, efficient level of economic output. 127 00:23:00.320 --> 00:23:27.320 Once again, as Posner says, the issue is rarely property rights or no property rights, but rather limited property rights or unlimited property rights with the limitation designed to induce the correct, not an insufficient or excessive level of investment. 128 00:23:27.320 --> 00:23:37.320 It sounds like another attempt to develop a general theory by a man who is not believed to be any great free marketeer. 129 00:23:37.320 --> 00:23:46.320 This suspicious is reinforced when we learn about Posner's macro view on economics, as he points out. 130 00:23:46.320 --> 00:23:57.320 Economics is concerned with explaining and predicting tendencies and aggregates, rather than the behavior of each individual person. 131 00:23:58.320 --> 00:24:07.320 Shall this be an antidote to our socialist and collectivist approaches of the past? 132 00:24:07.320 --> 00:24:28.320 And all this especially when we saw how Posner's ambitious law and economics projects ended up with Posner after decades of studies suggesting that soundness of theoretical arguments is not to be any more decisive because, quote, 133 00:24:28.320 --> 00:24:42.320 The ultimate criterion should be pragmatic. We should not worry whether cost-benefit analysis is well grounded in any theory of value. 134 00:24:42.320 --> 00:24:48.320 We should ask how well it serves whatever goals we have." 135 00:24:48.320 --> 00:24:58.320 Well, this concept of we and whatever goals seem to be quite frightening in the post-socialist reality 136 00:24:58.320 --> 00:25:07.320 and do not seem by no means to give us a clear direction how to move from socialism toward capitalism. 137 00:25:07.320 --> 00:25:15.320 Public Choice is a school that came to revolutionize the perception of the state 138 00:25:15.320 --> 00:25:18.320 and attempted to demystify it. 139 00:25:18.320 --> 00:25:23.320 However, it doesn't seem to be of much help either, 140 00:25:23.320 --> 00:25:28.320 with its parallel between economic and political relations 141 00:25:28.320 --> 00:25:35.320 that allegedly both, quote, represent cooperation on the part of two or more individuals 142 00:25:35.320 --> 00:25:42.320 and hence at base they are much the same, end quote. 143 00:25:42.320 --> 00:25:57.320 It means mutually advantageous. It is hard to find a principal argument against socialist or semi-socialist policies and governmental activities. 144 00:25:57.320 --> 00:26:11.320 Moreover, if, as Buchanan says, the status quo always represents an existing implicit social contract and in the name of efficiency it might be justifiable to confiscate inheritance, 145 00:26:11.320 --> 00:26:19.320 You are left with nothing to protect property as a keystone of viable social fabric. 146 00:26:19.320 --> 00:26:28.320 It is even more disturbing when we realize that both law and economics and public choice are supposed to be, 147 00:26:28.320 --> 00:26:38.320 unlike many other pseudo-economic schools, the friends of property and capitalism. 148 00:26:38.320 --> 00:26:47.320 How refreshing it is to read Mises' works and see what a really comprehensive theoretical approach means. 149 00:26:47.320 --> 00:26:54.320 His praxeology naturally encompasses both law and political markets 150 00:26:54.320 --> 00:27:06.320 and gives us tools such as economic calculation to evaluate their interconnection with other parts of social reality. 151 00:27:06.320 --> 00:27:20.320 Now look what the most market oriented practical economic policy reforms proposals are suggested by free marketeers. 152 00:27:20.320 --> 00:27:39.320 In countries such as my own, what people who want to move the country away from socialism come up with is compulsory social security system and flat tax. 153 00:27:39.320 --> 00:27:55.320 The reason for the first one, social security, is that we'll have higher savings, hence higher investments, and hence higher GDP, that is, we'll become somehow more efficient. 154 00:27:55.320 --> 00:28:07.320 The reason for the second is not to lower taxes, but to have more efficient tax collection. 155 00:28:07.320 --> 00:28:12.320 Again, the strange concept of efficiency is entering the scene. 156 00:28:12.320 --> 00:28:18.320 Efficiency is here to manipulate property rights. 157 00:28:18.320 --> 00:28:29.320 In the name of efficiency, politicians were told years ago by Milton Friedman to get rid of the gold standard, 158 00:28:29.320 --> 00:28:36.320 and later by Posner and Coase to destroy property and property rights and redefine them anew, 159 00:28:36.320 --> 00:28:49.320 by Buchanan to nationalize inheritance and now, because of efficiency, to semi-nationalize savings and redesign the tax system with the objective to collect more taxes. 160 00:28:49.320 --> 00:28:51.320 It is completely absurd. 161 00:28:51.320 --> 00:29:03.320 As Mises said in Human Action, there is no such thing as an appropriation of portions out of a stock of ownerless goods. 162 00:29:03.320 --> 00:29:08.320 The products come into existence as somebody's property. 163 00:29:08.320 --> 00:29:14.320 If one wants to distribute them, one must first confiscate them. 164 00:29:14.320 --> 00:29:20.320 It is certainly very easy for the government apparatus of compulsion and coercion 165 00:29:20.320 --> 00:29:24.320 to embark upon confiscation and expropriation. 166 00:29:24.320 --> 00:29:35.320 But it does not prove that a durable system of economic affairs can be built upon such confiscation and expropriation. 167 00:29:35.320 --> 00:29:44.320 The very basis of social order is rooted in the concept of property. 168 00:29:44.320 --> 00:29:55.320 Efficiency, if it means anything, cannot rest on expropriation and the use of force against peaceful people. 169 00:29:55.320 --> 00:30:04.320 It is a result of market operation through which entrepreneurs discover better ways of conducting transactions. 170 00:30:04.320 --> 00:30:11.320 Efficiency stems from consent. It is a result of market operation. 171 00:30:11.320 --> 00:30:21.240 It is not something that must first be calculated by experts and then implanted onto the economy. 172 00:30:21.240 --> 00:30:29.680 Mises' understanding of this kind of defense of market economy is upped as he pointed out 173 00:30:29.680 --> 00:30:32.320 again in Human Action. 174 00:30:32.320 --> 00:30:39.700 Even those specialists who do not openly side with a definite pressure group and who claim 175 00:30:39.700 --> 00:30:48.700 In order to maintain a lofty neutrality, unwittingly endorse the essential creeds of the interventionist doctrine. 176 00:30:48.700 --> 00:30:55.700 Dealing exclusively with the innumerable varieties of government interference with business, 177 00:30:55.700 --> 00:31:00.700 they do not want to cling to what they call mere negativism. 178 00:31:00.700 --> 00:31:04.700 If they criticize the measures resorted to, 179 00:31:04.700 --> 00:31:14.700 They do it only in order to recommend their own brand of interventionism as a substitute for other people's interventionism. 180 00:31:14.700 --> 00:31:23.700 Without a qualm, they endorse the fundamental thesis of both interventionism and socialism. 181 00:31:23.700 --> 00:31:45.700 We do not seem to be able, neither here in the US nor in Europe, to, I'm quoting Mises, to bar such squanders from access to the universities and their articles from being printed in the periodicals of the associations of university teachers. 182 00:31:45.700 --> 00:32:01.700 That is already reality. We have to live in a world which is hostile to the concept of property, both on the theoretical front and in practical politics. 183 00:32:01.700 --> 00:32:10.700 However, I believe we can use the sorrow experienced with socialism to our benefit. 184 00:32:10.700 --> 00:32:17.700 We can show our students how crucial role economic understanding plays. 185 00:32:17.700 --> 00:32:25.700 We can show them that there were scholars who understood what is wrong with socialism. 186 00:32:25.700 --> 00:32:37.700 And we can use the same powerful economic logic to expose socialist or interventionist policies of today. 187 00:32:37.700 --> 00:32:48.700 Simply, we have Mises's property-based economics that can help us understand what is the way to go. 188 00:32:48.700 --> 00:32:55.700 Rather than as many other approaches suggesting a better socialist experiment, 189 00:32:55.700 --> 00:33:01.700 it identifies a viable alternative to our socialist past. 190 00:33:01.700 --> 00:33:22.700 As Mises pointed out in Human Action, whoever neglects to examine to the best of his abilities all the problems involved, voluntarily surrenders his birthright to a self-appointed elite of Superman. 191 00:33:22.700 --> 00:33:44.700 In such vital matters, blind reliance upon experts and uncritical acceptance of popular catchwords and prejudices is tantamount to the abandonment of self-determination and to yielding to other people's domination. 192 00:33:44.700 --> 00:33:59.700 As conditions are today, nothing can be more important to every intelligent man than economics, property-based economics indeed. 193 00:33:59.700 --> 00:34:01.700 Thank you for your attention. 194 00:34:13.700 --> 00:34:16.700 Time for questions. 195 00:34:16.700 --> 00:34:29.700 What other schools of thought are being taught in your department? 196 00:34:29.700 --> 00:34:42.700 Well, we have the whole range of professors teaching other economic schools. 197 00:34:42.700 --> 00:35:09.700 We are still not the only department that teaches economics, so in teaching Austrian economics, we might have one ally, but the other faculty members teach it the old way, which is not Marxism anymore, but the old Marxists switch into being Keynesians in theory, 198 00:35:09.700 --> 00:35:29.700 and Pro-European Union in Applied Policy, which makes our task easier because you don't need to use very subtle arguments to make students understand who is right and who is not. 199 00:35:29.700 --> 00:35:44.700 How is your government rebuilding and creating the local government? Are they giving your people more property rights? 200 00:35:44.700 --> 00:35:56.700 Well, as in many other places in Central and Eastern Europe, there was this wave of privatization at the beginning of the 1990s. 201 00:35:56.700 --> 00:36:09.700 Part of it was, they called it restitution, simply the stolen property, stolen by communists, was given back to the original owners. 202 00:36:09.700 --> 00:36:24.700 By the way, what was stolen by democrats before 1948, which was generally big firms, coal industry, mining and these important sectors, 203 00:36:24.700 --> 00:36:30.700 They were not returned back because this is considered to be, you know, fine as some people voted on it. 204 00:36:30.700 --> 00:36:44.700 But now the situation is getting a little depressive with the EU centralization project. 205 00:36:44.700 --> 00:36:51.700 One example, it was quite easy to start up a new business at the beginning of 1990s. 206 00:36:51.700 --> 00:36:59.700 In the 90s you just decided to do it and it was not much of red tape to really start business. 207 00:36:59.700 --> 00:37:10.700 Now you need all these certificates of, they call it protection of consumers and health and safety regulations, 208 00:37:10.700 --> 00:37:13.700 which has nothing to do with health, neither safety. 209 00:37:13.700 --> 00:37:37.700 So I like to tell my students that we are somewhere where the United States were a hundred something years ago when the federal income tax was suggested and first declared unconstitutional. 210 00:37:37.700 --> 00:37:44.700 However, you know, when you try for a couple of times, you typically succeed in these ventures. 211 00:37:44.700 --> 00:37:51.700 So now in Europe we are at that stage that, you know, something gets regulated centrally, 212 00:37:51.700 --> 00:37:58.700 something is only in the form of a draft. 213 00:37:58.700 --> 00:38:05.620 You already got the European Center Bank the same or similar way you got your Center Bank 214 00:38:05.620 --> 00:38:08.300 100 years ago. 215 00:38:08.300 --> 00:38:15.620 So all the problems stemming from political centralization we can expect in Europe and 216 00:38:15.620 --> 00:38:21.620 I would claim that they will be bigger and the centralization will proceed faster because 217 00:38:21.620 --> 00:38:26.480 we do not have this tradition of individualism which you have. 218 00:38:26.480 --> 00:38:33.360 We have socialist France with socialist Germany being behind decentralization, so it might 219 00:38:33.360 --> 00:38:39.240 have some short-term benefits such as the people from the Czech Republic can go and 220 00:38:39.240 --> 00:38:43.080 work in Germany or France or Spain. 221 00:38:43.080 --> 00:38:51.320 However, new pressure groups are formed on the continent-wide level with now more than 222 00:38:51.320 --> 00:38:59.320 And half of the new legislation already coming from Brussels with no way to reverse it. 223 00:38:59.320 --> 00:39:08.800 So politics is now much more distant from people. 224 00:39:08.800 --> 00:39:13.140 Living in a small country has an advantage that at least sometimes you might meet your 225 00:39:13.140 --> 00:39:20.420 minister who does all the harm to you and tell it directly to him that now if you do 226 00:39:20.420 --> 00:39:29.420 If you do not even speak the same language as these gangsters in Brussels, then it's over. 227 00:39:29.420 --> 00:39:36.420 Still, we are optimistic, cautiously. 228 00:39:36.420 --> 00:39:41.420 With your kids, describe how interested they get. 229 00:39:41.420 --> 00:39:44.420 When they have problems, what are their objections? 230 00:39:44.420 --> 00:39:50.420 Why do you have kids that at least seem to want to engage in the material? What are the kinds of reactions you're giving? 231 00:39:50.420 --> 00:39:59.420 You mean when exposing them to Austrian economics? Well, they like it because they can understand it. It makes sense. 232 00:39:59.420 --> 00:40:12.420 This deductive method has the advantage is that once they understand the basis, you don't need to force them to memorize the result. 233 00:40:12.420 --> 00:40:18.620 And they will think themselves through it and perhaps they are surprised at the beginning 234 00:40:18.620 --> 00:40:30.940 by what their brain is telling them but after a while they get it. 235 00:40:30.940 --> 00:40:41.580 So we don't have complaints and especially if you approach them with sort of a way in 236 00:40:41.580 --> 00:40:46.940 in which they do not feel the pressure on them. You tell them, well, this is the argument 237 00:40:46.940 --> 00:40:53.380 and I'll be very happy if you write your semester paper refuting it or telling me what's wrong 238 00:40:53.380 --> 00:41:00.380 in it, but you have to use arguments. And then they do it and they educate themselves. 239 00:41:00.940 --> 00:41:07.940 You just open the door for them and they do the study and use their logic and capacities 240 00:41:07.940 --> 00:41:24.460 Professor Seema, could you comment on our President Wilson and the creation by interventionists 241 00:41:24.460 --> 00:41:35.140 of the unified state of Czechoslovakia after World War I, and was that a typical era of 242 00:41:35.140 --> 00:41:43.140 Are there any bureaucrats who have joined both the Czechs and the Slovaks into one country? 243 00:41:43.140 --> 00:42:01.140 Well, definitely the project does not seem to be successful as Slovak used the first opportunity to leave and by the way Czechs were happy. 244 00:42:01.140 --> 00:42:29.140 Fortunately, it was the end of this nation of two greater nationalities living under one roof, ended up peacefully and I can tell that this split of the state actually improved the relation between both nations, 245 00:42:29.140 --> 00:42:35.700 The Theory is what we would theoretically expect, but it's nice to see that it really works, 246 00:42:35.700 --> 00:42:42.440 that there is no animosities, nobody has this feeling that, you know, I pay taxes for the 247 00:42:42.440 --> 00:42:50.740 subsidies of somebody, somebody else, somewhere else, when everybody pays his bill, it makes 248 00:42:50.740 --> 00:42:51.740 people friends. 249 00:42:51.740 --> 00:43:02.740 Your head of state, Mr. Klaus, is the only head of state who proclaimed that he is an Austrian economist. 250 00:43:02.740 --> 00:43:06.740 So does it help you in your work or has it been impeded? 251 00:43:06.740 --> 00:43:18.740 Well, yeah, we have this phenomena of having a prime minister who read Mises and Hayek, which is not very common. 252 00:43:18.740 --> 00:43:40.740 However, it's not helpful either. I would say that the only institutions that appreciate it are some of free market or libertarian think tanks in America, such as the Cato Institute, 253 00:43:40.740 --> 00:43:50.740 because they believe that this is the way how you can change the world, 254 00:43:50.740 --> 00:43:56.740 that they can show a living example of a successful free market economist. 255 00:43:56.740 --> 00:44:05.740 However, and I wrote an article for Journal of Libertarian Studies on this fable of laissez-faire reform in the Czech Republic. 256 00:44:05.740 --> 00:44:22.740 You know, it's simply not trustworthy when you have all banks in state hands, you have socialist health care and school system, 257 00:44:22.740 --> 00:44:32.740 you redistribute 50% of GDP and you have a prime minister who is celebrated as a great libertarian. 258 00:44:32.740 --> 00:44:44.740 who in addition to it approves draft and attacks everybody who are against draft, right? 259 00:44:44.740 --> 00:44:59.740 At the same time, as I said, he has friends such as Milton Friedman that is helpful in these circles, 260 00:44:59.740 --> 00:45:09.740 But, you know, some absurdities appeared. For example, Heritage Foundation produces this Index of Economic Freedom. 261 00:45:09.740 --> 00:45:19.740 And it was done at the beginning of 1990s as a sort of questionnaire for free market people, such as Milton Friedman, 262 00:45:19.740 --> 00:45:27.740 to rank countries according to economic freedom. And with all banking sector in state hands and all these things I mentioned, 263 00:45:27.740 --> 00:45:34.740 because of Klaus being friend to Friedman, Czech Republic ranked, I guess, fifth. 264 00:45:34.740 --> 00:45:40.740 It was like Hong Kong, you know, New Zealand, and then the Czech Republic. 265 00:45:40.740 --> 00:45:49.740 So, of course you get all the problems of welfare state. 266 00:45:49.740 --> 00:46:01.740 Unfortunately, as people see it, the bad results are associated with your libertarian prime minister or president. 267 00:46:01.740 --> 00:46:08.740 So all the blame goes on libertarianism or free market, which is completely, you know, absurd. 268 00:46:08.740 --> 00:46:16.740 But I would rather have a socialist as a prime minister doing the same things. 269 00:46:16.740 --> 00:46:21.740 And then you can at least claim correctly socialism for the failure. 270 00:46:24.740 --> 00:46:31.740 You criticized Posner and public choice and so on and so forth. 271 00:46:31.740 --> 00:46:33.740 Are they... 272 00:46:33.740 --> 00:46:42.740 It sounds like you're saying that the former socialists have taken interventionist ideas from 273 00:46:42.740 --> 00:46:49.740 What do you think about this from, not only free market thinkers, and not taking the free market parts? 274 00:46:49.740 --> 00:46:53.740 I mean, is that a fair description of what you've experienced? 275 00:46:53.740 --> 00:47:03.740 Well, what I'm saying is that if you do not really preach pure free market, 276 00:47:03.740 --> 00:47:24.740 Then the interventionist in power will misuse this weakness and will claim by practicing semi-socialist policies that even this school and that great free marketeer suggested this. 277 00:47:24.740 --> 00:47:41.740 So, you simply, you create problems within the economy that then are blamed on wrong person, right? 278 00:47:41.740 --> 00:47:49.740 So, I understand that politics is based on compromise. 279 00:47:49.740 --> 00:47:56.540 Compromise, so I'm not saying that you can like that change the country, but at least 280 00:47:56.540 --> 00:48:05.740 if you want to be called a libertarian, you should stick to some principles such as non-confiscation 281 00:48:05.740 --> 00:48:10.940 of property, right? 282 00:48:10.940 --> 00:48:15.080 And then if the compromise arrives, then you may say, okay, that's a compromise. 283 00:48:15.080 --> 00:48:20.880 But if you started with something which is already semi-socialist, then the result is 284 00:48:20.880 --> 00:48:21.880 a disaster. 285 00:48:21.880 --> 00:48:35.680 Do you have a political party called the Libertarian Party? 286 00:48:35.680 --> 00:48:48.680 Though there are some small parties that have a libertarian agenda, some of them, after 287 00:48:48.680 --> 00:48:56.520 attending our summer programs, misunderstood what we are saying and went to politics, starting 288 00:48:56.520 --> 00:49:04.520 this venture, however, they will never make it to be anything else than just amusement 289 00:49:04.520 --> 00:49:06.520 and for others.