 Good afternoon. First of all, thank you very much for inviting me. It's been 16 years since I've been here. Time flies very quickly, but I'm very happy to be back. I'm very happy not only to see the city of Bodrum booming, but also seeing the size of the group expanding as this is a great conference and I'm privileged to also contribute a little piece to it. My talk today will be devoted to the issue of freedom in Europe. It will partially, hopefully be similar to the story we've heard yesterday about Switzerland in which we had freedom in the past, then some time in between when the statists gained power and then be it a dream or not some future which might be again a future of free people living, not only in Switzerland, but hopefully in the whole of Europe. I'll be using an example of my country Czech Republic or Czechoslovakia where I was born as an example of a transition between periods of freedom and unfreedom. I will use some of the greatest ideas of Austrian economists such as Ludwig von Mises to explain the story. Also I should mention at the very beginning that my speech is based on a chapter of a book which has just been released by Rutlich called Transitional Economies, Austrian Perspective, which is an outcome of a conference organized something like two years ago, not even two years ago by the Mises Institute of Poland, Wroclaw University and the University of Alberta in Canada. All right, as I said I was born in Czechoslovakia unfortunately to the period of communism which started there a few years after the Second World War as you may know in this part of the world communists typically or at least in my country they first became popular they won elections so by pretty much democratic tools they got to power in our case it was 1946 and then within two years they got complete control over the army and police forces and so on and then once they got it they started misusing the power so in the next 40 years they would kill thousands of people they would imprison dozens of thousands of people and they would force to leave the country hundreds of thousands of people a country which once was a kind of industrial powerhouse over time due to central planning and political oppression got destroyed and became poor at the beginning so in the late 40s and maybe 50s a lot of people actually believed that socialism is doable we know that these people were naive but well many of them honestly believed but over time nobody could possibly believe that the system can produce something else other than poverty or oppression so towards the end in like the mid and late 80s nobody believed anything what was said on TV nobody believed politicians nobody believed in any noble ideas that possibly those politicians could deliver so everybody knew that that's not the way or that's not what what people wanted that the idea of socialism became discredited some people saw just practical problems with it and that was enough to see that the system is broken but not many people knew you know what to do about it how to replace it with something more livable and at that time with the fall of the Berlin Wall indeed in so in November 1989 a new generation of politicians got to power and in our case it was actually a unique generation of politicians and this is exactly the place where the ideas of Austrian school played an important role in changing the system from central a plant economy into sort of market-based economy you know back then we had a privatization minister who was a chief translator of f a high ex books so still under communism he would translate the road to serve them or law legislation and liberty so he he knew what to do theoretically and then by a chance of history by or by an accident of history he became highly ranked in the political hierarchy being responsible for privatization or another man who was the leading force of the reforms in early nineties first the finance minister later on prime minister and even later on the president of the country he explicitly stated that he has learned economics from Ludwig von Mises and that he considers Mises to be the greatest economist of all time which is interesting right you do not compare it to politicians in your own countries today or in my country for that matter as well today it has you know nothing of the sort you do not see nothing of the sort anymore but back then these people who knew at least some of the Austrian approaches to you know like policymaking they were in power and hence privatization happened before everything was state owned all land all factories everything under state control so privatization was needed exactly as the Austrians argue well you have to have the system of private property private property of the means of production so that you then get markets that produce reasonable meaningful prices and these prices are telling us something about you know what to do how to find a place in the division of labor which is needed for the economy to function for the society to prosper so that was done a restitution took place many things which had been stolen before by the communists returned or where returned to original owners it so it played both the role of reintroduction of private property and at the same time it played a role of reintroducing justice to the system indeed unfortunately was not perfect only some of the restitution took place so it didn't go before communists took power despite the fact that still under the democratic regime before communism a lot of nationalization happened all banks got nationalized big industry and so on but you know better rest restitutedly something and actually sent a sort of sound message that you know we are here now building the society based on private property there was a little complication in the transition process pretty much exactly as Ludwig von Mises predicted when you read his book nation state and economy he says well in multi-ethnic societies you should not rather centralize because centralization typically means imposing the will of majority meaning the the bigger group linguistic or national group on like smaller groups on people speaking other different languages or belonging to different ethnic group and so in multi-ethnic societies these centralization should place should take place otherwise you create hostilities well exactly that happened between Czechs and Slovaks where Slovaks believe that most of the problems they have to face or cope with are not their own problems that these are problems caused by the evil Czechs and hence there they wanted to separate to succeed from the Federation Czechoslovak Federation and as many of you know it was actually a very peaceful divorce a very peaceful secession exactly what we would expect in terms of results of such a step that whereas before there were problems and your first excuse always was about the other guys are responsible for it once the secession happened you didn't have that easy excuse and hence relations relations between the two countries dramatically improved and are great till that moment until now so indeed negotiation and debate about how exactly to do it took some time but then it happened a political deal was made and the country peacefully split and as I said it dramatically improved the relationships indeed as a part of transition toward market society sort of political foreign political involvement in our case presence of Russian soldiers of Soviet Russians had to be solved as well and here once again a deal was made that they sort of peacefully left the country leaving behind destroyed military bases and a load of environmental damage and all the rest of it but they they went home after almost 30 years of being there and so far have not returned indeed practical policymaking and economic and social development is not easy but now after 30 years after the fall of communism in my country we actually can see a big picture of a successful economic transition and yes it lasted 10 years before banks got privatized and indeed you know state is still too big redistribution is over 40% and so on and so forth but when you see how different the country looks like how different the cities look looks like how once an impoverished country is actually now a prosperous place you know that looks like a successful story or success story of economic transition in terms of GDP per capita for example Czech Republic is now richer than Spain is roughly at the same level as Italy is in terms of economic freedom Czech Republic is number 17 by the Fraser Institute index of economic freedom so again could be better I can imagine you know number two is better number one is better than 17 and I know that people from countries who ranked higher still complain that the state is too big and economic freedom still has to be fought for yes I know that but you know given that 30 years ago everything will state owned and we all lived with all the consequences of economic and political oppression we have a success story here now this is not the end of my talk here there is indeed a problem or a potential problem which appeared in the meantime namely that the process of rediscovering markets the process of privatization and so on and so forth got complicated by the fact that the European Union emerged was put together and new and new centralization tendencies take place at the same time which for some of us was indeed a danger as the great reform ethos of 1990s over time was replaced by adoption of all sorts of you know bureaucratic measures imported to the country from the European Union I myself actively resisted that I wrote articles against EU accession as a footnote I I even managed to publish an article called down with the EU in the Czech version of the Playboy magazine so that you could see naked girls and next to it an article that quoted Hans Hoppe and Ludwig for me says but didn't really you know change the forces of history and here we are as the Czech Republic and other countries members of the European Union and the big question is you know what to do about it now as always it's useful to take a look at the works of Ludwig von Mises and maybe surprisingly for many the story doesn't necessarily have to be too pessimistic here now why back in the 30s Ludwig von Mises could witness the breakdown of the European liberal order he could see all sorts of nationalists being in power using national or misusing nationalistic sentiments in turning them into nationalistically oriented policies that targeted like neighboring countries or sometimes targeted people within the country simply there was a huge wave of economic nationalism politics that rather than supporting or creating social harmony as markets do brought about a lot of interventionism and a lot of you know problems and hatred and conflicts and and everything which is not compatible with a peaceful classical liberal social order and Mises back then as he indeed still believed that you know markets are the solution decentralization is the solution suddenly saw that that's not what we are getting and nobody was listening to him or other classical liberals and so as a desperate attempt to save Europe maybe he wrote an article in which he suggested introduction of what is what he called Eastern European Democratic Union and attempt to create some kind of classical liberal framework almost like a constitution that would impose classical liberal order from above and prevent nationalistic policies to be used and misused so suddenly we are having this great libertarian who always argued decentralization actually argued decentralization in the name of maybe last possible attempt to you know save Europe from nationalists of and socialists of all sorts and what is interesting here is that he said because he was knowledgeable of the dynamics of interventionism so then he said okay well it's not enough to say you cannot use like state schools against minorities or whatever because that could be circumvented smartly by you know like manipulating building codes construction codes so that you know you would not allow schools to be built and hence education for minorities to happen and so Mises surprisingly came up with actually a very centralized or idea of a very centralized system which then should serve as a protection against nationalistic sentiments and nationalistically driven policies indeed he knew explicitly mentioned that there is no chance how such a plan could be introduced let's say in Europe in 1930s or something like that but well wrote it anyway and elaborated on an idea how you know prevent nationalism from spreading by centralization rather than decentralization now back to the story Europe today Czech Republic as a member of the European Union what should libertarians do visa the European Union indeed the current European Union is not a classical liberal paradise you can't meet anybody who would be free market leaning politicians when you visit Brussels or other places so the the institution is full of statists full of people who want to build something else that what what we want but still you could find works papers even books by people who appreciate liberty who are advocates of the Austrian School of Economics who are libertarians who actually is say all right similar things that what what Mises was arguing for an example of it would be one of the greatest Austrians in Europe professor Jesus Huerta de Soto in Spain a decade ago he wrote an article named a an Austrian defense of the euro right and now you may say okay well that's weird because we know the guy he was he's in favor of the gold standard and so on he understands that there has to be separation of state and money that once you start thinking about the argument well then it's perhaps similar to how Mises thought about these things like all right well you know option number one decentralization or denationalized money or something that that's not available at the moment so we have either nationalists running the printing presses on national level so like Spanish center bank printing you know pesetas which they have a great history of or you may have European bankers center bankers who maybe are not necessarily worse than the national ones it's a an open question these are in both cases center banks are institutions which are not really compatible with with like you know free market order but it's an empirical question which once will misuse the printing presses more and the Soto argued that euro in a way is almost like a you know the gold standard because it prevents local nationalistic politicians to misuse monetary policy it took some powers from one level of governance and shifted it upward now indeed the the question is shall we for some reason like more like the gang leaders that speak the same language as we do more than those who do not speak the same language or is there some interesting interplay between now those two new institutions meaning or one new institution there is the European level of governance or policymaking and you national level which in a way bounces out each other somehow right so once we realize that we do not live in the in the world of best options only we are talking here second best trying to understand that with the European Union in existence we might perhaps witness some of the effects which Mises wanted the hissing sort of European Union couldn't vote to perform maybe we can see it somehow maybe due to the existence of that level of political decision-making some of the worst nationalist policies would not be able to take place we can't answer that maybe I believe theoretically but we have some experience and we will have experience in the future to actually see whether that is true or not because indeed nationalists or socialists will be running both of those institutions and indeed the centralization tendencies they take a long time right we've seen it in the US how how it started with a you know a simple constitution a limited government and over time what has been happening so something of that sort indeed has been happening and will be happening in Europe as well the question is whether perhaps there are some contravailing forces which might or might not bring some sort of equilibrium in which the centralization might or could possibly be stopped now some people argue that here the nationalism which Mises was so much afraid of can actually play a useful role in the following sense indeed most of politicians most of interventionists and socialists of all kinds would want to centralize as much as possible to get control over over us but in Europe with still existing nation nation states it seems impossible or it at least it's complicated to to centralize quickly and fully because that goes against those nationalistic sentiments so you know French would never agree on something which somebody else suggests so there might be limits to what could be done and the idea of ever closer union sounds for them good on paper but it's more and more difficult to materialize it especially when the European the membership of the European Union is going up is growing so we see it today that there is that to agree on something is actually very complicated and that very often what we see is that some states try to navigate or to look for unorthodox solution which are not necessarily in the original framework of the European architecture right let's say the Schengen agreement so it's it's it's only some people or not people some countries some states that participate so because larger agreement is not feasible today so now the optimist could possibly argue that higher cost of closer and closer or bigger and bigger centralization closer and closer union prevent centralization from deepening and at the same time there will be these ad hoc alliances of states to address some problems which looks or may look like you know what we in economics know under the name of theory of clubs so you know ad hoc kind of coalitions or maybe it could lead to an idea which some with economists are famous for such as this Bruno Leone a public choice with economists who came up with the idea of functional overlapping competing jurisdictions so yes we see the process happening in Europe under the umbrella of the European Union yes that's all true we don't know what the result will be but I'm hoping that for the reasons I try to explain namely existing nationalistic sentiments and hence national states that do not want to fully transfer power to the European level we may end up in the world of some kind of polycentric club like operation which might then actually sort of bring into existence the means old musician ideas that even that by setting some rules of state coexistence we might end up living in a in Europe which will be far from classical liberal or libertarian ideal but will not necessarily be a sort of totalitarian fully centralized hell and hence the quality of life and standard of living could the same way as I documented on the numbers from the Czech Republic over the last 30 years could continue in a sort of similar way in the future decades so I'm not sure whether the story is an optimistic one but at least I guess there is still hope thank you very much