Academic address of Minister Milen Veltchev on “The Inequality of Freedom, and the Lack of Liberty in Equity”
Mr. President,
Dear Lecturers and Students,
Ladies and Gentlemen,
Please, allow me to express my gratitude to you all for the high honour of conferring on me today the title of Doctor Honoris Causa of the University of National and World Economy. I would like to thank sincerely the Academic Council of UNWE for the attention shown to one of their alumnus – proud, happy and sincerely moved by the opportunity to receive the most precious recognition for his work and achievements by his own university. Please, allow me to share with you that this moment is even happier for me also due to the fact that the title conferred on me is also recognition for the work of all adherents, colleagues, professionals without whom the achievements that have attracted your attention would not have been possible. And let me add that this high honour I owe to any one of us, who have contributed the successes of our country to become visible, the achievements real and the progress – material.
Today I would like to defend before you an idea that inspires me, an idea in which I believe; a modern and at the same time old philosophy about freedom, about the building of a free civil society of economic progress and prosperity, a society which our country is aiming at. I am speaking about libertarianism.
In a sense, there have always been only two key concepts in all political philosophies: liberty and power. The first acknowledges the right of the individual to govern his own destiny by following his views, beliefs, attitudes and desires, providing he respects the same rights of the others. The second, figuratively said, “exports” and imposes its own idea about good and right, not recognizing the right of the individual to err even towards himself, but most of all towards the right direction drawn by the power. Of course, it is no surprise, that the philosophy of power has usually been more attractive for those, who are in the power.
The philosophy of freedom has had many names. It can be found in ancient Eastern thought; it provoked the minds of the Greek civilization; it is defended by Christianity. The philosophy of freedom changes its faces, its names, its heralds down the ages in order to reach us in its constant nature – respect for the individual and confidence in the ability of ordinary people to make wise decisions about their own lives.
Libertarianism, as the name itself suggests, is belief in that every person owns his own life and property and has the right to choose what to do with them as long as he respects the same right with regard to others. Hence, it is evident that libertarians consider the individual to be the main unit of social analysis – it is the individuals that make the decisions, but it is also them who "own up" to their acts, that is, that they take responsibility for what they do. Since the individuals are moral subjects they have the right to be protected in their lives, freedom and property. And these rights are not a gift from the state or society, but on the contrary, they are inherent to the nature of human beings. It is no chance that one of the most famous books of all times which has played an enormous role for the development of Western civilization – The Social Contract by Jean Jacques Rousseau begins with the following proclamation: “Man is born free; and everywhere he is in chains”. This concept preordains the position of libertarian philosophy with regard to the state, namely that its role should be brought to that of a protector of the primary human rights, where they may be violated, but that should be done with minimum intervention in the life of the individual in order not to infringe upon his right to autonomy. The right to precisely that freedom, where the individual is unrestricted in his creative and productive impulses, the freedom whereby the individual is strong to interact with others, to make a choice, to err and to bear the consequences of his errors, but mainly to create goods, a future and a better life for himself and as logical result – for the society.
Where in the broad political spectrum is the place of libertarianism – whether next to the left idea of the social state or closer to the market concept of the right wing? Some say that libertarianism is neither left nor right if we go by the definitions of contemporary politics. Others think that it combines in an appropriate manner the best in the two antipodes, to step, on the one hand, on the left position of self-government as tolerance towards the others, and on the other, on the right one – of responsible economic behaviour. And the combination of these two bases leads to social harmony and material prosperity. Third paraphrase this concept and, by way of a joke, maintain that libertarians are right in economic matters and left – in the social ones.
Today I am not addressing you to electioneer for the ruling coalition NMSS – MRF. I think though that the sharply cut down tax rates during the past years speak of more than just a linguistic coincidence between libertarianism and the liberal character of our two political parties.
Libertarianism, however, is not only a political philosophy. It is an idea, conception, intuition, what liberty is in itself, therefore it is fight for the right of free choice and tolerance in all spheres of our lives. We will find the libertarian idea in the efforts to establish religious tolerance, in the abolitionist movement in the USA, in the fight for non-discrimination of various groups of people.
I hope that you will forgive me for being pragmatic as a man of finance, Ladies and Gentlemen, which makes me choose only one of these spheres and just talk about some of the basic economic views of libertarianism. In order to get ourselves near to the economic vision of the philosophy of freedom, I would like to share with you two fundamental principles which undoubtedly are the primary characteristics and engines of free economy. They are simple, evident and irrefutable. Let us start with the first one that can be presented as follows:
“Free people are not equal and equal people are not free.”
I am quick to clarify which equality I actually mean. Of course I do not mean equality before the law or political liberty; it is not about politically free people who are not equal before the law. „He who confuses political liberty with freedom and political equality with similarity has never thought for five minutes about either”, G.B. Shaw said on a similar occasion.
What it is actually all about is economic equality – income and economic status, in other words all we can offer and acquire on the free market.
In order to better explain this principle, let us divide it into two and start with “Free people are not equal”. I suppose you will agree that when people are free to be themselves, to command their fortune, to freely make efforts to improve their well-being and that of their families, the market outcome could not be equal income for everyone. Since indisputably everyone of us is a unique human being, different from any other that has ever existed, why should we expect that our actions and market interrelations would yield equal results? We all have different gifts, talents, skills. Some of us have more or more highly esteemed gifts than others have. Sometimes we find our true vocation not until a later stage of our lives. What is important is to be free to seek for it.
We are also different in the extent of our entrepreneurship, in our preparedness to work, in our efforts we devote to it, we are also different in our ability to save. I would bet that if someone managed to make us all equal in income and prosperity overnight by just clicking their fingers, this time tomorrow we would all be different again for some of us would have saved part of their money while others would have spent it all.
All this makes us conclude quite logically that if people are free to be themselves, they could not be economically equal.
That is why, I cannot agree with the proposition that transition in Bulgaria will end only after everybody will have become rich and started living like the average European. There is no average European. This concept groundlessly conceals the huge abyss between the poor unemployed and homeless people and the inconceivably wealthy aristocrats of an England, for instance. We do not state that since 30% of Americans do not have health insurance, the USA have not yet come out of transition, do we?
As far as the second part of this principle is concerned, namely that “equal people are not free”, I would suggest thinking together for a moment and trying to find a country where people are really economically equal. If you have already managed to think about such a country, let me convince you that people in that country are not free at all. Why? Frankly speaking, the only way to make the income and well-being equal in a given society is to suppress the capabilities of the more enterprising ones; to impede their self-development and becoming well-off, to artificially retain minority’s development, for, alas, highly gifted people are always a minority, so that we can make their speed equal to that of the slower, less active majority. In other words, the only way is to literally use power to make the talented ones obey orders like: Do not do well! Do not work more and better than the others! Do not serve better than your competitors! Do not save and do not spend more reasonably than the others! I hope that none of us would like to live in such a society especially after the unlucky attempts of the communist regime to unify us all by frequently using similar methods of power.
Let me give another example from the international tax practice. Without going into the specifics of the tax laws, which have just been voted by the Bulgarian Parliament, I would like to note that the libertarian idea of non-intervention of state and of free market relations envisages low tax rates that are to promote production and business. Of course, we should not forget that what our government is also striving at is a smooth phased process. What I wanted to share with you is concerning the high taxes and in particular – the highly segmented bracket for personal income taxation traditionally proposed by the left political forces. When we raised the salaries in the budget sphere this summer it turned out that many of the employees were not satisfied. And it is quite natural. It was secret for no one that the increased income of many of them passed to the next stage of the tax bracket, which automatically meant higher percent of income tax. That is to say, many people asked themselves the question: “What do I need a higher salary for when my real income grows more slowly?” We know that payment may be increased for various reasons – individual approach of the employer when the employee works well, improvement of qualification, etc. What stimulus would you have to improve the quality of your work or your skills if your payment would not actually increase? Shouldn’t people strive to work more and better in order to increase their wealth? And should they be sanctioned in this striving of theirs? Should we aim at relatively standardizing people in their payment regardless of the different efforts, time and skills they commit to their work. The tax legislation in countries like the United Kingdom, the Netherlands and Ireland where the personal income tax bracket has not more than 3 stages affirms this conclusion.
Now I would like to avail of the opportunity to express a position that in the next days may be considered brave by the well-wishers and reckless – by the ill-wishers.
It is a challenge for me to be the first Finance Minister who supports the recent appeal of Prof. Victoria Curzon Price, President of the Mont Pelerin Society, to globally abolish the corporate income tax.
I have mentioned above that I would dwell on two basic principles of the economic philosophy of libertarianism. So far, I have dwelled on the principle of free inequality and lack of liberty in equity. And the other principle is:
“People take care of what is their own. What belongs in common to the most people is accorded the least care: they take thought for their own things above all, and less about things common.”
This principle underlies the “magic effect” of private property. It also gives a key explanation of the failure of socialist economies in the world.
In the Soviet Union, and in Bulgaria before 1989, the authorities proclaimed supremacy of central planning and public property. They believed that private property was selfish and non-productive and tried to convince us that under the competent management of the central government the resources would be used for the general welfare. The food of the farmer became “food of the people” and people were hungry. The factory of the entrepreneur became “factory of the people” and started manufacturing goods that could not be sold in any foreign market.
And if you believe that you can equally well take care of any property I would advise you to go and live in the house of someone else and drive his car for a month. I guarantee that neither the house, nor the car would look in the same way as your own do after the same period of time.
That is why the concept that people are more assiduous and use the resources more wisely if the ownership over the property is private is a working one.
Another benefit of the private property, which is not so much economically obvious, is that it allocates power. When a subject like the state owns the whole property individuals have no protection against its will. The institution of the private property allows many people to find their own place where to be protected from the hostile actions of either other people or the state.
Ladies and Gentlemen,
Liberal and libertarian concepts actually have their long tradition in Bulgaria, too. Immediately after the liberation of our country in 1878 many of the builders of the Third Bulgarian State adopted this philosophy and this approach to the government of society, economy and state. And it is quite logical – great number of them had been active participants in the national liberation struggles. In their view the concept that each person has an inherent right to existence, freedom and property was a natural continuation of their ambitions and dreams to see their mother land an independent and prosperous state.
Today, after a long and difficult period of isolation and totalitarianism, after another equally difficult and long period of transition, a significant part of the Bulgarian society sees again in these ideas a chance for a more successful and accelerated development of the country. Development which is based on transparency in politics, on private property, low taxes, free markets and competition in economy, on decentralization of power, on people’s free choice. Because freedom is no luxury. It is much more than a lucky coincidence or a concept we defend by sheer force of habit. Freedom is the driving force behind everything that happens in us, with us and through us. Let’s live in this freedom to be ourselves and to remain tolerant to others. Or as Doctor Kenneth Bisson, member of the American Libertarian Party, jokes: “Libertarianism is what your mom taught you: behave yourself and don't hit your sister”.
Ladies and Gentlemen,
I am glad I had the opportunity to share these ideas with you today and I would once again like to thank you for the high honour you bestowed on me.
Thank you for your attention .————-Source: Ministry of Finance website.The address was given on 02-12-2004 at the University of National and World Economy, Sofia.
