Klaus to UN: blame governments, not markets for world economic crisis

President Václav Klaus has once again appealed to world leaders not to sacrifice the sanctity of the free market in looking for ways to tackle the global economic crisis. Mr Klaus, speaking at the United Nations General Assembly session in New York, said governments – not the markets – were to blame for the world’s current economic woes.

The 64th UN General Assembly has so far been dominated by the debate over nuclear proliferation, amid worldwide concerns over Iran’s nuclear programme. But while speeches by Barack Obama and Mahmoud Ahmadinejad naturally stole the headlines, the General Assembly also gives less well-known leaders a chance to bask in the global spotlight - at least for 10 minutes.

Václav Klaus, photo: CTK

For Czech president Václav Klaus, a free-market economist with Milton Friedman and Margaret Thatcher his heroes, his speech provided an opportunity to reiterate his concerns that the principles of the free market were under threat as governments scramble to rescue their flagging economies:

“It would be a tragic mistake to fundamentally impair economic freedom in favour of state or supra-state regulation just now. The long-term experience tells us that it is thanks to the free markets and free entrepreneurship that we can enjoy the current material welfare and economic progress. Business cycles, accompanied by economic downturns, recessions and crises, did exist, do exist and will exist in the future. In spite of them, the world has been – at least in the last two centuries – characterized primarily by economic growth and growing prosperity.”

Mr Klaus stressed that governments, not markets, were to blame:

“When looking for an appropriate reaction to the problems connected with the current crisis, we should build on the idea that the crisis was basically a failure of governments, not markets. The manipulation of monetary policy in an attempt to artificially prolong the period of growth, the irrational subsidization of demand in the housing sector and the failures of financial market regulation contributed substantially to the crisis. Let us not delude ourselves that the economic cycle and its consequences can be prevented by the more extensive government regulation or by aiming at global governance of the world economy.”

Photo: European Commission

President Klaus – a noted critic of the accepted wisdom on global warming – also warned that the economic crisis would affect the viability of expensive proposals to counter the effects of climate change, saying that such projects were a great financial burden on both developed and developing countries.

Mr Klaus spoke for just under 10 minutes – his allotted time according to UN regulations. Speaking to journalists afterwards, he criticised Colonel Gaddafi for droning on for two hours. Not everyone agreed with what the Czech president said in New York, but as a keen sportsman with a penchant for order, he did, at least, keep to the rules.