The Inequality of freedom, The non-freedom of equality

Author:   Academic speech of Milen Velchev 24 December 2012 font size decrease font size decrease font size increase font size increase font size

Mr. Chancellor,

Dear Professors and students,

Ladies and Gentleman,

Let me address all of you to express my thanks for the high honor I was granted today by being bestowed the honorable title “doctor honoris causa” of the University of National and World Economy. I most sincerely thank the Academic Council of UNWE for the tribute it has given to one of its alumni- proud, happy, and honestly moved by the possibility to acquire the most valuable tribute for his work and progress from his University.

Let me share it with you – this moment is more the happier for me also since the title I am bestowed is in recognition also of the work of all followers, colleagues, professionals, without whom the achievements which have attracted your attention would not have been possible. Let me ad that I owe this high distinction to each one of us, who contributed to the success of our country becoming visible, the achievements to be real, and the progress – remarkable.

I would like to espouse an idea before you, an idea that inspires me and in which I believe: a modern, and at the same time an old philosophy of freedom, of building a free civil society of economic progress and well being, of building a society our country is striving to have.  I am talking about Libertarianism.

In a sense there have always been only two key concepts in all political philosophies: freedom and power. The one admits the right of the individual to control their own fate by following their own outlooks, beliefs, state of mind and desires, so long as they honor the same rights of the rest of the individuals. The other, figuratively speaking, “presents” and enforces its own idea of good and rightful, while not admitting the right of humans to err even against themselves, but, most of all, it does not admit erring against the exact tracks, marked out by power itself. It is of no surprise, naturally, that the philosophy of power has usually been more attractive for the ones holding the power.

The philosophy of freedom has had many names. It was presented in the ancient eastern thinking, provoked the minds of the Greek civilization; it was espoused by Christianity. The philosophy of freedom changed its faces, names, its exponents during the centuries to finally reach us in its constant expression – respect for the individual and confidence in the ability of normal people to make wise decisions about their own lives.

Libertarianism, as the name itself suggests, is a belief in the concept that each person exercises sole dominion over her/his own life and property and is entitled to choose how to dispose of them as long as they respect the same right for the others. Wherefore it is evident that the Libertarians name the individual as the chief unit of public analysis – only individuals make decisions, but at the same time only they bear the responsibility for their actions. Since individuals are moral subjects, they have the right to be protected in terms of their life, freedom and property. And government or society does not specifically grant these rights, but, on the contrary, they are typical of human nature. It is of no surprise that one of the most famous books of all times, which has played a significant role in the development of Western civilization – “The Public Treaty” by Jean Jacques Rousseau, begins with the following manifesto: “Man is born free, but is in chains wherever he goes.” This notion predetermines the notion of the Libertarian philosophy with respect to government: mainly that its role must be limited to the one of defender of the primary human rights when violated. Though done with the minimum intervention in the life of the individual so that it does not interfere with his/her right to personal freedom. This is the right to the very freedom where man may have unlimited creative and productive impulses, which gives each individual the strength to interact with the others, to make choices, to err and bear the consequences of her/his mistakes.  But most of all, this is the freedom to create welfare, a future and better life for him/herself and, as a logical consequence, for society.

Where is the place of Libertarianism in this wide political spectrum – whether next to the leftist idea of social government, or closer to the market outlook of the right wing? Some say that Libertarianism is neither leftist, nor rightist according to the definitions of the contemporary political spread. Others believe that it combines in a relevant way the best of both opposing sides to lean, on the one hand, on the leftist platform of self-government as tolerance to the others and, on the other, on the rightist responsible economic behavior. And the combination of these two platforms leads to social harmony and material welfare. Yet others paraphrase this outlook and jokingly declare that the Libertarians are right wing in terms of economic issues and left wing in terms of the social ones.

Today my goal is not to promote the governing coalition NMSS (National Movement Simeon the Second) – MRF (Movement for Rights and Freedoms). Though I feel that the sharply reduced tax rates during the last several years show something more than a linguistic coincidence between Libertarianism and the liberal nature of our two political forces.

Libertarianism, though, is not only a political philosophy. It is an idea, an understanding, intuition, as freedom is itself, and therefore it is a struggle for the right of free choice and tolerance in all domains of our life. We discover Libertarian ideas in the efforts for establishing religious tolerance, in the Abolitionist movement in the USA, in the battle for non-discrimination of different groups of people.

I hope you will forgive me for my pragmatism as a financier, dear ladies and gentlemen – it made me choose only one of these fields and limited my speech only to some of the chief economic outlooks of Libertarianism. To approach this economic perspective of philosophy of freedom more closely, I would like to share with you two main principles, which are, no doubt, primary features and engines of free economy. They are simple, clear, and indisputable.   Let us start with the first one, presented as follows:

“Free people are not equal, equal people are not free.”

I shall not hesitate to point out which equality I have in mind. Of course, it is not the matter of equality in the eyes of law or political freedom; it is not about politically free people who are not equal in the eyes of law. “A person who confuses political freedom with freedom as a whole and political equality with sameness, has not pondered the issue for more than five minutes without interruption”, Bernard Show said upon a similar occasion.

The issue here is economic equality – income and financial status - that is, all that we may offer or acquire on the free market.

In order to clarify this principle more fully let us divide it in two and start from “Free people are not equal”. I suppose you will agree that when people are free to be themselves, to decide their fate, to freely make efforts for the improvement of their welfare and of the welfare of their families, the outcome on the market would not be equal income for everyone. Since each one of us is, without doubt, a unique being, different from any other who has ever existed, why should we expect our acts and market relations to give equal results? All of us have different gifts, talents, and skills. Some have more, or more highly cherished, gifts than others. Sometimes we find our real vocation at a later stage in our lives; the important thing is to have the freedom to pursue it.

We differ also in our spirit of enterprise, in our readiness to work, in the efforts we spare doing it; we differ in the skill of saving. I am ready to bet that if anyone succeeds for a night, with one snap of the fingers, to make us all equal in income and welfare, the next day, same time, once again everyone will be different, because some will have saved part of their money while others will have spent it.

All this logically leads to the conclusion that if people are free to be themselves, then they could not possibly be economically equal.

Therefore I am unable to concur with the thesis that the transition in Bulgaria will come to an end only when all become rich and begin to live like the average European. There is no average European. This concept needlessly hides the huge chasm between the poor jobless and homeless people and the extremely rich aristocrats in England, for example. It is the same as saying that because 30 % of Americans do not have health insurance, the USA has not yet come out of the transition.

As to the second part of this principle, mainly that “equal people are not free”, I would suggest thinking for a moment about a country where people are indeed economically equal. If you have already thought of one let me convince you that the people in that country are not at all free. Why, you would ask? Honestly speaking, the only way to even out the income and welfare in a society is to suppress the abilities of the more ambitious individuals; to prevent them from achieving and getting rich, to artificially hold the progress of the minority (since, alas, the exceptionally skillful people always represent minority) in order to slow down their speed to equal the speed of the more inactive and lagging majority. It means there is one way to accomplish this: apply power directly to force the talented to fulfill orders like: Do not achieve! Do not work more or better than the others! Do not service your clients better than the competition! Do not save and do not spend more sensibly than the others! I hope that none of us would like to live in such a society, especially in the background of the hapless efforts of the communist regime to unify everyone, often applying such power methods.

Let me give you another example from the universal tax practices. Without examining in detail the newly approved tax legislation by the Bulgarian parliament, I would like to point out that the Libertarian idea of non-interference of government and of free market relations envisions low tax rates which would stimulate production and business. Naturally, we must not forget that what our government endeavors is a smooth process by stages. I wish to share with you something directly related to the high taxes and, more precisely, to the highly segmented taxing scale for the income of individuals traditionally proposed by the leftist political powers. When we increased the budgetary salaries this summer, many of the employees were dissatisfied. This was normal. It was no secret that the increased income of many of them put them into the next tax bracket, which automatically meant higher tax rates. Then many people asked themselves “Why do I need a higher salary if my real income grows much more slowly?” We know that compensation may be increased due to various reasons – individual decision on the part of the employer if the employee has performed well, improved their qualification, or other. What motivation would you have to increase the quality of your work or to improve your skills if your compensation, in fact, won’t increase? Mustn’t people try to work more and better to increase their welfare? And must they be penalized in the process? Must we aim to relatively level out people in terms of their pay despite the different efforts, time and skills devoted to their work? The tax legislation in countries like Great Britain, the Netherlands, Ireland, where there are no more than three tax brackets for individuals, confirms this opinion.

Herewith I would like to benefit from the opportunity to express an opinion which in the following days might be considered bold by the well wishers, and rash by the ill favored. For me it is a challenge to be the first financial minister supporting the recent call of Prof. Victoria Curzan Price, President of the “Mon pereline” Society, to remove the corporate income tax in the entire world.

A little while ago I said that I would examine two basic principles of the economic philosophy of Libertarianism. So far I described the principles of free inequality and the non-free equality. Here is the other principle:

“Men take care of what belongs to them. What belongs to everyone or to no one is usually left to rot.”

This principle is at the basis of the “magical effect” of private property. It gives the key explanation of the failure of the socialist economies in the world.

Before 1989 in the Soviet Union, as well as in Bulgaria, the officials proclaimed the superiority of central planning and state proprietorship. They believed that private property was egotistic and unproductive, and wished to convince us that under the skilled leadership of central authority the resources would be used for the public good. The food of the agricultural worker became the “food of the people” and people were hungry. The factory of the entrepreneur become “factory of the people” and began producing goods, unmarketable on any outside market.

And if you are convinced you can attend to any property with equally the same care, I beg you to go live in the home of someone else and drive his/her car for a month.  Believe me! - neither the home, nor the car will look the same way as your own after a similar period of time.

Therefore the concept where people are more diligent and use resources more reasonably if property is privately owned is a working concept.

Other benefit from private property, not so purely economical, is that it divides power. When an entity, like the state, owns the entire property, individuals are not protected from its will. The institution of private property allows a lot of people to find their own place where they are protected from the hostile actions of other people or of the state.

Dear ladies and gentlemen,

Actually, the liberal and Libertarian ideas have a long tradition in Bulgaria as well. Immediately after the Liberation of our country in 1878, many of the draftsmen of the ThirdBulgarianState adopted this philosophy and this approach to the management of society, economy and the state. This was completely logical – a considerable part of them were active participants in the national movements for freedom. In their eyes the idea that man from birth had right to existence, freedom and property was a natural extension of their ambitions and dreams to see their motherland independent and prospering.

Nowadays, after a continuous and difficult period of isolation and totalitarianism, after another, also continuos and tough period of transition, the majority of Bulgarian society once again perceives a chance for a more successful and faster development of the country along these ideas. A development based on transparency in politics, on private property, low taxes, free markets and competition in the economy, on decentralization of power, on free choice for the people. But freedom is no luxury. It amounts to a lot more than lucky coincidence or a concept we support by dint of habit. Freedom is a stirring force for everything happening in us, with us and through us. Let us live in this freedom to be ourselves and to remain tolerant to others. Or, as Doctor Keneth Bisson, member of the American Libertarian Party, jokes from time to time, “Libertarianism is what your mom tells you: behave yourself and don’t hit your sister.”

I am happy to have had this opportunity to share these ideas with you today and once again I thank you for the high honor you conferred to me.

Thank you very much for your attention!

source: Media Time Review

The great virtue of a free market system is that it does not care what color people are; it does not care what their religion is; it only cares whether they can produce something you want to buy. It is the most effective system we have discovered to enable people who hate one another to deal with one another and help one another.

Milton Friedman

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