It would be a tragic mistake to fundamentally impair economic freedom in favor 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.
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.
Václav Klaus, President of the Czech Republic, September 23, 2009
economic welfare…
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