In 1994 Estonia introduced a flat tax rate of 26%. The flat tax is a system with only one tax rate for all personal income and corporate profits. Almost overnight this led to a phenomenal economic expansion. Contrary to the situation in a tax system with progressive rates, people were no longer punished fiscally if they worked harder. Very soon the Estonian example was being followed by its Baltic neighbours Lithuania and Latvia. In 1997 Russia introduced a flat tax of 13%. Serbia followed suit, as did the Ukraine, Slovakia and Georgia. Romania followed in 2005.
[inline:01]The monster of the 20th century was the state. In the 1920s and ’30s the Austrian economist and philosopher Friedrich von Hayek saw the power of this Leviathan expand in his native Central Europe. Two brands of socialism – communism and national-socialism – were eradicating the freedoms of individuals and replacing the existing spontaneous order by the imposed order of the state.
In 1931 Hayek, who called himself a liberal (in the original “classical” meaning of the word as a philosophy defending freedom), left Vienna for London. Though Hitler did not annex Austria until 1938 Hayek realised that the pattern which applied to Germany also applied to his home country: “By the time Hitler came to power liberalism was to all intents and purposes dead in Germany. And it was socialism that had killed it.”
The Mont Pelerin Society (MPS), an international organisation of classical-liberal academics, politicians, journalists, think tank people and businessmen, is currently holding a Regional Meeting in Reykjavik, the capital of Iceland. The Society was founded after the Second World War by the later Nobel Prize winner Friedrich Hayek and friends such as Karl Popper, Milton Friedman, Ludwig von Mises and others. From its modest beginnings with a small group consisting of Hayek and 35 “friends of Hayek” who convened in the Swiss resort of Mont Pelerin in 1947, the MPS today has over 500 members who convene every two years for a General Meeting (the last one was held in 2004 in Salt Lake City) and once or twice a year at Regional Meetings. The Reykjavik meeting, attended by 109 participants, started last Sunday and ends tomorrow evening.
Bomb attacks are good news for the Euro-centralisers. They make it possible to push through policies which, in normal times would be highly contentious: the integration of criminal justice, the European Arrest Warrant, the harmonisation of immigration rules, a European public prosecution service (Eurojust), an operational role for the EU police force (Europol). All these things can now be presented to the public as “anti-terrorism measures” – and, of course, no politician wants to appear soft on terrorism. As the Liberal leader in the European Parliament, Graham Watson, tastelessly put it: “Osama bin Laden has done more for European integration than anyone since Jacques Delors”.
Barely have European citizens recovered from the Bavarian Bosoms Directive, than they escape another stupid regulation. Yet again a European directive - in this case the Noise Directive (2000/14/EC) - has gone through every stage of legislation: Commission, Parliament, Council, scrutiny (Hah) at the national level, and at the point of second stage implementation people cotton on to the basic fact. If it had been brought in as passed all the following plant and construction equipment would be illegal from January 1 next year: "tracked dozers; wheel loaders less than 55 kW; screed pavers; screed finishers; vibratory plates; vibratory rammers; pedestrian vibratory rollers; forklifts, and hand-held concrete breakers" of the sort that infamously spends its time crossing roads.
I have a great deal of affection for the Motorcycle Action Group, or MAG as they are known. Their European end, FEMA, provide an annual jolly for Members of the European Parliament and assorted hangers on, giving a pillion trip up to some restaurant in Alsace where one is, I am told, wined and dined most effectively, just in time for a splendid ride back to Strasbourg (this year sponsored by Harley Davidson. I really have to go next year, might take my own bike).
[inline:01]My 16-year old son is off to the World Youth Day gathering in Cologne, where Pope Benedict XVI is addressing young people from all over the world next Saturday. He left by train from Brussels with a group of friends and will spend a week in prayer and meditation before the Pope’s address and also a week after. He clearly belongs to the generation that Time described last week as the “John Paul generation.” Says Time: “Young people today are more likely to attend mass weekly, pray daily and trust their church than their parents’ generation. More than 50% of young Catholics attend mass weekly, compared to 39% just a generation ago. Nearly 90% believe that religion is important, compared to 77% from the prior generation.”
European protectionism is Europe’s business, one might think. If people on the Old Continent want to pay more for goods that they might well get for less – vis-à-vis the dubious benefit of keeping alive inefficient companies – then they should be allowed to do so. This line of reasoning may make sense to a certain extent, yet there are two serious problems.
Yesterday, the Belgian leftist newspaper De Morgen had a story on the so-called freeway bloggers, apparently a new phenomenon in the US. Quoting British newspaper The Independent, De Morgen writes:
The messages, posted from overpasses, bridges and verges, are short, pithy and very, very rude.