“There is a well-known saying that we should not fight the old, already non-existent battles. I find this point worth stressing even if I do not want to say that socialism is definitely over. There are, I believe, at least two arguments, which justify looking at other ideologies as well. The first is the difference between the hard and soft version of socialism and the second is the emergence of new ‘isms’ based on similar illiberal or antiliberal views.”
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.
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.”