The second day of the European Resource Bank Meeting was opened by Pia Kinhult and Ingo Friedrich. Pia Kinhult welcomed the large audience and was looking forward to the many discussions, debates, and presentations of the day. Furthermore she was pleased to announce that this is the 111th year for the Swedish Taxpayers Association. However, not everything is alright yet, “I don’t know what there is to celebrate. After 100 years of existing [The Swedish Taxpayers Association], Sweden still has the highest taxes.”
Ingo Friedrich had three messages for the audience. First he congratulated both organizations for their anniversaries. Next he mentions the increase of inflation, hunger in poor countries, and interruption of supply chains due to the today’s crises. He prophesized that the war in Ukraine might last another five to ten months. Finally he states “In times of war and crisis, the government will overextend its power at the expense of the market power. This conference must send a clear signal that this way is not the good way. It is better to look for solutions that lower taxes. This is possible even in bad times. I wish the conference intensive discussions, new ideas, and success.”
How to Create Wealth and Prosperity
The first speaker of this panel, Scott Hodge began with a warning, “There are many ways the government can limit liberties and free enterprise. There is political oppression, regulatory policy, and tax policy. We should be especially troubled by the kinds of progressive and redistributive tax policies.” Progressive tax policies cause many problems. They limit opportunities, reduce incentives to work, undermine entrepreneurship, lower living standards, and are anti-economic growth. His suggestion to solve the problem are the four principles of sound tax policy: neutrality, simplicity, stability, and transparency.
Michael Jäger explained the necessity of government spending being efficient. “The waste of public funds is important. There is five to ten percent of misuse. We need to ask for fair and simple tax laws. Laws that we can all understand.” He advocated for a simple approach to boosting the economy. This approach includes a fair and simple tax plan, no new taxes or tax raises, less bureaucracy, and quick decision making with decisions that stand up to scrutiny.
Krassen Stanchev started by quoting the economist Ronald Coase, who is known for his groundbreaking Coase Theorem, “If you torture a database enough, it will confess.” He then went into details about added taxes. “Inclusive growth is no justification for progressive taxes.” A seven point plan for FT reform solves the issue: 1. Simplify, 2. Include Elements of Voluntary Compliance, 3. 10% Justification, 4. No non-taxable income, 5. No cuts on social welfare, 6. Proofs on applicability, and 7. Same rules for indirect taxes. Finally, Stanchev presented data showing how this plan has worked already by an increase in the propensity to consume, lower tax wedges, good financial reserves, and in an elevenfold growth in wealth over a decade.
Rainer Zitelmann presented the results of a survey about people’s views on capitalism and the market, conducted in 19 countries. Results show that the word “capitalism” has grown to have a negative connotation. “It is a dirty word.” The respondents were asked questions where the word capitalism was replaced with a similar phrase. His data shows that when the word capitalism is substituted for other synonyms, there is a general leaning towards statements positive for economic freedoms. When using the word capitalism, the results show less enthusiasm for free markets. His data also shows that anti-capitalist attitudes tend to be linked the belief in conspiracy theories.
How to Face Today´s Challenges Against Market Liberalism
Johan Norberg reassured the audience, “Markets have continued to deliver. Capitalism has continued to deliver under terrible circumstances around the world.” Despite inconsistency within governments’ policies, and distribution, capitalism remained one of the few things that were consistent. Due to capitalism, companies were able to produce protective equipment. They were able to analyze the free market and decide what to produce. This would not have been possible if this was centralized. “Capitalists rebuilt global supply chains in real time. It was an astonishing achievement.” Norberg ended with the plea, “Ideas play a significant part by keeping options open, by providing alternative policies when changes must be made.”
Moderator Anders Ydstedt introduced the discussion on Conservative Liberalism. He recalled the past of this term and compared it to the present: the term liberalism has changed its meaning over time. He stateed, “The term market liberalism is not the same as liberalism today. That is my opinion. That is why I call myself a conservative liberalist.” With this panel he wanted to analyze what liberalism or libertarianism means to the people present.
Hannes Gissurarson has researched a lot on this topic and could now present his book “Twenty-Four Conservative-Liberal Thinkers”, a two volume series. One of the thinkers he wrote about, was of course Friedrich von Hayek. Gissurarson recalled having dinner with Hayek at Oxford and remembered Hayek as “the most profound thinker of the Conservative-Liberal tradition”. He also pointed out that the theory of spontaneous order shows that liberty is not only possible but inevitable. It is from thinkers both past and present that we continue to develop the principles of conservative liberalism. The three core elements of conservative-liberalism, Gissurarson stressed, are private property, free trade, and limited government.
Daniel Klein agreed with the idea that in today’s modern world, the meaning of “liberal” has changed. Klein introduced the history behind the idea of liberalism, “Did Liberalism exist before the word existed?” According to Klein, it did. He then reconstructed Hayek’s belief that the term liberalism came from a much different place than many past thinkers thought. It is through people like Adam Smith that the first political meaning of the word formed in the 1770s. Smith, Hume, Burke, and Tocqueville were what we would consider to be conservative-liberalist. Due to changes there was a need to define liberal as new and old. Klein compared Smithian-Liberalism to Conservative-Liberalism which he defines as his “understanding of classical-liberalism.”
The next speaker was Catarina Kärkkäinen. She concentrated on the status of liberalism in northern Europe and especially Sweden. According to her, “Liberalism is in decline, but at the same time, market-liberalism is not. We have seen an increase in people defining themselves as conservatives in Sweden.” It all comes down to discovering how wealth and prosperity are created.
Kristina Bogdanova was the fourth panel speaker. She defined liberalism as based on personal liberty, free markets, and limited government intervention. “We should not push people around. We should literally help people whenever we can. Democracy is not just the majority.” Bogdanova recalled issues when private affairs of citizens are being controlled by the government. We should not depend on government, “We have to open our eyes and look into our own ideas.”
Matthew is a student at Wabash College in Crawfordsville Indiana, where he studies Classics and Rhetoric. He is an active member of Kappa Sigma Fraternity and enjoys traveling, playing volleyball, and writing. Matthew is the spring 2022 intern with the Austrian Economics Center.
The AEC’s fundamental goal is to promote a free, responsible and prosperous society. Through education and improving public understanding of key economic questions, the AEC promotes the idea of a free market economy and the ideal of a free society.