THE FUTURE OF THE REVOLUTION FROM THE REVOLUTION TO INSTITUTIONS

THE FREEDOM REVOLUTION 3. THE FUTURE OF THE REVOLUTION Two phrases that have echoed through recent history come to mind immediately when we mention the American Enterprise Institute. The first, the famous call by President Ronald Reagan to Mikhail Gorbachev in Berlin in 1987: ‘General Secretary Gorbachev, if you seek peace, if you seek prosperity, come here to this gate. Mr. Gorbachev, open this gate, tear down this wall’. The second is the challenging proclamation made by President Bush in his inaugural speech last January: ‘All who live in tyranny and hopelessness can know: the United States will not ignore your oppression or excuse your oppressors: when you stand for your liberty, we will stand with you’. Many politically correct European politicians and thinkers branded President Reagan a utopian, paternalistically proclaiming the virtues of realism, stability and peaceful coexistence. Today we know that history has proved the United States and President Reagan right, along with those European leaders who supported his position: Margaret Thatcher and John Paul II. Similarly, today the road towards freedom promoted by President Bush, supported, as before, by certain European leaders –including the British Prime Minister, Tony Blair and the Spanish Prime Minister, José María Aznar– has raised similar objections from various advocates of outdated ideas, dead ideas that persist among us and continue to influence people, ideas which could be called ‘zombie’ ideas. But meanwhile, history is being made to the echo of voices of millions of people, from Afghanistan to the Lebanon, who are crying out for freedom. In one of his most recent articles entitled ‘Why the Economy Must Remain Job One’, Chris DeMuth says: ‘The Islamic radicals do not hate the United States so much for its symbols as its virtues of freedom, prosperity and dynamism’. DeMuth is a lawyer and economist, who worked for the Nixon and Reagan administrations and taught in the famous Kennedy School of Government in Harvard University. Since 1986, he has been president of the American Enterprise Institute, a think tank which is behind much of the intellectual structure of the idea of freedom underlying the groundbreaking stance of the Republican presidents Reagan and Bush. Underpinning the intellectual approach which inspired the creation of the American Enterprise Institute, and which it continues to defend staunchly under DeMuth’s presidency, there is a common belief in humanity, in our capacity for creation and imagination, our capacity for initiative. There is a belief in freedom, in contrast to the pacifist defeatism underlying the doctrine of ‘foreign policy realism’ which the European Left continues to promote today, and which is really defeatism, however much it may be dressed up in fancy slogans such as the ‘Alliance of Civilizations’. THE FUTURE OF THE REVOLUTION: FROM THE REVOLUTION TO INSTITUTIONS Christopher DeMuth It is a great honour for me to have been invited to appear in this FAES lecture series. I must say that the invitation was a moment of some puzzlement and amusement. President Aznar was in Washington in the middle of 2004 and we were having a meeting, talking about think tanks and his plans on coming to FAES. We were two think tank guys talking about our work and our plans for the future, and he said that he was going to be working with Ana Palacio to put together a lecture series in 2005 to commemorate the ‘25th anniversary of the revolution’. I said, ‘Excuse me, President Aznar, what revolution?’ And he said back to me in his gentle way, ‘Do you remember 1980, Ronald Reagan and Margaret Thatcher?’ We were both amused that a European political leader should be reminding the president of the American Enterprise Institute and a former Reagan administration official of the importance of Ronald Reagan and of this anniversary. But it was also a telling moment. There is some truth to the caricature that Americans tend to be very preoccupied with the here and now, and that Europeans have a greater sense of history and of the past looming over and shaping our current endeavours. So I greatly appreciate the invitation to think back to the Reagan-Thatcher years and to see what lessons I can derive from them for the current different, but equally dramatic, circumstances that we are in today. But I must begin by saying that the date of the Freedom Revolution might be appropriately marked not as November 1980 when Ronald Reagan was elected in the United States, but Ana Palacio Christopher DeMuth gave his lecture on 7/03/2005. 132 133 THE FREEDOM REVOLUTION 3. THE FUTURE OF THE REVOLUTION exactly five years before in November 1975 when King Juan Carlos took the throne in Madrid and announced that he would be King of all the people and that his intention was to usher in democracy in Spain. The importance of that moment cannot be over-emphasized. Through the King’s leadership, and that of a rising generation of young Spanish political activists, Spain demonstrated for the first time in modern history that it was possible for a nation to go from dictatorship to democracy without great violence. That was a proposition that many intellectuals had doubted and argued against. But the example soon spread to Portugal and throughout Latin America. By the end of the 1980s, there were only two nations in the Spanish and Portuguesespeaking world that were not free democracies. Nevertheless, it is true that the examples of that initial movement towards democracy received tremendous impetus with the rise of Margaret Thatcher in England in 1978 and of Ronald Reagan in 1980. I believe that their political careers teach three great lessons relevant to our circumstances today. I The first is that democratic institutions and political, civil and economic freedom are not the parochial birthrights of the North Atlantic peoples, but are universal and fundamental ideals. They are also transforming ideals enabling us to see possibilities for radical improvement that would otherwise be foreclosed to us. These ideas were fundamental for Reagan and Thatcher, but they had little to do with the way they came to power. They were from very humble lower-middle class or working-class backgrounds and had been looked down on by the establishment of their parties, the British Tory Party and the American Republicans. They were minority figures in minority parties and came to power in a climate of crisis which had discredited those around them. In England, there was the decomposition of the British economy, a series of ugly and paralyzing strikes, garbage piled high in the streets, and coffins piled high too as a notorious strike led the ambulance drivers to refuse to take the sick and injured to hospitals. What had been called by then the ‘British disease’ was threatening to turn deadly. In the United States, we faced fantastic rates of inflation and unemployment; the Iran hostage crisis, where American citizens were captured on American soil and where America’s response was pathetically ineffectual; and a President who moaned about the malaise of the American people and bitterly rebuked his own fellow-citizens for failing to accommodate themselves to a world of crisis and (in his opinion) declining opportunity. It was only after they got into office that it became clear that Thatcher and Reagan were not merely conservative alternatives to the political failure of James Callaghan in Britain, or of Jimmy Carter in the United States. They had a their own ideas on the role of freedom and democracy in practical politics that did not form part of the general political thinking which had gone before them. In particular, they took on board two premises. The first was their assessment of Soviet economic power. From the end of the 1950s to the 1980s, there was a general assumption in the West that the market economy represented a handicap in our struggle against Soviet Communism, because of all its advantages at home. Economic freedoms were thought of as a source of private wealth and personal satisfaction, but they had a high price when it came to 134 taking on greater objectives. Western economies were created for consumers, whilst the Soviet economies were created for national power. An example which illustrates this idea clearly is the fight for the presidency of the United States in 1960 between Vice President Richard M. Nixon and Senator John F. Kennedy. The previous year, Vice President Nixon had taken part in a celebrated spontaneous discussion with the Soviet leader Nikita Khrushchev in an American exhibition in Moscow, comparing consumer technologies in both countries. During the visit, Nixon talked about colour television –a revolutionary new technology at that time which in the United States quickly took over from black-and-white television– as an example of American economic superiority. However, he also recognized that the Soviets were ahead in other areas such as launching rockets for space exploration. Later, in 1960, Kennedy declared that America should be in first place in the space-rocket race, even if this meant being second in colour television. In reply, Vice President Nixon –a Republican candidate, who supposedly had more ‘market vision’– replied: ‘No way. America can allow itself both things, colour televisions and more powerful missiles. The only thing we have to do is work harder’. It seems that it hadn’t occurred to anyone –even to those taking part in the 1960 debates– that an economy so technologically advanced and capable of mass-producing televisions (a miracle comparable to today’s iPods) could outpace the planned Soviet economy, which was incapable of even producing black-andwhite televisions of any quality, to say nothing of fridges or toasters. The only person who understood this point was Nikita Khrushchev himself, who insisted to Nixon that the Soviet Union was ahead of the United States both in colour television and in rocket launches. This ridiculous claim was made by a cynic who knew his enemy very well. I mention this anecdote as a metaphor for the profound confusion which reigned in the West during throughout Cold War in terms of the merits of the free economy compared to the socialist economy. For decades, the CIA prepared annual estimates of the progress of the Soviet economy which we now know were inflated. (We also know that in overestimating the Soviet GDP they , underestimated the percentage that the Soviets were dedicating to military spending.) The mistaken calculations of the CIA were not the result of an inefficient intelligence service or inexact methods of calculation. The Agency was staffed by economists from our elite schools: Yale, Harvard, Stanford and so forth, who had imbibed deeply of the then popular notions of the advantages of socialism and the waste and inefficiency of free markets. It would have been enough to walk around Moscow and Leningrad for a few days to demonstrate that these ideas were totally false. If you go to a library and consult the Statistical Abstract of the United States for 1989, you realize that in the year the Berlin Wall fell, the US government calculated the per capita GDP of East Germany to be higher than that of West Germany. The second premise on which Reagan and Thatcher based their views was human rights and democracy in foreign policy. The dominant view held that these were alien and even harmful to Western political interests. This view, which seems so strange today, was derivative of the view that the Soviets, and the Soviet block economies, were performing very well and perhaps catching up with us. It was believed that the current state of international politics was immutable. If this was the case, then undoubtedly Soviet Communism was there to stay, and the foreign policy situation was unchangeable. We could bemoan the lack of civil rights and political freedoms in Communist countries, but their system showed some advantages, and showed no signs at all of disappearing. So the best we could do is live with it. Among conservatives, both in Britain and in the United States, the dominant school of analysis of foreign policy was realism. Realism 135 THE FREEDOM REVOLUTION 3. THE FUTURE OF THE REVOLUTION meant managing power relations among states as best as possible, with very little attention to what was transpiring within the state, in other words within the societies those states claimed to represent. There was a rival school of human rights activism in international policy, but it had been dominated at that time for four years by President Jimmy Carter, who had embraced what I must say was a rather perverse notion of human rights. In the hands of President Carter, human rights were a tool to be used against authoritarian governments that were friendly to the United States in the struggle against Soviet Communism. But human rights violations would be completely overlooked in the Communist nations themselves. Under Carter’s predecessor, Gerald Ford, human rights had played a more neutral and efficient role in the politics of the Cold War. In 1975, when President Ford and various European leaders signed the Helsinki Accords with Soviet leader Brezhnev, it gave some recognition to Soviet domination over the nations of Eastern Europe in return for the Soviets agreeing to recognize a degree of human rights among its own people. The Helsinki Accords were a masterstroke of human rights realpolitik and offered the first breaches in domestic Soviet politics for Andrei Sakharov, Natan Sharansky, and other brave dissidents. At the time, American conservatives criticized Gerald Ford for signing the Accords as strongly as they attacked the policy of Jimmy Carter on human rights. Ronald Reagan and Margaret Thatcher rejected clearly and outright these dominant ideas as soon as they came to power. To them, the essential contest between the free world and the Soviet world was a moral contest, not a power contest. The power contest was simply a reflection of an underlying moral competition between us. The free economies of the West were not a weakness but rather a strength in the struggle against Communism. And the lack of personal and political freedoms among the subjects of the Soviet block nations was the Achilles’ heel that would lead to their downfall. Their goal was not détente, but destruction of the Soviet empire; not peaceful coexistence, but peaceful victory over Communism. Domestic policy and foreign policy were linked in Reagan and Thatcher’s strategic vision. Deregularization, monetary stability, low taxes, a vibrant economy and privatization were ways of enhancing the West’s natural advantages over the socialist and planned economy. The vast resources President Reagan poured into armaments in the 1980s, and the confidence he expressed publicly in the creation of a hi-tech missile defence system were as much economic policies as military policies. Taking a leaf out of Khrushchev’s book, Reagan aimed to convince the Soviet leaders who succeeded Brezhnev that they had no hope of catching up with the West, that they were going to fall further and further behind, even in the part of their economy that was doing best, which was the militarized part. And he provided continuous material and moral support to those fighting the Soviets and defending freedom in many places such as Latin America. We now know from Natan Sharansky the effects this had within the Soviet Union, long before we knew in the West. In the prison where he had been incarcerated for many years some prisoners had developed ingenious surreptitious methods of communication: they would tap out a code on the pipes, or when they had something particularly important to say they would drain the water out of the toilet bowl, dip their heads down in the bowl and shout to communicate directly with each other. On the day after Ronald Reagan gave his famous ‘Evil Empire’ speech in the United States, the toilet bowls and the pipes of the prison where Sharansky was being held were ringing with nervous codes and shouts of joy. Every one of the prisoners knew that having been called by its real name by the leader of the West, the Soviet Union was doomed and would fail within their lifetimes. 136 When Ronald Reagan left the presidency after eight years in power in a world of foreign policy realism and pessimism about the decline of the West, he gave his last major public address in Washington at my institute, the American Enterprise Institute, and this is how he summed it up: ‘We promulgated a foreign policy whose fundamental bases were the truths all Americans hold to be self evident: that all men are created equal, that they are endowed by their Creator with unalienable rights and that among those are life, liberty, and the pursuit of happiness. We told the world the truth we had learned from the noble tradition of Western culture, and that the only answer to poverty, to war, to oppression, is one simple word: freedom. Freedom is not only a moral imperative for our foreign policy; it is also supremely pragmatic. For if there is anything the world has learned in the 1980s, it is that freedom works’. The application of the lessons of Reagan and Thatcher to the new struggle we are facing against terrorism and Islamic radicalism can hardly be more conspicuous than it is today. Soon after September 11, Gorge Bush, José María Aznar, Tony Blair and an important number of Asian leaders, such as Japanese prime minister Koizumi and Taiwanese president Chen Shui-bian, put freedom and democracy at the centre of their geopolitical strategy, just as Reagan and Thatcher had done. George Bush’s second inaugural, which Ana Palacio quoted from, built on many speeches he has given over the past two years and made his most emphatic statement of these principles. He was widely disparaged for it in the American press on all sides of the political spectrum and around the world. But less than two months later, in Irak, Afghanistan, the Ukraine, Palestine, Lebanon and Egypt we have seen such a dramatic series of democratic breakthroughs that even the New York Times and others of his harshest domestic critics in the United States have been saying in the past two weeks what must have been very difficult for them to say politically: that maybe, just maybe, he was right. Of course, some say that George Bush uses democracy as an excuse to get rid of Saddam Hussein only become he failed to find weapons of mass destruction. That is not true. The United States government drew up the two main pillars of the fight against terrorism a few months after 9/11. The immediate task was to hunt down, root out, incarcerate or kill the members of AlQaeda and other terrorists. However, this would not be enough because there would be many more young fanatics eager to fill their places. The new recruits, like the Saudi-Egyptian group which planned and directed the September 11 attacks, would be the followers of the secular and theocratic tyrannies which had ruled the destiny of the Middle East for so many decades, indifferent to the terrible failure of their societies and the religious fanaticism which this failure had engendered. In a world where small and well organized cells had the means to provoke massive destruction among innocent civilian populations, the only hope of achieving world peace was to take peace to the Arab and Persian Middle East societies –and this meant Islamic civilizations– through individual freedom, free elections and the rule of law. Irak was the most urgent crisis of the time because its dictator not long before had invaded a neighbouring sovereign state, had violated term after term of the cease-fire agreement after his failed invasion, and had made his country a paradise for local (at least) terrorists. His displacement at least held the hope that free institutions could begin in the heart of the Arab world and spread. A few weeks before the commencement of the operation ‘Iraki Freedom’, George Bush spoke at the American Enterprise Institute and here is what he said about the rationale for the action that was about to begin: ‘The Iraki regime has shown the power of tyranny to spread discord and violence in the Middle East. A liberated Irak can show the power of freedom to transform that vital region by bringing hope and progress 137 THE FREEDOM REVOLUTION 3. THE FUTURE OF THE REVOLUTION into the life of millions. America’s interests in security and America’s belief in liberty both lead in the same direction: to a free and peaceful Irak. There was a time when many said the cultures of Japan and Germany were incapable of democratic values: they were wrong. Some say that of Irak today: they are mistaken. The nation of Irak, with its proud heritage, abandoned resources, skilled and educated people, is fully capable of moving towards democracy and living in freedom. The world has an interest in spreading democratic values because stable and free nations do not breed the ideologues of murder. They encourage the peaceful pursuit of a better life. It is presumptuous and insulting to suggest that a whole region of the world — the one-fifth of humanity that is Muslim — is somehow untouched by the most basic aspirations of life. Human cultures can be vastly different. Yet the human heart desires the same good things, everywhere on earth’. I can say much less about the case of Margaret Thatcher. But I can say what anybody who encountered her in office, or out of office, would tell you: that casual conversation with Margaret Thatcher was very much like an oral examination at a very competitive university by a very challenging and persistent group of professorial interlocutors. She was a woman with very strong convictions and an extraordinary ability to deal with people. She took advantage of any meeting to get new information and test her opinions and beliefs. She expounded her own opinions very clearly, and with the same force she would pummel you with questions demanding opinions and arguments. She wanted facts, and she loved discussion. She could refute practically anything people said in order to gain more information. She had an insatiable curiosity, and it was part of her strategy of leadership to develop lines of communication outside of those of officialdom. The lesson of this, I believe, is that groups like the AEI, FAES and similar ones that are growing up around Europe and, to some extent, in Asia, are not entertainment for politicians with free time on their hands. They are not think tanks where people are insulated in a tank simply thinking; they are incubators of new ideas and incubators of individuals who will be tomorrow’s transforming leaders. Most of the time, in most democracies, our politics have been led –and probably still will be led– by conventional leaders; not the sort of leaders that I am talking about, but conventional political characters such as we have in Spain today, such as we had in the United States in the 1990s. But the leaders that actually make a difference, that move history forward, are going to come from the institutions that nurture new ideas and see politics not as a popularity contest, but as an education contest. George Bush does not have the same intellectual background as Ronald Reagan and Thatcher did, but I can attest that throughout the late 1990s the Governor of Texas was consulting writers, academics and policy experts from different backgrounds to talk about the North Korea problem, the Iran problem, Social Security, taxes, and a great deal of subjects related to social welfare. That is how he accumulated information and knowledge which served to complement his strong convictions and determination. He continues to do that. In the last two years, the strategy of freedom in the Middle East has come under a great deal of attack from the Left in the United States and from many official and intellectual quarters in Europe. What is less well known is that it has come under attack within his own administration. The State Department and CIA now oppose George Bush’s initiatives in the same way that they opposed the most important of Ronald Reagan’s foreign policy initiatives. Our ‘permanent government’ had a vision of the Cold War in 1980 which turned out to be very counter-productive, and the outdated ideas they have today are a hangover from the Cold War. Their main aim is stability and the maintenance of the status quo, and they are afraid of the risks which freedom and democracy in the Middle East undoubtedly bring. This situation has tested President Bush’s strong personality, and also the depth of the knowledge of his policies when it comes to presenting them to an internal opposition which is so strong that at times it could be said to be sabotage. A wonderful current example of President Bush’s extraordinary and individual intelligence is his recent meeting with Natan Sharansky, whom I have mentioned earlier. Sharansky wrote a book called The Power of Democracy, which was published at the end of December. An old Texan friend of George Bush’s read this book and sent it to him and told him to read it immediately. Bush did. A few weeks later, Sharansky was in Washington, speaking at the AEI about the book, and he got a call from the White House asking if he could meet the President. They spoke for an hour, and George Bush told Natan Sharansky, ‘This book describes the whole purpose of my administration’s foreign policy. You have understood this and expressed it better than anything that I could say’. Reading that book had a profound effect on his second inaugural address. At the conclusion of the 139 One cannot imagine a more perfect grafting of the doctrines begun by Reagan and Thatcher onto our current circumstances. II The second lesson of the freedom revolution of Reagan and Thatcher is that effective political leadership is based on ideas and independence. Ronald Reagan and Margaret Thatcher demonstrated that ideas are as important for successful government as political parties and campaign organizations. Both were politicians with a highly developed pragmatic instinct, but they came from an intellectual culture, from think tanks, opinion journals and magazines, and argumentation at conferences such as this, which transcended their parties and, as we have seen, raised doubts about some of the most deeply rooted of their party dogmas. They saw their careers not as ends in themselves, but as a means of accomplishing larger goals for the societies they lived in. Once they were in office they kept their links alive to their countries’ intellectuals and preferred to listen to their opinions rather than those of a new team of political manipulators and specialists in public relations. This provided an important protection for them against the isolation which sets in to anybody at the top of political office. They never became captured by their ministers or staff, and they never imagined that political success cane from simply triangulating the parochial interests which they were surrounded, pressured and adulated by. I was on Ronald Reagan’s staff in the White House and I can tell you first-hand that the news accounts of Ronald Reagan’s being out of touch were completely wrong. A lot of those rumours came from his own staff. It is because what the staff perceived was that Ronald Reagan was out of touch with their own recommendations. It was very frequent in the Reagan White House to give Ronald Reagan an option paper and give him three options: A, B or C; but he always chose one nobody had thought of, to the consternation of everyone except, of course, himself. He had his own ideas about the right policies and good government that were supported by his relations with academics, intellectuals, people in the world of business, old friends and other people who didn’t form part of any government or political hierarchy. Our State Department and our CIA were appalled at the draft that he prepared of his ‘Evil Empire’ speech. They warned him about the serious consequences which could result in international relations. This was the speech which would make Natan Sharansky and his fellow prisoners jump for joy and terrify the Soviet leaders. When he was preparing the famous speech at the Berlin Wall, his main advisors crossed out the phrase ‘Mr. Gorbachev, tear down this wall’ in five or six successive drafts, urging him not to say such a stupid and dangerous thing. But Reagan knew what he was doing. His profound knowledge, together with his extensive sources of information, which were not those which prepared his option papers, gave him the confidence he needed to make his opinion count. 138 THE FREEDOM REVOLUTION 3. THE FUTURE OF THE REVOLUTION meeting, Natan Sharansky embraced the president and said, ‘Mr President, you are the first dissident of the world’. From Natan Sharansky, that was the highest praise he could give. Imagine what it means for the President of the United States to be envisioned as a dissident! It means that he is a man who understands the importance of maintaining intellectual independence from the constant pressure of political opinions. One of the most important tasks that FAES and the AEI can do is to cultivate that independence in political leaders. III The third lesson is that freedom has powerful enemies and that the struggle for the maintenance and expansion of the free order is not something that is going to have a set finite conclusion. Ronald Reagan and Margaret Thatcher were in their time almost as controversial and despised as George Bush, José María Aznar or Tony Blair are today. When their ideas triumphed, those who had opposed them did not concede defeat, did not concede conversion. They rationalized the outcome. Many said that the Soviet empire had collapsed of its own accord, and that it would have done so earlier if Reagan and Thatcher had not prolonged it with their bellicose stance and military provocation. Having declared without blushing that it was an inevitable event (though before they had declared it impossible), they regrouped and dedicated themselves to new causes with which to express their hostility to the idea of individual freedom. As the strategy for freedom progresses in the Middle East, we shall see how these those who opposed it begin to come out with the most surreal theories. There are three obstacles to freedom that are permanent and which each generation has to overcome. The first are totalitarian ideologies: ideas about the proper construction of society which requires that the State take total control of the life of the individual. It was Communism before, it is radical Islamism today. The second is organized interest groups: business groups, union groups, farmers, professors, pensioners, etc. Whatever groups are profiting in some way from the current panoply of government policies will fight to keep their regulatory preferences, their subsidies, their monopolies of one kind or another. The third obstacle is public opinion itself. Most of the time, most people pay no attention to politics. They have enough to do with their work, families, local communities, hobbies, sports, and other aspects of personal life. This is positive, but it puts control of the political process into the hands of interest groups and ideologues. Interest groups are always watching what the government does and are specialists in defending the policies which benefit them at the expense of the rest of society. Ideologues are also experts in giving simple and quick responses to complex and intricate problems, making them attractive to people who have other things to do. Democracy can be really complicated, and free societies are uncertain, but many people would want their government to give them answers, and not fewer procedures for receiving answers. Although the conclusions from the Ronald Reagan and Margaret Thatcher era are sufficiently clear when it comes to the Middle East and other tyrannies in the world, the freedom revolution presents three particular challenges which are of our time. The first is to do with how far we as classical liberals (in the United States we call them conservatives or libertarians; in Europe, liberals) actually propose to roll back the Welfare State, including social insurance and business regulation. Ronald Reagan and Margaret Thatcher managed to stop the growth of government, reduce taxes, spending and regulations, but they did not go as far as they really wanted, and apart from the privatization initiatives of Margaret Thatcher, none of their achievements lasted. The reason we have not addressed these problems more rig140 orously is, first of all, because of disagreement among ourselves (to say that I am a liberal does not imply anything about pensions policies). And secondly, because of uncertainty over how our fellow-citizens will respond to our ideas. Secondly, how strong is our commitment to democracy, not just in Irak and Syria, but in our own countries? To say that one is pro-democracy does not answer the question of what one thinks about the EU Constitution, or about the many forms of supranational government such as the United Nations, the World Trade Organization, and the Kyoto Protocol, which only have a slight relationship with popular feeling and democratic control. It does not tell me whether proportional representation is better than a first-past-the-post system, and does not answer questions about the relative power of the federal government versus the state governments. Lastly, can the ideals of classic liberalism, which have made strides in practical politics and some parts of the intellectual world, make progress in the popular and elite cultural institutions, in other words in the newspapers and magazines, in television and the cinema, in universities, in the world of art and literature? It is notable that after twenty-five or thirty years of the freedom revolution, nearly the whole of Western culture continues to be clearly and manifestly leftwing and anti-liberal. It is frankly shameful that societies which have attained such high levels of economic prosperity and social pluralism should remain so closed and immobile in the cultural sphere. Liberals like me like to complain that the media are very biased and about the ideological frivolity of professors and Hollywood stars. But advances in this direction demand something more than complaint. We would have to develop our own institutions and our own talents, our cultural equivalents of Reagan, Thatcher and Aznar. I think that a fruitful way of meeting these three challenges is to tackle them from the perspective of free competition. Free competition is different from the idea of freedom, democracy or the free market. It simply says that all things of value ought to be permitted to be offered by a multitude of suppliers, and so no one has a monopoly. Many people are sceptical about big business and the free market, and many do not trust intellectuals of any kind, whether liberals or socialists. But nearly everybody understands the principle of competition thanks to sports and daily life, and understand that competition is a very strong incentive to work hard and achieve more, and a strong antidote against corruption and favouritism which is a real plague in many government programmes. Let me explain how the principle of competition can be applied to the challenges which I specified earlier. In terms of the Welfare State, I believe –and I am sure that the majority of people also believe– that in societies as wealthy as ours, the government should support the education of young people and give generous support to the sick and people who have serious problems which are not their fault. But this does not mean that these services should be State monopolies. It would be far better if the services were competitively supplied. In the United States, we are in the midst of a great debate over reform of our public schools, which are increasingly chaotic and unproductive, especially in the poorest urban communities. The most promising proposal is that we provide parents vouchers which they can use to send their children to the school they choose, whether public or private. This is the principle of competition in action. When the parents are in a position to deny resources to one school and give them to another, all the schools will have to work harder to survive. The same principle can be applied to pensions, health care, professional training, and other social services. You can be equally generous when offering a pension or health care to people with few resources without using a State monopoly. Private pension plans and cheques to buy private medical insurance have sufficient potential to 141 THE FREEDOM REVOLUTION 3. THE FUTURE OF THE REVOLUTION correct many of the tax and economic problems suffered by the Welfare State, at the same time offering a solid safety net to the most needy. Competition is also an important principle when determining the relative powers of local, national and supranational government. Of course, by definition, government is a coercive monopoly, but the degree of monopoly is the essential point. A government can make citizens fulfil its laws, but the citizens can also ‘vote with their feet’ or their wallets, and move or move their businesses to other jurisdictions which have different regulations. In the United States, the most successful regulations are those which introduce the greatest competition between the governments of the states (such as corporation laws, where companies choose to be governed by the laws of a particular state, regardless of where their headquarters are). In the international sphere, the phenomenon of globalization –the increasing mobility of people, capital and commercial transactions around the world– has enormously intensified competition in laws between different nations compared to the past, and has resulted in countless very positive reforms. In contrast, some recent initiatives at a supranational level and some treaties are initiatives which are designed to protect the traditional national powers from the effects of globalization, creating ‘normative conventions’ which prevent citizens from escaping these unfortunate laws. Like many foreigners, I am loath to make any comments about the European Constitution. It is a Constitution which is so linked to the political situation, and so organic to the experience and aspirations of a given people, that an outside opinion has only a limited value. But there is something a foreigner can talk about, and that is the potential for government abuse when power becomes too centralized. In my view, the details of the Constitution are unimportant compared to the great political power that has been accumulated in Brussels. In many areas of government policy, there is healthy competition among the nations of Europe. For example, in the case of tax policy, Ireland introduced dramatic reductions ten years ago in interest rates (especially in capital taxation). This led to a flood of foreign investment, hugely increasing labour productivity and thus average wages. In 1998 the cut in tax rates in Spain generated a significant increase in labour supply and other benefits similar to those in Ireland. These innovations in tax policies raised protests from other European countries, but they also generated many other improvements across the length and breadth of the continent. However, the European government in Brussels talks of suppressing tax competition (which it has always promised that it was not going to do, but is now taking steps towards doing), which would be a very bad measure for economic prosperity. And there are many other policies, like the current proposals for a European-wide securities regulatory body as opposed to mutual recognition of the laws of each nation. I must say too that I was really disappointed to hear just the other day about the delay and perhaps permanent reversal of proposals to permit free supply of services, such as healthcare services, across national borders. For the government in Brussels, which began with this great Treaty of Rome whose dream was a single European market, to give in to national protectionist pressures would be really deplorable. Thirdly, on the matter of culture, may I quote the great Peruvian novelist and essayist Mario Vargas Llosa, who last week gave a talk at the American Enterprise Institute. He said that what differentiates civilization from barbarism is not the economy; it is ideas and culture. I believe that the creation of a global culture of liberty is more important than anything else today. Democracy and capitalism can only succeed in a culture which informs free men and women of the different options they have and which gives sense to the social consequences of their deci142 sions. But a successful culture, like a democracy or a successful free market system, has to be based on persuasion and not only coercion. It must be prepared to compete openly with other ideas, other ideals and other norms. When our cultural institutions, whether popular or elite, are as plural and competitive as our political and commercial institutions, we will have taken a great step forward in the freedom revolution. 143