A voice of sanity

The Wall Street Journal comes with a special supplement this morning derived from the second annual “ECO-nomics” (groan) conference convened by the Journal. The piece carried under the heading “No debate” is worth reading in its entirety.

The piece is an interview with Czech President Václav Klaus, whom the Journal invited to attend the conference. Klaus talked to Journal managing editor Robert Thomson. The Journal introduces the interview with this explanation:

For Václav Klaus, the inconvenient truth is this: Global warming is far from being proved, and the problem is that everybody has jumped on the bandwagon before any real debate has taken place.

Mr. Klaus won his second five-year term as president of the Czech Republic in February 2008. He studied at the Prague School of Economics, where he currently holds a professorship in finance.

Here are the edited excerpts of the interview provided by the Journal.

Listening in Frustration

ROBERT THOMSON: Mr. President, obviously during the dark days of communism, America was a beacon for you and many other people in Central and Eastern Europe. What are your impressions of contemporary America?

VÁCLAV KLAUS: Sitting here in this room in the last two hours and the coming from, first Europe, and, second, from a former communist country where I spent most of my life, I almost don’t believe my eyes to see how much you believe in government and how much you don’t believe in the market.

This is for me a shocking experience. And I have to say that very loudly. As a professor of economics, I have my theoretical arguments about the impossibility of running the economy from above.

As a person who spent almost 50 years of his life in a communist country, I know how crazy it is to introduce schemes like the cap and trade and similar ideas, how devastating and damaging for the economy all those ideas really are. So I’m rather frustrated. It seems to me that to fight for freedom, free markets, is still the task of today, even if we hoped almost 20 years ago in the moment of the fall of communism that it was over.

This is the same in Europe these days. There is one EU summit after another one weekend after another, there is a summit trying to find solutions. But I don’t think that this solution will come from the government.

MR. THOMSON: Now, you’re also well known for your views on the environment. Are you concerned more about the environmental debate or the lack of debate that seems to be implicit in some people’s approach to the environment?

MR. KLAUS: I’m afraid that a serious debate about that issue has not yet started. What we witnessed are monologues, a conference of believers in global warming. The debate has not yet started. Nevertheless, I’m afraid the politicians have already accepted this idea, understood that it’s a good political project, and now the things are moving in a way which I consider extremely dangerous. And I know that not only politicians, the businesspeople discovered that it’s very attractive investments to get taxpayers’ money and to start doing some things. So this is another problem.

But I would like to make one thing clear, let’s really differentiate the protection of the environment from the debate about global warming and decarbonizing the economy. I am not against the protection of the environment. I am against global-warming alarmism. Those are conceptually, structurally, two totally different issues.

MR. THOMSON: But a person could argue, “Look, frankly, you’ve lost the debate on global warming. And what you’re doing now is just blaming political correctness for your inability to win an argument you’ve already lost.”

MR. KLAUS: To win an argument you must have a potential place to argue, but I am afraid it does not exist anymore. And to speak about the scientific consensus about global warming, it’s not true. To speak about a very strong relationship between carbon dioxide and the temperature in the world, again, not true. And I am really frustrated, I must say.

The Price of Water

AUDIENCE MEMBER: I have great respect for your work in promoting freedom. And at the heart of the current situation regarding climate change, I’d like to compare it to the water-scarcity issue that you identified in California. At our breakout session this morning, I think we pretty much reached a unanimous conclusion that one of the causes is a failure to price water appropriately. It’s priced below market. Isn’t that a failure in terms of dealing with the environment overall, a failure to price environmental goods?

MR. KLAUS: Well, of course, as an economist, I am aware of the externalities. I am aware of various cases of market failure. Nevertheless, I am first convinced that the government failure is incomparably bigger than any imaginable market failure in history.

With regard to the question of water, I think it’s rather difficult to introduce the real market in the case of water. I wouldn’t mind doing it in some respect. We are used to doing it differently, without paying attention to the real cost of water. It was a mistake, definitely so. I wouldn’t be against, not rationing water, but introducing some sort of market mechanism in consuming water and then paying for that.

AUDIENCE MEMBER: I’m an environmentalist. But I want to applaud your willingness to take on and to try to separate the sometimes frustratingly intertwined topics of climate change or, say, global warming, versus environmental conservation. The Amazon rainforest, for instance, we’re looking the equivalent of about 180 football fields every three minutes in deforestation. And that’s not a sustainable model in my opinion. Can you comment on what it means to help conservation without overheating the argument around carbon?

MR. KLAUS: Well, there are several points. The first one, I thank you for stressing the difference between protection of the environment and global-warming alarmism and decarbonization of the economy. Those are two separate issues. By the way, communism is the nonexistence of real economic prices on the one hand, and state ownership, no private ownership, was a disaster for the environment. Everyone knows that. So we solved the environmental issues in our country in the moment of the fall of communism. By reintroducing normal prices, which give you the real scarcity of one thing or another, plus by introducing private property forced the solution for the environmental protection in general. This is my very strong, strong belief. The policy, the government policy for the environment, was not secondary but much lower importance as compared to those two systemic changes, prices and property rights.

Second, thank you for differentiating conservationism from environmentalism. Environmentalism is really a doctrine, religion, ideology, which has no connection to climatology or environment or anything else.

Then you mentioned the Brazilian forests. Well, tragic problem. Nevertheless, I think that the real stimulus for deforestation in many developing countries, including Brazil, was the crazy idea of biofuels. And those ideas came from the environmentalists. Now, they discovered it was a wrong idea, so they tried to pretend that they forgot the idea. So I’m afraid the deforestation in Brazil and the environmentalism is deeply, negatively connected.