costs of this fundamental system of change and i have been many times emphasized that there are not only no free lunches, but no free system make changes, either. it was a very costly process. most of the politicians were in charge of the reforming countries at this very moment were aware of this. they had a mixed mandate. they felt relatively strong support for rejecting, abandoning and dismantling the regime as well as its unproductive the economic system. there was no clear idea or

vision of where to go. there were not many of us who were ready to openly say that they wanted capitalism. and some of you remember. most of the people in our country'ies were afraid to say that they wanted capitalism and free markets. in our country'ies were free to say that they wanted capitalism and free markets. the reluctance was in this respect. the second issue was how to get there. immediately after the fall of communism, it was necessary to open the markets internally and

externally to liberalize and deregulate them in order to reveal the true costs of all kinds of economic economist. of the " disappearance of the institutions of the old system were left to institutional idea. this was to be done as soon as possible. we would avoid huge costs of anarchy, waiting for the existence of a perfectly prepared box of rules and institutions of a market economy. that would be before the starting of the deregulation

process. it would have been a tragic mistake. the cost of dispute of what should come first, or market supporting institutions, it reminds me of the eternal chicken, egg sequence question. we had to go ahead and use that analogy and work on chickens and eggs simultaneously. the moralistic preaching, coming from this country and maybe even from this place, that there must be the rule of law, 1st, was in in the second. the issue was how to create the rule of law. not whether we wanted it or not. this was really easily and cheaply misunderstood.

where are we now? on the one hand, the economy's of the post-communist countries are stronger, more stable, more robust and less vulnerable than at the beginning. the institutions are more comprehensive. the spontaneous learning by doing brought about positive results, new generations and it is a different approach to life and society that is taking the lead. the development was near. it went in one direction only. i believe that the first post- @@@ @ @ @ @ @ @ @ z@ @ @ @ @ @

somism, such as environmentalism has been gaining strength and some of us learned of that, but their role was not yet as it is now. this has dramatically changed.

the second most common this decade was quite different from the first one. we have been moving into the opposite direction, downhill and will experience less freedom, more regulation, more manipulation of people in the name of all kinds of political correct ambitions and we experienced post democracy instead of democracy. we experienced growing disbelief in markets. this was on the winning side. the market economy more or less disappeared because of social and ecological markets. this shift was, i believe, evident during the whole second decade of the post-communist era.

that was for all who wanted to see it. but the current financial economic crisis made it even more profound. it weakened many of the achievements of the time. the same happened in the non post-communist countries. i know that we did not come here to discuss the current crisis. we know it will sooner or later be over. the real damage caused by the crisis well, i'm afraid, stay with us for a long time. the market has again managed to spread before reaching distrust.

this time, and this is the main problem, this time it is adopted mistrust in free-market capitalism, this is not a mistrust in the system. this is not mistrust in the capitalism. this is not the mistrust in the system for decades. this was not created by the cato institute as was the case 70 or 80 years ago. it is now the mistrust in the highly regulated capitalism of the last decade. i am not sure whether capitalism can serve such a massive [unintelligible] the market either is or it is not. there are no [unintelligible] we should consider our duty to

fight against the newly rediscovered state against a second generation. we must not allow the repetition of the 1930's and the decades that followed. we must limit government intervention and to the market. that is our task for today. the final sentence is that the communist experience should never be forgotten, otherwise it will be repeated. [applause] , very much. >> thank you, mr. president. we are going to take questions.

i would just ask that you hold the microphone close to your mouth. please i did the five who you are and whose acts your writing. >> -- please identify who you are and whose axe you are granted. >> i am with the cornwall alliance and i wondered if you could just give us a bit of an update on how things are going in europe in terms of the controversy over potential policies to deal with global warming. in your position as president of the european union, you have been standing against the attempt to do more capt. trade. that is a very good thing for you to do.

can you just catch us up with things are? >> i think it is wrong to concentrate or to narrow the discussion on capt. trade. as i said, the difference is that we accept crazy doctrine of global warming. we look at collins of instruments to use. that is another issue. that is just an instrument. for me, it is irrelevant. i am afraid that there is the that.

the other side doesn't listen. tran gadahn participate in the discussion. i have one frustrating experience after another. we go from here and have the climate change conference. governments participate and i have the pleasure of sitting at the same table. i am afraid that there is no serious discussion. nevertheless, i published a book i was in slovenia where the

book was also published. this is the 11th language published. the launching ceremony had the president coming to me and opening the discussion. this means it has been changing a little bit. the real controversy in europe does not exist. politicians believe swallowed the irrational doctrine it is our task to do something with it.

your final words about mistrust in markets, particularly the advanced economies and the regulated markets. what is your take on the financial crisis? there is so much thought that it was the absence of regulation and adequate regulation that allowed banks to be paid in the way the united states does this because of this crisis. would you elaborate? >> first, i will argue the global warming doctrine. the day after tomorrow, there is the general assembly of the united nations. [unintelligible] we have the crisis.

my fellow heads of state will be surprised that there is someone in this huge building who openly and dramatically say that the financial crisis was a government failure. that is the substance of my speech and on wednesday afternoon. i do not believe that this is the problem. any regulation is more or less wrong. i am sure that all of you took with you the journal of regulation. i tried to read that. i do not believe in regulation. we lived -- we live in a regulated world. we lived in communism. that is based on the mistrust in

the market and the trust in regulation. we have very strong views about that. >> who is organizing? >> mr. president, i would like to ask you to comment more on this debate of communism and capitalism in the crisis. you're talking about mostly post-communist countries. according to the latest question, i would like to raise a question. in colombia, most of the people voted for socialism.

socialism are going through extreme poverty. one of the things that are attractive is health care and education. i would like to ask you as a politician, and an economist, do you think that health care and education could be free in a market economy? >> was that a question for a statement? it did -- was that a question or statement? [unintelligible]

these were both free. the have to pay for them. the more you pay, the real price -- [unintelligible] the more you are aware of the costs that was the preaching you were trying to bring. . . .

>> well, it is better to say that we had the presidency, not exactly of the european union, but of the european council. our task is to organize the meeting, to forward the agenda, to give the floor to one and another. somehow to demonize that position is in my understanding wrong. but i would say one observation, only one observation. this is that i suppose, before,

the presidency, that i already knew what i@@@@@@@ h@ @ @ @ @ @b >> i do not know, going from our continent to hear.

it used to be a solution. i am not sure it is now. it is a little bit more complicated. i do not know. we have to come back to the clearer ideas, messages that we want to achieve. the situation in europe is very difficult, especially because -- has been moving for years and decades from individual member states to the unelected central power in brussels, and this is really the post-democratic world. i am afraid that this will bring us more and more problems, we have short ambitions. one of them would be to stop the

lisbon treaty, because this is the wrong way to go. otherwise, it is a permanent fight. markets, freedom, state, government. >> from the voice of america. pleased to meet you, sir. my question is, what do you make of the obama administration's recent decision to reorganize missile defense and pull the missiles out of your country or the radar system out of poland, and help the uc the relationship developing -- and how do you see the relationship developing between russia and the allies you have referred to in the european union? thank you. >> this is the question for the president.

it is wrong for me to make strong political stations -- statements. it is not my ambition here this morning. i do not have troubles and problems to accept. demonize this solution? i did not demonize the previous concept, so it is one relatively smaller, smaller moment in our current history. so it is not a big issue for me. someone invested too much of his or her political capital into this idea, and this investment is now lost. that is quite understandable. this people who lost invested capital are a little bit more angry than i am. >> question down here.

the amount mr. president, i was involved in the political activities in 1989. but recalling your role in 1989, what was your observation or the point at which you realized that czechoslovakia could break free without the soviet union been able to stop it? >> again, this is the question for writing a book or -- first, and by the way, i am preparing a serious book about the last decades, which hopefully it will be published in november in the czech language. i will try to discuss both. the first part is i call it pre- yesterday. this is the communist era, what

we left behind. the second is yesterday, the moment of transition of transformation. the third part is today, and the fourth part is tomorrow. it is moving. so i hope this book will be completed and a month plus time, so for a more detailed answer to that question, i would say on the one hand, the fall of communism in its moment came definitely unexpectedly on the other side. on the other hand, we have been moving in the second half of the 1980's to such a situation. it was just a question of timing. it was not a shocking experience.

we were looking for something like that. the question was, what would be the last drawl that would change the situation. it was not a shocking experience. when i got the austrian question here, i happened to be in austria the last six days before the velvet revolution, before the 17th of november in our country, and it happened on a friday evening, the student demonstrations in prague, and on thursday evening i was at the university of linz, and quite a well-known university, and i spent two hours talking with the university professors, economic professors, and i asked about -- and they thought me it does not

exist here, it does not exist here. since at the university do not have -- on the list of literature. i was in the huge hall with students, and i said, one day before, 24 hours before the break, i said if -- is dead in austria, will make him alive in prague. which means i did not know -- i could not expect that it could be the next day. but the general feeling in the country, i would say, was really such. >> last question. >> hello, good morning. take your for your comments. i am from temple university in philadelphia, and i am ukranian.

i am just as cheerful as you are about the fall of communism and the soviet union. but at the same time i wanted to ask you, there is plenty of evidence, plenty of historical evidence that free market capitalism does not work in every aspect of life. certain areas of life it works better, but there are mythologies of free-market cap elise -- capitalism that is real, and i'm not trying to say -- in my view, and i think a lot of people, younger people think that way. neither the free market capitalism or socialism are -- work as ideologies, as systems of organizing society is. so they both have their own

pathologies. i am asking, there is dangers, which -- there is plenty of evidence, you call it global warming. >> regression is what? >> the question is, how are you planning to protect your society in the czech republic from these pathologies, free market capitalism? >> we understand the question, so i do not want to protect the check society from free-market system. on the contrary, i want to introduce the free market system as much as possible. so the markets will take care of itself and of the rest of us, including a a few. i am absolutely sure. [applause] >> thank you, president klaus,

for a very informative presentation. in 2004, i gave a speech at st. petersburg university to 60 business students, and i asked how many new who ayn rand was. she was a graduate, and one person raised his hand. a similar situation. thank you, very much, mr. president, and please stay seated. the next panel will be up here immediately.

the crisis has the long time in the making. and we know that we cannot turn this around overnight. recovery will be measured in years, not weeks or months. but we also know that the economy will be strong for generations if we commit ourselves to the work that needs -- the work that needs to be done today. be done today. ñrwe will not make the mistake f