document will have to be created ". reading through his most recent publications, it seems to me that president klaus ’ s views are anchored in a two - pillar philosophy ( like the ecb policy strategy ) • the first pillar is the traditional divide between the individual and the collectivity, or the private sphere and the public sphere, and • the second pillar is the appropriate level at which to deliver public goods, the european level or the national one. on the first pillar he describes himself " as a conservative economist and politician … reading mises, hayek or friedman and … being their follower and true believer ". as such his views have been compared with those of former prime minister margaret thatcher who also opposed conservative liberalism to mainstream conservative ideas embedded in the idea of a social market economy. president klaus considers that this latter thinking leads to " a european paternalistic, overregulated welfare state " and that " extensive regulation of economic activities has structural similarities with the communist past ". he writes that “ slow economic growth, high unemployment, loss of competitiveness, the aging of the european population, the crises of pension systems or of health - care systems, the insufficient quality of education, the problem of immigration and multiculturalism all have their roots in this freedomconstraining welfare system. these views are more often reflected among economic observers. martin wolf recently wrote in the financial times : “ there is something rotten in the welfare state of europe. the time has come for europeans to ask themselves the unthinkable : can their vaunted social model endure "? wolf speaks of " the hypertrophy of the state " which is " maternal, protective, but also infantilising : its high taxes and benefits discourage anybody from doing too well, while ensuring that nobody does badly. its services are available to all, but are also mediocre and inflexible. " we are in the trap, hayek denounced : the view that society can be rationally planned and directed. our question, as pragmatists, is : can the system be mended? is the lisbon agenda not an appropriate response? is there no middle ground between the invisible hand that creates very visible wounds and a stifling overregulation unable to deliver growth and jobs? what about the nordic model combining welfare state and growth? what does history teach us? is communism not rooted in the excesses of unrestricted economic freedom? how do we best prevent economic, social and even political difficulties in

of a myriad of small states etc. the present model, based on fitting together certain areas of policy making, retaining others and giving a proportionally larger say in decision - making to smaller countries is two generations old. did it serve us well or do we have to roll it back? the chief economist of the london based centre for european reform, katinka barysch, questions whether in the current political climate, eu member states would be ready to reaffirm their support for the “ four freedoms of capital, goods, services and people, which president klaus strongly endorses. president klaus, you said your vision is not about closing ourselves in. is protectionism not the most imminent danger? barysch argues that " the nature of the single market and competition has changed since enlargement ", pointing out that the much wider gulf between highwage and low - wage countries has fuelled fears among workers in old europe. president klaus, few have been able to stimulate our thinking about our socio - economic and political environment in a way you do. you abhor intellectual cosiness. we are eager to listen to you. we have a fascinating evening before us, especially since president klaus has kindly agreed to reply to questions at the end of his speech. mr. klaus, you have the floor.