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Former President Václav Klaus once again criticized the current situation in the country and the Fial government. He resents the “chronic stagnation” of the economy and demands “radical change”.

He summarized his ideas in the new book Partial reforms are not enough – the solution is a systemic change, which was published by his institute. In its conclusion, there are 19 suggestions for how Klaus would imagine a real change for the better. Similar to his earlier public appearances, he calls for a reduced role of the state and less regulation.

“Radical change is necessary,” declared Klaus at the presentation of the book. According to him, the Czech Republic must undergo a “revolution of thought”, which someone should begin to promote politically. “Someone has to take up this project, some political party or part of it,” urged the ex-president.

In answers to questions about how he envisions putting his visions into practice, he again distanced himself from the ODS, which he founded years ago. In addition to the coalition of five, led by the ODS, he also criticized the National Economic Council of the Government (NERV) and its recently presented 37 improvement proposals – even though he himself proposes similar things to NERV in some areas.

The first item on Klaus’ list is to rid the Czech Republic of inflation. This already happened between the writing of the book, which Klaus says happened over Christmas, and its publication – according to the latest data, the annual inflation rate is back at two percent. According to Klaus, however, it is not yet won, the company’s adjustment to price growth is taking time, and it is therefore not desirable to rush into lowering interest rates.

According to Klaus, the second priority should be balancing the state budget. The deficit is high by historical standards, but mainly due to the high starting level after covid, which the current cabinet is gradually reducing, even in combination with costly measures such as help with energy prices or defense investments. The cancellation of the super-gross wage at the end of 2020, which was voted for by ANO, ODS and SPD MPs, also caused a big hit to state income.

But Klaus sees a balanced budget as the goal. Klaus describes this year’s proposal with a deficit of 270 billion crowns – for which the government emphasizes that in the sum for the entire public sector it will already be below three percent of GDP, considered in Europe to be a bearable debt limit – as a “joke”. And further, he proposes that every newly adopted law leading to new demands on the budget must include a description of where the necessary amount will be saved.

In other points, Klaus proposes a “radical reduction” of state agendas, institutions and employees. Similar proposals have been heard a lot recently, but in practice they run into the fact that a large part of the people paid by the state are hard-to-dispense professions, such as teachers, soldiers or policemen. On the other hand, only eight percent of the entire state apparatus are genuine civil servants, with whom discussions about possible cuts often begin.

“If society and politicians agree that the state should not perform a certain role, it would be good for it not to perform it. Which can in some cases reduce the need for the state to pay its employees or invest, thus leading to a reduction in public spending. On the contrary, I don’t think it’s appropriate to approach a blanket cut of civil servants or public spending,” says Petr Janský from NERV about Klaus’ menu.

Klaus agrees with NERV that it is appropriate to loosen the labor code so that companies can more easily say goodbye to unnecessary or ineffective workers, and that reforms in education, healthcare and pensions need to be prepared. In other points on the topic of less regulation, Klaus demands to transfer EU regulations into domestic laws “in a minimalist, not a maximalist version”, which leads to a frequent reproach towards the local bureaucracy.

“Any discussion about how to move our stagnant economy forward is important. As a representative of the non-profit sector, Václav Klaus can also propose radical changes that do not belong to NERV. As members, we each have lots of ideas for big systemic changes, but what’s important is that it meets voter demand. It is a shame that Václav Klaus did not devote more space to his proposals (they are on 6 small pages) and did not explain in more detail the method by which he would like to achieve his goals,” comments economist and NERV member Dominik Stroukal for SZ Byznys.

According to him, many people want a balanced budget without higher taxes. “But few people tell us exactly which chapters we should cut and by how much. Many want fewer civil servants, and there is certainly a lot of room, but who exactly should they be and what about their agenda – abolish or hand over? At least the general outlines would be enough, then the debate would be much better.”

In other areas, Klaus’ proposals sound attractive, but in practice they can easily fail. One of these is the demand for maximum cutting off of the state from non-profit organizations, which, however, in the field often replace the provision of those services that the state apparatus has not had time to arrange for years, typically in the social area. Also debatable is Klaus’s demand that state authorities have unexceeded deadlines for handling the agenda and that pending applications automatically pay, but this could easily degenerate into automatic approval of highly questionable proposals.

Klaus devoted the last point to high-speed railways. He describes them as a symbol of “populist, seemingly action plans”, which can easily turn into very expensive and loss-making projects. Minister of Transport Martin Kupka objects to doubts of this kind, that a large part of the expenses on the express line are to be paid by European funds and that the investment will pay off.

We added Dominik Stroukal’s comment.