How Free Is Slovakia Today?

Where the state begins, individual liberty ceases, and vice versa.” - Mikhail Bakunin

I am fortunate to have the opportunity to hold some very interesting discussions with my colleagues here. Since the Department of Economics and Management at Slovak Agricultural University is a new environment for me, the discussions remind me of the free flowing discussions that I had with my fellow graduate students many years ago. One of the younger faculty members was a student in a class that I taught here back in 1996. He went on to earn the doctorate degree and is now on the faculty here. In a recent discussion that I had with this young man about the changes that have occurred in Slovakia since 1996, his most memorable response was “now we are free, everything else can be managed.”

On November 17 each year the Slovaks celebrate as a public holiday the “Day of Freedom and Democracy” (“Velvet Revolution Day”) to commemorate the non-violent revolution that resulted in the overthrow of the Communist government in Czechoslovakia. Obviously, Slovakia is a much freer place today than it was prior to 1989. And, by all appearances it is much freer than it was when I was here back in 1996.

But how much freer is Slovakia today? I decided to do a little research to try to find out. It is widely believed that Slovakia’s path toward economic and political freedom got a major boost in 1998 with the election of the coalition government led by Mikulas Dzurinda. This coalition government served from 1998 to 2006. According to The Economist article A tale of two Slavic States, Mr. Dzurinda was the longest serving head of government in any of the former Eastern European Communist countries. The Finance Minister during the Dzurinda period was the economist Ivan Miklos. During this period, a number of reforms were implemented that increased the degree of economic and political freedom in Slovakia. Some of the more significant pro market economic reforms that were implemented during the Dzurinda period included the following:

• A major privatization of state owned enterprises



• Simplification of the tax system by substituting a 19 percent flat individual and corporate income tax for a very complex income tax system. At the same time most income tax exemptions and many types of taxes that were not raising much revenue but had high administrative costs, such as the inheritance tax and real estate transfer tax, were eliminated.


• Privatization of the pension system that allowed workers to place 9 percent of their wages in private pension plans rather than into the pay as you go government system.


• A set of new labor laws that provided for a more flexible and competitive labor market.


• Reform of the welfare system to provide greater incentives to participate in the work force.
  
  Largely because of these reforms, the Heritage Foundation in its 2007 Index of Economic Freedom ranks Slovakia as the 40th freest economy in the World. Slovakia is tied with the U.S. on the measures of trade freedom and financial freedom. It ranks higher than the U.S in terms of fiscal freedom. It has made the least progress in the areas of instituting and protecting private property rights and in being free from corruption. In fact, it is thought by some that the Dzurinda coalition government’s lack of progress in eliminating corruption was one of the major contributors to its defeat in the election of 2006.
  
  According to Freedom House, Slovaks enjoy a high degree of political freedom. On a scale of 1 to 7, with a score of 1 being the highest, Freedom House gives Slovakia a score 1 on the degree to which its citizens enjoy political rights and civil liberties. Since 1998 it has been classified as “Free” by Freedom House. On both the civil liberties and political rights indexes Slovakia has the same ranking as the United States. Both have scores of 1 in both areas monitored by Freedom House and both are deemed to be free.
  
  Finally, Reporters Without Borders for Press Freedom ranks Slovakia third (tied with Estonia) in its World Press Freedom Index of 2007. The organization ranks the United States as 48th most free.