I am very pleased to appear here before the representatives of the next generation of liberal Europeans. Liberalism is our common "home". It is the carpet on which we stand together. I am proud to see so many countries represented here.

My generation and yours live in a fascinating era. Europe is in transition from the age of industry to the age of services, so to speak. My generation is working on this transition, but we will leave many open issues to your generation, such as coming to terms with the consequences of demography. To master this transition, the will to reform is necessary. Reform parties are necessary, not parties standing still. What is needed is - liberalism. Why, I will explain later in this speech.

There are certain abilities and characteristics that humans carry in their genes. I do not believe that political orientation is one of these characteristics. Rather, I believe that political orientation is acquired by thinking about things on one's own, through the zeitgeist, through role models, and through political discussion.

It is therefore our responsibility to help liberal ideas break through and to anchor our movement in the population. This requires courage, diligence, enthusiasm, and cleverness, but first of all common convictions, especially concerning the relationship of the State with its population.

Liberalism has much to do with the freedoms of people. Thousands of people have sacrificed their lives for freedom over the centuries. Only with the Enlightenment and the ideas of the French Revolution did this result in liberalism. In 1789, philosophers passed the dossier on to politicians, so to speak. Thanks to them, we have democracy, the rule of law, and human rights.

By about 1870, most European States already had liberal governments. But as is so often the case, the new era and its citizens were overly cocky. With Manchester Liberalism, this led to an almost archaic form of economic freedom. It promoted the idea of almost complete freedom of commerce. It believed that only this form of liberalism was suited to advance the prosperity of a country.

Many decades later and many experiences wiser, the era after the Second World War finally gave rise to the social market economy. Eucken, Röpke and Müller-Armack installed competition as the fundamental principle. They surrounded it - in today's terminology - with "accompanying measures". Private property, freedom of contract, formation of prices, currency stability, and especially a comprehensive social policy this side of collectivism are the key phrases in this undertaking. Schmölders in particular advocated a strong State for this reason. A powerful State would be able to assert itself against powerful economic potentials. But it would also be able to secure multifaceted competition. For me, liberalism is therefore the only basis on which effective and at the same time humane competition can thrive.

Liberalism has much to do with freedoms. For this reason, I follow the thesis that we need a strong but slender State. Strength and slenderness are not mutually exclusive. On the contrary. In light of our complex, globalised world, in which society, science, and politics do not always move forward at the same speed, the State must play a clear role. It must be legislator and regulator, and it must find the most rational methods for these purposes. The State not only requires legitimacy, but also strength. A social market economy is not possible without the ordering power of the State.

A number of conclusions can be derived for a strong but slender State. I shall name four:

1. Only a strong State can effectively supervise competition. Switzerland, for instance, has enacted laws on the internal market, cartels, and illegal employment in the field of tension of the freedom of business and commerce.

2. A strong State can then certainly improve the international competitive position of its economy. Very deliberately, our country relies on strong financial market supervision, which makes such an important contribution to the excellent reputation of our financial centre.

3. A slender State, on the other hand, does not withdraw too many resources from the people and the economy, thereby leaving these resources to the actors engaged in competition, who have greater leverage when the tax burden is lower.

4. "Slender" finally also means that the State cannot do everything, and that it must have the courage to leave gaps. No other way is possible. Switzerland therefore operates under the assumption of the mature, honest citizen, and not of the potential "perpetrator". For this reason, we do not need an excessive preventative bureaucracy, or a flood of directives and licences. Liberalism wants the privacy of the free individual, not the transparent citizen. The citizen must encounter the State with respect and with simple, understandable rules. Self-declaration and self-regulation must be the norm; but they must be armed with penalties.

Liberalism is not limited to State action. It is comprehensive and radiates into all areas. In our culture, it is well known that the idea of freedom is deeply anchored. We must always defend it. But we must also not succumb to it. Not everything is allowed that is not forbidden. In other words, freedom must be paired with responsibility. Freedom and responsibility are inseparable, like two sides of a coin. Only when everyone fulfils his or her individual responsibility can freedom be expected as a reward.

Not long ago, this awareness for responsibility was no longer pervasive in the business world. Managers helped themselves to the detriment of their companies, and auditing firms approved dubious balance sheets. The larger the New Economy bubble grew, the smaller became the sense for what was morally defensible. I know that the great majority of entrepreneurs and managers have always done their work well and responsibly, especially also in the more manageable structures of small and medium-size enterprises. But the lapses of individuals are still a threat today, and they unfortunately always cause extensive damage to entrepreneurship.

The business world has largely learned its lesson. This is a reason for optimism, and I am grateful for this. I believe it is being recognized that beyond law and good governance, there are still unwritten virtues that promote freedom and competitiveness. I would like to name three examples of such liberal virtues:

First, there is self-responsibility. In airplanes, security announcements tell adults to protect themselves with their oxygen masks first, before they put the mask on their children. The image was and is of a unit: the survival of the strong adult must be secured. Only then is the adult able to take care of the weak. Self-responsibility requires us to take care of ourselves first. The great weakness of socialism is its constant reversal of this strategy. The goal is always to weaken those who can still help the weak. And the great weakness of opportunism is that it exhausts itself with the justification of individuality and self-interest. For this reason, self-responsibility and solidarity belong together, in that order.

A second virtue might be moderation. Saint Benedict even calls the sense for the right measure the mother of all virtues. Whoever wants too much, takes on too much, promises too much, renounces too much - in other words, whoever fails to find the right measure - fails. The German monk Anselm Grün describes the path of the right measure as the path limited by humility and magnanimity. And old Paracelsus was completely right when he succinctly said, "the amount makes the difference".

To the liberal mind, progress is also a virtue. Liberalism brings forth renovators and modernizers. Progress comes from stepping forward. Progressive individuals are not scared by experiments, and they have the courage to question the status quo and even to destroy it for the purpose of innovation. In particular, they promote education and research, for instance by granting the necessary freedoms to the latter in genetic technology and allowing the necessary resources.

You already know: Liberalism has developed for generations with society. So it is not dogmatic, but rather solution-oriented. For this reason, its concrete application is always a challenge for us. This is why we do not always immediately have striking slogans at hand. But in return, we offer solutions that actually bring our continent forward. We have always been reform-oriented. We fight against stagnation and polarization. Whoever does not think about and believe in the future, has no future.

A finance minister is one of those responsible for implementing the abovementioned ideal of the strong and slender State.

Healthy finances create trust. They make the State fiscally predictable. When finances are under control, nobody must fear tax increases to reduce State debt. The generation currently at the political helm must not write cheques belonging to the next generation, but it must instead live at its own expense. Only a financially healthy State is a sustainable, social, secure, and ecological State. The amount of the tax burden and the amount of the debt burden are questions that liberals consciously do not answer hastily, but that we rather think about and debate intensively. My treasury, like those of almost all my colleagues, is actually empty. We are therefore living on credit, but we want to end this state of affairs. Some want a thrifty State; others do not want the State to be squeezed too hard. Liberals guarantee both, since our point of departure is always what is feasible. Or as Valéry once said: Politics is the art of making the necessary possible. Our politics grab problems at the roots. But unlike others, we do not pull out the roots.

Another important framework condition is tax policy. From the perspective of businesses, taxes represent costs that reduce returns and profits, thereby taking precisely those resources away that could be invested. In this respect, a critical basic attitude toward the tax system is understandable. For taxes have an impact on competitiveness. The way in which we deal with taxes is therefore of crucial importance to the entire economy and the population.

The diagnosis of the tax system in our country is similar to that in many other European countries. Our tax system is not consistently fair, not entirely growth-friendly, not sufficiently competition-neutral, and above all, it is becoming ever more complicated.
I am working on this. I want to get rid of the annoyances of the tax system. Only when it acts more neutrally will businesses be able to make their entrepreneurial decisions as independently as possible of tax constraints. I want our family taxation to gear itself to the new forms of living together in society, and not the other way around. Today in our country, the marital status of a couple still affects its tax burden! And women should not have to leave the workforce because of tax disincentives.

Another reform project of my department is the total revision of value added tax, which in its current form is unreasonably complex for businesses. For this reason, I have set the goal to radically simplify it. In principle, we are therefore aiming for a completely simplified value added tax with a single flat rate. This requires that, to the extent possible, all exemptions from value added tax liability be abolished, and that the three existing value added tax rates be harmonized. In this way, the new, single value added tax rate would end up being lower, probably somewhere between 5% and 6%. With this low rate - the lowest in Europe - and with this pioneering simplification, we would reposition our country as a business location.

We liberals have shaped many European States throughout all ages and developments into what they are now. If we always recall our origins, we will succeed in drawing the strength necessary to solve the problems we face. But our origins should not make us blind. Europe is an old continent because of its history. But Europe must not become an old country because of its behaviour.

The 21st century has just begun; Europe has every opportunity for the 21st century to become the European century as well. But to achieve this, we need the capacity and will to reform. We need liberalism.

Liberalism as basis for progress and renewal