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Klaus & Kohl Capitalism

The resignation of the Czech Republic's stalwart privatizer, Vaclav Klaus, carries a valuable reminder: Free enterprise capitalism is a better friend of the individual than state socialism. But capitalism with checks and balances is still better.

Prime Minister Klaus's bold break with four decades of deadening Marxism served his nation well. But his brash overconfidence that unfettered privatization of state industries would be fair went astray. Coupon stock shares distributed to the public, absent better oversight, were too easily manipulated. And then his government fell prey to a political contribution scandal that is all too familiar in the US.

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But Klaus leaves a political scene where parliamentary democracy seems secure. Younger leaders imbued with similar aims appear ready to carry on his Thatcherite program.

Meanwhile in neighboring Germany, capitalism hamstrung by an opposite malady may be nearing rescue. Chancellor Helmut Kohl says he will try again to adjust a welfare state weight on the German economy. That is the drag of state social security pensions in an era when unemployment is so high that social security taxes are dragging down both the economy and workers' pay.

Leaders of Mr. Kohl's Social Democratic opposition hint that some modification of state pensions involving a private component similar to US 401(k) plans may now be acceptable. If so, that's good news for Germany, and ultimately for German workers.

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