Sanjeev Sabhlok's blog

Thoughts on economics and liberty

The submission to VCAT by 815 Truemans Cabin Hire Pty Ltd – to seek compensation from Victorian government

Someone’s share this info:

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The applicant applied to the secretary of DHHS for compensation and VCAT has been asked to determine if the CHO (Brett Sutton) had sufficient grounds for authorizing the use of emergency and public health risk powers under the PHW Act and, if not, to pay just and reasonable compensation.

Brett Sutton was questioned under oath and his responses are included in the document. It’s all rather shocking to read. VCAT has as yet not made a determination.

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The document – a PDF, is available at https://drive.google.com/file/d/1qCFwb4A34ae5o_Xv2h7Xm_6fhlM8zNMx/view

I’ve skimmed through this. I’ve seen some pretty ordinary legal cases in the past, but this one seems to be much better. If I had been asked and if I had time, I’d have provided some more inputs to this submission, but overall, this is a good document.

It is unclear to me, however, whether any court in Victoria has the courage to upturn the government’s policies, which have also been ratified by Victorian and national courts.

One can only hope that the VCAT has an inquisitive mind.

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My position re: Stop North East Link Alliance (SNELA)

My response to an email received:

xx, thanks for this. There was a group called RUANELA that sent me their suggestions last time around (I contested the seat of Menzies). I published my response here: https://www.sabhlokcity.com/2022/05/my-response-to-ruanela-menzies-regarding-the-north-east-link-program/

I’ve advised within the government on a number of infrastructure projects and on public transport – I do believe a CBA is generally conducted (although not always published due to commercial-in-confidence issues: we don’t want bidders to know the cost estimates that the government uses). I’ve seen many cabinet-in-confidence CBAs for infrastructure, but not this particular one. Public transport is not a magic bullet since many Victorians have no hope of using it (I have been distributing my flyers across Bulleen/Menzies and around 90% of the homes are simply not within walking distance of any public transport – the topography is unsuitable). Currently, for every $10 in ticket price that’s paid by the public, the subsidy from taxpayers is well over $30. While much of it is justified due to reduced congestion and pollution, the point of efficient subsidisation might have passed.

The use of cars will continue in the medium term, so large roads are an inevitability unless we want Victorians to be impoverished. We should improve NELP, not scrap it. Also, there are definitely better (and cheaper) options for public transport and I’ve suggested many of them while I was inside the government, but there is no political will to reform the bus system including the Bus Act and mass transit bus system.

My focus is to get back basic human rights and sanity in Australia – something for which I’ve quit my job and am fighting till today. Hope you can support me on this most basic issue. Help me get into Parliament – I can assure you I’m 100% committed to evidence and reason and will be most keen to raise any well-justified arguments of yours in the Parliament and beyond.

Regards

Sanjeev Sabhlok

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My comment on “Indian Democracy at 75: Who Are the Barbarians at the Gate?”

Someone shared this article and sought my comments: https://quadrant.org.au/opinion/qed/2022/08/indian-democracy-at-75-who-are-the-barbarians-at-the-gate/

My response might interest some people.
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Thanks, had a skim through the article. Very comprehensive, and raises some valid points.

Two basic facts. First, India’s political parties are entirely socialist. Second, India’s democracy has been flawed since its inception – and that has increasingly gotten worse. See my book, Breaking Free of Nehru for a detailed description of its shortcomings.

It is a well-established fact that hardcore criminals (murderers, etc.) or those who connive with criminals (such as former PM Manmohan Singh) are the only ones who’ve got a tolerable chance of survival in India’s “democracy”.

I’ve worked with senior politicians from all parties during my civil service career and all parties are entirely corrupted/ mostly criminal. With regard to BJP, most foreign observers don’t know its history – that it is the direct ideological offshoot of European fascism. In its case Muslims are the enemy, instead of the Jews. But the Babri Masjid demolition of 1992 happened with the direct support of Congress PM Narasimha Rao, which shows that the RSS (the mother organisation of BJP) has infiltrated all political parties.

To call BJP conservative (in the Tory tradition) would be equivalent to saying that the Nazis were conservative. Likewise, to celebrate India as a democracy is similar in many ways to stating that Germany was a democracy during the time of Hitler. No, let me add! – India is not Nazi Germany – yet. There is a strong group of (socialist) parties which theoretically abjure the interference of religion in politics. But the original democratic ambition of Nehru (which he himself did the most to destroy) has not yet been wiped out from the country.

Further, both major socialist parties – Congress and BJP – have been forced by circumstances to attempt liberal economic reforms (first in 1991 by Narasimha Rao, and a few sketchy post-2014 reforms by Modi) but India has no significant liberal party since Swatantra Party folded in 1973. Getting one established has been my mission since 1998.

My lifetime mission for reform of India’s governance has, though, been entirely diverted by recent events in Australia. Australia’s totalitarianism needs to be addressed first before we even think of other totalitarian nations. In many ways, Australia has been more totalitarian than India in recent years. Its border closures were comparable with those of North Korea. Beating up and imprisoning people for not wearing a mask or for protesting totalitarian policies was on par with India’s comparable extremes. In summary, the situation is dire for liberty and democracy across the entire world, not just in India.

Having said that, I would like Australia to continue to engage with India. India’s treatment of its citizens remains far superior to China’s – Indian politicians still fear the criticism of the West. But to overstate the democratic credentials of India is probably not why this engagement with India should continue. More importantly, Australia or any Australian is in no moral shape to judge India. Australia’s democratic and human rights credentials are in shambles – see my complaint to the ICC against the Australian PM. Heal thyself, as they say. Let’s start with Australia before worrying about the Third World, miserably poor and corrupt, socialist India.

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Human Betterment Through Globalization – Vernon Smith

This is from The Morality of Capitalism edited by Tom Palmer. But it is taken also from here.

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My message today is an optimistic one. It is about exchange and markets, which allow us to engage in task and knowledge spe­cialization. It is this specialization that is the secret of all wealth creation and the only source of sustainable human betterment. This is the essence of globalization.

The challenge is that we all function simultaneously in two overlapping worlds of exchange. First, we live in a world of per­sonal, social exchange based on reciprocity and shared norms in small groups, families, and communities. The phrase “I owe you one” is a human universal across many languages in which people voluntarily acknowledge indebtedness for a favor. From primitive times, personal exchange allowed specialization of tasks (hunting, gathering, and tool making) and laid the basis for enhanced productivity and welfare. This division of labor made it possible for early men to migrate all over the world. Thus, specialization started globalization long before the emergence of formal markets.

Second, we live in a world of impersonal market exchange where communication and cooperation gradually developed through long-distance trade between strangers. In acts of personal exchange we usually intend to do good for others. In the marketplace this perception is often lost as each of us tends to focus on our own personal gain. However, our controlled laboratory experiments demonstrate that the same individuals who go out of their way to cooperate in personal exchange strive to maximize their own gain in a larger market. Without intending to do so, in their market transactions they also maximize the joint benefit received by the group. Why? Because of property rights. In personal exchange the governing rules emerge by voluntary consent of the parties. In impersonal market exchange, the governing rules—such as prop­erty rights, which prohibit taking without giving in return—are encoded in the institutional framework. Hence the two worlds of exchange function in a similar way: you have to give in order to receive.

The Foundation of Prosperity

Commodity and service markets, which are the foundation of wealth creation, determine the extent of specialization. In orga­nized markets, producers experience relatively predictable costs of production, and consumers rely on a relatively predictable supply of valued goods. These constantly repeated market activities are incredibly efficient, even in very complex market relationships with multiple commodities being traded.

We have also discovered through our market experiments that people generally deny that any kind of model can predict their final trading prices and the volume of goods they will buy and sell. In fact, market efficiency does not require a large number of participants, complete information, economic understanding, or any particular sophistication. After all, people were trading in markets long before there existed any economists to study the market process. All you have to know is when you are making more money or less money and whether you have a chance to modify your actions.

The hallmark of commodity and service markets is diversity— a diversity of tastes, human skills, knowledge, natural resources, soil, and climate. But diversity without freedom to exchange implies poverty. No human being, even if abundantly endowed with a single skill or a single resource, can prosper without trade. Through free markets we depend on others whom we do not know, recognize, or even understand. Without markets we would indeed be poor, miserable, brutish, and ignorant.

Markets require consensual enforcement of the rules of social interaction and economic exchange. No one has said it better than David Hume over 250 years ago—there are just three laws of nature: the right of possession, transference by consent, and the performance of promises. These are the ultimate foundations of order that make possible markets and prosperity.

Hume’s laws of nature derive from the ancient commandments: thou shalt not steal, thou shalt not covet thy neighbor’s posses­sions, and thou shalt not bear false witness. The “stealing” game consumes wealth and discourages its reproduction. Coveting the property of others invites a coercive state to redistribute wealth, thus endangering incentives to produce tomorrow’s harvest. Bearing false witness undermines community, management cred­ibility, investor trust, long-term profitability, and the personal exchanges that are most humanizing.

Only Markets Deliver the Goods

Economic development is linked with free economic and political systems nurtured by the rule of law and private property rights. Strong centrally planned regimes, wherever attempted, have failed to deliver the goods. There are, however, plenty of examples of both big and small countries (from China to New Zealand and Ireland) where governments have removed at least some barriers to economic freedom. These countries have witnessed remarkable economic growth by simply letting people pursue their own economic betterment.

China has moved considerably in the direction of economic freedom. Just over a year ago China revised its constitution to allow people to own, buy, and sell private property. Why? One of the problems the Chinese government encountered was that people were buying and selling property even though those transactions were not recognized by the government. This invited local officials to collect from those who were breaking the law by trading. By recognizing property rights, the central government is trying to undercut the source of power that supports local bureaucratic corruption, which is very hard to centrally monitor and control. This constitutional change, as I see it, is a practical means to limit rampant government corruption and political interference with economic development.

Though this change has not resulted from any political pre­disposition for liberty, it may very well pave the way toward a freer society. The immediate benefits are already there: 276 of the Fortune 500 companies are currently investing in a huge R&D park near Beijing, based on very favorable 50-year lease terms from the Chinese government.

The case of Ireland illustrates the principle that you don’t have to be a big country to grow wealthy through liberalizing government economic policy. In the past, Ireland was a major exporter of people. This worked to the advantage of the United States and Great Britain, who received many bright Irish immi­grants fleeing the stultifying life of their homeland. Only two decades ago Ireland was mired in third-world poverty, but has now surpassed its former colonial master in income per capita, becoming a committed European player. According to World Bank statistics, Ireland’s growth rate of Gross Domestic Product (GDP) jumped from 3.2 percent in the 1980s to 7.8 percent in the 1990s. Ireland recently was the eighth highest in GDP per capita in the world, while the United Kingdom was fifteenth. By fostering direct foreign investment (including venture capital) and promoting financial services and information technology, Ireland has experienced a formidable brain-drain reversal—young people are coming back home.

These young people are returning because of new opportuni­ties made possible by expansion of economic freedom in their homeland. They are examples of “can-do” knowledge-based entrepreneurs who are creating wealth and human betterment not only for their native country, but also for the United States and all other countries around the world. These people’s stories demonstrate how bad government policies can be changed to create new economic opportunities that can dramatically reverse a country’s brain drain.

We Have Nothing to Fear

An essential part of the process of change, growth, and eco­nomic betterment is to allow yesterday’s jobs to follow the path of yesterday’s technology. Preventing domestic companies from outsourcing will not stop their foreign competitors from doing so. Through outsourcing, foreign competitors will be able to lower their costs, use the savings to lower prices and upgrade technol­ogy, and thus gain a big advantage in the market.

One of the best-known examples of outsourcing was the New England textile industry’s move to the South after World War II in response to lower wages in the Southern states. (As was to be expected, this raised wages in the South, and the industry eventu­ally had to move on to lower-cost sources in Asia.)

But the jobs did not vanish in New England. The textile busi­ness was replaced by high-tech industries: electronic information and biotechnology. This resulted in huge net gains to New England even though it lost what had once been an important industry. In 1965 Warren Buffett gained control of Berkshire-Hathaway, one of those fading textile makers in Massachusetts. He used the company’s large but declining cash flow as a launch pad for reinvesting the money in a host of undervalued business ventures. They became famously successful, and 40 years later Buffett’s company has a market capitalization of $113 billion. The same transition is occurring today with K-Mart and Sears Roebuck. Nothing is forever: as old businesses decline, their resources are diverted to new ones.

The National Bureau of Economic Research has just reported a new study of domestic and foreign investment by U.S. multina­tional corporations. The study demonstrated that for every dollar invested in a foreign country, they invest three and a half dollars in the United States. This proves that there is a complementary relationship between foreign and domestic investment: when one increases, the other increases as well. McKinsey and Company estimates that for every dollar U.S. companies outsource to India, $1.14 accrues to the benefit of the United States. About half of this benefit is returned to investors and customers and most of the remainder is spent on new jobs that have been created. By contrast, in Germany every Euro invested abroad only generates an 80 percent benefit to the domestic economy, mainly because the reemployment rate of displaced German workers is so much lower due to the vast number of government regulations.

I believe that as long as the United States remains number one on the world innovation index, we have nothing to fear from out­sourcing and much to fear if our politicians succeed in opposing it. According to the Institute for International Economics, more than one hundred and fifteen thousand higher-paying computer software jobs were created in 1999–2003, while seventy thousand jobs were eliminated due to outsourcing. Similarly in the service sector twelve million new jobs were being created while ten mil­lion old jobs were being replaced. This phenomenon of rapid technological change and the replacement of old jobs with new ones is what economic development is all about.

By outsourcing to foreign countries, American businesses save money that enables them to invest in new technologies and new jobs in order to remain competitive in the world market. Unfortunately, we cannot enjoy the benefits without incurring the pain of transition. Change is certainly painful. It is painful for those who lose their jobs and must seek new careers. It is painful for those who risk investment in new technologies and lose. But the benefits captured by winners generate great new wealth for the economy as a whole. These benefits, in turn, are consolidated across the market through the discovery process and competitive learning experience.

Globalization is not new. It is a modern word describing an ancient human movement, a word for mankind’s search for betterment through exchange and the worldwide expansion of specialization. It is a peaceful word. In the wise pronouncement of the great French economist Frederic Bastiat, if goods don’t cross borders, soldiers will.

 

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