Hayek, Mises and Classical Liberalism

Last month I gave a lecture at SFL-PH, small but engaged audienced.

Six sections: (1) Hayek, (2) Mises, (3) Classical liberals, (4) Pre-classical, (5) Modern liberals, and (6) Bonus. Hayek was a very prolific writer, produced many books and manuscripts from 1931 to 1980s. 

Likewise among his mentors, Mises was also a prolific writer.

Among the classical liberals, Adam Smith was a stand out. His prior work "Theory of Moral Sentiments" provided the philosophical and economic background to his more famous work, "The Wealth of Nations."

Other classical liberals were David Ricardo (labor theory of value, theory of comparative advantage, etc), John Locke (social contract theory, Treatise on Government, etc.), JS Mill, etc.

But more than 1,000 years before Adam Smith, perhaps the world's first liberal was an Asian, the philosopher from China.

The recent liberals, there are many of them now.

The full 36-slides presentation is posted in my slideshare account. Thank you.

BWorld 222, Austrian thinkers and the G7 zero tariff challenge

* This is my column in BusinessWorld last June 14, 2018.

“To act on the belief that we possess the knowledge and the power which enable us to shape the processes of society entirely to our liking, knowledge which in fact we do not possess, is likely to make us do much harm.”

— Friedrich Hayek,

“The Pretence of Knowledge,” Nobel Prize lecture, Dec. 11, 1974.

This piece of advice from a famous classical liberal Austrian thinker should be a constant reminder to central planning-thinking leaders and officials in governments around the world, especially in communist and socialist societies like China, North Korea, Vietnam, Venezuela, and Cuba. It should also apply to global central planning-prone agencies like the UN and multilaterals.

Another famous Austrian thinker that advocated freeing individuals and private enterprises from too much regulations, taxation, and state nannyism is Ludwig von Mises.

In his book The Anti-capitalistic Mentality (1956), he extolled the value of competition and endless innovation in a free market economy:

“The characteristic feature of modern capitalism is mass production of goods destined for consumption by the masses. The result is a tendency towards a continuous improvement in the average standard of living… the market of a capitalistic society, the common man is the sovereign consumer whose buying or abstention from buying ultimately determines what should be produced and in what quantity and quality… Wealth can be acquired only by serving the consumers. The capitalists lose their funds as soon as they fail to invest them in those lines in which they satisfy best the demands of the public.”

The dramatic expansion of goods and services worldwide has resulted in substantial increases in global trade and investments. Consumers are the main beneficiaries of increased trade as they get access to more products and services from more suppliers and countries at competing prices.

Some governments, however, are less friendly to their own citizens and trade partners abroad by erecting various forms of restrictions, implicit and explicit, through high tariff and/or non-tariff barriers and measures (NTBs, NTMs) to products and services that enter their soil.

The term “trade war” has become famous recently because of the sentiments of US President Donald Trump to match the high tariff imposed by its G7 partners to some of its exports. He cited Canada’s 270% tariff on US dairy exports, the 10% tariff by the European Union on American car exports, the 25% China tariff for the same while US tariff for imported cars from EU, Japan, China, etc. is only 2.5%.

So during the G7 Summit in Canada last week, instead of having equalized high tariff (EHT) among the members (aka “trade war”), Trump proposed a second option – equalized zero tariff (EZT), zero subsidy.

Between these two options, EZT is the easier thing to do, for two reasons.

One, four G7 members are also EU members and they have zero tariff already among them in the EU. So they only need to extend the zero tariff to the three other G7 members, Japan, Canada and US.

Two, existing tariff rates are generally low and hence, closer to zero than 10%. Member-countries of the World Trade Organization (WTO) enjoy the most favored nation (MFN) privilege, meaning what one country imposes as tariffs on its favorite trade partner should also apply to all other members. Standard deviation of tariff rate (SDTR) means the extent of variation in tariffs, so the higher the SDTR, the more protectionist an economy is for certain products or commodities.

So for the G7, EZT is easier to implement and more preferable than EHT. It is China that is the most protectionist and hence, will have great difficulty moving towards EZT.

The works of Hayek, Mises, and other classical liberal thinkers like Adam Smith, David Ricardo, John Locke, and John Stuart Mill, the application of their thoughts to current issues like free trade vs protectionism, will be tackled in a lecture by the Students for Liberty Philippines (SFL) this coming June 16, Saturday in Quezon City.

Young minds are more receptive to classical liberal and free trade philosophy because they have experienced first hand the beauty of more consumer freedom, more mobility across countries, and more civil society action to social problems.

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See also:

BWorld 214, Disruption in global economic power, May 24, 2018 

BWorld 219, The US-North Korea summit and the global economy, June 20, 2018 

BWorld 220, Trade imbalances, protectionism and rhetoric, June 15, 2018 

BWorld 221, Mindanao power development, reality vs illusion, June 16, 2018

BWorld 139, State central planning vs household decentralized planning

* This is my column in BusinessWorld last week.

“The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design... Planning leads to dictatorship because dictatorship is the most effective instrument of coercion and the enforcement of ideals and, as such, essential if central planning on a large scale is to be possible.”-- Friedrich Hayek

The bigger the socioeconomic unit like a state, the less central planning should be. And the smaller the socioeconomic unit like a household, the bigger the planning should be. The family is a good example of this. Parents take care of their children until they grow up. Once the kids feel they are independent enough, they move out of the house. And moving out is an expression or an attempt at independence of the kids from the nitty-gritty of support and intervention by the parents or guardians.

In contrast, in many countries including the Philippines, as the population expands and as the needs and aspirations of the growing population further diversifies, the state bureaucratizes further and regulates and imposes more taxes. Meaningful decentralization and federalism is muted by high taxes and regulations from the central or federal government so that the states, provinces, and cities are left with little leeway for tax adjustments and regulations.

 The current tax reform program of Dutertenomics known as TRAIN (Tax Reform for Acceleration and Inclusion) is generally based on envy. While its income tax cut for the low income earners is good and commendable, its tax hike for upper middle class and the rich is not. And the government will hike the taxes of many other products and services including those consumed by the poor and lower middle class -- cars, petroleum products, sugar-sweetened beverages, more services that will be covered by VAT.

This government therefore, its politicians and bureaucracies, feel that they have more entitlement to the income and wealth of the upper middle class and the rich. The implicit message is that if people aspire to become upper middle class and rich, the state will go after them, demonize them if they resist paying more taxes. And this is where the advice of Friedrich Hayek above becomes appropriate.

During the BusinessWorld Economic Forum last May 19, 2017 at Shangri-La at the Fort, one of the impressive speakers in the afternoon session was Ms. Vicky Abad of Kantar. She discussed what are the income ranges of upper and lower middle class households and their aspirations. Below is the income class differentiation she made. ONCR means Outside of the National Capital Region (NCR) or Metro Manila (See table).

Three things are worthy of note in Ms. Abad’s presentation.

One, middle class households in C1, C2, and D classes comprise some 72% of the population or nearly three out of four households. Those in D should include previously bicycles- or jeep-riding people who now drive motorcycles or second, third-hand cars.

Two, while middle income class C1 and C2 are big consumers of fast-moving consumer goods (FMCG) or consumer packaged goods, the class D households drive about 62% of the FMCG market in value contribution.

Three, the key, constant driver of middle class aspirations is being able to provide for the needs of family. Family basic needs, health, and savings are the top three concerns. Followed by friends/bayanihan, car and house, value of work, and social status/rewards like travel.

Many of these things are not sufficiently provided by the government. There is public education, yes, but many middle class including government officials and personnel bring their kids to private schools and universities. There is public health but these people go to private hospitals and clinics when they are unwell. There is public peace and order by the police but these people employ lots of private security agencies to secure their villages, schools, shops, banks, buildings. There is public welfare department but many people still dig deep into their pockets and savings to help their fellow Filipinos struck by severe natural calamities.

With this wide gap between government taxation and low quality of public services, and the rising aspirations of the people, government central planning should decline, and households should be given more leeway, more take home pay via deep income tax cut across the board. Household planning should prevail over state central planning.

Bienvenido S. Oplas, Jr. is the head of Minimal Government Thinkers and a SEANET Fellow. Both are members of Economic Freedom Network (EFN) Asia.

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See also: 

BWorld 136, Income tax and the politics of envy, June 12, 2017 
BWorld 137, ASEAN trade expansion and RCEP, June 20, 2017 
BWorld 138, PPP vs ODA, Part 2, June 21, 2017

BWorld 109, Asians' march to liberty and progress

* This is my article in BusinessWorld last January 30, 2017.

“Progress by its very nature cannot be planned. It is knowing what we have not known before that makes us wiser men... Progress is movement for progress’ sake, for it is in the process of learning, and in the effects of having learned something new, that man enjoys the gift of his intelligence.”

-- Friedrich Hayek, Chapter 3,

“The Common Sense of Progress,”

The Constitution of Liberty (1960)

Many Asian societies have experienced economic and social upheavals and ups and downs in growth and political stability for more than the past two decades. These have been expected because people aspire for improvement and, as a result, they demand change.

After going through these upheavals, societies emerge somehow stronger, better, and more dynamic.

There are many indicators of growth and development and among them is the ability of the people in developing Asian economies to (a) travel by plane, (b) buy new models of mobile phones for communication and information, and (c) have access to the Web and the Internet.

Below are the numbers for selected Asian economies, grouped into three: (1) developing north and south Asia, (2) developing South East Asia, and (c) developed Asia plus Australia. For purposes of brevity, countries with small populations, those three million and below -- Bhutan, Brunei, Maldives, Mongolia -- are excluded from this list (see table).

The above numbers show the following:

(1) The pace of expansion in mobile phone subscriptions and Internet use in developing economies has been very fast over the past decade and a half, especially for India, Bangladesh and Nepal; Cambodia, Laos, Myanmar and Vietnam (CLMV). As a result, people now can learn new and more skills, or simply be regularly connected with their families, clans, and friends.

(2) The same pattern can be seen in air travel, as indicated by the number of airline passengers in the region. Indonesia and the Philippines experienced fast rate of growth in this area, along with China, India, and CLMV.

(3) Expansion in developed Asia + Australia is muted and modest compared to their developing neighbors.

Therefore, Hayek is correct in his observation about human progress. It is the less-planned and less socially-engineered economies that are experiencing faster improvement at least in these three indicators. This is partly because the developed economies are dealing with plenty and rising government regulations that tend to restrict faster growth.

The subject of human and social progress in Asia will again be discussed in the forthcoming “Asia Liberty Forum” (ALF) in Mumbai, India, Feb. 9-11. This big international conference will be jointly sponsored by the Center for Civil Society (India), Atlas Economic Research Foundation (USA) and the Friedrich Naumann Foundation for Freedom (FNF, Germany).

Among the important topics to be discussed will be (a) overview of what’s happening in the freedom/liberal movement around the world and Asia, (b) State, private sector and liberty in a digital world, (c) Regulations for a prosperous and innovative market economy, (d) Property rights as a human right, and (e) Education of choice for all: the role of budget private schools.

The Economic Freedom Network (EFN) Asia is also participating by sending some of its regular and long-time partners in the region to the ALF. Aside from holding its own annual EFN Asia Conference, EFN is also participating in the annual ALF and the Jeju Forum for Peace and Prosperity in South Korea.

Through continuing involvement in these three important regional and global annual meetings and conferences, EFN Asia is doing its share in securing a more prosperous, more developed Asia through the path of less government planning and more market competition, deregulation, and innovation.

Bienvenido S. Oplas, Jr. is the head of Minimal Government Thinkers and a Fellow of SEANET. Both institutes are members of EFN Asia.

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See also:

BWorld 106, Top 10 projections for Asian economies, January 23, 2017 

BWorld 107, Top 10 myths for oil tax hike, January 28, 2017 

BWorld 108, Rising feed in tariff (FIT) due to more wind-solar power, February 06, 2017

The Students for Liberty - Philippines (SFL PH)

Last October 20, 2016, the Students for Liberty - Philippines (SFL PH) launched their facebook and twitter pages. Congrats guys.

I am happy that the liberty movement among the Philippine youth is taking shape formally. And when we say liberty, it is individual liberty, not national or class or clan liberty.

From Joseph Bautista, President of SFL PH, October 20:

We're pro-peace, pro-individual, pro-market, and pro-liberty.. We're part of the bigger Students For Liberty network around the world. We have students from the USA, Indonesia, Canada, Europe, New Zealand, Australia, Africa, and many others.

Here in the Philippines, we also have a growing local network, initially consisting of students from Ateneo de Manila University, the University of the Philippines, and San Beda College.

Interested in joining? Feel free to message me if you belong in any one of the universities, and I'll happily redirect you to the respective Campus Coordinator to get you started right away. If your university is not yet on our network, please do not hesitate to contact me. We'll help you start one there.

Posted by some SFL PH members:

From Jonathan Michael Vegamora, Public Relations Officer of UP Libertad:

I'm a libertarian because I believe individuals have the right to live their own lives as they see fit as long as it does not encroach on the freedoms of others to do so. This political philosophy has guided me for a long time and I want to keep it that way, especially in a time when many people in the Philippines and all over world believe more in the capacity of government to act for the greater good than their own selves.

In the face of what's happening at home and overseas - state-sponsored violence (and if you ask me for examples, I'll give you a dump truck load of 'em from US interventionism to Saudi airstrikes on Yemenis to AFP forces shooting up Lumad communities) - we need those basic classical liberal rights that have made our lives peaceful and prosperous more than ever.

From Emil Apostol, another member of UP Libertad and supporter of SFL-PH:

Because I believe freedom is the virtue by which all other virtues can be exemplified, I fight for it. Smaller government, fewer taxes, and the freedom to live my life the way I see fit without anyone forcing me to do otherwise; sounds great, if I do say so myself. :) 

Last May, UP Libertad held its first, inaugural and open house forum, I was one of two speakers, I talked about Friedrich Hayek. See the 22-slides presentation here.

UP Libertad will partner with Pan Xenia fraternity in organizing a forum on Foreign Trade Issues. Initially scheduled this coming November 09, it will be rescheduled for early next year. I will be one of several speakers and I will talk about the challenge of unilateral trade liberalization in the ASEAN, both tariff and non-tariff in goods, also in services.

BWorld 46, China's debt, central planning and central crashes

* This is my article in BusinessWorld yesterday.

"The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.” -- Friedrich Hayek.

One of the characteristics of centrally planned economies like China is that officials and planners centralize many resources, which creates centralized expectations from the people, and since planners’ egos cannot really plan and control all factors, this often results in centralized economic dislocation, disappointment, and anger.

Take the case of China’s debt.

Officially, China has a gross public debt/gross domestic product (GDP) ratio of only 41% in 2014, manageable and just slightly higher than the debt/GDP ratio of Taiwan and South Korea (38% and 36%, respectively). But China has more debt that what it will officially admit.

A report by McKinsey Global Institute (MGI) said that China total borrowings (individuals + companies + local and central governments + state enterprises) was 282% of GDP in 2014, higher than the debt ratio of the US, Germany, Canada, and other big economies. (See Graph 1)

High debt, private and public, will always create financial turmoil, today or tomorrow. Especially in a dictatorship that abhors political competition and yet wants to mimic economies that allow market and political competition.

This was discussed in “The Chinese Financial Crises and their Impact on Asia,” one of the panel discussions during the recently-concluded “Asia Liberty Forum” in Kuala Lumpur, Malaysia from Feb. 18-20. The session was chaired by Prof. Christopher Lingle of the Universidad Francisco Marroquin in Guatemala. The speakers were Dr. Carmelo Ferlito, IDEAS Senior Fellow, Malaysia and Adjunct Faculty Member at INTI International College Subang, Malaysia, Andrew Shuen of Lion Rock Institute, Hong Kong, and Dr. Mao Shoulong, Renmin University, also of Unirule Institute, China. These three independent think tanks -- IDEAS, Lion Rock, and Unirule are all members of the Economic Freedom Network (EFN) Asia. (See Graph 2)

In his presentation, Carmelo Ferlito noted that from 2003-2008, China’s total debt was stable to declining at 170% of GDP, then by 2009, it exploded and kept rising. He further noted that “a lot of this debt is sitting in local governments or state-owned enterprises. There is assumption that government can let its “zombie” entities stumble on as debt-paying vehicles or maybe occasionally let a couple default without any systemic contagion.

But now the Chinese government again began buying stocks to prop up its plummeting stock market, that is unsustainable.”

LESSONS FOR SOUTHEAST ASIA

With the continuing financial turmoil in China that started last year, there are lessons to be explored for emerging economies in the region like the Philippines.

1. Fiscal and household irresponsibility will snap. As public and private debts become bigger, economic uncertainty will also rise as those debts should be repaid. People will never know who can pay back and when, and who will default.

2. Moral hazards. A central planning government tends to attract less-studied behavior by the public. As a result, people with low financial literacy may be encouraged to gamble their savings at the stock market, thinking that the government will bail out anyway.

3. Central planning leads to central disappointment. Central planning cannot and will not cure and control everything, including stock prices, booms and busts, debt spirals, and inflation. Central planning can only postpone small busts until these become bigger and burst. Authoritarianism can never be compatible with free markets.

The great Nobel prize economist and political philosopher, Friedrich Hayek, has some words to say about central planners. It is important that economists and planners outside communist China should heed them.

“No man or group of men possesses the capacity to determine conclusively the potentialities of other human beings and that we should certainly never trust anyone invariably to exercise such a capacity.” -- The Constitution of Liberty (1960), Chapter 6, “Equality, Value and Merit.”

Bienvenido S. Oplas, Jr. is the President of Minimal Government Thinkers, a member of the Economic Freedom Network (EFN) Asia, and a fellow of South East Asia Network for Development (SEANET).  minimalgovernment@gmail.com

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See also:
BWorld 11, China's stockmarket and central planning, July 18, 2015
BWorld 43, More on WESM, PEMC and DOE, February 14, 2016
BWorld 44, Why the Philippines should join the TPP, February 19, 2016 
BWorld 45, Asia Liberty Forum and property rights, February 20, 2016

China Watch 21, Is a War Between US and China "Inevitable"? May 30, 2015

China Watch 22, On many rich Chinese leaving their country, January 17, 2016

Pol. Ideology 62, Marx and Hayek on Property Rights

Nearly six years ago, I presented this paper in a seminar on "Freedom and Property" in Manila, sponsored by the Friedrich Naumann Foundation for Freedom (FNF) Philippine Office.

Yeah, I recalled my UP student activism days in the 80s, when the Maoist Nat-Dems were the dominant leftist groups, but our small group dissociated with their ideology as we read more Marx and Lenin, not Mao Tse Tung :-) I re-read portions of "Das Kapital"  and "The Communist Manifesto" in making that presentation.

Recognizing the mistakes of Marx' analysis contributed why I abandoned the Marxist ideology. And later embraced the philosophies of Adam Smith, Friedrich Hayek, Mises, etc.

Property Rights Alliance's (PRA) annual IPRI Reports are good materials in the study of how countries and economies respect or disrespect private property ownership and control, both physical and intellectual property.

My first published article in BusinessWorld was in November 2007. (This year I have two articles already in that newspaper, a 3rd article coming up this Friday :-))

The full text and presentation is available in my slideshare page.

I posted this paper because next week, I will be a reactor to a mainly socialist paper presentation on "Alternative Economic System", with a largely socialist audience. No problem with me, I don't evade any debate, civil debate. Excitng.

See also: 

Pol. Ideology 58: Democracy, Coercion and Civil Society, November 29, 2014 

Pol. Ideology 59: On PostModern Politics, December 14, 2014 

Pol. Ideology 60: Lecture in Nepal on Liberalism, Rule of Law, Civil Society, January 13, 2015 

Pol. Ideology 61: Raison d 'Etre of Government, January 30, 2015

Rule of Law 23: RoL Index 2014 by the World Justice Project

The World Justice Project (WJP) released its Rule of Law Index 2014. Nine factors were considered in constructing the RoL index:

1. Constraints on government powers

2. Absence of corruption

3. Open government 

4. Fundamental rights

5. Order and security 

6. Regulatory enforcement

7. Civil justice

8. Criminal justice and 

9. Informal justice.

Here is the result. I marked the East Asian economies.

On page four, they explained the FOUR UNIVERSAL PRINCIPLES OF THE RULE OF LAW: 

The WJP uses a working definition of the rule of law based on  four universal principles, derived from internationally accepted standards. The rule of law is a system where the following four universal principles are upheld:

1. The government and its officials and agents as well as individuals and private entities are accountable under the law.

2. The laws are clear, publicized, stable, and just; are applied evenly; and protect fundamental rights, including the security of persons and property.

3. The process by which the laws are enacted, administered, and enforced is accessible, fair, and

4. Justice is delivered timely by competent, ethical, and independent representatives and neutrals who are of sufficient number, have adequate resources, and reflect the make up of the communities they serve.

While the 4 principles adopted by the WJP are generally fair and they broadly define RoL, I still prefer the Hayekian definition of RoL -- equal application of the aw to unequal people. Hayek wrote,

By ‘law’ we mean the general rules that apply equally to everybody.… As a true law should not name any particulars, so it should especially not single out any specific persons or group of persons.

 I am curious why the WJP did not mention about the numerosity or high number of laws in each country, as hindrance to RoL. If one will consider national or federal laws (like Republic Acts) + state or provincial laws + city or municipal laws + village laws and ordinances. And Executive Orders, Department or Ministry Orders, Administrative Orders by Bureaus, one is talking about tens of thousands of laws and orders.

So WJP's Principle #2: "The laws are clear, publicized, stable, and just" is immediately violated by the numerosity of laws.

The numerosity of laws alienate the ordinary people, hence the need to get lawyers to understand those numerous laws and orders. And I think Hayek suggested implicity, that the number of laws shoud be as few as possible -- so that even ordinary people can understand and hence, follow those laws, orders and prohibitions.

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January this year, I have a  brief discussion with a lawyer friend, Jemy Gatdula, on "Law Beyond the Courts". It is about an announcement by the University of Asia and the Pacific (UAP) here in Manila, to attract new law students.

Nonoy: Many laws and contracts are beyond the courts. I think it is a misnomer to call "law" only those that come out of the legislative mills, national or local govt legislations. If I borrow money from a friend and promise that I will pay back after X months, with or without interest, that verbal or written contract is a law. I am obliged to respect it. If I don't, my friendship will be damaged, or he may even go to court to force me to pay him back.

Jemy: exactly, Nonoy. hence the need for lawyers with a liberal education (and even international perspective). because of the policy, social, economic aspects of every matter.

Nonoy: Yes, that is why "rule of law" can apply from the micro (between friends, between couples, etc.) to the macro as a law or contract happens everywhere. The higher law, the "natural/universal law" (no killing, no stealing, no abduction,...) that applies to all societies and countries worldwide), plus the "middle level laws", those created by national legislatures, local legislatures have their own purposes. But in the observation of Friedrich Hayek, most if not all laws that come from the legislature are commands, not laws in the general and abstract sense of their universal applicability, no one is exempted and no one can grant an exemption, philosophy.

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Freedom Barometer Asia also has its ranking of countries based (a) political freedom, (b) economic freedom, and (c) rule of law. To get the score or index for RoL, 3 factors were considered and the respective data sources were given:

1. Independence of the Judiciary

Data from the Economic Freedom of the World Report published by the Fraser Institute.

2. Corruption

Based on the Corruption Perceptions Index by Transparency International.

3. Human Rights

Based on Maplecroft‘s Human Rights Risk Atlas.

And here is the result for countries in East Asia, 2013 ranking and score:

1              Hong Kong           23.93

2              Japan                     23.09

3              Taiwan                  19.95

4              Singapore             22.20

5              South Korea         17.72

6              Brunei                    16.68

7              Malaysia                 15.04

8              Mongolia               13.39

9              Thailand                   12.67

10           The Philippines   10.84

11.          Indonesia              11.41

12           Cambodia             9.12

13           China                     10.50

14           Vietnam 9.73

Countries with incomplete datasets:

16           Laos                       5.03

15           Myanmar               3.14

17           North Korea          1.45

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See also: 
Rule of Law 11: RoL Index, October 15, 2010
Rule of Law 13: Freedom Barometer 2011, March 23, 2012
Rule of Law 19: How to Strengthen RoL?, March 25, 2013
Rule of Law 20: PNP and Rule of Men, April 21, 2013 
Rule of Law 21: Violating Simple Parking Rules, September 17, 2013
Rule of Law 22: IAF Seminar in Germany, April 09, 2014

Pol. Ideology 55: Jules Maaten's Lecture on Liberalism

A very informative lecture given by Jules Maaten last Tuesday night at our Rotary Club of Taguig Fort Bonifacio, along with RC Makati Pio del Pilar.

 Not many people were able to come though although they really wanted to hear Jules' talk. Like at least three from the Initiatives for Filipino Liberty (IFL) group, at least three from our club, and so on. So this blog post is for those who were not able to come and regular readers of this blog.

At the onset, Jules defined Liberalism as:

* It is the philosophy of liberty

* It is a philosophy of empowerment

* Origin in protecting the individual against institutions of power.

This quote from JS Mill, among the classical thinkers of liberal philosophy, is clear and direct.

Then Jules specified how the  philosophy is applied, Liberalism in Politics:

* Protection of individual rights

* Equality of all human beings under the law

* Balance and separation of powers

* Belief in liberal representative democracy

* Balance between majority rule and the rights of the minority

* Weary of (state) authority, but state is rights guarantor

* Limitation and decentralisation of government powers

* Separation of church and state

I like this quote from my favorite economist and philosopher, F. Hayek. Yes, allow people to decide things for themselves, to make mistakes, to excel.

Then he discussed what is Liberalism in Economics:

* Belief in free enterprise and free markets with many players

* Protection of private property

* Support for free trade

* Privatisation of services better provided by the private sector

* Competition, no private monopolies

* Role for state where market does not function (education, environment, culture, social policies)

* Don’t leave debts to future generations.

The last item is important. As Germany and many European and rich economies go deeper and deeper in public debt, with huge interest payment annually, the economic freedom and well being of the future generation is heavily compromised.

Rule of Law 22: IAF Seminar in Germany

The Friedrich Naumann Foundation for Freedom (FNF) is calling for nomination and participants to this seminar, deadline of application on April 11, this Friday.

Target participants for this seminar are young politicians, journalists, civil society activists and academics. 

The application and elimination process before one can be accepted to the actual seminar in Gummersbach (near Cologne), Germany is two-stage. First, FNF Philippine Office will shortlist from among the many applicants, get only about five or so, and the selected ones will participate in an online discussion involving perhaps a hundred people from different countries and continents, to be moderated by German liberal facilitators. After about three weeks of online discussion, the facilitators will choose only 24. These guys will travel to Germany for a one-week intensive (morning till evening sometimes) seminar, including a field trip to Cologne, visit several offices and political leaders there. At least that's how it was done six years ago. I think it's the same process until now.

During the online discussion, the participants are from Asia, Africa, S. America and E. Europe. It is a good learning process itself, so that even if one is not accepted in the actual seminar in Germany, one has learned a lot already from the reading materials given by the facilitators, and from the actual discourse with fellow participants.

I attended the seminar on "Local Government and Civil Society" in October 2008. I was lucky to be admitted to the actual seminar in Gummersbach, 8 days including 1-day field trip in Cologne. There are participants from all 4 continents. The Latinos could not speak English, there is a translator (English-Spanish) throughout the course. My experience in that seminar with photos,

IAF Seminar 2008, Gummersbach, Germany, January 21, 2011 

IAF Seminar, Gummersbach, Germany, Part 2, October 13, 2013.

Stefan Melnik, a former FNF officer, suggested that good introductions to the concept of rule of law and its necessity are (1) Hayek's The Constitution of Liberty, and( 2) Tom Bingham's Rule of Law.

It's a good suggestion. Here is a portion of what Hayek wrote about the rule of law:

Law in its ideal form might be described as a ‘once-and-for-all’ command that is directed to unknown people and that is abstracted from all particular circumstances of time and place and refers only to such conditions as may occur anywhere and at any time…. “By ‘law’ we mean the general rules that apply equally to everybody… As a true law should not name any particulars, so it should especially not single out any specific persons or group of persons. -- F. Hayek, Chapter 10, "Law, Commands and Order", The Constitution of Liberty (1960). See: Hayek 7: Rule of law means no exception.

There is a suggestion that the PNoy government has violated the rule of law in the impeachment of former SC Chief Justice Renato Corona.

I think ALL government administrations in the PH, many other countries, selectively violate the rule of law. "general rules that apply equally to everybody", no one is exempted and no one can grant an exemption. Stealing is stealing, whether the theft is the King or President or Prime Minister or the Mayor or the poorest man on Earth. The fact that stealing and plunder happening in all administrations means that in most cases, rule of men, not rule of law, is the norm.

Stefan further suggested that “the FNF focuses on the term rule of law as internationally understood- because the term Rechtsstaat has a slightly broader meaning. To use the latter in a foreign domestic context would confuse people, given the legal environments in which they live. Briefly, the German concept includes basic rights whereas "rule of law" implies and protects such rights but does not include them. For instance, equality under the law implies a right to equal treatment and demands that this is what the legal system does.”

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See also: 
Rule of Law 18: Damaso and Carlos Celdran Conviction, February 04, 2013 
Rule of Law 19: How to Strengthen RoL?, March 25, 2013
Rule of Law 20: PNP and Rule of Men, April 21, 2013 
Rule of Law 21: Violating Simple Parking Rules, September 17, 2013

Lion Rock 7: Reading Club Salon 2013, Hong Kong

The Lion Rock Institute (LRI), Hong Kong's first and only free market think tank, will hold its second annual round table discussion on some theoretical concepts, billed as "Reading Club Salon 2013". The first event, "Reading Club Salon 2012" was held in early November 2012, two days before the Economic Freedom Network (EFN) Asia conference which was held in another hotel in Hong Kong. I attended both events. Below, our group photo at the conclusion of the 1 1/2 days LRI event. 

The Reading Salon is unique because (1) there are no primary or resource speakers, every participant is a speaker, and (2) all participants have to read some or all the e-books and short articles in the reading list, before they attend the discussion. A moderator introduces the topics and relevant reading materials then asks the participants to share their ideas and observations on those materials, in relation to some practical experiences and policies.

Last year, the foreign participants came from China, India, Thailand and Philippines (me). The rest of the participants are from Hong Kong, both native and expats.

The theme last year was "Dealing with Populism" and our reading list included books by Ludwig von Mises, Friedrich Hayek, Eric Hoffer, Allan Salinsky, Mao Tse Tung, Tom Hayden, plus short articles or chapters of books.

This year, the theme will be Democracy -- Past, Present and Future. The announcement says,

Democracy does not mean populism. Majority does not mean truth. Standing where we are today, how do we view democracy with its legacy from the past, and projection into the future?
 

The Lion Rock Institute is proud to present our Annual Reading Club Salon 2013. In this event, we will investigate the topic of democracy through four sessions: 

I. Athenian Democracy v. Roman Republic
II. Federalism
III. Subsidiarity
IV. A Way Out for the World – Can Democracy Survive?

The reading materials will be sent to us soon. For me, democracy can be liberating, or enslaving if the will and biases of the majority is forced upon the minority even if such programs or policies can cause harm to the minority. Especially if we keep in mind that the smallest minority, the smallest political unit in society, is the individual, not a village or a clan or a corporation.

We then must focus on the liberating aspects of democracy, and that is by providing check mechanisms that will prevent the majority to unfairly impose their will on the minority that can result in physical or economic harm on the latter. Government is force and coercion, and government almost always wave the "will and interest of the majority" mantra in justifying the use of various coercion (regulations, prohibitions, penalties, imprisonment, taxation) in society.

I like these words from Friedrich Hayek in Chapter 7, "Majority Rule" of his book, The Constitution of Liberty (1960):

Advance consists in the few convincing the many. New views must appear somewhere before they can become majority views. There is no experience of society which is not first the experience of a few individuals... It is because we normally do not know who knows best that we leave the decision to a process we do not control. But it is always from a minority acting in ways different from what the majority would describe that the majority in the end learns to do better... The imposition of the will of the majority's coercive, monopolistic, and exclusive character destroys the self-correcting forces which bring it about in a free society that mistaken efforts will be abandoned and the successful ones prevail…. 

If opinion is to advance, the theorist who offers guidance must not regard himself as bound by majority opinion. The task of the political philosopher is different from that of the expert servant who carries out the will of the majority... he will often serve democracy best by opposing the will of the majority…. 

The individual has little reason to fear any general laws which the majority may pass, but he has much reason to fear the rulers it may put over him to implement its directions. It is not the power which democratic assemblies can effectively wield but the powers which they hand over to the administrators charged with the achievement of particular goals that constitute the danger to individual freedom today... The most enthusiastic supporters of such unlimited powers of the majority are often those very administrators who know best that, once such powers are assumed, it will be they and not the majority who will in fact exercise them…. 

Democracy will remain effective only so long as government in its coercive actions confines itself to tasks that can be carried out democratically... Though democracy is probably the best form of limited government, it becomes an absurdity if it turns into unlimited government. Those who profess that democracyis all-competent and support all that the majority wants at any given moment are working for its fall.

There. Democracy can lead to limited or unlimited government. Limited government means limited coercion, like limiting and controlling the "right" to kill, stab, shoot, abduct, steal of people against other people, especially by big, organized and armed individuals and groups. 

Unlimited government and coercion is wrong and evil. It means totalitarianism. Democracy guided by the rule of law must work to prevent this from happening.
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See also 
Lion Rock 2: Populism and Anti-Capitalism, LRI Forum, HK, October 05, 2012
Lion Rock 3: The New Poor, Free Poor and Eric Hoffer, October 30, 2012
Lion Rock 4: Leftism and Populism by Intellectuals, November 05, 2012 
Lion Rock 5: Free Will vs. Power Over Others, December 26, 2012 
Lion Rock 6: Honoring Milton Friedman, July 31, 2013