Lion Rock 17: Photos and Discussions in Reading Club Salon 2014

Here are some photos of the Lion Rock Institute (LRI) 3rd Reading Club Salon (RCS) 2014 held three weeks ago in Hong Kong. Below, our group photo after the morning session, moderated by LRI Chairman Bill Stacey (seated, center). The afternoon session was moderated by Ken Schooland (seated, 2nd from left) of the Hawaii Pacific University. LRI Executive Director, Peter Wong, is standing behind Bill.

Milovan Djilas' book, "The New Class" (1957) was our take off discussion in the morning session. Bill asked something like, "Is there something in Marxism and its class analysis that makes it so appealing to the public and intellectuals?"

Among those who answered Bill's question was Feng Xingyuan (CASS, Unirule, CIPA, in Beijing), standing behind me in the above photo. He reasoned that the term "class" (Marx's capitalist class and working class) is misleading because there are now many "in-between" sectors in society like small entrepreneurs who are also workers and managers of their own small companies, so who exploits whom? 

I agreed with Xingyuan and added that  Marx’s class is indeed misleading and not useful, but Djilas’ concept of a "political class" is useful. Not only in national and local governments political class but also those in the international, multilateral and bilateral bureaucratic class. Good example is the UN, its attached or partner organizations and institutions, in pushing alarmism and more government intervention in crafting climate and energy policies.

Nick Smith (The Link, HK) added that aside from Djilas' bureaucratic class, there is also the managerial class,  An expansion of "class".

Fred McMahon (Fraser Inst., Canada) noted that with global competition, political nepotism has drastically declined in dispensing power and privilege in many countries.

Xingyuan added his observation that the Chinese government's power has increased, there is "methodological individualism", a class of people within the government doing detrimental things. An expansion of the concept of "class" may be ok but “class struggle” is not appropriate. More of “interest struggle” within governments, within businesses.

Here are some points by Djilas in Chapter 3, "The New Class". It talks about huge inequality between the ordinary citizens and the political class, the huge privileges of the latter, a capitalism "disease" that a communist society is supposed to correct, not continue and even exacerbate. This did not happen of course.

And a portion of Chapter 4, "The Party State". Djilas made a quick survey of Marx, Lenin and Stalin, their differences in personality, in one paragraph. Then  the expansion of the communist state under Stalin.

Djilas' book should be read or browsed by current socialists and bleeding heart activists, government and foreign aid bureaucrats and consultants. Their new mantra of "alarming social inequality" points to only one thing -- even bigger governments (local and national) and multilateral institutions (UN, WB, ADB, IMF, etc.) whose main goal is to further redistribute by force and coercion, the wealth and assets of the more hard-working, more efficient, more ambitious sectors of the planet.

This is a different "class" of people. They enjoy the products and innovation of capitalism and individual excellence, then turn around and demonize the free enterprise system, and call for more regulations on top of existing multiple and rigid regulations.

Sincere and non-envious scholars and researchers should not demonize capitalism  and high inequality. Rather, they should demonize policies that prevent the poor from taking advantage of the momentum of innovation and competition. Or create a culture of entitlement, dependency and mendicancy among the poor.

Thanks again to LRI for another stimulating, small group discussions.
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See also 

Lion Rock 13: LRI Position on the Hong Kong Protests, October 08, 2014

Lion Rock 14: Reading Club Salon 2014, on Class and Inequality, October 27, 2014

Lion Rock 15: Mary Ruwart's Book, "Healing Our World", November 03, 2014
Lion Rock 16: 10th Anniversary of LRI, November 07, 2014

Lion Rock 15: Mary Ruwart's Book, "Healing Our World"

The Lion Rock Institute (LRI) Reading Club Salon 2014 on the theme, "Class and Inequality" will be held tomorrow here at Harbour Grand Hong Kong. Among the reading assignments for participants is this book by Mary Ruwart, published in 1992, revised in 1993 and 2003.

It's a nice book, 22 chapters. There are five suggested chapters for the round table discussion.

Chapter 8, "Destroying the Environment".

Mary mentions various layers of aggression. These are the different layers, from the base layer of No Aggression to  the 4th layer. Monopoly (via government franchising, other schemes) means preventing or prohibiting other players to come in and compete with existing player.  Subsidy means the rest of taxpayers will pay (by force and coercion of course) to give special privileges to the recipients of subsidies.

Chapter 14 is "The Pollution  Solution". Here is the chapter summary.

The next three chapters are about foreign policy. Chapter 18, "Beacon to the World" is about foreign aid and why it can amplify the underdevelopment problem of many poor countries, rather than help solve it. There is truth to this because by nature, foreign aid is government to government. So if the recipient is a dictatorship or simply highly corrupt government, then the taxes of rich country citizens are simply used to further enrich those dictators, their cronies and consultants.

Chapter 19, "Is Communism Really Dead?" Yes, if it is a voluntary commune or collectism, it should be fine, meaning people have arranged things that are mutually beneficial for all. But if it is forced commune or coerced collectivism, then people are forced and coerced to share with the rest, including the lazy, shrewd and opportunists. Why be industrious when you can get something even if you're lazy and irresponsible.

Chapter 20, "Making Our Nation Safe and Secure". It is a long chapter dealing with various historical and recent events in the last decade like post 9/11.

Mary's book is suggesting that if we want a more peaceful, more dynamic world, then various layers of aggression and government coercion should drastically shrink, some policies and regulations should outrightly be removed and withrawn. There is nothing wrong if people will trade with each other voluntarily. Nothing wrong if people settle disputes among themselves peacefully and amicably. Only when the dispute can possibly get out of hand, then government can come in to enforce rules and contracts, before people practice aggression towards other people.

Thus, various aggression and coercion by government -- local, national, international/multilateral -- creates new class in society. They can worsen rather than limit inequality and animosity in  society. Government and its coercive powers must shrink.
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See also 

Lion Rock 11: Barun Mitra on Democracy, Reading Salon 2013, October 28, 2013 

Lion Rock 12: Bill Stacey on Free Markets, Big Government and Hong Kong, March 10, 2014

Lion Rock 13: LRI Position on the Hong Kong Protests, October 08, 2014

Lion Rock 14: Reading Club Salon 2014, on Class and Inequality, October 27, 2014

Lion Rock 14: Reading Club Salon 2014, on Class and Inequality

Next week, I will attend the Reading Club Salon 2014, the 3rd annual round table discussion sponsored by the Lion Rock Institute (LRI), Hong Kong's free market think tank. The theme of this year's discussion will be "New Class, New Inequality?"

The theme of the EFN Asia Conference 2014, to be held also next week in the same hotel will be on Liberalism and Inequality. So the LRI event provides additional theoretical discussions to the EFN conference.

Unlike in the previous two Reading Club Salon in 2012 and 2013 where there were many reading materials, this year, there will be only three books to read. The sessions and books for the whole day discussion are:

Session I: Class vs. Inequality

• The New Class by Milovan Djilas (1957), Chp 3, The New Class

Session II: Inequality: Rooted in Economics?

• The New Class by Milovan Djilas (1957) Chp 4, The Party State

Session III: Attempts for an Equal Society: Creation of a New Inequality?

• The Adventures of Jonathan Gullible by Ken Schoolland (1995), Chp 26, 29, 36, 37

Session IV: The Path to a Truly Equal Society
• Healing Our World by Mary Ruwart (1992), Chp 8, 14, 18, 19, 20

And here are the two other books, hard copy.. I first met Ken and Mary in 2007 in Hawaii, during the first Pacific Rim Policy Exchange sponsored by the Americans for Tax Reforms (ATR), International Policy Network (IPN, London), Property Rights Alliance (PRA), LRI and the Grassroot Institute Hawaii (GIH).

From Djilas' book, Chapter 3:

The greatest illusioп vas tћat industrialization апd  collectivizatioп iп the U.S.S.R., апd destructioп of capitalist ownership, would result in а classless society.  Iп 1936, vheп tће new Coпstitutioп was promulgated, Stalin aпnouпced  tћat the "exploiting class"  ћаd ceased to exist. The capitalist and other classes of ancient origiп had iп fact been destroyed, but а new class, previously unkпovn t.o history, had been formed.

It is understandaЬle that this class, like those before it, should believe that the estaЬlishment of its pover vould result in happiness and freedom for all men….

This new class, the bureaucracy, or more accuтately the polltical bureaucracy, has all the characteristics of earlier ones as well as some пеw characteristics of its оwп. Its origiп had its special characteristics also, even tlюugh in essence it was similar to the begiпnings of other classes.

This is a straightforward discussion of the ugly nature of the bureaucratic class. Neither capitalists nor workers. Just plain regulators, tax/revenue collectors and spenders. They are the class that immediately becomes the ruling power after a successful socialist revolution, like what happened in Soviet Russia.

A "classless" society is impossible even in theory because government will always create a group of men and women, elected or appointed, who will command and control the rest of the population what are allowed and not allowed, what kind of penalties and fines to impose on violators, create new regulations and prohibitions  in order to address and correct past government failures.

Djilas continued,

In loose terrпs, as the new class becomes stronger and attains а more perceptible physiognomy, the role of the party diminishes. The core апd tће basis of the new class is created in the party and at its top, as well as in tће state political organs. The once live, corпpact party, full of initiative, is disappearing to Ьесоrпе transformed into the traditional oligarchy of the new class, irresistibly drawiпg into its ranks those who aspire to join tће nеw class and repressing those wћо ћаvе any ideals.

Тће party makes the class, but tће class grows as а result and uses the party as а basis. Тће class grows stronger, wћile the party grows weaker; this is the inescapable fate of every Communist раrtу in power.

As the state grows, the ambitions and desire for power of those who administer the state, the top Party officials and their lieutenants in the various bureaucracies also grow. I am not convinced though that the Communist Party becomes weaker as this political class becomes stronger. The Party is the chief machinery, the provider of institutional legality for the various polcies, programs and regulations of the state in ruling over ordinary mortals.

Discussions to be continued....
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See also 

Lion Rock 10: On Having Centralized or Self-Government, October 17, 2013 

Lion Rock 11: Barun Mitra on Democracy, Reading Salon 2013, October 28, 2013 

Lion Rock 12: Bill Stacey on Free Markets, Big Government and Hong Kong, March 10, 2014

Lion Rock 13: LRI Position on the Hong Kong Protests, October 08, 2014

Lion Rock 11: Barun Mitra on Democracy, Reading Salon 2013

I still have to write my reflection paper on the Reading Club Salon 2013 of the Lion Rock Institute (LRI) on "Democracy -- Past, Present and Future" held in Harbour Grand Hong Kong last October 19, 2013. It's good that good friend Barun Mitra, Founder and Director of Liberty Institute in India, sent us today his reflection paper about the event. Short and well-argued points by Barun, reposting it below. 

Our group photo after the whole day round table discussion. Barun is 4th from left standing. To his left is Peter Wong, Executive Director of LRI, and to Barun's right (3rd from left) is Simon Lee, LRI co-founder and moderator of the Reading Salon. To my left, 2nd from right sitting, is Andrew Work, co-founder and first Executive Director of LRI. 

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My take home points from the 2013 Salon.

The idea of democracy as the critical political institution has clearly been established. Just over two hundred years ago, the founding fathers of the United States of America, were concerned about the majoritarian aspects of democracy. The debate was encapsulated in the Federalist and Anti-Federalist papers. In the Federalist Papers, the authors underscore the need for a strong central government in order to hold the states together in a nascent country. In the Ant-Federalist paper, many leaders from the states argue the case for strengthening the lower tiers of government, so that a strong people would together strengthen the nation. Two hundred years later, James Buchanan, Nobel prize winning economist, wrote his classic text "Calculus of Consent", where he explored a whole range of ways to restrain the majoritarian threats on the one hand, and prevent capture of state agencies by vested interests on the other hand. These three books, were in the list of readings selected by for this year's salon on democracy.

A number of key points that emerged from the discussions at the salon, underscored the essential features of democratic politics.

Democracy is not about majority rule, but about recognition of and respect for minority opinions. So that the minority view of today, may enjoy the freedom to peacefully persuade others, and could become a majority opinion of tomorrow. This is why democracy requires consent of the governed, so that the diverse minorities do not feel so aggrieved as to try and revolt or secede from the rest.

For democracy to survive in large communities and countries, where only representative democracy is possible and practical, democracy has to be minimal, so that it does not offend or alienate too many people. Secondly, as societies become complex, there is a need to recognise the challenges of centralised government, and devolve greater political authority and autonomy to lower tiers of government and local communities. Because only at such community level, with shared values, can there be a realistic prospect for widest consensus on such complex issues.

Threats to democracy arise from the majoritarian perspective which is reflected in centralisation of decision making. This invariably leads to populism and patronage. Consequent spread of corruption, triggers cynicism, and undermines the legitimacy of democratic polity. Growing illegitimacy provides an incentive for demagogues and dictators to seize the levers of power by promising to solve all the ills of society. And democracy collapses in to despotism.

Democracy and markets are analogous. Democracy empowers the citizens with choices in the political domain. While markets empowers the consumers with choice in the economic domain. Adam Smith had warned about the tendency of businessmen and traders, to collude, seek special protection and privileges from the state, at the cost of the consumers. And others have warned about the special protection and privileges that many politicians seek, in the name of the public, but actually endangering the political freedoms of the citizens. This is why economic competition and open market are critical in keeping businesses focussed on delivering better goods and services in order to win the customers. So too does political competition in a vibrant democracy, ensures that politicians offer a diverse range of political options to the citizens to choose from.

In a competitive democratic environment, politicians could either be businessmen, offering the conventional political ideas and operate within the prevailing political paradigm, or they could be like entrepreneurs, offering radical ideas, in a manner that would be understood and accepted by the people, thereby shifting the centre of political discourse, itself.

Economic and political freedoms go together. All the developed and rich countries are democracies. Even the small principalities and city states, which are rich, people enjoy a very high degree of economic freedom, and share the basic elements of participatory politics, that is democracy.  On the other hand, poor and less developed countries, are much lower on the economic and political freedom scores.

Barun Mitra

Liberty Institute, New Delhi

www.InDefenceofLiberty.org 

www.EmpoweringIndia.org 

www.RighttoProperty.org  

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See also 
Lion Rock 7: Reading Club Salon 2013, Hong Kong, September 17, 2013 

Lion Rock 8: On Opposition, Factions and James Madison, October 01, 2013 

Lion Rock 9: Federalism, Decentralization and George Clinton, October 07, 2013 

Business 360 12: Optimum Size of Government, October 13, 2013 

Lion Rock 10: On Having Centralized or Self-Government, October 17, 2013

Lion Rock 10: On Having Centralized or Self-Government

This Saturday, I will attend the Reading Club Salon 2013 of the Lion Rock Institute in Hong Kong. It is a full day round table discussion with the theme this year, "Democracy -- Past, Present and Future".

There are dozens of reading materials. Today I read  Anti-Federalist Paper #3. This portion is cool.

'The only foreign, or at least evil foreign influence, must be obtained through corruption. Where the government is lodged in the body of the people, as in Switzerland, they can never be corrupted; for no prince, or people, can have resources enough to corrupt the majority of a nation; and if they could, the play is not worth the candle. The facility of corruption is increased in proportion as power tends by representation or delegation, to a concentration in the hands of a few. . . ."

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Yes, the main external or foreign source of social disharmony or even decay, is corruption from within, internal and self-inflicted misery. And that is why the more concentration of power in few people, more is corruption unleashed. Thus, people should not give too much power to any few people, even if they look like angels, even if they act and sound like angels.

"Where the people are free there can be no great contrast or distinction among honest citizens in or out of office. In proportion as the people lose their freedom, every gradation of distinction, between the Governors and governed obtains, until the former become masters, and the latter become slaves.... Our people are capable of being made anything that human nature was or is capable of, if we would only have a little patience and give them good and wholesome institutions; but I see none such and very little prospect of such. Alas! I see nothing in my fellow-citizens, that will permit my still fostering the delusion, that they are now capable of sustaining the weight of SELF-GOVERNMENT: a burden to which Greek and Roman shoulders proved unequal."

I agree with the statement that if people are free, corruption, extortion and distrust of the rule of law will significantly decline. And I think the "self government" here refers to a state of civil society. People are mature and responsible enough to run their own lives, their own communities, without much coercion and central planning.

"If the body of the people will not govern themselves, and govern themselves well too, the consequence is unavoidable — a FEW will, and must govern them. Then it is that government becomes truly a government by force only, where men relinquish part of their natural rights to secure the rest, instead of an union of will and force, to protect all their natural rights, which ought to be the foundation of every rightful social compact."

Yes, failure of "self government" would mean the success of coercive government. But such coercion is limited to protecting the people's natural rights. Right to life, right to private property, right to liberty.

"As to any nation attacking a number of confederated independent republics … it is not to be expected, more especially as the wealth of the empire is there universally diffused, and will not be collected into any one overgrown, luxurious and effeminate capital to become a lure to the enterprising ambitious."

Nice term, "overgrown, luxurious and effeminate capital" as magnet for foreign invasion.

"In small independent States contiguous to each other, the people run away and leave despotism to reek its vengeance on itself; and thus it is that moderation becomes with them, the law of self-preservation."

This is possible, so long as people have the freedom to "vote with their feet" or mobility among people across countries and continentis relatively easy.

Bottom of Form

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See also Lion Rock 6: Honoring Milton Friedman, July 31, 2013 
Lion Rock 7: Reading Club Salon 2013, Hong Kong, September 17, 2013 

Lion Rock 8: On Opposition, Factions and James Madison, October 01, 2013 

Lion Rock 9: Federalism, Decentralization and George Clinton, October 07, 2013 

Business 360 12: Optimum Size of Government, October 13, 2013

Business 360 12: Optimum Size of Government

* This is my article for B360, a monthly business magazine in Kathmandu, Nepal, October 2013 issue.
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Most of the discontent and disharmony of people within and among countries around the world can be traced to the size and degree of invention and regulations of government. Some people want government to be as extensive as possible, approaching a socialist economy, some want no government at all.

Too much government means too many taxes and fees to sustain a big army of government officials and personnel, and also sustain an enormous number of people who will be waiting for various subsidies and welfare that the government will give or promise. Citizens will also have to comply with too many regulations and restrictions.

Thus, many people want a certain government size that is neither too big nor too small and allow government to perform its main functions, especially those related to protecting the citizens’ right to life against murderers and aggressors, right to private property against thieves and destroyers of property, and right to liberty against bullies and dictators.

The question of what is an optimal, most efficient, midway between maximum and minimum government size, has been discussed possibly since government was first invented.

The Lion Rock Institute, Hong Kong’s first and only free market think tank, will hold its second “Reading Club Salon 2013” this coming October 19, 2013, in Hong Kong. The theme of this year’s round table discussion will be “What is Democracy?” The theme last year in Reading Club Salon 2012 was about Populism and Welfarism.

Among the reading materials for the participants of this extensive and focused discussion is a book by Dr. James Buchanan, The Calculus of Consent: Logical Foundations of Constitutional Democracy [1962].

Chapter eight of the book, “The Costs of Decision-Making”, tackles this subject. It is an attempt by the author to construct a theory of an optimum size of the collective unit or government, subject to constitutional determinations. His theory is that “The group should be extended so long as the expected costs of the spillover effects from excluded jurisdictions exceed the expected incremental costs of decision-making resulting from adding the excluded jurisdictions.”

This means that government can expand as long as the externality of an activity is larger than the internal costs to people if such activity is shouldered by their individual or small units.

An externality can be positive (say killing mosquitoes in many villages to control malaria, dengue and other diseases) or negative (say air pollution). The presence of an externality does not justify automatic government intervention. Job creation and entrepreneurship has positive externality as people will have stable source of income, criminality is reduced, but it does not mean that the State should put up thousands of government corporations nationwide.

Buchanan suggested State decentralization to reduce basic cost functions to individuals. He wrote,

The decentralization of collective activity allows both of the basic-costs functions to be reduced; in effect, it introduces elements into the political process that are not unlike those found in the operating of competitive markets. 

Both the decentralization and size factors suggest that, where possible, collective activity should be organized in small rather than large political units. Organization in large units may be justified only by the overwhelming importance of the externality that remains after localized and decentralized collectivization.

This is a sensible suggestion to allow some degree of local government competition. Local governments are not the same, there are differences among them not only in natural resources but also in public policies. Such differences are the basis for competition among them and people and private enterprises choose the local governments that give them better treatment while collecting not too high taxes and fees.

While this scenario is worth supporting, liberalism's concept of expanding civil society is a superior alternative. If things can be done by civil society, then do not give that function to local government, and much less to the national or central government.

So, what is the optimum size of government?

One that is small enough and not cause unnecessary regulatory burdens and costly taxes and fees, but big enough to enforce the rule of law. To provide security and peace of mind to people that their lives, their private property, and  their dignity and freedom of expression and mobility are respected and protected against aggression and forced expropriation.

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See also:Business 360 9: Free Trade and Economic Prosperity, July 03, 2013 
Business 360 10: Foreign Aid as Band Aid Solution, August 11, 2013 
Business 360 11: Avoiding Middle Income Trap, September 19, 2013

Lion Rock 7: Reading Club Salon 2013, Hong Kong, September 17, 2013 

Lion Rock 8: On Opposition, Factions and James Madison, October 01, 2013 

Lion Rock 9: Federalism, Decentralization and George Clinton, October 07, 2013

Lion Rock 9: Federalism, Decentralization and George Clinton

The Reading Club Salon 2013 of the Lion Rock Institute is fast approaching, this coming October 19, 2013 to be held in Hong Kong. I will be there. Among the readings of the participants to this theoretical roundtable discussion are the Anti-Federalist Papers. 

A paper I checked today is Paper 14: Extent of Territory Under Consol-idated Government  Too Large to  Preserve Liberty or Protect Property written by George Clinton (1739-1812), Vice President of the US (1805-1812) and NY Governor (1801-1804), aka Cato. This was published October 25, 1787.

Among the arguments made by G. Clinton or “Cato” was this.

You must risk much, by indispensably placing trusts of the greatest magnitude, into the hands of individuals whose ambition for power, and aggrandizement, will oppress and grind you. Where, from the vast extent of your territory, and the complication of interests, the science of government will become intricate and perplexed, and too mysterious for you to understand and observe; and by which you are to be conducted into a monarchy, either limited or despotic; the latter, Mr. Locke remarks, is a government derived from neither nature nor compact.

Political liberty, the great Montesquieu again observes, consists in security, or at least in the opinion we have of security; and this security, therefore, or the opinion, is best obtained in moderate governments, where the mildness of the laws, and the equality of the manners, beget a confidence in the people, which produces this security, or the opinion. This moderation in governments depends in a great measure on their limits, connected with their political distribution.

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In short, NEVER trust big and expansive government and the persons administering it. They will make rules and laws that are too complicated for us but will provide loopholes for their friends. Moderate or limited government can provide us security because its coercive power is limited, limited to equal application of laws to all.

He also wrote,

The strongest principle of union resides within our domestic walls. The ties of the parent exceed that of any other. As we depart from home, the next general principle of union is amongst citizens of the same state, where acquaintance, habits, and fortunes, nourish affection, and attachment. Enlarge the circle still further, and, as citizens of different states, though we acknowledge the same national denomination, we lose in the ties of acquaintance, habits, and fortunes, and thus by degrees we lessen in our attachments, till, at length, we no more than acknowledge a sameness of species.

Cool. That is why forced collectivism by a central or national government often begets suspicion, disapproval and discontent . The sentiment by people in the provinces who dislike "Imperial Manila" collecting lots of taxes and fees from them, telling them what are prohibited and which ones are not.

Centralism -- economic central planning and centralized politics and government -- disrespects individual diversity and spontaneity.

Interesting to note that John Locke has influenced both the Federalists (Alexander Hamilton, James Madison, et al) and the Anti-Federalists (George Clinton, et al). Clinton aka Cato, has mentioned Locke several times in that paper.

Lion Rock 8: On Opposition, Factions and James Madison

* This is my article yesterday in thelobbyist.biz.
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When people are free, diversity and spontaneity among them is to be expected. Some will have very high ambition and would employ the most efficient ways to achieve things and accomplish more. Others will be less ambitious or less efficient and would settle for lesser economic and social accomplishment, in exchange for a less stressful, less complicated life. Social inequality is a natural result and it is not to be feared nor demonized by free people.

Certain sectors of society though would not look kindly at this situation and would device ways via government coercion to limit if not control such diversity and inequality in society. Political groups and factions are created and their size and influence will grow in direct proportion to the degree of coercion and intervention to be exercised by government.

Democracy and the philosophy of majority rule is supposed to address animosities among competing factions and political groups in society. How should it be done?

This question will be explored by participants of the Reading Club Salon 2013, in a round table discussion this coming October 19, 2013 in Hong Kong. The event is sponsored by the Lion Rock Institute, Hong Kong’s first and only free market think tank. I will be one of the foreign participants of that discussion.

Among the materials that participants must read are The Federalist Papers, essays promoting the ratification of the US Constitution and were published between 1787-1788.

James Madison, among the fathers of the US Constitution and also served as the 4^th US President  (1809-1817) wrote Federalist No. 10 (November 23, 1787), particularly on political factions. He said,  

… two methods of removing the causes of faction: the one, by destroying the liberty which is essential to its existence; the other, by giving to every citizen the same opinions, the same passions, and the same interests.

It could never be more truly said than of the first remedy, that it was worse than the disease. Liberty is to faction what air is to fire, an aliment without which it instantly expires. But it could not be less folly to abolish liberty, which is essential to political life, because it nourishes faction, than it would be to wish the annihilation of air, which is essential to animal life…

The diversity in the faculties of men, from which the rights of property originate, is not less an insuperable obstacle to a uniformity of interests. The protection of these faculties is the first object of government. From the protection of different and unequal faculties of acquiring property, the possession of different degrees and kinds of property immediately results; and from the influence of these on the sentiments and views of the respective proprietors, ensues a division of the society into different interests and parties.

This is true. Factions, diversity and inequality among people is natural and inevitable if society is free. Individual freedom allows people to choose their fate, to be lazy or hardworking, complacent or ambitious. So from such liberty, acquisition of private property (from cell phones to tv, cars, houses, shops and offices) is inevitable, and it is an important function of government to protect private property. Madison continued,

But the most common and durable source of factions has been the various and unequal distribution of property. Those who hold and those who are without property have ever formed distinct interests in society. Those who are creditors, and those who are debtors, fall under a like discrimination. A landed interest, a manufacturing interest, a mercantile interest, a moneyed interest, with many lesser interests, grow up of necessity in civilized nations, and divide them into different classes, actuated by different sentiments and views. The regulation of these various and interfering interests forms the principal task of modern legislation, and involves the spirit of party and faction in the necessary and ordinary operations of the government.

Again, this is true. Since inequality and diverging economic interests is inevitable, a minimum degree of regulation, not zero regulation, is necessary to protect the people's right to property and right to liberty, without resorting to violence and heavy coercion resulting in property expropriation.

My American academic friend who teaches part-time at UP Visayas, Bruce Hall, made this important clarification. He wrote,

Let me, the lecturer in history, put Madison's quote into context. To Madison and other 18th Century American political thinkers, factions were evil things. Factions, as opposed to interests, were permanent organizations of politicians who worked to increase their organizations power and wealth, bending the powers of the government to favor them. They were in short organized special interests, that continued issue across issue… This needs to be contrasted with different positions on a particular issue. There will always be multiple sides on any single issue. But those sides are not permanent. They do not continue once the issue is resolved. Nonoy and I might be opponents on Issue A but on Issue B we are allies. Factions are always opposed to each other, across the issues.

Americans were opposed to factions -- or special interests -- and this was an argument against creating a federal government out of the 13 original states. Those arguing against federalism and in favor of separate or nearly separate countries -- those arguing against centralization -- argued that a central federal government will be used by factions (special interests) to favor themselves over the public good. Madison argued in the Federalist paper, in favor of a federal state, in favor of more centralization, that factions exist in human nature. Freedom and human nature creates factions. They will exist regardless of what the political structure is.

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