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(Julian Morris, Executive Director, International Policy Network)

In order to have economic growth and prosperity, there must be three elements:

1. property rights
2. rule of law
3. equality before law

Economic growth is a result of a virtuous cycle consisting of production of goods / services, freedom to exchange the goods / services, ability to enforce contracts, ability to innovate new goods / services, and once again, ability to produce those innovative products / services.

Filed under: Freedom & Liberty

(Alex Singleton, Director-General, The Globalization Institute)

Those who oppose markets are overwhelmingly good campaigners and seem to have won the argument of the day. They seem to have succeeded in creating the impression that business is bad, businessmen are greedy and companies are unethical.

Many left-wing policy-makers believe that protectionism is necessary at the early stages of development.

Protection of a particular sector almost always incur costs to another sector of society. For example, in protecting a state-sponsored industry, the tax-payers may be forced to pay for something they never use and, if given the choice, would not want to pay for.

Protectionism is an impediment to development. It prevents efficient allocation of resources and prevents lay people from having access to better providers. Liberalization promotes economic growth.

China and India are two very good examples. Having unilaterally liberalized their economies, they are now experiencing phenomenal growth. Protectionist economies harm the people. In Europe, for example, the Common Agricultural Policy inflated the rice of food making Europeans pay more for their food.

Smaller and developing economies are usually very protectionist. They quote America and Europe as being protectionist and therefore this justifies them being protectionist too. This is a mistake. America and
Europe can afford to be protectionist because they have massive internal free markets. But the smaller countries do not have internal markets of that size and protectionism retards their growth.

The way forward is for countries to unilaterally liberalize the economies. India and China did just that and they are now reaping the benefits.

Question to self:

1.   Should we just take the plunge and abolish bumiputera-ism?
2. What if market liberalization, which in principle is good, is not politically popular?

Filed under: Freedom & Liberty

(Mark Pennington)

Mark started off by criticizing those who prefers creationism instead of evolution. He argued that it is irrational for those who oppose central planning to also believe in a designed order of the world as suggested by creationism.

(Later on the day I challenged him on this assertion. I argued that it is very possible to believe that the world and its components were created and still conform to the concept of spontaneous order. I argued that he, or the people propagating creationism, may have confused the belief in creation with the belief that our lives are subject to a central design. I explained to him that, as a Muslim, I believe that we were created, but at the same time we were created with the ability to choose. As creations who were created to make choices, central design is therefore incompatible with my beliefs as a Muslim. It is our ability to choose, which was given to us by the Creator, and given to us with the commandment that we use it to choose rationally, that makes spontaneous order possible). 

There can be order in society without someone being in control.

Spontaneous order is a situation where system and order exist, but no one ‘assigned’ the system or order onto others.

Planned order is a system where there is a hierarchy and a common purpose that was imposed onto others.

Human beings are intelligent and creative beings. They do not just react mechanically.

In the natural world, order is established naturally. For example, snowflakes naturally take a certain shape. No outside force determines the shape a snowflake will take.

In an artificial order, order is created by force or imposition. For example, in the arm forces, order is created by establishing strict hierarchy and discipline.

If we imagine a continuum, spontaneous order is between order in the natural world and artificial order. A good example, as given by Hayek, was language. Language is not exactly a natural thing. It didn’t just exist from nowhere. But neither was language artificially created. Nobody sat down and decide “this is English, that is French”. Language is therefore a good example of spontaneous order and is also a good example of how order can develop without someone being in charge.

Other examples include money and fashion.

Common traits of spontaneous order:

1. Individuals pursue their own aims but the unintentional outcome is order.
2. There is no specific overall purpose as each person is pursuing their own interest.
3. The order that is created is not static – it continues to evolve through the multiple acts of the actors.

Libertarians see spontaneous order as important in social affairs because we need to rely on spontaneous order – if we rely on planned order, we will not advance ourselves due to the ‘knowledge problem’. Nobody has perfect knowledge and the knowledge of central planners is certainly limited to only what they know. Spontaneity releases people to be free to benefit from the collective knowledge of a much wider pool of intellect. Spontaneity reduces the cognitive limitations.

Libertarians prefer the market economy because:

1. The market economy helps overcome the cognitive limitation. We do not have to rely on the limited cognitive ability when allocating resources. The market does it most efficiently.
2. The market economy allows smooth and almost automatic prioritization of resources.

Libertarians do not claim that planning is universally bad. They just have to be limited.

Market economy does not dispense with planning. It just demands that the market economy be allowed to determine the level of planning that is necessary.

Critics of spontaneous order claim that spontaneous order:

1. is a kind of social Darwinism (which is supposed to be bad, I think)
2. needs “perfect” environment for competition (i.e.: a level playing field for all competitors). To create the “perfect” environment, protectionism is necessary at least at the early stages.
3. denies the fact that many developments were a result of force and imposition.

Mark provided an answer to criticism number 1 but I did not write it down. I do not think there is anything wrong with social Darwinism.

To criticism number 2, we say that protectionism, in reality, harms consumers. Consumers cannot choose the supplier of goods because protectionism favours certain companies. These companies are not necessarily the ones who can provide the best value for money. And protectionism also harms local companies as they are not exposed to market pressures and have no incentives to adapt or improve. In the long run, protectionism is harmful to those who were supposed to benefit from it.

To criticism number 3, we say libertarians do not claim force brought no good whatsoever. We are just saying that without force, we could have achieved more.

Question to self:

1. How can we make those who have been trained for so many years to obey orders to realize that blind obedience is harmful to them? This is even more difficult if the obedience is given a religious dimension.
2. Is it possible that the problem we have with the younger generation – i.e.: their inability to think creatively and to act decisively without the need for approval – is a result of excessive central planning and denial of freedom?

Filed under: Freedom & Liberty

(Kenneth Minogue, Emeritus Professor of Political Science, University of
London) 

Kenneth uses the works of Hobbes in many parts of his presentation.

Political activity is from one of view, a theatre – it trades upon the illusions people have.

Illusion is about playing with realities. What we see with our eyes are not necessarily true and cannot necessarily be trusted. It must be tested by experience. Seeing is therefore not believing. It is, rather, the beginning of learning.

Hobbes was unhappy with people going to universities and thinking that what they learnt was all there is to understand. Knowledge is supposed to create ‘hunger’, not satisfaction.

According to Hobbes:

1. “Wisdom is much memory”.
2. Freedom is “the silence of the law”

Freedom is not only moral, but it also entails duties and responsibilities.

Kenneth also suggested that it may be a good idea to check out Timur Kuran on preferences falsification.

Question to self:

1. Can we trust politicians, including (or should I say, especially?) those who do politics under the name of a religion?
2. How do we deal with the issue of some people creating the illusion that they are trustworthy (e.g.: by being religious) just to get or maintain political influence?

Filed under: Freedom & Liberty

(Tom Palmer, Director of Cato University and Director of Jack Byrne Project on Middle East Liberty)

Tom gave a wonderful and detailed introduction to the concept of political economy, and some basic principles that can be employed when looking at socio-economic issues. He defined “political economy” as the acknowledgement that politics and economy are inter-related and cannot be separated.

His presentation was quite technical in nature but he also supplied a paper to elaborate his ideas. It is difficult to summarize his points and, in fact, it would be unfair to summarize what was a very long and intellectual discussion. But, these are a few things that I found most interesting:

1. In a free society, rules matter. Rules can influence the outcome and sometimes the rules have a huge impact on the outcome.
2. Rules can be chosen
3. Society may not be a rational chooser.

Filed under: Freedom & Liberty

(Madsen Pirie, President Adam Smith Institute)

Spontaneity is better than central planning because:

• It is more efficient and almost always does better. There are several reasons for this:

  • It is “cleverer” in the sense that it lets more people to think. Central planning is limited to the intelligence of the few planners.

  • It has more information available to it. Central planners only have access to what they know.

  • It is quicker to react to change. Central planning requires many stages to filter and process information. A spontaneous system doesn’t.

  • It is smoother. Central planning brings with it many hick-ups.

  • It is not subject to political interference or control. Central planning is almost always subject to the priorities of the planners

• It is more moral.
• It allows individuals to choose.
• It serves the interest of the people. A spontaneous system allows people to participate and therefore it is more likely to serve the interests of the many. Central planning doesn’t allow participation.
• Planning means coercion and treat people as merely means to the planners’ ends.

A spontaneous society is not laissez-faire. Rule of law is imperative and rules are still needed. But the rules are there to allow people to choose rather than to impose a system.

If you give those in authority the powers to curb your freedom, the likelihood is they will use the powers for things other than what those powers were initially meant for.

Central planners typically think “I have a vision of how society should be and I am going to impose it”.

Questions to self:

1. What about the claims that we have to follow the decision of the group (keputusan jamaah?)? Is that moral?
2. Without some elements of control, surely some parts of society would lose out. Is that justifiable?
3. If rule of law is so important, who makes that law?

Filed under: Freedom & Liberty