Sukrit is Programs Director of Liberty Australia. He received a Bachelor of Arts (First Class Honours) and Bachelor of Laws from the University of Melbourne. In 2008, he was awarded the JA Aird Award for his expertise in public policy by the Institute of Public Administration. He is currently editor of the "Journal of Peace, Prosperity and Freedom" and has been published and interviewed in numerous newspapers and magazines.
Imagine you are an entrepreneur. As a businessperson, would you start a venture where you were forced to pay workers $100 an hour, a rate which is well beyond what you could earn from them? No — you wouldn’t open a new enterprise if you were guaranteed a loss. Therefore, the only businesses that will thrive under such conditions are those which are sure to recover the cost of labour plus the cost of capital, and also compensate themselves for the enormous risk of opening a business in the first place. This argument, which is persuasive with a $100 per hour wage rate, can be repeated incrementally down the ladder.
Labour economists have devoted much effort to empirically estimating the effects of minimum wage legislation on the employment levels of various age, race and gender groups. It is now widely agreed that increases in minimum wages do reduce employment opportunities, especially among teenagers.
To mark the historic Mises Seminar in Sydney, Liberty Australia is launching The Journal of Peace, Prosperity and Freedom. Inspired by the Libertarian Papers, the new journal will carve out a niche in applications of Austrian economics, revisionist history, legal arguments from an individualist perspective and other topics not addressed by existing free-market publications. The primary focus will be on Australia, however analysis of other countries and general principles is welcome.
I will maintain a list of referees with expertise in the specialist topics covered by the review. If you are interested in acting as a referee please shoot me an email.
Most central banks are staffed by unelected bureaucrats. They are considered outside the realm of political control. The Treasurer, no matter how much he may disagree, is bound by convention not to interfere with the monetary policy decisions of the bank.
This state of affairs has insulated them from accountability. Parliament does not control the Reserve Bank of Australia’s budget, as it does for the High Court.
Full disclosures of monetary policy dealings domestically and internationally are not accessible. The RBA’s exemption from Freedom of Information laws prevents the public from finding out the extent of its relationships with external actors. Like the Fed, no parliamentary committee truly oversees every aspect of its decision-making, meaning it is probably more secretive than the Australian Security Intelligence Service.
Leithner’s goal is simple: to challenge conventional wisdom in the field of monetary economics. Along the way, he also demolishes a variety of other fallacies surrounding the State and its interventions. Harvard-educated academics – the same people who did not foresee the crisis – have blamed the crisis on capitalism and greed, but Leithner is here to defend the free-market perspective against the Keynesian onslaught.
The media and mainstream academics have done their best to suppress the true causes of the recession. But finally, the truth about the financial crisis is here.
In his latest book, The Evil Princes of Martin Place, investor Chris Leithner puts forward a free-market view of the economic crisis in 2008 as a counter to critics who have blamed capitalism and supported Karl Marx's notion of central banking.
Dr. Leithner's argument is that although the Reserve Bank of Australia masquerades as a "scientific" and independent organization, it is the underlying cause of the financial crisis.
In 1933, a referendum was held in Western Australia. Voters were asked whether WA should secede from the Commonwealth. Amazingly, a sizable majority – 68 per cent – decided that it was time to become an independent nation! Yet despite the sentiment in favour of seceding, WA’s plea was denied by the Australian government and the British Parliament. The powers that be were not about to stand for such intransigence.
'I find it hard to think of any innovation in taxation - any new form of taxation, any new way of collecting taxes - that was not brought into being as part of a government scheme to pay for war.'
What has caused the growth of government in the 20th century?
Historical analysis can provide the answer to this question. In particular, it is essential to study the history of warfare. The State grows during times of war -- to the detriment of individual liberty. As Randolph Bourne famously said, ‘War is the health of the State’.
In Australia, it was the World Wars that set the fiscal, institutional and ideological precedents that allowed for the rise of big government. The wars legitimated Keynesianism by allowing social democrats to speak lovingly of the wonders of central direction of the economy.
The United Nations is far removed from the daily grind of domestic politics, where seemingly more pressing ‘bread and butter’ issues are debated.
Its relative immunity from oversight can be attributed to a brilliant strategy of enshrouding itself in a veil of do-gooder spirit. Publicity campaigns routinely proclaim noble objectives such as substantially reducing poverty by 2015, helping achieve world peace, and bringing about inter-cultural dialogue.
Being sceptical about the U.N. is similar to questioning the worth of Mother Teresa – decent, politically correct people just don’t do things like that.
But when it comes to international stability, the cumulative effect of the United Nations is a disastrous one.
In yet another example of the unintended consequences of foreign aid, it was recently reported that Australia may be paying troops who torture.
According to the Associated Press: "Australia has sent an official to the Indonesian province of Maluku to investigate claims that Indonesia's elite counter-terrorism unit, Detachment 88, which receives millions of dollars from Australia each year, brutalised a group of separatists last month, repeatedly beating them in detention."
Liberty Australia's Sukrit Sabhlok says that "Regardless of whether these claims are true, the fact that Australia is sponsoring an organization that actively cracks down on civil liberties is a cause for concern".
An essay in Policy by Edwin van de Haar (Autumn 2009) does a great job of explaining how libertarian principles apply to international relations. According to Haar, libertarians are opposed to international organisations, treaties and foreign aid. They also advocate free trade as a means of increasing cooperation between nations and reducing the likelihood of conflict.
And although Haar does not say this explicitly, libertarians are also hesitant about intervening militarily.
In Australia debate on issues of foreign policy is dominated by conservatives and social democrats, both of whom favour intervention overseas. The only difference between the two mainstream ideologies pertains to the particular instances on which they would intervene. Social democrats tend to be sympathetic towards so-called ‘humanitarian interventions’, while conservatives favour ‘police actions’ such as in Iraq.
Medical doctor Wendell Rosevear, who works on the front-lines of the War on Drugs, explains the hypocrisy of state-sanctioned strip searches:
When individuals continue to use drugs in prisons, the system feels loss of power and face and with ‘mud on their face’ [and] wants to justify ‘coming down harder’ with strategies such as locking individuals in indefinite solitary confinement after overdoses or drug use and justifying forced internal body cavity searches, strip searches and observed urine tests which make individuals feel degraded and ‘raped’. To deny someone a choice in relation to protecting their body is rape even if you use the power of the state to justify it. The ‘Tough on Drugs’ strategy justifies rape, the very crime our society imprisons individuals for committing. To use the same strategies that cause the problem is to discredit oneself. Strip and Internal Body Cavity searches can happen to ordinary citizens coming through an airport as well as people in prison.
I never thought about invasive searches this way until I read Rosevear's article, but on reflection, it makes a lot of sense. Especially since the courts have always held that rape, in criminal law, does not require penetration of the penis but can also include insertion of any other object into the vagina or anus. In its futile quest to protect people from their own harmful vices, the government is encouraging its agents to do despicable things.
David Aaronovitch (The Australian, 3/12/2008) appears to have accepted the pernicious myth that ideology is the key factor driving Muslim terrorists. But the most important cause of terrorism – and suicide terrorism in particular – is foreign occupation.
This has been shown comprehensively by University of Chicago Professor Robert Pape in his book Dying to Win: The Strategic Logic of Suicide Terrorism. Pape’s work has been reviewed in leading political science journals in America and has met with much acclaim. Until someone is prepared to demonstrate flaws in Pape’s data, we should consider the possibility that actions do have consequences; that the favourable light in which we perceive our own governments is not how residents of other countries perceive them.
Friedman’s money growth rule, which would be a legislated rule instructing the monetary authority to achieve a specified rate of growth in the stock of money. For this purpose, Friedman defines the stock of money as including currency outside commercial banks plus all deposits of commercial banks. He "would specify that the Reserve System should see to it that the total stock of money so defined rises month by month, and indeed, so far as possible, day by day, at an annual rate of X per cent, where X is some number between 3 and 5" (Dollars and Deficits, p. 193).
A gold standard is another reform aimed at reducing arbitrariness in monetary policy. Former Chairman of the Federal Reserve, Alan Greenspan, once defended gold because of its ability to act as a restraint on government.
Unlike the American founding fathers, who were classical liberals, those who helped bring together the Commonwealth of Australia were social liberals.
From the very beginning of Australian history, utilitarianism was the dominant philosophy. Economic liberty, while seen as important, was never viewed as an inviolable freedom derived from natural law. Rather, private property could be abrogated whenever the “national interest” – as defined by the government – demanded it.
Yet despite its Bill of Rights and widespread ideological resistance to Big Government, the American experiment has reached approximately the same position as Australia. Both America and Australia are now social democracies with large welfare states. In America, there is also a gigantic warfare state. A country founded on libertarian principles has reached the same place as one founded on utilitarianism and expediency. What conclusion are we to draw from this state of affairs?
The Frankenstein Candidate is Vinay Kolhatkar’s debut novel. Kolhatkar is no novice writer, however, having written two screenplays that have been converted into short films. Kolhatkar is a libertarian, and in The Frankenstein Candidate he constructs a fictional world replete with strong, principled characters in the mould of Ayn Rand’s Atlas Shrugged.
What’s relevant in this world is not just the events that are taking place, but also the content of the character’s monologues and the integrity of their personal ethics. We are asked, essentially, to compare between competing political ideologies using the setting provided by the book.
The plot is fairly straightforward. Frank Stein, a respected billionaire who amassed his wealth through practicing honest – as opposed to crony – capitalism, has decided to spend his fortune contesting the 2020 US presidential election. His Republican and Democratic opponents attempt to smear his free-market platform as anti-poor and pro-business. The dirtiness of politics reaches new heights with assassination attempts, entrapment and scandals galore. In the end however, Stein is able to convince large sections of the public of his views and makes a respectable effort at winning the presidency.
Australian forces invaded Afghanistan in 2001, and entered Iraq in 2003. Although the Rudd Government has withdrawn troops from Iraq, our involvement in Afghanistan is continuing without end. It has become a perpetual war.
Consider this: Australia’s military involvement in World War I lasted four years and World War II was over and done within seven years. The danger posed by terrorism is miniscule compared to the threat from a Hitler or Mussolini, so why has the war in Afghanistan lasted for a longer period of time?
SUKRIT SABHLOK on scandals concerning Australia’s primary financial institution.
The Reserve Bank of Australia has been in the news recently, thanks to a corruption scandal splashed across the front pages of newspapers throughout the country. According to reports, two currency firms overseen by the Reserve Bank funnelled bribes to government officials in Indonesia, Malaysia and Vietnam, to win banknote deals. Securency and Note Printing Australia are partly and wholly owned (respectively) by the RBA, and many prominent political figures sat on the boards of the two companies.
Ten years ago, the United Nations (UN) promised to deliver a “drug-free” world by the year 2008. Pino Arlacchi, the Drug Czar at the UN, exclaimed that although “[t]here are naysayers who believe a global fight against illegal drugs is unwinnable … they are wrong”. For what seemed like the umpteenth time, the UN assured us that if we simply sent them more money, their team of “experts” would take care of the problem.
A decade later, how has UN fared? Any dispassionate observer would surely agree that they have failed dismally. After all, drugs are more widely available than before.
In spite of the mass murder perpetrated by the governments of the Soviet Union, China, Cuba, and many other “revolutionary” societies, socialism continues to have many real world adherents. So deep is the faith that even India’s former finance minister Palaniappan Chidambaram, in an interview with TIME magazine in 2005, professed that “Socialist goals remain valid. What we are trying to do is devise and invent better means to achieve those goals”.
For socialists, the standard retort is that none of the societies that we traditionally consider as socialist were socialist. Rather, they were “state-capitalism”.
Even if that were true, the dictionary definition of socialism doesn’t inspire much confidence either.
In the 21st century, the idea of federalism seems quaint and somewhat naive. Since 1920, the High Court has consistently handed down judgments that grant the federal government plenary power. Any notion of the States having powers that are beyond the Commonwealth’s grasp has been summarily dismissed. Not surprisingly, the noble intention of the founders to put in place a system where the federal government deals only with national matters such as defence, interstate commerce etc. and state governments are responsible for education, health and other local issues, has not been achieved in practice. There is not much left of federalism in the Australian Constitution.
We have just been informed that the venue has imposed a deadline to buy tickets to the historic Mises Seminar in Sydney. Tickets must be purchased by November 17. So you have about 2 weeks left to make up your mind: will you join us and defend liberty or will you stay home?
For most of their existence, central bankers have been shielded from scrutiny. In Australia, for instance, most Reserve Bank governors have kept a low media profile. As late as the 1980s the Bank did not announce interest rate changes, and kept market actors in a state of ignorance.
Inquiry into central banking has been obfuscated by jargon and unnecessary technicalities. One method relied upon to discourage the public from inquiring into monetary policy is to promote an aura of value-free scientism. There has been a shift towards quantitative analysis and away from qualitative economic theory accessible to the layperson. Increasing reliance on statistics has led to a situation where "democratic decision-making must be replaced by the administrative and technocratic" (Rothbard, 1999, p. 288).
Walter Block has labelled Stefan Molyneux - a libertarian anarchist - an enemy of the libertarian movement (along with Reason magazine) because he criticises Ron Paul for supporting the US Constitution.
While I won't go as far as Walter in his characterisation of Molyneux's bona fides, I do agree that Molyneux is dead wrong: his arguments only apply to fake libertarians like Ronald Reagan, they don't apply to Ron Paul. Unlike Reagan, we can trust Paul to actually carry out his free-market program and reduce the size of the state. He's actually moving us closer to a position where we can re-evaluate the entire US Constitution and shift back to a more libertarian Articles of Confederation, and from there to market anarchy.
So anarchists should definitely support Ron Paul for president.
An excellent article by Adam Creighton of the Centre for Independent Studies:
Fiat currency has been the biggest moral hazard of all time, encouraging governments to borrow and spend beyond their natural limits in full knowledge they could always repay their debts. After all, even the crazy French 1st Republic repaid its debts: in worthless assignats.
Rampant money creation in the United States and Europe, politely known as ‘quantitative easing’, is having little impact on job creation. Unemployment still hovers above 9% on both sides of the Atlantic. But it will surely ease the debt burden of governments. As a 40-year-old Alan Greenspan wrote in 1966 (somewhat ironically given his later career): “In the absence of the gold standard, there is no way to protect savings from confiscation through inflation."
The Mises Seminar will bring together Australians interested in libertarianism and the Austrian school of economics. The event comprises a dinner on Friday, November 25, and an all day seminar on Saturday, November 26. The events can be purchased separately, or together as a package deal at a discount.
The seminar will field a line-up of prominent anti-state, anti-war and pro-market thinkers from around Australia, with special guest Professor Hans-Hermann Hoppe. Our speakers understand that free-markets generate prosperity, and that government intervention is both economically and socially destructive.
Leading scholars and authors will discuss a wide range of subjects including the causes of the business cycle, problems with mainstream economics, and the prospects for liberty. The seminar will provide an opportunity for libertarians to connect with like-minded colleagues from across Australia.
During World War II, there was one heroic dissenter on the High Court who – unlike the other lapdog justices – thought that government should obey the law even during wartime. Hayden Starke is described in these terms by Brian Galligan in his book Politics of the High Court (p. 127):
Many of the regulations that the court allowed as valid exercises of the defence power were only very indirectly linked to defence. For instance, the Court upheld a national marketing scheme for apples and pears on the basis that the export part of the crop was now subject to war restraint on shipping. Starke, a fairly regular and quite sarcastic dissenter in many of the defence cases concerning economic regulation, claimed that the apple and pear marketing regulations had no relation whatever to the “economic front”, but merely propped up one sector of the economy that had been affected by war. Starke accused the court of accepting arguments that led to the conclusion that “in time of war the Commonwealth had complete power to legislate in respect of the social and economic conditions of Australia”. He reminded his fellow judges that “after all, the government of Australia is dual system based upon a separation of powers”.
The court even went as far as declaring constitutional the restriction of drinking hours in the name of national defence. Starke again disagreed and called this regulation “one of those irritating orders and restrictions upon freedom of action which is arbitrary and capricious, serves no useful purpose, and has no connection whatever with defence”.
Thank goodness for Justice Starke. Because of the dissenting arguments which he placed on the legal record we now have a hope, however slight, of reversing the warfare state in the future. There are many such heroes of Australian liberty willing to stand against the government’s lies and power grabs during times of war.
The failure of economic modelling has become painfully obvious.Terry McCrann makes the point well ("Treasury is no longer a bastion of reason, The Australian):
[L]ook at the accuracy of Treasury’s modelling of the budget and the economy.
In the 2007 budget, it projected the economy would grow 4.25 per cent in the 2007-08 year. It grew by 2.7 per cent. It projected a budget surplus of less than $11 billion, it came in (adjusted) at $27 billion. Indeed, it was still $3 billion out in the 2008 budget, when the year was already almost over!
It can’t get within cooee of the year ahead, yet it expects us to believe that it can “accurately’ project growth out to 2050. Assuming a whole series of complex behaviours in the entire world!
As everybody knows, government is inefficient and wasteful. It is incompetent. “Left-wing” people point out this incompetency in foreign affairs (i.e. the warfare state), while “right-wing” people talk a lot about high taxes (used to pay for the welfare state).
Although each side readily admits the counter-productiveness of government intervention in their favoured area, neither side of politics concedes the more fundamental point: that government simply does not work, and that the market should be preferred wherever possible.
I was reminded of the dichotomy between markets and the state by Lew Rockwell, who wrote:
Would it ever occur to [TV news channels] to interview the head of Wal-Mart or some other commercial enterprise that actually serves the people, in a crisis as well as every day? That actually coordinates and plans effectively as a matter of course? No. Actual public servants are invisible on CNN.
So why is it that government agents frequently grace the front pages? Why does the media buy into false promises that politicians cannot deliver?
"Do we need a Reserve Bank?" is the title of a book published by the Centre for Independent Studies in July 1990. It features an essay by famous free banking advocate Lawrence White.
I had a look at the CIS bookstore, but unfortunately it appears to be out of print.
There's a copy available at Melbourne University's library.
Libertarians should know better than to believe that anything funded by the government is "independent". There is copious amounts of evidence that the Reserve Bank of Australia is politically influenced. For example, during election times, the pressure is always to cut the cash rate. During the current financial crisis, the pressure has also been to cut the cash rate, even though the RBA Governor admitted it will lead to another housing bubble.
You have to have a certain degree of hardcore cynicism about the State to believe that even when something is labeled "independent", it is still open to political influence.
Early American history is full of clear thinkers who offered simple solutions to societal problems. Only since fashionable, but wrong, European ideas began to make their way into America did a pernicious myth begin – the myth that small-government types naively neglect the “complexities” of life.
This is the sort of mentality that makes the average person trust people like Ben Bernanke or Hank Paulson; they think they have some special insight into how to centrally plan an economy because, after all, they must understand the complexities of stabilization policy. In reality, there is a simple solution to most of our problems: "Freedom".
The common sense of mankind has been confounded by the notion that we need tens of thousands of pages of legislation, and just as many bureaucrats running our life, because the modern world is supposedly just “too complex”. It is high time that this myth was debunked.
Milton Friedman, in his famous essay The Methodology of Positive Economics, says that we should not judge a theory by the realism of its assumptions, but by the accuracy of its predictions. So, assuming we accept Friedman’s argument, how should we judge the neo-cons who have been wrong about practically everything in relation to the Iraq war? Shouldn’t we instead listen to the likes of Ron Paul, a man who has been accurately predicting the disastrous consequences of American foreign policy since 1976?
The lifting of millions of Indians out of poverty after the country’s economic reforms in 1991 should have delivered a decisive blow to those who argue that capitalism exploits the poor. Thanks to deregulation, there has been a significant rise in India’s standard of living during the past 15 years. Unfortunately, the same arguments against the free-market persist. Yet the problem is government, not the market.
If governments faced the same discipline that private corporations face, the next election would result in all of India’s politicians being voted out. In spite of grandiose promises, hardly anyone doubts that India continues to remain near the top of the world in corruption and inefficiency. The sad reality is that India has fallen behind the East Asian nations. The subcontinent holds the dubious distinction of having the world’s largest number of poor people, despite the crores of rupees spent to “stimulate” development.
The rate at which the West is proceeding towards a full-blown war with Iran is shocking. Already, numerous sanctions have been placed upon the Iranians. There have also been reports that the CIA is conducting covert operations aimed at destabilizing the Iranian government.
Let’s not forget the parallels in the path to war with Iraq. The push to oust Saddam Hussein really began in 1998, under Bill Clinton, when the Iraq Liberation Act was passed calling for regime change. From then on, each step taken beat the drums of war until there was sufficient paranoia about Hussein to support a ground war.
I sincerely hope the Australian people resist the new warmongering against Iran.
How remarkable that there has been practically no debate on the civil liberties implications of the full-body scanners set to be introduced at Australian airports ("Airport security gets $200m boost", 10/2). These scanners will permit government employees to, essentially, produce pornographic images of men, women and children.
No doubt, there will be safeguards. But the machinations of bureaucracy guarantee that these safeguards will also be flouted on occasion.
If Australians permit this, we have given up far too much. Next, the government will parade us naked through airports in the name of security.
With so many Indian students being killed or assaulted, why is it that a very effective means of deterrence – pepper spray – is banned in this country? At present, any person walking alone late at night is a defenseless target for hoodlums. But legalising pepper spray, a non-lethal means of self-defence, would surely make thugs think twice before they attack someone.
The media and mainstream academics have done their best to suppress the true causes of the recession. But finally, the truth about the financial crisis is here.
