Sanjeev Sabhlok's blog

Thoughts on economics and liberty

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

Someone shared this article and sought my comments:

My response might interest some people.

Thanks, had a skim through the article. Very comprehensive, and raises some valid points.

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

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

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

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

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

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

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

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Human Betterment Through Globalization – Vernon Smith

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


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

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

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

The Foundation of Prosperity

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

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

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

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

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

Only Markets Deliver the Goods

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

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

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

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

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

We Have Nothing to Fear

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

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

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

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

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

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

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


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Offer of $11k AUD to any doctor or media company in the world for proof that COVID is in the league of the Spanish flu

I started on 6 June 2022 by offering 10k to Brett Sutton, Chief Health Officer of Victoria, to prove his claims about COVID being in the league of Spanish flu.

On 10 June 2022 I expanded the offer to both Dan Andrews (Premier, i.e. Chief Minister) of Victoria and to Matthew Guy (the opposition leader of Victoria). I also increased the amount to $11k.

It is more than a month and these cowards have failed to take up the offer since there is NO EVIDENCE on their side.

Now I’ve decided to expand this offer to a) any licensed doctor or b) media company IN THE WORLD who can prove this claim.


Claims of this sort by politicians and the media, that COVID is a “once-in-100-year event”, in the league of Spanish flu, etc.

A compilation of some such claims:


1. Write down your proof (which must refute the evidence at B above, in full detail). Make a Word document and attach any calculations in an Excel or Google spreadsheet.

2. Deposit $100 AUD administrative fee for me to read your document and make an assessment. Details of the bank, below.

3. Send it to me at ALONG with a scanned copy of your doctor’s license or an authorisation forwarding letter from the CEO of your media company.

4. I will need to see the evidence refuted robustly, i.e. which considers all aspects of the situation. If I’m persuaded that your proof qualifies the hurdle of all relevant evidence, I’ll change my mind and pay you $11k. My decision will be final.

5. You can appeal my decision (should I reject your proof) for a fee of $500. At that stage I will publish a detailed explanation of why your proof doesn’t stack up – if I find that your appeal doesn’t stack up. If it does, I’ll pay $11k.

6. The copyrights to the work sent to me (with or without the fee) will vest with me. By participating in this offer, you agree to have any of your email statement/s or documents that are sent to me (with or without the fee) published – at my discretion – on my blog or elsewhere. You will not be able to publish your own work anywhere without prior permission by me, or you’ll be able to do so, but under conditions to be prescribed by me (this is to ensure that you do not continue to mislead people with false information).


Account holder’s name: Sanjeev Sabhlok

Bank: HSBC, Melbourne

BSB: 343002

Account: 142008412



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Announcement: resignation from the Victorian branch of Australian Federation Party


I am resigning from the (currently being formed) Victorian branch of the Australian Federation Party.

1. Despite repeated reminders, Peter Harris has failed to hear or address my significant concerns about the party. Since mid-March 2021 I used to speak with Peter Harris on a regular basis to discuss Australia’s Representatives for which I put in hundreds of hours of intense work in 2021, but PH (as leader of AFP) has not found time for months now to even hear about my concerns.

2. I have come across potential integrity issues in the party – such matters are simply unacceptable.

3. The merger has failed. AFP bears no resemblance to AusReps, the party I had helped start in March 2021 with the goal of offering an alternative to the major parties.

4. I do not lightly dissociate with something I had personally helped start (AusReps). AusRep members should think carefully about whether AFP is the answer they are seeking. Australia needs an alternative major party but I don’t have the energy any more to help create one.

I would like to add that in June 2021 I had paid the $500 fee for registration of AusReps and also another $880 for party work approved by PH but despite at least 20 reminders, the party has not reimbursed my money. This is totally unacceptable.

More later.

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