Thoughts on economics and liberty

Author: Sanjeev Sabhlok

Is there any merit in Yascha Mounk’s thesis about populist democracies? Not really.

I chanced upon Yascha Mounk through Sagarika Ghose (she’d particularly recommended that I read him, when I met her in October 2018).

So what’s his main thesis? I’ve summarised from this paper.

Who are populist leaders?
“In a wide swath of countries across Europe and North America, a new crop of populists has entered parliament or even ascended to executive power. … Populist politicians as France’s Marine Le Pen, Hungary’s Viktor Orbán, and Donald Trump in the United States”

What do they do?
“Most populists are democratic in that they do actually seek to translate popular views on issues such as migration into public policy. At the same time, they are illiberal in their readiness, once in power, to attack independent institutions, undermine the rule of law, and violate the rights of minorities. … While the form populism takes may initially be democratic, its long-term effect is to undermine not only liberalism, but democracy as well. … As we have seen in countries from Venezuela to Hungary, attacks by populists on independent institutions and the rule of law. . .. Evidence from countries including Hungary, Turkey, and Venezuela suggests that illiberal democracies are always in danger of degenerating into electoral dictatorships.

Why do we have them?

“Rich individuals and big corporations favor trade treaties, independent central banks, and powerful bureaucratic agencies because they can capture the professionals who work for these institutions, bending their work until it furthers the interests of the wealthy and powerful. In short, most members of the political class favor technocracy because its opaque institutional apparatus makes it easier for them to ignore the popular will.”

He then adds that this is not the only cause – there are many complexities involved.


Based on this limited review, I am not persuaded that Yascha Mounk has understood the real issues – that in the long run (of hundreds of years) liberty and democracy is constantly being expanded. Liberty does not follow a linear course, but people continuously learn and re-learn.

Neither have we reached the end of history as Fukuyama wrote about, nor is there any special advance towards illiberal democracy. Conflating Trump with Maduro is a category error. Trump is no Modi, either. Trump has problems of character and I would not vote for him, but he is a democrat. Most importantly, Trump is bound by the US Constitution which sets the limits of his power. Maduro and the communists do not believe in any limitation of state power anyway. We can’t compare these enemies of liberty with Trump, no matter how abhorrent Trump’s personal behaviour might be.

So is there any cause for concern? Yes and no. Yes, because the forces for liberty have to fight every battle anew in each generation. No, because the forces of liberty have incrementally imposed institutions of liberty on a wide range of countries and these countries are unlikely to deviate too much from the liberal norm.







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Cryptocurrency taxation – Take 2

I had written this around 18 months ago: How governments can benefit by imposing a range of taxes on cryptocurrency

I’ve completely changed my mind regarding capital gains tax on the increase in the value of cryptos.

Competitive neutrality requires that the government NOT tax the increase in value of cryptocurrency. If it were to do so, it would then need to allow us to debit as a capital loss the annual reduction in value in fiat currency from our income tax returns.

If cryptocurrency is an “asset” then fiat currency is a loss making “investment”.

If cryptocurrency has the characteristic that it appreciates in value over time, fiat currency has the characteristic that it falls in value over time. The mere fact that private currency appreciates while fiat depreciates doesn’t mean that one can be taxed for capital gains. Both need to be treated exactly the same. If crypto is taxed for gains, the fiat losses must be charged towards capital loss


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My next Whooshkaa podcast: Refinements to the grassroots message of liberty

In which I outline key improvements to SBP’s grassroots script. I believe based on recent innovations that we now have some very significant punchlines which land a fatally destructive blow upon the ideas of the socialists and Hindutva fanatics from  which they simply can’t recover.

We can now completely wipe out the enemy in a mere 20 minutes anywhere in India. No socialist will be left standing once this script is adopted and training imparted to the booth level workers and other party members.

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