A Mont Pelerin Society Conference in Oslo (Part 3)

MPS Oslo

So it was in early October that I travelled to Oslo. This was my first visit to Norway. With a per capita income of $67,000 (as of 2020), it is among one of the richest nations in the world. The country’s population is just over 5 million with 20% of the people living in Oslo. Norway has been greatly benefited by the discovery of oil; the value of its sovereign fund exceeds a trillion dollars. Like all the Scandinavian countries, government spending on social welfare is high.

The Airport Express covered the 48 kms from the airport to Oslo Central in 22 minutes. The conference hotel (Clarion Hotel The Hub) was just a five minute walk from the station. While most of the four-and-a-half days were spent in the hotel at the MPS meeting, we did have a half-day excursion to the Oscarsborg fortress via a 75-minute boat ride each way, which gave a glimpse of the beautiful fjords that Norway is so well known for. As National Geographic explains: “A fjord is a long, deep, narrow body of water that reaches far inland. Fjords are often set in a U-shaped valley with steep walls of rock on either side. Fjords were created by glaciers. In the Earth’s last ice age, glaciers covered just about everything. Glaciers move very slowly over time, and can greatly alter the landscape once they have moved through an area. This process is called glaciation. Glaciation carves deep valleys. This is why fjords can be thousands of meters deep. Fjords are usually deepest farther inland, where the glacial force was strongest.”

The meeting was organised as a set of plenaries, with presentations and discussion. The session titles tell the story of the themes:

  • Challenges and Prospects for the Liberal World Order
  • The New Totalitarian Threats: Russia and China
  • The Recalibration of Globalisation and the Future of the WTO
  • The Enemies of the Open Society 2.0
  • The Climate and Environmental Challenge and Opportunity
  • The Challenge of Neo-Planism and Top-down Industrial Policies
  • Entrepreneurship, Innovation and Creative Destruction
  • Reforming the Framework of the Market Economy
  • Freedom, Economy and the Pandemic
  • New Perspectives on Liberal Democracy and the Social Contract
  • The Monetary, Financial and Fiscal Framework under Pressure
  • Federalism, Subsidiarity and the Future of the EU
  • Reforming Liberalism: From The Colloque Walter Lippmann to the Present
  • Reinventing Liberalism for the 21st Century

For me, it was a wonderful experience being back in the world of liberal ideas, discussion and debate. I came to liberalism late in life – only when I started thinking about India’s lack of poverty and possible paths to prosperity. It was from these ideas that I had started Free A Billion which later morphed into Nayi Disha. While I failed to change minds or channel votes towards a prosperity movement, what became clear to me is that unless Indians demand liberty, it is going to be a difficult path ahead for most Indians. Having lost 75 years to illiberal and interventionist governments, we are in danger of losing many more.

Thinks 667

Frameworks: “Many of the thoughts in this document draw on and synthesize concepts from economics, math, physics, chemistry, biology, and psychology.”

Vitalik Buterin: “We’re starting to understand what both the politics and the technology of the 21st century is going to look like, and how each of the pieces of what we’re working on are going to fit into the picture. In 2022, crypto finally feels meaningfully useful; lots of mainstream organizations and even governments are using it as a way to send and receive payments, and I suspect other applications are soon to come. The future still feels less uncertain, but we have much more of a view than before as to how it’s all going to play out.”

Ruchir Sharma: “Each robot can replace three or more factory workers, the hardest hit group. But the degree of disruption depends on the often-exaggerated pace of change. Forecasters have been predicting since the 1950s that full-blown AI would arrive in 20 years, but it is not here yet. Dire warnings that autonomous vehicles would wipe out one of the most common jobs in America -truck driver — have given way to a trucker shortage. Now recession is looming, but unemployment is unlikely to rise as high as in previous downturns, owing again to shrinking labour forces. Fewer workers will leave the labour market tighter than usual through the business cycle, even as robots continue to multiply. They can’t arrive too soon. Owing to an unexpectedly steep drop in birth rates, the UN recently raised its forecast for the pace of population decline, from the US to China. It takes years for births to affect the workforce, but smart governments will act now, by drawing more women, immigrants, seniors and — yes — robots into the workforce. The other option is fewer workers, automated or not, and a growthless future.”

A Mont Pelerin Society Conference in Oslo (Part 2)

Parallels

The world in 2022 is looking eerily similar to the 1930s and 1940s. Russia and China have emerged as global threats to peace. A war is underway in Europe. Authoritarianism and populism are on the rise. Covid has seen a massive expansion in government interventions globally. Economic challenges (in the form of rising government debt, runaway inflation, high energy prices, trade wars, and a looming recession) are rising. In this context, it is worth reading the “Statement of Aims” outlined at the first meeting held at Mont Pelerin in 1947:

The central values of civilization are in danger.  Over large stretches of the Earth’s surface the essential conditions of human dignity and freedom have already disappeared.  In others they are under constant menace from the development of current tendencies of policy.  The position of the individual and the voluntary group are progressively undermined by extensions of arbitrary power.  Even that most precious possession of Western Man, freedom of thought and expression, is threatened by the spread of creeds which, claiming the privilege of tolerance when in the position of a minority, seek only to establish a position of power in which they can suppress and obliterate all views but their own.

The group holds that these developments have been fostered by the growth of a view of history which denies all absolute moral standards and by the growth of theories which question the desirability of the rule of law.  It holds further that they have been fostered by a decline of belief in private property and the competitive market; for without the diffused power and initiative associated with these institutions it is difficult to imagine a society in which freedom may be effectively preserved.

Believing that what is essentially an ideological movement must be met by intellectual argument and the reassertion of valid ideals, the group, having made a preliminary exploration of the ground, is of the opinion that further study is desirable inter alia in regard to the following matters:

  1. The analysis and exploration of the nature of the present crisis so as to bring home to others its essential moral and economic origins.
  2. The redefinition of the functions of the state so as to distinguish more clearly between the totalitarian and the liberal order.
  3. Methods of re-establishing the rule of law and of assuring its development in such manner that individuals and groups are not in a position to encroach upon the freedom of others and private rights are not allowed to become a basis of predatory power.
  4. The possibility of establishing minimum standards by means not inimical to initiative and functioning of the market.
  5. Methods of combating the misuse of history for the furtherance of creeds hostile to liberty.
  6. The problem of the creation of an international order conducive to the safeguarding of peace and liberty and permitting the establishment of harmonious international economic relations.

The group does not aspire to conduct propaganda.  It seeks to establish no meticulous and hampering orthodoxy.  It aligns itself with no particular party.  Its object is solely, by facilitating the exchange of views among minds inspired by certain ideals and broad conceptions held in common, to contribute to the preservation and improvement of the free society.

MPS 2022 in Oslo, hosted by Civita, a Norwegian think tank, echoed some of the core ideas. As the Chair of the Organizing Committee, Lars Peder Nordbakken, wrote: “At a time of fundamental uncertainties and threats to both Liberalism and the open society and rules-based international order, it is also with a certain sense of urgency that we invite you to take part in this meeting. We will be covering many pressing and interrelated issues, some of them with clear parallels to the first meeting in 1947.”

Thinks 666

Mark Koyoma and Jared Rubin: “Nor do we necessarily have to choose between economic growth and a fairer society. In fact, a lack of economic growth has serious moral downsides. Historically, it is in stagnant or declining economies that one observes the worst episodes of violence, intolerance, and political polarization. On the other hand, social mobility and greater equality of opportunity are much more likely in an economy that is growing.” [via CafeHayek]

Manav Garg: “Over the last two years, the pandemic has precipitated the push towards digitisation. SaaS now comprises $600 billion of the $3 trillion global enterprise IT and communications spending market, and is expected to be worth $1.3 trillion by 2030. Hybrid work environments are the norm now, and B2B buyer preferences have moved to a digital-first approach irrevocably…The SaaS opportunity for India is flipped from merely looking at SaaS startups competing for a small piece of the global pie to establishing itself as a global substratum for SaaS operations for companies operating anywhere in the world. This is a $1 trillion opportunity for India within the next 10 years…While China is a manufacturing superpower, India is becoming a digital    one. If you are an entrepreneur building the next great SaaS business anywhere in the world, it would be worthwhile to consider India as your SaaS OS.”

Cato: “For more than 15 years, the iPhone has embodied 21st century globalization. Apple’s signature smartphone, as well as the hundreds of subsequent competitor products, has helped billions of people around the world communicate, transact, entertain, and consume—overcoming once massive geographic, cultural, and logistical barriers along the way. The device itself, meanwhile, is a testament to the value of global supply chains and the mostly frictionless world in which they operate, thanks to major recent advancements in technology (shipping, information, logistics, etc.) and trade policy liberalization.”

A Mont Pelerin Society Conference in Oslo (Part 1)

The Society

The Mont Pelerin Society (MPS), created by F.A. Hayek shortly after the end of the Second World War in 1947, is a forum to discuss and debate ideas about liberalism. An explanation from the MPS website on the use of the word “liberal”: “[It] is used in its European sense, broadly epitomized by a preference for minimal and dispersed government, rather than in its current American sense which indicates the opposite preference for an extension and concentration of governmental powers.”

From the MPS website:

The Mont Pelerin Society is composed of persons who continue to see the dangers to civilized society outlined in the statement of aims. They have seen economic and political liberalism in the ascendant for a time since World War II in some countries but also its apparent decline in more recent times.

Though not necessarily sharing a common interpretation, either of causes or consequences, they see danger in the expansion of government, not least in state welfare, in the power of trade unions and business monopoly, and in the continuing threat and reality of inflation.

Again without detailed agreements, the members see the Society as an effort to interpret in modern terms the fundamental principles of economic society as expressed by those classical economists, political scientists, and philosophers who have inspired many in Europe, America and throughout the Western World.

Eamonn Butler writes in his book “Scaling the Heights”, a history of MPS:

…[W]hile the Society itself remains little known among the public, many of its individual members are indeed both well known and influential in the academy and in world affairs.

Some, for example, have been government ministers (e.g. Sir Geoffrey Howe in the UK, Antonio Martino in Italy, Ruth Richardson in New Zealand and George Shultz in the US) or senior officials (such as former Federal Reserve Chairman Arthur Burns and Polish National Bank Chairman Leszek Balcerowicz). A few have been presidents or prime ministers (among them Ludwig Erhard of Germany, Luigi Einaudi of Italy, Mart Laar of Estonia, Ranil Wickremesinghe of Sri Lanka and Václav Klaus of the Czech Republic). Several have influenced economics and culture sufficiently to win a Pulitzer Prize (Felix Morley and Walter Lippmann) or a Nobel Prize (including Friedrich Hayek, Milton Friedman, James M. Buchanan, Gary S. Becker and Mario Vargas Llosa). Others, including educators, journalists, businesspeople and leaders of policy think tanks across the world, have wielded influence in different ways.

Yet they have done all this as individuals, not as representatives of the Mont Pelerin Society. The Society’s sole contribution to world affairs is its provision of a forum for debate, discussion, study and self-education among its members, their guests at meetings and young scholars – not through political action. It has no official views, formulates no policies, publishes no manifestos, aligns itself with no party and accepts no political or public funding. It does not even try to reach agreement on anything. No votes are taken. Instead, it promotes free and frank debate, aided by a long-standing policy that its discussions are neither broadcast nor reported (though some of the set-piece lectures and presentations are now recorded and appear online).

I was introduced to MPS in 2014 by Parth Shah, the founder of India’s Centre for Civil Society. I became an MPS member in 2018. General meetings are held every two years. So far, I have attended the meetings in 2014 (Hong Kong), 2016 (Miami) and 2018 (Gran Canaria). (The 2020 general meeting was not held because of the pandemic. There was a special meeting held in early 2020 at Hoover Institution which I had attended.) I also recently attended the 2022 meeting held recently in Oslo in the 75th years of MPS. The theme was “Liberal Institutions and International Order—Renewing the Infrastructure of Liberty”. For me, attending an MPS meeting is a wonderful way to meet academics and intellectuals from all over the world, along with an exposure to ideas about freedom and prosperity, which are quite alien in the Indian context.

Society meetings are completely private, so this is not an essay about the meeting and the discussion that took place. Instead, what I want to discuss is the importance of MPS in creating a better, more liberal world order, and India’s pathway to creating a free, open and prosperous society.

Thinks 665

Randall Holcombe: “Humans have always lived and worked in groups and instinctively seek to cooperate with others in their group while viewing people in other groups with hostility. People in the same tribe work together for their common good. People in other tribes are potential predators or potential prey. Those tribal instincts have stuck with us in modern times, often in socially harmful ways. Tribal instincts are the basis for racism and lay the foundations for nationalism. Modern societies have developed institutions to channel tribalism in non-destructive ways, such as organized sports. Rather than going to war with those of another tribe, we play games against them, giving us the satisfaction of battling another tribe while minimizing the death and destruction that accompanies other types of battles. Electoral politics also plays on tribal instincts. We choose sides, and it is us against them. How sides are chosen is, at least partly, up to the politicians who are up for election.”

Talia Barnes and Luke Hallam: “Freedom has value because it allows us to find structure, while structure has value because it helps us to exercise freedom. Only through a healthy relationship with both do we feel empowered and connected. On the other hand, when freedom is stifled or misdirected, people feel anxious and trapped; and when structure is thwarted or tampered with, people feel depressed and disoriented. This suggests why social media is contributing to a sense that everything is going wrong. When it comes to both freedom and structure—those precarious interrelated values—digital platforms offer us the hope of something meaningful, and spectacularly fail to deliver.”

Mint: “Artificial Intelligence (AI)-based image and art generators are having a moment. While DALL-E 2 and Craiyon have garnered most of the attention so far, a new tool is now generating interest. It’s called Midjourney…These new AI tools let people create images through simple word descriptions.”

A Vietnam Visit (Part 4)

Learnings for India

Vietnam’s manufacturing and exports success has been one of the key reasons for its growth. This is where India lags. India has still not been successful in moving people out from low productivity agriculture into manufacturing. I believe there are four reasons which need to be tackled. First, there needs to be a much greater on-ground ease of doing business. Laws, politicians and bureaucrats connive to make doing business hard. Second, there needs to be a strong emphasis on improving education. Under successive governments, education has been politicised and controlled. India needs to free its education sector. Third, India’s policymakers falling in love with tariffs need to realise that a tax on imports is a tax on exports. Finally, there needs to be a focus on encouraging labour-intensive industries to absorb people wanting to move out from villages and agriculture.

What India is missing is quality jobs paying Rs 40-50,000 a month with a promise of upward mobility as a reward for hard work. Today’s India seems stuck between the sub-Rs 20,000 job and the high-end job in IT and specialist functions paying upwards of Rs 100,000 a month. The chasm in the middle needs bridging. This will need a disciplined focus on education, manufacturing, free trade, contracts enforcement (a legal system that works), and removal of restrictions that hinder doing business on-ground. Simply creating more PLI (production-linked incentives) schemes is not the solution to creating hundreds of millions of jobs which ensure that tomorrow’s life will be better than today for aspiring Indians.

The Indian Express explains India’s jobs crisis:

The movement of workforce from agriculture that India has witnessed over the past three decades or more does not qualify as what economists call “structural transformation”. Such transformation would involve the transfer of labour from farming to sectors – particularly manufacturing and modern services – where productivity, value-addition and average incomes are higher.

However, the share of manufacturing (and mining) in total employment has actually fallen along with that of agriculture. The surplus labour pulled out from the farms is being largely absorbed in construction and services. While the services sector does include relatively well-paying industries — such as information technology, business process outsourcing, telecommunications, finance, healthcare, education and public administration — the bulk of the jobs in this case are in petty retailing, small eateries, domestic help, sanitation, security staffing, transport and similar other informal economic activities. This is also evident from the low, if not declining, share of employment in organised enterprises, defined as those engaging 10 or more workers.

Simply put, the structural transformation process in India has been weak and deficient.

India needs to prioritise economic growth. It needs policies which free businesses, people and trade – and get the government out of business. With many countries and continents under economic duress, this is a unique moment in time for India to shed the baggage of the past and reverse policies that have kept people poor. (800 million Indians are still dependent on free food from the government for their survival.) Politically-induced poverty needs to be replaced with freedom-driven prosperity. If the politicians don’t do it, middle-class Indians need to rise and set the agenda. It is their future that is at stake. Can India, learning from countries like Vietnam, set itself on a Nayi Disha? It was these thoughts that were uppermost in my mind as we landed back in Mumbai from Ho Chi Minh City.

Thinks 664

Fraser’s Economic Freedom of the World Annual Report 2022. It reports on the economic freedom for the year 2020. Hong Kong remains in the top position, though its rating fell an additional 0.28 points. Singapore, once again, comes in second. The next highest-scoring nations are Switzerland, New Zealand, Denmark, Australia, United States, Estonia, Mauritius, and Ireland. The rankings of some other major countries are Japan (12th), Canada (14th), Germany (24th), Italy (43rd), France (54th), Mexico (65th), India (90th), Russia (94th), Brazil(114th), and China (116th). [via Atanu Dey]

Russ Roberts: “”I came to realize that economists…tend to focus on things that can be measured. Dignity is hard to measure. A sense of self is hard to measure. Belonging is hard to measure. A feeling of transcendence is hard to measure. Mattering—that you are important, that people look to you. [These sorts of things are] about the life well-lived and they’re not about getting the most out of your money. They’re not about what the interest rates are next week. And economists truthfully have virtually nothing to say about these things.” [via Reason]

Samuel Gregg: “[G]overnment use of industrial policy undermines the market’s ability to furnish the accurate information needed by entrepreneurs, investors, and businesses to identify the most optimal economic path for each of them to follow – a process which constantly allows millions of piecemeal improvements to be made across the overall economy. By contrast, if industrial policies become a central feature of economic life, inefficiencies will grow throughout the economy as people act on the basis of increasingly bad information.” [via CafeHayek]

A Vietnam Visit (Part 3)

Like China, Vietnam has single-party rule. From Wikipedia: “Vietnam is a unitary Marxist-Leninist one-party socialist republic, one of the two communist states (the other being Laos) in Southeast Asia. Although Vietnam remains officially committed to socialism as its defining creed, its economic policies have grown increasingly capitalist, with The Economist characterising its leadership as “ardently capitalist communists”. Under the constitution, the Communist Party of Vietnam (CPV) asserts their role in all branches of the country’s politics and society. The president is the elected head of state and the commander-in-chief of the military, serving as the chairman of the Council of Supreme Defence and Security, and holds the second highest office in Vietnam as well as performing executive functions and state appointments and setting policy. The general secretary of the CPV performs numerous key administrative functions, controlling the party’s national organisation. The prime minister is the head of government, presiding over a council of ministers composed of five deputy prime ministers and the heads of 26 ministries and commissions. Only political organisations affiliated with or endorsed by the CPV are permitted to contest elections in Vietnam.”

A 2018 WEF article wrote about Vietnam’s growth: “According to analysts from the World Bank and the think tank Brookings, Viet Nam’s economic rise can be explained by three main factors: “First, it has embraced trade liberalization with gusto. Second, it has complemented external liberalization with domestic reforms through deregulation and lowering the cost of doing business. Finally, Viet Nam has invested heavily in human and physical capital, predominantly through public investments.”

Bloomberg wrote a few months ago about the challenges facing Vietnam:

Vietnam can do a lot better. The government is only aiming for 7% growth this year — meager compared to the double-digit expansions China registered during its export-driven boom in the early 2000s. Even though there have been talks of shifting supply chains, progress in moving mass production of more advanced tech products to Vietnam has been slow.

The bottleneck is poor infrastructure. The nation, shaped as a long and curvy letter “S,” still relies on roads — which can be narrow, congested and bumpy — for three-quarters of freight and 90% of passenger traffic. Meanwhile, not all ports along the coast can be used for the biggest container ships. By comparison, even during Shanghai’s Covid-related lockdown, the nearby Ningbo port was still operating and exporting.

Road modernization, while a national priority, has been slow. A planned North-South Expressway, described as the future transport backbone, has seen long delays, as the government struggles with cost overruns.

… From geopolitics to female labor-force participation, Vietnam’s got everything to its advantage. What’s holding the country back is Hanoi’s policy inertia, and its failure to build up its infrastructure.

As India seeks growth and betterment for its people, what can we learn from Vietnam’s success story?

Thinks 663

Peter Coy: “Economists ought to read more science fiction. All that fun, futuristic stuff: phasers, lightsabers, replicants, intergalactic federations, extraterrestrial beings in hovercrafts…One reason economists should read more science fiction is that sci-fi opens the mind to other ways the world could be. That’s valuable in general, but sci-fi is especially useful for economists, because it often delves into topics that occupy them, pushing those ideas to their logical extremes. For example: What if money went away? What if corporations became more powerful than governments? How would we reorganize society if no one needed to work? This isn’t idle speculation. Strange things happen far more often than we like to think. Reading sci-fi sensitizes us to the possibility of radical change…But sci-fi doesn’t just brace people for extreme change; it can also encourage them to bring it about. Science fiction is “a political resource, as it empowers the critic and the radical to see the present as amenable to conscious transformation,” William Davies, a professor at Goldsmiths, University of London, wrote in a 2018 book that he edited, “Economic Science Fictions.””

Anton Howes on writing strategy: “I find that in general getting writing done always comes down to just two things: underlying tensions between research and writing, and editing and writing. In these titanic struggles, research and editing both cannibalise writing. Although they are still necessary to it, they are still ultimately the enemy. And once you know who your enemies are, they get a whole lot easier to fight. Knowing the strengths and weaknesses of these enemies, the main overall strategy I have is to just write. Splurge whatever you can on the page and just. keep. writing. Don’t look back over any single line you write or you will be like Orpheus escaping the Underworld with Eurydice — look back even once and it’s game over. Just keep going, writing as though you’re talking to a chatterbox and you’re afraid they might interrupt. When there’s a point you can’t remember just put a placeholder in. Can’t remember a precise year? It was in XXXX. Can’t remember a name? XXXX said it. Can’t remember a statistic? It was X%. Citation here? Don’t pause to insert a footnote or you lose. Just put the surname of the author in square brackets right then and there in the line to come back to and tidy up later, perhaps a page number if you’re afraid you’ll forget, or perhaps a hyperlink if you’ve already got something open and to hand. But you just have to keep going or one of either research or editing will win. Once you’re done and your thoughts are all on the page, the enemy is broken. You can go back over and edit for clarity, and pick up any nonsense or repetition. You can go look up what all those XXXXs were and insert them or correct them or decide to put in something else entirely. But by this stage you’ll have already won the war.”

Eric Ashman: “The startup press chases clicks on headlines, just like every other online publication, which leads to an overly simplistic framing of founders as either heroes or villains. The hero story follows founders on the way up, fundraise after fundraise, championing growing valuations and larger rounds of funding. They build these founders up and never miss an opportunity to turn them into villains and kick them on the way down. Do you know what stories don’t get told? The grind. The stress. The sleepless nights as you think about your missed sales targets, shrinking cash runway, and increasingly contentious board meetings. My advice. Be wary of stories about founders and their startups that are told throughout the journey before we know how the story ends. More often than not, you’re reading PR rather than an accurate account of the prospects for that startup’s success.”