Mannkal Economic Education Foundation


Memories of Moscow - The usefulness of Public Choice Theory

Ron Manners, 11 March 2015
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The brief mention of ‘Public Choice Theory’ in last month’s Mannerism - ‘Why have we built a million shrines to Islamic Terrorism?’ - link has created considerable interest with many people asking why Public Choice Theory appears not to be taught as a subject in Australian universities.

The usefulness of Public Choice Theory, in explaining all manner of bad government policies, has been known for many years. So could I cynically ask if this may be why it is not being taught?

One of the originators of this theory was James Buchanan (1986 Nobel Prize Winner) and I was fortunate enough to be with him on the 40 person, Cato Transition to Freedom, team sent to Moscow / St. Petersburg for several weeks in September, 1990. Our task was to “show the Russians how to handle free-enterprise because it was arriving the following month.”

Our audience consisted of high ranking government officials / Communist Party operatives, intellectuals and sundry dissidents.

Some of the audiences were over 1,000 in number, all leaning forward eagerly, with their translating devices to their ears.

James Buchanan was telling any Russian who cared to listen that one of the greatest dangers they faced was to have their economy captured by ’special interest groups’.

As a result, of this, they could end up with a catastrophe that would bear no resemblance to a free-market economy, one that would deliver them absolutely none of the anticipated benefits.

He explained that a study of Public Choice Theory would explain how political decision-making quite often results in outcomes that conflict with the preferences of the general public. Advocacy groups, with their pork-barrel projects, could be the end result of the painful revolution they were currently experiencing.

He painstakingly explained to them the extreme effort to which those receiving the ‘concentrated benefits’ would go to bring about their objectives at the expense of all those millions shouldering the costs. Those bystanders would not make any effort to resist strenuously and, in fact, be unaware of what was happening.

Now, 25 years later, looking back, it is plain for all to see that this is exactly what transpired and why so many Russians ‘yearn for the return of Communism’.

Unfortunately, our Australian experience is not much different (apart from the lack of physical violence) as we can see the detrimental effect, capably explained by Public Choice Theory, as we observe the constant stream of news reports drawing attention to bad government policy forever coming out of Canberra or Perth, delivered as from a conveyor belt with no ‘off button’.

Here, in Perth, let me give you three examples ….

1. The Potato Board survives (Western Australia has become an international joke because of this).

Those benefiting from the existence of the Potato Marketing Corporation of Western Australia receive benefits, concentrated and focused on them and them alone. The rest of us share the burden of the cost of all this as well as reduced choice of potato varieties.

2. Another example is the extortionate rate of Credit Card Interchange Fees applying in Australia, resulting in Travel Industry Downgrades to Australia: -

YouTube link

Click here for text of YouTube

The attention to these issues by the travel industry should bring this taxi / airline game to an end shortly.

Recently, our State Government announced that they have reduced the maximum Interchange Fee for taxis permitted, down from 10% (+ GST) to 5% (+ GST).

However a reasonable rate should be ‘zero percent’, as is charged by the new competitor, Uber.

The 10% or 5% does not go to the taxi drivers or to the credit card companies; it mainly goes to Cabcharge who pad their lobbying justification with all sorts of ‘administrative fees’.

The minuscule credit card fee is normally absorbed by most businesses, simply as a ‘cost of doing business’.

Meanwhile, it’s best to pay for taxi rides or air tickets with cash, as recommended by overseas travel agents.

3. Another example of the Public Choice Theory explaining some government expenditure mysteries, could be the ‘forest’ of Solar Operated Speed Signs popping up all around Perth’s schools.

This could be a ’solution’ in search of a ‘problem’ as it appears to solve a non-epidemic of student deaths near schools.

The schools already have clearly visible speed signs, but the new solar contraptions are a tribute to supreme salesmanship.

Yes, it will be us again picking up the invoice, $160,000 per school and W.A. has 1,113 schools, so that’s potentially between $36M and $178M neatly spread over all of us.

All this at a time when the State’s finances are stretched and Perth is already known as the ‘Sign Capital of the World’ with signs everywhere proclaiming what we can and can’t do.

I won’t even start on Federal affairs, but will leave it to you to apply this Public Choice Theory to our Foreign Affairs Department who are currently spending hundreds of millions of our dollars searching for someone else’s plane, in an area where there is absolutely no evidence of the plane disappearing.

4. Shortly we will have another example put before us.

This week’s announcement about major ‘reforms’ to your ‘Superannuation arrangements’, is alerting us to the fact that our Federal Government, in deep trouble financially, has noticed that prudent Australians share $2 trillion in their superannuation funds.

That’s greater than the entire value of Australia’s Stock Exchange and 30% more than Australia’s entire GDP.

If these private assets could be seized, or diverted to infrastructure, it is plain to see who will benefit.

It has happened before, in Australia and elsewhere.

Perhaps this is why some investment managers are suggesting that a portion of our superannuation funds should be allocated into more ’secure’ investments.

Watch out whenever governments knock on your door (or your TV screen) with ‘offers to help’.

It could be that we have learnt from history and know all this already.

Is that why Australians usually vote against any amendments to the Australian Constitution?

Those pushing hardest for those amendments will be those receiving the ‘concentrated benefits’.

Please enjoy your search for ‘bad government policies’ and the driving forces behind them.

Why have we built a million shrines to Islamic terrorism?

Ron Manners, 5 February 2015
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Do you remember the old Chinese proverb?

“Travelling ten thousand miles is better than staying home and reading ten thousand scrolls.”

Well, after passing through seventeen airports in the last four weeks, I’m convinced that this proverb was written long before we transformed all our airport security facilities into ’shrines’ which demonstrate to the world that Islamic terrorism has decisively won the war against civil society.

Will we continue to erect these barriers to free movement to the point where we will be forced to stay home and read those boring ten thousand scrolls?

A good economist would analyse these ‘Airport Shrines’ of sophisticated screening equipment, all expensively staffed, as examples from Public Choice Theory that studies ‘concentrated benefits and dispersed costs’. Those benefiting from the provision of such equipment and services – such as those selling body-scanners or working as intrusive security officers – profit very handsomely from being a part of this nefarious charade. Conversely us many millions of travelling public patiently endure this disruptive probing, poking and inconvenience, feeling powerless to do anything about it.

Well, next time you travel and have to take out your laptop, empty your pockets, remove your belt and shoes and spread your personal items before the gloating eyes of a bureaucrat, simply think of this as the outcome of your non-action.

Edmund Burke put it well when he said, “All that is necessary for the triumph of evil is that good men do nothing.”


Ron Manners, 23 January 2015
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Ron’s comments for Saturday 29th Nov. 2014

Mannkal’s Outgoing Student Briefing

I have 3 minutes….

1. Someone sent me a LinkedIn message earlier this year saying ………, “I’d like you to tell me exactly what you had in mind when you set up Mannkal Foundation.  Was it to get people interested in politics?”

My reply was, “It was exactly the opposite.  It was to get people more interested in themselves and their own ability to solve problems without getting the government involved (which usually brings on more problems than solutions).”

So, I’m interested in CHANGE and we want you to be facilitators for change.

We don’t just mean cosmetic change, like changing one set of politicians for another bunch.

This is not change as the same political and bureaucratic apparatus remains in place.

That sort of change reminds me of the Admiral of a ship some years ago who had just inspected the living quarters on one of the ships and he said to the Captain, “This is no good, it stinks below deck and I think it is time for your crew to do something about it.  For instance they could start by changing their underwear.”

So the Captain immediately went below, called the crew together and issued specific instructions to remedy this problem.  He commanded that Jones change underpants with Simpson and Brown change underpants with Ledger and so on.

So that is simply change for change sake, but it’s not what I’m talking about today.  I’m talking about fundamental change.  What sort of fundamental change?

a) Speak up when you see governments spending your own hard earned money on dubious populist causes.

For instance Perth currently is at risk of ending up with more football ovals than we have football teams.

b) The problem is not just political either it has infected the business community around the world too.  For instance, every day we see executives of public companies giving away their shareholders’ money on various benevolent causes and then those executives go out and pose as ‘philanthropists’ themselves.  It’s not even their money to give.

This is replicated in a larger sense by the investment banks where you saw them bringing in the financial crisis by creating those defective derivatives and selling them off all around the world.  Their actions were criminal and those investment banks were subsequently fined billions of dollars.

But, who paid the fines?

The shareholders.  The executives didn’t pay the fines it was the shareholders!  The executives kept their jobs and their bonuses.

Why no outcry?

Simple, because very few understood the scale of manipulation that was going on at the time.

2. What got me interested in the power of these short term internship opportunities that you’re embarking on?

Well, I was lucky enough to be selected when I was about your age, back in 1968, to attend a Duke of Edinburgh Commonwealth Study Conference.

Prince Philip, himself, trained us on how to get inside the minds of community leaders and people at all levels, simply by asking the right questions.  The first question is never the one that gives you the real answer.

That experience, combined with an understanding of the free-market’s ability to solve complex problems, has made all the difference in my own personal life and business life over those subsequent decades and I hope that your own experiences, as you go out into your various locations, will give you the same lasting benefits for the rest of your own lives.

It’s as simple as that.





A Big Fat Fail for ANU!

Ron Manners, 9 December 2014
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The appalling behaviour of Canberra’s Australian National University calls into question their understanding of the word ‘research’.

Proudly, with his biases on full display, ANU’s Vice Chancellor, Prof. Ian Young, announced that the university’s $1 Billion investment fund would no longer hold shares in seven resource companies:

 Iluka Resources Ltd
 Sandfire Resources NL
 Independence Group Ltd
 Santos Ltd
 Oil Search Ltd
 Newcrest Mining Ltd
 Sirius Resources NL

He said that these companies had failed their socially responsible screening process and the university did not want to invest in companies that cause ’social harm’.

‘Social harm’ now joins Australia’s collection of weasel words that can mean anything to anyone, depending on how they were programmed for that day.

After publicly damaging the hard-earned reputations of these seven fine Australian companies, it was disclosed that ANU’s ‘research’ was limited to what was disclosed on those company websites and not concerned in any way with what the companies actually were doing in the ‘real world’.

Having made fools of themselves in this way, ANU should not be surprised at any resulting withdrawal of research funding (on the assumption that all their research may be similarly flawed) or if parents and students take steps to investigate the ANU’s research credentials and compare them with other competing educational institutions.

Entrepreneurship Kalgoorlie style, circa 1985

Ron Manners, 12 November 2014
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Business was a bit quiet so we moved the office back into the home and leased out the office building.

This caused us to acquire another telephone line, to separate our ‘private’ from ‘business’ life.

We were totally unprepared for the deluge of phone calls we would receive to the ‘new number’.

Evidently, this number was previously owned by a lawn mowing contractor who had gone out of business but in a testimony to the effectiveness of the ‘yellow pages’ the phone kept ringing and people kept requesting their lawns to be mowed.

After a few calls Jenny and I, one Saturday afternoon, took a call and whimsically agreed to mow a gentleman’s lawn at 3.00 p.m., on the condition that he paid in cash and we offered him our ‘special service for the day’.

This was, in fact, an offer to send a ‘topless’ woman down to mow his lawn promptly at 3.00 p.m.

Well, at that time Jenny and I were happily in our car, driving by this gentleman’s address and laughingly note that he was all polished up, showered, shaved and a fresh shirt, standing out there on his front veranda with expectation written all across his face.

He was of course disappointed but we enjoyed the comical aspect of the situation.

Well, after some time, we had tired of playing this trick and decided to offer our ‘ongoing business’ of lawn mower contracting for sale as a going concern.

My Accountant warned me that the ATO had just introduced something called the Capital Gains Tax, so we would have to pay tax on the proceeds of such a sale.

However, we managed to sell the business for cash, and we proceeded to acquire quite a different phone number and managed to live happily ever after.

Australian Embassy in Ukraine? (The things seen and unseen)

Ron Manners, 4 September 2014
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A recent news item about Australia opening a full embassy in Ukraine could be seen as good news for Ukraine as it entails some additional ‘spending’ on probably a new building and local staff and this as the early French Economist, Frederic Bastiat would say, “are the things seen.”

However, Bastiat, being a good economist, was always conscious of the things unseen as, in this case, the additional spending by the long-suffering Australian taxpayer and the other priorities within our ‘foreign aid budget’ that need to be diminished if Australia is to avoid borrowing even more money from China to allow us to continue spending beyond our means.

Pardon me for being cynical on this occasion but it reminds me of my first visit to Western Australia House in London in the mid-1980s when I was being shown around by our Agent General, Mr Ron Douglas (former State Manager for the Shell Company). Ron had just taken up this position and he explained to me his amazement to find that he had a staff of 48, very few of whom had ever been to Australia.

All were employed under the Australian Public Service Act, which meant that they were ‘unsackable’ and he was unable to dismiss those who were not productively engaged.

In fact, he was having difficulty in finding out what they were actually doing as from the quick appraisal around the office it appeared that they were more interested in drinking cups of tea and reading paperback novels.

He smilingly explained to me, once he realized they could not be dismissed, “Ron, I am unable to sack them, however, I intend to stretch them and I’ve cancelled the courier contacts and any mail or packages that need delivering will be delivered personally by my abundant staff here”.

Presumably, this was duplicated in all the other individual ‘State Houses’ that were in London at that time, remembering that, in addition, there was another complete duplication in the form of Australia House where our Commonwealth was engaged with the ‘Motherland’ quite independently of the efforts of each State.

Moving completely away from my cynicism let me finish with a quotation that may be the sanest comment ever made by any Australian politician. This comment relates absolutely to the situation I’ve described above where Sir Charles Court said,

“The miner, the industrialist, the trader, the financier and the banker, if they play their role correctly, will do more to achieve world understanding and peace in a generation than the politicians and diplomats could do in a hundred years. Why? Because they are closer to reality, closer to their opposite numbers, closer to the community in the countries where they operate. In other words, they have more to do with real people than with institutions”.

Hon. C.W. Court, OBE, MLA., Minister for Industrial Development – 1971.

“Drink a Toast to Outstanding Public Service!”

Ron Manners, 28 July 2014
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In Australia, if there is one person to thank for Australia’s prosperity over the past 30 years, it is Bert Kelly - the Modest Farmer / Modest Member from Tarlee, S.A.

He had an idea that Australia’s then overwhelming protectionist policies and tariffs were holding back Australia’s prosperity.

He stuck with his idea and mentored a small bunch of volunteer colleagues who became known as ‘The Dries”[i]. They conceived policies to remove these restrictions. These policies were implemented and Australia flourished.

At Mannkal Foundation we ‘prospect’ but unlike prospectors who prospect for gold and minerals, we prospect for success stories like Bert Kelly’s and we have found another in the form of John Cowperthwaite.

If there is one person that deserves credit for the prosperity of Hong Kong it is John Cowperthwaite (Financial Secretary 1961- 1971).

His idea? He refused to provide any Hong Kong statistics to his political masters in the U.K.

He knew that if they had access to such statistics they would be tempted to impose central planning on Hong Kong.

He could see the damage that central planning was doing to the economy in the U.K. and he would have no part of it for Hong Kong.

So, Hong Kong prospered and has for many years been the ideal model for other countries to follow.

Hong Kong repeatedly comes in first in the Annual World Index of Economic Freedom[ii].

John Cowperthwaite had this idea and although it made him unpopular in certain circles, he knew that he had to safeguard the prosperity of Hong Kong; so we honour him as a public servant with the qualities of clear thinking and courage.

We will be ‘saluting’ him by requesting our Mannkal scholars, who attend internships in Hong Kong, to research aspects of Sir John Cowperthaite’s career.

Cowperthwaite’s challenge was entirely different to Bert Kelly who set about removing impediments to prosperity.

Cowperthwaite’s challenge was to preserve and encourage prosperity.

They were both fine examples of individuals who should be remembered and emulated.

Please bring more success stories to our attention.


[i] The foremost of the ‘Dries’ included Bert Kelly, John Hyde, Jim Carlton, Peter Shack, Murray Sainsbury, Stephen Lusher, Jim Short and Ross McLean. Their full story is told in John Hyde’s Dry: In Defence of Economic Freedom - IPA -

[ii] In Perth, the Fraser Institute, will be launching the results of this year’s World Index of Economic Freedom at a Mannkal / IPA event at the Celtic Club on Thursday, October 30th - you are invited, see details at

Travel; an easy decision!

Ron Manners, 24 June 2014
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When multiple invitations arrive and they all string together into one potentially great adventure, what does one do about it?

Accept of course! This resulted in a remarkable June, 2014.

The five invitations were:-

• Attend an intimate dinner with one of my favourite economists, Prof. David Friedman, during his brief visit to the Lion Rock Institute in Hong Kong.
• An opportunity to interview the remarkable Linda Whetstone in U.K. (and spend a weekend with my daughter and family).
• To attend the wedding of two amazing young people in Ukraine, including the opportunity to try some Australian poetry on the guests.
• To interview four of the key young people in Ukraine who organized the Euro-Maidan Revolution, resulting in their corrupt President fleeing the country.
• To participate in the 25h anniversary of the Tiananmen Square Revolution, held in Hong Kong on 4th June, 2014 where 1,500 people were expected to attend but 200,000 turned up. There I was with my video camera and a supportive Chinese interpreter.

There are many memorable moments from this trip as I was confronted by young people who, having experienced living in a country or close to a country that has been stripped of everyday freedoms, virtually sparkle with anticipation of enjoying the freedoms that we, in Australia, are born with and so casually take for granted.

We can ‘buck the bureaucracy’ and the penalty is to be annoyed with correspondence or perhaps a modest fine.

For them, they will carry memories for the rest of their lives, particularly if they have been standing next to a 25 year old friend who was shot by their own Government for ‘bucking the bureaucracy’.

These thoughts run through my mind as I complete the editing of some videos to be loaded - here

These are the videos with details of their availability status.

1. Prof. David Friedman – Lion Rock Institute, Hong Kong here

2. Linda Whetstone (U.K.) in Conversation here

3. Tiananmen Square 25th Commemoration in Hong Kong here

“Do not expect water from an empty well!”

Ron Manners, 20 May 2014
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Budget comment


The wise old Chinese philosopher Four Finger Wu used to say, “Do not expect water from an empty well!”, when he realized there was nothing there to feed your fantasies.


Yes, it’s time to look after ourselves, even after spending so many years living at the expense of others.


“Others”, in reality ourselves, have become tired of paying everyone else’s expenses now that they realize so little comes out the other end after politics and the bureaucracy “skims the cream off”, as it passes through so many government departments.


Federal and State budgets have come and gone again with the usual amount of squealing from those who feel disadvantaged after being reminded that “the age of entitlement is over” (as announced by Federal Treasurer, Joe Hockey).


Interestingly enough our Prime Minister, Tony Abbott, has simultaneously announced that “the age of entitlement is just beginning” (with his Parental Leave Scheme where we are now expected to pay people to stay home and share quality time with their children).  Yes, it is us paying as we are the shareholders, through our compulsory superannuation funds, who own shares in the companies that are now to pay the Parental Leave Tax.


On the positive side, these budgets, State and Federal, have brought on many statistics to prompt us to face reality.


1.       Australia is now one of the highest taxed countries (I bet you don’t know how much total tax you are paying, as it is a mammoth job to add all the hidden taxes together.  It is possible for you to pay 84% total tax in one year in Australia).

2.       Australia’s household debt is now amongst the world’s highest so where do we go from here?

3.       Australia is paying $90 million to search for someone else’s plane (Malaysian Airlines MH 370), without us being told if this amount is to come from either of the following two options;

·         Our existing foreign aid budget (which means that some other numbers are to be reduced).


·         By borrowing more from China.


Perhaps it is fair to observe that nothing much will change until “we, the people”, accept responsibility for our own selves and families. 


Do you see many of us sending back our welfare payments? (Family support, health, education and, in particular, the corporate welfare payments).  However, let me mention that pensions are not welfare payments to those who have paid taxes.


The French philosopher, Frédéric Bastiat, over 150 years ago must have had in mind Australia 2014 when he said, “The Government is that great fiction by which everyone tries to live at the expense of everyone else.”


However, at least we still have the best beaches in the world!

Western Australia Revitalized?

Ron Manners, 28 April 2014
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The Economic Regulation Authority (ERA) has opened up the windows and let some fresh air in.

Congratulations to Lyndon Rowe, the Chairman of the ERA, in releasing this draft report on “Microeconomic Reform in W.A.” on April 11th, 2014.

You will find the draft report, the separate overview and also a six minute video - here

Our State politicians are in a fortunate position, having a document such as this, to guide them in actions that will make a difference.

The timing of this report is important as our parliamentarians are faced with the choice of:-

1. To do nothing and allow us to drift into a ‘period of weak growth in Australia for at least 50 years’) as outlined in Federal Treasury’s warning from today’s Australian – here

& capably described by State Treasurer, Dr. Mike Nahan today - here


2. They can revitalize our State’s economy by instituting policies outlined in the ERA report.

There is no ‘third way’ so those of us who favour a healthy economy should open up lines of communication with our own local MPs and urge them to read and understand the ERA report and step forward and kick a goal for our State.

How do we judge whether this report is effective?

It must be, because it has upset all the usual entrenched vested interests that have lost sight of ‘serving their clients’ (an example is the Potato Board … having been abolished elsewhere it has miraculously survived in W.A., and continues to give us more expensive potatoes).

Henry Ford once said;

“Obstacles are those frightful things you can see when you take your eyes off your goal.”

His words should be remembered by our politicians when they study the ERA’s report.

The ‘obstacles’ identified in that report benefit only the bureaucracy and our politicians were not elected to represent the bureaucracy.

I commend this report to you and for further background reading you might enjoy:-

  • Mannkal’s submission to the ERA in September, 2013 - here
  • The Mannkal – IPA Project WA Report - here
  • How Weak Management Destroyed Australia’s Competitiveness - here

We are happy to receive your own comments, by simply responding to this blog.