Mannkal Economic Education Foundation


Governments spend your money unwisely, and then blame you for not paying enough tax!

Ron Manners, 3 June 2015
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Comments to the Free Market Road Show in Budapest, Hungary - May 27th, 2015

You might think that Australia is not relevant to this wonderful country of Hungary but let me assure you that we have exactly the same problems with government that you have and that Greece has…. In fact, it is a universal problem of governments spending your money unwisely, buying your votes for their next election, and then blaming you for not paying enough money in taxes.

They then think that by raising taxes, they will raise more revenue.

They are quite wrong you know because in reality it works the opposite way. Tax rates and tax revenue are quite different.


This graph illustrates that in Australia when taxes were reduced in the 1990s, the tax revenue actually went up, mainly because we were all encouraged to work harder.

Our politicians have forgotten this because many of them don’t understand economics.

Australia has a lot to learn from Hungary with your decision to introduce the simple flat rate tax, as this has given you an opportunity to start reducing your debt.

I’ve just spent an interesting week in Greece, the home of democracy where the original idea was to vote for people who have earned our trust and respect.

Well, all that has changed in most countries where, apart from a few exceptions, people vote for the politicians who promise to steal money from others so they can buy the votes of their own followers and so remain in power.

We are hearing today from various speakers whether this is the case in Hungary but in Australia it can be seen that welfare, unemployment and entitlements have become dynamic growth industries, whilst innovation and productivity are not enthusiastically encouraged.

This will all change in both our countries when the philosophy of liberty and free markets becomes the driving force and the national priority. I have been impressed at the way Barbara Kolm’s Free Market Road Show has taken this message to a combined audience of over 7,000 this year over the past 44 days, visiting 35 European cities.

Well, that’s the big vision and goal on a large scale which will bring us good government, small government, plus governments we can trust and respect.

However, my message for you today is, “what can each of us, as citizens, do to activate our economies right now while we are waiting for the big tide to change.”

There are many things that can be done to draw attention to the insanity of out-of-control government expenditure and I understand that Australia and Hungary are both facing the possibility of having more football stadiums than football teams.

Anything to get votes!

Now, let me quickly tell you the story of the surprise circumstance that gave Australia its best 15 years of remarkable growth.


A major event happened in 1983. A Labor politician who was a former union boss got elected as Prime Minister; he called his first Cabinet meeting and asked, “Have we got any policies?” Nobody knew what policies were and somebody said, “A small group of politicians known as ‘The Dries’ have been talking about policies for years.” However, their own Prime Minister (Fraser), refused to listen but Hawke, the newly elected Prime Minister, requested information on these deregulation policies (note this is a gross over-simplification of the events), he listened to every detail and then asked his own Party members if they had any better policies. When they advise no, he instructed his own Party to ‘do the lot’. As a result, Australia experienced 15 years of remarkable prosperity.

I benefited from this in several ways, including having one of the ‘Dries’, John Hyde, on our Mannkal Foundation’s Board. John and Mannkal’s Andrew Pickford have produced an instruction book - Project Western Australia - which outlines policies for new Governments to adopt which will get the economy moving. It’s available via a link on Mannkal’s website - This is a model of simplicity which reminds any new government why they have been elected. We sent a signed copy of this to every politician.

So the moral of my story is simply, ‘be prepared’.

Have your own ‘instruction book’ ready in case you can fire it off like an intellectual bullet every time you have the opportunity.  That way, and only that way, will we encourage growth and win the intellectual and economic battle of ideas that we must win, if our future generations are to have a future full of opportunity.

Wanted: An App to Replace Government (For Greece & Australia)

Ron Manners, 7 May 2015
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Just as the Uber App has expanded our choices of transport, so too, do we need apps to avoid  being locked into monopolies or government licensed services.

The recently announced $250M program announced by our government to provide ‘nanny services’ to Australia’s working families is the latest attempt to buy votes with borrowed money.

In other countries apps are available for ‘nanny services’ so you can make your own ‘nanny arrangements’, just as you can for fast food deliveries and other items to make your life easier.

If you are wondering why your government is spending hundreds of millions of dollars of your money, looking for someone else’s aircraft (MH370) in an area where there is no evidence of it having come down you might wonder what additional costs we will incur if we actually find the plane.

Will we offer to recover and rebuild that aircraft?

A risk-reward analysis of this expensive effort would look decidedly unimpressive.

Perhaps this would be avoided if there was a ‘missing aircraft app’?

Here in the West we see our State Government borrowing another $8 billion [i] so it can continue to pay itself.

A remarkable result from our ‘once in a lifetime minerals boom [ii]‘

I worry where all this mismanagement will end.

Perhaps I’ll find out at the Emergency Economic Summit for Greece [iii], to which I have been invited, followed by four Greek city visits.

Will I be having a glimpse into Australia’s possible future?

I promise to report-back on this experience (and I’ll watch out for a ‘better government app’).

How We Lost Our Comparative Advantage

Ron Manners, 7 April 2015
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(A question: Where were our leaders and philosophers, when we had a chance to set some sensible rules on how the game should be played?)

Nobel Laureate (1969) Paul Samuelson was once challenged by the mathematician Stanislaw Ulam to “name me one proposition in all of the social sciences which is both true and non-trivial.”

It was several years later that he thought of the correct response: comparative advantage. “That it is logically true need not be argued before a mathematician; that it is not trivial is attested by the thousands of important and intelligent men who have never been able to grasp the doctrine for themselves or to believe it after it was explained to them.”[i]

I humbly suspect that our mining industry’s ‘bright and intelligent’ people were among those who didn’t appreciate this concept of comparative advantage, otherwise they would have resisted repeated successful attempts by various enemies of our industry to de-knacker it.

This has led to a decline from hero status to ‘pathetic performance status’, where investment returns are such that no-one in their right mind would rely on dividend flow from our resource companies to finance their future.

If what I’m saying is true, then this reflects badly on our industry leadership.

Talking about the word ‘leadership’ our Mannkal Foundation ran an essay context last year at Curtin - W.A. School of Mines. The contest challenged students to ’search for leadership in our industry and report on any examples they could find.’

There were 35 finalists in the contest.

Overall it confirmed that, apart from the courageous few (three or four), there exists a leadership crisis in our industry …. generally populated by puppets and caretakers.

The over-use of the word ‘leadership’ could lead to it becoming yet another ‘weasel’ word’ where any real meaning is blurred.’

Here are some other words and descriptions that fall into the category of ‘weasel words’:-

  • Sustainability
  • Corporate Social Responsibility
  • Social Justice
  • Anthropogenic Global Warming
  • Political Correctness
  • Native title
  • Traditional Owners, or the current push to change Australia Day to Invasion Day.
  • & last, but not least, Stakeholders, (where companies are ranking stakeholder interests before shareholder interest …. it is no wonder that investors have gone elsewhere).

    All of these words or phrases have been used by various rent-seekers as weapons in their campaigns. As public choice theory economists have shown, there is a lot of money to be made by the few who benefit, while the costs are designed to be spread across such a wide number of ‘victims’ that, although debilitating, they are not ‘life threatening’.

    The result is that those who benefit greatly from these programs are incentivized to put in a huge effort to advance their interests, whereas the many who share the burden are not as well organized and continue to carry the financial burden.

    The usefulness of public choice theory in explaining bad government (or company) policies was explained to me by Prof. James Buchanan in Moscow, Sept., 1990 and Robert Nozick described resulting government policy….

    “The illegitimate use of a State, by economic interests, for their own ends, is based upon pre-existing power of the State to enrich some at the expense of others.”

    Governments and corporate executives are in fact giving away money that is simply not theirs to give.

    If they had any understanding of public choice theory they would realize that the moral thing to do is simply say no to all these competing demands for corporate support.

    Economists describe this as ‘Concentrated Benefits and Diffused Costs’.

    The costs are nevertheless substantial and have in many cases caused Australia to become uncompetitive.

    *An excerpt from a speech to the Yilgarn 50 Year Retrospective - - full notes on the speech will be available @

    [i] P.A. Samuelson, “The Way of an Economist.” In International Economic Relations: Proceedings of the Third Congress of the International Economic Association. (London: MacMillan, 1969), pp. 1-11.

    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