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CSOs and State 20, Gawad Kalinga and Housing for the Poor

June 7, 2015, 7:05 pm
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Below are some thoughts from Benito Claudio, a friend of my former professor in UP Diliman in the 80s, Dr. Doy Romero. This was posted last week by Benito and sir Doy in fb and  was read by many people. I like this very successful civil society initiative, Gawad Kalinga (GK). It is very successful that it is being replicated in other Asian countries, and there are GK offices in  the  US, Europe, other countries. Reposting this with my comments below. The images I got from the web and adding them here.
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Doy I speak from my personal participation in three project sites of GK where about 400 houses were built in two sites and about 80 houses and a school were re roofed after a super typhoon in another site. I led a team of volunteers twice to re roof about 80 houses and rebuild a school and provide learning materials and two teachers for a year.

I volunteered in the other two sites. What was so noticeable in the site where we re roofed the houses and rebuilt the school was a working community with sense of involvement and belongingness. The project was well planned with common areas for school, livelihood and open spaces. In effect GK built a community not just houses.

This did not happen by chance but by meticulous planning and highly committed implementation by silent and unsung volunteers. Gk has teams of social workers, construction engineers, educators, livelihood trainors and site managers who oversee the community after the houses were built.
"House owners who were obviously poor in material things donated their service as their equity and I believe this provided a basis for ownership and pride. Livelihood volunteers provided the know how to create common plots for vegetables for the community and other entrepreneurial undertakings. Social workers ensure that community members gel.

In short what I am describing is the building of a wholistic communities where the members can live with dignity. It is so inspiring that my fellow employees grouped themselves to pool resources for a house they helped build. Others spent their vacation leaves to individually volunteer.

But all of these pale in comparison to the commitment of the Meloto family. I suggest the commentators start their research there. A foreign government was so impressed with GK that it provided an office in their country so that GK's effort can go international. . . I believe rightly so.
"The poor will always be with us but it was heart breaking to see a widow covering her young famished children with plastic sheathing against a pouring rain under a roofless house. And I wondered why so few people are lifting their fingers to help.
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Sir Doy Romero added his  own thoughts on the subject: 

the GK communities we visited appeared better organized than many of the non-GK resettlements we visited later. We did not see the lamentable condition of government resettled informal settlers that we documented in our study. In the end, we who observe from a distance really will not matter. The poor who need shelter will get them from GK and not from any other provider, if GK it is that is able to galvanize the energy and passion to get them done. 

I thanked sir Doy for those notes  and observations. GK is a clear example of civil society role at the max, government role at the minimum. People and beneficiaries behave differently if the project implementer is government, national or local. They tend to downshift to dependence, complacency and feeling of entitlement. “Money is from taxes and fees, those politicians are courting our votes, so we sit back and wait.” And just wait for the government housing to be turned over to them by some political bigwigs, with glare and flare of  tv cameras and other media coverage.

In a GK and civil society project, money is from donation, not from coercion. Beneficiaries behave differently. “Those talents and engineers are volunteers, not political appointees and hired paid for by taxes. If we do not help here, those volunteers will pack away and find other beneficiaries who are willing to help themselves and the project.”

GK, Rotary Homes, Books for the Barrios, etc. These initiatives build not only wholistic communities but also mature, self-reliant and non-corrupt, non-entitlement-minded people, especially the poor.

I have a friend from UP, now based in California. He regularly donates to GK and GK updates him and other donors of new projects, how funds are used, etc. He is satisfied so he keeps giving. But he told me that the moment he sees or reads and confirms wasteful use of funds or other shenanigans, his donation will abruptly end.

This threat of fund/donations discontinuity, plus any criminal charges to be filed, is the best regulator of civil society organizations like GK. It’s not the SEC or Congress or BIR that forces transparency and accountability, but the private donors who give in cash or in kind.

One implication here, it is possible to abolish some government housing agencies like the National Housing Authority, in exchange for some tax cuts somewhere. The poor do not care much who can give them free or subsidized, nice housing, whether civil society or government. If dynamic civil society like GK, Rotary Homes, etc. can do the job at little or zero cost to taxpayers, government should step back from more housing bureaucracies and more taxation.

* Digression 1: About relocation of M.Manila squatters to secluded municipalities in Bulacan, Rizal, Cavite and Laguna. A better option is high rise, vertical housing for the informal settlers within M.Manila. Beneficiaries will pay of course, not free, no subsidy. Otherwise, there will be one million more migrants from other provinces seeking free condo in MM. Beneficiaries can pay because they can retain their current jobs and income, the cost of transportation to work is lower, and they will have peace of mind of having ownership of the place where they live. Those who are too poor to pay even small condo units should not begrudge being  brought to  far away resettlement areas. They can have highly subsidized housing there but they will suffer temporary economic dislocation.

The cost of condo units can be reduced via drastic reduction of various taxes, fees, permits imposed by national and local governments. Real property tax (RPT) alone by LGUs can be very high, and that contributes to high cost of condo housing.

* Digression 2, on "We should not give up on encouraging government agencies to improve their performance." 

True, but only for agencies that are directly related to rule of law, protection of private property and citizens life, and protection of individual liberty. That means the justice system, the courts, the police, correctional, etc. If there is government failure in this very basic function of government, we can expect government failure in many other agencies that are not even related to rule of law implementation. Like housing, education, healthcare, pension, credit, etc. And that is precisely what's happening now. Government has expanded too much, the taxes, interventions and bureaucracies have expanded but the basic function of protecting our lives and private properties, there is government failure. So peace and order has been privatized, private security guards protecting our villages, shops, malls, schools, offices, airports, seaports, bus terminals, There is widespread and large scale distrust of government peace & order agencies.
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See also:
CSOs and State 10: The Role of Civil Society, June 15, 2010
CSOs and State 16: The Integrity Initiative, December 17, 2012 
CSOs and State 17: UP Pahinungod and Typhoon Victims in Mindanao, December 31, 2012 
CSOs and State 18: Civil Society as Lobbyists for More Government? Cigarette Warning Bill, March 02, 2014 
CSOs and State 19: UP Maroons and UP Alumni, March 24, 2014
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Macro Econ Update

June 8, 2015, 5:59 pm
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My sister's accounting and auditing firm, Alas Oplas and Co., CPAs (AOC) has produced a new monthly publication, the Business and Economic Update. Issue no. 1 for this month was released last week. I helped in producing that paper.

In the coming months, the publication will tackle sectoral issues like energy, trade and investment, healthcare, agriculture, public finance, and so on.

AOC has many local clients, and some multinationals, doing business in different sectors of the PH economy. The firm is also affiliated with BKR International, a global network of accounting and auditing firms with about 500 partner firms worldwide. AOC is the only partner firm in the PH.

So issue #1 introduces the readers to the macroeconomic view of the PH economy in relation to  its neighbors in the ASEAN, North Asia and South Pacific, Europe and North America. Multinational companies and partner firms of BKR International will find the data useful.

Here are the macro data.


The size of countries' GDP now is getting more and more related to the size of their population, unlike before. This is because with increasing globalization and global mobility of goods and services across countries and continents, more people have more access to various economic opportunities. Thus, the economic size of countries with bigger population tend  to expand larger than countries with smaller population.



And unemployment data. Underemployment data is not included as there seems to be no internationally-comparable definitions and data.


Check it out guys, thank you.
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See also:
Ipagbawal ang GDP Growth, Part 3, April 06, 2015 
BWorld 1, PH Economy and Politics, Is there a Disconnection?, April 24, 2015 
Demography 23: The UN, Depopulation and Climate, May 03, 2015 
Why are Interest Rates so Low?, May 05, 2015
Market Reforms in the 2016 Elections, May 25, 2015
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CSOs and State 21, Patient Organizations, PAPO and HealthPRx

June 8, 2015, 9:44 pm
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During the 2-days Medicines Transparency Alliance-Philippines' MeTA National Forum 2015 last February 17-18 held at Bayleaf Hotel in Manila, I noticed a significant change in NGOs involvement in public health discourse: a shift in active involvement from what I would call as "ideology-based" NGOs to "patients-based" NGOs. What is the difference between the two?



For me, the ideology-based NGOs tend to be more vocal against multinational and innovator pharma companies, against strong intellectual property rights (IPR) like patents of newly-invented medicines and vaccines, against price differentiation and advocate drug price control and mandatory price discounts. There is also implicit hatred of capitalism and support for health nationalization if not socialism.

The patients-based NGOs on the other hand are less vocal about those ideology-based concerns and are more concerned with helping patients of specific diseases have access with (a) financial assistance, (b) access to affordable medicines, and (c) support groups from fellow patient groups, other NGOs, academe, industry players and government.

After all, patients and their families do not care or segregate much whether the ones who can give them effective medicines or treatment are multinationals or local firms, innovators or generics, patented or off-patent drugs. An expensive but effective medicine would actually come as more useful and cheaper than cheap but ineffective (even substandard) medicine. The former would treat or kill a disease and improve the condition of the patient, the latter would allow an original disease to evolve and expand to something more dangerous, more lethal diseases. Of course the best scenario is cheap and effective medicines and vaccines.


So during the MeTA forum last February, I saw leaders of support groups for patients of diabetes, hepatitis, cancer, psoriasis, eyesight problems, cerebral palsy, etc. Cool. And while I have met some of them before, many others I have met there for the first time. This is a good and new development in public healthcare discussions.

Until recently, the state through the DOH and its support agencies like PhilHealth and FDA, was pressured by ideology-based advocacies like drug price control, 50 percent mandatory price cut of the most popular products of some multinational pharma. With the entry of patients-based NGOs, such politics of envy policies can be avoided or minimized.

Among those present at the MeTA Forum were the leaders of the Philippine Alliance of Patient Organizations (PAPO), the first umbrella or coalition of patient organizations in the Philippines advocating for universal access to health care and allied services, including persons with disabilities (PWDs). PAPO President or Director is Fatima "Girlie" Garcia-Lorenzo, who is also the Executive Director of Kythe Foundation, Inc. PAPO is a SEC-registered NGO.

PAPO has 12 member organizations: Akap Pinoy , Balikatang Thalassemia , Foundation for Sight, Haplos, Kythe Foundation, New Vois Association, Philippine Cerebral Palsy Inc. (PCPI), Phil. Society of Orphan Disorders (PSOD), Psoriasis Society of the Phils, Yellow Warriors, plus two others.

Girlie's deputy in PAPO is Karen Villanueva, another friend who retired from MSD pharma last year. Karen is a fellow UP alumni, she was in charge of public affairs of her company before.

Last Friday, Karen launched her new PR firm, Health PRx. As the name implies, it is a PR firm for healthcare-related campaigns and advocacies. Invited guests were Karen's family, friends, PR practitioners, former officemates at MSD, other players in the pharma sector, foreign and local. I was there, along with Jess Lorenzo, Girlie's husband and  is part of the company as its officer or director for good governance. Girlie was there too, we were seatmates in the table.


I asked Karen two questions about her company, who are their target clients, and in what sense that it is a patients-oriented PR firm?


Karen replied, 

“My target clients are persons or institutions who have a health advocacy and want to mainstream and popularize their cause. I also have to personally believe in their cause for me to take on the work. I would like to think that at the end of the day, everything we want to do for health should have the patients in mind.  And so my work in PAPO is an excellent way for me to ground my company and keep me focused on what is important.  It will be a constant and daily reminder to always put the patients perspective first.”

Cool views and mission, Karen. I wish PAPO and Health PRx a successful endeavor in the future.
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See also:
CSOs and State 18: Civil Society as Lobbyists for More Government? Cigarette Warning Bill, March 02, 2014 
CSOs and State 19: UP Maroons and UP Alumni, March 24, 2014 
CSOs and State 20, Gawad Kalinga and Housing for the Poor, June 08, 2015

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Climate Tricks 41, CO2 Leads Temperature, or Vice Versa?

June 14, 2015, 3:17 am
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There is an interesting article yesterday in WUWT, Presentation of Evidence Suggesting Temperature DrivesAtmospheric CO2 more than CO2 Drives Temperature. The author is right on target when  he  wrote,

The IPCC’s position that increased CO2 is the primary cause of global warming is not supported by the temperature data.

In fact, strong evidence exists that disproves the IPCC’s scientific position. The attached Excel spreadsheet (“CO2 vs T”) shows that variations in atmospheric CO2 concentration lag (occur after) variations in Earth’s Surface Temperature by ~9 months (Figures 2, 3 and 4). The IPCC states that increasing atmospheric CO2 is the primary cause of global warming – in effect, the IPCC states that the future is causing the past. The IPCC’s core scientific conclusion is illogical and false....


Veizer’s approach is credible and consistent with the data. The IPCC’s core scientific position is disproved – CO2 lags temperature by ~9 months – the future can not cause the past.

While further research is warranted, it is appropriate to cease all CO2 abatement programs that are not cost-effective, and focus efforts on sensible energy efficiency, clean water and the abatement of real atmospheric pollution, including airborne NOx, SOx and particulate emissions.

The tens of trillions of dollars contemplated for CO2 abatement should, given the balance of evidence, be saved or re-allocated to truly important global priorities.

Amen to those statements. A huge scam perpetrated by the UN and various governments that victimize taxpayers and energy consumers in so many countries around the world.

Dr. Roy Spencer made a good discussion of the subject too, How Much of Atmospheric CO2 Increase is Natural? (August 27th, 2014). He showed these two charts with a note,

But what if (I’m NOT necessarily advocating this) most of the CO2 humans produce, which is near the land surface, is absorbed by vegetation, and the observed global increase is partly or mostly due to outgassing of the oceans?

Scientists seem to make the assumption that nature is always in balance. But this clearly isn’t the case for natural sources and sinks of CO2 (you can find such plots in the IPCC reports, too)....


We should remember how much we have anthropomorphized recent warming: Human activities produce CO2 in reasonably well known amounts, humans do the monitoring of CO2, then humans do the modeling. Since we really don’t understand the natural sources and sinks very well — not to the <1% level needed to document that a “natural balance” exists (since human emissions are now close to 5% of natural sources and sinks) -- we just assume they are “in balance”. There, problem solved.

So, we impose a human explanation on what we observe in nature. A common tendency throughout human history. We are searching for answers at night under the only streetlamp where we can see.

Here's another plot from http://friendsofscience.org/. Lower troposphere global temperature, monthly data from January 2002 to April 2015, vs. CO2 concentration in the planet. Note the lack of "causality" between the two.


 Dr. Tim Ball made a good discussion paper on this subject, Plants encouraged as CO2 levels reach 400 ppm (May 9, 2015) and observed, 

All life on Earth exists because of CO2. It is essential to flora, which then produce oxygen essential to fauna.... Most plants, especially the complex vascular plants evolved in the last 300 million years. The average level of atmospheric CO2 over that period was approximately 1200 ppm....

The longer geologic record produced by Scotese and Bernier (Figure 1) shows that for most of Earth’s history the level was well above the current level. The only time when levels were commensurate with today was from 315 million years ago (mya) to 270 mya, yet for over half of that period temperature was similar to today.

Most plants, especially the complex vascular plants evolved in the last 300 million years. The average level of atmospheric CO2 over that period was approximately 1200 ppm.


Some government units are more honest than others (many are outright lying when it comes to CO2 and climate). From Ontario government, "Carbon dioxide in greenhouses", http://www.omafra.gov.on.ca/english/crops/facts/00-077.htm

CO2 increases productivity through improved plant growth and vigour. Some ways in which productivity is increased by CO2 include earlier flowering, higher fruit yields, reduced bud abortion in roses, improved stem strength and flower size. Growers should regard CO2 as a nutrient.

For the majority of greenhouse crops, net photosynthesis increases as CO2 levels increase from 340–1,000 ppm (parts per million). Most crops show that for any given level of photosynthetically active radiation (PAR), increasing the CO2 level to 1,000 ppm will increase the photosynthesis by about 50% over ambient CO2 levels.

In many or most modern greenhouse farming in the world, farmers use CO2 generators and inflate the CO2 level from 400 ppm outside to at least 500 ppm inside. Here in one farm in Israel, they use 500 ppm. In many farms in the US, they inflate up to 800-1,000 ppm. More CO2, more and faster plant growth, more food for humanity, organic products. 


At 400 parts per million (ppm), it is not that big and many crops are considered as "carbon starved." Divide 400/1,000,000 = ???? 

Just 0.04 percent only of total GHGs in the entire planet. More CO2 means more plant growth, more trees, more vegetables, more rice, thank you gas-of-life, CO2. Only dishonest entities like the UN, Al Gore, and many other "planet saviours" keep saying that CO2 is a pollutant, if not evil gas, that must be demonized, over-regulated, over-taxed and must be cut.
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See also: 
CO2 is a Useful Gas, February 11, 2011
Climate Tricks 5: CO2, Clouds and Positive Feedback, March 21, 2012 
Climate Tricks 25: Demonizing CO2 as a Toxic, Pollutant Gas, January 19, 2014 
Climate Tricks 26: CO2, Pollution and Climate Junkets, February 21, 2014
Climate Tricks 37: Climate Money and the Scientific Dishonesty Behind It, January 31, 2015 
Climate Tricks 38: Threats and Witch Hunt of Skeptical Scientists, March 02, 2015 
Climate Tricks 39: Many Attacks on Dr. Willie Soon, He Repliedm March 03, 2015
Earth Hour 6: The WWF can Change Climate Change? March 29, 2015
Climate Tricks 40: Arrest Climate Change Deniers, April 11, 2015
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Energy Econ 38, Solar Power in Germany and in Cadiz City, Negros Occidental

June 14, 2015, 11:30 pm
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Many sectors have been hoodwinked into believing that solar power is "free" and "reliable". At day time, yes, it is free, one does not need a single power plant to produce lights.

Here is the case of renewables in Europe. Solar power's actual power output is on average, only 11.2 percent of its rated or installed capacity. And the cost, solar power is up to 34 times the cost of putting up a natural gas power plant. wow.


Source: Charting the costs and effectiveness of Renewable Energy in Europe,
https://edmhdotme.wordpress.com/2015/01/22/charting-the-effectiveness-of-renewable-energy-in-europe/

Reposted in http://notrickszone.com/2015/02/08/analysis-shows-wind-and-solar-power-in-europe-is-on-average-16-times-more-expensive-than-gas-fired-power/#sthash.1erMw947.dpbs, February 08, 2015.

Capacity factor of only 11.2 percent of its rated or installed capacity, wow. Meaning a 100 MW solar power plant can produce on average, only 11 MW. Well at night time, output is zero; on cloudy days, output may be 20-30 MW and on cloudless, sunny day, output may be 50 MW and higher. So you get an average capacity factor of 11 percent.

In Germany, the King of wind and solar power installation in the whole planet, here are the numbers.


Source: same as above.

Solar power is fine, they expand energy production  in the planet. But giving it huge subsidy and priority in the national grid is not fine because such policy is forcing the rest of energy consumers to pay for expensive electricity.

Here is one clear example of energy cronyism, in Cadiz City, Negros Occidental: a 150-MW coal power plant has been scrapped, while a 100-MW solar power has been approved, with huge fanfare.

From Business Mirror, June 10, 2015:

BACOLOD CITY—Construction of the 100-megawatt (MW) solar-power facility of Equis Funds Group, which is considered the biggest in Southeast Asia, has started at Hacienda Paz, Barangay Tinampaan, Cadiz City in northern Negros Occidental.

Equis Funds, Asia’s largest independent energy and infrastructure private equity fund manager, is expected to complete the project by the end of the year.

Representatives of Equis Funds, led by its Chief Technology Officer Michael Vukelic, met with Gov. Alfredo Marañon Jr. and Cadiz City Mayor Patrick Escalante at the Provincial Capitol on Tuesday. Escalante said the solar-plant project, worth $175 million, is on a 175-hectare land area.

From The Philippine Pride, June 14, 2015.

Craig Marsh, Equis Funds Group director, and executives from Soleq, led by its chief technology officer Michael Vukelic, paid a courtesy call on Gov. Alfredo Marañon Jr. at the Capitol yesterday, to brief him on their solar project.

The plan to build a coal-fired power plant in Cadiz City has been scrapped but the construction of a diesel-powered plant is still ongoing, he added.

150 MW coal power has been scrapped? To be replaced by 100 MW of solar which has a potential average output of only 11 MW of more expensive electricity?

Electricity from solar and wind is expensive, about 2x from coal or natural gas because of feed in tariff (FIT) and renewable portfolio standards (RPS) provisions of the RE law of 2008 (RA 9513).

The solar plant and other facilities will occupy 175 hectares. That's a wide area of land. Compare it with Sual coal plant in Pangasinan, 1,218 MW occupying only 280 hectares (power plant + other facilities + ash disposal area).  Source, http://www.teamenergy.ph/about01_sual.php

Or compare it with Pagbilao coal power plant in Quezon province, 735 MW existing + 400 MW expansion (unit 3), total 1,135 MW, occupying only 300 hectares including ash disposal area.

Coal, natural gas, big hydro, geothermal, are "dispatchable" energy sources. Meaning a power plant can dispatch based on power demand. Solar and wind are "non-dispatchable" based on demand because they are dependent on the weather and time of the day. When the wind does not blow, when the Sun does not shine, a 100 MW solar and 500 MW wind will have great, combined output of zero. They are not useful for baseload (always "on" 24/7) electricity production, yet are expensive.

Climate alarmism and energy cronyism continue to fool the people. The UN, WWF, Greenpeace, Al Gore, almost all governments, etc. are responsible for this continued alarmism and public miseducation. Simply because they want more government role in environment, energy and taxation policies, more climate bureaucracies and junkets.
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Market Failure vs. Government Failure, Part 5

June 15, 2015, 7:40 pm
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* This is my guest article for suarakebebasan.org, a new website for freedom created by some Indonesian friends.
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Market Failure vs. Government Failure
Expert Column   Bienvenido Oplas Junior  | 15 Jun 2015

The main reason  why governments (local, national, regional/multilateral) around  the  world keep expanding is because they want to correct and address “market failure”, generally defined as the failure of the market players – firms and households – to supply certain goods and services at prices and  quantity that the public needs and demands.

While this is a generally accepted justification for government intervention, there is also  caution that “market failure” is only a necessary but not sufficient condition for such  intervention. There are two reasons for this.

One, market failure attracts market solutions (not government intervention) and such solutions may not be available today but will be available tomorrow. Good examples are mobile phones. Before, many poor people wanted to have their own phones but could not afford one. Today, prices of this commodity are affordable to the poor, including some of those cute, touch screen and  wifi-ready phones.

Two, it is highly probable that government will only exacerbate the problem and replace market failure with government failure. Good example is healthcare. There is widespread belief that governments should provide free or highly-subsidized healthcare to the poor, but systems are either too bureaucratic, or fast but wasteful and subject to corruption and robbery. And public dissatisfaction with government healthcare remains very high.

Sources of market failure

In economic theory, the two sources of market failure are identified. First,"public goods" character of a commodity or service. Once it is provided, it is difficult or impossible to exclude non-paying people from enjoying and free-riding the benefits of such good or service; or the cost of excluding the free-riders is high. Examples are national defense, traffic lights, peace and order and justice administration.

Second are "externalities", positive or negative. Examples of negative externalities are air, water and noise pollution, and examples of positive externalities are clean air and good peace and order situation.

With modern technology and management systems, various market solutions have been invented to deal with such perceived market failures. Examples are private villages, townships and industrial and economic zones. Almost everything that governments would normally provide are provided by the private sector there: roads and drainage, security, traffic lights, street lights, garbage collection, public parks, even schools and mini-hospitals. Thus, the “public goods” character of those services is not absolute. Their provision can be done entirely by the private sector, various market players and civil  society organizations.

The externalities aspect of those goods and services can also be internalized. Meaning the private sector players can internalize and absorb the full cost of providing such services, no government taxes and  fees are needed to finance them, partly of fully. These private villages and  ecozones have their  own systems of  internal revenue mobilization and local spending.

Sources of government failure

After identifying one "market failure" after another, governments began intervening in many sectors and sub-sectors of society. And the first source of failure is created: many bureaucracies. Government should be in healthcare, education, housing, roads, ports, credit, irrigation, trains, media, and so on. And many of those bureaucracies at the national government level are replicated at the state or provincial, city/municipality and barangay/village levels. Duplication, multiplication or missing of functions create wastes and distortions in society, not to  mention big opportunity for corruption in various levels of government.

A second source of failure has to be invented: more taxes, fees, fines, penalties, mandatory contributions, to finance the huge and  expansive bureaucracies. If one will check the World Bank’s “Doing Business” annual reports, as well as Price Waterhouse Coopers (PWC) “Paying Taxes” annual reports, one will see big number of taxes and fees, national and  local, that an average private enterprise will have to pay. Not included there are the costs of getting auditing, business compliance and law firms to help them understand and  comply with new and sometimes  overlapping requirements, permits and  fees to pay.

Since government administrators and officials are spending not their own money, the tendency and temptation to over-spend, to live beyond their means, is high. And huge public debts were invented. Almost all countries in the world now have public debts. While some have a debt/GDP ratio of only 20 percent or lower, many governments have debt/GDP ratio of 50, 80, 100, 200 percent or more.

The litany of reports and citizen complaints of government corruption, plunder and other forms of waste and crimes especially developing countries confirm that government failure is often worse than the market failure that such intervention wanted to correct.

Many people who demand more government intervention forget that aside from more taxes, fees and charges; huge and extensive bureaucracies also mean more regulations, inspections, registrations, accreditations, permits and licenses.

It is now difficult to identify any sector or industry and sub-industries in our social and economic lives where there is no government intervention and registration required. In many cities and countries, ven repairing or remodeling one’s office or condo requires city hall permit or license. And to reoccupy said office after a remodeling would require another city hall permit.

Those in the "informal" or "underground" economy do not exactly escape 100 percent of  those government permits and licenses. It is more like out of 10 or 20 business registrations, taxes and fees required by government, they only managed to escape perhaps 50-70 percent of them.

Good governance can cure government failure?

Very often, government failure is addressed or “corrected” by another set of government intervention. Like creating a new anti-corruption office or task force, creating new internal regulations and mechanisms to check and double check procedures and release of funds. These moves are essentially pouring more public money to determine how much public money have been stolen and wasted already.

The new key word being sold to the public to accept new interventions is "good governance", more transparency and accountability of public institutions and government officials and personnel. Implied in this formulation of course is the retention of a big, expansive, and interventionist bureaucracy; only to expect them to behave more transparently.

An option to go "back to the market" and "less government intervention" is far out among the minds and demands of many groups and people, even from those very vocal sectors and individuals that regularly note government failure, like those in media, the academe, NGOs and civil society groups.

Anyone anywhere can create a “market failure”. If people demand a USB with 20 GB memory and sold for only US$10, they create a market failure.  Demand is there but supply is zero. The price these people are willing to pay is too low compared to what producers are willing to sell. Or a biotech firm supplies a particular rice variety with several nutritional values but sold at $10 per kilo and no one buys it, also creates  a market failure. Supply is there but demand is zero, market failure.

Rent seeking

In the book, "Government Failure: A Primer in Public Choice" written by Tullock, Seldon and Brady (2002, published by Cato Institute, Washington DC), Chapter 4 is entitled “The cost of rent-seeking”. Examples of rent-seeking are (a) trade protectionism, where the protected local industry benefits but the local consumers are worse off; (b) private monopolies, and (c) direct income transfers by government where A is taxed and B receives the money.

Trade protectionism is trade dictatorship. The domestic consumers are being told that they can only buy or import from this country but not from other countries; or they can buy from anywhere but only for xx tons volume; or they can buy anywhere at any amount but at 10 percent, or 100 or 500 percent more expensive price because of import tariff and  other national and local taxes and fees.

Private monopolies via government franchising is enterprise dictatorship. The public, the consumers are told that they can only purchase a particular product or service from a single company.

Direct income transfers are political cronyism and nepotism. Very often the targeted beneficiaries are old political supporters, relatives and clan members of the  politicians  and officials in charge of money transfer, in cash or in kind.

Voluntary Exchange vs. Forced Exchange

In voluntary exchange, producers come or attract consumers to sell their products or services like fruits, fish, beer, hair cut, tutorial, cell phone repair and so on. Consumers choose from various producers who offer the same or  similar goods and services, and chose those who offer them good value for their money.

No one is coerced or arm-twisted to surrender his/her money to someone else. Only when the consumer is satisfied with  the product or  service will  he/she give the money to the product seller.

In forced exchange, people are coerced to surrender their money to a big and armed body or institution. Their monthly salaries are automatically deducted of a certain percentage; their earnings in bank deposits, stocks and commodity markets, are automatically withheld of a certain percentage. When they buy or purchase something like hamburger, the price they pay is higher because of taxes and surcharges imposed on the original price of those services and commodities.

And even if the people do not like the personnel and officers assigned to help them because they are arrogant or lazy or corrupt, their taxes and fees will be used to sustain these people.  Or if people feel that certain services being offered and already budgeted are unnecessary, there is little choice to stop them. Lazy and arrogant government personnel can be kicked out of office, true, but one must set aside substantial time and effort, and money of course, to take short leaves from work and stand up as witness to usually long court procedures.

Market, state and civil society

Markets and trade were invented to fulfill certain human demands for survival and modernization. Fishermen who have surplus fish catch need wood, nails and carpentry tools to build their house. They also need a boat, fuel and fishing gears and equipment. People specialize in doing a particular skill and they can have many things  they want through trade.

Government and the state was invented mainly to help enforce agreements and contracts among people, to have rule of law. Before people will stab or shoot each other over disputes in contracts, verbal or written, misunderstandings and disputes are settled in peaceful and transparent way and the penalties for violators are also made transparent.

Civil society was invented to help address certain government failures. As government deviates from its basic function of promulgating the, rule of law – the law applies equally to unequal people, no one is exempted and no one can grant an exemption – it creates one government failure after another. Civil society is non-state, non-government entities that help people to have mature, responsible and voluntary assistance to other people. The idea of being shamed among peers and neighbors is sometimes a worse punishment than government prison and incarceration.

It is important that individuals should assert their personal freedom, their right to voluntary exchange, and oppose an ever-widening system of forced exchange and government intervention. This is not a call for zero government. Government has an important but limited function in our lives. Its expansion to so many sectors and facets of our lives however, is not only dangerous, but has already wreaked havoc to our lives. The task of asserting our individual liberty is a continuing challenge for all of us.

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Alasan utama mengapa pemerintah (lokal, nasional, regional atau multilateral) di seluruh dunia terus berkembang adalah karena mereka ingin mengoreksi dan memperbaiki "kegagalan pasar", yang secara umum didefinisikan sebagai kegagalan pelaku pasar - perusahaan dan rumah tangga - untuk memasok barang-barang tertentu dan jasa dengan harga dan kuantitas sesuai kebutuhan masyarakat dan permintaan.

Meskipun alasan tidak bekerjanya pasar adalah pembenaran yang berlaku umum untuk intervensi pemerintah, ada juga mengingatkan bahwa “kegagalan pasar" hanya kondisi yang perlu (necessary), tetapi bukan kondisi yang cukup (sufficient) untuk intervensi tersebut. Ada dua alasan untuk ini….
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See also: 
Market Failure vs. Government Failure, June 07, 2006 
Market Failure vs. Government Failure, Part 2, March 03, 2008
Market Failure vs. Government Failure, Part 3, June 23, 2010
Market Failure vs. Government Failure, Part 4, March 22, 2014

Market segmentation and pricing, October 09, 2007
Limits to Free Market?, November 16, 2007 
Are Markets Moral?, January 05, 2014
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BWorld 5, Transportation Bureaucracy and Uber

June 16, 2015, 2:29 am
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(This is my article last week  in BW Weekender)

AMONG the major complaints of passengers of regular taxis are (a) drivers who are choosy about faraway or traffic-congested destinations, (b) the risk of being mugged or molested by the driver as well as the general lack of safety, and (c) dirty or foul-smelling taxi units.

Uber, a technology-based system of ride-sharing, was introduced in the United States in 2009 and soon enough adopted in other countries. In February 2014, the company and its services came to Manila. What are the features, advantages, and disadvantages of this mode of transportation?

One, transparency and security -- as passengers themselves would attest to. Both passengers and drivers have accounts with Uber, somehow they know each other before the driver picks up the passenger. The passenger knows beforehand the model and plate number of the vehicle that will pick him/her up.

A passenger’s Uber account has the following information: the passenger’s full name, mobile number, email address, and credit card number. If the passenger doesn’t have a credit card, a debit card is also accepted. Partner drivers also have Uber accounts with information like full name, mobile number, email address, and bank account number, as well as vehicle information (brand and model, plate and registration numbers, etc.).

This disclosure of information should serve to discourage criminality either on the part of the driver or the passenger. There is also the system wherein the driver rates the passenger, among whom those reported to be prone to verbal abuse eventually lose access to the system. So only well-behaved passengers can avail themselves of the system and get a ride.

Uber’s system also serves to ease traffic and enhance mobility. A passenger need not bring his/her car, brave the heavy traffic, and worry about parking. Uber is a ride-sharing scheme wherein the motorist picks up a passenger going in the same direction.

From passenger observations, private-owned cars are generally cleaner than taxis, and their drivers, who are also subject to a rating system, are said to be friendlier. Another now-common compliment about Uber is that no passenger is turned down all because of the remote or traffic-heavy destination.

Yet the same service that encourages passengers to leave their cars at home may also aggravate traffic congestion with its network of vehicles, and this in turn prompts taxi operators keeping up with Uber’s service to expand their fleet. Moreover, cab operators are subject to stringent and costly regulations from which Uber so far has been spared. Also, there’s a premium to passenger safety and convenience, thus the perception that Uber somewhat more expensive compared with a regular taxi.

On May 10, the DoTC enacted a new order on “Promoting Mobility” that aims to modernize and improve transport services to the commuting public. Among the order’s guidelines and accreditation requirements for Uber and other ride-sharing services: passenger personal accident insurance; maximum vehicle age limit of seven years from the date of manufacture; one-year validity of accreditation; registration with the Bureau of Internal Revenue and provision of receipts to passengers; and an accreditation fee of P10,000 and application fee of P510 for the first two cars.

Meanwhile, a technical working group of the House committee on transportation wants these ride-sharing services suspended, amid the still-unresolved legalities over whether such services fall under “colorum” transport, among other concerns such as passenger safety and tax liability.

On the other hand, Uber’s patrons themselves have been critical of the many requirements by the Land Transportation Franchising and Regulatory Board for ride-sharing operations to be validated by transport authorities. But the government should step back from its customary bureaucratism and recognize this development in public transportation as filling in the sorry gaps in this very component of public service.

Bienvenido S. Oplas, Jr. heads a free-market think tank in Manila, Minimal Government Thinkers, Inc.
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See also: 
BWorld 1, PH Economy and Politics, Is there a Disconnection? April 24, 2015 
BWorld 2, Benefits of Trade Liberalization for the Philippines, May 16, 2015 

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Islamic Militance 2, ISIS Threats in South East Asia

June 17, 2015, 4:20 am
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Last month, I attended this conference at Edsa Shangrila. I learned there that the main sponsor was the Office of the President; I thought it was the RSIS in Singapore because all the key speakers were from that institute.


The speakers in the morning session were Ahmed Hashim, Bilbeer Singh, and Joseph Franco, all from RSIS. Reactors though were all from the Philippines -- Dr. Clarita Carlos, Ma. Antonina Leong, and B/Gen. Carlito Galvez.


The 3 speakers from Singapore were fine, articulate, but while A. Hashim's paper was good, I was not impressed by the two other presentations. I think their papers were not substantive enough, say compared to discussions by a local scholar on the subject, Rommel Banlaoi.

Nonetheless, they were unanimous in arguing for more diplomatic solution to Islamic militant movement, which I agree. There will be armed or military aspect of course, as some  militants know only one thing -- violence and killings -- to advance their political and/or religious agenda.


I also do not like the usual equation of radicalism = militance/violence. As Rommel explained in his presentation last year, the most radical thinker may also be the most peace-loving person. To advocate for radical change means to seek ideas that are outside the box, or the person has removed the box. Alternatively therefore, the most militant and most violent person  may also be the least radical, the most old-fashioned and "conserve the status quo" advocate.

Below is a portion of the Executive Summary of the conference prepared by the organizers:

Speakers emphasized the interconnectedness of the events in the different parts of the world to domestic politics and how issues in the island of Mindanao could have implications for the region and the international community. The growing threat of ISIS has been seen as a product of ideology, conflict, and deprivation. Its more radical position compared to other groups need to be seen as an international concern. Southeast Asians are reportedly joining ISIS and they would be dangerous in their return to region. Indonesia, Malaysia, and the Philippines are the most vulnerable states in the region. On the other hand, the instability in Mindanao has implications for the region. The spillover effects of the conflict and the attractiveness of a conflict area for terrorists is a concern for the international community, particularly ASEAN. The interconnectedness of international and domestic factors and their relation to radicalization have been proven in past cases.  It is therefore the opinion of the speakers that there is a need to support the peace process in Mindanao. They see a dim future with the failure of the current peace process in Mindanao.

There is hope in reintegration, religious rehabilitation, and sustainable peacebuilding programs. The speakers have also identified ideology, specifically Al-Qaedism, as the key to understanding radicalization. While material factors are important, the realm of the mind and the role of ideas are critical in resolving the potential threat of radicalization. Hope therefore can be brought about by programs of de-radicalization and rehabilitation of former militants. Reintegration and religious rehabilitation could mitigate radicalization. Cases in Singapore, the United States, and Belgium could help us understand the best ways to curb the influence of radical ideologies. It is important that the reintegration and religious rehabilitation programs are adjusted to local conditions…. Lessons should be culled from cases in Aceh and Myanmar. The roles of different domestic stakeholders and international community should be harnessed to achieve peace and prevent radicalization.

For me, governments should continue using a combination of reason/diplomacy and armed response. For every armed insurrection or secessionist movement, there are moderates and hard-liner factions always. And often this leads to breakaway groups, which is good. Talk to the moderates, work for a peaceful solution to the conflict. Deal with the hardliner, violent break away groups via armed response until they adopt the moderate approach. And needless to say, governments should keep their house in order, remove the corrupt and thieves within their ranks.

Thanks to Ms. Amina Rasul, President of the Philippine Center for Islam and Development (PCID) and a fellow UPSE alumni, for inviting me to that forum.
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See also:
Pilipinas Forum 8: On the Abu Sayyaf, September 11, 2011 
Radicalism, Islamic Militance and Terrorism, October 03, 2014 
MILF, Fallen 44 and Napenas, Part 5, February 21, 2015
War, War is Stupid, Part 3, March 13, 2015

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AEC 13, SEANET Website, AFAS in Financial Services

June 18, 2015, 3:01 am
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The South East Asia Network for Development  (SEANET) website, http://seanetwork.asia/, has been expanded. It now has more pages, more contents. Check it guys, thanks.


Yesterday, I attended this lecture at the Philippine Institute for Development Studies (PIDS) here in Makati. It's a USAID-funded study aimed to assess the Philippine government’s commitments on the financial services sector under the ASEAN Framework Agreement on Services (AFAS), the status of its compliance, and the country’s financial services sector’s competitiveness in comparison to other ASEAN Member States (AMSs).


Here is one indicator in the banking sector. Broad money/GDP ratio, A higher ratio connotes higher level of banking development. Malaysia, Singapore and Thailand had higher levels of banking development than the rest of AMSs, the Philippines’ratio was higher only than those of Indonesia’s and Myanmar’s.

In money supply per capita, the Philippines fell behind five AMSs; Singapore stood out way above other countries in the region; the Philippines fell behind five AMSs, including Vietnam.


The Philippines ranked 7th in terms of the ratio of banking assets to GDP, ranked 6th in banking assets per capita, deposits per capita was equivalent only to one-third of Thailand’s and one percent of Singapore’s.


In life insurance, Singapore had the largest market both in terms of assets and premiums while the
Philippines had the smallest market. Market penetration (insurance premium as percent of GDP) for the Philippines was second to the lowest among AMSs, and its insurance density (insurance premium per capita or average spending of each individual on insurance) was the lowest.

In non-life insurance market, the Philippines’ was the smallest both in terms of assets and

premiums. It is dominated by small companies just as its life insurance subsector. And the country was second to the lowest in terms of non-life insurance market penetration and the lowest in terms of non-life insurance density.


In capital market, the Philippines had virtually the same number of listed companies during the period 2003-2012 and stood at 268 in 2012. Vietnam experienced a sustained rise in the number of listed companies during the same period, overtaking the Philippines in 2010.

In market capitalization, Malaysia and Singapore stood out as consistent leaders in the region despite a sharp decline in their capitalization in 2008. The relatively few firms listed in the Philippine Stock Exchange, accompanied by a relatively high market capitalization, suggest that only a few large firms carry the ball compared with Thailand. And this also suggests that a few stocks tend to be highly priced, making the stock market greatly vulnerable to sudden withdrawal by investors as happened in the last global financial crisis.


In capital account openness index De Jure, this index takes on higher values the more open the country is to cross-border capital transactions. Singapore has the highest degree of capital openness among AMSs.  The Philippines has the same degree of restrictiveness as Thailand, Malaysia and Lao PDR, all of which are more restrictive compared with Vietnam’s and Indonesia’s.


In De Facto openness index, second chart below, the higher the ratio of total stock of foreign assets and liabilities to GDP indicates that the country concerned has a de facto higher degree of capital account openness. Singapore is still the most open, the Philippines is less financially integrated with the rest of the world compared with other AMSs. This is possibly due to, among others, the size of the markets for financial instruments in the country and investment climate.


In financial regulaton, AFAS commitments, the Philippines’ recent equity cap reform for banks is not yet reflected in the AFAS commitments. AMSs apply different degrees of restrictiveness on the equity participation of foreign players. Market entry can be further limited by imposing the requirement that the majority of the board members be nationals.

In financial regulaton, de facto, shares of foreign banks in total deposits is less than 10% in Indonesia, Lao PDR, the Philippines and Thailand. Foreign banks seem to focus more on wholesale banking, probably due to the limited number of branches in countries where they operate. ASEAN banks still have much room to expand their presence in the Philippines in the near term, while it is a big challenge for Philippine banks to penetrate the banking markets in other AMSs.


On the competitiveness of ASEAN narkets and financial institutions, descriptive analysis, banking subsector.


Descriptive analysis, insurance subsector.


The paper's recommendations as discussed by Dr. Lamberte.

1. Unlock the power of the banking system through the reduction of intermediation taxes (reserve ratio) and unwinding the special deposit accounts (SDA).

2. Continue the liberalization of the financial system, particularly by encouraging more foreign players to enter the domestic financial market.

3. Combine liberalization with a strong merger and consolidation policy. Having subsidiaries will allow foreign partners to play a bigger role in the domestic financial system than if confined to being branches of their head offices.

4. Introduce measures to support SMEs to scale up their operations. Raise competitiveness by allowing more branches on the basis of capital and SME loan portfolio.

Durng the open forum, I noted that the recommendations did not expound much on how the various government regulatory agencies should step back from costly regulations -- Bangko Sentral ng Pilipinas (BSP), SEC and the Bureau of Internal Revenue (BIR) especially. Their regulate-regulate-regulate, tax-tax-tax policies often tie the hands of players, existing and potential players, from engaging in more dynamic competition that benefit the borrowers and the public.

Dr. Lamberte replied that this is the latest paper in a series of studies they have done on the financial sector of the Philippines. Previous papers have touched on those regulatory agencies.

Well, this is a USAID-funded paper and I don't expect that it will take a more radical, less-government role in the financial sector perspective, as the US government itself (SEC, Fed, etc.) keeps piling up plentier and thicker set of regulations yearly. Nonetheless, the data presented by the paper are informative and useful.
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See also:
AEC 9: SEANET Forum on Economic Liberalization, Kuala Lumpur, April 23, April 19, 2015 
AEC 10: Indigenous Rights, Labor and Human Rights in the ASEAN, April 21, 2015 
AEC 11: Trade and Economic Development is Social Development, April 25, 2015 
AEC 12: Workshop on Trade Liberalization at the APF 2015, Kuala Lumpur, April 27, 2015
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BWorld 6, Biotechnology, Innovation and the Philippines

June 18, 2015, 6:32 pm
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* This is my article yesterday in BWorld Weekender.

BIOTECHNOLOGY involves food production and healthcare. It involves life: from new rice or vegetable varieties that are resistant to certain pests -- and are flood tolerant and still high-yielding -- to new medicines that raise or improve the survival chance of a cancer patient by 10 or 30 percent compared with old and existing medicines and treatment.
Innovation -- endless improvement -- in the quality of biotech products and processes is the key towards a better life, a healthier and more productive life for the world’s peoples. While some people might complain that new seed varieties, new medicines and vaccines, and new literature are costlier, they tend to neglect the fact that overall productivity among enterprises and people is rising because of these new products, such as disease-killer drugs and treatment, brought by innovation.

Scientific American’s Web site has a regular report called the Annual World View Scorecard (WVS). The popular science magazine’s annual report for 2015 is its 7th, and it’s an analysis of the biotechnology’s innovation potential in 54 countries, including the Philippines.

GLOBAL RANKING
Unlike many annual reports that measure economic competitiveness or economic freedom or transparency, the WVS measures biotech innovation, a very specialized field. It is a privilege for the Philippines to be included in this annual study because it will give ideas to both government policymakers and private players on how to improve the national business and scientific environment and, thus, the country’s global ranking.

The WVS has seven categories covering 27 components, from biotechnology inputs and outputs through government protection and beyond. These categories are (1) Productivity of public companies, (2) Intellectual Property (IP) Protection, (3) Intensity of public companies per million population and biotech patents, (4) Enterprise Support for business-friendly environment, (5) Education/Workforce, (6) Foundations like infrastructure and public spending for R&D, and (7) Policy and Stability, including rule of law.

Scoring is 0 to 10, with the lowest-ranked nation scored as 0 and the highest-ranked as 10. Then the average score is computed. The results for WVS 2015 report are here. Take note that many countries did not make any score in category (1). 


Of the 10 ASEAN countries, five were included in this study and their respective scores for 2015: Singapore 5th, Malaysia 29th, Thailand 48th, Philippines 50th and Indonesia 52nd.

Five other East Asian economies were included in the study: Hong Kong 11th, Japan 16th, S. Korea 23rd, Taiwan 25th, and China 42nd.

The Philippines made a relatively surprising high score in category (2) on IP protection, which is composed of (2a) patent strength and (2b) perceived IP protection. One possible explanation here is that the country has a law on IP protection, the Intellectual Property Code of the Philippines (Republic Act 8293) enacted in 1997. It was revised focusing on patents of pharmaceutical products through the Cheaper Medicines Act of 2008 (RA 9502).

Although IPR tweaking that is consistent with TRIPS Flexibilities is contained in RA 9502, like the state’s power to impose compulsory licensing (CL) and special CL for some important medicines in case of “national health emergencies,” no CL or SCL application has ever been filed with the IP Office (IPO) until today.

The Philippines made a modest score in category (4) on Enterprise Support, composed of business-frienndly environment, biotech venture capital (VC), and VC availability. But the country scored very low on (3) Intensity, and fairly low on (5) Education/Workfore, and (6) Foundations.

As earlier noted, SA has been doing the WVS for seven years now since 2009. In this revised table, the scores for 2009 and 2010 have been omitted, partly because several countries were not included on those two maiden years of reporting. 


For the Philippines, the bad news is that it has been consistently ranking low all these years: 45th/47 countries in 2011, 48th/50 in 2012, 51st/54 in 2013 and 2014. The good news is that it has improved its ranking by one notch, from 51st in 2014 to 50th in 2015.

This is not enough, of course. Which means that the country’s government and private players must improve particularly in categories (3), (5), (6) and (7).

Change comes in marginal steps. The important thing is that the country’s private enterprises and educational capacity for biotech innovation must keep improving and evolving. The goal is improving the Filipinos’ health and well-being -- having a healthier and longer life. Improvement in the country’s global ranking in this report may be considered as icing on a delicious cake, additional accolade to improvement in public policies that respect and encourage innovation and intellectual property.

Bienvenido “Nonoy” Oplas, Jr. is the president of Minimal Government Thinkers, a Manila-based free market think tank, and a fellow of South East Asia Network (SEANET), a Kuala Lumpur-based regional think tank advocating free trade and inclusive growth in the ASEAN.
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Here is the scanned hard copy.

  
 
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See also: 
BWorld 2, Benefits of Trade Liberalization for the Philippines, May 16, 2015 

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Extortionist Traffic Enforcers in Ortigas, Pasig City

June 19, 2015, 2:27 am
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This story was reported by Kicker Daily News last December. It's about some traffic enforcers in Ortigas Center, Mandaluyong City, Metro Manila, who extort money from hapless motorists. Vehicles going to Edsa should be in the middle to right lane. The traffic officers would flag down motorists in the middle lane and insist that they were using the left lane and hence, should be penalized for traffic violation. It is time consuming to argue with these officers, and even more time consuming to redeem one's driver's license at their office + pay the penalty. So they extort money and they will let go of the motorists.


The motorist who posted originally in facebook, David Kilpatrick, has been extorted previously, P500. The practice is repeated, so one day he took video of the two officers, shown above. The one directly facing the camera is JA Cruz, Traffic and Parking Management Office (TPMO) #276. His buddy's name was not captured by the camera.


After their faces have been reported in media, one may expect that these guys may have been suspended or sacked already as their acts would negatively affect TPMO Mandaluyong Pasig City. This did not happen.

Today, a friend way back in Congress, Jojo Menorca, posted and positively identified these two officers who flagged down his daughter two weeks ago for the same accusation against Kilpatrick, and tried to extort P2,000 from her.

Jojo wrote (posting this with his permission):

Itong dalawang tarantadong ito ang nanghuli sa anak kong si Elysse Toral Menorca dyan mismo sa ORTIGAS two weeks ago. Same situation. Nasa mid lane sya at iniinsist ng mga ito na me violation siya. I am sharing this para makita nyo mga pagmumukha ng mga hayup na ito.

Akala ng mga ito e matatakot sa kanila ang anak ko. Kinokotongan nila ng P2K para di na raw maabala. I told her over the phone na wag siya aalis kung saan siya pinara until I get there to challenge these 2 idiots sa sinasabi nilang violation. Dahil palaban ang anak ko, nakipag argue siya at hinahanap niya ang karatulang sinasabi nila na bawal dumeretso ng Edsa ang galing sa Ortigas. Elysse went down her car and took picture of the signboard that says something like "Vehicles in the inner lane must turn left to Meralco Ave." So, where is her violation? She is in the middle lane and not in the inner lane? Sensing na walang mangyayari sa pakikipag argue nila sa anak ko, they let her go without giving money to these two CORRUPT TRAFFIC ENFORCERS. Buti nga hindi sila nakatikim ng mura sa anak ko e. Kahit timid anak ko palaban yun!

Look at how they cover their NAMECLOTH with accessories.

Many government personnel especially in local governments have acquired that extortionist culture. Here's what they do: they create many Nos, prohibitions and restrictions on the roads -- No left turn and No right turn on red, No U-turn here, No Parking or Waiting there, No Loading here, No Unloading there, etc. Sometimes the left or U-turn slots are far away or in traffic-congested areas, enough to cause inconvenience to motorists. Some drivers who want to avoid getting stuck in heavy traffic try their luck and take the nearest open intersection, and that's where the "public servant" traffic officers come to harass them, impose fines and penalties + deliberate time consuming process to redeem the driver's license. Motorists will be pressured to pay the extortion that they demand.

As government expands, opportunities for extortion also expand. Hence, the need to stop further and endless expansion of the government, local and national.
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See also:
LTO Bureaucracy 8, No Driver's License Available, May 24, 2015 
On Taking Photos of Government Personnel and MAPSA, May 28, 2015 
Confiscation of Driver's License by Pasay Traffic Enforcers, May 31, 2015
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Fiscal Irresponsibility 29, On the so-called DBM "Underspending" in 2014

June 19, 2015, 11:00 am
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A physician friend posted this report last week. Many of his friends (except me of course) blasted the "underspending". The report says, 

Abad attributed the sluggish spending mainly to the "structural weaknesses within national government agencies and government owned-or-controlled corporations (GOCCS), (42 percent); peculiar problems of small agencies (30 percent); savings generated from lower interest payments and net lending (14 percent); others reasons beyond the control of the agencies (12 percent); refocusing of efforts to Yolanda rehabilitation and recovery (1 percent); and, unutilized funds due to the Supreme Court decision on the Priority Development Assistance Fund and the Disbursement Acceleration program (DAP), (1 percent).

The budget for 2014 was P2.4 trillion.

Among the unreleased appropriations for agencies in 2014 were for major departments such as Department of Education (P2.2 billion); Department of Public Works and Highways (P26.3 billion); Department of Agriculture (P2.6 billion); Department of Agrarian Reform (P5.8 billion); and Department of Environment and Natural Resources (P1.9 billion).

The headline of course is wrong. No administration in the country since Marcos (then Cory, FV Ramos, Erap, Gloria, PNoy) knows how to "underspend", to have fiscal surplus during period of no crisis and pay previous debts incurred during crisis or financial turmoil years. Each year, government over-spends, expenditures > revenues, always, resulting in annual budget deficit and annual borrowings. Here is the annual budget deficit, 2000-2014. Average around P180 B a year.

source: http://www.treasury.gov.ph/.../2015/03/yr_cor_fiscal.pdf

With annual deficit, there is annual and endless borrowings. The PH public or government debt stock keeps rising by an average of P192 B a year from 2004-2014, with or without a crisis. Meaning the PH government, regardless of administrations, just keeps the spend-spend-spend, borrow-borrow-borrow policy. 




Source: Bureau of Treasury.

Governments must learn to underspend, to have fiscal surplus during non-crisis years and pay back some old debts. 

Another physician friend commented that the DOF and DBM "do not want to invest in more health human resource in the face of a growing population. The primary care coaltion is lobbying for more Health human resource, with decent and attractive compensation, and the government answers with a small govt paradigm, cutbacks and contractualization disguised as "rationalization ".imagine what we could have done with P303 billion in advancing universal health care."

Hmmm, "a small govt paradigm, cutbacks and contractualization", he could be referring to Hong Kong. The PH is definitely among the big government models. Combine the cost of national govt + local govt + government corporations (GOCCs, like SSS, GSIS, PhilHealth, PagIBIG) + cost of compliance of various regulations, the cost is big.

Besides, P192 billion a year net increase in public debt stock with or without a crisis is not enough? How much do they want, P300 B year, P500 B a year, increases in public debt?

The "underspending" of P303 billion in 2014 was not directly used to pay our public debt, but rather, it represented money that should have been borrowed and the borrowing by that amount did not materialize. 

It is understandable that the health sector will lobby to use that "underspent" P303 billion for more  health spending, like hiring more health human resource as "we don't even have 1 midwife or nurse per barangay."

One problem is that DepEd cries "we need more money", DA and DAR cry, "we need more money", DILG and PNP cry, "we need more money", DPWH and DOTC cry "we need more money", etc.

Another comment suggested that "Underspending is not a sign of good governance. It's a sign of bad budgeting and neglect of duty."

This is one clear proof that it is not only the government officials and legislators who love fiscal irresponsibility, but many in the public too, including many professionals. For them, government annual over-spending, living beyond its means, endless borrowings, is a virtue so long as the money goes to their favorite sector/s.

Consider this: A person who earns P100k a month but spends P110k a month, with or without health emergencies and borrows P10K a month on average will be called "mayabang", "maluho", "magarbo", "hindi marunong magtipid", "palautang", other unkind adjectives.

But when a government does the same, it is ok, it is fine, it is good governance. There is double standard and double talk here. In this example, that irresponsible individual can finance his endless borrowings by selling some of his assets and properties, or resort to stealing from other people, then pay his debts. An irresponsible government can finance its endless borrowings also through large-scale privatization of its assets and corporations, or resort also to stealing -- from the pockets of future taxpayers. Whether they steal from current or future people, it is a criminal act.

Finally, about this "more public spending in healthcare means better health outcome" hypothesis or theory. I am really curious about the case of Manila city. It has a total of 10 government hospitals -- 6 city hospitals, 3 DOH hospitals, and 1 UP PGH. Per sq. km. of land, it has the most number of government hospitals and hence, has the most number of government doctors, nurses and other health professionals in the country.

In addition, it has barangay health centers + clinic within city hall + private hospitals giving subsidized treatment to indigent residents of the city.

Is there an existing study/ies showing that the residents of Manila City are the healthiest people in the PH? I doubt it, but in case there is one, I want to see that paper.
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See also: 

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Election 13, Bernard Ong's Analysis

June 20, 2015, 9:52 am
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I do not want to do serious political analysis of the coming May 2016 Presidential, Senatorial and local elections in the Philippines for several reasons. First, my hands are full  with other papers to write and I often miss deadlines. Second, there is no single free market-leaning national candidate or political party. And third, there are so many analysts of this subject around, it is entertaining to read them, from the sensical ones to the absurd. 

So I resort to reposting the ideas of some friends whom I think make useful analysis. Below, some random thoughts posted by a friend way back from UP Diliman in the 80s, Bernard Ong, in his fb wall. Reposting these with his permission.
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June 16:  
Serge Osmena is the premier campaign strategist of the Philippines. Local version of Karl Rove or David Axelrod. He saved the Pnoy candidacy in 2010. Villar was polling well vs Pnoy, until Serge took over the campaign management & messaging.

Here's what he has to say for 2016: Grace Poe should run as an independent. She can win w/o a party. Like Miriam or Roco before, plus the FPJ magic. Poe should drop Chiz. He will be a baggage to Poe for people who don't like him.

Exactly my thoughts. The added bonus is she can govern w/o political debts afterward. Our current party system is a joke - local parties are mainly a mix between personality cult, marketplace for exchanging political favors, and exclusive club for rich families.

June 18-20: 
Binay went to 3 markets in Antipolo - shaking hands, asking for votes, giving away wheelchairs & T-shirts with his face & slogan. Typical trapo & epal stuff. HIndi daw campainging. Part daw ng kanyang official duties (which are Housing & OFWs).

Law on premature campaigning is flawed. It only covers acts after one files his candidacy. Any campaigning before that is allowed. It should be amended to cover retroactive acts by eventual candidates. Meanwhile we should not vote those who use technicalities to go around the spirit of the law. Like this thief & liar.
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Biggest gainers in lastest survey: Poe & Duterte. Biggest losers: Binay & Others. Shortlist seems to be Poe, Duterte, Binay, Roxas (unless he drops out). Erap only comes in if Binay can't run. Otherwise, he "endorses" Binay but his followers vote FPJ/Poe.



Poe can win this 1-on-1. Or 1-on-3. Duterte not so because of narrower base & appeal. Nice to have both "outsiders" trending positively. Major parties (UNA & LP) should be on panic mode. All the e-pal, premature campaigning & preemptive strikes aren't working. Probably thinking of Plan B which is PCOS & Smartmatic.
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Drilon said "No party convention needed. Mar is the man." Good. I'd like Mar to run for President. It will cure his itch & redistribute some of that fabled Roxas-Araneta-Ayala wealth.

More important, it will keep Grace Poe free of Liberal Party baggage. Beyond May 2016, those responsible for PDAF, DAP & Mamasapano should be held accountable. Without political debts to worry about.
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"A P-Noy endorsement of Roxas is clearly a secret vote for Binay. Roxas is one weak challenger to Binay and it is doubtful public sentiment will drastically change."

It is Poe vs Binay now. I've said this before: Poe can beat Binay 1 on 1. Poe can beat Binay + Roxas + Duterte 1 on 3. Machinery is over-rated. The game has changed.
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Binay's preemptive strikes (residency, citizenship) & half-baked apologies backfired big time. It firmed up Poe's resolve. And changed the storyline from Binay-vs-Others (where he had a comfortable lead) to Binay-vs-Poe. Or more accurately Looter-vs-Orphan. Unwinnable for him without Smartmatic intervention.

In effect, Binay annointed Poe to be the anti-Binay alternative. Drove most of the "Anybody But Binay" millions into one candidate. Under the spotlight, Poe parried the attacks skillfully. And now we have Poe-vs-the-Rest. Salamat Toby Tiangco!
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Personally, I wish that Sen. Grace Poe will run for President. Her being a "newbie" compared to Binay, Roxas, Duterte, Estrada, etc. is for me, an advantage. It means less political baggage and old compromises. When a candidate is financially- and politically-indebted to certain economic interests, it  is hard to decline their political and business "requests." Thus, it is easier for that "newbie" to further advance trade and investment liberalization in the country than candidates who were long indebted or engaged to local monopolists, duopolists and oligopolists.
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Business 360-25, Economic Liberalization and GDP Expansion

June 23, 2015, 2:05 am
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* This is my article for Media 9's business magazine in Kathmandu, Nepal, May 2015 issue, column on "Free Market."
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Economic Liberalization and GDP Expansion

Economic liberalization, such as having freer trade in goods, freer mobility of people and  services, a better flow of investments and capital across countries and continents, almost always unleashes human potentials and talents. Where there used to be “impossible” mindset, slowly they become possible as economic, social and cultural changes unfold.

South Asia has huge potential, mainly because of its huge population and diverse geography -- from  world-class beach resorts of Maldives to the scenic mountains of Bhutan and India, up to the sky-hugging Himalayas of Nepal. What land-locked countries lack in terms of access to the ocean, they make up with mountains that can easily attract visitors and investors from around the world. The infrastructure to make this happen, such airline liberalization and competition, airport modernization and electricity supply stabilization, should be put in place.

The International Monetary Fund (IMF) released its annual World Economic Outlook report in mid-April this year. It points out some interesting points, such as the fact that in the Purchasing Power Parity (PPP) valuation of Gross Domestic Product (GDP),  China has overtaken the US in 2014 as the world’s largest economy. In terms of nominal values though, the US is still number one.

Below are the numbers for South Asian economies.

Table 1.South Asia GDP Sizes at PPP Valuation, in Billions of Current International Dollars

 Source: IMF, World Economic  Outlook 2015 Database, April 2015.
The column on Multiple is not part of the IMF report, it was added in this paper.

A number of South Asian economies are not liberalizing fast enough. That is displayed by  rather low expansion of their GDP size, only 3-4 times of expansion after two decades. Bhutan, India and Maldives have displayed good and impressive economic expansion.

In comparison, four South East Asian economies that liberalized only over the past two decades, and liberalized fast enough, have experienced GDP expansion of 5-6 times. These are Cambodia, Laos, Myanmar and Vietnam (CLMV). Indonesia is added in this table because it is the biggest economy and has the biggest population in the respective region.

Table 2.Selected South East Asia GDP Size at PPP Valuation, Billions Current International Dollars

* 1998, earliest data for Myanmar.

The agreement among the 10-members Association of South East Asian Nations (ASEAN) was faster and accelerated liberalization in trade and investments. So these four economies that emerged from big political instabilities and even civil wars until the 70s started with protectionist mindsets. Their membership in the ASEAN slowly changed their mindsets to embrace faster economic liberalization, at least among their neighbors in the region. So far, the results for them have been generally positive.
                                                                                      
Faster economic liberalization allows quicker reallocation of resources – people, capital, technology, land – to sectors where they are most needed. Price inflation signals people where they will be compensated higher, as workers, managers or entrepreneurs.

A free market gives individuals the chance to decide on prices and run a business independently, while all individuals are producers and consumers at the same time. Thus, a free market for people means they are free to sell their products or their labor to other people who can compensate them higher. It also means freedom of people to reject goods and services that are of inferior value, thus forcing people to continuously improve their products and services, improve their skills, talents and human relations.

In the end, a free market can help the poor, give them jobs, or allowthem to become start up entrepreneurs.
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See also:
Business 360 21: Cheap Oil and Nepal, February 20, 2015
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Election 14, The Middle Earth of PH Politics, by Doy Romero

June 23, 2015, 6:58 pm
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The Presidential and local elections in the Philippines are just 10 1/2 months away. Generally it will be a battle between which side of Big Government advocates will prevail. Nonetheless, we can delineate or distinguish them which side will advance Big Government + Big Private Monopolies and Oligopolies, vs. Big Government + Competitive Economy.

I think the old and traditional politicians like VP Binay belong to the former while newbies like Sen. Grace Poe may belong to the later, am not sure.

What about good governance? For me, Big Government = bad governance There is little or no justification why bureaucracies, regulations, permits, taxes, fees, fines, mandatory contributions, etc. should be as many as possible.

In the absence of a political party in this country that advocates limited and small government, free marketers like me can only compromise with candidates or political parties that somehow advocate more economic freedom and less monopolies, oligopolies, which are always created by government via Constitutional restrictions and franchising system.

This article by my former Prof. in a Political Science subject in UP Diliman in the 80s, Dr. Segundo "Doy" Romero, is another sharp analysis and can help guide voters who among the different political parties and factions can advance more economic freedom and who can oppose it. Sir Doy posted this in his fb wall, reposting with his permission.
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The Battle for "Middle Earth" Begins
 Dr. Segundo Romero
June 24, 2015

The resignation of Jejomar Binay from the Cabinet of President Aquino is a declaration of war. Now the campaign for the Presidency in 2016 is unofficially open. The battle lines are drawn. Consolidation of forces begin.

The Binay declaration of war is timed to prevent other opposition contenders from prematurely declaring and committing themselves to the fight for the Presidency. If they do, it will take time and a lot of resources before they and their core supporters can be cajoled to give up their presidential ambitions and agree to put themselves behind Binay. That would waste at least six months of preparation for and conduct of war.

Now that Binay is the default leading opposition contender, he can now begin to consolidate the fragmented opposition. He is hopeful despite the polls showing he is steadily losing the people's favor, for he finds himself in fertile opposition ground. PNoy has so changed the political landscape that he has created powerful enemies among the traditional elite and political families. These families, while themselves competitors and rivals for slices of political and economic power, are willing to set that aside at this time, just to bring back the old rules of the game of politics where they perform exceedingly well..

Jejomar Binay is the man for this nostalgic return to the status quo ante, the return to the good old days. There is no doubt He is open to negotiation. He is an astute cobbler of win-win situations with political factions and other parochial tribes. So, he will be busy building the forces of the future Binay empire, selling shares of stock to the following, who must now be eagerly waiting to make deals with him:

Class A: The Core Ex-Presidential families

1. The Macapagal-Arroyo family and loyalists
2. The Estrada family and loyalists
3. The Marcos family and loyalists

Class B: The "Penumbra" Dynasties, such as

4. The Enrile family and loyalists
5. The Bong Revilla family and loyalists

Class C: The Issue advocates, such as

6. The "progressive" groups who have been calling on PNoy to resign
7. The various opponents of the Tuwid na Daan in the government
8. The various opponents of the Tuwid na Daan in the private business sector
9. The passionate advocates or opponents of very specific policies (FOI, BBL, CCT, K-12) who are disaffected

Class D: The Spurned Supporters

10. The various enthusiasts of the Tuwid na Daan who have been variously slighted, rejected, abandoned, and now decry what they claim to be the Baluktot na Daan

Class E Middle Earth

At this early point, there is also a big chunk of the electorate who are unattentive, just observers or hecklers of the passing political scene, who are yet uncommitted, perhaps as much as 60 percent of the electorate. The polls show they are the voters who are lower in socio-economic status and farther from Manila. They are in the middle between the Binay camp and the Poe camp. They are the Middle Earth.

This is a source of hope for Binay. The Binay touch had shown wonders here in the 2010 elections, using local government officials and leaders to transact electoral support the way cobradors of jueteng fan out to the countryside.

Binay's assets are frozen and, under the watchful eye of the public, cannot be renewed or augmented through public coffers as in the past. He needs the subscription of various investors and stakeholders to his campaign.

His promises will be weighty, because Grace Poe, will not be willing to enter into these sweetheart deals, using the Presidential prerogatives as a futures commodity to be traded.

The reason Grace Poe has edged Binay from the presidential preference polls is that she has served as the consolidation point for all those who advocate for continued good governance and rejection of corruption.

The Binay declaration of war simply creates a parallel, symmetric consolidation around two opposite poles -- the experienced but tainted, the inexperienced but principled.

For the first time since the Ferdinand Marcos-Cory Aquino face-off in 1986, we will have another face-off between just two major opponents -- Binay and Grace Poe. .Any other candidate will serve to be a muddler -- serving only to draw votes from any of these two primary contending forces. Mar Roxas and Duterte are in this category.

SWS and Pulse Asia, working independently but validating each other's reading of the people's political pulse, will ensure that no politicians will be blinded with illusory hopes of personal grandeur.

With social media as the new powerful channel of information between candidate and voter, the 2016 elections will be the neatest, sharpest reflection of the people's will in a long, long, time.

It will tell us whether the Filipino people essentially judge on the basis of the "aliwalas ng mukha" factor, or the "lalim ng bulsa" factor.

For the first time since Cory Aquino, the Philippines is poised to have a majority president in 2016. The question is, Binay or Poe? I already have my answer, and it makes me smile.
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AEC 14, SEANET-ABAC Meeting, IDEAS-OBG Partnership

June 24, 2015, 3:36 am
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The ASEAN Economic Community (AEC) will materialize in just six months, at end-December 2015. Many people both within and outside the region are excited about this common market project, composed of some 630 million people. Free movement of people and commodities, free mobility of goods and services within the 10 member-countries. That is economic freedom. 

But not full mobility yet, there are still pockets of protectionism especially in services, in almost all member countries. But the trend is towards gradual phase out of those non-tariff barriers (NTBs) in  goods and protectionism in services.

Yesterday, the team of South East Asia Network for Development (SEANET)  met with Tuan Syed Nabil Aljeffri, the Secretary General of the ASEAN Business Advisory Council (ABAC). Photo below, from  left:  Mr. Yohannan "Yogi" Nair of SEANET, Mr. Aljeffri, and Ms. Fareeza Ibrahim, also of SEANET.

In its facebook page, SEANET reported that the discussion focused on the various challenges and prospects that ASEAN and regional small and medium enterprises (SME's) face, and the necessary steps that must be taken to ensure that economic integration is equitable and sustainable in the long run.

See also the network's first newsletter, http://seanetwork.asia/index.php/seanet-newsletter-2/

On a related note, our ally and fellow free market think tank based in Kuala Lumpur, the Institute for Democracy and Economic Affairs (IDEAS), has partnered with the global publishing and consultancy firm Oxford Business Group (OBG). The two think tanks will produce a report about Malaysia and the ASEAN economic integration.

IDEAS is the "mother entity" of SEANET. It is also a member of the Economic Freedom Network (EFN) Asia. Photo below, IDEAS CEO Wan Saiful Wan Jan and OBG’s Regional Manager for Asia Lauren Denny.


From IDEAS Press Release today,

The Report: Malaysia 2016 will provide detailed analysis of what the launch of the ASEAN Economic Community at the end of 2015 signals for both the regional and global economy. The publication will chart ASEAN’s drive to ensure people and their needs remain the top priority in the nations’ efforts to promote regional cooperation and solidarity.

Other issues set for coverage include ASEAN’s push to boost the part played by small and medium-sized enterprises (SMEs) in regional economic development and its efforts to promote more public-private sector partnerships (PPPs).

In other analysis, The Report: Malaysia 2016 will explore the achievements of the 10th Malaysia Plan, as well as the launch and goals of the new 11th Malaysia Plan which will lead the country to Developed Nation status by 2020.The publication will also shine the spotlight on the Malaysian states of Sabah and Penang, where there is evidence of significant economic potential; as well as the opportunities for foreign direct investment (FDI) emerging across many of the sectors of the country’s economy.

The Institute for Democracy and Economic Affairs (IDEAS) has signed a Memorandum of Understanding (MOU) on research with OBG for its forthcoming report on the country’s economy. Under the first-time MOU, OBG will work with the leading think-tank, which promotes market-based solutions to public policy challenges, to compile and produce The Report: Malaysia 2016.

Wan Saiful Wan Jan, Founding Chief Executive of IDEAS said he is excited to contribute to The Report especially this year as IDEAS has just started their project on ASEAN.

"This is an exciting time for Malaysia and for the region. The birth of the ASEAN Community and the ongoing negotiations around the TPP hold huge potential for growth in this region and if done correctly Malaysia will certainly benefit from them. The government too has introduced some important structural changes in our economy which shows their commitment to improve the investment climate. My team has been looking into these issues and we are very keen help OBG capture these important developments in The Report."

OBG’s Regional Manager for Asia Lauren Denny said she was delighted that the Group’s team in Malaysia would benefit from IDEAS’ local knowledge in what marks its ten-year anniversary of analysing the country’s economy.


“Oxford Business Group has long recognised the importance of working closely with local partners who bring on-the-ground insight and expertise to the table,” she said. “The Institute for Democracy and Economic Affairs and Oxford Business Ground share plenty of common ground when it comes to areas of research, especially in the fields of economics and education. I am thrilled that our team will benefit from the institute’s contribution to our forthcoming report, which we’re sure will be a valuable tool for investors.”
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See also:
AEC 10: Indigenous Rights, Labor and Human Rights in the ASEAN, April 21, 2015 
AEC 11: Trade and Economic Development is Social Development, April 25, 2015 
AEC 12: Workshop on Trade Liberalization at the APF 2015, Kuala Lumpur, April 27, 2015 
AEC 13, SEANET Website, AFAS in Financial Services, June 18, 2015
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BWorld 7, Free Trade vs.Protectionism via Non-Tariff Measures

June 25, 2015, 6:26 pm
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* This is my article for BusinessWorld Weekender. Posted online yesterday, hard copy is published today.
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Trade, human welfare, and their barriers

TRADE is perhaps the single most important invention made by humanity to improve their condition and welfare. It is so vital as to be essentially inherent to human nature, as shown by the earliest, the most primitive societies.

This is because no man, no matter how bright and resourceful, is capable of producing everything that he needs for himself and his family, especially in modern societies. Modernization is possible only through specialization of labor and skills, making efficient production of certain goods and services, generating big surplus and using the surplus to procure other goods and services that are more efficiently produced by other people somewhere else.

While trade is vital to human welfare and progress, it is also the object of envy and contention among certain sectors of society in different countries. While it is human nature to have free trade among people, politics and governments come in to cater to special interests in society and deprive many consumers of the freedom of choice, by erecting various tariff and non-tariff barriers (NTBs) to trade. And this creates trade disputes among participating governments.

The World Trade Organization (WTO) was established in 1995 mainly to pave the way for a rules-based global trading regime. The rules are transparent and apply to all member-countries.

In a forum at the Asian Development Bank on May 21, WTO director-general Roberto Azevedo said the organization supports global trade and development via five schemes.

1. Providing a rules-based trading system that now covers around 98% of global commerce.

2. Serving as a forum where countries can sit down and monitor each other’s practices and regulations to ensure that agreements are observed and respected.

3. Offering a settlement mechanism for trade disputes between and among countries. Almost 500 trade disputes have been heard by the WTO, helping members to resolve their differences in a fair, open and transparent manner.

4. Fighting protectionism. During the 1929-1933 Depression, retaliatory trade restrictions wiped out two-thirds of world trade. Such practice was not repeated when the world experienced heavy fiscal and financial turmoil in 2008, and response by governments was mostly calm and restrained. Under the WTO, member-states knew that they were bound by rules and obligations, so they had the confidence to resist domestic protectionist pressure.

5. Providing a place where developing and least-developed countries have a seat at the table and an equal voice in global trade issues. These countries are also afforded special and differential treatment, and technical assistance to help improve their trading capacity.

While tariffs have generally gone down across many countries, there are various non-tariff measures (NTMs) and barriers that restrict free trade. The most prominent is restriction via various bureaucracies or trade bureaucratism, a serious problem for many exporters and importers.

In December 2013, a historic WTO ministerial conference in Bali produced an important output, the Trade Facilitation Agreement (TFA). Its goal is to make faster, easier, and cheaper the movement of goods across countries and borders. The WTO estimates that the TFA can reduce trade costs at the border by up to 15% for developing countries, and inject up to $1 trillion per year into the global economy, creating some 21 million new jobs worldwide.

The next challenge for the WTO is the TFA’s ratification by at least two-thirds of the member-states.

There are many other barriers to free trade. Here are the eight non-tariff measures (NTMs) imposed by different governments that limit or restrict the movement of goods and services across borders: Sanitary and phytosanitary (SPS), technical barriers to trade (TBT), anti-dumping, countervailing duties, safeguards, special safeguards, quantitative restrictions (QRs), and state trading enterprises (STEs).


STEs are also known as state-owned/operated enterprises (SOEs) and, in the Philippines, they are called government-owned and -controlled corporations (GOCCs).

In East and South Asia, the NTMs are plentiful. See these charts. In the first row are charts for the Philippines, Thailand, Indonesia, Malaysia; second row has India, China, Japan, USA.

In the Philippines and Indonesia, the most common NTM is SPS. In Thailand and India, safeguards and anti-dumping are the common NTMs. China loves imposing QRs and anti-dumping while Japan’s favorites are safeguards and special safeguards.


The US, falsely labeled by many people as the “chief ideologue” of the “jobs-killing free trade” philosophy, is actually a practitioner of multiple NTMs and other forms of trade restrictions.

In contrast, many other economies have very few NTMs, among them, Singapore, Hong Kong, United Arab Emirates, Qatar, United Kingdom, Germany, Spain, and Sweden.

Hong Kong and Singapore are the known practitioners of unilateral trade liberalization in goods in this part of the planet. Their NTMs are few compared to their neighbors in East Asia. UAE and Qatar used to be very small economies that became super rich largely through trade opening.



UK, Germany, and other EU member-countries have strict observation of the free mobility of goods and people across the Union. Thus, their NTMs are very few, except for SPS measures. Freeing trade is among the most important policies that any nation can undertake to unleash the entrepreneurial skills and potentials of its people.

Whether high tariffs or low tariffs but multiple NTMs, such policies deprive the people of the freedom to choose and buy those goods and services that maximize their individual and household welfare. When households make big and regular savings via purchase of cheaper, freely-traded commodities, they can use those savings and surplus to procure other goods and services that otherwise they could not buy. This expands the range of commodities among consumers and, in turn, this expands business and employment opportunities for many other people.

Free trade simply expands human welfare, whether people realize it or not.


Bienvenido S. Oplas, Jr. is president of Minimal Government Thinkers, a Manila-based think tank advocating free-market economics, and a fellow of South East Asia Network (SEANET), a Kuala Lumpur-based regional think tank advocating free trade in the ASEAN. 
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See also: 
BWorld 2, Benefits of Trade Liberalization for the Philippines, May 16, 2015

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BWorld 8, Manila's Traffic and Transport Woes

June 27, 2015, 5:52 am
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* This is my second article for BusinessWorld Weekender yesterday.
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Metro Manila’s transport woes and the aircon-van alternative 

ELLEN is a senior accountant in one of the offices on Ayala Avenue, Makati City. She lives in Dapitan, Manila. Her father has a car that she can borrow occasionally and drive to Makati but she has little patience enduring the traffic congestion, then paying high parking fees in Makati. So she takes public transportation.

If she takes the regular transportation route to Ayala, that means three rides: jeep from Dapitan to LRT Tayuman Station, then LRT to Buendia Station, then aircon bus to Ayala. Total fare would be P35 but travel time will be between 1.5 and 2 hours one way due to the traffic and the inconvenience of walking and queuing to ride the train then the bus.

There is an alternative to multiple and inconvenient rides, the air-con vans. Only one ride from Dapitan to Makati, travel time is one hour or less, fare is P60 for the legal, franchised vans up to Ayala, and P45 for the non-franchised “colorum” vans that stop only at Makati Central Post Office, at the Buendia-Ayala intersection. To save money, she takes the “colorum” van, gets off at Makati Post Office, then walks two blocks to her office.

While the colorum van drivers can somehow deal with the “yellow boys,” officers of the Makati Public Safety Authority (MAPSA), they will have difficulty dealing with another bureaucracy, the “blue boys” of the Makati Parking Authority (MAPA) keeping watch on Ayala Avenue. These officers are often stricter and more inclined, shall we just say, to slapping penalties on both public and private vehicles.

SERIAL HARASSMENT
Being robbed in an air-con van by a fellow passenger is a possibility, of course, but that risk is minimal, compared with the risk of being robbed in a jeepney or on the streets, as one commutes from one ride to the next. It is also inconvenient, obviously, to be out in the streets when it is raining and the streets are flooded.

Queuing at Dapitan can be long, because of the many residents who commute to Makati where they work, and the number of aircon vans is not enough. Normally, Ellen would be in a queue for 30 to 45 minutes until a new, empty van arrives, but she prefers the relative convenience of taking only one ride in an air-con van.

Therefore, with or without a regular franchise from the LTFRB, those vans provide real public service to regular passengers like Ellen. She feels that her energy and work productivity are higher if she takes the van than if she goes through the three-ride system or drives a car.

Government officials have yet to acknowledge this view, going by the serial harassment of drivers of “colorum” vans -- who can avoid the harassment and penalties if they bribe the officers, but this “cost” is passed on to the passengers, naturally.

Ellen has noticed that a number of these colorum drivers are off-duty policemen or their siblings, even officers at the usual government offices, or barangay chairmen. She believes roughly one-third of these drivers belong to those categories. Asked how she knows this, she says these drivers show their IDs, and they have these unique hand signals that traffic officers recognize to spare these drivers from their usual harassment. This is what happens when you have an observant passenger on board, as opposed to a commuter who is lost in his headset or social media.

HARRIED EMPLOYEES
Makati’s Central Business District (CBD) is a premier area for the Philippine economy. Business groups surely recognize this distinction as sustained through the decades by their harried employees. Data from the city government’s website show that as of 2012, there are 472 banks, 3,279 insurance and other finance-related institutions, and 48 shopping malls in Makati. Data as of 2013 show that there are 41 PEZA-registered IT buildings, 47 embassies, 40 consulates, and 20 international organizations like the UN and its various offices located in the city.

These banks, hotels, shops, restaurants, malls, and other establishments employ roughly a few hundred thousands of people. Those employees, from the clerical to the managerial levels, need convenient transportation to be able to arrive at their offices promptly and render efficient work. Otherwise, employees beyond the frontline services may be spared the trouble of commuting to work, but many employers are still not open-minded enough to accommodate flexible time or work from home -- options that should ease Metro Manila traffic considerably.

This daily scenario is common everywhere in the National Capital Region, which, in the given year of 2013, contributed P4.29 trillion or 37.2% of P11.55 trillion in GDP. In the services sector in particular, 2013’s national output at current prices was P6.66 trillion, of which P3.49 trillion or 52.7% was contributed by the NCR.

The NCR’s registered population in 2013 was 12.5 million or only 12.8 percent of the total Philippine population of 98.2 million that year. But NCR’s weekday population can soar up to 15 million, as residents, including university students, from the neighboring big provinces of Rizal, Cavite, Laguna, Bulacan, and Pampanga would troop to the NCR to do various businesses.

The development of an integrated and efficient public transport system, as existing in developed economies in Asia and Europe, is the best long-term solution to Metro Manila’s traffic woes. That dream has been articulated for decades, until the gap in public transportation is now being filled by private initiative, to the chagrin of government.

The absence of an efficient and integrated public transport system in Metro Manila can be considered as due both to market failure and government failure. The appearance of air-con vans and other ride-sharing schemes like Uber is a market solution to such previous market failure. Government should not over-bureaucratize and over-tax these transport innovations. By stepping back from too much regulation and taxation, government effectively renders public service.

The services of air-con vans that provide workers and employees with convenient and direct public transportation, similar to school buses that transport students from their homes to school, are the next best thing for people who don’t or would rather not drive and brave the traffic. This is public service, providing an efficient, fast, economical, and safe car pooling system.

But when government agencies and their officers make the franchising system of air-con vans very costly and bureaucratic, many operators skip the franchise system and become “colorum” operators. To avoid the harsh penalties and regular harassment, they must bribe traffic enforcers, and this further compounds the culture of corruption in government. -- Bienvenido S. Oplas, Jr. 
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CSOs and State 22, CIPS' Community Schools Project in Indonesia

June 27, 2015, 6:38 pm
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Here is another noble project worth supporting. Our friends in Jakarta, new independent think tank Center for Indonesian Policy Studies (CIPS) is launching a big project -- to develop NGO-administered community schools that will provide low cost but good quality education for some 36 M poor Indonesian kids. They are seeking donations for this project. In their special site for this project, CIPS wrote,

Low-cost community schools is a way to get more kids in classrooms.

Low-cost community schools are schools set up by community leaders and members to teach children from low-income families. Community schools use curricula that give parents and teachers more influence, so that schools provide their child the type of education they feel is most needed for better opportunities.

Students from low-cost community schools in Asia and Africa have even done better than their counterparts in government-run schools. Proving that quality education does not need to be expensive, and can be done.

For example, in India, poor families are willing to invest $2 a month to send their children to such community schools. Kids in these schools achieve higher scores in maths and english than children in public schools.

Being a think tank, CIPS will conduct a major study on how public basic education in Indonesia can be made more effective and less costly. The paper, when finished, will find its way in the hands of the Education Minister and Indonesian legislators. CIPS has a working relationship with some important policy makers in Indonesia.

It should be a good initiative that can be replicated in other big SE Asian countries with big population like the Philippines, Vietnam, Thailand and Myanmar. Here in the PH for instance, I think ALL high officials and consultants of multilaterals and foreign aid (UN (WHO, ILO, UNDP, UNICEF, etc), WB, ADB, USAID, etc.) plus high PH government officials and legislators, them who endlessly call for "more government spending in public education", do NOT bring their kids to public elementary and high schools, except in science HS. That alone is a clear admission by the eople working for those institutions that they have high distrust of the quality of public education.

I admire and support the CIPS for this project. Friends and readers, please consider giving a donation for this project. Thank you.
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See also:
CSOs and State 18: Civil Society as Lobbyists for More Government? Cigarette Warning Bill, March 02, 2014 
CSOs and State 19: UP Maroons and UP Alumni, March 24, 2014 
CSOs and State 20, Gawad Kalinga and Housing for the Poor, June 08, 2015 
CSOs and State 21, Patient Organizations, PAPO and HealthPRx, June 09, 2015
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Election 15, On Inclusive, Principled, Competent and Humble Presidentiables

June 28, 2015, 7:25 pm
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My former Prof. in undergrad Political Science subject in UP Diliman in the 80s, Dr. Segundo "Doy" Romero, asked yesterday in his fb wall, "Is Mar Roxas inclusive, principled, competent, and humble as appropriate to the Philippine Presidency?"

He then defined those four concepts.

1. “Inclusive” means you, the candidate, is committed to the quality of life of, by, and for the whole Filipino people. Inclusive development means enabling the poor, the vulnerable, the marginalized, and the disadvantaged to develop faster than the rest of society.

2. “Principled” comes from a consistent code of behavior (“sa isip, sa salita, at sa gawa”) that, faced with a series of dilemmas, enables you to choose the higher interest of nation over sectarian or narrow interests.

3. “Competent” comes from doing the right things right – good technical and administrative results being consistently produced to match good intentions. This includes extending your reach beyond your grasp through teamwork and technology.

4. “Humility” is when self-praise is unnecessary; it comes from public acknowledgment that you are inclusive, principled, and competent.

I commented and gave a direct answer, No.

But in fairness to Mar Roxas, other Presidentiables like VP Jojjo Binay, former President Erap Estrada, Sen. Alan Cayetano, Sen. Bongbong Marcos, other presidentiables, will also have a NO answer, at least for me.

Sen. Grace Poe may have humility; and competence, am not sure. 

With the current system of personality-oriented, not philosophy or ideology-oriented politics in the PH, no candidate can be really principled. Where the populist and welfarist idea prevails, Presidentiables and other politicians will be swayed by populism too. If majority of voters want more subsidies, more welfare, more entitlement programs, never mind that taxes are high and public debt is rising yearly because of annual deficit, with or without a crisis, most or all Presidentiables will be swayed towards populism.

Being a free marketer and believer of classical liberalism (not US liberalism or other variants), the closest political party in this ideology in the PH is the Liberal Party. The LP is also affiliated with Liberal International (LI), based in Europe. European liberalism is closer to classical liberalism.

My beef or complain about the LP is that it is not acting liberal enough. Many of Its policies adopted and implemented is far from being liberal but closer to the populist and welfarist philosophy. Notice how socialists like Walden Bello. Joel Rocamora, Ronald Llamas and other officers of BISIG-Akbayan found it easy to be in partnership with the LP. Either the latter group are confused socialists or the LP are confused liberals.

Sir Doy asked, "Is it possible to assess the utility of political parties in terms of the outcomes they envision and actually achieve for the people and nation over a period of time...?"

Maybe Yes. One problem is that all political parties here say the same thing -- "good governance", "anti-corruption," or "the current administration is corrupt, we can clean government", etc. And personality-based political parties are born. PROMDI party by Lito Osmena, REPORMA party by Rene de Villa, Aksyon Democratiko by Raul Roco, PRP by Miriam, PMP by Erap, Lakas by FVR and JDV, etc. When those leaders are gone or lie low, the party is gone or become less visible too.

We cannot expect much differences among political parties and leading candidates. The visible difference perhaps is that one candidate is more vulgar in its plunder and robbery (like Jojo Binay, based on various pending and filed cases against him and his family) while the others are less vulgar.

Very often, the mentality of the politicians is a reflection of the mentality and behavior of the voters, the public, mainstream media and NGOs. From some politicians that I talked to, they often say, "so many people clamor for it", referring to the entitlement and welfarism mentality. Many voters  feel they are entitled to be given free healthcare, free education, free housing, free or highly subsidized credit, tractors, burial, etc.

The people's values, in short, are corrupt. Many people will not admit it of course that they have corrupt minds and entitlement values. It is always easy to blame the politicians. And somehow true, the politicians take advantage of populism and entitlement mentality. How else can one justify that the government confiscates almost 1/3 of people's monthly income, and from the take home pay, government further collects many other taxes and fees (VAT on consumer items, vehicle registration tax for their cars, real property tax for their house and lot and farm, franchise tax for their business, etc.).
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See also:
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