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Starting this week, this column will produce a series of Market-Oriented Reforms for Efficiency (MORE) articles related to recently enacted laws and proposed legislations in the Philippines on various sectors. Thus, recent Republic Acts (RA) and some pending bills for bicameral committee meetings after the May 2019 elections will be discussed.
“Many people want the government to protect the consumer. A much more urgent problem is to protect the consumer from the government.” -- Milton Friedman (1912-2006), Nobel Prize economist
“The natural effort of every individual to better his own condition...is so powerful, that it is alone, and without any assistance, not only capable of carrying on the society to wealth and prosperity, but of surmounting a hundred impertinent obstructions with which the folly of human laws too often encumbers its operations.” -- Adam Smith, Book IV, Chapter V, The Wealth of Nations (1776).
“The over-all speed of advance will be increased by those who move fastest. Even if many fall behind at first, the cumulative effect of the preparation of the path will, before long, sufficiently facilitate their advance that they will be able to keep their place in the march.” -- Friedrich Hayek, Chapter 5, The Constitution of Liberty (1960)
The second Trump-Kim Summit in Vietnam this week, February 27-28, points to many good and optimistic scenarios not only for both US and N. Korea but also for the ASEAN, East Asia and the rest of the world.
Most anti-coal activists would resort to disinformation and deception to advance their ecological leftist agenda and in the process, deprive energy consumers of the opportunity to have cheaper, stable and reliable 24/7 electricity, badly needed to sustain fast growth and generate more jobs for the people.
MODERN day socialists and populists in governments, explicit and implicit, are aware of the limits of governments giving all sorts of endless, no timetable subsidies, discounts and other welfarist programs. So they invented a new form of welfarism — forcing private corporations to give mandatory discounts (restaurant food, medicines, fare in public transportation, etc.) to people, rich and poor no distinction. Politicians and governments get the credit while corporations get the financial burden as those forced discounts cannot be used for tax deduction.
On the Philippines’ GDP growth rates, the good news is that from 2010 to 2018, the Philippines has been growing above 6% yearly except in 2011. High growth was experienced in 2010 with 7.6% (recovery from 2008-2009 global financial turmoil) and 2013 (election year) with 7.1%.
The cronyist “Solar para sa Bayan Corporation” (SPBC) franchise bill (HB 8179) was magically passed by the House of Representatives despite opposition by many groups in the energy sector. Among the oppositors is the Developers of Renewable Energy for AdvanceMent, Inc. (DREAM), the umbrella organization of all RE associations in the Philippines.
The Philippines registered a 4.4% inflation rate for January 2019. The good news is that it is a lot lower than the past four months’ average of 6.1%, but the bad news is that compared to our neighbors with January 2019 data, it is the highest. In the ASEAN-6, three have near-zero inflation while Indonesia and Vietnam have below 3%.
The Senate is once again the battleground of public debates on many issues. This is because it is still deliberating its own versions of House Bills (HBs) passed on third reading, and the official campaign period will already start on February 12 -- which means all congressional activities and meetings will cease and resume only after the May elections.
At the UP School of Economics Alumni Association (UPSEAA) sponsored “Economic Briefing” on Jan. 25, the speakers were DBM Secretary Benjamin Diokno and NEDA Secretary Ernesto Pernia. My former teacher in undergrad and graduate economics, Sir Ben Diokno said in his presentation that with high GDP growth in 2017 and 2018, “Duterte hit the ground running.”
Until about the 1960s and 70s, Philippine business was dominated by the land-based and a few real estate wealthy families like the Zobel-Ayalas. Things changed in the 1980s in both politics and business and when the Marcos dictatorship collapsed along with its huge cronies.
The Philippines has a huge and increasing economic potential mainly because of its big population, estimated at 108 million as of mid-2018 and the 13th largest in the world. Which means more entrepreneurs and workers, more producers and consumers.
We have the 2nd or 3rd most expensive electricity in Asia (after Japan and Hong Kong or Singapore) mainly because there are many charges that are imposed on our monthly electricity bill. The biggest item is the generation charge (goes to power generation plants) plus eight other items: transmission charge, distribution charge, supply charge, metering charge, system loss charge, universal charge, feed-in-tariff allowance (FIT-All), VAT and other taxes.
When the Philippines public debt reached P7.2 trillion last November, I was curious which among the previous and current administrations were the major debt generators. I checked the Bureau of the Treasury (BTr) website and summarized the numbers below and computed the per year rise in public debt stock.
The Philippines’ Commission on Human Rights (CHR) has accepted the petition by Greenpeace and other environmental groups in mid-2016 and it has launched the “National Public Inquiry on the Impact of Climate Change on the Human Rights of Filipino People and the Responsibility of the Carbon Majors Therefor, If Any.”
“I stand before the whole nation on a day when people begin to free themselves from socialism, from the inversion of values, from state gigantism and from the politically correct.” -- Jair Bolsonaro, Brazil, President Inauguration Speech, Jan. 2, 2019
“A contestable market is one into which entry is absolutely free, and exit is absolutely costless… Absolute freedom of exit is one way to guarantee freedom of entry, any firm can leave without impediment, and in the process of departure can recoup any costs incurred in the entry process. Their firms need not be small or numerous.” -- William Baumol, Presidential address at the 94th meeting, American Economic Association, December 1981
A report in BusinessWorld yesterday, Dec. 17, said that the country’s foreign debt grew 5.6% to $76.4 billion as of end-September 2018.
The University of the Philippines (UP) Fighting Maroons reaching the University Athletic Association of the Philippines (UAAP) championship this year was so spectacular, the spectacle is easily seen in two things: quick scarcity of game tickets and hyper-inflation of available ones.
“The rapid economic advance that we have come to expect seems in a large measure to be the result of this inequality and to be impossible without it. Progress at such a fast rate cannot proceed on a uniform front but must take place in echelon fashion, with some far ahead of the rest.” -- Friedrich Hayek, The Constitution of Liberty (1960), Chapter 3.
“The man of system...is apt to be very wise in his own conceit; and is often so enamoured with the supposed beauty of his own ideal plan of government, that he cannot suffer the smallest deviation from any part of it....He does not consider that in the great chess-board of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might choose to impress upon it.” -- Adam Smith, Theory of Moral Sentiments (1759)
“Something terribly wrong with a program that grows ever larger even when prosperity for everyone else is increasing. We should measure welfare’s success by how many people leave welfare, not by how many are added.” -- Ronald Reagan, 40th US President
Integrated Public-Private Partnership (PPP) means the construction then operation and maintenance (O&M) phases will be done by a single entity while Hybrid PPP means the construction is done by one entity, the O&M to be done by another entity. Funding of the former therefore will be fully shouldered by that entity while in Hybrid PPP, construction cost to be funded via ODA/foreign loan or Philippine government budget appropriation, O&M by a local private firm.
When a “bright idea” needs legislation, 90 to 99% it is a lousy idea that will not work if not implemented by force, coercion and state favoritism. In contrast, many of the brightest innovations and successful business projects in the country and the world were born without legislation, they just prospered under a competitive environment.
The Duterte government is known for political environmentalism and recycling -- it recycles its heavily tainted officials, sacking them from one post only to be given another post in another government agency. The Bureau of Customs in particular is becoming more known as a “blinded” facilitator of multibillion pesos worth of imported shabu smuggled into the country.
Yesterday, a lecture on “Capitalism and inclusion under weak institutions” was delivered by national scientist Dr. Raul Fabella, my former professor at UP School of Economics and fellow columnist here in BusinessWorld. Another columnist Romy Bernardo mentioned the lecture in his column here last Monday.
Two weeks ago, I traveled from Manila to North Luzon by bus. Going up via NLEx, SCTEx, Tarlac, Pangasinan, La Union, Ilocos Sur, Ilocos Norte, finally to Gonzaga, Cagayan. I went there to visit a friend, also gave a talk on TRAIN law and inflation at Cagayan State University (CSU) Gonzaga campus. Going back I took the Cagayan Valley route, passed Isabela, Nueva Vizcaya, Nueva Ecija, SCTEx, NLEx.
The government recently announced that it will suspend part 2 of the oil excise tax hike this coming January 2019. So another increase of P2/liter for both diesel and gasoline will be temporarily suspended but the tax hikes in 2018 of P2.50/liter for diesel and P2.65/liter for gasoline (from P4.35 to P7.00/liter) will remain.
The Duterte economic team aka “Dutertenomists” composed of the DBCC, the Secretaries of DoF, DBM and NEDA and Governor of BSP have been peddling the “6.7% inflation rate will be the peak” statement after the September inflation was announced. They are daydreaming, of course.