Thursday, March 26, 2009

It's the Sun, stupid!


Below is an oped by a new friend whom I have met in NY 2 weeks ago during the 2nd ICCC sponsored by Heartland Institute. The author, Dr. Willie Soon, is a Malaysian-American solar and climate scientist at the Harvard-Smithsonian Center for Astrophysics. This is his personal opinion based upon 18 years of scientific research.

This article further convinced me that the "anthropogenic climate change" theeory is wrong. CO2 is not a pollutant. It's a gas that comes out of our nose and mouth when we exhaule, a gas that comes out from the mouth and nose of our dogs, cows, chickens, other animals. It's a gas that plants, flowers and trees "inhale".

The many scientific evidence that Astrophysicists, meteorologists, geologists, etc. have gathered showed that there is NO correlation between CO2, much less man-made CO2 emission, and global climate. Rather, it's the sun -- solar irradiance, sun spots cycles, other solar activities.

Here are the relevant materials:

(a) Dr. Soon's article, below.

(b) his youtube video,
http://www.youtube.com/watch?v=9rEXe4y1d8Q

(c) a news report, "Gore “not interested” in debate with Dr. Willie Soon and Lord Christopher Monckton",
http://theclimatebet.com/2008/04/09/gore-not-interested-in-debate-with-dr-willie-soon-and-lord-christopher-monckton/

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It’s the Sun, stupid!
New direct evidence demonstrate that changes in solar activity influence climate

Willie Soon
March 2009

The theory that climate change is chiefly caused by solar influences “is no longer tenable,” says US National Academy of Sciences president Ralph Cicerone. Carbon dioxide, he argues, is the key driver of recent climate change. I beg to differ.

The amount and distribution of solar energy that we receive varies as the Earth revolves around the Sun and also in response to changes in the Sun’s activity. Scientists have now been studying solar influences on climate for 5000 years.

Chinese imperial astronomers kept detailed sunspot records. They noticed that more sunspots meant warmer weather on Earth. In 1801, the celebrated astronomer William Herschel noticed that when there were few spots, the price of wheat soared -- because, he surmised, less “light and heat” from the Sun resulted in reduced harvests.

Is it true then that solar radiation, which supplies Earth with the energy that drives our climate, and caused so many climate shifts over the ages, is no longer the principal influence on climate change?

The UN’s climate panel claims there is scientific “consensus” that man-made CO_2 emissions are causing “dangerous” climate change. However, its 2007 Climate Assessment is fraught with serious scientific shortcomings in its discussion of the Sun’s influence on Earth’s climate.

The UN said direct measurements of solar radiation since 1979 show little increase. However, this conclusion depends upon disparate and adjusted measurements that were combined from several satellites and may be incorrect.

Between 1645 and 1715, sunspots were very rare and temperatures were low. Then sunspot frequency grew until, between 1930 and 2000, the Sun was more active than at almost any time in the last 10,000 years. The oceans can cause up to several decades of delay before air temperatures respond fully to this solar “Grand Maximum.” Now that the Sun is becoming less active again, global temperatures have fallen for seven years.

Next, the UN said estimates of the increase in solar radiation over the past 400 years should be reduced. The basis for this claim was a modeling study by the US Naval Research Laboratory. However, the Navy computer program was not designed to reach such conclusions, as it has no routine to calculate solar radiation.

We have known for nearly 80 years that small changes in solar activity can cause large climatic changes. Where sunlight falls, for how long, and with what effect, determine how climate will respond.

The most recent scientific evidence shows that even small changes in solar radiation have a strong effect on Earth’s temperature and climate.

In 2005, I demonstrated a surprisingly strong correlation between solar radiation and temperatures in the Arctic over the past 130 years. Since then, I have demonstrated similar correlations in all the regions surrounding the Arctic, including the US mainland and China.

The close relationships between the abrupt ups and downs of solar activity and of temperature that I have identified occur locally in coastal Greenland; regionally in the Arctic Pacific and north Atlantic; and hemispherically for the whole circum-Arctic, suggesting that changes in solar activity drive Arctic and perhaps even global climate.

There is no such match between the steady rise in atmospheric CO2 concentration and the often dramatic ups and downs of surface temperatures in and around the Arctic.

I recently discovered direct evidence that changes in solar activity have influenced what has been called the “conveyor-belt” circulation of the great Atlantic Ocean currents over the past 240 years. For instance, solar-driven changes in temperature, and in the volume of freshwater output from the Arctic, cause variations in sea surface temperature in the tropical Atlantic 5-20 years later.

These previously undocumented results have been published in the journal /Physical Geography/. They make it difficult to maintain that changes in solar activity play an insignificant role in climate change, especially over the Arctic.

The hallmark of good science is the testing of a plausible hypothesis that is then either supported or rejected by the evidence. The evidence in my paper is consistent with the hypothesis that the Sun causes climatic change in the Arctic.

It invalidates the hypothesis that CO_2 is a major cause of observed climate change -- and raises serious questions about the wisdom of imposing cap-and-trade or other policies that would cripple energy production and economic activity, in the name of “preventing catastrophic climate change.”

Bill Clinton used to sum up politics by saying, “It’s the economy, stupid!” Now we can fairly sum up climate change by saying, “It’s the Sun, stupid!”

Thursday, March 19, 2009

John Rutledge on entrepreneurship


Among my favorite bloggers is John Rutledge, Chairman of Rutledge Capital. I met him 2 years ago in Honolulu, Hawaii, during the Pacific Rim Conference sponsored by 6 free market think tanks -- ATR, SPN, IPN, GIH, LRI, and NF. I doubt that he will remember me, but he was our dinner keynote speaker. After his talk, I joined a group of other participants who "ambushed" him in a long informal talk.

The man is very intelligent. I think he has double degrees -- Physics and Business administration. He was talking about economic growth and competition using some concepts in physics like the law of thermodynamics. His blog is
http://www.rutledgeblog.com/

Last week, he wrote a very inspiring blog entry,
"Mary, my Hero of the Week"
from their Saturday Entrepreneur Show

Here is the story of Mary, 70, who wanted to become a start-up entrepreneur.

March 08, 2009 By: John Rutledge

We have a new Fox Business show for entrepreneurs...
I don’t mean entrepreneurs like Bill Gates or Warren Buffett. they are already wealthy. I mean REAL entrepreneurs that start companies in their kitchen and struggle every day to survive.

Our message is simple. We need to stop waiting for the government to bail us out or some big company to offer us a job. We need to get off the couch, light the blue flame, and do it ourselves by starting and growing our own businesses.

Yesterday we had a ton of calls from people fighting to survive in the tough economy. It breaks my heart to talk with a man running a shower door company, like we did yesterday, who is trying to decide who to fire because he can’t make next week’s payroll or pay the rent. But I admire these people so much that we have to try–and sometimes we can find a way to help.

Every week there is some person on the show that really gets to me. These are my heros. So far my all time champion is Terry–tell you about him later. This week my hero is Mary from Arkansas.

Mary called in to ask us if we thought she was crazy that she is thinking about starting a business.

Mary is 70 years old and has no business experience. But she has developed a dipping sauce in her kitchen that her friends all say is so good that she ought to be selling it. She had 2 questions. Was she crazy at her age to think she and her family could do this in their own kitchen? And how can she get started?

Crazy? Are you kidding, Mary? It is you, and people who have even half your energy, that built this country in the first place. I am humbled by your example. Go get ‘em girl.

Mary’s questions were good ones. Does she need any special equipment? (No) Can she start it in her own kitchen with her family? (Yes. That’s the best way.) Does she need a bigger pan to get started? (she only has a 5 quart pan) (No. Buy a bigger pan when you make some money.) Should she start selling the first (5 quart) batch or wait until she has made a lot more of it? (Waiting is for tourists. Start NOW.) And how can she find customers (lots of ideas including using local restaurants and gift shops, a card table by the road, going on local (free) radio and TV, and friends and family.) I told Mary I would take a jar of her sauce with me next trip to China.

Later in the day I got emails from people all over the country who were inspired by Mary to get their businesses going too. Working on a way to connect the mini entrepreneurs into a virtual marketing network they can each help the other sell into their local markets.

I may be a simp, but Mary gives me hope. I hear so many people whining every week about what they don’t have that I am uplifted to talk with a 70 year old woman in Arkansas who is ready to kick some butt.

Mary, you are my hero.

JR

Pol. Ideology 13: Liberty and Liberty Forum, the LP

Liberty is a philosophical concept often associated or deemed synonymous with freedom, democracy and sovereignty. But while freedom can be a close synonym of liberty, democracy and sovereignty may not be. This is because liberty has two wide connotations: collective liberty and individual liberty. Democracy (the will of the majority) and sovereignty (freedom from foreign colonialism or domination) therefore, connotes more of collective (national, regional, community) liberty and cannot be a substitute for individual liberty.

This distinction is very important because most -- if not all -- public policies and institutional or organizational tools and rules that oppress or harass the individual, are done in the name of the collective, in the spirit of “country/nation first before self” or “community first before the individual”.

There is one case though, when collective liberty can be equivalent to or synonymous with individual liberty: when the collective is done or aggregated in a voluntary way, and not forcibly imposed. Examples of voluntary collectivism are civic organizations, sports clubs, neighborhood associations, among others. Here, individuals join voluntarily, or were invited and sponsored by their close friends or associates, and individuals have the option or freedom to get out of such collective. And the voluntary organization or collective can possibly die when it no longer enjoys the support of its members. This is also the essence of “civil society”.

When a collective is done forcibly, ie, individuals are mandated or coerced to belong to a collective, this is considered “forced collectivism” and cannot be considered as synonymous with individual liberty. The single biggest example of forced collectivism is Government (local or national). There are plenty of public policies that assert or impose forced collectivism, foremost of which are the various taxes and regulations, restrictions and prohibitions unless those regulated will first secure the approval and signatures of the regulators.

In many lectures, symposia and conferences on economics, business and politics, the primacy of individual liberty and the dangers of imposed collectivism are hardly mentioned, or none at all. The mere absence of this reminder or distinction already reflects the triumph of forced collectivism in the minds of the public.

Thus, if one finds a symposium or conference where the primacy of individual liberty is often mentioned, if not made a central theme of the activity, one is considered very lucky.

The annual “Atlas Liberty Forum” by the Atlas Economic Research Foundation (www.atlasnetwork.org) can be considered as one of those very few conferences around the world were individual liberty and the importance of free market is a constant central theme. Some panel discussions that mention collective liberty refer to the voluntary collectivism strand.

When I and a few friends in Manila formed “Minimal Government” around February 2004, we knew that we were free marketers, we knew that we believed in “minimal government = minimal taxes = minimal bureaucracy”, but we did not realize much the distinction between individual and collective liberty, we did not know much about the free market and liberty movement around the world, we barely knew any free market-oriented think tank or institute outside of the Philippines.

These all changed, almost abruptly, when Atlas offered me an international fellowship in April 2004. There were several activities for an international fellow, one of which was attend the “Atlas Liberty Forum”. It was the 4th liberty forum and held in Chicago. That was my first “baptism” of what a liberty forum looks like, and a wide world of free market-oriented independent think tanks from many countries and continents around the world slowly unfolded before my eyes.

The forum and various panel discussions were very helpful and educational, but the most important aspect of the activity that I later realized, was the “liberty networking”. First, my roommate in the hotel would turn out to be among my closest friends in the liberty movement, Mr. Barun Mitra, founder and Director of Liberty Institute in Delhi, India. Second, a number of new friends and allies that I met there five years ago, especially those from Asia, I would meet in other succeeding international and regional conferences and meetings; or at least correspond regularly by email. And third, collaborative work and campaigns among ally think tanks would soon be initiated and sustained.

(With JTR President Mr. You, and Atlas President Alex Chafuen, Atlanta, 2008)

My second attendance of the Atlas Liberty Forum was in Atlanta, Georgia, April 2008. This time, I was a confident participant who knew a number of other international and American participants and speakers. And this time, my interest was more on the panel discussions on fund-raising, though the discussions on liberty issues, like the panel on “Promoting freedom in difficult countries”, were also very informative.

Any serious liberty-oriented think tank or political movement needs substantial financial resources, for obvious reason. But a more specific reason not known to many people, is that more serious free marketers do not solicit or accept any government money (local, national or inter-governmental/multilateral) or funding from any political party, to keep and sustain their full independence from governments and political parties. Whereas most think tanks and political groups, including many NGOs and civil society organizations (CSOs) get substantial funding from governments, inter-governmental or multilateral institutions, and political parties.

Thus, fundraising is a recurrent topic in every annual Atlas Liberty Forum. This coming Liberty Forum will be held in Los Angeles, California, April 24-26 of this year.

Participants of this forum, as well as symposia, training and conferences by allied think tanks and institutes, are constantly reminded, explicitly or implicitly, that they are fighting for a society, they are envisioning a world, where the individual is not taken for granted or oppressed, in the pursuit of collective freedom and economic development.
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My recent short paper on liberty and liberalism,

Liberal Tradition and the Liberal Party



A relatively known political strategist and blogger discussed the question, "What's the matter with Mar?" to refer to the low popularity as a Presidential candidate in the Presidential elections next year of Liberal Party President, Sen. Mar Roxas. The author, Mr. Lito Banayo (http://litobanayo.blogspot.com/2009/02/whats-matter-with-mar.html), asked, "How come he ranks low, even behind his fellow senator Ping Lacson, who has not bothered to move around the country nor advertise his wares yet?"

I think Mar and the LP need to reassert the classical liberal agenda. The primacy of individual liberty, the limits and some dangers of (forcible) collective liberty like nationalism, protectionism and property rights confiscation.

This is because almost ALL political parties in this country, big and small, are warped in the semi-socialist slogan, "country/collective over the individual". Isn't the progress and growth of society ultimately measured by the freedom and progress of the individual?

There are many negative implications of forcing collective liberty over the individual: the individual should not become very rich, he cannot be allowed to become super-rich, his income, his cars, his house/s and properties, his company, his savings, his travels, his consumption, his estate to his children and grandchildren, etc. need to be over-taxed and over-regulated. And the "guardians" of the collective -- the government and its thick army of politicians and bureaucrats -- will get the confiscated incomes and savings to force equality in society, even to the point of rewarding and subsidizing the lazy and irresponsible -- after putting huge share of such resources for the salaries and perks of the "guardians".

This is not to say that LP and Mar should strictly embrace that classical liberal philosophical tradition, but anything closer to that tradition, and away from the populist, collectivist, if not confiscatory mindset, will make Mar and the LP unique. Too many businessmen and entrepreneurs want a break from the choking bureaucracies, taxes and fees that all administrations in the past, regardless of their political parties, have instituted and/or maintained. This group of entrepreneurs will be a huge army of supporters and allies for the party.
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See also:
Pol. Ideology 4: Comments to Minimal Government Manifesto,  December 05, 2005
Pol. Ideology 5: Have Movements for Liberty Progressed? June 26, 2006
Pol. Ideology 6: Quotes from Adam Smith, February 04, 2007
Pol. Ideology 7: Individualism, Entitlement and Freedom, April 30, 2007
Pol. Ideology 8: Ideas on Liberty, September 15, 2007
Pol. Ideology 9: Liberty and Choice, Atlanta and HK Conferences, June 09, 2008
Pol. Ideology 10: Joe Stiglitz and the Market, December 16, 2008
Pol. Ideology 11: Liberalism, Democratism & Authoritarianism, January 04, 2009
Pol. Ideology 12: Lao Tzu, Cooperative Individualism, February 07, 2009

Free Trade 11: Global Petition, Keynes

Yesterday, I wrote this:

There is an on-going global campaign against the wave of protectionism. An international coalition composed of individuals and institutes or think tanks, explicitly free marketer or not, will be formed. This campaign and coalition has been initiated by the International Policy Network (IPN) and the Atlas Economic Research Foundation, two of the closest friends of MG Thinkers.

May I encourage readers to sign this petition, below.

http://atlasnetwork.org/tradepetition/
http://freedomtotrade.list-manage.com/subscribe?u=4a59832f04a5d6164a0b81a24&id=6cdd6e9f9d

This petition will be presented in London during the G20 summit (2-3 April).

Free trade is freedom to trade and exchange.
Zero coercion or restriction.
Period.

regards,

Nonoy Oplas
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Petition:

Free Trade Is the Best Policy

The specter of protectionism is rising. It is always a dangerous and foolish policy, but it is especially dangerous at a time of economic crisis, when it threatens to damage the world economy. Protectionism’s peculiar premise is that national prosperity is increased when government grants monopoly power to domestic producers. As centuries of economic reasoning, historical experience, and empirical studies have repeatedly shown, that premise is dead wrong. Protectionism creates poverty, not prosperity. Protectionism doesn’t even “protect” domestic jobs or industries; it destroys them, by harming export industries and industries that rely on imports to make their goods. Raising the local prices of steel by “protecting” local steel companies just raises the cost of producing cars and the many other goods made with steel. Protectionism is a fool’s game.

But the fact that protectionism destroys wealth is not its worst consequence. Protectionism destroys peace. That is justification enough for all people of good will, all friends of civilization, to speak out loudly and forcefully against economic nationalism, an ideology of conflict, based on ignorance and carried into practice by protectionism.

Two hundred and fifty years ago, Montesquieu observed that “Peace is the natural effect of trade. Two nations who differ with each other become reciprocally dependent; for if one has an interest in buying, the other has an interest in selling; and thus their union is founded on their mutual necessities.”

Trade’s most valuable product is peace. Trade promotes peace, in part, by uniting different peoples in a common culture of commerce – a daily process of learning others’ languages, social norms, laws, expectations, wants, and talents.

Trade promotes peace by encouraging people to build bonds of mutually beneficial cooperation. Just as trade unites the economic interests of Paris and Lyon, of Boston and Seattle, of Calcutta and Mumbai, trade also unites the economic interests of Paris and Portland, of Boston and Berlin, of Calcutta and Copenhagen – of the peoples of all nations who trade with other.

A great deal of rigorous empirical research supports the proposition that trade promotes peace.

Perhaps the most tragic example of what happens when that insight is ignored is World War II.

International trade collapsed by 70 percent between 1929 and 1932, in no small part because of America’s 1930 Smoot-Hawley tariff and the retaliatory tariffs of other nations. Economist Martin Wolf notes that “this collapse in trade was a huge spur to the search for autarky and Lebensraum, most of all for Germany and Japan.”

The most ghastly and deadly wars in human history soon followed.

By reducing war, trade saves lives.

Trade saves lives also by increasing prosperity and extending it to more and more people. The evidence that freer trade promotes prosperity is simply overwhelming. Prosperity enables ordinary men and women to lead longer and healthier lives.

And with longer, healthier lives lived more peacefully, people integrated into the global economy have more time to enjoy the vast array of cultural experiences brought to them by free trade. Culture is enriched by contributions from around the world, made possible by free trade in goods and in ideas.

Without a doubt, free trade increases material prosperity. But its greatest gift is not easily measured with money. That greatest gift is lives that are freer, fuller, and far less likely to be scalded or destroyed by the atrocities of war.

Accordingly, we the undersigned join together in a plea to the governments of all nations to resist the calls of the short-sighted and the greedy to raise higher the barriers to trade. In addition, we call on them to tear down current protectionist barriers to free trade. To each government, we say: let your citizens enjoy not only the fruits of your own fields, factories, and genius, but also those of the entire globe. The rewards will be greater prosperity, richer lives, and enjoyment of the blessings of peace.


Sign the Petition
http://freedomtotrade.list-manage.com/subscribe?u=4a59832f04a5d6164a0b81a24&id=6cdd6e9f9d
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Today, I received a comment from a Filipino friend based in Europe. He wrote,

I just read an interesting passage from John Maynard Keynes on his 'National Self-sufficiency' , which could be interpreted as his proposition that 'de-globalisation' (or a certain degree of protectionism) or national self-suficiency or nationalisation of finance - and not free trade actually promotes peace and development. Keynes wrote:



I sympathize, therefore, with those who would minimize, rather than with those who would maximize, economic entanglement among nations. Ideas, knowledge, science, hospitality, travel – these are the things which should of their nature be international. But let goods be homespun whenever it is reasonably and conveniently possible, and, above all, let finance be primarily national. Yet, at the same time, those who seek to disembarrass a country of its entanglements should be very slow and wary. It should not be a matter of tearing up roots but of slowly training a plant to grow in a different direction.

'For these strong reasons, therefore, I am inclined to the belief that, after the transition is accomplished, a greater measure of national self-sufficiency and economic isolation among countries than existed in 1914 may tend to serve the cause of peace, rather than otherwise. At any rate, the age of economic internationalism was not particularly successful in avoiding war; and if its friends retort, that the imperfection of its success never gave it a fair chance, it is reasonable to point out that a greater success is scarcely probable in the coming years.' (Keynes 1933/1972).


My friend added, "I think your ranks or 'the big names' themselves should come back debating the ideas of Keynes, especially that this crisis moment when 'we all seem to be Keynesian now' as the Financial Times put it a few months ago."

It's good that Keynes recognized the internationality or globalized character, of knowledge, science, travel, etc. I think if he were alive today, he will also recognize the globalized character (hence, must not be "caged" in any national boundary) of sports, culture, music, adventure, online networking (facebook, friendster,...).

So why would he propose to "cage" goods to national territories and not be internationally exchanged and traded freely? Is it wrong for my HP laptop, your (probably Nokia) cellular phone, someone's Ford expedition or Toyota Avanza, other people's gadgets, appliances, cars, shoes, salmon, Australian beef, etc. to be traded internationally? I cannot see any point why it is wrong.

Protectionism for me, is dictatorship.
The protectionists are dictating us to whom we can sell, to whom we can buy, at how much quantity, at what price and tax rates, when we can buy or sell, etc.

Under free trade, there is zero restriction, zero coercion.

A Finnish cell phone manufacturer can offer us their best models, but we can say "No, we're not buying from you, we prefer Korean or Japanese cellphones, or we want Taiwanese or Chinese copycats..."

A carinderia (streetside foodshops) owner can say "it's good to patronize onions and vegetables from the Cordilleras (mountain provinces in northern Philippines), but my customers are ordinary folks and jobless people who want the cheapest food possible, and imported onions and vegetables from Taiwan or Vietnam are a lot cheaper than those coming from the Cordilleras..."

A free trader ideologue (like me) can theorize from that carinderia owner's statement that "free trade of onions and veggies will help enable the poorest of the urban poor in the Philippines to deal with the current global economic turmoil and high unemployment. "

Talking about "free trade = peace", maybe the best examples will be Hong Kong and North Korea. HK being the epitome of free trade in Asia, has zero external threat of war (even if one will remove the "China's army" factor). The biggest banks, the biggest clothing and apparel manufacturers and distributors, the biggest hotel chains, the biggest food chains, etc. of the US, Europe, Japan, Canada, Korea, etc. have offices in HK. Any country that dare invade and attack HK will face the most modern fighter planes and armies of those countries mentioned.

In contrast, North Korea, autarkic except limited trade with neighboring China and S. Korea, is suspected by many countries around the world, in Asia especially, of possibly starting a war, or inviting a war, partly because of the absence of free flow of goods and services across its borders, absence of the internationality of the wwweb and the information it brings, etc.

"We're all Keyneysians now" were uttered by people who love more government, more borrowings and taxes, more intervention and regulations, more politicians and bureaucrats. I dont think the owners of yahoo, google, facebook, linux, etc. would ever desire and hope for such kind of a business environment. And yet these are among the companies that make lots of money with almost zero government subsidy and "support".
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See also:
Free Trade 1: Estonia's Free Market, Globalization, May 09, 2006
Free Trade 2: Unilateral Trade Liberalization, May 17, 2006
Free Trade 3: Protectionism Perpetuate Poverty, September 05, 2006
Free Trade 4: FTA in APEC, July 09, 2007
Free Trade 5: Business , Rock Music and Cycling Globalization, July 17, 2007
Free Trade 10: More on Unilateral Trade Liberalization, July 15, 2008

Wednesday, March 18, 2009

Rule of Law 3: AIG Bonuses, Government Bail-outs



A corporation aiming to keep its bright people to produce bright work needs to provide them bright incentives. Bonuses are one of such incentives. So when AIG decided to give bonuses to its people who stuck with it through these past few months, so that those people will help the company recover from its shameful position of being bailed-out by a government just to escape bankruptcy, AIG was doing the right thing.

Unfortunately for AIG, by soliciting and accepting bail-out money from taxpayers and the politicians in the first place, AIG has politicized its corporate nature. It has abdicated its corporate independence and embraced political dependence. The moment it accepted the bail-out money, it should expect intervention anytime anywhere by politicians and taxpayers. The current howl against AIG giving bonuses to its personnel is understandable, but AIG's desire to keep its people is also understandable, and that those bonuses are stipulated in the contract between the company and its personnel, and that contract was made before the financial crisis emerged.

If the rule of law is to be respected, US legislators and the President should stay away from internal arrangement and contract between employers and employees. The rule of law also stipulates that AIG should pay each and every single dollar and cents that it owed the US Treasury. There are harsh penalties if the debtor will not fulfill its obligations. This gives teeth to the rule of law.

If giving bonuses will keep good staff or attract new people who can make the company recover financially so it can pay all its debts to the government and other private creditors, so be it. What the US politicians and taxpayers are howling is that by giving huge bonuses at the time the company is bleeding financially and asking for billions of $ of bail-out money, the likelihood of that company paying back all its debt to the government and taxpayers will become small.

The politicians and bureaucrats who extended the bail-out, as well as private citizens who supported the bail-out, are playing double-talk when they howl against the AIG bonuses. Governments and corporations have their own set of profligacies and wastes. That is why it is important that they keep to themselves those profligacies, and not extend or infect the other. Government bail-outs are perfect tools of co-inflicting those profligacies.

Should AIG justify and proceed the bonuses?
I say Yes.
Should AIG get more bail-out money?
I say No.

AIG should limit the foolishness of losing its corporate independence and embracing political dependence. The sooner it can do it, the better for its staff, shareholders and clients. By cutting or reducing its bail-out loan, the better. When it has brought down its bail-out debt to zero, then it can give double, triple, or whatever multiple, of current bonuses or whatever profligacies to its people.
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On a related note, I wrote this last October 07, 2008:

Failing Big Business Marries Big Government

One Cato scholar I read said the Democrats and other big-government advocates among the Republicans passed the bail-out bill because it will give them additional power to regulate big banks and other financial institutions, on top of SEC, Fed, other US government agencies' regulation work. He called it, "where failing big business marries big government".

Private enterprises should be allowed to grow big or go bankrupt -- without government intervention. The job of the government is to ensure the rule of law, that parties honor their obligations and contracts with other parties, and that robbers, thieves and killers along the way are neutralized.

Meanwhile, I am wondering where the left, the socialists, anti-imperialists, the anti-capitalists, anti-market, etc.. position themselves first on the bail-out debate last week, and the implementation of the bail-out and more regulations in the coming weeks and months as a result of the bail-out law.

If they have to be consistent as leftists and socialists, they should have clapped and supported the bail-out plan and its full implementation. Because it means more taxes, more regulations, more protection for the irresponsible.

Leftists and socialists who oppose the bailout and its future implementation have no right, or are inconsistent, to do so. The job of opposing more government regulations and taxation is the task of the free marketers, not the statists and leftists.

About the Lehman brothers investigation in the US congress yesterday, I was curious -- why did Congress investigate the firm that the government did not rescue and now bankrupt? Why did it not investigate first the firms that got tax money, that's why they're not bankrupt yet? Why save IndyMac, Fannie and Freddie, and AIG, but not Lehman and Washington Mutual?

Regulators and politicians who chose whom to save and whom to allow to sink, whom to investigate and demonize in a congressional hearing and whom to spare from investigation and given tax money, are practicing double-standard. So I don't see the logic of trusting the same regulators and politicians or institutions to do more regulatory powers. Only big government can do such double standard.

Have no sympathy for Lehman and its top executives who were receiving millions of dollars in compensation and perks while the firm was bleeding. It's good that such firm has already collapsed. But the same corproate callousness and irresponsibility could be said of Freddie and Fannie and other firms bailed out and soon to be "rescued" by the US government.
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See also:
Rule of Law 1: Entrepreneurship and Government Permits, September 16, 2008
Rule of Law 2: Property Rights and Lefts, March 02, 2009

World water forum


Water, clean drinking water, should be the second most important or most urgent thing needed for human survival, next to air. And like education, health care, housing, other sectors, there is a continuing debate over who can better provide clean drinking water to billions of people in the planet -- the government or private water companies (with heavy government regulation, of course).

This is among the subjects being tackled by the Fifth World Water Forum (March 16-22, 2009) which began in Istanbul, Turkey, the other day. Reports showed however, that many activists opposing water privatization begun to create trouble, with violent protests that have diverted attention from the above agenda.

Kendra Okonski, IPN Research Fellow and editor of The Water Revolution, said of the protestors:

Whether it’s Tokyo, Mexico City or Istanbul, a few global activists show up like clockwork at the World Water Forum to protest and make noise. Unlike the bona fide participants in the forum, they offer few – if any – concrete solutions to real water problems. In fact, these activists harm the world’s one billion people who lack clean water and the 2.6 billion without sewerage.

Caroline Boin, IPN Research Fellow, explained that the status quo with water is harmful and unsustainable:

The activists attack the World Bank, multinationals and the very notion of profit. But less than five percent of global water management today is private. The real culprits are governments who mismanage and misallocate water to farmers and other special interests, as well as the politically connected, in poor countries. Not only does this harm the poor, it also harms the environment by encouraging waste.

The International Policy Network (IPN) published two new studies on water management -- in Bolivia (by David Bonnardeaux) and Chile (by MarĂ­a de la Luz Domper).

Monday, March 16, 2009

Pharma mergers and government




Last week saw two huge mergers in the global pharmaceutical industry. The first was the Merck-Schering-Plough merger that amounted to $41 billion take-over of Schering-Plough. The second was the Roche-Genentech merger where the former bought the latter for nearly $47 billion. These 2 mergers happened within 2 months after the Pfizer-Wyeth merger (see my discussion on this last January 28, 2009).

Such large mergers in a short period of time did not seem to happen in any other industry. So one may wonder, what triggered such moves, aside perhaps from the on-going global financial crisis?

There are two important development that seem to stand out. One is internal to the industry, the other is external. The industry-related development is the growing competition by generic manufacturers as the patents and IPRs of key blockbuster medicines by innovator pharmaceutical companies are nearing expiration. Almost all industries in the world face this kind of competition from various players within the industry. So this factor is understandable.

The second development, external to the industry, is the growing or creeping take-over by governments of health care, particularly of medicines, through more rigid regulations. For instance, many countries have medicines price control, intellectual property rights (IPR) busting like compulsory licensing of effective but "expensive" medicines, and parallel importation. In the US in particular, the current administration is very vocal on more government role and intervention in public health, and it can include more regulations of innovator pharmaceutical companies who produce more effective, more revolutionary, but "more expensive" medicines.

An Editorial by the WSJ last week, "Mergers and Inquisitions", pointed this out (http://online.wsj.com/article/SB123664413584778083.html?mod=djemEditorialPage). The Editor wrote,

"Deal-making is fast reshaping the pharmaceutical industry, and we wish we could say it was a sign of creative destruction. More likely it is the industry's way of anticipating, and building insurance against, the coming era of government-run health care."

The number of "block-buster" medicines that come on stream globally seem to be dwindling, whereas the number of generics manufacturers seem to be expanding. The current trend of governments -- and supported by huge inter-governmental bodies like the WHO -- is favoring generics production and patent busting of innovator companies, all in the name of "access for all to effective medicines". But this can lead to a danger of "absence for all of future revolutionary medicines". Like more revolutionary medicines against evolving strands of AIDS, cancer, TB, etc.

If I were an innovator pharmaceutical company and the trend of IPR-busting will continue, I will shift to innovating more revolutionary medicnes for skin whiteners, dandruff removers, fat burners, height enhancers, pimple removers, breast and penis enlargers, and so on. There are no IPR-busting laws or regulations for these medicines, so that innovators can be assured of huge profit.

Pakistan demonstrations



A friend from Lahore, Dr. Khalil Ahmad, of the Alternate Solutions Institute (Pakistan's first and possibly only free market think tank), posted that they are in the "midst of a revolution".

This afternoon, the demonstrations by lawyers and other activists turned violent, and scored have been wounded.

I told Khalil that it's "People Power" revolt. I just hope that it will not be as bloody like what happened in Tibet and Myanmar the past 2 years, where scored have been killed by the government soldiers.

In Philippines' People Power 1 and 2 in 1986 and 2001, respectively, there was regime change, the incumbent Presidents on those periods were toppled, no bloodshed. It's just that many participants in People Power 2, like myself, regretted we did it because we installed an equally corrupt but more politically-shrewed President.

This thing, I believe, though dangerous, must come and must happen, as part of Pakistan's political evolution. Despots must learn their lesson that the people cannot be oppressed for long without them asserting their civil and political rights.

Thursday, March 12, 2009

Heartland 2nd ICCC 2009: Politicizing science


New York – When something is politicized – whether it’s rice or wages, energy or just about anything, expect the politicians and bureaucrats, not the market players, whether they’re producers or consumers, to dictate the price and the rules of exchange.

Even in the field of science, when it is politicized, politicians and various political forces, not scientists, set the rules on how to tackle the perceived scientific problem.

Climate change alarmism and global warming scare can prove to be one of the greatest scams and taxation rackets that the world would ever know. The notion is: this is an anthropogenic (man-made) global warming caused by high carbon dioxide (CO2) emissions. The result is large-scare climate, economic and social catastrophe. The solution is large-scale reduction in human emission of CO2, reduction in economic activities if necessary, just to “save the planet” and ourselves.

The flow in this logic looks rational except that there are plenty of premises that need to be satisfied before the above logic holds. Failure in any of those premises will cause the breakdown of the above reasoning and render it illogical. Consequently, this affects the all-encompassing proposals to cut down CO2 emissions by heavier government regulation and taxation, heavy subsidization (if not cronyism) of taxpayers’ money for favored “clean” energy sources, and the companies, consultants, expensive speakers and powerful lobby groups that benefit from alarmism.

These are among the important issues and topics that were discussed during the “International Conference on Climate Change” (ICCC) with a sub-theme, “Global Warming: was it ever really a crisis?” The event was sponsored by the Heartland Institute (www.heartland.org) and co-sponsored by 60 other private and independent think tanks from around the world, mostly from the US. Our group, Minimal Government Thinkers, Inc. (www.minimalgovernment.net) is one of the three think tanks from Asia that co-sponsored the event, held at the New York Marriot Marquis hotel in this city. I was given a travel scholarship by Heartland and I was able to attend the event from March 8 and concluded today, March 10. Well, I was the only Filipino participant out of around 700 people who came to that conference.

Among the important speakers in the event were Vaclav Klaus (getting his autograph of his book here), President of the Czech Republic and current President of the European Union (six-months term). A PhD economist by education, he wrote a book, “Blue Planet in Green Shackles (What is Endangered: Climate or Freedom?)”, published in 2007 by the Competitive Enterprise Institute (www.cei.org). I have a picture with him during the event, as well as a signed copy of his book.

There were plenty of known scientists-speakers during the event. Among them were Dr. Richard Lindzen, a Professor of Meteorology (with degrees in Physics and Applied Mathematics) at the Massachusetts Institute of Technology. Dr. Jack Schmidt, an American geologist, former NASA astronaut, university professor and US Senator also spoke. He was the 12th and last person to walk on the moon.

Dr. Arthur Robinson who heads the Oregon Institute of Science and Medicine, spoke and dissected inconvenient contradictions in the “Inconvenient Truth”. He directed the Petition Project (www.petitionproject.org) which declared:

“There is no convincing evidence that human release of carbon dioxide, methane or other greenhouse gases is causing or will, in the foreseeable future, cause catastrophic heating of the Earth’s atmosphere and disruption of the Earth’s climate. Moreover, there is substantial scientific evidence that increases in atmospheric carbon dioxide produce many beneficial effects upon the natural plant and animal environment of the Earth.”

This Petition obtained the support and signatures of 31,478 American scientists, 9,029 of whom have PhDs! I also got a copy of this Petition that contains the paper by Dr. Robinson and his two colleagues. It contains lots of graphs and scientific evidence, and the list of Petition signers alone, state by state, is 200 pages long.

A Swedish scientist, Dr. Fred Goldberg, professor at the Royal Institute of Technology in Stockholm, Sweden, and an authority on polar history and exploration, delivered a paper, “Do the planets and the sun control our climate and the CO2 in the atmosphere?” From the various graphs, charts and scientific tables that he presented, his answer was a clear “Yes”.

Dr. Laurence Gould, a professor of Physics (and Math, astronomy, etc.) at the University of Hartford, showed in his presentation that humans produce only 3.5% of all CO2 emissions in the air and CO2 comprises only 0.038% of the atmosphere. He noted that even if all Kyoto Protocol agreements were to be implemented, global temperature will decline by only 0.07 degree Celsius (at a cost of several trillion dollars of carbon and petroleum taxes, higher energy prices and lower economic, lower standard of living).

There were several dozen other scientist speakers, along with several economists, legislators and think tank leaders. But a striking speaker for me on the last day of the conference was Dr. Willie Soon, a Malaysian-American astrophysicist and geoscientist at the Solar, Stellar and Planetary Sciences Division of the Harvard-Smithsonian Center for Astrophysics.

Dr. Soon (in this photo: Barun Mitra from India, Willie Soon, Jose Tapia from Peru) discussed a paper, “Disconnects in Sun climate studies: removing politics from science”, and he was very vocal in dissecting the Intergovernmental Panel on Climate Change (IPCC) WG paper on solar forcing as largely a political document. His field is astrophysics and his research work showed with great clarity, that the Sun’s activities (radiation, sunspots and sunspot cycles, etc.) showed a direct and clear correlation with climate changes (cooling and warming cycles) over a long period of time.

The IPCC Report said there was no connection between the sun and climate changes. Dr. Soon also showed that CO2 emission has very little, if any, correlation to climate changes. He showed a chart for data collected in Salt Lake City, which shows that CO2 emissions were high during winter and recedes to low levels when summer comes. This suggests zero connection between CO2 emission and climate changes.

The IPCC report was also very adamant in arguing that it is not only carbon emission per se, but anthropogenic or man-made carbon emission that’s to blame for global warming and climate change!

There is absence of “consensus” therefore, among scientists around the world, to declare that anthropogenic carbon emission is the single biggest culprit that causes global warming, now billed as climate change.

From the long line-up of scientists who spoke during the conference, it showed that the above assertion has NO scientific basis at all. It also showed that the IPCC Report was a political document masquerading as a scientific paper to push certain political agenda like controlling people’s pockets and lives – how much petroleum and energy taxes to pay, what kind of energy sources they should or should not use (energy sources to be killed), what new tax-and-trade (a.k.a. “cap-and-trade”) schemes to be imposed, how much biofuel mix to be made mandatory for our vehicles, what percent of agricultural lands can be devoted to planting bio-fuels, etc.

The threats to economic growth and world food production as well as individual liberty is large due to the politicization of climate science to favor various rent-seekers, inside and outside of governments and inter-government bodies. It is a dangerous scheme that must be exposed to the public.

And what is the alternative? Do nothing. Do not legislate tax-and-trade schemes, do not legislate mandatory bio-fuels or ethanol for our vehicles, do not create new Presidential (and Governors’ and Mayors’) task forces or Commissions for climate change, do not raise petroleum taxes or hike existing rates, do not subsidize clean and renewable energy sources. There is big demand for renewable energies, many people will buy such energy even if it’s expensive than conventional and non-renewable energies.

Adaptation – not alarmism and bureaucratism, to climate change is the simplest and most effective way to deal with climate change, whether it’s global warming or global cooling.
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On February 01, 2009, I wrote this:

Global Warming Cancelled

Recently, the US and Europe experienced some of their most nasty and icy winters on record. Even tropical countries like the Philippines also experienced a long and oftentimes nasty “cold front” the past two months and until early this month. Consequently, news stories about global warming (GW) and climate change (CC) were not as frequent and virulent as last year.

The GW and CC scare, while supposedly a “wake-up call” for the rest of humanity to mend their ways so they can help “combat” GW and CC, is actually a very expensive and dangerous move. Expensive because all governments, rich and poor alike, are talking about several hundred billion dollars of funding and new foreign aid, to kill “dirty” energy sources and subsidize “clean” ones. Dangerous because GW and CC scare is being used as a convenient excuse to increase government control over the citizens’ lives, income and decision making.

The government will now be producing new rules and regulations, new bureaucracies outlining what acts by the citizens will be penalized with taxes and fees -- if not imprisonment, what acts to be given government subsidies, and so on. This is effectively a new form of social engineering where the State further shapes our lives, our working and spending habits and our relationship with other people.

Meanwhile, governments continue to set up dozens of new agencies and bureaucracies that require regular funding from tax money. In the Philippines for instance, the government created a new and big bureaucracy called the Presidential Task Force on Climate Change (PTFCC). This body has also created 14 “task groups” to cover wide issues from rainwater conservation to outdoors and rooftop structures, including regulating and penalizing some activities and providing incentives to others. The amount of new government personnel to be hired just to monitor, who are violating certain regulations and who deserves incentives like subsidies, will be huge.

Lucky though, there is a growing number of people, especially scientists and policy makers, NGOs and think tank leaders around the world, who are not enamored by the continuing GW and CC scare. They recognize that there is climate change, the same way that people change and cultures, communities and technologies change. But they do not believe that the answer is more government environmental and taxation regulations, but rather adaptation by the people to the changing climate and its consequences, changing hydrologic pattern, changing agricultural production, and so on.

One of such international think tanks that does not believe in the GW scare, is the Heartland Institute in Chicago. It is sponsoring the 2nd International Conference on Climate Change (ICCC), and it will be supported by more than 40 other independent think tanks including Minimal Government Thinkers, Inc., as co-sponsors. The event will be held in New York on March 8 to 10, 2009.

Among the speakers in the conference will be Vaclav Klaus, Jose Maria Aznar and Dr. Jack Schmitt. Vaclav Klaus is the President of the Czech Republic, and the current president of the European Union. He wrote a recently-published book, Blue Planet in Green Shackles, where he argued that the debate over GW has "become a symbol and example of the clash between truth and propaganda.”

Jose Maria Aznar is the former Prime Minister of Spain. He calls GW alarmism as a form of “new religion”. Dr. Jack Schmitt is a retired astronaut, the last living man to walk on the moon. Other speakers in the Conference will be Willie Soon of the Harvard-Smithsonian Center for Astrophysics; and Richard Lindzen of MIT and one of the world's leading experts in dynamic meteorology, especially planetary waves.

The current global financial turmoil proved to be an ally and a friend of GW scare. A friend because demand for petroleum products in many countries around the world has plummeted, resulting in lower oil consumption and lower air pollution. But it is also an enemy of GW scare because even governments of rich countries are running out of money for huge subsidies for “clean” energy sources, as governments are diverting huge amount of tax money for fiscal stimulus and to bail out their collapsing huge banks and corporations.

Adaptation by people, not more government environmental regulations and taxation, remains the best measure to cope with climate change.

Sunday, March 08, 2009

US Debt 6: Stimulus Trap, $1.75 Trillion Deficit, and Taxation Blackhole


Recently, US President Barack Obama announced that projected federal budget deficit during his first year in office will be $1.75 trillion! This is an eye-popping figure, considering that: (a) this is only for one year, last year’s federal budget deficit was $1 trillion; (b) this is only for the Federal government, the deficit that also needs borrowings by the state and city governments are not included yet; and (c) the cumulative public debt if unfunded social security, Medicare and MedicAid are included, the figure is approaching the $100 trillion mark in just a few years.

A debt is a debt and it has to be paid in the future. So the big question after another pile of debt has been incurred to finance a deficit, is how to pay those ever-expanding public debt. Where do they get the money in the future to pay it?

Perhaps the most common sensical answer is: reduce future spending, increase future taxes, and/or sell or privatize certain government corporations and banks. Live within your means.

The US President’s fiscal team has identified at least two important sources of reducing future deficit and public debt: reduce military spending in Iraq, and raise taxes for the wealthier Americans. The first looks very logical, but can be compromised by possible increase spending in Afghanistan war. Those two wars drain American taxpayers’ pockets by $10 to $12 billion per month. Not included are the costs of rehabilitating physically-disabled and mentally-tortured (by war) soldiers, pension for the family of dead and disabled troops, and so on.

Raising the tax on rich Americans looks “equitable”. The plan is to raise the 2nd highest income bracket from 33% to 36%, and the top bracket from 35% to 39.6%. At a time when a number of other rich and emerging economies are engaged in tax competition (ie, race to attract more investors by lowering taxes), the plan to hike taxes for the richer citizens of a country can backfire. How? Many wealthy and entrepreneurial people would reduce their tax payment to the American government – not through working less, not through tax evasion – but through migration to other low tax countries, by moving out of America!

So while the American President is calling for “fiscal responsibility” after four years (ie, cutting the deficit within 3% of GDP versus the planned deficit this year of 12% of GDP) that may end up as plain rhetorics. The real test of fiscal and personal responsibility, is living within one’s means now, this year, and not four or 10 years from now.

A friend here in Manila posted this quote,

"I think everybody should just calm down. Give Obama four years. See what he can do. Then if he's a miserable failure, we'll do what we did with George W. Bush and elect him to a second term." -- Craig Ferguson

I like that quote. And I wish that the American President will succeed in bloating the US public debt. Then many Americans, especially those high-earning ones, will be overtaxed paying those debts. And many of them may consider moving out and live abroad. There will always be a place for people somewhere, somehow, sometime.

So, if the current American President is paving the way for the future migration of rich and wealthy Americans because of the current overspend-overborrow-overtax policy, resulting in an endless stimulus trap and taxation blackhole, what can the Philippines and other countries do?

This is a great, perhaps a once in a lifetime opportunity, for other countries to position themselves as the target destination for migration by those rich and entrepreneurial Americans – and Europeans and Japanese too. The big challenge for these countries, therefore, is to offer something that their future wealthy migrants want, something that they wished their home countries could give them: low taxes, and a government committed to the preservation of the rule of law. There are other factors that foreign investors look up to, like good infrastructure and simple, predictable business rules. But the promulgation of the rule of law should take care of various other negative concerns: corruption and bad governance, unstable and unpredictable business rules and procedures, high criminality, and so on.

Even if those rich Americans will live and do business not in the Philippines, but in other low-tax Asian countries like HK, Singapore and Malaysia, the Philippines will still benefit because of the economic integration of many Asian economies.

A taxation blackhole in rich countries that try to cover up personal, corporate and fiscal irresponsibility with endless subsidies and bail-out, is a great opportunity for other countries that encourage more personal, corporate and fiscal responsibility. Provide tax haven to rich, productive and entrepreneurial people of the world, and limit government role to the promulgation of the rule of law, to the preservation of the citizens’ right to life, right to private property, right to liberty and entrepreneurship.
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My two short papers written earlier...

(1) Trillion $ deficit and irresponsibility

The budget deficit (expenditures larger than revenues) of the US federal government in 2008 alone was estimated at $1 trillion. It's the biggest figure in US fiscal history. And note that state and other local governments' deficit are not included here, it's only the federal government.

For this year, the US' Congressional Budget Office (www.cbo.gov) projects federal deficit to top $1.2 trillion! And federal spending will be $3.54 trillion, that's equivalent to the combined GDP (joint output of all companies, households and government) of Russia and Italy in 2007.

The debt culture, exemplified by ever-rising public debts, is an indicator of irresponsibility. When expenditures exceed income, responsible people would cut expenses and live within one's means, whereas irresponsible people would borrow more and continue living beyond one's means. And we are told that governments are our leaders, they set the direction of our lives and economy by signalling to us, explicitly or implicitly, that it pays to be irresponsible because there are always taxes to subsidize you, or there are always borrowings to plug any deficit by over-spending.

There is a chorus of "more government spending to fight recession" from officials and consultants of many governments, the IMF, WB, UN, ADB, other multilateral and foreign aid bodies. This would seem understandable because these are people who live off on taxes and not on any productive entrepreneurial activities. In entrepreneurship, expansion or bankruptcy is as certain as the sun shining tomorrow. But in governments and multilateral institutions that live off on taxes, bankruptcy is a never-heard word for them.


(2) Obama’s $1.75 trillion ’09 federal deficit

February 26, 2009

Aside from the Dow Jones just 2 days ago hitting just half of its all-time high level of 14,000+ index sometime in 2007, another eye-popping story in the US today is the level of the federal budget deficit under President Obama’s first year in office: $1.75 trillion!

That’s the news report today,
“Obama forecasts $1.75 trillion deficit this year”
http://www.reuters.com/article/topNews/idUSTRE51O6JA20090226?feedType=RSS&feedName=topNews&pageNumber=2&virtualBrandChannel=10112

Before proceeding futher, please take note of the following:

One, this is only for 1 year. Last year, the federal budget deficit was $1 trillion.
Two, this is only for the Federal government alone. Not included there are deficit that also need borrowings, by the state and city governments, and by counties.
And three, the cumulative public debt if unfunded social security, Medicare and MedicAid are included, the figure is approaching the $100 trillion mark in just a few years.

Debt is a debt is a debt, the same way that a tax is a tax is a tax. Even a $1 debt has to be paid in the future. So the next big question after another pile of debt has been incurred to finance a deficit, is how to pay those ever-expanding public debt? Where to get the money in the future, aside from borrowing in the future to pay the debt, waste and other fiscal profligacy of the past and the current period?

Perhaps the most common sensical answer to that question is: reduce future spending, increase future taxes, and/or sell or privatize certain government corporations and banks.

President Obama’s fiscal team has identified 2 important sources of reducing future deficit and public debt: reduce military spending in Iraq, and raise taxes for the wealthier Americans. The first looks very logical, but can be compromised by possible increase spending in Afghanistan war. The second looks “equitable” too, but what if many of those wealthy Americans would reduce their tax payment to the American government, not through tax evasion, but through migration to other low tax countries?

For all the dreams and plans of instilling “fiscal responsibility” after 4 years (ie, cutting the deficit within 3 percent of GDP versus the planned deficit this year of 12 percent of GDP) when the President finishes his term, those may end up as plain rhetorics. Because the real test of fiscal and personal responsibility, is living within one’s means now, this year, and not 4 or 10 years from now.
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See also 
US Debt 1: How Bloated is the US Govt? May 08, 2006
US Debt 2: Private Sector Bailout of Government, September 26, 2008
US Debt 3: Crisis of Irresponsibility, October 13, 2008
US Debt 4: Obama and US Entitlement, November 11, 2008
US Debt 5: Obama's Taxes, Bail Outs, $56 Trillion Debt Bomb, November 13, 2009

Monday, March 02, 2009

Property Rights 1: IPRI 2009 Report

(Note: this is my article for http://thelobbyist.biz this week with original title, "Property Rights and Lefts")

The ability to own or control, to keep or exchange, to sell or give away, a particular product or service, is one major indicator of how free an individual is.

For instance, a person owns a car but he believes or suspects that his car can also be claimed as a private property by other people, especially the bully and high-ranking government officials. The result is that he will have no peace of mind, always on his toes that his car can be taken or confiscated by other people any day and anytime. So he seldom uses his car, or he may have to hire a private security guard to help him guard his car. Lack of peace of mind means lack of energy to work productively and earn higher, while hiring a private security guard would mean higher monthly expenses and hence, lower disposable income and lower savings for the family.

Thus, societies that have well-defined private property rights and where the rule of law is properly and strictly observed, tend to have more economic stability.

Consumers and producers, workers and entrepreneurs, have peace of mind knowing that whatever contract they will enter with other people within or outside the country will be honored and respected -- that whatever commodity or service they will buy or receive as grants from other people, will be protected as their own private property, and no other people can claim ownership or control of those commodities and services.

This philosophy and sentiment is captured by a Report released this week entitled International Property Rights Index (IPRI), 2009 Report. This study is done and commissioned annually by the Property Rights Alliance (PRA) starting in 2007.

The 2009 IPRI Report compared the protections of physical and intellectual property to economic stability in 115 countries representing 96% of the world’s GDP. The Report is a composite ranking of three comprehensive areas of property rights: Legal and Political Environment (LP), Physical Property Rights (PPR), and Intellectual Property Rights (IPR).

Among the general findings of the Report are the following:

a. Countries that protect the physical and intellectual property of their people enjoy nearly nine times higher GDP per capita than countries ranking lowest in property rights protections.

b. Of the 115 countries included, the top quartile averaged $39,991 in GDP per capita while the average in the bottom 20% was only $4,341 per capita. The second, third and fourth quartiles averaged $23,982, $11,748, and $4,891 respectively. The nearly linear data trend shows that countries placing a high priority on property rights see increased economic security.

c. The result of scoring and ranking of each country and city, especially for Asian countries, is shown in this table below:

Table 1. Overall IPRI score and ranking, 2008

Rank Country Score

1 Finland 8.7
2 Netherlands 8.5
Denmark 8.5
4 New Zealand 8.3
Sweden 8.3
Germany 8.3
Norway 8.3
8 Switzerland 8.2
Australia 8.2
10 Austria 8.1
Iceland 8.1
Singapore 8.1

Rank Country Score

17 Japan 7.6
19 Hong Kong 7.3
24 S. Korea 6.8
29 Taiwan 6.5
36 Malaysia 6.2
46 India 5.6
51 Thailand 5.4
68 China 4.7
71 Sri Lanka 4.6
74 Philippines 4.5
77 Vietnam 4.4
87 Indonesia 4.1

The Philippines had a respectable score in PPR (5.5) but was pulled down by a low score in LP (3.3), so that based on LP score, the Philippines ranked 95th out of 115 countries!

It is not healthy therefore, for an economy to embrace left-leaning policies that attempt to disrespect individual talents and performance, and forcibly collectivize things.

Property rights is not a result of positive accidents that allowed the rights owner/s to own and control something without hard or meaningful work. Neither is it a privilege that was bestowed by the gods of the earth to their current right owners. Leftism cannot guarantee the respect and expansion of private property rights.
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See also: Rule of Law 1: Entrepreneurship and Government Permits, September 16, 2008