Wednesday, June 30, 2010

Arctic-Antarctica ice and ozone hole

The "rapidly declining ice in the Arctic (and Antarctica)" is one of the alarmist statements peddled by the warmers. What they usually do is to get a satellite picture of the Arctic during September-October, or Antarctica during February-March. On those months, the volume of ice on those polar areas are at their lowest. Naturally, because those are the peak of summer months on those polar regions.

There is a beautiful graph for the 12 months period per year, from 2003-2010, for both the Arctic and Antarctica at WUWT, here.

(Check that article, lots of good data and graphs)

See, the ice melts... then recovers... then melts... then recovers... in an annual cycle, year in and year out.

Another alarmist statement that we often hear is that the ozone hole depletion in the southern hemisphere is permanent. Plain wrong. The ozone hole appears during August, and disappears by December. And re-appear again the next August, and disappears again by December. Cycle, year in and year out.

source: same above

The ratio of political science to climate science in the warming literature could be something like 10:1, or 50:1, or higher?

The President's economic team

Yesterday afternoon, while attending a round-table discussion on the global public debts, I was interviewed by Ms. Cai Ordinario, reporter for the business paper, Business Mirror. Her querry was about my reaction to the economic team of the new Philippine President, Benigno "Noynoy" Aquino.

Below is a portion of her report.

Economists approve of new economic team

"AFTER President-elect Benigno Aquino III unveiled his new economic team on Tuesday, local economists and former economic managers gave their approval of the incoming President’s choices....

Academician and former president of Philippine Economic Society Dr. Fernando Aldaba said the President chose a “team heavy with experience and integrity.” The team, he said, is likely to maintain macroeconomic stability and improve the country’s investment climate....

For his part, economist Bienvenido Oplas, president of independent think tank Minimal Government Thinkers, said the choice of the new economic team is not really important. What is important, Oplas said, was who the President was.

Oplas said after nine years of the Arroyo administration, so much negativity and hopelessness enveloped the economy. But with the new government, the economy can expect a more positive outlook.

He is also hoping that the new economic team will exert efforts to liberalize the economy more. But Oplas said the more important thing now is that there is a change in government which will revive hope among Filipinos."

Rule of Law 9: Laws, Prohibitions and Corruption

(Note: this is my article for "People's Brigada News", submitted June 25, 2010)

Laws are enacted by the legislators of any country in order to restrain what they consider as bad and anti-social behavior. Laws by nature are prohibitions and restrictions.

Such prohibitions are either direct (do not do this) or indirect, aka mandatory (do that, or the State will penalize you if you don't do that). There are some laws that look "innocent", like mandatory 20% discount to senior citizens and persons with disabilities (PWDs). It looks very welfarist, and all drugstores, all restaurants, all moviehouses, all public transpo (plane, ship, bus, jeepney, etc.) are mini-criminals if they will not give the mandatory discount. Then the State can run after them.

Since all laws are prohibitions, then more laws = more prohibitions. It should be a formula to restrict individual freedom. I will be more than happy if everyone, no exception, will follow the prohibition against killing, against stealing, kidnapping, etc. But if new laws will tell us, "You cannot improve or expand your own house or your own office unless you get a 'Permit to Renovate' from the city hall", then another law that says, "You cannot re-occupy your own renovated house or office unless you get a 'Permit to Re-occupy' from the city hall", man that's something really restrictive.

I know a friend here in Metro Manila whose office has no electricity for at least one month because their "permit to renovate" was not yet signed by the city hall. I adviced her, "It only means one thing: those city hall building permit division bureaucrats want a bribe."

And we go to a discussion of a free and unfree society. In a free society, the dominant rule is: "Everything is allowed unless explicitly prohibited." And those expressly prohibited are just few, like no killing, no stealing, no kidnapping, no raping, etc. Everything else is allowed, like putting up your own vulcanizing shop with zero or just two signatures needed, from the city hall and from the national government, say the BIR.

In an unfree society though, the rule is a complete reversal : "Everything is prohibited unless explicitly allowed." So, putting up a business and creating job for the jobless is not allowed, unless one goes through a maze of bureaucracies. Putting up your own house, or renovating an old one, is not allowed, unless one gets certain permits from the local and/or national government agency.

The "rule of law” therefore, means the rule of prohibitions. Rule of law means no exception, no one is exempted from the law, and no one can grant exemption from the law. The law applies equally to unequal people.

Where there is full promulgation of the rule of law, the natural size of government will be small. Why? Because all laws and prohibitions that apply to ordinary people will also apply to all government officials, from the President or Prime Minister, to the lowest-ranking bureaucrat. This means that even the President and his/her military and police security aides should stop on red lights, should not counter-flow one-way streets, should not park on “No Parking” areas.

Since most politicians and bureaucrats do not like too many restrictions themselves, then they are obliged not to create new restrictions that will equally apply to them, to their friends and family. And they will be obliged to reverse or abrogate previous unnecessary restrictions. When there are few restrictions in society, then there will be few agencies and bureaucrats who will monitor and implement those restrictions and prohibitions. Overall result: small government.

Governments become big and expansive only because politicians and bureaucrats know that certain rules apply only to ordinary mortals but not to them, they know that they are exempted from such restrictions as they themselves granted the exceptions. This is wrong.

On a related note, I wrote this last April 12, 2010:

Coercion and Corruption

Coercion and corruption are two aspects of the same body, whether government or private. They are not exactly the same but there is some causality between the two. Corruption is greatly facilitated when there is some coercion involved. And in many countries where there is weak promulgation of the rule of law, coercion is instituted and retained mainly to create the best opportunity for corruption.

Consider the coercion of outlawing certain drugs and other addictive chemicals. There are strict, if not deadly. penalties in producing and distributing prohibited drugs. But up to now, drug pushing and addiction remains a big issue in many countries, from poorer ones with weak promulgation of the rule of law like the Philippines, to richer countries with stronger implementation of the rule of law like the US. Corruption by certain law enforcers is the main explanation why the coercion against prohibited drugs is not and can not be fully implemented.

In many public discourses, even in electoral campaigns, the focus of discussion by almost all political parties, groups and individuals is on corruption. There is in fact general acceptance, if not consensus, that widespread corruption is happening in the country, and that the next administration should radically move to curtail and control it.

Coercion though, is never publicly discussed. The implication is that the various coercions instituted and enacted by the State and its various agencies, both national and local, are correct and acceptable. What government administrators and law enforcers need to do, in this philosophy, is simply implement those coercive laws and regulations without fear or favor.

This kind of thinking was hijacked by various vested interests in society who do not want to assume more personal responsibility about their own lives, their own households, their own communities. Thus, various lobbyists succeeded in having coercive laws that give them entitlement to certain subsidies and welfare. More subsidies, more personnel and bureaucrats to implement those subsidies, more taxes and fees to pay for the thick army of government personnel and another thick army of people expecting the subsidies.

Government is power, force and coercion. Government is never about voluntary exchange, it is all about coercive exchange. Government says, "I take your money (taxes and fees), I give you this policeman, this public works engineer, this taxation assessor, this school teacher... whether you like them or not, they are your public officials."

All the public noise about "bad governance" mainly refers to the government – from the Executive, Legislative, Judiciary, down to the local governments. It is not much with the private sector. If people find the richest man in the country as a labor exploiter, a shrewd businessman, or whatever complaint, the people have the option to boycott that man’s businesses like malls and banks. They can patronize the malls, supermarkets, banks, and other business interests of the competing businessmen, or simply not visit any mall at all. There is choice.

In government, choice is almost zero. Especially if you one is a fixed income earner. Thus, since government is an imposition, a coercion in body and spirit, then such coercion should not be big. Let there be big coercion and over-regulation of criminals, rapists, killers, kidnappers, thieves, land-grabbers, extortionists, etc. But there should be little or zero coercion in entrepreneurship and job creation.

Take the case of the Finance Department or Ministry of many countries. It is usually in an ugly position. It is a powerful agency but ordinary citizens hate it because their mandate is mainly to tax and penalize those who work, those who create jobs, those who produce various goods and services in society.

Is your job stealing, bank hold-ups or kidnapping children? The Finance Department will not deal with you.

Is your job to manufacture food, sell medicines and clothing, distribute housing and construction materials, operate a barber shop or an internet shop? The Finance Department will deal with you. If there are only two to four taxes to pay each year, at low rates, people would gladly comply and not hate that Department. But since there are one dozen to four dozen taxes and fees to pay, including those imposed by other agencies and local government units who also want a slice of the sweat and blood of the job creators and workers, then people begin to dislike, if not hate, the taxes and fees collectors. Thus, it is not surprising that the Finance Department is among the most corrupt agencies in the Executive branch.

Where there is more coercion, where there is more prohibition, there is more corruption.

See also Rule of Law 8: Purpose and Supremacy of the Law, June 15, 2010

Sunday, June 27, 2010

June 29, lots of forum

This coming Tuesday, June 29, 2010, there are lots of forum that I know.

1. Interdisciplinary Conference on Caritas in Veritate, Univ. of Asia and the Pacific (UA&P), Ortigas, whole day. Free, no registration fee.

2. Forum on Universal Health Care, Univ. of the Philippines, College of Public Administration, whole day. Sponsored by WomanHealth, CHAT, other groups. Also Free.

3. Power Forum, NEDA sa Makati Building, Amorsolo St., 1-5pm, sponsored by the Philippine Economic Society (PES). Free for PES members, non-members pay P1,000.

4. Coal forum, Edsa Shangrila, Ortigas, 1-5pm, sponsored by Platts. By invite, free.

5. Global public debt troubles: the next phase of the global crisis?
Balay Internasyonal, UP Diliman, 2-5pm, sponsored by IBON Foundation, free.

I'm sure there are other fora somewhere else on the same day. And I wonder why they have to happen on the same day, just when I'm interested to attend ALL of them... So will skip some and attend some.

The next day, June 30, will be the inauguration of the next President of the Philippines. He will be in power for the next 6 years, and the outgoing President who has been in power for the past 9 years, will bow down.

I think that in many of those fora before the June 30 inauguration, the organizers or sponsors will submit some recommendations to the incoming administration.

Personally, unless those fora and papers will have new data to show and new perspectives to offer, I don't think they should be forwarded to the incoming administration.

I believe that any political party that wins an election already has a definite program of action. It is sort of its "social contract" with the voters. The political party was saying, "Vote for us, we will implement the following." And the voters are also saying, "we voted for you, we hope you will implement what you promised to us."

That's why I never joined any group or any online networking sites that gave "unsolicited advice" to the incoming administration. Let the winning political party implement what it promised to the voters prior to the elections. But I respect the opinion of other people who gave unsolicited advice to the new government. It's just that I don't believe I should join them.

Freeing markets amidst rising govt debts

(Note: this is my article for, June 27, 2010)

When the housing bubble burst started in the US in 2007 and later spread out as a global financial turmoil, many people blamed “market failure” and called for greater government regulations and bigger intervention in the economy. When public debt woes are surfacing, especially in Greece, Spain and UK, we do not hear the term “government failure” from those people.

Below are some data on the budget balance (deficit or surplus) as percent of GDP of selected countries, 2010

Deficit, Europe

Ireland, -19.0
Britain, -12.0
Greece, -10.2
Spain, -9.9
France, -8.4
Portugal, -7.9
Slovakia, -6.5
Netherlands, -6.2
Belgium, -6.0
Germany, -5.6
Italy, -5.2

Deficit, N.America, Asia

US, -8.8
Canada, -4.3
Japan, -7.8
Vietnam, -7.7
India, -5.5
Malaysia, -5.4
* Philippines, -3.6

Fiscal surplus:

Norway, 9.9
Saudi Arabia, 4.3
Hong Kong, 0.6

Source: The Economist, June 17th 2010,

We are no longer talking about “maximum -3.5 percent of GDP” as the “warning bell”. We are now talking about -6 percent, -10, -19 percent. And this is one of the economic backgrounds when leaders of the G20 member-economies will meet this weekend in Canada.

Government failure is much worse than market failure. There are lots of market solutions to market failure, but there are just few “government solutions” to government failure.

This coming September 28 to 30, 2010, the 4th Pacific Rim Policy Exchange to be held in Sydney, Australia, promises to have lots of discussions how to limit the actual and potential damages to the global economy by ever-expanding governments around the world in general, and the Pacific Rim countries in particular.

Among the topics and panels to be discussed are the following.

One, obstacles to investment. The seemingly endless government taxation, intervention and regulations are inconsistent with the realities. How come that the institution that does not have the discipline to live within its means and sustains its profligacy only by endless borrowings, can impose lots of regulations supposedly to instill discipline to private individuals and enterprises?

Two, free trade. The freedom to trade, to buy and/or sell to anyone and from anyone from anywhere, is among the major characteristics of a free and dynamic society. But as the financial turmoil dragged last year, more governments turned protectionist, which prevented their economies from recovering fast.

Three, digital liberty. Individual liberty is better respected via revolutions in the information technology and the digital world. People now have more options other than tuning in to major and traditional media outlets. But there are attempts by governments for more regulations and implicit censorship of content by both traditional and alternative media outlets like blogs.

Four, intellectual property (IP), jobs, and the economy. Societies develop and modernize because of continuing innovation by different economic actors and players, individuals and corporations. Innovation in more expensive undertakings like health need some protection, if only to give incentives to innovators and inventors to continue what they are doing.

The event will be co-sponsored by 4 independent think tanks: the Americans for Tax Reforms (ATR,, the Property Rights Alliance (PRA,, the Institute of Public Affairs (IPA, and the Heartland Institute ( More details about the event can be found at

Freeing markets means freeing individuals. Because markets are composed of individuals, both buyers and sellers, producers and consumers, rich and poor, young and old, male and female. The economy, culture and arts, science and sports, they all become more modern and more useful to society when individuals are freed from the shackles of various restrictions and prohibition by governments.

Friday, June 25, 2010

An ever-expanding universe

The University of the Philippines (UP) in Diliman, Quezon City campus, has a Science, Technology and Society (STS) subject that is mandatory for certain undergrad courses. Currently, the director of that program is my good friend, Dr. Fidel Nemenzo (below), who is a faculty member of the UP Math Department. Fidel is a bright guy, his specialization is number theory, perhaps the purest and the most abstract of all math topics.

The STS occasionally holds large lectures. One of their lectures that I attended early this year was about the 150th anniversary of the publication of Charles Darwin’s “The origin of species”. And last June 15, 2010, STS sponsored another big forum, “An accelerated history of the universe” given by Dr. Daniel Holz of the Los Alamos National Laboratory (LANL) in New Mexico, US.

Daniel Holz, below, is another bright guy, he’s a young cosmologist at LANL. Cosmology is the study of the universe, from its beginning to its end. Well, the beginning is definite, they have computed the age of the universe, 13.8 billion years old, from the “big bang”. The end is still indefinite though, so cosmology keeps developing theories that will predict the “future” of the universe.

Albert Einstein and the “Big Bang” theory. I didn’t realize until that afternoon that it was Einstein who developed this theory. Anyway, here’s one slide by Daniel.

Gravity. A very very important force in our planet, in our solar system, in the universe. Without gravity, the Earth will spin out of its axis and possibly get out of the solar system, and we will be doomed to indefinite darkness and global cooling as it’s the Sun that gives us light and warmth. Without gravity, our solar system might spin out and get out of our galaxy and go somewhere else.

So it’s gravity that somehow hold planets, comets, stars, galaxies and constellations in the universe. If there is a super-super-huge gravity somewhere, then the expansion of the universe should somehow slow down, if not stop later on, right?

The cosmologists and other physicists though were surprised that the universe’ expansion was even accelerating, not decelerating. Which means there is another force, stronger and more powerful than gravity, that allows the universe to expand further.

Daniel said it’s the “dark energy”. And dark energy comprises 70 percent of the entire composition of the universe. Much much bigger than stars, dust and gases. The other components of the universe are “dark matter” 25 percent, and “baryons” and ordinary matter (protons, neutrons, electrons, etc.) cover the remaining 5 percent. Below is the summary of the “vital statistics” of the universe.

Our universe is really dynamic, never static and dormant. Change and cycles dominate nature. Like water cycle, hydrologic cycle, carbon cycle, weather cycle.

I wanted to ask Daniel about “cosmology and the Earth’s climate” as I believe more the Sun-climate link theory and not the “man-made warming” junk, but I did not. I think such question may be too parochial as the general topic is really beautiful – the beginning and the (possible) “end” of the universe. But will there be an end to the universe? I do not know, I’m only an ordinary audience of scientific discussions.

Meanwhile, I really thanked Fidel for emailing and texting me about the last 2 STS lectures, the Darwin and evolution lecture and the cosmology lecture. Well, I’m his fan, so whenever he invites me to certain lectures in UP, I am 100 percent sure that it is going to be an interesting one.

Wednesday, June 23, 2010

Market Failure vs. Government Failure, Part 3

After posting my short essay “The purpose of the law” in one of my various online discussion groups, I got comments from two friends. The discussion has actually veered from the philosophy of the law, and towards market and state.

One argued that “Greed is part of human nature, and it is up to the government to stifle that greed. Business is all about greed, so it has to be regulated. En ceteris paribus, a society is better off with business regulated by government, because the concept of a self regulated global citizen who is morally and ethically perfect is but a dream.”

The other argued that “the best response to this is Greenspan's own mea culpas for the excesses of the ‘free market’ environment that he championed for so long. ‘Market forces’ is really a misleading term. By it, one is led to believe that the seller has the same inherent interest as the buyer. That is not so, obviously. Any "self-correction" that the "free market" (as espoused by Greenspan) may experience, is obviously not so much to match price with demand, but rather to maximize profits.”

On the first comment, I argue that the best regulatory mechanism for business is competition, not government.

Consider Toyota, how arrogant their staff will be and how lousy their cars will be, if they have no competitors -- no Honda, no Ford, no BMW, no Benz, no Kia, no GM, no Nissan, no Hyundai, no one else. But with the competition by many other auto companies, the staff of Toyota -- and all other auto companies -- are friendly to their customers, have good after-sales service, and their price is not far out compared to the price of their competitors.

Or Consider Jollibee, how arrogant their staff will be and how lousy their food will be, if there is no McDo, no Burger King, no Chowking, no Pizza hut, no other food chains, and Jollibee is the only monopoly food chain across the country.

It is true that greed often rules our instinct. The greed for more profit of one company is tempered by the greed for a slice of the overall profit by other companies.

Why is yahoo and yahoogroups making this service to us for free? Because it wants big profit, because there are huge competitors like google and gmail and facebook and many other social networking sites.

Government regulations exist mainly so that politicians and bureaucrats will feel they are doing something. Corporate expansion and corporate bankruptcies are 100 percent part of capitalism. Capitalism without failure is like religion without sin. Or like Christianity without hell. People were clapping their hands when capitalism was expanding and creating millions of jobs. But when capitalism is doing some internal checks and bringing to bankruptcy some companies that abuse their power, people are wondering that capitalism is "dying" or "finished".

On the second comment, I told him that he’s got a really wrong example of a free marketer. A central banker -- like central planner -- is never a free marketer. Central bankers centralize the monetary policies in their hands -- when to raise or cut interest rates, by how much, when to print more money, by how much, when to "recall" the excess money by raising the bank required reserves and other monetary tools, etc.

And in the case of the Philippines, supposedly independent central bankers play chummy-chummy with fiscal authorities at the Executive branch. There is coordinated monetary and fiscal central planning.

There will ALWAYS be market failures as anyone can create a market failure anytime anywhere. For instance, if I demand to buy a USB flash disk with 120 GB memory for only P10,000 or about $210, presto, 100 percent market failure. There is demand by at least one person, there is zero supply, anywhere in the world at such price. Supply does not meet the demand, market failure.

Or Juan Penduko dela Cruz produces a hybrid balut with the embryo of duck-chicken- crocodile in one egg, and sells for P5 million pesos each egg because of the huge cost of his scientific R&D. No one buys the egg, Ergo, another market failure. There is supply, there is zero demand, market failure.

So what now because there is market failure, governments should come in to "correct" the market failure, by heavily subsidizing the manufacturing of 120 GB or more powerful memory USB flash disks for only $200 or less? And governments will over-tax people so it can have plenty of money to subsidize this and subsidize that?

Both sellers and buyers have the same objective: to optimize their respective utility in buying or selling something. A buyer wants to buy as cheaply as possible, a seller wants to sell as expensively as possible. If both will insist on his original goal, there will be market failure. The buyer cannot buy anything at the low price he's asking for, the seller cannot sell anything at the high price he's asking for. And both will become miserable, will have no money and possibly starve. So they decide to meet half-way, supply meets demand at a particular price for a particular quantity of commodities. And both are happy somehow. The beauty of trade, of free trade and free market.

Would the lawyer be happy if he cannot decide how much will be his legal fees as there might be market failure somewhere, so government comes in to dictate how much that lawyer can charge his legal services so that there will be no market failure?

Tuesday, June 22, 2010

Electing political parties, not politicians

When we buy hamburger or pasta or roasted chicken, we do not ask who are the owners, presidents and board of directors of McDo, Jollibee, Burger King, Pizza Hut, Andok’s Manok, etc. We just buy the food because of the brand that those food corporations have built through the years. It is a brand or image of safe (non-poisonous) and delicious (need not be nutritious) food at a particular price range.

The same can be said when we buy a car (brand new or second hand), a cell phone, a tv, a computer, gasoline, etc. We do not ask who are the Presidents, major owners and Board of Directors of those companies, we buy their products based on the brand and corporate integrity that they have built which the public has accepted and respected.

The same cannot be said of politics though. People do not look at the brand or integrity of a political party; people look at the politicians that represent their parties. And in the case of the Philippines, politicians who are intent on running for a political position, if they cannot be the standard bearer of a political party that they originally belong to, they create and register a new political party (or resurrect an old and dying one) with them as the standard bearer, and such political party has little or no track record of good governance to speak of.

This situation largely explains the weak party-system in the country. The existence and institutionalization of the “party-list” system further exacerbated this situation. In the last May 2010 elections for instance, nearly 500 different party-lists – on top of existing dozens of national and provincial political parties – registered with the Commission on Elections (Comelec) and 187 were accredited.

The multitude of thousands of politicians from hundreds of political parties promising the moon and the stars only succeeded in confusing the voters and exacerbating the personality-oriented politics in the country, never in developing principle- and philosophy-based politics.

In the recent post-election forum organized by the Ateneo School of Government (ASoG) entitled “Leaning Lessons, consolidating gains: the 2010 national elections” last June 18, 2010, I raised some of those issues during the open forum and during the workshop.

It was a good forum. Among the speakers were Atty. Rene Sarmiento of Comelec, Dr. Mahar Mangahas of the Social Weather Stations, Mr. Ramon Casiple of the Institute for Political and Electoral Reforms (IPER), Atty. Eduardo Nuque of the Legal Network for Truthful Elections (LENTE), and Police CS Ager Ontog of the Philippine National Police (PNP).

During the open forum, I argued that the party-list system is wrong even in theory, and much more wrong in practice. Thus, the system should be abolished, there are no marginalized sectors, only marginalized individuals. I also suggested that ASoG should consider having a special forum on the party-list system alone.

I also commended the PNP – one of the few instances that I do so – for having a generally peaceful elections. Here is the PNP data for the decline in election-related violent incidents (ERVIs): from 249 incidents in the 2004 elections to 229 in the 2007 elections and only 180 in the recent 2010 elections.

Prior to the recent elections, the PNP was among the most distrustful agencies in the government. It has improved its image, I think, after the elections last month. It took a long time for the PNP to destroy and continue destroying its reputation. It will take also a long time to regain that reputation. It will need a series of confidence-building measures and proof to achieve this. The recent elections has contributed to that confidence-building.

I like the idea that the PNP also accosted and arrested some of its own personnel who violated the Comelec gun ban. Out of the 3,182 people who were arrested, 108 of them were PNP personnel (those carrying their firearms while off-duty and wearing civilian clothes). Some military personnel were likewise arrested for the same offense.

In one of the simultaneous workshops in the afternoon session, I argued that civil society groups should push for a change in the electoral system – via legislation – where voters will only vote the political party, never the name of politicians. Voters will judge and select the principles and political philosophies of political parties including their track records, not so much the politicians that represent those parties. This way, political parties will be forced to really define their party principles and stick to them, and not just blabber with generalities like “anti-corruption” where hundreds of political parties and party-lists in the country, all of them without exception, were campaigning against.

Picture below during the workshop discussions. Beside me is Byron Abadeza of the Transparency and Accountability Network (TAN).

A number of participants in the workshop group like the idea that it should mainly be the political party, like a corporation, and not the politicians, that will be directly accountable to the people and voters. The politicians will be accountable to their party. The party will discipline its politicians, apply severe disciplinary and even criminal charges to their erring members, so that the party can show and retain its reputation to the public. The same way that a big restaurant with hundreds of food chains across the country cannot afford to have even a single case of food poisoning in any of its food outlets in the country.

I hope that more civil society leaders will take up this topic and hopefully, support it.

WSJ article on drug price control

About 2 weeks ago, I got a call from James Hookway of WSJ in my cp. He said he read my papers and presentation materials on drug price control from the MG website. Below is his news report, I was quoted in one paragraph there.

Wall Street Journal
JUNE 18, 2010

Philippine Price Controls Hamper Rise of Generics


MANILA—The Philippines recent embrace of drug-price controls to lower the cost of life-saving medications is creating some unexpected problems—including crimping the supply of inexpensive generic drugs.

The country's president, Gloria Macapagal Arroyo, was eager to reduce the cost of pharmaceuticals in a nation where a third of its 95 million citizens live on around $2 a day. Last August, she used new regulations to cut the cost of five widely used medications, including Pfizer Inc.'s Norvasc hypertension drug and GlaxoSmithKline PLC's Augmentin antibiotic.

Facing mandatory price cuts, drug companies in the Philippines cut the prices of an additional 16 drugs, and in February agreed to slash the prices of frequently prescribed medicines.

A pharmacy customer in Manila.

Industry analysts and executives said the price caps have unintentionally knocked the wind out of a nascent generic-drugs industry that had sprung up here. Lower-priced brand- name drugs are pressuring these low-cost producers, and creating a policy challenge for President-elect Benigno Aquino III, who takes over at the end of June.

Edward Isaac, executive director of the Philippine Chamber of the Pharmaceutical Industry, said price controls and the threat of more caps have lowered the cost of some brand-name drugs to near those of generic competitors. Pfizer's Norvasc was cut to about 22 pesos, or 47 cents, for a five milligram tablet, from over 44 pesos.
"What's happening now is that when the price of Norvasc, for example, is cut, the generics have to slash their own prices," Mr. Isaac said.

Declining profits have some drug retailers putting expansion plans on hold. "We've not opened any new stores since the price controls were introduced," said Leonila Ocampo, vice president of Manila-based MedExpress. The drugstore chain has seen sales volumes drop since the price controls were introduced. "Our margins are under pressure, and if there's no profit, I don't know what will happen," said Ms. Ocampo.

Another drug store operator, Florecita Intal of Stardust Drugs & Medical Supplies Corp., said lower revenues from the branded-drug price caps restricts her ability to expand and offer less expensive generics. She fears smaller retailers might not survive.

While brand-name drugs still account for a large proportion of the drugs market here, generic competitors were beginning to gain in popularity, driven by the spread in recent years of generics-based chain stores up and down this densely populated country.

Data collected by Mr. Isaac's organization indicate, however, that the value of all drugs sold dropped 15% from August 2009 to February 2010, while the volume of pharmaceutical sold here held steady.

Bienvenido Oplas, head of the Manila-based Minimal Government Thinkers Inc. think-tank and a member of the consultative panel advising the Philippines' Department of Health, said this means the price controls policy just isn't working. "It hasn't fulfilled its objective of making more drugs available to more people," he said....

Jobs, jobs, jobs

(Note: this is my article for, June 19, 2010)

Jobs, jobs, jobs

When people have stable and good-paying jobs and do not lose their ambitions in life, they become self-reliant, confident and independent-minded. They do not demand much subsidies and special protection from the government and politicians as they can take care of their own lives and their companies.

On the contrary, when people have no stable job, or endure low-paying jobs, or they may have stable jobs (like work in government) but have little or no ambition in life, they become less confident and dependent on more protection and subsidies from the government and the politicians.

It is extremely important, therefore, that the economy should remain competitive so that private enterprises can continue hiring people, or people can put up their own enterprises and become start-up entrepreneurs, creating new jobs for themselves and their employees.

The National Statistics Office (NSO) released this week the result of its April 2010 labor force survey. See the table below.

Indicators April 2009 April 2010 Increase/Dec.

Population, 15 yrs and above (mill.) 59.07 60.56 1.49
Labor force participation rate 64.0 % 63.6 %
People in the labor force (mill.) 37.80 38.52 0.72
Employed (mill.) 35.0 35.41 0.41

Unemployed (mill.) 2.83 3.10 0.27
Unemployment rate 7.5 % 8.0 %
Underemployed (mill.) 6.62 6.30 - 0.32
Underemployment rate 18.9 % 17.8 %
Unemployed + Underempl. (mill.) 9.45 9.40 - 0.05

Source: NSO,

Here are three notable points in the above figures.

One, there was a big increase in the number of population who are 15 years old and above from April 2009 to April 2010, almost 1.5 million people. Not all of them enter the labor force (ie, they have work or are still actively looking for work) as many of them are still studying (high school to university).

Two, the increase in unemployment rate from 7.5 percent last year to 8.0 percent this year was mitigated by the decrease in underemployment rate, from 18.9 percent to 17.8 percent. The underemployed are those who already have jobs but are still looking for additional work, mainly to augment their low income.

Three, the combined number of unemployed and underemployed remains at a very high figure of 9.4 million people. That number is already more than twice the entire population of Singapore.

There is a big pressure, therefore, for the incoming administration to make the economy become efficient and competitive so that it can create millions of jobs, at least 2 million new jobs per year, and not just 0.4 million as indicated from April 2009 to April 2010. And it should be the private sector, not the government, that should generate most of those new jobs. Why?

There is little or no politics involved when private companies and individual hire people. These enterprises operate in a competitive environment. If they hire lazy people, they might lose money and go bankrupt. Thus, there is pressure on the people, the job-hunters especially, to show some skills and hard work, or the willingness to be trained and re-trained to gain new skills, so that they will be hired. In government, on the other hand, there is high politics involved in general in the hiring of people.

It is imperative, therefore, for the new administration to reduce or lessen the bureaucracies, regulations and taxation by both national and local government units, imposed on entrepreneurs and job creators. This way, there will be less signatures, less paperwork, to be required from entrepreneurs. And this in turn reduces if not controls, corruption.

Jobs, jobs, jobs. This should be among the priority targets of the incoming administrations, national and local, in order to drastically fight high unemployment and high poverty.

Tuesday, June 15, 2010

Rule of Law 8: Purpose and Supremacy of the Law

In one of my discussion yahoogroups, there is a discussion about "midnight appointment" by the outgoing President of the Philippines whose term will end this coming June 30, 2010. I did not join their debate on "midnight appointment" as I feel it is a debate of who should fill up vacancies in certain bureaucracies of the BIG government, the outgoing or the incoming administration. Being a non-believer of big and bloated government, I think that about half of the current bureaucracy are abolishable and we ordinary taxpayers, especially those in the private sector, will be better off with less taxes and fees to pay, with less signatures and permits required by bureaucrats before we want to start a business, for instance.

There was one idea thrown in during the discussion. That "the law exists to arbitrate where different positions cannot be reconciled per se. Where the law is silent, neither position can claim to be self-evidently superior..."

I am not too keen to accept this definition, that the purpose of the law is to arbitrate. From what I observe and read, the purpose of the law is to prohibit, to make restrictions.

When we say there is a law on something, that means -- explicitly or implicitly -- there is prohibiton on something. When there is no law on something, that means there is no prohibition on something.

Take breathing. Is there a law on breathing? Any regulation, republic act, decree, executive order, administrative order, local government order, on breathing? No. No law on breathing means no restrictions, no prohibitions, on breathing.

Take pollution. Is there a law on pollution (air, land, water)? Yes, hundreds of them, from local government to administrative orders to laws and decrees enacted by congress/parliament or the President. This means there are prohibitions and restrictions on pollution.

That is why the "rule of law" simply means the "rule of prohibitions". Laws against killing, against stealing, against kidnapping, against rape, against extortion, against stabbing and whacking people's head, against pollution, against smuggling, etc.

And the rule of law means rule of law, not rule of men. No one is exempted from the law, and no one can grant exemption from the law. The law applies equally to unequal people. Whether the theft is the President or the poorest man in this country, both should be penalized for stealing. Whether the murderer is the chief of police or the most hardened criminal or the most holy religious leader of the planet, the law against murder rules. It applies equally to unequal people.

And this makes ALL leaders of the country, past and present, hypocrites about the rule of law. Just observe ordinary traffic laws. The most notorious, the most arrogant violators of traffic laws are government people -- drivers of police cars, other red plate cars, and the king of them all, the Presidential Security Group (PSG).

Laws against stealing and plunder. Laws against illegal gambling and prohibited drugs. The fact that there are such laws and prohibitions and those things and activities continue up to this day, just shows how hypocritical the leaders of the country are in disrespecting and not promulgating the "rule of law."

Essence of the Rule of Law

Life will be simpler if there is simply a real "rule of law" as in "no exception", not even the governors and administrators of laws can grant exemption to anyone, even to themselves and their families.

Law = prohibition.

rule of law = rule of prohibition.

Since these are prohibitions, the number of laws should be as few as possible if society is to remain free and non-intrusive and less-interventionist. So maybe only 5 general laws all in all:

1. No killing or attempting to kill
2. No robbery or attempt to steal
3. No stabbing/shooting/poisoning/kidnapping or any attempt to harm other people
4. No censorship, no control of right to self-expression
5. 1 or 2 more.

Drinking, smoking, gambling, drugs, sex, speculative trading, entrepreneurship, job creation, international trade, etc. all allowed, zero or minimal restriction
but shooting other people after one got drunk (or even if the shooter is sober) is not allowed.

The number of prohibitions is very small, everyone will remember them, and everyone knows the consequences for violating those very few general laws or prohibitions.
This is the kind of "discipline" that people expect: the predictability of action and penalties when one violates those very few laws.

Too many laws mean lots of leeway and arbitrary powers to the law enforcers and administrators which law will apply to whom and which ones will exempt some people. This is very evident in our traffic "laws". Too many no left turn, no u-turn, one way no counterflow, no right turn on red, etc in our roads, the police and government vehicles, civilian cars but the drivers are politically connected, violate each and all those traffic "laws" with impunity.

Last February 07, 2010, I wrote this:

Rule of Law and Supremacy of the Law

There is a brief discussion in my other discussion group, about democracy. Democracy is a popular concept and most politicians and political groups around the world say they are democrats, very often with an adjective before it -- like social democrat, liberal democrat, christian democrat, and so on.

A friend from India, Barun Mitra of Liberty Institute, made a good presentation about democracy and property during the "3rd Pacific Rim Policy Exchange" held in Singapore last Oct 14-15, 2009. Entitled "The politics of property", it’s available at:

It's 27 slides (powerpoint), lots of philosophical discussion about democracy. I like one of Barun's arguments: Democracy is not majority rule because the smallest minority is the individual.

A friend from Georgia (Europe, not US) opened up a new topic, “Rule of Law is not the same as Supremacy of Law.”

While I am familiar with the definition and discussion of the “rule of law”, I am not familiar with the latter. The former, at least in the Hayekian definition, is very clear. The law is above everyone. No one is exempted from the law, no one can grant exemption, and the law applies equally to unequal people.

A quick search of the “supremacy” shows that the latter means that in case of a conflict between a local or community law with a national law and/or a federal or union law (say in the US or the EU), one has the supremacy over the other.

Another source made this definition,

"The rule of law requires both citizens and governments to be subject to known and standing laws. The supremacy of law also requires generality in the law. This principle is a further development of the principle of equality before the law." (

I don't remember Hayek discussing or mentioning the topic, "supremacy of law", at least in his book, "The Constitution of Liberty" (1960). Hayek's definition of the "rule of law" covers both -- application of the law to everyone and such laws are abstract and of general application to all.

Another thing, Hayek did not consider all laws emanating from the parliament or legislature as real "laws" in the sense of being abstract, genral laws. For him, only general laws that mention no individual, no institution, no group or sector, can be considered as real "laws".

Thus, we can consider the "law against killing" as a general law. Also, the "law against stealing". These laws make no mention of any individual or institution or group, nor make any exemption. Whether the killer or theft is a king or president or prime minister or the poorest of the poor, killing and stealing is prohibited, period. No ifs, no buts, no however.

In contrast, laws on financial bail-out, agricultural subsidies, trade subsidies, health/housing/education subsidies, tax holidays, etc. are not abstract, general laws. Such "laws" contain too many details. When there are too many details, there are many potential loopholes and exemptions.

From Hayek's definition and discussions, therefore, we can infer that "rule of law" is similar to "supremacy of the law".

Adding here2 of my earlier notes on the subject.

1. Rule of Law and Property Rights

September 11, 2008

Rule of law is among the most misunderstood and most abused political philosophies in the world today, particularly in this country. When the President for instance was fighting for her political survival -- with more and more street protests and demonstrations and the crowds getting bigger and bigger, during the "Hello Garci" impeachment moves and the ZTE-NBN scandal, the President and her coterie of top bureaucrats were one in calling for a "rule of law" and not to allow "mob rule." Of course these officials and bureaucrats do not appreciate or fully understand that the term implies "the law (against election cheating, robbery, plunder, etc.) applies to everyone and exempts no one." What they understand and fully implement is the "rule of the administration," meaning the Administration is above everyone else, and they are the Administrators.

In my last month's column entitled "Rule of law and rule of the lawless", I argued that "Societies will be better off if there are less laws. We should have very few laws that apply equally to everyone and exempts no one. This 'rule of law' will discipline people, both governors and governed, both rich and poor."

Property rights is another widely misunderstood concept. Using high poverty and social inequality as alibi, there have been a number of moves and policies to make "private property rights" become "public (or collective) property rights." In this case, the owner of a particular private property, whether physical or intellectual property, will be disfranchised and robbed of ownership of such property. The State, or other political organs or private enterprises authorized by the State, can confiscate private property.

Lack of security, if not outright absence, of private property rights, therefore, is a formula for social chaos. People will have no peace of mind if their car or TV or song composition can be claimed by other people as their own car or TV or song composition too. And if people cannot have security of private property ownership, they will not work hard; they will not become ambitious and efficient in their work. Rather, they will be driven by envy -- pure, dark, evil envy. When someone improves his life due to hard work and has certain material things, other people around will conspire or compete with each other on how to steal or confiscate such properties for their own selfish and envious interests. In this case, society will stagnate and decay. And that largely explains why socialism can never be attractive to hardworking and responsible people.

2. Child Murder and the Rule of Law

July 01, 2009

There is an overseas Filipino worker (OFW) named May Vecina, who has been spared from death row in Kuwait for killing a 7-year old child of her employer, also attempting to kill two other children.

VP Noli de Castro, DFA Secretary Alberto Romulo, and Ambassador Endaya fetted her, shown on media smiling, flashing a peace sign, given cash assistance and a loan to start a business. Is this the way to treat a self-confessed murderer?

While it is possible that she indeed was maltreated by her employers, killing a child is not the right way to "get even". And the RP government officials who saved her from being killed in Kuwait should have kept a low-profile action on it. But since she was helped by high-profile officials with high media value and seeking high political mileage, the uneventful thing happened.

One major reason why societies are in disarray is because the leaders of societies -- the top government officials -- do not fully promulgate the rule of law. The rule of law says no one is above the law, the love is above everything else and no one else. So when the law says killing (and stealing, kidnapping, etc.) is bad, it is punishable, and some government leaders begged for exemption to the law, then there is disrespect of the rule of law there. Granting that the parents of the child and the government of the victimized citizens have granted her pardon for humanitarian purposes, still the murderer should be demonized as a killer. Because she killed a child, not a rapist or hold-upper who was on the act of assaulting her.

I would assume that the same high level politician and government officials -- VP Noli, Sec. Romulo, Amb. Endaya, etc. -- are among the top government officials who disrespect traffic rules in this country who drive with low-number and/or diplomatic cars and with police escorts on big bikes who think that a red light is also a green light, that a one-way street is also a two-way street, that a no left turn or no U-turn street is also a left turn or U-turn street.

The lawlessness in our streets by the supposed law enforcers in government is just one indicator of the weak promulgation of the rule of law in this country. And so we may have a warped sense of justice and morality, even in the case of that child murderer.

See also:
Rule of Law 1: Entrepreneurship and Government Permits, September 16, 2008
Rule of Law 2: Property Rights and Lefts, March 02, 2009
Rule of Law 3: AIG Bonuses, Government Bail-outs, March 18, 2009
Rule of Law 4: On Thailand Crackdown, April 18, 2009
Rule of Law 5: Lawless State, Corruption and Coercion, August 01, 2009
Rule of Law 6: Discussions in Facebook, January 10, 2010
Rule of Law 7: Property Rights and IPRI 2009 Report, February 27, 2010

CSOs and State 10: The Role of Civil Society

Sometime in mid-November 2001, I had a debate with Mr. Nicanor Perlas in the KOMPIL yahoogroups/ Mr Perlas was a known environmental and civil society organizations (CSOs) leader in the country then. He ran for President in the 2010 national elections as an independent, with no established political party to support him. He lost naturally, along with other candidates from small and non-established political parties.

The debate started with his critique of then NEDA Deputy Director General (DDG) Popo Lotilla over certain decisions of the Philippine Agenda (PA) 21. Since the focus of this paper is on the theoretical debate on the role of civil society, I removed discussions that focused on details of the debate then. I copy-pasted Mr. Perlas’ postings in pilipinasforum yahoogroups and that’s where a friend, Ozone Azanza was able to read and made counter-arguments against his points.

Here are the snipped exchanges:

Dear Mr. Perlas,

You said,

the PCSD and PA21 take, head on, the challenge of globalization in the framing of its agenda, policies, and programs. In this way, the Philippines has a powerful alternative to the neo-liberal, radical free market approach of the World Bank, IMF, and WTO, an approach the NEDA is beholden to, an approach that is starting to collapse rapidly worldwide.

The beneficiary of liberal flows of capital and international NGO funds consider free market as "an approach collapsing rapidly worldwide.” 

In a number of papers and discussions, Mr. Perlas defines civil society as "an institution to challenge the totalitarianism of the state and the market". To which I don’t really buy. For me,

a. Markets - individual producers and traders, individual firms and consumers, from prehistoric times to the present - make the world go round.

b. State - an invention to correct market failures, address harmful "externalities", provide "public goods".

c. Civil society - an invention to correct state failures and inefficiencies, later lambast market's self-correcting mechanisms (such as de-monopolization of industries through deregulation & more competition).

Thus, I find the PCSD's composition - 16 from govt., 9 from civil society, 2 from labor (hence, 2 more for civil society), 2 from business - rather weird. The government bureaucrats and many self-styled civil society leaders outvoting business who provide jobs, who produce & trade the goods and services that give sustenance to the other 2 groups. And this set-up is almost "ideal, second to none", according to Mr. Perlas.

-Nonoy Oplas

I agree with you, Noy. There may really be some extreme positions that the civil society group of Mr. Perlas would want Deputy Director General (DDG) Popo Lotilla to endorse to the Office of the President. And of course, the good DDG would not be anybody's lap dog. As one of the only two real recognized experts in international law (the other would be Commie Haydee Yorac?) of course he would have to view things bearing the Philipines' various commitments in the international arena. The problem with SOME civil society groups/watchdogs is they act like kalesa horses. They can see well up ahead, but their peripheral visions are restricted. In a globalized market setting, nations can not be saddled by NIMBYism and other restrictive tendencies. The world is changing, and we have to change with it.

-Ozone Azanza

Monday, June 14, 2010

Idle land tax vs. real property tax

(Note: this is my article for "People's Brigada News", June 12, 2010)

One of the important debates in government and political philosophy is how to treat productive resources (people, land, buildings, etc.): should they be penalized with high taxes or be rewarded with zero tax.

The dominant thinking in many governments around the world including the Philippine government, is to take the former view, that is, to tax productive resources. One purported objective of this policy is to raise more tax money so that government can subsidize the poor, including the less productive people and resources.

I believe that it should not be the case. That governments should respect the result of hard work, that governments should encourage hard work and productive resources should therefore, be rewarded with minimal if not zero taxes and fees.

In many parts of the country, many areas are idle and underutilized. These lands should be penalized with idle land tax, while productive lands, whether for forestry and various crops, whether residential villages or commercial/industrial projects, should be rewarded with no income tax or no real property tax.

When a land is full of agricultural crops (grains, vegetables, fruits), that means (a) food supply is augmented and increased, resulting in stable and lower food prices, (b) jobs are created, from manual laborers to agricultural researchers and marketing people, and (c) profit and surplus is created and accummulated. These alone create welfare for society so that some welfare programs of governments that are financed by taxes can be reduced if not abolished.

When idle land tax is imposed, owners of idle and underutilized lands will have two options: develop and improve their land to escape paying the tax, or sell their land to other people and investors who can make the land productive. Either way, this will mean more jobs to be created, hence solving the high unemployment and underemployment problem, and more food, housing, schools, shops and other goods will be produced.

There are concerns and questions of "Who decides what is idle and what isn't? What's the difference between a piece of property that is a private nature reserve and idle land?”

It is easy to distinguish idle land from those which are not. A land full of trees (natural or plantation forest), various crops, farm animals, houses and villages malls and industrial zones, is not idle. A land full of cogon and other grasses with no grazing activities is idle; it should be taxed. A land full of shrubs and vines with no parks is idle; it should be taxed.

Real property taxation very oten has one ugly characteristic: land and buildings that create the most number of jobs per square meter of space are also those that are heavily taxed. Like tall buildings, malls and factories. This should be corrected.

Some people think that golf courses are a waste of land, diverting land away from more food production. Hence, these lands should be heavily taxed. That is one side of the coin. The other side is that golf courses and other tourism projects create lots of jobs to people – gardeners, caddies, restaurant and hotel staff, building maintenance staff, and so on. When people have jobs, they can better take care of their households, they can have resources to bring their kids to private schools, etc.

We should encourage industriousness and hard work, discourage idleness and laziness. Taxation is one tool that governments use to influence behavior of the people. Government taxation and regulation therefore, should target the lazy and irresponsible people. Government should also refrain from hiring too many employees because taxation and regulation are not exactly useful and productive work.

Sunday, June 13, 2010

Cancer and politics

(Note: this is my article for, June 12, 2010)

Cancer is among the top killer diseases in the world and in the Philippines. Personally, this disease is impossible to brush aside because a number of people close to me have died of it.

My elder brother, the eldest in our family, died of prostate cancer a few years ago. His wife and my sister in law, died of colon cancer several months before him. My mother’s first cousin in Cebu also died of prostate cancer. One of our wedding godmother died of cancer early this year. Another godmother is undergoing chemotherapy with a rare type of cancer.

The latter is very close to us, especially to my wife. News of her having a cancer made us very sad. But news that she is fighting back and doing well also cheers us. Sometimes she is weakened and has to be hospitalized, on most days she is doing well and following the medications given by her physicians. Nonetheless, we only wish that the cancer cells in her body will be gone and defeated, we wish nothing less than that.

Thus, I really wish that this killer disease will be killed someday too, or be significantly neutralized and controlled. The role of innovator pharmaceutical companies is important here because they are the only ones – not the generic manufacturers, not the tobacco or alcohol or automobile or energy companies – which do serious and very costly research and development to find more powerful, more disease-killer drugs and vaccines.

While some cancer cases are due to genetics, many cancer cases are lifestyle related. Like lung cancer due to over-smoking and liver cancer due to over-drinking. Thus, the first defense or “cure” against the latter type of cancer is to have healthy lifestyle. This highlights our main argument explained several times in this column, that health is first and foremost, personal and parental responsibility, not government responsibility.

Once cancer cells have grown, whether due to genetics or unhealthy lifestyle, the next line of defense will be by medications and physician intervention. It is important of course, to keep – or go back to – healthy lifestyle in order to help keep one’s body have stronger immune system.

When medications and medicines come in, that is where politics also come in. The immediate concern of many sectors in society, especially the health NGOs, patient groups, media, politicians and other political groups, is to pressure innovator pharmaceutical companies to significantly bring down the price of their new, more powerful, more disease-killer, but still patented drugs. The fact that all innovator companies are multinationals and are based in rich countries make them even more “devil-looking” in the eyes of such activist groups.

That there is huge cost in both actual R&D work and in complying with various requirements of various government drug regulatory agencies like the Food and Drug Administration (FDA) is less important to the different activist groups. The point is to use politics and political pressure to demonize the innovator companies. There are several tools to achieve this, like compulsory licensing (CL), parallel importation and drug price control. CL on some anti-AIDS and anti-cancer drugs has been used by the government of Thailand while the outgoing Philippine government has used drug price control for a number of drug molecules ranging from anti-hypertension, anti-cancer, anti-cholesterol, antibiotic, anti-diabetic and anti-thrombotic.

The high cost of new medicines is indeed a valid issue. This is no different from the higher prices of new models of mobile phones, flat tv, laptops and cars. New models are seen to be more revolutionary and contain qualities that are more powerful than the older models. But the availability of new and more powerful drugs and vaccines is sometimes a more basic issue than their price. There are many drugs that are deemed powerful but are not found in drugstores.

Desperate patients and their families and friends are willing to forego certain material things in their lives – like selling the second car, selling other properties – just to save a beloved person’s life. For this type of people, the price of more powerful drugs is secondary to their availability. The typical argument is that they can earn money later on, but they cannot bring back to life once a beloved person and friend has died.

Politics should step back in areas where science and medicine have the dynamics and incentives to find treatment to killer diseases. Where there is profit to be earned in this sector, more pharmaceutical, biotechnology and research companies will sprout and compete with each other in developing more powerful drugs and treatment to cancer and other killer diseases. The public’s desire for more powerful but more affordable drugs will be assured by a healthy competition among innovator and research companies. Once the patent has expired, the next line of competitors, the generic manufacturers, will further introduce off-patent drugs at a lot lower price.

The important thing is that new, innovator drugs from innovator companies should be allowed and encouraged to come on stream regularly. Patients’ lives are more important than politics.

Thursday, June 10, 2010

Al Gore politics in Manila

Former US Vice-President Al Gore spoke in a big forum in Manila the other day, June 8, dubbed “Al Gore Live in Manila”. I did not attend of course, knowing that this politician will peddle political science masqueraded as climate science.

Since I did not attend, I checked some newspapers in Manila yesterday about the event. Here are some of them, along with some quotes on those reports. I did not catch the other papers though.

(1) Climate crusader gets warm welcome

By Volt Contreras
Philippine Daily Inquirer
First Posted 02:37:00 06/09/2010

“…images and charts hammering down apocalyptic warnings: ancient glaciers receding if not totally vanishing in a matter of decades, lakes and rivers drying up, stronger storms, droughts in areas where there used to be none, and flooding in towns… global warming and resulting “shifts in the seasons” have led to the resurgence of diseases that were once declared under control, and the emergence of new viruses, as in the case of SARS (Severe Acute Respiratory Syndrome).”

(2) Al Gore cites RP efforts in renewable energy

Written by Ma. Stella F. Arnaldo / Special to the BusinessMirror
TUESDAY, 08 JUNE 2010 23:21

“…Gore pointed to Typhoon Ondoy (“Ketsana”) which struck the Philippines on September 26, 2009, as one of the examples of global warming’s impact. The typhoon dumped 341 mm. of rainfall in Metro Manila and outlying provinces in just six hours. Many low-lying cities and municipalities were flooded with 20 feet of water and remained so for a week.”

(3) Saving the environment deemed profitable
Posted on 10:29 PM, June 08, 2010

“…warmer oceans are resulting in more numbers of stronger hurricanes and larger volumes of rainfall. "That’s why we’re getting stronger ocean-based storms... You had a series of giant typhoons. It was just a horrible situation you had to endure," he said flashing photos of flood-stricken Luzon which was hit by tropical storm Ondoy late last year.”

(4) Gore to Pinoys: Take a stand on climate change

By Rhodina Villanueva (The Philippine Star) Updated June 09, 2010 12:00 AM

“A clear manifestation of global warming, he said, the occurrence of storms worldwide.
“It has been increasing the odds of experiencing or having more of these giant storms in our respective countries as what scientists say,” Gore said.”

Some comments:

It is terrible to hear or read about “glaciers receding or totally vanishing due to global warming”, then “stronger storms and flooding in towns due to global warming.” Haaa? Even severe winter, severe rains, flooding and cooling are due to global warming?

Much of news reports and literatures of the warmers are narrative, not quantitative. One can take a picture of one side of the north pole or the south pole as having “less ice than usual” and make a 3 pages or more “special report” about it. But if one is to report about the ice area of the whole north pole or south pole, you need to produce a chart with numbers for the whole area.

Al Gore and the UN IPCC are fooling us with their climate political science. There is no “catastrophic man-made global warming” happening like vanishing ice and glaciers, continuously-rising global temperature, and so on.

Will just show 3 charts here – ice thickness in the Arctic (north pole), Antarctica (south pole) and global temperature based on satellite measurements of the Earth’s troposphere.

(1) Arctic ice thickness: No “catastrophic” loss of ice.


(2) Antarctica: No “catastrophic” loss of ice.


(3) Global tropospheric temperature: No “catastrophic” global warming. Global cooling is developing, instead.


Conclusion: The Earth is not in danger. There is no need for more environmental regulations, more energy taxation, more global and national climate bureaucracies, more global climate meetings, more global ecological central planning.

Wednesday, June 09, 2010

European unemployment

A number of European countries have become the “flavor of economic discontent” recently, led by Greece and Spain.

I try to look at the unemployment picture as much as possible, aside from GDP output and prices or inflation rates. An economy growing at 7 percent or higher but has double-digit unemployment rate is still problematic.

Below is among the latest data on unemployment in Europe. In this list, I chose only those countries with double-digit (ie, at least 10.0 percent) unemployment rate, because that somehow speaks of the status of their economy.

Unemployment rate, in percent, as of April 2010 unless specified

Latvia, 22.3, March
Estonia, 19.8, Q1
Spain, 19.7

Lithuania, 15.1
Turkey, 14.4, Feb.
Ireland, 13.4
Slovakia, 12.5
Poland, 12.3
Greece, 12.1, Feb.
Hungary, 11.8
Belgium, 11.6
Slovenia, 10.7, Feb.
Portugal, 10.6, Q1
France 10.1

Source: The Economist, June 3rd 2010, table on “Output, prices and jobs”,

Greece, Spain, Portugal and Hungary were in the news recently. But there are few news about other European countries with even worse situation in the jobs market, like Latvia and Estonia. Or maybe I just did not catch the news when they were mentioned or reported.

An unemployment rate of 20 percent or higher is mind-boggling for me. That’s one out of five able-bodied people in the economy looking for a job cannot find one. And if underemployment (those who have jobs already but are looking for additional work) situation is to be added, the situation would look really bad.

What happened to the new democracies of Europe? Why do they have such high unemployment situation?

Tuesday, June 08, 2010

Democracy and dystopia, Elections and coercion

A good friend, Bruce Hall, an American academic teaching at UP Visayas, a fellow Rotarian, and a volunteer in Global Foodbanking Network (GFN), wrote a good, short essay. Below is his paper, and next to it are my comments and reactions.

Elections are about avoiding dystopia, not achieving utopia

By Bruce Hall
June 7, 2010

Democracy is not a search for the good and the perfect; it's a flight from dystopia. The most powerful books and writings in favor of liberal democracy are dystopian, like 1984, or polemics against monarchy or tyranny, see Thomas Paine. Even in the Philippines. the great democratic moments weren't great steps towards a bright, glorious future, but an attack on the terrible present -- e.g. the Philippine Revolution and People Power. Those movements that strived for a better, more perfect world have always failed, often ending in tyranny and oppression --- e.g. Marcos's New Society, japan's Greater East Asis Prosperity Zone, Communist and Fascist revolutions worldwide.

What does that mean for an electoral system?

First and foremost, elections are about avoiding tyranny. They are about overturning governments, about throwing the bums out. It is not about finding the "perfect" way to determine the "will of the people". The will of the people is not sacred or brilliant, and it's irrelevant. What matters is that there are checks and balances on the power of the powers-that- be. The type of voting system is therefore secondary to other consideration and should primarily be chosen depending upon its ease and transparency of declaring a winner, the difficulty of stealing the election, the ability of holding governments accountable even if the election is stolen, and a few similar factors. It should not be chosen because of some mathematical model about which system best reflects the will of the people or whether it allows for the perfect person to be chosen. Elections and voting systems about avoiding the worst, not choosing the best.

The easiest and best way to make sure that governments are accountable is to shrink the size of the polity, of the electorate. If one was to hold an election in your immediate family, it would be much easier to choose, almost by consensus, the best leader. Why? Because the electorate is small and everyone knows each other, and can speak to each other in the same language and culture. As you expand the circle to include say your extended family and beyond to the barangay, which in many places is really just a very extended family, it becomes harder and harder to reach a consensus, to make sure that governments are accountable, that there is a check on power. If one was to rank Philippine governments by accountability, by responsiveness to the people, from most responsive to least, it would look like this:

Most accountable: Barangay
Least accountable: National

All this discussion over what the electoral process should be therefore should be secondary to the question over devolution of power. If you want a more accountable, a more democratic political system, fight for more local control. Give barangay and then municipal governments more power, especially the power over taxing and spending. He who has the gold rules. Give these local governments the gold and let them rule, not Imperial Manila.

I agree with a number of points that Bruce wrote above. In particular, his argument that centralized political structures are the least democratic, the least transparent and least accountable. That's why economic central planning and centralized politics, are bad. Decentralization and devolution of political power is a laudable move.

But decentralization does not automatically mean less government or making the government more accountable. What happens in many cases with decentralization is that the national or central govt temporarily shrinks -- and expand much bigger after sometime -- and the local govts become bigger. For instance, an ordinary city used to require only 2 or 3 procedures to give a business permit. After devolution and with expanded functions and subsidies by local govts., the same city will now require a dozen different procedures before it issues a business permit. The local bureaucracy has expanded several fold.

My beef against any form of government -- democratic, totalitarian, republican, welfare state, etc. -- is the widespread use of coercion, of state force, to implement certain social engineering that the politicians, entrenched bureaucracies and dominant political parties have designed.

In a market economy, you go to restaurant A. You don’t like their food, you get out, you pay nothing. Then you go to restaurant B. You like their food but not their price, so you get out again, you pay nothing. Then you go to restaurant C. You like their food, their price, but the waiters and staff do not look friendly, so you get out again and pay nothing. Until you find a restaurant that pleases you. Zero coercion involved.

In state coercion, even under a democracy, the school principal might an arrogant teacher; the police chief might be an extortionist; the mayor and the city councillors might be corrupt; the governor and congressman might be the gambling lords; the President might notoriously corrupt and has cheated big time in the last elections, and so on. Whether we like them or not, both elected and appointed bureaucrats, citizens and voters generally have to support those people with different taxes, fees and regulatory procedures.

Consider also this statement: "Everyone should eat decent food everyday."

Very laudable goal, no question about it. In a market economy, people, parents and guardians especially, should work to earn money to buy food. Or they work to grow their own food. Those who are lazy and do not want to work will either be supported by their family members and friends, or they starve and die later.

With coercion though, even in a democracy, the lazy and irresponsible will receive food stamps or welfare dole-outs from the government. Eating and healthcare is a "right", an entitlement. So the state over-taxes the hard-working people, first to pay for the salaries and perks of government personnel who will administer the welfare programs; then to feed those who are hungry, including the lazy, drunkards and irresponsible.

Thus, the form of government has become secondary to the issue of using coercion in many aspects of our lives. A democracy can be a lenient form of authoritarianism and totalitarianism if the culture of entitlement is done massively. People who smoke 2 packs a day will never worry about lung cancer or hypertension and other smoking-related diseases, they can always run to the state and demand "quality" healthcare because "health is a right."

With the foregoing discussion, I argue that we should aim not for decentralization, but for a state of civil society. From centralization to decentralization to civil society. A state of civil society is a state of responsible citizens who can take care of their own lives, their own households, their own communities, with the least external coercion necessary. It is a state of a lean or small or minimal government. Personal responsibility, not more government responsibility, is the "default" mode.