Sunday, July 31, 2011

Free Trade 18: Regional Trade and East Asian Model

(This is my article today in the, with original title, Philippine Trade and East Asian Economic Model)

Trade, selling what one produces in relative abundance, and buying what one needs but can not produce more efficiently, is among the cornerstones why societies and economies prosper. This philosophy applies both in domestic and international trade.

The National Statistics Office generates the monthly and annual international trade data of the Philippines. The tables though are relatively detailed, like month-on-month and year-on-year changes (value and percentage). I only want to see the cumulative data.

My sister's auditing office has an economics blog, Alas, Oplas & Co. CPAs-RSM. It's cool, short and summarized data, little commentaries. So I used the trade data there in these two tables. The NSO is the primary source of data there.

Of the top 10 or 11 exports market of the Philippines last year, only three are non-Asians: US, Germany and Netherlands. This speaks of the growing regional trade and economic integration in the continent. The main beneficiaries of globalization and global capitalism over the long-term are the neighboring countries themselves, especially if such countries are growing dynamically.

For the top 10 or 11 sources of imports of the Philippines, only the US is non-Asian. Saudi Arabia is also in Asian continent, though the Middle East is much closer to Africa mainland than Asia mainland.

In the first five months of this year, the same top 10 countries in 2010 also ranked in top 10 this year. The difference is that the percentage shares of Germany and Netherlands are shrinking. There is greater regionalism in trade and other economic activities now, than inter-continental trade.

The way the public debt problem of many European and North American economies are dragging and burdening them, slower economic growth, if not economic stagnancy, will be the ultimate result. Governments of welfare states have to retain their high and multiple taxes to sustain those expensive entitlement programs. This process siphons off a big portion of personal, household and corporate income and savings, into state coffers. 

And this brings me to another topic: the East Asian Model (EAM) of economic growth. A friend from Pakistan, Ali Salman, wrote in his article last month, Myth buster: Debunking the clichés in economic policy making". He wrote about certain economic myths like forced collectivism, economic central planning, as “motors” of economic growth in Pakistan and other developing countries. I agreed with many of the things he wrote, except one “myth” which he described as,

"Government should provide everything or at the very least, it should engineer society just like the East Asian Model."

I wrote to him to say that he may have misrepresented the EAM here. The EAM that I know has prospered in recent decades because compared to developed economies of North America and Europe, the EAM is or has:

1. Less welfarist. You don't work, you go hungry. There is little or zero state subsidy for unemployment insurance or food stamps.

2. Less rigid labor laws. Entrepreneurs can hire and fire people easily, the same way that employees can quickly move from one employer to another, or set up own micro or small enterprises.

3. Less environmental dictatorship. Environmentalism and its policies are there, sure, but not as strict as those in Europe and N.America. Thus, many East Asian economies have grown fast via cheap power sources - coal and nuke, especially.

The more that countries and governments attempt to disregard personal responsibility and assert or impose more government responsibility in running the people’s ordinary lives, the bigger will be the long-term restriction on individual and economic freedom, and the larger will be public indebtedness.

As the debt crisis in the US show, BIG governments, socialist or democratic, must learn to step back and scale down their huge bureaucracies and expensive welfare programs. A nanny state that attempts to baby-sit people even if they are already adults, will not help in cultivating more personal responsibility in how people should manage their own lives.

See also,

Thursday, July 28, 2011

Fiscal irresponsibility 12: More on US debt default

Last week, July 21, I wrote this:

In less than two weeks, on August 2, the US federal government's public debt of $14.294 billion threshold where the government can no longer borrow, will be reached. That is why the noise on "debt default" is becoming louder. See my paper on this 3 days ago, Fiscal irresponsibility 11: US debt default talks.

Source of this chart, The Economist, America's public debt: Down to the wire, July 18, 2011.

Please note that these figures are public debt by the federal government alone. Not included here are debt by local governments -- states, counties and cities. Those lower government levels have their own share of debt crisis too, like the state of California.

The extent of fiscal irresponsibility, of persistently living beyond their means, criss-crosses various levels of government.

The next chart is from Dan Mitchell of Cato, Mr. President, Here’s that Balanced Approach You Keep Demanding, July 15, 2011.

He made a 5-10 years projection in both US tax revenues and federal spending. From the data he gathered from OMB and CBO, projected revenues will remain at 18 percent of GDP, similar to the average figure for 1950-2000. But projected spending will be 23.6 percent of GDP, much higher than the 50-years average of 19.8 percent of GDP from 1950-2000.

Over-spending, then over-borrowing to finance the excess spending. This is the plain and simple reason why the US government is digging deeper in public indebtedness and the various economic, financial and political problems attached to it.

There should be other potential government revenues aside from more taxation. Privatization of many government assets (land, corporations, banks, universities, hospitals, etc.) is one important policy tool. But it is not palatable to the political class. And this attitude is not unique to the US. There is deep insecurity and hypocrisy in the political and bureaucratic class not to entertain this policy tool.

Today, July 28, 2011

There is a good graphics I saw from, Debt limit of the US federal government from 1980 to 2011. There are 4 lines there. Topmost is US GDP, next (light brown) is the debt limit, below it is the debt subject to debt limit (light green) and further below (dark green) is marketable debt.

The debt limit started rising more frequently since 2003. And the gap between the size of GDP and debt limit used to be far until about mid-2008. Since then, the gap between the 2 has become narrower and narrower. The two almost intersected in early 2010. That's when the US government was bailing out many big private corporations using money it borrowed from many sources. Click these charts for a larger image.

This table is interesting. It shows who lent how much to the US federal government, as of end-March this year.

Domestic private investors lent $3.23 trillion while foreign investors, mostly governments and foreign central banks, lent $4.48 trillion. Of the latter, the Chinese government lent $1.15 trillion, Japan government lent $0.91 trillion. Graph source, Who holds the federal debt.

Chart source below, The Economist, Daily Chart July 28th 2011. It shows the overall debt over GDP ratio for both the US and Canada. I just copy-pasted them from the interactive graph of The Economist. All 4 sectors -- financial, government, non-financial business, and households, contribute to rising overall debt.

Fiscal irresponsibility of the government is often matched by corporate and household irresponsibility, of further accumulating more debt. Having debt is normal, especially for investments or for emergency spending. But having an ever-rising debt is not normal, or not proper as the cost of their future payment becomes more and more difficult.

Tuesday, July 26, 2011

The President's SONA 2011, part 2

After the President delivered his State of the Nation Address (SONA) 2011 yesterday, many people as expected, dissected and analyzed, positively and negatively, his speech. The basis of their analysis, of course, are their personal biases. A socialist and interventionist for instance, would naturally lambast his speech for not promising the public of more subsidies -- more education scholarship, more public hospitals, more condoms and pills for the poor, and so on.

My analysis of the President's SONA is from a liberal philosophy perspective. Because the President won under the Liberal Party, not from the socialist-leaning parties like Bayan Muna, Anakpawis, Gabriela and Akbayan. Liberalism as a philosophy does not advocate more state subsidies of things that are better left as personal and parental or household responsibilities.

Here are among the important achievements and directions of the government as mentioned by the President yesterday.

1. No more wang-wang, sirens and display of political power over ordinary people.

2. Imprisonment for the corrupt, level playing field for people to improve their lives.

3. Better economy: (a) reduction of self-rated hungry Filipinos; (b) stock market at record highs; (c) improved credit ratings by Moody’s, S&P, Fitch and JCRA; (d) more investments in energy exploration, new power plant; (e)

4. Discovery of excesses in the past: (a) used police helicopters purchased at brand new price; (b) PNCC officials who gave themselves huge bonuses and pay and brought the company to new debts; (c) costly dredging of Laguna Lake; (d) arbitrary food for school program; (e) PAGCOR, P 1 billion for coffee alone.

5. Tax evasion by many professionals, only 1.7 million self-employed have filed income tax returns.

6. More honest DPWH, dismissal of a district engineer who wanted to steal.

7. No more over-importation of rice, which also required more warehouses. Increased rice output due to better irrigation, seed and farm support.

8. Housing subsidies for the police, military, jail personnel and firemen.

9. Better protection of Recto Bank in the Spratlys, purchase of Hamilton Class Cutter, a modern warship; also more helicopters, patrol crafts and armaments for the AFP. Bring the (Spratlys) conflict to the International Tribunal for the Law of the Sea.

10. Reduced crime, lower stolen cars and motorcycles. More conviction of human traffickers, enforcement of Anti-Trafficking of Persons Act of 2003.

11. Lower unemployment, from 8.0 percent in April 2010 to 7.2 percent in April 2011; job-matching programs by CHED, TESDA, etc.

12. More condition cash transfer (CCT) beneficiaries, more PhilHealth coverage through the National Household Targeting System for Poverty Reduction (NHTS-PR).

13. Synchronizing the ARMM and national elections, discovery of 80 percent of disbursement were unliquidated.

14. Agro-forestry (coffee, cacao, forest trees) programs to give upland livelihood, control flooding, protect the environment.

15. More mass transport via monorail at lower cost.

16. Thanked Congress for enacted laws: GOCC Governance, ARMM Synchronization, Lifeline Electricity Rates Extension, Joint Congressional Power Commission Extension, Children and Infants’ Mandatory Immunization, Women Night Workers.

17. Bills requested in Congress: (a) compensation for victims of Martial Law, (b) just salary and benefits for household workers, (c) just pension system for soldiers, (d) more DOST scholarship, (e) universal healthcare, (f) environmental protection and disaster risk reduction, (g) strengthening of BuCor, (h) of NBI, (i) of NEA, (j) of PTV 4. Other priority bills at the Budget Message.

18. New Ombudsman to fight corruption. End to crab mentality.

There are other achievements and directions of the administration mentioned by the President but I won’t mention them all here. For now, I will categorize the above list into (A) Liberal policies, (B) Interventionist/socialistic policies, and (C) Plain description of achievements.

A. Liberal Policies, Promulgation of the rule of law:

1. no more wang-wang;
2. imprisonment of the corrupt, level playing field;
9. Protection of Philippine claims in the Spratlys, go to the International Tribunal;
10. Reduced crime, lower stolen cars, more conviction of human traffickers.

B. Interventionist/socialistic, and arbitrary/selective policies

7. No more over-importation of rice, more warehouses.
8. Housing subsidies for the police, military, jail personnel and firemen.
11. job-matching programs by CHED, TESDA, etc.
12. More CCT beneficiaries, more PhilHealth coverage
14. Agro-forestry programs for upland livelihood,
15. More mass transport via monorail.

C. Description of Achievements:

3. Better economy: stock market at record highs,
4. Discovery of excesses in the past: used helicopters purchased at brand new price;
5. Tax evasion by many professionals
6. More honest DPWH,
13. Synchronizing the ARMM and national elections,
16. Congress-enacted new laws: GOCC Governance…
17. Bills requested in Congress: compensation for victims of Martial Law,…
18. New Ombudsman.

So for me, the President affirmed his being a liberal leader by promulgating the rule of law in four (4) statements and goals. They are generally self-explanatory, I will not elaborate on them anymore.

I will elaborate instead, why I think the six statements above are anti-liberal and more interventionist and socialistic.

7. Over-importation of rice, building more warehouses. Is rice trading a state responsibility? Isn’t it private and market function, along with tilapia and bangus trading, medicines and oil trading? Government should discontinue the wrong policy of being involved in rice importation and trading, even at a reduced volume.

8. Housing subsidies for the armed government personnel. The rule of law postulates that if you have to do or subsidize something, it should apply to all other sectors. If government must give housing subsidy to its employees, it should cover all employees, not just the armed personnel like soldiers and policemen. Is the President afraid of military and police coup d’etat?

9. Job matching programs is no government function. Companies and entrepreneurs sound out the kind of jobs they will be needing, students and job-seekers adjust to it, unless they intend to become entrepreneurs and employers themselves after their schooling.

12. More CCT. I have argued it in the past. The government has provided lots of programs and subsidies for the poor already: education (elementary to tertiary), healthcare (barangay health centers to specialized government hospitals to drug price control policy), housing, credit, irrigation, agrarian reform, public works, etc. for the poor. They should be failures somehow that poverty remains high, so government invented cash transfer for the poor. Sensing that it will be another failure, government is now readying condoms and pills for the poor, or population control of the poor. Endless state subsidies that encourage abdication of personal and household responsibilities.

14. Agro-forestry programs. Crops and tree farming is mainly private enterprise function. Besides, if government will provide subsidies for upland farming, government should also provide subsidies for lowland farming and aquaculture farming. Arbitrary social engineering usually creates more problems than solutions.

15. More mass transport via monorail. Government should better limit its function at ensuring that contracts between and among private parties are respected and enforced. If a group of companies will put up an MRT or monorail from Quiapo to Fairview or Bulacan or Cavite and risk their own money, why should government restrict and over-regulate?

Liberalism limits the role of government to a few important functions that will enhance, not restrict, individual freedom. Promulgating the rule of law, of government own rules and contract between private individuals and entities. The rest, individuals as businessmen and employees, as producers and consumers, as buyers and sellers, they should be free to set their own production and pricing.

By mentioning or advocating the above six points, the President is veering away from liberalism and moving towards more interventionism, even socialism.

See also
SONA 2011 part 1, and
SONA 2010.

Monday, July 25, 2011

Migration and Freedom 10: Multiculturalism and the Norway massacre

Norway is a famous country for various reasons, like its very rich economy and expensive welfare system that does not seem to bleed its fiscal resources compared to other welfare states in Europe and North America. Norway is also the home of the Nobel Foundation which every year gives the famous Nobel awards in various disciplines, including the Nobel Peace award.

That is why the bombing in Oslo and the massacre of so many young Norwegians by their fellow national, Anders Behring Breivik, was a very shocking news. Plain barbaric and condemnable. Whatever political and economic ideology, religious belief and cultural advocacy that a person or group of persons hold, there is no justification, nothing, zero, to use violence.

From the various reports that I have read, Breivik was described as a “right wing extremist/fundamentalist”, or a “far right Christian” or “ultra-right anti-Muslim”. He is said to hate the growing presence of many migrants, Muslims especially, to Norway and other rich economies of Europe, and that he and his fellow extremists who do not like multiculturalism, were planning some attacks against the government which allows, if not encourage, multiculturalism and the high presence of foreign refugees, asylum seekers and migrants who may be after the expensive welfare system.

Thus, the target of attack was a government building in Oslo, then the young leaders where many are children of members and officials of the government Labor Party in Norway. An attack on a government structure and then the future leaders of Norway who will most likely continue the policies of the ruling administration that is deemed too friendly to the migrants.

The welfare system, especially those in Norway, Sweden, Finland and Denmark, is very expensive to maintain as it practically provides free or highly-subsidized services “from cradle to grave.”

And it is this expensiveness and too welcoming to migrants of the welfare system which attract both the welfare-seeking immigrants and the envy of the locals. A section of the locals are jealous or envious that the system that is supposed to benefit them only is being extended to, and being enjoyed by, many immigrants.

I am not a fan of a BIG state that provides big and expensive welfare to the people, mainly because it substitutes personal and household responsibility with big government responsibility big time, there is big coercion involved, especially in taxation and plentiful regulations. But I also do not support any form of violence, especially massacre and bombing, to criticize and attack that system. There are always peaceful and transparent way to convey their message and opposition to certain policies on migrants and their entitlement or non-entitlement to certain subsidies that are enjoyed by the locals.

Thus, the state should not use violence and coercion, explicit or implicit, too often to implement whatever new regulations and restrictions that it has invented.

See also:
Part 3, Remittances and Guest workers, March 25, 2008
Part 4, Filipino entrepreneur in Germany, June 04, 2009
Migration and Freedom 5: Conferences on Liberty and Migration, October 19, 2010
Migration and Freedom 6: Passport and People Mobility, November 30, 2010
Migration and Freedom 7: Restrictions to OFWs , April 13, 2011
Migration and Freedom 8: Denmark's immigration policy, May 17, 2011
Migration and Freedom 9: Immigration bureaucracy, July 19, 2011

Sunday, July 24, 2011

The President's SONA 2011

(This is my article yesterday in the with original title, SONA bath and the liberal challenge)

The President’s annual State Of the Nation Address (SONA) is always an occasion to enumerate what it has done the previous year/s, what are its goals in the coming year/s, and what it wants from Congress and other sectors to achieve its remaining goals.

Thus, the SONA is an important political event every year where so many people in government meet and talk about past achievements and short-term goals, then only one person talks and almost the entire nation listens, then almost everyone talks as they analyze what the President said and did not say.

In a sense, the SONA is a brief embodiment of central planning thinking in the country. It is the main “roadmap” of the government for the year and the remaining years of its term, and every major economic, social and political actors in the country are watching if their respective sectoral agenda are being upheld, ignored, or contradicted by the President in power.

The President will deliver his second SONA this Monday. I have little idea what he will say or not say in his Address. I only wish that he will speak as a liberal political leader. After all, he comes from the Liberal Party, not from a socialist or nationalist or populist or other political party and ideology.

Liberalism in theory, is opposed to socialism, anti-globalization nationalism, and the populism of forced collectivism. Because liberalism stands for individual freedom, lean government, free market, rule of law and civil society self-reliance. “Good governance” is not the distinctive ideology of liberalism; it is a populist goal by all political parties. Even dictators, despots and authoritarian leaders talk about “good governance.” It is the belief in individual liberty and freer markets that distinguish liberalism from socialism and many other political ideologies.

It is wrong, therefore, for so many sectors to demand that the President should promise them all sorts of “free” or highly subsidized services. When they demand free or highly-subsidized education, healthcare, housing, credit, unemployment insurance, pension, transportation, public works, agricultural machineries and so on, they are asking for socialism. And as mentioned above, the President did not run on a socialist platform during the campaign.

One of the good promises of the President in his 1st SONA last year when he was just three weeks in office, was this:

Ang walang-katapusang pabalik-balik sa proseso ng pagrehistro ng pangalan ng kumpanya, na kada dalaw ay umaabot ng apat hanggang walong oras, ibababa na natin sa labinlimang minuto. Ang dating listahan ng tatlumpu't anim na dokumento, ibababa natin sa anim. Ang dating walong pahinang application form, ibababa natin sa isang pahina.

(Translation: The endless procedures in registering a business name, which takes between four to eight hours a day, we will reduce it to 15 minutes. The old requirement of 36 documents, we will bring it down to six. The eight pages application form, we will make it one page.)

I considered it a real liberal policy and promise. Simply reduce the bureaucracies, reduce the number of signatures by government officials and bureaucrats, and that will enhance individual freedom, the freedom to become economically productive and create jobs for the jobless. And that policy alone will drastically reduce (but not totally eliminate) corruption in the country.

As expected, some groups and individuals considered that policy as “elitist” and “pro-big business.” I don’t think so. That policy is both pro-big business and pro-small business. When there are plenty of bakeshops and food shops, internet and book shops, parlor and barber shops, vulcanizing and machine shops and so on, more jobs will be created. When people have jobs, they tend to become more independent of government. In emergencies, they have their own savings and do not easily run to politicians and government welfare offices. They have the resources and self-respect, self-confidence, to take care of themselves, their families and friends.

After a year, did the President deliver that promise? Sadly, the answer is No. The volume of business bureaucracies did not seem to have decreased. It even increased in some local governments as those units have the power and capacity to create their own business regulations on top of national government business regulations.

I just hope that the next SONA will not sound like sauna bath cleansing or “pagmamalinis” why the previous year’s promise was not delivered. Rather, there is recognition of failure to deliver, and that a stronger resolve will be made to really implement that and other liberal promises.

But honestly, judging from the way many Filipino liberal politicians themselves speak and behave, and from the way they have allied with so many populists and socialists, liberalism as a philosophy has been largely compromised. This is not the way to lift the economy and many poor Filipinos from the endless disease of bureaucratism, corruption and underdevelopment.

See also The President's SONA 2010

Thursday, July 21, 2011

Responsible parenthood cannot be legislated, Part 4

Yesterday, there was a good, fast and dynamic debate in twitter on the Reproductive Health (RH) bill in Congress. I joined the debates, it was very engaging and fun at the same time.

Then I went to my facebook account and posted this in my status,

Just joined the debates on RH bill on twitter, enjoyed it :-) Too many planners and interventionists in society. They want more money from our pockets so they can plan the family of other people.

Then my fb wall was (happily) peppered with a number of comments and counter-comments from some friends. In particular, from Danny A, Doods dlR, Francis, and Ted J. Below are our exchanges.

WARNING: this is looonggg. Nice to read this if holding a cup of your favorite drink :-)

Doods: no to sex education in schools, yes to sex education from the parents. yes to choices, no to religious exclusivism. let tolerance and understanding reign, as long as no laws are being broken and human rights are protected.

Nonoy: RH bill says we pay more taxes so that DepEd can hire more teachers to teach sex education from Grade 5 to HS (7 years!)

Doods: we need more teachers to teach basic education. and more classrooms.

Danny: But if you think spending for sex education is expensive, try ignorance.
The effects of ignorance are pretty obvious: teen pregnancies, abortions and high mortality rates for pregnant women. Can't blame RH for that because there is no policy or program for it. These are the problems a comprehensive RH policy and program intend to help solve.

Nonoy: Parents, older family members, older friends, NGOs, can teach sex education for free. Here, I counted 12 sections of RH bill that say spend-spend-spend,

Danny: That's the result of "free education". Or should we call it free ignorance?

Nonoy: Only the state thru DepEd has monopoly of sex education? From other sources are called "free ignorance"? wow.

Danny: And why oh why should basic education be so divorced from human biological programming?

Nonoy: Pub educ has been hijacked by so many interest groups. Gender equality, environmentalism and saving the planet, sex education, etc. Could mean little time for science and math, good english and grammar.

Doods: I myself don't subscribe to the "free condoms is the solution" doctrine. i think eliminating the macho man mystique, gaining respect for your partner and the other sex in general, respecting choice, and empowering women would go much further and actually fix a lot of the social ills especially among the poor.

Danny: Explain the problems cited and show how "free education" is positively impacting on it. Better yet, check out the communities where these problems are happening. It is so easy to spin theories and dreams of freedom from the ivory tower, but what is to be learnt from there?

Doods: Danny: IMO the effects you cite can also be directly attributed to lack of choices and opportunities for women in the countryside, lack of health services at the barangay level, and lack of sex education within the family unit. The RH bill doesn't really directly solve any of those problems.

Danny: A thorough check of the public school system shows that there is so much time for learning English, Math and Science but it isn't happening. How many students per teacher and classroom? How much are teachers paid and why? No one is claiming full health socialism, only education on and access to a full range of options so families can plot their future. Will you let the parish priest dictate on this?

Francis: I hate it when people proclaim 'tolerance.' Do you tolerate a beautiful day? A child's smile? Your basketball team crushing the opposition? Of course not.

So what do people tolerate? Broccoli. Someone farting in an elevator. Your boss' stupid plan. If whatever someone tries to sell you can only be sold through tolerance... screw it. It's probably ugly, evil, without merit, disgusting, or smells like old socks.

Danny: There is no hijacking of public education, only loud expressions of concern and continuing deterioration. Otherwise, there would be no need for a reproductive health law. Without a policy and programs in place, reproductive health will not happen. The important first step is to pass that law. The next step is to implement it. Happily, most Filipinos agree.

I believe the time for debate has passed. Let all arguments pro and con be fully aired, but let a vote decide the matter, preferably a binding referendum.

Francis: I don't think there is a 'need' for a reproductive health law. I do believe the politicos have found a 'need' for the P 3billion payload. With that kind of money involved, they could find a need in providing bubblegum to coma patients...

Nonoy: As I said earlier, I counted at least 12 sections of RH bill that say, spend-spend-spend. Do you have the figures how much they will cost, initial year and continuing spending each year? P300 B/year budget deficit even w/o RH bill is not enough yet, we shd make it P320 B? more? Please provide the numbers. People just approve of something without bothering how much it will cost them.

Danny: No one was asking how much it would cost when we voted in a referendum for the 1987 Constitution. No one was asking how much it would cost when provisions for free elementary and high school education were included in it. How much are teen pregnancies, abortions and deaths of pregnant women costing us? How many poor Filipinos are asking about the cost of information on choices that they can make so they can have just the number of children that they can support?

It is expensive to be healthy. But how much more expensive is it to be sick?

Francis: P300 billion? Not P3billion?! Crap. Worse than I thought. How much is the deficit now after Arroyo's pump-priming plans in the last three years of her Presidency? I know we're broke, so how on earth are we gonna pay for this?! This probably explains why the BIR has been so agressive these past three years. I thought this RATE thing was over the top, but it's damn deliberate.

Nonoy: So anyone can propose new spending, like free bicycles or free motorcycles for the poor, w/o bothering how much they will cost, how much they will add to the P4.7 trillion public debt, where to get the new spending? We've had educ & healthcare for the poor, housing & MRT subsidy for the poor, AR, irrig & credit for the poor, now cash transfer for the poor, soon condoms & pills for the poor. What's next? No one shd bother how much they will cost?

Francis: Question. These meds are essential, so how come they ain't tax-free? We don't manufacture them, so why is there an importation duty on them? I buy dopamine from overseas and it's only P3.00 a tablet compared to P120 a tablet local. You want people healthy, get these damn politicians out of the equation. Then you'll see poverty levels go down.

Doods: Danny: i myself am in favor of an RH Bill, with revisions. It's high time this country paid attention to the health, social, and economic problems caused by our population explosion. i don't think the RH Bill in its current form is going about it correctly. Sex education in schools takes away time and resources that can be used for teaching something else, and I think parents have the moral ascendancy to teach their children about sex and the family unit. Let the RH Bill teach parents how to talk to and educate their children about sex, and let this be done at the barangay level instead of in schools.

Danny: If you really want concrete answers to questions about cost, visit communities were the local government has put in place a reproductive health law and programs, like Aurora province, I'm sure you can find the information, if you really want it. You can compare the situation there with the situation of communities that actually ban or do not bother to put in place reproductive health policies and programs.

Then again, if you've already decided against it, what's the point? The ivory tower is a comfortable place to stay. Just don't expect people to hang around and accept what can be found there.

Nonoy: The burden of providing the numbers shd be on those who propose it. Convince us that it won't be costly, that the benefits are larger than the costs. Otehrwise, don't propose it.

Danny: I don't have to convince anyone. You convince yourselves. the burden is now on those who oppose it. Politics, in the end, is a numbers game.

Nonoy: That's why I dont support that RH bill because it's a lousy proposal. Proponents cannot even provide the numbers, we just have to accept it daw, be an idiot supporter and not ask questions.

Danny: by the way, the latest version of the bill allows parents to choose not to have their children undergo sex education in school. What version are you reading? This bill is still undergoing revisions and the proponents are listening. but to insist that things should stay the way they are, with no law in place, is unacceptable.

Doods: Danny: be that as it may, it only allows parents to exclude their children from such. it doesn't empower the parents to do the proper guidance themselves.

Danny: Saka na ito, time for a gym workout. As I said, health is expensive, but I'm spending, for myself and my family. Are you?

Nonoy: I spend money for my family. that's why I dont want the state to confiscate more money from me so the politicians and bureaucrats can just propose and implement new spending, even for programs that I don't even support. Govt business is coercion, right?

Doods: i just got a health insurance policy from Manulife. :) the only sure things in life are death and taxes. must do all we can to uplift our quality of life, must we not? :)

Nonoy: Yes, we work hard for ourselves, our family, other people close to us. And govt says it should confiscate more money from us, to spend on programs that we may not even support.

Ted: Spending on reproductive health is investing in human capital. The ratios that the RH bill are aiming to achieve are necessary in the context of a poverty rate of 3 in 10. Proposed RH measures will have to be targeted accurately at these poor households. Details will have to be fleshed out through the GAA but indicative figures would need to be discussed by Congress. Yes, responsible parenthood cannot be legislated but women from poor households need help.

Nonoy: Ted, all those public spending on educ (elem to tertiary), healthcare (brgy centers to DOH), housing, social work, environment, agri, etc. are investments in human capital. Why new programs like cash transfer for the poor and condoms for the poor? Because past programs were failures or mere opportunities for robbery. If this is the case, the solution is to improve existing programs, or abolish them first before we create new programs, like condoms and ligation for the poor.

Francis: Yeah. It sounds dumb any way you sell it. I'm being tapped to help some other guy's family. At least I think it's some other guy's family and not some politico's wife's Hongkong junket... Still, while I'm doing who is going to take care of my family? Some other guy the government is tapping? That's just so wrong.

"Spending on reproductive health is investing in human capital." I dunno. Sounds more like you're reducing human capital right there.45 minutes ago • Like

Ted: Helping others makes society possible. Given the problems of governance in the Philippines, a lot of work needs to be done in terms of the effective and efficiency of this help. Looking for better mousetraps presupposes the need for mousetraps.

Nonoy: Helping others via voluntary charity is highly possible. Govt thinks it is impossible, thus govt shd coerce people to contribute and govt itself will do it. And that's how large-scale coercion and corruption happens. Govt can force its way, whether we like it or not.

Francis: Helping others, sure. But don't we get a say in what we can give and what our capabilities and resources are? I can't exactly give what I don't have or have prior allocation. Things should stand on their own intrinsic merits. If something has to be mandatory or needs someone behind you with a stick to get it done... maybe we should be asking what is it really worth.

Ted: Government (the state), by definition, is coercive. And, yes, you can fight City Hall.

Nonoy: So by bending on another coercion by the state, after we've bent hard on its many other programs that were mostly failures, we end up big losers, the politicians, bureaucrats and their rent-seeking allies in media and NGOs are big winners.

Francis: Malacañan, yes. City Hall, no. I can go to Edsa and kick out the President. But when the Mayor declares your street is now One-way... SHIT!!!!

Nonoy: A friend commented that the RH bill is not that expensive, mura lang naman daw. If it's cheap, then PNoy and other RH supporters can chip in, or ask Henry Sy & Gokongwei to donate big time, ask the WB-ADB-WHO to give grants, no more debates and social division on that bill while goal is attained. Mura lang naman pala eh.

Danny: The idea that an RH law means more taxes is a lot of bullshit. If that;s where this is coming from, then the burden of proof is on those spreading this lie. Facebook discussions obviously cannot provide all the information you are demanding for, but surely you should know where to find that information.

The driving motive behind an RH law is informed choice, the right of couples to choose from various options so they can plan their families. Information on this is not readily available yet and in many cases is denied to those who need it. Now where is the coercion there?

I am glad that most people aren't asking questions about budget items per RH provision because no such budget exists. Anyone with common sense who is immersed day in and day out in the lives of poor communities know there is a crying need for an RH policy and programs. They know how much more expensive it has been because there is no RH law.

Nonoy: RH bill is expensive, that is why it has to be done by legislation and all the state's revenue collection agencies will be compelled to look for more revenues to finance it. If it's cheap, then private donations + grants from the foreign aid establishments would be enough to finance it.

In our ordinary private lives, if we want our kids to go to a language school, or ballet or music school, or a swimming or basketball clinic, we ask, "how much does it cost?" But in govt programs like RH bill, we are supposed NOT to ask questions how much it will cost, we should just sheepishly and idiotly support it, wow.

We ord folks are busy working to sustain our households, communities, etc. We also have to work hard bec govt already gets lots of taxes and fees to finance its old programs like public educ, healthcare, housing, social work, agri, env., public works, MRT subsidy, irrig, AR, etc. Then pro-RH bill groups say, "Hey we got a really bright idea to solve poverty, you all shd support it too." But when they are asked, "how much will it cost? the existing programs are already costing us some P300 B a year on average in budget deficit alone." The pro-RH camp says, "The burden of finding the numbers how much it will cost is on you, just support it, blindly as much as possible." Really cool.

Stephen: Nonoy, I'm a bit chagrined to ask the RH bill proposal posted someplace so we can read it? I'd like to know more, but not sure where to look.

Nonoy: One of the mysteries of Philippine Congress and other govt agencies that support the RH bill, it is hard to find the most recent copy. Check, search "Reproductive Health bill" and their online query system will ask you more questions instead of just pointing to you the bill. I read a copy from via google, problem is that I dont know if it's the most recent or not.

My next query was the DOH website, since DOH is one of the major implementing agencies once this becomes a law. They have the comm report no. 664, but it's dated Feb 17, 2011, so obviously it's not the most recent bill with many changes,​s/rh_bill_2011.pdf, DOH website

Danny: Not much mystery here. For updates on a controversial bill still undergoing heated deliberations, information online is hard to come by. However, the bill's proponents, or their staff, or the staff of House committees to which the bill is assigned, or enterprising reporters at the House who are actively covering the issue, would have the information

Nice quote: The pessimist sees difficulty in opportunity; the optimist sees opportunity in difficulty

Nonoy: ‎"entertaining reporters at the House..." Which means we ordinary mortals cannot see that document online? No transparency how much that bill will cost, no transparency of what's newly added or removed on that bill. That's government.

The optimists say that even if you keep hiding info from those who will be affected, state coercion will prevail. Cool.

Fralin: P300 B? A big amount... but i'd be happy to instead spend that to buy off the sanctimonious brains and the ridiculous contentions of the 4x4-hungry, child-molesting hypocrites who are stopping the Divorce Law from beng passed.:))

Nonoy: Fralin, the P300 B per year is the budget deficit, or difference between lower revenues and higher spending. Because so many sectors and politicians are sooo bright in coming with new spending each year, revenues always fall behind, so the deficit don't go away, and accumulated public debt keep rising, now P4.7+ trillion. Interest payment alone this year, excluding principal amortization, is P357 B.

And now we are told that we shd swallow, no question, the expensive RH bill, they won't even tell how much this will cost, how much this will add to the deficit of P300 B per year on average. Basta daw gastos lang ng gastos, don't ask how much the cost and where to tax next to finance those additional spending. Really bright ideas.

Fralin: Well then, i hope the govt. does not end up purchasing condoms at P5,000/pc. ...brings back memories of Joey Marquez's walis-tingting controversy.:)) Always a need for a streamlined program and an extensive cost-benefit analysis (after all, we have already allowed the Arroyos to steal billions, what's to spend some more?), but i always appreciate it when democracy is at work: when people are given the right to CHOOSE; when govenment decides on stern realities, and not on dogma or sentimentalities Back to divorce... lolz

Nonoy: There is no assurance, zero, that the political and bureaucratic class will not resort to over-pricing of everything, from condoms to pills to injectibles to hospital lab equipment. That is why the total cost of this bill remains a mystery, a deliberate mystery.

Related article is Responsible parenthood cannot be legislated, Part 3, May 22, 2011

Wednesday, July 20, 2011

Healthcare Monopoly 3: China

There was a good article in BBC last weekend,

Middle class China turns to private health insurance
BBC, July 18, 2011

Middle class China turns to private health insurance

Over half of all healthcare in China is paid for by the consumers themselves
Healthcare - and how you pay for it - is one of life's big worries. In China few people have private health insurance but the market is growing.
Polly Deng is 30 and lives with her husband and her mother, Lu Xiao Dang, in Shanghai. Polly's mother has just returned home after a stay in hospital.
"She was in hospital for 12 days having an operation on her foot. It was a minor operation, so we hope she's going to be fully recovered within three months," she says.
The cost of Lu Xiao Dang' procedure was 5,000RMB ($773). The Chinese government's health insurance scheme paid for 60% of the cost of the operation.
She paid cash for the other 40% and will claim this against her additional private health insurance - although she does not know if she will be compensated for the full amount.
Polly picked up the health insurance habit from her mother. She belongs to the government's scheme, her company's scheme, and she has her own private cover.
Private health insurance is relatively new to China, but it's growing fast.
"Between the years 2000 and 2009 the average annual growth rate of the private health insurance market in China was around 27%. But what you have to remember is this is growth from a small base," says Brian Mi, General Manager in China for IMS Health, a medical market research company.
"It is only a tiny proportion of the population who have any kind of private cover, around 3.5% of the market spend on healthcare is paid for by private health insurance. Over 50% of all healthcare in China is paid for by the consumers themselves."
Private policy potential
Although the number of people with private healthcare policies may be small now, insurance companies see China as a country with huge potential. But there are obstacles to the development of private health products.
Dr Feng LiuDr Feng Liu: "Too much emphasis on selling the policies and not enough on processing the claims"
One of them is that in the Chinese health system, doctors get a small proportion of their salaries from the state, and have to raise the rest through their patients.
This means there is a high rate of drug over-prescription and diagnostic tests - the more you have, the more you pay. Some insurance companies are reluctant to get involved in a market where cost can be open-ended.
But Dr Feng Liu, the Chairman of the Financial Planning Standards Board of China, says insurance companies offering private health plans sometimes do not operate in the interests of their clients.
"People aren't used to buying health insurance, and sometimes companies encourage people to buy insurance they don't actually need. I think there is too much emphasis on selling the policies and not enough on processing the claims, which always seem to be delayed," he says.
'Healthy China'

Start Quote

The Chinese government is working on a whole raft of state health reforms. Its Healthy China programme was announced in 2008 with the aim of providing state health insurance for all of its 1.4 billion population by 2020.
Before China's economic reforms began in 1978, there used to be a system of near-universal government insurance cover.
With the move to a market economy, people paid much more for healthcare, one of the reasons why China became a great nation of savers. It is estimated people squirrel away more than 40% of their disposable earnings, some of which will be savings in case of a health emergency.
Although 90% of the population now have state health insurance, it only offers partial cover. Generally outpatient costs are not covered and only 60% of inpatient hospital bills are compensated.
To pay the excess, people use their savings or borrow from family. But there are also cases where families are plunged into poverty and desperation because they cannot afford health bills.
People may buy separate private health insurance to cover the excess cost of healthcare not covered by the state.
Critical illness
Polly Deng has bought a critical illness policy from private insurers, which covers killer diseases like cancer.
"Depending on the policy, critical illness cover costs around $500 a year. It's probably 20% of what people pay in Western countries, but healthcare is less costly in China," says Phuong Chung, Senior Vice-President at Manulife-Sinochem, an insurance company with nearly 15 years experience in the Chinese market.
"In the event of illness, it will pay out around twice your annual salary."
He says this kind of policy - together with life insurance - has become popular with middle class people.
"This reflects the fact that in China people are very good at saving for emergencies. Middle class people often have savings in their homes, bank deposits and equity investments. So the portion of their income they commit to insurance doesn't have to be so high."
With her level of health insurance cover, Polly Deng thinks she has made a good investment.
"When I was at the hospital visiting my mother, there were women there who had paid between 30,000 and 50,000RMB ($4,640 - 7,734) to get treatment for broken legs. It can be very expensive!"
"My friends don't really have a clue about insurance, and I don't want to push them into it. But one day they will understand that it's a good idea."
The opinions expressed are those of the contributors and not held by the BBC. The material is for general information only and does not constitute investment, tax, legal or any other form of advice. You should not rely on this information to make any investment decisions. Always obtain independent, professional advice for your own particular situation.

A good friend of mine from London, author of several great articles on health policy, and editor of the book, Fighting the Diseases of Poverty, Philip Stevens, noted that "From where I'm sitting in the UK (where we've had 'universal' healthcare since 1946) I can't say I blame the Chinese middle class who buy private health insurance. As our populations age, such promises are going to become increasingly unaffordable as government systems struggle to cope with these generous committments."

The rise of private health insurance is happening in many Asian economies, I think. In the Philippines, almost all medium to big companies, and man national government agencies and big local governments, have private health insurance for their employees. The government-run national health insurance system, PhilHealth, has very limited services.

1. No off-patient service and reimbursement; one must be confined for at least 24 hours in a hospital before one can claim for reimbursement. So if one has a headache or fever and wants to see a physician, possibly undergo some diagnostic tests, get the doctor's advice and prescription then go home, PhilHealth is useless.

2. No annual medical check up. Annual check up is a useful, preventive healthcare. People undergo several tests while they are not sick, to determine the likely disease/s that will hit them in the futur, and so they can prepare or avoid lifestyles that can exaggerate the problem. And PhilHealth does not provide for this service.

3. The procedure for claims and reimbursement is time-consuming and bureaucratic. See for instance my earlier note, PhilHealth Watch 3: Bureaucracy and long lines

4. Being a government-operated system, it is prone to pressure by politicians. Like giving away free PhilHealth cards to certain political supporters of local and national politicians during election period.

In my case, I have been a member of the government-run health insurance system (first Medicare, it lost huge money, replaced by PhilHealth in 1995), been contributing to it since I started working around 1985, and NEVER ever benefited from it, because I was never hospitalized since around 1982. Thus, my (several) private health insurance cards which my past and current employers give me, is more useful.

The growing private health insurance system in China is understandable, and a lesson to ponder for us who live in non-socialist economies. Even a socialist government of China cannot provide full health socialism to its people. I think the same condition can be found in socialist Vietnam too.

See also:
Healthcare Monopoly 1: France and Canada, September 06, 2010
Healhcare Monopoly 2: United Kingdom, February 17, 2011

Healthcare competition 1: Switzerland, August 28, 2010
Healthcare competition 2: Singapore, August 29, 2010
Healthcare competition 3: Hong Kong, September 02, 2010
Healthcare Competition 5: Thailand, September 24, 2010
Healthcare Competition 6: United States, May 05, 2011

Healthcare Competition 7: Moral Hazards in Healthcare Subsidies, May 24, 2011

Tuesday, July 19, 2011

Corruption in the military, Part 3

This news report whirled around the blogosphere the past 2 or 3 days. Marine colonel detained over calls to 'replace government'

He concluded his videotaped statement by quoting Jose Rizal: “If we have bad leaders today and in the past, it is not the fault of the many who know less but the fault of the few who know more but do nothing or who do not do enough.”

“What we soldiers feel is no diffent from what our people see and feel... We have a responsibility that we don't forget, that is to defend the Filipino people” he said.

Mariano added ominously: “At kung ang kasalukuyang pamahalaan ay walang intensyon o kaya walang naisasagawa upang isalba ang buhay ng nakakarami [And if the present government has no intention or could not do anything to save the lives of the majority] – it is the duty, it is the right of every Filipino including soldiers to replace the government, I repeat, replace the government.”

[Let us fight for our right to live and for the good future of our youth. Our aim is to live based on truth, justice, peace, and progress.]

"Let us once and for all build a nation based on truth for without it, there can be no justice. And without justice, we shall have no peace. And without peace, there will be no development," he added.

My immediate reaction when I read that news report was, here we are again, another brand of military corruption, corruption of their own mind and the public mind, that anyone with arms and organized enough can change a civilian government anytime, anyhow they want to. The disrespect for the rule of law -- like the Constitutional law on how we should change government, by the ballot, not by the bullets and bombs, not by armed rebels or mercenaries or bleeding heart soldiers.

And this is another instance or reason why the AFP-DND should shrink. There are too many aspiring politicians in uniform there.

Then I heard or read that the noise by that Colonel "is only the beginning." Beginning of more political destabilization, of more military adventurism at seizing state power?

My unsolicited advice to the new round of military adventurists is this: DO IT. Show how interventionist you are to supposedly change and replace an already interventionist civilian government that you despise. Rule of men, not rule of law. That is the main preoccupation in government, whether in the civilian bureaucracy, or the police and military establishments. Pare-pareho na lang sila.

Rule of law, not rule of men. That is what all of them should understand and respect. The internal mechanisms to control corruption from each agency or department for instance, should be respected. Then restiveness, valid or invalid, can be minimized.

On another note, retired military officers also should NOT serve in any government agency after retiring. They shd work in the private sector. Having been living off subsidized by taxpayers from their Philippine Military Academy (PMA) education to military to post-military career, they should try being net taxpayer, not net tax receiver. Perhaps a law can be passed towards this direction.

A friend commented that in Singapore, military officers would leave the service and take positions in the civilian bureaucracy. Then Switzerland is another example, where virtually all civilian high ranking persons also have had high ranking posts in their military.

Here, many retired AFP generals and colonels do not move to the private sector. They move to become officers in other government agencies, like the BIR and BOC, DFA, LTO, DOTC, etc. Those guys who got lots of money from taxpayers (P500,000 per year per student at the PMA alone or P2M/student for 4 years), then to the AFP with its billions of pesos of annual budget, then to other government positions. They don't understand the plight of ordinary traxpayers and businessmen. They think that for almost ALL problems, government intervention is the solution.

See also:
Corruption in the military, part 2, January 31, 2011, and
Corruption, robbery investigation and suicide, part 2, February 08, 2011.