Friday, September 30, 2011

Lifestyle Diseases 5: NCDs Global Picture

Two weeks ago, there was a big two-days UN global summit on how governments can control non-communicable diseases (NCDs). See Lifestyle Diseases 4: The UN on NCDs, September 25, 2011.

Because so many governments today, both rich and poor economies alike, have become highly welfarist or at least pretending to be one, governments think that personal irresponsibility of their citizens in abusing their own bodies should be highly subsidized too. That is why they think that more lifestyle-related diseases are a "drain on public resources."

Here is the chart from The Economist Daily Chart September 20th 2011. Global death from communic-able or infectious diseases + injuries and accidents, are no longer that worrying. It's the non-infectious or non-communicable ones. Some 63 percent of global deaths in 2008 were due to NCDs.

If governments and the UN-WHO will pour more tax money on preventing and treating NCDs, where is the distinction between personal responsibility and government responsibility in healthcare? People can over-drink, over-smoke, over-eat, over-sit, etc. and when they get sick, it is government responsibility to provide "quality healthcare" for them for free or at a highly-subsidized price? If the answer is Yes, then I think that this is a perfect formula for future fiscal bankruptcy and more government debt-initiated economic crisis.

I think a better formula is something like this: For infectious diseases, mainly government responsibility via vaccination, especially of babies and children. For NCDs, mainly personal and parental/guardian responsibility. Preventive healthcare via healthy lifestyle and eating will greatly help. People should as much as possible, get private health insurance, have ample savings for out of pocket (OOP) spending, with assistance from family and friends, and from private charity, voluntary and humanitarian organizations.

Half year ago, I wrote this:

Diabetes, lifestyle and government

March 02, 2011

Cardiovascular diseases, hypertension, diabetes, cancer, these are among the major killer diseases not only in rich countries but also in developing countries like the Philippines. Gone are the days where the dreaded killer diseases were malaria, polio and ordinary flu.

There is a news report in yahoo today that I read, Diabetes out of control in many countries: study. It says,

By Julie Steenhuysen – Tue Mar 1, 5:18 pm ET

CHICAGO (Reuters) – People with diabetes in the United States and several other countries do not get effective treatment to control their disease, U.S. researchers said on Tuesday, and health insurance, not personal wealth, plays a big role in determining which diabetics get good care.

The findings suggest millions of people with diabetes are undiagnosed or poorly treated, putting them at risk of an early death from heart disease or significant complications of diabetes, such as blindness, chronic kidney disease and foot problems that can require amputations...

Diabetes is reaching epidemic levels. An estimated 280 million people, or 6.4 percent of the world's population, are suffering from it, according to the researchers...

In the United States, nearly 90 percent of adult diabetics - or more than 16 million adults aged 35 and older - fail to meet widely accepted targets for healthy levels of blood sugar, blood pressure and cholesterol.

In Thailand, up to 62 percent or more than 663,000 men surveyed are either undiagnosed or untreated for diabetes....

In October, the U.S. Centers for Disease Control and Prevention projected that up to a third of U.S. adults could have diabetes by 2050 if Americans continue to gain weight and avoid exercise.

The short discussion and picture below are from, Type 2 Diabetes Pictures Slideshow.

Diabetes is a chronic condition that thwarts the body's ability to change food into energy. This allows sugar levels to build up in the blood, which can increase the risk of heart disease, loss of vision, and other serious complications.

Factors You Can Control
1. Avoid being overweight, defined as a body mass index (BMI) over 25.
2. Avoid sedentary lifestyle.
3. Avoid abnormal cholesterol and blood fats, such as HDL "good" cholesterol lower than 35 mg/dL or a triglyceride level over 250 mg/dL.
4. Avoid high blood pressure greater than 140 /90 in adults.
5. Avoid smoking.

See, in helping prevent diabetes, there is nothing above that says "Avoid cutting budget for government healthcare." Much of things that are doable have nothing to do with government and public healthcare. Most doable things lie on healthy lifestyle, on personal responsibility aspect of healthcare.

See also:
Part 1: Obesity, February 04, 2011, and
Part 3: Causes of Mortality in the Philippines, August 10, 2011.

Abolish Income Tax 8. From low flat tax to zero income tax

Chatting with some friends recently over priority measures we can do if we have the political power to do so, among the few policies we chose was low and flat income tax, leading to the ultimate abolition of income tax as the economy slowly adjusts to a small and limited -- but not zero -- government.

Digging further in my other notes outside of this blog, I found four papers I wrote in 2006-2007. Posting them below.

(1) Flat tax is beautiful

May 9, 2006

Multiple rates and high personal income tax system in general, is distortionary and anti-entrepreneurship; it is confiscatory and it encourages cheating; and lots of cheating do happen as discussed in a paper that I and a friend, Rodolfo "Ozone" Azanza, co-authored entitled, "Flat is beautiful: Proving the feasibility of a 10% flat personal income tax in the Philippines".

The current personal income tax system in the Philippines is composed of 7 tiers, from 5% to 32%. The top rate of 32% applies to taxable income (net of exemptions) of more than P500,000/year (or US$8,930/year at P56/$). For the first P500,000 annual income, government will get 25%; incomes above this level, government will get 32%. While p500,000 per year may be big in 1997 when the tax reform law was made, these days it is not. The series of oil price hikes, the high inflation and interest rates, the increasing government fees and consumption taxes like the VAT hike, not to mention the high cost of corruptions in government, have chopped the real value of the people’s income.

So-called "progressive taxation" (the higher your income, the higher the percentage that will be taken by the state) is anti-entrepreneurial and hence, regressive. It is regressive because it penalizes hard work and performance.

Out of 32.3 million employed Filipinos as of April 2005, we just considered a 20 million gainfully employed Filipinos as potential tax base. We did not consider anymore the 8.4 million underemployed, and a few million working overseas and those employed in multilateral and foreign aid institutions, and foreign embassies in the country, them who are not subjected to automatic withholding taxes. From our computation, only about 1.8 million individuals are implied to have paid personal taxes to generate the Bureau of Internal Revenue’s (BIR) target of P107 billion ($1.7 billion at P56/$) in 2005. Now, if we assume 3 million individuals who paid personal income tax, potential collections this year should have been P178 billion, not P107, implying tax evasion of around P71 billion. The higher the tax base to be assumed (4 million, 5 million, and so on), the bigger the tax evasion to be seen.

We therefore propose a 10% flat personal income tax with no exemptions, for annual incomes above P40,000. The beauty and advantages of a flat tax system are as follows:
(1) It is easier to administer and compute since there are no exemptions allowed.
(2) It promotes fairness between the taxed individuals and those who are exempted, like the highly-paid employees and consultants of foreign aid institutions.
(3) In absolute amount, the rich still pays higher than the poor and thus, it is not regressive.
(4) It respects hard work and encourages entrepreneurship as fixed-income earners can save the de-facto “pay rise” from the tax cut.
(5) It will help expand collections from consumption-based taxes like VAT as savings from tax cuts is spent on more household needs.
(6) It will help reduce brain drain as take-home pay of employees planning to work abroad will be larger, while some foreigners who dislike high income taxes in their home countries will be attracted to come and work in the Philippines.

Finally; the proposal will reduce tax evasion. In general, the decision whether to pay the “right” taxes or evade paying them can be modeled as:

Tendency to evade taxes = high tax rates + perception of corruption and wastes in government – cost of bribing tax authorities – probability of being caught – severity of penalties if caught.

From the computations we derived, the tax base need to increase from around 3 million to only 4.3 million individuals paying personal income tax to generate the “revenue-neutral” BIR-projected collections of P107 billion in 2005, and around 5 million individuals to generate the projected collections of P124 billion in 2006. Again, this higher tax base is not impossible to assume since we are looking at 20 million potential individual tax filers, out of the 32+ million employed Filipinos. In short, a low and flat tax rate with high tax base will generate revenue-neutral, if not larger revenue collection, result.

To summarize, a flat 10% personal income tax system in the Philippines is feasible for the following reasons First, it will be attractive to the taxpayers given its respect for hard work and performance, is simpler to compute and comply with, resulting in a much larger tax base. Second, our computations shows a revenue-neutral, even higher revenue results, compared with actual and projected collections under the current multiple, high tax rates system. Third, potential entrepreneurial and economic growth will be large as millions of fixed-income earners burdened by high withholding taxes will have bigger take-home income, and bigger savings for their future investment projects. Finally, income tax cut coupled with cut in government bureaucracy results in a society that emphasizes greater personal freedom and responsibility, and lesser state taxation and welfarism.

Wednesday, September 28, 2011

Drug price control 18: Wikileaks and former US Amb. Kenney on price control

(This is my article yesterday in the, with original title, Wikileaks on Drug Price Control)

Wikileaks is becoming more popular as it becomes more controversial. Leaking to the public what are supposedly secret and classified documents of the US government and its embassies abroad is yummy to the public.

Some of the wikileaks documents that are freely available on the web now are the supposed cable reports by former US Ambassador to the Philippines, Kristie Kenney, on the drug price control policy that has adversely affected many multinational companies, mostly American and Europeans.

One report is this, Philippines Imposes Pharma-ceutical Drug Price Controls created September 11, 2009. I am posting two of the seven paragraphs of the report here and supply some data and my own observations.

Local Drug Firms Also Not in Favor

5. Contacts at domestic generics pharmaceutical firms and drug distributors profess that the majority of local drug companies are against the new pricing regime. These controls have significantly reduced their cost advantage over brand-name medicines, and some claim they will lose market share as former generics consumers choose to pay the smaller additional cost to purchase cheaper brand name pharmaceuticals.

As a member of the DOH Advisory Council on Price Regulation (now called the DOH Advisory Council on Healthcare), I can confirm that this is true. I was there in several meetings from June to 2009 onwards of the Council, and the President of the Philippine Chamber of Pharmaceutical Industry (PCPI) and a few other federation leaders were very explicit in opposing the price control policy. Why?

Consider drugs A, B and C, same molecule and generic category, from companies 1 (multinational), 2 and 3 (locals) respectively. Drug A is branded innovator drug while B and C are branded generic drugs by the locals. Before price control, A’s price is P30 per tablet, B’s is P18 and C’s is P13. At this price range, they all serve specific markets and buyers, they all make sufficient profit, and they can comfortably co-exist and compete with each other.

After price control, A’s price becomes P15. B’s price is now the “expensive drug” and C’s price is not that far from A. To keep up with competition and retain their buyers, prices of B and C must significantly go down too, say to P10 and P6 respectively. Everyone is now adversely affected, their profitability is significantly reduced, if not eroded. What if C’s price cannot be brought down to P6-P7 without incurring losses? Then it will be forced to quit the market, temporarily or permanently (and company 3 must lay off some personnel if they cannot introduce new other products) while the number of drugs available to the consumers has declined.

Below is data from Watsons’ Drugstore. I am very thankful to their Director for Health Business Unit for giving me the go signal to share this to the public.

With a few exceptions, growth rate in both value and volume of the price-controlled innovator drugs by the multinational pharma has significantly increased to 22-23 percent this year over the previous year. And sales of those drugs 2010 were higher than their 2009. Which means one important thing: people, at least for the Watsons’ customers, have shifted to the innovator drugs and most likely, away from the generic drugs in the same molecular and generic category.

The Generics Act of 1988 was enacted precisely to promote the local generics. The price control policy of 2009 was enacted precisely – though implicitly – to promote the innovator drugs. These policies are clearly contradictory and both policies are implemented at the same time by the DOH.

Back to the wikileaks report. There are some points in the final paragraph, the supposed commentary of the US Ambassador, that need clarification.


7. Although the government conducted public consultations on the implementation of this law, industry officials have a point about the lack of thorough scientific or economic studies underlying the government's actions to halve the price of these medicines. On the other hand, there is intense pressure for the current government to reduce medicine prices as the election season is nearing (reftel A), and calls for affordable medicines increase from civil society groups (reftel B). Prescription medication prices in the Philippines are the second highest in Asia (next to Japan), in a country where about a third of the population subsists below the official poverty line. In this instance, some multinational companies failed to recognize that cheaper medicine for the masses is an emotional and political issue. When price controls were placed on several of their most profitable products, it affected some companies' whole business model. Investment, and therefore, job creation by research pharmaceutical companies in the Philippines, will continue to be inhibited by such government market interventions. Furthermore, Philippine civil society's and government's success in lowering prices might encourage further interventions.


It is true that the DOH Advisory Council has met several times prior to the actual price control policy in August 16, 2009, especially on June 5, 2009, on whether a price control policy should proceed or not. There was also no list of drugs that were “candidates” for price control. Weeks before that, there was sustained, intensive and heavy pressure by then former Senator, former Presidential aspirant, Mar Roxas, to proceed with drug price control.

But to the big surprise of the members of the Council, by June 8, 2009, former DOH Secretary Francisco Duque and former Sen. Roxas already have the list of drugs to be put under mandatory 50 percent discount and presented to media. The criteria for selecting those 22 molecules were also illegal – they cannot be found in the Cheaper Medicines Law (RA 9502) nor in its implementing rules and regulations (IRR). The new four criteria were jointly designed by the IMS and DOH. There was also no scientific or economic basis for imposing a flat 50 percent discount – not 25 or 38 or 70 percent on specific drugs.

The supposed commentary above mentioned the high prices of drugs in the country. To a certain extent, true. But it failed to mention that government taxes on medicines – 5% import tax + 12% VAT + local government taxes – also contribute to high medicine prices here.

It is good that wikileaks has released these classified US government documents publicly. I am not sure though if these are indeed 100 percent correct, or some sentences and paragraphs were added or omitted. Nonetheless, my comments and data above stand, whether the stated document is correct or altered.

See also Part 17: Wikileaks on the planned Pfizer drugs withrawal, September 22, 2011.

Typhoon Nesat ("Pedring") in pictures

The 16th typhoon of the year in the country, "Pedring" (international name "Nesat") brought not only heavy rains but also really strong winds up to 120 kph. Click on these photos to see larger images.

Here is the satellite picture of the typhoon, bulls eye on Central and Northern Luzon provinces, just north of Metro Manila.

As of this writing, at least 18 people have died, many dozens still missing -- mostly due to drowning or penned by falling trees or collapsed walls while inside their houses. Fatalities usually rise after the storm has passed as indirect effects -- diseases from dirty water, infected wounds and animal bites -- set in.

High and strong waves were able to penetrate the seawall along Roxas Boulevard. A combination of high tide + strong winds + sort of elliptical motion of the typhoon, caused waves to rise several meters high, tsunami style.

What the militant rallyists and communist activists cannot do -- entering the US Embassy without permission -- the seawater from Manila Bay brought up by storm surges + inland flooding -- were able to accomplish.

Cobblestones along the seawall were thrown out. But look at the Filipinos strolling the seawall after the high waves have passed. Typical "cool" Filipinos :-)

More flood scenes...

And more...

Poor Sofitel Hotel, definitely among the really beautiful (and expensive) hotels in the country. Heavy waves from the sea damaged its ground and basement floors, knocked out electricity, and all hotel guests have to be transferred to other hotels.

Satellite pictures of the typhoon as it was entering the country's landmass, and upon exit.

I really hope that there will be no idiots around who will boldly proclaim, "Man-made global warming causes less rains and more rains, less typhoon and more typhoon."

Monday, September 26, 2011

Climate stupidity 18: Warming causes more storms and less storms, Typhoon Ondoy Photos

Today is two years anniversary of typhoon "Ondoy" (international name "Ketsana") which flooded so many places in Metro Manila and neighboring provinces. And today, a wide typhoon "Pedring" (international name "Nesat"), this year's 16th tropical storm in the country, has dumped lots of rain in so many provinces from Region 5 (Bicol) all the way up to Regions 1 (Ilocos) and 2 (Cagayan Valley).

Last week September 19, a friend from Bangkok wrote,

At this time about half of the 77 provinces of Thailand are under water. In Chiang Mai area there used to be flooding once a year. But since 2006 I noted that the flooding in there became something like five times a year. This year, I heard from one community in the lower north that they had suffered from flood already eight times this year.

Let me show a few graphs on the current status and projections of equatorial Pacific Nino region 3.4. Data from WUWT's ENSO page

Upper graph is actual temperature anomaly for Nino 3.4, where La Nina has officially returned. Extended global cooling.

Lower graph shows projections of where the current La Nina is headed to in the next few months. Well, it's headed to more cooling, with a temperature anomaly of around -2.5 C (negative means "colder than normal") sometime around March 2012,

Upper graph is temperature anomaly for Nino 4, the region closest to East Asia. It's also showing a resumption of cooling after a brief pause a few months ago.

Lower graph shows where those Nino regions are. Same data source as mentioned above.

Next graphs below would refer to the overall Pacific Decadal Oscillation (PDO). Data are from WUWT's Oceanic Oscillation page

Upper graph is from The same trend of declining temperature anomaly is observed over the past 30+ years.

Lower graph is from US Department of Commerce's National Oceanic and Atmospheric Administration (NOAA), 1950 to present. The global cooling from the 50s to the 70s is clearly shown here.

Finally, data on Global Tropical Cyclone Accumulated Cyclone Energy (ACE), 1972 to Present. Data from WUWT's Tropical Cyclone page.

The AGW literature and fiction says that as the planet becomes warmer and warmer, the occurrence of more extreme events like more tropical storms and typhoons will intensify. This is not shown in this graph. On the contrary, there is a decline in both number and ACE of tropical storms over the past few years.

So long AGW fiction. Nature simply dooes not show what you wish to see to continue your large-scale public miseducation and climate alarmism.

Last March 03, 2011 I posted this text below. I am attaching some pictures during typhoon "Ondoy" two years ago.

I am re-posting here a short but wacky summary of the seemingly "irrefutable" laws of climate change by Steven Goddard. I regularly follow his blog, along with WUWT, Dr. Roy Spencer, and NTZ.

Important Laws Of Climate Change

Posted on March 2, 2011 by Steven Goddard

* Cold weather is not climate
* The US occupies a tiny fraction of the earth’s surface
* Hot weather in Moscow is representative of the planet
* If the present refuses to get warmer, adjust it upwards
* If the present refuses to get warmer, the past must become cooler
* GISS can always squeeze an extra 0.01 degrees out when marketing needs it
* Cold is just another manifestation of heat
* Whatever the weather is, the climate models predicted it
* Government funding is pure. Imaginary oil money is dirty

* All coral atolls were exactly 130 meters above sea level at the end of the last ice age, and are about to drown now
* Sea level is rising dramatically – somewhere else
* Temperatures are rising dramatically – somewhere else
* Global warming selectively targets the poor
* The weather is much more extreme now than it was before 24 hour cable news service started
* When CO2 hits XXX ppm, the poop is really going to hit the fan.

Sunday, September 25, 2011

Lifestyle Diseases 4: The UN on NCDs

(Note: This paper is written by a good friend, Philip Stevens, previously with the International Policy Network in London, now a Senior Fellow at the Center for Medicine in the Public Interest in New York. He wrote this on the UN Summit on NCDs in NY this week)

The UN is at risk of over-reaching on ‘lifestyle’ disease

By Philip Stevens

After years of prioritising diseases of poverty such as HIV and malaria, the UN has finally realised that “non-communicable diseases” such as cancer, diabetes and heart disease are now the biggest health problem facing developing countries. That was the topic of a major UN summit in New York this week, where governments were to agree a global plan for tackling these diseases. For discussion were new targets and funding.

This is not the first time the UN has proposed a grand initiative to tackle disease. Although they are fading from public consciousness, in 2000 the UN created the Millennium Development Goals (MDGs), a series of global targets to reduce disease and poverty. Over a decade on, what lessons do the MDGs hold for this new generation of summiteers?

Those trying to influence the New York summit are convinced of the utility of measurable targets. "Without global goals or targets, this is not going to fly. What gets measured gets done," Margaret Chan, Director-General of the World Health Organization told a pre-summit meeting in April. The WHO wants the UN to agree to a target of 25 per cent fewer preventable deaths by 2025, and detailed targets covering everything from salt consumption to breast cancer screening.

The MDGs show the need for caution, particularly when applying targets to developing countries. In most such countries, the quality of health data is patchy in the extreme. Causes of death are rarely registered, and the incidence of diseases such as malaria is only vaguely understood.

This paucity of data made the MDGs meaningless from the outset, and almost useless as a mechanism to track progress.

Unfortunately, the same gaps in data exist for non-communicable diseases, forcing public health specialists to rely on forecasts and models, which give only a vague indication of the reality on the ground – hardly a sound basis from which to mobilise hundreds of millions of dollars.

Second, politicians too often succumb to the temptation to sign up to targets that sound good in the conference hall, but have little chance of actually being achieved. The MDGs fall into that category, with 48 of the world’s poorest countries totally off-track as the 2015 deadline approaches.

Other failed health plans include the Roll Back Malaria target of reducing malaria deaths by 50 per cent by 2010, and the WHO ‘3 by 5’ target of putting 3 million people on AIDS treatment by 2005.

These kind of catchy targets offer no real accountability, as there are no sanctions for failure – the health agencies simply move on, setting up a new target for a new problem. But continually missed targets can breed cynicism, undermining public support for global efforts to tackle poverty and disease.

Money is not necessarily the issue, either. Foreign aid for health has more than tripled over the last decade, rising from $7.6bn in 2001 to $26.4bn in 2008.

Sadly, much has been wasted. A 2009 study by the WHO attempted to gauge the impact of the last 20 years of aid spending. While it listed some successes, such as increased diagnosis of tuberculosis and higher vaccination rates, it also found some U.N. programs were counterproductive because they undermined basic services and resulted in falls in domestic health spending.

The USA and its European allies are facing a massive debt crisis. As such, is it feasible to continue the old way of handing money to health ministries in developing countries in the hope that public health infrastructure will improve enough to deliver the treatments and interventions necessary to tackle diabetes, heart disease and cancer?

Instead of re-treading the old path of attempting to fund increases in capacity in local public sector health provision, why not try to harness the private sector, which already provides the majority of healthcare throughout Africa and Asia? Experiments have long been taking place using public money to provide access to quality private sector healthcare for the poor, via methods such as contracting and franchising.

Framed correctly, these partnerships can improve both the quality and capacity of health services, something that will be vital as the numbers of people suffering from non-communicable diseases grows. Without such bold thinking, the UN summit risks becoming yet another historical footnote.

Meanwhile, 3 1/2 years ago, on March 17, 2008, I wrote this:

Bloated UN and funding gap

Can the private sector save the UN? John Holmes, the UN's top aid official, is said to include private companies in his search for contributions in an effort to close an estimated $3.8 billion gap in funding.

No, the private sector cannot and should not save the UN. The UN was a creation of governments, in fact a club of government leaders and international bureaucrats. If the UN is so useful, let the governments who created and benefit from it finance it.

The private sector have various schemes and avenues to help other less privileged people if they wish too -- humanitarian organizations, international social and civic groups, private foundations, etc.

The UN can survive on existing funding by governments if it will just focus on a few, important functions. When the UN spreads itself too wide and thinly, that's where the funding problem begins. Thanks to its international bureaucrats wanting to play hero far and wide but themselves are exempted from paying income and other taxes.

See also:
1. UN bureaucracies -- too many!, September 20, 2010, and
2. UN bureaucracies -- too many, part 2, December 21, 2010.

Pilipinas Forum 12: Origin of Zero, Nothingness, Big Bang...

Below are exchanges in pilipinasforum yahoogroups -- made in October 16-20, 2001 -- that simply mutated into different but somehow related threads. Some weird but many are simply fantastic ideas and observations, 11 pages long. Enjoy!

I went to scientific american and stumbled unto this short but intriguing question: what is the origin of zero? Yeah. Stephen Hawkings has the "brief history of time", so what is the "brief history of zero"? (answer below)

"What is the Origin of Zero?"
Robert Kaplan, author of The Nothing That Is: A Natural History of Zero, provides this answer:

The first evidence we have of zero is from the Sumerian culture in Mesopotamia, some 5,000 years ago. There a slanted double wedge was inserted between cuneiform symbols for numbers, written positionally, to indicate the absence of a number in a place (as we would write 102, the '0' indicating no digit in the tens column).

The symbol changed over time as positional notation, for which zero was crucial, made its way to the Babylonian empire and from there to India, via the Greeks (in whose own culture zero made a late and only occasional appearance; the Romans had no trace of it at all). Arab merchants brought the zero they found in India to the West, and after many adventures and much opposition, the symbol we use took hold and the concept flourished, as zero took on much more than a positional meaning and has played a crucial role in our mathematizing of the world.

The mathematical zero and the philosophical notion of nothingness are related but aren't the same. Nothingness plays a central role very early on in Indian thought (there called "sunya"), and we find speculation in virtually all cosmogonical myths about what must have preceded the world's creation. So in the Bible's book of Genesis (1:2): "And the earth was without form, and void."

But our inability to conceive of such a void is well caught in the book of Job, who cannot reply when God asks of him (Job 38:4): "Where wast thou when I laid the foundations of the earth? Declare, if thou hast understanding." Our own era's physical theories about the Big Bang cannot quite reach back to an ultimate beginning from nothing-although in mathematics we can generate all numbers from the empty set. Nothingness as the state out of which alone we can freely make our own natures lies at the heart of existentialism, which flourished in the mid-20th century.

Answer posted October 04, 2001

Now that you got an explanation, may I ask this question:

"What the origin of zero government?"

"State of nature", according to social contract theoreticians Hobbes, Locke and Rousseau.

"Primitive communal" mode of production, according to Karl Marx.

"Invisible hand/perfectly competitive market", according to classical economists like Adam Smith.

"Invisible nature", according to Nonoy Oplas. he he he.

-- Nonoy Oplas

Well ... prior to the "big bang" there was no "nothing", there simply wasn't, period. No space, and therefore no void. No time, and therefore no significance to either a "moment" nor "eternity". There was no "zero" (a "zero" is a placeholder), there was no place to hold a zero, nor was there anything to tick away the time that the "zero" would be occupying a "void".

But apparently something came out of nothing. This may seem strange, but is in accord with current physics. The "nothingness" (even between isolated hydrogen atoms in intergalactic space) is actually a seething, foamy soup where some things (photons, electrons, etc.) come into being for very, very short periods of time. This is not a violation of the laws of conservation of mass/energy. There is a loophole in those conservation laws related to the Heisenberg uncertainty principle, where for such short periods of time (Planck's constant in the uncertainty formula) some "things" will spontaneously "be" out of "nothing". An analogy --- if you're filching centavos from a multi-billion dollar trans-national, and you make sure to return those centavos very quickly, then the (conservation) accountant won't notice.

A practical example --- you would think that photons generated in the computer monitor travel across space and impact your retinas, thus generating the image you see. Well, not quite. There are "virtual" photons that spontaneously come into existence in the space between the monitor and your eyes. The reason these photons are "virtual" is because they lack the energy to become real. Thus, virtual photons dissappear as quickly as they appear.

But now a "real" photon from the monitor collides with one of these virtual photons (during its momentary, "magical" existence); the impact destroys the original "real" photon, while all its energy (momentum, spin, frequency, etc.) gets transferred to the virtual photon, which now (because of the energy input) becomes a "real" photon and continues the journey to your eyes. Along the way, this newbie photon collides with another virtual photon, etc. You get the photon ... errrr ... picture, so far?

So, am I saying that this foaming bubble bath where "particles" spontaneously come into being out of nothingness, is what there was before the big bang? Ahhh ... NO (don't hit me! promise, 3 paragraphs na lang, and all will be made clear, i hope :) You see, before space and time, there was no space-time within which the "foam" could exist (be).

Saturday, September 24, 2011

Weekend fun 23: Economist Jokes


1. Economists do it with models.
2. They are armed and dangerous: "Watch out for our invisible hands."
3. They can supply it on demand.
4. You can talk about money without having to make any.
5. You get to say "trickle down" with a straight face.
6. Mick Jagger and Arnold Schwarzenegger both studied economics and look how they turned out. (so did gary lising, jon santos and the guy who created dilbert)
7. When you are in the unemployment line, at least you will know why you are there.
8. If you rearrange the letters in "ECONOMICS", you get "COMIC NOSE".
9. Although ethics teaches that virtue is its own reward, in economics we get taught that reward is its own virtue.
10. When you get drunk, you can tell everyone that you are just researching the law of diminishing marginal utility.

"I'd rather be vaguely right than precisely wrong."
- J.M.Keynes; Found in Forbes magazine 01/25/1999 issue.
In the Numbers Game column by Bernard Cohen

Three professionals -- a physicist, an engineer, and an economist -- survived a plane crash and went to a small island, ala Robinson Crusoe (?) island, nothing much to eat there nor are there other islands with people to trade with. Luckily they got several boxes of canned food that also fell from the plane, but they got no can opener. So the natural challenge is how to open the cans so they can eat.

Engineer improvised wooden sticks to open the cans, fail.
Physicist used fire and heat (rubbing stones to produce fire, etc.) to melt the can and hope it will open, fail.
Economist's turn, he said, "Let's assume that the cans are open."

In front of St. Peter were 3 souls.
St. Peter to soul 1, "What's your IQ? soul 1 said "300!". St. Peter said, "Great! we can discuss Einstein's theory of relativity and Svensmark's Sun-GCRs-climate theory. Wait for me on that door.

Same question to soul 2, the latter replied "200!". St. Peter said, "Good! we can discuss about reptiles, amphibians and dinosaurs. Wait for me on that door.

Same question to soul 3, the latter replied "100". St. Peter said, "So what do you think will happen to the Phils. budget deficit next year?"

Q: Why do Economists provide estimates of inflation to the nearest tenth of a percent?
A: To prove they have a sense of humour.

Q:Why did God create economists ?
A:In order to make weather forecasters look good.

Q: Why did the economist cross the road?
A: It was the chicken's day off.

Q. What does an economist do?
A: A lot in the short run, which amounts to nothing in the long run.

Two economists meet on the street. One inquires, "How's your wife?" The other responds, "Relative to what?" To an economist, real life is a special case.

See also Weekend fun 22: Functions and equations, September 17, 2011

Thursday, September 22, 2011

Drug price control 17: Wikileaks on the planned Pfizer drugs withrawal

Where there is political and economic coercion by governments, there is also product and service non-availability or withrawal by the affected players and companies. The stronger the coercion, the plentier the amount of goods and services that are non-available in the market.

A clear example are the highly-repressive governments of North Korea, Myanmar, Venezuela, Congo and many other African countries. Private companies, especially multinationals, would hardly consider setting up businesses in those countries as the political threat of price control, product confiscation, raids and other forms of harassment are very clear and real. Contrast that with free trade economies like Hong Kong (unilateral free trade policy actually), where almost anything and everything is available from so many countries and territories.

While searching google on "drug pricing", I saw this article from InPharm, Philippines pricing controls: Pfizer 'considered taking drugs off the market', dated September 2, 2011. It said,

Pfizer considered withdrawing some of its products from the Philippines rather than face planned pricing controls, according to a US diplomatic cable released by WikiLeaks.

The March 2009 cable was sent during intense debate about drug pricing in the country as the Philippines’ Department of Health drew up a list of 25 prescription medicines that could have been affected....

The article referred to a Wikileaks cable, PHILIPPINES CLOSER TO DRUG PRICE CONTROLS, so I visited the site.

It's about the supposed cable of then US Ambassador to the Philippines, Kristie Kenney (I follow her on twitter, and just 3 days ago, she mentioned me and replied to my tweet on the subject of Rule of Law :-)) to the US Secretary of State, dated March 5, 2009. The cable said,

1. Summary. The Philippine Department of Health has listed 34 prescription medications that will be subjected to price controls under the Cheaper Medicines Act (reftel) enacted last year. The main impetus for the rapid imposition of price controls came from advocacy groups and non-governmental organizations. Local representatives of international drug companies participated in consultations on maximum retail prices, but warn that some of the controlled prices are lower than the costs of making the drugs, which could force them to withdraw many drugs from the Philippine market. End summary...

4. We met with several directors of the Pharmaceutical and Health Association of the Philippines, the trade association of foreign drug companies, who noted that the main impetus for the rapid imposition of price controls came from advocacy groups and non-governmental organizations. While the Association acknowledged that it has been invited to consult with the Health Department, it also noted that some member companies had not participated. The Association is also concerned that the final list of drugs subject to price control may contain more than 25 medications.

5. In addition, the Association asserts that the Health Department has been pressuring companies to sell drugs in small packages that can retail for 100 pesos, or around USD 2, offering to
exempt such drugs from price controls. In many cases, this can amount to a handful of tablets needed for one cycle of a course of doses. Representatives of Pfizer warned us that for certain
antibiotics, small doses can promote antibiotic-resistant bacteria, and claimed that it is being pressed to sell antibiotics that currently cost over 1000 pesos for the 100-peso fixed price. Pfizer said that if these price controls are put into effect, it will withdraw many drugs from the Philippine market.


6. The Philippine press has recently featured stories noting that drug prices have not fallen since the Cheaper Medicines Act came into effect, creating pressure for more immediate action from the government. However, the Philippine government must tread carefully and should not ignore Pfizer's warning that it could withdraw many drugs from the Philippine market if price controls are put into effect. Pfizer's withdrawal of medicines from Thailand following laws on compulsory licensing clearly demonstrates the risks. Post will continue to remind Health Department officials that expecting pharmaceutical companies to sell products for less than it costs to produce them could prove counterproductive.

Wow. I have read other Wikileaks cable release supposedly also from then US Ambassador Kenney about her opinion about now PNoy Aquino when the latter was still a Senator. There were questions about the validity and authenticity of those "cable leaks." So I will also not take the above cable leak as 100 percent true.

But assuming for the same of argument, that the above communication was indeed true, I will not be surprised of the wording of the former Ambassador. Pfizer as (or any other) US-based company that pays plenty of taxes to the US government, would naturally seek the assistance of its own government to talk to the host (Philippine) government when the policy of the latter will adversely affect its business. The same way that some Philippine-based company/ies sought the assistance of Philippine Congress and the Executive branch in crafting the Cheaper Medicines Law (RA 9502) and amended the Intellectual Property Code so that certain patent protection of innovator drugs by some multinational pharma companies can possibly be tweaked and dishonored via provisions on compulsory licensing, special CL, early working, exhaustion of rights and government use.

While I was a member of the DOH Advisory Council on Price Regulation (now it's called the DOH Advisory Council on Healthcare), the DOH body that was referred to by Ambassador Kenney, I was not aware of the first 3 Council meetings and consultations from January to April 2009. And that was the period stated in the above cable.

I started attending only on its 4th meeting in early June 2009. I have a long discussion of what transpired in the 4th and 5th meetings of the Council on June 2009, see my book, Health Choices and Responsibilities (published January 2011, 233 pages) and turn to pages 2-7, also pages 72-73.

Anyway, these issues are now water under the bridge. Pfizer did not withraw its innovator drugs that were hit by price control (Norvasc (amlodipine), Lipitor (atorvastatin) and Azithromycin (anti-biotic), what else) and opted to absorb the losses and resorted to deep cost-cutting measures including laying off a few hundred employees.

But what will not go away is the damage done by government intervention -- particularly the Philippine Senate, the Committee then headed by former Sen. Mar Roxas, the DOH then headed by former Sec. Francisco Duque, and the former President Gloria Macapagal Arroyo -- in drug pricing. As I wrote here in the past, price control is price dictatorship.

This damage to the business environment, at least in the health sector as far as foreign investment is concerned, is long-term. And the fact that the price control policy is still not lifted until now even if all the 3 main political personalities involved are no longer in their offices, makes the damage last longer.

See also Part 16: More on Cong. Biron's Bill, September 01, 2011, and
Part 12: Blog posts on page 1 of Google, Yahoo and Bing, August 14, 2011

Inequality 9: CMFR Forum on Inclusive Growth

Sustainable Inclusive Growth (SIG) is being aggressively promoted these days as the next big goal of the government and the multilateral and foreign aid institutions. It is a relatively new but already abused term or topic. It was previously called "broad-based growth" or "bottom-up growth", all of which are accompanied by heavy lending by the foreign aid establishment (WB and ADB especially).

Yesterday, I attended the Pre-Conference briefing on Pathways to High and Inclusive Growth sponsored by the Center for Media Freedom and Responsibility (CMFR) held at the Asian Institute of Management (AIM), Makati. There were many participants from local media (GMA-7, BusinessWorld,, KBP, PPI, etc.) and NGOs.

The speakers were (from left) Dr. Ronald Mendoza of AIM Policy Center, Ms. Risa Hontiveros of Akbayan, Assistant Sec. Lila Shahani of the National Anti-Poverty Commission (NAPC), and Dr. Natalie Chun of ADB-ERD.

Ronald gave an overview of the main international conference that will happen tomorrow, a full day activity also to be held at the AIM. There are a number of high-profile speakers like the Secretaries of NAPC, DOLE, the Minister of Social Development of Mexico (to talk about the CCT in Mexico, the Swiss Ambassador, etc.

Risa talked about certain social legislations and regulations that she wished were on hand to help the poor and marginalized sectors. Akbayan is a diluted socialist party-list. I say diluted because the socialist group BISIG which I used to be an active member in the late 80s, is a big part of the coalition but there are also non-socialist groups within the Party.

Lila discussed the 4Ps or Pantawid Pamilyang Pilipino Program or the Conditional Cash Transfer (CCT) program and related matters, while Natalie talked about the role of foreign aid like ADB in funding social protection programs.

CMFR Executive Director Melinda Quintos-de Jesus (here speaking) was the MC and moderator of the open forum. As usual, I was the first to raise my hand during the open forum and argued the following.

While reviewing the various social protection, pro-poor employment, and related programs, I think the UN, the government and the foreign aid were just fooling us. We have education for the poor, healthcare and medicines for the poor, housing and MRT subsidy for the poor, agrarian reform and credit for the poor, seeds and farm animals for the poor, and now we have cash transfer for the poor, very soon we shall have condoms, pills and ligation for the poor. Maybe in the coming years there will be IPhone and IPads for the poor, cars for the poor? And look at the social inequity that all those past and present government programs were supposed to correct.

The main obstruction now to self-reliance and inclusive growth of the poor is government waste and irresponsibility. Take the Philippine public debt. Our interest payment alone for those public debt was P294 billion in 2010, P357 billion this year, and P333 billion in 2012. Principal amortization not included yet, only interest payment. When there was talk about imposing VAT on NLEX and SLEX, supposed to generate about P1 billion a year, or when the MRT subsidy of about P5 billion a year is proposed to be reduced, some people want to start a civil war already, and here is the government paying more than P300 billion a year on interest payment alone for its huge debt and annual budget deficit.

Such huge transfer of money from the poor and middle class taxpayers to the rich -- there is no poor among the bondholders, banks and other lenders to the government -- is a big hindrance to sustainable growth. The economic and financial turmoil in Greece, Spain, other European countries and the US are all rooted in high government debts.

(Note: Please check my earlier discussions when I gave a talk on this subject three months ago, Part 1 and Part 2, June 23, 2011)

The first to reply was Lila, she said that certain government programs and interventions indeed help the poor. She talked long but I didn't think it made much sense. Next to reply was Ronald who is also an economist. He said that at the heart of the things that I mentioned was the question of market and state, to what extent the government should provide for certain services to the public, and to what extend the market should be left alone to do its job.

Melinda gave me a chance for a follow up comment, thanks Melinda. I said that the "market and state" formulation is old. My focus is more on the division between personal responsibility vs. government responsibility. This week, there is a big UN meeting in NY where government leaders talk about addressing non-communicable diseases (NCDs) or lifestyle-related diseases. The communicable and infectious diseases like polio, flu, tb, etc. are now easily curable. So when people will drink and drink and have liver cancer or related diseases, they can just go to the government and demand that health is a right? Or when people smoke and smoke and have lung or throat cancer, or when they over-eat and over-rest and have hypertension, become fat, they also run to government to seek "health is a right" under universal healthcare? To me that is wrong.

Next to react to what I said was Vergel Santos, member of the CMFR Board of Directors and Chairman of the Editorial Board, BusinessWorld. He argued that the problem of the country is the ruling class and the elite, not government. They are too rich, the poor got nothing, government should run after their undeserved wealth, have real agrarian reform. Those who run away, government should go after them and impound their wealth, distribute to the poor.

Wow. I have no more chance to talk as there were others in the audience who were also raising their hands. I would have said that his proposal is absolving the government -- from the Constitution, Congress and Legislative franchising,government cronyism and business bureaucracies -- for creating monopolies and oligopolies, the guys and businesses who could be the object of his point. To continue demonizing the rich, especially those who became rich due to plain hard work, due to business efficiency and innovation, and asking government to run after their wealth to be distributed to the poor, is a proposal based on envy and heavy coercion.

Lila followed up on Vergel's comments, saying that the Filipino elites should indeed do more. Even Fil-Ams in the US, other well-off Filipinos abroad, should contribute their share and not turn their backs on the country.

My watch said it was already past 12 noon and my daughter was waiting for me in her kinder school since 12 noon. I bid Melinda a ba-bye and went out.

I shall go back to the big conference tomorrow anyway.

See also:
Hayek 3: Inequality and Progress, May 19, 2009

Tuesday, September 20, 2011

On IPR Abolition 12: Patent, Mini-Monopolies and Trademark

Businessmen and companies themselves want trademark and IPR protection. Apple, Microsoft, Google, Yahoo, Facebook, Youtube, Nokia, Samsung, Toshiba, etc., they want their own unique corporate brand and identity. So when the IP Code or law of the US, UK, Japan, Phils., etc. was enacted, all these companies supported it. I am not aware of any big companies moving earth and mountains to abolish IPR.

For better appreciation of this thread, check also On IPR Abolition 11: Trademark and Brands, September 05, 2011.

There was a case of a local burger shop named “Mang Donalds” with logo somehow similar to MacDonald. The latter did not like this, so it sued the former over trademark issue, the former later closed shop, resurfaced as another food shop with a more unique name and encountered no legal issues. This shows how McDo can be so protective of its name and trademark.

With this precedent, I don’t think there will be another burger company that will be named Jollybees or Joylibee or Jojolibee and have logo similar to Jollibee’s. The latter will most likely hail them to court. The latter will say, "You lazy and opportunist businessmen, Be creative, find a business name really unique and not borrowing rhymes from our name". Which should validate that IPR abolition is for the lazy and non-innovative guys.

There are additional points raised by the anti-IPR camp:

1. The people in generic companies don't even know a paradigm exists apart from IP, like those articulated by Stephan Kinsella, et al… IP is anti-physical property.

2. Period of patent is arbitrary.

3. Loss of earnings is not a property violation.

#1 looks too presumptuous. The owners, lawyers, PR guys of those generic companies are ignorant of the anti-IPR philosophy and campaign? First time I've heard that. I have talked to some officials of the PCPI, the federation of local pharma companies here, I asked them if they ever entertained or wished the possibility of drug patent abolition, of no-IPR world, they said NO. They know the huge costs of inventing new drug molecules. They don't want to enter that high risk, high cost business. They are happy waiting for the patent of the innovators to expire, then they manufacture their own brands and make money. Both innovators and generics companies are happy with this arrangement, they only squabble from time to time on the extension or the granting of another patent to what they think was a non-inventive process. The debate is more on legality, not on philosophy of IPR.

A molecule is a physical, tangible property. It is intangible with the naked eye, but tangible under a microscope. The “non-physical property” label on a molecule is a misnomer in the first place.

A logo and trademark may be a product of the mind but it also attains physical presence. Even a no-read no-write person can distinguish a McDo or Jollibee logo from the logo of other companies.

On #2, I agree that the 20 years patent on a drug molecule, the 50 years copyright on a song composition, may have been arbitrary. Any number of years can be labeled as arbitrary, but that is no reason to call for the abolition of the patent or copyright system.

If a drug patent is longer than 20 years, say 39 or 53 years, I bet that many of the current big generic companies around the world, like Unilab – the biggest pharma company in the Philippines with about 24 percent of total pharma market share, also ASEAN'S 2nd or 3rd biggest pharma company -- will also become an innovator company.

On #3, I agree too. A company which hired an idiot CEO who wasted the money for his perks, will soon be losing money if not go bankrupt. And IPR has nothing to do with it.

During the online debate, I asked the anti-IPR guys several questions:

a. Any big and successful company which has no trademark? Say a big "motor company", a big "IT company"?

b. An IPR is a mini-monopoly. Starbucks, Figaro, UCC, McCafe, Seattles Best, etc have their individual trademark and hence, individual monopoly. Who now has monopoly for the entire coffee shop industry?

c. If Jollibee will sue a hypothetical Joyllibee burger company, if Figaro will sue a hypothetical Figaru coffee company, if Itallianis will sue a hypothetical Ittaliano’s restaurant, etc., will the anti-IPR camp also be against those companies who sued?

d. Who is the bigger enemy, the BIG state or the many famous and successful private companies who just want all their competitors to have their own unique trademark and company names, and not copy-catting from their corporate name, trademark and logo?

The anti-IPR camp followed up with another round of arguments.
4. These trademark and patent holders are beneficiaries of the patent system. They are not going to move for its abolition.

5. It's like saying Meralco is a mini-monopoly because it only monopolizes electricity distribution.

6. Those private companies using the state to enforce their supposed IP, these companies are cronyistic to the degree that they use the state.

7. Generic companies not knowing the anti-IP paradigm, this is sure. It's not simply a matter of you asking if they're against abolishing IP altogether and their saying "No." It's about their being aware of the arguments for abolition.

On #4. the IPR system has contributed to dynamic capitalism. We consumers benefit from more choices from more players -- should we go for Figaro or Starbucks or UCC or Gloria Jeans or Seattle’s Best or Dunkin Donuts coffee? Each trademarked company wants to do better, to keep improving to please consumers so they will come back. Why abolish the IP system that contributed to a more dynamic capitalism?

On #5. Meralco monopoly is bad because it is an industry monopoly, it is not just a mini-monooly under the electricity distribution sector. Are there other electricity distributors in Metro Manila and surrounding provinces? No. Meralco has monopolized the entire power distribution business in said franchise area. In the case of the coffee shop or burger business, there ARE many other suppliers and players. Each is a mini-monopoly in a deregulated and non-monopolized industry.

On #6, it’s the first time again I’ve heard that those famous coffee shop brands, those successful burger and fastfood restaurants, those successful innovator and generic pharma companies, all those big and trademarked names in the IT industry like Apple, Sony, Toshiba, HP, etc., now are ALL cronies. This is weird.

On #7, it is weird to say that leaders of the local generic industry are not aware of the anti-IP paradigm as lionized by urban legend propagator Stephan Kinsella, et al. I have heard of the IP lawyer of Unilab, an expert on TRIPS and other IPR issues. I heard him argue against patent ever-greening, the Bolar principle, etc. but I haven’t heard him saying that IPR like patent should be abolished. Or did I miss it big time?

The IP Code (IPC) of the Philippines and other countries recognize something that is an "inventive step" over the previous process or molecule as patentable.

Now here is one mistake or myth that many anti-IP folks sometimes or often mention: that mathematical formulas, chemical and physical formulas, dance steps, etc. are patentable. WRONG. These are NON-patentable. I've heard a number of anti-IP guys arguing against IPR because they thought that such things are patentable. Equations in algebra, trigonometry, Integral and differential calculus, the famous E=MC2, hydrogen, oxygen, H20, CH4, breakdance, new tango steps, etc. are NON-patentable.

The inventive step whether it is 1% or 0.001% over the originally-patented process or molecule is a matter of details. But that’s treading on many grey areas that are easily questionable. So IP lawyers come in, and a referee called the IP Office (IPO) decides which patent applications are valid and which ones are frivolous and invalid. The point is that changes over the original is encouraged, recognized, respected and protected. I think that's how the IPhone evolves, marginal improvement over the previous ones. IPone1 patented, IPhone2 another patent, IPhone3 another patent, and so on.

If one is a serious and really innovative entrepreneur, he should avoid those inventions which have grey areas. Do not go for a drug molecule which is just 1% or 0.1% different over the currently patented drug molecule. Go for 50% to 100% different drug molecule. If a new and famous patented drug against breast cancer is using raw materials 100% from mangos, then go for a drug against breast cancer where the raw materials are at most 50% mangos, 10% avocado, 25% orange, etc. to produce another drug to kill a similar disease that the currently patented famous drug aims to do. Or get raw materials and active ingredients from rabbit intestines or cow liver, etc. The raw materials for active ingredients can be endless for the really innovative inventors. For copy-catters and somehow lazy inventors, they want to hop on what is currently popular and effective and introduce minute different and claim they made big inventive step.

There is a, trying to make fun of facebook itself. I say that it’s cute, its funny. So I don’t think that facebook will ever be worried of their existence and hail the creator of that site to court. The site does not attract subscribers, it's a non competitor. It's just a spoof, and normally, big companies which are getting spoofed usually get entertained rather than get irritated.

Another round of counter-points by the anti-IPR camp:
8. It is careless to say that IP abolition is for lazy businessmen. That's an ad hominem.

9. By bringing in trademarks, you make someone legally liable for something in which they will fail anyway due to competition.

10. My own Meralco mini-monopoly comment was intended to express the absurdity of euphemizing a monoply by calling it 'mini.'”

11. Private companies are cronyistic TO THE DEGREE that they use the state to monopolize certain aspects of their business.

12. What IP does is because you patented the IDEA of a molecule, you own not just that one molecule in your possession, but even those molecules on the other side of the planet.

13. Tthe patent system is supported by businesses out of ignorance and because they are beneficiaries.

On #8. It is my perception that IP abolition attracts the lazy and non-innovative businessmen. Like the guys perhaps who will put up a Jollybee burger or Starbacks coffee or Unolab pharma or Philtranko bus line. There are thousands of possible names for their company but they lazily choose one that rhymes very closely and trademarked very closely, with the popular brands. That's why I call it plain laziness, lack of productive creativity, only the creativity to copy-cat.

On # 9. Trademark violation applies to the non-innovative businessmen. There is an Aling Pilang Cafe. Would new coffee shops aspire to name their company as Aling Pelang or Manang Pilang Cafe? Not a bit. The former is a never-heard, unglamorous to hear company name. On the other hand, lazy and deceitful businessmen are likely to try their new company names Starbacks, Storebucks, Straybucks coffee, etc. Why? Envy, desire to attract many customers at once despite having zero track record as a good coffee company. Laziness to become really unique and creative.

On #10, Wrong. If we do not differentiate what is a mini-monopoly in trademark only vs an industry monopoly, then one can also say that ‘UCC monopolizes the coffee shop industry’, or Figaro monopolizes the coffee shop industry, which is clearly wrong. But if one will say ‘Meralco monopolizes the electricity distribution industry in Metro Manila and neighboring provinces’, that is clearly correct.

On #11. Then ALL companies are government cronies because to some degree, whether 1% or 100% degree, they use the state to monopolize certain aspects of their business, say their location, their parking lot, their oh-cute company name, their oh-pretty actress model, their oh-macho athlete model, their unique and eye-catching logo, etc. Could it be true that all companies are government cronies? Tough luck.

On #12, This is really weird, that if one owns and patented one drug molecule, then he also owns ALL other molecules around the planet. Where could this urban legend come from? I wrote earlier about different molecules SIMULTANEOUSLY invented, all patented, all not in drugstores yet. Molecules just to kill prostate cancer with weird names like abiraterone acetate, azazitidine, befetinib, cixutumumab, docetaxel liposomal, enzastaurin, intetumumab, ixabepilone, lenalidomide, nimotuzumab,... There are also acronym-numbers like MLN 8237, ISIS EIF4ERx, GDC 0449,... So I invent only one molecule, the other guys invent their own molecules, everyone happy. Now whether the molecule that we invented will become blockbuster and profitable or not, is another story.

On #13, Again wrong. ALL generic manufacturers are non-ignorant, and non-beneficiaries of the patented drugs. And yet they all support the patent system for drugs. Why? Because they spent not a single centavo in the very costly R&D, multiple clinical trials (with some animals first, then with a few sick people, then with many sick people, the non-sick, etc.), taking up from 8 to 13 years out of the 20 years total patent life, just to develop one drug. But once the patent expires, all the generic manufacturers can jump in and develop their own brand of drugs from the same molecule that the innovator companies have developed.

I repeat my observation that the libertarian anti-IPR cause is really infantile. They would rather point their guns and angst on private individuals, private companies, which only want protection of their new invention, their carefully-protected business name and brand, than point their guns on the BIG and monster state that taxes big, intervenes big, regulates and restricts big.

More private ownership, more capitalism.
More social ownership, more socialism.

Monday, September 19, 2011

Fiscal irresponsibility 17: Cut Spending and Borrowing

(This is my article this morning in thelobbyist. biz, with original title, Cut Spending, Borrowing and Irresponsib-ility. It seems to be my most popular article in the magazine as it is getting about a dozen hits per hour today :-))

When someone is irresponsible – a person, a corporation, an NGO, a government, etc. – there is tendency to live beyond one’s means. To splurge in over-spending, saying that such extra spending are “necessary and inevitable”, and resort to endless borrowing.
The irresponsible can partially correct its bloated ego and not be stuck in forever indebtedness if it will (a) cut its spending relative to its income or revenues and slowly pay the debt, and/or (b) sell some of its assets and properties, pay the debts, and slowly mend its ways to live within its means.

The incorrigible irresponsible though, would never do the above two measures. In the case of governments, what they do is (i) create new tax measures, or raise existing taxes and fees, or (ii) simply declare a default and ask for debt write off for some, or restructuring and postpone payment to even longer period. Let the future administrations worry about the wastes and excess of the past and current administrations.

There is a good chart from 
The Economist last September 15, 2011, “Splurge or Slash?”

Citizens of highly indebted countries like Portugal, Spain, US, France and Germany, simply want their governments to cut spending, not increase spending via Keynesian stimulus hallucination. Ordinary citizens, especially those in the private sector, are net taxpayers. The politicians and those in various government bureaucracies – local, national, and multilateral or foreign aid government bodies – plus the welfare dependents, are net tax receivers. Thus, there is a big gap in perception on how to solve the perennial public debt problem. The net tax payers do not want additional taxes to pay for those increasing debts. The net tax receivers want ever bigger governments to be financed by ever-higher taxes from the rich, the industrious and responsible people. 

Here in the Philippines, the ever-rising public debt is also financed by endless borrowings – from foreign aid (WB, ADB, JICA, etc.) and from private lenders (individuals, banks, corporations). Below is a table of how scandalous the interest payment that we taxpayers in this country have to pay in order to bail out the continued wastes and irresponsibility of our political and bureaucratic leaders. These debts have high interest rates and other charges, from 4 to 10.6 percent p.a. or several times larger than the London Inter Bank Offered Rate (LIBOR) of around 1 percent. Table is lifted from Alas, Oplas CPAs blog, 
Interest payment on foreign debt securities, Philippines.
source: DBM, BESF 2012, Table B.22

* Notes:

1.    These foreign debts were meant purely for budgetary support, ie, to finance the budget deficit.
2.    Only loans with more than $50 M in interest payment in 2010 (1stblock) and in 2012 (2nd block) are included here.
3.    The Loan Account name indicates (a) amount loan, (b) interest rate and other charges, and (c) year of loan maturity.

Check that one RP loan until 2030 at 9.5% p.a. (vs LIBOR around 1% pa) and we pay $142 M per year on interest payment alone. Another loan until 2031 at 7.75% pa and we pay $116 M/year. More foreign loans just to finance the annual budget deficit.

If a debtor has some sense of responsibility and sanity, it will take the high interest rate as a signal  and say, "Hoops, they are charging me high cost of borrowings, I might as well reduce, if not stop borrowing even temporarily."

An economist friend suggested, “BSP's foreign currency reserves (not counting gold and other forms of reserve assets) are already $59B. These are earning, what, 2% p.a. or less? In principle, forex reserves are assets owned by the Philippine Government. The latter can take half of the stockpile of forex reserves (or even less), and pay down the entire amount of USD denominated debt on your spreadsheet above.”

I am not aware of the technical or legal issues why such measure cannot be done by the government through the central bank (BSP). But if those issues are not too serious, the government should pursue such measure. The important thing is that the high public debt, especially those from high interest rate foreign debt securities, should be retired as soon as possible.

Greece is falling closer and closer to a debt default, which is option (ii) that we discussed above. Governments do not collapse even if they default on their debt obligations. Maybe the administration in power can collapse but government as an institution does not. The guys and entities who lent to the irresponsible government are also the other group who might collapse.

Government is force and coercion. That is why it often attracts the most horrible and irresponsible people in the planet masquerading as saviors of the poor and masses.

That is why we need less government. Less force, less coercion, less corruption and less irresponsibility.


See also:
Part 14: Debt crisis and government failure, August 08, 2011
Part 15, Philippine government budget 2012, August 08, 2011, and
Part 16: On government bail-outs, September 11, 2011