Tuesday, December 11, 2018

BWorld 272, The ASEAN Prosperity Initiative

* This is my article in BusinessWorld last December 05, 2018.

“The rapid economic advance that we have come to expect seems in a large measure to be the result of this inequality and to be impossible without it. Progress at such a fast rate cannot proceed on a uniform front but must take place in echelon fashion, with some far ahead of the rest.”
— Friedrich Hayek, The Constitution of Liberty (1960), Chapter 3.

While many activists and central planners will disagree with the Nobel economist Hayek, this has been the inescapable reality – as prosperity expands, inequality among people also expands but the state of poverty significantly declines.

One measurement of economic prosperity is per capita income or GDP. Many economies in East Asia were able to double or triple the figure in just two decades. The Philippines’ income per head for instance has expanded from only $1,241 in 1997 to nearly $3,000 in 2017 (see table 1).

The Institute for Democracy and Economic Affairs (IDEAS), a free market think tank in Malaysia, will launch the ASEAN Prosperity Initiative (API) next Tuesday, December 11, at Intercontinental Singapore. API predecessor is the Economic Freedom Network (EFN) South East Asia.

The API launching will coincide with the publication of two IDEAS reports: (1) ASEAN Economic Integration Report Card, comparing the targets set in the ASEAN Economic Community Blueprint 2025 and actual achievement; and (2) ASEAN-EU Free Trade Agreement (FTA), studying the potentials and pitfalls of such big FTA.

One indicator for these two topics is the direction of trade – how much of ASEAN countries’ exports go to fellow members and the rest of Asia-Pacific, and how much of their imports come from the region (see table 2).

Many ASEAN countries are trading more with themselves and the rest of Asia-Pacific, reducing the share of trade with North America, Europe, Oceania, South America and Africa.

Another indicator of economic integration is the flow of foreign direct investments (FDI).

FDI inflows in Southeast Asia have more than doubled, but, more important, the FDI stock has expanded nearly 15 times over the past two decades (see table 3).

For the Philippines in particular, FDI inward stock was only $13.8 billion in 2000, rose to $25.9 billion in 2010 and $78.8 billion in 2017. Good expansion but still low compared to our neighbors in the ASEAN as of 2017: $130 billion in Vietnam, $140 billion in Malaysia, $219 billion in Thailand, $248 billion in Indonesia, and $1,285 billion in Singapore.

A day before the API launching, IDEAS will also organize a meeting among ASEAN think tanks on air transport liberalization. If this liberalization happens someday, investments and tourism in the region will further expand significantly.

More economic liberalization and deregulation, this should be the continuing policy of the Philippines and neighbors in the region.

See also: 

Inequality 36, Adam Smith the poor

Last September, I have a brief email discussion with some friends and former classmates from UPSE in the 80s. A summary of those points:

1. On scale of economy -- PH economy has momentum mainly because of our big population. Our GDP size doubles about every two decades on average.

2. Poverty reduction, what to do -- Adam Smith the poor. Don’t give too many freebies, forever subsidies. But if the poor are industrious, government and NGOs also should not ask for too many permits, taxes, fees, penalties. There are 100 ways to be poor like being lazy, or work 1 day and then complain about work the next full day. Or people work 6-7 days a week but they also drink, party and/or gamble 6-7 nights a week and have zero savings. These are 101% sure formula for perpetual poverty.

3. "Ambisyon Natin 2040" by NEDA -- it's useful but it looks more like centrally-planned ambitions and hence, may not be attainable. Households and individuals' ambitions are different from bureaucrats and legislators' ambitions.

4.  Where are we headed -- I think towards more, bigger government. Take the RH law, condoms lang, govt and legislation pa? These can be done via civil society, corporate volunteerism.

5.  The "Marcos revival” -- this seems inevitable, as govt expands like amoeba, the amoeba will proliferate like Marcos big govt.

6. Is the PH hopeless? -- No. No country is hopeless, even N.Korea, Myanmar, Venezuela have hopes but the realization takes time. Something like 2 steps forward, 1 step backwards. I remember the first time I took a plane, I was 25 years old already. My eldest took her 1st plane ride at about 6 months, her 1st trip abroad at 1 yr 8 months, 2008. Things are improving fast in the private sector, government is only the drag.

See also:

Monday, December 10, 2018

BWorld 271, More smokers and drinkers needed to fund more UHC?

* This is my column in BusinessWorld on November 30, 2018.

“The man of system…is apt to be very wise in his own conceit; and is often so enamoured with the supposed beauty of his own ideal plan of government, that he cannot suffer the smallest deviation from any part of it….He does not consider that in the great chess-board of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might choose to impress upon it.”
— Adam Smith, Theory of Moral Sentiments (1759)
That observation by Adam Smith also applies to the plan of many sectors to further raise tobacco and alcohol taxes to fund higher resources for universal health care (UHC).

There is a clear contradiction here. The stated goal is to further reduce smoking and drinking but there is implicit demand for more smokers and drinkers who will pay more tobacco and alcohol taxes to fund more UHC beneficiaries and health care providers.

There are four stories in BusinessWorld this week related to this:

1. House hearing bills on P40-P60 per pack increase in cigarette tax (Nov. 26),
2. Senate panel opens hearing on raising tobacco tax (Nov. 26),
3. Alcohol tax hike hurdles House committee on 2nd reading (Nov. 26),
4. Tobacco excise bill hurdles House on 2nd reading (Nov. 28).

In report #2, Senator Pacquiao’s bill proposes a cigarette tax hike to P60 per pack, Senator Ejercito’s bill wants to raise the tax up to P90 per pack, to cover the estimated P164-billion funding gap in UHC on top of current funding of only P93 billion.

In report #3, the plan is to generate P60 billion for five years in higher alcohol tax rates. Distilled spirits ad valorem tax on net retail price (NRP) per proof liter will rise from 20% to 22%, in addition to a rise in specific tax from P23.40 to P30 per liter in 2019, P35 in 2020, P40 in 2021, P45 in 2022 and annual increase of 4% be changed to 7% beginning 2023.

In report #4, the approved excise tax hike is P2.50 per pack per year on top of current P35/pack until it reaches P45/pack in 2022, then annual increase of 4%.

My 54-page paper, “Assessment of the Sin Tax Reform Act of 2012” was released last Monday Nov. 26 by Stratbase-Albert Del Rosario Institute (ADRi). I made my own estimates of price elasticity of demand (PED) for both alcohol and tobacco products based on estimated retail price (ERP), changes in tax revenues and volume removals. The various estimates of tobacco smuggling are also summarized here (see Table 1).

There was consistent decline in volume removals except in 2015, and consistent rise in ERP, resulting in average PED of -0.31 for 2013-2016. This paper’s estimate is lower than the PED findings of Quimbo, et al (2012) of -0.87 and DoH (2012) of -0.58.

But all three estimates have one conclusion: PED is below 1 and hence, is inelastic, meaning less- or non-price responsive. A 10% increase in the price because of higher taxes did not result in 10% decline in tobacco consumption, only 3% decline as estimated in my paper.

So for tobacco products, the Sin Tax law was successful only in raising more money for the government but a failure in significantly reducing tobacco use.

For alcohol products — beer, wine and distilled spirits — the average PED from 2013 to 2016 is 0.40 (see Table 2).

Both tobacco and cigarettes products exhibited inelastic demand. If government imposes even higher taxes, many smokers and drinkers will simply shift to (a) cheaper legal brands with lower taxes, or (b) cheaper illegal products with little or no taxes. Thus, a potential failure to address high smoking and drinking incidence and at the same time, revenue loss for the government.

Instead of calling for higher sin tax rates, government should focus on significantly controlling smuggled and illicit products that are cheap and readily available. Newton’s 3rd law of motion (for every action, there is an equal opposite reaction) restated — for every government intervention and taxation, there is an equal opposite distortion — seems to apply in our tobacco-alcohol taxation experience.

See also: 

Agri Econ 29, Bruce Tolentino lecture at BSP

Last November 28, I attended the lecture of Dr. Bruce Tolentino, "Rice and Inflation: the supply side" at BSP. Bruce is the new member of BSP Monetary Board, a former DA UnderSecretary and former IRRI Dep. Dir. Gen., I think.

Among the slides shown by Bruce:

 Room later became full. Connie Dacuycuy of PIDS was giving her own presentation. 

Among the conclusions by Bruce -- the PH needs more: R&D, tariffication and liberalization, resilient varieties, rice crop managers, mechanization,...

Former DOST Secretary Emil Javier also spoke, among his points....

I also do not support giving away more "freebies" to farmers, and to many other sectors. There is no such thing as "freebie", taxpayers pay for those things while politicians and bureaucrats get free PR points. 

Government resources for agri should be focused on improving rural infra, like more farm roads, wide and cemented roads; more dams and irrigation. Taxpayers' money should not be used for price support and direct subsidies.

See also: 

Tuesday, December 04, 2018

BWorld 270, Debating with Mr. RE

* This is my article in BusinessWorld last November 27, 2018.

In a paper, “Setting up the debate with Mr. Coal,” published in BusinessWorld yesterday, Mr. RE and climate scam Eddie O’Connor of wind-solar lobby made new wild claims but did not answer the points I made against his previous paper.

In my paper, “Corrupted science to justify renewables cronyism” in BusinessWorld last Oct. 11, I made these points that the RE/climate scam did not respond to:

(1) “Earth’s climate history is one of natural warming-cooling cycles since the planet was born some 4.6 billion years ago.” I showed there a chart, ”450 Million Years of Unrelatedness between Atmospheric CO2 and Temperature.”

In his paper yesterday, O’Connor showed a chart of ocean heat content the past 50+ years. Sorry but planet Earth was not born in the ’60s as starting point of temperature measurement. Here is another chart showing warming-cooling cycle (see Figure 1).

(2) “Solar price of P9/kWh at P54/US$ is not 2.9 cents but 17 cents/kWh. Wind price of P8.5/kWh at P54/$ is not 4.1 cents but 16 cents/kWh.”

In his paper yesterday, Mr. O’Connor made other wild and fake claims:

(1) “Of course, the developers of wind and solar agree to abolish mandatory dispatch.”

This is lie #1. Mandatory dispatch was put in the RE law of 2008 (RA 9513) because it was demanded by the solar-wind developers. Cost upon dispatch includes the total price (capex and opex; WESM price + FIT-All) and not just the marginal price. In 2018, the total price of solar is P9+/kWh, the total price of wind is P8.50/kWh, data from ERC.

(2) “Regarding abolishing the feed-in-tariff. It is not hard to agree to this, as it is already abolished.”

Lie #2. FIT is still there, not abolished. The FIT-Allowance in our monthly electricity bill has been rising from 4 centavos/kWh in 2015 to 12.40 in 2016, 18.30 in 2017, and 25.32 centavos /kWh since June 2018 billing.

(3) “I am alarmed, indeed devastated by the disappearance of some 60% of species by 2020 due to global warming.”

Lie #3. In a paper published in Nature this year, Steinbauer and 52 other scientist-co-authors reported “a continent-wide acceleration in the rate of increase in plant species richness, with five times as much species enrichment between 2007 and 2016 as fifty years ago, between 1957 and 1966… consistent across all [continental regions], with no single region showing the opposite pattern.” (See Figure 2.)

(4) “I am afraid that Mr. Oplas is a latter day flat earther for denying climate science.”

Lie #4. I believe in climate change and global warming, they are true, they are happening. What I do not believe is that they are “man-made.” On the contrary, the climate/RE scam and square-earther is the big denier: (a) deny that global warming has many precedents and not ‘unprecedented’; (b) deny that climate change is natural and cyclical; (c) deny that global cooling can happen after global warming phase; (d) deny that natural factors — the Sun, galactic cosmic rays, water vapour, clouds, geological degassing, AMO/PDO in the ocean, etc. — are big factors for climate change.

Finally, square-earthers (e) deny that coal remains a big if not biggest source of electricity for many Asia-Pacific economies (see Figure 3).

Square-earthers produce lots of lies and fake stories to fool the public so that the people will keep subsidizing their expensive, intermittent solar-wind energy.

BWorld 268, Market-oriented reforms in the Senate, November 24, 2018 

Energy 118, Climate lies to justify RE subsidies

An RE developer and lobbyist reacted to my paper, "Corrupted science to justify renewables cronyism". He wrote again to oped editor and his paper was published by BWorld. My reply to this in my next post.

November 25, 2018 | 11:01 pm

By Eddie O’Connor

MR. Bienvenido S. Oplas, Jr. writes in his Oct. 10 column, “Corrupted science to justify renewables cronyism,” “if wind-solar are indeed that cheap, then will the lobby agree to (a) abolish the priority and mandatory dispatch of wind-solar to the grid, and (b) abolish the feed-in-tariff (FIT) scheme of guaranteed high price for wind-solar, other variable REs for 20 years?”

Of course, the developers of wind and solar agree to abolish mandatory dispatch. So long as the system dispatchers continue with the practice of dispatching the next batch of electricity at the lowest marginal price, wind and solar will always be dispatched first. The marginal price of wind and solar is zero. Every system dispatcher in the world dispatches the lowest marginal cost first. Remember that once plants are built every marginal unit of coal costs circa $3.5+ cents depending on efficiency. A unit of electricity from a wind and solar plant, once built, costs 0.

Regarding abolishing the feed-in-tariff. It is not hard to agree to this, as it is already abolished. Thank God. Now perhaps we will get a chance to compete head to head with dirty coal. We can then do what has been done in South Africa, Chile, Mexico, and everywhere auctions are run and hammer coal into oblivion.

Mr. Oplas seems to be unaware that in an experiment conducted in the Royal Institution in London in 1861, the great Irish scientist, John Tyndell, passed radiation through a series of gases and observed that CO2 CH4 and H2O, absorbed radiation while oxygen and nitrogen did not. This experiment is easy to replicate, and any university to which Mr. Oplas has access, can replicate it.

I apologize to non-technical readers for the following but it is the real science which has driven the world to sign the Paris accord.

All radiation is quantized. These quanta, or packages of solar radiation, only interact with certain molecules, whose electrons can be jumped to a more energetic orbital. They then fall back releasing an increment of heat.

The chart here shows the heat buildup due to the absorption of radiation by greenhouse gases (see chart).

The slope of the global heat accumulation graph tells us how rapidly the Earth’s climate is building up heat. Over the past decade, the rate is 8 x 1021 Joules per year, or 2.5 x 1014 Joules per second. The yield of the Hiroshima atomic bomb was 6.3 x 1013 Joules, hence the rate of global heat accumulation is equivalent to about 4 Hiroshima bomb detonations per second.

The data comes from peer-reviewed research (Church et al. 2011) and has also been confirmed by more recent research (i.e. Balmaseda et al. 2013).

The slope of the global heat accumulation graph tells us how rapidly the Earth’s climate is building up heat. Over the past decade, the rate is 8 x 1021 Joules per year, or 2.5 x 1014 Joules per second. The yield of the Hiroshima atomic bomb was 6.3 x 1013 Joules, hence the rate of global heat accumulation is equivalent to about 4 Hiroshima bomb detonations per second. That’s nearly 2.7 billion atomic bomb detonations worth of heat accumulating in the Earth’s climate system since 1998, when we’re told global warming supposedly “paused.” That has to be the worst pause ever.

Again let me reiterate. I am alarmed, indeed, devastated by the disappearance of some 60% of species by 2020 due to global warming. I am similarly saddened to observe that even if we can limit the temperature increase to 1.5 degrees we lose 90% of all the corals in the oceans.

There were those who persisted in believing that the earth was flat for hundreds of years after it was demonstrated by Ferdinand Magellan to be round. I am afraid that Mr. Oplas is a latter day flat earther for denying climate science. Delighted to debate on my next visit in May 2019.

Eddie O’Connor is chairman of global renewable energy company Mainstream Renewable Power.

See also:

Tuesday, November 27, 2018

Santo Duterte vs the Catholic Church, again

Normally an idiot does not know his idiocy and arrogance so he braggingly announces it.

His dictatorship-leaning prouncements are consistent with his threat to behead a bishop, attacking an institution, in this case the church, that criticizes some of his policies. Even attacking a "stupid" God  that he does not believe. People and institutions should never criticize him, otherwise they are into drugs, they can be murdered.

We should not go back to a dictatorship. In a democracy, the President and his political party, administration are fair game. They allow drugs by the billions of pesos, they kill by the thousands, they will be criticized. They impose high taxes, they are smeared in corruption, they will be criticized. A dictatorship does not like being criticized, one reason why Du30 loves Xi Jinping -- a communist government does not allow organized and sustained criticism.

BWorld 269, IPR, private property and prosperity

* This is my article in BusinessWorld last November 23, 2018.

“Every Man has a Property in his own Person. This no Body has any Right to but himself. The Labour of his Body, and the Work of his Hands, we may say are properly his.”
— John Locke, Two Treatises of Government (1689)

Private property, not collective or communal or state property, is the cornerstone of social order, innovation and prosperity in the history of humanity. The most prosperous economies are those that respect and protect private property of the means of production. Backward communist China and Vietnam realized this later so they instituted reforms that allow and protect private property even if they retain the one-party socialist government.

Such private ownership apply to both physical and nonphysical or intellectual property, the latter including trademark and brand, patent on inventions, copyright on compositions, and trade secret.

In Asia in particular, economies with high per capita income — Singapore, Hong Kong, Japan, South Korea, Taiwan — are also those with high scores and global ranking in intellectual property rights (IPR) protection. And countries with poor or low per capita income also have low scores and ranking in IPR protection. Exception here is Brunei, high per capita income due to gas and oil-based economy and not FDIs-based like the five economies mentioned, and low scores and global ranking.

Data below are from four sources. (1) International Monetary Fund’s (IMF) World Economic Outlook (WEO) October 2018 database, (2) Property Rights Alliance’s (PRA) International Property Rights Index (IPRI), (3) World Economic Forum’s (WEF) Global Competitiveness Report (GCR), and (4) US Chamber of Commerce’s Global Innovation Policy Center (GIPC).

IPRI is composed of three factors, one of them is IPR protection. WEF’s global competitiveness index is composed of 12 pillars, pillar #1 is about Institutions and among the sub-pillars is intellectual property (IP) protection, and global rank is out of 137 countries in 2017 and 140 countries in 2018.

Now there are IPR-busting policies in several governments like plain packaging for tobacco products. Australia was the first country in the world to do it in 2012, and in the ASEAN Thailand wants to do it too.

Plain packaging (PP) is a ban on branding, it removes trademark, certain graphics, colors and logo, and allows only a generic name in a standard font/size with graphic warnings. And this is where the danger lies.

Corporate branding is elaborate and complicated, the bar codes can even show where the product was manufactured and when. By removing corporate branding via PP, generic branding is less complicated, less elaborate, and very easy to copy and reproduce by illegal producers and smugglers. Since these smugglers did not invest decades of business developing their brand, they can sell at a much cheaper price. And this will attract more smokers, more smoking, not less.

IPR issues like forced technology transfer and outright IPR robbery are among the thorny issues in the ongoing US-China mild “trade war.” The US says its companies are losing as much as $600 billion per year via piracy, counterfeits, imitations, trademark infringement and other IPR robbery, but China denies it.

Health socialists and activists who hate tobacco, alcohol, soda, confectionery companies and their products should realize that both nature and the market hate a vacuum. Remove the legal products and demonize their manufacturers, and that gives room for smugglers, criminal gangs and terrorist organizations to produce and sell their own fake, substandard but cheap products. This results are more smuggling and corruption, more smoking and drinking, not less.

See also: 
BWorld 238, Trademark ban and health alarmism, August 04, 2018

Saturday, November 24, 2018

China Watch 30, Distinction between CN people and CN communist government

The China economy and people are ok, the China communist government is not. Jack Ma and other Chinese businessmen are fine, Xi Jinping and other top officials of the China Communist Party are not. Sailing in the SCS/WPS under FONOPs is ok, controlling and “owning” that sea is not. Only a communist dictator government would say that they “own and/or control” that sea by stealing territories. And only a dictatorship-leaning PH government will be happy to kowtow to China dictatorship.

When Xi Jingping visited Manila this week, Nov. 20-21, see how President Duterte behaved -- he walked behind Xi, no PH flag behind him while Xi has the CN flag following him.

Have a friend from UP in the 80s, Lauro Gamboa, son of former Assemblyman Wilson Gamboa Jr. of Negros Occidental who was a famous anti-Marcos dictatorship legislator. See Lauro's posting last November 21 of which he later tagged me, what a bummer il-logic:

“we lost the shoal to china sa panahon ni AQUINO ... he is so stupid ... kaya nga nagreklamo sya sa HAGUE ...BULLSHIT ang HAGUE na yan ... may ruling nga sila sana to cure the STUPIDITY AT PAGKA-TRAYDOR NI AQUINO ... then what? they cannot even enforce it. Hague is asking the Philippines and DUTERTE to enforce the ruling by going to war with China? ... buti pa gawing pampunas sa pwet ang ruling nila ...”

If his father is still alive, I think he would disown his son Lauro Gamboa. The late Assemblyman Gamboa Sr. was a staunch anti-dictatorship legislator. Now his son supports a government that kowtows to China dictatorship.

China communist govt. bully stole Scarborough. The previous administration has no huge armaments to match those of CN but it has legal weapons to counter it. It used that legal weapon, it brought a case vs CN at the UN PCA, it won. Now Du30 the traitor kowtows to CN, his administration does not and cannot protest the stealing of more territories, bowing to Xi Jinping, the leader of China communist dictatorship.

Lauro and his fellow Du30 supporters asked who will enforce that PCA ruling? Many. The US’ Trump, UK’s May, JP’s Abe, AU’s Morrison, etc ARE enforcing the PCA ruling – that portion of SCS/WPS is international waters, NOT owned or controlled by China communist government. So Trump, Abe, May, Morrison, are correct in sending their battleships and aircraft carriers in that portion of SCS.

Lauro further wrote, “AQUINO who facilitated the occupation of the shoal by China.”
This is a very idiotic statement of course. If he “facilitated” it, why did he go to the UN PCA? On the contrary, he protested it, opposed it, that is why he went to the PCA. Lack of military armaments does not mean a country has zero other option to protest big communist dictator bully governments like CN.

Lauro further wrote, “because AQUINO is so stupid !!! sila dalawa ni TRILLANES…”
Huh, going to the UN PCA to protest CN communist bullying and stealing of territories is “stupid”? Far out. It is wisdom to protest bullying, dictatorship and stealing of territories. Use legal weapons, not military weapons if one is weak militarily.

CN govt does not need a Trillanes or anyone else to know that PH has no big military to defend its territorial claims in SCS/WPS. Even a grade schooler in CN and PH would know that. But what CN did not know was that the PH under the previous administration has assembled a strong, intelligent legal team when it went to the UN PCA. So CN communists did not know that the PH has a chance of winning there and it won.

This is treason, verbal surrender by a President of a country.

Duterte says China 'already in possession' of South China Sea, tells US to end military drills
PUBLISHED NOV 15, 2018, 5:16 PM SGT   Raul Dancel  

"China is already in possession (of the South China Sea). It's now in their hands. So why do you have to create frictions… that will prompt a response from China?" -- Duterte.

Duterte followers do not find this idiotic and treason? ONLY the CN Communist government + Du30 communist lover say that CN controls and possesses that area. The UN PCA, the US, UK, AU, JP, other governments do NOT recognize CN possession of that area. Go Trump, Go May, Abe, Morrison, send your battleships to that area under FONOPs.

See also:

BWorld 268, Market-oriented reforms in the Senate

* This is my article in BusinessWorld on November 20, 2018.

“Every family should have the right to spend their money, after tax, as they wish, and not as the government dictates. Let us extend choice, extend the will to choose and the chance to choose.”
— Margaret Thatcher, UK Prime Minister (1979-1990)

Advocates of forced collectivism, health socialism in particular, will be unhappy with that advice from the Iron Lady of the United Kingdom. For them, health care, education, many other services are not personal and parental responsibility but state responsibility. So the state is justified to slap tax-tax-tax anywhere, regulate-prohibit anytime, because the state has “endless responsibilities” that often lead to endless abuses and corruption.

In a column yesterday in BusinessWorld, “Watching out for UHC” by Ms. Diosana of AER, they attacked Sen. Ralph Recto because he “intends to give more PhilHealth benefits to those who can pay more. Under the section “Entitlement to Benefits” of the approved SB 1896, he inserted this provision: “PhilHealth shall provide additional NHIP benefits for direct contributors, where applicable.… the two-tiered benefit scheme will also exacerbate health inequity in the country.”

This market-oriented reform initiated by the Senator is correct. There should be a two- or multiple-tiered system in health care, inequality in contribution should lead to inequality in getting benefits. Socialism wants inequality in contribution but equality in social results.

If people can afford to buy alcohol, tobacco, fatty food, nice cellphones, etc., it is assumed that they should also have some resources to buy health insurance that will augment state-sponsored health care.

SB 1998 led by Sen. Cynthia Villar will untie the heavy hands of the state and its bureaucracy to restrict and prohibit free trade in rice. By replacing high quantitative restrictions (QRs) with tariffs, the NFA’s monopoly power to import through its favored and crony traders will be clipped.

Free trade in rice means freedom to choose from various rice exporters in Asia, and freedom for consumers to choose cheaper rice, which will help reduce inflation rate.

SB 1439 by Sen. Sherwin Gatchalian is meant to reduce the widespread bureaucratic delays in power plant construction caused by various government agencies, national and local, which lead to fewer power plants than potential, and higher electricity prices for consumers. The delays and costs caused by the bureaucracy can be horrible, based on the actual experience of a hydro plant developer (see table).

A total of 359 signatures, from 74 regulatory agencies and bureaus, involving 20 different laws, requiring 43 different contracts, certifications, endorsements and licenses.

So the EVOSS bill will create a single electronic network-based platform under the DoE, and power plant proponents and developers will submit all documents and permits and the respective agencies are given timeline to act on applications, and if they fail to act on the timeline, the application is deemed approved. Clipping the long tentacles of bureaucracies and corruption.

SB 2073 by Sen. Ralph Recto intends to lift this obligatory and coercive training that costs professionals huge money. R.A. 10912 or the CPD Act of 2016 requires professionals to earn 45 CPD units of seminars and trainings that cost between P10,000 to P30,000 per person every three years, otherwise they cannot renew their PRC license.

That CPD Act and its mandatory order is lousy for at least two reasons: (a) Professionals normally attend various seminars, conferences and trainings in the course of their work, and (b) the market, the customers are the best judges and natural regulators. Lousy professionals are punished by customer dissatisfaction that is easily spread through social media, they lose clients.

There are many anti-market, statist or state-worship bills in the Senate of course but those proposals and bills that advance market-oriented reforms need to be highlighted.

See also: 
BWorld 265, Integrated PPP vs Hybrid PPP: The case of Kaliwa Dam, November 15, 2018 

Friday, November 23, 2018

Energy 117, Cheap oil and Trump

In terms of climate and energy policies, this leader is bright. Obama, HRC, the Dems and other climate alarmists are bonkers :-)

Some news reports:

Coldest Thanksgiving In 150 Years As Northeast Hit By "Siberian" Temperatures
by Tyler Durden Thu, 11/22/2018 - 23:08

Thanksgiving Day will be coldest in over a century for millions in U.S.
Nov. 22, 2018 / 12:48 AM GMT+8 /
By David K. Li and Alex Johnson

Winter is Coming – Super Grand Solar Minimum
brian wang | November 22, 2018 

Oil Crashes To One Year Low, Brent Below $60 As Saudis Pump Record Crude
by Tyler Durden Fri, 11/23/2018 - 08:26

(Original post, November 14, 2018)

Wow, WTI prices today went down to $55.7 a barrel ($4 decline in a day), Brent $65.5, Dubai $69.8.  Despite rising global demand, despite political and military tensions in big oil exporting countries (Iran, Venezuela,...), oil supply keeps increasing. Thank you America (latest output 11.6 million barrels a day), thank you Trump. Oil prices must fall further.

Many anti-Trumpistas will be unhappy that the man is further opening up US energy potentials, especially in oil, gas and coal? They are unhappy that oil and energy prices are going down? They want the Dems to lock up oil and gas reserves and go back to $100 a barrel or higher?


I applaud my friends who work in the fossil fuels sector, they help make our lives more convenient, more modern, we have electricity 24/7 with no blackouts, streets and roads are lighted at night, less accidents, less crimes, our lives are safer.

For the anti-fossil fuel guys, I still have to see them riding bicycles or skateboards or manual scooters to work, meetings or schools. I still have to see them riding giant kites, solar planes, Uber brooms, instead of airplanes that use oil, when they announce and post photos of their travels abroad or in the country.

Thank you Trump. You are correct, the Dems, the UN, Al Gore, NYT, CNN, WaPo, etc are wrong in their climate alarmism and renewables cronyism lobby. Climate change (warming-cooling-warming-cooling...) has been with us for the past 4.6 B years, with us for the next 4 B years or so. Fossil fuel energy will allow us to adapt better under global warming or global cooling period. 


Meanwhile, last November 08, a Filipino friend in the US who is a consistent anti-Trumpista, anti-fossil fuel activist who seems to frequently fly from California to the PH, elsewhere, posted this and tagged me despite knowing my criticism of renewables cronyism. It's like challenging me to another debate despite our many debates before.

I commented that he has undeniable daydreaming. In 2017, 50% of PH total electricity production came from coal power. From his beloved but expensive, subsidy and cronyism-dependent solar + wind? Only 2%. So if he wants massive blackouts, be an Ambassador of N.Korea darkness in the PH, elsewhere, he can go ahead. I also adviced him that if he keeps spreading energy stoopidity, he better keep it in his own wall, no need to tag me.

See his reply:

Joe Real: Nonoy Oplas your future grandchildren would surely know who’s stupid! For now your coal stinks and losing. Consider changing careers bro! Better advice than yours.

The guy wants massive darkness. When there is frequent blackouts, the poor will use more candles, then have more fires and deaths. The rich will use more gensets, then more air and noise pollution, what a stoopid proposal. Again, I adviced him to keep his energy stoopidity in his own wall, no need to spread it in other people's wall, like mine.

See his second reply, worse:

Joe Real: Nonoy Oplas, I have more world credentials than you in Math and Physics, and have many best scientific papers, and yet you call my energy analysis stoopid? Only because Facebook and I allow you my friend and I care for you and our fellow friends. I have more well cited scientific publications than my colleagues. I am giving you the best advice as a friend. I will respect your opinion if you resist. The economics aren’t in the coal’s favor now. I have excellent proposal for coal, however, they can be turned into humic and fulvic acids that can increase the soil’s physical properties for ecosystems restoration and agricultural productivity. After all, I’m just an AgroEcologist by passion and credentials too! I am spreading the solution and you won’t be able to stop it. Resistance to goodness is futile.

What an insecure and arrogant position. I was attacking his proposal, not him personally, he cannot distinguish the two. What's the point of announcing one's credentials in a policy debate?

I checked his fb post on this thread, it's gone. He deleted it. Lousy.

BWorld 267, Poverty data vs banking, mobile phones and Internet access

* This is my article in BusinessWorld last November 15, 2018.

“Something terribly wrong with a program that grows ever larger even when prosperity for everyone else is increasing. We should measure welfare’s success by how many people leave welfare, not by how many are added.”
— Ronald Reagan, 40th US President

Among the economic phenomena that I am skeptical about is the continued high poverty incidence of the Philippines. I often go to provinces especially in rice farming villages and among the things I notice is that the poor hardly ride animals or bicycles anymore, they ride motorcycles, electric bikes, or buses and vans. Farmers hardly use cows and carabaos to till the farms, they use hand tractors or big tractors. The poor now communicate via e-mails and social media, not slow mails or smoke signal.

I suspect that there is some corruption in the design and measurement of poverty because there is big public money involved in high poverty: multi-billion pesos of continuing loans with WB-ADB; big budget yearly for welfare agencies like DSWD, DepEd, CHEd, DoH; big pork barrel (explicit and implicit) for legislators, national and local governments; big projects for consultants and academics; even big indirect funding for NGOs.

From ADB’s Key Indicators for Asia and the Pacific (KI) 2018, here are some data on poverty (see Table 1).

See that the Philippines has higher poverty incidence than Cambodia, Indonesia and Vietnam, and nearly similar as India and Laos?

There are several possible proxies for poverty, like low access to formal credit markets like bank accounts, low access to modern telecoms and the web. From four selected factors, they belie the high poverty incidence data of the Philippines: Cambodia, Laos, Myanmar and Vietnam (CLMV) people have lower access to formal credit markets, LTE mobile and Internet access. India and Indonesia have lower access to LTE network, mobile phones, Internet access, etc. (see Table 2).

Reagan was right. Any serious, honest and successful welfare, anti-poverty programs by government should result in a decline in the number of the poor and state-dependent, subsidy-seeking people.

What we often have are either dishonest, unsuccessful welfare and anti-poverty programs so that the current poverty incidence is similar to those three decades ago and will remain so two decades from now. Or the programs somehow were successful but implementers, lenders and consultants have invented new schemes so that revised definitions and measurements of poverty always lead to high poverty incidence.

So government invents new taxes and fees, or raise existing taxes and fees, to finance new programs and bureaucracies to “fight poverty” endlessly.

If there is more honesty in reducing poverty, the budget for welfarism, the number of bureaucracies and politicians, the rates of taxes and fees, should flatline and even decline through time. This is hardly happening.

Here is an old anecdote about poverty:

Politician: Thank God for poverty, it provides my political platform.
Consultant: Thank God for poverty, my occupation is to study it.
ODA lender: Thank God for poverty, we endlessly lend money for it.
Poor: I feel so appreciated, thank God.

See also: 
BWorld 264, Energy by legislation promotes corruption, November 14, 2018 

Saturday, November 17, 2018

Agri Econ 28, SE Asia rice production is rising, not declining

"Man-made" climate change (CC) / global warming is causing SE Asia rice harvest to decline? Another proof that the climate alarmism movement is based on dishonesty, deception and lies. SE Asia rice production keeps rising, not falling.

Climate Change Causing Southeast Asia Rice Harvests to “Dwindle”… NOT!
David Middleton / November 14, 2018

Crop losses are caused more by rising rivers and lakes, heavy flooding by monsoon rains, not by rising sea level. And here is the climate alarmism article from the Straits Times, it keeps harping about "rising sea level", far out. 

Last July, the Philippines, Central and North Luzon in particular, experienced bad monsoon, about 2 weeks of rains day and night. Many rice fields were heavily flooded, young crops were damaged, some farmers have to replant. By August, another monsoon, 1 week of rains day and night, another round of crop losses for many rice farmers. Also bangus/milk fish farmers, their fish cages were overflowing with water, hundreds of thousands of caged fishes escaped and began swimming on the roads and streets. By September, a strong storm "Mangkhut" that dumped huge volume of rain water again aside from its strong winds. Good that somehow many crops survived and there were harvests last October.

We need more dams to 'harvest' and store lots of rain water during the wet season yearly, reduce flash flood. We also need large-scale dredging of many rivers and lakes that become depository of eroded soil, mud during flash flooding. But governments would rather spend huge tax money on many climate bureaucracies, climate meetings and junkets, in the country and abroad. Very wasteful.

In terms of absolute production, the giant rice producers are #1 Indonesia, #2 Vietnam, #3 Thailand, #4 Myanmar. PH only #5. One reason is huge rice lands devoted to rice farming in those top 4 countries. VN and TH for instance have about 10-11 M hectares each for rice farming alone, PH has about 4.4 M hectares.   Chart from the WUWT article.

CC is REAL, it is true. But it is not man-made, it is nature-made. It is natural, and cyclical. We've had CC since the planet was born 4.6 B years ago, we have CC now, and we'll have CC in the next 4 B years or so. Warming-cooling-warming-cooling-warming-cooling....

In 24 hours, it’s day-night cycle.
In a year in the tropics, it’s wet-dry cycle.
In the N and S Hemisphere, it’s winter-spring-summer-fall cycle.
In the ocean, it’s El Nino-La Nina cycle (about 6 years on average)
In the atmosphere, it’s water evaporation-condensation cycle.
In the Sun, it’s solar maximum-minimum cycle (every 11 yrs on average).
Then there are hydrogen cycle, carbon cycle, etc.

The climate alarmism movement is a denier. Deny that there is warming-cooling cycle. Deny that CC is natural and cyclical. Deny that global warming happened in the past even with zero car, mall, coal plant. Deny that global cooling will happen after the global warming phase. Deny that CO2, the gas that humans and animals exhale, the gas that plants and trees need to produce their own food, is a useful gas.

Even IRRI joins the climate alarmism movement and does not recognize that CC is natural and cyclical. After the medieval warm period (MWP), it was followed by the little ice age (LIA) that ended in mid-1800s, then global warming resumed, the modern warm period, now we are in a transition towards global cooling phase. We should expect more rains and flood, not less. We should have more dams, not more climate bureaucracies and junkets.

See also: 

Friday, November 16, 2018

BWorld 266, Inflation, GDP and Duterte

* This is my article in BusinessWorld on November 13, 2018.

Last week, the October inflation and 3rd quarter GDP growth data were released by the Philippine Statistics Authority (PSA) and the numbers confirm the fear of many observers of deteriorating macroeconomic fundamentals of the Duterte administration.

The big jump in inflation rate was triggered by the TRAIN law. Only 2.9% in December 2017, went up to 3.4% in January 2018 (first month of TRAIN law), 3.8% in February, 5.7% in July, 6.4% in August, 6.7% in August and same 6.7% in September. The year to date (ytd, January to October) inflation rate then is 5.1% or nearly double 2017’s 2.9%.

The good news is that this may be the peak inflation for the year. Any upward pressure in prices because of the provisional fare hikes and wage hikes implemented this November will be compensated by low world oil prices. WTI oil peaked at $76.4 a barrel last Oct. 03, down to $60.6 a barrel on Nov. 11.

The bad news is that compared to many neighbors in Asia, the Philippines has the biggest jump in inflation this year compared to last year. Some countries even experienced decline in inflation despite the high world oil prices (see Table 1).

The high inflation rate coupled with rising interest rates as the BSP tries to temper price uptick via monetary policy has resulted in low consumer confidence.

Recall the basic macroeconomic equation, GDP = C + I + G + (X-M), where C is household consumption, I is investment, G is government consumption, and (X-M) is net exports less imports. C is huge, 61% of GDP and the three others constitute only 39%. C growth has been declining, 6.2% in Q4 2017, went down to 5.7% in Q1 2018 (with TRAIN law), 5.6% in Q2 then 5.2% in Q3. This is bad.

As a result, overall GDP growth of the Philippines has been pulled down, from a high 6.9% in 2016, 6.7% in 2017, and only 6.3% in 2018 Q1-Q3. By way of recommendations, the following may be considered by the Duterte government.

One, suspend part two of TRAIN excise tax hikes for oil and coal, full year 2019 and not reinstate them after the May 2019 elections.

Two, freeze or suspend raising the Motor Vehicle User’s Charge (MVUC) or road user’s tax, (RA 8794). Like oil tax hike, this has inflationary pressure, a good observation and proposal from the Senate President Pro Tempore Ralph Recto.

Three, continue the agricultural trade liberalization, replace the quantitative restrictions (QR) with low tariff and remove NFA importation monopoly.

Four, cut VAT rate from 12% to around 8% and reduce the exempted sectors. Malaysia is the best example for this, it has a gross sales tax (GST) of 6% until May 2018 then abolished it in June, a campaign promise of PM Mahathir. Its average inflation rate four months before (February 1.4%, March 1.3%, April 1.4%, May 1.8%) was 1.5%, became 0.3% four months after (June 0.8%, July 0.9%, August 0.2%, September 0.3%).

See also: 
BWorld 259, Inflation, fare hikes and TNCs competition, October 17, 2018