Government and Taxes

Sunday, March 26, 2023

BWorld 589, Sustained growth via stable and ample electricity

* BusinessWorld March 20, 2023.
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The Independent Electricity Market Operator of the Philippines (IEMOP) is holding a big conference, the Philippine Electric Power Industry Forum (PEPIF) 2023, with the theme “Partnering to Achieve a Secure and Reliable Supply of Electricity for the Country,” on March 20 and 21 at Diamond Hotel, Manila. It is in partnership with the Department of Energy (DoE) and the Energy Regulatory Commission (ERC). BusinessWorld is a media partner of this important event.

Among the important parts of the two days program are the overview of policies and programs of the DoE and ERC, Keynote speeches are by the Senate President Pro Tempore, and the Chairpersons of the Senate and House Committee on Energy.

Then the discussions will tackle the challenges and opportunities in the generation sector, the distribution and retail electricity supply, the transmission development program, the privatization program by the Power Sector Assets and Liabilities Management Corp. (PSALM), and the relaunching of nuclear energy program in the Philippines.

Electricity security and reliability is very important when it comes to attaining fast and sustained growth. To help illustrate this point, I construct this table (See Table 1). The numbers show many important points.

One, compared to our neighbors in the ASEAN-6 (Indonesia, Vietnam, Malaysia, Thailand, Philippines and Singapore), the Philippines had the lowest electricity generation in the region until 2021, with only 108 terawatt-hours (TWH). This level was attained by Vietnam in 2012, by Malaysia in 2007, by Indonesia and Thailand in 2002, by Taiwan in 1992, and by South Korea in 1989 or more than three decades ago.

Two, in kilowatt-hour (KWH) per capita generation, ours is also among the lowest in the region.

These two indicators suggest that the Philippines does not have sufficient electricity security and reliability. When the power supply is low, it means yellow-red alerts are not far behind, and potential blackouts will continue to harass businesses and households.

Three, fast growth in power generation leads to fast GDP growth. A good fit and experience in this trend are China, India, South Korea, Taiwan, and the ASEAN-6.

Four, slow growth in power generation leads to slow GDP growth. Good examples are the G7 countries — the US, Canada, Germany, France, the UK, Italy, and Japan — especially from 2006 to 2021 (See Table 1).

That the Philippines has thin power reserve margins coupled with supply withholding by big gencos is not good. Last week I attended Kamuning Bakery Café’s Pandesal Forum, hosted by Wilson Lee Flores, where ERC Chairperson Monalisa Dimalanta spoke on “Philippine energy security and affordability.”

One question that was asked of Ms. Dimalanta was how the ERC would go about enforcing contracts, particularly the power supply agreement (PSA) between Meralco and units of SMC Global Power Holdings Corp. Ms. Dimalanta said that the ERC has to implement and assert the PSA as it relates to prices and continuous power supply to consumers, including requiring the utility to enforce the contract. I like this lady — she really practices the rule of law. The law and contract apply equally to unequal people and circumstances. The fixed-price contract was voluntarily signed and not coerced.

Related stories recently reported in BusinessWorld are: “Mindanao-Visayas grid connection seen completed by June” (March 13), “ERC to review Meralco-GNPD power deal” (March 13), and, “ERC sees new missionary charge taking effect in May at earliest” (March 16).

On relaunching nuclear power in the Philippines — tackled in Day 1 of the IEMOP conference — there were two related reports in BusinessWorld: “Meralco chairman says plan to go nuclear may take 10 years for PHL” (March 6), and, “Health impact added to nuclear plant objections” (March 12).

Nuclear power has been used to generate power since the 1960s, with some 2,800 TWH generated in 2021. Big users with generation of at least 150 TWH are the US, China, France, Russia, and South Korea. Thousands of hospitals and healthcare facilities worldwide have benefited from having ample electricity contributed to by nuclear power, more than offsetting the hypothetical health dangers of this technology.

The Philippines’ Bataan Nuclear Power Plant (BNPP) has 620 MW in installed capacity. If the average capacity factor is 85%, then its dependable capacity is 527 MW. So, in one day, or 24 hours, it can generate 12,648 megawatt-hours (MWH) of electricity; in one year, or 365 days, it can generate 4.62 million MWH or 4.62 TWH.

If the BNPP was allowed to operate in 1985 or 1986, then it could have contributed or added 20% of total generation in 1985, and 4.2% in 2021 (See Table 2).

There are important lessons from all this in planning for electricity security, stability, and reliability are the following.

One, we should measure power addition and security in MWH or TWH, not MW. Coal, gas, and oil plants, plus nuclear have higher energy density and capacity factor than intermittent and unstable sources like wind and solar.

Two, electricity price control should go. The most expensive electricity is no electricity — blackouts. Using candles or gensets are dangerous and more costly. When power supply and reserves are high, prices generally decline due to competition.

Three, since the Philippines targets to have sustained GDP growth of 6-8% a year, power generation must also increase 6-8% a year. That means from 108 TWH in 2021, we should have 116 TWH in 2022, 124 TWH in 2023, 133 TWH in 2024, 142 TWH in 2025, 152 TWH in 2026, 163 TWH in 2017, and 174 TWH in 2028. There should be an annual increase of 9-11 TWH a year.
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Saturday, March 25, 2023

Covid 80, 3rd anniversary of lockdown

Belated post, but last March 16 was the 3rd anniversary of "two weeks to flatten the curve" in the Philippines and many countries. That day, all flights and boat trips, domestic and international were cancelled; all buses, jeeps, taxi, Grab etc were halted; all malls, many restos and shops were closed, etc. Even mobility of people on their cars were limited and restricted. Anyway, "only 2 weeks to stop the virus spread" of heavy draconian lockdown.

Two weeks passed, wrong mistake palpak. The bright infectious disease "experts" said "two more weeks" of lockdown,... Became two months, became two years. Now three years and several restrictions remain like mandatory facemask in many areas, inside planes, even requiring vaccination cards in some hotels and restos. Or requiring antigen test for all guests like what they do at the Senate and House of Reps.

The experts from WHO, DOH, FDA, PMA, PSMID, UPCM, OCTA, etc even added or didn't oppose the mandatory face shield in public. All bright moves and restrictions.

Three years now the same guys who invented the draconian lockdown dictatorship, mandatory vaccination, etc. are still in their places advising the new administration to continue the scaremongering as much as possible.

We look back at how authoritarian and lockdown-loving dictators many physicians, other professionals and media can be.

Some basic rights below -- human rights, inalienable rights not given or granted by government -- were trampled by governments and their bright "experts".

Some vax-related injuries.

Both materials prepared by the Concerned Doctors and Citizens of the Philippines (CDC PH), Covid Call to Humanity (CCH), Juan Dakila (lawyers' group), and Legal Lightworkers for Life and Liberty (4L), and Post Pandemic Medical Help Advocates for Vaccine Injured (PPMH AFVI).

Moving on, we wait for another scary Frankenstein virus that will be announced so that another round of lockdown dictatorship will be imposed. That horrible prolonged lockdown has no precedent yet it happened. Now that it is a precedent already, we can expect the same or worse forms of lockdown dicatorship. Maybe new strains of Marburg virus, Ebola virus, others to scare the public again.

Meanwhile, a good article:

Bonfire of the Covid Vanities
By Gabrielle Bauer, MARCH 15, 2023
https://brownstone.org/articles/bonfire-of-the-covid-vanities/

...With three years of pandemic history behind us, it’s high time to put these clunkers to bed. I’ve collected a baker’s dozen of the slogans that have dogged us for the past three years, and explain why they deserve to be torched and thrown into an unmarked grave.

Two weeks to flatten the curve.

Stay home, save lives.

Follow the science.

We’re all in this together.

Muh freedumb.

Mask it or casket.

The virus doesn’t discriminate.

Can’t do X if you’re dead.

Listen to the experts.

My mask protects you, your mask protects me.

Pandemic of the unvaccinated.

You may be done with Covid, but Covid isn’t done with you.

Stay safe.
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BWorld 588, Addressing high inflation and tax leakage

* BusinessWorld, March 13, 2023.
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In East Asia, only the Philippines and Japan sustained high inflation until January-February this year. Indonesia, Singapore, and Vietnam have generally trended flat while Thailand, Malaysia, China, South Korea, and Taiwan have declining trends.

This suggests that internal or domestic factors affect our commodities market more than external factors. The main contributors of high inflation in the Philippines, from the fourth quarter 2022 until February 2023 are transport, electricity and fuels, food, and alcohol-tobacco. (See Table 1.)

So, despite the series of interest rate hikes by the Bangko Sentral ng Pilipinas from only 2% in May 2022 to 5.5% last December, this demand restriction scheme did not work as expected because the commodities that experience high inflation until today are basic necessities like food and electricity.

The non-monetary measures needed both in short- and long-term would include: 1.) more food production preferably via corporate farming; 2.) more food imports as they are cheaper now — rice, corn, wheat, cooking oil, beef, hogs, etc.; 3.) ending or limiting hyper taxation of alcohol and tobacco as people consume either legal products with high taxes, or smuggled products with zero revenue for the government, and, 4.) more power generation, reducing or cutting taxes on fossil fuels because about 80% of power generation is from coal, gas and oil.

The creation of the Inter-Agency Committee on Inflation and Market Outlook (IAC-IMO) is justified. The Department of Finance (DoF) may have to bend over backwards on energy taxes in order to tame inflation.

Recall that when the Tax Reform for Acceleration and Inclusion (TRAIN) Law of 2017 (RA 10963) was implemented in 2018 — a series of tax hikes on diesel, gasoline, LPG, coal, sugary drinks, etc. — the added costs were immediately passed on to the consumers, as was the inflation expectation for 2019. In 2018, only the Philippines experienced a big jump in inflation, from 2.9% in 2017 to 5.3% in 2018, while most of our neighbors had flat or declining inflation trends. The inflation rates from 2017 to 2018 were as follows: Malaysia 3.8% and 1%, Singapore 0.6% and 0.4%, Indonesia 3.8% and 3.3%.

When diesel taxes and prices go up, the cost of operation of tractors, harvesters, threshers, trucks, irrigation pumps, buses, boats, gensets for off-grid islands, etc. rise 100%. And this cost is passed on to the prices of agriculture and food products, contributing to higher food inflation.

World oil, gas, and coal prices have been declining — they are now lower than they were pre-Russia invasion. Domestic food production will be aided by lower fertilizer prices, supplementary food importation will be aided by cheaper food prices abroad, and electricity generation will be aided by lower coal prices. (See Table 2.)

Non-monetary tools and opportunities to significantly reduce inflation are currently available. Government, especially the economic team, should optimize this window of opportunity.

Aside from high inflation, government must also grapple with high public debt resulting from the huge budget deficit and borrowings yearly from 2020 to 2022. The major policy tools and options should include: 1.) a drastic cut in spending and subsidies, 2.) the large-scale privatization of some government assets and corporations, 3.) imposing tax hikes in some sectors, and avoiding giving tax exemptions (like the lousy but successful lobby to impose zero taxes on electric vehicles), and, 4.) have better tax administration, stronger rule of law, and minimize leakage via smuggling and illicit trade.

On Point 1, key measures should include the Government Rightsizing plan and military and uniformed personnel (MUP) pension reform. On Point 2, the Philippine Amusement and Gaming Corp. (better known as PAGCOR) and other government enterprises are good candidates because there is no market failure when it comes to running casino and gambling enterprises.

On Point 3, special privileges for renewable energy must be curtailed — they have lots of legalized ways of evading taxes: zero VAT on sales, zero income tax for seven years of operation and after that only 10% corporate income tax, zero income tax for carbon credits, plus Nolco (net operating loss carry-over deduction), and zero VAT on imports of equipment. Plus, there is feed-in tariff (FIT) or a guaranteed high price for 20 years, and priority dispatch in the grid even if its price is higher than that of conventional power sources.

On Point 4, when looking at estimates of smuggling nationwide and non-payment of excise tax, estimates for VAT alone range from P250 billion to P500 billion yearly. Among the biggest illicit trade is that of tobacco products, with estimates of government tax losses ranging from P25 billion to P100 billion yearly. (See Table 3.)

Aiming for a 50% reduction in smuggling will give the government some P13 billion to P50 billion more yearly already. The rule of law should be stronger when it comes to tax enforcement.
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Friday, March 24, 2023

Belgica papers 2, The unalienable rights of man and the govt's protection of life, liberty and property

Good political philosophy and governance papers by Atty. Belgica, reposting below.
(This image from https://twitter.com/johnlockeingood/status/667959259594801152)

The unalienable rights of man and the govt's protection of life, liberty and property
By Jeremiah Belgica, April 24, 2022
https://www.manilatimes.net/2022/04/24/opinion/columns/the-unalienable-rights-of-man-and-the-govts-protection-of-life-liberty-and-property/1841045#

ARTICLE 3 of the Philippine Constitution contains our Bill of Rights. This is perhaps the most important list that contains one's protection against any governmental abuses. The very first part of Section 1 states, "No person shall be deprived of life, liberty or property without due process of law..." This portion merely echoes what all free nations refer to as Man's Unalienable Rights. These rights are neither granted nor could be taken away by any government or institutions, simply because it is considered to be sacred and divinely given. In fact, the protection of the unalienable rights to life, liberty and property is one of the most compelling reasons and bases for the creation of a civil government. This connection between the protection of the unalienable rights and the creation of government by the people is eloquently stated by Thomas Jefferson in the US Declaration of Independence, to quote:

"We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness — That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed."

What happens, however, when the very institution that was created to protect the unalienable rights of the people becomes the very institution that threatens and encumbers them? The result would be catastrophic and tragic. World history is never lacking with examples that show oppression by government or its institutions of the people's rights to life, liberty and property, which led to their revolting against the powers-that-be. Great examples of which are the American Revolution, French Revolution and our very own Philippine Revolution, to mention a few.

But there is a more subtle way that these unalienable rights could be abused by government instrumentalities. This is through red tape or excessive bureaucratic regulations and processes. Red tape is defined by Republic Act (RA) 11032 or the "Ease of Doing Business and Efficient Government Service Delivery Act of 2018" as "any regulation, rule or administrative procedure or system that is ineffective or detrimental in achieving its intended objectives and, as a result, produces slow, sub-optimal and undesirable social outcomes."

In the end, red tape breeds more opportunity for fixing and corruption to fester within the bureaucratic system leading to more bureaucratic problems. This could result in deprivation of the people from the productive use of their time (life and liberty) and resources (property).

This is the reason why we in the Anti-Red Tape Authority continue to push for reforms within government agencies and institutions that would capacitate them to appraise proposed and existing regulations and processes as to whether they are causing unnecessary bureaucratic burden to the people...

The true statesman and government streamlining
By Jeremiah Belgica, May 1, 2022
https://www.manilatimes.net/2022/05/01/opinion/columns/the-true-statesman-and-government-streamlining/1841906

BRITISH economist and philosopher Edmund Burke once said, "The great difference between the real statesman and the pretender is, that the one sees into the future, while the other regards only the present; the one lives by the day, and acts on expedience; the other acts on enduring principles and for immortality."

It is important that in order for any society to survive in constantly changing times is to have timeless principles as its bedrock and foundation. An example of which is the concept of a statesman. A statesman is no ordinary governmental leader but is a kind of public servant leader who is wise, skillful and well experienced in handling public matters and concerns. He is also one who people normally believe to be of good character and is of well repute. Thus, every generation needs to have their own statesmen serving them in different capacities in various public institutions for it to develop and enrich everything that it inherited from the past and lead the way as it passes its gains to the succeeding generations....

BWorld 587, Inflation, government spending and borrowings

* BusinessWorld March 6, 2023.
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The Philippines’ inflation rate of 8.1% last December, then 8.7% last January, was high but it is not unique to us — the country just joined Singapore, Thailand, and Taiwan in hitting a 14-year high in its inflation rate. Japan, the US, and the UK have hit 41-year highs while Germany has had its highest inflation rate in 70 years.

Contrary to the dishonest narrative that global inflation started rising only when Russia invaded Ukraine on Feb. 24, 2022, the start of the increase in inflation coincided with US President Joe Biden’s succeeding Donald Trump. US inflation was only 1.4% in January 2021, which was Trump’s last month in office, jumping to 7.5% in January 2022 or 12 months under the Biden administration and one month before the Russia-Ukraine war. (See Table 1).

Last week, the Cabinet economic team gave a briefing at the House Committee on Appropriation about government policies to control inflation. Finance Secretary Benjamin Diokno discussed the high fiscal and revenue performance in 2022 which exceeded targets, and identified interventions to ensure food security and energy security because the main drivers of the 8.7% inflation were food and energy (electricity, fuels, transportation).

Budget Secretary Amenah Pangandaman discussed subsidy programs to mitigate the inflationary impact on the poor, like the fuel subsidy for public transport (P3 billion), conditional cash transfer (P102.6 billion), social pension for indigent seniors (P25.3 billion), agriculture and agrarian reform support (P186.4 billion), and so on.

National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan highlighted that the 7.6% GDP growth in 2022 was the highest in 46 years, and that the unemployment rate of 4.3% was the lowest since April 2005 or a 17-year low. Then Bangko Sentral ng Pilipinas (BSP) Governor Philip Medalla emphasized that strong monetary policy action, a higher BSP rate was necessary given continuing global risks outlook and higher inflation expectations.

I agree with most of the policy responses given by the economic team. Now I want to add some specific measures to complement those policies.

One, drastically cut the budget deficit and the need for borrowings/financing. When government borrowed an average of P2.24 trillion a year from 2020-2022 compared to only P0.8 trillion a year prior, the government competed for funds with corporate and household borrowers, which saw interest rates rise, and inflation rate rises too.

The Philippines’ public debt, actual plus guaranteed, has increased from P8.22 trillion in 2019 to P12.15 trillion in 2021 and P13.82 trillion in 2022. Our debt/GDP ratio jumped from 37% in 2019 to 51.6% in 2020 and yet our GDP contracted by 9.6%. The strict prolonged lockdown with heavy government spending and borrowing was pure bad economics.

Two, focus on cutting spending and the endless subsidies. Revenues significantly declined in the 2020 lockdown but quickly recovered by 2022, even without any new tax hike. But expenditures continued increase even during lockdown — that led to a high budget deficit, an average of P1.55 trillion a year from 2020-2022. (See Table 2)

Three, the government rightsizing program must proceed. Many government offices and corporations hardly moved during lockdown, yet salaries and allowances kept pouring in. See these two reports in BusinessWorld: “DBM hopeful Congress will approve rightsizing plan within the year” and “Subsidies extended to GOCCs up 8.5% in 2022” (March 6).

Four, the pension reform for the military and uniformed personnel (MUP) must proceed. MUPs, not taxpayers, should pay for their own future pension out of their own salaries and other compensation like the rest of the government’s civilian personnel. The P135 billion/year average MUP pension from 2021-2023 should not be in the budget — it should come from active personnel’s monthly contribution into the Government Service Insurance System (GSIS) but currently they contribute zero.

Five, National Government expenditures should flat line as the revenues and expenditures of local government units (LGUs) are rising fast with the implementation of the Mandanas ruling in 2022. A decline in National Government transfers, like shares from the internal revenue allotment (IRA) in 2023, is temporary because it is based on three years prior or the 2020 national revenues. By 2024 onwards, National Government transfers will resume high increases.

Six, National Government borrowings should decline because LGU borrowings are on the uptick. Only P15 billion in loans in 2020, it will triple to P47 billion in 2023 (Table 3). In addition, LGUs’ public-private partnership (PPP) projects in local infrastructure is also increasing.

Seven, National Government climate spending must taper off. The climate adaptation plus mitigation budget is rising fast: P183.9 billion in 2020, P178.2 billion in 2021, P289.7 billion in 2022, and P459.5 billion in 2023. It is unclear how more climate bureaucracies, climate meetings and travel can fight less rain and more rain, less floods and more floods, temperatures getting colder or hotter because climate has been changing since planet Earth was born some 4.6 billion years ago, with a natural (or nature-made, not man-made) cycle of warming-cooling-warming-cooling.

Endless subsidies (with no timetable) to people and MUP pensioners are inflationary. High inflation means demand for commodities and services is rising faster than the supply. Endless subsidies encourage high demand, even if many people do not work or work efficiently, do not contribute to raising the supply of food, energy, housing and so on.

Endless budget deficits and government borrowings are inflationary. Government should practice fiscal discipline and responsibility, aim for a balanced budget (expenditures are equal to revenues) if not a fiscal surplus, then significantly reduce the public debt.

The endless presence of government enterprises and corporations is also inflationary because many of them rely on annual budgetary appropriation and subsidies, and because there is no “market failure” in health insurance, power generation, rail transportation, airport administration, banking, etc. Large-scale privatization of many government assets and corporations and using the proceeds to reduce the public debt will greatly contribute to achieving fiscal responsibility and control inflation.
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Tuesday, March 07, 2023

This blog has reached 2 million views, thanks readers

Yesterday, this blog has reached 2 million views since July 2010, thanks readers. Two million over 153 months (July 2010 to March 2023) average is 13,070 views per month, not bad. Here is the total views as of today. Highest views registered on April 2021 with 56,845 views, followed by March 2011 with 47,684 views.

The bulk of this blog's readers are from the US, followed by readers from the Philippines, then Russia, France, Germany, Ukraine. Readers from other ASEAN countries not in the top 20.

Thank you, readers, for visiting this blog. Just expressing my ideas, sharing data, reading other people's useful articles, they give me happiness.

Saturday, March 04, 2023

Belgica papers 1, The responsibility of life, liberty and property

I am reposting this two-parts column by Atty. Jeremiah Belgica, good reviewer why government was invented, its purpose and limitations. Thanks Atty Miah for these good papers.
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The responsibility of life, liberty and property
MY LAW.IQ
By Jeremiah Belgica. February 23, 2023
https://www.manilatimes.net/2023/02/23/opinion/columns/the-responsibility-of-life-liberty-and-property/1879903

... The idea of the existence of the natural or inalienable rights to life, liberty and property has greatly shaped the way the world perceives the relationship between a person and the government, in essence defining the limits and purpose of government as dictated by the need to protect the individual rights of its constituents.

The concept of inalienable rights, however, was not originally articulated by Jefferson because there were other noble minds who were ahead in this topic. Foremost of whom was the renowned English philosopher and thinker John Locke, also known as the "Father of Modern Liberalism."

Locke is one of the three notable figures in history who advanced the concept of a social contract as the basis for establishing a government. Rather than just perceiving the king and the crown as having taken their right to rule over the people by "divine right," the principle of a social contract proposes that the people are governed through their consent. It implies that the ruler or government receives their authority from the voluntary consent of the people who recognize the necessity of the government for their protection and benefit.

But unlike other social contract theorists who believed in the absolute surrender of a person's rights over to governmental powers, Locke introduced the concept of individual and natural rights to life, liberty and property as both the origin and natural limitation of governmental authority. He argued, through his acclaimed two "treatises of government," that "being all equal and independent, no one ought to harm another in his life, health, liberty, or possessions." He articulated that each of us has a God-given responsibility or "a property in" our own persons which right is by nature "inalienable," thus may not be removed, transferred, or taken away by anyone. For this reason, Locke believed that power over the life, liberty and property of individuals cannot be totally abrogated either voluntarily or involuntarily in favor of government, as previous thinkers had argued, as this would violate the inalienability of such rights. This is akin to man's moral responsibility over one's act which may not likewise be alienated and separated from each other.

Thus, the very existence of governments under the social contract principle is for the primary purpose of protecting the individual's natural and inalienable right to life, liberty and property. As Jefferson eloquently stated in the Declaration of Independence when explaining inalienable rights, "to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed." Governments then did not create the inalienable rights but, on the contrary, governments owe its existence to them.

These concepts of inalienable rights are also said to be the origin of what we now believe to be "human rights." Of course, since Locke, Jefferson and the other liberal thinkers have long been gone, the world has taken these concepts to different dimensions and applied them to various issues affecting us.

Since 1935, all Philippine Constitutions have featured in its Bill of Rights the protection of these inalienable rights. Section 1, Article 3 of the 1987 Constitution states that, "No person shall be deprived of life, liberty, and property without due process of law..." thereby setting forth the utmost protection against possible abuse upon these rights. Thus, any limitation on life, liberty and property may only be done if there is a law authorizing it and if the said limitation has been enforced after observance of substantial and procedural due process. This should be true comprehensively across the entire expanse of society so long as the laws of the Republic are made applicable....

The responsibility of life, liberty and property
MY LAW.IQ
By Jeremiah Belgica. March 2, 2023
https://www.manilatimes.net/2023/03/02/opinion/columns/the-responsibility-of-life-liberty-and-property/1880909

...That is why Christian philosopher John Locke's formulation of the social contract theory based on man's individual, natural and inalienable rights of life, liberty, and property has struck an important and fundamental chord with libertarians throughout history.

One of my personal thought heroes is the 19th century French economist and champion of liberty, Fredric Bastiat, who wrote the classic The Law. He beautifully articulated and explained the Lockean ideas on the purpose and limitations of the law and governmental powers. He warned that men in power have the tendency to use the law to destroy individual rights and commit legal plunder. He said: "It is impossible to introduce into society a greater change and a greater evil than this: the conversion of the law into an instrument of plunder."

In explaining examples of legal plunder, a translation of his book quoted him as saying: "Now, legal plunder can be committed in an infinite number of ways. Thus, we have an infinite number of plans for organizing it: tariffs, protection, benefits, subsidies, encouragements, progressive taxation, public schools, guaranteed jobs, guaranteed profits, minimum wages, a right to relief, a right to the tools of labor, free credit, and so on and so on."

According to Bastiat, one of the main reasons and motivations of legalized plunder is the desire for "false philanthropy" where the government seeks to give something to someone at the expense of another.

The more government seeks to do something that we should and could be doing for ourselves and our family, an immediate trade-off happens — what the government will give to one, it will first take away from another. The greater the dole-outs, freebies and social welfare activities, the higher the taxes and the fiercer the taking of properties and freedoms from others. Redistribution of wealth is great until it is your hard-earned and honest wealth that starts to be taken unceremoniously by people in power to give to others for political gain, not to mention bureaucratic losses and losses due to kickbacks and corruption.

I personally subscribe to Locke's belief that the sacredness of God's gift of life necessitates the belief that all life also has meaning and divine call. What is life without liberty? All life must be free to find its calling and meaning. The free pursuit of life and its meaning results in a productive intermingling of a person's faculties, ingenuity and labor with the world and resources around him which ultimately bears fruit and produce for his sustenance, upkeep and satisfaction, otherwise called his property. Property, then, is the expression and result of a life using his liberty to apply his God-given faculties and abilities to take care and enrich the world and resources around them. In the Christian and biblical context, the right to property is taken and understood in the greater concept of man's "stewardship" of God's resources entrusted to him. Being a mere steward of these resources, he is called and expected not just to create "wasted surpluses," but to apply these resources to make lives — his and everyone else's — more sustainable and meaningful for the glory of his principal, God his Creator.

In this context, we can now conclude that man was not only given the "right" but instead the "responsibility" of life, liberty and property, simply because everyone has been given these gifts to cherish, explore and cultivate. This, likewise, gives everyone an optimistic foundational paradigm of society because this puts in perspective that everyone's life has meaning and has the capacity to sustain itself, and more than that, has the calling to be a productive part of a society. Government's role is not to run the lives of the people with the messianic desire to provide all their needs because it is only God who can do that. Instead, the government's role is to protect the individual's right to life, liberty and property so that they can freely pursue and exercise their responsibility to freely live their lives productively.

As Congress once again considers deliberating whether to amend the Constitution, it is my hope that we not only retain Section 1, Article 3 of the present Constitution that protects our inalienable right to life, liberty and property but also codify everyone's "inalienable responsibility" to live one's life in pursuit of one's divine call to cultivate and replenish their own world.

Friday, March 03, 2023

BWorld 586, Crisis narratives as hindrance to growth and freedom

* BusinessWorld February 27, 2023.
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Feb. 24 last week marked the first anniversary of Russia’s invasion of Ukraine. The Ukraine crisis has morphed from a border war between the two countries to a potential nuclear conflict in Europe. Here are five major crisis narratives which have had a big impact on economic growth and individual freedom.

1. The virus/pandemic crisis. It led to widespread government-imposed business and mobility restrictions or lockdowns and human isolation, while expanding government spending and borrowing.

House Bill 6522 and Senate Bill 1869 will create a new bureaucracy — the Philippine Center for Disease Prevention and Control (CDC). I have two objections against this bill.

One, it contradicts the National Government Rightsizing Program (NGRP) of the Marcos Jr. administration which aims to reduce redundancy or duplication of functions, and reduce government spending. See this column’s piece last week, “Bureaucratic rightsizing a big part of fiscal reform push” (Feb. 20). Instead of reducing the existing bureaucracies, the bill is creating a new agency with new plantilla positions and more personnel with national and regional offices.

Two, the same people and professionals who distrust natural immunity from natural infection from COVID-19 and pushed to trust only vaccine immunity and mandatory vaccination, who demonized cheap, off-patent, generic medicines like ivermectin and other supplements as prophylaxis and treatment to COVID, will likely be sitting in the key positions of the new bureaucracy CDC.

The Concerned Doctors and Citizens of the Philippines (CDC PH), Covid Call for Humanity (CCH), Constitutionally Compliant Businesses (CCB PH), Hilway Panay, and other NGOs held a simultaneous protest movement against the proposed CDC bill in key cities of the country on Feb. 25. Stay brave, guys. Protect civil liberties and human rights, and individual rights to one’s body and health. Resist political science that masquerades as medical science to impose political and medical tyranny.

2. The economic/poverty crisis. Government-imposed lockdowns then overspending and borrowing for aid/ayuda and subsidies will lead to more taxes in the future to pay for the huge borrowing.

Below I make two computations: a.) required growth in 2021 to reach the level of 2019’s gross domestic product (GDP), and, b.) required growth in 2023 to expand by 15% over 2019’s GDP level. The results show that for many East Asian economies, their GDP growth in 2021 has enabled them to recover a similar GDP size of 2019.

For the Philippines, a.) GDP growth in 2021 should have been 10% and not just 5.7% to be at the same GDP size or level of 2019, and, b.) growth in 2023 should be at least 11.7% if targeting to have at least a 15% expansion in 2023 over 2019 level (See Table 1).

By 2021, many of our neighbors in East Asia had already recovered to their 2019 levels — the Philippines did not. Meaning that the effects of the government’s lockdowns and business shutdowns was severe and deep. This administration and succeeding ones should never impose another lockdown and political-medical tyranny.

Related narratives are: the inequality crisis, population/congestion crisis, education crisis, housing crisis.

3. The climate/environment crisis. This is based on the persistent narrative that there is no natural or nature-made climate change, only man-made climate change; that there is no natural warming-cooling cycle, only “unprecedented, unequivocal” warming; that “extreme weather” is getting more frequent, more deadly, and that there is no natural cycle of strong and weak cycle energy. Thus, heavy intervention by governments and multilaterals to fight less rain and more rain, less snow and more snow, less cold and more cold, less cats and more cats.

No, the number of strong storms and hurricanes is not increasing. No, the accumulated cyclone energy (ACE) is not getting stronger (see Chart). In fact, the years 2021 and 2022 saw weak ACE, a less windy planet, which is why wind power plants were not producing enough electricity and led to wind power-heavy countries firing up their coal and gas plants to avoid blackouts.

The Philippines and other countries should cut their huge spending on climate bureaucracies, climate meetings and travel, cut taxes on fossil fuels, or impose uniform taxes like VAT for both fossil fuel and renewable plants, and uniform excise tax for both gasoline-powered cars and e-cars.

Now there is another lobby by some groups that the irrational zero excise tax for e-cars should be extended to e-motorcycles. This is equally irrational, for three reasons. One, there is little difference between gasoline vehicles that use 100% fossil fuel and e-vehicles that use 80% fossil fuel because about 80% of the Philippines’ electricity generation comes from coal, natural gas, and oil plants. Two, both gasoline and electric vehicles occupy road space and contribute to the depreciation of public infrastructure. And, three, government is in search of more revenues and lobby groups and sellers do not want to contribute to tax mobilization. The Finance department should stonewall such a lobby.

Related narratives are: the garbage/plastic crisis, carbon crisis, energy crisis.

4. NCDs crisis. Non-communicable diseases (NCDs) like cancer, heart disease, and stroke are now the main causes of deaths in the world — good. Perhaps the best ratio would be something like 98% of people dying of NCDs, and only 1% from infectious/communicable diseases, and another 1% from accidents or violence (war, murder, homicide).

In the Philippines, the share of NCDs to total deaths rose from 55% in 2000 to 70% in 2019. And life expectancy has increased from only 59 years in 1960 to 69 years in 2000, and 72 years in 2020. There is a correlation between a high share of NCDs/total deaths to longer lifespan (See Table 2).

People own their bodies. Not the government or doctors, NGOs or media. The decision to smoke, vape, drink alcohol, soda and other sugary drinks, climb steep rocks and mountains, do fast downhill bicycle racing, go skydiving, take two or six vaccine boosters, etc. should be left to the individuals, their families and friends.

Related narratives are the tobacco and alcohol crisis, the sugar addiction crisis.

5. The food/hunger crisis. Related to the climate crisis narrative, it argues that “extreme weather” plus other political, business, and technological factors adversely affect global food production. So, government must step in via more agricultural subsidies and freebies, more irrigation, machine and fertilizer subsidies, and so on.

Going back to Feb. 23, 2022 — or day before the Russia invasion of Ukraine — and even a year before that, commodities like rice, corn, coffee, wheat, soybeans, palm oil, lean hogs, poultry, beef, fertilizers had prices this month that were similar or even lower than last year’s prices (See Table 3).

Prices are indicators of a product’s abundance or scarcity relative to demand. When prices flatline or decline, this means the supply is stable or rising relative to demand and hence, there is no food crisis. Government should resist temptation and lobbies to further raise agricultural and food subsidies. Farming should be a business venture, not a government or tax charity.

Related narratives are: the population crisis, the fertilizer crisis.

We should grow our businesses and economy fast, widely, and in a sustained manner.

We should streamline and cut spending and subsidies, and reduce borrowings and high interest payments.

We should apply uniform tax rates for each sector and avoid cronyism and favoritism.

We should avoid another round of political-medical tyranny.

We should be wary of new “crisis” narratives because the hidden goal is to have more command and control over our lives, our work, our body and family.
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