Thursday, February 02, 2006

Migration and Freedom 1: World Cup, brain gain and OFWs

During the last World Cup, a small and "lowly" African country, Senegal, beat the defending world champion France in the eliminations (or quarter finals?) round. It was one of the "shocking" results of that world cup. Why? One important reason is because Senegal "exported" or "brain-drained" some of its best soccer players to play abroad, in European football clubs, especially. Then one day the boys came home to play for their national flag, and the players used the experience and talent they gained while working and playing abroad. And they beat and eliminated the reigning, the defending, world champion!

For me that's one big advantage of brain gain. And I don't believe in "brain drain". OFWs or other nationalities leaving their countries to work abroad should never be considered as brain drain. When Filipino nurses and doctors leave the hospitals they are working in the Philippines, went abroad to work in a hospital in the US or Canada or Europe or elsewhere, the health displacement is temporary. One day, some of those health professionals will come back, not as nurses or doctors, but as owners and administrators of new clinics, new hospitals, or an HMO company. The experience, talent, network and business partners, and savings they got abroad.

So I stick with my simple formulation:

Migration = Mobility = Freedom.

Whether such migration results in some broken families back home, these are some of the costs that households can decide and risk. The same way that there are costs and risks for staying in the country for many people when jobs and pay are not enough.

The OFW phenomenon has been with us for the past 30 or hundred years, though it grew noticeably larger and faster over the past 20 years, along with faster pace of globalization (more work opportunities abroad, more competing international airlines, cheaper info and communications dissemation among families, etc.).

Maybe we just don't notice it, but the new medical and nursing schools, the new clinics and private hospitals, new HMO companies, that we have NOW, are put up or managed by health OFWs who have left the country 10, 20, or 30 years ago. They may or may not be in the Philippines physically, but the resources and network are all here.

For whatever reason or alibi, government should not put up any barrier or hurdle or hindrance to migration and mobility of people, whether health professionals or rock bands or investment analysts. If people want to go abroad, let them be. People respond to incentives, and shy away from disincentives. If staying here in the country means bearing low incomes while paying high personal income taxes -- gee, the House Committee on Ways and Means (in charge of taxation), is planning to hike personal income tax from 32% to 35% for those with annual taxable income of P500,000 or more.

So government policies are not a good reference point for many individuals and households to decide to stay. While govt. says it wants to lure health professionals to stay in the country, it whacks them with double taxes -- VAT on health services (which possibly reduce their clients since medical check-ups and medicines are now subject to higher VAT), and high personal income tax. This is not to mention the other taxes and govt. fees on their household consumption, from VAT on hamburger to excise tax & VAT on fuel products. So, households weigh the costs/risks and benefits of staying in the country. And it turns out that for many households, the costs far outweigh the benefits.

If government really wants to help the poor and the sick, government should abolish income taxes (or keep a low, flat tax) and retain VAT (I'd even favor a 15% VAT if income tax is zero) as main govt. revenue source. So that if you're a doctor (or engineer or manager or...), you keep all of your incomes (no confiscation by govt.), you keep your friends and family members here, you pay tax only when you spend, better stay here. Because in the US and Canada and UK, incomes are high but income taxes are also very high.

And yes, churn out more health professionals and other skilled people in the education and formal training institutions. So what if 200,000 nurses and doctors leave every year, if you also graduate 250,000 nurses and doctors every year. This means deregulating the education, health care, and the business environment in general. Less permits and licenses, less charges and fees, less signatures and paper work, less taxes and bureaucracies, and you'll have lots of entrepreneurial initiatives.

There are policy implications for this formulation. If migration is good (since it is voluntary, not forced), then government should not get in the way over-regulating and choosing players (and disallowing many others) in the manpower recruitment agencies. Let the sector regulate themselves, like forming their own industry associations, and these associations will police their ranks who are the recognized members (ie, good recruitment agencies) and who are not. One reason why "placement fees" for potential OFWs are very high is because there are just too few "licensed" recruitment agencies. And I would presume that the licensed ones have paid huge amount of fees, legal and under-the-table, to the government overseas placement agency, the POEA, and other government agencies. This makes working abroad an expensive option.

Finally, when people wish that "all (or most) politicians would leave and be exported", unconsciously I think, people are wishing that there be "less government". Because politicians and many many bureaucrats represent taxes, charges and fees, permits and licenses, that the citizens bear. And very often, the wastes and corruption that come with the presence of too many politicians and government bureaucrats.

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