Friday, July 31, 2009

Scientists Speak: No "Consensus" on AGW

Below is a letter signed by 6 notable American scientists, published in a student paper at the Brigham Young University (BYU), USA. This letter was initiated by my friend, American-Malaysian astrophysict, Willie Soon.

Note, all of these 6 scientists have PhDs, they just did not put the title in their names in this letter. One of them is a geologist and former astronaut who was the last living "Moon walker", Jack Schmitt.

These 6 intelligent souls are saying only one thing: there was no scientific "consensus" to the anthropogenic global warming (AGW) theory in the past, no "consensus" until now, and there will never be one. Because the theory behind AGW is flatly wrong.

below is their letter.

Viewpoint: Still a hot debate
Mon, 07/27/2009 - 20:54

Jeremy Kuhre recently suggested BYU students are unreasonably skeptical about global warming, in the face of “virtually unanimous” acceptance among climatologists of the belief our planet is “heating up.” He equates the students with people who maintain the lunar landing was a hoax.

We the undersigned have studied weather, climate and climate change for years — and we can state with certainty that there is no unanimous view among scientists on the matter of man-made catastrophic global warming.

One of us, Harrison Schmitt, actually stood on the moon, drilled holes, collected moon rocks and has since returned to Earth. He knows the landing was real.

Probably all climate and other scientists do agree our Earth warmed intermittently and slowly between 1850 and 1998 and has cooled slightly since then. But that is not the issue. The question is whether humans’ use of oil, coals and natural gas can cause a future global warming disaster — and on that there is tremendous disagreement, just as there is about the forces that are responsible for recent, current and past climate changes. This is the reason why over 31,000 scientists have signed the Global Warming Petition.

The opposition to the hypothesis of catastrophic climate change from rising atmospheric CO2 is legitimate, and it is the right and duty of all citizens, including American farmers, to ask questions and demand evidence and answers. The news media have contributed to the incorrect and biased view that recent warming was caused by human CO2 emissions and that future warming will be disastrous for humans, wildlife and our planet.

The media and political activists have also promoted policies that attack American liberties and harm and kill people, by diverting money, attention and energy resources from far more urgent and worthy purposes, such as reducing poverty, malaria and malnutrition and improving the living standards for everyone.

The issue of global warming is not a war of “expertise.” It is, or should be, an objective study of scientific measurements and data — which can now confirm atmospheric CO2 plays at most a minor role in causing weather and climate change.

BYU is an institution of higher learning that should promote the seeking of truth. Similarly, science is an objective assessment of hypotheses, testing concepts against actual data and observations; it is not a matter of votes, popularity or “virtual unanimity.” We are all harmed, if we allow our universities or our science to be politicized.

Harrison Schmitt
Geologist and Astronaut

Craig Idso

David R. Legates

Art Robinson

Noah Robinson

Willie Soon

Meanwhile, I wrote this two days ago:

Climate Alarmists BBC vs UK Met Office

It's interesting how a big climate alarmist media like BBC is now criticizing the UK's Meteorological office for whipping "barbeque summer" or "scorching summer" predictions in April of each year the past 3 Aprils, only for the British public to endure cold and wet summers, especially June-July. See BBC news report below.

Meanwhile, per Joe d Aleo's (or perhaps other scientists') monitoring of sunspot activity, since January this year, 76 percent of all days have zero sunspot, blank as in white paper. The implication for this in the Sun-climate link theory, is that more cooling is way ahead.

From what I have read, the Sun's magnetic field (as observed in the number of sunspots) creates solar wind. Strong solar magnetic field, strong solar wind. Which drives away cosmic galactic rays from the outer space that are suppose to help catalyze the formation of low-lying clouds, which blocks sunlight, which results in global cooling. With weak solar magnetic field, few or zero sunspots, more cosmic rays reach the Earth's atmosphere, they help form low-lying clouds, which mainly explains for the current global cooling.

David Archibald, a physicist, noted the other day that even NASA now admits that the Earth may be approaching the Dalton Minimum of global cooling, occured 2 centuries ago. I wonder what James Hansen, the top and most vocal climate alarmist in NASA, would say about the recent pronouncement of NASA?

http://news. 2/hi/science/ nature/8173533. stm

Met Office cools summer forecast
By Roger Harrabin
BBC environment analyst

You will need a brolly on holiday in the UK in August - the Met Office is issuing a revised forecast for more unsettled weather well into the month.

It is a far cry from the "barbecue summer" it predicted back in April.

The news will raise questions about the Met Office's ability to make reliable seasonal forecasts.

But the organisation has defended its record, saying people have already forgotten the hot weather experienced across many parts of Britain in June.

It also highlights the absence of the sort of major floods that blighted 2007 and 2008; and the largely fine weather for the Wimbledon tennis championship, the cricket Tests and the Open golf.

The Met Office also says temperatures have been around or above normal, and that the end of August might be better again.

It did indeed stress at the time of the summer forecast in April that the odds of a scorching summer were 65%. It explains that it coined the phrase "barbecue summer" to help journalists' headlines.

But this has come back to bite the organisation because many people do not feel like they have been enjoying a "good" summer, especially compared with previous searing years....

Wednesday, July 29, 2009

US Debt 7: US Budget Deficit and G8 Debt

Now the US government's fiscal irresponsibility is being scrutinized by its big lenders. Especially the Chinese government. There seems to be no limit to the US government's hunger for ever-bigger expenditures and budget deficit, more public debt, administration after administration, from Republicans to Democrats. That's the debtor.

The lender, the world's 2nd biggest economy in terms of GDP PPP valuation, China. Its government is said to be holding about $1-5 trillion of US debt papers. That amount is equivalent to the GDP of Spain or Turkey, I think, and about 4x the GDP of the Philippines.

The ugly -- fiscal irresponsibility of the government of the world's biggest economy. There is a transmission line somewhere from the fiscal to financial and overall economic environment. So a crisis from the fiscal side can easily be transmitted to the financial markets. When the US government begs for more debt in order to pay some or most of its past debt, then trouble will not be far behind. The "savior" of today's US credit crisis will become the villain in the coming years.

But can the private sector -- the private enterprises, the households and average citizens -- bail out the US government? Yes, they can. In the form of higher taxes (to pay some of the maturing debts), higher interest rates (as government borrowings compete with corporate and household borrowings), and higher inflation rate (a result of higher interest rate, US $ depreciation, etc.).

The G8 would not matter much here because almost all of those industrialized countries -- US, Canada, Japan, UK, Germany, France, Italy and Russia -- are huge debtors. The bigger question is the capacity of the world's biggest lender, China (both its private corporations and government), how long it will keep on lending. Or whether it will get tired and stop lending somewhere in the near future, if not dispose and dump even 1/4 of its huge US$ holdings.

There is no long-term benefit to fiscal irresponsibility. Only short-term gains like bailing out the administration who is sitting in the White House at the time of fiscal bleeding.

Below is the relevant news report today.

On Washington
U.S. Budget Is Scrutinized by a Big Creditor

Published: July 28, 2009

No sooner had President Obama greeted nearly 200 of the bankers, bureaucrats and policymakers who could make or break his economic plans on Monday than they started grilling his economic team with the hardest questions about his economic strategy.

How long are these huge deficits sustainable, they wanted to know. How long do you keep stimulating the economy, and when do you break for the exits? If the dollar nosedives compared other major currencies, what’s the administration’s Plan B?

The questions were mostly asked in Chinese — by a delegation from Beijing that, diplomatic niceties aside, has come to check in on the investment of more than $1.5 trillion that China has made in United States government-issued securities....

I wrote this last June 04, 2009:

Budget Deficit and Irresponsibility

Budget deficit means that revenues are lower than expenditures. When a household regularly spends more than its combined earnings, then it is said to be regularly living beyond its means and is known to be irresponsible and braggart (“mayabang”). The only understandable exception for such label is when that household has one or more family member/s with a complicated disease and health problem that requires expensive health treatment. In such a case, some people who lent that family some money will not expect to be repaid because they know the hardship and emotional troubles that household is regularly experiencing.

At the macro level, when a government is on perennial budget deficit, say running for 10 or 20 years or more, then it can easily be considered as fiscally irresponsible. It perfectly knows that its revenues from taxes, fees, charges, fines, grants and some privatization are not enough and yet it continues creating new agencies, bureaucracies and enterprises, new programs and subsidies, hiring new and additional people, raising the salary of its employees, and more often than not, raising the perks and pork barrel funds of its President, Prime Minister and legislators.

There are two important negative effects of this kind of philosophy and government practice. First, it corrupts and distorts the financial flows in the economy. The government is perennially borrowing to finance yearly budget deficit, that results in ever-larger public debt, that requires ever-larger debt servicing (principal and interest), that adds pressure in future expenditures that will require more borrowings. Second, the citizens are corrupted into dependence or rent-seeking behavior. If they have some problems that could otherwise be addressed through community or corporate and personal responsibility, they run to the State for subsidies, protection from competition, or they simply wish to become new bureaucrats and politicians in the State’s expansive and high pile of existing bureaucracies and agencies.

One policy tool that a government can do to reduce or stop its fiscal irresponsibility is the privatization of some or all of its government-owned and controlled enterprises, banks and utilities. If those enterprises are currently earning, then the government can sell them at a high price to help retire the huge pile of public debt, resulting in lower debt servicing and lower expenditures. If those enterprises are losing, then the government can sell them at a bargain, get some revenues while stopping the annual subsidies for those losing enterprises and reduce the fiscal bleeding caused by those inefficient State corporations.

But this is easily said than done. Those State enterprises, banks and utilities are one of those “bribery departments” that the politicians in power use to reward some of their political supporters and financiers. Or politicians and activists from other political parties, media, NGOs, and academe that will otherwise become critical of the administration, are co-opted and silenced with high positions and very handsome salaries, perks, travels and arbitrary power to dispense political and financial favors. Thus the inefficiencies and rent-seeking of the past political administration are simply replicated, if not exceeded, by a new batch of inefficiencies, wastes and rent-seeking.

The number of fiscally irresponsible governments (FIGs) around the world far outnumbers the responsible ones. Even the rich countries, majority are perennial debtors. All the G7 countries for instance (US, Canada, Japan, UK, Germany, France and Italy) have huge public debts. Their gross debt as percent of their GDP ranges from a low of 44 percent (UK) to a high of 104 percent (Italy) and 195 percent (Japan).

Here at home, the Philippine State is among those fiscally irresponsible governments in the world. Its annual budget deficit ranges from one to three percent of GDP, amounting to several billion pesos every year. When this is accumulated along with past debts and deficit, outstanding public debt should be nearly Php4 trillion pesos or nearly half of GDP. This year and next year, top State bureaucrats at the Finance, Budget and Economic Planning departments are discussing how many hundred billion pesos they will “allow” as budget deficit.

Those FIGs are more often than not perked up and supported by multilateral and foreign aid institutions. These are regional and global banks funded by contributions by governments themselves but run and managed by technocrats. When FIGs from poor countries lack resources mainly due to wastes and corruption, these foreign aid bodies are more than willing to lend more money. The case of many governments in Africa is a classic example.

More than distortion in financial flows in the economy, it is corruption of the citizens’ mind that is a worse crime of fiscal irresponsibility. For instance, people who abuse their body with excessive intake of alcohol and tobacco products, or live in dirty surroundings and do not observe basic personal hygiene, would later run to the State for “quality” health care and subsidized or free medicines.

It is the relegation, if not substitution, of personal responsibility for “government responsibility” that is the main crime of big and fiscally irresponsible governments.

See also 
US Debt 1: How Bloated is the US Govt? May 08, 2006
US Debt 2: Private Sector Bailout of Government, September 26, 2008
US Debt 3: Crisis of Irresponsibility, October 13, 2008
US Debt 4: Obama and US Entitlement, November 11, 2008
US Debt 5: Obama's Taxes, Bail Outs, $56 Trillion Debt Bomb, November 13, 2008
US Debt 6: Stimulus Trap, $1.75 Trillion Deficit, and Taxation Blackhole, March 08, 2009

Tuesday, July 28, 2009

Health politics

I am thankful to the DOH that I've been a part of the DOH Advisory Council on price regulation -- a multi-sectoral, multi-interest body that deliberates on whether government shoup dip its hands in setting or dictating the price of certain medicines, on whether to allow or restrict drug discount cards, and related topics. The DOH's hands are tied here because the Cheaper medicines law mandates it to take up such matters.

I perfectly remember that the subject of voluntary drug price reduction was extensively discussed during the 4th and 5th Council meetings last month, and I realized there that for the first time perhaps in the history of the Philippine pharma industry, the multinationals and Filipino pharma companies were united -- in opposing mandatory government price control.

Last Saturday, July 25, the Advisory Council released its first Resolution, "Implementing the voluntary price reduction for at least 16 molecules (or 41 drug preparations)". It was signed by various stakeholders and participants that regularly attend the Council meetings. I wasn't there because the schedule of the meeting and announcement was moved from 1pm to 10am, and I have an obligation for my daughter in the morning of that day.

The big problem in the implementation of 50 percent price cut (or any other rate) are the small drugstores in the provinces which have no computerized system in tracking their inventories, sales, orders, and so on. Otherwise, the big drugstores (Mercury especially, Watsons, PITC Pharma, etc.) can easily comply within the 1 month transition period (August 15 to September 15) before penalties for violation will be implemented.

The list of medicines under voluntary price reduction was advertised in big newspapers last Sunday (and perhaps in other days).

But politics set in, as usual. What could be plain "voluntary price" became "Government Mediated Access" (GMA) price, referring to the initials of the name of the President of the country. Which shows once again the ugliness of government intervention. When government comes in, there are always "bahid politika" or political motives, and there are always politicians taking the undeserved media credits.

In reality, government produces not a single tablet, not a single medicine. Government only produces regulations, prohibitions and ots of paper work that all private enterprises (from barber shop to food shop to pharma companies) must comply.

When my brother was still undergoing chemo treatment (prostate C), one injection was worth P25,000, nearly P3,000 of which was VAT alone. Eight (8) or more treatments, not effective enough because the cancer virus has spread to his body already. A last-attempt chemo just to prolong his life was worth P90k (of which around P10K was VAT alone). Days before his death, his pain was beyond description. On his last few hours though, he was already unconscious and perhaps, rested.

Cancer and Taxes, they have one similarity: they both suck, they both kill.

I know of some rich people who have cancer. They can afford even the most expensive medicines, even the most expensive doctors. But current breed of many medicines are not powerful enough to beat and kill cancer (or AIDS and Alzheimers). So they die quick once the virus spreads in their body.

Some NGO leaders in our local health coalition in Manila portray me as a "traitor" for consistently opposing government price control, government confiscation of private property in IPR. But I sincerely believe in medicine innovation. Only new, revolutionary, more powerful, real killer drugs of killer diseases can save lives. The generics and cheaper versions can follow later.

Tax Cut 10: Mongolian Taxpayers Movement

A friend from Ulaanbaatar, Mongolia, Mr. Jargal Dambadarjaa (JD), put up a new non-government organization (NGO) there, called Mongolians for Fair Taxes and Wise Spending (FTWS). The position papers are posted in his blog,

His last article as of this writing is entitled "Another Tax Load". He rightfully put it when he wrote,

"Today, the single largest factor hindering Mongolian society’s progress is our own ever-growing government. It enforces tax collection from people, but never gives a clear report where those money go, and with what interest rates those funds are kept. Because of this unclear condition of public funds, corruption stems from the government walls. The government is keeping our development stalled instead of facilitating it."

I was also shaking my head to read that Mongolian government officials can have medical treatment in Japan and Singapore for free. Well at least they are not going to UK, France, Canada or the US where medical treatment are very expensive.

I believe that free market think tanks and institutes should include some tax activism in their menu of research work and/or political activities. This will help discipline them NOT to accept any government money, national or foreign aid.

My observation here in the Philippines is that so many NGOs and civil society groups that are supposedly activist, fighting corruption and advocating good governance, are silent when it comes to taxation issues. Why -- I think mainly because they receive funding from some government departments, or from foreign aid bodies (USAID, WB, UN, ADB, EC, GTZ, etc.). WB-Philippines for instance was shameless to openly advocate higher excise tax for petroleum products. I wrote a blog entry about it here.

Meanwhile, I wrote this last February 07, 2009:

On Taxing the Rich

There is an interesting article this week from the NY Times, 

Please raise my taxes

Published: February 5, 2009 
Los Gatos, Calif.

The author wrote,

"I'M the chief executive of a publicly traded company and, like my peers, I'm very highly paid. The difference between salaries like mine and those of average Americans creates a lot of tension, and I'd like to offer a suggestion. President Obama should celebrate our success, rather than trying to shame us or cap our pay. But he should also take half of our huge earnings in taxes, instead of the current one-third. 

Then, the next time a chief executive earns an eye-popping amount of money, we can cheer that half of it is going to pay for our soldiers, schools and security. Higher taxes on huge pay days can finance opportunity for the next generation of Americans. 

Clearly, the efforts over the past few decades to control executive compensation haven't accomplished much. Improved public disclosure was supposed to shame companies into lowering salaries, and it obviously hasn't worked. In 1993, President Bill Clinton changed the tax law to effectively cap executives' salaries at $1 million a year, but that simply drove corporate boards to offer larger bonuses and stock options to attract and keep talent. More recently, "say on pay" proposals would have shareholders opine on their boards' compensation decisions, but "say and pay" won't change the fact that luring a top executive away from another company is never easy or cheap. 

The reality is that the boards of public companies hate overpaying for anything, including executives. But picking the wrong chief executive is an enormous disaster, so boards are willing to pay an arm and a leg for already proven talent. Putting limits on the salaries at public companies, or trying to shame them into coming down, won't stop this costly competition for talent.... 

I agree that putting a cap on executive pay is a terrible idea.
But asking that income tax on high-earning people be raised is also a horrible idea.

A better solution is that neither of the above should be done. And if the author believes that parting with one-half of what he is supposed to earn every month or every year, the money be used to fight poverty in America is a good idea, then he can do it himself. If he pays taxes 30 percent now, then he can send the IRS another 20 percent, total 50 percent. Then he can also convince his other friends who are company President and corporate executive to do the same. This is a perfectly fine arrangement. No coercion needed or attempted.

But asking the government that his bright idea be made into a law so that it will apply to everyone including those who do not believe in his bright idea, is wrong. That is coercion. That is dictatorship.

And going back to democracy, technically, one would not need coercion to implement democracy. If the majority think that education for all is a bright idea, then there is no need to employ coercion and force everyone to contribute to that cause, whether they have children or none, whether rich or poor. Non-coercion means parents will be responsible enough to work hard so they can send their kids to a school of their choice (foreign language school, arts and culture school, science and math school, religious school, practical arts school, etc.). For children of lazy and irresponsible parents, they can be adopted as scholars by charitable organizations, or by the local government's special welfare program, provided that these kids will show that they are serious in their studies. Then allow the lazy parents to fade, slowly but surely, to oblivion, unless they will reform themselves and assume more personal and parental responsibilities.

* See also:

PLDT inefficiency

I got a Landline Plus telephone for Minimal Government Thinkers. Before it was post-paid, then I shifted to pre-paid after a year. They gave me a new number, 701-6558.

Around July 19 or 20, I received a text from PLDT saying that the service under the P300/month plan will expire in 2 days. July 21, I went to PLDT office in Ayala, Makati. It was loaded P300, around 12noon. I was able to make 1 landline call that day, about 2 minutes. No call the next day.

July 23, around 5pm, I received a call in my cell phone from a friend saying that she could not reach me at my landline. I checked -- made an outgoing call, nothing. I called up the landline myself, it's dead. No outgoing, no incoming calls, the phone is useless.

I called PLDT's landline plus hotline, 101-328, past 5pm, pushed 0 to talk to a customer service representative. No one answered the phone. Another call before 7pm, no one picked up the phone again.

July 24 Friday, another call in that hotline, the same zero response from the customer care. The same on Saturday, no one picks up the phone among the customer care people. I did not call Sunday.

July 27 I was out of town. Today, July 28 Tuesday morning, I made 2 calls, still no one answers. I was terribly disappointed already. So I wrote a complaint letter detailing the above to PLDT in their Ayala office through my sister's staff. The messenger went there in the afternoon. A staff at the customer care did not even bother to read my letter and told the messenger that I should call 101-328. In effect I was told that I should call the number that is the subject of my complaint itself!

So that's triple inefficiency on the part of PLDT.

One, disconnecting my landline plus even after I have loaded the required P300 before the scheduled disconnection date.
Two, having a hotline number that no one answers.
And three, having a customer care staff at PLDT office in Ayala saying that I should call the number that I indicated in my letter, is the source of my frustration. Since they are customer service staff, they should have read entirely my letter and did any remedial measure why my Landline Plus phone is still useless even if I already paid them several days ago.

I thought that PLDT is no longer a monopoly. Because only monopolists are arrogant and inefficient, and customers have no other option but bear their laziness and stupidity.

But PLDT is indeed no longer a monopoly. So there must be some sense of professionalism left. I made another call this afternoon, around 2:30pm. To my surprise, a staff picked up the phone, introduced herself as Michelle. I immediately told the lady of my frustration that my PLDT tel. is still useless for 6 days now.

Her explanation? I loaded P300 two days before the scheduled expiration of my previous P300. Since I made one call, the remaining balance is only P296. Since it is below P300, they have to disconnect my tel. -- no outgoing, no incoming calls either.

Wow! Ok, since P296 is not the same as P300, I accepted the explanation. But my 2nd question, why was it so hard to call that hotline number so that one staff could have explained to me as early as last July 24 that I needed at least P4 of additional load so that my telephone will become useful again?

Her answer, they entertain so many callers and they could not answer all calls.

Ok, damage has been done, my phone was useless for 6 days now, for a crime of lacking P4 in the load that nobody in PLDT was able to explain to me earlier.

To my friends -- don't believe those cute promos and sweet talks by PLDT about their Landline Plus. There are hidden inefficiencies somewhere that can cause you some stress, if not anger.

After posting this blog entry here, I will email PLDT and see if they will make any response or explanation. If I don't hear anything from them, that means they are indeed callous. I will make another blog entry and spread to my various yahoogroups or googlegroups.

Meanwhile, I reiterate my position that further government regulations of telecom companies is not the answer to some of their unfair promos. As customers, we need more options, more choices, so it will be to our interest if there will be 5 or more players in the telecom sector, and not just the current 3 players. If one promo or one player is lousy, like the PLDT Landline Plus program, we can dump them and move to the other competitors.

More government regulations to a certain extent is favorable to the existing players. The latter may feel the pain of more government intervention, but such increased intervention also discourages other players and potential competitors from entering the sector. Thus the incumbent's oligopolistic control of the industry is retained and cemented.

Sunday, July 26, 2009


It is said that in a welfare state, politicians are well, taxpayers pay the fare. In the case of the health sector, often an emotional subject, politicians are not far behind.

In the current debate on drug price control or maximum retail price (MRP) as stated in the new law, acronyms of big politicians are indicated if not implied.

MRP becomes "Mar Roxas for President", in reference to Sen. Mar Roxas who authored the cheaper medicines law in the Senate and is running for President in the elections next year. It was his strong pressure during the Congressinal Oversight Committee on the cheaper medicines law that forced the Department of Health (DOH) to produce a list of medicines to be issued the MRP or price control.

GMA now becomes "Government-Mediated Access" price of the medicines that have voluntary price reduction by their multinationals manufacturers. GMA of course, refers to the President, Gloria Macapagal-Arroyo. The list of drugs under GMA was released today (or perhaps yesterday) in big newspapers. Tomorrow will be a very big day for the President when she delivers her 9th and last State of the Nation Address (SONA) in her 9 years in power.

The DOH Secretary, Sec. Francisco T. Duque III, has his own motto for the Department even before the current drug price control debate. The motto is


Which sounds like "OK Duque".

Now I am tempted to join the fray and insist that the real definition of NGO is not non-government organization but rather, Nonoy Gwapo Oplas. hehehe. And of course, many will protest with this new nomenclature while a few will laugh.

Those who will protest are most likely of the grim-and-determined type of militant NGOs while those who will laugh have good sense of humor.

Happy weekend.

Saturday, July 25, 2009

SONAnyms and Anthonames

It’s SONA (State of the Nation Address) time again, and the usual polemics and tautology that comes with the annual practice always lead to one conclusion: more government responsibility, less individual freedom and responsibility.

This week, I have attended several fora on different topics, all of which will most probably be included in the President’s last SONA to the jointly convened Houses of Congress and the public this coming Monday, July 27.

Last Tuesday, there was a forum on “The 7th Plague: threats to public health due to global climate change” sponsored by the Philippine College of Physicians (PCP) at Annabel’s in Quezon City. Two bright physicians spoke in the event: Dr. Romy de Villa, Dean of the Pamantasan ng Lungsod ng Manila (PLM) College of Medicine, and Dr. Irma Makalinao, Dean of the University of the Philippines (UP) College of Medicine.

Climate change equals global warming is a dominant and continuing myth that pollutes the public’s mind. Philippine temperatures (as measured by PAGASA Science Garden station) and global temperatures (as measured by UAH satellite data) have been going from 2003 up to the present, and the cooling trend points to several decades more. The two physician-speakers in the forum did not join the warming bandwagon and spoke of the various diseases that threaten the public because of changing lifestyle. Dr. de Villa for instance predicted that by 2015, he sees that malignant neoplasm like cancer and hypertension-related diseases will become the top killers as contagious diseases become more and more controllable and preventable. Dr. Makalinao talked about the dangers of mercury, among others.

Lifestyle-related diseases are actually a result of growing economic development (as measured partly by rising life expectancy) coupled with growing inequality. Te plight of the poor becomes more pronounced as the rest of society progresses.

Last Wednesday, I attended the “Come, Elect: National conference on ensuring successful automation in 2010” sponsored by the Transparency and Accountability Network (TAN) and the Ateneo School of Government, held at Astoria Plaza, Ortigas. In the morning, COMELEC officials spoke, and in the afternoon, Smartmatic showed what their poll computer can do, and what it cannot do. I realized in that forum that there are still plenty of questions, both administrative and technical, that still cannot be answered by the winning bidder, Smartmatic. After this, there was the NGO workshop and plenary on their perceived role in the coming computerized elections.

I could sense, and I think everybody does, the level of distrust in the Philippine electoral system, whether manual or automated. It’s just that there is less distrust in the latter than in the former, but the level of distrust remains high. The distrust and lack of integrity of the electoral procedures should be directly proportional to the distrust and lack of integrity of the political parties and their politicians in the minds of the public. Makes me wonder: if the people so distrust government and the electoral process that elects and put people in government, why do we keep a big government that requires election of a big number of people to fill such a monster institution, both as elected politicians and as appointed bureaucrats?

And yesterday, I attended the 6th DOH Advisory Council meeting on price regulation, held at the Manila Pavilion. The usual participants – representatives from the pharma industry, both multinational and local, from the drugstores, NGOs, and various government agencies involved in formulating and implementing the drug maximum retail price (MRP, now fondly and satirically called “Mar Roxas for President”).

If there is distrust in the electoral process, there is also distrust in the principle that government should dictate the price of something, and there is distrust in the mechanics and details in implementing it. But politics have already taken over, so those two concerns are no longer relevant. A tidal wave of political pressures coming from different directions converged: coming from a Senator who co-authored the cheaper medicines law with high Presidential aspirations; coming the President riding the last 10 months of her 9 years in power; coming from some NGOs, academic and media people with deep hatred for capitalism, its profit motive and the multinationals; and coming from some bureaucrats with hands itching for more regulations and intervention.

Climate change, poll automation, drug price control, these 3 will probably be among the key issues that the President and her government will “address” when she speaks this Monday for her last SONA. The SONAnyms for these can be summarized as “more intervention to address the distrust in past interventions.” Poll automation though, is a valid intervention to mitigate the deep distrust in an ever-expanding, ever-longer list of political names and political parties that hunger so much to “serve the public”.

Where’s the anthology of names (Anthonames) that provide the warm bodies for such SONAnyms? Too many to enumerate. They range from those in the administration to the so-called opposition. But whether administration or opposition, they are all similar – similar in their hunger for using government coercive powers to coerce people and the public to follow their political and social engineering designs to make the country and the planet a better place.

For these people, individual, parental and enterprise responsibility sucks, and individual freedom equally sucks. Only government responsibility matters. Therefore, only government coercion and taxation matters.

The size and depth of the government bureaucracy and regulations – from local to national to international or multilateral bodies – are directly proportional to (a) the number of minds that have been polluted and poisoned that individual freedom and responsibility is not important, and (b) the level of coercion that those deep in the bureaucracy have projected and actually implemented, in order to intimidate and harass those who are seeking to question and invalidate the so-called supremacy of the forced collective over the individual.

Judging from the ongoing turn of events, both at the national and global levels, the forced collectivists are winning. But life goes on. Communism and central planning have been proven to be ineffective already. Current ecological central planning, health central planning, and related disciplines are just counting their years and moments.

Friday, July 24, 2009

Politics and Money in Climate Hysteria

The Science and Public Policy Institute (SPPI, released its newest study this week, "Climate Money" written by Joanne Nova (19 pages, pdf).

Below is the "Summary for Policy Makers":

"The US government has spent over $79 billion since 1989 on policies related to climate change, including science and technology research, administration, education campaigns, foreign aid, and tax breaks.

Despite the billions: 'audits' of the science are left to unpaid volunteers. A dedicated but largely uncoordinated grassroots movement of scientists has sprung up around the globe to test the integrity of the theory and compete with a well funded highly organized climate monopoly. They have exposed major errors.

Carbon trading worldwide reached $126 billion in 2008. Banks are calling for more carbon‐trading. And experts are predicting the carbon market will reach $2 ‐ $10 trillion making carbon the largest single commodity traded.

Meanwhile in a distracting sideshow, Exxon‐Mobil Corp is repeatedly attacked for paying a grand total of $23 million to skeptics—less than a thousandth of what the US government has put in, and less than one five‐thousandth of the value of carbon trading in just the single year of 2008.

The large expenditure in search of a connection between carbon and climate creates enormous momentum and a powerful set of vested interests. By pouring so much money into a question have we inadvertently created a self‐fulfilling prophesy instead of an unbiased investigation?

Can science survive the vice‐like grip of politics and finance?"

The full report can be viewed at

Actually, $79 billion over 19 years (1989 to 2008) is peanuts as far as the US government is concerned. President Obama’s cap and trade bill alone will cost around $5.7 trillion of carbon tax revenues over 18 years (2012 to 2030), which is around $317 billion/year, and that’s for federal carbon taxes alone. Excluded there are carbon taxes by various states, counties and cities.

So spend $79 billion, even $150 billion over 20 years, scare the American public, scare the world, lie if you must -- for big carbon tax revenues in the future, for income taxes from carbon trading among private corporations, for the power to tell people what energy sources they can use and what they cannot use, for the arbitrary power to give away subsidies to favored power plants (solar, wind, etc.) regardless of the amount of electricity those power plants can produce, and so on.

This is not just a big scam. It is monster scam. No wonder why the ecological socialists and rent-seekers are riding vehemently on this climate hysteria.

Last July 02, 2009,  I write this:

Politics Over Science: the US Climate Bill

I am posting here a letter by some top notch American scientists to the US Congress. I have personally heard some of them in an international climate change conference in NY last March.

Short but very clear message. Among the signatories here, Dr. Fred Singer is a co-author of the comprehensive report, "Climate Change Reconsidered" by the Nongovernmental International Panel on Climate Change (NIPCC,, an 880-pages paper explaining why the UN IPCC 4th Assessment Report (AR4) is wrong.


You have recently received an Open Letter from the Woods Hole Research Center, exhorting you to act quickly to avoid global disaster. The letter purports to be from independent scientists, but that Center is the former den of the President’s science advisor, John Holdren, and is far from independent. This is the same science advisor who has given us predictions of “almost certain” thermonuclear war or eco-catastrophe by the year 2000, and many other forecasts of doom that somehow never seem to arrive on time.

The facts are:

The sky is not falling; the Earth has been cooling for ten years, without help.
The present cooling was NOT predicted by the alarmists’ computer models, and has come as an embarrassment to them.
The finest meteorologists in the world cannot predict the weather two weeks in advance, let alone the climate for the rest of the century. Can Al Gore? Can John Holdren?

We are flooded with claims that the evidence is clear, that the debate is closed, that we must act immediately, etc, but in fact


The proposed legislation would cripple the US economy, putting us at a disadvantage compared to our competitors. For such drastic action, it is only prudent to demand genuine proof that it is needed, not guesswork, and not false claims about the state of the science.


Finally, climate alarmism pays well. Many alarmists are profiting from their activism. There are billions of dollars floating around for the taking, and being taken.

Robert H. Austin
Professor of Physics
Princeton University
Fellow APS, AAAS
American Association of Arts and Science Member National Academy of Sciences

William Happer
Cyrus Fogg Brackett Professor of Physics
Princeton University
Fellow APS, AAAS
Member National Academy of Sciences

S. Fred Singer
Professor of Environmental Sciences Emeritus, University of Virginia
First Director of the National Weather Satellite Service

Roger W. Cohen
Manager, Strategic Planning and Programs, ExxonMobil Corporation (retired)
Fellow APS

Harold W. Lewis
Professor of Physics Emeritus
University of California at Santa Barbara
Fellow APS, AAAS; Chairman, APS Reactor Safety Study

Laurence I. Gould
Professor of Physics
University of Hartford
Chairman (2004), New England Section of APS

Richard Lindzen
Alfred P. Sloan Professor of Meteorology
Massachusetts Institute of Technology
Fellow American Academy of Arts and Sciences, AGU, AAAS, and AMS
Member Norwegian Academy of Science and Letters
Member National Academy of Sciences

Thursday, July 23, 2009

Drug pricing and IPR on facebook

The other day, I posted some of my thoughts on drug price control in the Philippines in my facebook status.

I got several comments after that. The one with the most comments was Francis Bonganay, he’s the editor of the forthcoming paper, “The New Commonwealth Herald.” Francis gave me permission to post his comments in this compilation in my blog. The others – Boying, John, Patrick – did not reply yet to my request-for-permission-to-quote posting, so I won’t give their full name and affiliation. What is important here is the articulation of their comments which other people may possibly share with.

Here’s the compilation of such thread:

With drug price control, if I am a pharma company with a revolutionary and very effective drug against say, cancer, but the drug is expensive, I won't bring that drug to countries that have official drug price control policy. I will be seen there not as a revolutionary innovator but as a blood-thirsty, profit-hungry multinational-capitalist firm. -- Nonoy

Are you saying that price control is crude way to control the price of drugs? or that govt should not ever control the price of drugs (even if the price in its jurisdiction is significantly higher than in other jurisdictions)? -- Boying

Government should not ever control the price of drugs because pricing actually serves a purpose in the economy. It allows the supply of drugs to remain available for when it is needed. This is why medicines in a hospital are usually 3x the price of drugs found at the store. If it wasn't, people would buy from there first and the hospital would have shortages for their patients. Now, to keep pricing down, the government should also not ever enfore copyright laws. -- Francis Bonganay

Price control distorts market signals that direct producers use to direct their business. While favoring consumers (especially the poor), price controls in the end will result in negative outcomes as its stifles competition by removing the incentive to innovate and discouraging new entrants. – John

Thanks John, Francis. Price control is often driven by envy, not rational thinking. For instance, currently there are 200+ different drugs against hypertension, prices range from P3/tablet and up, but people are so fixated with Norvasc (P44/tablet), they don't consider the 200 or so competitor drugs that are priced lower. So price control is on Norvasc. -- Nonoy

If all markets were like that you wouldn't have any money to develop it in the first place! -- Patrick

Not true. If you actually did an audit on pharmaceutical R&D, you'd find that almost 80% goes to administrative overhead, government lobbying (and red tape), and an extremely costly trials system... once more organized by the government. – Francis

Currently all medicines vs. AIDS can only keep the virus at bay, not really kill it. If I am capable of inventing a medicine that can really kill the virus but other companies will say, "your cost of R&D is yours alone but your successful invention is also my invention", then why would I iinvent that drug?

If your figure of 80% of R&D is admin and unproductive costs is correct, then why don’t those tens of thousands of generics manufacturers become innovators too, and make money early instead of just waiting for the drug patent to expire? -- Nonoy

Because the government doesn't like it when there are drugs out there without their holy stamp of approval (like recreational pharmaceuticals). hence the tests and lobbying required. don't forget the whole patents thing if you ever have a similar molecule in your lab. – Francis

It's the desire of the innovator company that its invention will be protected from poaching and being claimed as "that igreat invention is mine too" by any company. As long as this protection can be assured, by govt. or NGOs or private contracts, no problem, provided the innovator should be encouraged, and protected, not discouraged. Otherwise, societies will be full of copycatters only, very little or few innovators. -- Nonoy

Yeah, its the "common sense" idea that everyone has. Omigod! No protection? Who will want to do stuff if everyone is gonna copy myself. That's why its real hard to sell the idea that "No, with all that protection and patents gone there will be MORE INNOVATION." -- Francis

Most inventors and authors are more than willing that their intellectual output will be shared immediately to everyone for free. I write an original article based on a book that I have read or a conference that I have attended, I post my article in my blog, everyone else can read and see it for free. Fine. There is very little cost for me to bother asking people to "pay" for my article. The cost of enforcement is million times higher than whatever projected benefit.

But for those whose costs are very high and they are not willing to share their invention for free, then they should be respected. -- Nonoy

I think the big contention is not property rights, but enforcement of intellectual property. -- Francis

Private property ownership is important under capitalism. Absence of private property, through forced collective property ownership, means society is under socialism. If people want enforcement of their IPR -- say a fee for every downloaded article from the author's website, then there is a market for that. People who think the author really makes sense and the fee is affordable, they will pay. For those who think otherwise, they can "boycott" that author.

The same logic for drug invention and patent applies. If people think the drug by the innovator company is too expensive and there are alternative drugs, they will boycott that drug. If they think that drug is too life-saving while other alternative drugs are not so effective, then they will pay.-- Nonoy

Saturday, July 18, 2009

What's wrong with economics?

There was a long article in The Economist magazine entitled, "What went wrong with economics", July 16th 2009.
http://www.economis on/displayStory. cfm?Story_ ID=14031376

The article started with these 2 paragraphs,

"OF ALL the economic bubbles that have been pricked, few have burst more spectacularly than the reputation of economics itself. A few years ago, the dismal science was being acclaimed as a way of explaining ever more forms of human behaviour, from drug-dealing to sumo-wrestling. Wall Street ransacked the best universities for game theorists and options modellers....

In the wake of the biggest economic calamity in 80 years that reputation has taken a beating. In the public mind an arrogant profession has been humbled. Though economists are still at the centre of the policy debate—think of Ben Bernanke or Larry Summers in America or Mervyn King in Britain—their pronouncements are viewed with more scepticism than before. The profession itself is suffering from guilt and rancour. In a recent lecture, Paul Krugman, winner of the Nobel prize in economics in 2008, argued that much of the past 30 years of macroeconomics was 'spectacularly useless at best, and positively harmful at worst.'...”

Economics' simplest definition is that "it is the study of proper allocation of limited resources." This definition is applicable in the past, in the present, and in the future.

What could go wrong in the most recent financial turmoil were the economists who mis-practiced economics. Resources are limited, and they will always be as demand and wants for certain goods and services will never be satisfied, even if global GDP will be 5x or more of its current size.

Consider the US government, always in fiscal deficit and forever raising its public debt. To my mind, it is already a failure of the economists and politicians in the US government. Common sense economics say that with limited resources, if revenues are not enough, then stop bloating the expenditures. Don't over-spend, don't over-borrow, because you will only pass your fiscal irresponsibility to the next generation. Does one need to take up financial economics or Econ. 201 and Econ 301 to comprehend this?

The problem with many economists working with government and even in multilateral institutions like the WB, ADB, IMF, UN, etc., is that politicians and political expediency of poverty -- including self-imposed poverty due to laziness and personal irresponsibility -- have ruled their lives and thinking. Fiscal resources are in the red every year, but the politicians say "find ways to borrow, find ways to further hike taxes and fees", and the economists obey them, sometimes blindly, sometimes with full agreement.

In the most recent financial turmoil, most economists I think, were with the politicians in the white house and capitol hill in saying "too big to fail companies should not be allowed to fail; here are some tax money and here are more IOU papers." As if US government debt was still small or non-existent.

So, what's wrong or what went wrong with economics?

What's wrong with economists?
They sometimes behave like politicians throwing away subsidies, expensive welfare programs and various political favors.

What's wrong with this article?
The author forgot the definition of Economics when he took Econ. 11 several decades ago.

Wednesday, July 15, 2009

Uncontrolled Emotions in Drug Price Control

Yesterday afternoon, the Coalition for Health Advocacy and Transparency (CHAT), co-sponsored by the Affiliated Network for Social Accountability (ANSA) and the Transparency and Accountability Network (TAN), held a forum on drugs maximum retail price (MRP) and drug discount cards. The event was held at the conference hall of the Ateneo School of Government, Ateneo de Manila University, Katipunan, Quezon City.

In the morning session, the topic was about the Access to Information bill -- passed in the House of Representatives, pending at the Senate. Vince Lazatin, Exec. Director of TAN eloquently explained the need for citizens' greater access to certain government records, and the important provisions of the bill.

The forum on drugs MRP, the agenda was prepared by HealthWatch, an NGO headed by former Bulacan Gov., former DAR Secretary, and former PITC President, Obet Pagdanganan. The speakers were (1) former Sec. Obet Pagdanganan, he presented a general situationer on the Philippine pharmaceutical industry, (2) Rose Trajano of 3CPNet, she narrated to us what happened in the July 8 (last Monday) meeting of the Congressional oversight committee on cheaper medicines law at the Senate, and (3) Dr. Robert So of the DOH, he explained the scientific basis for the 21 molecules that the DOH recommended for issuance of MRP. It was a very informative presentation by the 3 speakers.

I also spoke and narrated that during the 2 DOH advisory council meetings on price regulation last June 5 and June 26, they at the DOH were also in favor of "voluntary compliance of large price cut by multinationals if necessary" because the DOH recognize the big problem and logistical requirements of full enforcement of MRP. See my account of those 2 DOH meetings below, late June.

The VP of HealthWatch, Cecile Sison, who prepared the agenda for the afternoon forum, asked me if I can be the facilitator of the open forum later, and to write the draft statement of CHAT later on the subject. I said No because I am a highly opinionated participant to become a facilitator, but Cecile and other CHAT leaders there insisted that I can write the draft statement, so I later said Ok.

To be a forum or round-table meeting facilitator can be tough. For one, I would be forced to listen carefully to the sentiments of all participants, which means I could not go out of the room anytime. Then I would have to cut some sleep to prepare the draft statement that captured the general sentiments, the points which were most agreeable to all, and they would be waiting for that draft statement that evening!

CHAT has about 25 member-NGOs, including network of NGOs themselves. But by afternoon, only 7 NGOs were represented. The sentiment went like this:

YES to the issuance of MRP by the President the soonest possible -- HealthWatch, 3CPNet, and Kilos Damit.

NO to the issuance of MRP if voluntary big price reduction by pharma companies will happen -- Natl. Pharma Foundation (NPF), AGAP, Minimal Government Thinkers, and ANSA.

With that mixed opinion and sentiments, I wrote the draft statement. I prepared 1 page long and posted in the CHAT googlegroups by around 1am today. I will not post that full draft statement here for now because it is still subject to further revisions and changes. Will post it later, along with the final draft. The Final Draft will be written by Fe Remotigue, CEO of the National Pharmaceutical Foundation (NPF), which is the franchisor of "Health Plus" village pharmacies.

Anyway, portion of the draft statement I made went like this:

"While some of us, member-NGOs of CHAT, directly and openly support the issuance of MRP by the President, others do not see the move as the priority action. Even the DOH has some reservations in such move mainly because of the huge logistical requirements for its enforcement nationwide on a sustained basis.

We welcome therefore, the agreement between the government and the pharmaceutical companies whose products are among those in the 21 medicines for issuance of MRP, for voluntary price reduction by the latter of those medicines by at least 50 percent...."

Then Edwin Santiago of the National Consumers Affairs Council (NCAC) leaped and posted a long, all-Filipino posting, attacking the draft statement that I prepared. He said,

"Hindi makatotohanan ang statement na ginawa ni Nonoy. Puno ito ng sintemyento na pabor sa mga MNC's na tinatamaan at tatamaan ng MRP....HINDI PO AKO SANG-AYON SA NILALAMAN NG STATEMENT NA GINAWA NI NONOY."

(Translation: "What Nonoy wrote is not true. It is full of sentiments in favor of MNCs that are hit by the MRP... I do not agree with the draft statement made by Nonoy.")

This guy has been watching my postings in the CHAT googlegroups then launch counter-arguments, almost always, cc various individuals that I do not know. Fine, the googlegroups is an avenue for members of CHAT to post their opinions and ideas.

This guy has 3 problems.

One, while everyone in CHAT, including him was invited to the forum and meeting, he did not show up. He would just appear in the ggroups to launch counter-comments to almost anything that I will post there.

Two, he is attacking a draft statement that captured the general sentiment of the 7 NGO leaders who were there yesterday, not just the sentiment of Nonoy Oplas.

And three, his organization, NCAC, is not an NGO. It is a government office and bureau under the Department of Trade and Industry (DTI).

NCAC is one of the 8 bureaus under the DTI: BTRCP, BPS, CIAP, CMDF, IPO, NCAC, PAO and PSB.

I actually raised that issue with CHAT ExeCom -- if NCAC can become a member of CHAT, fine, no problem with me. CHAT should also invite representatives from DOH, BFAD, PITC, PhilHealth, Senate, House of Reps, WHO, ADB, WB, etc.

Well it's an issue that the Execom has not acted yet. I dont want to bug them on it because those guys should be busy with various other concerns too.

The guy posted another attack on me, with a parting slogan,
"Mabuhay si Nonoy at ang mga MNCs!"
(Translation: "Long live Nonoy and the MNCs")

I replied that his sloganeering was insufficient.
He can add also,

Long live Nonoy and capitalism! 
both foreign capitalism and domestic capitalism!
Long live Nonoy and globalization!
Long live small government intervention and big market competition!"

More complete ingredients, longer sloganeering, alright!

About the draft statement I made, there was nothing, zero, nada, that I said or implied, that it cannot be criticized. I expicitly said that after that draft, then it was open to expansion, reduction, changes, etc. And that is precisely why I limited the draft to only 1 page, to give more allowance for more insertions and changes, provided that the final draft should not be more than 3 pages, as agreed upon by those present in the meeting.

There was also nothing, zero, nada, that I said or implied, that those who did not attend cannot introduce any change or shoot their gun. Precisely that after I wrote the draft, I posted it for everyone in the CHAT googlegroups to make any comment, addition, subtraction, multiplication or division.

So if I never mentioned, implicitly or explicitly all the above charges or innuendos made -- that those who were not there cannot introduce any change or revision, that the earlier draft can never be altered anymore -- it only means one thing: deep insecurity on the part of the accuser to just criticize and attack even without any basis.

Meanwhile, I remember Dr. Robert So himself expressed reservations of the capability of the DOH to fully enforce the MRP very quickly. Like putting the sticker "price not to exceed P___" in ALL medicine bottles, in ALL blister packs, in ALL capsule/tablet packs, in ALL 10,000+ drugstores in ALL cities and municipalities in the country. Dr. So even mentioned that it will take at least 2 to 3 months AFTER the President has signed the EO issuing the MRP, before the DOH can enforce and implement the MRP.

Thus, assuming that President Gloria will sign the EO this coming Saturday, July 18, the agreed-upon deadline for the multinational pharmas to produce a voluntary drug price cut scheme that will be acceptable to the Executive branch (OP, DOH, DTI, BFAD, etc.), the soonest time that the DOH can implement that EO will be September 18 to October 18 (ie, 2 to 3 months after the signing of the EO). That's how messy the implemention of the MRP is.

And that is why even BFAD people are possibly horrified of the new tasks that will be assigned to them by the President and the DOH, to check ALL those bottles and tablet packs that are under MRP in ALL drugstores nationwide, on a sustained and regular basis. Then receive all attacks and flak by the legislators in the oversight committee should there be loopholes and inefficiencies in their implementation.

And that is why even PCPI leaders, the owners of Filipino-owned, non-MNC pharma companies, are also not in favor of drastically issuing the MRP, partly because of that logistical nightmare.

Dr. So added that "what is crucial is enforcement on the part of the DOH. Otherwise, if the DOH cannot fully enforce the MRP effectively, then the affected pharma companies can just find ways to go around the entire procedure, DOH efforts will be wasted."

So I wonder who now has the more realistic view -- the DOH and BFAD that will implement the EO and will receive all flaks and congressional criticisms if the EO is not fully enforced, or the groups and individuals who want MRP signed and implemented veeeerrrryy soon, if not today.

Saturday, July 11, 2009

Discount card vs. discounted competition

In a competitive business environment, enterprises resort to various forms of competition in terms of (a) quality (who has the most durable, most reliable, most effective, safest, and so on) and (b) price (who has the cheapest, most cost-effective).

More players, more competition, more marketing schemes and more price discounts promo. Ultimately, the consumers will benefit because they will have lots of options and choices among the various producers and suppliers of the products that they need based on their particular tastes, preferences, needs and budget.

The proper role of the government therefore, is to encourage more competition among different enterprises and producers, not stifle it. And for government to successfully encourage competition, all it has to do is practically do nothing. Do not over-regulate. Do not bureaucratize. Do not impose high and multiple taxes and fees. Do not intervene anytime for any alibi. Just step back and watch for whoever is doing foul and harmful schemes. Like producing cheap but poisonous food and drinks, cheap but structurally defective houses, cheap but fake and substandard drugs, those resorting to arson and sabotage against competing firms, and so on. People will really appreciate it when government comes in and intervene in cases like these because there is physical harm being done or about to happen to the public.

Recently, discount cards and coupon promos by some drug manufacturers became a negative public issue. The issue is that if those pharmaceutical companies are capable of selling their drugs (patented or generic) at 30 to 50 percent discount or higher to those who hold their discount cards, why not make it a “universal” price for all consumers, with or without a discount card. Why give those discount cards only to doctors in expensive clinics and hospitals for their rich and the middle class patients, why not give the same privilege also for patients who cannot afford to see a doctor.

Since there is obvious “class” discrimination among rich and poor patients, government should come in and mandate or force those drug companies to remove those discount cards altogether and sell their drugs at the existing discount price.

This does not seem to fall in the above definition of where government is expected to keep out or come in. There was no harm to the public when some companies would give price discounts to patients who voluntarily signed into some discount cards. The patients signed in voluntarily like they sign in to their yahoo or gmail or facebook account. The service provider – web-based email or social networking or pharma company – asked the person to give his/her name, age, etc. in exchange for a particular favor, like free email account or highly-discounted medicine prices.

As discussed above, price discounts and various forms of marketing promo are expected from enterprises which are operating in a competitive environment. No discounts, less customers, less revenues, less profit, if not losses. Very simple.

Should the State, through the Department of Health (DOH) and/or the Department of Trade and Industry (DTI) and other government agencies devote their thin resources into coercing companies to another set of price control, then monitor for their compliance or non-compliance, then wait for the “offending” parties’ position paper in a public hearing, then prepare charge sheets and go to the courts if necessary. Is this the right way to spend taxpayers’ money?

It is true that those discount cards may be used by the issuing pharma companies for their “intelligence gathering”. If those pharma companies will distribute their discount cards to all doctors nationwide, let them continue their marketing promo. Other competing pharma companies can bring down the prices of their drugs without discount cards, threatening the marketing promo of the earlier companies that issued discount cards.

Whatever dynamics and counter-promos in quality and price competition among the various enterprises, the State should get out of such deals. By keeping out, the State is indirectly inviting more pharma companies to come in, both domestic and multinationals, to launch their own promos, and ultimately the patients and their families will benefit.

The State should reserve its coercive resources in tracking and controlling those pharma companies that produce and/or import fake or substandards drugs because of the harm they bring to the public. For these companies, they can always price their drugs at just 1/2 or even 1/5 of the supposedly comparable drugs by other companies because the former just used flour or any cheap and medically useless substances in producing their own “drugs”. Isn’t this a better use of the taxpayers’ money?

There are still soooo many multinational innovator pharma companies abroad that are not yet in the country that can help increase competition. These multinationals are global corporate brands that are too scared to be involved in even a single case of producing fake or substandard or ineffective drug. Why should the Philippines be satisfied with the current 30 to 40 multinational pharma companies and about the same number of reliable domestic pharma companies, when there is a potential of 200 to 500 reliable companies who can offer more choices for the Filipino patients?

The State, through the Department of Finance (DOH) and the Bureau of Internal Revenue (BIR) should also consider cutting drastically the various taxes and fees that they imposed on medicines and active ingredients.

There is nothig to fear in discount cards. We should be afraid in discounted competition instead. Monopolists, oligopolists and political rent-seekers thrive in an environment of discounted and limited competition.

Friday, July 10, 2009

Foreign Aid 9: WB Wants Hike in Gasoline Excise Tax

Multilateral institutions like the WB, IMF and UN are not exactly as bleeding-heart do-gooders as they portray themselves to be. They are international bureaucracies that live off on taxes and more government intervention and taxation.

I read today a news report where the WB is proposing that the excise tax on gasoline products in the Philippines be raised to increase government revenues. The main reason is that taxes/GDP ratio is projected to fall from 14 percent in 2008, to only 13.1 percent this year.

Tax bureaucrats and WB developmentalists are targeting 15 percent or higher tax/GDP ratio in order to “finance development”.

Even if we take the “feared” ratio of 13 percent Tax/GDP ratio, so what? National government taxes are only one of several government revenues, composed of:

Taxes + fees, charges and fines (aka non-tax revenues) + PAGCOR/PCSO income + privatization proceeds + foreign grants + local government taxes and fees.

Huge incomes by SSS, GSIS, PhilHealth and Pag-IBIG that make mandatory and coercive collections from the monthly income of salaried individuals should actually be considered as additional government revenues, but we leave it aside for the moment.

Many local governments act like little welfare states in terms of high taxation and supposedly comprehensive welfare programs for their constituents. In Makati for instance, they have free vitamins, free goodies on birthdays, free movies (everyday) for senior citizens. So some of the developmentalist functions of the national government are slowly being taken over by some local governments.

The WB says gasoline products are used mostly by the rich anyway, that gasoline emission contribute to global warming anyway, that more vehicular trips contribute to traffic congestion anyway.

Great bleeding heart arguments. The WB and other groups and institutions that buy this alibi might as well propose that VAT for petroleum products be raised from 12 percent to 24 or 50 percent. Gasoline is an “evil” product anyway, so why not discourage its use, in order to raise more money for the government, in order to “save” the planet, in order to reduce traffic congestion?

But almost all economic and social activities require input from gasoline and other petroleum products. Even marathon and cycling races where participants do not use a single drop of gasoline, need marshals, paramedics and race officials who ride on cars and motorcycles, that run on gasoline or diesel. So it is not true that gasoline and other petroleum products are "public bads".

If government revenues are falling, then the appropriate policy response is to reduce government expenditures. Why raise more taxes or borrow more? Aren’t Philippine taxes among the plentiest in the world? The WB itself, in partnership with the Price Waterhouse Coopers, produce the annual report “Paying Taxes”, and that report shows that supposedly capitalist Philippines has 2x to 3x more taxes than socialist Vietnam and China.

And instead of raising the excise tax on gasoline, it should be abolished. There are lots of taxes on petroleum products already existing -- import tax, import doc stamp tax, local tax, value added tax, etc. These can be retained but the excise tax should be abolished.

The WB should better admit that it wants the Philippine government to raise more taxes, to cause more public misery, because the WB has lent lots of money and projects to the government, and it wants to lend more, and it wants to be assured of regular payment for all the loans that it has made and about to make in the future.

Below is the news report.

WB pitches gas excise-tax hike

Written by Jun Vallecera / Reporter
THURSDAY, 09 JULY 2009 23:11
THE World Bank (WB) has recommended increasing the excise tax on gasoline to help arrest the country’s deteriorating ability to generate a limited array of taxes as a percentage of the gross domestic product (GDP).
At the Department of Finance on Thursday, officials said they are evaluating the merits of this recommendation in anticipation the 2008 average 14-percent tax-to-GDP ratio will fall this year, as the World Bank has projected, to 13.1 percent. It’s a level prevalent during the preconsolidation years when reforms to the value-added tax (VAT) system were mere plans.
The WB noted that petroleum products are “lightly taxed” considering the Philippines is an oil-importing economy, although retail prices of the various petroleum products are not particularly low…

Meanwhile, I wrote this related short paper last February 03, 2009:

Foreign Aid and Underdevelopment

There's a recent news in WSJ on foreign aid and corruption. It's true. Countries that live off on foreign aid until now -- Indonesia, Vietnam, Cambodia, Philippines (the ADB headquarters is in Manila), etc. remain underdeveloped. While countries that never relied on foreign aid, spent their energies on entrepreneurship and trade -- Singapore, HK, Korea, Taiwan -- are now developed.

The main defect of foreign aid is that it is government to government. Or bureaucracy to bureaucracy. If one or both sides of the money flows is/are corrupt, then tax money for foreign aid is simply wasted, and a culture of bureaucratism and robbery is cultivated in the recipient country.
Foreign Aid and Bad Government
Helping entrepreneurs is the right approach.
Pakistan has been one of the key recipients of U.S. aid over the last six decades, but there has been no real progress as a result. Pakistan is riddled with problems that are rooted in the disproportionate power of the state. Aid has only boosted that power.
In contrast, Malaysia saw its economy grow at twice the rate of Pakistan's over the same period of time. Fueled by trade rather than aid, Malaysian economic prosperity is decentralized, and its reliability as an ally much greater.
Tragically, the Cold War aid approach actually preserves suffering in poor countries. Aid empowers bureaucracies, promotes statism, and weakens government incentives to boost tax revenues through growth. Economic assets are often kept in the hands of the state, leading to monopolies, stagnation and extortion. All of this hurts entrepreneurs, who have the potential to create wealth and promote governmental accountability.

See also:
Foreign Aid 5: Failure in East Timor, May 31, 2006
Foreign Aid 6: IMF is Engineerable and Abolishable, September 05, 2006
Foreign Aid 7: Wolfowitzoellickation of the WB, May 30, 2007
Foreign Aid 8: Abolish the IMF, August 08, 2007