Welfarism 26: John Mangun on Economic Decline of the West

There are a few Philippine-based foreigners that I admire, especially those who are free market-leaning thinkers. Like good friend and fellow Rotarian, Bruce Hall, based in Iloilo City; Peter Wallace, and John Mangun.

John is an American stock market investor and analyst at the Philippine Stock Exchange, and does business consulting, writing columns, on the side. He has been living in this country for more than three decades now. His kids were born here. John’s articles are archived in his website, http://www.mangunonmarkets.com/.

I am posting below three of his recent articles, about the slow economic decline of the West and the US in particular, almost in tandem with these economies’ piecemeal departure from free market policies and respect for economic mobility of individuals. Five pages for these three articles below, enjoy.

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(1) The Economic Death of the West?

Posted by John Mangun on June 3, 2013  

THERE are many reasons why for 100 years, the United States was the global center of economic power and innovation.

The US was isolated from military invasion. The land was rich with mineral wealth and, more important, vast farmlands capable of producing an abundance of food and agricultural raw materials. While the European nations all had colonies in every corner of the world providing both natural resources and markets for their goods, the US had to rely on creating its own wealth.

The Industrial Revolution began and was in full swing in Europe long before the US entered its darkest period, the civil war, which tore the country apart. But it was the US that took the advancements brought about by the Industrial Revolution and made the country the most prosperous in history.

The one defining characteristic of the US that separated it from every other nation on earth was economic mobility, the freedom and ability for virtually everyone to move up the economic ladder. The social and economic structure of every other country severely limited a person’s opportunity to become wealthier. The social and economic-class structure was fixed. A peasant would always be a peasant. One who was born into a family of shopkeepers would never become part of the ruling elite class. And by the same token, a member of the aristocracy could never understand what starting from the ground up would mean.

The Industrial Revolution slightly opened the door of economic mobility but it was the very rare exception of a man who started at the bottom and could work his way to the top of any private or public organization.

The US was the exact opposite. Each man had the chance to excel and achieve, based on merit and effort, not the status and station into which he was born. Of course, there were many rich families that savagely protected their own interests; oligarchs we call them today. But the system was designed to reward initiative and smart work.

Some of the most successful men in US history made the move up the economic food chain. John D. Rockefeller, in his time the wealthiest man in the world, was the son of a traveling salesman.

Rockefeller’s first job at 16 was as an assistant bookkeeper. Railroad and shipping magnate Cornelius Vanderbilt quit school at 11 and at 16 ran a small sailboat ferry in New York City. The founder of US Steel Corp., Andrew Carnegie, came with his family as poor immigrants from Scotland, borrowing money to make the voyage. Henry Ford started as an apprentice machinist and owned a small sawmill to pay the bills while he studied engineering and bookkeeping. Wall Street icon Jesse Livermore ran away from home at 14 because he did not want to work on the family farm. Another stock-market name, James Fisk, ran away from home and worked at a circus. Fourteen years later he became a stockbroker.

The US was a nation where a person could start by cleaning tables at a fast-food restaurant with the idea that someday he/she could own their own restaurant. That is economic mobility.

Lion Rock 6: Honoring Milton Friedman

Today is the 101st birthday of Milton Friedman. He died in November 2006. This great mind has been espousing free market and minimal government policies in many of his academic and public policy work in the past century. He has battled believers of more government intervention in various academic and public policy debates in the US, Europe and other continents.

The Library of Economics and Liberty mentioned two of Friedman's work and their importance,

His landmark 1957 work, A Theory of the Consumption Function, took on the Keynesian view that individuals and households adjust their expenditures on consumption to reflect their current income. Friedman showed that, instead, people’s annual consumption is a function of their “permanent income,” a term he introduced as a measure of the average income people expect over a few years.

In Capitalism and Freedom, Friedman wrote arguably the most important economics book of the 1960s, making a case for relatively free markets to a general audience. He argued for, among other things, a volunteer army, freely floating exchange rates, abolition of licensing of doctors, a negative income tax, and education vouchers.

Tonight, the Lion Rock Institute (LRI), Hong Kong's first and only free market think tank formed in 2004, is holding a cocktails entitled "Friedman 101 and His Eastern Europe Experiment." The event was posted by EFN Asia here.

The three speakers tonight are from Ukraine, Australia and Bosnia and Herzegovina.

Congratulations to LRI for holding this event. While there are many other free marketer economists and social scientists who are known today, perhaps none has reached the popularity attained by Friedman for many decades.

One Filipino free marketer friend here, Mark B., always attach some quotes from known free market leaders in his emails.

A society that puts equality before freedom will get neither. A society that puts freedom before equality will get a high degree of both.

A major source of objection to a free economy is precisely that it ... gives people what they want instead of what a particular group thinks they ought to want. Underlying most arguments against the free market is a lack of belief in freedom itself.

-- Milton Friedman

And rightly so. Free people are not equal and equal people are not free. And the desire to force equality among people via socialism or heavy state intervention, regulations and taxation, will only succeed in having dictatorship and have many dictators. People who dislike spontaneity and diversity, people who are insecure and want to have central planning in almost all sectors of the economy.
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See also
Fat-Free Econ 28: Poverty, Planning and Populism, October 28, 2012
Lion Rock 3: The New Poor, Free Poor and Eric Hoffer, October 30, 2012
Lion Rock 4: Leftism and Populism by Intellectuals, November 05, 2012 
Lion Rock 5: Free Will vs. Power Over Others, December 26, 2012

Mining 28: Markets, Government and Rule of Law

Of all sectors or industries in the Philippine economy, among the most heavily regulated, taxed and intervened by the government are the mining, pharmaceutical and petroleum industries. One proof if an industry is heavily regulated is the existence of high black market presence in that sector.

In the case of mining, it is the so-called “small-scale” gold and other metallic mining. In pharmaceuticals, it is the presence of many counterfeit, substandard or simply unregistered medicines and food supplements. In the case of petroleum, it is the existence of huge volume of oil smuggling.

So it is a case where as government intervenes more, supposedly to protect public interest, public health and interest is even more jeopardized for certain sectors of society. There is a universal law to explain this phenomenon and it is not created by Congress or any government department. It is called the “Law of Unintended Consequences.”

Minimal Government Thinkers, Inc., the free market think tank that I head, is advocating less government, less taxes, rule of law and free market. We have been around since 2004, formally since 2008, and we saw instances and quantitative data of such unintended consequences to the public.

Large metallic mining in particular is pummeled and heavily regulated not only by the national government – MGB-DENR and BIR-DOF in particular -- but also by municipal, city and provincial governments. And the very vocal and militant NGOs, media, the church and other civil society organizations (CSOs) advocating further regulation if not a ban on large scale mining, they can be eerily silent on the environmental abuses and non-tax payment of many “small scale” metallic mining.

Exposing this double standard by those government agencies and CSOs is among our cup of tea. We believe that the main function of civil society is to keep reminding government that its main function in society, its “raison d’etre” or reason for existence, is to promulgate the rule of law, to protect the citizens’ private property rights, right to life and liberty, and freedom from aggression by lawless elements in society.

So if government imposes various environmental and health standards, multiple taxes and fees, punitive penalties for violators, then those regulations and taxation should apply to all players, big and small, corporate and individual, multinationals and local. Rule of law means no exception, the law applies equally to unequal people, no one is exempted and no one can grant an exemption to the penalties of the law.

If rule of law is strictly observed and implemented in the country, we should see dynamic markets and responsible mining companies, big or small, foreign or local, complying with various regulations, and government regulations would be simple and practical enough, and not assume that only angels, not humans, can do responsible mining.

It is a big disservice to society therefore, if many CSOs will only lobby for strict implementation of those regulations and taxation to large mining and multinational companies, but are silent on the violations on environmental laws and taxes of small-scale metallic mining companies and individuals. Thus, while large-scale metallic mining have paid about P12 billion in taxes, fees and royalties in 2010, excluding various community and corporate society responsibility (CSR) projects, small scale mining paid zero that year to the BIR and the CSOs are nowhere to hear complaining this big discrepancy in tax payment.

One myth in mining that persists in many sectors, government and private, is that mineral resources are non-renewable and hence, should be kept untapped whenever possible. A review of Earth Science subject in our undergrad years would show that magma or molten rock from the Earth’s core keep finding their way to the mantle and then to the crust, where our land and sea surfaces are located. That is why we have volcanic eruptions and huge earthquakes until now in many parts of the planet.

This movement of magma and super-hot gases from the core to the crust mineralizes ordinary rocks and soil. And since such movement is endless and forever, then the creation of mineral products is also endless and forever, especially in the Pacific Rim of Fire where about 80 percent of all volcanic and earthquake activities occur.

Thus, for technical purposes, the term “non-renewable” mineral resource is wrong. But since such processes take thousands of years, for practical purposes, that term is considered correct. But banning or strictly limiting mining is a non-option. All materials in modern society – cars and buses, knives and spoon, hammer and nails, planes and boats, cell phones and computers, TV and DVD players, and so on – come from mining. Not one of them came from farming, forestry or fishery. Things that cannot be grown must be mined.

The militant opposition to metallic mining therefore, is illogical.

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See also:
Mining 24: Casino-Hontiveros Mining Socialism is Off Tangent, June 25, 2013 
Mining 25: Changes in Brazil Mining Taxation, July 02, 2013 

Mining 26: Presentation at Rotary Club of Taguig Fort Bonifacio, July 16, 2013 

Mining 27: Ensuring Responsible Mining from Small and Large Projects, July 19, 2013

UHC 17: First, Second and Third Lines of UHC for the Poor

Later today, I will attend a round table discussion on Health System Shapers (HSS), Patients and Consumers Sector, at the Department of Health (DOH) main office. The goal of this and related fora is to further fine tune the government’s universal health care (UHC) goal.

Last week, I also attended the two-days (July 25-26) “Policy Dialogue on UHC and Access to Medicines “ held at the Asian Institute of Management (AIM) in Makati. Here are two of the definitions or presentations about UHC.

This one is from DOH UnderSec. Madeleine “Madz” de Rosas Valera in her presentation, “The Philippine Response to Universal Healthcare and Access to Medicines 2013”. She added that UHC is one of four major social investments of the government to help the poor. The other three are public education, housing and conditional cash transfer (CCT).

And this one is from Dr. David Lee of Management Science for Health (MSH) in his presentation in the same forum last week, entitled “Medicines as Part of Universal Health Coverage: The Global Dialogue”

Pondering on UHC, I think the health sector already has among the monster budget in the country today. Consider the following:

1. Proposed DOH budget for 2014, P80.2 billion, from P50.5 B* this year and P34.0 B in 2012

http://www.dbm.gov.ph/wp-content/uploads/NEP2014/XIII/DOH.pdf

2. projected PhilHealth revenue 2014, about P80 B, from about P62 B this year and P47 B in 2012. (Revenues almost equal Benefits payment per year)

3. PGH budget, P2+ B, from P2 B this year

4. AFP hospital, P1.5 (?) B, from P1.3 B this year

5. PNP hospital, Veterans hospital, etc.

6. Other state universities' hospitals

7. PCSO, PAGCOR, SSS, GSIS, etc. health spending

9. Provincial, District, City, Municipal hospitals **

10. Provincial, City, Municipal, Barangay health centers

11. WHO, WB, ADB, UN agencies, multilateral grants

12. USAID, JICA, KOICA, CIDA, EU, etc. bilateral grants

* I saw the DOH presentation last year for its 2013 budget, they were spending on a P42B approved budget, now it has been revised to P34 B? What happened to the P8 B? Can an approved budget still be slashed? Weird… will ask around why.

** Total number as of 2013: (a) DOH hospitals 60, (b) LGU hospitals 584,

(c) Rural health units (RHUS) 1,285, and (d) Barangay health stations (BHS) 962. The nearly 600 LGU hospitals alone, I think they will have at least P50 billion budget next year.

Should be P300+ B next year alone? And that’s for government spending alone.

I am wondering if there was any study conducted by the UHC study group (UP Manila), Health Policy Development Program (HPDP, UPSE + UP Manila + other colleges?) or other groups, detailing how much really is spent by the public sector alone yearly, on healthcare?

It seems none, except that every year, there is belief that there is  "not enough money, give more money, raise more money, to public health."

Meanwhile, there are various private and civil society spending on health charities. PHAP Foundation gives about P100+ M a year , Unilab another P100M? other PCPI-affiliated pharma. Zuellig Foundation, Rotary Foundation, GMA Kapuso foundation, ABS-CBN foundation, St. Lukes Foundation, MMC Foundation, etc.

I think ALL foundations and private charity organization have health spending in one way or another. Plus extra spending during calamities, like individuals donating money or medical products and devices.

So we are talking of possibly P500+ billion health spending in one year alone?

And many people still think that health spending is still "not enough". hmmmm...

The first line of UHC for the poor are the RHUs, BHS, and LGU hospitals. The second line will be the DOH hospitals, Philippine General Hospital (PGH), other state universities’ hospitals, AFP hospital, other departments’ health facilities. Plus the charity emergency/wards of private hospitals. That is for outpatient services (have fever, or headache, stomach ache, then go home after consultation) and wards in case of confinement.

PhilHealth should be considered as a third line in UHC of the poor. Yet PhilHealth is the main discussion point when people talk about UHC.

PhilHealth is NOT a healthcare provider, unlike those RHUs, BHS, LGU hospitals. PhilHealth is only a health financier, for those who are hospitalized, and assuming that they were not technically disqualified, say they forgot to pay the premium last month or a few months back. Or they are unmarried couple.

So the focus on expanding PhilHealth coverage may be a secondary consideration compared to improving the healthcare delivery of those RHUs, BHSs and LGU hospitals.

As an advocate of minimal government involvement, in healthcare in this case, I maintain that PhilHealth membership should not be made mandatory and obligatory for all people. What should be made mandatory is that all people, children especially, should have health insurance – whether from private charity organizations and foundations, or private HMOs, or some health NGOs, or LGU schemes and hospitals, or from PhilHealth.

Population Control 18: Billions of RH Services Even Without an RH law

This poster has been circulating in some friends’ facebook wall, like new but good friend, Butch Cabanban. I made this comment on Butch’s wall,

Ako naman Butch, Ethell, anti-RH but for zero religious reason, pure econ and pol philosophy lang. No one prohibits people from donating their own resources to distribute condoms, pills, etc. for free to the poor. Gawad Kalinga (GK) or Books for the Barrios (BftB) or Rotary Homes, etc. did not say that they needed a GK bill or BftB bill to become a law first before they will build a single house or distribute books to the poor. If people help, fine. If not, fine too. And maternal care, child care, is part of the DOH, UP PGH, AFP hospital, LGUs hospitals, PNP hospital, etc etc mandates, nothing new.

Someone has a "very bright" idea. That he will give a big portion of his wealth to people in calamities like victims of heavy flooding. But he needed a law first, say a "Calamity assistance law" with fines, penalties and imprisonment provision, for those who do not help during calamities, before he will help. That is one example of a lousy thinking, but that guy thinks his idea is "very bright" and must be imposed on everyone else in the country via a law from congress.

Then Butch’s friend Nathan commented,

No budget to support programs mean it will just fail. That money is called investment in a better future --- one that has less mouths to feed and more sustainable. Saying no money shd be spent for it is like not willing to put into roads and education. Pretty short -sighted.

By calling my idea “short sighted”, I returned the favor and made these counter-comments.

"No budget to support programs" is an idiotic statement. Even without an RH law, DOH has a budget of P42B in 2012, P52B in 2013 approved even before the RH bill became a law. A big portion of those billions of pesos are already in maternal and child care. Then there are billions of pesos more for PGH, AFP hospital, LGUs hospital, also for maternal and child care.

People are liabilities, thus there should be "less mouths to feed" is another stupid and short sighted statement. Those bus and taxi drivers, office workers and pub school teachers, yayas and drivers of the middle class and the rich, etc., many of them come from households with 5 or more children, they are "surplus" and hence, "unwanted children" because they come from "unwanted pregnancies." Yeah, those people should have never been born.Lousy and idiotic thinking.

Many people are ignorant of numbers and they just want to open their loud mouth because of emotionalism. The 2013 DOH budget of P52 B was approved in Dec 2012 or one year before the RH bill became a law, Dec. 2013. In that 2013 budget, DOH already included P2.539 billion for various RH services alone, of which P538 million is for FP supplies and contraceptives alone -- even without an RH law. 
http://funwithgovernment.blogspot.com/2012/09/health-spending-6-dohs-proposed-2013.html

LGUs also have their own RH services in their respective provincial and city hospitals. PGH has RH services in its P2 billion annual budget -- even without an RH law.

No counter-argument from him. I also posted the first comment on other rabid RH campaigners like Tonton Contrereas of DLSU and Oscar Picazo of PIDS. Tonton replied,

The state has an obligation to spend for women's health because it is their bodies that are worn out just to reproduce future members of the labor force and to think that most of the work they do rearing these future workers are not being paid by the capitalist system. Put that in your equation Nonoy Oplas.

I replied,

"The state has an obligation to spend for women's health..." is off tangent as it assumes or implies that the state has NOT been spending on RH services. Wrong. Even without an RH law, the DOH, PGH, LGU hospitals, etc. have been spending on RH services already for many years.

Take the DOH 2013 BUDGET, approved in Dec. 2012 or one year before the RH bill became a law. Of the P52 B total budget, P2.539 billion alloted for various RH services alone, of which P538 million is for FP supplies and contraceptives alone -- even without an RH law.

http://funwithgovernment.blogspot.com/2012/09/health-spending-6-dohs-proposed-2013.html

 And you mentioned the capitalist system, among my favorite topics J. Capitlaism gave us facebook, youtube, google, yahoo, twitter, samsung, apple, black berry, cars, buses, restaurants, hotels, private schools and universities. Capitlaism is a wonderful system, it creates revolutionary products and services that even socialists or other anti-capitalist groups so love and patronize. It gives jobs to people, and people feed their children. What looked like undernourished or underclothed children running in the streets will soon be the bus/taxi/office/familyi drivers, office workers, yayas for kids of people including the anti-capitalism ideologues, NGOs, media and academics alike.

That is why people are assets. More people, more assets. The real liabilities -- thieves, murderers, rapists, extortionists, kidnappers, land grabbers, etc. -- rich and poor, in private or public offices, government should get them. That is the main purpose of having government, to protect people from those criminals, especially the armed and organized ones.

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See also:
Population Control 14: Lessons from the Cybercrime Law, October 08, 2012
Population Control 15: Debate, Debate, on the RH Bill, December 03, 2012
Population Control 16: RH Bill as HR, Coercion as Choice, December 13, 2012 
Population Control 17: China's Depopulation and RH Law, March 03, 2013

Pol. Ideology 47: SONA Rallies, Socialism and Thomas van Beersum

Another big rally by the leftist group Bayan Muna and other nat-dem allies was made last Monday, July 22, to protest the annual State of the Nation Address (SONA) speech of the President at the House of Representatives in Batasan, Quezon City. The entire north-bound lane of the 10-lanes Commonwealth Avenue was closed by the demonstrators and the big police force blocking them. There was a collision between the two groups that afternoon.

I commented in one friend’s facebook wall that they were “ungas, violent demonstrators.” A certain Paul G. corrected me, posting a news story with video that it was the police who charged first.

http://www.humanrightsphilippines.net/2013/07/sona-2013-police-attack-protesters-scores-injured-arrested/

SONA 2013: Police attack protesters; scores injured, arrested

I apologized to him and other demonstrators who may be reading that thread, for my earlier comment. But I added that I do not support those huge and confrontational mobilization to air grievances. I wrote,

You have the right to demonstrate but you also deprived ordinary motorists and commuters who use Commonwealth ave. of their right to fast and safe travel. Your "right of expression" is not absolute as other people also have the "right to travel" that a large demonstration has curtailed if not limited. Many classes and business transactions in QC were cancelled that day because of such big demos. These people and students also have the "right to education" and "right to economic transactions" that were curtailed that day.

Paul countered that with a SONA, 

the road in the area is definitely a headache ... so they know that one day they have to understand the situation ... mapipigilan ba ang tao lumabas at sa dami nila .. ako mismo nagulat at nalula ... di mo sila pwede ilagay sa bangketa kasi aabot sya sa edsa kung sa bangketa mo ilalagay ... pang unawa naman at sinabi nang maka ilang beses na iwasan ang lugar .. sadyang sinadya lang ng QC govt na di kami payagan at d silai nagbigay ng alternate route para sa demonstrators magalit ang riding public at di sa gobyerno nila ... isang araw lang yun .. sana nakaunawa din kayo ... ako mismo nakipag diskurso ako samga mananakay sa lugar ... sadyang sa dami ng taong nakita ko sumama .. di talaga maiiwasan.

I saw the tv footage last Monday morning, around 6am, the demonstrators already occupied the entire north-bound lane of Commonwealth Ave. as they marched from Philcoa. The demonstrators could have lessened the inconvenience to the public, especially to people who do not share their political demands and pol ideology, if they started their march and demo at noontime, instead of early morning. Kung gusto nilang unawain sila ng publiko, dapat mang unawa din sila.  Hindi komo galit sila sa gobyerno, idamay nila ibang tao the entire day. Even already traffic-congested Marikina experienced extra congestion that day because vehicles that were supposed to take the San Mateo and Montalban roads to Batasan then Commonwealth, took the Marikina route. They caused inconvenience not only to QC residents and motorists that whole day.

He countered that they needed understanding as the neoliberal policies of the Aquino government will hit more poor people.

These guys should hear the other side, people who may respect their political ideology but disrespect their methods to propagate it. I oppose socialism and heavy statism, I engage people in some debates, in fb or other online media, in seminars and conferences. People who do not share my views have the freedom to delete or disregard my comments, they have an option. In the case of demonstrators, the only options they give to other people is more traffic or cancellation of their educational, business or personal transactions for one day. Intolerance breeds resentment from others.

The discussion later shifted to that young European man who was caught on camera shouting at one police officer during the anti-SONA rally. Some people think it was a case of “foreign intervention” in Philippine soil. It is not "foreign intrusion" as it is just an individual's action.

This poster was posted by Paul. See this, that foreigner is struggling "alongside Filipinos" including me? That’s garbage. That young Dutch man is only struggling for himself and his political ideology, and the demonstrators. People have the right to proudly announce their arrogance and intolerance, let it be. If people self destruct, we should not interrupt them. No need to physically harm guys like him. We can broadcast their faces, names and character. There is personal responsibility to each personal action (or inaction).

Paul commented further that “Nonoy… arguing that we should all vanish from the face of the earth because we think differently and act accordingly ... peaceful pa nga kami at practicing what is said in the Consti.”

Intolerant people tend to have poor reading comprehension. Nowhere did I advocate that demonstrators should "all vanish from the face of the earth." I said that they have the "right to demonstrate" but such right is not absolute, it has limit. Anyone can hold plackards and b___t the President or anybody he does not like, in his house. But not in my house or somebody else's house. There are certain limits to the "right to self expression" of people.

Intolerant people cause big disharmony in society. They will force their way, like blocking roads and stop motorists and ordinary passengers, so they can shout what they want to shout. Respect for other people's right to safe and fast mobility is nothing, is useless in their vocabulary.

Then he posted this poster. My simple definition of a socialist are those people who want to socialize everything, from education, healthcare, housing, agriculture, factories, banks, our pockets, our savings. No or little private property and savings allowed, most if not all will be forcibly socialized, forcibly collectivized, by the state and the dictators.

A good reading for believers of confrontational politics to advance the Maoist and socialist ideology, 11 pages long, is this, Pilipinas Forum 19: The CPP-NPA, Sison and Maoism

And for believers of Marxism and class struggle, class war ideology, also 11 pages long, Pilipinas Forum 3: Is Marxism Still Relevant?

These photos of Thomas van Beersum with CPP founder Joma Sison in the Netherlands, have been circulating in facebook and twitter yesterday and today.

The Vincenton Blog has two articles about this guy today,
An Open Letter to Thomas van Beersum, 
Commie Trash-Talker van Beersum and JoMa Sison are Revolutionary Comrades
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See also: 

Pol. Ideology 43: On BIG Government Fetish, June 17, 2013 

Pol Ideology 44: Another Debate With an Anarchist, July 07, 2013

Pol. Ideology 45: Left Intellectualism Means Abandonment of Socialism, July 08, 2013 

Pol. Ideology 46: Misunderstanding Adam Smith, July 14, 2013

UHC 16: Dialogue on UHC and Medicine Access, AIM July 25-26

The Department of Health (DOH), Philippine Health Insurance Corporation (PHIC or PhilHealth), FDA and the AIM Dr. Stephen Zuellig Center for Asian Business Transformation (AIM ZCABT) will hold a policy dialogue tomorrow and on Friday, on “Universal Health Care and Access to Medicine” at the Asian Institute of Management (AIM), Makati City.

I received the invite only today when the DOH National Center for Pharmaceutical Access and Management (NCPAM) extended the invite to all members of the DOH Advisory Council for the Implementation of RA 9502 (Cheaper Medicines Law of 2008). Thanks to Mhyanne Dioso, the chief “workhose” of NCPAM for the Advisory Council, aside from NCPAM Director, Doc Virgie Ala.

The main objective of the seminar is “to identify the gaps and solutions in ensuring universal access to medicines in the Philippines” and hence, contribute to attaining universal health care (UHC) or Kalusugan Pangkalahatan.

The DOH’s budget has been rising big time in recent years: from only P18.9 billion in 2008, marginally rising to P23.7 billion in 2009 and P24.6 billion in 2010. When the PNoy Aquino government came, the DOH budget jumped to P31.8 billion in 2011, P42.1 billion in 2012, to P52 billion this year. Next year, the DBM-approved budget that was sent to Congress is P87 billion, or a P35 billion jump over this year’s budget.

A big portion of such huge jump in the proposed spending next year will be used to cover more poor households in PhilHealth insurance system, as the President said in his State of the Nation Address (SONA) last Monday. And medicine procurement by DOH hospitals and other agencies will likely get a big boost too.

Please note that public health spending in this country does not only come from the DOH. There are also the LGUs through their provincial, city and district hospitals, provincial and city/municipal/barangay health centers. Then other government agencies like the AFP Hospital, Veterans (under the DND) hospital, PNP Hospital, UP-PGH, PCSO ambulances and health charities, and so on. And almost all departments and agencies have their own in-house clinics for the healthcare of their employees and their dependents. There is huge public spending in healthcare and many people do not realize it, so they ask for more subsidies through the DOH and PhilHealth.

Back to the forum tomorrow. Among the speakers will be DOH Secretary Enrique T. Ona, DOH UnderSec. Madeleine “Madz” Valera, PhilHealth President and CEO Alexander “Alex” Padilla, FDA Dir.- General Kenneth Hartigan-Go, and Mr. Deejay Sanqui of IMS Health.

I hope that Sec. Ona will give an overview of the big DOH budget next year seeking approval by Congress. It seems that the “creeping re-centralization” of healthcare is no longer creeping but already hopping. Healthcare is among those functions by the national government that were devolved and decentralized to the LGUs under the Local Government Code of 1991.

I also hope that PhilHealth President Alex will not announce another round of hike in annual premium, especially for those in the formal sector. PhilHealth hiked plans to hike the premium from 2.5 to 3.0 percent of the basic salary of those working in the formal sector just a few years ago. The premium of OFWs has been raised from P900 to P1,200 per year and the sponsored program, the poor, from P1,200 to P2,400 per year, but the poor do not pay this amount, the LGUs and/or the DOH do.

My advocacy for minimal government in healthcare does not include healthcare for pediatric diseases and infectious diseases for both children and adults. I support further DOH and LGUs spending for these two types of diseases. But I do not support more government subsidy for NCDs for adults. If people have money to buy lots of fatty/salty food and drinks, lots of alcohol and tobacco products, or nice flat tv and DVD players and become couched potatoes, and they become sickly later, they should also have the money to buy private health insurance to augment their PhilHealth insurance. To say that they have no money for their own healthcare while they can spend for those food, drinks and smoking, is simply “palusot” and must be checked.

PhilHealth I think, should prioritize issuing automatic membership card for all poor children, say 6 years old and below. If DOH and LGU resources cannot support automatic coverage for older children and parents from poor households, then other agencies like DSWD, PCSO, UP PGH, private charities and foundations can come in. But usually LGU hospitals provide universal coverage for their local residents, young and old alike.

Tomorrow afternoon panel discussion will be on “Innovating and Improving Access to Medicine via Good Governance” with Tarlac Gov. Victor Yap, Gov. Alfonso B. Umali, Jr. of ULAP, Ms. Esther Go of Medilink, and Dr. Peter Glen Chua of FDA as speakers.

The role of LGUs is important in this aspect as lots of waste if not corruption in medicine procurement and distribution happen at the LGUs level. Many LGUs do not have the proper training and expertise in the proper storage and dispensation of medicines given free to their local residents.  

On Day 2, July 26, there will be a panel discussion on “4Ps of Financing Pharmaceuticals”: Rational Pricing, Tailored Procurement, Strategic Purchasing, and Risk Pooling, with four speakers:

Dr. Melissa Guerrero of DOH-NCPAM, Mr. Bienvenido Bautista of PITC Pharma, Inc., Dr. Dennis Ross-Degnan of Harvard Medical School, and Dir. Carlos Da Silva of AHMOPI.

NCPAM has a big budget for medicine procurement for “drugs entitlement” on certain diseases like breast cancer. PITC Pharma is the state’s chief drug importer and wholesaler for the various DOH-sponsored Botika ng Bayan, Botika ng Barangay, and other DOH agencies.

I am curious about the lectures on various topics like the ASEAN Pharma Harmonization, Anti-Microbial Resistance (AMR), Drug Price Referencing, PPP to Improve Access to Medicine, and PHIC and PCB 2. The  speakers will be Ms. Joyce Cirunay of FDA, Dir. Virginia Ala of DOH-NCPAM, Mr. Alex Haasis of NCPAM, Dr. Anthony Faraon of Improving Access to Medicine Project, and Dr. Francisco Soria of PHIC.

We shall have an ASEAN Economic Community (AEC) in 2015 or less than two years from now. The ASEAN Free Trade Area (AFTA) will mature, meaning zero tariff for all imports from any ASEAN member-countries, except perhaps for poorer economies Myanmar, Cambodia and Laos who might slap import tariff on some imported products from other ASEAN countries.

Singapore is the regional headquarter of many innovator pharma companies, not only because it is a regional financial center at par with Hong Kong, but also it strictly respects IPR like patent and trademark. Thus, IPR-busting policies like compulsory licensing of new and patented medicines, and drug price control are not done there. An ASEAN harmonization plan will consider this disparity in IPR and drug pricing policy. Many ASEAN countries like the Philippines, Thailand, Indonesia, Malaysia and Vietnam have laws allowing CL or similar schemes, and drug price control policy. Singapore does not have such policies.

Another learning experience for me in the next two days in health economics and public policy.

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See also:

Socialized Healthcare 12: Nurses, Doctors and Other Resources, March 03, 2013

Socialized Healthcare 13: On Inequality and Inclusive Business in HC, March 19, 2012  

Socialized Healthcare 14: Over-extending Government Role in Health, May 22, 2013 

UHC 15: On DOH Plan to Recentralize Healthcare, June 27, 2013

EFN Asia 25: The ASEAN Economic Community in 2015

The Economic Freedom Network (EFN) Asia http://efnasia.org/ posted today a new report on scooping of the ASEAN Economic Community (AEC) future, less than two years from now.

I already like the current set up, especially the visa-free entry to visit any of the nine other members of the 10 member-countries of the Association of South East Asia Nations (ASEAN) for visits less than 30 days, or less than 15 days in some countries. Thus, it is very convenient for me and other Filipinos to visit Singapore, Kuala Lumpur, Jakarta, Hanoi, Bangkok and other cities in the region.

Once the AEC materializes, the flow of economic activities and movement of people among residents of the 10 countries will become even easier and simpler.

Economic freedom, people mobility across countries. To a certain extent, they are "ends" by themselves in terms of public policy. The challenge to advocates of free market and economic freedom is how to further expand this to cover not only our region but also to the whole Asian continent and later on, to the rest of the world.

Here are two new articles from EFN website.

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Asia Driving the World: How leading ASEAN CEOs see the future of the fastest-growing region and beyond

Tuesday, 23 July 2013 13:16

Bangkok, Thailand

The event is full with top ASEAN business leaders. They discussed broadly about the future of Asia, especially ASEAN, with the 2015 launch of the ASEAN Economic Community (AEC) expected to present huge economic opportunities for businesses both within the group's 10 member countries and beyond.

These top business figures include Kyoichi Tanada, president of Toyota Motor Thailand, Chartsiri Sophonpanich, president of Bangkok Bank, Timothy Ong Teck Mong, chairman of Asia Inc Forum of Brunei, Ngo Thanh Tung, chairman of Vietnam International Law Firm, Paul Blanche-Horgan, chief executive officer at Ezecom Corp from Cambodia, U Zaw Zaw, chairman of Max Myanmar Group, and many others, with  Suthichai Yoon, Nation Multimedia Group chairman, the host of the event and also the moderator in the discussion.

"Business Visions 2020" was the main idea of the discussion. These high-profile executives from all over the region shared their ideas on business perspectives, trends and the opportunities that lie ahead once the AEC starts in 2015. Nevertheless, several issues still have to be addressed.  With so diverse cultures, rules and regulations, a number of obstacles will have to be overcome if the region's economies are to be integrated into a single market. In particular, social inequality, local administration, governance and a number of other key issues will have to be tackled.

Timothy Ong Teck Mong from Brunei made several good arguments about the difference of ASEAN countries, yet the potential after better integration is huge.

For example, getting construction permits in Singapore took about 26 days; 110 days in Vietnam; and 652 days in Cambodia. In addition, applications for business start-ups in Singapore took three days; 47 days in Jakarta; and 101 days in Brunei and Indonesia.

More importantly, he said, the gap between Asean's poorest and its wealthiest citizens, measured in terms of per-capita GDP, was huge - a factor of almost 16, compared to a factor of just two in the European Union.

Business leaders agreed that other key factors for continued growth include good governance in both the corporate and state sectors, and social responsibility among Asian entrepreneurs to ensure that all members of society benefit.

Asia’s Story of Growing Economic Freedom

Friday, 12 July 2013 14:05

By Razeen Sally

Policy Analysis No. 725 from Cato Institute

The global financial crisis reinforced a sense that the world is "shifting East"—to Asia. The essential story of modern Asia is its unprecedented expansion of economic freedom, enabled by market liberalization. Economic freedom, however, remains substantially repressed across the region.

There are three key policy challenges to expanding economic freedom in Asia today. The first is to open up financial markets, which remain backward and repressed by command economy controls. The second is to renew trade and foreign-investment liberalization, which has stalled since the Asian crisis of the late 1990s. And the third is to open up energy markets, which, even more than financial markets, are throttled by government interventions.

Increasing Asian consumption of fossil fuels will increase carbon emissions. Mainstream advocacy of carbon reduction in Asia should be met with skepticism, given its potential to lower growth substantially. A far better approach is one based on adaptation to global warming through market-based efficiency measures.

Asia’s poorer economies should concentrate on "getting the basics right" for "catch-up" growth. These are "first-generation" reforms of macroeconomic stabilization and market liberalization. Asia’s middle- and high-income economies need to focus also on "second-generation" reforms—more complex structural and institutional reforms to boost competition and innovation. Diverse political systems can deliver catch up growth. But autocracies are badly fitted to deliver second-generation reforms for productivity- led growth. The latter demands a tighter link between political and economic freedoms.

The Asian miracle is not the product of superior technocratic minds who concocted successful industrial policies. Rather, freedom and prosperity bloomed on Asian soil because government interventions were curtailed and markets unleashed. Classical liberalism, however partially implemented, has worked in Asia. It is a system to which Asians should aspire.

  

Please see original website for full analysis: 

http://www.cato.org/publications/policy-analysis/asias-story-growing-economic-freedom 

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See also:

EFN Asia 21: On Think Tank Independence, Jeju Forum, May 31, 2013 

EFN Asia 22: Dealing with Economic Nationalism, Jeju Forum, June 03, 2013 

EFN Asia 23: More Photos at Jeju Forum, June 06, 2013 

EFN Asia 24: Jim Rogers talk at Jeju Forum, June 10, 2013

Counterfeit Drugs 7: WHO, InterPol and IFPMA on SFFC

The spurious/falsely-labelled/falsified/counterfeit (SFFC) medicines or simply counterfeit medicines is a big public health problem. Patients who take such fake and/or substandard drugs will not experience improvement from their illness unless their immune system is strong enough. At worse, their condition might even worsen as the disease can mutate and evolve into something more complicated, and can even result to death.

While the more commonly faked medicines are those patented or newly-introduced ones and hence, are priced high, even cheaper but popular generic drugs are also counterfeited. The Department of Health (DOH) and the Food and Drug Administration (FDA) are also raising public awareness of this problem, like this DOH poster.

At the World Health Organization (WHO) website, this basic information is posted.

http://www.who.int/mediacentre/factsheets/fs275/en/

Medicines: spurious/falsely-labelled/ falsified/counterfeit (SFFC) medicines

Fact sheet N°275
May 2012

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Key facts

• Spurious/falsely-labelled/falsified/counterfeit (SFFC) medicines are medicines that are deliberately and fraudulently mislabelled with respect to identity and/or source.
• Use of SFFC medicines can result in treatment failure or even death.
• Public confidence in health systems may be eroded following use and/or detection of SFFC medicines.
• Both branded and generic products are subject to counterfeiting.
• All kinds of medicines have been counterfeited, from medicines for the treatment of life-threatening conditions to inexpensive generic versions of painkillers and antihistamines.
• SFFC medicines may include products with the correct ingredients or with the wrong ingredients, without active ingredients, with insufficient or too much active ingredient, or with fake packaging.

Recently, the International Federation of Pharmaceutical Manufacturers and Associations (IFPMA), based in Geneva like the WHO, produced a short video clip about the danger of SFFC medicines, Watch Out for False Friends.

Some of the points mentioned by the WHO above were reiterated there. It also highlighted that some 124 countries are impacted/affected by these fakes, and 532 products have been counterfeited. The longer, 3:30 minutes version, is found here.

These fakes that are dangerous to public health are being exposed by certain civil society organizations including the federation or association of pharma companies themselves, both innovator and generic. And there is a big role for the government here, when civil society effort are not enough and a bigger, wider network of government agencies, local and national, armed (the police) and non-armed, are needed. After all, the main function of government is to promulgate the rule of law, including the law against stealing the intellectual property of certain companies like trademark, patent and copyright.

The former Executive Director of PHAP, Reiner Gloor, wrote a paper about this subject a few months ago. He discussed the role of the Interpol, in coordination with country governments, drug manufacturers and civil society organizations, in battling this global crime. For instance,

In 2012, an Interpol-supported initiative spanning 100 countries aimed at disrupting the organized crime networks behind the illicit online sale of medicines, resulted in some 80 arrests and the seizure of 3.75 million units of counterfeit medicines worth $10.5 million.

Below is the article.
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http://www.bworldonline.com/content.php?section=Weekender&title=Interpol-in-fight-vs-fake-medicines&id=67608

Interpol in fight vs fake medicines

Medicine Cabinet -- Reiner W. Gloor

Posted on March 21, 2013 07:22:41 PM

FAKE MEDICINES are found everywhere in the world. Emerging economies like the Philippines, as well as highly developed countries with strong regulatory systems, have fallen victims to pharmaceutical counterfeiting.

In the Philippines, close coordination between the government and the pharmaceutical industry has resulted in the monitoring and seizure of counterfeit medicines in Metro Manila and some provinces. A multi-stakeholders alliance advocating patient safety called the Safe Medicines Network has also been established to help the government in the campaign against fake medicines.

Mining 27: Ensuring Responsible Mining from Small and Large Projects

A friend, Arcy Garcia, posted in his facebook wall my recent paper, Mining 26: Presentation at Rotary Club of Taguig Fort Bonifacio, and invited his friends from the Alyansa Tigil Mina (ATM) and Philippine Misereor Partnership, Inc. (PMPI) to comment on it. Only one commented, Mr. Samson Pedragosa, and I’m glad he did, as Samson has some constructive ideas how to further encourage responsible mining, not kill it.

Below are our exchanges from July 16-19, 2013 , with permission from Arcy and Samson that I will use their comments. Thanks Arcy, Samson. This is six pages long including photos, nearly 3,000 words, enjoy.

Arcy Garcia sa mga kasama sa ATM, PMPI at iba pang kasama natin sa paglaban sa iresponsableng pagmimina, pwede ba nating sagutin isa-isa ang artikulong ito? ang may akda ay isa sa mga ginagalang kong tao, kahit pa man malinaw sa kanya na siya ay pro-capitalism at neo-liberalism....

Government and Taxes: Mining 26: Presentation at Rotary Club of Taguig Fort Bonifacio

funwithgovernment.blogspot.com

Samson Pedragosa This presentation assumes that mining in this country is done responsibly. I have serious reservations about the sildes on Rio Tuba. Like the writer, I have been too the place, not once but many times. But I agree with the author that no mining is not an option. Choosing where to mine should be done, again responsibly. The author also used the so-called "stone age argument" about cars and laptops, etc. This argument reeks of arrogance and deserve to be responded with the eat-your-ore-till-you-choke reposte that does not add anything positive on the discourse on mining versus conservation ek-ek. Between mining and agriculture, the choice is clear. Finally, not to tax mining and instead settle for spoons and forks, well, you be the judge. And Chile, where in the world is that? It may be just a narrow strip of land but it is part of one of the biggest landmass in this planet (American Continent). The Philippines? We are just a string of islands and islets serving as the first line of defense from the wrath of the Pacific Ocean.

Nonoy Oplas Hi Samson, to your points.
1. This presentation assumes that mining in this country is done responsibly.
--> Wrong. If you imply me suggesting that "all miining done responsibly", I made zero statement about that. Please provide an exact quote where I made a statement to that effect.

2. "stone age argument"... reeks of arrogance and deserve to be responded with the eat-your-ore-till-you-choke reposte
--> the photo is shown there -- "STOP MINING!!!" Those people can modernize with zero mining.

3. Between mining and agriculture, the choice is clear.
--> Commenting without reading. It's there, "Should be no conflict between the two. But labor productivity and income per worker is larger in LSMM..."

4. not to tax mining and instead settle for spoons and forks,
--> The exact sentence is "People benefit from it (mining) even if taxes are zero... cellphones and laptops, cars and airplanes...they all came from mining."

5. Chile, where in the world is that?
--> $40 B mining exports per year could be "nothing" to some people. But here, a $20 B per year OFW remittance is already a big thing. Chile earns twice from that remittances, even if they export not a single citizen anywhere around the world.

--> $67 B in new investments until 2017, on top of existing investments, vs. $12 B investments in PH. Yes, all those numbers and money are nothing, cool.

Transport Econ 10: MMDA and Car Ban

* This is my article today in thelobbyist.biz
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Metro Manila Development Authority (MMDA) Chairman Francis Tolentino has proposed to raise the prohibition in the use of private vehicles in Metro Manila’s streets from one to two days a week. The goal is to reduce traffic in the national capital region.

Public outcry and disapproval, especially among car owners, and more particularly from those who have only one car, was high. The message is simple: Prohibiting people from using their own car/s two days a week is wrong. Especially if such car is used for business or to transport kids to school.

The  MMDA and many local government units (LGUs) in the country tend to specialize on having more  prohibitions in society: Driving your own car is not allowed on this day and hours, prohibited to drive on yellow lane, prohibited to make a left turn or U turn on certain streets, prohibited to drive your diesel engine car or van unless you pass their arbitrary smoke emission test.

The twice-a-week-car-ban proposal will actually result in more traffic congestion because (a) the rich will simply buy additional cars to go around the coding, and (b) there will be a new problem of lack of parking for many houses and streets.

A proposal like this by the MMDA Chairman is anti-liberal and anti-freedom. He is pulling the liberal PNoy government towards more statism, more prohibitionism and hence, more stupidity. Mr. Tolentino should remember that he is working under a liberal government, not a socialist or fascist government.

In a free society, everything is allowed, except for a few prohibited act -- like murder, stealing, abduction, rape, extortion, arson and carnapping. In an unfree society like a socialist or fascist government, everything is NOT allowed, except those with government permits. We are far from that highly unfree society, but more prohibitions, more regulations and more restrictions thinking by certain government officials can slowly pull the country towards such unfree society. And we pay more taxes and fees to pay for the salaries and perks of people with dictatorial and prohibitionist thinking in  government.

The usual proposal coming from various sectors  is to (a) encourage people to take the bus, jeepney and train more often. Raise the MRT/LRT fare prices and buy more trains. Other proposals include (b) building more covered walkways, (c) suspending the approval of new bus franchises or retiring old public vehicles, and (d) requiring provincial bus lines to stop, load and unload passengers only in areas near the North and South Expressways and prevent them from using Edsa.

One problem of expecting people to leave their cars at home and use the bus/jeepney/train  is that many people live in villages and residential areas far from the bus/train route. So from their houses, they take (1) tricycle, then (2) jeep or bus, then/or (3) MRT/LRT, then (4) jeep again or walk long to destination, especially in major commercial business districts (CBDs). The inconvenient multi-ride system, especially if one is regularly carrying a laptop or important documents or big cash, or in decent corporate attire, is forcing some people to drive their cars, even if they have to endure heavy traffic and difficulty in finding safe parking, or expensive parking fees.

A friend suggested that imposing frequent car bans is attacking the traffic problem on the demand side, when what are lacking are solutions on the supply side. One such solution is to construct more bridges over or across the Pasig River, to provide alternative routes to existing roads and bridges across the river.

I  support this proposal. There are currently about six or seven bridges across Pasig River. If there will be twice that number, then the traffic pressure in existing bridges like those in Pasig, C5, Edsa, Rockwell, Makati Avenue, etc. will be drastically reduced and vehicles will be more dispersed.

Multiple transport transfer is cool if we are talking of bus-MRT-bus transfers. But if we are talking of tricycle-jeepney-bus/MRT-jeep again, the combined fare may be equivalent to the fuel use of a car, not to mention the inconvenience of such multiple transfers.

There is an existing alternative now, the air-con vans. They ferry passengers from residential areas to different destinations, particularly Makati, Manila, Ortigas, Eastwood, Fort Bonifacio and other major CBDs. Just one-ride instead of three or four.

One problem here is that getting a franchise is very bureaucratic and costly, hence the presence of so many unregistered vans or "colorum". These are subject to frequent flag down and extortion by some corrupt elements of the police, MMDA and the Land Transportation Office (LTO). These costs -- high franchise fees for registered and high extortion for unregistered -- make the fare rather high, but still cheaper compared to driving one’s car.

On expanding the coverage and capacity of MRT and LRT in Metro Manila, Peter Wallace once said that the Avenida/Quiapo to Fairview MRT has been submitted to the government at build-operate-transfer (BOT) or related schemes as far as 20 years ago or longer. But the NEDA Board and the Investment Coordinating Council (ICC) bureaucracy, plus changes in administration, have conspired so that such unsolicited proposal from the private sector at little or no initial cost to taxpayers would remain as plain  dreams and never implemented. It is a disease of central planning at the ICC level.

The tricycles are given monopoly routes by the LGUs. Jeepneys and air-con vans  are not allowed to pick up passengers in routes that were assigned  by the LGUs as "exclusively for tricycles." So people who live in these routes have only three options: drive their car, get a taxi, or take the tricycle. The first two are costly.

If such tricycle route monopoly is absent, meaning passengers have a choice  to take jeepneys/vans or tricycles, most likely they will take the former and tricycles will die a natural death, even without national or local legislation. But the LGUs are protecting the tricycle monopoly system as they get lots of votes from tricycle drivers and operators, and these people pay annual registration fee or franchise fee to city/municipal halls.

A complicating situation is that some debt-pusher institutions like the Asian Development Bank (ADB) contribute to such traffic congestion by pushing some lousy programs, like the $300 million e-tricycle loan. Even a small country like Singapore with just 5+ million people has no tricycle, the more that a country with nearly 100 million people should have no tricycles and have more buses and trains instead.  

To recap, this paper is suggesting alternative measures other than the current and expanded car bans:

1.       LGUs should consider removing the monopoly route system for tricycles, allow jeepneys and air-con vans to serve these routes as well.

2.       Build more bridges across Pasig River.

3.       Simplify and reduce the cost of registering air-con vans, encourage corporate branding and competition among them.

4.       Simplify the approval of new or expanded MRT/LRT lines.

There are many other proposals from many sectors. So long as they do not advocate more restrictions, more prohibitions by governments on people to use their own cars, such proposals can be worth supporting.

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See also:
Fat-Free Econ 14: Traffic, Car-pooling and LTFRB, June 21, 2012
Transport Econ 7: Encourage Branding, Deregulate Fares of Taxi, January 02, 2013  
Transport Econ 8: Removing MRT and LRT Fare Subsidy, March 08, 2013 
Transport Econ 9: MMDA Bureaucratism, May 27, 2013