BWorld 369, Copyright and trademark in the ASEAN

* My column in BusinessWorld on September 17, 2019.

“A power ‘to promote the progress of science and useful arts, by securing, for a limited time, to authors and inventors, the exclusive right to their respective writings and discoveries.’… The right to useful inventions seems with equal reason to belong to the inventors. The public good fully coincides in both cases with the claims of individuals.”

— James Madison,

The Federalist Papers, No. 43, 1788.

This argument by Madison would be among the basis for the enactment of the USA’ first copyright law in 1790. The US patent law was also enacted that year while its trademark law was made in 1881, revised and expanded in 1905.

The Philippines’ law on these are contained in the Intellectual Property Code of the Philippines (RA 8293, 1997). A report in BusinessWorld, “Intellectual property applications climb 11% in first half” said:

“‘Society is now appreciating the IP (intellectual property) system more than ever,’ IPOPHL (Intellectual Property Office of the Philippines) Director-General Josephine R. Santiago said. Trademark filings rose by 11% year-on-year to 18,964 in the first half… Patent filings grew 4% to 1,991… Utility model filings grew 31% to 1,173… Industrial model filings rose 14% to 824… Copyright filings rose 53% to 990.”

These are good numbers. I checked the World Bank’s World Development Indicators (WDI) database, data on trademark application. Then, I also checked the World Economic Forum (WEF) Global Competitiveness Index (GCI) 2018 report — Pillar No. 12 is Innovation capability, and among the sub-pillars are patent applications and trademark applications per million population.

So for the numbers in the table, trademark applications are in absolute amounts, both country residents and non-residents, while the index for patent and trademark applications refers to per capita applications. China and India lead in absolute amount while Singapore and the Philippines are the laggards as of 2017. But in patent applications ranking, Japan, Taiwan, and South Korea were the world’s top three (See Table).

The good news for the Philippines then is that we are fast catching up on the use of intellectual property rights (IPR). Trademark applications have doubled from 2007 to 2017, and for copyright, IPO’s first half data for 2019 show a huge increase of more than 50%.

Recall also that the fastest-growing sub-sector in the Philippine economy over the past 5-1/2 years, 2014 to H1 2019, is intellectual property products, under Capital Formation (or private investments). It was growing at 28% per year, capital formation growing at 14%, and GDP at 6.3%.

Fast growth in IPR use also means fast growth in IPR infringement. This was tackled in the last panel of the BusinessWorld Industry Summit 4.0 last week, Sept. 9, at Shangri-La at The Fort at BGC. The last panel was about “Content and piracy” with speakers from the Coalition Against Piracy, the Optical Media Board, Globe Telecoms, and a film director.

So the role of the state in protecting private property, both physical and intellectual property, is reasserted by the current situation. And on this, two IPR-related events will be co-sponsored by our think tank, Minimal Government Thinkers (MGT).

The first is the launching of a new report, “The importance of IPR for progress: reform agenda for ASEAN countries,” in partnership with Geneva Network (UK), on the afternoon of Sept. 24 at the Holiday Inn Makati. Department of Trade and Industry (DTI) Secretary Ramon Lopez will give the keynote speech and, since the DTI is the mother agency of the Intellectual Property Office, he has a good overview of the sector in relation to the overall trade and investment environment.

The second is the global launch of the International Property Rights Index (IPRI) 2019 by the Property Rights Alliance (PRA, Washington DC) on Oct. 16 at Fairmont Hotel Makati. MGT and the Foundation for Economic Freedom (FEF) will be the local partners in launching this big event. The author of the report, Dr. Sary Levy-Carciente, and PRA Executive Director Lorenzo Montanari will come to Manila to present the report. Both events are by invitation only, but we will consider some interested individuals working on the sector who are not in our list. Send me an e-mail.

Private property is the cornerstone of economic freedom and free enterprise. Both physical property and intellectual property. Investors come if they are assured that their offices, investments, corporate brands/trademarks, patented and copyrighted inventions are respected and protected by the government against pirates and IPR thieves.

--------------

See also:

BWorld 366, ‘Social cost’ of carbon and trash to jetfuel, September 20, 2019 

BWorld 367, FIRe, innovation and stealing of innovation, September 21, 2019 

BWorld 368, More politics will worsen the Philippines’ power deficiency, September 22, 2019

Report on IPR in the ASEAN

Last Tuesday, we launched this report, “The importance of Intellectual Property Rights for progress: reform agenda for ASEAN countries” at Holiday Inn Makati.  https://geneva-network.com/article/intellectual-property-asean/. The recommendations are shown further below.

This is the program.

BWorld 368, More politics will worsen the Philippines’ power deficiency

* My column in BusinessWorld on September 11, 2019.

It is pathetic that people often politicize many things, whether food or medicines or electricity. Like creating a new energy company by legislation instead of the normal ERC-SEC process, or getting the Supreme Court to stop implementation of certain provisions of the EPIRA law of 2001 (RA 9136) such as the retail competition and open access (RCOA).

The Philippines, till today, is among the countries with the lowest electricity generation in Asia, both in absolute amount and per capita. I derived the per capita electricity production below from two data sources: generation from BP Statistical Review of World Energy (June 2019), and population from IMF World Economic Outlook database (April 2019). (see table 1)

We need to stop further politicizing the power sector because low power capacity automatically means that electricity prices will remain high as demand continues to rise. We should encourage more generation companies (gencos) to build more power plants and compete with each other in supplying (1) electric cooperatives, (2) private distribution utilities (DUs), (3) retail electricity suppliers (RES), and (4) the Wholesale Electricity Spot Market (WESM). More market competition will lead to lower prices while more political intervention will lead to higher prices as gencos, DUs and RES have to factor in the cost of politics and more regulations and restrictions.

Recently, leftist Bayan Muna led by ex-Cong. Colmenares and Cong. Zarate went to the Supreme Court (SC) to stop the implementation of another provision of EPIRA law, the competitive selection process (CSP) on certain DUs. The target, as usual, is the biggest DU in the country, Meralco — demonized for entertaining a sister genco company. Earlier, there were attempts to stop — also via politics — this big DU from getting supply contracts from new big coal plants (to help “save the planet,” the protesting party-list said).

Is it possible that big non-coal plants and companies — say, big gas plants — are desperately trying to stop these coal contracts to force Meralco into buying their power after these new coal plants have been demonized and isolated? If so, it’s a lousy and ugly business model; and lefties are playing along.

Below I try to derive why there were many yellow and red alerts from March to July this year, and how much estimated available power there was during those five months.

First, I computed the implied capacity factor (ICF, measured as: ICF = (Generation)/(installed capacity x 24 hours x 365 days). For oil plants that are used mainly for peak load, I assumed an ICF of 70%, running for only around 6 hours/day for 200 days. From the ICF, the implied available capacity (IAC) can be derived (see table 2).

  

Then I made projections from 2019 to 2023. Peak demand from 2015 to 2018 rose by 5.7% a year on average, so for 2019 to 2023, I projected a 5% annual increase due to the recent GDP growth deceleration. From there, I computed the projected reserves (see table 3).

We should have reserves of at least 20%, not 2% or even -7%. Of course, there are power plants from the Visayas grid to augment Luzon, but Visayas provinces are also growing fast on their own.

Lefties like Bayan Muna have bad analysis and lousy mathematics in assuming that things in the power sector will be okay in the coming years. More politics, more Congressional harassment, and SC’s TRO will not protect the public from blackouts and high electricity prices.

They should not announce their intellectual mediocrity and do more realistic power projections. Neither should they drag the country toward darkness, as dark as their leftist philosophical advocacies.

-----------------

See also:

BWorld 365, FIRe, Innovation and rising income, September 5, 2019 

BWorld 366, ‘Social cost’ of carbon and trash to jetfuel, September 20, 2019 

BWorld 367, FIRe, innovation and stealing of innovation, September 21, 2019

Expensive bureaucracy and WHO vs cheaper medicines

A new report was released this week that should help remind the UN and country leaders, WHO and health Ministers or Secretaries, and many other officials flying to NYC for a UN High Level Meeting (UNHLM) next week on health, climate, many other issues -- that they themselves are part of the problem on expensive medicines and healthcare. Minimal Government Thinkers (MGT) is one of the many co-signatories of this report.

See the report here,

https://geneva-network.com/article/improving-access-to-medicines/

How do governments become contributors to expensive medicines, less affordable and less efficient public healthcare?

Via many taxes, duties, tariffs, non-tariff barriers (NTBs) on imported medicines and medical devices; via long and bureaucratic approval of patents of newly-invented and revolutionary drugs, and so on.

Take this chart from the report, ad valorem duties or tariffs on imported medicines.

Then the long approval process of newly-invented, patented drugs. Thailand and Brazil are the emerging economies' topnotchers in such delays.

To help remedy these problems and issues, the report has recommended the following:

1. Reduce unnecessary medicine costs by:

* Reducing taxes,

* Abolishing tariffs,

* Eradicating other trade barriers.

2. Accelerate access to medicines by:

* Speeding up patent examination,

* Simplifying the drug approval process,

*  Modernising government medicine reimbursement decision-making, and

*  Promoting open trade in medicines.

I am happy to be part of this very useful and important report.

Thank you, Geneva Network for initiating this study.

BWorld 367, FIRe, innovation and stealing of innovation

* This is my column in BusinessWorld last September 10, 2019.

“All creation is a mine, and every man, a miner… In the beginning, the mine was unopened, and the miner stood naked, and knowledgeless, upon it… Man is not the only animal who labors; but he is the only one who improves his workmanship. This improvement, he effects by Discoveries, and Inventions…”

— Abraham Lincoln,

“Lecture on Discoveries and Inventions” (1858)

The Protection of companies’ intellectual property rights (IPR) is very important to encourage more innovation and discoveries, as observed by Abraham Lincoln. And among the big issues in the ongoing US-China trade war are those related to IPR — forced technology transfer, if not outright stealing of the intellectual properties (trademark, patent, copyright, trade secrets) of US and other Western companies by Chinese companies including their state-owned enterprises.

I found this data on product counterfeiting, which reflects the smuggling of pirated commodities, from the US Chamber of Commerce’s Global Intellectual Property Center (GIPC) report, “Measuring the Magnitude of Global Counterfeiting” (2016). China plus Hong Kong corner the bulk of such IPR infringement. Note that the Chamber is a private organization, not a US government body and, hence, more objective in its assessment of the degree of IPR stealing (See table).

  

At the BusinessWorld Industry Summit 4.0 held at Shangri-La at The Fort in BGC yesterday, IPR was not highlighted but it is among the assumed prerequisites, along with physical, financial property protection, for companies to engage in endless innovation and competition in the Fourth Industrial Revolution (FIRe).

Anthony Oundjian, Managing Director and Senior Partner of the Boston Consulting Group, emphasized the value of people and their creation — they comprise some 60% of total FIRe inputs, while processes comprise 30%, and technology, 10%.

Senator Grace Poe said that “innovations are unfolding at breakneck speed” while legislation takes years for important bills. She mentioned the 1936 law, the Public Service Act (PSA), which has restricted foreign investments and technology transfer in the country. The new bill amending the PSA will liberalize foreign investments in transportation (land, sea, air) and telecommunications, and limit “public utilities” — where foreign investments is limited — to only three sectors, namely, distribution and transmission of electricity, and water distribution. This bill should be among the priorities for legislation and enactment into new laws.

Dr. Jose Ramon Albert, Senior Research Fellow of the Philippine Institute for Development Studies discussed the potential labor displacement of robots, artificial intelligence, and other FIRe technologies, and what government and other stakeholders can do.

Looking at the list of major and minor sponsors of the BusinessWorld conference, they are just represented by their logo and one-word corporate name. The logo and brand say it all, both old and new companies from different sectors and industries. Which speaks of the underlying importance of IPR and brand protection.

Related to all this, two IPR-related reports will be launched in Makati over the next few weeks. On Sept. 24, the Geneva Network (UK) and Minimal Government Thinkers (MGT) will launch a new report, “The importance of IPR for progress: reform agenda for ASEAN countries.” Four other independent and market-oriented think tanks from Malaysia, Indonesia, Thailand, and Vietnam are co-producers of this report. Department of Trade and Industry Secretary Ramon Lopez will be the keynote speaker. Philip Stevens of the Geneva Network and yours truly will present the report. Reactors will be Jess Varela of the Philippine Chamber of Commerce and Industry, and Kristine Alcantara of the Foundation for Economic Freedom (FEF).

And on Oct. 16, the International Property Rights Index (IPRI) 2019 Report will be launched by the Property Rights Alliance (PRA, Washington DC, USA) in partnership with FEF and MGT. The author of the report, Dr. Sary Levy-Carciente who is a Venezuelan economist, PRA Executive Director Lorenzo Montanari, and Chris Butler of the Americans for Tax Reforms will come to Manila to present the report.

Both events are by invitation only but we will consider some interested individuals outside the list — just send me an e-mail.

With FIRe technologies and, in the next few decades, the Fifth Industrial Revolution, even more modern, seemingly impossible inventions and creations will emerge. Companies and individual researchers will just keep producing those new inventions and processes. The role of government is to ensure protection of private property, their inventions and corporate identities and brand.

----------------

See also:

BWorld 364, Brief analysis of Budget 2018-2022, September 03, 2019 

BWorld 365, FIRe, Innovation and rising income, September 5, 2019 

BWorld 366, ‘Social cost’ of carbon and trash to jetfuel, September 20, 2019

Climate Tricks 86, Cannibalism and eating bugs to 'save the planet'

I have another climate debate with a friend last week when he posted this weird article in my fb wall,

(Why) The Next 3000 Days Will Decide the Fate of Human Civilization

How The Four Greatest Existential Threats in History Will Conquer Us This Decade — Unless We Conquer Them

umair haque  Sep 7 2019

https://eand.co/why-the-next-3000-days-will-decide-the-fate-of-human-civilization-213e3f0561b6

Garbage in, garbage out. 3,000 days? Whaaat? I thought we only have 3,000 hours left?

I have little patience for long, literary, wordy papers with no tables, no charts or graphs, no hard data. Garbage is easier spread via wordy, emotional papers.

There are now many ways to extend the "3,000 days" Armageddon to perhaps 3,001 days left -- via cannibalism. Instead of eating more meat (more cow fart, more methane, which is one of several "catastrophic" GHGs), people should eat other people when others die. Very bright this cult called 'save the planet.'

Swedish Scientist Proposes Cannibalism to Fight Climate Change

CHRIS TOMLINSON 6 Sep 2019

https://www.breitbart.com/europe/2019/09/06/swedish-scientist-proposes-cannibalism-fight-climate-change/

Swedish behavioural scientist Magnus Söderlund has suggested that eating other people after they die could be a means of combatting climate change.

The scientist mentioned the possibility of cannibalism during a broadcast on Swedish television channel TV4 this week about a fair in Stockholm regarding “food of the future”.

Swedish Behaviourist Suggests Cannibalism to Combat Climate Change

Eric Worrall  September 6, 2019

https://wattsupwiththat.com/2019/09/06/swedish-behaviourist-suggests-cannibalism-to-combat-climate-change/

Or instead of eating other people, they can eat cockroaches, termites, to 'save the planet.' Very idiotic proposals.

Would you eat insects to save the planet from global warming?

Jessica_E_Brown

Mon 15 Oct 2018 09.10 BST Last modified on Mon 15 Oct 2018 14.21 BST

https://www.theguardian.com/commentisfree/2018/oct/15/edible-insect-save-planet-global-warming-tasty-trendy

People are Eating Bugs to Fight Climate Change

https://entonation.com/people-are-eating-bugs-to-fight-climate-change/

Would eating insects save us from climate change?

Camellia Williams  Jan 17 2019

https://medium.com/vizzuality-blog/would-eating-insects-save-us-from-climate-change-a7d9b1ad01f9

The "man-made" Gorebal warming is a movement of dishonesty, corruption, robbery, large-scale robbery. Lots of rains, flood and storms and we send more money to CCC, DENR, DOF, LGUs, UN, WB, ADB, etc. No rain, no flood, no storm and we send more money to CCC, DENR, DOF, LGUs, UN, WB, ADB, etc. Whatever weather, whatever climate, less cold or more cold, we must send more money to them and they will produce more global junkets, create new energy and carbon taxes and confiscate via legislation more money from our pockets and savings.

Those feed in tariff (FIT) in our monthly electricity bill; the higher oil/lpg/coal taxes in TRAIN law, the annual budget of CCC, higher climate budget of DENR and LGUs, billions of $ of climate loans from WB, ADB, etc -- those are ALL products of all these climate robberies and scam. All they want is more people sharing and spreading alarmist, frankenstein stories -- and that helps their rackets and junkets.

It is difficult to refute a derange argument -- that less rain or more rain, less flood or more flood, less dogs or more dogs -- ALL proof of 'man-made' Gorebal warming. And such deranged idea comes from the world's biggest and influential institutions like the UN.

The argument is as crazy as this: Mr. X and family have less money and more money, proof that they are poor, so taxpayers should keep sending them money, subsidize them forever. 

And people clap the argument, and keep sharing it. Moronic, deranged argument and being shared endlessly.

-----------------

See also:

Climate Tricks 83, On Greenland ice melt alarmism, August 05, 2019 

Climate Tricks 84, 97% climate consensus in Sicily, August 12, 2019 

Climate Tricks 85, Sachs and UN anger at Trump, August 31, 2019

BWorld 366, ‘Social cost’ of carbon and trash to jetfuel

* My article in BusinessWorld on September 4, 2019.

Among the topics discussed during the Heartland Institute’s 13th International Conference on Climate Change (ICCC-13) that I attended on July 25 in Washington, DC, USA, was the social cost of carbon (SCC) vs social benefit of carbon (SBC).

Among the speakers was Dr. Kevin Dayaratna, Senior Statistician and Research Programmer of the Heritage Foundation’s Center for Data Analysis.

Kevin discussed the “Cost-Benefit Analysis of the Green New Deal.” The Obama administration proposed the Social Cost of Carbon (SCC) for regulation, defined as “the economic damages per MT of CO2 emission.”

Kevin wondered how does one actually estimate the SCC and what really is the long-term economic impact of CO2 emissions across a particular time horizon. He mentioned three statistical models (IAMs) to estimate SCC: the DICE model, the FUND model, and the PAGE model.

Heritage altered the assumptions made by the Obama administration, they ran two of the three models, the results show that SCC can drop by 40-200%, can even be negative at times, under very reasonable assumptions. Negative “social cost” means social benefits. Like the greening of the planet, 1982-2009.

Kevin concluded that for the newly proposed Green New Deal (GND) in the US, instituting carbon capture regulations by 2040 will result in income loss of more than $160,000 for a family of four, increase in household electricity expenditures of up to 30%, and an aggregate $15 trillion loss in GDP. Thus, the GND should be junked, using the SCC for cost-benefit analysis should be junked.

Another speaker, Dr. Roger Bezdek, Founder and President, MISI, a DC-based economic, energy and environmental research firm, noted that: 1.) Fossil fuels and CO2 are demonized and blamed for everything but they are essential to modern life and will remain so in the future. 2. To reduce 2050 GHGs to 80-95% of 1990 levels implies that 2050 living standards in the world would be reduced to levels of 1800s; 3.) Benefit-cost ratios are very high and will remain orders of magnitude larger than any reasonable SCC estimates; and, 4.) The social benefits of carbon (SCB) and fossil fuels outweigh costs by orders of magnitude and will continue to do so.

Dr. Craig Idso, founder and former President of the Center for the Study of Carbon Dioxide and Global Change, lead author of “Climate Change Reconsidered” series produced by the Non-governmental International Panel on Climate Change (NIPCC), argued that more CO2 emissions and fossil energy have improved human prosperity and benefit the human and natural world. Atmospheric CO2 is the basic food of plants, their primary raw material to construct their tissues and, aided by sunlight, produce their own food via photosynthesis. Thousands of laboratory and field experiments have shown that higher CO2 concentrations increase plant productivity and growth. Which means more trees, more crops, more food production. More, not less, fossil energy is needed to enhance the future of human environment.

He computed “total human life-years” until around 2017, I updated his computation to 2019 and expanded it to 2050. Data from the UN DESA and geoba.se/population. (See Table 1.)

  

From 1820 to 2019 or nearly 200 years, there was 17.4x expansion as humans live longer and healthier, mainly because humanity used fossil fuels to modernize their food production, transportation of goods and people, modern electricity that run 24/7 and so on. Projecting to 2050, there would be 24.3x over 1820 and 1.4x over 2019 levels.

The Philippines should never toy with the idea of following GND-type of energy policies. Currently, the per capita energy consumption of Filipinos on average is among the lowest in East Asia, only 18.5 gigajoule per person in 2018 — just one-half the consumption of an average Vietnamese and nearly one-fifth (1/5) of the global average. A gigajoule is equivalent to 277.8 kWh. (See Table 2.)

  

Last week, my friend and fellow BusinessWorld columnist Andrew Masigan invited me to a presentation by Trevor Neilson of i(x) investments, about the economics and technology of converting solid waste into aviation fuel or diesel. We often hear of biomass energy, converting agro-forest and household solid wastes into electricity, it is old technology but this one is new — solid wastes to aviation fuel. A summary of the economics and business prospects of this business innovation is found in Table 3.

It is a good initiative. Very costly investments but high potentials for the Philippines, singled out by the US business proponents because of its high solid waste production and geographical location — just two to four hours by plane to major business centers in the region, north-west-south of Manila.

---------------

See also:

BWorld 363, IPR protection in the ASEAN, August 31, 2019 

BWorld 364, Brief analysis of Budget 2018-2022, September 03, 2019 

BWorld 365, FIRe, Innovation and rising income, September 5, 2019

China Watch 39, Martin Jacques as CN propagandist

Last Tuesday, September 10, I attended the lecture of Martin Jacques, afternoon of Day 1 of Mining Philippines Conference at Sofitel Philippine Plaza Hotel. Martin is a British academic who for many years now sound and speak like China Ministry of Foreign Affairs' spokesman and #1 propagandist.

I first heard Martin in 2012 when he spoke in Manila. That time I was less observant of CN and its activities in the region and the world. Second time I heard him was last May at the Jeju Forum for Peace and Prosperity, S. Korea. I was not impressed of him. So I didn't want to attend his lecture at Sofitel, will not waste my money on him (perhaps he should pay me so that I will listen to him :-)). Then a friend secured a ticket for me (ticket price is P7,500, roughly $150) with a soft arrangement that I would challenge Martin in the open forum, I agreed, that's why I attended his lecture.

For me, the three Filipino reactors were more quotable, more sensible, than the speaker. Images I got from Chamber of Mines of the PH (COMP) facebook page.

And this is the main speaker.

See his book (2012) -- when CN rules the world... hehehe. I took this photo at the registration table that afternoon.

And he kept using PPP (purchasing power parity) value of GDP where CN's is larger than the US'. Never showed any nominal values of GDP.

So during the open forum, I made these comments:

1. It is deceptive to use only PPP values of GDP size and not show nominal GDP sizes. In 2018, US GDP size was $20.5 trillion, CN $13.4 T, JP $5 T, so that US econ is larger than CN + JP economies combined.

2. Stockmarket capitalization 2018, US $30.4 trillion, CN $6.3 T, JP $5.3 T... so CN's is small, even if it's 2nd biggest in the world, compared to US.

3. Technology, the US Chamber of Commerce estimated global physical counterfeiting 2016, total $461 B, of which 72% came from CN. So CN development in technology is partly or largely due to cheating and stealing of IPR.

4. On CN having "peaceful" history, not colonized any country in the past, because CN is busy bullying and killing its own people, thousands killed during Tiananmen massacre (1989), during the Cultural Revolution of Mao and his gang.

(Background data for my first 3 comments, below:)

1. GDP size nominal values, 2018. See https://www.bworldonline.com/why-is-philippines-gdp-growth-decelerating/)

2. Stock market capitalization, see https://www.theglobaleconomy.com/rankings/stock_market_capitalization_dollars/

3. IPR stealing, counterfeits, see https://www.bworldonline.com/fire-innovation-and-stealing-of-innovation/

Martin responded. He was defensive that I raised using nominal GDP, saying that PPP values of GDP is more useful. Realllly?

Look -- when people use comparative data for exports and imports, foreign investments, remittances, tourism revenues, stockmarket capitalization, military spending, etc -- all are expressed in nominal values, not PPP values. So to be consistent, we should always show nominal GDP. Because one cannot compare say, exports (X/GDP) ratio, Investments/GDP, Savings/GDP, etc if the numerator is nominal while denominator is PPP value. One would look like an idiot moron,

Using nominal GDP sizes would crash his narrative, that CN is the rising and bigger power while the US is the declining, smaller power. Martin is dishonest, deceptive. Similar with Xi Jinping and the CN communist party leaders.

----------------

See also:

China Watch 36, Manila kowtows to Beijing, July 02, 2019 

China Watch 37, US is winning the trade-IPR conflict with China, July 14, 2019 

China Watch 38, China Army to attack HK protesters? August 13, 2019

BWorld 365, FIRe, Innovation and rising income

* This is my article in BusinessWorld last September 03, 2019.

Next week, on Sept. 9, the BusinessWorld Industry 4.0 Summit with the theme “Winning Together in the Fourth Industrial Revolution” (FIRe) will be held at the Shangri-La at The Fort, BGC, Taguig City. This big event is a partnership of BusinessWorld, the Department of Information and Communications Technology (DICT), and the Philippine Chamber of Telecommunications Operators (PCTO).

The main speakers will be DICT Secretary Gregorio Honasan II, Senator Grace Poe, Anthony Oundjian of Boston Consulting Group, and Dr. Jose Ramon Albert of the Philippine Institute for Development Studies.

FIRe is the most recent of the technological revolutions that modern humans have invented. I searched for the approximate timeline, here is what I got. Others will have slightly different years but the period will not be far from what I have stated in Table 1. 

Taking this timeline, I am curious how major economies and ASEAN countries have developed since the First Industrial Revolution, at least from 1800. I found data from the University of Groningen, Groningen and Growth Development Center (GGDC) – the Maddison Project Database, version 2018. Bolt, Jutta, Robert Inklaar, Herman de Jong and Jan Luiten van Zanden (2018), “Rebasing ‘Maddison’: new income comparisons and the shape of long-run economic development,” Maddison Project Working Paper, nr. 10, www.ggdc.net/maddison. (See Table 2.)

  

Here are some important points to consider from the data in Table 2:

• One, growth and income from the First to Second Industrial Revolutions was modest, per capita income of the United States of America and the United Kingdom expanded only two to three times after 100 years.

• Two, incomes from the Second to Third Industrial Revolutions have expanded by 1.5 to 2.5 times after 50 years. Since ASEAN countries have no data in 1900 except for Singapore, we use 1913 as the region’s Second Industrial Revolution income baseline. For the region, there was a decline or a modest increase in income from 2013-1950, that is after World War II.

• Three, the recurring belief that the “Philippines was the second strongest Asian economy after Japan after World War II” is a myth, not true. In the ASEAN alone, Malaysia and Singapore had per capita incomes nearly two times that of the Philippines.

• Four, the Third Industrial Revolution ushered fast growth in wealth worldwide, with incomes expanding by 1.5 to four times (Singapore) and eight times (Japan) in just 30 years between 1950-1980.

• Five, the Fourth Industrial Revolution (FIRe) was even more expansionary in terms of the material wealth and prosperity of people. Incomes have increased two to six times (Vietnam), and seven times (Singapore) from 1980 to 2016. The Filipinos’ incomes expanded only more than two times during that period. Marcos’ Martial Law’s repression of the economy, and huge natural disasters (the Pinatubo eruption in 1990, the big earthquake in 1991) contributed to this sad story.

We have entered the beginning of FIRe, where smart mobile phones have become affordable to billions of people and they have more access to internet, where drones take aerial photos and videos much better, where robots and modern machines are used more in manufacturing, commerce, and restaurants.

It is also in FIRe period where intellectual property rights (IPR) are becoming more and more prominent. Innovation is the keyword that is almost interchangeable with modern IR and innovation cannot happen fast if innovators’ patent and trade secrets of their inventions, trademarks and brands of their companies, copyrights to their compositions, are not respected and protected.

On Sept. 24, strong advocates of private property and market competition, the Geneva Network (UK) and the Minimal Government Thinkers (MGT, Manila) will launch a new report, “The importance of IPR for progress: A reform agenda for ASEAN countries” at the Holiday Inn Makati. Speakers will be DTI Secretary Ramon Lopez, Philippine Chamber of Commerce’s IPR Committee Chair Jess Varela, Geneva Network Executive Director Philip Stevens, and yours truly for MGT.

IPR protection ensures more innovation, which fuels endless modernization and disruption under FIRe. Humanity’s material prosperity is further ensured. More people, rich and poor, will ride cars, motorcycles, e-bikes and they will ride horses and bicycles only for leisure and sports. This is the positive impact of continuing IR and innovation, enabled by private property protection and market competition.

------------------

See also:

BWorld 362, More expensive electricity via climate tax, August 30, 2019 

BWorld 363, IPR protection in the ASEAN, August 31, 2019 

BWorld 364, Brief analysis of Budget 2018-2022, September 03, 2019

MGT and FEF to co-sponsor IPRI 2019 launching

This coming October 16, 2019, Minimal Government Thinkers (MGT) and Foundation for Economic Freedom (FEF) will co-sponsor with the Property Rights Alliance (PRA) in the launching of International Property Rights Index (IPRI) 2019 Report,
http://www.internationalpropertyrightsindex.org/.

IPRI 2015 to 2019 author Dr. Sary Levy-Carciente and PRA Executive Director Lorenzo Montanari will come to Manila to formally launch the report, also meet with some PH government officials, private sector and NGO players engaged in property rights protection, physical and intellectual property.

The index is composed of these three components and their respective sub-components, numbers are tallied and the overall scores determine the global ranking of countries and jurisdictions.

IPRI 2018 was co-sponsored by the following independent, non-government and market-oriented think tanks and research institutes.

The event is by invitation only but a few interested leaders and individuals outside the list may be accommodated. Send me a letter of interest, minimalgovernment@gmail.com.

FEF made the announcement too in their website,
http://www.fef.org.ph/uncategorized/fef-to-co-host-2019-ipri-report-global-launch/.
--------------

See also: 
IPR and Innovation 35, Letter to WIPO on World IP Day, May 06, 2017 
IPR and Innovation 42, Coalition letter to WHO re plain packaging, March 22, 2018

Energy 129, Fault in OPEC supply cut and oil price decline

Good news. World oil prices declining, now hovering at $53/barrel mainly because of higher supply from Iraq and Nigeria (they somehow disobeyed OPEC) and new all-time high US oil production, 12.5 million barrels per day (mbpd). See also US oil output, August of 2014-2016 (within last 3 years of Obama) vs August of 2017-2019 (Trump), huge discrepancy.

Obama was saying, "Yes to expensive oil so long as we keep US oil on the ground to help 'save the planet'." He's a good ally of Saudi and Russia. Trump does the reverse, "No to expensive oil, drill baby drill." He's a non-friend of Saudi and Russia. That's why the "Trump is Putin puppet" is an idiotic-moronic proposition at the onset.

Meanwhile another report,

Trade War Panic Sends Oil Lower

By Nick Cunningham - Sep 03, 2019, 6:00 PM CDT

https://oilprice.com/Energy/Energy-General/Trade-War-Panic-Sends-Oil-Lower.html

“Oil prices fell sharply on Tuesday as fears over the economic fallout from the U.S.-China trade war returned.

On Sunday, a 15 percent tariff on roughly $112 billion worth of Chinese goods took effect, and retaliatory tariffs by Beijing on American goods also went up. Trump had previously decided to hold off on putting tariffs on a much larger $300 billion tranche of Chinese goods – the remaining levies are set to take effect in December. Together, the tariffs could impose the equivalent of a $1,000 tax on American consumers over the course of a year.”

-------------------

See also:

Energy 126, Oil prices now only $51+ per barrel, June 06, 2019 

Energy 127, Power underwhelming: Why are there power outages? June 22, 2019 

Energy 128, Oil production and ENSO, July 08, 2019

BWorld 364, Brief analysis of Budget 2018-2022

* My column in BusinessWorld on August 29, 2019.

The Duterte government’s fiscal and expenditure program can be briefly summarized and characterized as one of over-spending and over-borrowings. Four proofs in three tables below will show why.

One, the Philippine government’s debt/GDP ratio has been declining steadily from 54.8% in 2009 (Arroyo administration) to 42.1% in 2016 (H1 Aquino, H2 Duterte), then it stayed there at 42% in 2017 and 2018. The steady decline has been halted by the current administration.

Compared to seven other neighbors, the Philippines has the biggest improvement, major decline in debt/GDP ratio at nearly 13% over the past nine years while China has the biggest deterioration, major increase of 16% over the same period. (See Table 1.)

  

Two, the level of spending despite rising revenues is huge, resulting in ever-rising budget deficit, from P558 billion in 2018 to projected P824 billion by 2022.

High deficit means high borrowings aside from high taxes. And so the interest payment alone, principal amortization not included yet, will double from P249 billion in 2018 to P504 billion in 2021, and further rise to P561 billion in 2022. Data are from the Department of Budget and Management’s Budget of Expenditures and Sources of Financing (BESF) 2020.

Three, while actual GDP growth was higher than target/projections and inflation was lower than target in 2016 (last half-year of previous administration), it was the opposite by 2017 to present, growth was lower than target and inflation was higher than target from 2018 to present. Multiple tax hikes under TRAIN (Tax Reform for Acceleration and Inclusion) law implemented in 2018, uncertainties of TRABAHO (Tax Reform for Attracting Better and High-Quality Opportunities) bill and other legislative proposals contributed to growth deceleration: 6.9% in 2016 to 5.6% in the first half of 2019. (See Table 2.)

It seems that the National Economic and Development Authority-Department of Finance — Department of Budget and Management triumvirate were using false assumptions in their growth and inflation projections. Like their assumption that tax hikes in oil, other products under TRAIN law would be low or insignificant — wrong.

Four, the bulk of high spending goes to salaries, meetings, travels, offices plus expanding subsidies, not in Build, Build, Build as often claimed. If we remove interest payment and bank charges, then allocation to local government units like the Metropolitan Manila Development Authority and Internal Revenue Allotment for provincial LGUs, most of which goes to salaries too, the combined shares of personnel services and Maintenance and Other Operating Expenses would be 70% and capital outlays for Build, Build, Build is only 30%. (See Table 3.)

What then to expect in the next few years?

What else but more taxes and regulatory fees. Public debt and interest payment keep rising, new agencies and departments are created, new welfare subsidies are invented and expanded, government personnel and consultants, national to local governments, their pay and perks keep rising.

While it is true that there are Build, Build, Build projects on-going, they are small compared to the hype and promises. It is possible to have faster growth and lower inflation with retained or lower budget, less taxes and borrowings. People and businesses keeping more money in their pockets and savings will prefer more investments, more integrated Public-Private Partnership infrastructure projects, and more household consumption.

-----------------

See also:

BWorld 361, PCC, LTFRB, MMDA and transportation woes, August 25, 2019
BWorld 362, More expensive electricity via climate tax 

BWorld 363, IPR protection in the ASEAN, August 31, 2019

Lion Rock 30, Positive non-interventionism

I like these two papers from Lion Rock Institute (LRI) in HK, reposting below. The image here, I got from the web, CTTO. Enjoy.

Asset (Mis)management

25/01/2019 Nick Sallnow-Smith

http://www.lionrockinstitute.org/en/2019/01/asset-mismanagement/

… The incentives with a privately held asset are to maximise its value. That could be a value consumed by the owner, through occupation of the flat. If the asset is an investment, the owner will rent it out or otherwise try to gain value from it. (I recognise that there are owners who appear to allow assets to remain unused. But these are rare and occur despite the incentives, not because of them.)

In the public estate, matters are quite different. Many sites controlled by bureaux and departments of the Government lie either unused or suboptimally used. Partly this may be due to site-use specifics of the land leases, as discussed in my Best Use piece. For example empty school sites cannot, under our current system, be easily switched to meet other needs. Hence the Bureau’s seeking international schools to bid for some of these.  No change in use needs to be sanctioned in that case. But switching out of educational use is more difficult.

More generally the failure to maximise value for the community comes not from land use restrictions but from other perverse incentives. These sites are out of the public eye politically (although you may walk past them every day and wonder why they lie vacant). Little criticism is occasioned by their lack of use, except perhaps occasional comments from the Government Auditor. By contrast, attempts to bring a vacant site into use will frequently lead to political criticism from those who would prefer a different use to the one proposed. For the civil servants concerned the best way of avoiding criticism is to do nothing with the site. In other words the incentives are against maximising the value for the community. The perverse result is that public sector ownership of assets is not in the public interest!

… Without addressing the question of whether the final plan represents “best use” for the community, my concern is with the loss of value to the community due to the lack of use of that site for over a decade. Had it been promptly redeveloped as an office building in the heart of Central it would have generated millions of dollars of income. That revenue should not be dismissed as merely “profits for greedy tycoons”. That revenue would have represented willingly paid rent by occupiers who needed the space for their businesses. That is value to the community of Hong Kong which has been lost because of the lack of use of a prime asset. No private company would have left that asset idle for 10 years….

I often read comments that question why, given that Hong Kong is “so rich”, there are still poor quality buildings and acres of poorly used land. A big part of the answer is that the system of land use in Hong kong is a million miles from being a set of privately held and freely traded assets. Many international think tanks continue to insist on rating Hong Kong as one of the freest economies in the world.  It seems they look only at the traded goods sector and ignore the rest.

Positive Non-Interventionism

27/02/2019 Nick Sallnow-Smith

http://www.lionrockinstitute.org/en/2019/02/positive-non-interventionism/

….  We can assume that any violence against the individual or their property will already be illegal in any civilised society. So the “behaviour” referenced here is not illegal (yet!). It is simply disapproved of by certain members of society, who then attempt to contract the powers of the government to enforce their personal morality on all citizens.

For me, this has a distinctly medieval flavour. In those days a religious reference was usually needed to demonise certain “behaviours”. Today, the references are mostly secular but the process is similar; use the state to impose a particular view of how people should “behave”, under threat of coercion by the state. We are experiencing a regression to a time of less civility, less tolerance, less freedom.

I find this a very dispiriting trend. The change of attitude towards positive non-interventionism reflects this. Once citizens accept, as a given, that the role of government is actively to direct our lives (economically and otherwise) rather than to defend our right to direct our own lives, then the “policy debate” becomes an argument over whose view should be imposed, not whether any view should be imposed.

If you doubt whether this is now the prevailing view, consider two recent “policy decisions”; the golf course, and the proposed vaping ban. In the first case the debate concerns whether the golf course decision is right kind of intervention, not whether the “land problem” might be solved by removing as much Government intervention as possible. In the second case, the debate focuses on whether vaping is bad for you, whether it is worse the smoking, and so on….

In my opinion, this default way of thinking about the role of government is the complete reverse of positive non-interventionism. We now have a government focussed on what might be called “negative interventionism”; negative because it is aimed at preventing a personal choice, not enabling it – as did positive non-interventionism. How quickly the debate became about how much of the golf course should be confiscated; not whether it is any business of government to change the purpose of a lease more than 100 years old. (I am not arguing here that the lease does not provide the opportunity for the Government to do this legally but whether morally it should be doing so.)…

As I noted, this not only about economics, money and taxes (although these are important)  but the bigger context of how people live their lives. Can citizens make choices about how they want to live without the modern day “inquisition” (a team of vaping inspectors?), telling them that “unacceptable behavior cannot be tolerated”?

If we are to make any headway in reversing the anti-freedom tide we are experiencing, it is crucial that citizens think about personal freedom and its four word summary, “live and let live”, before zealously claiming a “right” to decide how all others should “behave”, and beg their Legco member to fight for less freedom, rather than more.

-------------------

See also: 

Lion Rock 27, Conduct and HK is not a corporation, June 02, 2019 

Lion Rock 28, HK as free market, and private property rights, June 29, 2019 

Lion Rock 29, Government does not create wealth, August 02, 2019