Friday, March 03, 2023

BWorld 586, Crisis narratives as hindrance to growth and freedom

* BusinessWorld February 27, 2023. 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

We should avoid another round of political-medical tyranny.

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

See also:
BWorld 583, Ten trends in global and Philippine energy, February 17, 2023
BWorld 584, Ten trends in inflation, PPP, employment, cancer treatment and energy, March 01, 2023 
BWorld 585, Bureaucratic rightsizing a big part of fiscal reform push, March 02, 2023.

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