Tax Cut 20: On the Excise Tax on Gasoline, Various Regulatory Fees

Prof. Amado "Bong" Mendoza of the UP Political Science Department wrote another good article yesterday on tax policy.

Part of his paper mentioned a low tax-GDP ratio (T/GDP) of only 12 percent in 2011, in reference to other data and points raised by WB consultant and now UPSE visiting Prof. Rosa Maria Alonso  Terme. I commented that those measurements of low T/GDP ratio are wrong because such measurement counts only the collections of the BIR + BOC in computing T. It excludes other collections: 

1. Collections by local government units (LGUs) of various taxes (real prop. tax, residence tax, various business taxes) and regulatory fees (sanitation fee, fire dept fee, bldg permit fee, Mayor's permit fee,...).

2. Collectios of various regulatory fees by other agencies: DFA's passport fee, DOT/PTA's travel tax, NAIA's terminal fee, DOTC's vehicle registration tax, driver's license fee; PNP's police clearance fee, DOJ's NBI clearance fee, NSO's birth cert fee, death cert fee, marriage cert fee, and so on.

3. Collections of various fines and penalties by both national and local governments. More prohibitions in society, more violations to catch and penalize, more revenues to collect.

4. Collections of mandatory and forced monthly contributions by the SSS, GSIS, PhilHealth, PagIBIG, etc.

If these various payment to government, by hook or by hook, are included in the tax collections by BIR + BOC, a T/GDP ratio of 25 percent or higher is possible.

Singapore, Hong Kong, other governments with no or little LGUs have tax revenue that are almost equal to total revenues. In governments with many LGUs, many government corporations and financial institutions, many departments having their own collections and mandatory fees system, the total revenues are much much larger than the usual T/GDP ratio. It is an old trick by the WB, IMF, ADB, other foreign aid bodies to justify and rally a rah-rah-rah, more-taxes-rah campaign and lobbying.

Talking about government provision of public goods, the best "quality public goods" that the PH or any government can give its citizens is to have rule of law. The law rules over governors and governed, administrators and administered. The law applies equally to unequal people, no one is exempted and no one can grant an exception. Thus, the law against stealing and robbery, the law against killing and murder, the law against abduction and rape, the law protecting private property, applies to all. 

Then people will have peace of mind and have high respect for government. When there is government failure in rule of law promulgation, then one can expect government failure in many of its avowed welfarist functions. All other axation to justify multiple, endless welfarist functions lose their value.

Some sectors are proposing that taxes on petroleum products should be raised further. They are echoing the old WB and other foreign aid lobbying. They are wrong of course because petroleum is a useful product, it should not be penalized with more taxes. If people think that petroleum is a socially-bad product and hence, must be taxed as high as possible to discourage its frequent use, then they may be suggesting implicitly that we should ride carabaos, horses or bicycles to work or bring our kids to school so that we will use less or zero petroleum products. 

But petroleum is a socially-useful product. Government should in fact reduce taxes on it, and in particular, abolish the excise tax on gasoline, only VAT, import duties and related taxes should apply.

The main arguments by those advocating for more, higher petroleum tax, are: (1) Gasoline pollutes and creates traffic; increasing the tax will alleviate these twin problems; (2) Gasoline is mainly consumed by the rich and the middle class; hence a higher tax on gasoline is progressive; and (3) Petroleum products are imported, and scarce resources.

I disagree with these arguments of course.

1. Non-gasoline transportation of goods and cargo (via carabaos, horses, cows, etc.) creates more animal dung and urine pollution, creates more traffic as they move very slow. To transport Dagupan bangus or Batangas tilapia to Manila via animals will take several days, the bangus and tilapia reach Manila either rotten or in dried fish form.

2. Gasoline is used by tricycle drivers, taxi drivers, and other non-rich people. Besides, what is wrong with the middle class and rich driving a car? People work hard to have more convenience in life and this is not a bad or criminal goal. Those who demonize car ownership may consider not owning or driving one and ride bicycles only.

3. All imported products from mobile phones, laptops, flat tv, buses, boats, medicines, processed foods, etc. are also scarce. The price of a product or service is a reflection of its scarcity or non-scarcity. Gold and diamond are very scarce to find and hence, their prices are very high. Air is non-scarce, it is abundant hence, its price is zero. Unless one is into scuba diving, then air in scuba tank has a price and not free.

So government should either abolish the excsie tax on gasoline, or all other imported goods should be slapped with excise tax too.

Many environmentalists and anti-capitalism activists who demonize fossil fuel capitalism are actually car-owners too; they frequently ride planes for their meetings and activities across the country or around the world. And all airplanes use that "bad" (if not "evil") product called petroleum.

Back to the basic function of government -- yes, there is a need for government. Promulgate the rule of law. Of what use to a poor man that he gets free PhilHealth card, free education for the kids, free conditional cash monthly, subsidized train rides, etc. but his tricycle or 2nd-hand jeep or car can be easily stolen by other people; or the kids can be easily abducted and raped or murdered; the small piece of land he inherited or bought can be easily land grabbed by influential people?

Protection of private property, protection of human life, government role is needed and recognized, and taxation to allow government to do this job is needed. All other functions are secondary or unnecessary, as most functions can be provided by the private sector under a voluntary exchange system. Thus, the various taxes and mandatory fees to justify those secondary or non-necessary government functions should be significantly cut, if not abolished.

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See also:
Tax Cut 16: Conserving Fishery Resources by Taxing Demersal Fish Catch?, May 27, 2013 
Tax Cut 17: BIR vs. Physicians, March 06, 2014
Tax Cut 18: On 10% Flat Tax, Greco Belgica and GDP Growth, March 27, 2014
Tax Cut 19: Letter to Sen. Sonny Angara Re. SB 2149, June 06, 2014

Competition Policy 4: Paradox of Anti-Trust and Fair Competition Legislation

A good friend and academic from UP Political Science Department, Prof. Bong Mendoza, wrote this article last week.

Good article from Bong, as usual.

But there is the paradox of Fair Competition or Anti-Trust legislation.

If your price is higher than your competitors, you can be accused of price gouging the consumers.

If your price is the same as your competitors, you can be accused of price collusion and/or cartel.

And if your price is lower than your competitors, you can be accused of predatory pricing.

Any pricing that one will take can be a ground for harassment by corrupt, extortionist, or biased officials and bureaucrats of a Fair Trade Commission on the payroll of one or more of the private players that they are monitoring and regulating.

In a free and spontaneous market economy, enterprises can take various pricing for various products and services geared for different consumers and group of buyers. Thus, a can of Coke or SM Beer Pilsen is priced lower in sari sari stores compared to convenience stores (7-11, Mini Stop, Family Mart, Select, etc.), which is lower than in fancy restos, which is lower than in 5-star hotels, and so on. Same product, same volume, same packaging, same manufacturer, yet have different prices varying from P25 to P150/can or higher.

Market segmentation and price differentiation are spontaneous market reactions by players to different situations. A monopolist (No thanks to congressional franchising, or national agency or LGU franchising) can price its product or service at the highest possible rate that consumers can endure. A proposed Fair Trade Commission (FTC) cannot discipline a monopoly or duopoly if these were government-created.

All electric coops and distribution utilities are monopolies, there are about 120 of them nationwide, the biggest is Meralco of course. Because they are utilities, electricity distribution is reserved 100% to Filipinos only, but not all Filipino enterprises can compete, they need congressional franchising which creates the monopoly in particular areas.

Inter-island shipping is generally government-created monopoly or duopoly via MARINA franchising; bus line route monopoly is also government-created (via LTFRB franchising); or airline route monopoly for lesser-known island destinations is another government-created (via CAB franchising). 

Even tricycle route monopoly (say UP Village to Philcoa) is government-created  via city or municipal hall franchising. Jeepneys and air-con vans are prohibited on those tricycle-only monopolized routes. Passengers have no  other option but ride those tricycles, otherwise they must walk or take the more  expensive taxi, or drive their  own car or motorcycle. Which contributes to more traffic congestion.

Someone suggested that the Freedom of Information (FOI) bill is needed to advance the Fair Competition (FC) bill. This is a misunderstanding. The FOI bill intends to make government become more transparent. The FC bill intends to make private companies become more transparent.

Bottomline, even if Congress will enact an FC law next week, many monopolies and duopolies will remain because they were created by different government agencies  themselves, from the Legislative to Executive to LGU offices. What the proposed FC law will do is simply tinker with existing players that are already regulated by various government agencies.

As government expands, its cronyism also expands. One more reason why government, from Executive to  Legislative to LGUs and  other offices should shrink.

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See also:
Anti-trust law is anti-competition, July 22, 2008

Competition and Prosperity, KL Conference, October 12, 2011

Fierce Competition is Fair Competition, January 22, 2013 

Competition Policy 3: Jemy Gatdula's Article, September 16, 2013

D.Ricardo, JS Mill, A.Smith and Bong Mendoza on Taxes, BIR vs. Doctors

Two good essays here by a friend, Dr. Amado "Bong" Mendoza of the UP Political Science Department. There is a need of course to justify which are the real "public goods" that need continued provision by government and hence, would need continued taxation. There is a growing role for corporate and civil society sectors in providing many public goods that used to be monopolistically provided by governments then. Like quick dispatch of relief goods and food items to victims of calamities like heavy flooding and storm surges. Or residential villages that provide many services to the community, from roads/drainage construction and maintenance, street lighting and security, and they collect annual association dues and various fees -- these serve in effect as taxes and regulatory fees .
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Taxation: coercive and consensual

March 06, 2014

In theory, taxation is essentially coercive because taxes are never paid voluntarily. However, taxes are supposedly collected not only for purpose of collecting them but to finance public goods. Thus, consensual taxation is possible since private taxpayers desire public goods (the reason why they left the state of nature in the first place).

In comparing coercive and consensual or negotiated taxation, Michael Moore of the University of Sussex, not the controversial film-maker, argued that the latter constituted a better institutional technology. Coercive taxation (largely in agrarian societies) is relatively ineffective since it tends to generate resistance and because coercive tax collectors were well placed to pocket a large part of the proceeds for themselves. In contrast, consensual taxation offers (within the boundaries of individual states) joint gains for both rulers and taxpayers.

In the late 18th century, the idea that citizens must contribute to the upkeep of a state was developed.  On of the political economists of the time, Adam Smith forwarded four maxims of taxation (equity, certainty, convenience, and efficiency).  These maxim were also supported subsequently by David Ricardo and John Stuart Mill:

1. “The subjects of every state ought to contribute to the support of the government, as nearly as possible in proportion to their respective abilities: that is, in proportion to the revenue which they respectively enjoy under the protection of the state. In the observation or neglect of this maxim consists what is called the equality or inequality of taxation.

2. “The tax which each individual is bound to pay ought to be certain, and not arbitrary. The time of payment, the manner of payment, the quantity to be paid, ought all to be clear and plain to the contributor, and to every other person. Where it is otherwise, every person subject to the tax is put more or less in the power of the tax-gatherer, who can either aggravate the tax upon any obnoxious contributor, or extort, by the terror of such aggravation, some present or perquisite to himself. The uncertainty of taxation encourages the insolence and favours the corruption of an order of men who are naturally unpopular, even when they are neither insolent nor corrupt. The certainty of what each individual ought to pay is, in taxation, a matter of so great importance, that a very considerable degree of inequality, it appears, I believe, from the experience of all nations, is not near so great an evil, as a very small degree of uncertainty.

3. “Every tax ought to be levied at the time, or in the manner, in which it is most likely to be convenient for the contributor to pay it. A tax upon the rent of land or of houses, payable at the same term at which such rents are usually paid, is levied at a time when it is most likely to be convenient for the contributor to pay; or when he is most likely to have wherewithal to pay. Taxes upon such consumable goods as are articles of luxury are all finally paid by the consumer, and generally in a manner that is very convenient to him. He pays them by little and little, as he has occasion to buy the goods. As he is at liberty, too, either to buy or not to buy, as he pleases, it must be his own fault if he ever suffers any considerable inconvenience from such taxes.

4. “Every tax ought to be so contrived as both to take out and to keep out of the pockets of the people as little as possible over and above what it brings into the public treasury of the state. A tax may either take out or keep out of the pockets of the people a great deal more than it brings into the public treasury, in the four following ways. First, the levying of it may require a great number of officers, whose salaries may eat up the greater part of the produce of the tax, and whose perquisites may impose another additional tax upon the people.” Secondly, it may divert a portion of the labour and capital of the community from a more to a less productive employment. “Thirdly, by the forfeitures and other penalties which those unfortunate individuals incur who attempt unsuccessfully to evade the tax, it may frequently ruin them, and thereby put an end to the benefit which the community might have derived from the employment of their capitals. An injudicious tax offers a great temptation to smuggling.

Fourthly, by subjecting the people to the frequent visits and the odious examination of the tax-gatherers, it may expose them to much unnecessary trouble, vexation, and oppression:” to which may be added, that the restrictive regulations to which trades and manufactures are often subjected to prevent evasion of a tax, are not only in themselves troublesome and expensive, but often oppose insuperable obstacles to making improvements in the processes.

To Adam Smith’s mind, bad governance is excessive taxation of capital and property. Not taxation per se, as he recognized the need for public goods and the role of the state in the provision of such goods. Bad governance discourages investment and owners of transportable assets can readily change domiciles to jurisdictions with acceptable tax burdens. Smith argued that a tax burden is acceptable to businessmen if the state is able to provide an equally acceptable bundle of public goods.

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The limits of public shaming

March 13, 2014

The controversy generated by BIR Commissioner Kim Henares' shaming indictment of an entire profession reminds me of these words I wrote earlier.

Bong Mendoza's Political Poetry

Below are three of the various short poems and septons by a friend, Dr. Amado “Bong” Mendoza of the UP Political Science Department. Posted yesterday and today, reposting them here with his permission. My short comments after each poem.

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(1) self-rule, anarchy and leadership

there is without doubt
greater demand for
than supply of good leaders

for leaders, what's the recipe?
mix vision and charisma?
courage and resolve?

no equilibrium in sight
we should eventually learn
to lead ourselves.

Right Bong, but anarchy to mean "zero authority" and "zero government" is a pipe dream, a fiction. I like the example of many village associations. They provide roads/drainage/flood control construction and maintenance, garbage collection, street lighting, security, fire truck/control, village park and multipurpose hall, etc. They have elected officials with term limits, have appointed or hired staff and bureaucrats. They have their own internal revenues like the annual dues, car sticker fees, household ID fees, etc. It is one classic case of self-government, minarchy, and it is working. People who are not satisfied with how the village fund and security is being managed, can move out and go to another village, or plot to change the leadership of the village.

(2) why do we obey so-called leaders?
t'is the key question in political philosophy

They're elected, they're the best
men of virtu
slaves not to fortuna's
shifting fickle tides

Karl Marx said they owned us
Robert Michels declared
They do what we can't do, daily, 24/7!

(I acknowledge my intellectual debts to Aristotle, John Locke, Niccolò Machiavelli, Karl Marx, and Robert Michels.) 

We obey so-called leaders because we are forced to do so. There are laws, armed forces and prison system by the state that forced us to obey them. True democracy should mean the least coercion. Someone thinks he's got a very bright idea. In a democracy with least coercion, he should be able to finance it without coercion, and not forcing me and you to finance his bright idea. The fact there it needs coercion and legislation means that 99 percent, it is a stupid idea.

(3) what's a CAP?
collective action problem
there's one when people
do not help each other
constitute a community

why this behavior?
we do compete or cooperate
the stronger instinct seems to be
consistent with our best lights.

bakit di magtulungan?
mga tao sa lipunan
sadya bang
mas malakas
pagnanais na
isulong ang sarili
isulong ang interes?

kailangang magtulungan
para mabuo, ating pamayanan.

(c) 2014 Amado M. Mendoza, Jr.

Collective action is often hidden, especially from the eyes of central planners. Some people focus on producing or spreading knowledge, they do not produce a single kilo of food. Some people produce food, they contribute little or nothing in producing knowledge. They exchange somewhere, the knowledge producers have food, the food producers have knowledge for them and their kids. There is collective action there, and it benefits humanity.

Thailand Politics and the Monarchy, Part 3

A friend, Dr. Amado "Bong" Mendoza, Prof. of UP Political Science, wrote a brief but good analysis of the Thai political crisis. He gave me permission to post it here; photo from his fb wall. My comments below his article.
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Oh, Thailand

Dr. Bong Mendoza

February 01, 2014

While we had delightful face-offs in Manila's Chinatown, there are dangerous ones going on in Bangkok.

Thais cast their ballots in polling stations today hopefully to form a new government after Prime Minister Yingluck Shinawatra dissolved parliament in the face of vociferous opposition last year.

The cause celebre?

Yingluck's parliamentary majority rammed through an amnesty bill that, among others, would allow Yingluck's older brother, former prime minister Thaksin Shinawatra to go home from exile in Dubai.

The proverbial straw that breaks a camel's behind!

Elections in democracies are supposed to settle rivalries between political factions; that is, decide which camp will lead a nation. However, these elections may not be able to accomplish that due to several complications.

The opposition's strategic objective: the ouster of the "Thaksin regime"

Opposition tactics: blocking of major Bangkok intersections; occupation and paralysis of government ministry buildings; calls for Yingluck's resignation; calls for take-over by a reform council before elections are held; election boycott; blocking of candidate registration--all resulting in failure of elections and failure to constitute parliament and a government.

This latest crisis is part of the continuing struggle roughly between pro-Thaksin and anti-Thaksin forces. Said contest started in 2006 when then prime minister Thaksin was ousted by a royally-endorsed coup. A few decidedly inept military men (including one, General Samak, who cannot decide what his job was: general, prime minister, or television cooking show host?) were at the helm until a civilian politician from the Democrat Party took over.

Thaksin fled the country in 2008 to avoid cases filed against him in court.

However, he retains strong support and loyal Red-shirts clashed with pro-government Yellow-shirts in 2010.

In 2011, the rival political factions arrived at a modus vivendi upon the election of the Pheu Thai government led by Prime Minister Yingluck Shinawatra. Eventually, the peace was roiled by the railroaded amnesty bill.

Thus in Thailand, we have minorities who try to impose their wills. We have majorities abusing their numbers. King Bhumibol, who had influentially shaped the course of Thai politics for several decades, is old and sickly. The military top brass can mount another coup. Question is how long can the generals man the household before the civilians assume power once more.

The eventual death of Bhumibol will be a game changer. His heir apparent is a wastrel. The Crown Princess is respected but she has to hurdle the gender bias before she could be named head of state and monarch of Thailand.

Bhumibol is also a very tough act to follow. The 1932 Revolution may have ended absolute monarchy in Thailand. In the early years of his reign, during the government of a military dictator, Bhumibol may have had little power and was no more than a ceremonial figure. However, military rivals for leadership begun to seek his blessings.

The English academic Duncan McCargo have noted the active political involvement of Bhumibol through a "network monarchy" working through the Privy Council. The network's political cachet was supposedly threatened by the rise of Thaksin. The network's capacity to exercise power is based partly on Bhumibol's popularity and strict control of his image.

Bhumibol's power is largely based on mystique. He is reputed to do things. We will never know how these are done since he works behind the scenes.

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The Thaksin camp has its set of sins and corruption, so does the anti-Thaksin camps, from the monarchy to the traditional Bangkok-based political elites. The problem of the anti-Thaksin camps is they can NOT win any election. Since 2006 ouster of Thaksin, all four elections including the last 2011 elections were won by the Thaksin camp. That is why the opposition including the Democratic Party, campaigned for mob rule, bring down the Yingluck Shinawatra government without elections, and their unelected "People's Council" will rule for two years without election. 

Mob rule, no respect for the rule of law, the Thai constitution. The problem with mob rule policy is that assuming they succeed in bringing down the Yingluck government without election, the next months, if the Thaksin camp can also mobilize millions of supporters, there will be another round of paralyzing rallies and change of government. Mob rule is ugly and not advisable.

On the monarchy. Its "holiness" should be damaged by now among many rural residents who are mostly pro-Thaksin. The monarchy and Thaksin are both populists, giving away various subsidies and freebies to buy political support, bloating the Thai public debt. But it seems that Thaksin was the better populist than the monarchy, his family and business cronies.

Not that I am pro-Thaksin and his corruption and populism. I am for the rule of law, in Thailand and elsewhere. If a government is corrupt, then bring it down and change it via constitutional processes like elections or impeachment or similar schemes. Mob rule is rule of men and the opposite of rule of law.

The snap election was held yesterday. Here is one news story, it is ugly. Preventing other people to vote, and still call themselves as democrats, people's representatives? They are mini-dictators who are not in power yet, and they want to be in power sooo bad.

http://www.interaksyon.com/article/79951/thai-protesters-block-voting-in-chaotic-election

BANGKOK - Opposition protesters prevented voting at thousands of polling stations in Thailand on Sunday, triggering angry scenes in the capital over an election that plunged the strife-racked kingdom into political limbo.

Despite weeks of mass street demonstrations aimed at forcing her from office, Prime Minister Yingluck Shinawatra was widely expected to extend her billionaire family's decade-long winning streak at the ballot box.

But the disruption to voting means that the results are not expected for weeks at least, and there will not be enough MPs to convene parliament and appoint a government until new elections are held in the problem areas….

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See also: 
Thailand politics and the anti-globalists, November 20, 2008 
Thai politics and the Monarchy, December 04, 2008 
Killings in Thailand and Military Crackdown, April 16, 2009 
Rule of Law 4: On Thailand Crackdown, April 18, 2009 

Thailand Politics and the Monarchy, Part 2, January 14, 2014

Church and State, The Iglesia Medical Mission

* This is my article today in thelobbyist.biz.
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Last Monday, October 14, 2013, the Iglesia ni Cristo (INC) held a huge medical mission in several places in Manila City. The organizers announced that they expect to gather about 1.5 million people from many places in Metro Manila and neighboring provinces. In anticipation of the huge traffic, Manila Mayor Erap Estrada suspended  all classes from all levels in the city. Other cities in the metropolis also suspended classes up to high school as long convoys of vehicles from many places will be passing by their cities on their way to Manila.

This incident has angered many Filipinos, especially the non-Iglesia members. Hundreds of thousands of students from pre-school to tertiary were deprived of one day of schooling. Those with official and personal trips to and around Manila City suffered super heavy traffic, which started at dawn that day. Many people started queuing at designated places at dawn and hence, travelled to the place at midnight and early morning the previous day. The big volume of buses and jeepneys that ferried the people from different cities and provinces parked at no parking areas, further worsening an already bad traffic situation.

A friend, Dr. Bong Mendoza of the UP Political Science Department, commented in his facebook wall that “Religious freedom is not the freedom to inconvenience the metropolis. And complaining about the inconvenience is not a violation of religious freedom.”

I agree with Bong’s assessment. Freedom without responsibility is stupidity or dictatorship. If the INC officials and members can practice religious freedom, other people also have freedom of mobility,  freedom of education, freedom of commerce and so on. These various freedoms should not be trumped and sacrificed in advancing other people’s religious freedom.

An Iglesia member reacted to Bong’s comment, said that there is a need “to uphold the core value of humanity which is respect.”

I replied to this guy and asked if the INC also respected the right to mobility of other people? No. The INC threw its weight around. They have INC hospitals, churches, schools and so on where they can conduct such medical mission, daily if they want. Luneta and other big open spaces are also alternative venues. Not a bit, INC chose the heavily congested places of Manila, on a weekday.

If the INC wanted respect and understanding from the inconvenienced public, they should have anticipated those problems as it is not the first or second time that their big gatherings cause heavy traffic congestions and trip delays for many other people.

The INC guy replied that “there was no intent to disrespect anyone in the outreach. The argument of respect begets respect clearly does not apply. Why on a Monday? Because Weekends are our days of worship as well as Wed and Thursday…. INC helped thousands of families in Manila. I hope that while you contemplate on the inconvenience, you also realize the medical and relief help we have extended to these families.”

The alibi does not hold water. When you bring a million people or more in a small piece of land like Manila City in one day, the freedom of mobility of other people is immediately disrespected. The Supreme Court, Court of Appeals, lower courts in Manila have all suspended proceedings by afternoon of that day. Classes were suspended whole day. Religious and humanitarian freedom by INC has trumped all other freedoms -- freedom of fair court trial, freedom of education, freedom of mobility, freedom of commerce, others -- these were all rendered secondary or unnecessary that day.

Other INC members may feel that they are being discriminated against because such "rants" are not heard when the Catholics also hold religious-related activities like the Feast of Nazarene and Christmas holidays, where heavy traffic congestion is also experienced.

This is not a valid observation. The Catholic Nazarene Feast and its heavy traffic is confined around Quiapo area only and does not affect the outer rings and streets of Manila City, and definitely does not affect other neighboring cities. The Christmas season is feast and business season. Even atheists and agnostics enjoy the holidays, there are many reunions, partying, perhaps 99 percent of which are not related to religion.

The various city governments in Metro Manila M are also to blame for suspending classes. It is not a far out possibility that there is implicit pressure from INC that if those Mayors do not close schools in their areas, the INC may not support them in the 2016 elections. Many local and national politicians are afraid to antagonize a solid-voting INC bloc.

But even if the other city governments did not close schools that day, the fact that INC brought hundreds of thousands of its followers from northern, central and southern Luzon to Manila City, on a weekday, is already bad. INC has thrown its political weight around.

This should be another warning signal for the rest of Philippine electorates. A big religious bloc can throw its weight around and cause huge public inconvenience for one day or more, when its purported  goal, to conduct medical mission, can be done in other venues, or be phased into several days on smaller venues.

The medical mission was a political mission with a clear political statement. The inconvenienced public should also send a political statement to them: religious freedom cannot and should not undermine other individual freedoms. There are other ways so that any potential conflict between the two can be avoided,  but the INC leadership opted to highlight its own political statement.

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See also: 

CSOs and State 14: Lady Gaga and the Intolerant Religious Groups, May 21, 2012 

Rule of Law 18: Damaso and Carlos Celdran Conviction, February 01, 2013

Pol. Ideology 50: Plato, The Republic and Pork Barrel

Another intellectually stimulating posting by Dr. Amado “Bong” Mendoza in his facebook wall last Thursday, analyzing the on-going pork barrel scandal using the ideas of the famous Greek philosopher, Plato (428/427 BC  – 348/347 BC). Bong wrote,

The best ancient philosophers like Plato flourished when the Greek city states like Athens were in crisis and on the decline. Let's face it; who philosophizes during swell times? That's the time to party!

Plato's over-riding concern was justice and the specification of the best, which must be a just, political order.

Plato observes that each of us have three components of the soul: reason, spirit, and desire.

He then proceeds to classify people into three based on the dominant element: creatures of "appetite" or "desires", creatures of "spirit" or "courage"; and creatures of "reason". He promotes the ideal, the mirror that the rule of people ruled by reason is best. They will establish a harmony between reason, spirit, and appetite.

This is true for a single individual. If a person is ruled by desires, she will be distorted by greed. If she is ruled by spirit, she will be foolhardy and impetuous. Only when she is ruled by reason will a healthy balance prevail.

By implication, a society cannot be ruled by people of spirit since it will be a bellicose and tragic society. If it is ruled by people of desires, society will be a poorer and a sorry lot.

IMO, politicians who salivate for pork barrel and other forms of ill-gotten wealth are not fit to rule. They do not deserve to be our public servants. Ditto with NGO chieftains, bishops, bureaucrats, and the others who enjoyed the loot while our people were hungry, sick, and homeless.

I thanked Bong for his theoretical contribution in analyzing the pork barrel scandal Bong. Most discussions are too general, and sometimes too pedestrian.

Someone suggested that “rule of law should prevail but the enforcers must follow the spirit in which those laws were made and not stick to the letter, ethics goes beyond compliance.”

The "rule of reason", or more commonly called as rule of law, is beyond enforcers and administrators of the State. Rule of law means the law applies equally to unequal people, both governors and governed, administrators and the administered. No one is exempted and no one can grant an exemption. When governors or administrators or enforcers make rules that apply to some and exempt themselves and their friends, that is rule of men, or "rule of desires" in Plato's language. It is a formula for sporadic or general social conflict and even chaos as people have little faith and respect of laws.

Examples of disrespect of laws are frequent stealing and robbery. Whether petty robbery like stealing slippers or cell phones, or large scale robbery like land grabbing and plunder in government, there is disrespect of the law against stealing. More cases of stealing, petty or big cases, more proof of government failure in doing its core function, to protect the citizens' right to private property (against thieves and destroyers of property), right to life (against murderers, like those who shoot or stab their victims if they resist the robbery) and right to liberty.

Perpetrators of robbery, the thieves and plunderers, are showing that "rule of desires" and rule of men can prevail.

Bong added,

Does Plato's "spirit" cover the whole gamut of emotions? It does not. His spirit is the dominant element in soldiers and it covers bravery, appetite for adventure, love for the polity, and related affects. It does not cover romantic love, which I believe is the bulk of human emotion. The soldier may have contempt and hatred but for the enemies of his state.  

Plato talks about the coexistence of the three components of the soul and the interaction between the three determines an individual's behavior. In this sense, Plato is aligned with the findings of modern neuroscience.

It was good that Bong  mentioned that.  I was also wondering why Plato's "creatures of spirit" cover only courage and bravery. The romantic, spiritual and cultural aspects of humanity should be covered too.

Meanwhile, I like this part from Plato’s book:

"And for this reason, I said, money and honour have no attraction for them; good men do not wish to be openly demanding payment for governing and so to get the name of hirelings, nor by secretly helping themselves out of the public revenues to get the name of thieves. And not being ambitious they do not care about honour. Wherefore necessity must be laid upon them, and they must be induced to serve from the fear of punishment.... Now the worst part of the punishment is that he who refuses to rule is liable to be ruled by one who is worse than himself. And the fear of this, as I conceive, induces the good to take office, not because they would, but because they cannot help --not under the idea that they are going to have any benefit or enjoyment themselves, but as a necessity, and because they are not able to commit the task of ruling to any one who is better than themselves, or indeed as good."  

-- Socrates - Glaucon, Book 1, The Republic.

The fear of being ruled by bad people is the main reason why good men should aspire to become rulers, and not for any other reasons like getting perks (pork barrel, huge allowances) or honor and glamour (being called "Honorable" Cong., Senator, Governor, etc.). Wow.

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See also: 

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

Pol. Ideology 47: SONA Rallies, Socialism and Thomas van Beersum, July 24, 2013 

Pol. Ideology 48: Hobbes, Locke, Rousseau and Social Contract Theory, September 09, 2013 

Pol. Ideology 49: Machiavelli, The Prince, Liberality and Meanness, September 11, 2013

Pol. Ideology 49: Machiavelli, The Prince, Liberality and Meanness

My political theoretician and academic friend, Dr. Amado “Bong” Mendoza, made a follow up discussion about the pork barrel scandal, this time getting the ideas of the famouos Italian historian-philosopher Niccolo Machiavelli (1469-1527). Earlier, Bong used the ideas of Thomas Hobbes, John Locke and Jean Jacques Rousseau, in analyzing pork barrel scam. See Hobbes, Locke, Rosseau and Social Contract Theory.

In his facebook posting yesterday, Bong wrote,

The Florentine political philosopher Niccolo Machiavelli (I affectionately call him the Big Mac) counseled the Prince that if he cannot be both, it is better to be feared than loved by his subjects. Love is fleeting and inconstant while commitments made in fear will be kept out of fear. The Prince however must ensure that he is not feared to the point of being hated virulently.

What could elicit pure hatred? Machiavelli noted that coveting his wife will not rile the Florentine. However, if the Prince stole his riches, the Florentine will really get mad and will most likely rise against the Prince to overthrow him.

The moral lessons for Pnoy: Don't be deluded by high approval ratings and think that the people adore you. High ratings are impermanent. In fact, it is better that they fear you for firmly upholding the rule of law. You will be hated if you continue to hem and haw, to cover up, and to justify the rotten pork barrel system.

Some of Bong’s friends made short comments, including the socialist academic and NGO leader Walden Bello of Akbayan. I commented the following on Bong’s wall:

In theory, the Big Mac is correct in advising that rulers and government administrators must emphasize fear/coercion than love/affection. Government by nature, is force and coercion. It is not like a private enterprise that survives on voluntary exchange, and can go bankrupt when customers or the public stop patronizing it. Government survives on coercion, not on voluntary submission by the citizens. It's that power to coerce, to impose penalties on violators, that makes government and rulers to become effective. Thus, coerce people -- do NOT kill, steal, abduct, rape, destroy properties, etc. The fear of the coercive power of the rulers or The Prince makes government effective.

Problem arises when government coercion and prohibition has expanded to so many areas. Like prohibiting people from putting even a simple bake shop unless they get plenty of permits from many government agencies. Or prohibiting you from driving your own car on certain days while allowing certain individuals and officials to drive their cars anytime, any day they want.

In practice, Bong’s suggestion that PNoy should enforce the rule of law is right on target. Government and its administrators or Prince and King, will be both loved and feared if it can enforce rules without favors and discrimination. Rule of law means no exception. The law applies equally to unequal people, no one is exempted and no one can grant an exemption.

Shrinking pork barrel, by both the Executive/President and the Legislative is a good reason to shrink the budget. Government must aspire to have fiscal surplus on years where there are no clear national emergencies. This would mean shrinking the budget by P300 to P400 billion a year, the equivalent amount of the rise in public debt stock annually. Government must have zero borrowing on certain years, and must be paying old debt instead of getting new loans. When real emergencies come up, having budget deficit and getting new loans will be justified.

I'm sure socialist leaning guys like Walden Bello will oppose any proposal to shrink the budget and certain government programs and subsidies. But they are partly to blame here. They are noisy on "freedom from debt" but they are silent on advocating "freedom from borrowing" policy. Pork barrel is a bribe by the Executive branch to the Legislative branch so that wasteful and corrupt spending by the Executive will be tolerated and not be questioned or cut by the Legislative. By having their own pork, legislators allow huge Executive pork. Even if local revenues are insufficient, legislators have allowed the Executive to over-spend and over-borrow, and it resulted in huge public debt. Paying P332 billion a year on interest payment alone (average for 2012-2014) is a criminal act by government, by the Executive especially, and the legislative branch was a party to such crime.

Many people who demand the abolition of pork barrel are not aware that some of the accusing fingers they point to the legislators also point to themselves.

Zero rebuttal from Walden or other socialist friends of Bong. I read certain chapters of The Prince (published 1532), and these words from the “Big Mac” are useful.

Pol. Ideology 48: Hobbes, Locke, Rousseau and Social Contract Theory

A friend, one of the few real political science academics who can dabble in political theory and discuss things in their facebook walls or blogs, Amado “Bong” Mendoza  (http://bongmendoza.wordpress.com/) of the UP Pol. Science Department, posted the following in his facebook wall yesterday.

I like Bong's discussions about these three classical thinkers of the social contract theory, so I am reposting them here. "Social contract" is an agreement, explicit or implicit, between citizens and the State and how freedom and power are to be divided and implemented between them. I made a few comments to Bong's discussions. I added the years of those three classical thinkers plus Adam Smith. Photos (top, Hobbes and Locke; bottom, Rousseau and Smith) are from wiki.

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1. Thomas Hobbes (1588-1679). In the beginning, there was no state or public authority. Since there was no state, there was no law. Since there is no law, nothing is right or wrong. Everyone is free to do as she pleases. 

Consequently, life was nasty, short and brutish. Civilization was not possible in this so-called state of nature. However, since human beings were rational, they agreed to leave this world of delusion, of fake freedom and submit to the Leviathan's authority.

The implied social bargain is that submission to authority will result in a life so much better than that in the state of nature.

How is this discussion connected to the current abuse of public money by the Philippines' political class and its minions? One can argue that the rape of the public treasury sends us back to the barbaric state of nature.

2. John Locke (1632-1704) saw the social bargain to get out of the state of nature as one between each and every person who becomes a citizen of political society.

The people are the ultimate sovereign and government is its public servant.

There is a separate contract between the people and government. As public servant, the government is contractually obligated to protect the life and property of its citizens.

Failure to do so is a simple breach of contract.

However, if government itself (or key officers of government) actively defrauds its citizens of their lives (extra-judicial killings) and their property (plunder of the public treasury), this act is high treason.

Papa John warned that the sovereign people have the right to rebel against a grossly abusive "servant."

3. Jean Jacques Rousseau (1712-1778). Of the three social contract philosophers, Rousseau is the most controversial and less straightforward. He talked about people being "forced to be free" since they apparently do not know what's best for them.

And yet Papa Jean was concerned with, like other political philosophers, ensuring the freedom of the individual was compatible with the authority of the state.

The growth of human population has led to increased human interaction and interdependence. Beginning with his solitary noble savage, Papa Jean saw the emergence of inter-dependent societies that required ordering by political authority.

The noble savage is undoubtedly free. The status of the individual in inter-dependent communities is unclear. Papa Jean suggested that the latter have actually degenerated into class-divided societies where the rich impose unfreedom on the poor.

Rousseau is clearly dissatisfied with this set of affairs. He argues that the key to the reconciliation of individual freedom with state authority is the idea of the general will: the collective will of the citizenry taken as a whole. The general will is basis of law and is willed by one and all. In following the law, each citizen follows his own will and is thus free.

All of the discussion above may be Greek to us but Papa Jean made some practical points. He was not in favor of political parties because they represent narrow particular wills. He was also not in favor of representative democracy or government. In the determination of the general will, each citizen must directly manifest his preferences without being filtered by a representative.

Papa Jean was in favor of direct democracies which must be of necessity small in scope.

Will there be a need for pork barrel allocations in Papa Jean's direct democracies?

If so, what are the chances that they will be plundered?

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The following are my comments to Bong’s postings and his reply:

On #1, Hobbes:

Rule of Law 19: How to Strengthen RoL?

* This is my 4th guest post in antipinoy.com
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This is a puzzle that all administrations in the Philippines have answered or attempted to answer. And it seems that almost all of them have provided the wrong answer, or partially correct answer.

I had a long discourse last week with a friend who teaches Political Science at UP Diliman, Prof. Amado “Bong” Mendoza, and some friends in his facebook wall.

Bong wrote,

I agree with you Nonoy Oplas that we do not have a rule of law culture and situation in our country. The question to be asked and answered: why is it the case? Some economists (like Noel de Dios) point to the mismatch between what is provided by law and what is socially acceptable–corruption is okay as long as the loot is shared. Randy David opines, following Niklas Luhman, that the rule of men is a key feature of pre-modern as well as societies in transition to modernity. Foreign scholars (Douglass North, Daron Acemoglu, etc.) argue that the Philippines either has a limited access (rather than an open) or an extractive rather than an inclusive society. The malaise is not limited to the Philippines. Indeed, very few political scientists are in mainstream political studies. We should take off from Temy Rivera’s explanation of the incoherence of the Philippine state’s policy. If policy is incoherent, it will be perceived as irrational, impermanent, and changeable. The situation offers numberless opportunities for negotiations, importuning, bargaining, and horse trading. This is the environment where the administrator, the lawyer will flourish and prosper.

Politicians and lawyers love more laws because laws by nature, are prohibitions. For instance, there are laws against expired foods but there are no laws on eating  outdoors. Meaning there are prohibitions against selling or manufacturing adulterated, unsafe foods, but there are no prohibitions on eating outdoors, except when a private place would say so. So more laws means more prohibitions, and thus, more arbitrary powers to administrators and legislators to whom they can grant exemptions of those prohibitions.

If people are serious in seeing a society with strong rule of law culture, then one solution is to stop supporting the expansion of laws. Scrapping or abolishing existing laws is too hard, but stopping the creation of new laws is easier. Some flexibility, support just a few laws amending existing ones. Unfortunately, for many political and social scientists, economists, civil society leaders, they support if not write, more new laws so long as those legislative proposals or administrative orders conform with their “grand ideas”.

Rule of law means no exception. The law applies to all, no one is exempted, and no one can grant an exemption. The law applies equally to unequal people. Thus, the law against stealing should apply to the richest and poorest man on earth. Exempting the very poor from penalties against stealing will encourage people to become lazy, they will have no jobs, they become poor, and thus, their stealing can be considered as “understandable”. No Sir. The law against stealing applies to you. It applies equally to unequal people.

Rule of men is the reverse of the above.

Equating “rule of law = good governance” is lousy. For instance, the law on subsidies, like tertiary education subsidy. Classic rule of law says that if the state should provide subsidy to one group of students, it should extend that subsidy to all students, no exemption. But the state violates this, grants subsidy to students of UP and other SUCs but not to students of UE, UST, etc. The state is a violator of the rule of law. Good governance means making this violation well executed.

About the big number of lawyers or their prominent role in PH society, that’s a result of the “rule of men” and not “rule of law” culture in the country. In the latter, you need only very few laws — law against murder and shooting, law against stealing and carnapping, law against rape and abduction, etc. The law applies to all.

In a rule of men society, administrators and governors make rules that apply to some but not to others. Administrators have arbitrary powers to whom the laws will apply and to whom they don’t. One would need a battery of lawyers in that environment, to know the various loopholes of the thousands of new laws, from LGU regulations to Department Orders and/or Circulars to Executive Orders, Republic Acts, Presidential Decrees.

Anarchist Kropotkin said, “The law has no claim to human respect. It has no civilizing mission; its only purpose is to protect exploitation.” 

I disagree, even partially, on that statement. The purpose of the law is to impose coercion and prohibitions. Like the law against killing and murder. It says that murder is prohibited, and violators will meet the full force of coercion of the state. I like that kind of coercion and prohibition.

It’s another thing though, when the law and the state says, “No one moves, no one can start putting up a barber shop or bakery shop or a taxi company, unless he will get these permits and pay these taxes and fees: barangay permit, electrical permit, fire department permit, health and sanitation permit, Mayor’s permit, BIR permit, DTI or SEC permit,…” This expansion of laws and prohibitions results in limitation, not expansion, of individual freedom.

It’s weird how left anarchy (communist) and right anarchy (libertarian anarchy) can have similarity. And that is one difference between the libertarian anarchist vs minarchist. I belong to the latter. I don’t believe in anarchy. Some state coercion and prohibition are useful in protecting and expanding individual freedom. Like the law against murder.

The libertarian minarchist position recognizes there is a role for government, and that is to protect the citizens’ right to life (against murder and physical aggression), right to private property (against stealing, land grabbing, etc.) and the right to liberty (freedom of expression). But all other extended functions of the state are either secondary or unnecessary, and tend to restrict and limit, not respect, individual freedom.

“To the powerless, the rule of law is abstract and cannot be eaten.” This statement is wrong. The poor also have private property – some pigs, goats, carabao or cow, motorcycle, tractor, tricycle, house, tv, cellphone, etc. When these simple private properties are stolen, it means a lot for them. The law against stealing, if properly and strictly implemented, zero exception, is something that the poor really look up to.

Having rule of law, more than various subsidies, would mean a lot to the poor. Of what use it is to receive free education, free medicines, subsidized MRT fare, subsidized housing, etc., if one’s kids can be abducted and raped or killed anytime? Or his cows or tricycle or piece of land can be stolen/grabbed by bullies or people with strong political and police connection? Income redistribution, welfarism and subsidies are meaningless if one’s right to life, right to private property, are being violated and disrespected.

On “stop supporting the expansion of laws”, if one will check the list of old and new laws, about 90 percent are local laws (creating or renaming a new municipality or city, creating a new RTC or drug rehab center, declaring ____ (date) as provincial holiday for ___ province, etc. For the national laws, among the things that legislators do is expand the Executive bureaucracy like creating a new commission or a new regulation authority. Or expanding the legislative bureaucracy like creating a new Oversight Committee, usually with a budget of P10 M a year, and that committee will meet just once or twice a year and spend little, the balance will go to the discretionary fund of the legislators.

If we have to support new laws, they should be amending existing laws, like amending the NIRC and cutting income tax from 32 percent top rate to say, 15 percent flat rate.

Someone commented that  “rule of law has an embedded liberal ideology, biased towards individualistic notion of life and society… progressive notion of negative liberties or social rights are more appropriate for the Philippines and other Third World countries.”

Well, if some criminals enter his house and steal many things and even sexually abuse his wife or daughter or sister, perhaps that’s the time that he will appreciate rule of law and its strict implementation, that the laws against stealing and sexual abuse should be applied in full force, and that the implementer of the law, the government, is doing this job religiously and not side tracked with concerns like running casinos, universities, banks, and so on.

Rights should be coupled with responsibilities, always. Entitlements should be coupled with obligations, always. People who over-eat, over-sit, over-drink, over-smoke, and when their body becomes bloated and sickly they run to the state to demand that “health is a right” are lousy, if not idiots. No one put a gun on their heads so they will over-eat and over-drink, now they want the state to put a gun on the heads of responsible people to finance their healthcare via more taxes and fees.

What many people call as “rights” are actually privileges. That is how students in UP and other SUCs get subsidies while students in FEU, Mapua, CEU, other private universities don’t. Some are given privileges which they call rights, while others are simply denied of such privilege.

Someone commented, "In our society, the source of order is not the law but human relations. Social order does not come from the state but from the community."

I disagree with the first sentence, somehow agree with the second. Strictly speaking, laws do not only come from government, national and local. Private enterprises, CSOs, also have their own laws. A mall is a private place, it has its own rules, like everyone who enters is subject to physical check of bags; thieves who will be caught will be photographed first before they will be turned over to the police, and so on. These rules, at the micro level (villages, companies, households, etc.) help create order in society, beyond human relations. The state has its own laws too, like the laws against killing and stealing.

On laws by the state and why they are not the source of social order, I can partially agree with this. My earlier comments above centered on it actually — when laws have become too numerous (Republic Acts, Executive Orders, Department Orders, plus City and Provincial Ordinances) and complicated, that’s where the rule of men and not rule of law prevail. Legislators and administrators/implementers of those laws have leeway and arbitrary powers who can be explicitly exempted from regulations via loopholes in the law, or be implicitly exempted via official and personal prerogatives.

So back to the original question on how to strengthen the rule of law, in the Philippines or elsewhere. I think the simple answer is that government laws should be as few as possible, and as generally applicable to all people as possible. This way, people will easily remember those restrictions and the penalties for their violations.

Where there are few laws and prohibitions, society will be more free and more peaceful.

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See also:
Rule of Law 15: RoL and Government Failure, August 16, 2012
Rule of Law 16: On the New SC Chief Justice Ma. Lourdes Sereno, August 25, 2012
Rule of Law 17: Justice Without Discrimination, October 18, 2012
Rule of Law 18: Damaso and Carlos Celdran Conviction, February 04, 2013