Lion Rock 9: Federalism, Decentralization and George Clinton

The Reading Club Salon 2013 of the Lion Rock Institute is fast approaching, this coming October 19, 2013 to be held in Hong Kong. I will be there. Among the readings of the participants to this theoretical roundtable discussion are the Anti-Federalist Papers. 

A paper I checked today is Paper 14: Extent of Territory Under Consol-idated Government  Too Large to  Preserve Liberty or Protect Property written by George Clinton (1739-1812), Vice President of the US (1805-1812) and NY Governor (1801-1804), aka Cato. This was published October 25, 1787.

Among the arguments made by G. Clinton or “Cato” was this.

You must risk much, by indispensably placing trusts of the greatest magnitude, into the hands of individuals whose ambition for power, and aggrandizement, will oppress and grind you. Where, from the vast extent of your territory, and the complication of interests, the science of government will become intricate and perplexed, and too mysterious for you to understand and observe; and by which you are to be conducted into a monarchy, either limited or despotic; the latter, Mr. Locke remarks, is a government derived from neither nature nor compact.

Political liberty, the great Montesquieu again observes, consists in security, or at least in the opinion we have of security; and this security, therefore, or the opinion, is best obtained in moderate governments, where the mildness of the laws, and the equality of the manners, beget a confidence in the people, which produces this security, or the opinion. This moderation in governments depends in a great measure on their limits, connected with their political distribution.

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In short, NEVER trust big and expansive government and the persons administering it. They will make rules and laws that are too complicated for us but will provide loopholes for their friends. Moderate or limited government can provide us security because its coercive power is limited, limited to equal application of laws to all.

He also wrote,

The strongest principle of union resides within our domestic walls. The ties of the parent exceed that of any other. As we depart from home, the next general principle of union is amongst citizens of the same state, where acquaintance, habits, and fortunes, nourish affection, and attachment. Enlarge the circle still further, and, as citizens of different states, though we acknowledge the same national denomination, we lose in the ties of acquaintance, habits, and fortunes, and thus by degrees we lessen in our attachments, till, at length, we no more than acknowledge a sameness of species.

Cool. That is why forced collectivism by a central or national government often begets suspicion, disapproval and discontent . The sentiment by people in the provinces who dislike "Imperial Manila" collecting lots of taxes and fees from them, telling them what are prohibited and which ones are not.

Centralism -- economic central planning and centralized politics and government -- disrespects individual diversity and spontaneity.

Interesting to note that John Locke has influenced both the Federalists (Alexander Hamilton, James Madison, et al) and the Anti-Federalists (George Clinton, et al). Clinton aka Cato, has mentioned Locke several times in that paper.

Pol. Ideology 38: Central Planning vs. Free Market

My article in interaksyon.com, Poverty, Planning and Populism has attracted the attention of some lovers of central planning and more government. Below are our exchanges, dated October 28 to 30, 2012:
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Carlo Lacanilao What this article failed to mention is that this is the very economic framework that sets the objective structural barriers to achieving prosperity; and - while, shifting the blame on the poor - forgets that poverty in itself shapes, conditions, and constrains, individual freedom and responsibility.

Nonoy Oplas ·  More on "shifting the blame, and credit, on the individual", rich and poor alike, not just the poor.

Lean Porquia ·  Time and again, economists failed to see that the Philippines does not have material conditions to become industrialized. Look at the policies implemented and how they affect millions of poor Filipinos (contractual status, export-labor policy, value added tax, two-tier wage system, privatization of social services). The stubbornness of the current system is the biased favor for the entrenched wealthy elite rather than protect the interest of the majority poor people. The key in resolving the problem, turn it upside down.

Nonoy Oplas · It is often easy to blame all other external factors and excuse the individual for his accountability to himself, his family and community. And precisely why central planning in labor, trade, other policies do not jibe with encouraging more entrepreneurship and individual creativeness.

Lean Porquia ·  Individual accountability is actually enshrined in collective and centralized planning. Has every individual performing for the economy. The thing with your point that it does not jibe with encouraging entrepreneurship is actually persistent in the current status quo. Bakit po ba, well protected and small and micro entrepreneurs with the kind of policies implemented right now? It's very ironic that your idea is very much conservative to the point that even European countries are turning against trade liberalization and is gearing for protectionism. The only countries who survived the recent crisis are those with solid centralized economic planning. Please consider that.

Nonoy Oplas ·  Yes, much of Europe is protectionist, there is free trade only among EU member countries. Protectionism or central planning in international trade, restricts or kills individual freedom. Imagine a situation where there is a national or Filipino cell phone manufacturer and the PH government will restrict importation of iPhone, Samsung, HTC, other foreign brands. It will be a very lousy situaton. We are lucky that such type of protectionism is non-existent in our economy.

Carlo Lacanilao Nonoy Oplas: Granted that that there has to be accountability attributed to individuals but, we know for a fact that, it is collective action that changes society (history) - not individuals. So we go back again to the economic providing hindrances to the achievement of individual creativeness by restricting the spread of mass development and by doing so reserves the fullest of development gains to the benefit of the very few.

"Protectionism or central planning in international trade, restricts or kills individual freedom" <- It's a flimsy assumption that a planned economy will be inefficient considering how meticulous major corporations are when it comes to their own business plans. Planning is not an an end in itself but a means to determine what is essential. The freedom - that word again - to determine by social need rather than the bottom line. To produce more hospitals or more rice or more corn rather than cellphones. Under Hayekian economic libertarianism this is left to those whose drive and interest is solely motivated primarily by profit.

Nonoy Oplas · Where there is more central planning, there are more problems than solutions. Look at healthcare: there are hundreds of govt hospitals (under DOH, UP PGH, AFP hosp., provincial hospitals, city govt hospitals), there are tens of thousands of govt. rural health centers, there is government health insurance monopoly (PhilHealth), thousands of DOH-sponsored Botika ng Barangay, there is drug price control policy, there are free medicines for the poor, etc., and yet health problems are never ending.

Compare that in the food sector: there is not a single government restaurant or carinderia, no government supermarket or grocery store, and yet people are eating. The big difference? There are rigidities under central planning while there is flexibility under free market. Someone eating a P20 spaghetti in a carinderia does not feel that he will die or will get food poisoning compared to someone eating a P200 or P500 pasta in a fine resto.

Carlo Lacanilao It is not the number of hospitals that's causing this problem. It is how these hospitals are managed based on the budget being given compared to other spending (military, debt-servicing, and other palliative programs). Cuba with its economic embargo has a very low if not the lowest child-mortality rate. Let's look at Sweden where, although private healthcare exists, is still mainly funded by the government: "life expectancy at 79/83 for men/women; 5% are aged 80 and above compared to EU member states; maternal mortality at 6 out of 1,000 babies and fewer than 1 out of 100,000 die in birth."

I don't even understand your pasta economics. What is certain is that there are fewer and fewer individuals who can afford that 20-peso spaghetti in a carinderia - preferring the 7 to 10 peso chicken or beef noodles - how much more the 200-500 peso kind. If you think that won't add to the health problem, then who are we kidding?

Nonoy Oplas ·  Sweden, UK, Germany, US, France, etc., they hold on economically despite heavy public debt and expensive welfarism mainly because of their adherence to the rule of law. In countries where rule of law implementation is weak and where rule of men rather dominates -- like the PH and many other poor countries -- having more and big government often leads to more wastes and corruption. That is how the free market fills the gap of large scale government failure.

Maintaining peace and order, protecting private properties, is mainly a government and police function. But in PH, the ones who guard our schools and universities, malls and shops, airports and seaports, villages and condos, hospitals and banks, are ALL private security agencies. Without this market-supplied security scheme, the country could be more underdeveloped as criminality and robbery will be rampant.

Carlo Lacanilao You have taken the discussion from central planning to health and then to food and now to peace and order "supplied by private security agencies" but there seems to be no satisfactory answer as to why central planning per se has no place in economic governance except in saying there are conditions for such and such country that don't exist in this country, therefore central planning is...

Systemic economic issues will not be resolved by more of the same policies which engendered the problems in the first place but by recognizing that such a system no longer works. It will require more than market reforms to correct this.

Also, the main argument remains: it is the current economic policies (neoliberalism) that has riddled the world not just in the grip of one crisis after another under the illusion that markets correct themselves (failing to underscore that the correction in itself is planned and was made possible due to the heavy bailout from govt); it is this economic libertarianism that has perpetuated poverty at the mercy of multinational corporations and investment bankers. Truly, in this state of things, they are the ones who are most free.

Lean Porquia · Nonoy Oplas centralized economic planning does not equal to restriction. that's the failure of your argument.

Nonoy Oplas · @Carlo, have to cite cases where central planning fails and where free market succeeds. To add more examples and cases: No government shirts and clothing corporations, no govt shoes and sandals corporations, no central planning how many running shoes, basketball shoes, golf shoes, cycling shoes, at what designs, and yet the market provides. Those who over produce at little demand lose money, those who produce at high demand make lots of money. Corporate expansion and bankruptcy are 100 percent part of business risks and market competition. Capitalism without failure is like religion without sin, that is why any form of government bail out to failing corporations is wrong, more statism than free market.

@Lean, central planning also means the government will confiscate certain percentage of our income and savings -- prevents us from spending more of our own money where we really need them -- and govt will give such money to cronies or wasteful govt corporations which tend to lose more than they earn.
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Meanwhile, I posted this poster in my facebook wall with this note, "Right. A bright idea does not need coercion to get implemented. An idiotic or moronic idea does."

That is why central planners love coercion and government enforcement. Whether people like their idea or not, they have to obey that idea, they have to finance that idea, even if it is an idiotic one.

A friend, Carlos Tapang, commented on it:
Take, for example, Obama's idea to produce an electric car. GM took the challenge only because they are (were?) partly owned by government. The Volt came into being at much fanfare. Last time I heard, it's still not selling. If it were really a good idea, it would not have required government incentives or prodding.

Obama promised that products that are good for the environment are not only good for the environment, they are supposed to provide jobs. Solyndra, a solar power company, took in half a billion dollars of investment the Obama's administration. It went bankrupt, leaving the taxpayers with a hefty bill to pay.
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See also:
Pol. Ideology 32: On Shrinking Government, June 19, 2012
Pol. Ideology 33: Anarchy or Minarchy, July 13, 2012
Pol. Ideology 34: More on Anarchy or Minarchy, July 17, 2012
Pol. Ideology 36: On Capitalism, Akbayan, Drugs Legalization and Toqueville, October 10, 2012
Pol. Ideology 37: Collectivism, Conservatism and Liberalism, October 12, 2012

Filipino Free Market Blogs 4

How is the free market movement going in the Philippines?

There are several qualitative and anecdotal discussions and proof that shows it is alive and kicking. By how much?

Until now I can only think of one measurement, and that is the global traffic rank of Filipino free market blogs via www.alexa.com. As of today, here are the top five and their respective global ranks:

As there are several hundred million blogs and websites worldwide, to land in the first six million would be a privilege. Here are other free market-oriented Filipino blogs but have relatively low (above 20 million) or no rank assigned by alexa.

1. Carlos Tapang, http://ctapang.wordpress.com/
2. Joshua Lipana,  http://joshualipana.com/
3. Laisse Faire Filipino,  http://filipinofreedomfighter09.blogspot.com/
4. Minimal Government Thinkers, Inc. http://www.minimalgovernment.net/
5. Monkey Society, libertarian Buddhist blog,  http://monkeysocietyblog.blogspot.com/
6. New Commonwealth, http://libertadfilipinas.wordpress.com/

I think there are other free market-leaning blogs and websites by Filipinos, whether based here or abroad. I hope to find and read them someday.

Decentralization 10: Devolution, Federalism and Subsidiarity

I posted my paper, Decentralization 9: Ben Diokno Says Recentralize, in the CORRECT Movement (Constitutional Reform & Rectification for Economic Competitiveness & Transformation Movement) group in facebook because that group is advocating "evolving federalism" plus two other issues, economic liberalization and Parliamentary form of government. The exchange has expanded into a long discourse.

Below are the exchanges -- with explicit permission from Carlos Tapang and implicitly from Paul Alli (Paul is a friend way back in the 80s in UP, Carlos I have met 2 years ago) -- minus the comments from Orion Perez, the main convenor of CORRECT Movement. He does not want his comments to be publicized.

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  Nonoy Oplas 
  
  

  The subsidiarity principle is very radical, it says that if the smallest social unit can do a task, no need to give it to the higher social or political unit. The smallest social unit in society is the individual, then the household. If an individual can do a task by himself, like taking care of his/her body and health, then there will be no or little need for govt healthcare program, especially for non-communicable diseases (NCDs).

  
  

  22 hours ago · 
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  Paul Alli There is a much more cogent reason why decentralization is necessary- the unequal development of regions.
  

  21 hours ago ·  ·  1
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  Nonoy Oplas But that is why Ben Diokno shot down in his presentation, he said that decentralization is a failure in reducing inequity bet and among regions and LGU localities, that is why he is arguing that the natl govt should do that job, not the LGUs themselves.
  

  20 hours ago · 
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  Paul Alli Because of corruption among LGU officials. There should be a check and balance bet natl govt and local govt. One sad case is Samar.
  

  20 hours ago · 
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  Nonoy Oplas 
  
  

  Yes, corruption is endemic in both national and local governments. That is why I argued in my paper that we need less and small government, both at the national and local levels. Government should focus on stamping out criminality, protect private property rights and the citizens from killers and other criminals. But government, both national and local, veered into so many sectors and areas, because that's where corruption and extortion can be maximized, like controlling "illegal gambling", "Illegal drugs", "Illegal prostitution", etc.

  
  

  19 hours ago ·  ·  2
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  Carlos C Tapang 
  
  

  This is very good discussion. I think we should think of government power in terms of points being allocated instead of "areas of responsibility". The problem with thinking in terms of area of responsibility is that those in the national government can claim that because the whole country is their responsibility, it is OK for them to meddle in local affairs. This is the part of centralization that is bad, in my opinion. If we think in terms of power points to be allocated, there should be not so many points allocated to the central government, because otherwise there would be no points left to each of the regions or provinces. Allocate only 10% of the power points to the central government, and give 90% to the LGUs. What this means in practice, with regards to taxation, for example, is that the central government should collect only as much as 10% of the total tax revenue. For each taxpayer, the local government can tax say 9% max, and the national government only 1%.

  
  

  15 hours ago ·  ·  1
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  Carlos C Tapang 
  
  

  Our situation in Pinas is the opposite of what is desirable: 90% of the power points is concentrated in the central government, 9% to local governments, and 1% to each individual.
  
  We experience this power on a daily basis. Observe how even the lowest government official behave towards citizens. Go to the local SSS office and see how many people line up for service at any one time. When you finally reach the end of the long line and are finally able to talk to a clerk, observe how the clerk feels more important than you are. Compare that to the behavior of a bank teller in a well-run bank. The government clerk feels no compunction to demand a requirement that you forgot to do, like filling up another form, or getting the signature of somebody else. It does not matter how minor the missing paper is, it must be with you; if not, you either go fill that silly piece of paper and go back to the other end of the line, or worse, come back some other time.
  
  We have to deal with the central government in most that we do. If we want to buy land, the title gets registered all the way to Manila. If we want to start a business, our corporation papers gets filed with the central government and not the local government. The central government is like a bad CEO who doesn't know how to delegate, who can't trust anybody else to do something well, so he does everything himself, to the detriment of the whole company.

  
  

  14 hours ago · 
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  Nonoy Oplas 
  
  

  I think local govts are more notorious in imposing stupidity than the central or national govt. Take makati city. So many NOs, Donts, Prohibitions. Buendia and its long blocks is now "No Jaywalking". They say they want people to commute and walk, to leave their cars at home to reduce traffic, but they make crossing streets hard and bureaucratic, penalty is P200 and you have to get your ID at a far out office. Ayala ave is "No loading here, walk to the next block" and "No unloading here, walk to the next block" (about 250 meters away).
  
  These may seem trivial but if you are subjected to these types of inanities and stupidity every day, you won't be happy. I don't think a central govt would think of this type of stupidity, but a local govt can. That's why I'm never a fan of decentralization or devolution or even federalism/autonomy if such will mean worse bureaucracies at the local levels.

  
  

  12 hours ago · 
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  Carlos C Tapang 
  
  

  Let's look at this more closely. At some point, yes, we can say that some traffic rules are just silly. The question is whether you prefer such silly traffic rules to come from the central government (in which case all traffic rules in Pinas would be uniformly silly), or from the local government (in which case there is no uniformity and one locality can have silly rules and people disobey them all the time and get a away with it, while another locality has simple rules and people seem tame enough).
  
  Here's one reason why you want it local and non-uniform: the word is competition. As Orion has just written about, competitition is what will slowly drive local laws and ordinances to parity. I took a taxi once from Pasay to Cubao, and the driver asked permission, before we got started, to avoid Makati roads. I asked why, and the answer was because of the silly traffic rules that you mentioned. People will avoid localities with silly rules and very high local taxes. Businesses, when locating their branches, certainly look at how rational local governments are, among other things.
  
  The funny thing about local autonomy and uniformity is that, the more local autonomy we have, the more the LGUs tend towards uniformity, because of competition. Here in the US there is variety in certain local ordinances: there are subtle differences among cities, and glaring differences among states. But there are certain things like how easy it is to set up a corporation that trends towards uniformity: there is clearly competition on which state it is easiest to setup a corporation. It used to be that Delaware was the easiest state to setup a corp. Now most states have changed their laws to make it even easier to setup shop. Here in Washington I can setup a corp in less than a day, and less than $200, without ever going to a state government office (I just visit the secretary of state website).
  
  Of course, there are certain things that will always be different among localities, and this then is what would give them their own character. Our ideal should be not one color for all of Pinas, but rather an array of bold colors to start with, which would gradually dissolve naturally into pastel colors, with each locality having its own natural color.

  
  

  11 hours ago ·  ·  2
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  Carlos C Tapang 
  
  

  Instead of micro-managing the different localities, the central government should be limited in what it can do. The central government should be limited, as much as possible, to only enforcing simple rules on local government, rules that should be written in the constitution. For example, the Bill of Rights should be uniformly applicable everywhere, and there can be no local ordinance or rule that can contradict any section of the Bill of Rights. Another example of a simple rule that the central government can and should enforce on all localities is a lmit on taxation: the constitution should limit local income taxes to a maximum of, say, 10% or less. Of course, the same constitution should also limit what the central government can collect, which should even be less (as a percentage of individual income, but not necessarily as a percentage of total govt revenues) than what the LGUs are allowed to collect.

  
  

  11 hours ago ·  ·  3
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  Paul Alli 
  
  

  Decentralization, federalism and local autonomy are concepts meant to free up the potential of local regions to develop itself without much assistance from the national govt. In fact, by virtue of local autonomy parts now of Mindanao, esp ARRM, is moving on its own. But despite this, there is still glaring poverty in the area because of warlordism. We have to recognize the fact that Philippines have unequal development brought forth by colonialism and feudalism. The structures of feudalism still prevails in some areas, and some has been masked by corporatism- or stock distribution e.g hacienda luisita- in order to circumvent modernization of regions. If we really need to get Free Market principles going, federalism shouldl be implemented on a nation-wide scale making regions or LGUs compete among themselves by enticing investors, tourists, transient class, and businessmen to locate or relocate or even travel to better places, be it under a Parliamentary form or Presidential form. I am reminded of my 7 year stay in America. I can always choose to locate in different states offering the best opportunities in life. I moved around from coast to coast searching for the American dream. I ended up now working out here in Samar to develop the coconut industry.

  
  

  4 hours ago ·  ·  1
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  Nonoy Oplas It's unfortunate that Orion equates disagreement or agnosticism with federalism aka region-based decentralization as "extremist and knee-jerkishly dogmatic and narrow-minded interpretation...".
  
  My concept of subsidiarity is that if things can be done by the individual and households, them as the smallest social and political unit in society, then don't give it to higher political units -- barangay, city, province or federal governments. Take healthcare, do we need any local or national govt to remind people that over-drinking, over-smoking, over-eating is bad for one's health? Preventive healthcare in this case won't need govt, local or national, autonomous or federal, it purely falls on the level of the individual, the household and civil society. Even healthcare financing can be done at the personal and household or enterprise level too, people getting their private health insurance. To insist that we still need govt even in simple cases like preventive healthcare, local or national, for me is wrong. Privatization of certain functions, not just decentralization or devolution, is more economical as this will enhance more personal and parental/guardian responsibility.
  

I left the CORRECT Movement fb group today. Below is my last comment to the group before I clicked "Leave Group". Nonetheless, I thank Orion for the opportunity to exchange notes with him and many of his followers in the said movement.

Orion, a few months ago, I already asked you if you will accommodate people here who only believe in free market, and is/are indifferent on the 2 others -- federalism and parliamentarism. You said fine, so I stayed. Until now, I remain indifferent and agnostic -- someone who neither believes or disbelieves on something, simply indifferent -- about those federalism and parliamentarism. I don't agree with your defiinition of agnosticism of "does not know". For me, neither believe nor disbelieve. Sa tagalog, wala akong paki, ang paki ko lang ay economic liberalization and less government.

From your points above, there is clear message of your intolerance to agnosticism to the 2 other programs of CORRECT, like repeated use of "knee jerkish dogmatism".  Fine. If being in this movement means obedience to all 3 advocacies so as not to be labelled as knee-jerk dogmatism, then this group is not for me. Thank you.
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See also:

Decentralization 1: It's Still More Government, July 25, 2007

Decentralization 2: From Local Government to Civil Society, August 30, 2008

Decentralization 3: Challenges to Local Government, November 18, 2008