Rizal Day, 121 years of heroism vs colonialism

Today is Jose Rizal Day, a regular holiday in the Philippines to commemorate his death anniversary in December 30, 1896, less than two years before the end of Spanish formal colonization that started around 1560s. He was killed via firing squad at Luneta, Manila.

With more than two centuries of generally cruel and bloody colonization by Spain, the Philippines has produced dozens of heroes in many parts of the country, leaders who started early independence movements but were unsuccessful because of the superior arms and merging of church-state affairs by the Spanish colonizers. Jose Rizal was one of those heroes.

Rizal however, was a standout among them because of his brain, his high intellect. He was a writer and book author, a poet, a painter, a physician, an orator, has several other talents. His two books, "El Filibusterismo" and "Noli me Tangere" are classic materials that are still used in elementary and high schools until now in Philippine history subject.

Another thing that distinguished Rizal from majority of Filipino heroes then was that he was a "pacifist" reformer, he did not favor armed confrontation with Spain. He travelled a lot, in Spain and other European countries, he was able to highlight the cruelty of Spanish front line officials in the Philippines and thus, campaigned hard for drastic reforms. Of course the colonizers' cruelty prevailed and he was jailed for several months as the colonizers were searching for the leaders of the spreading armed insurrections against them. Then the final verdict, death by firing squad, 121 years ago.

My friend, famous libertarian Lawrence "Larry" Reed, President of the Foundation for Economic Education (fee.org) in the US, asked me to write about Rizal, to be published in their website. I readily said Yes because Larry is a good friend since 2004 when he was still the President of the Mackinac Center for Public Policy in Midland, Michigan. I attended the Mackinac Leadership Conference, early April that year, a training for aspiring free market leaders.Our batch that year has many participants from Asia -- from HK, Sri Lanka, India, Vietnam, Mongolia, PH of course.

Rizal is famous in fighting for national freedom and independence. I am not familiar, however, if he also wrote a lot about individual freedom and liberty. That is something I have to research.

Jose Rizal, thank you for your bravery and heroism. Other heroes in the PH fight vs Spanish colonization -- Andres Bonifacio, Apolinario Mabini, the Gomburza priests, Diego Silang, Marcelo del Pilar, etc. -- thank you too.

* Trivia:

1. The PH is the only Asian country colonized by Spain; also the only Asian country colonized by the Americans after the Spaniards have left.

2. Many Filipinos have Spanish family names, like Gonzales, Marquez, Evangelista, de los Santos, Burgos, Zobel, etc. Many also have Spanish first names, like Bienvenido (me and my late father), Juanito, Andres, etc.

Fiscal Irresponsibility 25: Spain Panic, More Eurozone Woes

Just a continuing proof that BIG government is wrong, is also the continuing debt and financial turmoil in Europe. Of course, the same heavy debt burden is also experienced in North America, Japan and other developed economies, regardless of their forms of government -- parliamentary, presidential, federal, centralized, unitary, etc.

Here are some news headlines yesterday, June 5, from BBC, CNN, FT, WSJ. They look self-explanatory.

A good chart from The Economist, Crunch Time, May 28th 2012.

...According to The Economist's credit-crunch index, credit is now tighter in the euro area than it was at the height of the financial crisis (see top-left chart). This is having a detrimental effect on the real economy, as demonstrated in the following three charts. When the index was last at a similar level during 2008-09, economic output tanked, unemployment shot up and stockmarkets plummeted. Unless policymakers find a lasting and credible solution soon, it seems likely that the same will happen again.

Another chart below from the same magazine, A rebalancing act, May 22nd 2012.

GREECE is in a bind. Because it is stuck with the euro, it cannot become more competitive by currency depreciation. Instead it must lower its real exchange rate, by cutting prices and wages. This is proving a painful process. One measure of progress, unit labour costs (the average cost of staffing per unit of output), is declining and will continue to do so, according to the OECD’s latest Economic Outlook. Cheaper labour should result in cheaper goods, making Greek exports more attractive to foreign buyers and helping to improve the trade deficit. But with less money in workers’ pockets domestic demand—the sum of consumption, investment and stock-building expenditure—is likely to fall further. The OECD recommends that trade-surplus economies, such as Germany and the Netherlands, push up costs. This would make Greece more competitve, without dragging on Greek workers' incomes.

And one more chart, also from The Economist, The German motor, May 15th 2012.

(Germany's) economy surpassed expectations by managing to grow by 0.5% during the first three months of the year. As a whole, the euro area registered stagnant growth, and without Germany its economy would have declined by 0.2%. Germany accounts for about 28% of euro-area output, yet its contribution to euro-area growth has increased markedly since 2004. It was responsible for 65% of the region's growth in output on average since 2007. Meanwhile the euro zone's peripheral countries—Portugal, Ireland, Italy, Greece and Spain—have seen their contribution decline from a pre-crisis average of 45% to a drag of 10% since 2007.

Look at that, a 0.7 percent GDP growth is already "high" in EU situation these days. The economic contraction, negative change in GDP size, has spilled over beyond the PIIGS, now covering Britain and the Netherlands.

Being an advocate of lean and limited government -- for limited coercion, regulations, restrictions and taxation -- it does not make me happy either to see these figures of bad economic performance by those economies under BIG governments.  But since those governments and the respective political parties and political groups and NGOs that support them, cannot be convinced easily of the mistake of further expanding government size and costly welfarism, we have to allow the natural course of events to teach them, the public, some hard lessons.

Some libertarian anarchist friends would question, "Why have limited coercion, why not zero coercion by abolishing government entirely?" Well, sports and gun clubs, rotary and other civic clubs, village and professional associations, etc. are mini-governments actually. They have their own bureaucracies, their own set of rules and regulations with respective rewards and punishments, collect mandatory annual dues and other fees that appear like taxes. In the event of conflict among their leaders, or an inter-club (say gun club) disputes, there is a need for a bigger force with its own coercive power, to settle disputes with finality. And we are referring to the promulgation of the rule of law, enforcement of contracts, between and among people, private enterprises, various civil society organizations, as the main "raison d etre" of government.

Suffice it to say that somehow we need government, but it should be a lean one focused on implementing very few functions. Big and expansive, highly intrusive government is wrong.

Ok, one last data for now. The world's largest economies in terms of GDP size, in trillion US$ current prices, 2001, 2006 and 2011.

Source: CNN Money

* Trivia: If the basis for G8 membership is being the "world's largest economies", then Russia and Canada should be out of G8 and China and Brazil should be in. One way to correct this is to expand the association to G10 and Russia and Canada can remain. But it's all about politics by the G8 member-governments.
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See also:
Fiscal irresponsibility 17: Cut Spending and Borrowing, September 19, 2011
Fiscal Irresponsibility 18: Greece Bailout, October 29, 2011
Fiscal Irresponsibility 19: Rich Countries' Debts, November 24, 2011
Fiscal Irresponsibility 20: Trade and Budget Balances, January 06, 2012
Fiscal Irresponsibility 21: Eurozone Debt, GDP and Unemployment, March 06, 2012
Fiscal Irresponsibility 22: China Borrows, China Lends. April 16, 2012
Fiscal Irresponsibility 23: High Debt and Unemployment and Parliamentarism Hard Sell, May 02, 2012
Fiscal Irresponsibility 24: More on the PIIGS and European Debt, May 16, 2012

Fiscal Irresponsibility 24: More on the PIIGS and European Debt

Below are some charts that I got from various sources, on some fiscal and economic data of Portugal, Italy, Ireland, Greece, Spain (PIIGS) and the other major EU economies. I will limit commentary to the sub-heading in each chart. These images are mostly self-explanatory anyway.

(1) Declining GDP growth while rising unemployment, PIIGS.

source: NYT,   http://www.nytimes.com/2012/05/16/business/economy/leaving-the-euro-may-be-better-than-the-alternative.html?_r=1&ref=global-home#


(2) Government spending 40 to 60 percent of GDP (They need lots of taxes to finance it; taxes not enough, so they borrowed like crazy).

source: Dr. Ed's Blog,  http://blog.yardeni.com/2012/05/europes-wonderland.html

h/t: Prudent Investor Newsletters,  http://prudentinvestornewsletters.blogspot.com/2012/05/unraveling-of-europes-wonderland.html


(3) Governments of G7 countries notorious for fiscal irresponsibility.

source:  http://www.economist.com/blogs/graphicdetail/2012/05/daily-chart-4


(4) 13 European economies have unemployment rate of 10 percent or higher

source:  http://www.economist.com/blogs/graphicdetail/2012/05/european-economy-guide

Meanwhile, in a facebook discussion, my German friend posted that one has to "question the collective wisdom of markets a bit when you see them panicking on the news about Greece..."

I think those bankers and market traders were just watching how much other EU governments (Germany, France, Belgium, etc.) would use their taxpayers' money to bail out Greek pensioners, welfare dependents and the huge bureaucracy. Meaning if more taxpayers' money from other European countries are expected to flow in, those bankers and stock traders will do their usual stuff. If less taxpayers money from other countries are coming in, they will panick and head for the exit. So its a question of how much moral hazards problem is being contributed by those bail out money from other European taxpayers. The bankers and traders mainly react to those moral hazards problem and do their thing as profit-maximizing or loss-minimizing individuals.

Governments created those huge public debts, they are not personal or private debts. These are accumulation of past over-spending and excesses. So the bankers and market traders are watching how much of those excesses in the past will be reformed and thrown away, or how much will be retained or even expanded, via bail out money from other European (or Chinese) taxpayers. Internal reforms like deregulation, liberalization and privatization of some (or many) government assets, and more personal responsibility in many social sectors, do not seem to be highlighted there.

Fiscal irresponsibility, spending always larger than revenues,  living beyond one's means, heavy welfarism even if revenues are not enough to sustain it, reliance on endless borrowing. These are the marks of statism bordering on near socialism policies.

* See also Fiscal Irresponsibility 23: High Debt and Unemployment and Parliamentarism Hard Sell, May 02, 2012

Welfarism 10: Spanish Problem, the Euro or the State?

Spain is being watched now by many people if it will also follow Greece and Ireland's debt crisis, which will necessitate large-scale bail-outs. A friend posted in one of my discussion yahoogroups, an article by NYT columnist Paul Krugram, "The Spanish Prisoner" on November 28, 2010. In that article, Krugram wrote,

Why is Spain in so much trouble? In a word, it’s the euro.

Spain was among the most enthusiastic adopters of the euro back in 1999, when the currency was introduced. And for a while things seemed to go swimmingly: European funds poured into Spain, powering private-sector spending, and the Spanish economy experienced rapid growth.

...During the boom, prices and wages rose more rapidly in Spain than in the rest of Europe, helping to feed a large trade deficit. And when the bubble burst, Spanish industry was left with costs that made it uncompetitive with other nations.

Now what? If Spain still had its own currency, like the United States — or like Britain, which shares some of the same characteristics — it could have let that currency fall, making its industry competitive again. But with Spain on the euro, that option isn’t available. Instead, Spain must achieve “internal devaluation”: it must cut wages and prices until its costs are back in line with its neighbors.

And internal devaluation is an ugly affair. For one thing, it’s slow: it normally take years of high unemployment to push wages down. Beyond that, falling wages mean falling incomes, while debt stays the same. So internal devaluation worsens the private sector’s debt problems.

This article is one more reason why I'm no fan of Paul Krugman.

He says the main culprit of Spain's woes is the Euro. That if Spain has its own currency, say a Spanish peso or a Krugman dollar, then it would be easy for Spain to get out of its current economic problems because a big state can manipulate the local currency -- devalue or revalue, depreciate or appreciate -- and wages and prices will follow.

Why would wages and prices need government manipulation of the currency so that they will adjust upwards or downwards? Aren't wages and prices a function of supply and demand?

Demand for labor is high relative to supply, wages will rise. Supply of labor is high relative to demand, say there is an influx of foreign workers, legal or illegal, wages will decline. Why can't Spain's wages follow that simply and spontaneous adjustment of the cost of labor?

Prices. Supply of paella and tapas increases relative to demand, their price will decline. Their supply cannot cope with sudden increase in demand, say there is a big fiesta or big celebration -- like Fernando Alonso winning again the F1 championship, or Alberto Contador winning the Tour de France, or Rafael Nadal winning the Wimbledon or the US or French Open -- the price of paella and tapas will increase.

So now Krugman is saying that Spain will need the big State's manipulation of its local currency -- assuming it has its own aside from the Euro -- so that the price of tapas and paella will move up or down?

Krugman misses the point. It is big State and its heavy intervention -- rigid labor laws and heavy protection of workers "against capitalist exploitation", that disallows the labor market to spontaneously adjust to high unemployment and artificial high wages.

If I am an entrepreneur, or simply a profit-hungry capitalist, and I have 3 employees for my restaurant, my customers are increasing but still I won't hire a 4th or 5th worker, even if national unemployment rate is close to 21 percent. It's too costly to add additional worker, the marginal cost is much higher than the marginal revenue (MC > MR) as there are lots of mandatory contributions, obligatory social security payments by employers. I'd rather keep the 3 workers and give them higher pay for higher productivity, more bonuses for longer working hours, or I'd rather work as the 4th worker myself and cut my siesta and partying with friends.

Perhaps if I become richer this way, I can hire a nanny for my children and that's one job creation already. Or I can keep high personal or company savings -- for the rainy days. The point is that I will not hire extra worker as much as possible, thanks to heavy state regulation of the labor market and over-protection against "capitalist exploitation."

About capitalist exploitation, a favorite topic by statists and socialists that's why they push for ever stricter labor regulations, for more mandatory social security payments, who is the exploited one -- the employed worker or the jobless?
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See also:
Welfarism 4: Italy's Fiscal Woes, Kid Glove to Criminals, May 29, 2006
Welfarism 5: Germany's Tax Hikes, June 28, 2006
Welfarism 6: Obama and US Entitlement, November 11, 2008
Welfarism 8: Send All Monthly Salary to UK Govt First, September 21, 2010