CSOs and State 24, Mark Zuckerberg and Charity

Another civil society and volunteerism in action. Giving away one's own money, not other people's money collected by force.

"Mark Zuckerberg and his wife pledged to give away virtually all of their $46 billion in Facebook Inc. shares, setting a new philanthropic benchmark by committing their massive fortune to charitable causes while still in their early 30s.... promising to donate 99 percent of their stock in the social-networking company "during our lives."

"Mark Zuckerberg announced Tuesday that he's giving away 99% of his Facebook shares — valued at $45 billion today —during his lifetime." http://www.businessinsider.com/mark-zuckerberg-giving...

So not entirely by next year or next 5 years. He plans to increase his wealth from the current $45B to perhaps $100B or $300B, then give away 99% of it. Maybe in 20 years. It's all about volunteerism, not coercion.

"Zuckerberg and Chan have already donated more than $1.6 billion to charity in the past decade, including a $100 million gift to the Newark Public School System, a $25 million donation to the CDC to stop the spread of Ebola, and a $120 million commitment to education in the Bay Area." -- from the BI article above.

So there is record already, gave even before announcing this new initiative.

This is a new phase of global capitalism. Those super-super rich, they see that governments are getting more bureaucratic, more coercive and even more stupid, they do not like how their huge tax money is being spent by those governments. So they spend and distribute their OWN money to see more meaningful results.

Politics of envy 1: rich people don't give to charity, damn them.

rich people give to charity, directly or indirectly, still damn them.

like this article. http://says.com/.../what-no-one-is-telling-you-about-mark...

Politics of envy 2. All people, rich and middle class and poor alike, should be disempowered to do charity projects. Only the government, its politicians, legislators and officials/bureaucrats can be trusted. wow.

"It is all just a bad transfer of power from the state to billionaires. So it's not the state that determines what is good for the people, but rather the rich want to decide. That's a development that I find really bad. What legitimacy do these people have to decide where massive sums of money will flow?" http://www.businessinsider.com/mark-zuckerberg-skeptics...

Politics of envy 3: Only government central planners can do real charity, wow.

“I applaud their emphasis on ‘promoting equality,’ but that starts with paying one’s taxes,” said Gabriel Zucman, an economics professor at the University of California, Berkeley. “A society where rich people decide for themselves how much taxes they pay and to what public goods they are willing to contribute is not a civilized society.”

http://www.bloomberg.com/.../for-facebook-s-zuckerberg...

"by using an LLC instead of a traditional foundation, we receive no tax benefit from transferring our shares to the Chan Zuckerberg Initiative, but we gain flexibility to execute our mission more effectively." Zuckerberg said that if his intentions were to avoid tax, he could've simply set up a charity. "If we transferred our shares to a traditional foundation," he wrote, "then we would have received an immediate tax benefit, but by using an LLC we do not. And just like everyone else, we will pay capital gains taxes when our shares are sold by the LLC."

http://www.theverge.com/.../mark-zuckerberg-explains...

He posted: "This enables us to pursue our mission by funding nonprofit organisations, making private investments and participating in policy debates — in each case with the goal of generating a positive impact in areas of great need.

"Any net profits from investments will also be used to advance this mission."

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See also:

CSOs and State 20, Gawad Kalinga and Housing for the Poor, June 08, 2015 

CSOs and State 21, Patient Organizations, PAPO and HealthPRx, June 09, 2015 

CSOs and State 22, CIPS' Community Schools Project in Indonesia, June 28, 2015

CSOs and State 23, Financial education and Pidro Sing, October 27, 2015

CSOs and State 23, Financial education and Pidro Sing

To accumulate wealth and assets, to have sufficient resources for investments in the future, one must have savings, right?

Yes, and to have sufficient savings, we must use the habit and formula,
Income - Spending = Savings, right?

Wrong. It should be:
Income - Savings = Spending

This is among the most important messages that my friend, Peter "Pidro" Sing, imparted to the accountants, auditors and other staff of my sister's auditing firm last June 03, 2015. He gave a lecture on Personal Financial Education as part of the firm's education and training series for its staff, and some 30 staff and officers of the company were hooked and glued on  their seats, savoring every message, anecdote and experiences of other people, that Pidro shared.

Peter, or better known as "Pidro", is a self-made successful businessman. Meaning he did not inherit any huge money or business from his parents or close relatives. He went through a roller coaster of starting a business, go bankrupt, start another, close it, start another, sometimes simultaneously. Such experience is not attained or achieved in formal business education, only in the "school of hard knocks" or "school of life." Something that his audience that day greatly appreciated.

The above formula, Spending = Income - Savings, is something new for  many people. Meaning, spending must adjust after forced savings have been set aside. Forced, deliberate, personal and/or household savings. Monthly.

Pidro is not selling any product, any service, any consultancy. In fact he's doing this for free, he spends his own money and time as his personal advocacy. After going through the roller-coaster of business set up -- wealth -- bankruptcy cycles, he realized and teaches repeatedly, that the key is not so much on how big the monthly or yearly income is, but in how big and consistent is the forced personal and household savings. He says that he does not need any consultancy or professional fee with what he's doing because his businesses is earning money for him as he speaks for free. And it's true.

I have known Pidro for 3+ decades now, dating back when we were dormmates at Narra Residence Hall and fellow student activists in UP Diliman in the early 80s. He's a "slippery" guy even from police and military agents during the Marcos period. After graduating from UP, he would slip from one employment to another, then slip from one business to another, and wealth would also slip from him as he closed one business after another, until he found a good niche since several years ago.

Pidro's personal advocacy is civil society in action. We do not need the government in many cases to improve our lives. Life is about more personal and parental responsibility, and more individual freedom. Government  responsibility should be limited to a few functions, like having rule of law and protecting the people from aggression by organized, armed bullies and criminals.

Thanks again Pidro. Keep kicking.
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See also:

CSOs and State 19: UP Maroons and UP Alumni, March 24, 2014 
CSOs and State 20, Gawad Kalinga and Housing for the Poor, June 08, 2015 

CSOs and State 21, Patient Organizations, PAPO and HealthPRx, June 09, 2015 

CSOs and State 22, CIPS' Community Schools Project in Indonesia, June 28, 2015

Market Failure vs. Government Failure, Part 5

* This is my guest article for suarakebebasan.org, a new website for freedom created by some Indonesian friends.
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Market Failure vs. Government Failure

Expert Column   Bienvenido Oplas Junior  | 15 Jun 2015

The main reason  why governments (local, national, regional/multilateral) around  the  world keep expanding is because they want to correct and address “market failure”, generally defined as the failure of the market players – firms and households – to supply certain goods and services at prices and  quantity that the public needs and demands.

While this is a generally accepted justification for government intervention, there is also  caution that “market failure” is only a necessary but not sufficient condition for such  intervention. There are two reasons for this.

One, market failure attracts market solutions (not government intervention) and such solutions may not be available today but will be available tomorrow. Good examples are mobile phones. Before, many poor people wanted to have their own phones but could not afford one. Today, prices of this commodity are affordable to the poor, including some of those cute, touch screen and  wifi-ready phones.

Two, it is highly probable that government will only exacerbate the problem and replace market failure with government failure. Good example is healthcare. There is widespread belief that governments should provide free or highly-subsidized healthcare to the poor, but systems are either too bureaucratic, or fast but wasteful and subject to corruption and robbery. And public dissatisfaction with government healthcare remains very high.

Sources of market failure

In economic theory, the two sources of market failure are identified. First,"public goods" character of a commodity or service. Once it is provided, it is difficult or impossible to exclude non-paying people from enjoying and free-riding the benefits of such good or service; or the cost of excluding the free-riders is high. Examples are national defense, traffic lights, peace and order and justice administration.

Second are "externalities", positive or negative. Examples of negative externalities are air, water and noise pollution, and examples of positive externalities are clean air and good peace and order situation.

With modern technology and management systems, various market solutions have been invented to deal with such perceived market failures. Examples are private villages, townships and industrial and economic zones. Almost everything that governments would normally provide are provided by the private sector there: roads and drainage, security, traffic lights, street lights, garbage collection, public parks, even schools and mini-hospitals. Thus, the “public goods” character of those services is not absolute. Their provision can be done entirely by the private sector, various market players and civil  society organizations.

The externalities aspect of those goods and services can also be internalized. Meaning the private sector players can internalize and absorb the full cost of providing such services, no government taxes and  fees are needed to finance them, partly of fully. These private villages and  ecozones have their  own systems of  internal revenue mobilization and local spending.

Sources of government failure

After identifying one "market failure" after another, governments began intervening in many sectors and sub-sectors of society. And the first source of failure is created: many bureaucracies. Government should be in healthcare, education, housing, roads, ports, credit, irrigation, trains, media, and so on. And many of those bureaucracies at the national government level are replicated at the state or provincial, city/municipality and barangay/village levels. Duplication, multiplication or missing of functions create wastes and distortions in society, not to  mention big opportunity for corruption in various levels of government.

A second source of failure has to be invented: more taxes, fees, fines, penalties, mandatory contributions, to finance the huge and  expansive bureaucracies. If one will check the World Bank’s “Doing Business” annual reports, as well as Price Waterhouse Coopers (PWC) “Paying Taxes” annual reports, one will see big number of taxes and fees, national and  local, that an average private enterprise will have to pay. Not included there are the costs of getting auditing, business compliance and law firms to help them understand and  comply with new and sometimes  overlapping requirements, permits and  fees to pay.

Since government administrators and officials are spending not their own money, the tendency and temptation to over-spend, to live beyond their means, is high. And huge public debts were invented. Almost all countries in the world now have public debts. While some have a debt/GDP ratio of only 20 percent or lower, many governments have debt/GDP ratio of 50, 80, 100, 200 percent or more.

The litany of reports and citizen complaints of government corruption, plunder and other forms of waste and crimes especially developing countries confirm that government failure is often worse than the market failure that such intervention wanted to correct.

Many people who demand more government intervention forget that aside from more taxes, fees and charges; huge and extensive bureaucracies also mean more regulations, inspections, registrations, accreditations, permits and licenses.

It is now difficult to identify any sector or industry and sub-industries in our social and economic lives where there is no government intervention and registration required. In many cities and countries, ven repairing or remodeling one’s office or condo requires city hall permit or license. And to reoccupy said office after a remodeling would require another city hall permit.

Those in the "informal" or "underground" economy do not exactly escape 100 percent of  those government permits and licenses. It is more like out of 10 or 20 business registrations, taxes and fees required by government, they only managed to escape perhaps 50-70 percent of them.

Good governance can cure government failure?

Very often, government failure is addressed or “corrected” by another set of government intervention. Like creating a new anti-corruption office or task force, creating new internal regulations and mechanisms to check and double check procedures and release of funds. These moves are essentially pouring more public money to determine how much public money have been stolen and wasted already.

The new key word being sold to the public to accept new interventions is "good governance", more transparency and accountability of public institutions and government officials and personnel. Implied in this formulation of course is the retention of a big, expansive, and interventionist bureaucracy; only to expect them to behave more transparently.

An option to go "back to the market" and "less government intervention" is far out among the minds and demands of many groups and people, even from those very vocal sectors and individuals that regularly note government failure, like those in media, the academe, NGOs and civil society groups.

Anyone anywhere can create a “market failure”. If people demand a USB with 20 GB memory and sold for only US$10, they create a market failure.  Demand is there but supply is zero. The price these people are willing to pay is too low compared to what producers are willing to sell. Or a biotech firm supplies a particular rice variety with several nutritional values but sold at $10 per kilo and no one buys it, also creates  a market failure. Supply is there but demand is zero, market failure.

Rent seeking

In the book, "Government Failure: A Primer in Public Choice" written by Tullock, Seldon and Brady (2002, published by Cato Institute, Washington DC), Chapter 4 is entitled “The cost of rent-seeking”. Examples of rent-seeking are (a) trade protectionism, where the protected local industry benefits but the local consumers are worse off; (b) private monopolies, and (c) direct income transfers by government where A is taxed and B receives the money.

Trade protectionism is trade dictatorship. The domestic consumers are being told that they can only buy or import from this country but not from other countries; or they can buy from anywhere but only for xx tons volume; or they can buy anywhere at any amount but at 10 percent, or 100 or 500 percent more expensive price because of import tariff and  other national and local taxes and fees.

Private monopolies via government franchising is enterprise dictatorship. The public, the consumers are told that they can only purchase a particular product or service from a single company.

Direct income transfers are political cronyism and nepotism. Very often the targeted beneficiaries are old political supporters, relatives and clan members of the  politicians  and officials in charge of money transfer, in cash or in kind.

Voluntary Exchange vs. Forced Exchange

In voluntary exchange, producers come or attract consumers to sell their products or services like fruits, fish, beer, hair cut, tutorial, cell phone repair and so on. Consumers choose from various producers who offer the same or  similar goods and services, and chose those who offer them good value for their money.

No one is coerced or arm-twisted to surrender his/her money to someone else. Only when the consumer is satisfied with  the product or  service will  he/she give the money to the product seller.

In forced exchange, people are coerced to surrender their money to a big and armed body or institution. Their monthly salaries are automatically deducted of a certain percentage; their earnings in bank deposits, stocks and commodity markets, are automatically withheld of a certain percentage. When they buy or purchase something like hamburger, the price they pay is higher because of taxes and surcharges imposed on the original price of those services and commodities.

And even if the people do not like the personnel and officers assigned to help them because they are arrogant or lazy or corrupt, their taxes and fees will be used to sustain these people.  Or if people feel that certain services being offered and already budgeted are unnecessary, there is little choice to stop them. Lazy and arrogant government personnel can be kicked out of office, true, but one must set aside substantial time and effort, and money of course, to take short leaves from work and stand up as witness to usually long court procedures.

Market, state and civil society

Markets and trade were invented to fulfill certain human demands for survival and modernization. Fishermen who have surplus fish catch need wood, nails and carpentry tools to build their house. They also need a boat, fuel and fishing gears and equipment. People specialize in doing a particular skill and they can have many things  they want through trade.

Government and the state was invented mainly to help enforce agreements and contracts among people, to have rule of law. Before people will stab or shoot each other over disputes in contracts, verbal or written, misunderstandings and disputes are settled in peaceful and transparent way and the penalties for violators are also made transparent.

Civil society was invented to help address certain government failures. As government deviates from its basic function of promulgating the, rule of law – the law applies equally to unequal people, no one is exempted and no one can grant an exemption – it creates one government failure after another. Civil society is non-state, non-government entities that help people to have mature, responsible and voluntary assistance to other people. The idea of being shamed among peers and neighbors is sometimes a worse punishment than government prison and incarceration.

It is important that individuals should assert their personal freedom, their right to voluntary exchange, and oppose an ever-widening system of forced exchange and government intervention. This is not a call for zero government. Government has an important but limited function in our lives. Its expansion to so many sectors and facets of our lives however, is not only dangerous, but has already wreaked havoc to our lives. The task of asserting our individual liberty is a continuing challenge for all of us.

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Alasan utama mengapa pemerintah (lokal, nasional, regional atau multilateral) di seluruh dunia terus berkembang adalah karena mereka ingin mengoreksi dan memperbaiki "kegagalan pasar", yang secara umum didefinisikan sebagai kegagalan pelaku pasar - perusahaan dan rumah tangga - untuk memasok barang-barang tertentu dan jasa dengan harga dan kuantitas sesuai kebutuhan masyarakat dan permintaan.

Meskipun alasan tidak bekerjanya pasar adalah pembenaran yang berlaku umum untuk intervensi pemerintah, ada juga mengingatkan bahwa “kegagalan pasar" hanya kondisi yang perlu (necessary), tetapi bukan kondisi yang cukup (sufficient) untuk intervensi tersebut. Ada dua alasan untuk ini….

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See also: 
Market Failure vs. Government Failure, June 07, 2006 
Market Failure vs. Government Failure, Part 2, March 03, 2008
Market Failure vs. Government Failure, Part 3, June 23, 2010
Market Failure vs. Government Failure, Part 4, March 22, 2014

Market segmentation and pricing, October 09, 2007
Limits to Free Market?, November 16, 2007 
Are Markets Moral?, January 05, 2014

CSOs and State 20, Gawad Kalinga and Housing for the Poor

Below are some thoughts from Benito Claudio, a friend of my former professor in UP Diliman in the 80s, Dr. Doy Romero. This was posted last week by Benito and sir Doy in fb and  was read by many people. I like this very successful civil society initiative, Gawad Kalinga (GK). It is very successful that it is being replicated in other Asian countries, and there are GK offices in  the  US, Europe, other countries. Reposting this with my comments below. The images I got from the web and adding them here.

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Doy I speak from my personal participation in three project sites of GK where about 400 houses were built in two sites and about 80 houses and a school were re roofed after a super typhoon in another site. I led a team of volunteers twice to re roof about 80 houses and rebuild a school and provide learning materials and two teachers for a year.

I volunteered in the other two sites. What was so noticeable in the site where we re roofed the houses and rebuilt the school was a working community with sense of involvement and belongingness. The project was well planned with common areas for school, livelihood and open spaces. In effect GK built a community not just houses.

This did not happen by chance but by meticulous planning and highly committed implementation by silent and unsung volunteers. Gk has teams of social workers, construction engineers, educators, livelihood trainors and site managers who oversee the community after the houses were built.

"House owners who were obviously poor in material things donated their service as their equity and I believe this provided a basis for ownership and pride. Livelihood volunteers provided the know how to create common plots for vegetables for the community and other entrepreneurial undertakings. Social workers ensure that community members gel.

In short what I am describing is the building of a wholistic communities where the members can live with dignity. It is so inspiring that my fellow employees grouped themselves to pool resources for a house they helped build. Others spent their vacation leaves to individually volunteer.

But all of these pale in comparison to the commitment of the Meloto family. I suggest the commentators start their research there. A foreign government was so impressed with GK that it provided an office in their country so that GK's effort can go international. . . I believe rightly so.

"The poor will always be with us but it was heart breaking to see a widow covering her young famished children with plastic sheathing against a pouring rain under a roofless house. And I wondered why so few people are lifting their fingers to help.

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Sir Doy Romero added his  own thoughts on the subject: 

the GK communities we visited appeared better organized than many of the non-GK resettlements we visited later. We did not see the lamentable condition of government resettled informal settlers that we documented in our study. In the end, we who observe from a distance really will not matter. The poor who need shelter will get them from GK and not from any other provider, if GK it is that is able to galvanize the energy and passion to get them done. 

I thanked sir Doy for those notes  and observations. GK is a clear example of civil society role at the max, government role at the minimum. People and beneficiaries behave differently if the project implementer is government, national or local. They tend to downshift to dependence, complacency and feeling of entitlement. “Money is from taxes and fees, those politicians are courting our votes, so we sit back and wait.” And just wait for the government housing to be turned over to them by some political bigwigs, with glare and flare of  tv cameras and other media coverage.

In a GK and civil society project, money is from donation, not from coercion. Beneficiaries behave differently. “Those talents and engineers are volunteers, not political appointees and hired paid for by taxes. If we do not help here, those volunteers will pack away and find other beneficiaries who are willing to help themselves and the project.”

GK, Rotary Homes, Books for the Barrios, etc. These initiatives build not only wholistic communities but also mature, self-reliant and non-corrupt, non-entitlement-minded people, especially the poor.

I have a friend from UP, now based in California. He regularly donates to GK and GK updates him and other donors of new projects, how funds are used, etc. He is satisfied so he keeps giving. But he told me that the moment he sees or reads and confirms wasteful use of funds or other shenanigans, his donation will abruptly end.

This threat of fund/donations discontinuity, plus any criminal charges to be filed, is the best regulator of civil society organizations like GK. It’s not the SEC or Congress or BIR that forces transparency and accountability, but the private donors who give in cash or in kind.

One implication here, it is possible to abolish some government housing agencies like the National Housing Authority, in exchange for some tax cuts somewhere. The poor do not care much who can give them free or subsidized, nice housing, whether civil society or government. If dynamic civil society like GK, Rotary Homes, etc. can do the job at little or zero cost to taxpayers, government should step back from more housing bureaucracies and more taxation.

* Digression 1: About relocation of M.Manila squatters to secluded municipalities in Bulacan, Rizal, Cavite and Laguna. A better option is high rise, vertical housing for the informal settlers within M.Manila. Beneficiaries will pay of course, not free, no subsidy. Otherwise, there will be one million more migrants from other provinces seeking free condo in MM. Beneficiaries can pay because they can retain their current jobs and income, the cost of transportation to work is lower, and they will have peace of mind of having ownership of the place where they live. Those who are too poor to pay even small condo units should not begrudge being  brought to  far away resettlement areas. They can have highly subsidized housing there but they will suffer temporary economic dislocation.

The cost of condo units can be reduced via drastic reduction of various taxes, fees, permits imposed by national and local governments. Real property tax (RPT) alone by LGUs can be very high, and that contributes to high cost of condo housing.

* Digression 2, on "We should not give up on encouraging government agencies to improve their performance." 

True, but only for agencies that are directly related to rule of law, protection of private property and citizens life, and protection of individual liberty. That means the justice system, the courts, the police, correctional, etc. If there is government failure in this very basic function of government, we can expect government failure in many other agencies that are not even related to rule of law implementation. Like housing, education, healthcare, pension, credit, etc. And that is precisely what's happening now. Government has expanded too much, the taxes, interventions and bureaucracies have expanded but the basic function of protecting our lives and private properties, there is government failure. So peace and order has been privatized, private security guards protecting our villages, shops, malls, schools, offices, airports, seaports, bus terminals, There is widespread and large scale distrust of government peace & order agencies.

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See also:
CSOs and State 10: The Role of Civil Society, June 15, 2010

CSOs and State 16: The Integrity Initiative, December 17, 2012 
CSOs and State 17: UP Pahinungod and Typhoon Victims in Mindanao, December 31, 2012 

CSOs and State 18: Civil Society as Lobbyists for More Government? Cigarette Warning Bill, March 02, 2014 

CSOs and State 19: UP Maroons and UP Alumni, March 24, 2014

Nepal 4: Earthquake and Civil Society Initiatives

Very sad to see the huge destruction in Kathmandu and other places in Nepal after the magnitude 7.8 earthquake yesterday.

Reports as of this writing say that there were 2,500+ deaths and 60,000+ injured people. All of my Nepalese friends there were safe, but they were not exactly fine.  Yesterday they could not go home and have to stay in open areas, in case a round of strong after shocks would shake the ground again. No electricity too, some could not post updates because their phone batteries were fully discharged.

Here are some photos of Durbar Square, Kathmandu. Above, from my camera last January, lower photo from Bigyan Prajapati; not my friend but his photos were shared by some friends in fb. My good friend Charu Chadha of Media 9, which publishes Business 360 and World of Women (WOW) magazines, toured me for half day after I and Media 9 team came back from Pokhara.

Below, same photo sources, respectively.

Some of the things needed urgently in Nepal, posted in twitter, #NepalQuakeRelief.

I read once that earthquakes in Nepal may not be frequent, unlike in the PH, about 5 EQs a day on average, although majority of them are weak, felt only by seismograph machines, or happen under the sea. But Nepal EQs can be strong as the Indian sub-continent continues to collide or move deeper with the Asia mainland sub-continent. Thus, Mt. Everest and the other Himalayan mountains keep rising higher.

There should be hundreds, even thousands, of donation drives ongoing worldwide by now. Many of them should be honest and reliable but a few could be bogus. If you wish to help, I can recommend one or three groups that are honest.

1. Media 9, Kathmandu, headed by its Editor, Charu Chadha.
2. Samriddhi The Prosperity Foundation, headed by Robin Sitoula.
But I don't know if they are launching their own donation drives; will update if they do.
3. Krishna Neupane, a friend who used to head a small think tank, Limited Government Nepal, http://www.gofundme.com/sxmud5h9.
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See also:
Earthquake 6: One Year of Japan EQ and Tsunami, March 12, 2012
Nepal, Maoist Government and Samriddhi, Part 2, April 07, 2014 
Nepal 3: Banda/Strike and Forced Closure of Shops, Schools, Transportation, February 07, 2015

ALF 3: Photos with Friends, Kathmandu Conference, January 20, 2015

Also my travel blog, previous articles about Kathmandu and Nepal in January and February 2015: Kathmandu to Pokhara by plane, Tribhuvan Airport,  Durbar Square, Swayambhu Temple, Kathmandu from the Air.

Pol. Ideology 60: Lecture in Nepal on Liberalism, Rule of Law, Civil Society

Back here in Kathmandu yesterday afternoon, after giving a talk before a group of university students in Pokhara, Nepal, about 30 minutes by plane from Kathmandu. The other speaker was Prof. Cris Lingle of the US, who also attended the 3rd Asia Liberty Forum last week, January 8-10, here in Kathmandu. Our trip to Pokhara was sponsored by Media 9 and Business 360 magazine.

The students have various academic backgrounds and are just interested to learn about freedom, markets, governments and business.

My presentation outline followed the 7 chapters of the book: (1) F. Hayek, liberty and rule of law, (2) Local government and civil society, (3) Liberalism, socialism and conservatism, (4) Raison d ‘etre of government, (5) Minarchy vs. anarchy, (6) Pork barrel scandal and liberalism, and (7) Concluding notes.

Cris spoke before me and he mentioned about liberty and permits, how the latter often impinge on the former. I rephrase this quote from Hayek, that in a free society, liberty dominates, everything is allowed except for a few prohibited acts (no killing, no  stealing, no abduction,...) whereas in a non-free society, in "liberties", all things are prohibited and disallowed except with permits -- from the government, clans, gangs, etc.

This is the basis for our advocacy, Minimal Government = Maximum Civil Society.

Lao Tzu came much earlier than  the classical liberal thinkers like Adam Smith, David Ricardo and John Locke, even earlier than Plato and Aristotle.

MeTA 18: More Financial Independence, More Stakeholders Participation

The Medicines Transparency Alliance (MeTA) Philippines will be conducting meetings and fora next year related to health transparency and its own financial sustainability. It is a UK Department for International Development (DFID) funded project conducted in seven developing countries including the Philippines. Thus, while MeTA is classified as a non-government organization (NGO), technically it is a government-funded organization (GFO).

Despite this fact, MeTA-PH is providing the regular venue for multistakeholder discussions on medicines and healthcare in general in the Philippines. Below, in one of the big meetings of MeTA held in Makati, early July 2014.

The Department of Health (DOH) Advisory Council for the implementation of RA 9502 (Cheaper Medicines Act of 2008) seems to be dead, at least temporarily. Zero meeting this year.  There should have been about two meetings, like the  one in mid-July 2014, but in both cases, they were cancelled. And no reason/s is/are given why the meetings are cancelled. I suspected that  the July meeting was cancelled because the  DOH got busy with the Disbursement Acceleration Program (DAP) controversy where the DOH got P3+ billion of extra funding from that program. When DOH Under Secretary Mads Valera was still there, the agreement was a quarterly meeting. When she left the DOH, the meetings were also gone.

I think there is also zero meeting by the Congressional  Oversight Committee on RA 9502 this year, the legislators (House and Senate) perhaps just divided among  themselves the P10 M/year average budget of Congressional Oversight Committees. Another fiesta time for Congress.

  

So if DOH cannot provide the regular consultation and dialogue process, MeTA should fill that vacuum. And Yes, MeTA should go for a real civil society and NGO status, not largely GFO. The annual dues for all members, corporate, institutional and professional affiliates, individuals, should proceed and not sidelined. Government/multilateral money (UK-DFID, WHO, etc.) can help finance the overhead expenses but the regular fora and conferences should be internally generated. Many local pharma companies, innovator and generics, can co-sponsor certain events. Participants can also pay minimal registration fees, and so on.

Below, another MeTA meeting held in February 2014. Both photos I got from MeTA facebook page.

Past President of the Philippine Pharmaceutical Association (PPhA) Leonie Ocampo noted that medicines are not given due attention in protecting their integrity in the supply chain  Rather, quality (transport, storage, dispensation, etc.) is sometimes sacrifice because medicines are  used as a political tool. Thus, the need for a multistakeholder involvement to prevent their wastes, advance rational and responsible use of drugs. And the need for better system in the procurement, warehousing, distribution, and use of medicines.

Tonight over dinner, I talked to a friend whose wife is a cancer survivor. He shared that his wife's doctor told him that until about 10 years ago, the survival rate of his wife's cancer at stage 4 was only about four percent (ie, around 96 percent mortality). Now with new treatments, survival is more than 50 percent. Wow, in just 10 years! But her anti-cancer medicnes are expensive, something like P70,000 every three weeks for about one year. Good that they are both rich, they can afford it and recoup that money once the wife goes back to full time work. I think that in 10 years time, that P70k (DOF/BIR gets at least P8K of it in VAT alone) can go down significantly. This chart is true.

A stronger and more financially sustainable MeTA-PH is a good springboard for dynamic multi-sectoral discussions and dialogue for more stakeholders participation, if not consensus building. I am not hopeful of the Advisory Council now to continue big multi-stakeholder participation given the recent and on-going politics at the DOH.

In our book, “minimal government = maximum civil  society”. That is why civil society organizations (CSOs) should be as independent of government as much as possible. Civil society is about volunteerism while government is about coercion. One can  say that government is the “uncivil society” :-) Note that in government, things are  done by coercion, with fines, penalties and even  imprisonment for  violations, Thus, the drug price control  policy, the mandatory and forced discounts for all senior citizens including the rich and super-rich ones, are bad policies but they remain in force until now. And even if people are not happy with the 32 percent (max rate) mandatory withholding tax for fixed income earners, they are forced and coerced to send 1/3 of their monthly or annual  income to the government.

Dynamic and independent CSOs can point out certain mistakes of more government interventions and unnecessary regulations.

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See also:
Health Transparency 14: IMS-CHAT Meeting, April 18, 2013, Friday, July 12, 2013 
MeTA 15: Forum 2014 on Healthcare Ethics and Transparency, January 30, 2014 

MeTA 16: Day 1 of Conference 2014, February 11, 2014 

MeTA 17: CHAT General Assembly, March 2014, March 31, 2014

ETHIKOS 1: MeTA-PH, PCPI, PHAP and FDA on launching, March 30, 2014

ETHIKOS 2: Pharma Companies and Patients, April 01, 2014

Pol. Ideology 58: Democracy, Coercion and Civil Society

Democracy has many definitions and people can reveal their philosophical and ideological leaning based on how they define the word. The most common or even generic definition of democracy perhaps is “power by the people, for the people.” This connotes or implies that  the people have similar if not monolithic interests and goals in society, which very often is not the case.

Another common definition is that democracy is  “rule and will of the majority/people” in society and such majority rule should prevail over the minority. Critics of this definition call this as “mob rule” where the mob act in behalf of the majority, whether real or imaginary majority.

And still another definition is that democracy means “equal participation” by the people either through direct involvement or elected/representative democracy.

A lesser-known definition is that democracy means “respect and tolerance of minority opinions” so that such minority opinion can be heard and discussed without feat of persecution and harassment by the State or other armed groups.

One indicator if people hate democracy is that they want all things to be legislated and forcibly enforced nationwide. Or if a local legislation, those things should be forcibly enforced province-wide or city-wide. Choice is zero as things have been legislated already, with fines, penalties and even imprisonment for violation.

Most legislations and coercion are done to favor one sector and deny the same favor to other sectors as if they are not citizens or taxpayers of the same country. For example, if a new state college or university is created in one province, only students and faculty, officials of that new university will get taxpayers' subsidy while students, faculty, officials of private universities in the same province or big city do not get the same subsidy, as if they and their parents are non-taxpayers of the country.

Or when a legislation or Executive Order was made to subsidize MRT/LRT passengers in Metro Manila, passengers in Ilocos, Cagayan Valley, Bicol, Visayas, Mindanao are not given the same fare subsidy as if they are not taxpayers of the country. That is why legislation that favor one sector but exclude other sectors should be avoided whenever possible. Such practices are actually undemocratic as a big portion of the country's population are excluded from certain favoritism by the state.

Most majority decisions are done outside of government and legislation. For instance, if people want cheaper clothes, cheaper shoes, toys, food, etc., they do not go to the streets to rally and demand that government through DTI or LGUs or Congress should impose price control on clothes, shoes, toys, food, etc. of SM, Robinsons, Rustans, Ayala malls, etc. Instead, many people go to Divisoria, Baclaran, tiangge-tiangge, etc. where cheap goods and services are available with zero politics and government horse-trading involved.

My good Indian friend, Barun Mitra, is correct in saying that for government "democracy has to be minimal, so that it does not offend or alienate too many people."

This implies that the more vibrant the democracy is, the smaller the government should be, where smaller social actors (the smallest actor is the individual, not a clan or trade union, etc.) are supposed to be empowered at the expense of the government. 

Civil society or self-government can be considered as democratic governance. When a Rotary club or Lions club or Jaycees etc. conduct medical and dental mission and give away free healthcare, free medicines even for one day, it already has high impact on the people of a community that received such civil society action. More self-government means less institutional, taxpayers-funded government. They are all part of real democracy.

Barun wrote correctly, 

"Democracy is not about majority rule, but about recognition of and respect for minority opinions. So that the minority view of today, may enjoy the freedom to peacefully persuade others, and could become a majority opinion of tomorrow."

A friend asked, “Can a state be truly democratic? Or democracy exists as its tenacious opposition?”

I suggested that unhampered democracy can lead to socialism and totalitarianism. If the majority will decide that they should eat, have free or subsidized housing, etc. even if they donot work or work very little, then a law will be passed to reflect the will of the majority. Socialism and forced equality is the ultimate result, and since the middle class and upper class will resist, then totalitarianism and strong arm dictatorship will evolve.

The limit to democracy is rule of law. The law applies equally to unequal people. If people want to eat even if they do not work, then all other people should be allowed to not work also, the socialist government can collapse. It can stay afloat by endless borrowing, and/or selling its land and other resources so it will have money to feed people who do not want to work. That is one proof why socialism will never be successful, but many intellectuals and masa want socialism. They want to be the new dictators.

An unfettered or limitless democracy will ultimately result in socialism and totalitarianism and hence, a negation of democracy. Democracy tempered by rule of law -- the law against stealing and destruction of property, law against murder and harming other people, law against abduction and repression of individual liberty -- is ideal. Socialism and totalitarianism can never prosper in that condition.

Can unfettered democracy be the button of self-destruction to all types of states, or the button for further/endless expansion of states and governments? 

Notice that almost all democratic governments around the world, from N. America to Europe to Asia have an expanding public sector, not only at the national or federal level but also at the local (state, province, city, village/barangay) levels. Before, a lazy or irresponsible person will have no money, now he can get cash monthly from the government on top of free education for the kids, free healthcare. Before, it is relatively easy to put up a shop; now one needs to get dozens of permits and pay lots of taxes and fees to officially start a business.

To conclude, unlimited or unchecked democracy can lead to populism, welfarism and socialism. From books and education for the poor, medicines and healthcare for the poor, housing and relocation for the poor, tractors and credit for the poor, electric tricycles and MRT fare subsidy for the poor, cash transfer and condoms for the poor, all of which are existing and implemented, an iPad for the poor, 2nd-hand cars for the poor will not be far behind in the near future. All in the name of democracy, unfettered, populism and welfarism will expand.

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See also:

Pol. Ideology 54: On the Multiple "Death" of Capitalism, March 11, 2014

Pol. Ideology 55: Jules Maaten's Lecture on Liberalism, May 11, 2014

Pol. Ideology 56: Democracy and the Devils, June 11, 2014

Pol. Ideology 57: Radicalism, Islamic Militance and Terrorism, October 03, 2014

Free Trade 37: Multiple Concerns and Regulations in the ASEAN

The next and 25th Association of South East Asian Nations (ASEAN) Summit will be held this coming  November 12-13 in Myanmar. Among the preparations for this, the Department  of Foreign Affairs (DFA) is conducting consultation with some stakeholders in the Philippines to explain its position on certain issues and get feedback from the public.

Yesterday, the DFA consultation with civil  society organizations (CSOs) for the 25th ASEAN Summit plus related matters -- PH advocacies in the 23rd and 24th Summit, 47th ASEAN Foreign Ministers Meeeting -- was held at the DFA Auditorium, main building in Pasay City. DFA Under Secretary for Policy Evan Garcia gave the welcome message and an overview of the recent ASEAN Summit and this coming event in Myanmar.

An update on the ASEAN Intergovernment Commission on Human Rights (AICHR) was given by the PH Representative to the Commission, Rosario Marcelo. Ms. Daza of ASEAN office in DFA was the event moderator while Assistant Secretary Luis Cruz was the discussant in the consultation with CSOs.

Issues on (1) foreign policy and national security, (2) economic diplomacy and ASEAN economic integration, and (3) social protection for overseas Filipinos were discussed.

Most NGO participants lobbied for more social protection re human rights, labor rights, environmental protection, some even calling for postponing economic integration. No other free trader in the room except me, as usual. Fellow free marketer Kenneth Varona accompanied me but he did not speak, thanks Kenneth.

All CSO leaders were given the floor to first introduce themselves and their institutes or organizations in round 1, then in discussing their position on the presentation of DFA advocacies and agenda as earlier presented. Some spoke longer than others, as usual. 

When my turn came, I just argued on four points.

1. Rule of law on the SCS/WPS conflict. China's communist government is a bully and would unshamelessly bully its own citizens. It would even deprive its people access to facebook, twitter and  youtube. No independent NGOs, no big citizens assembly, people can be imprisoned if they do so. But internationally, China can be ashamed. Thus, the need for endless, continuous, internationalization of the conflict. Do not be tempted by the militarist approach. China is shameless internally/domestically but can be ashamed internationally.

2. Food security. Thailand and Vietnam are the world's top rice exporters, they are our neighbors. Cambodia and Myanmar are approaching that stage too of being major rice exporters. They have abundant, wide, flat lands with good irrigation that are suitable to rice farming. Hence, they have cheap rice there while we have expensive rice due to trade protectionism. Our neighbors should prioritize us in cases of emergencies like large scale destruction of rice crops due to heavy flooding. 

3. Energy security. The 3 power plants in Batangas that run on Malampaya's natural gas supply about 45% of total Meralco customers (M.Manila, Bulacan, Rizal, Cavite; and Laguna?). Malampaya's gas output is slowly declining and will be depleted by 2022-24, or 10 years or less from now. Nat gas is abundantly available in some of our neighbors. Brunei is 99% dependent on nat gas for its power; Singapore is 78% dependent on nat gas, about 45% for thailand, etc. Successor to Malampaya is question mark, so we need to import LNG Our neighbors should prioritize us. We don't want to go back to candles and noisy gen sets in houses and shops.

4. Economic integration must proceed. Do not postpone or delay it. While some sectors have expressed reservations about it, the argument of "hindi tayo handa" (we're not ready) with more economic competition and integration has been argued in the 60s, in the 70s, 90s, until now.

I could see some smirks, raised eyebrows from some NGO leaders in the room when I said that. It is expected from a protectionist perspective. It is a policy dialogue so diversity of ideas is expected.

If I have to illustrate a supply-demand graph. Supply curve 1 (S1) is the status quo curve. S2 is free trade supply, moving to the right of S1 because domestic supply expands with the entry of more products and services from abroad, giving local consumers more choices, more options re quality and prices.

Having more regulations though -- labor regs, environmental regs, energy regs, human rights/gender regs, health regs, LGU regs, etc. -- effectively a form of bureaucratic protectionism, will restrict the entry of more foreign goods and services. This shifts S2 back to S1 position, or worse, to S3, to the left of S1. Meaning higher prices, lower aggregate supply. Local consumers will be penalized and worse off.

The draft presented by DFA as PH agenda for the 25th ASEAN Summit contains many social concerns that can divert the main purpose of integration -- more trade, freer flow of goods and services across countries who are ASEAN members. Yes, ASEAN is more than trade, there are human rights and other political and social concerns. But trade is the single most important aspect of the association. Countries that have less trade also have more human rights violations, like Myanmar and Laos. Countries that have more trade also have more economic prosperity and less human rights violations, like Singapore and Thailand.

I believe that the only considerations in regulating foreign trade is if things involve public health and safety. Like bringing in guns bombs, poisonous substances, fake medicines, virus-infected animals, etc. All other goods should be allowed entry with the minimum or zero restrictions and taxation as this will significantly bring down prices and benefit consumers, especially the poor.

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See also:
Free Trade 33: ASEAN Economic Community 2016, February 16, 2014
Free Trade 34: ASEAN's Bilateral and Regional FTAs, February 27, 2014
Free Trade 35: EU-FNF Forum on 'FDI Engine for Job Growth', May 15, 2014
Free Trade 36: Taxation, Regulations, Trade and Rule of Law in ASEAN, August 05, 2014

Business 360 16: ASEAN Economic Community 2016, March 20, 2014
ASEAN Tax Reform Initiative, April 10, 2014
EFN Asia 25: The ASEAN Economic Community in 2015, July 23, 2014
Stratbase Forum on ASEAN Competitiveness, July 25, 2014