BWorld 109, Asians' march to liberty and progress

* This is my article in BusinessWorld last January 30, 2017.

“Progress by its very nature cannot be planned. It is knowing what we have not known before that makes us wiser men... Progress is movement for progress’ sake, for it is in the process of learning, and in the effects of having learned something new, that man enjoys the gift of his intelligence.”

-- Friedrich Hayek, Chapter 3,

“The Common Sense of Progress,”

The Constitution of Liberty (1960)

Many Asian societies have experienced economic and social upheavals and ups and downs in growth and political stability for more than the past two decades. These have been expected because people aspire for improvement and, as a result, they demand change.

After going through these upheavals, societies emerge somehow stronger, better, and more dynamic.

There are many indicators of growth and development and among them is the ability of the people in developing Asian economies to (a) travel by plane, (b) buy new models of mobile phones for communication and information, and (c) have access to the Web and the Internet.

Below are the numbers for selected Asian economies, grouped into three: (1) developing north and south Asia, (2) developing South East Asia, and (c) developed Asia plus Australia. For purposes of brevity, countries with small populations, those three million and below -- Bhutan, Brunei, Maldives, Mongolia -- are excluded from this list (see table).

The above numbers show the following:

(1) The pace of expansion in mobile phone subscriptions and Internet use in developing economies has been very fast over the past decade and a half, especially for India, Bangladesh and Nepal; Cambodia, Laos, Myanmar and Vietnam (CLMV). As a result, people now can learn new and more skills, or simply be regularly connected with their families, clans, and friends.

(2) The same pattern can be seen in air travel, as indicated by the number of airline passengers in the region. Indonesia and the Philippines experienced fast rate of growth in this area, along with China, India, and CLMV.

(3) Expansion in developed Asia + Australia is muted and modest compared to their developing neighbors.

Therefore, Hayek is correct in his observation about human progress. It is the less-planned and less socially-engineered economies that are experiencing faster improvement at least in these three indicators. This is partly because the developed economies are dealing with plenty and rising government regulations that tend to restrict faster growth.

The subject of human and social progress in Asia will again be discussed in the forthcoming “Asia Liberty Forum” (ALF) in Mumbai, India, Feb. 9-11. This big international conference will be jointly sponsored by the Center for Civil Society (India), Atlas Economic Research Foundation (USA) and the Friedrich Naumann Foundation for Freedom (FNF, Germany).

Among the important topics to be discussed will be (a) overview of what’s happening in the freedom/liberal movement around the world and Asia, (b) State, private sector and liberty in a digital world, (c) Regulations for a prosperous and innovative market economy, (d) Property rights as a human right, and (e) Education of choice for all: the role of budget private schools.

The Economic Freedom Network (EFN) Asia is also participating by sending some of its regular and long-time partners in the region to the ALF. Aside from holding its own annual EFN Asia Conference, EFN is also participating in the annual ALF and the Jeju Forum for Peace and Prosperity in South Korea.

Through continuing involvement in these three important regional and global annual meetings and conferences, EFN Asia is doing its share in securing a more prosperous, more developed Asia through the path of less government planning and more market competition, deregulation, and innovation.

Bienvenido S. Oplas, Jr. is the head of Minimal Government Thinkers and a Fellow of SEANET. Both institutes are members of EFN Asia.

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See also:

BWorld 106, Top 10 projections for Asian economies, January 23, 2017 

BWorld 107, Top 10 myths for oil tax hike, January 28, 2017 

BWorld 108, Rising feed in tariff (FIT) due to more wind-solar power, February 06, 2017

BWorld 94, Economic freedom, taxes and tariffs in Asia

* This is my article in BusinessWorld last December 01, 2016.

Human prosperity is not possible if there is no economic freedom, if people do not have the freedom to own private property and have freedom to trade. Misery is the result if people live under political dictatorships and bear the effects of the state’s economic central planning.

These, among others, were the topics discussed in the two-day Economic Freedom Network Asia (EFN Asia) Conference 2016 last Nov. 22-23, 2016 at Dusit Hotel, Makati City. The event’s theme was “Economic freedom and human rights in business,” primarily sponsored by EFN Asia and the Friedrich Naumann Foundation for Freedom (FNF).

The event also launched the results of the Economic Freedom of the World (EFW) 2016 Report by Fraser Institute in Canada. The EFW index is measured by getting the scores (0 to 10, zero is totally unfree and 10 is full economic freedom) of countries covering five criteria: (1) Size of government, (2) Legal system and property rights, (3) Sound money, (4) Freedom to trade internationally, and (5) Regulation.

Countries with big governments and high taxes get low scores in the first measure while nations with highly corrupt legal systems and unstable property rights protection will receive low ratings in the second, and so on. The composite score of the five criteria covered is generated and countries are ranked from highest to lowest (see table).

The numbers on the right show the following.

One, for many years now, Hong Kong and Singapore are recognized as the two freest economies in the world. Their governments are strong in enforcing the rule of law and protecting property rights, have low income tax rates, zero or near-zero tariff rates. They may have many non-tariff barriers (NTBs) but that is for another paper.

Two, many ASEAN countries are in the middle tier in global ranks out of 157 countries covered. Outliers are Singapore which is high up there, and Vietnam and Myanmar which are among the bottom-ranking countries.

Three, the Philippines and other ASEAN countries’ score and global ranking do not significantly move up or down and I think there are flaws in the scoring made by Fraser. Here’s why.

In sub-area “Freedom to own foreign currency bank accounts,” the Philippines, Malaysia, Thailand, and Vietnam got 0 (out of 10). Similarly, these four countries also posted low scores in criteria 3, Sound Money. I think foreigners and foreign corporations can own forex bank accounts here in the Philippines, also in Malaysia, so why did Fraser give a score of 0?

In sub-area “Capital controls,” the Philippines, Malaysia, and Vietnam scored only 0.77 while Indonesia and Thailand scored 1.54 (again, out of 10) such that their scores under Area 4, Freedom to Trade Internationally, are again low.

Perhaps the capital control that Fraser refers here is the maximum amount of Pesos (about P10,000) and dollars ($10,000) that Filipinos and foreigners can bring in or out when they travel abroad. But many travelers hardly use big cash for their transactions, they use credit and debit cards. People can also send huge amounts of money anytime via banks or money couriers from abroad to the Philippines and vice versa, without capital control limits.

Since countries’ global ranks are separated only by one or two decimal places, significant low score in Areas 3 and 4 in this case would mean overall low score. As a result, the Philippines’ overall score of 7.01 made it rank 80th while Taiwan’s score of 7.65 made it ranked 23rd. A difference in score of 0.64 already spells a huge difference of 67 places in global ranking.

Fraser should either check its data properly or adjust the scoring.

Instead of 0 or 10 for “freedom to own forex account,” “capital control” and other sub-areas, it may adjust the score to 0 or 4 or 5. This will reduce the distortion in overall score and hence, in global ranking.

Nonetheless, Fraser is doing a good job in promoting the philosophy of economic freedom, free trade, rule of law, low taxes and limited government. Its annual EFW report is being cited in various international studies and helps guide civil society and corporate leaders, government and public policy makers in instituting reforms towards a freer, more prosperous world.

Bienvenido S. Oplas, Jr. is the head of Minimal Government Thinkers and a Fellow of SEANET. Both institutes are members of EFN Asia.

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See also:

BWorld 91, Free trade means faster growth in manufacturing, November 14, 2016

BWorld 92, Climate action and Asian energy realities, November 19, 2016 

BWorld 93, ASEAN multinationals, December 02, 2016

EFN Asia 63, Day 1 of Conference 2016

The Economic Freedom Network (EFN) Asia conference 2016 at Dusit Thani Hotel in Makati ended last Wednesday. Thanks again FNF and EFN for another wonderful conference.

Here are some tweets from #efnasia2016 and my own thoughts about the event.

Protection of human rights is part and parcel of EU policy – Walter van Hattum, EU Delegation to the Philippines.

It's a responsibilty of businesses to respect human rights... It is state duty to protect and defend human rights in its territory.

Nobody can seriously suggest that businesses can opt in and out of respecting human rights as they wish... There is legal obligation for businesses to respect HR.

Businesses should be as transparent as possible so they will be less likely to be attacked by false news. Business leaders are often uncomfortable explaining to the public how they work. It's understandable but unwise. -- Markus Leöning, former Himan Rights Commissioner in Germany.

Increasingly populist goverments a threat to human rights and economic freedom. The pendulum has swung as globalization has failed in its promises to those who have lost out in its benefits. Food for thought. -- Frank Largo

For me, among the important human rights of the people is freedom to choose in the market place, freedom to sell or not sell, freedom to buy or not buy. Political human rights like the right or freedom from theft (especially organized criminals), murders, prosecution and harassment, that is where the state should come in.

A minimal government focused on enforcing the rule of law, enforcing contracts between and among people, is consistent with economic freedom and human rights protection. That minimal govt should have no business creating and expanding lots of endless welfarist programs. Prosperity is not an entitlement or privilege. Lazy and irresponsible have no right to a prosperous life, they deserve poverty. Politically incorrect statement, as usual.

Rule of law means the law applies equally to unequal people. So the law should apply to both rich and poor people, to big/giant and small firms. A law or contract can be written, verbal, done by govt or private entities. Basic human rights then means that people have access to such equality before the law.

Below, Rainer Heufers moderating, with Wan Saiful Wan Jan, Peter Kompalla, Rishi Sher Singh, Dr. Manzoor Ahmad in the new panel.

People's definitions of human rights vary. What may be HR violations to some can also be another's sole income source... Definitions of human rights vary. What may be HR violations to some can be another's sole income source. -- Wan Saiful Wan Jan

Good point. Some westerners may consider temporary child labor as HR violation already but for some households, it is ok and necessary. If a sole family breadwinner is gone for instance, the young need to work to help sustain the family. Harsh but necessary.

Stakeholder values, not just shareholder values. -- Rishi Sher Singh

Barun Mitra tweets:

Business of business is indeed business! Inclusive of profitability for investors, benefit to consumers, add values to society.

Better protection of human rights, improved environmental quality, higher sense of justice, necessary social value additions.

Value added products, economic and social, become affordable with prosperity, and necessity in a free competitive market.

Implentating Rule of law carries cost, level of effective enforcement has to be affordable, economically socially politically. #EFNAsia2016

I think corporate branding will help global firms stay the course in HR and econ freedom protection, respecting #ruleOfLaw. Firms would dislike to be associated with bad products, bad services, bad corporate image. So they will try to be as transparent as possible, to be accountable to their products and practices. Transparency is good protection vs negative image/attacks.

Session 2 Panel speakers: H.E. Franz Jessen of EU, Dr. Lee Taekyu of KERI, and Atty. Arpee Santiago of Ateneo Human rights Center.

Govt and countries don't trade, individuals and businesses do. Govt negotiating trade treaties leading to anti-trade backlash.

Free trade is voluntary, so win win. Govt negotiations may liberalise trade, but legitimises govt in trade n economy, corruption.

Environment, labour or human rights standards in national trade treaties, focus on outcomes, give advantage to large, richer cos!

Society / govt benefit most if they adopt unilateral free trade. All politics is local, a local decision will minimise backlash. 

Govt negotiating trade, inevitably adopt export is good, import is bad outlook. Free trade is beneficial when govt has no role.

Access to internet can't be a "Right". Political rights are negative rights. Any +ive right paid for by others can't be a RIGHT.

TPP may be good agreement, but has lost legitimacy because govts. no longer carry credibility among large sections of people. -- Barun Mitra

As usual, I agree with Barun's ideas and observations: unilateral trade liberalization; countries and governments do not trade with each other, people do; so governments, national and multilateral, should step back from trade negotiations as much as possible. Let companies and people organizations negotiate with their suppliers and consumers abroad and keep prices low via low or zero tariff, minimal non-tariff barriers.

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See also: EFN Asia 60, Conference 2014 in Hong Kong, part 5, April 03, 2016
EFN Asia 61, Panel on TPP at Jeju Forum 2016, June 14, 2016
EFN Asia 62, Program for Conference 2016, Manila, November 20, 2016

BWorld 88, Economic freedom and human rights

* This is my article in BusinessWorld last October 18, 2016

Economic freedom is the ability and privilege of people to engage in various social and economic activities without unnecessary restrictions and prohibitions. Such freedom is guided by voluntary exchange, open markets, personal choice and accountability, and clearly defined private property rights.

People are economically free if they can choose to buy or not buy certain goods and services from various sellers, when they are not forced and coerced to buy something expensive and/or poor quality. Freedom is not absolute though and free people have no freedom to harm other people nor destroy, burn or steal their private properties.

Human rights include the right to life, right to private property, and right to liberty and security of person. Thus, even a person who has committed a wrong act should be given due process to defend him/herself from false or exaggerated accusations. Murders of individuals based on flimsy or unsubstantiated accusations like what is happening in a number of instances in the on-going war on drugs are deprivations of those people’s human rights.

Combining these two concepts is very important for people to live with freedom and dignity.

And these two concepts will be tackled in a big international conference by the Economic Freedom Network (EFN) Asia on the theme, “Economic freedom and human rights in business” this coming Nov. 22-23 at Dusit Thani Manila Hotel, Makati City. The conference is jointly organized by EFN Asia Economic Freedom Network Asia (EFN Asia) and the Friedrich Naumann Foundation for Freedom (FNF), supported by four local organizations, the Philippine Commission on Human Rights (CHR), Philippine Economic Society (PES), Ateneo Human Rights Center (AHRC), and Bloomberg TV Philippines.

Among the key speakers and major resource persons in this event will be Siegfried Herzog, head of Regional Office, FNF South East and East Asia; Ms. Rosemarie Edillon, president of PES; Markus Loening, former German Federal Government Commissioner for Human Rights Policy and Humanitarian Aid, and Vice-President Leni Robredo.

Other speakers will be Wan Saiful Wan Jan, CEO of the Institute for Democracy and Economic Affairs (IDEAS), Malaysia; Chito Gascon, chairperson of CHR; Franz Jessen, ambassador and head of Delegation of the European Union to the Philippines; Nicholas Sallnow-Smith, chairman of the Lion Rock Institute, Hong Kong; and Peter Perfecto, executive director of the Makati Business Club (MBC).

So, how economically free are the people of the Philippines and big nations of the ASEAN? How free or unfree are they from heavy regulations that tend to restrict entry into markets and interfere with the freedom to engage in voluntary exchange?

The Economic Freedom of the World (EFW) 2016 report give scores to countries (0 most unfree, 10 most free) based on five criteria and areas: (1) Size of government, (2) Legal system and property rights, (3) Sound money, (4) Freedom to trade internationally, and (5) Regulations. Then they are ranked from the most free to the least free economies.

For this short paper, only the performance in Area 5 will be tackled and in particular, sub-areas on labor regulations and business regulations.

The Philippines has a modest score in both labor and business regulations, meaning not yet choked by those multiple bureaucracies and permits. In particular, the country has a good score in labor hiring regulations and enforcement of the minimum wage, but it has a low score in hiring and firing of employees.

From some existing policy debates in the Philippines today, we can apply the principles of economic freedom and human rights on these issues.

(1) On labor contracting including endo, being hired for short-term labor contracting is a privilege, a human right for new job entrants and the unskilled. It is much better than being rejected and not hired by employers because of the high cost of hiring new additional workers and the threat of government harassment for firing the un- or less-experienced, less skilled people.

(2) On a nationwide minimum wage and abolition of regional wage disparities, this one-size-fits-all policy will make hiring people in the provinces become more expensive, and, as a result, there will be fewer hiring of lesser-skilled, lesser-experienced people. There are now more machines and robots available that can slowly replace more laborers.

(3) On entrepreneurship, it is a privilege and human right for the more hard-working, more ambitious people and they should not be deprived or discouraged to try that route because of heavy government regulations, bureaucratism, and taxation.

Increased market dynamism and fewer government regulations and taxation are the keys to ensuring economic freedom and protection of human rights.

Bienvenido S. Oplas, Jr. is the head of Minimal Government Thinkers and a SEANET Fellow. Both organizations are members of EFN Asia.

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See also:
BWorld 81, Property rights are human rights, September 30, 2016

BWorld 86, Philippine industrial policy, October 15, 2016 

BWorld 87, Economic, fiscal and energy policies of the Duterte administration, October 17, 2016

Pol. Ideology 65, Liberals and liberty, positive and negative freedom

Reposting  here a good article by a friend, published yesterday in a paper in Kuala Lumpur. Good discussion about liberal vs. illiberal, liberty vs. coercion, positive vs. negative  freedom.
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http://www.thestar.com.my/opinion/columnists/thinking-liberally/2016/01/05/how-liberals-become-illiberal/

Negative freedom is the true way to respect choice, while positive freedom brings you closer to an illiberal coercive environment.

IT is heartening to see more liberals speaking up these days. Every time an illiberal idea is put to the public, you can almost rest assured that someone will fight back to defend their freedom and liberty to seek happiness in their own ways.

Liberty is the principle that founded this nation.

In fact, our Bapa Malaysia Tunku Abdul Rahman announced proudly in the Pro­clamation of Independence and Procla­mation of Malaysia that this nation shall “be forever a sovereign democratic and independent State founded upon the principles of liberty and justice and ever seeking the welfare and happiness of its people”.

Liberalism is indeed about liberty and freedom. But when we at Ideas hosted “The Liberalism 2015 Conference” back in September, the confusion about what libera­lism actually means was obvious.

We intentionally designed the conference to be a platform for stakeholders to discuss with each other what they thought about the philosophy.

By stakeholders I mean anyone with an interest in the topic, regardless of whether or not you agree with it.

We saw a beautiful interaction between the proponents and opponents of liberal ideas and, of course, we also saw how confused some people were about the topic.

One of the speakers made a succinct point about the confusion. Khalid Jaafar, a member of the Ideas Council, said that it was apparent some speakers were talking about anarchism, despite using the label liberalism.

They thought liberalism meant not having any laws, when that is actually anarchism. On the contrary, liberalism is about upholding the rule of law.

One way to understand the meaning of freedom in its classical sense is by using philosopher Isaiah Berlin’s description of positive and negative freedom.

It is impossible to give a full description of these two types of liberties in this short article. But to simplify, positive freedom is “freedom to” while negative freedom is “freedom from”.

If you take, for example, the fact that I cannot afford to send all my children to quality private schools, a government that believes in positive freedom will want to ensure I have the freedom to send my child to that school.

The government may tax everybody else and pass the money to me so that I can pay the fees. Or the government could put a cap on the school fees, coercing the school to reduce their fees for me.

On the other hand, if a government that believes in negative freedom wants to ensure I can afford that school, it will do so by removing the hurdles preventing me from being able to pay.

The fees might be expensive because the number of private schools is small and setting up more is too bureaucratic.

So the government will remove the bureaucracy and give more licences to create competition, which will in turn reduce the cost.

It gives me the freedom to choose that school by removing the barriers that prevent me from going there, not by coercing others to help me.

These two concepts are important to understand when talking about liberty because they can be competing ideas that are incompatible with one another.

Positive freedom coerces people into doing something they don’t want. You are coerced to pay tax to help me even though you might need the money more than me.

Negative freedom frees up the supply and avoids coercion, for example by giving more licences and reducing bureaucracy so that you are free from the limitations that held you back.

Those who believe in liberty in its classical sense believe in negative freedom and not positive freedom. Negative freedom is the true way to respect choice while positive freedom brings you closer to an illiberal coercive environment.

If we apply this to the hot issues that exist today, we will actually come to some very interesting policy challenges.

Take the desire to practise one’s religion. Let us take the desire by some Muslims to have hudud.

This is a challenging situation and I myself am still researching for the most acceptable policy solution.

But a liberal would respect the right of a person to practise his religion, including to have hudud imposed on him.

The challenge, however, is how to ensure the person can fulfil his religious obligations while at the same time ensure there is no coercion on others.

In this case, while I understand the concerns of those who oppose hudud, I also fear that the opponents may have become illibe­rals themselves by denying the right to have hudud.

Similarly, there is an increasing number of people these days who jump when they see signs of an “Islamised” society.

A liberal would respect and indeed defend the choices made by those who want to live life in what they deem as “Islamic”. Islamophobia is not at all liberal.

The policy problem, however, is when government coercive powers are used to impose a set of values on those who prefer not to live their lives according to those values.

How to decouple personal beliefs from illiberal government coercion in a country like Malaysia is one thing that I am still trying to figure out because it has to be done delicately.

But one thing I do know is that liberals respect choices. To paraphrase a popular saying, I may not agree with your belief but I will defend to death your right to believe in them.

If we are liberals, we should look for ways to accommodate the different beliefs and choices made by individuals for themselves.

We should not become illiberals ourselves by stopping others from living their lives the way they choose.

Wan Saiful Wan Jan is chief executive of the Institute for Democracy and Economic Affairs (www.ideas.org.my). The views expressed here are entirely the writer’s own.

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See also: 

Pol. Ideology 60: Lecture in Nepal on Liberalism, Rule of Law, Civil Society, January 13, 2015 

Pol. Ideology 61: Raison d 'Etre of Government, January 30, 2015 

Pol. Ideology 62, Marx and Hayek on Property Rights, May 19, 2015 

Pol. Ideology 63, Alternative Economic System, May 25, 2015

Pol. Ideology 64, Big World Government or Smaller Countries and Governments? June 03, 2015

EFN Asia 54, Sethaput Narueput on economic freedom and poverty

Reposting a good article here by Sethaput, posted in EFN Asia website last week. My short comments about his paper:

1. The World Bank (WB), along with the Asian Development Bank (ADB), IMF, OECD, UN, etc. are government clubs and associations, NOT clubs of corporations (big or small) or NGOs or other civil society organizations. Its funding come from governments, its leadership is nominated and approved by governments, its programs and lending are for governments. Thus, words like "government", "state", "tax", "regulation" are expected to dominate its literatures. It should not be a surprising finding.

2. Sethaput's observation here is spot on, bulls-eye. The UN, WB, all other multilaterals are institutions of global central planning. People and officials there think they know a lot, they have lots of numbers, they can plan and control things. I think the top officials there have messianic and megalomaniac views of themselves.

"... international experts to be experts in any country they work on, armed with examples of “international best practice” and able to ignore local history and conditions. Unfortunately this problem is by no means limited to the World Bank. Probably the most egregious example of the technocratic illusion of supply-driven solutions to poverty is the United Nations Millennium Development Goals or MDGs. Soviet-style central planning may be dead even in Russia today, but its ethos still lives on in the international development community."
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ECONOMIC FREEDOM AND POVERTY: REFRAMING THE DEBATE

Wednesday, 9 December 2015

Sethaput Suthiwart-Narueput, Thailand Future Foundation[1]

In the 352 pages and over 250,000 words in its flagship 2001 World Development Report (WDR), Attacking Poverty, the World Bank mentions the word “freedom” 12 times. By contrast, the words “government” and “state” are mentioned about 450 and 350 times, respectively. Such an omission and imbalance is particularly surprising in light of some of the Bank’s own findings. Stating at the outset that “the poor are the true poverty experts,” the Bank conducted many interviews of the poor as background for the WDR and found that the poor repeatedly described their well-being in terms of five related dimensions, one of which was “freedom of choice and action.”[2]

Why isn’t economic freedom–or its core elements of personal choice; security of person and property; voluntary exchange; freedom to enter markets and compete–at center stage in policy discussions given its critical and empirically documented role in fostering growth and reducing poverty? Why isn’t it given greater attention in policy discussions by governments, international organizations, and even civil society at large?

While the omission by governments is understandable but regrettable, the omission by international organizations tasked with poverty reduction such as the World Bank is less so. In his thought-provoking book The Tyranny of Experts, Bill Easterly states that

The conventional approach to economic development, to making poor countries rich, is based on a technocratic illusion: the belief that poverty is a purely technical problem amenable to such technical solutions as fertilizers, antibiotics, or nutritional supplements…The technocratic illusion is that poverty results from a shortage of expertise, whereas poverty is really about a shortage of rights. The technical problems of the poor…are a symptom of poverty, not a cause of poverty…[the] cause of poverty is the absence of political and economic rights, the absence of a free political and economic system that would find technical solutions to the poor’s problems.[3]

Having previously worked at the World Bank myself for close to a decade, I can readily testify to the enormous appeal that such a technocratic illusion has for a large international bureaucracy. It allows for vast amounts of resources to be deployed towards producing more outputs which can be centrally monitored and verified (e.g., more schools and hospitals regardless of whether they are wanted or really result in improved educational and health outcomes). It allows for international experts to be experts in any country they work on, armed with examples of “international best practice” and able to ignore local history and conditions. Unfortunately this problem is by no means limited to the World Bank. Probably the most egregious example of the technocratic illusion of supply-driven solutions to poverty is the United Nations Millennium Development Goals or MDGs. Soviet-style central planning may be dead even in Russia today, but its ethos still lives on in the international development community.

More puzzling is why discussions of economic freedom aren’t more center stage for civil society and the public at large. Or to put it more starkly and specifically, why is there such a distrust of free markets in Asia even though they have delivered such prosperity to the region?

BWorld 28, Economic freedom in Asia

* This is my article in BusinessWorld last November 25, 2015.

Humanity’s material progress and cultural development is made possible largely due to the freedom of people to initiate innovations that did not exist before and their freedom to buy and sell extra output and services produced by themselves and other people.

In short, economic freedom and freedom to trade are among the cornerstones of human progress. Remove this freedom and innovation and ingenuity will largely be curtailed and human misery and underdevelopment will result.

These are other related issues were tackled in the two-day Economic Freedom Network Asia (EFN Asia) Conferences 2015, here at Taj Tashi hotel in Thimpu, capital city of Bhutan. The event’s theme is “Economic freedom as a way to happiness” and the main sponsors are EFN Asia, QED Group, and the Friedrich Naumann Foundation for Freedom (FNF).

QED is a private, independent think tank and consulting firm based in Thimphu while FNF is a German political foundation tasked to help conduct economic and political education around the globe about the merits of classical liberalism, lean state, and increased market competition.

EFN Asia was born in 1998 during a conference in Manila discussing how more economic freedom and less government interventions could have anticipated and minimized the financial turmoil that occurred during the “Asian financial crisis” of 1997-1998. Since then, EFN Asia conferences are held yearly in different big cities in the region.

How is economic freedom measured and quantified? Which countries are the most free and least free in economic innovation? What are the implications of such scoring and ranking in economic freedom of countries and economies?

These and related questions are answered by the Economic Freedom of the World (EFW) annual reports, produced by Fraser Institute in Canada, in partnership with FNF (Germany).

The EFW is measured by getting the scores (0 to 10, zero is totally unfree and 10 is full economic freedom) of countries covered on five areas: (1) Size of government, (2) Legal system and property rights, (3) Sound money, (4) Freedom to trade internationally, and (5) Regulation.

As a result, countries with big governments and high taxes get low scores in area (1); countries with highly corrupt legal systems and unstable property rights protection will get low scores in area (2); countries that have high inflation rates and make it difficult for their citizens to own and use other currencies will get low scores in area (3); countries that have low import tariffs, have few non-tariff barriers will get high scores in area (4); and countries with less restrictions and regulations in credit, hiring of labor and few business permits and compliance costs will get high scores in area (5).

The composite score for the five areas covered is generated and countries are ranked from highest to lowest. For Asia, here are some results. (See table)

For many years now, Hong Kong and Singapore are recognized as the two freest economies in the world. They have small and few taxes, their governments enforce the rule of law, and protect property rights. Since they have low or zero import tariff, it is easy and less costly for their exporters and importers to buy and sell goods abroad, and so on. Taiwan, Japan, and South Korea try to follow these policies set by the two freest economies.

The Philippines has been ranking modestly in the 60th to 70th positions in the three years above. It gets high scores in area (1) as it does not have too many transfers and subsidies, have few government enterprises. But the Philippines gets low score in area (2) with scores of only 3 to 4 in sub-areas Judicial independence and impartial courts, other sub-areas.

That presents a big challenge for the Philippine government (and other Asian governments too) and civil society organizations -- nongovernment organizations, media, academe, professional organizations, church groups, and so on: Control or minimize corruption and bribery by having rule of law: the law applies equally; no one is exempted and no one can grant an exemption to penalties set by the laws.

Bienvenido S. Oplas, Jr. is the head of Minimal Government Thinkers, Inc., and a Fellow of the South East Asia Network for Development (SEANET). Both think tanks are members of EFN Asia.

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See also:
BWorld 24, Traffic and Newton's 3 laws of motion, November 12, 2015 
BWorld 25, Feed in tariff means expensive electricity, November 14, 2015 
BWorld 26, IPRI 2015 in APEC economies, November 19, 2015 

BWorld 27, The rich getting richer, the poor getting middle class, November 21, 2015

EFN Asia 52, The 5 fishbowls of economic freedom in Asia, November 20, 2015 

EFN Asia 53, Successful Conference 2015 has ended, November 25, 2015

EFN Asia 53, Successful Conference 2015 has ended

Yesterday, the Economic Freedom Network (EFN) Asia Conference 2015 has ended. Reposting below some of the tweets under #efnasia2015, other tweets.

@efnasia  @meinardus giving Welcoming Address 

‏@QEDBhutan  "Freedom is a condition for happiness..." H E Kwon Tae-shin delivering keynote at #efnasia2015

@rdieckhoff  Kwon Tae-Shin's keynote stresses need for limited AND strong governments

@parthjshah  Discussion on Buddhism n econ freedom. And we judge morality of action by outcomes or intentions? 

@subodhtweet  Speed Dating #efnasia2015. An innovative way to get to know each other in large groups. interesting!!

@meinardus  You need growth, you cannot redistribute your way to poverty reduction, argues Dr Sethaput

@meinardus  Authoritarianism per se doesn't deliver. What does deliver is economic freedom, it's the core to poverty reduction, Najaf  Khan

@QEDBhutan  A human being is not just a happiness machine...there are other dimensions to being human - " Fred McMahon

‏@meinardus   Presenting UN data, @FraserInstitute Fred Mac Mahon says: Nations with least economic freedom are also least happy.

@QEDBhutan  Making the world your market- place is the key to prosperity here in Bhutan - Fred McMahon 

@subodhtweet  @QEDBhutan is the latest member to the Economic Freedom Network, announced Fred McMohan, Fraser Institute

@Kellerhoff  Phub Tshering, SecGen #Bhutan Chamber of Commerce: With freedom comes innovation 

@QEDBhutan  According to a CBS study, men are happier than women and, on the whole, framers are the unhappiest- Sunil Rasaily

Development in Bhutan is nuanced, and we need to be aware of this. - Sunil Rasaily

@QEDBhutan  Dasho Sonam P Wangdi delivering remarks after launching the EFW 2015 Report - Bhutan Edition

@meinardus  Economic damage done to #Nepal through the #India embargo several times bigger than that caused by #earthquake

‏@Kellerhoff  @robsitoula #southasia needs to improve foreign relations, in #Nepal we have a political crisis

‏@QEDBhutan  Yes, Bhutan is landlocked but so is Switzerland. Why can't Bhutan be another Switzerland ?  - Peter Wong 

‏@Kellerhoff  @peterwongbi #efnasia2015 #HongKong came out stronger out of each crisis. Just take bitter pill prescribed by Hayek

@meinardus  Democratic dividend: As politics in #India became more competitive economic growth has picked up, @barunmitra

@meinardus   Negative impact of intolerance: a country that restricts freedom of speech eventually also limits economic freedom  @barunmitra

@meinardus  Strong appeal by @barunmitra to promoters of economic #freedom to pay more attention to "real world of politics

@Kellerhoff  Economic Freedom and inclusive growth #efnasia2015 with @tomgpalmer @parthjshah @wansaiful @razeensally

@IDEASMalaysia  @wansaiful sharing Msia's experience on the panel for econ freedom & inclusive development @ #efnasia2015 in Bhutan.

@acorn  "People have died from poverty, but so far as we know, no one has died from inequality" - @tomgpalmer #efnasia2015

@QEDBhutan  "There are many poor counties with rich people. What we want is rich countries ... " Dr Tom Palmer 

‏@Armin_"Freedom is happiness" @QEDBhutan & @FNFreiheit closing #efnasia2015  in #Bhutan 

All photos above taken from tweets and fb.

Thanks for the opportunity to attend this great event, EFN Asia.

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See also:
EFN Asia 49, Conference 2015 in Bhutan, September 15, 2015 
EFN Asia 50, New network member, Center for Indonesian Policy Studies, September 25, 2015 
EFN Asia 51, Draft program, Day 1 of Conference 2015, November 05, 2015 
EFN Asia 52, The 5 fishbowls of economic freedom in Asia, November 20, 2015

EFN Asia 52, The 5 fishbowls of economic freedom in Asia

The two-days Economic Freedom Network (EFN) Asia conference 2015 in Bhutan is just 3 days away. Among the important activities on Day 1 is the dynamic discussion on Economic Freedom and Happiness: Five Fishbowls.

The term "fishbowl" is taken from the seating arrangement of participants: listeners form a circle in the centre of which sit the discussants. 

Each fishbowl will have six persons at the centre: 1 expert, 1 moderator, 1 rapporteur, and 3 “open” resource persons. The listeners form a circle. The first 3 persons never leave their positions while the 3 open resource persons can, they can be replaced by some listeners who want to speak, upon the permission of the moderator for orderly allocation of time and discussions in case there are debates.

I have not attended this type of discussion before, it looks challenging and exciting. 

The five fishbowl topics are also the five areas that constitute the Economic Freedom of the World (EFW) scoring, and "Happiness" is added to each fishbowl topic. Here are the topics and the facilitators that day:

1. Size of government: expenditures, taxes, and enterprises and Happiness

Expert: Muntasir Mamun Iqbal, Lecturer, North South University, Bangladesh

Moderator: Ruben Dieckhoff, Regional Project Manager, FNF Regional Office South Asia

Rapporteur: Akash Shrestha, Senior Research Office, Samriddhi, The Prosperity Foundation, Nepal.

2. Legal structure and security of property rights and Happiness

Expert: Muntasir Mamun Iqbal, Director, Takshila Foundation, India

Moderator: Subodh Kumar Agarwal, Programmes Executive, FNF Regional Office South Asia

Rapporteur: Sreya Majumder, Executive, Energy, Confederation of Indian Industry (CII) (TBC)

3. Access to sound money and Happiness

Expert: Nonoy Oplas, President, Minimal Government Thinkers Inc., The Philippines

Moderator: Moritz Klein-Brockhoff, Resident Rep. Indonesia, Project Director Malaysia, FNF

Rapporteur: Yu Suhyeon, Programme Officer, FNF Korea

4. Freedom to trade internationally and Happiness

Expert: Prof. Eric Gartzke, Professor of Political Science, University of California, San Diego, USA

Moderator: Olaf Kellerhoff, Head of Asia Department and Human Rights, FNF Head Office

Rapporteur: Khim Sophanna, Programme Manager, FNF Cambodia

5. Regulation of credit, labor, and business and Happiness

Experts: Suwanchai Lohawatanakul, President, Institute of Small and Medium Enterprise Development, Thailand

Moderators: Armin Reinartz, Regional Project Manager, FNF Regional Office South East and East Asia

Rapporteur: Sorasak Phaengkote, Student, Thammasat University, Thailand

Below, from left to right:
1st row: Muntasir Mamun Iqbal, Muntasir Mamun Iqbal, me.
2nd row: Eric, Gartzke, Suwanchai Lohawatanakul.
3rd row: Ruben Dieckhoff, Subodh Kumar Agarwal, Olaf Kellerhoff.
4th row: Moritz Klein-Brockhoff, Armin Reinartz.

Excited to see Bhutan, and experience the fishbowl discussion. Both for the first time.
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See also:
EFN Asia 48: Report on "Free Market Environmentalism", May 29, 2015 
EFN Asia 49, Conference 2015 in Bhutan, September 15, 2015 
EFN Asia 50, New network member, Center for Indonesian Policy Studies, September 25, 2015 
EFN Asia 51, Draft program, Day 1 of Conference 2015, November 05, 2015

EFN Asia 51, Draft program, Day 1 of Conference 2015

The Economic Freedom Network (EFN) Asia Conference 2016 in Bhutan is fast approaching, more than two weeks away.

Here is the provisional program and some speakers for Day 1.

I start with the Master of Ceremonies (MCs). The MC for November 23 will be Ms. Tricia Yeoh, Chief Operating Officer, Institute of Democracy and Economic Affairs (IDEAS), Malaysia.

The MCs For November 24 will be 

Karma Choden, Program Coordinator, QED Group, and Pett Jarupaiboon, Program Manager of EFN Asia and Human Rights, FNF, Thailand. Tricia and Pett are my good friends.

Welcoming remarks will be given by Thinley Palden Dorji, Founding Partner, QED Group, and Ronald Meinardus, Regional Director, FNF South Asia. The Keynote Speaker for the opening keynote address on “Economic Freedom as a Way to Happiness” still has to confirm.

Then the opening lecture, “Economic Freedom and Happiness: Data, Models and Results” by Fred McMahon, Fraser Institute Resident Fellow and holder of the Dr Michael A. Walker Research Chair in Economic Freedom, Canada. There will be two commentators: Pema Wangchuk of the Centre for Bhutan Studies and Gross National Happiness (GNH) Research, and Dr. Mahar Mangahas, President of the Social Weather Stations (SWS) in Manila.

Photos below by rows:
Tricia Yeoh, Karma Choden, and Pett Jarupaiboon;
Thinley Palden Dorji and Ronald Meinardus;
Fred McMahon, Pema Wangchuk, and Mahar Mangahas.

The second lecture will be about Combating Poverty through Economic Freedom with four speakers from Bhutan, S. Korea, India and Thailand.

Third lecture is on Buddhist Ethic and the Spirit of Economic Liberalism with two speakers

This will be interesting: simultaneous lectures on Economic Freedom and Happiness. Five Fishbowls and topics:

1. Size of government: expenditures, taxes, and enterprises and Happiness

2. Legal structure and security of property rights and Happiness

3. Access to sound money and Happiness

4. Freedom to trade internationally and Happiness

5. Regulation of credit, labor, and business and Happiness.

Each fishbowl has five resource persons (1 fixed expert, 1 fixed moderator and 3 open resource persons from each group in each time) and a rapporteur.

I am curious what is that "Happiness Index" that helps Bhutan become prominent, here's what I found.

source: http://www.grossnationalhappiness.com/SurveyFindings/Summaryof2015GNHIndex.pdf

It is not an international comparison of which country has the most number of happy people compared to other countries. Nonetheless, it is another approach to measure people's well-being.

For me, the important thing to remember always is that where the people have more economic freedom and individual responsibility (freedom and responsibility must be intertwined, always), there is more happiness.

I will continue with program for Day 2 in the next few days.
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See also:
EFN Asia 47, Participation in Jeju Forum 2015, May 08, 2015 
EFN Asia 48: Report on "Free Market Environmentalism", May 29, 2015 
EFN Asia 49, Conference 2015 in Bhutan, September 15, 2015 
EFN Asia 50, New network member, Center for Indonesian Policy Studies, September 25, 2015

Global belief in free market

I originally posted this on April 11, 2011. Updates below it.

There is one interesting chart from The Economist daily chart, April 6th 2011. There is a disconnect, however, between the title, "Market troubles" and the chart, below.

Of the 16 countries showed above, 13 have more than 50 percent of their people who believe in the free market system. Only 3 countries, Japan, France and Turkey, have less than 50 percent of their people who do not agree with the free market system. Meaning they believe in more government intervention.

So it does not appear to be "market troubles" but rather "market belief".

Now here is the original chart from the Globescan, also dated April 6, 2011. It was drawn from 12,884 interviews across 25 countries, people were asked, "The free market system and free market economy is the best system on which to base the future of the world." People choose whether "Strongly Agree", "Somewhat Agree", "Somewhat Disagree", and "Strongly Disagree". Click on the chart to get a larger image.

A. Above 50 percent Agree: (19)
1. US, 59%
2. Canada, 59%
3. Brazil, 77%
4. Colombia, 57%
5. Mexico, 57%
6. Germany, 68%
7. Italy, 61%
8. UK, 55%
9. Russia, 52%
10. Spain, 52%
11. Kenya, 61%
12. Nigeria, 58%
13. Ghana, 57%
14. China, 67%
15. Philippines, 65%
16. India, 59%
17. Indonesia, 55%
18. Australia, 54%
19. Pakistan, 51%

B. 50 percent or below Agree (6)
Ecuador, Peru, Chile; France, Turkey; Japan

I am glad that the Philippines has a high percentage of respondents who have belief in economic freedom, in the free market and free enterprise, and have little belief in more government intervention, regulation and high taxation. Well, seeing the huge volume of government failure and government corruption in many sectors in the Philippine economy, it is not hard for Filipinos to choose economic freedom over government coercion.
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Update:
In a Spring 2015 Global Attitudes Survey by Pew Research Center, released last July 22, 2015, among the results is this chart. Optimism for the kids' future is highest in socialist and/or big population countries like Vietnam, China, Nigeria and India. The trajectory of many emerging and developing countries is generally towards more market-oriented reforms while those in developed countries is generally towards more bureaucratism,  more government regulations. This sends signals to the parents and current workers.

Of course there is no such thing as truly free market economy as even Hong Kong suffers from rising state regulations imposed from Beijing. But monopolies and oligopolies are becoming less and less tenable as the consumers become more informed, more articulate and more demanding for more options, more consumer freedom. And only market-oriented reforms can satisfy this rising consumer activism as more players, more producers can adjust more quickly to changing and rising consumer demand, both in prices and product/service quality.
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See also:

Inequality 24: Inheritance, Poverty and Envy, April 17, 2015
Inequality 25: On High CEOs Pay and Legislated Minimum Wages, April 30, 2015 

Inequality 26, Pew survey result on support for free market, July 27, 2015 

Inequality 27, ADR Institute forum on poverty and growth, August 18, 2015

BWorld 16, Growth, capitalism and inequality, August 22, 2015