BWorld 144, Individual liberty vs state coercion and taxation

* This is my article in BusinessWorld on July 18, 2017.

“I hope we once again have reminded people that man is not free unless government is limited. There’s a clear cause and effect here that is as neat and predictable as a law of physics: as government expands, liberty contracts.”

-- Ronald Reagan, former US President

Perhaps the first intellectual in China and the world who championed individual liberty was Lao Tzu (600 BC). He was born more than 2,000 years before Adam Smith wrote and called for a “simple system of natural liberty.” Here, Lao Tzu wrote referring to government:

The more restrictions and limitations there are, the more impoverished men will be...

The more rules and precepts are enforced, the more bandits and crooks will be produced. Hence, we have the words of the wise (the sage or ruler):

Through my non-action, men are spontaneously transformed.

Through my quiescence, men spontaneously become tranquil.

Through my noninterference, men spontaneously increase their wealth.

The “restrictions and limitations” that Lao Tzu mentioned are now what we call regulations, permits, licenses and taxes. The “bandits and crooks” that he mentioned are now the various officials and bureaucrats in government, elected or appointed. While the “noninterference” that he mentioned refers to a minimal and limited government that intervenes and taxes the least.

And talking about taxes, especially Dutertenomics’ TRAIN, the numbers below should be a good reminder that it is largely a train for more government coercion and interventions.

A short definition of these concepts: (a) Total taxes (TT) are the sum of corporate income tax + labor taxes + other taxes; (b) Total tax rate (TTR) = TT/private enterprises’ net and taxable income, in percent (see table).

Total tax rates in East Asia, % of commercial profits

Source: Price Waterhouse Coopers (PWC), Paying Taxes  annual reports 2009, 2012, 2015, 2017.

Based on these numbers, we both have good and bad news.

The good news is that the Philippines has a declining TTR, from almost 51% in the 2009 PWC report to nearly 43% in the 2017 report. Other economies with declining TTR are Brunei, Singapore, Laos, Indonesia, Myanmar, Taiwan and Japan. Only Malaysia has a deteriorating or rising TTR.

The bad news is that the Philippines has the highest TTR in the 10-country ASEAN, higher than socialist Vietnam, also higher than developed Hong Kong, South Korea, and Taiwan. Only welfarist Japan and socialist China have TTRs higher than the Philippines.

These are the more controversial aspects of Dutertenomics’ TRAIN -- (a) hike in excise tax for oil products and new cars, (b) introduction of additional tax on sugar-sweetened beverages, and (c) expansion of VAT coverage to more sectors including business process outsourcing (BPO).

To help dispel the ugly label of “Philippines having the highest TTR in the ASEAN and other East Asian economies,” tax proposals (a) and (b) should have been abandoned, and 12% VAT (highest in the ASEAN) should be reduced to only 6%, probably even 8% and cover more sectors including BPO. The main reason why many sectors lobbied for exemption from VAT is because 12% is high.

To help fund Dutertenomics’ build-build-build plan without those new taxes and tax hikes, the government should cut spending on some agencies and bureaucracies whose welfarist goals and mandates overlap with other agencies. Then rechannel the savings to more infrastructure spending. But this is now wishful thinking as the TRAIN is on a fast track of legislative wreckage.

The issue of more state coercion and taxation will be tackled in the inaugural “Philippine Students for Liberty Conference” this coming July 21-22, 2017 at the Hive Hotel in Quezon City. The event sponsor is the Students for Liberty Philippines (SFL-PH) and the theme will be “live freely, live fully.”

SFL-PH President Joseph T. Bautista has invited me to be one of the speakers on Day 2 of the event and I gladly accepted the honor. SFL CEO Wolf von Laer will give the keynote address. Other speakers will be Thomas Laughlin, CEO of Amagi; Luis Sia, president of UpStart; Shahab Shabibi, CEO of World by Machine Ventures; Mahar Mangahas, president of Social Weather Stations (SWS); Imantaka Nugraha of SFL-Indonesia, and Markus Löning of Friedrich Naumann Foundation for Freedom (FNF).

I will talk about state coercion and legislations in the energy sector, infrastructure, and fiscal policies during the SFL conference.

Bienvenido S. Oplas, Jr. is the head of Minimal Government Thinkers and a SEANET Fellow. Both are members of Economic Freedom Network (EFN) Asia.

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See also:
BWorld 141, Reducing system loss, Part 2, June 30, 2017 
BWorld 142, PPP vs ODA, Part 3, August 08, 2017 
BWorld 143, Coal power and economic development, August 09, 2017

Liberty Notes from Larry Reed (2)

More notes on liberty, self reliance, personal responsibility, and a few funny quotes, from the facebook wall of Lawrence "Larry" W. Reed of the FEE, in 2011-2012.
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"It will take America fifteen years of steadily taking care of our own business and letting everybody else's alone, to get us back to where everybody speaks to us again" -- humorist Will Rogers, in a prophetic comment from seven or eight decades ago.

"The trade of governing has always been monopolized by the most ignorant and the most rascally individuals of mankind" -- Thomas Paine.

(With Larry and some batchmates during the Mackinac Leadership Conference, mid-April 2004, Michigan. Kendra Shrode, a Mackinac staff, 3rd from right))

"One of the qualities of liberty is that, as long as it is being striven after, it goes on expanding. Therefore, the man who stands in the midst of the struggle and says, 'I have it,' merely shows by doing so that he has just lost it" -- 19th Century playwright and poet Henrik Ibsen.

"Compared with the totality of knowledge which is continually utilized in the evolution of a dynamic civilization, the difference between the knowledge that the wisest and that which the most ignorant individual can deliberately employ is comparatively insignificant" -- F. A. Hayek, who also wrote that "...the case for individual freedom rests largely on the recognition of the inevitable and universal ignorance of all of us concerning a great many of the factors on which the achievements of our ends and welfare depend."

"A society that puts equality ahead of freedom will end up with neither equality nor freedom" -- Milton Friedman.

Assessing the Performance of an Administration

If one has to assess the performance or non-performance of a government or administration, what is the better parameter, how much it has done, subsidized, regulated, etc. or how little it has done or intervened?

This is corollary to my friend Ethel's question in her fb wall, "Sige. Let's be fair. Give me something Noynoy has done in the past five years that is actually good for the Filipinos."

Some  of the "pro" comments:

1. He took out wangwangs on the road. he curbed corruption.

2. He brought peace to Mindanao?

3. The creation of the GOCC Commission tasked to privatize, abolish, merge, the duplicating, non-performing corporations, offices of the huge bureaucracy.

4. Jailing of three senators and former lawmakers.. never done before

5. The PERCEPTION of an honest and transparent government in the international community,

6. Napaalis niya si Corona.

And the “anti” comments:

1. He curbed corruption because he wants all corruption to go straight to the palace. See what happens to LTO plates.

2. He gave each congessman and senator so much in lump sum appropriations under PDAF and DAP

3. He was able to avert an armed confrontation in the West Philippine Sea against an armed invader.

4. He gave the bird to the Catholic Church by getting congress to pass the RH Bill.

5. I see wangwangs everywhere

6. Zero infrastructure in 5 years/ LRT/ MRT in ruins.

Most people would use how much subsidies and welfarism, how much regulation and interventionism, how much taxation of the rich or top 1%, etc as their parameter. So less welfarism and subsidies means bad government.

I take the 2nd parameter. The worst thing that a government or administration can do to its people is that it does and intervenes so much. So a government that does not intervene too much, which "does little" is actually a good thing. When a government requires you need a permit to renovate your CR or change the color of your roof before you move, even if there is zero corruption involved, you will hate that government.

My beef is that PNoy Aquino is not liberal enough, he is not non-interventionist enough. Lots of past interventionism and bureaucratism are not removed yet.

In a free, (classical) liberal society, everything is allowed except for a few prohibitions. LIke no killing/murder, no stealing or destruction of others' property, no abduction/kidnapping, no rape/trafficking, etc. The rest is allowed. Have alcohol and drugs, sex, open shops left and right, etc. so long as no one is hurt or harmed.

In an unfree society, everything is NOT allowed, prohibited, unless one gets a permit from the government. Thus, one cannot drive his own car, cannot open and start a business, cannot repair his house or office, cannot sell something, etc. unless he/she gets a permit.

It is not so much the degree of welfarism and subsidies given away, but the degree of freedom that people enjoy, including the freedom to be hard working and freedom to be lazy, that should be given more weight in assessing a government.

So if one is a lover of huge welfare, beautiful infrastructures, then he/she can love China and its communist government, love PM Xi Jinping. They give lots of free housing, free university education, beautiful roads and airports, etc.

But if one is a lover of freedom, he will hate China and any commie or one-party government. No fb and youtube, no twitter and gmail, etc.

How about Singapore? It allows fb and youtube, twitter and gmail, etc., have lots of beautiful infra like roads and huge airport. Nice, except that you can never ever criticize the government with those social media. Their government gives heaven on earth, it should not be criticized.

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See also: 
Fat Free Econ 55: The President's 5th SONA and Market-Oriented Reforms, August 01, 2014
Citizen Watch 3: Political and Economic Reforms After SONA 2014, September 06, 2014

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

Freedom Run 2013, I will Run the 10K

Tomorrow, I will join the Freedom Run 2013 to be held in Quezon City. Like the Freedom Run 2012, I will run the 10K, even if did not join any other run this year. So my legs, be ready to be hammered tomorrow. That means terrible pain in the legs 2-3 days after November 10 :-)

At the Freedom Run facebook page, there was one discussion last Sunday, November 02, if this "freedom from corruption" run is pro-abolition of pork barrel, or simply keep but reform pork barrel. I joined that thread.

I said that the organizer of the Freedom Run is the Friedrich Naumann Foundation for Freedom (FNF) Manila office. That FNF is one of the German political foundation with an office in the country, along with Konrad Adenauer Foundation (KAF), Friedrich Ebert Foundation (FEF) Hans Seidel Foundation (HSF), etc. 

FNF I think does not take any position on the pork barrel debate, whether to reform it or abolish it. And I don't think any foreign political foundation should take that position. It is funded by German taxpayers, not Filipino taxpayers, and the goal of each political foundations is to propagate their respective  philosophy at the general level, not taking into specific details of policy debates in the country where they have an office.

So if people feel so strongly about a particular stand, that pork barrel should be scrapped, or be reformed, then they might be disappointed that FNF will not take a specific position. If your participation in the Freedom Run is pre-conditioned on such scrap or reform pork, black or white position, then they might be disappointed as FNF has no stand.

I suggested that they join the run and get a running shirt which says at the back, "We believe in the power of freedom and the responsibility of citizens, and a strong commitment to the strengthening of democratic institutions, human rights, transparency,…”

The shirt in Freedom Run 2011 has this message, “We support the liberal values of freedom and individual responsibility, democracy and the rule of law, respect for human rights and tolerance."

All the German political foundations -- FNF, FEF, KAF, HSF, etc. -- do not display their pol philosophy in each of their activities. KAF is affiliated with CDU-CSU of Angela Merkel, FNF is affiliated with FDP (Free democratic party), FEF is affiliated with the Social Democrats. These foundations do not always advertise their party affiliation in Germany. They just focus on their pol philosophy. So FNF is focused on individual freedom and personal responsibility, rule of law, economic freedom, human rights.

So the Freedom Run is under one of its philosophies -- to promote more individual freedom, apart from collective or national freedom.

So join the Run and set aside the debate on abolish or reform the pork barrel as it won't be tackled there. It is not a symposium or seminar, it is a run but there are a few speakers and performers after the run who will discuss what "freedom" means to them. We may agree or disagree with their own definitions of what freedom is, but overall, the event is to celebrate, or advance and insist, that we people should advance our individual freedom. We may have been too engrossed with the politicians, whether they are pro-abolish or pro-reform the pork. Some of us may define freedom as less politics, less government, less interventionism, like I do.

I join the annual Freedom Run because as one of the local friends of the FNF, my personal philosophy of less government, more free market, is consistent with the FNF philosophy more than KAF, FEF, etc.

Some people may insist and accuse that "FNF is supportive of the Liberal Party. Hence, it is supportive of the administration and 'reform the pork' side."

The first sentence is correct because FDP, the party affiliation of FNF, is sort of the "liberal party" of Germany, its philosophy is liberalism. So LP Philippines and Free (liberal) Democratic Party Germany are ideological allies. Beyond that, similarities may end. Thus, the second sentence is wrong. FNF takes no side on whether to abolish or keep/reform the pork barrel. FNF works not only with pol parties and politicians, it also works with civil society and non-politicians, like us in Minimal Government Thinkers, Inc.

I know the FNF Manila people, they are very professional, they know their mandate and their limit. They are accountable to the FDP and German taxpayers, not to the LP or UNA or any other Filipino pol parties and politicians, or the Filipino taxpayers. They are here to help advance the ideas of liberalism and individual freedom, rule of law, tolerance of social diversity and respect of human rights. So they are selling an idea, not politicians or a political party.

Freedom Run. It is the only run in this country with clear political message printed on the running shirt itself like “individual/citizen freedom and responsibility”, “human rights and rule of law.” Beyond the nation, beyond the collective, there is need to remind ourselves the value and primacy of the individual.

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See also:
Freedom Run 2011, November 28, 2011 
Freedom Run 2011 and 2012, November 03, 2013

Fat-Free Econ 28: Poverty, Planning and Populism

* This is my article in TV5's news portal last Saturday,
http://www.interaksyon.com/business/46631/fat-free-economics-poverty-planning-and-populism
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The fight against poverty is the most financially enriching endeavor for government officials, their consultants as well as the foreign aid community.

Trillions of dollars of taxpayers’ money every year are being siphoned off from the income and savings of the more productive sectors of societies in different countries, and diverted to the coffers of governments and multilateral institutions, before the monies are channeled to hundreds of different agencies and bureaucracies, for distribution to the poor.

The most elaborate and the grandest central plan to fight poverty worldwide is the Millennium Development Goals blueprint by the United Nations, supported and implemented by governments, foreign aid bodies like the World Bank and Asian Development Bank, and many NGOs.

By forcibly socializing and collectivizing resources and plans into the hands of those poverty fighters, individual freedom and responsibility has, directly or indirectly, been disregarded or even disrespected.

On November 3-4, I will join a small group of free-market advocates from around the world who will gather at the Harbour Plaza Resort City in Hong Kong for a round table discussion on populism and the religion of “All Powerful Government.” The forum is organized by the Lion Rock Institute, Hong Kong’s first and only free-market think tank.

The discussion would take off from The Road to Serfdom, a bedrock defense of free-market thinking by the Austrian economist and political philosopher Friedrich Hayek.

Hayek is a strong advocate of individual freedom and responsibility and the rule of law. An individual has the freedom to be industrious and responsible, and the freedom to be lazy and irresponsible. It is mainly individual choice that can set the future and destiny of a person and that of his/her household and immediate community. In his book, Hayek wrote:

“Individualism, in contrast to socialism and all other forms of totalitarianism, is based on the respect of Christianity for the individual man and the belief that it is desirable that men should be free to develop their own individual gifts and bents…

“Perhaps the greatest result of this unchaining of individual energies was the marvelous growth of science. Only since industrial freedom opened the path to the free use of new knowledge, only since everything could be tried – if somebody could be found to back it at his own risk – has science made the great strides which in the last 150 years have changed the face of the world. The result of this growth surpassed all expectations. Wherever the barriers to the free exercise of human ingenuity were removed, man became rapidly able to satisfy ever-widening ranges of desire.

“The effect of this success was to create among men a new sense of power over their own fate, the belief in the unbounded possibilities of improving their own lot…”

This is something that the various poverty fighters generally do not consider. They did not ask how much of the poverty that they are trying to fight and solve was due to personal reasons, in contrast to poverty caused by nature, by manmade calamity and by government failure. What the poverty fighters do is to have a grand and elaborate plan backed up by centralized resources to be implemented from the top down. Hayek further wrote:

“’Planning’ owes its popularity largely to the fact that everybody desires, of course, that we should handle our common problems with as much foresight as possible. The question is whether we should create conditions under which the knowledge and initiative of individuals are given the best scope so that they can plan most successfully; or whether we should direct and organize all economic activities according to a ‘blueprint’, that is, ‘consciously direct the resources of society to conform to the planners’ particular views of who should have what’.

“Liberalism regards competition as superior not only because in most circumstances it is the most efficient method known but because it is the only method which does not require the coercive or arbitrary intervention of authority. It dispenses with the need for ‘conscious social control’ and gives individuals a chance to decide whether the prospects of a particular occupation are sufficient to compensate for the disadvantages connected with it.”

The LRI event will be followed by a bigger forum, the Economic Freedom Network Asia Conference, to be held in Crowne Plaza Hong Kong Kowloon East Hotel on November 5-7.

With the theme, “How Welfare Populism Destroys Prosperity,” the forum will have several hundred international participants and will be sponsored mainly by the Friedrich Naumann Foundation for Liberty. 

Political populism - pandering to the lobby of the noisy sectors and to the deep desire of many politicians to win votes through welfarist programs - has created huge havoc in the fiscal condition of many governments. It has also caused more uncertainty in the global macroeconomic environment and has corrupted the attitudes and work ethic of many individuals.

Many people now begin to think that for whatever social or economic issues, more government is the solution. And that is how many societies and governments have elaborately planned and created various “poverty-fighting” programs - from education and books to healthcare and medicines, housing and relocation, MRT subsidy and fuel discounts, tractors and credit, multiple business regulations and taxes on the well-to-do, cash transfers, and very soon, condoms and pills.

It may not be a far out possibility that governments may soon introduce iPad and Samsung Galaxy tablets. After all, many governments and politicians are specialists in the “spend-tax-borrow” philosophy.
By shelving more individual freedom and responsibility, by having more central planning and political populism, governments are contributing to poverty.


See also:
Fat-Free Econ 24: Government Fat and Public Expectations, September 21, 2012
Fat Free Econ 25: Property Rights and the Cybercrime Prevention Law, October 01, 2012
Fat-Free Econ 26: US Public Debt and the November Elections, October 10, 2012
Fat-Free Econ 27: Sin Tax and Nannyism, October 22, 2012

Hayek 12: Friedrich Hayek's 20th Death Anniversary, March 26, 2012
(has links to Hayek 1 to 11, discussion on some chapters of Hayek's book, "The Constitution of Liberty")
Hayek in Asia 2: Shanghai Austrian Economics Summit 2012, April 15, 2012
Hayek 13: Friedrich Hayek's 113th Birthday, May 09, 2012

Pol. Ideology 37: Collectivism, Conservatism and Liberalism

This will be a continuation and expansion of my earlier paper, Pol. Ideology 15: Socialism, Conservatism and Liberalism posted last March 08, 2010. It is about a discussion paper by Stefan Melnik on Political Values -- Review of Basics, written possibly in 2008-09. These are the three major political mainstreams and the value systems that they preach.

Socialism and its cousin ideology, communism, highlights or focuses on equality and forced collectivism. Equality of outcome, social justice, income redistribution, social security, state welfare and forced solidarity. These are the synonyms of their heavy focus on equality and forced collectivism. Too much individual liberty and private property are not good, according to this philosophy, so they have to be limited and heavily regulated by the state, leading to social or communal ownership of the means of production, central planning by the state and its lower organs and government agencies.

Conservatism focuses on order, tradition and conservation of existing social units.  Thus it highlights discipline, authority, hierarchy, the conservation of the nation, the family, morality. There are some similarities with socialism like the big role of state authority, distrust of spontaneity and importance of managed order. But there are also differences as there is primacy given to non-government social units like the family, clan and private enterprises.

Liberalism focuses on liberty or freedom, individual liberty specifically and individual responsibility. Liberty and responsibility are closely and strictly intertwined, one is not possible without the other. With more individual liberty, spontaneity, diversity and inequality are inevitable. Tolerance of such diversity and spontaneity among people, their right and choice to be industrious or be lazy, their private property ownership, are part of human rights that are to be respected under strict respect of the rule of law, equal application of the law on unequal people.

Pol. Ideology 31: Quotes on Liberty and Government

These quotes below are useful. First group I got from the facebook wall of a friend, Banner C. The second group I got from the facebook updates of a good friend, Lawrence "Larry" Reed.

Photos below, left to right,
First row: George Washington, Tacitus, Albert Einstein.
Second row:  P.J. O'Rourke, Doug Casey, Ludwig von Mises.
Third row: H.L. Mencken, Benjamin Franklin, Barry Goldwater.

"We hang the petty thieves and appoint the great ones to public office." - Aesop

"Government is not reason; it is not eloquent; it is force. Like fire, it is a dangerous servant and a fearful master." - George Washington

“It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.” - Henry Ford

"The more numerous the laws, the more corrupt the society." - Tacitus

"Never do anything against conscience even if the State demands it." - Albert Einstein

"The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves." - Alan Greenspan (or as I like to dub "Greenscam"

"You have to choose between trusting to the natural stability of Gold and the natural stability of the honesty and intelligence of the members of the government. And, with due respect to these gentlemen, I advise you, as long as the capitalist system lasts, to vote for Gold." - George Bernard Shaw

""I will do this. Nothing in my life matters except this. No moment of my life exists except this moment. I am born in this moment, and if I fail, I will die in this moment." - Raistlin

"If you scratch a cynic, you'll find a disappointed idealist." - George Carlin

"Foreign aid might be defined as a transfer of money from poor people in rich countries to rich people in poor countries." - Doug Casey
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From Larry Reed's facebook updates:

"A little government and a little luck are necessary in life, but only a fool trusts either of them: -- P. J. O'Rourke.

"Despots and democratic majorities are drunk with power. They must reluctantly admit that they are subject to the laws of nature. But they reject the very notion of economic law . . . economic history is a long record of government policies that failed because they were designed with a bold disregard for the laws of economics" -- Ludwig von Mises.

"Let no man be sorry he has done good because others have done evil. If a man has acted right he has done well, though alone. If wrong, the sanction of all mankind will not justify him" -- Henry Fielding, English novelist (1707-1754).

"The typical lawmaker of today is a man wholly devoid of principle—a mere counter in a grotesque and knavish game. If the right pressure could be applied to him, he would be cheerfully in favor of polygamy, astrology or cannibalism.

It is the aim of the Bill of Rights, if it has any remaining aim at all, to curb such prehensile gentry. Its function is to set a limitation upon their power to harry and oppress us to their own private profit" -- H. L. Mencken, 1930.

"I am for doing good to the poor, but I differ in opinion of the means. I think the best way of doing good to the poor is not making them easy in poverty, but leading or driving them out of it. In my youth I travelled much, and I observed in different countries that the more public provisions were made for the poor, the less they provided for themselves, and of course became poorer. And, on the contrary, the less was done for them, the more they did for themselves, and became richer" -- Benjamin Franklin, 1766.

"I have little interest in streamlining government or in making it more efficient, for I mean to reduce its size. I do not undertake to promote welfare, for I propose to extend freedom. My aim is not to pass laws, but to repeal them....And if I should later be attacked for neglecting my constituents' "interests," I shall reply that I was informed that their main interest is liberty and that in that cause I am doing the very best I can" -- Barry Goldwater.

John Dryden's words, "Better to shun the bait than struggle in the snare" would have saved Americans a boatload of grief if followed in the early stages of our costly, demoralizing and unsustainable welfare state.

Call it what you want—capitalism, free enterprise, laissez faire or whatever—but a system that upholds property rights and otherwise allows free people to be themselves is remarkable precisely because it’s NOT a "system" per se. No deluded, pretentious planners devise or direct it. It’s no Rube Goldberg contraption of mandates and decrees. It’s simply what happens when you leave peaceful people alone. They produce more and satisfy human wants to a far greater extent than empty nanny-state promises could ever hope to deliver. -- Lawrence Reed.
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See also:
Pol. Ideology 9: Liberty and Choice, Atlanta and HK Conferences, June 09, 2008
Pol. Ideology 10: Joe Stiglitz and the Market, December 16, 2008 
Pol. Ideology 11: Liberalism, Democratism & Authoritarianism, January 04, 2009

Pol. Ideology 12: Lao Tzu, Cooperative Individualism, February 07, 2009

Pol. Ideology 13: Liberty and Liberty Forum, the LP, March 19, 2009
Pol. Ideology 14: Liberalism and Democratism, January 18, 2010

Pol. Ideology 15: Socialism, Conservatism and Liberalism, March 08, 2010

Pol. Ideology 19: What is the Role of Government?, March 08, 2011
Pol. Ideology 20: Liberalism and the Squatters, May 17, 2011

Pol. Ideology 21: The Nature of Government, November 14, 2011

Pol. Ideology 26: Socialists in a Liberal Government, February 21, 2012 
Pol. Ideology 27: Why do Many Intellectuals Oppose Capitalism?, March 01, 2012
Pol. Ideology 29: Raison d 'Etre of Government, May 20, 2012
Pol. Ideology 30: Federalism, Debt and Civil Society, May 21, 2012

Hayek 13: Friedrich Hayek's 113th Birthday

Yesterday, March 08, 2012, was the 113th birthday of Friedrich Hayek, the Austrian economist and legal/political philosopher known for his work in defending individual liberty, free market and the rule of law.

Below are some quotes I got from his book, The Constitution of Liberty.

The individual has little reason to fear any general laws which the majority may pass, but he has much reason to fear the rulers it may put over him to implement its directions. It is not the power which democratic assemblies can effectively wield but the powers which they hand over to the administrators charged with the achievement of particular goals that constitute the danger to individual freedom today... The most enthusiastic supporters of such unlimited powers of the majority are often those very administrators who know best that, once such powers are assumed, it will be they and not the majority who will in fact exercise them.

Law in its ideal form might be described as a ‘once-and-for-all’ command that is directed to unknown people and that is abstracted from all particular circumstances of time and place and refers only to such conditions as may occur anywhere and at any time…. “By ‘law’ we mean the general rules that apply equally to everybody… As a true law should not name any particulars, so it should especially not single out any specific persons or group of persons.

Even general, abstract rules, equally applicable to all, may possibly constitute restrictions on liberty. But this is unlikely. The chief safeguard is that the rules must apply to those who lay them down and those who apply—that is, to the government as well as the governed – and that nobody has the power to grant exceptions.

The ‘law’ that is a specific command, an order that is called a ‘law’ merely because it emanates from the legislative body, is the chief instrument of oppression. The confusion of these two conceptions of law (general rules vs. legislative law) and the loss of the belief that laws can rule, that men in laying down and enforcing laws in the former sense are not enforcing their will, are among the chief causes of the decline of liberty.

Not every enactment of the legislative authority is a law…only a very small proportion are substantive laws regulating the relations between private persons or between such persons and the state. The great majority of the so-called laws are rather instructions issued by the state to its servants.

That any law should apply equally to all. General and equal laws provide the most effective protection against infringement of individual liberty. It is this fact that all rules apply equally to all, including those who govern, which makes it improbable that any oppressive rules will be adopted.

Under the rule of law the private citizen and his property are not an object of administration by the government, not a means to be used for its purposes. It is only when the administration interferes with the private sphere of the citizen that the problem of discretion becomes relevant to us…. What distinguishes a free from an unfree society is that in the former each individual has a recognized private sphere clearly distinct from the public sphere, and the private individual cannot be ordered about but is expected to obey the rules which are equally applicable to all.

Below is a short article written by the President of Cato Institute, Mr. David Boaz.
http://www.cato-at-liberty.org/happy-birthday-f-a-hayek/

Happy Birthday, F. A. Hayek

Posted by David Boaz

Today is the 113th anniversary of the birth of F. A. Hayek, perhaps the most subtle social thinker of the 20th century.

He was awarded the Nobel Prize in Economics in 1974. He met with President Reagan at the White House, and Margaret Thatcher bangedThe Constitution of Liberty on the table at Conservative headquarters and declared “This is what we believe.” Milton Friedman described him as “the most important social thinker of the 20th century,” and Lawrence H. Summers called him the author of “the single most important thing to learn from an economics course today.”

He is the hero of The Commanding Heights, the book and PBS series by Daniel Yergin and Joseph Stanislaw. His most popular book, The Road to Serfdom, has never gone out of print and sold 125,000 copies last year. John Cassidy wrote in the New Yorker that “on the biggest issue of all, the vitality of capitalism, he was vindicated to such an extent that it is hardly an exaggeration to refer to the 20th century as the Hayek century.”

Last year the Cato Institute invited Bruce Caldwell, Richard Epstein, and George Soros to discuss the new edition of The Constitution of Liberty, edited by Ronald Hamowy. In a report on that session, I concluded:

Hayek was not just an economist. He also published impressive works on political theory and psychology.

He’s like Marx, only right.

Cato published two original interviews with Hayek, in 1983 and 1984.

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See also:
Hayek 12: Friedrich Hayek's 20th Death Anniversary, March 26, 2012
(has links to Hayek 1 to 11, discussion on some chapters of Hayek's book, "The Constitution of Liberty")
Hayek in Asia, September 20, 2010
Hayek in Asia 2: Shanghai Austrian Economics Summit 2012, April 15, 2012

Rule of Law 13: Freedom Barometer 2011

(Note: this is my article today in the online magazine, http://www.thelobbyist.biz/perspectives/less-gorvernment/1288-freedom-responsibility-and-freedom-barometer)

Freedom is absence of coercion. A person is free if he can do what he wants so long as he does not harm or prevent others from pursuing their own freedom. This includes the freedom to put up a bakeshop, a barbershop, other entrepreneurial activities with the least restrictions and regulations possible. But freedom does not include the right to stab or kill another person over some disputes.

Coercion is a matter of degree. A child is not free to watch tv all he likes if the parents will limit his exposure to tv. A person is not free to get somebody else’s property without the consent of the other person on a voluntary exchange contract, like someone buying a product or service.

Most coercion are unjustified, like the various coercion imposed by governments: taxes, fees, fines, regulations and other prohibitions. Trade protectionism for instance prohibits the citizens from buying certain goods made abroad at the cheapest price possible because government has imposed tariff, import and related taxes that make those imported products become expensive. Entrepreneurship is hindered when various levels of government offices, from local to national, will impose many different permits with their corresponding fees and taxes.

To estimate how much freedom people enjoy in different countries, certain studies and indexes on economic freedom, press freedom, political freedom are done by various groups and think tanks around the world.

In Asia, a new index was developed by the Friedrich Naumann Foundation for Freedom (FNF) called the Freedom Barometer (http://freedombarometer.org/). The index they devised is composed of three factors and these are their sub-components:

1. Political Freedom: (a) Free and fair elections, (b) Absence of unconstitutional veto players, and (c) Press freedom.
2. Rule of Law: (a) Independence of the Judiciary, (b) Corruption, and (c) Protection of human rights.
3. Economic Freedom: (a) Security of property rights, (b) Size of Government – expenditures, taxes and enterprises, (c) Regulation of credit, labor and business, and (d) Freedom to trade internationally.

More freedom means higher score (0 to 100). A government in one country may give more economic freedom to the citizens, say they put up any shop any day and anywhere with the minimum restrictions and regulations, but people have limited political freedom, they cannot publicly criticize or blog negative things about the government.

A composite score is then derived to get the degree of freedom that people in a particular country in Asia. And here is the result for 2011:

Source: http://freedombarometer.org/ranking/

The Philippines ranked 9th out of the 12 Asian countries surveyed with complete datasets in 2011. The same rank was also obtained by the Philippines In the 2010 Freedom Barometer, The high incidence of media people who have been murdered – most especially during the “Maguindanao massacre” – gave us a low score in press freedom. The high degree of corruption in the country, from the Executive to Legislative to Judiciary, also gave us low score in the Rule of Law category.

There is a big challenge for the Philippine government, especially under a liberal administration – the only Liberal government in Asia actually – to improve these poor performance.

It is good that the FNF has taken this initiative to remind Asian governments hat more and more eyes and minds are looking at them, watching their current policies and programs if they promote more political and economic freedom, if they respect and promulgate the rule of, or not.

But more than expecting governments to reform by themselves and let go of certain unnecessary restrictions and coercion, it is the citizens’ obligation, it is individual responsibility, to guard whatever freedom they have from being stolen and deprived by their governments. And to reclaim and take back previous freedom which have been hijacked and taken away from them in previous laws and regulations.

Freedom and responsibility, rights and obligations. They are two sides of the same coin. People who are afraid of responsibility are afraid of freedom itself.
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See also
Rule of Law 1: Entrepreneurship and Government Permits, September 16, 2008
Rule of Law 2: Property Rights and Lefts, March 02, 2009
Rule of Law 3: AIG Bonuses, Government Bail-outs, March 18, 2009
Rule of Law 4: On Thailand Crackdown, April 18, 2009
Rule of Law 5: Lawless State, Corruption and Coercion, August 01, 2009
Rule of Law 6: Discussions in Facebook, January 10, 2010
Rule of Law 7: Property Rights and IPRI 2009 Report, February 27, 2010
Rule of Law 8: Purpose and Supremacy of the Law, June 15, 2010
Rule of Law 9: Laws, Prohibitions and Corruption, June 30, 2010
Rule of Law 10: On Wang-wang and Government Laws, July 04, 2010
Rule of Law 11: RoL Index, October 15, 2010
Rule of Law 12: Gloria Arroyo, Travel Abroad and the SC, November 16, 2011

Fireworks and Liberty: New Year 2012

Happy New Year, 2012!
It's 6am here in Manila as I write this. Europe will have their 12:01 am of January 1, 2012 in two hours. Just one advanctage of being in East Asia, we're +7 to +8 hours GMT.

One good thing this new year -- there are less firecracker explosions than in previous years. Or there may be about the same, but they end quick.

Fireworks in Beijing. The fireworks culture has slowly set in among the Filipinos. There are many fireworks display in big cities around the country, especially in Metro Manila. Here in Iloilo City, there were also several fireworks display. It should be a case of the price of fireworks coming down, they are becoming more affordable to the middle class, thanks to competition among various fireworks manufacturers.

Another is that the gory photos and videos of people who lose their arms and other body parts has scared many people from buying those powerful firecrackers. There are also government campaigns, led by the DOH, to discourage people from lighting those firecrackers.

Fireworks in Taipei and Sydney. Luckily, I've been to these two cities. In October last year in Sydney, and November this year in Taipei, both to attend a conference. Taipei isn't really glitzy compared to say, Hong Kong or Singapore or Seoul, but Taipei 101 building is really tall and very prominent in the city.

Singapore and Sydney fireworks today. My trip to Sydney last year was my first and last, so far. I like that city, but like all other big and modern cities worldwide, it is expensive.

Fireworks mean glitzy and colorful lights on the evening sky. They also symbolize economic prosperity of the people, or some wealth (even borrowed one) of governments, who sponsor the celebration and light up the sky. And only liberty and economic freedom can guarantee economic prosperity. Economic monopolization and centralization, usually by political dictatorships, always result in disaster and mass poverty.

Once more from Sydney. Photocredit from Daily Mail, Here comes 2012! Spectacular fireworks light up the skylines as countries across the world welcome the new year

New year means new challenges. Or looking at old challenges in a newer perspective. Each passing day, month and year is a stepping stone to acquire new knowledge and new perspectives. Slowly we are building a more modern, more plural, more diverse but more peaceful society. There is less war around the world, and any existing wars are always sponsored by BIG governments with big armies and big debts.

And slowly we are building a more free society into the future. For ourselves, our children and the generations to come.

Pol, Ideology 24: Democratism and Coercion

Compared to most ideologies -- socialism, communism, fascism, autocratism, liberalism, republicanism, etc. -- democratism, or belief in democracy, "rule of the people, by the people, for the people", seems to be the most popular worldwide. Even dictators and autocrats would call themselves as practicing democracy in one way or another.

I think that apart from liberalism, most other ideologies including democracy, have taken the BIG government as the default mode, even implicitly. Individual liberty often takes a back seat compared to "collective good" or "national interest" or "communal aspirations". Thus, the main agenda of most of those ideologies is to have "good governance" and to limit abuse of political power by the ruling political party, clan or monarchy.

Among my friends in facebook that I follow more regularly is Dr. Zosimo Lee, a professor of Philosophy at the University of the Philippines (UP). He was actually my teacher in my Philo 11 (Introduction to Philosophy) class in my undergrad in the 80s. Below I post two of our exchanges, dated December 6 and December 16 (today), respectively.

Below are among the Asian dictators who are now out of power. This is related to Sir Zos' first discussion, below. All photos are from wikipedia.

Zosimo Lee: Adrian Karatnycky and Peter Ackerman report that of the 76 authoritarian regimes that were dismantled between 1972 and 2002, more than 70% were the result of nonviolent civilian uprisings. Maria Stephan and Erica Chenoweth found that nonviolent uprisings tend to be more effective than violent campaigns. Of the hundreds of resistance campaigns over the past century, nonviolent movements were successful 58% of the time against only 26% of groups employing violent tactics achieved their goals. These are significant findings.

Nonoy Oplas: People in general are rational. They dont want to do violent things whenever possible. But some people are simply irrational, these include dictators, bureaucrats and military officials. They often live unproductive life, meaningless work, like having bloated military supposedly to protect against external aggression even if such threat is zero. Thus, violence often starts from this unproductive sectors of society who want to live and retire being fed by taxpayers.

Inequality 7: Roger Federer, Manny Pacquiao and Free Market

Sports Illustrated recently released its "Fortunate 50" richest athletes around the world. Here is their 20 highest-earning international athletes. The Philippines' most famous person and athlete, Manny Pacquiao, is no. 2!

The amount stated is for salary/ winnings + endorsements. In the Top 20 richest international atheletes outside the US), Paquiao is the only boxer. He earns bigger than the heavyweight or super-heavyweight champions. Two are tennis superstars (Roger Federer and Rafael Nadal), three are F1 drivers (Fernando Alonso, Lewis Hamilton and Michael Schumacher, yey, Schumi!).

Soccer has the most number of rich superstars, there are 8 of them in the top 20: (Lionel Messi, Cristiano Ronaldo, Wayne Rooney, Kaka, David Beckham, Ronaldinho, Carlos Tevez, Frank Lampard).
NBA superstars are 3 (Yao Ming, Dirk Nowitzki, Pau Gasol), baseball has 2 (Ichiro Suzuki, Miguel Cabrera), and motorcycle racing has 1 (Valentino Rossi).

Meanwhile, here is SI's 50 highest-earning American athletes this year.

Money in golf does not come much from winnings, but from endorsements.

A friend in facebook, a self-confessed Marxist-socialist, posted the earlier link in his wall. I commented that it just shows one beauty of capitalism (hehe, alam ko dami galit sa mga friends ni bonn just to mention the "virtue of capitalism"). Those who really excel in their field are super-compensated. And here's another virtue of capitalism: those "super-compensated" are also super-solicited by so many charities, foundations, friends, relatives, clans, etc. And that diffuses the wealth of the super-compensated. Bill Gates for instance did not spend all his money for himself, he put up a super-huge foundation that grants money sometimes bigger than the grants by USAID or WB. Warren Buffet also gives several billion $ of his own money to the Gates Foundation.

He commented that capitalism "is the system that is causing suffering, impoverishment, and misery of billions and billions of people in the world", but that "there is a way to organise capitalism - its production and distribution - to improve the lot of billions of people in the world." And finally added, "we have an experience of modifying capitalism just like the Keynesian welfare state which is far more acceptable to my values than the Hayekian-Friedmanian life of misery and selfish individualism."

Imagine that statement, "billions and billions of people", including the billion plus in China, another billion plus under near-socialist India. I reminded him that facebook is also a product of capitalism, does fb also causes lots of capitalist exploitation?

And the reference to ‎"Keynesian welfare state", like Denmark where he currently works that he's beginning to criticize more ofen now. That welfare state of 4 or 5 million people which does not want to open its border to people victimized by socialism or other statist capitalism somewhere. A welfare Keynesian state will always be allergic, even paranoid, to open its economy to "billions of people" that socialists and welfare statists wish to help.

Another friend commented about small or micro capitalism. I also like "people's capitalism" or micro capitalism. If being an employee forever sucks, then employees who are ambitious and hard-working enough should start becoming an entrepreneur, to become job creator themselves. But look at how the governments of the Philippines and other countries treat entrepreneurship with lots of bureaucracies and taxes to pay even before one can start a business. Statism and envy of entrepreneurship are the cousins of socialism.

Global capitalism, or nation-based capitalism, or even micro-capitalism aka people's capitalism, will always result in inequality. Even among siblings raised in the same house by the same parents and went to the same school, etc., will have inequality in performance someday -- academically, financially, economically. And this leads us to individual freedom, individual ambition and responsibility, vs. its other side, individual irresponsibility, dependence and lack of high personal ambition. And that explains why some guys are super-rich while others are super-poor.

If you is too focused on equality, then good examples will be N. Korea, Myanmar, Congo, Zimbabwe, etc. People there are generally equal, equally poor, except the leaders of their socialist or near-socialist state.

If one will focus on greater wealth creation, then one must accept inequality as one inevitable result. Give three people one hecare of land each, contiguous to each other. One may develop an organic farm (no tractor, no factory, environment preserved, yeah). One may develop it as housing for the squatters. One will develop it into a compound of high-rise condo buildings. See the huuuuge inequality later.

By writing the inevitable result of inequality in a free society, I was mistaken for advocating or valuing inequality per se. Wrong. I value individual freedom or liberty, period. The individual's freedom to ambition soooo high, freedom to work so hard to realize that ambition, and that individual will soon become a super-rich entrepreneur or capitalist. The freedom to move across islands, across countries and continents, is part of that individual freedom.

(These pictures of airplanes I took while inside various international airports in some my recent foreign trips). Incidentally, it is those global multinational capitalist enterprises that allow such international mobility -- the multinational airlines, hotels, and those huge capitalist enterprises like facebook, google, youtube, yahoo, facilitate information gathering by people before and during their international mobility. Inequality is an outcome, not advocacy, of individual freedom. Government coercion like socialism and big statism is the main enemy of individual freedom.
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See also:
Inequality 1: Rich Getting Richer is Good, August 29, 2009
Inequality 2: To Each According to his Needs... September 01, 2010
Inequality 3: Freedom, Free Market and Inequality, February 14, 2011
Inequality 4: Why Inequality is Good, May 10, 2011
Inequality 5: Comments to Why Inequality is Good, May 11, 2011
Inequality 6: On Social and Class Dominance, May 13, 2011
Hayek 3: Inequality and Progress, May 19, 2009