Inequality 29, More on Oxfam, squatters and a lamborghini

A friend commented on my critique of the Oxfam paper and said that it is not only Oxfam that questions rising inequality, there are also some reference to the  Credit Suisse report, the last Davos conference saying that inequality as "deepening", and Piketty says the same thing.

My main issue here is against bad math. The numerator, world's top billionaires (numbers from Forbes) is cumulative wealth of the top 80, or top 100, etc. rich individuals, accumulated after 4, 5, 7 decades. But denominator is wealth of a country for 1 year. Numerator will be bloated while denominator is relatively understated, that is why people get quotients like 40% or 60% of GDP, etc. 

To compare apples to apples, it should be:

[wealth of top 10 (or top 80, or top 100, etc.) accumulated over 40 years] / [national wealth (or GDP size) accumulated over 40 years].

What Oxfam and others lousily did is:

[wealth of top 10 (or top 80, or top 100, etc.) accumulated over X years] / [national wealth (or GDP size) of only 1 year]

That is why the numerator is bloated, the denominator is controlled. Lousy math.

Here's an analogy. People take the cumulative wealth of the CEO of a company with 200 employees, the value of his houses, cars, investments, other properties, things that he acquired over the past 40 years as an ordinary employee, then a junior officer until he became a CEO of that same company. That's the numerator, it's big because it's accumulated wealth over 40 years.

Then people get that company's gross sales for one year. This method of bloated numerator over denominator = "scandalous inequality" is simply lousy math.

The gross debt/GDP ratio can be comparable because a responsible government would aspire to pay back or retire some debts in period of no economic and financial turmoil or crisis, so the ratio should flatline or even decline after sometime. But most or majority of governments are outright irresponsible, spend-spend-spend, borrow-tax-borrow is their endless motto, thus the ratio keeps rising.

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See photo 1 below. Many people say having those tall and flashy skyscrapers in Makati is scandalous or even criminal because there are so many squatters left behind. Are they correct in saying this?

No. Why? 

1. In the first place, there should be no squatters in this part of the river, Pasig river. That area should have no structures because that is a river bank, prone to flooding and the people living on those structures contribute to more solid wastes directly dumped to the river.

2. Assuming that all laws (on private property, public property, environmental protection, etc.) are waived and the squatters are justified to live in that river bank. Those structures will greatly improve as the residents there have property rights to the area, there is no threat of being demolished, so they will aspire to build more stable structures.

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See photo 2 below. Some people say that society should demonize this, that government should tax ostentatious goods 500%, 2,000% or more as an "equating factor". Are they correct in saying this?

No. That is another politics of envy, the thinking that no one in this country should drive a lambo, a ferrari, etc. because there are "so many" poor people. Better if everyone is riding a motorcycle or tricycle, there will be equality? Equally poor?

In a country of 102 M people, only a few dozen of Lambo and Ferrari? There should be hundreds. There should be more rich and super rich people here.

A position in government is often a trap. Rational people become irrational, easily infected by a welfarist, populist, and even socialist thinking. Inequality is wrong so there should be forced equality. Pull down the rich and efficient and subsidize the lazy or irresponsible. Like people who do not want to work, or they work 6 days a week but also drink and party 6 nights a week and have zero savings.

"Trickle down" philosophy is actually from a statist or "worship the state" philosophy. The biggest entity in society is the state and its national and local agencies and bureaucracies. From the state, subsidies and welfare and the moon and the stars will trickle down to the masses.

A friend commented that "To improve I believe we all need to be Smart. Being able to get by with just a "job" is not enough. People don't realize that in a few years computers will replace us. I struggle to figure out which job a computer won't do better in the future."

Right, and many jobs that are done by less skilled workers -- laundry, street sweeping, kitchen dish washing, rice planting and harvesting, cashiers in MRT stations, etc. -- will be done by machines. And many anti-rich, anti-capitalism, anti-globalization, anti-many things will cry out loud in the streets to further raise the government-dictated minimum wage. And this will result in an unintended consequent of more unskilled people who will no longer be hired because the mandatory wages + mandatory social contributions have become higher while those skills are replaceable by machines.

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See also:

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

Inequality 28, IBON and sensational analysis, November 19, 2015

BWorld 42, World inequality, Oxfam and bad mathematics, February 11, 2016

Pol. Ideology 20: Liberalism and the Squatters

(This is my article today in thelobbyist.biz with original title, Squatters, land reform and liberalism)

Squatting or settling illegally on land that people do not own or lease, is violation of private property rights. Land reform and forced land redistribution without timetable, is another violation of private property rights. Liberalism is the philosophy that focuses on individual liberty, rule of law and private property rights.

Early last week, there was a news report, Aquino plans massive relocation of squatters. It reported that:

President Beigno Aquino III said late Saturday more than half a million squatter families in Metro Manila will be relocated and receive two hectares of farm land each under his administration’s program on illegal settlers.

He said the government had identified some 1.5 million hectares of farm land that could be distributed to an initial 560,000 squatter families in Metro Manila in a bid to decongest the capital and improve agricultural production nationwide.



 “The Department of Agriculture and the Department of Environment inventory shows we can lend, lease or give two hectares of land per indigent family provided they cultivate agricultural crops, develop, and earn from the land they will live on.

“If they fail to stick to these conditions, the land will be taken from them.”

If this plan will push through, there are several negative implications.

One, it pays to become an illegal settler. By living on other people’s private land, you will be rewarded with land up to two hectares that can become yours. Even ordinary employees cannot afford to buy such huge area of land.

Two, for agribusinessmen and women, the threat of forced land redistribution with no timetable will remain. From former President Cory Aquino’s CARP law of 1998 that was supposed to end in 1998, it was extended to 2008, and further extended to 2013. Looks like it will be re-extended to 2018, or longer. The number of squatters nationwide is rising, not declining. So more private lands will be subjected to forced land redistribution in the next few years to be given to the squatters.

Three, not all squatters are former farmers or have the heart in farming. What can happen is that upon getting the land title or similar proof of ownership or lease, some squatter beneficiaries can sell or transfer the right to use such land to other people, get the money and squat again in other cities, then hope that the existing and the next administrations will give them new subsidies and entitlements.

Four, the spend and spend, borrow and borrow and later, tax and tax policy will continue. Giving away land for free or at highly subsidized price, then provision of various farm and marketing support to land beneficiaries, is a costly and expensive program.

And five, liberalism and (classic) liberal philosophy that are supposed to be implemented by the President and his team who come from the Liberty Party, will be sidelined further, if not forgotten.

One of the big burdens and baggage of the Philippine economy and society is the lack of strict promulgation of the rule of law, of securing private property rights like land. Many people and businessmen will be hesitant to develop certain lands into long-term agribusiness projects because the “land reform with no timetable” will be haunting them for several years more to come.

Liberalism is supposed to be the main philosophy and guiding principle by the current administration that will help shape public policy. But as things unfold, real liberalism is being pushed to the margins while statism and near-socialist policies take center stage.

Let us hope that there will be awakening in the minds of key LP leaders. That LP stands for liberalism and individual liberty, not statism or socialism.
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On "No taxes, No Government"


This is among the common misconception, honest or deliberate. that some people, academics and consultants, NGO leaders included, would portray someone who advocates minimal and limited government. Personally, I have NEVER advocated that, and I do not believe in anarchy or zero government.

Government is necessary, I wrote several times, on certain functions. I believe in BIG government -- to run after killers, murderers, thieves, rapists, terrorists, bombers, kidnappers, carnappers, land-grabbers, other criminals, especially the organized and well-armed gangs.

Thus, we need taxes to finance government to perform such function, to promulgate the rule of law, to protect private property rights, and citizens' right to life against aggression. 


But we need no taxes for government to over-regulate entrepreneurship and job creation. We need no taxes to create and expand various bureaucracies that do nothing but make the life of job creators more difficult and more miserable.

"No taxes, no government, no subsidies" is a classic paranoid reply by many people who do not understand or appreciate the philosophy of more personal responsibility, more individual freedom, limited government and free markets.

Someone redefined the excise tax as a tax on goods where "the source is scarce or expensive". This is wrong. If this is correct, then the government should also slap medicines, medical equipment, construction and housing materials, others with excise tax. These are "necessary product/s, but we do not produce it out of thin air."
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See also
Pol. Ideology 14: Liberalism, Democratism and Coercion, January 18, 2010
Pol. Ideology 15: Socialism, Conservatism and Liberalism, March 08, 2010

Pol. Ideology 16: Liberalism and Social Opportunity, July 29, 2010

Pol. Ideology 17: The LP and the Philippine President, November 03, 2010

Pol. Ideology 18: John Lennon and Liberty, Purpose of the Law, December 15, 2010

Pol. Ideology 19: What is the Role of Government?, March 08, 2011

Welfarism 7: Squatters in the Univ. of the Philippines (UP)

Last week, I wrote this:

Squatters in UP

Recently, there were a few undesirable events happening at my alma mater, the University of the Philippines (UP) in Diliman campus. Last year, a male student was killed by some outsiders or non-students/personnel, said to be from the squatters area. Last week, a rumble occured between outsiders who forced their way inside during the UP Fair, and a member of the UP Police force was badly wounded.

These and related incidents are rooted to one issue in the university: the presence of too many non-UP related residents, aka "squatters". They occupy a big portion of the land area of UP Diliman. So many UP Diliman personnel -- faculty members, administrative staff, etc. have to live in sometimes far away cities and villages because the area occupied by the squatters is big. The same problem is experienced in UP at Los Banos (UPLB). Lots of squatters at Mt. Makiling, UPLB side.

UP is supposed to have property rights on its area. UP's property is UP's property, and it's not a property of the city government or the squatters' association or Congress or the Office of the President.

But everytime the UP adminstration will move to clear those areas of squatters, Mr. Mayor, or Mr. Congressman, some city councilors, etc., will call the UP President or campus Chancellor, asking that certain due processes should be observed, sthat the squatters be spared. They are voters and political supporters (or would-be supporters) of incumbent politicians.

So, how to solve the squatters problem? Along with UP's annual fiscal problem -- every year, UP administrators will beg the support of Malacanang, DBM, Congress and Senate -- UP should become a private university someday.

UP has been a fiscal beggar the past 100 years, even the squatters it can't force out because UP has some political favors to return to Congressmen, Senators, the President, and perhaps even the city Mayor and provincial Governor.

UP's (other state U's) privatization should be coupled by major tax cuts. Cut expenditures, cut taxes, cut bureaucracies.

After all, education is parental responsibility, not government responsibility.

1 comments:

Chiwee said...

Interesting. As per my tabulation on these IS inside UPD, they now occupy more than 79 hectares of campus land and still growing. Now that's 80% more space than the land built with legit structures inside (UP-Ayala technohub, student/faculty/staff housing, academic structures and numerous government offices scattered inside.

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The concept of “property rights", especially private property, becomes diluted, if not becomes a farce, when public authorities come in. Those officials are used to assuming and working with public land, public park, public rivers and oceans, public air space, etc. When a resource is owned by everyone and no one in particular, expect some abuse of that resource. That partly happens in UP.

A related issue among squatters, are former and retired faculty members. They have left many years ago, took consulting work outsize, zero official work with UP, and still occupy those houses in UP meant for faculty members.

Wishing a safer UP campus, an academic-oriented and not a social welfare and public housing campus, is not elitist. It's those people who insist that UP should be a public housing compound who are elitist because they don't understand what an academic environment should be, and yet they impose their concept of social welfare, to the rest of the academic community.

What can solve any conflict of land use in UP is a well-defined property rights. Clearly defining, this part is UP property. Over there is not. Then those squatters, including retired faculty who are no longer connected with UP, should get out, they give UP housing to new and current UP faculty members.

The main decision makers in the university are the UP administrators, not the Office of the President or Congress or the Senate or the City Mayor's Office.

Among the most urgent issues for UP now is how to house its faculty, students, non-acad personnel, so that they won’t have to live far away, where transportation cost and/or rental cost are much higher, which cuts deep into their take-home pay and/or monthly allowances as students.

The space, the housing units are already there, in the case of retired faculty members for instance. Why can’t UP use it for its current faculty members? No need to build new units, it will take years and xx million pesos and new round of political begging with Malacanang, Congress and Senate to approve a new housing program for UP. That is why I suggested that UP should assert its property rights over its properties inside the campus. Those land and housing units occupied by the squatters are owned by UP as an institution – not by the UP administrators, not by Malacanang and Congress, not by the QC Mayor, not by the squatters, not by any bleeding heart lefties or burning heart righties.

If UP becomes a private university – after 1 century of being a fiscal beggar, of being a political eunuch de baog that cannot enforce its property rights – many of those housing and crime problems will be solved, or at least significantly reduced. Even the most interventionist politicians would be ashamed to transgress into private property by private universities. Hence, you don’t hear huge squatter problem, if any, in Ateneo or UE or La Salle or AMA or UE, etc.

A friend suggested to “guarantee long term tenure for the squatters.” This is dangerous. Why would we reward theft of other people’s or institutions’ property with long-term tenure? Are we now rewarding robbery and theft?

If the Philippine State wants, they can cut UP Diliman’s land area from say, 4,000 hectares to only 500 hectares, even 100 hectares, fine. Give all the “freed” land to the squatters, both poor and multi-millionaire squatters alike. Then set UP free as a private university. It will be one huge welfare program by the State where it will distribute lands for free or very cheaply to squatters. Some current universities were just computer and training schools about 2 or 3 decades ago, now they are huge universities putting up campuses left and right. UP with a 10 decades history and has produced some of the brightest minds of this country, should be able to survive and thrive as an autonomous institution.

I will concur that primary education can be State responsibility. Perhaps until high school on some cases. But tertiary education should be private. What I know is that all responsible parents in this country work hard just to bring their kids to a private school somewhere, from pre-nursery to kinder to high school. Not that public elementary education now is complete junk, a few are still good. But the level of inefficiency and waste in public school system is simply high. I talked to a teacher once, who teaches at a private elementary school, and was moving the earth and the moon so she can transfer to a public school. Why? Parents in private schools are very demanding, teachers need to work hard to ensure that their students would learn something useful, and yet the pay is lower. Whereas in public schools, teachers don’t care sometimes if their students won’t learn a thing (average ratio is usually 60 students/teacher) and yet the pay, bonuses and pension are high.

Some parents are just simple and cool. They work hard, they also party hard. They work 6 days a week and also drink 6 nights a week. Well, ok, they don’t drink 6 nights a week, they only gamble 6 nights a week. After all, their children’s education is social and government responsibility, why worry?

* See also:  Welfarism 6: Obama and US Entitlement, November 11, 2008