What do Bono (U2 band), Jeff Sachs (Kofi Anan's chief consultant on the UN Millenium Devt. Goals, MDG), Bill and Melinda Gates (multi-billion philantrophists), former US Presidents Jimmy Carter and Bill Clinton, Make poverty history (headed by former rock star Bob Geldoff) and William Easterly (of NYU) have in common? They're either Americans or Brits?
Well, they are among the nominees in the "2006 Commitment to Development Award" sponsored by the Center for Global Development (CGD, www.cgdev.org) and Foreign Policy magazine. And that's where the commonality among them ends. For these guys have varying, even opposing, ways in advancing development in the world's poorest regions and countries. For instance, while Bono, Geldoff and Sachs are campaigning hard for "more foreign aid" to Africa and other poor regions of the world (of course they cannot be as loud in campaigning as well for "more taxes please" to finance those "more foreign aid"), Easterly wrote a book, "The White Man's Burden: Why the West's Efforts to Aid the Rest HaveDone So Much Ill and So Little Good" (http://www.cgdev.org/content/article/detail/6926/ ). I voted for Easterly in the CGD survey.
Dr. Easterly by the way came to my alma mater, the University of thePhilippines, School of Economics (UPSE) January 17 this year. He spoke on "Can national policies really raise growth?". His talk was based on his other book, "The elusive quest for growth: economists'adventures and misadventures in the tropics". I was in that big conference, also attended by the Philippines' 5 past economic planning secretaries and ministers! Easterly didn't talk much about foreign aid though. I spoke briefly during the open forum, and argued that "less government and less taxes can raise economic growth".
"The white man's burden" was among the recently featured articles in Tech Central Station (www.tcsdaily.com), below. For brevity purposes, I cut some paragraphs. If interested to see the entire article, see
http://www.tcsdaily.com/article.aspx?id=042806D.
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Planners vs. Searchers
By Roger Bate
28 Apr 2006
The White Man's Burden is a rare book. Its author, William Easterlydistills all of his considerable knowledge and experience aboutforeign aid into it, and never pulls punches in a subject noted forstar-studded platitudes and uncritical thinking. Given how aid hasfailed so utterly in so many places to alleviate the suffering of thepoorest people, The White Man's Burden could have been a depressingread. But Easterly's natural good humor and humility -- as well as hissolid narrative abilities -- make it an inspirational work. Perhaps noone knows better than Easterly that you need a good sense of humor towork in foreign aid to begin with.
The 2005 love-fest with Africa -- G8 summit, Live8 concerts, Angelina,Bono and Brad highlighting the plight of the poor, etc. -- and theideal of making poverty history has led to an increase in aid fundingfrom private and, especially, state coffers. Easterly's conclusion,however, is that this money will not only be wasted, but it will becounterproductive.
Foreign-aid is driven by "Planners" says Easterly. Perhaps the most famous planner and a determined opponent of Easterly is Jeffrey Sachs of Columbia University and the United Nations. Planners think of development as a technical problem that can be overcome by ambitious, multi-faceted, centrally-controlled campaigns, backed up by oodles of cash. Unfortunately, planning lacks market feedback mechanisms, so cannot measure useful performance indicators. Plus, Planners are rarely held accountable for their myriad failures...
Easterly demonstrates that nearly all aid programs fail to reach individually set targets "A UN summit in 1990, for example, set a goal for the year 2000 of universal primary-school enrollment. (That is now planned for 2015). A previous summit, in 1977, set 1990 as the deadline for realizing the goal of universal access to water and sanitation. (Under theMillennium Development Goals, that target is now 2015). Nobody was held accountable for these missed goals....
While Easterly is critical of the foreign aid status quo, he cites many examples of ways in which aid has worked, such as food vouchersto poor families -- contingent upon children attending school ratherthan working in low productivity jobs. Such a scheme was pioneered inMexico and is working well there and elsewhere....
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Last April 20, 2006, I wrote this:
Debt-Relievers are Themselves Indebted
The G7 countries -- US, Japan, Germany, UK, France, Italy, Canada -- are among the world's largest lender countries. They set aside billions of dollars every year in foreign aid to be lent to the world's poorest economies through the multilateral institutions like the UN, World Bank (WB), and Asian Development Bank (ADB), and their respective countries' international development agencies.
Presidents and politicians of indebted poor countries always look up to the G7 and other rich countries for "debt forgiveness/write-off", debt swaps like "debt for nature", "debt for UN MDG goals", and other forms of "debt relief". But are these rich countries, the G7 in particular, still that rich to throw in more money to the indebted poor countries? Nope, many of them are not, and they themselves are highly indebted. See table below.
General government gross debt as % of GDP, G7, 2000 and 2005 respectively:
1) Japan: 142.2%, 175.5%
2) Italy: 111.3%, 106.3%
3) Canada: 101.5%, 85.0%
4) Germany: 58.7%, 67.5%
5) France: 56.6%, 67.3%
6) US: 57.1%, 62.9%
7) UK: 41.6%, 43.3%.
(source: IMF, World Economic Outlook, April 2006 database).
So how can these countries continue their practice of throwing more money into the same problem in poor countries, when they themselves are indebted? The G7 and other indebted rich countries can help the poor countries even with less foreign aid if the former will reduce their indebtedness, reduce their borrowings, which will help push world interest rates downwards. Poor countries' debt service payment (both foreign and domestic debts) will decline if interest rates (both world and national) will go down. Then poor countries can either reallocate part of their expenditures from debt payment to social services, or cut taxes to encourage entrepreneurship and job creation among the people.
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See also: Foreign Aid 3: Bob Geldoff and More Aid, November 10, 2005
Monday, May 01, 2006
Friday, April 21, 2006
Welfarism 3: Spiraling Costs and Rent-Seeking
A story today from the Financial Times reported, "Welfare costs threaten Merkel reform agenda". The related numbers from the same report are as follows:
* Spiralling welfare costs could add €4bn to Germany’s 2006 budget deficit and undermine Chancellor Angela Merkel’s efforts to bring her country’s finances under control
* faster-than-expected rise in the number of households claiming long-term unemployment benefits could bring this year’s deficit from a planned €38.3bn to well above €40bn ($49bn, £27.7bn).
* the number of households claiming “unemployment benefit II”, the most basic form of welfare support, comparable to the UK’s income support, has risen from 2.9m to 3.9m since its introduction 15 months ago.
* According to a labour ministry document obtained by the FT, the actual number is even higher. The document shows the agency’s monthly reports, based on samples, had underestimated the number of claimants by 200,000 a month throughout last year, suggesting today’s figure was around 4.2m.
* estimates total payments in 2006 could reach €28bn, well above the €24.4bn provided for in the budget.
* loopholes appeared in the system that have led to a flood of claims. Young jobseekers, for instance, have moved out of their parents’ homes and into their own flats in order to claim generous rent subsidies.
* news that her fiscal consolidation plan may be in jeopardy could be a blessing for Ms Merkel. It should make it easier to justify a hefty, three-point increase in value-added tax planned for next January.
Never fails. People respond to incentives and shy away from disincentives. If you put a lot of incentives and subsidies on something (unemployment claims, house rental subsidies, etc.), then you'll have more claimants than what you expect. If you tax people more, like the planned 3 point increase in VAT, you'll discourage more investments and job creation that will solve your high unemployment, high unemployment claims spending. Many businessmen will still invest, of course, but not in home country where taxes are high and piling on each other. Many of them will do business elsewhere where taxes are lower, labor and environmental laws are more liberal, then send some income and profit back home.
Many left-leaning, welfarist, socialist and statist groups in the Philippines and other developing countries dream of following the welfare system of Germany, France and many European coutries. They want to force social equality by over-taxing and over-regulating the productive and hard-working people, give the money to guys who are encouraged by generous welfare, with the huge, thick and expensive layers of government bureaucracy and politicians as intermediaries.
Subsidizing personal irresponsibility and penalizing hard work is one formula for social equality and mediocrity. And this is the folly of socialism. As Larry Reed of Mackinac Center pointed out, "equal people are not free and free people are not equal". Not that Germany and other rich countries of Europe are largy socialist, they are still predominantly capitalist but the bureaucratic, high state welfare system and high taxes discourage certain individual initiatives and entrepreneurship of their citizens. European countries are just lucky that they have put up good and less corruptible institutions. Government personnel are less corruptible because of their high pay and generous allowances and pensions someday. But what was corrupted is the system of incentives and disincentives in society.
I guess this is one reason why a number of Asian countries are growing much faster than the rest of the world. Aside from certain philosophical and cultural ethics that drive their people to high ambitions, they are not burdened by strict government-mandated welfare standards and the energy-sapping bureaucratic regulations and taxes. For instance, people work 10 to 14 hours a day, 6 days a week (equivalent to 60 to 84 hours/week), and any government labor laws that limit people's work to only 35 or 40 hours/week are not strictly followed.
Rent-seeking and Government
In the book Government Failure: A Primer in Public Choice written by Tullock, Seldon and Brady (2002, published by Cato Institute, Washington DC), chapter 4 was entitled "The cost of rent-seeking", written by Prof. Gordon Tullock. Dr. Tullock defined the words "rent seeking" as "the use of resources for the purpose of obtaining rents for people where the rents themselves come from some activity that has negative social value."
Examples of rent-seeking are (a) trade protectionism, where the protected local industry benefits but the local consumers are worse off; (b) private monopolies, and (c) direct income transfers by government where A is taxed and B receives the money. The real cost of rent seeking, according to Tullock, comes from the distortion of the voting process. People vote for politicians and legislators who promise them special local projects, barely realizing that the cost of high taxes from many other taxpayers elsewhere, and the high taxes that they themselves pay to finance the special local projects elsewhere, is high.
But the indirect damage of rent-seeking, he says, is even worse than direct damage. Example of indirect damage is drawing a big number of intelligent and energetic people into an activity that has no social product, or may have a negative social product (example, political lobbying for special privileges and protections).
I would say that around 95 percent of all forms of government restrictions, from bureaucratic procedures in starting a business, to erecting rigid labor laws like setting up high minimum wages mandated by Congress, to welfarism financed by high and complicated taxes, are rent-seeking in nature. They are tying productive people's hands, siphoning off if not outrightly confiscating, their income and savings, and transferred to people often driven by envy and too lazy to accept personal responsibilities on things that ought to be their private domain. The huge government bureaucracy and long layers of politicians that stand in-between the people whose incomes are confiscated and the beneficiaries who wait for such wealth transfer, also eat up precious social resources.
* See also: Welfarism 2: France Riots, Taxes in Welfare States, November 17, 2005
* Spiralling welfare costs could add €4bn to Germany’s 2006 budget deficit and undermine Chancellor Angela Merkel’s efforts to bring her country’s finances under control
* faster-than-expected rise in the number of households claiming long-term unemployment benefits could bring this year’s deficit from a planned €38.3bn to well above €40bn ($49bn, £27.7bn).
* the number of households claiming “unemployment benefit II”, the most basic form of welfare support, comparable to the UK’s income support, has risen from 2.9m to 3.9m since its introduction 15 months ago.
* According to a labour ministry document obtained by the FT, the actual number is even higher. The document shows the agency’s monthly reports, based on samples, had underestimated the number of claimants by 200,000 a month throughout last year, suggesting today’s figure was around 4.2m.
* estimates total payments in 2006 could reach €28bn, well above the €24.4bn provided for in the budget.
* loopholes appeared in the system that have led to a flood of claims. Young jobseekers, for instance, have moved out of their parents’ homes and into their own flats in order to claim generous rent subsidies.
* news that her fiscal consolidation plan may be in jeopardy could be a blessing for Ms Merkel. It should make it easier to justify a hefty, three-point increase in value-added tax planned for next January.
Never fails. People respond to incentives and shy away from disincentives. If you put a lot of incentives and subsidies on something (unemployment claims, house rental subsidies, etc.), then you'll have more claimants than what you expect. If you tax people more, like the planned 3 point increase in VAT, you'll discourage more investments and job creation that will solve your high unemployment, high unemployment claims spending. Many businessmen will still invest, of course, but not in home country where taxes are high and piling on each other. Many of them will do business elsewhere where taxes are lower, labor and environmental laws are more liberal, then send some income and profit back home.
Many left-leaning, welfarist, socialist and statist groups in the Philippines and other developing countries dream of following the welfare system of Germany, France and many European coutries. They want to force social equality by over-taxing and over-regulating the productive and hard-working people, give the money to guys who are encouraged by generous welfare, with the huge, thick and expensive layers of government bureaucracy and politicians as intermediaries.
Subsidizing personal irresponsibility and penalizing hard work is one formula for social equality and mediocrity. And this is the folly of socialism. As Larry Reed of Mackinac Center pointed out, "equal people are not free and free people are not equal". Not that Germany and other rich countries of Europe are largy socialist, they are still predominantly capitalist but the bureaucratic, high state welfare system and high taxes discourage certain individual initiatives and entrepreneurship of their citizens. European countries are just lucky that they have put up good and less corruptible institutions. Government personnel are less corruptible because of their high pay and generous allowances and pensions someday. But what was corrupted is the system of incentives and disincentives in society.
I guess this is one reason why a number of Asian countries are growing much faster than the rest of the world. Aside from certain philosophical and cultural ethics that drive their people to high ambitions, they are not burdened by strict government-mandated welfare standards and the energy-sapping bureaucratic regulations and taxes. For instance, people work 10 to 14 hours a day, 6 days a week (equivalent to 60 to 84 hours/week), and any government labor laws that limit people's work to only 35 or 40 hours/week are not strictly followed.
Rent-seeking and Government
In the book Government Failure: A Primer in Public Choice written by Tullock, Seldon and Brady (2002, published by Cato Institute, Washington DC), chapter 4 was entitled "The cost of rent-seeking", written by Prof. Gordon Tullock. Dr. Tullock defined the words "rent seeking" as "the use of resources for the purpose of obtaining rents for people where the rents themselves come from some activity that has negative social value."
Examples of rent-seeking are (a) trade protectionism, where the protected local industry benefits but the local consumers are worse off; (b) private monopolies, and (c) direct income transfers by government where A is taxed and B receives the money. The real cost of rent seeking, according to Tullock, comes from the distortion of the voting process. People vote for politicians and legislators who promise them special local projects, barely realizing that the cost of high taxes from many other taxpayers elsewhere, and the high taxes that they themselves pay to finance the special local projects elsewhere, is high.
But the indirect damage of rent-seeking, he says, is even worse than direct damage. Example of indirect damage is drawing a big number of intelligent and energetic people into an activity that has no social product, or may have a negative social product (example, political lobbying for special privileges and protections).
I would say that around 95 percent of all forms of government restrictions, from bureaucratic procedures in starting a business, to erecting rigid labor laws like setting up high minimum wages mandated by Congress, to welfarism financed by high and complicated taxes, are rent-seeking in nature. They are tying productive people's hands, siphoning off if not outrightly confiscating, their income and savings, and transferred to people often driven by envy and too lazy to accept personal responsibilities on things that ought to be their private domain. The huge government bureaucracy and long layers of politicians that stand in-between the people whose incomes are confiscated and the beneficiaries who wait for such wealth transfer, also eat up precious social resources.
* See also: Welfarism 2: France Riots, Taxes in Welfare States, November 17, 2005
Thursday, April 20, 2006
China Watch 1: World's Largest Economies, Population, 2005
The International Monetary Fund (IMF) has released today the full text of its World Economic Outlook (WEO), April 2006 issue (www.imf.org). I immediately checked the database, created my own table and arranged countries based on size of their economies represented by their Gross Domestic Product (GDP). To adjust for cost of living in each country, economists use the Purchasing Power Parity (PPP) valuation. I have a ranking of more than 180 countries, will show here only the top 25.
Its interesting to note that out of the 25 largest economies in the world in 2005, 9 are Asians (including Iran); and more interesting is that 3 Asian countries (China, Japan and India) are in the top 4 and have economies much larger than any of the European countries.
I also checked the ranking of countries in 1980, to see how countries fared 25 years ago, when the pace of globalization was slower (next table after the 2005 ranking). Back then, China and India ranked #s 8 and 9.
Over the last 25 years, China's GDP has increased by 21x, Korea's GDP has increased by 10.8x, Taiwan's by 9.4x, Thailand's by 8.6x, India's by 8.4x.
In contrast, over the last 25 years, the US's GDP has increased by 4.5x, Canada's by 4.2x, Mexico's by 3.8x, Brazil's by 3.5x. For the European countries, Spain's by 4.2x, UK's by 3.8x, France's by 3.4x, Germany's by 3.3x, Italy's by 3.1x.
Indeed, faster globalization has benefitted the Asians more than the North and South Americans, and the Europeans. No wonder anti-globalization sentiment is much stronger among Europeans and Americans than Asians.
Below are the 2 tables for 2005 and 1980 figures.
GDP based on PPP valuation of country GDP, US$ Billion, 2005
1. United States 12,277.6
2. China 9,412.4
3. Japan 3,910.7
4. India 3,633.4
5. Germany 2,521.7
6. United Kingdom 1,832.8
7. France 1,830.1
8. Italy 1,668.2
9. Brazil 1,576.7
10. Russia 1,575.6
11. Canada 1,104.7
12. Spain 1,089.1
13. Mexico 1,072.6
14. Korea 994.4
15. Indonesia 977.4
16. Taiwan 631.2
17. Australia 630.1
18. South Africa 570.2
19. Turkey 569.2
20. Iran 554.8
21. Thailand 544.8
22. Argentina 533.7
23. Netherlands 503.4
24. Poland 495.9
25. Philippines 414.7
GDP based on PPP valuation of country GDP, US$ Billion, 1980
1. United States 2,750.4
2. Japan 1,053.0
3. Germany 768.3
4. France 540.0
5. Italy 535.5
6. United Kingdom 475.7
7. Brazil 447.1
8. China 445.1
9. India 431.1
10. Mexico 278.5
11. Canada 267.6
12. Spain 257.5
13. Argentina 176.8
14. South Africa 167.3
15. Indonesia 148.5
16. Poland 147.3
17. Netherlands 141.0
18. Australia 131.7
19. Saudi Arabia 106.2
20. Philippines 103.4
21. Iran 98.8
22. Belgium 96.8
23. Turkey 96.6
24. Korea 92.4
25. Switzerland 80.3
World's Most Populous Countries, 2005
In the world's largest economies by GDP, PPP valuation, 9 of top 25 are Asians.
Of the world's 25 most populous countries, nearly half or 11 are Asians. The top 2 are occupied of course, by China and India, the only billion-plus population countries.
Mid-2005 Population estimates:
1. China 1,306.3
2. India 1,080.3
3. US 295.7
4. Indonesia 242.0
5. Brazil 186.1
6. Pakistan 162.4
7. Bangladesh 144.3
8. Russia 143.4
9. Nigeria 128.8
10. Japan 127.4
11. Mexico 106.2
12. Philippines 87.9
13. Vietnam 83.5
14. Germany 82.4
15. Egypt 77.5
16. Ethiopia 73.1
17. Turkey 69.7
18. Iran 68.0
19. Thailand 65.4
20. France 60.7
21. UK 60.4
22. Congo Dem. Rep. 60.1
23. Italy 58.1
24. S. Korea 48.4
25. Ukraine 47.4
(source: http://www.infoplease.com/ipa/A0004379.html)
Its interesting to note that out of the 25 largest economies in the world in 2005, 9 are Asians (including Iran); and more interesting is that 3 Asian countries (China, Japan and India) are in the top 4 and have economies much larger than any of the European countries.
I also checked the ranking of countries in 1980, to see how countries fared 25 years ago, when the pace of globalization was slower (next table after the 2005 ranking). Back then, China and India ranked #s 8 and 9.
Over the last 25 years, China's GDP has increased by 21x, Korea's GDP has increased by 10.8x, Taiwan's by 9.4x, Thailand's by 8.6x, India's by 8.4x.
In contrast, over the last 25 years, the US's GDP has increased by 4.5x, Canada's by 4.2x, Mexico's by 3.8x, Brazil's by 3.5x. For the European countries, Spain's by 4.2x, UK's by 3.8x, France's by 3.4x, Germany's by 3.3x, Italy's by 3.1x.
Indeed, faster globalization has benefitted the Asians more than the North and South Americans, and the Europeans. No wonder anti-globalization sentiment is much stronger among Europeans and Americans than Asians.
Below are the 2 tables for 2005 and 1980 figures.
GDP based on PPP valuation of country GDP, US$ Billion, 2005
1. United States 12,277.6
2. China 9,412.4
3. Japan 3,910.7
4. India 3,633.4
5. Germany 2,521.7
6. United Kingdom 1,832.8
7. France 1,830.1
8. Italy 1,668.2
9. Brazil 1,576.7
10. Russia 1,575.6
11. Canada 1,104.7
12. Spain 1,089.1
13. Mexico 1,072.6
14. Korea 994.4
15. Indonesia 977.4
16. Taiwan 631.2
17. Australia 630.1
18. South Africa 570.2
19. Turkey 569.2
20. Iran 554.8
21. Thailand 544.8
22. Argentina 533.7
23. Netherlands 503.4
24. Poland 495.9
25. Philippines 414.7
GDP based on PPP valuation of country GDP, US$ Billion, 1980
1. United States 2,750.4
2. Japan 1,053.0
3. Germany 768.3
4. France 540.0
5. Italy 535.5
6. United Kingdom 475.7
7. Brazil 447.1
8. China 445.1
9. India 431.1
10. Mexico 278.5
11. Canada 267.6
12. Spain 257.5
13. Argentina 176.8
14. South Africa 167.3
15. Indonesia 148.5
16. Poland 147.3
17. Netherlands 141.0
18. Australia 131.7
19. Saudi Arabia 106.2
20. Philippines 103.4
21. Iran 98.8
22. Belgium 96.8
23. Turkey 96.6
24. Korea 92.4
25. Switzerland 80.3
World's Most Populous Countries, 2005
In the world's largest economies by GDP, PPP valuation, 9 of top 25 are Asians.
Of the world's 25 most populous countries, nearly half or 11 are Asians. The top 2 are occupied of course, by China and India, the only billion-plus population countries.
Mid-2005 Population estimates:
1. China 1,306.3
2. India 1,080.3
3. US 295.7
4. Indonesia 242.0
5. Brazil 186.1
6. Pakistan 162.4
7. Bangladesh 144.3
8. Russia 143.4
9. Nigeria 128.8
10. Japan 127.4
11. Mexico 106.2
12. Philippines 87.9
13. Vietnam 83.5
14. Germany 82.4
15. Egypt 77.5
16. Ethiopia 73.1
17. Turkey 69.7
18. Iran 68.0
19. Thailand 65.4
20. France 60.7
21. UK 60.4
22. Congo Dem. Rep. 60.1
23. Italy 58.1
24. S. Korea 48.4
25. Ukraine 47.4
(source: http://www.infoplease.com/ipa/A0004379.html)
Wednesday, April 05, 2006
CSR as "mandatory requirement" = extortionism
There was a good article on corporate social responsibility (CSR) in Tech Central Station (www.tcsdaily.com) co-authored by Mr. Stagnaro and Mr. Kogan, entitled "Corporate Social Restriction". The 2 guys got the right adjective: restriction. Although I would add a more appropriate term: extortion.
Making those CSR benchmarks as "mandatory requirements" to be administered by statist NGOs + UN + national governments (or a mafia of statism and interventionism) is tantamount to extortion. You slug it out in a very competitive market, where your competitors are employing various cost-minimizing production techniques (through expensive R&D and innovation, through locating their factories in low-wages countries, etc.), so you must employ more innovative production processes since your consumers want "good quality goods and services at reasonable and competitive prices". You don't please your consumers, you lose them, they buy the products of your competitors. Later on you close shop, forget about "social responsibility", whether realistic or imposed upon you.
If you combine the various national government taxes/charges/fees + local government taxes/charges/fees + environmental clearances/permits/licenses/registrations + payment to third-party groups to make sure that you abide by the "mandatory CSR practices", that's a lot of expenses already on top of your normal production costs.
Taking care of the environment, giving out scholarships and free livelihood trainings to the communities, other social and ecological programs, are something that is up to corporations to undertake or not. These should be voluntary, not mandatory; freely provided, not coercively required.
Making those CSR benchmarks as "mandatory requirements" to be administered by statist NGOs + UN + national governments (or a mafia of statism and interventionism) is tantamount to extortion. You slug it out in a very competitive market, where your competitors are employing various cost-minimizing production techniques (through expensive R&D and innovation, through locating their factories in low-wages countries, etc.), so you must employ more innovative production processes since your consumers want "good quality goods and services at reasonable and competitive prices". You don't please your consumers, you lose them, they buy the products of your competitors. Later on you close shop, forget about "social responsibility", whether realistic or imposed upon you.
If you combine the various national government taxes/charges/fees + local government taxes/charges/fees + environmental clearances/permits/licenses/registrations + payment to third-party groups to make sure that you abide by the "mandatory CSR practices", that's a lot of expenses already on top of your normal production costs.
Taking care of the environment, giving out scholarships and free livelihood trainings to the communities, other social and ecological programs, are something that is up to corporations to undertake or not. These should be voluntary, not mandatory; freely provided, not coercively required.
Wednesday, March 29, 2006
Socialized Healthcare 1: More Government = Less Health Care
What restricts the poor to have access to efficient healthcare, and what prevents medicine development? Big and intrusive government.
About 50 per cent of people in parts of Asia and Africa have no access to medicines due to harmful government policies, reports the "Civil Society Report on Intellectual Property, Innovation and Health", released on March 28. The document was produced by 16 civil society organizations from around the world, and was released ahead of a report on a similar theme from the World Health Organisation (WHO). I was one of the many discussants actually in the final revision of the paper.
How does big and intrusive government restrict the poor access to efficient healthcare, as identified in the report?
1) High taxes and tariffs, up to 55 per cent on imported medicines price people out of treatment. In the Philippines, medicines and health services (like medical and dental check-ups, hospitalization, etc.) are also covered by the 12% VAT. Weak, sick and dying people are still taxed to prop up fiscally irresponsible and tax-hungry government.
2) Complicated and costly registration requirements, where many medicines already approved in the US, EU and Japan are simply not registered in most poor countries because manufacturers cannot justify the investment in registration.
3) Regulations by various government agencies, that hamper development of private health insurance. The poor are unable to obtain insurance and are only able to pay for treatments if they have sufficient savings, or must rely of charity or meagre government healthcare provision.
4) Price controls, supposedly to benefit the poor, actually reduce the availability of drugs, especially in distant rural regions, by making it uneconomic for pharmacies to stock them. Even in relatively wealthy South Africa, price controls have led to the closure of scores of rural pharmacies – leaving thousands of poor people without any access to medicines at all.
5) Inadequate protection for intellectual property in poor countries, this undermines incentives to invest in R&D for the diseases of poverty by making it more difficult to recover costs. The report found no evidence that intellectual property protection had hampered access to medicines.
I will add that restrictions in opening up new private schools for health sciences, new hospitals and clinics discourage the emergence of more health educational institutions that can churn out and supply more nurses, more doctors, other health professionals, to replace those who have migrated to wealthier countries. In the Philippines, thousands of Filipino nurses and doctors are leaving every year, affecting both government- and privately-run hospitals and clinics. If there is big demand for health professionals (domestically and internationally) or other professions, supply normally follows. Thus, greater supply should not be restricted by high corporate taxes and bureaucratic regulations that discourage more private enterprises that want to open up new health learning institutions.
Big and intrusive government is the author of big and multiple taxes; the administrator of multiple permits, licenses and fees, of a maze of regulations, registrations, inspections and accreditations. Ultimately, it is the main hindrance to the poor having greater access to cheaper and more effective medicines and health care.
If there are less taxes, less business regulations and registrations, more private enterprises that produce more medicines (from R&D to marketing), that build more hospitals and clinics, that open more colleges and universities offering health sciences, will spring up. The simple and old formula of "more competition" and NOT "more government regulations", should ensure that rich and poor alike, will have some access to various medicines and health care at various price ranges and packages.
(If you want electronic copy of the report, pdf form, 76 pages long including bibliography, write me: minimalgovernment@gmail.com)
About 50 per cent of people in parts of Asia and Africa have no access to medicines due to harmful government policies, reports the "Civil Society Report on Intellectual Property, Innovation and Health", released on March 28. The document was produced by 16 civil society organizations from around the world, and was released ahead of a report on a similar theme from the World Health Organisation (WHO). I was one of the many discussants actually in the final revision of the paper.
How does big and intrusive government restrict the poor access to efficient healthcare, as identified in the report?
1) High taxes and tariffs, up to 55 per cent on imported medicines price people out of treatment. In the Philippines, medicines and health services (like medical and dental check-ups, hospitalization, etc.) are also covered by the 12% VAT. Weak, sick and dying people are still taxed to prop up fiscally irresponsible and tax-hungry government.
2) Complicated and costly registration requirements, where many medicines already approved in the US, EU and Japan are simply not registered in most poor countries because manufacturers cannot justify the investment in registration.
3) Regulations by various government agencies, that hamper development of private health insurance. The poor are unable to obtain insurance and are only able to pay for treatments if they have sufficient savings, or must rely of charity or meagre government healthcare provision.
4) Price controls, supposedly to benefit the poor, actually reduce the availability of drugs, especially in distant rural regions, by making it uneconomic for pharmacies to stock them. Even in relatively wealthy South Africa, price controls have led to the closure of scores of rural pharmacies – leaving thousands of poor people without any access to medicines at all.
5) Inadequate protection for intellectual property in poor countries, this undermines incentives to invest in R&D for the diseases of poverty by making it more difficult to recover costs. The report found no evidence that intellectual property protection had hampered access to medicines.
I will add that restrictions in opening up new private schools for health sciences, new hospitals and clinics discourage the emergence of more health educational institutions that can churn out and supply more nurses, more doctors, other health professionals, to replace those who have migrated to wealthier countries. In the Philippines, thousands of Filipino nurses and doctors are leaving every year, affecting both government- and privately-run hospitals and clinics. If there is big demand for health professionals (domestically and internationally) or other professions, supply normally follows. Thus, greater supply should not be restricted by high corporate taxes and bureaucratic regulations that discourage more private enterprises that want to open up new health learning institutions.
Big and intrusive government is the author of big and multiple taxes; the administrator of multiple permits, licenses and fees, of a maze of regulations, registrations, inspections and accreditations. Ultimately, it is the main hindrance to the poor having greater access to cheaper and more effective medicines and health care.
If there are less taxes, less business regulations and registrations, more private enterprises that produce more medicines (from R&D to marketing), that build more hospitals and clinics, that open more colleges and universities offering health sciences, will spring up. The simple and old formula of "more competition" and NOT "more government regulations", should ensure that rich and poor alike, will have some access to various medicines and health care at various price ranges and packages.
(If you want electronic copy of the report, pdf form, 76 pages long including bibliography, write me: minimalgovernment@gmail.com)
Thursday, February 23, 2006
Visa-free entry and people mobility
The Philippine government allows citizens of 145 countries to enter the country visa-free for visits of 21 days or less, and citizens of a few other countries for visits of 7 days or less; 59 days or less. The list of these countries can be found in the Philippine government portal,
http://www.gov.ph/faqs/visa.asp . For visits longer than 3 weeks, a Philippine visa will be required though.
A few countries allow Filipinos to enter their country visa-free too for short visits. Among these are Singapore, Thailand, Malaysia, Indonesia, Vietnam, Laos, Cambodia, Brunei, East Timor (as fellow members of ASEAN); Hong Kong, Macau, Seychelles, Maldives, Nepal; Cuba, Netherlands Antilles, Bermuda, Haiti; Costa Rica, Nicaragua, Panama, Ecuador, Brazil, Peru, Colombia, Bolivia, El Salvador, Honduras, Suriname, Belize; Morocco, Israel; Palau, Fiji.
(Thanks to Robby G. for this list!)
One proposal made by some people is "reciprocity" in visa-free entry; ie, if the Philippine government gives visa-free entry for short visits to nationals of about 150 countries, then governments of those 150 countries should also give Filipinos visa-free entry into their lands. I don't believe in reciprocity. Just open entry of foreigners to the Philippines visa-free (again, for visits of 3 or 4 weeks or less), even if the governments of those foreigners will not grant the same privilege to Filipinos. I advocate full free trade, even unilateral trade liberalization, so I also advocate full mobility of people, even unilateral free entry and mobility of foreigners into the country -- except the known terrorists and organized criminals.
The geographical isolation of the Philippine archipelago from the rest of the world, even from its South East Asian neighbors, is already a big factor why the country is not attracting too many tourists. For instance, when you land in Vietnam, you can take a bus or train to China and Laos (north), bus or train to Cambodia (west), then further west to Thailand, Myanmar, etc. But when you land in Manila or other international airports (Cebu, Davao, Clark), we have no other neighboring countries accessible by land. It's the vast Pacific Ocean in the east, South China Sea in the west, and lots of small seas in between the islands and provinces. So, easier access through visa-free entry is one incentive to lure tourists, foreign businessmen and visitors, to come in. Although it doesn't help that Manila's international airport (NAIA 1 and 2) are just "provincial and domestic" airport in size and facilities compared to many other countries' international airports, like those in Thailand, Singapore, Malaysia, Vietnam, Korea, Japan, and so on.
Some African countries which don't give visa-free entry for Filipinos are ruled by dictators who just live off on taxpayers' blood and sweat, both local and foreign taxpayers. Even if the "visa fee" is only $10 or $20, for those dictators and bureaucrats, that's still money that can go to their pockets. Now if their rich nationals (say, families and relatives of those dictators, top bureaucrats and private cronies) would come into the Philippines to see Boracay, Davao, Cebu, Manila, Baguio, Bohol, Palawan, Puerto Galera, etc., let them come in visa-free, let them spend their money in Philippine beach and mountain resorts, in Philippine malls and restaurants, in Filipino boatmen and travel guides. (We can't bar and confiscate their money as "ill-gotten wealth" as it is an internal problem that has to be resolved in their own countries.)
The wealthy countries of W. and N. Europe, N. America, N. Asia (Japan and Korea) are too protective of their welfare system; that system is too expensive, financed by high and multiple taxes of their citizens, and continuously accummulating public debts (e.g., France's unfunded social security system is around 200% of GDP!) that they can't extend such welfare to many citizens of other countries. Hence, the strict "visa-required" rule, even for few-days visits.
The Department of Foreign Affairs (DFA) though, does not give visa-free entry yet to citizens of Russia, Kazakhstan, Croation, other central Asian and eastern European countries. I don't understand why, but it will be an important diplomatic and economic move to lift such travel restriction and allow the nationals of those countries to come in visa-free.
People by nature want to be free to move around in many places, islands and continents. Before, it was the harshness of nature and environment (very hot desert, very cold and prolonged snow, presence of many savage animals that can attack people, tribes that are averse to entry of foreigners) that prevented many people to move around. Later on, governments of many countries began expanding, and so the bureaucracy and restrictions to travel also expanded. With modern technology and increasing competition among international airlines, international hotels, international telecomms companies, communication and mobility among friends, families and clans, business and cultural partners, become easier. It is only rightful that full mobility be respected and given back to people -- except to those who inculcate hatred and violence.
http://www.gov.ph/faqs/visa.asp . For visits longer than 3 weeks, a Philippine visa will be required though.
A few countries allow Filipinos to enter their country visa-free too for short visits. Among these are Singapore, Thailand, Malaysia, Indonesia, Vietnam, Laos, Cambodia, Brunei, East Timor (as fellow members of ASEAN); Hong Kong, Macau, Seychelles, Maldives, Nepal; Cuba, Netherlands Antilles, Bermuda, Haiti; Costa Rica, Nicaragua, Panama, Ecuador, Brazil, Peru, Colombia, Bolivia, El Salvador, Honduras, Suriname, Belize; Morocco, Israel; Palau, Fiji.
(Thanks to Robby G. for this list!)
One proposal made by some people is "reciprocity" in visa-free entry; ie, if the Philippine government gives visa-free entry for short visits to nationals of about 150 countries, then governments of those 150 countries should also give Filipinos visa-free entry into their lands. I don't believe in reciprocity. Just open entry of foreigners to the Philippines visa-free (again, for visits of 3 or 4 weeks or less), even if the governments of those foreigners will not grant the same privilege to Filipinos. I advocate full free trade, even unilateral trade liberalization, so I also advocate full mobility of people, even unilateral free entry and mobility of foreigners into the country -- except the known terrorists and organized criminals.
The geographical isolation of the Philippine archipelago from the rest of the world, even from its South East Asian neighbors, is already a big factor why the country is not attracting too many tourists. For instance, when you land in Vietnam, you can take a bus or train to China and Laos (north), bus or train to Cambodia (west), then further west to Thailand, Myanmar, etc. But when you land in Manila or other international airports (Cebu, Davao, Clark), we have no other neighboring countries accessible by land. It's the vast Pacific Ocean in the east, South China Sea in the west, and lots of small seas in between the islands and provinces. So, easier access through visa-free entry is one incentive to lure tourists, foreign businessmen and visitors, to come in. Although it doesn't help that Manila's international airport (NAIA 1 and 2) are just "provincial and domestic" airport in size and facilities compared to many other countries' international airports, like those in Thailand, Singapore, Malaysia, Vietnam, Korea, Japan, and so on.
Some African countries which don't give visa-free entry for Filipinos are ruled by dictators who just live off on taxpayers' blood and sweat, both local and foreign taxpayers. Even if the "visa fee" is only $10 or $20, for those dictators and bureaucrats, that's still money that can go to their pockets. Now if their rich nationals (say, families and relatives of those dictators, top bureaucrats and private cronies) would come into the Philippines to see Boracay, Davao, Cebu, Manila, Baguio, Bohol, Palawan, Puerto Galera, etc., let them come in visa-free, let them spend their money in Philippine beach and mountain resorts, in Philippine malls and restaurants, in Filipino boatmen and travel guides. (We can't bar and confiscate their money as "ill-gotten wealth" as it is an internal problem that has to be resolved in their own countries.)
The wealthy countries of W. and N. Europe, N. America, N. Asia (Japan and Korea) are too protective of their welfare system; that system is too expensive, financed by high and multiple taxes of their citizens, and continuously accummulating public debts (e.g., France's unfunded social security system is around 200% of GDP!) that they can't extend such welfare to many citizens of other countries. Hence, the strict "visa-required" rule, even for few-days visits.
The Department of Foreign Affairs (DFA) though, does not give visa-free entry yet to citizens of Russia, Kazakhstan, Croation, other central Asian and eastern European countries. I don't understand why, but it will be an important diplomatic and economic move to lift such travel restriction and allow the nationals of those countries to come in visa-free.
People by nature want to be free to move around in many places, islands and continents. Before, it was the harshness of nature and environment (very hot desert, very cold and prolonged snow, presence of many savage animals that can attack people, tribes that are averse to entry of foreigners) that prevented many people to move around. Later on, governments of many countries began expanding, and so the bureaucracy and restrictions to travel also expanded. With modern technology and increasing competition among international airlines, international hotels, international telecomms companies, communication and mobility among friends, families and clans, business and cultural partners, become easier. It is only rightful that full mobility be respected and given back to people -- except to those who inculcate hatred and violence.
Thursday, February 02, 2006
Migration and Freedom 1: World Cup, brain gain and OFWs
During the last World Cup, a small and "lowly" African country, Senegal, beat the defending world champion France in the eliminations (or quarter finals?) round. It was one of the "shocking" results of that world cup. Why? One important reason is because Senegal "exported" or "brain-drained" some of its best soccer players to play abroad, in European football clubs, especially. Then one day the boys came home to play for their national flag, and the players used the experience and talent they gained while working and playing abroad. And they beat and eliminated the reigning, the defending, world champion!
For me that's one big advantage of brain gain. And I don't believe in "brain drain". OFWs or other nationalities leaving their countries to work abroad should never be considered as brain drain. When Filipino nurses and doctors leave the hospitals they are working in the Philippines, went abroad to work in a hospital in the US or Canada or Europe or elsewhere, the health displacement is temporary. One day, some of those health professionals will come back, not as nurses or doctors, but as owners and administrators of new clinics, new hospitals, or an HMO company. The experience, talent, network and business partners, and savings they got abroad.
So I stick with my simple formulation:
Whether such migration results in some broken families back home, these are some of the costs that households can decide and risk. The same way that there are costs and risks for staying in the country for many people when jobs and pay are not enough.
The OFW phenomenon has been with us for the past 30 or hundred years, though it grew noticeably larger and faster over the past 20 years, along with faster pace of globalization (more work opportunities abroad, more competing international airlines, cheaper info and communications dissemation among families, etc.).
Maybe we just don't notice it, but the new medical and nursing schools, the new clinics and private hospitals, new HMO companies, that we have NOW, are put up or managed by health OFWs who have left the country 10, 20, or 30 years ago. They may or may not be in the Philippines physically, but the resources and network are all here.
For whatever reason or alibi, government should not put up any barrier or hurdle or hindrance to migration and mobility of people, whether health professionals or rock bands or investment analysts. If people want to go abroad, let them be. People respond to incentives, and shy away from disincentives. If staying here in the country means bearing low incomes while paying high personal income taxes -- gee, the House Committee on Ways and Means (in charge of taxation), is planning to hike personal income tax from 32% to 35% for those with annual taxable income of P500,000 or more.
So government policies are not a good reference point for many individuals and households to decide to stay. While govt. says it wants to lure health professionals to stay in the country, it whacks them with double taxes -- VAT on health services (which possibly reduce their clients since medical check-ups and medicines are now subject to higher VAT), and high personal income tax. This is not to mention the other taxes and govt. fees on their household consumption, from VAT on hamburger to excise tax & VAT on fuel products. So, households weigh the costs/risks and benefits of staying in the country. And it turns out that for many households, the costs far outweigh the benefits.
If government really wants to help the poor and the sick, government should abolish income taxes (or keep a low, flat tax) and retain VAT (I'd even favor a 15% VAT if income tax is zero) as main govt. revenue source. So that if you're a doctor (or engineer or manager or...), you keep all of your incomes (no confiscation by govt.), you keep your friends and family members here, you pay tax only when you spend, better stay here. Because in the US and Canada and UK, incomes are high but income taxes are also very high.
And yes, churn out more health professionals and other skilled people in the education and formal training institutions. So what if 200,000 nurses and doctors leave every year, if you also graduate 250,000 nurses and doctors every year. This means deregulating the education, health care, and the business environment in general. Less permits and licenses, less charges and fees, less signatures and paper work, less taxes and bureaucracies, and you'll have lots of entrepreneurial initiatives.
There are policy implications for this formulation. If migration is good (since it is voluntary, not forced), then government should not get in the way over-regulating and choosing players (and disallowing many others) in the manpower recruitment agencies. Let the sector regulate themselves, like forming their own industry associations, and these associations will police their ranks who are the recognized members (ie, good recruitment agencies) and who are not. One reason why "placement fees" for potential OFWs are very high is because there are just too few "licensed" recruitment agencies. And I would presume that the licensed ones have paid huge amount of fees, legal and under-the-table, to the government overseas placement agency, the POEA, and other government agencies. This makes working abroad an expensive option.
Finally, when people wish that "all (or most) politicians would leave and be exported", unconsciously I think, people are wishing that there be "less government". Because politicians and many many bureaucrats represent taxes, charges and fees, permits and licenses, that the citizens bear. And very often, the wastes and corruption that come with the presence of too many politicians and government bureaucrats.
For me that's one big advantage of brain gain. And I don't believe in "brain drain". OFWs or other nationalities leaving their countries to work abroad should never be considered as brain drain. When Filipino nurses and doctors leave the hospitals they are working in the Philippines, went abroad to work in a hospital in the US or Canada or Europe or elsewhere, the health displacement is temporary. One day, some of those health professionals will come back, not as nurses or doctors, but as owners and administrators of new clinics, new hospitals, or an HMO company. The experience, talent, network and business partners, and savings they got abroad.
So I stick with my simple formulation:
Migration = Mobility = Freedom.
Whether such migration results in some broken families back home, these are some of the costs that households can decide and risk. The same way that there are costs and risks for staying in the country for many people when jobs and pay are not enough.
The OFW phenomenon has been with us for the past 30 or hundred years, though it grew noticeably larger and faster over the past 20 years, along with faster pace of globalization (more work opportunities abroad, more competing international airlines, cheaper info and communications dissemation among families, etc.).
Maybe we just don't notice it, but the new medical and nursing schools, the new clinics and private hospitals, new HMO companies, that we have NOW, are put up or managed by health OFWs who have left the country 10, 20, or 30 years ago. They may or may not be in the Philippines physically, but the resources and network are all here.
For whatever reason or alibi, government should not put up any barrier or hurdle or hindrance to migration and mobility of people, whether health professionals or rock bands or investment analysts. If people want to go abroad, let them be. People respond to incentives, and shy away from disincentives. If staying here in the country means bearing low incomes while paying high personal income taxes -- gee, the House Committee on Ways and Means (in charge of taxation), is planning to hike personal income tax from 32% to 35% for those with annual taxable income of P500,000 or more.
So government policies are not a good reference point for many individuals and households to decide to stay. While govt. says it wants to lure health professionals to stay in the country, it whacks them with double taxes -- VAT on health services (which possibly reduce their clients since medical check-ups and medicines are now subject to higher VAT), and high personal income tax. This is not to mention the other taxes and govt. fees on their household consumption, from VAT on hamburger to excise tax & VAT on fuel products. So, households weigh the costs/risks and benefits of staying in the country. And it turns out that for many households, the costs far outweigh the benefits.
If government really wants to help the poor and the sick, government should abolish income taxes (or keep a low, flat tax) and retain VAT (I'd even favor a 15% VAT if income tax is zero) as main govt. revenue source. So that if you're a doctor (or engineer or manager or...), you keep all of your incomes (no confiscation by govt.), you keep your friends and family members here, you pay tax only when you spend, better stay here. Because in the US and Canada and UK, incomes are high but income taxes are also very high.
And yes, churn out more health professionals and other skilled people in the education and formal training institutions. So what if 200,000 nurses and doctors leave every year, if you also graduate 250,000 nurses and doctors every year. This means deregulating the education, health care, and the business environment in general. Less permits and licenses, less charges and fees, less signatures and paper work, less taxes and bureaucracies, and you'll have lots of entrepreneurial initiatives.
There are policy implications for this formulation. If migration is good (since it is voluntary, not forced), then government should not get in the way over-regulating and choosing players (and disallowing many others) in the manpower recruitment agencies. Let the sector regulate themselves, like forming their own industry associations, and these associations will police their ranks who are the recognized members (ie, good recruitment agencies) and who are not. One reason why "placement fees" for potential OFWs are very high is because there are just too few "licensed" recruitment agencies. And I would presume that the licensed ones have paid huge amount of fees, legal and under-the-table, to the government overseas placement agency, the POEA, and other government agencies. This makes working abroad an expensive option.
Finally, when people wish that "all (or most) politicians would leave and be exported", unconsciously I think, people are wishing that there be "less government". Because politicians and many many bureaucrats represent taxes, charges and fees, permits and licenses, that the citizens bear. And very often, the wastes and corruption that come with the presence of too many politicians and government bureaucrats.
Thursday, January 12, 2006
Party List 3: Marginal Parties Should Aspire to Become Big
A friend commented to one of my postings about the party list system. He wrote,
I thanked him for his comments. Actually I want to see Akbayan, Sanlakas, Bayan Muna, other current party-list groups evolve into a "real" political party -- challenging the Lakas, LDP, NPC, other traditional parties in some congressional districts, fielding local candidates
in some municipalities, cities and provinces.
By doing so, these groups can go beyond the 3 seats maximum at the House if they get lucky, and field Senatorial candidates someday -- on the assumption that the Upper House will not be abolished someday.
But I maintain my position: the party-list system should be abolished (together with the Senate) in the next round of constitutional change. parties should aspire to be big; if they cant do it on their own, they should learn the art of coalition with other small parties.
I also think that in future constitutional change, initiatives should consider going back to the two-party system. It's simpler because most policy questions are answerable by Yes or No. For instance, on the questions of government size and individual liberty:
a) Should govt. cut taxes, cut its services (welfare + bureaucracy), and let the citizens decide where to allocate their hard-earned income?
b) Or should government get more and higher taxes from the citizens, expand services (welfare + bureaucracy), so that govt. will decide where to allocate taxpayers' money?
c) Should government liberalize trade, let the tens of millions of Filipino consumers decide where to buy their needs, the Filipino producers and exporters where to sell their products?
d) Or should govt. restrict trade, protect the producers, but deprive the consumers of more options and liberty where to buy their needs?
These and similar policy questions are generally answerable by Yes or No. Hence, only two major political and economic philosophies will represent the citizens' aspirations. A multiple party system often contributes to muddled understanding of issues.
---------
See also:
Party List 1: Opportunism, 2001 Elections, November 28, 2005
Party List 2: Opportunism, 2004 Elections, December 12, 2005
Hi Nonoy,
I am no fan of sectoral representation myself, but let's not dismiss the party list system altogether.
I agree, there is no such thing as solid sectoral interests. Sectoral lobby groups have their rightful place in advocacy. But for progressive legislaton to be passed, we need Lower House Representatives who will be taken seriously by trapo politicians, because they are backed by a
constituency that is serious about reform. Sectoral reps with narrow agendas will always be condemmed to the "margins" of the current political system that we have. It is no surprise that the party list reps who have gained some prominence to date are Etta Rosales and Satur Ocampo, or even JV Bautista -- all of whom represent multi-sectoral formations.
The party-list system of representation that we have is a hybrid, a mix of sectoral and proportional representation. It should be directed towards strengthening the proportional aspect. We should not encourage interpretation that stress that the party list is a voice of
the "marginalized". Instead it should be seen as an opportunity for non- traditional formations to enter mainstream politics and build a broad reform constituency to counter conservative elements.
In the long run, progressive agendas are not served well by this insistence on being marginalized. It's self-defeating. Party lists are in the business of competing (and winning) in elections. Textbook definitions of political parties state that parties are there to aggregate and articulate interests. This is a number game.
I thanked him for his comments. Actually I want to see Akbayan, Sanlakas, Bayan Muna, other current party-list groups evolve into a "real" political party -- challenging the Lakas, LDP, NPC, other traditional parties in some congressional districts, fielding local candidates
in some municipalities, cities and provinces.
By doing so, these groups can go beyond the 3 seats maximum at the House if they get lucky, and field Senatorial candidates someday -- on the assumption that the Upper House will not be abolished someday.
But I maintain my position: the party-list system should be abolished (together with the Senate) in the next round of constitutional change. parties should aspire to be big; if they cant do it on their own, they should learn the art of coalition with other small parties.
I also think that in future constitutional change, initiatives should consider going back to the two-party system. It's simpler because most policy questions are answerable by Yes or No. For instance, on the questions of government size and individual liberty:
a) Should govt. cut taxes, cut its services (welfare + bureaucracy), and let the citizens decide where to allocate their hard-earned income?
b) Or should government get more and higher taxes from the citizens, expand services (welfare + bureaucracy), so that govt. will decide where to allocate taxpayers' money?
c) Should government liberalize trade, let the tens of millions of Filipino consumers decide where to buy their needs, the Filipino producers and exporters where to sell their products?
d) Or should govt. restrict trade, protect the producers, but deprive the consumers of more options and liberty where to buy their needs?
These and similar policy questions are generally answerable by Yes or No. Hence, only two major political and economic philosophies will represent the citizens' aspirations. A multiple party system often contributes to muddled understanding of issues.
---------
See also:
Party List 1: Opportunism, 2001 Elections, November 28, 2005
Party List 2: Opportunism, 2004 Elections, December 12, 2005
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