A friend from Liberty Institute, India, Barun Mitra, wrote a good article,
"The political fallout of the battle of the sexes"
Pragati: The Indian National Interest Review, April 2010
http://pragati.nationalinterest.in/2010/04/the-political-fallout-of-the-battle-of-the-sexes/
Barun looked at the proposed constitutional amendment in India which is seeking to reserve one-third of the seats in legislative assemblies, on a rotational basis. Barun said that "While I am all for greater political participation by women and all other sections of society, I am completely against this idea of reserving seats for any section of society."
I told Barun that in the Philippines, this is similar to the party-list system in the House of Representatives. The Constitution mandated that "up to 20 percent" of the House should be alloted to party-list groups. The result is ugly. I made a short discussion about it, "Party-list as a marginal concept" (article below) and also posted in
http://www.thelobbyist.biz/perspectives/columns/back_to_personal_responsibility/838.html
A friend who worked in Norway once also observed that the law mandating that up to 20 or 30 percent of management position in private corporations should be reserved to women, is putting many Norwegian companies at a disadvantage in global corporate competitions. Not because women are "inferior" but when female managers take maternity leave of up to 1 year, the company is somehow crippled.
Wholesale socialism is still difficult to advance now as the fall of the berlin wall and east european communism is still fresh in the minds of many people. So many socialists advocate "sectoral socialism", like forced gender equality (gender socialism?), forced health equity (health socialism), forced and heavy environmental regulations (ecological socialism), and so on.
There are a number of successes with sectoral socialism compared to wholesale socialism.
Wednesday, April 07, 2010
China Watch 7: Rising Yuan, Economic Bubbles
There is a growing literature and op-ed articles arguing of an "impending" China economic bubble burst. A few Chinese scholars argue otherwise. One such guy is Dr. Fan Gang, a professor of economics at Beijing University and the Chinese Academy of Social Sciences (CASS), director of China's National Economic Research Institute (NERI), secretary general of the China Reform Foundation, and a member of the monetary policy committee of the People's Bank of China.
I have met him in 2004 in Hong Kong, during the Economic Freedom Network (EFN)- Asia Conference. He presented their study on "China marketization index" then.
Fan Gang wrote an article that was published in the WSJ Asia, reprinted in Mint newspaper in India, entitled "Illusion of a Chinese economic bubble".
For me, economic bubble is 100 percent part of a market economy, it's part of corporate and capitalist expansion. The same way that bubble burst and corporate bankrupties are 100 percent part of a market economy.
So the terms "Chinese bubble", "Korean bubble", "US bubble", "European bubble", etc. are not illussions, they are realities. Like political coercion, it's just a matter of degrees. So, one can say there's "35% Chinese bubble", "80% US bubble", "25% Indian bubble", "10% Philippine bubble", and so on. The bigger the bubble, the sooner it will burst. Once an economic bubble bursts, it pours some sense and more realistic assessment of the valuation of assets (housing, education, banking, etc.) and capitalism or the market economy goes back to a bit lower level, but not "zero" as implied by the term "economic collapse".
What Fan Gang is saying is that the Chinese bubble is not too big yet. Either it will become bigger, or the current precautions of a "bubble burst" will prevent it from becoming bigger and hence, a "hardlanding" burst may not happen, at least not this year or next few years.
A friend from the Lion Rock Institute (LRI) in HK, Simon Lee, argued that
"Fan has totally ignored the fact that China's RMB is a currency under a managed peg, or more appropriately a dirty float system with currency control. Yes, RMB is still not freely convertible and Chinese on mainland do not have the choice to keep their wealth in instrument other than RMB denominated ones! So what happen then is they horde whatever they can buy with RMB: stock, real estate, commodities. The "administrative control" causes bubble bursting in one domain and the creation of one in another. This is the state-made bubble and Fan remains zip about it."
On second reading, Fan appears more of a statist apologist than a free marketer analyst. Well, he's a member of the monetary policy council of China's central bank.
Anyway, exchange control is exchange control. No different from price control, trade control, or political control. It's government control, period. I agree with Simon that on this account alone, bubble is being created somewhere. Once a control and heavy regulation is introduced, the quick solution to avoid a big bubble is to remove such controls, not to reinforce with new controls and regulations. LIke raising the bank required reserves (RRs). But I guess central banks around the world are just doing their work: they are the central planners of the monetary system, so they centralize policies.
I guess Fan is correct though, when he asserted that people in fast-growing economies, in crisis-free economies (for at least 3 decades), tend to become less risk-averse. But as I argued earler, allow those people to do so, to become less risk-averse, to become less financially responsible and are financially wild and high risk takers. So long as the government will NOT give any signal, any hint, any policy, that it will come to rescue those guys later on.when a financial crisis would hit them big.
I am slowly writing a "China watcher". And being a resident of the Philippines which benefits from the continued economic boom of China -- rising number of Chinese tourists here, rising exports of the Philippines to China, investments of both Filipino and Chinese businessmen in both countries, etc. -- I will not be happy to read that China will suffer a hard landing someday. But neither am I happy that there is continued political monopoly and political coercion by the Chinese government.
So let nature take its course. People invest where they can make money, and run away if they will lose money. China's economic bubble will definitely burst. It's just a question of when. Perhaps not this year, perhaps not in 2011, perhaps in 2012 or beyond.
Below is the link to his article.
Illusion of a Chinese bubble
Fan Gang
Mint, 3 April 2010
http://www.livemint.com/2010/03/02204340/Illusion-of-a-Chinese-bubble.html
On the eve of Chinese New Year, the People’s Bank of China (PBC) surprised the market by announcingâ€"for the second consecutive time in a monthâ€"an increase in banks’ mandatory reserve ratio by 50 basis points, bringing it to 16.5%. Shortly before that, China’s government acted to stop over-borrowing by local governments (through local state investment corporations), and to cool feverish regional housing markets by raising the down payment ratio for second house buyers and the capital adequacy ratio for developers.
------
Two related papers that I wrote the past few months:
(1) Weakening $, Rising Yuan
May 14, 2009
April of every year is tax deadline month, so revenues rise like a tidal wave, then ebb in the succeeding months. This is the tax schedule in the US, Philippines, and many other countries. But last month was the first time that the US experienced a deficit (in about 26 years) in the month of tidal wave revenues. Why? Because its expenditures were a mega tidal wave. And such kind of development (or underdevelopment) creates a bad image for the US $.
Super loose monetary policy of near zero interest rate. Super-spending fiscal policy of nearly $2 trillion budget deficit in 2009 alone by the federal government alone.
Since interest rate and inflation rate behave the same way in general, then US inflation rate should be very low. Might be in the short term, but not for long. With too much $ roaming the banks, shops and government spending, high inflation should be just around the corner. And the weakening of the US$ becomes just a question of when it will happen.
Below are 2 of the many articles today on the weakening US$.
http://businessmirror.com.ph/home/opinion/9090-geithners-biggest-problem-is-dollar-not-china.html
It’s a bit rich for US politicians to berate Treasury Secretary Timothy Geithner for not labeling China as a currency manipulator.
Perhaps Sen. Lindsey Graham, a South Carolina Republican, hasn’t seen a newspaper in the last 12 months. With near-zero interest rates, the likely issuance of trillions of dollars of government debt and massive taxpayer-funded bailouts, the US will soon make China look like a manipulation piker.
Memo to Graham and his ilk: Your economy has lost any moral high ground as it drags the world down with it. That will be even truer as the dollar eventually pays the price for ultra-loose monetary and fiscal policies. And it will....
(b) The Almighty Renminbi?
http://www.nytimes.com/2009/05/14/opinion/14Roubini.html?_r=1
THE 19th century was dominated by the British Empire, the 20th century by the United States. We may now be entering the Asian century, dominated by a rising China and its currency. While the dollar’s status as the major reserve currency will not vanish overnight, we can no longer take it for granted. Sooner than we think, the dollar may be challenged by other currencies, most likely the Chinese renminbi. This would have serious costs for America, as our ability to finance our budget and trade deficits cheaply would disappear.
Traditionally, empires that hold the global reserve currency are also net foreign creditors and net lenders. The British Empire declined — and the pound lost its status as the main global reserve currency — when Britain became a net debtor and a net borrower in World War II. Today, the United States is in a similar position. It is running huge budget and trade deficits, and is relying on the kindness of restless foreign creditors who are starting to feel uneasy about accumulating even more dollar assets. The resulting downfall of the dollar may be only a matter of time....
(2) China's Boom: Going Bust?
January 12, 2010
China now the world's biggest exporter (overtook Germany), biggest car market (overtook the US), to overtake Japan shortly as world's 2nd biggest economy. Is economic "bubble burst" near for China? I don't think so. With the bulk of its 1.3 billion people still in poverty, there is still huge room for economic expansion.
See this news report below:
http://www.nytimes.com/2010/01/12/world/asia/12china.html?ref=global-home
As China Rises, Fears Grow on Whether Boom Can Endure
By MICHAEL WINES
Published: January 11, 2010
BEIJING — As much of the world struggles to clamber out of a serious recession, a gradual flow of economic power from West to East has turned into a flood.
New high points, it seems, are reached daily. China surged past the United States to become the world’s largest automobile market — in units, if not in dollars, figures released Monday show. It also toppled Germany as the biggest exporter of manufactured goods, according to year-end trade data...
------
A friend commented via this news link,
http://dailyreckoning.com/china-boom-or-china-bust/
China Boom, or China Bust?
By Ian Mathias
01/08/10 Baltimore, Maryland – Is the great hope of the investment world little more than hype? We like to visit the “China boom or China bust?” debate every once in a while, and the argument today is pretty one-sided… the “busts” have it....
------
It's true that to go "bust", there should be credit excesses. I don't know much about personal and corporate debts, but on the fiscal side, China's govt is sort of mercantilist, surplus thinking, not deficit and borrow thinking. This is not to say that I sing Jalleluiah to a socialist government.
Another friend voted "bust". For me, it is important that China won't bust in the coming few years. The China-ASEAN free trade agreement (FTA) will be the largest free trade area in the world, about 2 billion consumers (1.3 + 0.7 billion, China-Asean countries' population, respectively). China will become ASEAN countries' biggest export market in the coming years.
* See also:
China Watch 1: World's Largest Economies, Population, 2005, April 20, 2006
China Watch 6: China-India Blog, Eco-Protectionism, August 30, 2009
I have met him in 2004 in Hong Kong, during the Economic Freedom Network (EFN)- Asia Conference. He presented their study on "China marketization index" then.
Fan Gang wrote an article that was published in the WSJ Asia, reprinted in Mint newspaper in India, entitled "Illusion of a Chinese economic bubble".
For me, economic bubble is 100 percent part of a market economy, it's part of corporate and capitalist expansion. The same way that bubble burst and corporate bankrupties are 100 percent part of a market economy.
So the terms "Chinese bubble", "Korean bubble", "US bubble", "European bubble", etc. are not illussions, they are realities. Like political coercion, it's just a matter of degrees. So, one can say there's "35% Chinese bubble", "80% US bubble", "25% Indian bubble", "10% Philippine bubble", and so on. The bigger the bubble, the sooner it will burst. Once an economic bubble bursts, it pours some sense and more realistic assessment of the valuation of assets (housing, education, banking, etc.) and capitalism or the market economy goes back to a bit lower level, but not "zero" as implied by the term "economic collapse".
What Fan Gang is saying is that the Chinese bubble is not too big yet. Either it will become bigger, or the current precautions of a "bubble burst" will prevent it from becoming bigger and hence, a "hardlanding" burst may not happen, at least not this year or next few years.
A friend from the Lion Rock Institute (LRI) in HK, Simon Lee, argued that
"Fan has totally ignored the fact that China's RMB is a currency under a managed peg, or more appropriately a dirty float system with currency control. Yes, RMB is still not freely convertible and Chinese on mainland do not have the choice to keep their wealth in instrument other than RMB denominated ones! So what happen then is they horde whatever they can buy with RMB: stock, real estate, commodities. The "administrative control" causes bubble bursting in one domain and the creation of one in another. This is the state-made bubble and Fan remains zip about it."
On second reading, Fan appears more of a statist apologist than a free marketer analyst. Well, he's a member of the monetary policy council of China's central bank.
Anyway, exchange control is exchange control. No different from price control, trade control, or political control. It's government control, period. I agree with Simon that on this account alone, bubble is being created somewhere. Once a control and heavy regulation is introduced, the quick solution to avoid a big bubble is to remove such controls, not to reinforce with new controls and regulations. LIke raising the bank required reserves (RRs). But I guess central banks around the world are just doing their work: they are the central planners of the monetary system, so they centralize policies.
I guess Fan is correct though, when he asserted that people in fast-growing economies, in crisis-free economies (for at least 3 decades), tend to become less risk-averse. But as I argued earler, allow those people to do so, to become less risk-averse, to become less financially responsible and are financially wild and high risk takers. So long as the government will NOT give any signal, any hint, any policy, that it will come to rescue those guys later on.when a financial crisis would hit them big.
I am slowly writing a "China watcher". And being a resident of the Philippines which benefits from the continued economic boom of China -- rising number of Chinese tourists here, rising exports of the Philippines to China, investments of both Filipino and Chinese businessmen in both countries, etc. -- I will not be happy to read that China will suffer a hard landing someday. But neither am I happy that there is continued political monopoly and political coercion by the Chinese government.
So let nature take its course. People invest where they can make money, and run away if they will lose money. China's economic bubble will definitely burst. It's just a question of when. Perhaps not this year, perhaps not in 2011, perhaps in 2012 or beyond.
Below is the link to his article.
Illusion of a Chinese bubble
Fan Gang
Mint, 3 April 2010
http://www.livemint.com/2010/03/02204340/Illusion-of-a-Chinese-bubble.html
On the eve of Chinese New Year, the People’s Bank of China (PBC) surprised the market by announcingâ€"for the second consecutive time in a monthâ€"an increase in banks’ mandatory reserve ratio by 50 basis points, bringing it to 16.5%. Shortly before that, China’s government acted to stop over-borrowing by local governments (through local state investment corporations), and to cool feverish regional housing markets by raising the down payment ratio for second house buyers and the capital adequacy ratio for developers.
------
Two related papers that I wrote the past few months:
(1) Weakening $, Rising Yuan
May 14, 2009
April of every year is tax deadline month, so revenues rise like a tidal wave, then ebb in the succeeding months. This is the tax schedule in the US, Philippines, and many other countries. But last month was the first time that the US experienced a deficit (in about 26 years) in the month of tidal wave revenues. Why? Because its expenditures were a mega tidal wave. And such kind of development (or underdevelopment) creates a bad image for the US $.
Super loose monetary policy of near zero interest rate. Super-spending fiscal policy of nearly $2 trillion budget deficit in 2009 alone by the federal government alone.
Since interest rate and inflation rate behave the same way in general, then US inflation rate should be very low. Might be in the short term, but not for long. With too much $ roaming the banks, shops and government spending, high inflation should be just around the corner. And the weakening of the US$ becomes just a question of when it will happen.
Below are 2 of the many articles today on the weakening US$.
(a) Geithner’s biggest problem is dollar, not China
Written by William Pesek / Bloomberg
Monday, 20 April 2009 22:03
http://businessmirror.com.ph/home/opinion/9090-geithners-biggest-problem-is-dollar-not-china.html
It’s a bit rich for US politicians to berate Treasury Secretary Timothy Geithner for not labeling China as a currency manipulator.
Perhaps Sen. Lindsey Graham, a South Carolina Republican, hasn’t seen a newspaper in the last 12 months. With near-zero interest rates, the likely issuance of trillions of dollars of government debt and massive taxpayer-funded bailouts, the US will soon make China look like a manipulation piker.
Memo to Graham and his ilk: Your economy has lost any moral high ground as it drags the world down with it. That will be even truer as the dollar eventually pays the price for ultra-loose monetary and fiscal policies. And it will....
(b) The Almighty Renminbi?
By NOURIEL ROUBINI
May 13, 2009
THE 19th century was dominated by the British Empire, the 20th century by the United States. We may now be entering the Asian century, dominated by a rising China and its currency. While the dollar’s status as the major reserve currency will not vanish overnight, we can no longer take it for granted. Sooner than we think, the dollar may be challenged by other currencies, most likely the Chinese renminbi. This would have serious costs for America, as our ability to finance our budget and trade deficits cheaply would disappear.
Traditionally, empires that hold the global reserve currency are also net foreign creditors and net lenders. The British Empire declined — and the pound lost its status as the main global reserve currency — when Britain became a net debtor and a net borrower in World War II. Today, the United States is in a similar position. It is running huge budget and trade deficits, and is relying on the kindness of restless foreign creditors who are starting to feel uneasy about accumulating even more dollar assets. The resulting downfall of the dollar may be only a matter of time....
(2) China's Boom: Going Bust?
January 12, 2010
China now the world's biggest exporter (overtook Germany), biggest car market (overtook the US), to overtake Japan shortly as world's 2nd biggest economy. Is economic "bubble burst" near for China? I don't think so. With the bulk of its 1.3 billion people still in poverty, there is still huge room for economic expansion.
See this news report below:
http://www.nytimes.com/2010/01/12/world/asia/12china.html?ref=global-home
As China Rises, Fears Grow on Whether Boom Can Endure
By MICHAEL WINES
Published: January 11, 2010
BEIJING — As much of the world struggles to clamber out of a serious recession, a gradual flow of economic power from West to East has turned into a flood.
New high points, it seems, are reached daily. China surged past the United States to become the world’s largest automobile market — in units, if not in dollars, figures released Monday show. It also toppled Germany as the biggest exporter of manufactured goods, according to year-end trade data...
------
A friend commented via this news link,
http://dailyreckoning.com/china-boom-or-china-bust/
China Boom, or China Bust?
By Ian Mathias
01/08/10 Baltimore, Maryland – Is the great hope of the investment world little more than hype? We like to visit the “China boom or China bust?” debate every once in a while, and the argument today is pretty one-sided… the “busts” have it....
------
It's true that to go "bust", there should be credit excesses. I don't know much about personal and corporate debts, but on the fiscal side, China's govt is sort of mercantilist, surplus thinking, not deficit and borrow thinking. This is not to say that I sing Jalleluiah to a socialist government.
Another friend voted "bust". For me, it is important that China won't bust in the coming few years. The China-ASEAN free trade agreement (FTA) will be the largest free trade area in the world, about 2 billion consumers (1.3 + 0.7 billion, China-Asean countries' population, respectively). China will become ASEAN countries' biggest export market in the coming years.
* See also:
China Watch 1: World's Largest Economies, Population, 2005, April 20, 2006
China Watch 6: China-India Blog, Eco-Protectionism, August 30, 2009
Monday, April 05, 2010
On airport terminal fees
The Holy Week and its long vacation is over. Many Filipinos now fly instead of taking the boats in visiting various islands and provinces in the country. There are more budget airlines now than before, so that flying has become more affordable to more people. And this is where the government makes lots of money, foremost of which is the collection of airport “terminal fee” of P200 per person for domestic flights, and P750 per person for international flights.
Except in Thailand and Vietnam I think, government airport administrators in many airports in Asia, the US and some European countries do not collect “terminal fee”. Perhaps for some of those airports, the “terminal fee” is included in the plane ticket costs. Passengers do not need to check their wallets if they have the local currency to pay for the last-minute fees. Besides, those airports are very big, modern and beautiful, compared to the airports in Manila (terminals 1, 2 and 3), Clark, Cebu and other provincial airports.
For me, the P200 per person domestic terminal fee is big, even unnecessary. For one, passengers normally do not stay long inside the airport terminals. After queuing for security check-up and to check in their airline, passengers just wait for about 30 to 45 minutes before they board their plane. There are not even drinking fountains in the biggest terminal, terminal 3, so people will have to buy bottled water or soda/juices inside the shops, and the prices there are expensive as those shops and tenants pay a handsome fee for their lease and monthly rental at the airport.
Mall owners can give the public equally comfortable air-conditioned place for hours for free, and the food and drinks are cheaper.
The government, through the various government-owned airport authorities, makes plenty of money as a monopoly airport operator. Among these revenue sources are:
1. Passenger terminal fee, as discussed above.
2. From the various airlines - landing fee, navigation fee, ground handling fee, etc.
3. Lease and rental from shops inside the airport terminals.
4. Lease and rental from taxi and transport operators, hotels, that occupy spaces at the passenger arrival area.
5. Advertisers inside and outside the passenger terminals.
6. Car parking fee.
7. Franchise or related fee for the two airport-based taxi lines (yellow taxi and “Bayan ko” taxi).
8. Passengers’ waiting area in the case of NAIA terminal 1.
9. Other revenues.
While plane fares are dynamic and changing, depending on the season, day and time of flights, government terminal fees are fixed. Sometimes budget airlines give promo fares of only P10 on a few seats in each flight, the terminal fee plus other fees (aviation security fee, fuel charges, etc.) are fixed.
Aside from revenues by airport administrators, the government also collects more revenues from the airlines and other tourism-related investments. These include more fuel taxes (excise tax and VAT), more corporate income taxes and VAT.
I believe that to encourage domestic tourism and investments, airport terminal fees should be abolished. As enumerated above, the airport administrations have plenty of other revenue sources to recover the “foregone” revenues of terminal fees. Passengers include the cost of terminal fee (P200 each way or P400 per passenger for domestic flights) in deciding whether to visit a particular place or not. With this additional cost to passengers, there should be fewer than potential number of passengers that actually fly. Which adversely affect domestic tourism, domestic trade and investments.
When there are more investments and jobs in the provinces, there will be less poverty, less government expenditure for social and economic services, less social tension and unrest and less political and economic instability.
Except in Thailand and Vietnam I think, government airport administrators in many airports in Asia, the US and some European countries do not collect “terminal fee”. Perhaps for some of those airports, the “terminal fee” is included in the plane ticket costs. Passengers do not need to check their wallets if they have the local currency to pay for the last-minute fees. Besides, those airports are very big, modern and beautiful, compared to the airports in Manila (terminals 1, 2 and 3), Clark, Cebu and other provincial airports.
For me, the P200 per person domestic terminal fee is big, even unnecessary. For one, passengers normally do not stay long inside the airport terminals. After queuing for security check-up and to check in their airline, passengers just wait for about 30 to 45 minutes before they board their plane. There are not even drinking fountains in the biggest terminal, terminal 3, so people will have to buy bottled water or soda/juices inside the shops, and the prices there are expensive as those shops and tenants pay a handsome fee for their lease and monthly rental at the airport.
Mall owners can give the public equally comfortable air-conditioned place for hours for free, and the food and drinks are cheaper.
The government, through the various government-owned airport authorities, makes plenty of money as a monopoly airport operator. Among these revenue sources are:
1. Passenger terminal fee, as discussed above.
2. From the various airlines - landing fee, navigation fee, ground handling fee, etc.
3. Lease and rental from shops inside the airport terminals.
4. Lease and rental from taxi and transport operators, hotels, that occupy spaces at the passenger arrival area.
5. Advertisers inside and outside the passenger terminals.
6. Car parking fee.
7. Franchise or related fee for the two airport-based taxi lines (yellow taxi and “Bayan ko” taxi).
8. Passengers’ waiting area in the case of NAIA terminal 1.
9. Other revenues.
While plane fares are dynamic and changing, depending on the season, day and time of flights, government terminal fees are fixed. Sometimes budget airlines give promo fares of only P10 on a few seats in each flight, the terminal fee plus other fees (aviation security fee, fuel charges, etc.) are fixed.
Aside from revenues by airport administrators, the government also collects more revenues from the airlines and other tourism-related investments. These include more fuel taxes (excise tax and VAT), more corporate income taxes and VAT.
I believe that to encourage domestic tourism and investments, airport terminal fees should be abolished. As enumerated above, the airport administrations have plenty of other revenue sources to recover the “foregone” revenues of terminal fees. Passengers include the cost of terminal fee (P200 each way or P400 per passenger for domestic flights) in deciding whether to visit a particular place or not. With this additional cost to passengers, there should be fewer than potential number of passengers that actually fly. Which adversely affect domestic tourism, domestic trade and investments.
When there are more investments and jobs in the provinces, there will be less poverty, less government expenditure for social and economic services, less social tension and unrest and less political and economic instability.
Oil Politics 7: Oil Price and Fare Hikes, Public Transpo Deregulation
With the recent spike in local oil price hikes recently as world oil prices were rising, there are growing voices and lobbying to demand higher fare for jeepneys, taxi and buses. While it is understandable that movement of fares (upward or downward) should follow movement in petroleum prices, I find it irrationale that politics should be used in determining when and how much, such fare movement should happen.
It is chaotic and politically complicated if government transport officials will always call for public hearing. Supporters and opponents to come, including those who ride on the issue so they will get good media coverage, which helps in their political work and lobbying, like those running in the forthcoming elections.
It is possible to detach politics from fare setting. Here are some mechanisms that may be worth considering by the various stakeholders.
1. Encourage corporate brands of jeepneys and taxis. Jeepney drivers and operators will become conscious of the corporate brand that they carry and passengers will remember the corporate brand of particular jeepney and taxi groups. Thus, some passengers will remember and avoid taking a particular jeepney or taxi corporation where drivers are discourteous and road maniacs that get into frequent accidents. And passengers will remember those jeepney or taxi corporations where drivers are courteous and friendly, give the exact change, and maintain their units in good running conditions. Competition among various jeepney and taxi corporations, not among single units, will give more comfort and safety to the passengers.
2. Deregulate fare-setting. Some jeepney or bus lines that do not maintain their units well will be forced to charge lower fares per kilometer while those jeepney or bus lines that give passengers comfortable and safe rides can charge higher fare. For instance, some bus lines can field buses with only 40 seats instead of the usual 60 seats, and charge minimum fare of P20 to P25 for the first 4 kms. Other bus lines can dispatch crammed buses (say 70 seats or more) and charge only P10 minimum fare for the first 4 kms. If fares are deregulated this way, some ugly and not regularly-maintained jeepneys will either slowly vanish from the road, or they will be forced to charge only P5 minimum fare for the first 4 kms., because passengers will have other options to ride the more comfortable jeepneys or buses even if they pay a higher fare.
3. Deregulate routing. Some jeepney or bus lines can dispatch their vehicles near the gates of big private villages in the suburbs (say Novaliches, Fairview, Antipolo, Las Pinas, Bulacan, etc.) to Makati, Ortigas, Eastwood, Manila, and so on. Then people will be encouraged to leave their cars in their house when they go to their offices or schools as they will take only one or two rides, not four or more rides.
At the moment, people who will not bring their cars from say, a village in Fairview, Quezon City to Makati, will take 4 rides or transfers. First, tricycle from their village gate to the main road. Second, jeepney or air-con van to MRT station. Third, MRT to Buendia or Ayala station, and fourth, jeepney or bus or taxi to Ayala or Buendia avenue. If one is wearing proper corporate attire and/or carrying a laptop and other important documents, it is very inconvenient and unsafe to be moving from tricycle to jeepney to the train and back to jeepney again. So even if there is heavy traffic and parking is expensive, people are forced to bring their cars to work or school, which exacerbates road congestion and parking nightmares in major commercial and business districts. The national government, through the LTFRB, and the local government created mini-monopolies on certain routes, like tricycle monopoly and jeepney monopoly.
Just encourage competition among bus or jeepney lines, also taxi lines or corporations, so that passengers will have plenty of options. If people will find that such options are safe, comfortable and economical, then they will not insist on bringing their cars everyday to their offices or their kids’ schools. There will be less traffic congestion, less air pollution, less parking problems, and more savings for the public.
And we will avoid politicized fare setting. No need for any public hearing, no need for any political and media lobbying, no need for any intervention by politicians and government transport officials.
Driver and operators of jeepneys, buses and taxi will be forced to maintain their units in good conditions, they will be forced to become more courteous to their passengers. Passengers need not even complain to the government if the service of a particular bus or jeepney line is lousy. Passengers will just stop riding that particular corporation and let their friends and acquaintances know about their bad experience. This kind of passenger boycott is worse than being reprimanded and penalized by any government transport agency.
Nearly two years ago, I wrote something about petroleum taxes.
VAT on Oil Products
July 10, 2008
As the price of petroleum products keep rising, the call for the lifting or abolition of value added tax (VAT) on these products gets louder. While the goal of such measure -- help reduce the price of oil products -- is laudable, the policy tool being proposed is wrong.
The single most important element of the "rule of law" concept is that the law applies to everyone and exempts no one. Any exemption to the rule immediately invalidates the "rule of law" and automatically becomes "rule of men". When applied to commodities, the law should apply to all sectors or products and exempt not a single sector or product.
In the crafting of the current VAT law that was enacted in 2005, a few products were exempted from coverage of VAT. These include agricultural and fishery products in their original forms, meaning raw vegetables, meat, fish, fruits, etc. Once they are processed, like dried mangoes or canned sardines, the processed product is covered by VAT.
The exemption of these products, and the attempts by many other producers that the products or services they produce be exempted from VAT, was both a proof and indicator that the 12 percent VAT rate was high, so that almost everyone wanted exemption from the tax law.
Now that it is a law, the spirit of "apply to everything and exempt nothing" should be retained. In this sense, I am not in favor of lifting or abolishing VAT on oil products. Or any other products and services.
And yet I also want the prices of those VAT-covered products and services be made lower, so how can it be done considering that VAT is one of those significant price inflators?
One of my favorite alternative policy options is the abolition of import tax (if it is not abolished yet) of all petroleum products, and abolition of excise tax on gasoline products. Current excise tax is about P5.60 per liter. These will help reduce the price of oil products.
Another policy option is a lower, flat income tax, especially on personal income tax. Any tax cut is equivalent to "salary increase". Such de facto "pay hike" especially for fixed income earners, will enable many people to better adapt to higher oil prices since it is a global phenomenon anyway, and other commodities with higher prices with higher take-home pay.
How "low" should the flat tax be to have a maximum positive result to the people? Zero income tax is the best. But the best is not always the most practical and feasible. A 10 percent flat income tax, to my mind, is the second-best alternative. At this rate, many people, from public school teachers and policemen to private sector ordinary employees to struggling small entrepreneurs, will benefit. And the State will still collect taxes at a much broader tax base as more people will be encouraged to pay income tax because the rate is lower and complying with it is simpler.
----------
See also:
Oil Politics 1: Bush vs. Chavez? March 12, 2007
It is chaotic and politically complicated if government transport officials will always call for public hearing. Supporters and opponents to come, including those who ride on the issue so they will get good media coverage, which helps in their political work and lobbying, like those running in the forthcoming elections.
It is possible to detach politics from fare setting. Here are some mechanisms that may be worth considering by the various stakeholders.
1. Encourage corporate brands of jeepneys and taxis. Jeepney drivers and operators will become conscious of the corporate brand that they carry and passengers will remember the corporate brand of particular jeepney and taxi groups. Thus, some passengers will remember and avoid taking a particular jeepney or taxi corporation where drivers are discourteous and road maniacs that get into frequent accidents. And passengers will remember those jeepney or taxi corporations where drivers are courteous and friendly, give the exact change, and maintain their units in good running conditions. Competition among various jeepney and taxi corporations, not among single units, will give more comfort and safety to the passengers.
2. Deregulate fare-setting. Some jeepney or bus lines that do not maintain their units well will be forced to charge lower fares per kilometer while those jeepney or bus lines that give passengers comfortable and safe rides can charge higher fare. For instance, some bus lines can field buses with only 40 seats instead of the usual 60 seats, and charge minimum fare of P20 to P25 for the first 4 kms. Other bus lines can dispatch crammed buses (say 70 seats or more) and charge only P10 minimum fare for the first 4 kms. If fares are deregulated this way, some ugly and not regularly-maintained jeepneys will either slowly vanish from the road, or they will be forced to charge only P5 minimum fare for the first 4 kms., because passengers will have other options to ride the more comfortable jeepneys or buses even if they pay a higher fare.
3. Deregulate routing. Some jeepney or bus lines can dispatch their vehicles near the gates of big private villages in the suburbs (say Novaliches, Fairview, Antipolo, Las Pinas, Bulacan, etc.) to Makati, Ortigas, Eastwood, Manila, and so on. Then people will be encouraged to leave their cars in their house when they go to their offices or schools as they will take only one or two rides, not four or more rides.
At the moment, people who will not bring their cars from say, a village in Fairview, Quezon City to Makati, will take 4 rides or transfers. First, tricycle from their village gate to the main road. Second, jeepney or air-con van to MRT station. Third, MRT to Buendia or Ayala station, and fourth, jeepney or bus or taxi to Ayala or Buendia avenue. If one is wearing proper corporate attire and/or carrying a laptop and other important documents, it is very inconvenient and unsafe to be moving from tricycle to jeepney to the train and back to jeepney again. So even if there is heavy traffic and parking is expensive, people are forced to bring their cars to work or school, which exacerbates road congestion and parking nightmares in major commercial and business districts. The national government, through the LTFRB, and the local government created mini-monopolies on certain routes, like tricycle monopoly and jeepney monopoly.
Just encourage competition among bus or jeepney lines, also taxi lines or corporations, so that passengers will have plenty of options. If people will find that such options are safe, comfortable and economical, then they will not insist on bringing their cars everyday to their offices or their kids’ schools. There will be less traffic congestion, less air pollution, less parking problems, and more savings for the public.
And we will avoid politicized fare setting. No need for any public hearing, no need for any political and media lobbying, no need for any intervention by politicians and government transport officials.
Driver and operators of jeepneys, buses and taxi will be forced to maintain their units in good conditions, they will be forced to become more courteous to their passengers. Passengers need not even complain to the government if the service of a particular bus or jeepney line is lousy. Passengers will just stop riding that particular corporation and let their friends and acquaintances know about their bad experience. This kind of passenger boycott is worse than being reprimanded and penalized by any government transport agency.
Nearly two years ago, I wrote something about petroleum taxes.
VAT on Oil Products
July 10, 2008
As the price of petroleum products keep rising, the call for the lifting or abolition of value added tax (VAT) on these products gets louder. While the goal of such measure -- help reduce the price of oil products -- is laudable, the policy tool being proposed is wrong.
The single most important element of the "rule of law" concept is that the law applies to everyone and exempts no one. Any exemption to the rule immediately invalidates the "rule of law" and automatically becomes "rule of men". When applied to commodities, the law should apply to all sectors or products and exempt not a single sector or product.
In the crafting of the current VAT law that was enacted in 2005, a few products were exempted from coverage of VAT. These include agricultural and fishery products in their original forms, meaning raw vegetables, meat, fish, fruits, etc. Once they are processed, like dried mangoes or canned sardines, the processed product is covered by VAT.
The exemption of these products, and the attempts by many other producers that the products or services they produce be exempted from VAT, was both a proof and indicator that the 12 percent VAT rate was high, so that almost everyone wanted exemption from the tax law.
Now that it is a law, the spirit of "apply to everything and exempt nothing" should be retained. In this sense, I am not in favor of lifting or abolishing VAT on oil products. Or any other products and services.
And yet I also want the prices of those VAT-covered products and services be made lower, so how can it be done considering that VAT is one of those significant price inflators?
One of my favorite alternative policy options is the abolition of import tax (if it is not abolished yet) of all petroleum products, and abolition of excise tax on gasoline products. Current excise tax is about P5.60 per liter. These will help reduce the price of oil products.
Another policy option is a lower, flat income tax, especially on personal income tax. Any tax cut is equivalent to "salary increase". Such de facto "pay hike" especially for fixed income earners, will enable many people to better adapt to higher oil prices since it is a global phenomenon anyway, and other commodities with higher prices with higher take-home pay.
How "low" should the flat tax be to have a maximum positive result to the people? Zero income tax is the best. But the best is not always the most practical and feasible. A 10 percent flat income tax, to my mind, is the second-best alternative. At this rate, many people, from public school teachers and policemen to private sector ordinary employees to struggling small entrepreneurs, will benefit. And the State will still collect taxes at a much broader tax base as more people will be encouraged to pay income tax because the rate is lower and complying with it is simpler.
----------
See also:
Oil Politics 1: Bush vs. Chavez? March 12, 2007
Oil Politics 2: Oil prices and climate change, October 30, 2007
Oil Politics 3: $100/barrel Oil Price and Petroleum Taxes, November 13, 2007
Oil Politics 4: Is Expensive Oil Good for the World Economy?, March 18, 2008
Oil Politics 6: Price Control, Political Opportunism and the Oil Speculators, November 17, 2009
Sunday, March 28, 2010
Earth Hour 1: Success in North Korea
Our friends from Malaysia, the Institute for Democracy and Economic Affairs (IDEAS, www.ideas.org.my), got published in a newspaper in Kuala Lumpur regarding the "Earth Hour",
http://www.themalaysianinsider.com/index.php/opinion/kwek-kon-yao/57582-turning-out-the-lights-on-civilisation
They started receiving hate-mails!
I congratulated our friends there, especially IDEAS head, Wan Saiful Wan Jan.
If the rabid greens send you hate mails, that means you made a very clear message to them and the public.
Meanwhile, WWF made the most successful campaign of shutting out lights in... North Korea! A picture that our friend from Seoul, Chung-ho Kim of CFE, shares often, is that of a satellite picture in the evening of the 2 Koreas. Here's another shot of that picture.
source: http://wattsupwiththat.com/2010/03/27/earth-hour-in-north-korea-a-stunning-success/
I bet the rabid greens would consider migrating to N. Korea.
many people there shut out lights not only 1 hour/day.
they do so 365 nights a year.
-----
Two days ago, I wrote this in one discussion list:
Here is one example of carbon rent-seeking,
WWF hopes to find $60 billion growing on trees
"Earth hour" is one cheap gimmick by the WWF to continue scaring the world so that it's easier for them to extort billions of $ of foreign aid money and carbon cap and trade racket.
If the Earth Hour is meant to "save energy, save the planet", why only 1 hour/year?
Why not make it a monthly, or weekly, or daily activity? Better yet, don't use electricity. Those electrical currents that come from coal power plants, or from nuke and gas turbines, according to the WWF and other warmers, contribute to global warming.
http://www.themalaysianinsider.com/index.php/opinion/kwek-kon-yao/57582-turning-out-the-lights-on-civilisation
They started receiving hate-mails!
I congratulated our friends there, especially IDEAS head, Wan Saiful Wan Jan.
If the rabid greens send you hate mails, that means you made a very clear message to them and the public.
Meanwhile, WWF made the most successful campaign of shutting out lights in... North Korea! A picture that our friend from Seoul, Chung-ho Kim of CFE, shares often, is that of a satellite picture in the evening of the 2 Koreas. Here's another shot of that picture.
source: http://wattsupwiththat.com/2010/03/27/earth-hour-in-north-korea-a-stunning-success/
I bet the rabid greens would consider migrating to N. Korea.
many people there shut out lights not only 1 hour/day.
they do so 365 nights a year.
-----
Two days ago, I wrote this in one discussion list:
Here is one example of carbon rent-seeking,
WWF hopes to find $60 billion growing on trees
"Earth hour" is one cheap gimmick by the WWF to continue scaring the world so that it's easier for them to extort billions of $ of foreign aid money and carbon cap and trade racket.
If the Earth Hour is meant to "save energy, save the planet", why only 1 hour/year?
Why not make it a monthly, or weekly, or daily activity? Better yet, don't use electricity. Those electrical currents that come from coal power plants, or from nuke and gas turbines, according to the WWF and other warmers, contribute to global warming.
Saturday, March 27, 2010
Privatization 3: UP, NDCP, other SUCs
State universities being political creation and politically-funded, will never be independent of politics and politicians. And very often, the minds and academic biases of their faculty members and researchers are skewed towards justifying ever bigger government intervention, regulation and taxation of many aspects of our lives.
My article last week, "Privatization 2: State Universities and Colleges (SUCs), attracted a number of counter-arguments in one of my yahoogroups from some friends, especially from fellow UP alumni. The most common arguments are:
(1) might as well privatize Malacañang, the police, armed forces, disaster preparedness and everything in government, and
(2) SUCs educate the children of the poor, why deprive the poor of university education?
Liberty-oriented people do not advocate zero government and anarchy. They believe in a "limited (or minimal) government" and there are various definitions of what is a “limited government.” One such definition is one that focuses on “protecting the citizens' right to life, right to private property, right to liberty." Thus, there should be only few and small taxes to finance a limited and lean government.
The judiciary and the police, also the armed forces if there are clear, explicit threats of external aggression, are absolute necessity that government must keep, they cannot be privatized. All the other functions are either secondary or unnecessary functions. Even roads and highways construction and maintenance can be privatized, as seen from the various tollways in the country and abroad.
The problem is that the Philippine state has become lousy even in keeping the police, justice prosecution, and the judiciary, those directly involved in the promulgation of the "rule of law", into really credible institutions. Many people do not write even a single paper advocating the privatization of certain police functions like maintaining peace and order in society. They simply do it. The guys who protect our buildings, our schools and universities, our shops, malls, parking lots and churches, are not government policemen or spies. They are private security guards.
Below are the major arguments for UP privatization as a first step towards privatizing all other state universities and colleges (SUCs).
One, remove the hypocrisy of double standard. One policy of fiscal subsidy for some university students, and one policy of fiscal constraint for the others. The former includes those who get taxpayers subsidy of up to 80 to 90 percent of their school fees while the latter receive zero subsidy from the state, and still this latter group are generally able to manage. The "rule of law" says that the law should apply to all and exempt no one. So it does not appear good that two contradictory policies apply to tertiary students in this country.
Two, it is not true that UP attracts the poor and needy in Philippine society. In the first place, the poor and needy do not reach college. They drop out before they reach or finish high school. Secondly, the last time I observed, it would appear that the parents of UP students on average, are richer than the parents of students of UE, FEU, STI, AMA, NU, Adamson, Mapua, Perpetual, etc. But UP students get taxpayers subsidy while students of those private universities receive zero subsidy.
Recently, there was a big student unrest at the Polytechnic University of the Philippines (PUP). The school administration wanted to raise tuition fees from the current Php12/unit up to Php200/unit for some courses. The Php12/unit has been stuck for many years now. It would appear that the price of one hamburger or one bottle of beer in a restaurant is equivalent to, or higher than, the cost of one subject for four months in PUP. And the PUP student militants and their supporters elsewhere think this is correct, and the militants threw out and destroyed hundreds of chairs and tables in full public view and in front of many tv cameras, because they wanted more modern chairs and tables without paying extra for such additional costs.
Three, this statement is wrong now: “UP's reason for being is to gather the brightest of the youth and train them to run government.”
Some 102 years ago when UP was created by the Americans in 1908, that was a good reason and was worth supporting with taxpayers' money. There were also very few private universities then, and perhaps there were no other state Us. Now with more than a thousand private universities which have little or zero experience in relying on taxpayers’ money for their operation, the choice of the Philippine state and its local government units to run the various bureaucracies has expanded widely.
Besides, UP and other SUCs are also training students who have zero ambition of joining government, or have zero ambition of staying in the country shortly after graduation. And it is a human right violation to force these people to work in government, or force them not to go abroad. The injustice to taxpayers who do not even have children, or have children who went to private universities and receive zero subsidy is amplified.
If we privatize UP and all other SUCs, no exemption, we can then privatize all government-owned and controlled corporations (GOCCs) and government financial institutions (GFIs), no exemption. The proceeds and revenues from large-scale privatization should be used to retire the huge public debt (more than Php4 trillion) and/or reduce and abolish certain taxes and fees. Low and few taxes are certainly public service too.
On another note, the Philippine Military Academy (PMA), under the DND, not CHED, is the second most expensive SUC in terms of student per capita spending, P500,000/student/ year ++. It should be privatized, or at least the subsidy should be drastically reduced, portions of the huge campus can be privatized and the revenue from it can be used for the additional costs of PMA students.
Another SUC, the National Defense College of the Philippines (NDCP), also under the DND, should be privatized too. Its graduate students have a per capita subsidy of about P1 million/student/ year ++. Students there include some Congressmen/women, Mayors, business executives, people who do not need subsidy.
-------
More comments in facebook when I posted the earlier article in my wall. Among these comments:
1. There are indeed plenty of poor students in UP, children of ordinary parents.
2. Even for student loan program, when graduates default on their loans, taxpayers will again take the tab.
3. Tax-funded scholarships will attract abuses too.
I admit that there was some exagerration in my earlier statement that "no poor students in UP as the poor do not reach college in the first place." My main argument is that all SUCs should be privatized, and government can help the poor by giving them scholarships, and the poor but intelligent students can choose which university will attract and serve them better. If UP becomes a private university someday, after 102 yrs being a beggar to Malacanang, DBM, House of Reps (HOR) and the Senate, year after year, then it can charge full cost of education to the rich students who are more than happy to do so as their parents can afford it, so long as the quality of education will remain high.
Education is first and foremost, personal and parental responsibility; "government responsibility" in education is a far second. Parents can choose the kind of education for their kids (language school, science and math school, arts and culture school, religious school, applied science and technical school, etc.), from elementary to tertiary. But taking away elem. and secondary education as "government responsibility" is too messy, we have to focus on tertiary education.
As I argued in my paper, if the state can be lousy in doing its work in its real and core function -- to protect the citizens' right to life, right to priv. property, and right to liberty -- how can we expect the state to be efficient in doing other functions which are better left to the private sector?
A friend posted this quote from former US President Reagan as a comment,
"In America we created at the local level and administered at the local level for many years the greatest public school system in the world. Now through something called federal aid to education, we have something called federal interference, and education has been the loser. Quality has declined as federal intervention has increased." - Ronald Reagan
Another friend suggested an alternative to tax-funded scholarship program, the "Scholarship Fund" set up by the schools where anyone can donate to and gain tax deductions.
The latter is a good idea. Personally, I'd like to see government to have zero involvement in tertiary education, in exchange for drastic tax cuts somewhere, like income tax. Scholarship would be a good "compromise", with preconditions like scholars must keep an average grade of 85% (or 1.75 UP grading system) in each semester.
Whenever public funds are made available to some people, there will always be certain groups who will abuse it.
Another suggestion is to have multiple scholarships with different grade requirements. There are some companies, foundations and civic groups that currently offer scholarships every year to some students in private universities.
My article last week, "Privatization 2: State Universities and Colleges (SUCs), attracted a number of counter-arguments in one of my yahoogroups from some friends, especially from fellow UP alumni. The most common arguments are:
(1) might as well privatize Malacañang, the police, armed forces, disaster preparedness and everything in government, and
(2) SUCs educate the children of the poor, why deprive the poor of university education?
Liberty-oriented people do not advocate zero government and anarchy. They believe in a "limited (or minimal) government" and there are various definitions of what is a “limited government.” One such definition is one that focuses on “protecting the citizens' right to life, right to private property, right to liberty." Thus, there should be only few and small taxes to finance a limited and lean government.
The judiciary and the police, also the armed forces if there are clear, explicit threats of external aggression, are absolute necessity that government must keep, they cannot be privatized. All the other functions are either secondary or unnecessary functions. Even roads and highways construction and maintenance can be privatized, as seen from the various tollways in the country and abroad.
The problem is that the Philippine state has become lousy even in keeping the police, justice prosecution, and the judiciary, those directly involved in the promulgation of the "rule of law", into really credible institutions. Many people do not write even a single paper advocating the privatization of certain police functions like maintaining peace and order in society. They simply do it. The guys who protect our buildings, our schools and universities, our shops, malls, parking lots and churches, are not government policemen or spies. They are private security guards.
Below are the major arguments for UP privatization as a first step towards privatizing all other state universities and colleges (SUCs).
One, remove the hypocrisy of double standard. One policy of fiscal subsidy for some university students, and one policy of fiscal constraint for the others. The former includes those who get taxpayers subsidy of up to 80 to 90 percent of their school fees while the latter receive zero subsidy from the state, and still this latter group are generally able to manage. The "rule of law" says that the law should apply to all and exempt no one. So it does not appear good that two contradictory policies apply to tertiary students in this country.
Two, it is not true that UP attracts the poor and needy in Philippine society. In the first place, the poor and needy do not reach college. They drop out before they reach or finish high school. Secondly, the last time I observed, it would appear that the parents of UP students on average, are richer than the parents of students of UE, FEU, STI, AMA, NU, Adamson, Mapua, Perpetual, etc. But UP students get taxpayers subsidy while students of those private universities receive zero subsidy.
Recently, there was a big student unrest at the Polytechnic University of the Philippines (PUP). The school administration wanted to raise tuition fees from the current Php12/unit up to Php200/unit for some courses. The Php12/unit has been stuck for many years now. It would appear that the price of one hamburger or one bottle of beer in a restaurant is equivalent to, or higher than, the cost of one subject for four months in PUP. And the PUP student militants and their supporters elsewhere think this is correct, and the militants threw out and destroyed hundreds of chairs and tables in full public view and in front of many tv cameras, because they wanted more modern chairs and tables without paying extra for such additional costs.
Three, this statement is wrong now: “UP's reason for being is to gather the brightest of the youth and train them to run government.”
Some 102 years ago when UP was created by the Americans in 1908, that was a good reason and was worth supporting with taxpayers' money. There were also very few private universities then, and perhaps there were no other state Us. Now with more than a thousand private universities which have little or zero experience in relying on taxpayers’ money for their operation, the choice of the Philippine state and its local government units to run the various bureaucracies has expanded widely.
Besides, UP and other SUCs are also training students who have zero ambition of joining government, or have zero ambition of staying in the country shortly after graduation. And it is a human right violation to force these people to work in government, or force them not to go abroad. The injustice to taxpayers who do not even have children, or have children who went to private universities and receive zero subsidy is amplified.
If we privatize UP and all other SUCs, no exemption, we can then privatize all government-owned and controlled corporations (GOCCs) and government financial institutions (GFIs), no exemption. The proceeds and revenues from large-scale privatization should be used to retire the huge public debt (more than Php4 trillion) and/or reduce and abolish certain taxes and fees. Low and few taxes are certainly public service too.
On another note, the Philippine Military Academy (PMA), under the DND, not CHED, is the second most expensive SUC in terms of student per capita spending, P500,000/student/ year ++. It should be privatized, or at least the subsidy should be drastically reduced, portions of the huge campus can be privatized and the revenue from it can be used for the additional costs of PMA students.
Another SUC, the National Defense College of the Philippines (NDCP), also under the DND, should be privatized too. Its graduate students have a per capita subsidy of about P1 million/student/ year ++. Students there include some Congressmen/women, Mayors, business executives, people who do not need subsidy.
-------
More comments in facebook when I posted the earlier article in my wall. Among these comments:
1. There are indeed plenty of poor students in UP, children of ordinary parents.
2. Even for student loan program, when graduates default on their loans, taxpayers will again take the tab.
3. Tax-funded scholarships will attract abuses too.
I admit that there was some exagerration in my earlier statement that "no poor students in UP as the poor do not reach college in the first place." My main argument is that all SUCs should be privatized, and government can help the poor by giving them scholarships, and the poor but intelligent students can choose which university will attract and serve them better. If UP becomes a private university someday, after 102 yrs being a beggar to Malacanang, DBM, House of Reps (HOR) and the Senate, year after year, then it can charge full cost of education to the rich students who are more than happy to do so as their parents can afford it, so long as the quality of education will remain high.
Education is first and foremost, personal and parental responsibility; "government responsibility" in education is a far second. Parents can choose the kind of education for their kids (language school, science and math school, arts and culture school, religious school, applied science and technical school, etc.), from elementary to tertiary. But taking away elem. and secondary education as "government responsibility" is too messy, we have to focus on tertiary education.
As I argued in my paper, if the state can be lousy in doing its work in its real and core function -- to protect the citizens' right to life, right to priv. property, and right to liberty -- how can we expect the state to be efficient in doing other functions which are better left to the private sector?
A friend posted this quote from former US President Reagan as a comment,
"In America we created at the local level and administered at the local level for many years the greatest public school system in the world. Now through something called federal aid to education, we have something called federal interference, and education has been the loser. Quality has declined as federal intervention has increased." - Ronald Reagan
Another friend suggested an alternative to tax-funded scholarship program, the "Scholarship Fund" set up by the schools where anyone can donate to and gain tax deductions.
The latter is a good idea. Personally, I'd like to see government to have zero involvement in tertiary education, in exchange for drastic tax cuts somewhere, like income tax. Scholarship would be a good "compromise", with preconditions like scholars must keep an average grade of 85% (or 1.75 UP grading system) in each semester.
Whenever public funds are made available to some people, there will always be certain groups who will abuse it.
Another suggestion is to have multiple scholarships with different grade requirements. There are some companies, foundations and civic groups that currently offer scholarships every year to some students in private universities.
Saturday, March 20, 2010
Car plates and power trip
A car’s plate number is that vehicle’s identity and hence, points to the accountability of the owner and/or driver of that car. When something bad happens, say a car has hit a person or another vehicle and it speed away, witnesses can only identify the vehicle’s brand, color and most importantly, its plate number. Then it becomes easier for government investigators to identify the owner of that vehicle. When a car has a different plate number or no plate number at all and that car was involved in an accident or in the commission of a crime, then identifying the owner and/or user of that car is difficult, if not impossible.
The Metro Manila Development Authority (MMDA) and local governments in Metro Manila also use the plate number for vehicle restriction, aka “number coding” one day every week. Vehicles with plate numbers that end in numbers 1 and 2 are banned from Metro Manila’s streets on Mondays from 7am to 7pm except on holidays.
A few years ago perhaps, MMDA revised this restriction and allowed vehicles that are supposedly banned in the streets on certain days, and allowed them from 10am to 3pm, except in Makati and San Juan, probably in another city. Thus, vehicles with plate numbers that end in 3 and 4 are banned on Tuesdays from 7am to 10am, allowed in the streets from 10am to 3pm, and banned again from 3pm to 7pm, and allowed from 7pm to the rest of the night. A bit difficult to remember especially for motorists who come from neighboring provinces and have to go to the capital region.
An order or law is most effective when it makes not a single exception. That is, the order or regulation applies to all – governors and governed, administrators and administered – and exempts no one. This is the essence of the “rule of law”. Once an exemption is given to a particular sector or group of persons, then other people will also seek other ways to be exempted from whatever regulation and restriction that was ordered by the government.
At the onset of the “number coding” restrictions of the MMDA and local governments in Metro Manila, a number of exemptions were already given. These are for low-number plates reserved for high government officials like 6 (Cabinet Secretaries), 7 (Senators), 8 (Congressmen/women), 9 (Supreme Court Justices), and so on. Of course the exemption applies to unique plate numbers 1 (President), 2 (VP), 3 (Senate President), 4 (House Speaker) and 5 (SC Chief Justice).
Other plate numbers that are exempted are diplomatic vehicles (blue plates, 4 or 5-digits), vehicles driven by physicians, government vehicles (red plates), a few others.
This means that the restriction and prohibition to be on the road one day a week, quite difficult for some motorists, apply on private vehicles and public (for passenger) vehicles.
Seeing the difficulty of many motorists, certain government agencies created special plate numbers that give certain privileges to private vehicles that exempt them from “number coding” restrictions and flaunt some “connections” to some government agencies, so that the motorists can break certain traffic rules like “beating the red light”, “no left turn”, etc. and expect that traffic enforcers in the area may turn a blind eye for such violations.
Such plate numbers are for sale, of course, and the issuing government agency makes additional revenues by exempting motorists from certain restrictions that were created and implemented by the same government agencies. This is clear double standard and making a mockery of “number coding” and related traffic rules.
Lately, among the most visible “special plates” are LEAP (law enforcers’ association of the Philippines), PNP-CSG (Phil. National Police), PNPA-PMA (PNP Academy-Phil. Military Academy). These car plates seem to be increasing everyday. Other minor and less frequently-used plates are House of Representatives, IMMIGRATION, LAWYER.
All such plates are irritating for ordinary motorists like this writer. We try to obey certain rules set by the government like “number coding” in order to reduce the number of vehicles on the streets and hence, reduce the traffic congestion. But many private motorists and government agencies are flaunting their powers that they are exempted and have the power to grant exemptions, to those rules that government enforcers are supposed to implement without favoritism.
Promulgating the “rule of law” is still far out from this country. Government agencies that are supposed to implement certain rules and restrictions are among the first and worst violators of those rules.
If we are to develop as a mature and responsible society, a single most important factor that must be done is the promulgation of the rule of law.
Privatization 2: State Universities and Colleges (SUCs)
Universities are supposed to be among the major well-springs of new knowledge in society, innovative ideas that were not thought of or tested before. And among such ideas that universities should explore is financial independence and autonomy from politics.
Private colleges and universities are generally successful in this aspect. But most state universities and colleges (SUCs), because of their nature as political creation, remain dependent on politics and politicians for decades, some even for more than a century, as in the case of the University of the Philippines (UP).
Currently there are 102 SUCs in the country. A number of these have multiple campuses or branches in other parts of the country or other parts of the region or province. UP for instance has 7 constituent units in 9 campuses from Luzon to Mindanao. Cagayan State University has 8 campuses in Cagayan province alone.
SUCs on average are dependent up to two-third of their annual revenues from NG subsidy. For MSU and DMMMSU however, dependence on state subsidy is more than 80 percent and they collect less than 20 percent from tuition fees and other services by the university. And aside from direct subsidy, SUCs also receive additional funding from the annual budget to implement the Agriculture and Fisheries Modernization Act (AFMA).
Some rich cities also have their own city universities, like the University of Makati (UMak) and the Pamantasan ng Lungsod ng Maynila (PLM or City Univ. of Manila). So government spending on tertiary education is substantial. This creates some form of “addition” to taxpayers’ money by many SUCs and city universities’ administrators and officials.
It is important that the production of new knowledge be detached from politics. Politics cultivates a very partisan culture and the political biases of politicians in power somehow get into the university system’s administration like the appointment of key university officials, senior faculty members, and possibly in the content and curriculum of subjects and courses taught in the government universities.
It is also the belief of this writer that education is mainly a parental responsibility, not government responsibility. Government can come in to provide subsidized or free education up to elementary or secondary education to the poor. Education, like food and clothing, should be customized to the specific needs and resources of students and their parents or guardians. This is possible only if there is a wide range of diversity in the focus, specialization and quality of different schools and universities. Whereas it is the nature of government to provide a “standardized and homogenized” system of services like education. Homogeneity hates diversity and this often leads to mediocrity in the quality of services delivered.
It also gives additional pride and a sense of achievement to parents and guardians if they can proudly declare that it is them and their hard work, not the taxes that are coercively collected, that sent their kids to university education.
There are two important implications for this kind of philosophy or political belief. One, there should be no government tertiary institutions. Meaning all SUCs and city universities should be privatized. The national and local governments can help the poor by providing scholarships to intelligent but poor students, the latter will choose among the competing private universities. And two, there should be significant income tax cut, allow the parents and guardians to keep more of their monthly or yearly income so they can plan more about their kids’ education, healthcare, nutrition and related concerns.
This is another one of the “politically-incorrect” advocacies of this writer. An elaboration of this point will be made in future articles in this column.
(Originally posted with a table of the budget and total revenues of the 16 biggest SUCs, 2010, in http://www.thelobbyist.biz/perspectives/columns/back_to_personal_responsibility/836.html)
* See also Privatization 1: Philippine Military Academy (PMA), January 02, 2010
Private colleges and universities are generally successful in this aspect. But most state universities and colleges (SUCs), because of their nature as political creation, remain dependent on politics and politicians for decades, some even for more than a century, as in the case of the University of the Philippines (UP).
Currently there are 102 SUCs in the country. A number of these have multiple campuses or branches in other parts of the country or other parts of the region or province. UP for instance has 7 constituent units in 9 campuses from Luzon to Mindanao. Cagayan State University has 8 campuses in Cagayan province alone.
SUCs on average are dependent up to two-third of their annual revenues from NG subsidy. For MSU and DMMMSU however, dependence on state subsidy is more than 80 percent and they collect less than 20 percent from tuition fees and other services by the university. And aside from direct subsidy, SUCs also receive additional funding from the annual budget to implement the Agriculture and Fisheries Modernization Act (AFMA).
Some rich cities also have their own city universities, like the University of Makati (UMak) and the Pamantasan ng Lungsod ng Maynila (PLM or City Univ. of Manila). So government spending on tertiary education is substantial. This creates some form of “addition” to taxpayers’ money by many SUCs and city universities’ administrators and officials.
It is important that the production of new knowledge be detached from politics. Politics cultivates a very partisan culture and the political biases of politicians in power somehow get into the university system’s administration like the appointment of key university officials, senior faculty members, and possibly in the content and curriculum of subjects and courses taught in the government universities.
It is also the belief of this writer that education is mainly a parental responsibility, not government responsibility. Government can come in to provide subsidized or free education up to elementary or secondary education to the poor. Education, like food and clothing, should be customized to the specific needs and resources of students and their parents or guardians. This is possible only if there is a wide range of diversity in the focus, specialization and quality of different schools and universities. Whereas it is the nature of government to provide a “standardized and homogenized” system of services like education. Homogeneity hates diversity and this often leads to mediocrity in the quality of services delivered.
It also gives additional pride and a sense of achievement to parents and guardians if they can proudly declare that it is them and their hard work, not the taxes that are coercively collected, that sent their kids to university education.
There are two important implications for this kind of philosophy or political belief. One, there should be no government tertiary institutions. Meaning all SUCs and city universities should be privatized. The national and local governments can help the poor by providing scholarships to intelligent but poor students, the latter will choose among the competing private universities. And two, there should be significant income tax cut, allow the parents and guardians to keep more of their monthly or yearly income so they can plan more about their kids’ education, healthcare, nutrition and related concerns.
This is another one of the “politically-incorrect” advocacies of this writer. An elaboration of this point will be made in future articles in this column.
(Originally posted with a table of the budget and total revenues of the 16 biggest SUCs, 2010, in http://www.thelobbyist.biz/perspectives/columns/back_to_personal_responsibility/836.html)
* See also Privatization 1: Philippine Military Academy (PMA), January 02, 2010
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