Mining 5: Benefits of Mining Even Without Taxes

Last Thursday, December 06, I recommended this article in my facebook account and two friends, Jayant Bhandari and Citos Buenaventura, commented on my fb wall. It was a nice, civil discourse and debate.

Portions of the article say:
"Funny though, the government does not seem to know its own anti-mining proclivities. This seems to be the case as the agency in charge of the sector had to backpedal on its target of $2 billion in mining investments this year after the latest figures showed a 50 percent plunge to $160 million in the first half. The government agency admitted that “uncertainties surrounding the government's mining policies” were to blame for the huge shortfall. Well, duh.

"It stands to reason that the government’s “substantial” lean towards the cause of the anti-mining environmentalists would leave no room for compromise with the “pollutive” mining sector. This absence-of-a-middle-ground policy is a bit myopic: the environmentalists state that we ought to leave nature pristine for our children’s children and our grandchildren’s grandchildren.

"But so long as gold prices remain elevated at over $1,700 an ounce – valuing one listed mining company’s ore reserves underground at over P250 billion – and so long as man remains motivated by profits, then it’s quite obvious that if we don’t mine it now, then it would surely be dug from the ground by our grandchildren’s grandchildren. Mining the gold cannot be stopped. The only thing to do is to make sure that the extraction will be responsibly done."

Here are our exchanges from December 6-7. Both Jayant and Citos gave me implicit permission to use our exchanges in this blog post.
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Citos: If the majority want to concede mining profits for the sake of a better environment, that is their prerogative. Same thing with deforestation.

The profits of mining has traditionally been very concentrated in the hands of a few and in some cases foreign beneficiaries, for most of the Philippine population, there is little incentive to support the mining industry in general. We hardly see the benefits of mining, but when mining spills and habitat destruction happen, the consequences are all too visible.

Nonoy:  Hi Citos, "We hardly see the benefits of mining" -- your cp and laptop, your car or bicycle, your house or office building, your school or shop, your electricity and electronic cables other gadgets, are ALL products of mining. Not one of those came from agri or fishery or forestry or from thin air. ALL are products of mining. No mining, no modern life, back to the caves,  Fat-Free Econ 3: Mining and Environmentalism

Jayant:   Citos: If the locals who own the land do not want mining done that is understandable. But what actually happens is that locals and government let companies develop a project and then start creating problems when the companies have invested a lot of money. This is nothing but a lack of integrity and cheating. But the worst suffers of this cheating is the locals. The risk associated with mining is very high, so investors want more returns, part of which could have otherwise gone to the locals. Moreover, such difficult environment means that in Philippines good people do not want to come, leaving you with crooked miners.

Citos: Hi Nonoy, We are talking about mining in the Philippines. My bike and car were mined from elsewhere. As an industry, mining in the Philippines has not benefited a broad swath of the population. Try to write legislation that opposes call centers, I am sure you will get spontaneous opposition from a lot of people. I do not see the same happening in mining. The employment is quite low, less than 200,000 if this source is correct:

http://philippinemining.imaginet.com.ph/mining_articles/employment

Nonoy: We are lucky that people abroad have allowed mining otherwise we will have no cars, buses, motorcycles, airplanes, buildings, laptops, cps, electricity here. Bottomline, we benefit from mining, whether it's done in Africa or Australia or Indonesia or in the Philippines.

About "low employment", naturally, because mining of raw products is limited to a few areas. See also the data in agri, fishery and forestry, now constitutes a little over 10% of GDP. This is because employment in poultry is relatively small but see after the dressed chicken (counted in agri sector) has been sold as litson manok or chicken nugget or chicken curry or chicken adobo, etc. in millions of food stalls, restos, hotels. Employment and GVA here is no longer counted as agri employment and GVA but services sector employment and GVA.

Citos: Hi Jayant, I will not deny there is corruption in local governments which makes mining less attractive for good investors. I have very close experience with that. But that is the problem of the investors as it was for people close to me. From the point of view of the common person on the street however, mining has not benefited him. The profits of mining goes to the mining investor, then the local government official who allows the concession to operate. The local population in theory will benefit from the royalty being used for development/investment in their area. The most likely case however is that the royalty is misused by local authorities and do not turn into projects that benefit the area.

Nonoy: Taxes, fees and royalties of large mining companies (the small scalle mining do not pay any tax or royalty) are just gravy to the public. We benefit already from mining from the various mineral products alone, metallic or non-metallic, as I mentioned above. It's like the agri sector, even if the agribusiness companies do not pay a single tax or fee to the govt, we the public already benefit from the chicken, poultry, pork, cattle, veggies, tilapia, bangus, other crops and products that they produce and sell to the public. Taxes are just gravy and top off to the beneficial effects of agri and mining.

Jayant:  I am not sure why should you be obsessed with whether mining has helped the common man or not. Why should it be my problem or yours if someone does something and he profits from that? That is, unless I am coming from envy. In other words... Does what you do you do only with common man in mind? My view is that we add the most value to the society by focusing on us and our families. That is how I have seen people living, but then they don't want others to live that way---this mindset leads to social poverty, which is the case with Philippines. (I have a lot of experience with mining in Philippines. I love the country but absolutely hate the DIY economics of the those who live there.)

Citos: Hi Nonoy, can you name one metallic product you own where you are sure the material came from a local mine? I can't, probably most Filipinos can't either. Most of our metal products are imported, and I believe most of our metallic mining production is exported. What does that mean for me? I do not need local mining to get the products I use. I do not care if my bike came from an aluminum mine in China or Australia, local mining has no contribution that matters to me which is why I have little inclination to defend it.

Hi Jayant, legislation in a democracy is partly a popularity contest. Our president, it seems is more cozy with environmentalists who want to preserve nature at the expense of mining. Now if mining benefited more people in my country, there would be a better balance between leaving the minerals under the ground and preserving nature. Since the benefits of mining has been so concentrated to a few, there is then no popular movement to promote mining.

Mining is extraction of resources owned in common by citizens of the country. Granting anyone the rights to mine is a privilege granted by the state and local governments. So compared to other industries, it is not a purely private venture like writing computer code or building chairs. There is the element of an agreement between the miner and the people so that both parties will benefit.

 Mining is in trouble because it does not have the popularity it needs to secure that agreement. Under a dictatorship, or a corrupt government, mining companies only had to make a deal with the politician in charge. In a democracy, mining companies have to convince people that the venture will be worth the compromises in terms of degradation of nature and risk of pollution accidents.

Nonoy: From the link that I gave above, "A typical cellphone is made up of cobalt, silver, gold and palladium - all are mineral products. Even a barong-barong or bahay kubo will require nails, hammer, saw or bolo/itak - all from mining." From copper alone, people produce wires and cables for power generation, transmission, distribution, telecomms, electronics; in motor rotors, coils, copper alloys, etc. etc.

Mining is in "trouble" because ignorance and misconception are larger than knowledge. It's like coal power plants, right now the Philippines, Luzon especially, is dependent on coal by nearly 40 percent of total power generation yet many people hate coal simply because they believe in WWF, Greenpeace and other climate alarmists.

Right, mining is a privilege, not a right. The same with food, medicines, clothing. People who do not want to work but expect the govt to feed them should instead starve rather than live. Getting a mining permit is easier if knowledge is larger than ignorance and misconception.

Citos: Hi Nonoy, you can buy fabric and sewing machines and sew your own clothing as a completely private venture. Mining is different, you need a concession from the local government of the area that you will extract minerals from. If the local government is corrupt, you just pay him off. If the local government is doing it's job, it will have to balance cost and benefits with the people and get it's constituents' considerations before approving the venture. The two are not the same in that mining has a much more public aspect involved vs cloth manufacturing.

Nonoy: Right, it's one thing to get a permit from LGUs and the DENR-MGB, and another thing to say a sweeping "we hardly see the benefits of mining" because the benefits of mining is right there in your hands, in front of your eyes -- your cp and laptop, your watch and car or bicycle. With gold hitting $1,700+ an ounce, gold mining companies, including small scale gold mining, is rising, it should be easy for a mining company to put up a whole school, or whole hospital, in the main city or municipality and hence, hope to get public disapproval. Corrupt LGUs, corrupt NGOs and media, are another breed because they want huge money for their own personal bank accounts only.

Citos: Hi, when I wrote "we hardly see the benefits of mining", I was referring to local mining. My apologies if I was not clear enough about it.

Nonoy: Even to say "we hardly benefit from local mining", it is still wrong. I do not know how much of all electrical cables running from Sulu to Aparri are from imported copper, but it seems impossible that they are 100 percent imported, there should coming from local copper mines. BSP is very explicit that its gold reserves are from local, the small scale mines in particular that do not pay taxes and royalties as these are mostly informal companies that are not registered with SEC or DTI or DENR.

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See also:
Mining 1: Mineral Rights, September 09, 2010
Mining 2: Insurgents and Mining Companies, October 25, 2011
Fat-Free Econ 3: Mining and Environmentalism, March 15, 2012
Mining 3: Debates on Mining, March 17, 2012
Mining 4: EO 79 and the MICC, July 12, 2012

Fat-Free Econ 33: Institutions and Why Governments Fail

This is my article yesterday in TV5's news portal, 

http://www.interaksyon.com/business/49935/fat-free-economics--institutions-and-why-governments-fail

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Institutions are mechanisms and structures of social order, whether created via volunteerism or by coercion. Private institutions are characterized by their voluntary creation and sustenance while public and government institutions are created by coercion through the Constitution, legislation, or other government orders or proclamations.

In most public discourse, institutions often refer to those in the public sector because they prescribe certain behaviors of the people through various regulations, and they are sustained via taxation and other mandatory fees and contributions to the government.

When institutions are weak, they do not function properly. They or the officials that lead them do not enforce certain rules and regulations that they are mandated to do. Rather, they exercise certain arbitrary powers and allow exemptions as to whom the rules and penalties will apply and to whom the rules can not apply.

In their book “Why Nations Fail" (published 2012, 529 pages), Daron Acemoglu, an economist from MIT, and James Robinson, a political scientist from Harvard University, argue that nations can fail if they have more “extractive” rather than “inclusive” economic and political institutions.

Extractive institutions do not properly enforce law and order, they do not secure property rights, and there is “absolutism” in public commands. Inclusive institutions on the other hand ensure law and order, secure private property rights, allow for economic competition and political pluralism.

These points were discussed extensively by one of the authors, James Robinson, in a conference on December 5 at Mandarin Oriental Hotel jointly sponsored by the Angara Center for Law and Economics and the World Bank.

I agree with the Robinson's analysis that the main function of government is to promulgate the rule of law and protect property rights. And that is where the Philippines and other governments fail. They do not strictly promulgate the rule of law. Rather, there is more rule of men, deciding to whom the law and prohibitions will apply and to whom they do not apply. So it is more of government failure, not national failure. And the question is, why governments fail.

Examples are the protection of shops and malls, hotels and buildings, schools and universities, airports and seaports, ordinary individuals and so on, are done mainly by private security agencies, not government police and armed units. The police and other agencies are generally corrupt that people and businesses distrust their capacity to protect the citizens and their properties, so they get private security agencies to protect themselves and their properties. They turn only to the police after a crime has happened for legal cases later. But the crime prevention function is done mainly by the private sector.

There is also government failure in various welfarist and subsidy programs. There are endless programs like education and healthcare for the poor, housing and credit for the poor, tractors and electric tricycles for the poor, cash transfer and roads for the poor, condoms and pills for the poor, and so on. Someday there could be cars and iPads for the poor - and poverty still persists.

In the current global and regional public finance condition, almost all governments have dis-savings and are heavily indebted. The public debt-to-GDP ratio can range from 20 to 200-plus percent. Yet many economies have positive savings rates, meaning their savings-to-GDP ratio is positive - from about 14 to 50 percent among Asian governments alone. This is another example that savings and efficiency in the private sector is compensating for dis-savings, waste and inefficiency in the public sector. 

It is a bankrupt idea that more power should be given to governments (local, national and multilateral) and people should work and pray that "enlightened and good" leaders will wield such powers to do central planning and redistribute wealth, regulate and regulate, tax through "inclusive institutions". And when thieves and dictators grab government authority, people should rally and mobilize again to replace and topple them. Then gamble again that the next round of leaders are not thieves and dictators. This is precisely the experience of the Philippines and many countries for many decades now.

People are not idiots that government, whether ruled by thieves or angels, should nanny them from education to healthcare, housing, transportation, agriculture, condoms and so on.

One of the discussants in the forum, Dr.Bernie Villegas of the University of Asia and the Pacific made a correct position during the roundtable that the PNoy administration should focus its last three years on building or strengthening public institutions - the courts, the legislature, and various bureaucracies - to become "inclusive" and protective of law and order, protective of property rights. But he stopped there. 

For the government to focus on that very important thrust, it should stop creating new welfarist programs, step back and focus its resources on improving existing programs, or even abolish those programs that were more of debt generators than productivity enhancers. 

The free market, more personal responsibility - as opposed to more and bigger government - still has a long way to go in this country and elsewhere. There are just too many central planners around us who endlessly produce “great ideas” and they seriously think that their bright ideas should be forced on the rest of society, and taxpayers should finance their grand ideas endlessly.

It is this central planning mindset - of more forced collectivism and coercion in society - that causes conflict among people. We should have less coercion in society. It is good that people have lots of “bright ideas” but such ideas need not be forced and slammed on everyone else. Rather, bright ideas can survive and thrive via voluntary exchange and civil society volunteerism.
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See also:
Fat-Free Econ 29: Anti-capitalism, Fanaticism and the Poor, November 13, 2012
Fat-Free Econ 30: BPOs and Obama, November 14, 2012

Fat-Free Econ 31: On the Kasambahay, Solo Parents Welfare Bills, November 26, 2012

Fat-Free Econ 32: GDP Growth, Stockmarket and Rule of Law, December 01, 2012

Rule of Law 15: RoL and Government Failure, August 16, 2012
Rule of Law 16: On the New SC Chief Justice Ma. Lourdes Sereno, August 25, 2012
Rule of Law 17: Justice Without Discrimination, October 18, 2012

Drug Innovation 7: IFPMA, Superbugs and Tropical Diseases

People's lifestyle and communities evolve and continuously change. Their expectations, patience or impatience for more modern lifestyle, including more modern treatment in case they get sick, also evolve and changes. That is how modern medical science, pharmaceutical R&D, diagnostic tests and other aspects of the healthcare industry evolve.

I am reposting below three nice articles by the Executive Director of the Pharmaceutical and Healthcare Association of the Philippines (PHAP), Mr. Reiner Gloor. These are about the role of drug innovation and how to better encourage it, not demonize it. These appeared in his weekly column in BusinessWorld.

Protecting intellectual property rights (IPR) like drug patents is an important policy measure by governments to encourage innovation. Policy reversals like promoting compulsory licensing (CL) and other variants of IPR confiscation can only discourage innovation. After spending 10 to 14 years in various clinical trials and drugs R&D, and some $1 B or more per candidate drug molecule, it is not wise for governments to simply coerce the innovator companies to give away those efforts to other companies which did not spend equal amount of time and money to develop more revolutionary and more disease-killer medicines.

I have argued it over and over in this blog and other papers, that the main function of government is to promulgate the rule of law, protect private property rights, and the citizens' liberty, freedom of expression and freedom from aggression by bullies. Protecting IPR is consistent with this government role.

The three papers are entitled "Impact of innovation", "Protecting innovation", and "Encouraging innovation". Enjoy reading.

(1) Impact of innovation

Posted on 05:03 PM, November 08, 2012

Medicine Cabinet -- Reiner W. Gloor

http://www.bworldonline.com/weekender/content.php?id=61108

THERE was a time when infectious diseases such as pneumonia, typhoid fever and tuberculosis ravaged people around the world with no medicines available to treat or prevent them.

Alexander Fleming’s discovery of penicillin and subsequent research yielded new antibiotics that continue to protect the people from simple to complex infections. Since the 1920s, scientists also had their eyes on prevention, management and even cure for non-communicable diseases. Now, thousands of medicines have been produced to treat or prevent diseases, thanks to pharmaceutical innovation.

During the biennial conference of the International Federation of Pharmaceutical Manufacturers and Associations (IFPMA) in Geneva last week, the global research-based medicines industry called for a shared commitment to promote global health through the promotion of further innovation.

These medical innovations, along with other health interventions, have, after all, helped in beating polio on a global scale, and prevented measles, mumps, rubella and other ailments.

IFPMA President Dr. John Lechleiter said that in the past decade alone, vaccines for measles, polio, and diphtheria-tentanus-pertusis have saved the lives of an estimated 21.2 million children under the age of five each year.

He added that between 2000 and 2006, immunization campaigns reduced the number of deaths caused by measles by 68% worldwide and 91% in Africa. Furthermore, immunizations provided to nearly 300 million children in 72 developing countries have saved over five million lives. Reports also showed that global infant mortality fell from 77 deaths per 1,000 births to 62 or a reduction of 20% between 2000 and 2009.

Innovations in medicine have also helped increase cancer survival rates, and dramatically reduce deaths due to HIV/AIDS.

Biopharmaceutical research is likewise being focused on non-communicable diseases such as cardiovascular diseases, diabetes, chronic respiratory diseases, and cancers that have grown to become the world’s biggest killers.

The biopharmaceutical sector has similarly invested heavily on understanding so-called rare diseases or those which affect fewer than 200,000 people. A deeper look at an individual’s genetic make-up is putting personalized medicine in the forefront of today’s innovation so that detection, treatment and prevention of the disease will be more tailored to the needs of each patient (For more information on personalized medicine, go to www.innovation.org.)

People are also living longer due to medical innovations. In illustrating this, a child born in 1955 had an average life expectancy at birth of only 48 years. In 2000, a child could expect to live 66 years. Life expectancy will increase to 73 years in 2025, it is said. Dr. Lechleiter commented that developing countries are seeing the most rapid gains.

Professor Frank Lichtenberg of Columbia University disclosed “new medicines accounted for 40% of the increase in life expectancy during the 1980s and 1990s in 52 developed and developing countries.”

Apart from the impact to life and health, biopharmaceutical innovations also resulted in economic gains by way of years of productive work, economic value added, consumer spending, and taxes paid.

No less than the World Health Organization (WHO) said that a nation needs a healthy population to achieve economic development. In fact, the 2001 report by the WHO Commission on Macroeconomics and Health stated that “health is a creator and pre-requisite of development.” It emphasized that increasing the coverage of health services and a small number of critical interventions to include the world’s poor could “save millions of lives, reduce poverty, spur economic development, and promote global security.”

The IFPMA Assembly also pointed out that there is strong evidence that innovative medicines are the most cost-effective part of health care. In another study, Mr. Lichtenberg found that for every $1 spent on new medicines for cardiovascular diseases in Organization for Economic Cooperation and Development (OECD) countries, close to $4 were saved in hospitalization and other healthcare costs.

More than economic gains are the social impact of medical innovations on patients who may be our children, siblings, parents and friends.

These days, a diagnosis of a disease does not necessarily mean an end to ties with families and friends.

These gains and the processes that these innovations go through must not be taken for granted. As Mr. Lechleiter said, we must build upon and not rest upon the contributions of the past. For despite our tremendous progress, much more remains to be done.

Population Control 15: Debate, Debate, on the RH Bill

The pro-Reproductive Health (RH) bill camp has issued a public challenge today, nice press release, see below. One of my friends in facebook,, Louie Montemar, posted it in his wall. I replied with the following points.

I want to join the debate. Here are my questions:

1. Condoms lang, we need legislation pa?

2. Asking the OB professionals to render services to the poor for free, we need coercion and legislation pa?
3. DOH will spend P2.5 B for various RH services in its 2013 budget, so it is being done already even without new legislation, why do we need more coercion and more legislation?

4. There is an impending big typhoon coming to the country by tomorrow, to hit Mindanao and the Visayas  There is no "Solidarity during flooding bill" or law, and yet people are helping their fellowmen on their own even without coercion and legislation, so why more coercion and legislation?

5. With about P300 B per year budget deficit (expenditures larger than revenues), this is not enough. Govt must over-spend further, over-borrow further with new programs like cash transfer for the poor and condoms for the poor, while maintaining old programs?

As I argued before, I believe that this bill will become a law soon. There are just too many academics, media people, NGO leaders, etc. who are pushing for government expansion in population issue. 

Then people will realize later, "Ayy, kulang pa pala ang RH law, poverty persists pa rin, kaya beyond education & healthcare for the poor, housing and credit for the poor, train subsidy and tractors for the poor, cash transfer and condoms for the poor, we need iPad and samsung Tab for the poor pa pala. Add also cars and yacht for the poor." 

Their bottom line actually, is jut to keep expanding government, keep expanding taxes and fees.

Then one of the statement signatories, Dr. Antonio "Tonton" Contreras of DLSU Political Science Department, invited me to join the debate. I immediately said Yes. I told them that they cannot expect me to argue the Church position because I have zero sympathy with their argument. He said their position does not mention the church position as well. That's good.   Let us make the church position irrelevant in this debate. 

I also suggested that they reformulate some points into questions that are answerable by Yes or No, so that a black and white position can clearly be established. Fori nstance, one question will be:

Do we need new legislation for all these RH services and arguments? Why or why not?

I also asked them who are those anti-RH debaters they have tangled with in the past, but were cowards to share their presentation publicly. I think these are lousy debaters and I despise cowards. If people should debate publicly, they should open up their data and arguments to public scrutiny.

On another note, I attended last week the two-days Federation of ASEAN Economic Associations (FAEA) 37th annual conference at the PICC. In a keynote address, Dr. Charles Horioka of Osaka University presented a paper, “The Determinants and Long-Term Projections of Savings Rate in Developing Asia”. Their economic regression showed that domestic saving rates in developing Asia are determined primarily by the age structure of the population (negative effect, especially the aged dependency ratio),  the level of per capita GDP (positive effect), and the degree of financial sector development (also positive effect). 

So, having a less-ageing population is positive news as there are more young people who can produce more wealth – as entrepreneurs, as workers, as traders – and support the young and the aged section of the total population. This table below is interesting.

Source: Charles Horioka and Akiko Hagiwara, The Determinants and Long-Term Projections of Savings Rate in Developing Asia, presented at the 37^th FAEA Annual Conference, 28 November 2012, PICC, Manila.

During the open forum, I spoke and commented that with savings rate in Asia  ranging from 10 to about 50 percent of GDP, these are still savings whereas almost all governments in Asia (and elsewhere) have dissavings with their high public debt. In effect, private savings have compensated for government dissavings and fiscal irresponsibility and over-borrowing, resulting in a positive net savings. Dr. Horioka agreed with my observation.

Welfarism 24: Comments on the Kasambahay, Solo Parents Bills

My article on FAT-FREE ECONOMCS | Why we don't need the Kasambahay and Solo Parents bills has attracted a number of comments, I provided some reply to those comments, below. These were made on November 26-28, 2012.

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ariaanastacio All I know is that This bill is nothing but helpful. I believe that kasambahays deserve this kind of protection from the law. I really don't see how some people would even think of going against it. I can never imagine it being inefficient and non-beneficial. There's nothing to lose with this bill. So why would people even complain? This bill is a GREAT bill.

Nonoy Oplas · There is a tendency to support legislations that give mandatory welfare, mandatory high wages, mandatory price discounts. It's for the benefit of the target beneficiaries and the poor. But as shown by many rich welfarist countries who provide so many mandatory welfare to domestic helpers, the result is more unemployment. If you combine wages + contributions to PhilHealth, SSS, Pag-IBIG + food and lodging + bonuses and other perks, the cost will not be small. Then only the rich can afford to get a kasambahay and middle class couples who need to work both, one of them must drop from working and take care of the kids and households.

Antonio Perez Works at Shift Supervisor
Nakikita ko naman ang punto tungkol sa kasambahay bill na kadalasan nga naman ay mas ako pa ang nakukuha ng mga kasambahay ngayon kesa sa nakalagay sa bill subalit hindi naman yun para sa mga lumampas na ang sahod sa 2,500(o 2,000 at 1500), kundi dun sa mga nakakakuha ng mas mababa at naaabuso. Paraan lang ito ng gobyerno na makasiguro at maprotektahan ang ating mga kasambahay na hindi naipagpala ng mga mababait na amo.

Maria Mababang Loob · UST
As a solo parent myself, I beg to disagree. I have two minor kids still in school and a sick, elderly father to take care of. Although I am "gainfully employed," an assessment made by the local social worker when I applied for a solo parent ID, what I make is hardly enough to pay all the bills, tuition fees plus other school expenses, food, vitamins, and medicines when one of my kids or myself gets sick. As a result, I am neck deep in debt. Actually, what we are lobbying for is not so much the discounts but equal employment opportunities for all solo parents since some (esp private companies) are reluctant to hire solo parents, esp those with 10 yrs old below kids, even when they're qualified. True, not all solo parents in the Phils. are poor but we know for a fact that the majority are. I used to hire a part-time laundrywoman with seven kids, abandoned by her husband, and there are lots more like her out there who need government protection. What needs to be done is a comprehensive survey of all solo parents nationwide wherein the degree of assistance to be given depends on their prevailing situation. And even "rich" solo parents need a program where they can be counseled, guided and assisted to rebuild theirs and their children's lives esp after a devastating separation!

Nonoy Oplas ·
Thanks for the feedback Ms. Loob. It is true that on average, solo parents are more hard up financially than the husband-wife tandem, but forcing private companies to give mandatory discounts even to non-poor solo parents is unfair. If poverty is the problem, then give quality service to the poor, whether they are solo parents or intact husband-wife household, or even for orphans.

Your concern on equal employment opportunity for solo parents is understandable. There is big room for civil society and corporate responsibility, in helping these people, it's not all government responsibility. As the experience in the expanded senior citizens act has shown, the diswelfare to many old people who cannot buy the medicines they need in small but nearby drugstores is possibly larger than the supposed welfare of mandatory discounts they can get.

Web and State 2: FOI Bill and Right of Reply

This is my article today in the online magazine,
http://thelobbyist.biz/index.php/perspectives/less-government/item/131-not-right-of-reply-but-privilege-of-publication
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One deadlock in the Freedom of Information (FOI) bill is the proposal by some legislators that a “Right of Reply” should also be included in that proposed law, or the “Right of Reply Bill” should also be passed alongside the FOI bill.  

A proposal for instance by Cong. Rodolfo Antonino, is to insert his provision that:

Opportunity to Reply. – Any person natural or juridical who came to be involved directly or indirectly in the issue publicly obtained must be given the opportunity to account for, explain, manifest or throw light upon the issue concerned in the following manner:

(a) That, it shall be in the same space of the printed material, newspapers or magazines, newsletters or publications circulated commercially or for free;

(b) That, it shall be aired over the same program on radio, television, website, or any electronic device as the case may be;

(c) That mandatory explanation on the part of the person natural or juridical who is involved or happened to be involved in the public information obtained shall be published or broadcasted not later than three (3) days;

(d) That the explanation shall be thorough, clear and complete as to shed light on the issue of public concern.

Then he set various penalties and fines for failure to publish or broadcast the reply, like monetary fines of P10,000 to P100,000 for various offenses.

This is wrong. Right of reply is a right for people who would bother to reply to certain unfair accusations against them. But getting published in whatever media outlet, public or private, that the complaining person feels he was unfairly attacked, is a privilege, not a right.

If I attack a particular government official in my blog and say that his ideas are ugly and his face is even uglier, and many people including the concerned official happened to read that particular blog post of mine, the official concerned can write a comment in my blog, fine. Now if he wants me to post another blog article just for his reply, it is my right as blog owner, to post it or not. It is my right, not his. If I decide to post his full reply in my blog, I granted him a privilege, not a right.

Any person can put up a blog, it is very easy to open an account with blogger or wordpress, will take only one or two minutes. So that official can start a blog, if he has none yet, and post anything he wants. Better yet, if he is rich, put up an online newspaper or magazine with colorful lay out and lots of content to attract plenty of online readers. Or he can write a letter to the editor of some big online papers or go to some big radio or tv stations and counter-attack all those who have criticized him, me included.  

If I or others that he counter-attacked would decide to publish a rejoinder, I or we can post in our respective blogs and websites, or go to the same online papers, radio and tv stations, and ask that my/our rejoinder be publicized and broadcasted too. Whether the editors or station managers would grant my request or not, it is their right, not mine. If they approve my request, then they have given me a privilege, not a right, to be published in their papers. 

When a politician or group of politicians are being attacked for being corrupt and/or lazy, they have the Right of Reply, definitely, but whether their reply will be published in the media outlets that carried such criticism, is a privilege to be granted by the editors and/or owners of those media outlet. It is not a right by the complaining politicians, never.

The complaining politicians have the right to put up their own newspaper or magazine, radio or tv station, or buy shares in existing big media outlets, to regularly carry their personal and official pronouncements, making clarifications to accusations against them made elsewhere. 

It would be good actually if ALL legislators, mayors and governors, should have their own websites or blogs at least, where they can post their official statements. These are easy to manage anyway and would require zero or minimal cost to set up. There they can display and publish all their Right of Reply, attacks and counter-attacks, praises and halleluiahs, to whoever will be the object of their anger or praises.

For the legislators who are intent on pursuing the Right of Reply bill to become a law, they should have at least the decency and wisdom of changing the title of their proposal from “Right of Reply” to “Privilege of Publication”, then push their dictatorial intents.

Those legislators are not the owners of the media outlets that they wish to regulate if not control. They are not the ones who pay for the salaries and perks of the reporters, editors and administrative staff, the cost of printing and broadcasting, and there are private property rights in this country. Thus, they should recognize the dictatorial intent of their proposal.

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See also :
Web and the State 1: Cybercrime Law and Liberty, October 03, 2012
Fat Free Econ 25: Property Rights and the Cybercrime Prevention Law, October 01, 2012

Drug Price Control 31: Cancer Drugs and CWF

Among the members of the DOH Advisory Council (AC) on the Implementation of RA 9502 (Cheaper Medicines Law of 2008), and in our civil society health network Coalition for Health Advocacy and Transparency (CHAT), there is only one NGO leader who persists on lobbying for continued drug price control, the leader and founder of the Cancer Warriors Foundation (CWF), James Auste.

I can understand James' main concern, to save the lives of more and more children with cancer, and it is a noble goal. I myself have two young kids, aged only 6+ and 2+ years old. If anyone of them will get sick, I immediately become troubled but I try to stay calm as their illness are often not serious -- not dengue or similar fatal diseases. So I share with his concern.

But the means that he often advocates -- using politics and more government coercion -- is something that I definitely do not share with. Just three days ago, he posted in the Advisory Council members' email loop and said,

AMING PROPOSAL--TO EXPAND THE MDRP O MRP TO INCLUDE MIRACLE DRUGS LIKE TEMODAL NA EXORBITANTLY UN ACCEPTABLE UNCONSIENCABLE PRICED SA PINAS! ( CAN PROVIDE DATA FOR OTHER DISEASES)

TO SUGGEST AN AMENDMENT SA  CHEAPER MEDS LAW TO INCLUDE BRAIN CANCER! KASI ANG SURVIVAL RATE AY NASA 10%! DAHIL LANG DI MA ACCES ANG GAMOT! 

I replied to the email loop and argued this way:

Lousy argument James.

First you said "miracle drugs" meaning you recognize that no other drugs before were miraculous enough to cure patients, so they die more quickly.

Then you demonize those miracle drugs as if wishing that they were not invented, or were not brought to the Philippines in the first place.

It is possible that there are other anti-cancer drugs more "miraculous" than Temodal that are available in other countries abroad but not available here, precisely because the politics of envy is strong here, of wanting but demonizing revolutionary drugs.

Even local generic manufacturers like Unilab or Pharex who have the capacity to mass manufacture generics of off-patent medicines may shy away from doing so. At P100 per tablet of innovator drugs, the local generics can produce and sell at P50 or P55 and both camps will have their own markets and buyers. With MRP and drug price control, the local generics would find that they are now the expensive seller, so they have to push their prices further down, assuming there is enough leeway, or abandon selling such, even temporarily.

MRP and price control is killing competition. Where there is little or no competition, an economy can easily degenerate to socialism. See if healthcare is fantastic in socialist North Korea, Vietnam or China. But one problem with wishing for health socialism is that even socialist Vietnam and China now allows more players, allows more capitalism and the profit system, even at a limited scale.

Do not demonize the guys that give patients more modern treatment that improve their chances of survival. Demonize instead the taxation of medicines, demonize the absence of competition, demonize socialism.

Another member of the AC, the President of the Philippine Pharmacists Association (PPhA), Ms. Leonila "Leonie" Ocampo also replied.

Dear All,

I hope we wont be like Canada that because of Price regulation, many Anti cancer drugs are no longer available that they have to import these from the U.S. and Europe; in effect cost became higher. This is one concern being tackled in the global organization of Pharmacists (FIP) ; the Pharmacists being one key player in making the medicines available to the public.

Other means to lower cost, subsidy or whatever may that be could be the option to be used.

Again, the primary beneficiaries in the current price-regulation initiative  are the people who have the money to buy, but those who do not have continue not being able to access the essential medicines they need.   

Let us all be realistic. Let us also all work . . . that  practices in the use of medicines will be corrected, from procurement down to patient monitoring. Optimum benefits are NOT experienced by the patients because they get not only non-quality medicines but also non-quality services. Let us work together that GAPS existing now between the potential effects(efficacy) of medicines versus the actual effects(effectiveness) experienced by the patients will be closed to allow OPTIMUM OUTCOMES to happen. Many factors are to be looked into, in this situation and I am asking your support to PPhA for its programs addressing this issue with the ultimate end in mind . . . OPTIMIZE HEALTH OUTCOMES OF PATIENTS USING MEDICINES.

We remain, not in favor with price regulation. There are many options for cost-effective medications. We only need the more relevant policies and their right enforcement.

It's good that Leonie shared her observation about the case of Canada. Goivernment price dictatorship via price control simply did not work and will not work, if their goal is to allow more poor people to have access to more life saving medicines.
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See also:
Drug Price Control 27: Letter to Sen. Pia Cayetano, May 15, 2012
Drug Price Control 28: On Cong. Biron and Sen. Villar Bills, July 14, 2012
Drug Price Control 29: MRP Attempt Over Anti-Leptospirosis Drug, August 16, 2012
Fat-Free Econ 22: Three Years of Drug Price Control Policy, August 30, 2012 
Drug Price Control 30: Reversing the Policy on AC Resolution in 2009, September 14, 2012

Fat-Free Econ 32: GDP Growth, Stockmarket and Rule of Law

This is my article yesterday in TV5's news portal,
http://www.interaksyon.com/business/49318/fat-free-economics--fearless-forecast-up-to-7-percent-growth-for-philippine-economy-in-4q
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The Philippines’ high third-quarter growth in its gross domestic product (GDP) is good news. In the six major economies within Asean, the Philippines with 7.1 percent trumped Indonesia, which grew 6.2 percent; Malaysia, 5.2 percent; Vietnam, 4.7 percent; Thailand, 3 percent; and Singapore, 0.3 percent. 

The question is, will this be sustained at least over the short run? Before answering this, let’s look at the sectoral composition of GDP to get an idea of their relative weights over the past several quarters.

The share of the agriculture, hunting, forestry and fishing (AHFF) sector continues to shrink, with only 10 percent of GDP. The industry (IND) sector also follows this trend but at a slower pace than AHFF. The manufacturing (MAN) sub-sector accounts for slightly higher than one-fifth of GDP.

It is the service sector (SER), particularly the trade and repair of various goods (TR) that continues to dominate the local economy. This implies that high growth in services, which constitute 58 percent of GDP, would mean faster overall GDP growth, even if there is slow growth in agriculture and industry.

Table 1 details the sectoral and sub-sectoral composition of GDP, where AF stands for the agriculture and forestry sub-sector; F, fishing; MQ, mining and quarrying; CNS, construction; EGWS, electricity, gas and water supply; TSC, transport, storage and communication; FI, financial intermediation; RERBA, real estate, renting and business activities; PAD, public administration and defense; and OS, other services.

Source of basic data: National Statistical Coordination Board (NSCB).

Table 2 details growth by sector and sub-sector of the Philippine economy this year. Note the consistent drop in the share of fishing as well as of mining and quarrying this year.

The series of heavy flooding experienced in many provinces this year that damaged many aquaculture farms must have contributed to the shrinking in the fishery sub-sector. While the uncertainties in the mining sector, first with the major attacks by NPA rebels of several big mining companies in Mindanao, then the uncertainty over government policies contributed to the shrinking of this sub-sector.

On a positive note, there was a huge jump in construction activities in the second and third quarters of the year, which significantly pulled up growth in the industry sector from 5.5 percent in the second quarter to 8.1 percent in the third quarter.

The consistent growth in the service sector plus its relative weight in the overall GDP is the main explanation why third-quarter GDP growth was high. Take note that the growth in all sub-sectors, except in public administration and defense, was consistent.

With this development, any fear of “boom and bust” in the short term is unwarranted. It is more of a modest boom at least in the next few quarters. The notable growth in the stock market points to a possibility that a 6-7 percent growth in the fourth quarter this year is in the cards.

Table 3. Stockmarket Growth in Asia, 2012

Source: Hans B. Sicat, The Philippines Stock Exchange Inc.: Regional Integration of Financial and Capital Markets in the ASEAN as presented at the 37th FAEA Annual Conference, November 29, 2012 held in PICC, Manila.

Things appear to be bright and sunny in the Philippine economy, at least in the short term. There are external factors that contributed to this development, particularly the high uncertainty in the business environment in both Europe and the US as a result of their huge public debt burden, resulting in some investors fleeing those markets, and putting their money in the Philippine economy.

Certain internal reforms towards promulgating the rule of law, more protection of private property rights, and a credible justice system should be continued and sustained so the Philippines can secure its future.

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See also:
Fat-Free Econ 28: Poverty, Planning and Populism, October 29, 2012
Fat-Free Econ 29: Anti-capitalism, Fanaticism and the Poor, November 13, 2012
Fat-Free Econ 30: BPOs and Obama, November 14, 2012

Fat-Free Econ 31: On the Kasambahay, Solo Parents Welfare Bills, November 26, 2012