EFN Asia 43: Day 1 of Conference 2014

The Economic Freedom Network (EFN) Asia 2014 Conference started today at the Harbour Grand Hong Kong. Nice venue, great forum with great speakers, and many participants from Asian countries, from the US, Canada and Germany. The event is jointly sponsored by the Lion Rock Institute (LRI) in HK, EFN Asia in Bangkok, and the Friedrich Naumann Foundation for Freedom (FNF) in Berlin Potsdam, Germany.

Opening and Welcome Addresses were given by Bill Stacey, Chairman of LRI, and Siegfried "Siggi" Herzog, the new FNF Regional Director for East and Southeast Asia. Below, Siggi giving the welcome message.

The MC for the day was Wan Saiful Wan Jan of IDEAS Malaysia. From the Philippines, there are five of us here -- Dr. Vic Abola of  the Philippine Economic Society (PES), Tony Abad and Rhea Lyn Dealca of the Foundation  for Economic Freedom (FEF), Narwin Espiritu of FNF Manila, and me. FNF Philippines Country Director Jules Maaten arrived late today as there are a number of FNF activities in Manila until yesterday.

Dr. Razeen Sally delivered the Keynote Address, "Capitalism in Asia: Economic Growth and Inequality". Very articulate and clear defense of capitalism or market economy, innovation, competition, mass production and rising standard of living of the people in many parts of the planet. He concluded his speech with good and bad news.

The good news is that the world and its people today are much wealthier, healthier, higher economic freedom, mature institutions, compared to the people a century or many decades ago. The bad news is that governments almost anywhere are getting more interventionist and bureaucratic, often with no distinction between macro and micro, meaning even micro (community, firm, household and individual) levels are being monitored and regulated (micro-management).

Two distinguished reactors followed. Parth Shah of the Center for Civil Society (India) and Choi Byung-il of Ewha Woman's University (S. Korea) gave their thoughts on the subject of growth and inequality, while LRI Chairman Bill Stacey (middle in this photo) was the moderator.

I met a number of old friends whom I met last time about four or five years ago. Like Neena Moorjani, now with the Asian Trade Center in Singapore, andArpita Nepal of Samriddhi-Prosperity Foundation  in Kathmandu. Below, a group photo of participants from South Asia (India, Pakistan, Bangladesh, Sri Lanka,...)

The next round was the "Asian Cafe". Participants moved around in 5 groups representing 5 Asian economies and a resource speaker from each country gives a brief discussion about their country and the state of growth and inequality there. Here, Peter Wong (right, facing the audience), Exec. Director of LRI, spoke about HK. Many of the questions were about the protests by the "Umbrella Movement" or "Occupy Central" movement.

The last panel in the afternoon was about "Property Rights and Equality". Below, Lorenzo Montanari of the Property Rights Alliance (PRA) and Americans for Tax Reforms (ATR) in Washington DC, briefly discussed about the result of the International Property Rights Index (IPRI) 2014 Report.

The panel moderator and speakers in that session were, from left: Ken Schooland of Hawaii Pacific University, Andrew Work, co-founder of LRI and currendly editor-in-chief of the Harbour Times, Barun Mitra of Liberty Institute in  India, Michael Feng of CASS/Unirule Insitute in China, and Thitinan Prongsudhirak of the Institute of Security and International Studies in Thailand.

Many insightful ideas from the four speakers. We adjourned about 4pm, and we go back at 6pm for the cocktails and later, dinner program. Fred McMahon of Fraser Institute (Canada) will discuss the result of the Economic Freedom  of the World (EFW) 2014 Report. Then HK's Finance Secretary John Tsang will give a Keynote Address during dinner.

An after dinner program will be held in  honor of LRI's 10th Anniversary.
Photo credits -- from Jadranko Brkic, FNF S and SE Asia, Olaf Kellerhoff, Lorenzo. Thanks.

To be continued later...
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See also: 

EFN Asia 39: Rainer Adam's Farewell Letter, June 17, 2014

EFN Asia 40: Liberalism, Growth and Reducing Inequality, August 19, 2014

EFN 41: Program of Conference 2014, Hong Kong, September 30, 2014

EFN 42: Other Speakers in Conference 2014, November 04, 2014

Hong Kong Protests, Part 4

After our roundtable discussion on Intellectual Property and Innovation in Asian Markets at Harbour Grand Hong Kong, I and some friends went to the Admiralty center to see the protests. Below, from left: me, Armin Reinartz (Germany), Ken Schooland (Hawaii), Jadranco Brkic (Crotia?), Barun Mitra (India), Wan Saiful Wan Jan (Malaysia).

Narwin Espiritu from FNF Manila (rightmost here) also joined us.

The main protest site. See a photo of China PM Xi, holding an umbrella. We went there around 5:30-6 pm, Not too many protesters and I noticed there were so many tents. Perhaps more tents than protesters that hour, or on most days and hours.

Four lanes on each side were closed to traffic. Imagine  the traffic congestion that are created everyday in alternate roads. Even the road in front of our hotel at North Point, locals said the traffic congestion has worsened. Travel time by car or buses has become longer.

I support the call for more democracy in Hong Kong, that the people here should have the final voice whom they should elect as their overall administrator or President or Prime Minister or other head of state, and not Beijing and the China Communist Party. But I do NOT support continued occupation of major roads by the protesters, or tent occupation. The freedom of expression by the protesters clearly violates the freedom of mobility of other people. Roads are for vehicles, not for people.

I read though that the HK police have removed the protesters from a park. If so, it was a bad move by the police. Protesters should do their thing in areas where inconvenience of other people is minimized. That way, both freedom of expression by protesters and freedom of mobility of other people do not collide. The protesters do not alienate many people and do not create unnecessary enemies from the public.

I think a more effective way in practicing freedom of expression is to have huge rallies, protesters stay for just a day or two then go home. Then repeat the process, say once a week or once a month, until their political demands are heeded by their government. There is danger of losing political momentum in this process of course, but inconvenience to  other people and motorists will be drastically minimized.

With Narwin, the giant structures including the IFC building in HK island at the background.

All photos I got from Jadranco and Wan Saiful's fb posts.
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See  also:
Part 1, September 25, 2014
Hong Kong Democracy vs. China Dictatorship, Part 2, September 29, 2014
Lion Rock 13: LRI Position on the Hong Kong Protests, October 08, 2014
Hong Kong Democracy Vs. China Dictatorship, Part 3,October 14, 2014

Launching of SEANET, Malaysia

The Institute for Democracy and Economic Affairs (IDEAS) has launched a new project last October 30, 2014 in Kuala Lumpur, the Southeast Asia Network for Development (SEANET). Its main goal is to promote economic liberalisation in the ASEAN

IDEAS is a famous free market think tank in Malaysia and in ASEAN and SEANET will be its regional centre focused on helping the development of ASEAN nations through the adoption of market friendly, less government intervention policies.

The network is envisioned to work with policy makers and opinion leaders in ASEAN nations on its three pillars: property rights, freer movement of goods and people, and inclusive growth. SEANET will do this by producing research and publications, engaging local and regional media, conducting public education through effective open and closed door meetings, and organising training programmes for emerging leaders from ASEAN countries.

ASEAN has more than 600 million people and it has the third largest labour force in the world, behind China and India. Foreign direct investment (FDI) in ASEAN has expanded since the 1997 Asian financial crisis. The ASEAN-5 (Indonesia, Malaysia, Philippines, Singapore and Thailand) in particular attracted USD128 billion in fFDI compared to China’s USD117 billion in 2013.  Clearly ASEAN is an important and growing region.  SEANET aims to help policymakers make ASEAN into one of the world’s most diverse, fast-moving and competitive region.

Capitalising initially on Malaysia’s chairmanship of ASEAN in 2015, SEANET will be headquartered at IDEAS office in Kuala Lumpur.  SEANET will partner with like-minded organisations and individuals throughout the region, and will be appointing more staff and associates as it grows.  To start with, its operations will be led by IDEAS CEO Wan Saiful Wan Jan who will also be SEANET’s Director, and Fareeza Ibrahim as SEANET’s Manager.

SEANET’s first major event will be on Friday, Day 2 of the EFN Asia 2014 Conference here in Hong Kong. The network will sponsor a discussion with pro-market think tanks from across Asia. Tunku Abidin Muhriz, (President of IDEAS Malaysia) and Professor Kriengsak Chareonwongsak (President of the Institute of Future Studies for Development Thailand) will examine the opportunities and challenges brought by greater liberalisation in ASEAN, particularly to small and medium enterprises, and how ASEAN countries can ensure that the “smaller actors” are not left out from the region’s growth. This discussion will be chaired by Wan Saiful Wan Jan (Chief executive of IDEAS Malaysia).

Photo last night after the opening dinner at our hotel, hosted by The Policy Workshop headed by Cathy Windels. From left" me, Wan, Choi Byung-il from S. Korea, Cathy, Barun Mitra from India, Shoulong Mao and Xingyuan Feng from China.

Over dinner last night, I discussed with Wan my proposal to write a long paper on ASEAN trade policy. He liked the idea and alerted SEANET convenor Fareeza Ibrahim who was also seated near us.

Exciting initiative by IDEAS. 

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See also:
IDEAS 3: Wan Saiful's Presentation in Manila, September 11, 2013 
IDEAS 4: Photos of Wan Saiful's Talk on the Politics and Economy of Malaysia, September 12, 2013
IDEAS 5: Who is a Liberal? What is Limited Government?, October 15, 2014

Free Trade 38: Liberalize Rice Imports and Demonopolize NFA, September 28, 2014
Free Trade 39: Advantages of Unilateral Trade Liberalization, October 12, 2014

EFN 42: Other Speakers in Conference 2014

In two days, the Economic Freedom Network (EFN) Asia Conference 2014 will start here at Harbour Grand Hong Kong. Here are the speakers and rapporteurs of Session 2: Reality Checking in Asia, Asian Cafe. This will be on Day 1, November 6.

First sub-session:

- Hong Kong/Peter Wong, Executive Director, LRI/TBC

- Thailand/Dr. Sethaput Suthiwart-Narueput, Executive

Chairman, Thailand Future Foundation/Armin Reinartz, Senior Analyst, FNF Southeast and East Asia

- Bangladesh/Dr Naushad Faiz, Economic Consultant, Mir Shahabuddin Mohammad, Secretary General, FBCCI (TBC)

- Myanmar/Aye Kyaw, Principal of Myanmar Human

Resource Institute/Nway Nway Soe, Programme Manager, FNF Myanmar

- Sri Lanka/Dr Harsha De Silva, Member of Parliament, UNP,

Sri Lanka/TBC

I gathered photos from the web and facebook of these people. In case there are mistakes in the photos that I showed here, my apologies to the person/s concerned. 

Photos by row, 1st row: Peter Wong, Naushad Faiz, Shahabuddin Mohammad.

2nd row: Armin Reinartz, Sethaput Narueput, Aye Kyaw.

3rd row: Nway Nway Soe, Harsha De Silva, Mao Shoulong.

Second sub-session:

- China/Dr Mao Shoulong, Professor, Academy of Public Policy, Rennmin University/Rachaphum Panichsombat, Senior Analyst, Sasin Institute for Glabal Affairs, Thailand

- Indonesia/Ulil Absar Abdalla, Freedom Institute,

Indonesia/Raja Juliantoni, the Indonesian Institute

- Pakistan/Dr Ayub Mehar, Director General (R&D),

Federation of Pakistani Chamber of Commerce and Industry (FPCCI)/TBC

- Mongolia

- Vietnam/Dr Le Dang Doanh, Senior Economist, Association of Vietnam's Economists /Dau Anh Tuan, Director General of the Legal Department of Vietnam Chamber of Commerce and Industry

- Bhutan Sunil Kumar Rasaily, Senior Partner, QED Group/TBC.

Third sub-session:

- Korea/ Dr Choi Byung-il, Professor, Ewha Womans University, Korea/ Dr Lars-Andre Richter, Resident

Representative, Korea

- Malaysia/Wan Saiful Wan Jan, Chief Executive, Institute for Democracy and Economic Affairs (IDEAS), Malaysia/ Fareeza Ibrahim, Southeast Asia Network for Development (SEANET)

- The Philippines/Nonoy Oplas, President, Minimal Government Thinkers, The Philippines/

Rhea Lyn Dealca, Administrative and Operations Manager, Foundation for Economic Freedom, The Philippines

- India/Dr Sumita Kale, Chief Economist, Indicus Analytics/TBC

- Nepal/Arpita Nepal, Director of Research and Development, Samriddhi Foundation/TBC

- Cambodia

Photos by row.

1st row: Ulil Absar Abdalla, Raja Juliantoni, Ayub Mehar.

2nd row: Le Dang Doanh, Dau Anh Tuan, Fareeza Ibrahim.

3rd row: Rhea Lyn Dealca, Sumita Kale, Arpita Nepal.

On Day 2, November 7, Session 5 key speaker will be Dr. Tom Palmer of Atlas, USA.

In the afternoon, Session 6 key speaker will be Dr. Munir Majid, IDEAS Council member.

Then a special CALD-EFN Joint Session. Welcome Remarks to be given by Hon. Oyun Sanjaasuren, MP Chairperson, Council of Asian Liberals and Democrats (CALD), Bill Stacey of LRI, and 

Hon. Markus Löning, Former German Federal Government Commissioner for Human Rights Policy and Humanitarian Aid.

They Keynote Address will be given by Hon. Emily Lau, MP Legislative Councillor, Hong Kong.

A panel discussion will follow with the following speakers:

Hon. Sin Chung Kai, MP Legislative Councillor, Hong Kong

Dr. Parth Shah, President, Centre for Civil Society, India

Hon. Saumura Tioulong, MP Member of the Cambodian National Assembly

Dr. Sethaput Suthiwart-Narueput, Thailand Future Foundation.

Photos by row.

1st row: Tom Palmer, Munir Majid, Oyun Sanjaasuren.

2nd row: Markus Löning, Emily Lau, Sin Chung Kai.

3rd row: Parth Shah, Saumura Tioulong, Kenneth Chen Wei-on.

There will be a visit at the Hong Kong  Legislative Council (LEGCO). Speeches to be given by Hon. Kenneth Chen Wei-on, SBS Secretary General of the Secretariat Hong Kong Legislative Council, and Dr. Chee Soon Juan, Secretary General, Singapore Democratic Party.

A Gala dinner for CALD, EFN and Liberal International (LI) participants will follow with speeches by four key personalities.

Dr. Juli Minoves – Triquell, President of LI, Bill Stacey of LRI, Siegfried Herzog, Regional Director for Southeast and East Asia, and Martin Lee,  Founding Chairperson, Democratic Party of Hong Kong.

From left: Chee Soon Juan, Juli Minoves – Triquell, Martin Lee.

Lots of bright speakers to look forward to by Thursday and Friday. I am excited to hear them and learn from them.

I did not include photos of other speakers even if their names appeared above. See their photos in my previous article.

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See also: 

EFN Asia 38: Report on Globalization and Inequality, Jeju Forum 2014, June 02, 2014

EFN Asia 39: Rainer Adam's Farewell Letter, June 17, 2014

EFN Asia 40: Liberalism, Growth and Reducing Inequality, August 19, 2014

EFN 41: Program of Conference 2014, Hong Kong, September 30, 2014

Business 360 19: Investments and Inequality in Asia, October  15, 2014

Lion Rock 15: Mary Ruwart's Book, "Healing Our World"

The Lion Rock Institute (LRI) Reading Club Salon 2014 on the theme, "Class and Inequality" will be held tomorrow here at Harbour Grand Hong Kong. Among the reading assignments for participants is this book by Mary Ruwart, published in 1992, revised in 1993 and 2003.

It's a nice book, 22 chapters. There are five suggested chapters for the round table discussion.

Chapter 8, "Destroying the Environment".

Mary mentions various layers of aggression. These are the different layers, from the base layer of No Aggression to  the 4th layer. Monopoly (via government franchising, other schemes) means preventing or prohibiting other players to come in and compete with existing player.  Subsidy means the rest of taxpayers will pay (by force and coercion of course) to give special privileges to the recipients of subsidies.

Chapter 14 is "The Pollution  Solution". Here is the chapter summary.

The next three chapters are about foreign policy. Chapter 18, "Beacon to the World" is about foreign aid and why it can amplify the underdevelopment problem of many poor countries, rather than help solve it. There is truth to this because by nature, foreign aid is government to government. So if the recipient is a dictatorship or simply highly corrupt government, then the taxes of rich country citizens are simply used to further enrich those dictators, their cronies and consultants.

Chapter 19, "Is Communism Really Dead?" Yes, if it is a voluntary commune or collectism, it should be fine, meaning people have arranged things that are mutually beneficial for all. But if it is forced commune or coerced collectivism, then people are forced and coerced to share with the rest, including the lazy, shrewd and opportunists. Why be industrious when you can get something even if you're lazy and irresponsible.

Chapter 20, "Making Our Nation Safe and Secure". It is a long chapter dealing with various historical and recent events in the last decade like post 9/11.

Mary's book is suggesting that if we want a more peaceful, more dynamic world, then various layers of aggression and government coercion should drastically shrink, some policies and regulations should outrightly be removed and withrawn. There is nothing wrong if people will trade with each other voluntarily. Nothing wrong if people settle disputes among themselves peacefully and amicably. Only when the dispute can possibly get out of hand, then government can come in to enforce rules and contracts, before people practice aggression towards other people.

Thus, various aggression and coercion by government -- local, national, international/multilateral -- creates new class in society. They can worsen rather than limit inequality and animosity in  society. Government and its coercive powers must shrink.
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See also 

Lion Rock 11: Barun Mitra on Democracy, Reading Salon 2013, October 28, 2013 

Lion Rock 12: Bill Stacey on Free Markets, Big Government and Hong Kong, March 10, 2014

Lion Rock 13: LRI Position on the Hong Kong Protests, October 08, 2014

Lion Rock 14: Reading Club Salon 2014, on Class and Inequality, October 27, 2014

IPR and Medicines 30: R&D and Innovator Companies

Interesting  data here. Out of the top 10 biggest firms in the world in terms of R&D spending, five are pharma (Roche, Novartis, Merck, Pfizer, J&J), three are IT (Samsung, Intel, Microsoft), and two are automobile firms ((Volkswagen, Toyota). Latest data March 2014. 

Source: Raconteur, Intellectual Property 2014

But in terms of top 10 firms in terms of number of patents held, zero from pharma, almost all of them are IT companies.

From this article:

"It’s estimated that currently up to 80 per cent of stock market values are based on intangible assets. This compares to just 20 per cent in 1975, the year before Apple was founded. This remarkable difference reflects the fact that many companies in 2014 operate in industries with very little machinery or other fixed assets. Accordingly the observed company value must be attributed to intellectual assets such as brand value and other IP...

"The importance of IP is particularly apparent in the pharmaceutical sector, where the expiry of dozens of critical patents has wiped billions from the value of the industry over the past few years.

"On March 12 for example, Pfizer’s stock was suspended for 20 minutes on news that its blockbuster pain drug Celebrex would lose its patent protection 18 months earlier than expected. Pfizer stock closed down almost 3 per cent, a meaningful number for a company with almost $200 billion in market value...."

Yes, people simply want to live long -- against cancer (there are about 200+ different types of cancer), against Alzheimers, against various infectious diseases (dengue, malaria, HIV, MERS-CoV, ebola, etc.). There are ethical and economic issues, some people think the cost of R&D by innovator pharma should be neglected, the fruits of their successful drug inventions should be shared to all. This is a wrong argument.

More interesting infographics here, http://raconteur.net/.../ranking-the-worlds-most...

10 Most innovative nations in the world, 2014 (Raconteur)

1. S. Korea (and #3 by R&D intensity, #2 by patent activity)

2. Sweden (#4 by R&D intensity)

3. US (#10 by R&D intensity, #5 by patent activity)

4. Japan (#5 by R&D intensity, #3 by patent activity)

5. Germany (#9 by R&D intensity, #6 by patent)

6. Denmark (#6 by R&D intensity)

7. Singapore

8. Switzerland (#8 by R&D intensity)

9. Finland (#2 by R&D intensity)

10. Taiwan (#7 by R&D intensity, #1 by patent)

That's 4 from Asia, 5 from Europe and 1 from N. America..

Israel is #1 by R&D intensity, China is #4 by patent; both though are not in the top 20 most innovative nations in the world.

Samsung spent big time money in R&D because it wanted to topple Motorola, Nokia, other previous heavyweights in mobile phone and electronics. The innovator pharma spent big time money on R&D because the demand by patients, rich and poor, for new, more revolutionary, more disease-killing medicines, is high.

If governments are involved in many countries in pharma, it is more of helping the generic manufacturers, not the innovators. See policies like drug price control, compulsory licensing (CL), special CL, etc. All these are aimed and targeted at innovator pharma, never at generic pharma.

In the case of medicine innovation by innovator pharma, all of their new medicines that start out as patented, more expensive drugs "for the rich" for about 8-10 years (the various regulatory approvals, multiple clinical trials, take about 10-12 years out of total patent life of 20 years) ultimately become off-patent, the generic manufacturers come in and multiply the production at cheaper price, benefiting the poor. Government has zero role here except as drug regulatory agency via FDA and still the poor will benefit.

Here's a good chart. It shows that out of the 20 years patent life of a newly-invented medicine, up to 13 years are gobbled by R&D, pre-clinical, clinical trials, registration. Each stage must get regulatory approvals from government FDAs.

Source: IFPMA, 2012. The New Frontiers of Biopharmaceutical Innovation.

Exploratory stage: 2 to 4 years identifying antigens to prevent or treat a disease. Selected candidate vaccines will continue the process.

Pre-clinical stage: 1 to 2 years assessing antigens’ safety in animals and selecting the best candidate vaccine to continue the process.

Clinical development: 6 to 7 years Testing the candidate vaccine in humans.

Phase I: test of safety on 10 to 100 volunteers.

Phase II: Evaluation of the immune response in 100 to 3,000 volunteers.

Phase III: Large-scale tests of the vaccine’s efficacy and tolerance on 3,000 to 40,000 volunteers.

Registration: Synthesis stage from 12 to 18 months

Another good chart, the vaccine development cycle. Same source above, IFPMA.

Innovation and IPRs like patent, copyright, trademark, should be protected. Not all ideas are the same. Stupid ideas are numerous and endless, readily available anywhere, they do not need protection. Bright ideas are scarce, they need protection.

Governments should fully appreciate and recognize this, and not be easily pressured by populist demands to confiscate or disregard IPRs and give to some (very likely, crony) local firms.
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See also:
IPR and Medicines 26: Novartis' Glivec and India's IPR Ruling, April 01, 2013, 
IPR and Medicines 27: More on Glivec and India's SC Decision, April 02, 2013
IPR and Medicines 28: Politicizing Innovation, Rewarding Rent-Seeking, April 06, 2013
IPR and Medicines 29: Parallel Importation and Patent Linkage, August 19, 2014

Tax Cut 21: Taxation Without Income Discrimination

Reposting a nice article by a friend, Wan Saiful Wan Jan, CEO of the Institute for Democracy and Economic Affairs (IDEAS) in Kuala Lumpur. Originally posted in The Star and reposted in IDEAS website., October 28, 2014.
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In my column two weeks ago, I wrote about how taxes are a form of coercion by the government against the people. Since then, I received many comments saying that it is not fair to blame Barisan Nasional for everything.

I want to start this column by clarifying again that when I use the word ‘government’ I do not refer to any political party. A government is the entity that is tasked with governing. It can be at federal, state or local levels. And it can be made up of people from any party. I am not talking about Barisan Nasional government or Pakatan Rakyat government but simply the entity of the ‘government’ generally.

In this column I want to take my arguments about taxation a step further. Here I will try to explain that the coercive nature of taxes means that if we have to tax, then we must do it in the most moral way possible.

But before that, we need to ask if we need to tax at all. By nature taxation means the government coercively taking your money whether you like it or not, and punishing you if you refuse to pay. How is this coercion justifiable at all?

Perhaps in an idealised world we should outlaw any forceful confiscation from anyone. But that idealised world simply does not exist. The reality is, as long as we have a government, we need to tax because we must have money to pay for the operations of the government. So, unfortunately, in the real world, tax is unavoidable.

The unavoidability of taxation does not mean those in power should proudly proclaim that they will tax us. There is a good analogy in the Muslim tradition for this. Muslims are generally not allowed to eat pork but if you have no other option then you are exceptionally allowed to.

But that does not mean you should proudly proclaim that you have eaten pork and that you aspire to find new ways to eat more pork. After all, you are only doing it out of absolute necessity.

This is why I find it distasteful to see politicians to competing to announce how they want to tax us in the run up to the recent Budget 2015 announcement. Those in government were proudly promoting the Goods and Services Tax (GST) while those in opposition were hyping up the Capital Gains Tax (CGT).

It is as if they are proud to find new ways to make us part with our hard earned money and savings. Don’t they realise that they should be ashamed of making us pay for their political priorities?

Nevertheless, if we accept that some level of taxation are unavoidable, what is the most moral way to tax? This is where the GST vs. CGT tax actually becomes interesting.

I believe that if the government had to coerce us into parting with our hard earned money, then at the very least they should make us pay only when we spend, and not when we work or save.

Working and saving are positive attributes that should be encouraged. When incomes and savings are highly taxed, we are sending the wrong signal to the population because we are telling them that they will ‘punished’ for doing the right things. And this is what income tax, corporation tax and CGT do – they take away the money from us, the common people, after we worked so hard to earn and save.

Taxing spending through consumption taxes such as GST, while still objectionable, is the lesser of the two evils. Yes it is still coercion but at least it does not discourage you from working or saving.

And since both types of taxes – income tax and consumption tax – are still in essence coercively taking money away from the people, we should ensure that the rates are low. As I said earlier, if you have to do something out of necessity, don’t overdo it.

So if taxes are imposed because of its unavoidability, then policymakers must not set a punitively high tax rate. Otherwise people might start thinking that they actually enjoy taking our hard earned money.

There is another bogeyman that many people like to bring up, in that they argue the rich should be taxed more than the poor. This is simply a wrong and immoral conception. Since when do we say that it is acceptable to forcefully take away someone’s money if the victim is rich?

If it is wrong to do something to the poor, it is wrong to do it to the rich too. Discrimination based on income is still discrimination and it is still immoral. The glorification of Robin Hood is, in reality, despicable. A thief is still a thief regardless of who he steals from.

In short, when it comes to taxation, the ideal system is one that does not punish work, encourages saving, comes with a low rate, and does not discriminate. If we care about morality and integrity, then this is the more moral system of taxation.

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See also:
Tax Cut 17: BIR vs. Physicians, March 06, 2014
Tax Cut 18: On 10% Flat Tax, Greco Belgica and GDP Growth, March 27, 2014
Tax Cut 19: Letter to Sen. Sonny Angara Re. SB 2149, June 06, 2014
Tax Cut 20: On the Excise Tax on Gasoline, Various Regulatory Fees, October 08, 2014

Weekend Fun 57: Cow Capitalism

Two friends tagged me in fb with this funny definitions of capitalism.

I added these:

Philippine capitalism: You have two cows. One looks like a carabao, the other looks like an ostrich. You sell the former and buy a tricycle while you keep the latter and join a 5 cock derby/contest. 5 bladed cocks vs your unbladed ostrich-looking cow. The cow mows them all, but the referee declares a passer-by duck as the winner.

A congressional inquiry was conducted (a) how an ostrich can join a derby, and (b) how a duck can win a derby. The committee hearing was quickly ended because the Comm. Chairman owns the duck.

Dissatisfied that a Congressman Committee Chairman can quickly kill a Congressional investigation, a Senator initiated a Senate investigation about those two weird issues. And the Senate Comm. investigation was also quickly ended. Why, because the owner of both the 5 cocks and the ostrich-looking cow are among the political enemies of the Senate Comm. Chairman. :-)

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See also:
Weekend fun 15: Political jokes, March 12, 2011
Weekend Fun 36: The Karl Marx Mastercard, July 06, 2012
Weekend Fun 37: On Fighting Poverty, July 12, 2012
Weekend Fun 40: Bank Robbery and Management, May 18, 2013
Weekend Fun 44: Cow Economics, June 22, 2013
Weekend Fun 49: Lefties Songs, October 12, 2013

Weekend Fun 54: World Map of Country Images, January 11, 2014

Weekend Fun 56: Some Photos at Sic O'clock News, July 05, 2014