Some comedies in the recent PH high inflation rate

Comedy #1, Dutertenomics were totally clueless that this thing can happen. They have believed their own projections and delusion that inflationary pressure of the TRAIN law would be mild and slow (chart from Rappler).

Of course the bad joke is on the consumers. Dutertenomics officials will enjoy huge pay as consultants with the WB, ADB, IMF, other multilaterals when their term would end.

Comedy #2, this pronouncement from Roque.

Bogo man ito. The issue is not inflation per se, almost everyone accepts that reality. The issue is the pace or speed of inflation rates in 2018 relative to inflation rates in 2017 when there was no TRAIN yet. Dutertenomics is driven by either deluded technocrats or ignoramus politicians like this Presidential spokesman.

Comedy #3, Dutertenomics top guns were silent when Dr. Noel de Dios, among my former teachers at UPSE in the 80s, spoke and blamed them.

Who's to blame for soaring inflation? 'All of them' in gov't, says economist

Ralf Rivas

Published 9:50 PM, July 05, 2018  Updated 11:17 PM, July 07, 2018

https://www.rappler.com/business/206574-june-2018-inflation-who-to-blame

"University of the Philippines (UP) School of Economics professor Emmanuel de Dios called out the government for not taking the blame.

De Dios said economic managers should at least acknowledge that the Tax Reform for Acceleration and Inclusion (TRAIN) law has something to do with the soaring inflation.

"It's futile for the DOF (Department of Finance) to say TRAIN is only responsible for 0.4% of the [inflation]. But who is in charge of the economy? 'Di ba silang lahat (Isn't it all of them)?" De Dios said in a forum on democracy and governance on Thursday, July 5.

"If you read [Agatha Christie's novel] Murder on the Orient Express, ganoon ang nangyayari dito (that's what's happening here). Pointing fingers, but all of them are guilty. And the sad part about it is there has been no coordination among these government agencies," De Dios added.

Boom. By the way, of the 4 member-heads of the (Development Budget Coordinating Council (DBCC) -- DOF Sec. Dominguez, NEDA Sec. Pernia, DBM Sec. Diokno, and BSP Gov. Espenilla -- only Dominguez is not from UPSE. Pernia and Diokno were former faculty members, Espenilla is an alumni like me.

Dutertenomics will be busy looking for other factors to blame but they will never admit that their inflation projections and scenario were just delusions.

BWorld 225, Anti-reason of Duterte’s anti-tambay order

* This is my column in BusinessWorld last June 22, 2018.

“I have no reason to suppose that he, who would take away my Liberty, would not when he had me in his Power, take away everything else.”

— John Locke

(1632-1704, British philosopher)

Recently, President Rodrigo Duterte ordered the Philippine National Police (PNP) to arrest people who are out on the streets at night and seem to be idle or out making “tambay.” His speech to the PNP last June 14, 2018, which effectively became a directive was,

“My directive is ’pag mag-istambay-istambay sabihin niyo, ‘Umuwi kayo. ’Pag ’di kayo umuwi, ihatid ko kayo don sa opisina ni ano don, Pasig.’ Ako na ang bahala, ilagay mo lang diyan. Talian mo ’yung kamay pati bin[ti]–ihulog mo diyan sa ano. Do not — you be strict. Part of confronting people just idling around. They are potential trouble for the public.”

That directive has no details and since then, thousands have been rounded up by the PNP and brought to jails. Loitering or vagrancy has been decriminalized by RA 10158 in 2012 or under the previous administration.

I shared on Facebook a video uploaded by Ariel Morco last June 20. In that video, he went out of his small house, shirtless, when a police car and motorcycle passed by.

After he was accosted by an officer on a motorcycle, he went back inside but the officer pulled him out and was brought to the police van.

Mr. Morco wrote this note in his video,

“Ang tindi nio mga kumag na pulis. Andito lng ako sa bahay eh hinuli nio parin ako. Kahit wala ako damit pang itaas di naman ako nakatambay at wala ako sa kalye kita na naman sa video pumasok na eko eh hinila pa ako at pinilit na sumama. Mga walang utak na pulis. Kau na lng humusga.”

That video with 10,454 views the last time I checked it, was later removed with a note by Facebook, “Page could not be found.”

I suspect that some influential people have asked Mr. Morco to take it down otherwise, some ugly incidents might happen to him or his family.

Mr. Morco obviously is poor.

As seen in the video, his house is small and since it lacks air circulation, its residents occasionally remove their shirts while indoors to keep themselves cool. Occasionally, some of them go out, shirtless.

And when some PNP officers pass by, they think they have the “right” to penalize and prosecute these poor people, based on what the president said.

The World Justice Project (WJP) produces an annual study, the “Rule of Law Index” (RoLI) and score countries based on their performance on 8 factors and 44 sub-factors. The RoLI 2017-2018 Report involves more than 110,000 households as respondents and 3,000 expert surveyors in 113 countries and jurisdictions.

I checked the Philippines’ score in relation to our East Asian neighbors on two of eight factors: Factor 4 on “Fundamental Rights,” and Factor 8 on “Criminal Justice.” Not included in the report are Brunei and Laos.

In particular, I checked these four sub-factors:

4.2 The right to life and security of the person is effectively guaranteed.

4.3 Due process of law and rights of the accused.

8.1 Criminal investigation system is effective.

8.4 Criminal system is impartial.

The result for the Philippines indeed, is ugly.

Rule of Law Index 2017-18

These four sub-factors are among the “downers” or those that pulled down the Philippines’ overall score and global rank.

I was wondering, if Mr. Morco resisted being dragged to the police van, could he been considered as “nanlaban kasi” [resisted] and perhaps shot later?

The PNP should be ashamed of incidence like this.

If the leadership is serious in fighting abuses and extortion by their men, they should name those officers and announce their suspension, publicly. Otherwise, those officers will do it again, preferably in poor neighborhood with no CCTV.

We pay more tax-tax-tax under this administration that partly raise the salaries and perks of personnel in government including the PNP. One reason why crime can be high is because the PNP are busy with mundane concerns like going after ordinary, innocent, unarmed citizens.

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See also:

BWorld 222, Austrian thinkers and the G7 zero tariff challenge, July 8, 2018 

BWorld 223, Ease of setting up and closing down business, July 9, 2018 

BWorld 224, China mercantilism and US free trade challenge, July 10, 2018

PAGASA 5, They cannot accurately forecast the weather even 1 hour ahead but they can forecast global temp 100 years from now

Yesterday I was angry because of useless class cancellations. My 2 daughters should have classes yesterday and learning new stuff but DOST-PAGASA would f__k up their work in weather forecasting. And many LGUs quickly pushed the 'suspend classes' button.

I woke up yesterday 7am+ and four hours earlier, PAGASA made this wrong forecast:

"Heavy rains with lightning and strong winds due to thunderstorms are expected over #MetroMaila, #Bulacan, #Rizal, #Cavite within the next 2 hours."

Whole day yesterday, it was sunny in the morning, no rain, no wind, yet no classes. Some rains in Makati on and off for few minutes but definitely no strong wind, no heavy rains.

Then at close to 12nn yesterday, PAGASA predicted,

"Moderate to heavy rains with lightning and strong winds... next 30 minutes to 1 hour in... Pasay, Makati, Taguig..."

Until past 1pm yesterday in Makati -- NO heavy rains, no lightning, no strong winds. They cannot forecast accurately even for 1 hour ahead, even for a small area like M.Manila.

PAGASA is among the members of the World Meteorological Organization (WMO) under the UN. PAGASA cannot predict the weather w accuracy even 6-12 hrs away, even 1 hour away, they cannot predict w accuracy wind speed at narrow range few hrs away, in a small area like Metro Manila and nearby provinces. Yet PAGASA-WMO-UN-Al Gore-... can predict with accuracy the global temp. range 100 yrs from now, that it will be sizzling-scorching planet unless we send them hundreds of $ billions a year.

Weather forecasting should be deregulated, PAGASA be privatized. Allow competing private players to do national and regional weather forecasts. Those that frequently make wrong forecasts will go bankrupt. Currently, PAGASA budget gets higher as their forecasts become off-target often. It is rewarded for lousy forecasts.

If private weather forecasting agencies, what would be the revenue model?

A friend asked me that question. I think mainly via subscriptions. Very likely ALL airlines, all shipping lines, major bus/RORO lines, hotel chains, tourism spots, provincial governments, national government agencies (DA, DENR, Coast Guard, agri-business firms, etc will subscribe. They will get very area-specific forecast, say for Iloilo City alone and may exclude forecasts for Aklan and Capiz provinces.

Competition among private weather forecasting companies will lead to better overall weather outlook. The lousy firms will go bankrupt, the better firms will get more subscribers. Currently, Dost_pagasa lousiness is rewarded with more budget the next year, monopoly eh.

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See also:

PAGASA 2: Deregulate Weather Forecasting, Privatize PAGASA, December 20, 2011.
PAGASA 3: On Giving Local Names to Storms with International Names, August 20, 2012

PAGASA 4: On Unjustified Class Cancellations, July 15, 2014

BWorld 224, China mercantilism and US free trade challenge

* This is my article in BusinessWorld last June 20, 2018.

There seems to be a predominant sentiment to demonize the United States.

These sentiments are variations of a theme, which include: a) “US protectionism” vs G7 nations, the European Union (EU) and China; b) US is a declining power while China is now the “new vanguard” of globalization; and (c) US withdrawal from the Paris Agreement is adverse unilateralism while China or Germany is the new leader of the “save the planet” movement.

These sentiments are based on illusion and emotionalism than hard data and propelled more by anti-Trump hysteria and pro-China wishful thinking in its Belt and Road Initiative (BRI).

Here are the numbers that show why these assertions are based on illusion than reality. These data sources are (a) GDP: IMF, World Economic Outlook database, April 2018; (b) Tariff rates: Fraser Institute, Economic Freedom of the World (EFW) 2017 Report; (c) Coal use in million tons oil equivalent (mtoe): BP, Statistical Review of World Energy, June 2018.

Tariff rates’ standard deviation of tariff rate means the degree of tariff variation, the higher the standard deviation, the more protectionist an economy is for certain merchandise goods and commodities.

Covered here are the world’s six biggest economies in terms of GDP size, current or nominal prices. The Philippines is added to help compare our GDP size, trade and energy/climate policies.

These numbers show the following:

One, the US remains the biggest economy in the world despite anemic growth over the past decade (for instance, not one of the eight years of “hope and change” that the US economy grew 3% or higher). Its GDP size is nearly equal to the combined size of China, Japan, and Germany, the second-, third-, and fourth-largest economies.

Thus, to say that the US is a declining anchor of globalization is based on illusion.

Two, the US has the lowest average tariff rates in the industrialized world, has much lower rate, nearly one-third (1/3) that of China. Thus accusing “US protectionism” and implying that the rest of G7, EU, and China are non-protectionist is again based on illusion and not hard data.

Three, US withdrawal from the Paris Agreement is a wise move as China and India are the world’s biggest consumers of coal power, a favorite whipping commodity of the “save the planet” movement.

In 2017, China’s coal consumption was more than five times larger than the US; even India’s use was larger than the US.

On a related note, it is wrong for the anti-coal groups in the Philippines to call for further coal restriction since our coal use is very small even compared to “green” Germany and Japan, and much smaller than those of India and China.

China’s BRI can be considered more as a mercantilist project than a free trade project. Mercantilism is a 16th to 18th century economic policy that viewed more exports and less imports — more wealth accumulation via protectionism while having aggressive exports — as good policy.

Check China’s BRI information and these terms stand out:

• push further exports amidst slowdown in global trade;

• assist and promote troubled State-Owned Enterprises (SOEs) via lucrative projects abroad;

• enhance the absorption capacity of export markets in the emerging world;

• access to resource-rich nations in Central Asia, Middle East, Africa and Southeast Asia;

• globalize Chinese technological and industrial standards across emerging markets.

Dutertenomics’ build-build-build (BBB) with high involvement of China banks and contractors is falling along the China BRI mercantilism. This means the government’s build-build-build requires lots of loans-loans-loans from China and necessitates tax-tax-tax via TRAIN and succeeding tax laws.

The US’ zero tariff, zero subsidy challenge during the G7 Summit in Canada early this month is somehow addressed to China. As shown by the numbers, China is far out from going to zero and thus the Trump administration’s policy is equalized high tariff with China. Judging from current movement in global stock markets, China stocks in Shenzhen and Shanghai are experiencing heavy beatings. Very likely Xi Jinping will blink first.

Meanwhile, this June 20, the Stratbase ADR Institute, Inc. (ADRi) is hosting a roundtable discussion on “The 21st Century Silk Road: Perils and Opportunities of China’s Belt and Road Initiative” with Mr. Richard Heydarian as main speaker, with yours truly as one of the three reactors. Venue is the Tower Club, Makati City.

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See also:

BWorld 220, Trade imbalances, protectionism and rhetoric, June 15, 2018 

BWorld 221, Mindanao power development, reality vs illusion, June 16, 2018 

BWorld 222, Austrian thinkers and the G7 zero tariff challenge, July 8, 2018 
BWorld 223, Ease of setting up and closing down business, July 9, 2018

Energy 111, Coal demand about to soar

Until 2017 and today, 40% of the world's electricity comes from coal, same as 20-30 years ago. Below are some reports on the subject.

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(1) INVESTMENT EXTRA: Think coal is dead? It could be about to soar

By LUCY WHITE FOR THE DAILY MAIL

PUBLISHED: 21:51 BST, 29 June 2018 | UPDATED: 21:51 BST, 29 June 2018

http://www.thisismoney.co.uk/money/investing/article-5901973/INVESTMENT-EXTRA-Think-coal-dead-soar.html?

‘India in particular is struggling with supplies, which are essential for both its electricity network and steel production, and Australia looks set to be a key beneficiary of this.’

Australia was the second-largest exporter of thermal coal last year, sending 206m tons, according to Jefferies. Indonesia was the largest, exporting 387m tons.

(2) Australia PM: Coal to play a role in the energy mix "possibly forever"

Soila Apparicio, Climate Home News

27 June 2018

https://www.businessgreen.com/bg/news/3034874/australia-pm-coal-to-play-a-role-in-the-energy-mix-possibly-forever

(3) Delhi May Face Blackout Due to Coal Shortage, Says Power Minister

IANSUpdated:June 28, 2018, 11:21 AM IST

https://www.news18.com/news/india/delhi-may-face-blackout-due-to-coal-shortage-says-power-minister-1793481.html

It was the second time in the season that such a warning was issued. In May also, the issue had arisen as the coal reserves of the national capital had been reduced to a day.

(4) Coal comeback spurs new carbon emissions growth, says BP

BUSINESS NEWSJUNE 13, 2018 / 10:00 PM

https://uk.reuters.com/article/uk-bp-energy/coal-comeback-spurs-new-carbon-emissions-growth-says-bp-idUKKBN1J91V2

Demand for hydrocarbons rose across the board, led by a 3 percent increase in natural gas consumption, the fastest since 2010, followed by a 1.8 percent rise in oil demand which far exceeded the average of the previous 10 years, data in BP’s benchmark annual Statistical Review of World Energy showed.

(5) Coal, a dying industry, just became Australia’s number one export (again)

July 2nd 2018

http://joannenova.com.au/2018/07/coal-a-dying-industry-just-became-australias-number-one-export-again/

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See also:

Energy 108, On mandatory solar roof in California, May 20, 2018 

Energy 109, Sudden decline in world oil prices, May 29, 2018 

Energy 110, The 2nd America First Energy Conference (AFEC 2018), Louisiana, August 7, June 10, 2018

BWorld 221, Mindanao power development, reality vs illusion, June 16, 2018 

BWorld 223, Ease of setting up and closing down business

* This is my article in BusinessWorld last June 18, 2018.

Last June 6, I attended the “Seminar on Protecting your Trademarks and Inventions Overseas” jointly organized by the Philippine Chamber of Commerce and Industry (PCCI) and the World Intellectual Property Organization (WIPO), held at the PCCI building in McKinley Hill, Taguig City.

The main audience of that seminar were entrepreneurs and companies big and small to help them be aware of existing intellectual property rights (IPR) rules and their protection, commercialization, licensing and dispute resolution. I do not represent any SME or big company but I was invited there by Jess Varela, Chairman of PCCI Committee on IPR.

The three important speakers that day were Dennis Broze and Peter Willimott of WIPO Office in Singapore and Atty. Allan Gepte, Commissioner of the Tariff Commission and former Director-General of the Intellectual Property Office (IPO).

Then last June 13, I attended the 6th Ease of Doing Business (EODB) Summit 2018 at the PICC, organized by the Department of Trade and Industry (DTI). It is an annual event sponsored by the DTI with one important goal — to raise or improve the Philippines’ global ranking in the World Bank’s (WB) Doing Business (DB) annual reports. The DB 2018 report was recently released and the Philippines’ global rank has worsened, compared to its ranking in the last two or three years.

This year, the EODB 2018 event is more optimistic because of the passage of the “Ease of Doing Business Act of 2018” or RA 11032 which was signed into law only last month. The DTI and various agencies including SEC, LRA, BIR, BOC, BFP, LGUs have adopted various measures to hasten the law’s implementation.

Among the important speakers in the EODB 2018 were DTI Secretary Ramon Lopez, who is also the Chairman, Ease of Doing Business and Anti-Red Tape Advisory Council; Senators Juan Miguel Zubiri and Aquilino “Koko” Pimentel III, and Mr. Guillermo Luz, former Co-Chairman of the National Competitiveness Council (NCC). Sen. Zubiri is the main author of the law in the Senate and also the Majority Leader while Sen. Pimentel is former Senate President and now Chairman of the Committee on Trade.

In both the PCCI-WIPO and DTI events, the over-riding subject is competitiveness of the Philippine economy and its businesses.

Below are results of three annual reports, the WB’s DB, World Economic Forum’s (WEF) Global Competitiveness Index (GCI), and WIPO, INSEAD and Johnson Cornell University’s Global Innovation Index (GII) annual reports.

Numbers in parentheses represent the number of countries and economies covered in that particular annual report.

While the results in global ranking vary among the three reports, one trend can be identified — the most competitive Asian economies are Singapore, South Korea, Hong Kong, Japan, Malaysia, and Thailand.

The Philippines is among the least competitive in the region, which is not good for us.

I have three wish lists on this matter.

One, the prioritization and signing into law of RA 11032 is among the very few measures of the Duterte administration that I support. I wish that he will do more ease of doing business policies, not the ease of closing businesses such as when he moved to close Boracay for six months or the ease by which the government over-taxed people via TRAIN.

Two, I wish there was a provision on the ease of closing a business in RA 11032. Among the best incentives to attract investment is a contestable market or free/easy entry, free/easy exit. If businesses see that government will bureaucratize and harass them if they decide to close shop someday, they will think twice about coming in.

Three, I wish there was another law mandating that work in government (local and national, elected and appointed, continuous or on-off) will only be a maximum 15 years, prompting officials and staff to go back to the private sector.

Since many officials intend to become regulators and bureaucrats until they retire, they tend to be more prohibitionist and extortionist since their over-regulations and taxation of business will not apply to them.

Bienvenido S. Oplas, Jr. is President of Minimal Government Thinkers, a member-institute of Economic Freedom Network (EFN) Asia.

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See also:

BWorld 211, Intellectual property, innovation, and prosperity, May 20, 2018 

BWorld 220, Trade imbalances, protectionism and rhetoric, June 15, 2018 

BWorld 221, Mindanao power development, reality vs illusion, June 16, 2018 

BWorld 222, Austrian thinkers and the G7 zero tariff challenge, July 8, 2018

Hayek, Mises and Classical Liberalism

Last month I gave a lecture at SFL-PH, small but engaged audienced.

Six sections: (1) Hayek, (2) Mises, (3) Classical liberals, (4) Pre-classical, (5) Modern liberals, and (6) Bonus. Hayek was a very prolific writer, produced many books and manuscripts from 1931 to 1980s. 

Likewise among his mentors, Mises was also a prolific writer.

Among the classical liberals, Adam Smith was a stand out. His prior work "Theory of Moral Sentiments" provided the philosophical and economic background to his more famous work, "The Wealth of Nations."

Other classical liberals were David Ricardo (labor theory of value, theory of comparative advantage, etc), John Locke (social contract theory, Treatise on Government, etc.), JS Mill, etc.

But more than 1,000 years before Adam Smith, perhaps the world's first liberal was an Asian, the philosopher from China.

The recent liberals, there are many of them now.

The full 36-slides presentation is posted in my slideshare account. Thank you.

BWorld 222, Austrian thinkers and the G7 zero tariff challenge

* This is my column in BusinessWorld last June 14, 2018.

“To act on the belief that we possess the knowledge and the power which enable us to shape the processes of society entirely to our liking, knowledge which in fact we do not possess, is likely to make us do much harm.”

— Friedrich Hayek,

“The Pretence of Knowledge,” Nobel Prize lecture, Dec. 11, 1974.

This piece of advice from a famous classical liberal Austrian thinker should be a constant reminder to central planning-thinking leaders and officials in governments around the world, especially in communist and socialist societies like China, North Korea, Vietnam, Venezuela, and Cuba. It should also apply to global central planning-prone agencies like the UN and multilaterals.

Another famous Austrian thinker that advocated freeing individuals and private enterprises from too much regulations, taxation, and state nannyism is Ludwig von Mises.

In his book The Anti-capitalistic Mentality (1956), he extolled the value of competition and endless innovation in a free market economy:

“The characteristic feature of modern capitalism is mass production of goods destined for consumption by the masses. The result is a tendency towards a continuous improvement in the average standard of living… the market of a capitalistic society, the common man is the sovereign consumer whose buying or abstention from buying ultimately determines what should be produced and in what quantity and quality… Wealth can be acquired only by serving the consumers. The capitalists lose their funds as soon as they fail to invest them in those lines in which they satisfy best the demands of the public.”

The dramatic expansion of goods and services worldwide has resulted in substantial increases in global trade and investments. Consumers are the main beneficiaries of increased trade as they get access to more products and services from more suppliers and countries at competing prices.

Some governments, however, are less friendly to their own citizens and trade partners abroad by erecting various forms of restrictions, implicit and explicit, through high tariff and/or non-tariff barriers and measures (NTBs, NTMs) to products and services that enter their soil.

The term “trade war” has become famous recently because of the sentiments of US President Donald Trump to match the high tariff imposed by its G7 partners to some of its exports. He cited Canada’s 270% tariff on US dairy exports, the 10% tariff by the European Union on American car exports, the 25% China tariff for the same while US tariff for imported cars from EU, Japan, China, etc. is only 2.5%.

So during the G7 Summit in Canada last week, instead of having equalized high tariff (EHT) among the members (aka “trade war”), Trump proposed a second option – equalized zero tariff (EZT), zero subsidy.

Between these two options, EZT is the easier thing to do, for two reasons.

One, four G7 members are also EU members and they have zero tariff already among them in the EU. So they only need to extend the zero tariff to the three other G7 members, Japan, Canada and US.

Two, existing tariff rates are generally low and hence, closer to zero than 10%. Member-countries of the World Trade Organization (WTO) enjoy the most favored nation (MFN) privilege, meaning what one country imposes as tariffs on its favorite trade partner should also apply to all other members. Standard deviation of tariff rate (SDTR) means the extent of variation in tariffs, so the higher the SDTR, the more protectionist an economy is for certain products or commodities.

So for the G7, EZT is easier to implement and more preferable than EHT. It is China that is the most protectionist and hence, will have great difficulty moving towards EZT.

The works of Hayek, Mises, and other classical liberal thinkers like Adam Smith, David Ricardo, John Locke, and John Stuart Mill, the application of their thoughts to current issues like free trade vs protectionism, will be tackled in a lecture by the Students for Liberty Philippines (SFL) this coming June 16, Saturday in Quezon City.

Young minds are more receptive to classical liberal and free trade philosophy because they have experienced first hand the beauty of more consumer freedom, more mobility across countries, and more civil society action to social problems.

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See also:

BWorld 214, Disruption in global economic power, May 24, 2018 

BWorld 219, The US-North Korea summit and the global economy, June 20, 2018 

BWorld 220, Trade imbalances, protectionism and rhetoric, June 15, 2018 

BWorld 221, Mindanao power development, reality vs illusion, June 16, 2018