In both textbook economics course and everyday common sense, people would normally understand that one important reason why the price of a certain commodity is high is due to the scarcity, if not absence, of its supply relative to people’s demand. For instance, the price of tomatoes can fall down to Php5 (about US$0.09) per kilo, even Php2 a kilo, during the summer months of March-April in a number of provinces in the Philippines. During the rainy season, the same quality of tomatoes harvested and sold in the same municipality and province can go as high as Php40 to Php50 (about US$1) a kilo, or even higher. What explains the big jump in price for the same commodity sold in the same locality in a span of just three to four months? Were there “tomato cartels” suddenly formed during the rainy months? Were there massive pest attacks that affect tomatoes every year?
People understand the “seasonality” of certain commodities, and they understand the downward or upward swings in the prices of those commodities. So they do not ask for more government intervention like tomato price control, or new taxes to subsidize tomato farmers during summer months, or the establishment of another bureaucracy like a Tomato Development Authority.
Entrepreneurs, both new and incumbent, would flock to an industry or sub-industry that experiences fast demand growth, or projected to experience fast consumer demand in the near future. When suppliers in the market become plentiful, the price of the supplied commodity or service can go down, the consumers benefit, and some producers will lose money. They will then try to innovate and produce a “hybrid” product or service that will hopefully attract a new set of consumers and buyers.
Government mentality though is often more myopic and conspiratorial than what consumers and producers would normally comprehend. Many people in government cannot appreciate the importance of just leaving the entrepreneurs or producers, and the consumers to interact with each other. That is why governments tax both producers (income tax, business permit tax, franchise tax, etc.) and consumers (value-added tax, import tax, excise tax, etc.). Aside from taxation, governments also impose more sinister forms of regulation like price control.
By imposing price control, governments think the “evils” in society are the producers of innovative and revolutionary goods and services. That is why consumers rush to purchase that new product or service, resulting in higher-than-normal price hike. And governments think these innovative producers should be disallowed from making “extra high profit”, even if these producers paid extra high costs, waited extra long years to develop their product, and endured extra high taxes and regulations.
In the recently-enacted “Cheaper Medicines Law” (Republic Act No. 9052) signed into law early this month, with the implementing rules and regulations (IRR) currently being drafted by concerned government agencies, price control is among the measures that the State – through the President and upon the recommendation of the Secretary of Health – can impose to make effective and safe, yet “expensive” medicines be made more accessible and affordable to the people. As mentioned above, the premise here is that the pharmaceutical companies that produce those medicines sought after by many patients are seen by the State not as innovators and revolutionary inventors of safe and effective medicines, but as “evil” cohorts that are only after big profit at the expense of poor patients.
But is it fair to impose price control after the State itself has imposed uncontrolled taxes and uncontrolled regulations, and devised a scheme (disrespect of patent and intellectual property right through parallel importation) that can pave the way for uncontrolled entry of unsafe and ineffective drugs, a.k.a. counterfeit medicines?
My bet is that people who understand and appreciate the role of profit to embolden entrepreneurs to take high risks, to face and incur huge losses in case they will not succeed in producing an innovative and successful product, will answer ‘NO’ to this question, while bureaucrats, politicians, and people driven by envy and hatred of profit and markets will answer ‘YES’.
Even assuming, for the sake of argument, that the bureaucrats and the envious are correct in saying that the State has the right to impose uncontrolled taxes and uncontrolled regulations then control the price of medicines later, what if the price of raw materials and intermediate goods, not to mention the salaries of research scientists and pharmacologists, have increased to high levels. Is the State still justified in keeping a price cap to the final product, in this case, safe, and effective medicines?
The case of huge spikes in the price of raw materials and intermediate goods for making effective medicines has happened in India. The Indian government has that cute and magic formula to keep medicine prices low: price control through its Drug Price Control Order (DPCO) enacted in 1995. Unfortunately, the prices of raw materials and intermediate products have recently risen very steeply, by up to 100 to 200 percent, due to tight supply of such products from China. And yet the Indian government allows price hikes of active pharmaceutical ingredients (APIs) to only 10 percent. Those chemical inputs constitute up to 80 percent of the total cost of bulk drugs.
The immediate result of this situation is that many bulk drugs manufacturers will be forced to stop producing. This is according to the President of the Bulk Drugs Manufacturers Association (BDMA) of India, Narayan Reddy. So if patients need those bulk drugs and manufacturers will limit, if not stop, producing those drugs due to government price control, who will suffer, the patients or the demonized drug manufacturers? Unfortunately, both will suffer, but more so the patients. Despite this situation, the Indian government is said to be dragging its foot in addressing this issue. Do we need the same thing to happen in the Philippines?
Finally, as I have noted in my recent paper, “Promoting innovation and public health through less government intervention”, price control will allow a corrupt President and/or Secretary of Health to use the measure for extortion. Like going to big pharmaceutical companies and telling them, “Hey, we’re going to issue price controls to your best selling drugs, unless you pay us…” Not that I am saying that the current Health Secretary is corrupt, but a price control measure will encourage an ‘extortionary’ and corrupt behavior to top officials of the Health Department or Office of the President.
I have other arguments in my paper why price control is bad public policy. I just hope that the writers of the IRR of RA 9052 will consider them. Otherwise, the country will be courting future public health risks by putting the interests of the extortionists and interventionists ahead of the interest of the patients.
Saturday, June 28, 2008
Friday, June 27, 2008
Abolish Income Tax 1: Low, flat tax and economic growth
While the series of oil, food, and other commodity price hikes have punctured deep into the pockets of many Filipinos and other people around the world, they have also forced the Philippines to undertake what could be unthinkable if those price spikes did not happen: an income tax cut.
Under the Comprehensive Tax Reform Package (CTRP) that became a law in 1997, personal income tax system was among the most confiscatory in the world. Under that scheme, when a person has gross annual income of Php500,000 or more (net of a few deductions), the State will confiscate Php125,000 of the Php500,000 (leaving him/her with only Php375,000 disposable or after-tax income), and any amount above Php500,000, the State will further confiscate 32 percent of it. Perhaps a Php500,000 annual income was a “big” amount in 1997 when legislators made that law. But by mid-2000s, that amount was not that big and the tax system could push a middle income family into poverty level if there are plenty of expenses, like high health care cost for a sickly family member.
The new tax relief law, Republic Act No. 9502, promises to “correct” the confiscatory provisions by, among others, exempting minimum wage earners from paying personal income tax. In Metro Manila, at Php382 a day of basic pay and cost of living allowance, that’s equivalent to Php8,400 per month (22 working days/month) or Php109,200 per year (including 13th month pay). In addition, they increased personal exemption from Php25,000 to Php50,000 for all taxpayers, and additional deduction for qualified dependents from Php8,000 to Php25,000.
I think that the best tax policy that any government can give to its citizens is zero income tax, both personal and corporate, and for government to shift its main revenue source to consumption-based taxes. There are plenty of these types of taxes currently in place: value-added tax (VAT), excise tax, import tax, travel tax, amusement tax, real property tax, vehicle registration tax, and so on. An increase in VAT from the current 12 percent to 14 or 15 percent will not meet strong opposition if there is corresponding abolition, even a drastic cut, of income tax. In addition, there are plenty of business-related taxes currently in place: documentary stamp tax, percentage tax, franchise tax, capital gains tax, withholding tax on transactions with government, business permit tax, and so on.
Income tax is wrong both in theory and practice. Theory, income tax penalizes work and performance by productive people; while rewarding (recipient of tax collections) those in government bureaucracies and political leadership, and some less-industrious, less ambitious, or economically unlucky people. A number of people are poor because of laziness and personal irresponsibility, plus the incentives of various subsidies given by the state if one is poor.
Practice, out of 34 million employed Filipinos, both in public and private sectors, only less than 3 million are filing personal income tax. Well, if those who don't have to file because of automatic deduction are included, the figure could be around 10 million, but still too far from 34 million employed people. So many people are not paying income taxes, both rich and poor; professionals, and those in informal economies. In addition, those who work for multilateral institutions like the United Nations, the World Bank, the International Monetary Fund, the Asian Development Bank, the Organization Economic Cooperation and Development, USAID, the ASEAN Secretariat, and foreign embassies are not subject to automatic personal income tax deduction. If they file and pay income tax later, fine; if they don't, fine too. And people working in these institutions, especially the technical staff and consultants are earning big, many in six-digit monthly income, tax-free!
So a move to abolish personal income tax is simply to give justice to fixed-income earners, especially those in the private sector, and to correct the inefficiency of the tax system and the tax administration. In addition, any money retained in the paychecks of people and not taken in by the State in the form of income tax is money that will be spent on many other commodities and services. A tax cut is de facto "salary increase" and will go back to the economy in the form of higher domestic consumption, say repair or remodel an old house, or buy a new one, buy more hamburger and shoes, more office and school supplies, or hire a nanny for the kids, or more domestic travel. Even more international travels should not be spurned since other foreigners also come and spend their savings here.
In the case of corporate income tax, this is an illusion. This is because corporations do not pay taxes, people do – the firm owners and stockholders in the form of lower profit and investors equity, and the consumers in the form of higher prices. Corporations are just legal entity; they are not people.
Aside from higher domestic consumption, there will be billions of dollars of foreign investments that will come in – companies from high-tax countries in Europe and North America looking for "tax havens" that recognize their hard work. The jobs to be created locally will be enormous.
But a zero income tax is next to impossible to happen in this country. No country has also done it yet. So a low, flat income tax, say 10 percent – both personal and corporate – is the next best alternative which will give respite to many struggling businessmen and employees, as well as give additional revenues for the government. Even at this rate, the potential of big influx of foreign investors wanting to come in and escape the high taxes in Western Europe and North America should be considered. Think of the hundreds of thousands, if not millions, of jobs that will be created. Many Filipinos currently working abroad and endure the pain of being away from their families and relatives will have another employment alternative – right in the country itself.
One country that experienced fast economic growth because of the introduction of low, flat tax, is Slovakia. From being a communist state under the former Soviet Union, it adopted a market economy in 1991, after the Berlin wall collapsed. In 1994, it enacted a flat tax of 19 percent for both personal and corporate income. The effect was quick: in a few years, Slovakia became the "Detroit of Europe" with the entry of plenty of foreign car manufacturers – Western European, American, Japanese, and Korean car producers. GDP grew high and unemployment went down drastically.
Ireland is another "radical" economy: from 48 percent corporate income tax, it was cut down to a mere 12 percent! The volume of economic activity that transpired after this move, all other things being equal, was huge.
One consideration that other people ask if income tax has to come down to say, 10 percent flat rate, is where to get the money for more and better roads and other infrastructure. Simple: get the money from those consumption-based taxes. Better yet, allow more toll roads. Expenditures for these infrastructures will not come from taxes, but from corporate savings and investments that will make money from motorists who will use the road more often. This is very fair. If the toll road expressway is in Luzon, taxpayers from the Visayas and Mindanao will not be burdened in building and maintaining those highways. And even among those in Luzon, those who don't use the roads (say they don't have a car) need not fork out extra taxes for those roads; only those
who frequently use those toll roads.
A citizens’ movement to push a low, flat tax leading to an ultimate zero income tax after a few years transition, is now a big challenge for us.
Under the Comprehensive Tax Reform Package (CTRP) that became a law in 1997, personal income tax system was among the most confiscatory in the world. Under that scheme, when a person has gross annual income of Php500,000 or more (net of a few deductions), the State will confiscate Php125,000 of the Php500,000 (leaving him/her with only Php375,000 disposable or after-tax income), and any amount above Php500,000, the State will further confiscate 32 percent of it. Perhaps a Php500,000 annual income was a “big” amount in 1997 when legislators made that law. But by mid-2000s, that amount was not that big and the tax system could push a middle income family into poverty level if there are plenty of expenses, like high health care cost for a sickly family member.
The new tax relief law, Republic Act No. 9502, promises to “correct” the confiscatory provisions by, among others, exempting minimum wage earners from paying personal income tax. In Metro Manila, at Php382 a day of basic pay and cost of living allowance, that’s equivalent to Php8,400 per month (22 working days/month) or Php109,200 per year (including 13th month pay). In addition, they increased personal exemption from Php25,000 to Php50,000 for all taxpayers, and additional deduction for qualified dependents from Php8,000 to Php25,000.
I think that the best tax policy that any government can give to its citizens is zero income tax, both personal and corporate, and for government to shift its main revenue source to consumption-based taxes. There are plenty of these types of taxes currently in place: value-added tax (VAT), excise tax, import tax, travel tax, amusement tax, real property tax, vehicle registration tax, and so on. An increase in VAT from the current 12 percent to 14 or 15 percent will not meet strong opposition if there is corresponding abolition, even a drastic cut, of income tax. In addition, there are plenty of business-related taxes currently in place: documentary stamp tax, percentage tax, franchise tax, capital gains tax, withholding tax on transactions with government, business permit tax, and so on.
Income tax is wrong both in theory and practice. Theory, income tax penalizes work and performance by productive people; while rewarding (recipient of tax collections) those in government bureaucracies and political leadership, and some less-industrious, less ambitious, or economically unlucky people. A number of people are poor because of laziness and personal irresponsibility, plus the incentives of various subsidies given by the state if one is poor.
Practice, out of 34 million employed Filipinos, both in public and private sectors, only less than 3 million are filing personal income tax. Well, if those who don't have to file because of automatic deduction are included, the figure could be around 10 million, but still too far from 34 million employed people. So many people are not paying income taxes, both rich and poor; professionals, and those in informal economies. In addition, those who work for multilateral institutions like the United Nations, the World Bank, the International Monetary Fund, the Asian Development Bank, the Organization Economic Cooperation and Development, USAID, the ASEAN Secretariat, and foreign embassies are not subject to automatic personal income tax deduction. If they file and pay income tax later, fine; if they don't, fine too. And people working in these institutions, especially the technical staff and consultants are earning big, many in six-digit monthly income, tax-free!
So a move to abolish personal income tax is simply to give justice to fixed-income earners, especially those in the private sector, and to correct the inefficiency of the tax system and the tax administration. In addition, any money retained in the paychecks of people and not taken in by the State in the form of income tax is money that will be spent on many other commodities and services. A tax cut is de facto "salary increase" and will go back to the economy in the form of higher domestic consumption, say repair or remodel an old house, or buy a new one, buy more hamburger and shoes, more office and school supplies, or hire a nanny for the kids, or more domestic travel. Even more international travels should not be spurned since other foreigners also come and spend their savings here.
In the case of corporate income tax, this is an illusion. This is because corporations do not pay taxes, people do – the firm owners and stockholders in the form of lower profit and investors equity, and the consumers in the form of higher prices. Corporations are just legal entity; they are not people.
Aside from higher domestic consumption, there will be billions of dollars of foreign investments that will come in – companies from high-tax countries in Europe and North America looking for "tax havens" that recognize their hard work. The jobs to be created locally will be enormous.
But a zero income tax is next to impossible to happen in this country. No country has also done it yet. So a low, flat income tax, say 10 percent – both personal and corporate – is the next best alternative which will give respite to many struggling businessmen and employees, as well as give additional revenues for the government. Even at this rate, the potential of big influx of foreign investors wanting to come in and escape the high taxes in Western Europe and North America should be considered. Think of the hundreds of thousands, if not millions, of jobs that will be created. Many Filipinos currently working abroad and endure the pain of being away from their families and relatives will have another employment alternative – right in the country itself.
One country that experienced fast economic growth because of the introduction of low, flat tax, is Slovakia. From being a communist state under the former Soviet Union, it adopted a market economy in 1991, after the Berlin wall collapsed. In 1994, it enacted a flat tax of 19 percent for both personal and corporate income. The effect was quick: in a few years, Slovakia became the "Detroit of Europe" with the entry of plenty of foreign car manufacturers – Western European, American, Japanese, and Korean car producers. GDP grew high and unemployment went down drastically.
Ireland is another "radical" economy: from 48 percent corporate income tax, it was cut down to a mere 12 percent! The volume of economic activity that transpired after this move, all other things being equal, was huge.
One consideration that other people ask if income tax has to come down to say, 10 percent flat rate, is where to get the money for more and better roads and other infrastructure. Simple: get the money from those consumption-based taxes. Better yet, allow more toll roads. Expenditures for these infrastructures will not come from taxes, but from corporate savings and investments that will make money from motorists who will use the road more often. This is very fair. If the toll road expressway is in Luzon, taxpayers from the Visayas and Mindanao will not be burdened in building and maintaining those highways. And even among those in Luzon, those who don't use the roads (say they don't have a car) need not fork out extra taxes for those roads; only those
who frequently use those toll roads.
A citizens’ movement to push a low, flat tax leading to an ultimate zero income tax after a few years transition, is now a big challenge for us.
Monday, June 09, 2008
Pol. Ideology 9: Liberty and Choice, Atlanta and HK Conferences
I attended two international conferences recently. First, the Atlas Liberty Forum in Atlanta, Georgia, USA last April, and the Pacific Rim Policy Exchange in Hong Kong this week. One article per conference below.
(1) Liberty and Choice vs. Dictation and Extortion
April 30, 2008
The Atlas Economic Research Foundation (www.atlasusa.org), a think tank based in Arlington, Virginia, USA, held its 8th Liberty Forum in Atlanta, Georgia, USA last April 25-26, 2008. Atlas gave me a modest travel grant, so I was able to go there as one of the 300+ participants from many countries.
The Liberty Forum is an annual event organized by Atlas and held in several cities in the US. Its main purpose is to gather many leaders of free market-oriented think tanks and public policy institutes, as well as some scholars and corporate leaders who believe in individual liberty and free market, enable them to meet and network with each other. There are also lectures and fora on selected topics, like this year, one session was “Promoting freedom in difficult countries” and the speakers were from Iran, Ghana, Mongolia and Venezuela.
When we formed our own think tank here in Manila, the Minimal Government Thinkers, Inc., our goal is very clear and well-defined: to advance a society of free, responsible and self-reliant individuals who demand less government, less taxes and less regulations. In short, a society that gives utmost importance to individual liberty and choice, and fights dictation in many facets of our lives, dictation and regulations that often invite extortionary behavior from those who think individuals should be guided upon, even dictated upon, on how they should conduct their lives. Like how much they can keep from their monthly income, who should be over-taxed, who should be over-subsidized, and who should administer those taxation, regulation and subsidization.
That is how I and our think tank got known to fellow free market-oriented institutes in Asia and other continents of the world, like Atlas in the US and the International Policy Network in UK.
Here in the Philippines, the attempts by the state, from local to national government units, as well as from some multilateral institutions, to forcibly collectivize many aspects of our lives, is numerous. Many of which were successful and are simply being implemented, like those high and multiple taxes and fees, trade protectionism, regulations in starting and expanding a business, and so on.
A number of those forced collectivization attempts are still being planned and need institutionalization through legislation. Among these are various price control schemes for rice, petroleum, housing, wages and medicines.
This coming May 1, the President and the top legislative leaders want two new big laws: exempting the minimum wage earners from paying personal income tax, and enactment of the “cheaper medicines” bill. The former is very rationale, it even looks cute, except that the state will also adjust upwards the taxes for those earning above minimum wage.to “compensate for revenue losses”. The second is always a populist propaganda, and two schemes the Health Department and the House of Representatives have thought of, are “generics only, no branded drugs” in physicians’ prescription, and medicine price control.
If the latter bill becomes a law, it will have 2 perverse results. One is killing choice – physicians will have no more option to choose and prescribe a certain medicine brand that they think can cure their patients given their particular illness. And two, create an extortionary environment. If the President and/or the Secretary of the Health Department are corrupt, all they have to do is go to the biggest pharmaceutical companies (generics or branded) and tell them, “hey, we will put your best-selling drugs under price control, unless you pay us.”
The price system is always the best indicator of the usefulness and availability of a certain product or service. Cheap ones are always attractive, but there are dangers that those cheap goods are of bad quality and in the case of medicines, could be unsafe and fatal. Expensive products are unattractive, but they often bring with them reliable names or brands for their manufacturers and producers, which translate to effective and safe products.
There are many factors why a product becomes expensive. Among the prominent ones are one, government taxes and fees – they are always inflationary, they always make the taxed products become more expensive. Two, the high cost of product research and development (R&D) and innovation. Copycats are always cheap because their manufacturers did not spend a single amount in product development and innovation. Three, monopolistic or oligopolistic structure of the market; ie, the fewer the sellers, the greater the tendency of the few or lone seller to abuse the market and bleed the consumers.
Note that in 2 or all of the 3 major factors mentioned above, government is involved. R&D and the cost of innovation is always very costly because of strict government health, sanitary and environmental regulations.
And so, if government intervention is costly and make things expensive, why would we seek another set of government intervention – through wage control and higher taxation of skilled laborers, those earning above the minimum wage, and medicine price control, as well as killing choice for physicians and patients?
Not only are we hoodwinked of the excesses and distortions by past government intervention and dictation. We are also hoodwinked to believe that we need more of the same abuses and dictations.
If we value our individual liberty, not their liberty to dictate to us what is supposedly good for us, then let us say NO to their attempts and dangerous legislations.
(2) Individual Liberty in the Pacific Rim
Individual liberty is a subject that is often subsumed, if ever considered at all, under general concepts like collective liberty and national sovereignty. This is wrong because if liberty and freedom are to have serious meanings, they must redound to individual liberty. The collective is composed of individuals. If individuals are considered as plain adjuncts and appendages of the collective, then only the leaders of the collective have liberty and power to selectively choose what rights and liberty the individuals can have, and what rights and liberty they cannot have.
This subject is the theme of the recent “Pacific Rim Policy Exchange” held in Hong Kong on 04-05 June 2008. It was sponsored by four free market-oriented think tanks: the U.S.-based Property Rights Alliance, the Americans for Tax Reforms, U.K.-based International Policy Network, and Hongkong-based Lion Rock Institute.
The HK meeting was the second event after the first “Pacific Rim Conference” held in Honolulu, Hawaii in May 2007. It was jointly sponsored by the same institutes, plus the US State Policy Network and the Asia Forum-Japan. I have attended both conferences, courtesy of IPN sponsorship.
The HK event was composed of six panels or subjects, three per day. These were (1) Real property rights: traditional rights, formal protection and economic growth; (2) Taming the beast: accountability, deregulation and transparency; (3) Free market health care reform: keeping healthy with a healthy market; (4) Intellectual property rights: protecting the engine of innovation; (5) Adaptation or accommodation: energy production and its consequences; and (6) Globalization: trade, regulation and international markets. And the speakers came from China, India, S. Korea, Sri Lanka, Taiwan, Hong Kong, Australia, Canada, US, UK and Peru. Other participants came from other Asian countries.
Among the panels that attracted me most were those on real property rights, intellectual property rights, and taming the beast (the State). It’s very enlightening, or perhaps depressing, to know that many governments around the world are responsible for very complicated, time-consuming and costly procedures in registering property so that many real owners of land, for instance, do not have peace of mind in saying that they indeed have full control of their lands, whether to keep it for whatever use, or sell and exchange it for money or other real properties.
Protecting intellectual property – someone’s song composition, research data and methodology, technological invention, medical innovation, and so on – is also very important. If another singer can just steal a lesser-known musician’s songs and record them and claim them as his own composition, the latter would feel robbed. If other companies, including state enterprises, can just steal the formula of an effective and best-selling pharmaceutical product because they were allowed to do so by the State in the name of “national emergencies”, the company that invented that medical product (and spent many years and several hundred million dollars in R&D) would also feel robbed. And there are many governments, upon the prodding of some activist groups, itching to do this kind of intervention and legalized stealing.
To me, such unnecessary bureaucracies in registering real or physical properties, and disrespect of the IPR of an innovator company, are examples of “government failure”. I firmly believe that protection of the citizens’ right to life, right to dignity, and right to private property, are the State’s main function. Running and operating banks, power plants, pension funds, hospitals, universities, or engaging in rice trading and broadband deals, are secondary or unnecessary State functions because these are better left to the private sector in a deregulated and competitive business environment. There is pressure on private enterprises to perform well and satisfy customers in a competitive and level playing field, while there is complacency, resulting in mediocrity, when a service is under the hands of government. This is because private enterprises depend on revenues from customers who voluntarily come to get their services, while government enterprises depend on subsidies from taxes and fees that are forcibly collected from the people.
And how could one tame the beast? A speaker from Hongkong suggested to “declaw it, one claw at a time, and blind it, if you can”. I agree with this proposal, although achieving it is very difficult because the number of claws, those various regulations, seem to be increasing, not decreasing. And very often, those regulations are not transparent; one would not know them all, including the fees, hidden requirements, and the number of days, weeks, or months to wait, until he/she gets there, in front of the concerned regulatory office. Forcing the government, both national and local, to become more transparent should be a good challenge for citizens since the total cost of (a) taxes and fees + (b) cost of compliance can be high which siphons the people’s energy and resources away from actual productive undertaking.
Aside from the six panels, the conference also featured two luncheon speakers and two dinner speakers during those two days, and all of them were articulate speakers. But the most influential of them all was Jimmy Lai, founder of Next Media communications in HK. He was also the main character in a documentary called “The Call of the Entrepreneur” produced by the Acton Institute. The man had a typical rags-to-riches story due to non-typical character of super-hard work and strict business ethics. He was emotional in the documentary when he related how difficult his and his family’s life was, both in mainland China until he was a teen-age migrant worker in HK, and how his philosophy in life changed after he read Friedrich Hayek’s “The Road to Serfdom”.
Is democracy a political condition? Many people would nod in answering this question. But Jimmy Lai says NO, because for him, democracy is a moral issue. The freedom that people enjoy in a democracy is a deep moral right, something that they will not experience in a dictatorship where the citizens are worth nothing except as adjunct and slaves of the State and State leaders, the dictators. Most importantly, Jimmy Lai says that what matters most is individual responsibility, how individuals should conduct their lives. Yes, individuals have the option whether they can be ambitious and hard-working, or be lazy and dependent on family or State subsidies. So his message to the State, “Leave us alone.” Incidentally, the recently published book by the President of the Americans for Tax Reform foundation, Mr. Grover Norquist, has the same title, “Leave us Alone”.
---------
See also:
(1) Liberty and Choice vs. Dictation and Extortion
April 30, 2008
The Atlas Economic Research Foundation (www.atlasusa.org), a think tank based in Arlington, Virginia, USA, held its 8th Liberty Forum in Atlanta, Georgia, USA last April 25-26, 2008. Atlas gave me a modest travel grant, so I was able to go there as one of the 300+ participants from many countries.
The Liberty Forum is an annual event organized by Atlas and held in several cities in the US. Its main purpose is to gather many leaders of free market-oriented think tanks and public policy institutes, as well as some scholars and corporate leaders who believe in individual liberty and free market, enable them to meet and network with each other. There are also lectures and fora on selected topics, like this year, one session was “Promoting freedom in difficult countries” and the speakers were from Iran, Ghana, Mongolia and Venezuela.
When we formed our own think tank here in Manila, the Minimal Government Thinkers, Inc., our goal is very clear and well-defined: to advance a society of free, responsible and self-reliant individuals who demand less government, less taxes and less regulations. In short, a society that gives utmost importance to individual liberty and choice, and fights dictation in many facets of our lives, dictation and regulations that often invite extortionary behavior from those who think individuals should be guided upon, even dictated upon, on how they should conduct their lives. Like how much they can keep from their monthly income, who should be over-taxed, who should be over-subsidized, and who should administer those taxation, regulation and subsidization.
That is how I and our think tank got known to fellow free market-oriented institutes in Asia and other continents of the world, like Atlas in the US and the International Policy Network in UK.
Here in the Philippines, the attempts by the state, from local to national government units, as well as from some multilateral institutions, to forcibly collectivize many aspects of our lives, is numerous. Many of which were successful and are simply being implemented, like those high and multiple taxes and fees, trade protectionism, regulations in starting and expanding a business, and so on.
A number of those forced collectivization attempts are still being planned and need institutionalization through legislation. Among these are various price control schemes for rice, petroleum, housing, wages and medicines.
This coming May 1, the President and the top legislative leaders want two new big laws: exempting the minimum wage earners from paying personal income tax, and enactment of the “cheaper medicines” bill. The former is very rationale, it even looks cute, except that the state will also adjust upwards the taxes for those earning above minimum wage.to “compensate for revenue losses”. The second is always a populist propaganda, and two schemes the Health Department and the House of Representatives have thought of, are “generics only, no branded drugs” in physicians’ prescription, and medicine price control.
If the latter bill becomes a law, it will have 2 perverse results. One is killing choice – physicians will have no more option to choose and prescribe a certain medicine brand that they think can cure their patients given their particular illness. And two, create an extortionary environment. If the President and/or the Secretary of the Health Department are corrupt, all they have to do is go to the biggest pharmaceutical companies (generics or branded) and tell them, “hey, we will put your best-selling drugs under price control, unless you pay us.”
The price system is always the best indicator of the usefulness and availability of a certain product or service. Cheap ones are always attractive, but there are dangers that those cheap goods are of bad quality and in the case of medicines, could be unsafe and fatal. Expensive products are unattractive, but they often bring with them reliable names or brands for their manufacturers and producers, which translate to effective and safe products.
There are many factors why a product becomes expensive. Among the prominent ones are one, government taxes and fees – they are always inflationary, they always make the taxed products become more expensive. Two, the high cost of product research and development (R&D) and innovation. Copycats are always cheap because their manufacturers did not spend a single amount in product development and innovation. Three, monopolistic or oligopolistic structure of the market; ie, the fewer the sellers, the greater the tendency of the few or lone seller to abuse the market and bleed the consumers.
Note that in 2 or all of the 3 major factors mentioned above, government is involved. R&D and the cost of innovation is always very costly because of strict government health, sanitary and environmental regulations.
And so, if government intervention is costly and make things expensive, why would we seek another set of government intervention – through wage control and higher taxation of skilled laborers, those earning above the minimum wage, and medicine price control, as well as killing choice for physicians and patients?
Not only are we hoodwinked of the excesses and distortions by past government intervention and dictation. We are also hoodwinked to believe that we need more of the same abuses and dictations.
If we value our individual liberty, not their liberty to dictate to us what is supposedly good for us, then let us say NO to their attempts and dangerous legislations.
(2) Individual Liberty in the Pacific Rim
Individual liberty is a subject that is often subsumed, if ever considered at all, under general concepts like collective liberty and national sovereignty. This is wrong because if liberty and freedom are to have serious meanings, they must redound to individual liberty. The collective is composed of individuals. If individuals are considered as plain adjuncts and appendages of the collective, then only the leaders of the collective have liberty and power to selectively choose what rights and liberty the individuals can have, and what rights and liberty they cannot have.
This subject is the theme of the recent “Pacific Rim Policy Exchange” held in Hong Kong on 04-05 June 2008. It was sponsored by four free market-oriented think tanks: the U.S.-based Property Rights Alliance, the Americans for Tax Reforms, U.K.-based International Policy Network, and Hongkong-based Lion Rock Institute.
The HK meeting was the second event after the first “Pacific Rim Conference” held in Honolulu, Hawaii in May 2007. It was jointly sponsored by the same institutes, plus the US State Policy Network and the Asia Forum-Japan. I have attended both conferences, courtesy of IPN sponsorship.
The HK event was composed of six panels or subjects, three per day. These were (1) Real property rights: traditional rights, formal protection and economic growth; (2) Taming the beast: accountability, deregulation and transparency; (3) Free market health care reform: keeping healthy with a healthy market; (4) Intellectual property rights: protecting the engine of innovation; (5) Adaptation or accommodation: energy production and its consequences; and (6) Globalization: trade, regulation and international markets. And the speakers came from China, India, S. Korea, Sri Lanka, Taiwan, Hong Kong, Australia, Canada, US, UK and Peru. Other participants came from other Asian countries.
Among the panels that attracted me most were those on real property rights, intellectual property rights, and taming the beast (the State). It’s very enlightening, or perhaps depressing, to know that many governments around the world are responsible for very complicated, time-consuming and costly procedures in registering property so that many real owners of land, for instance, do not have peace of mind in saying that they indeed have full control of their lands, whether to keep it for whatever use, or sell and exchange it for money or other real properties.
Protecting intellectual property – someone’s song composition, research data and methodology, technological invention, medical innovation, and so on – is also very important. If another singer can just steal a lesser-known musician’s songs and record them and claim them as his own composition, the latter would feel robbed. If other companies, including state enterprises, can just steal the formula of an effective and best-selling pharmaceutical product because they were allowed to do so by the State in the name of “national emergencies”, the company that invented that medical product (and spent many years and several hundred million dollars in R&D) would also feel robbed. And there are many governments, upon the prodding of some activist groups, itching to do this kind of intervention and legalized stealing.
To me, such unnecessary bureaucracies in registering real or physical properties, and disrespect of the IPR of an innovator company, are examples of “government failure”. I firmly believe that protection of the citizens’ right to life, right to dignity, and right to private property, are the State’s main function. Running and operating banks, power plants, pension funds, hospitals, universities, or engaging in rice trading and broadband deals, are secondary or unnecessary State functions because these are better left to the private sector in a deregulated and competitive business environment. There is pressure on private enterprises to perform well and satisfy customers in a competitive and level playing field, while there is complacency, resulting in mediocrity, when a service is under the hands of government. This is because private enterprises depend on revenues from customers who voluntarily come to get their services, while government enterprises depend on subsidies from taxes and fees that are forcibly collected from the people.
And how could one tame the beast? A speaker from Hongkong suggested to “declaw it, one claw at a time, and blind it, if you can”. I agree with this proposal, although achieving it is very difficult because the number of claws, those various regulations, seem to be increasing, not decreasing. And very often, those regulations are not transparent; one would not know them all, including the fees, hidden requirements, and the number of days, weeks, or months to wait, until he/she gets there, in front of the concerned regulatory office. Forcing the government, both national and local, to become more transparent should be a good challenge for citizens since the total cost of (a) taxes and fees + (b) cost of compliance can be high which siphons the people’s energy and resources away from actual productive undertaking.
Aside from the six panels, the conference also featured two luncheon speakers and two dinner speakers during those two days, and all of them were articulate speakers. But the most influential of them all was Jimmy Lai, founder of Next Media communications in HK. He was also the main character in a documentary called “The Call of the Entrepreneur” produced by the Acton Institute. The man had a typical rags-to-riches story due to non-typical character of super-hard work and strict business ethics. He was emotional in the documentary when he related how difficult his and his family’s life was, both in mainland China until he was a teen-age migrant worker in HK, and how his philosophy in life changed after he read Friedrich Hayek’s “The Road to Serfdom”.
Is democracy a political condition? Many people would nod in answering this question. But Jimmy Lai says NO, because for him, democracy is a moral issue. The freedom that people enjoy in a democracy is a deep moral right, something that they will not experience in a dictatorship where the citizens are worth nothing except as adjunct and slaves of the State and State leaders, the dictators. Most importantly, Jimmy Lai says that what matters most is individual responsibility, how individuals should conduct their lives. Yes, individuals have the option whether they can be ambitious and hard-working, or be lazy and dependent on family or State subsidies. So his message to the State, “Leave us alone.” Incidentally, the recently published book by the President of the Americans for Tax Reform foundation, Mr. Grover Norquist, has the same title, “Leave us Alone”.
---------
See also:
Pol. Ideology 5: Have Movements for Liberty Progressed? June 26, 2006
Pol. Ideology 6: Quotes from Adam Smith, February 04, 2007
Pol. Ideology 7: Individualism, Entitlement and Freedom, April 30, 2007
Pol. Ideology 8: Ideas on Liberty, September 15, 2007
Pol. Ideology 7: Individualism, Entitlement and Freedom, April 30, 2007
Pol. Ideology 8: Ideas on Liberty, September 15, 2007
Friday, May 30, 2008
Inflation and state parasitism
The public in many countries around the world are enduring the pain of ever-spiraling prices of commodities, starting from high prices of oil, high prices of rice and other food products, housing and rental, electricity costs, and so on. Their real income – nominal income minus the value “eaten away” by inflation – is declining.
In UK, truckers blocked major streets leading to London; in France, fishermen blocked ports leading to the English Channel; in Bulgaria, truckers converged in a convoy that also caused traffic near the capital city; in the Philippines, some public transportation operators conducted transport strike – all actions protesting high fuel prices.
Many governments around the world recognize this, and they have instituted certain measures that will hopefully reduce the suffering of the citizens. Among such measures are (a) mandating employers to give higher minimum wages to their workers, (b) requiring companies not to sell goods that are genetically-modified; (c) directing companies to make some of their services free to the public, (d) forcing companies to give some discounts to certain consumers, and (e) commanding companies to make their patented products be available for manufacturing by their competing firms.
All these measures are meant to (i) increase the income of the poor, and (ii) reduce the expenses of the people, the poor especially. Cute and commendable goals. But do those measures respect private property rights, and will they really achieve the stated goals? My brief answer to both questions is NO. Why?
One, wage is a function of productivity, not of inflation or number of children that a worker has. Forcing companies to give higher wages even to unskilled and low-skilled workers will force some companies to stop hiring these people. And unemployment and hunger for this group of people will increase, not decrease. Firms and entrepreneurs should be allowed to set wages commensurate to the skills and productivity of their workers. And the economy should encourage the blooming of more employers and entrepreneurs so that workers can have more choices to whom they want to work, or if they themselves want to become entrepreneurs someday too.
Two, obliging food shops, supermarkets and other retailers not to sell genetically-modified (GM) food products and animal feeds would compel farmers not to produce GM crops and animal products when doing so would reduce their production cost due to fewer or zero need for certain pesticides or the crops and animals would grow much faster and they can harvest quicker. Which results in higher income for them and possibly lower food price, at least for consumers who are not convinced of food-Frankenstein scenarios. If such restriction is removed and food sellers are just required to label their products whether organic or GM or whatever, then consumers will have a wider choice, especially poor people who want cheaper food now and worry less about their so-called “mutation” 2 or 5 decades from now.
Three, compelling companies to provide some of their services free to the public will cause over-use or over-consumption of said services, and since the companies will not earn from said services, they will not expand investment, resulting in mediocre quality of those services, or they may opt to scrap providing that service. And the public will suffer. An example of this is the proposal by many top politicians and regulators in the Philippines to compel the 3 telecomms companies to stop charging for SMS or text messages, charge only on voice calls.
Four, requiring companies to provide discounts and such revenue loss cannot be charged as tax deductible, will force companies to either evade following the law, or harass those entitled to discounts by asking many documents, or give them bad quality service like expiring food and medicines. An example of this, also in the Philippines, is requiring restaurants, drug stores, hospitals, public transportation, other sectors, to give 20 percent discount to senior citizens. Bigger companies can absorb the revenue loss, but others, especially the smaller firms that survive only on low-profit margins, are either complaining or not following the law at all.
Five, coercing companies to make their patented products, where they spent a big amount of money and time to invent, be made available for manufacturing and distribution by other companies so that said products can be sold cheaper, will discourage if not kill innovation. An example of this is compulsory licensing (CL) of some pharmaceutical products. An innovator company usually spends nearly $1 billion and 10-12 years of several clinical trials and other R&D processes to produce one good medicine, and not all of those medicines may be profitable since they will have to be sold at a high price to recover the enormous cost at the remaining patent life, which is only 8-10 years out of the 20-years patent.
What governments are doing in these instances, is extend their regulatory power after private enterprises went through an earlier process of regulations and taxation. Regulation allows the regulators to behave as if they own the firms that they are regulating, even if they are not the owners of those firms. Ownership and control are two different things. One need not own something but if he has control of that thing, he can do whatever he wants. Like a family driver. He does not own the car, but when his employer is away and he decides to drive the car to visit and tour his friends without the knowledge or permission of his employer, he can do it. If he gets caught, that's another story.
Governments have two very important tools in their hands which they can do if they are really sincere in reducing inflationary pressures in society: reduce taxes and free up markets. First tool, reduce, simplify, or better year, abolish certain taxes that make the price of various goods and services become more expensive. In oil taxes for instance, the British government holds the distinction of having the highest oil taxes in the EU, if not the world, where up to 65 percent of oil retail prices are taxes. The US government, both federal and state, collects about 19 percent of oil retail price as taxes. In the Philippines, the government collects 3 different types of taxes for gasoline products: import tax (now at 1 percent, previously 3 percent), excise tax (about US$0.14 per liter) and value added tax, 12 percent.
Second tool, free up markets, reduce complicated regulations. Let the real owners of private enterprises – their stockholders – and their managers do what they think is necessary in a level playing field and competitive environment.
Since many governments do not show intention of reducing their regulatory powers over the businesses of companies and lives of individuals, they only show how parasitic they can be. A parasite creates more harm and problems than solutions to its host. Like sucking the host’s blood and multiplying much faster than the host.
But unlike animals preyed on by worms or fleas, people as host to parasitic governments are capable of exposing their parasites and possibly fighting back. And only if the people will realize the burden of heavy regulation and taxation. The inflationary pressure experienced by many people around the world is one symptom of the weight of thick layers of bureaucracies and regulators who all have to be paid salaries, offices and supplies, travels and bonuses, pension and pork barrel.
A competitive economy with more productive people and less regulators and bureaucrats is capable of holding off inflationary pressure, especially for basic necessities like energy and food. Productive people can produce and distribute more food, more energy sources, more houses, more cars, more schools. An economy can even experience short-term deflation – prices falling down – in a situation like this.
By exposing and understanding the parasitic nature of high government regulation, intervention and taxation, people should be able to free themselves up. And people should be ready to assume more personal responsibility about their own lives, their own family, their own community. Then people can really say that they have high level of individual liberty.
In UK, truckers blocked major streets leading to London; in France, fishermen blocked ports leading to the English Channel; in Bulgaria, truckers converged in a convoy that also caused traffic near the capital city; in the Philippines, some public transportation operators conducted transport strike – all actions protesting high fuel prices.
Many governments around the world recognize this, and they have instituted certain measures that will hopefully reduce the suffering of the citizens. Among such measures are (a) mandating employers to give higher minimum wages to their workers, (b) requiring companies not to sell goods that are genetically-modified; (c) directing companies to make some of their services free to the public, (d) forcing companies to give some discounts to certain consumers, and (e) commanding companies to make their patented products be available for manufacturing by their competing firms.
All these measures are meant to (i) increase the income of the poor, and (ii) reduce the expenses of the people, the poor especially. Cute and commendable goals. But do those measures respect private property rights, and will they really achieve the stated goals? My brief answer to both questions is NO. Why?
One, wage is a function of productivity, not of inflation or number of children that a worker has. Forcing companies to give higher wages even to unskilled and low-skilled workers will force some companies to stop hiring these people. And unemployment and hunger for this group of people will increase, not decrease. Firms and entrepreneurs should be allowed to set wages commensurate to the skills and productivity of their workers. And the economy should encourage the blooming of more employers and entrepreneurs so that workers can have more choices to whom they want to work, or if they themselves want to become entrepreneurs someday too.
Two, obliging food shops, supermarkets and other retailers not to sell genetically-modified (GM) food products and animal feeds would compel farmers not to produce GM crops and animal products when doing so would reduce their production cost due to fewer or zero need for certain pesticides or the crops and animals would grow much faster and they can harvest quicker. Which results in higher income for them and possibly lower food price, at least for consumers who are not convinced of food-Frankenstein scenarios. If such restriction is removed and food sellers are just required to label their products whether organic or GM or whatever, then consumers will have a wider choice, especially poor people who want cheaper food now and worry less about their so-called “mutation” 2 or 5 decades from now.
Three, compelling companies to provide some of their services free to the public will cause over-use or over-consumption of said services, and since the companies will not earn from said services, they will not expand investment, resulting in mediocre quality of those services, or they may opt to scrap providing that service. And the public will suffer. An example of this is the proposal by many top politicians and regulators in the Philippines to compel the 3 telecomms companies to stop charging for SMS or text messages, charge only on voice calls.
Four, requiring companies to provide discounts and such revenue loss cannot be charged as tax deductible, will force companies to either evade following the law, or harass those entitled to discounts by asking many documents, or give them bad quality service like expiring food and medicines. An example of this, also in the Philippines, is requiring restaurants, drug stores, hospitals, public transportation, other sectors, to give 20 percent discount to senior citizens. Bigger companies can absorb the revenue loss, but others, especially the smaller firms that survive only on low-profit margins, are either complaining or not following the law at all.
Five, coercing companies to make their patented products, where they spent a big amount of money and time to invent, be made available for manufacturing and distribution by other companies so that said products can be sold cheaper, will discourage if not kill innovation. An example of this is compulsory licensing (CL) of some pharmaceutical products. An innovator company usually spends nearly $1 billion and 10-12 years of several clinical trials and other R&D processes to produce one good medicine, and not all of those medicines may be profitable since they will have to be sold at a high price to recover the enormous cost at the remaining patent life, which is only 8-10 years out of the 20-years patent.
What governments are doing in these instances, is extend their regulatory power after private enterprises went through an earlier process of regulations and taxation. Regulation allows the regulators to behave as if they own the firms that they are regulating, even if they are not the owners of those firms. Ownership and control are two different things. One need not own something but if he has control of that thing, he can do whatever he wants. Like a family driver. He does not own the car, but when his employer is away and he decides to drive the car to visit and tour his friends without the knowledge or permission of his employer, he can do it. If he gets caught, that's another story.
Governments have two very important tools in their hands which they can do if they are really sincere in reducing inflationary pressures in society: reduce taxes and free up markets. First tool, reduce, simplify, or better year, abolish certain taxes that make the price of various goods and services become more expensive. In oil taxes for instance, the British government holds the distinction of having the highest oil taxes in the EU, if not the world, where up to 65 percent of oil retail prices are taxes. The US government, both federal and state, collects about 19 percent of oil retail price as taxes. In the Philippines, the government collects 3 different types of taxes for gasoline products: import tax (now at 1 percent, previously 3 percent), excise tax (about US$0.14 per liter) and value added tax, 12 percent.
Second tool, free up markets, reduce complicated regulations. Let the real owners of private enterprises – their stockholders – and their managers do what they think is necessary in a level playing field and competitive environment.
Since many governments do not show intention of reducing their regulatory powers over the businesses of companies and lives of individuals, they only show how parasitic they can be. A parasite creates more harm and problems than solutions to its host. Like sucking the host’s blood and multiplying much faster than the host.
But unlike animals preyed on by worms or fleas, people as host to parasitic governments are capable of exposing their parasites and possibly fighting back. And only if the people will realize the burden of heavy regulation and taxation. The inflationary pressure experienced by many people around the world is one symptom of the weight of thick layers of bureaucracies and regulators who all have to be paid salaries, offices and supplies, travels and bonuses, pension and pork barrel.
A competitive economy with more productive people and less regulators and bureaucrats is capable of holding off inflationary pressure, especially for basic necessities like energy and food. Productive people can produce and distribute more food, more energy sources, more houses, more cars, more schools. An economy can even experience short-term deflation – prices falling down – in a situation like this.
By exposing and understanding the parasitic nature of high government regulation, intervention and taxation, people should be able to free themselves up. And people should be ready to assume more personal responsibility about their own lives, their own family, their own community. Then people can really say that they have high level of individual liberty.
Thursday, May 22, 2008
Free trade 9: Parallel Importation of Medicines
( Posted today in
People want cheaper food, cheaper oil, cheaper shoes, cheaper cell phones, cheaper medicines, and so on. This is a perfectly rationale human behavior. But there are certain irrational interventions often done by governments, which make commodities expensive, which results in expensive food, expensive oil, expensive medicines, and so on. Two of such ugly interventions are multiple taxes and trade protectionism.
Medicines in the Philippines are immediately slapped at least with 5 percent import tax and 12 percent value added tax (VAT). Companies that import, manufacture, distribute, and retail medicines are slapped with 35 percent corporate income tax each, 12 percent VAT on office rentals, plus a host of other taxes and fees. The reduction if not abolition of certain taxes that make medicines more expensive is surprisingly among the things that were never considered by the legislators who wanted cheaper medicines. The legislators with bleeding heart concern for the poor patients were too tax-hungry to spare medicines from high and multiple taxes and fees.
More than a month ago, I emailed Sen. Mar Roxas, the chief author of the Senate version. I admired his keen interest in reducing or abolishing the taxes on petroleum products for “cheaper oil”, and asked why he can’t be equally keen in demanding for the reduction or abolition of taxes on drugs for “cheaper medicines”. I never got a reply from him.
The second ugly government intervention is trade protectionism. The 5 percent import tax is one proof of such protectionism. If we want cheaper medicines, we should have free trade – zero tariff and non-tariff barriers – and allow plenty of reliable pharmaceutical companies to come into the country. They will bring their medicines from Europe, US, Singapore, India, Pakistan, and other countries, and let them compete among themselves. But dismantling of trade protectionism in medicines was not considered in the medicines bill. What was put in the new “Cheaper and Quality Medicines Act of 2008” was the institutionalization of parallel importation.
Parallel importation looks cute: the same medicines of the same dosage made by the same pharmaceutical company currently under patent in the Philippines are sold at only one-half, one-fourth, or even lower price, in India, Pakistan, China, or elsewhere. So, import those medicines even without the permission of the IP owner or patent holder and sell them here. Filipino patients get cheaper medicines, importers make money, the State collects taxes, and there is no IPR infringement done on local patent holders. Everybody happy, except the multinational pharmaceutical companies who are demonized to have made “enormous profit” as a result of their monopoly of their medical invention and innovation.
Parallel importation is not equivalent to free trade. The former is allowing non-patent holders and “copycat-ers” to import medicines that are locally-patented without the permission of the local patentees. Free trade is allowing plenty of medicine manufacturers, especially medicine innovators, who are patent holders to bring in their innovative and patented medicines and products, and they compete among each other here both in quality and price.
Under parallel importation, the State can practice double standards: it creates bureaucracies, and collects taxes and fees to domestic-based pharmaceutical companies that applied for patent and IPR, then turn its back and disrespect the same patent that it granted by allowing parallel imports, then further collect taxes and fees from importers and retailers.
On the other hand, free trade has only one goal: give consumers more choices. The State need not practice double standards to achieve this. If it wants to implement the patent system and protect IPR, then all importers should be patent holders. If there are not enough patent holders and local players, then allow more players from more countries to come in. And they will come in if there is enough profit to make, meaning operational costs – like taxes, regulatory fees, and other compliance costs – are low and simple to follow.
Competition, not bureaucratic regulation, is the best disciplinarian among producers and sellers. Customers can mark those who sell expensive products relative to their quality, those who sell bad quality products, especially unsafe and fatal products in the case of counterfeit medicines. Sellers and providers would naturally aspire to sell only good quality and safe products, even if some of those goods have to be sold at higher prices, and gain customer support and patronage.
The key is to encourage the entry of more innovators who will be directly accountable should the medicines they brought in would turn out to be ineffective and unsafe. Parallel importers may not be accountable when they – intentionally or unintentionally – bring in counterfeit drugs because they are not necessarily the ones who manufactured those medicines. Or if they mishandled or misstored the products which may adversely affect the effectiveness and safety of such drugs. Or if they mislabeled after re-packaging those medicines bought in bulk from abroad.
Medicine innovation should be encouraged to come in if we want newer, more effective medicines, to fight evolving diseases in our evolving communities and evolving environment. Innovative medicines are not cheap, with an average industry cost of around US$1 billion just to develop one good medicine. Copycat medicines are always cheap because the “copycat-ers” never spent a single centavo on medical research and development; they only have to spend on glitzy marketing strategies and sales people.
---------
See also:
Free Trade 6: Counterfeit Drugs Worldwide, December 21, 2007
Free Trade 7: Class War, Eco-protectionism and Climate, April 02, 2008
Free Trade 8: Global RIce Price, May 13, 2008
Medicines in the Philippines are immediately slapped at least with 5 percent import tax and 12 percent value added tax (VAT). Companies that import, manufacture, distribute, and retail medicines are slapped with 35 percent corporate income tax each, 12 percent VAT on office rentals, plus a host of other taxes and fees. The reduction if not abolition of certain taxes that make medicines more expensive is surprisingly among the things that were never considered by the legislators who wanted cheaper medicines. The legislators with bleeding heart concern for the poor patients were too tax-hungry to spare medicines from high and multiple taxes and fees.
More than a month ago, I emailed Sen. Mar Roxas, the chief author of the Senate version. I admired his keen interest in reducing or abolishing the taxes on petroleum products for “cheaper oil”, and asked why he can’t be equally keen in demanding for the reduction or abolition of taxes on drugs for “cheaper medicines”. I never got a reply from him.
The second ugly government intervention is trade protectionism. The 5 percent import tax is one proof of such protectionism. If we want cheaper medicines, we should have free trade – zero tariff and non-tariff barriers – and allow plenty of reliable pharmaceutical companies to come into the country. They will bring their medicines from Europe, US, Singapore, India, Pakistan, and other countries, and let them compete among themselves. But dismantling of trade protectionism in medicines was not considered in the medicines bill. What was put in the new “Cheaper and Quality Medicines Act of 2008” was the institutionalization of parallel importation.
Parallel importation looks cute: the same medicines of the same dosage made by the same pharmaceutical company currently under patent in the Philippines are sold at only one-half, one-fourth, or even lower price, in India, Pakistan, China, or elsewhere. So, import those medicines even without the permission of the IP owner or patent holder and sell them here. Filipino patients get cheaper medicines, importers make money, the State collects taxes, and there is no IPR infringement done on local patent holders. Everybody happy, except the multinational pharmaceutical companies who are demonized to have made “enormous profit” as a result of their monopoly of their medical invention and innovation.
Parallel importation is not equivalent to free trade. The former is allowing non-patent holders and “copycat-ers” to import medicines that are locally-patented without the permission of the local patentees. Free trade is allowing plenty of medicine manufacturers, especially medicine innovators, who are patent holders to bring in their innovative and patented medicines and products, and they compete among each other here both in quality and price.
Under parallel importation, the State can practice double standards: it creates bureaucracies, and collects taxes and fees to domestic-based pharmaceutical companies that applied for patent and IPR, then turn its back and disrespect the same patent that it granted by allowing parallel imports, then further collect taxes and fees from importers and retailers.
On the other hand, free trade has only one goal: give consumers more choices. The State need not practice double standards to achieve this. If it wants to implement the patent system and protect IPR, then all importers should be patent holders. If there are not enough patent holders and local players, then allow more players from more countries to come in. And they will come in if there is enough profit to make, meaning operational costs – like taxes, regulatory fees, and other compliance costs – are low and simple to follow.
Competition, not bureaucratic regulation, is the best disciplinarian among producers and sellers. Customers can mark those who sell expensive products relative to their quality, those who sell bad quality products, especially unsafe and fatal products in the case of counterfeit medicines. Sellers and providers would naturally aspire to sell only good quality and safe products, even if some of those goods have to be sold at higher prices, and gain customer support and patronage.
The key is to encourage the entry of more innovators who will be directly accountable should the medicines they brought in would turn out to be ineffective and unsafe. Parallel importers may not be accountable when they – intentionally or unintentionally – bring in counterfeit drugs because they are not necessarily the ones who manufactured those medicines. Or if they mishandled or misstored the products which may adversely affect the effectiveness and safety of such drugs. Or if they mislabeled after re-packaging those medicines bought in bulk from abroad.
Medicine innovation should be encouraged to come in if we want newer, more effective medicines, to fight evolving diseases in our evolving communities and evolving environment. Innovative medicines are not cheap, with an average industry cost of around US$1 billion just to develop one good medicine. Copycat medicines are always cheap because the “copycat-ers” never spent a single centavo on medical research and development; they only have to spend on glitzy marketing strategies and sales people.
---------
See also:
Free Trade 6: Counterfeit Drugs Worldwide, December 21, 2007
Free Trade 7: Class War, Eco-protectionism and Climate, April 02, 2008
Free Trade 8: Global RIce Price, May 13, 2008
Oil Politics 5: $150 a barrel and Government Public Transpo Monopoly
The Financial Times reported yesterday that oil may hit $150 a barrel by end-2008, "Shortage fears push oil futures near $140"
http://www.ft.com/cms/s/0/c2955660-2696-11dd-9c95-000077b07658.html .
I think it is not a far-out probability. Judging from traffic volume here in Metro Manila, seems that the volume of vehicles on regular working days at today's $120+ a barrel price were not different when oil prices were at $80 or $100 a barrel. Initial conclusion: oil demand is "inelastic" or not price-sensitive. Thus, it should be safe to assume that the volume of vehicles plying the streets and highways will be the same today as in the next few months even if oil prices will reach $140, $150, or more.
Why? Government over-regulation of public land transportation. Just when people want to leave their cars at home and take public transpo, more efficient and comfortable public land transpo are being discouraged from plying the roads due to government's difficult regulations, coupled with harassing and impounding so-called "illegal" or no-franchise public transpo, which reduces the volume of public land transpo in the cities, forcing many people to drive their cars.
In the US and many rich countries, it never fails to amaze me why the state and city governments cannot trust private enterprises to provide bus lines that compete among each other, because those local governments still monopolize buses! Because of government bus monopoly, the buses are few, they come far and several minutes from each other; the number of served routes are few, resulting in people waiting long for the buses. If you wait long and walk long distances, better ride a bicycle, or drive your car, even if oil prices keep on rising.
That is why governments are among the least credible institutions to "fight GHG emissions and climate change" because they are the main culprit why markets for public land transpo cannot function efficiently.
Meanwhile, I wrote this last week, May 13, 2008.
Peak Oil and Price Bubbles
World oil prices hit the $126/barrel mark last Friday, May 9. It seemed that last week, the commodity was rising by around $1/day on average.
There was one $200/barrel "peak oil" theory that I heard. Goldman Sachs predicted last week that the world will see that mark in 2 years. I feel that the world will see that mark earlier, less than 2 years, judging from the pace of current price hikes, so I think the "peak oil" theory of $200 a barrel is a joke. When the oil reaches $201 a barrel next year, it will further rise towards $300, and people will still be driving their cars -- even on weekends only to tour their families to visit other friends and relatives.
A friend, Cynthia D., noted that much of the latest increase in oil prices has been due to speculation. So many are just taking it for granted that the price of oil MUST continue increasing at the rate we have seen over the last two years. She thinks this has already passed the point which was the realistic value of oil and now we are in a bubble. And no matter what, bubbles eventually pop.
I think there is general recognition, although not a consensus yet, that current world oil prices are bubble prices and hence, will pop up someday. But the bigger bubble that helps prop oil prices is the US$. At Euro 1.60/US$ for instance, many people still think there is a lot of room for further depreciation of the US$ given the spend-and-spend, tax-and-borrow mentality of the US government, from federal to state to county/city levels, as well as the trade deficit. The more fiscal irresponsibility to be exhibited by the US federal and local governments and continuing trade deficit, the more room for $ depreciation.
So people who hold assets in US$ will feel "robbed" by inflation and currency depreciation. That is why many of them dump their $ and buy oil futures and other commodities (gold, copper, rice, coffee, corn, etc.) in order to protect their money.
Another problem is that while the oil price bubble continues, the political instabilities in some oil-producing countries (Nigeria, Venezuela, Iraq, Iran,...) also continue. So if you're a highly oil-dependent industry, better buy oil at bubble prices but you are guaranteed of delivery in the next 2 months at least, than wait for the bubble to pop up next week or next month and have no guaranteed delivery in the next 2 months at least.
The $200 "peak oil" theory is wrong. When you say "peak", no other price can top or exceed it. With the current trend in oil prices, bubble or no bubble, I think a "peak oil" should be in the vicinity of $1,500 a barrel, or perhaps $2,000, 40 to 50 years from now. This is partly due to the fact that no matter how high petroleum prices will be, many governments will not let go of oil taxes. Governments in general are parasitic: their tax revenue increases as the suffering by the public increases, and they couldn't care less.
Half a century from now, many oil reserves in the world would be depleted and the world will consume more renewable energy sources, and the "peak price" will no longer be exceeded, succeeding oil prices can only go down.
--------
See also:
Oil Politics 1: Bush vs. Chavez? March 12, 2007
http://www.ft.com/cms/s/0/c2955660-2696-11dd-9c95-000077b07658.html .
I think it is not a far-out probability. Judging from traffic volume here in Metro Manila, seems that the volume of vehicles on regular working days at today's $120+ a barrel price were not different when oil prices were at $80 or $100 a barrel. Initial conclusion: oil demand is "inelastic" or not price-sensitive. Thus, it should be safe to assume that the volume of vehicles plying the streets and highways will be the same today as in the next few months even if oil prices will reach $140, $150, or more.
Why? Government over-regulation of public land transportation. Just when people want to leave their cars at home and take public transpo, more efficient and comfortable public land transpo are being discouraged from plying the roads due to government's difficult regulations, coupled with harassing and impounding so-called "illegal" or no-franchise public transpo, which reduces the volume of public land transpo in the cities, forcing many people to drive their cars.
In the US and many rich countries, it never fails to amaze me why the state and city governments cannot trust private enterprises to provide bus lines that compete among each other, because those local governments still monopolize buses! Because of government bus monopoly, the buses are few, they come far and several minutes from each other; the number of served routes are few, resulting in people waiting long for the buses. If you wait long and walk long distances, better ride a bicycle, or drive your car, even if oil prices keep on rising.
That is why governments are among the least credible institutions to "fight GHG emissions and climate change" because they are the main culprit why markets for public land transpo cannot function efficiently.
Meanwhile, I wrote this last week, May 13, 2008.
Peak Oil and Price Bubbles
World oil prices hit the $126/barrel mark last Friday, May 9. It seemed that last week, the commodity was rising by around $1/day on average.
There was one $200/barrel "peak oil" theory that I heard. Goldman Sachs predicted last week that the world will see that mark in 2 years. I feel that the world will see that mark earlier, less than 2 years, judging from the pace of current price hikes, so I think the "peak oil" theory of $200 a barrel is a joke. When the oil reaches $201 a barrel next year, it will further rise towards $300, and people will still be driving their cars -- even on weekends only to tour their families to visit other friends and relatives.
A friend, Cynthia D., noted that much of the latest increase in oil prices has been due to speculation. So many are just taking it for granted that the price of oil MUST continue increasing at the rate we have seen over the last two years. She thinks this has already passed the point which was the realistic value of oil and now we are in a bubble. And no matter what, bubbles eventually pop.
I think there is general recognition, although not a consensus yet, that current world oil prices are bubble prices and hence, will pop up someday. But the bigger bubble that helps prop oil prices is the US$. At Euro 1.60/US$ for instance, many people still think there is a lot of room for further depreciation of the US$ given the spend-and-spend, tax-and-borrow mentality of the US government, from federal to state to county/city levels, as well as the trade deficit. The more fiscal irresponsibility to be exhibited by the US federal and local governments and continuing trade deficit, the more room for $ depreciation.
So people who hold assets in US$ will feel "robbed" by inflation and currency depreciation. That is why many of them dump their $ and buy oil futures and other commodities (gold, copper, rice, coffee, corn, etc.) in order to protect their money.
Another problem is that while the oil price bubble continues, the political instabilities in some oil-producing countries (Nigeria, Venezuela, Iraq, Iran,...) also continue. So if you're a highly oil-dependent industry, better buy oil at bubble prices but you are guaranteed of delivery in the next 2 months at least, than wait for the bubble to pop up next week or next month and have no guaranteed delivery in the next 2 months at least.
The $200 "peak oil" theory is wrong. When you say "peak", no other price can top or exceed it. With the current trend in oil prices, bubble or no bubble, I think a "peak oil" should be in the vicinity of $1,500 a barrel, or perhaps $2,000, 40 to 50 years from now. This is partly due to the fact that no matter how high petroleum prices will be, many governments will not let go of oil taxes. Governments in general are parasitic: their tax revenue increases as the suffering by the public increases, and they couldn't care less.
Half a century from now, many oil reserves in the world would be depleted and the world will consume more renewable energy sources, and the "peak price" will no longer be exceeded, succeeding oil prices can only go down.
--------
See also:
Oil Politics 1: Bush vs. Chavez? March 12, 2007
Oil Politics 2: Oil prices and climate change, October 30, 2007
Oil Politics 3: $100/barrel Oil Price and Petroleum Taxes, November 13, 2007
Oil Politics 4: Is Expensive Oil Good for the World Economy?, March 18, 2008
Monday, May 19, 2008
Markets and natural disasters
In a discussion over the earthquake tragedy that happened in China just recently, killing more than 30,000 people, an Indian friend, Barun Mitra, asked, "In disaster relief, is it a case of market failure so government is seen as the only agency that can provide this service?"
My answer to Barun's question is NO. When Katrina hit New Orleans, I have read that private and voluntary relief work was larger than those given by FEMA + state governments + foreign governments. Here in the Philippines, when super-typhoons kill many people and knock down thousands of houses and trees, private relief is very often very fast, given by civic groups (rotary, lions, masons, etc.), religious and
church groups, media foundations, village associations, etc. This is because there is little if any, mistrust when one gives through these private and voluntary organizations. Where government entities are involved -- city or municipal or provincial or national government, public distrust is high. So government usually gives from its own "calamity fund" and attract little donation from private citizens. In addition, government relief would tend to be late because the Mayor or Governor or the President would sometimes be waiting for some media people to cover their
food and relief distribution.
In terms of weather forecasting, there's a Phil. government bureau doing this, but some people listen to CNN weather, a private news media, for additional info.
Meanwhile, The Foundation for Teaching Economics has created a curriculum addressing the role of the government and the market in dealing with natural disasters.
It's here,
http://fte.org/disasters/index.php
My answer to Barun's question is NO. When Katrina hit New Orleans, I have read that private and voluntary relief work was larger than those given by FEMA + state governments + foreign governments. Here in the Philippines, when super-typhoons kill many people and knock down thousands of houses and trees, private relief is very often very fast, given by civic groups (rotary, lions, masons, etc.), religious and
church groups, media foundations, village associations, etc. This is because there is little if any, mistrust when one gives through these private and voluntary organizations. Where government entities are involved -- city or municipal or provincial or national government, public distrust is high. So government usually gives from its own "calamity fund" and attract little donation from private citizens. In addition, government relief would tend to be late because the Mayor or Governor or the President would sometimes be waiting for some media people to cover their
food and relief distribution.
In terms of weather forecasting, there's a Phil. government bureau doing this, but some people listen to CNN weather, a private news media, for additional info.
Meanwhile, The Foundation for Teaching Economics has created a curriculum addressing the role of the government and the market in dealing with natural disasters.
It's here,
http://fte.org/disasters/index.php
Filipino biologist disputes climate change alarmism
news report yesterday in one Philippine newspaper about an interesting lecture last week, May 14, by the Director of the Institute of Biology, University of the Philippines (UP), Dr. Perry Ong. His paper is entitled, “Anthropogenic Global Warming: Beyond the Hype, Doing the Right Thing for the Right Reason.”
It was a “centennial lecture” in UP to commemorate the 100th anniversary of UP this year. Centennial lectures are big events, where well-known UP academics from different disciplines and colleges are selected to give a talk before a big crowd, including the President and other officials of the university, then it is broadcast in a video-conference type so that other faculty and students from other provincial campuses of UP around the country could hear the lecture live, and they can participate in the open forum, also live. Some media people also cover the event.
Here, Dr. Ong solidly disputed Al Gore's "Inconvenient truth" documentary and partly the IPCC report. These 2 papers look like political documents with scientific twang, urging governments to take more drastic political and economic actions like more environmental regulations to cut emissions. These regulations can take many forms, from higher (or retention of existing high) petroleum taxes to creation of “carbon tariff” (eco-protectionism against exports by emerging and industrializing countries), subsidies to bio-fuels, over-regulate if not kill coal power plants, and so on. These regulations look cute but they can cost us big amount of money, from higher taxes to higher prices (in rich countries) because of protectionism and higher unemployment and poverty (in developing countries) because of protectionism.
Consequently, Dr. Ong is proposing adaptation since it’s not us, humans, who are the main “culprit” for climate change. And if we look around us, it’s not only climate that change – the worlds’ volcanoes, tectonic plates and geological formations, human culture, human religion, human mobility across the globe, etc. are changing.
Incidentally, I'm also a UP alumni, but I'm no bio-logist, I'm a "small-state-logist", hehehe.
Below are some salient points of Dr. Ong’s lecture as reported in the newspaper. I don’t know what other local or international papers covered the event.
Nonoy
------------
Blaming man convenient excuse; UP prof cites Gore errors
By Jocelyn Uy
Philippine Daily Inquirer
05/18/2008
....Dr. Perry Ong, director of the Institute of Biology at the UP College of Science, said human-induced global warming was among many environmental problems that interacted in the “eternal tug of war” between global warming and cooling…
Ong said GHGs spawned by humans contribute merely 33 percent to global warming compared to the 67 percent traced to natural causes, which include changes in solar radiation, volcanic eruptions and the shifting of the Earth’s tilt and orbit.
“Humankind is guilty of a lot of crimes against the Earth and pumping greenhouse gases is just one among many,” Ong stressed….
Ong has a Ph.D. in science for behavioral ecology and evolutionary biology. He was given the Outstanding Young Scientist award by the National Academy of Science and Technology in 2000 for his contributions to the better understanding of Philippine wildlife diversity. He was a former representative of Conservation International.
In his talk, Ong disputed Gore’s worst-case scenarios in the documentary, noting that its distribution as an educational material by the United Kingdom Ministry of Education has been challenged in court.
Later, a UK court declared the documentary as a political tract, citing nine blunders in the film.
Ong listed the errors followed by his contentions:
1. Sea level rise of 20 feet or 7 meters.
The 2007 United Nations IPCC reported in its fourth assessment that the harshest picture was merely .59 m at the extreme range with a 4-degree Centigrade rise.
2. Evacuation of Pacific islanders to New Zealand.
Ong said there was no evidence that this happened.
3. Shut down of the ocean conveyor.
The IPCC said anthropogenic global warming could slow down but not entirely shut down the ocean conveyor.
4. Humans, by releasing carbon dioxide into the atmosphere, are causing global temperatures to increase. According to Ong, temperature rises first, then CO2 increases.
5. Melting snows of Mt. Kilimanjaro.
Ong said this was caused by other reasons, not just human causes.
6. Drying of Lake Chad.
Ong said no sufficient evidence was presented to establish that anthropogenic global warming caused this.
7. Hurricane Katrina.
The magnitude of the calamity was apparently caused by the US government’s neglect to fix the levee (an embankment built alongside a river to prevent flooding) before it broke.
8. Death of polar bears.
Ong said only one study was presented with four deaths and this did not support Gore’s claim.
9. Loss of coral reefs.
This could also be attributed to overfishing and pollution rather than greenhouse gases emitted by humans, according to Ong.
“Climate change has become a convenient excuse when there are other [environmental] issues that need to be addressed,” Ong said.
“If we disproportionately blame ourselves for [climate change], our response will be different … we should look at the [bigger picture] and address other issues,” he added.
* To view the full news report,
http://newsinfo.inquirer.net/inquirerheadlines/nation/view/20080518-137249/Blaming-man-convenient-excuse-UP-prof-cites-Gore-errors
It was a “centennial lecture” in UP to commemorate the 100th anniversary of UP this year. Centennial lectures are big events, where well-known UP academics from different disciplines and colleges are selected to give a talk before a big crowd, including the President and other officials of the university, then it is broadcast in a video-conference type so that other faculty and students from other provincial campuses of UP around the country could hear the lecture live, and they can participate in the open forum, also live. Some media people also cover the event.
Here, Dr. Ong solidly disputed Al Gore's "Inconvenient truth" documentary and partly the IPCC report. These 2 papers look like political documents with scientific twang, urging governments to take more drastic political and economic actions like more environmental regulations to cut emissions. These regulations can take many forms, from higher (or retention of existing high) petroleum taxes to creation of “carbon tariff” (eco-protectionism against exports by emerging and industrializing countries), subsidies to bio-fuels, over-regulate if not kill coal power plants, and so on. These regulations look cute but they can cost us big amount of money, from higher taxes to higher prices (in rich countries) because of protectionism and higher unemployment and poverty (in developing countries) because of protectionism.
Consequently, Dr. Ong is proposing adaptation since it’s not us, humans, who are the main “culprit” for climate change. And if we look around us, it’s not only climate that change – the worlds’ volcanoes, tectonic plates and geological formations, human culture, human religion, human mobility across the globe, etc. are changing.
Incidentally, I'm also a UP alumni, but I'm no bio-logist, I'm a "small-state-logist", hehehe.
Below are some salient points of Dr. Ong’s lecture as reported in the newspaper. I don’t know what other local or international papers covered the event.
Nonoy
------------
Blaming man convenient excuse; UP prof cites Gore errors
By Jocelyn Uy
Philippine Daily Inquirer
05/18/2008
....Dr. Perry Ong, director of the Institute of Biology at the UP College of Science, said human-induced global warming was among many environmental problems that interacted in the “eternal tug of war” between global warming and cooling…
Ong said GHGs spawned by humans contribute merely 33 percent to global warming compared to the 67 percent traced to natural causes, which include changes in solar radiation, volcanic eruptions and the shifting of the Earth’s tilt and orbit.
“Humankind is guilty of a lot of crimes against the Earth and pumping greenhouse gases is just one among many,” Ong stressed….
Ong has a Ph.D. in science for behavioral ecology and evolutionary biology. He was given the Outstanding Young Scientist award by the National Academy of Science and Technology in 2000 for his contributions to the better understanding of Philippine wildlife diversity. He was a former representative of Conservation International.
In his talk, Ong disputed Gore’s worst-case scenarios in the documentary, noting that its distribution as an educational material by the United Kingdom Ministry of Education has been challenged in court.
Later, a UK court declared the documentary as a political tract, citing nine blunders in the film.
Ong listed the errors followed by his contentions:
1. Sea level rise of 20 feet or 7 meters.
The 2007 United Nations IPCC reported in its fourth assessment that the harshest picture was merely .59 m at the extreme range with a 4-degree Centigrade rise.
2. Evacuation of Pacific islanders to New Zealand.
Ong said there was no evidence that this happened.
3. Shut down of the ocean conveyor.
The IPCC said anthropogenic global warming could slow down but not entirely shut down the ocean conveyor.
4. Humans, by releasing carbon dioxide into the atmosphere, are causing global temperatures to increase. According to Ong, temperature rises first, then CO2 increases.
5. Melting snows of Mt. Kilimanjaro.
Ong said this was caused by other reasons, not just human causes.
6. Drying of Lake Chad.
Ong said no sufficient evidence was presented to establish that anthropogenic global warming caused this.
7. Hurricane Katrina.
The magnitude of the calamity was apparently caused by the US government’s neglect to fix the levee (an embankment built alongside a river to prevent flooding) before it broke.
8. Death of polar bears.
Ong said only one study was presented with four deaths and this did not support Gore’s claim.
9. Loss of coral reefs.
This could also be attributed to overfishing and pollution rather than greenhouse gases emitted by humans, according to Ong.
“Climate change has become a convenient excuse when there are other [environmental] issues that need to be addressed,” Ong said.
“If we disproportionately blame ourselves for [climate change], our response will be different … we should look at the [bigger picture] and address other issues,” he added.
* To view the full news report,
http://newsinfo.inquirer.net/inquirerheadlines/nation/view/20080518-137249/Blaming-man-convenient-excuse-UP-prof-cites-Gore-errors
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