Uncontrolled passion for price control

Price control is price dictatorship. Or one form of product coercion, or industry over-regulation.

There are many factors why the price of a particular commodity or service is deemed “expensive” and “inaccessible”, especially to the poor. Foremost of which are (a) cost of production, including the cost of innovation and R&D, (b) cost of marketing and promotion, (c) cost of transportation, storage, distribution and retailing, (d) cost of taxes and regulatory fees by governments (national and local), (e) mark-up by producers and traders, depending on the extent of competition among suppliers and producers. Absence of any competition (monopoly) or just limited competition (oligopoly) means bigger mark-up.

Very often, government regulations directly or indirectly, determine the extent of competition or lack of it, in a particular industry or sector. Government franchising, for instance, creates monopolies. An electric cooperative, or a cable tv operator in a particular province or region, or tricycle route in a particular village or municipality, are given monopoly franchise by certain government agencies.
The drug price control policy is now five and a half (5 ½) months old since its implementation last August 15, 2009. There has been no serious study or assessment made by the implementing agency, the Department of Health (DOH) yet, on whether the policy has attained its primary objective – to make branded, popular and highly saleable medicines produced by multinational pharmaceutical companies, become more affordable and more accessible to the poor.


And yet, there are policy pronouncements by the DOH to issue another round of price control. Like this news report, “Therapeutic drug price cut considered”, January 28, 2010, http://www.bworldonline.com/main/content.php?id=5329

A Singaporean physician has written a number of observations about this Philippine government policy. The latest of his discussion was “The ultimate domino effect of ignorance”, January 28. 2010,
http://www.whitespacelab.com/2010/01/28/the-ultimate-chain-reaction-of-ignorance/


On the proposed round 2 of drug price control by the DOH reported in the news story above, the occasion was during the 3rd Medicines Transparency Alliance (MeTA) Philippines Forum this week, January 26-27. I have attended the 2-days forum held at Diamond Hotel in Manila. Drug price control, aka maximum retail price (MRP), was extensively discussed in the morning session of day 2, last January 27. The five speakers in that panel were leaders from the Cancer Warriors Foundation (CWF), Health Action Information Network (HAIN), Philippine Chamber of Pharmaceutical Industry (PCPI, the alliance of local pharma companies), the European Commission Technical Assistance - Health Sector Policy Support Program (ECTA-HSPSP), and Philippine Health Insurance Corporation (PhilHealth).

Drug price control is explicitly supported by the CWF leader, was deemed “important but not enough” by the leaders of HAIN and ECTA, was shot down by the PCPI leader, while the PhilHealth official has some preliminary but incomplete assessment of the policy yet.

Succeeding discussions during the open forum showed that the price control policy rests on a hollow base. A speaker from a medium-size drugstore chain, for instance, said that contrary to expectations that the volume of branded medicines by multinational pharmaceutical companies that were hit by the policy will increase, the lady said that their sales of such medicines even suffered a decline of 3 percent from mid-August 2009 to late January 2010. And why is this so?

It is because those who used to buy the affected drugs did not increase their purchase of said products. If they were taking one tablet per day, a 50 percent mandatory price cut did not cause them to buy two tablets per day. They just saved money. Meanwhile, the poor still found the 50 percent price cut not enough. Take amlodipine (most popular, branded drug is “Norvasc” made by Pfizer). Before the MRP, it was sold at Php44 per tablet. But the cheapest generic amlodipine, same dosage, was already selling at Php8 per tablet. So even at coercively reduced price of Php22 per tablet, it is still expensive for those who get another drug for the same disease at only Php8, or even Php11 per tablet.

In short, MRP benefited the rich and middle class, not the poor, who are the main target beneficiaries of the policy. Competition among pharma companies in the country made sure that poorer households and patients would have some alternative drugs at a lot cheaper price compared to branded and patented drugs. Besides, pharma industry leaders (both multinational and local) who spoke during the forum, pointed out that some small, local generic manufacturers whose drug prices are only about 70 percent lower than the branded products prior to MRP, suffered erosion of their market share as some of their customers shifted to the branded drugs that experienced mandatory price cut of 50 percent.

An official of another medium-size drugstore chain that I talked to said that their sales showed some increase in the volume of the branded drugs by multinational companies that were hit by MRP. Thus, local generic manufacturers were also badly hit by the policy. All drugstore managers (both chain stores and independent small ones) that I talked to during the forum said their sales as drugstores were badly hit too. Since they were advised by the DOH to keep their percentage mark-up, say 10 percent, before and after the MRP, their profit was affected. At 10 percent mark-up, they make Php5.00 gross profit from a drug selling at P50. When that drug’s price was forced by the government to be sold at only Php25, now they make only Php2.50 gross profit. And since drugstores are also forced by two laws to give mandatory 20 percent discount to (a) senior citizens and (b) persons with disabilities, the small mark-up they make from average customers can be wiped out by the mandatory 20 percent discount that the government mandated that drugstores alone should shoulder.

The uncontrolled passion for price control may be understandable if the intended target beneficiaries indeed benefit. But if it did not, such uncontrolled passion is no longer guided by the logic of economics and healthcare for the many. It is simply guided by politics and the deep desire for strong power to regulate other people’s lives and business.

Rule of Law 6: Discussions in Facebook

I got an email interview from an academic friend who also works as consultant at the ADB. His 2 questions were,

1. What, in your view, have been the top three impediments to rapid and broad-based (inclusive) growth in the Philippines?

2. If you were the President, what top three concrete measures (i.e., strategic measures which you believe that once achieved, would lead other issues to fall into place) would you implement to achieve rapid and broad-based (inclusive) growth for the Philippines?

I emailed back my answers to him. Then just curious, I posted yesterday morning in my facebook status to see some friends' comments. See those comments below.
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Nonoy Oplas:
A consultant of ADB asked, What's the top impediment to rapid growth in the Philippines? My answer: Lots of laws but no rule of law. Laws and prohibitions (no stealing, no killing, stop on red light, etc.) apply only to ordinary people but those in govt, especially the top leaders, are exempted from the law.

Franklin:
you bet.

Helio:
Love it Nonoy!

Nonoy:
Thanks. Half-implementation of the rule of law means govt. leaders can steal, can change rules and create new prohibitions arbitrarily, discouraging investments and job creation.

Rodney:
you hit the bull's eye, noy!

Norman:
Funny that she started out carrying the motto "Strong republic" 'no. So, does this mean you're vouching for Bayani? ;)

Rodney:
but the worst is colonialism... all the energy of the country is bent on consuming american cultural goods....

Porky:
mismo! :)

Leah:
korek ka jan pareng noy!! happy valentines!!

Jude:
And as somebody asked before, what needs to be done? :-)

John:
My answer was high barriers to entry and lack of competition. But you're right - Philippine government sucks at implementation and is obsessed with mere formalism (i.e. getting an E.O. or R.A. passed)

Nonoy:
Rule of law is a radical idea. No one is exempted from the law, no one can grant exemption from the law, and the law applies equally to unequal people. One implication is that the number of laws should be as few as possible. So, candidates who authored plenty of laws are dangerous.

Porky:
the sad truth is, some are more equal than others... :(

Antonia:
bingo! nothing's changed then eh...

Rica
The ADB Know it themselves. The top impediment to rapid growth is red tape and corruption. Probably even in that order.

Nonoy:
Yes, the ADB knows about the corruption and robbery, the absence of rule of law in the administration of public finance, happening in the countries they're lending to incl. the Phils., but generally keeps silent about it and just keeps lending.
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See also:
Rule of Law 5: Lawless State, Corruption and Coercion, August 01, 2009

Health Transparency 3: MeTA Forum January 2010 (Prevention vs. Medication)

The “3rd MeTA Forum” is on-going, January 26-27, at Diamond Hotel, Manila. It is sponsored by the MeTA Philippines.

I attended day 1 yesterday, and the topics were some updates on what MeTA International and MeTA Philippines have achieved so far in making medicines become more accessible to the poor. Other topics were procurement of essential medicines by the public sector (DOH-affiliated hospitals, local government units), and financing of such medicines.

There is a long and expanded discussion on medicines, their high prices compared to some Asian countries, the shenanigans in public procurement of medicines, other curative aspects of healthcare. Buried or not even mentioned in the discussions, is the preventive aspect of healthcare.

When people live in dirty places, say under a bridge or a creek with stagnant water, or shrubby areas that attract mosquitoes and various insects, people there, especially children, will be susceptible to various types of diseases. Or when people don’t observe proper hygiene like washing their hands well before eating. Or when people over-drink, over-smoke, over-eat fatty food, and so on.

So when people become sickly, the eyes of the public and political leaders are on medicines and the pharmaceutical companies that produce medicines.

Anyway, this is a forum by an organization with explicit and categorical mission to make access to quality medicines be easier to the poor. So we stick to the subject.

What I find rather strange, if not hypocritical, is the continued insistence that various government units, national and local, should be in the business of medicine procurement and distribution to the poor.

Last year in the 2nd MeTA Forum, there was a speaker from WB-Manila who documented instances of many drug warehouses by some big LGUs in the country – where rats, cockroaches, dust and garbage mix up in one room with useful drugs and expired drugs, and the room has no temperature control. In this case, even if we assume that there was no corruption and robbery in drug procurement, the big problem is the quality and efficacy of those medicines that LGUs will distribute to the public.

Yesterday, there was a session where speakers noted that drug procurement prices by government units are several times higher than those in a number of Asian countries. Which point to either, (a) certain government personnel are bloating their procurement amount so they can pocket and steal more money, or (b) pharma companies here, especially the multinationals, tend to price their products a lot higher in the Philippines than in other Asian countries. Or both happened.

If the main explanation is (a) above, then it’s one clear case of government failure, happening persistently. Then there should be some persecution of guilty parties in order to send a strong signal to other government personnel that stealing is heavily penalized, not forgotten. Then corruption in public procurement will be drastically reduced, if not controlled.

If the main explanation is (b) above, then it’s one clear case of the lack of competition among pharma companies, foreign and local. One policy implication is to encourage the entry of more players, both foreign and local, both manufacturers and traders (wholesalers, retailers).

Sadly, public policy actions in either (a) or (b) are not being done. Public procurement continues, foreign loans by the WB and other foreign aid institutions continue, poor health outcomes in the public continue, and endless taxation to pay for ever-rising expenditures and public debts on drug procurement and related healthcare items, continue.

So what is the result, the state of public health, especially the poor people, remains generally unchanged while public debts and taxes keep rising?

Cheap But Not Available

A presentation by Dr. Delen dela Paz of Health Action Information Network (HAIN) and also a faculty member at the UP College of Medicine, she mentioned one result of the HAIN medicines survey in 2009: essential generic drugs' prices in public drugstores are about 1/3 than prices in private drugstores. So many poor people go to government-run or sponsored "botika". Problem is that availability of such cheap drugs were only 31% in public outlets vs. 61% availability in private drugstores.

So, the hard lesson: cheap, yes, but less or not available.

Which is better: more expensive but available vs cheap but not available? If one is very sick, then price becomes a secondary issue compared to availability of a product that can make him/her well.

And this is one long-term effect of drug price control that advocates of the measure, including those in the government, seem not to realize: more effective drugs, more disease-killer medications, will theoretically be sold "cheaper" in the Philippines. But their availability is zero. Manufacturers and sellers of those drugs will sell such products in Singapore or Hong Kong or Japan or other Asian countries which have no drug price control policy, and not bring such products in countries where a price control is being implemented, or pulled out but can be re-implemented anytime, depending not on any health emergency, but on certain political emergencies of the big politicians and the administration in power. So desperate patients will be forced to purchase such drugs abroad, at a more expensive price because of the cost of shipping and storage.

Meanwhile, MeTA PHilippines leaders gave a press conference. Dr. Alberto Romualdez, former DOH Secretary and currently MeTA Philippines chairman, said that "More than half of the country’s annual expenditures for health products ranging from P100 billion to P150 billion are unnecessary because they hardly provide any therapeutic effect", see here, http://www.philstar.com/Article.aspx?articleId=544389

This is related to "irrational drug use" issue. People are buying medicines and vitamins even with little or no proven therapeutic effect simply because such drugs are cheap, or are heavily advertised (broadcast media, outdoor billboards, etc.).

One big local pharma company is the heaviest spender on drug advertising in the country.

US Debt 8: Big Government Getting Bigger, So Are Their Debt

There's a good article in The Economist this week, "The growth of the state: Leviathan stirs again".

This is chart 1 of the article, showing that big governments are getting bigger, especially UK and the US. http://www.economist.com/displayStory.cfm?story_id=15328727&source=hptextfeature.

Notice how total government spending were more than 50 percent of GDP in UK and France. While in the US, it has now reached 40 percent of GDP. I think the figures there are total for both national/federal and local government units (state, province, county, city, etc.).

Another chart projects the growth of US federal government alone. It is projected to grow to more than 40 percent of GDP by 2040. If spending by local governments are to be iincluded, which by themselves are also growing, then US total government spending should be similar to that currently in UK and France.


For the past few years, I noticed that The Economist was veering towards the big government philosophy. I seldom saw articles criticizing growing intervention in many governments around the world, especially the developed world. So it is refreshing to see this article. Among the relevant portions are the following:

"Interest groups spend hugely to try to affect political decisions: there are 1,800 registered lobbyists in the European Union, 5,000 in Canada and no fewer than 15,000 in America. Mr Bush’s energy bill was so influenced by lobbyists that John McCain dubbed it the “No Lobbyist Left Behind” act."

I highly recommend this article to my friends. It should be one consideration for them when they decide whom to vote in the coming national and local elections in the Philippines this coming May.

Meanwhile I wrote this last December 16, 2009:

Fiscal Deficit and Irresponsibility


This chart from The Economist, November 19, 2009,
Original data from the US Congressional Budget Office (CBO),
http://www.economist.com/displaystory.cfm?story_id=14903024&CFID=96654586&CFTOKEN=26430964

This is one face of fiscal irresponsibility, of persistent budget deficit (expenditures larger than revenues). For the past 29 years, except for a few years during the (ironically) Democrat leadership of former Pres. Bill Clinton, the federal government has been on deficit, stretching to even bigger deficit in the next 10 years, as projected by the CBO.

And note: this is federal deficit alone. Various local governments -- states, counties and cities -- also have their own set of deficit and rising public debt.

Fiscal deficit and irresponsibility. They are similar. Current over-spending and over-borrowing administrations will not be around anyway when it's time to pay off those huge debts.
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See also 
US Debt 1: How Bloated is the US Govt? May 08, 2006
US Debt 2: Private Sector Bailout of Government, September 26, 2008
US Debt 3: Crisis of Irresponsibility, October 13, 2008
US Debt 4: Obama and US Entitlement, November 11, 2008
US Debt 5: Obama's Taxes, Bail Outs, $56 Trillion Debt Bomb, November 13, 2008
US Debt 6: Stimulus Trap, $1.75 Trillion Deficit, and Taxation Blackhole, March 08, 2009
US Debt 7: US Budget Deficit and G8 Debt, July 29, 2009

Academic credentials vs integrity, the Presidential election

There are lots of noise to emphasize “academic credentials”, “legislative track record”, and related concerns in choosing the next President of the country in the coming May 2010 elections.

Those making such noise are more often than not, rooting for the candidate of the administration party. A UP law graduate, bar topnotcher, has Master of Laws from Harvard Law School, been a defense secretary, etc.

So what with all those Harvard degree/s? Gloria Magtatagal Arroyo also went to the US for her university studies where former US President Bill Clinton was her former classmate. And Gloria has a PhD Economics from UPSE.

Good academic performance, "efficiency and political experience" will kill you if the person has no integrity, like Gloria, like Marcos.

Any presidential candidate who talks about good governance but is silent about the corruption and dishonesty in the current government, has little integrity in the first place. Even if he has double masters and triple PhD somewhere.

About "legislative track record", my bias is: those who introduced the least number of new laws for more government intervention and regulation is the better candidate.
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The Liberal Party’s (LP) presidential candidate is keeping the liberal spirit. No price control, no IPR confiscation, no govt. auditing of private corporations in a particular industry, etc. That's great. See news report below.

LP's Presidential candidate is keeping the liberal spirit, while its VP candidate is moving away from it and embraced some populist-socialist policies. The two are united mainly on anti-corruption crusade.

http://www.philstar.com/Article.aspx?articleId=542640&publicationSubCategoryId=200

Noynoy assures free, fair competition for businessmen
By Dino Maragay (philstar.com) Updated January 21, 2010 03:54 PM

MANILA, Philippines – Wooing the nod of the business community, Liberal Party standard-bearer Sen. Benigno “Noynoy” Aquino III today vowed to provide businessmen a “level playing field” free of cronyism once he is elected as President in the May 2010 elections.

Speaking before members of the Makati Business Club (MBC) during the organization’ s inaugural “Presidential Candidate Series” forum, Aquino said if elected, his administration would not interfere with companies in carrying out their daily businesses.

“We will encourage free and fair competition in a level playing field. One not need be a crony in order to succeed in the field of business,” ....

“More importantly, (the) government will not compete with business. Nor will the government use its regulatory powers to extort, intimidate and harass,” Aquino added....

Warming scam and higher energy prices

Here's one negative effect of the man-made warming scam in the Philippines: higher electricity bills soon. We will be forced to pay extra for those expensive renewable energy sources with little and often unstable power supply. See this report today,
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http://www.business mirror.com. ph/home/top- news/21175- going-green- has-a-price- for-public. html

Going green has a price for public

Written by Paul Anthony A. Isla / Reporter
Wednesday, 20 January 2010 23:08

IF you are all for nature conservation and renewable energy, you cannot have them for free. You have to pay. The government will soon establish the rates that will be added to your power bills.
This was the message the government sent out on Wednesday as it spelled out the price for going green....
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Should energy prices rise because of supply-demand dynamics, so be it. For instance, the number of cars, buses, boats, tractors, malls, subdivisions, condo buildings, schools, etc. have doubled and the volume of energy demand has also doubled while supply can only increase by 25%, then prices will have to increase. Fine.

It's a different thing, however, when energy prices are rising because people are coerced and arm-twisted to subsidize more expensive energy sources even if cheaper, conventional energy sources are still available.

We have already parted with our tax money to support the various new climate bureaucracies in the Philippine government like
1. Presidential Adviser on climate change
2. Carbon cutting coalition
3. Presidential task force on climate change
4. Climate change commission
5. Renewable energy commission
6. other national climate bureaucracies?

Then such national climate bureaucracies are replicated at the local level, with several provincial, city and municipal task forces or offices on climate change. Then there are the expensive global meetings, national meetings, to "fight global warming and climate change", funded by who else, taxpayers' money.

The source of all those climate alarmism is the UN IPCC. Plus Al Gore, plus big international environmentalist groups like the World Wildlife Fund (WWF), Greenpeace, Oxfam and Friends of the Earth, plus Haribon, IBON, etc.

A friend commented that the man-made warming claim is part of the “free market of ideas”.

Wrong. The UN IPCC, Al Gore, Pachauri, etc. say there is no such thing. They have declared several times, "Debate is over. Science is settled. There is preponderance of evidence. It is man-made warming, you all shut up, listen to what we say on how to mitigate warming."

That's not free market of ideas. That's dictatorship, plain and simple. And the best way to do such ecological central planning is through the UN and the various national governments.
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On the “vanishing Himalayan Glacier" scandal, here's a brief background.

In 2007, IPCC produced a report saying something like "Himalayan glacier will be gone by 2035 if not sooner, if current warming will continue." The source of that report was the WWF 2005 report. Which WWF got from a 1999 article from the New Scientist journal. Which the NS reporter got from a phone conversation with a less-known Indian scientist, Syed Hasnain. Who later admitted that the claim was “speculation” and was not supported by any formal research.

A UN climate bureaucracy issued an alarmist report based on secondary, even tertiary, unverified source! see here,
http://wattsupwiththat.com/2010/01/17/told-ya-so-ipcc-to-retract-claim-on-himalayn-glacier-melt-pachauris-arrogance-claim-backfires/#more-15350

Now the IPCC retracted, but not entirely,

http://wattsupwiththat.com/2010/01/20/ipcc-admits-error-on-himalayan-glacier-melt-fiasco/

Drug price control and health socialism

While searching for materials on drug price control policy in google, I saw this entry in the LP website, "Roxas: where's the second list?"

The article was referring to the Senator's desire to see a second list or second round of drugs to be issued price control. The first list of drugs (21 molecules, nearly 100 drug preparations) was issued in late July 2009. Implementation of drug price control policy was August 15, 2009.

Drug price control, along with IPR-confiscation policies like compulsory licensing (CL), are examples of health socialism.

Price control policy says, "We don't care how excellent and revolutionary your products are. Their price should not be far from the price of the most mediocre products around. Their price should be socialized."

CL policy says, "We non-innovator companies declare upon you innovator companies: the high cost of your R&D and innovation, the losses in your failed researches and unsuccessful products marketed, are yours and yours alone. But your successful and highly saleable invention is also OUR invention."

That's socialism, plain and simple.

I have 3 compilation of my papers on the risks and disadvantages of drug price control policy, writtten over the second half of 2009. For those interested, these are:

1. "Essays on politicized drug pricing, part 2",
December 29, 2009 (25 pages, 17 short essays).

2. "Access to medicines through politics: Preliminary assessment of drug price control policy in the Philippines",
October 15, 2009 (33 pages incl tables and annexes), presented in a conference in Singapore last October.

3. "Essays on politicized drug pricing",
September 3, 2009 (24 pages),

It is dangerous to mix liberalism with socialism. Liberalism in its literal meaning, is to liberate, to free, to remove or limit coercion. Socialism in its literal meaning, is to socialize, to collectivize, by force and coercion.

It is unfortunate, therefore, that a key leader of a Liberal Party that is supposed to advance liberal politics and liberal economic policies, is advocating some populist and socialist policies.

Pol. Ideology 14: Liberalism, Democratism and Coercion

I just got a long comment from a reader, Terry Daly, in Part 1 of this discussion, posted last January 4, 2009.

Below are Terry’s comments, and further below, my additional discussion:

You confuse 'democratism' with 'democracy'. Fatal error.

As you say in your essay, 'democracy' is always prefaced by the words 'liberal', 'social', 'Christian', 'Moslem' et al. There is one major consequence to this. These ideologies and theologies always take precedence over 'democracy'. The 'democracy' element consists merely in individual citizens having one vote every five years - to elect a dictatorship (liberalist, socialist, Islamist, Christian et al), which is then at 'liberty' to act in blatant defiance of the will and wishes of the democratic majority in each and every piece of legislation it enacts and in each and every action it undertakes. Impressed? I'm not.

Take the present Obama health care legislation being rushed through the US Senate. All the polls show that the majority of the American people are against it. It's still being forced through. Take fundamental UN 'climate change' legislation. All the polls show the democratic majority of the people in America, Europe and many other places don't think such legislation is necessary. It's still being forced through. I could go on.

Now let me define 'democratism' for you. It's the will and rule of the democratic majority in all things at all times in every institution in every country. That's democratism. It hasn't happened yet. We're in the pre-democratism age.

Democratism as defined here, I'm sure you'll agree, bears no meaningful relationship to 'liberal democracy' or 'social democracy' or 'Islamic democracy' or 'Christian democracy'. These latter are all liberal, social, Islamic or Christian dictatorships, nothing more, nothing less.

I'm a democratist. I suggest you embrace democratism in place of your present classical liberalism. Classical liberalism has long ago lost the battle to social liberalism. Even if it hadn't lost the battle, classical liberalism in its heyday was never anything more than elective dictatorship - the antithesis of democratism - and therefore no different to contemporary social liberalism diktat and dictatorship.

Democratism as I have defined it here is a living, dynamic organism that gives each individual citizen a vote and a debate on everything, continuously, not merely once every five years to choose a dictatorship. Modern technology and the internet make all this possible. Everywhere.

Get ready. 2010 is about to witness the birth of democratism in Britain, America, Canada, Australia, Europe and elsewhere. From the bottom up.

Happy days.

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There is one very important concept in my earlier essay that Terry failed to notice or failed to discuss: coercion. The use or non-use of coercion separates the philosophies among liberalism, democratism, authoritarianism, and other ideologies.

Take this quote, for instance: “Everyone should eat and be entitled to quality education, quality healthcare.” The related or consequential quotes or policies will be, “No one should die early of certain diseases because he or his parents is/are poor.”

In a society of no coercion to materialize such vision, each able-bodied and able-minded person should have a job and/or sufficient savings. Other people will have extra resources to take care of people with special needs, like people with physical and mental problems (the blind, authestic, paralyzed, etc.) and with special health needs.

In a society of institutionalized coercion, even the lazy and irresponsible who are very articulate and influential in political lobbying, will eat and be entitled to certain social and economic subsidies, courtesy of governments (democratic, authoritarian, etc.). Governments do this via high and multiple taxation, then redistribute the tax revenues from the industrious to the less-industrious and the various bureaucracies in government agencies that will implement the multiple tax collection and monitoring, agencies that will implement the distribution of subsidies and perks.

Barun Mitra of Liberty Institute in Delhi, India has a good but different definition of democracy. Barun wrote,

Democracy is Not majority rule. Democracy is the recognition and respect of dissent; democracy is appreciation of the rule of law; democracy is protection of minority opinion as the individual is the smallest minority; democracy is recognition of individual rights and property rights.

See his presentation here,

Compare Barun’s definition of democracy with Terry’s. Terry wrote above,

“Democratism… is… the will and rule of the democratic majority in all things at all times in every institution in every country.”

This “rule of the majority” is what can be dangerous. As Barun argued, the smallest minority is the individual. If the majority is affiliated with a particular religion and one or two person/s believe in another religion, then religious persecution is possible to implement the will and rule of the majority.

Is a society of zero or little coercion possible?

Definitely. We are actually seeing and experiencing it everyday. When we go out to buy food outside, thousands of food vendors, food shops, food manufacturers and distributors, are competing with each other to get our attention, to get our patronage and support. There is zero external coercion involve when we choose milk C over milk A, B, D, E, F, etc.

This society is the free market out there. Those who fail to get enough consumer attention and support will later be forced to close shop, and/or be forced to move to another industry or sub-industry and try their luck in attracting customers and clients there.

So a vote for classical liberalism and individual liberty is a vote for a society of less government intervention, less government regulation and taxation, and a society of more personal and parental responsibility.

Authoritarianism need not be practiced by a political minority, say a dictatorship with a big army and big police. Authoritarianism can also be practiced by the majority, by enacting into laws certain public policy measures that subsidize and favor certain sectors in society, while over-taxing and over-regulating other sectors of society.
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A related note that I wrote more than two weeks ago, also discussing Barun's presentation:

Democracy and Coercion

January 02, 2010

A good friend of mine from India, Barun Mitra, heads the Liberty Institute in Delhi. He has written and talked a number of times on liberty and democracy. During the (3rd) Pacific Rim Conference in Singapore last october 14-15, Barun was the 1st speaker of the 1st panel of the conference. Barun spoke about democracy and why it's not equivalent to mob rule and the majority oppressing the minority (the smallest minority is the individual). During the open forum, more than half of the questions were directed to Barun :-)

I agree with Barun that democracy should be taken wholistically. Both economic and politicial democracy. But as I argued earlier, democracy per se, is not the problem or the solution. It's the coercion, state coercion using the laws, law enforcement agencies (police, armed forces, prison system), the legal system (courts and appeal courts), that makes whatever economic and political system potentially dangerous to the individual.

Most or all people will agree to the statement, "everyone should eat properly and have decent life."

If there was no state coercion involved, then it is assumed that everyone, the able-bodied and able-minded people, should work, so they will have money and resources to eat and live a decent life for their family and community. But ever since coercion was invented as a necessary part of government, certain sectors of society have mastered the art of political lobbying, not real working, as a way to feed themselves, their family, and other sectors.

First there is a big group of people who produce not a single kilo of food or transport a single person to do a service for a fee; these are the people who have become full time regulators and government administrators all their lives.

Second, there is another big group of people who rely on welfare and transfers. They may have zero work or work very little, but the entitlement system in society allows them to eat and have regular form of allowance and health insurance.

The US is the biggest democracy (or 2nd biggest, next to India?) in the world. Yet we hear many voices complaining that too much entitlement, expensive welfare system, all enabled by coercion in a democracy, is dragging the US economy and leaving a huge dent on the democractic process.

In a free market outside of government regulations and restrictions, there is full democracy without coercion. People patronize a particular food shop or barber shop or clothes and shoes shop, while ignoring the other shops. This forces the ignored ones to further improve their services or bring down their prices to attract more buyers.

So full democracy without or minimal coercion is possible. In government system, there may be full democracy (still subject to debate) but there is always coercion involved. And this makes the essence of government democracy questionable in the first place.

Anyway, just pondering on that nagging issue why I think it is coercion, not democracy or other forms of government structures and policies, that should concern us.

Of course I am not saying that it is possible to banish coercion from the face of the earth. There WILL always be coercion, happening in our daily lives, mostly done at the micro and household level. For instance, if our kids will not stop watching tv and they don't do their school assignment or will not go to bed early, we use our authority as parents or guardians to coerce those kids to stop watching tv all night. That's micro level of coercion. So as Hayek said, coercion is a matter of degree. Some coercion are at the household level, some at the societal level.

Some government coercion are useful and necessary, like the law against killing and murder, law against stealing and kidnapping, law against counterfeit and substandard medicines, law against adulterated and expired food and drinks, law against air and water pollution, and so on. They are deemed useful because they are meant to protect the citizens' right to life, right to private property, right to liberty and dignity.

It is those new set of coercion and social entitlement that has become problematic for social thinkers.

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See also:

Pol. Ideology 8: Ideas on Liberty, September 15, 2007
Pol. Ideology 9: Liberty and Choice, Atlanta and HK Conferences, June 09, 2008
Pol. Ideology 10: Joe Stiglitz and the Market, December 16, 2008

Pol. Ideology 11: Liberalism, Democratism & Authoritarianism, January 04, 2009

Pol. Ideology 12: Lao Tzu, Cooperative Individualism, February 07, 2009

Pol. Ideology 13: Liberty and Liberty Forum, the LP, March 19, 2009