Fat-Free Econ 34: Rise in Unemployment Rate Not Exactly Bad

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

http://www.interaksyon.com/business/50817/fat-free-economics--why-a-rise-in-unemployment-rate-is-not-exactly-bad
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The National Statistics Office (NSO) released the October 2012 quarterly labor force survey (LFS) results, the last for this year.  What was highlighted was the increase in unemployment rate from 6.4 percent in October 2011 to 6.8 percent this year.

This did not conform with the high economic growth in the third quarter, when the Philippines' gross domestic product (GDP) grew a surprising 7.1 percent, the second highest in Asia. If growth was high, it means that there were lots of economic activities that occurred over the last quarter and hence, more jobs must have been created, whether temporary or permanent. So what went wrong?

In the table below are the numbers over the past three years. We show both the actual numbers and percentages. Take note that in the fifth column, the increase or decrease in absolute numbers from October 2011 to October 2012.

Source: NSO, www.census.gov.ph

Here are the notable points:

a) There were 1.08 million new Filipinos who entered the labor force, whether looking for work, already working, or still studying.

b) Labor force participation though has declined by 0.76 million, meaning less people are actually working or are seeking work, or more people have retooled themselves by going back to school and postponed entering the labor force. The significant decline in labor force participation rate from 66.3 percent to 63.9 percent also shows this.

c) Employed people - whether employers, employees, self-employed or unpaid - declined by 0.88 million.  And whether fully employed or underemployed, which is a bit worrying.

d) Underemployed people also declined by 0.22 million, which implies that the fully employed people declined by 0.66 million.

e) Unemployed people increased by 0.12 million. We will have a longer discussion of the term “unemployed” below.

f) Unemployed and underemployed combined declined by 0.1 million people.

From a layman’s perspective, points (b), (c) and (e) are bad news, while points (a), (d) and (f) are good news. 

We now compare this year’s numbers with those two years ago: (a) employment rate is higher, (b) underemployment rate is lower, and (c) unemployment rate is lower. This means the labor force data are better this year compared to two years ago, but mixed compared to last year.

The NSO has defined the unemployed people as: “persons who are 15 years and over as of their last birthday and are reported as: (1) without work and currently available for work and seeking work; or (2) without work and currently available for work but not seeking work for the following reasons: ( a) Tired/believed no work available, (b)  Awaiting results of previous job application, (c) Temporary illness/disability, (d) Bad weather, (e) Waiting for rehire/job recall.”

This does not easily conform with the layman definition of an unemployed as someone who is “seeking work but is not hired”, as the above definition includes people who are “not seeking work” because of the five reasons given. Which means that many of the unemployed are people who generally have chosen to be unemployed temporarily. Someone who is offered to work at say, P30,000 per month gross pay has chosen to be unemployed temporarily because he is awaiting possible employment in another company that will give him P40,000 or higher per month in gross pay.

In this case, to be “unemployed” is not exactly a bad situation. It is “unemployment by choice” and not due to structural problems in the economy.

It is highly probable that many Filipinos have opted to be unemployed temporarily, say at the time the survey was conducted because they were awaiting job placement or hiring abroad. They want to be ready to leave any day without the hassle of seeking management permission to resign, get office clearance and related burdens.

The figures for OFW remittances seem to conform with this hypothesis: $19.24 billion in 2009, $20.74 billion in 2010, $22.35 billion in 2011, and projected to reach $24-plus billion this year. There is  generally higher pay abroad than here, despite the continued appreciation of the peso relative to the US dollar and other major currencies.

In short, a higher “reservation wage” abroad or here - as a result of anticipated faster economic growth and more business activities - is among the reasons why many Filipinos have opted to be temporarily unemployed. An increase in unemployment rate from 6.4 to 6.8 percent does not appear to be bad after all.

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See also:
Fat-Free Econ 30: BPOs and Obama, November 14, 2012

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

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

Fat-Free Econ 33: Institutions and Why Governments Fail, December 09, 2012

Labor Econ 6: Labor Rights and Employee Forever, May 05, 2012

Labor Econ 7: Unemployment in Advance Economies, May 06, 2012

Labor Econ 8: SWS on Unemployment Survey, June 08, 2012

Labor Econ 9: On 4-months Maternity Leave, June 14, 2012

Christmas Notes 7: UP Lantern Parade 2012

* Notes: (1) This is my article today in the online magazine, 

http://thelobbyist.biz/index.php/perspectives/less-government/item/137-up-lantern-parade
(2) Photos below are not part of the original article. First group of photos I got from interaksyon.com, the second group from gma news.
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 The University of the Philippines (UP) lantern parade is among the unique annual festival held in the country. Participants are all colleges of the UP Diliman campus, the major offices like the Office of the UP President, the UP Concert Chorus, the nearby campuses like UP Manila and UP Pampanga, and some student organizations based in UP Diliman.

There are thousands of participants as the different colleges bring in their faculty members and students, they have modest lanterns or exhibits which are either pushed or carried by people or mounted on a truck or a pick up. And there are several more thousands of spectators and visitors. It is a festive and joyful exercise done every year.

Last Friday night, December 14, I attended the parade, after more than a decade of missing it. I brought my  family and even my two young girls appreciated the various lanterns and the festivities. We sat at the Palma Hall steps where parade participants show off their wares and talents.

The most impressive lanterns for me are the following.

First, the UP College of Fine Arts (CFA). This group is a hands down winner each year in the parade competition. Since last year I think, they have been “disallowed” in the prize category because no one, not a single college can put up a serious competition to them. But they are given a special award or citation for their endless and non-tiring effort at entertaining the public. This year, they have a long parade of various lanterns, ranging from scary characters like a monster cockroach and monster “”aliens”, to children characters like tinker bell and forest fairies, to airplanes and different fishes, large and small. The CFA guys are really cool. Their annual participation is almost always the “highlight” of the UP lantern parade.

 

Second, the UP College of Human Kinetics (CHK). The participation and exhibition by the world famous UP Pep Squad was really awesome. Beautiful young men and women performing high acrobatics like throwing three girls high up in the air, the girls make 2 or 3 somersaults before landing on their back in the arms of 4 boys catching them. Even my two young girls were speechless at those acrobatic performance. The college also paraded the various UP sports teams – swimmers, divers, rowers, others.

Third, the UP College of Engineering (CE). For one, they have the most number of participants, hundreds of students from the different departments (Chemical, Industrial, Civil, Mining, etc.) participated and have their respective lanterns. One department showed a transformer mounted on a truck: an innocent-looking jeepney that later transformed into a giant robot standing high in a ready to fight stance, fascinating.

 

Fourth, the UP Babaylan. This is an organization of gays, lesbians, transgenders. Their costume was fantastic, some in two-piece attire. One participant looked like a real woman. They are cool and are very open about their chosen gender.

My college, the UP School of Economics (UPSE) also participated, the Dean and some faculty members were there, plus school administration staff and many students. They brought a replica of a bull mounted on a truck, to represent the bullish picture of the economy.

Now the lousy participants. I say lousy because there were indeed a bore.

First, the League of Filipino Students (LFS) and other activist groups. They held a mini-rally in front of ordinary audience and spectators, chanted the usual “Imperyalismo ibagsak, burukrata kapitalismo ibagsak, pyudalismo ibagsak” and the usual “Down with the Aquino-US regime” poster. I was a typical UP student activist too in the 80s, and chanting those slogans appeared somehow “relevant” in the 80s with Marcos still our President. I was amazed that nearly three decades have passed, the sloganeering of the student activists have not changed a bit. I graduated from UPSE with many if not all of us submitting our undergrad thesis written in a manual typewriter. There were no cell phones, not even pagers and beepers that time. Now gadgets are so modern, college students do not even know what a typewriter or a pager looks like.

These activists also held their mini rally for about 20 minutes or more, thereby preventing the parade to move on faster. The UP Babaylan and the CFA were among those held up by the boorish activists.

Second, the Aurora rallyists opposing the APECO project in the province. I sympathize with their demands, but holding also a mini-rally for several minutes at the lantern parade, is plain political opportunism. Holding rallies in many cities and later in Malacanang, in front of dozens of tv cameras and media people were not enough, they have to hold another rally in a Christmas festivity in UP.

There were other activist groups that also joined the parade, with their respective demands like “secure housing in UP” for non-UP related settlers, wow.

Such is the UP lantern parade. It attracts the most creative minds in UP like those from the CFA and CHK in showing off their creativity and talent. But it also attracts mediocre minds to hostage a festive mood for their political sloganeering and campaigns.

I hope that these political opportunists would have some sense of respect for the spectators and visitors. They can join the parade as no one seems to be banned or prohibited from participating in the lantern parade, but they can minimize the mediocre exhibition by minimizing the time they bore the ordinary spectators.

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See also:
Christmas Notes 1: Yuletide in Middle Earth, November 26, 2011
Christmas Notes 2: Econ. Songs + Christmas, December 01, 2011
Christmas Notes 3: December and the Filipinos, December 03, 2011
Christmas Notes 4: Thanks to International Policy Network (IPN), December 14, 2011
Christmas Notes 5: Flooding and Parenthood, December 23, 2011
Christmas Notes 6: Thoughts on 3 Christmas, December 25, 2011

CSOs and State 16: The Integrity Initiative

Government is force and coercion. It is an institution created by men and women mainly to protect themselves, their families and friends, their properties, from bullies among the population. It was a good "social contract" where people surrender a portion of their individual freedom to the government, like the "freedom to revenge" and physically attack those who committed physical aggression against them and their properties. Government and its courts, justice and police system is supposed to do that job, to penalize those who disrespect other people's right to peaceful living.

But governments since then have been expanding and getting larger to monster institutions. Rule of law was supplanted by rule of men, and some bullies, thieves and other criminals have captured government power so they can become bigger bullies protected by the government itself and its armed forces. Corruption and plunder is among the byproducts of this situation. Another is large-scale human rights violations, imprisonment if not murder of those who protest dictatorial and despotic governments.

In order to minimize or avoid this situation, government itself created certain offices and mechanisms for self-policing and self-regulation. Thus, the separation of power among the Executive, Legislative and Judiciary branches of government, fiscal and oversight function of opposition political parties, and creation of anti-corruption Commissions, Bureaus or Task Forces within the government. But these offices did not do their function in many countries like the Philippines and thus, corruption has become the norm rather than the exception in many countries and governments. 

Non-government mechanisms and initiatives have sprang up recently in many countries like the Philippines, to help fight government corruption. The approach is different than the usual anti-corruption campaigns. Instead of pressuring government to limit corruption from within, the move is to pressure private enterprises and individuals to stop bribery with government offices and even to report corrupt and extortion practices by certain government officials.

This is the thrust of a new group called the Integrity Initiative (II). I have attended a talk by II Chairman, Ramon del Rosario of the Phinma Group of Companies last month. It was held at the Asian Institute of Management (AIM) in Makati and was mainly sponsored by the Pharmaceutical and Healthcare Association of the Philippines (PHAP) and its partner companies, NGOs and government offices like the DOH.. I liked his talk, short (15 minutes or less), extemporaneous and direct. He said that from an initial 100 company-signatories in 2010, II has grown to more than 1,500 signatory companies. They are now piloting two procedures. One is an Integrity Assessment where companies self-declare certain practices to avoid or minimize corruption with government, and two, an Integrity Validation to be done by a third party and check if those self declaration by a signatory company are correct or not.

During the open forum, I spoke and praised this initiative as truly civil society. It's a unilateral action by the private enterprises and groups themselves to start cleaning up their own ranks first, then demand that government should clean its ranks too. This will be a good branding for company-signatories and have obeyed the processes of II. Thus, II-affiliated companies can "brag" or openly declare that they are doing their businesses in transparent manner and comply with certain government regulations. This can be considered as a trademark by which other companies (suppliers and buyers) and ordinary consumers can hold on and expect that what those companies say are indeed true. A pressure from the outside by a united group of companies from different sectors or fields of business can exert substantial change in government.

I also suggested that while there are industry associations in each sector or industry, some of those associations do not have their own code of ethics and self-regulation mechanisms to avoid unethical marketing and advertising of their products and services and hence, cheat on their consumers. So II can possibly create committees to represent the different sectors and industries that can exert if not impose a code of ethics for member companies in each committee. 

I cited a story of an anesthesiologist friend who complained that they caught one local pharma who sold a counterfeit or substandard anesthesia to one hospital. An anesthesia, if in good standard and effective, is supposed to take effect within minutes to a patient. So for a patient to undergo surgery, he is supposed to feel numbed and be asleep within minutes before the knife will slice his/her tummy or other body parts. But the patient was wide awake, did not get numbed, and it is impossible to do the surgery otherwise the patient will be shouting in deep pain. So the surgeons and anesthesiologists have to scamper for a new set of anesthesia before the surgery can proceed. Surgery done. After that, they reported the incident to the FDA through a very confidential letter, and the pharma company later knew of such letter complaint, meaning they have a "mole" within the FDA and threatened to sue the complaining physicians. 

There were other comments from the audience like those from Leonie Ocampo of the Philippine Pharmacists Association (PPhA). Later, Doc Virgie Ala, the director of DOH-NCPAM, came to represent DOH Assistant Secretary Madz Valera who was supposed to give a talk too in that event, but was not able to come due to a sudden Senate Committee meeting that she has to attend. Doc Virgie expressed support for such civil society initiative like the II, as it would be easier for government offices to reduce corruption if there is such initiative from the private sector.

Civil society organizations (CSOs) and State, not just market and state, is a good initiative to limit government power and coercion. CSOs should be independent of government whenever possible, and not just extension of government like what many NGOs, media and academic people are doing. CSOs should be independent of government funding too, in order to ensure such organizational and philosophical independent from the state.

Meanwhile, PHAP Executive Director Reiner Gloor wrote about that event, I just saw it recently, paper elow. Photos here, he's rightmost. Doc Virgie Ala is to my left. Cecile Sison and former Gov. Obet Pagdanganan of MeTA Philippines, Leonie Ocampo to my right. Lower photos, Mon del Rosario of II and Phinma, and Doc Virgie Ala of DOH-NCPAM.

http://www.bworldonline.com/weekender/content.php?id=62191

The Integrity Pledge

Posted on 05:40 PM, November 29, 2012

Medicine Cabinet -- Reiner W. Gloor

IN 2003, world leaders adopted the United Nations Convention Against Corruption and designated Dec. 9 of each year as International Anti-Corruption Day in a bid to promote a culture that values ethical behavior.

Believing that corruption undermines social progress and results in inequality, the Aquino Administration adopted a platform of government that embraces integrity in public leadership. Early this month, President Benigno S. C. Aquino III. issued Proclamation 506 declaring Dec. 9 as National Anti-Corruption Day. In the proclamation he signed, the President said that corruption undermines the institutions and values of democracy and ethical values as well as jeopardizes sustainable development and the rule of law.

The drive to promote integrity has also been undertaken by the private sector recognizing that the government cannot do it alone. In response to the government’s campaign on good governance, the Makati Business Club (MBC), together with several other organizations, launched the Integrity Initiative (II), a multi-sectoral campaign that seeks to ultimately eradicate the corruption that has worsened poverty and stunted “the development of a competitive business environment that operates on a level playing field.”

Blog Stats, On Reaching 500,000 Pageviews

Today, around 4pm Manila time, this blog has reached the half million pageviews mark. Not a fantastic achievement, just a modest one, but something to celebrate somehow.

Since the counter started in July 01, 2010, it took 2 1/2 years to reach the half-million mark. If this trend continues, then the 1 million pageviews mark will be reached in mid-2015.

Since about two months ago, there was a significant decline in viewership, from about 800+ pageviews a day on weekdays and some 500+ a day on weekends, viewership recently has gone down to only 300-400 a day on weekdays and less than 300 a day on weekends. I do not know the reason why, perhaps some of the regular blog readers have quit visiting the site, or some search engines have stopped referring the site, or other reasons.

Nonetheless, it is the freedom of expression that gives me happiness to keep writing. One cannot write sensibly if he has not read or watched or discussed sensibly the subject, as writing is a mental challenge to the writer to integrate many of the things that he/she has learned and discovered.  So the process of reading, comprehending, summarizing, integrating and later writing of ideas, gives me a natural "high".

Thanks readers.
 

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I posted this last July 01, 2012:

Blog Stats, On Reaching 400,000 Pageviews

The blog stats counter started only in July 2010 or exactly two years ago, although I started blogging in October 2005. Anyway, it feels good that this blog has reached the 400,000 pageviews mark after 24 months, as of 1:40 am, July 01, 2012 Manila time, or 5:40 pm, June 30, 2012, GMT.

Coincidence? Somehow yes. But here's a disclosure: Five days ago, sensing that the stats might not reach the 400k mark, probably only 399,000+, I asked a few friends if they can help by visiting this site daily for the next 4-5 days even if they did not do so before. I told them there's nothing really special, I just wanted to see the 400k mark by end-June 2012 or exactly 24 months after the blog counter started ticking, a shallow concern and request. Thank you guys, you know who you are.

Population Control 16: RH Bill as HR, Coercion as Choice

The Reproductive Health (RH) bill as a human right (RH) was passed on second reading at the House of Representatives early this morning. It was a close fight and debate, 113 Yes and 104 No. I did not expect that. I thought that it would be something like 150+ Yes and 60+ No, or other overwhelming figures in favor of Yes to RH bill. What happened? 

Nonetheless, here are my pieces of small debates in facebook recently:

A friend Louie Montemar posted,  "Ayon sa aking isang maaasahang Oracle, papasa ang RH Bill na yan. Manalig kayo mga kasama! :)" 

I replied,
Ako rin, kumbinsido magiging batas yan. Sa dami ng Pilipino na ang pag iisip eh, bawat kembot ng buhay, ke lapis or libro or condoms man yan, dapat may gobyerno, magiging batas talaga yan. May momentum na ang pro-BIG government. Ke libro or medicines, kalsada, trains, ospital, condoms or pills, gobyerno dapat. Kaya puro tax-tax-tax, fees-fees-fees tayo nyan, sa dami ng mga nakatunganga kakahintay kung ano iaabot ng gobyerno sa kanila ng libre.

Pero madi-disappoint din yong maraming nakatunganga. Kasi bago dumating sa kanila ang daming hingi nila na libre, syempre dadaan muna sa milya-milyang burukrasya. From Congress to DOH and DepEd to LGUs to rural govt clinics bago dumating sa mga tao. Sa sweldo, meetings and junkets pa lang, di pa kasama nakaw at korupsyon, konti na lang matitira sa mga nakatunganga.

Then Ador replied, 
Wow, never thought I would encounter a GOP/Tea-Party-ish anti-big-government argument. Here's a basic arithmetic question: What is more expensive? Spending on a pad of pills or raising a baby? A pack of condoms or lifetime HIV (hepa-B,herpes, etc.) treatment? Educating a couple about natural and/or artificial family planning methods or educating, feeding, treating, and supporting the welfare of additional children beyond their means?

And I replied back,
Wow, raising a baby like all of us once is now an "expensive" undertaking and by implicatiom, a liability. People are liabilities? Incl yourselves? thats news. In my book the real liabilities are thieves and plunderers, killers and rapists, kidnappers and carnappers, both in the private and government sectors. Government should go after these criminals,that's what our taxes are meant for, not to demonize new babies who will become the future workers , entrepreneurs, teachers, bus drivers, nurses, etc.

There is prevalent or dominant thinking that government is the only entity that can expand choice for couples, no one else, so everyone, whether they like it or not, should send more money to the government. This is pro-choice, cool.

That "RH is pro choice" argument is simplistic. Here's why.

a. Government to create more state universities in Metro Manila or in other provinces, funded by taxes of course. Then government will say, "It's up to students and their parents whether they will enroll in those new state universities or not, they are not coerced to do so. We are only expanding their choices in university education."

b. Government to put up a new bus corporation or a jeepney corporation or taxi corporation and offer rides at subsidized fares then declare, "It's up to passengers whether they will ride those government buses, jeepneys or taxis or not, they are not coerced to do so. We are only expanding passengers' choices."

And many other possible cases where government will provide a product or service at low or zero cost to the public and say that government is "expanding choices" for the public. Cool. People will grab freebies, no need to conduct a survey for that. But the only people who have zero choice, nada, zero, are the taxpayers, especially in the private sector, the fixed income earners. So, say that again: government is expanding choices to the people? 

Anoter friend, Karla Montemayor of Akbayan posted,
Ayaw niyo ng contraception, huwag niyong gamitin! Pero wala kayong pakialam at poder sa katawan at buhay ng mga Pinoy.

My reply,
Eto rin. Kung gusto nyo mamudmod ng condpms and pills, bumili kayo. Bakit pati bulsa ng mga ayaw, gusto nyo lusubin? Bakit sila gawad kalinga, gusto nila build houses for the poor, e di naman humingi ng GK bill as precondition? Bakit kailangan sumipsip sa state coercion mga civil society?

Lovers of more government think that reproductive health or public health in general should be government responsibility and should not be dependent on charity or volunteerism. That's their disease, deep distrust in civil society volunteerism and high trust of government coercion, yet call themselves as civil society leaders, whew.

The DOH is actually spending a lot on RH ever since. In the DOH 2013 budget for instance, it has alloted P2.54 billion for various RH services, P539 M of which are just for pills, DMPA vials, IUD, etc. The DOH has enough leeway to spend on these things even without the RH bill. 

I also think that there is over-spending in public health already. If you combine health spending of DOH + PhilHealth + LGUs + other national government agencies (UP Philippine General Hospital AFP hospital, PNP hospital, Veterans hosp, health clinics in almost all agencies) + PCSO + medical missions by other agencies, government funding is already big and not just 3+ percent of GDP, which I think refers only to DOH budget. UP PGH budget, about P1+ billion a year, is charged to UP budget, not DOH budget. The same for AFP hospital, PMA hospital in baguio, etc. which are charged to DND budget, PNP hospital charged to DILG budget, LGUs hospitals. Manila City govt alone runs about 7 hospitals. I read that there are about 618 government hospitals nationwide. These are not enough, all of them incl. DOH have little or no RH services to the poor, so there should be another legislation for more RH spending, cool. 


Anyway, panalo na ang pro state coercion, as expected. Lahat gobyerno kung pwede lang. Ngayon kapag sila ay aangal sa more taxes (cell phone text tax is already waiting after the sin tax hike), more government fees, there should be something wrong with them. Government has no money of its own except what it takes by force from the productive sectors of society.

So, sige lang, gastos lang ng gastos. Where to find the money to cover for the ever-rising public debt, bahala na si Batman.

Meanwhile in the Senate, I think it will also be passed there and soon, bicameral conference committee meetings will be held to produce an RH law. One downside for the pro-RH camp is that some rigid provisions like mandatory sex education from Grade 5 to high school, mandatory pro-bono services for all OB professionals, something like at least 48 hours a year, and mandatory RH services for pregnant personnel in private companies, have been removed or will be removed. I think this is a good compromise, somehow. 

So a new RH law will simply be formalizing and expanding what the DOH, PhilHealth, LGUs and other government agencies are already doing anyway.  .  
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See also:
Population Control 11: Church Coercion vs. State Coercion, August 12, 2012
Population Control 12: RH Bill will Become a Law, August 17, 2012
Population Control 13: Excess People are Liabilities kuno, August 25, 2012
Population Control 14: Lessons from the Cybercrime Law, October 08, 2012
Population Control 15: Debate, Debate, on the RH Bill, December 03, 2012

Senior Citizens Discount 3: Sharing of Mandatory Discounts on Medicines of Senior Citizens

Republic Act (RA) 9994 or the Expanded Senior Citizens Act of 2010 provides for these new benefits to resident citizens of the Philippines who are 60 years old and above:

"SEC. 4. Privileges for the Senior Citizens. -

The senior citizens shall be entitled to the following:

"(a) the grant of twenty percent (20%) discount and exemption from the value -added tax (VAT), if applicable, on the sale of the following goods and services from all establishments, for the exclusive use and enjoyment or availment of the senior citizen

"(1) on the purchase of medicines, including the purchase of influenza and pnuemococcal vaccines, and such other essential medical supplies, accessories and equipment to be determined by the Department of Health (DOH).

"The DOH shall establish guidelines and mechanism of compulsory rebates in the sharing of burden of discounts among retailers, manufacturers and distributors, taking into consideration their respective margins;

"(2) on the professional fees of attending physician/s in all private hospitals, medical facilities, outpatient clinics and home health care services;

"(3) on the professional fees of licensed professional health providing home health care services as endorsed by private hospitals or employed through home health care employment agencies;

"(4) on medical and dental services, diagnostic and laboratory fees in all private hospitals, medical facilities, outpatient clinics, and home health care services, in accordance with the rules and regulations to be issued by the DOH, in coordination with the Philippine Health Insurance Corporation (PhilHealth);...

While there is not much confusion or conflict in the discounts in professional fees of healthcare professionals, there is confusion and even conflict among the various players in the medicines sub-sector, in particular among drug manufacturers, distributors, importers/exporters, wholesalers, retailers, and hospital pharmacies.

The Department of Health (DOH) has requested members of the Advisory Council (AC) on the Implementation of RA 9502 (Cheaper Medicines Law of 2008) for their comments of the draft DOH Circular that will soon be issued by the DOH Secretary. Below is my letter to them which I sent by email yesterday.
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12 December 2012

Dr. Madeleine de Rosas-Valera

Chair, Advisory Council for RA 9502

Assistant Secretary

Department of Health

Dear Doc Madz,

Here are our comments to the draft Department Circular, “Clarification on Certain Provisions of Administrative Order No. 2010-0032” regarding RA 9994 or the Expanded Senior Citizens Act of 2010.

1. Definitions of Wholesaler, Retailer, Distributor, Manufacturer and so on, we agree with the definitions given.

2. On the sharing of the 20 percent mandatory discount to senior citizens, the 30-70 percent burden sharing to retailers-manufacturer/distributor/wholesaler looks fair.

It is assumed that whatever burden sharing should apply after the new Department Circular has been issued and not apply retroactively.

As an outside observer and not part of the major players – the drug manufacturers, distributors, retailers and so on – it is pathetic to see how these players were forced to debate among themselves who should get the bigger burden while government burden in the form of tax credits or loss carry over is not clear. Each of these players is doing its share in giving patients and consumers have access to quality and affordable medicines. That alone is an important social function or public service already..

An enterprise that is forced and coerced by the government to give discounts to certain group of consumers will attempt to survive and not go bankrupt. There are many ways to do this.

One is to stop selling those medicines and products that are highly demanded by the senior citizens. This is happening already in some small and independent drugstores in rural areas which have little leeway for further price discounts as they do not have the economies of scale. 

Two, raise further the regular price of those medicines demanded by the senior citizens so that after the 20 percent mandatory discount, the price simply goes back to its original level and thus, not suffer a loss.

Three, raise the price of other medicines and products demanded by the non-senior citizens. In effect they subsidize the price discount given to the senior citizens. This situation can be illustrated by this graph.

If there was no price distortion like RA 9994, the “equilibrium price” (P*) of a particular medicine will be at point A, With the law, the new price with mandatory discount (Pmd) will be at point B, lower or cheaper than point A. In order to prevent losses, an enterprise (retailer, wholesaler, manufacturer, etc.) will hike the price (Ph) of  medicines to point C. So a 20 percent discount at point C will only bring back the original price at point A while giving the illusion to patients that they are buying at point B. Or senior citizens pay at point B while non-senior citizens suffer even higher prices at point C.

The only way to correct this injustice is to scrap that law, but since this is impossible at the moment, let this situation serve as additional lesson, that government price regulations and forcible, mandatory price discount, produce more harm than good.

Thank you very much.

Sincerely yours,

Bienvenido “Nonoy” Oplas, Jr.

President

Minimal Government Thinkers, Inc.

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See also:
On Senior Citizens Discount, August 10, 2009 
Senior Citizens Discount, Part 2, November 03, 2010 
Drug price control 5: Mandatory discounts and acronym politics, March 21, 2011

Welfarism 23: Letter to Sens. Cayetano and Pangilinan on Solo Parents Welfare, October 23, 2012

12-12-12

Nice date today, 12-12-12, should be a once-in-a-century date.

Today, I composed this song, just for fun, to the tune of a famous Christmas carol.

12 days of Christmas

On the ____ of Christmas, Government said to me:

1^st – More taxes to pay public debts.

2^nd – More borrowings, and

3^rd – P2 trillion budget

4^th – Health for the poor

5^th – More sin taxes

6^th – Fight climate change

7^th – Cybercrime law

8^th – More CCT

9^th – More congress districts

10^th – K-12 for students

11^th – Condoms for the poor

12^th – RH for mothers

Merry Christmas.

Boxing and Politics 2: Pacquiao Loses, Long Live Pacquiao

After Manny Pacquiao's loss to Juan Marquez yesterday, facebook and other social media was peppered with different opinions and observations by different people. I was at CCP yesterday watching my daughter and many other young ballerinas in a play, "The Nutcracker". Besides, I was not interested to see a live Pacquiao fight anymore. I just want him to be a boxer and an athlete, never as a politician and legislator at the same time. Since he chose to be both, my interest in him has waned although my respect for him as a boxer is still there.

I posted this today in my facebook status...

My favorite quotes from some friend's fb status:

* PACQUIAO LOST! Headline I want to see after an election, not a boxing match.
* Pacquiao should not quit boxing to concentrate on politics. Rather, he should quit politics to concentrate on boxing
* Ayaw ko na mag boxing, planking na uso ngayon.

And more funny comments from other friends after this:

* Pacquiao should quit showbiz and focus on boxing or
Pacquiao should wither focus on boxing or focus on his bible. He cannot serve two masters, yet he is trying to serve 4.
* bawal ang planking sa loob ng ring. LOL
* Everybody hates a loser.
* Concentrate on boxing na lang kung nais talagang may natutonan si Manny bilang leksyon.

I added, "Nag-change kasi ng religion si Pacquiao kaya natalo. From the religion of Boxing/athleics and fierce competition, to Politics and fierce populism. 
I have long wanted him to lose in all of his political pursuits so he can focus on his boxing and athletic career, so I was happy that he lost in the 2007 elections, he kept winning. Then he won in the 2010 elections, and that's where his slow or sub-optimal fights started."

Manny, if you wish to become a top notch boxer, to remain being a very famous international athlete, quit being a politician, quit being a legislator. As an international athlete, you need to practice a lot, taking up many hours a day of body-battering physical exercises. So you need lots of sleep, lots of rest. As a politician, you get invites everyday and every night to different events and parties, and your political supporters expect you to join them. Even if you give in to just one fourth of those multiple invites, it's still a lot, and you will have less time to practice, less time to sleep. And you will become slower in the ring.

My high respect for you as a boxer and an athlete. My low respect for you as a politician. You cannot excel in both worlds. Boxing and sports is all about fierce competition and utmost personal discipline, you have to deprive yourself of many worldly concerns like endless partying and drinking. In politics, it'smostly about populism and various worldly concerns like endless partying and pandering to the most rent-seeking, most opportunistic voters and fellow politicians.

You lost the fight with Marquez yesterday. I hope it will be a convincing call for you to quit politics if you intend to stay fighting in the ring for the next few years. You entertain much much more people worldwide as an athlete, not as a local politician. You can help the poor more by being a world class athelete than by being a taxpayers' funded legislator. Many poor people want inspiration to succeed in life, more than money dole outs or by making them dependent on government subsidies. Besides, you are only 33 years old, Marquez  is already 39 and he is able to keep himself in top, competitive  form.

Meanwhile, more Filipino humor...

See also:
Weekend fun 1: Pac U, November 21, 2010
Inequality 7: Roger Federer, Manny Pacquiao and Free Market, June 19, 2011
Boxing and Politics 1: Pacquiao as a Boxer and as a Congressman, November 13, 2011
Welfarism 14: Hard Work vs. Dependence, the Pacquiao Experience, January 30, 2012