Business 360 5: Reducing Construction and Electricity Bureaucracies

* This is the article I sent to B360 for their March 2013 issue, published in Kathmandu, Nepal.
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Reducing various business bureaucracies is one important policy by any government, local or national, to encourage more entrepreneurship and job creation and hence, effectively fight poverty and high unemployment.

One good source to measure the extent of business bureaucracies worldwide is the annual Doing Business reports (www.doingbusiness.org) jointly published by the World Bank and the International Finance Corporation. The latest is the Doing Business 2013: Smarter Regulations for Small and Medium Size Enterprises published in October 2012.

The annual report covers several areas of entrepreneurship like starting a business, getting construction permit, getting electricity, registering property, getting credit, protecting investors, paying taxes, international trade, enforcing contracts, resolving insolvency. It shows the number of procedures to get certain permits, how many days or hours, and the cost to enterprises in complying with those taxes and permits.

For brevity purposes, we chose only two areas, (a) dealing with construction permits and (b) getting electricity as Nepal continues to endure long hours of power blackouts everyday.

To compare the data with Nepal, we chose two Asian countries: Malaysia because it has a similar population size as Nepal,  about 29.6 million and 27 million, respectively, and Hong Kong because it is a good free market model for many economies around the world. And here is the result:

In dealing with construction permits, Nepal and Malaysia have similar global rank, 97 and 96, respectively. Shorter procedures but high cost in Nepal, equivalent to 654 percent of per capita income,  while longer procedures but lower cost (17.5 percent of per capita income) in Malaysia. In Hong Kong, the procedures are short and the cost is low, for a company to get a construction permit.

In getting electricity, not only that it takes long but it is also very costly in Nepal, requiring the equivalent of 1,763 percent of the per capita income. Compare that with just 54 percent in Malaysia and 1.6 percent in Hong Kong.

These data, freely available online worldwide, are good benchmark to prod certain government agencies to do something to improve things for all – ordinary citizens, private companies, and the government. Highly bureaucratic governments tend to get low esteem not only from their own citizens but also from other people abroad. Reducing these bureaucracies therefore, would greatly improve public perception and esteem of such governments.

For Nepal in particular, reducing the bureaucracies in building new power plants, transmission lines,  electricity distribution network and offices of these companies would encourage more private enterprises to slowly enter the power sector and its sub-sectors. In the process, frequent power blackouts and electricity rationing can be slowly addressed.

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See also:
Busiiness 360 1: Nepal and the Philippines, November 26, 2012
Business 360 2: Free market means free individuals, December 28, 2012
Business 360 3: Fiscal Cliff and Government Irresponsibility, January 23, 2013
Business 360 4: Brownouts and Power Deregulation, February 26, 2013
Business Bureaucracy 7: Penalizing Small Businesses, February 01, 2013

Free Trade 28: Exports and Prosperity

* This is my article yesterday in thelobbyist.biz
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An economy that exports more is creating more local jobs, directly and indirectly. Even a highly import-dependent sector like electronics is still using lots of local contents like labor, electricity, water, land and office renalt, food, housing and entertainment for both the expat managers and local staff, and so on.

The less import-dependent service exports like business process outsourcing (BPOs) tend to create more local jobs and more local support businesses. Thus, an economy must aspire to ramp up its exports capability as there is unlimited number of consumers in the global market.

Philippine total merchandise exports in 2012 was  almost $52 billion, 7.6 percent higher than the 2011 level of $48.3 billion. Export growth in 2012 were fast in Hong Kong, S. Korea and Thailand, with growth of 28 to 29 percent over their 2011 levels. Exports to China contracted  by 1.2 percent last year compared to 2011 level.  The territorial dispute with China at the South China Sea or West Philippine Sea may have contributed to this decline.

Since joining the World Trade Organization (WTO) in 1995, many things have changed in the country’s major buyers of merchandise goods. Because of the failure of multilateral free trade to be fully implemented, countries have turned to regional and bilateral free trade agreements (FTAs) and this is shown in the numbers below.

Philippines’ Top 10 Exports Market, Various Years, in US$ Billion

Source: National Statistics Office, www.census.gov.ph

The US has been trading more with its neighbors in North America compared with its trade partnership with the Philippines and other Asian economies. So the share of the US of the Philippines’ exports has significantly declined from  35 percent in 1995  to only 14.2 percent last year.

The Europeans have also been trading more with each other through the EU, and the UK’s share of Philippine exports went down from from 5.3 percent in 1995 to to being out of the top 10 by 2006 until last year. Netherlands initially had a rising share of Philippine exports, from 4.6 percent in 1995 to 10 percent in 2006, but was out of the top 10 by 2012.

Asian markets have been buying more from the Philippines. For instance, Hong Kong’s share rose from 4.7 percent in 1995, more than doubled to 9.2 percent last year. Singapore, from 5.7 to 9.3 percent over the same period, and China, from being an outsider in the top 10 in 1995, to third biggest buyer in 2012.

Japan,Taiwan, Malaysia, Thailand and Germany were somehow able to retain their average share from 1995 to 2012, with slight changes in market share in between these years.

A country’s openness to global commerce or free trade-ness is a very important policy to improve its economic competitiveness and development. To produce good quality export products at competitive prices and hence, export more, one must get various raw materials, intermediate products, capital goods and machineries, finished consumer goods at competitive prices from as many producers from many countries whenever possible. And foreign economies that exported to the home country would tend to become more open to the exports of this home country.

While regional and bilateral FTAs are better than protectionism and trade paranoia, there is a better option, and that is unilateral trade liberalization, like what Hong Kong is doing. Millions of people around the world know that certain products and services that are not available in their countries at a good price can be found in Hong Kong. So that small economy is able to attract tens of millions of visitors, conference attendees and other tourists every year. Its airlines, hotels, restaurants, malls and shops are benefitting immensely. Hong Kong is importing goods in thousands of container ships and exporting in hundreds of millions of shopping bags as the tourists fly back to their home countries.

A unilateral trade liberalization policy on top of the Philippines’ membership in the ASEAN Free Trade Area (AFTA), ASEAN + 3 (China, Japan, S. Korea) FTA and other multilateral trade deals, is a promising policy that the Philippine government and businesses should consider.

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See also:
Free Trade 23: FNF on Free Trade Agreements, February 10, 2012
Free Trade 24: Trade and Improving Health Outcome, February 15, 2012
Free Trade 25: Excess Supply or Demand and Trade, June 05, 2012 
Free Trade 26: "Buy Local" and Protectionism, June 24, 2012
Free Trade 27: Proposed EU-PH FTA and TRIPS Plus, September 24, 2012 
EMHN 7: Free Trade Improves Public Health, February 26, 2013

Transport Econ 8: Removing MRT and LRT Fare Subsidy

The MRT line from North Avenue in QC to Taft Avenue in Pasay is the most congested among the three urban train systems in Metro Manila. At rush hours, it is relatively common that passengers in midway stations are “bypassed” once, twice or even thrice and wait for the next train as the trains are so packed with so many passengers.

  

There is a new program by the Department of Transportation and Communications (DOTC) to help decongest the trains. They are fielding buses that will pick up passengers at North Avenue station only and stop only at the last three stations -- Ayala, Magallanes and Taft Avenue. The fare is the same, just P15. The fare in normal air-con buses for this route is at least P35. The government says this is a temporary measure until they are able to get new trains.

Ok, what is wrong with this scheme? Or the MRT/LRT fare subsidy in the first place?

One, government gives fare subsidy to commuters of Metro Manila, but not to commuters in other parts of the country, say the cities in Davao, Cebu, Bacolod, Iloilo, Baguio, Tuguegarao. This is another example of Manila favoritism by the Manila-based government.  Thus, it contributes to tax distortion. Taxpayers from many cities and provinces in the country who do not benefit from the subsidized train fare contribute to the fund.

Two,  it promotes bus line cronyism. Give handsome subsidies to the favored bus lines while slapping lots of bureaucracies, fees and penalties to other bus lines taking the same route. Thus, it distorts bus line competition.

Three, it distorts or defeats moves to decongest Metro Manila. The implicit message of the MRT/LRT subsidy and other government programs is this: "You in the provinces, come to Manila. We give MRT and LRT fare subsidy, housing subsidy and free relocation, lots of government hospitals and PhilHealth cards, etc."

Most subsidies violate the rule of law. The latter says the law (like tax-funded subsidies) should apply to all, no one is exempted and no one can grant an exception. So if government should subsidize commuters in M. Maninla, it should also subsidize commuters nationwide, and this is impractical and impossible.  In most cases, government itself is the single biggest violator of the rule of law. We are not talking about the laws against corruption and plunder, robbery and murder.

Election Watch 4: Senatoriables on Healthcare

Last Monday, March 04, I attended the “2013 Senatorial Elections: A Universal Health Care Forum” held at Traders Hotel, Manila. The event was jointly sponsored by the UHC Study Group, Pharmaceutical and Healthcare Association of the Philippines (PHAP), AIM-Zuellig Center for Asian Business Transformation, and the Journalism for Nation Building Foundation. There were many media people who came.

Three candidates from Team PNoy were invited (or accepted the invite?) that day, Ms. Risa Hontiveros of Akbayan Party, former Senator Ramon “Jun” Magsaysay, and Senator Francis “Chiz” Escudero. This coming Monday, March 11, three Senatorial candidates from team UNA will speak on the same topic, to be held at the same hotel.

Ms. Hontiveros said that there is need for more government involvement,  need for more regulations by the government of the health sector because “markets do not work” well for the poor patients. That Filipino health professionals like doctors and nurses should stay in the country as much as possible because of the high need for their expertise, especially in the rural areas.

During the open forum, I commented that her proposals are more socialistic and that it is not true that markets do not work. Markets do work. For instance, there are no government hotels, no government restaurants or carinderia, no government supermarkets, and yet people are eating. In health, there are thousands of barangay health centers, thousands of government-sponsored drugstores, hundreds of government hospitals, drug price control policies, a government health insurance monopoly, health budget of DOH and local governments are rising, and yet health problems are expanding.

I added that it is weird that there are socialist leaning in a liberal coalition under a liberal government. In theory, liberalism is the opposite of socialism, they are east and west or north and south apart. There is some similarity between socialism and conservatism but not with liberalism.

She replied that hotels cannot be compared with healthcare so that while there may be no government presence in hotel, there should be one in healthcare because health is a right, many poor patients cannot afford private healthcare. Her being a social democrat is not consistent with being in a liberal coalition because their goal is the same, a clean and responsive government. I did not pursue a follow up question as there were other hands that were raised at the open forum.

Next speaker was Mr. Magsaysay, who said that one problem of the government is the high overhead cost,a bloated bureaucracy, resulting in high red tape and business bureaucracies. There is need to privatize some government functions to reduce cost. There are about 500 district hospitals nationwide, and many are barely surviving, local physicians can help by banding together to run and manage the hospital themselves, ownership will still be with government.

I spoke again during the open forum, I asked if there is anyone in the PNoy coalition who raise concern about the high public debt. As of end-2012, the total public debt stood at P5.44 trillion, or nearly P57,000 for each Filipino, from babies to oldies. People normally do not owe this big and only government is capable of expanding this inefficiency and stupidity of ever-rising public debt. Then I asked if he is amenable to remove or abolish taxation of medicines.

He replied that reducing the debt is indeed an important issue, and that there should be no tax on medicines, electricity, water and other essential services. And said that he supports a minimal government principle. I like this guy.

The last speaker was Sen. Escudero, said that there are many laws already, and some P500 billion worth of unfunded laws. If one goal of the sin tax law is to discourage children and minors from smoking, there is already an existing law prohibiting this, but no one has been arrested for violating this law. He also supported the renationalization of healthcare. Preventive healthcare is more important than curative healthcare.

What he said about unfunded laws is so true. For instance, Congress creates various regional or municipal trial courts, or various drug rehabilitation centers or new secondary or vocational schools, and yet they are not funded in the annual budget. I asked him at the open forum if he is open to the possibility of limiting Congress’ appetite at drug price control and mandatory discounts like the 20 percent discount for senior citizens and persons with disability, plus non-inclusion of the 12 percent VAT on medicine prices. The result of this is that various players in the pharma sector – drugstores, wholesalers, manufacturers, hospitals – are passing the burden to each other. For some small drugstores, some close down or those surviving have stopped selling some medicines for the senior citizens because they are losing money. So what happens is that there is “cheap but not available medicines.”

He said that the discount for senior citizens should be retained but there are other measures to bring down medicine prices. For instance, medicines that have been approved by the US Food and Drugs Administration (FDA) should not be subjected to another set of regulatory approval by our FDA and this will bring down the cost for those imported medicines. What is needed only is an MOU between the country’s FDA and its counterparts abroad, no need for a new law.

I failed to clarify that any amendment to the senior citizens discount should target only the poorer ones and exclude the rich senior citizens. Many of those small drugstores are struggling financially, some have already closed, and they are forced to subsidize the rich oldies. I like his proposal on the FDA drug approval process.

Dr. Alberto "Quasi" Romualdez, former DOH Secretary and among the core group members of the UHC study group, gave the closing remarks. He emphasized the problem of health inequity in the country.

We should avoid welfare populism as much as possible. Populism often leads to despotism. If the mob and the populists want all sorts of freebies to be provided to them by government, then the productive sectors of society will be the modern slaves that must finance all those senseless freebies.

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See also:
Election Watch 1: Anti Epal Photos, June 29, 2012
Election Watch 2: On Celebrities as Politicians, August 19, 2012
Election Watch 3: Defining Celebrities, Politicians and the State, August 30, 2012

Mining 7: Mining Taxation and Government

* This is my 3rd guest post in antipinoy.com.
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The large-scale mining sector  is probably the most taxed sector in the country. National taxes and fees include corporate income tax, tax on stockholders dividends (local and foreign),  excise tax, value added tax (VAT), capital gains tax, documentary stamp tax, tax on bank interest, tax on interest payment for foreign loans, vehicle registration tax, import tax for mining equipment and heavy machineries,  royalties to indigenous communities, mine tailing fees and occupation fees.

Local taxes include community tax, business permit tax, real property tax, registration fees, occupation fees, other taxes and fees.

In addition, big mining companies are also expected to provide various hard and social infrastructures to the residents and workers of the mining area, on top of the various taxes and fees to the national and local governments.

In contrast, the small-scale  mining enterprises are minimally  taxed and regulated.  

On top of these, there were a few recent moves by the government that expands the taxation base of big mining companies. One is the draft scheme by the Mining Industry Coordinating Council (MICC) through the Department of Finance and the Department of Environment and Natural Resources where big mining companies will be taxed twice, first on the gross revenue and second, on the end of year net income.

The other is the Revenue Memorandum Circular (RMC) No. 17-2013 dated February 15, 2013, saying that companies under the Financial or Technical Assistance Agreement (FTAA) must pay taxes throughout the duration of their contract with the government, and not just after the cost recovery period as provided under RA 7942 or the Philippine Mining Act of 1995.

These new revenue measures are created to further tax the sector which many people believe is “not taxed enough” yet and hence, endangers the environment.

Let us review how valid is this statement.

In 2010, the different players in the mining sector paid P13.4 billion in various taxes and fees to the government. There are different interpretations of what this figure represents as share of the government, local and national.

The three tables below collapsed into one image are from Dr. Artemio F. Disini, Chairman of the Chamber of Mines of the Philippines (CMP) in his paper, Getting a Fair Share: The Industry Perspective on Mining Taxation, presented at the Philippine Economic Society (PES) 50^th Annual Conference last  November 27, 2012, held at the PICC, Manila.

I attended that conference and the panel on mining taxation. The other speakers in the panel were Shanaka Peiris, IMF Resident Representative to the Philippines, Tristan Canare of the Asian Institute of Management (AIM), and Donna Gasgonia of the UNDP.

Dr. Disini was saying that the actual contribution of the large scale metallic mining industry to the government coffers was not just 9 percent but 13 percent of gross value production, as the small scale mining (SSM) sub-sector does not pay any taxes, at least to the national government.

After deduction of production cost, 60 percent for metallic and 50 percent for non-metallic, the total taxes, fees and royalties paid to the government of P11.9 billion in 2010 comprised 43 percent of the large scale mining companies’ net revenue.

This government share of nearly P12 billion in 2010 alone and constituting nearly one-half of big mining companies’ net revenue is big. It is hard to find other sectors that are taxed this much.

Thus, the statement that large scale mining is “not taxed enough” is not valid.

For one, humanity benefits from mining because no mining and mineral products means no modern life. From spoon and fork, nails and hammer, cellphones and laptops, cars and airplanes, engines and buildings, all of these came from mining. A mining expert Kennedy “Kori” Coronel aptly put it this way: “Everything that humanity needs that cannot be grown, must be mined.”

So, a “No to mining whatsoever” statement is a non-option. A corollary statement “tax mining as prohibitively as possible” is next to non-option as this will drive the legal, large and responsible mining companies and leave the country’s mineral resources to the guerilla type small-scale mining enterprises that are hardly taxed and regulated.

The appropriate attitude for government and the rest of society is to keep taxation at the minimum and go for full transparency and accountability of all mining companies, from small to medium to large firms. Putting strict regulations and high taxes only to large players but allowing small players that are often owned or protected by local politicians to disobey those regulations do more harm than good, to the environment, economy and society.

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See also:
Fat-Free Econ 3: Mining and Environmentalism, March 15, 2012
Mining 3: Debates on Mining, March 17, 2012
Mining 4: EO 79 and the MICC, July 12, 2012
Mining 5: Benefits of Mining Even Without Taxes, December 09, 2012
Mining 6: Large Investments vs. Large Bureaucracies, February 19, 2013

EMHN 8: Brand Protection and Safe Medicines

Our international health network has produced another good paper, Fake medicines in Asia The importance of brands to medicine quality. Authored by a good friend Philip Stevens, this six pages long paper is able to argue that corporate brand protection and brand competition coupled with rule of law, are the best way to protect the public from counterfeit and/or substandard medicines.

Fake or substandard drugs are dangerous and can be fatal. Either the patient does not get well, allowing the disease inside the body to mutate and become more serious, or the drug causes several adverse reactions and trigger more diseases and complications. 

As the "cheaper medicines" mantra is all over the country and the planet, somehow it gives an opening to dirty businessmen to offer really cheap but fake or substandard medicines. They do this by introducing unknown or lesser known brands to non-suspecting patients and drugstores. Or they simply copy the logo, brand and trademark of some known drug manufacturers, innovator or generic, and sell cheap.

The chief government regulating agency is the Food and Drugs Administration (FDA, http://www.fda.gov.ph/ in the Philippines, http://www.fda.gov/ in the US, and so on). The big problem is that this small bureau is mandated to check on the quality of (a) drugs, medicines and vaccines for humans, (b) drugs, vaccines for animals and fishes, (c) food/drink supplements and vitamins, (d) food and juice ingredients, sauces, etc., (e) perfumes, shampoo, soap, detergents, body odor spray, etc., (f) poisonous substances like insecticides and pesticides, and many others.

I think these products constitute at least 10 percent of the total output of the economy. FDA therefore, should have pharmacists, doctors, dentists, chemists, physicists, biologists, engineers, on top of having lawyers and administrators. Is it possible to have such an agency with supposedly super-technical powers and capability to minimize or control mistakes in doing its functions? I really doubt it.

One way to minimize risks and threats to public health, is to devolve product quality to the manufacturers and traders themselves, via brand protection and competition. Like "Jollibbee or McDonalds burger yan", "Starbucks or UCC or Figaro coffee yan", "Pfizer or GSK or Unilab or Pharex medicines yan", "Mercury or Watsons or The Generics yan", and so on. Consumers hold on to the brand as generally safe and these companies do all they can to avoid not even a single, not one, case of food or drinks or drug poisoning. 

Thus, products of these brands will be given minimal regulations and approval process. The main regulator for these brands and companies is the fear of being blacklisted or boycotted or sued by consumers due to bad or unhealthy products. Since these are huge if not global brands, the thought of being put in a bad light scares them more than the peering eyes of a few inspectors from the regulatory agency. Then the latter can focus their energy and resources on new products and brands. Shrewd and opportunist businessmen can put up a company and sell bad products and services that can harm public health. When the company is blacklisted, they simply close down the company and put up a "new" one and create new schemes to fool the public.

The sub-topics discussed by the paper are:

* Limits of regulation
* Brand competition and drug quality
* Intellectual property and brand integrity
* Brands are not just for multinationals
* Rule of law in defending brands
* Technological solutions to fake medicines
* Malysia's meditag scheme
* 2D and QR barcodes
* Dangers of government-mandated technology

And the paper's brief conclusions are:

The most fundamental cause of the spread of fake drugs in Asia has been the inability of manufacturers to protect the identity of their products. This is largely down to a lack of functioning rule of law, which makes it very difficult for manufacturers to protect their trademarks and brands via the civil and criminal courts – thereby handing a free rein to counterfeiters. The extra regulation called for by many commentators may well entrench the corrupt relationship between criminals and certain drug regulators. 

Strengthening the rule of law is a vital but long-term process. In the meantime, the private sector should take advantage of its innovative capacity to experiment with different technological solutions to brand infringement. It is well placed to lead this process, as it has unparalleled access to the entire pharmaceutical supply chain, as well as the clear financial incentive to protect its revenue. Governments should encourage this process, but refrain from mandating specific technologies or systems.

This new paper is another good reference for both government administrators and healthcare advocates in the country or abroad. Markets work. And though there are indeed market failures, there are also market solutions to such failures. Government simply have to focus on only one thing: rule of law. Private players and enterprises should do what they say they are supposed to do, and not offer counterfeits or substandard if not entirely useless products and services. If they don't, existing  governmentregulations and the penalty system should be slapped on them. No exception and no one can grant an exception. The law applies equally to unequal people.
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See also:
On IPR Abolition 12: Patent, Mini-Monopolies and Trademark, September 20, 2011
EMHN 4: Free Trade, TPP and Public Health Protection, January 13, 2013
EMHN 5: Free Trade and Markets in Healthcare, January 17. 2013 
EMHN 6: Fake Medicines in Asia, February 15, 2013
EMHN 7: Free Trade Improves Public Health, February 26, 2013

Socialized Healthcare 12: Nurses, Doctors and Other Resources

Last January 24, 2013, I attended a lecture by Dr. Jaime Galvez-Tan, a former DOH Secretary and now a health consultant for many agencies, heads a health NGO and is back to teaching at the UP College of Medicine. The event was organized by the Dr. Stephen Zuellig Center at the Asian Institute of Management (AIM), in partnership with several organizations. It was a good lecture because the focus is on human resources in healthcare -- nurses, doctors, dentists, pharmacists and other professionals.

His paper title however, has a negative implication, "Who will heal us now?", implying that very few have the capacity to provide the nearly 100 million Filipinos sufficient healthcare.

He started with an upbeat mode though, saying that 2013 is the "Golden Year for Health". Credit goes to the passage of the Sin Tax law plus the huge hike in DOH budget.

Dr. Tan is credited by many professionals and observers of Philippine public healthcare as among the few individuals who have greatly influenced the current President to pour more money on healthcare. He was among the key advisers to the President when the latter was still on the campaign trail during the 2010 Presidential elections. See more numbers in the jump in public spending on healthcare. The data on P31.35 B for 2013 is projection from Sin Tax additional revenues alone.

Then he asked that while there should be a balance between health infrastructures (hospitals, clinics, laboratory facilities, medicine, nursing and dental schools, etc.) and health human resources, the latter seems to have been left out in healthcare priorities.

Universal healthcare (UHC) or Kalusugang Pangkalahatan (KP) is the banner of the PNoy Aquino government's health agenda. It is actually a rehash of previous attempts by previous administrations, dating back since the 60s and 70s perhaps, with the creation of Medicare and its mandatory membership for all. Corruption, wastes and inefficiency killed it, along with the money and forced contributions by members on top of the taxes they paid to the government. That is why the Philippine Health Insurance Corporation (PHIC or simply PhilHealth) was created in 1995 to replace Medicare.

Of course I don't believe in government monopolization and nationalization of healthcare. Like in other sectors, a monopolist is not seriously interested in bringing down costs, but in jacking them up. Customers and patients have no choice anyway but give their money to the monopolist. I believe that  healthcare competition and deregulation is a more cost-effective way to achieve UHC. Nonetheless, here are Dr. Tan's graphics on UHC.

The UN's MDGs are just two years away. Of the eight sectoral goals, three are healthcare related. And healthcare is not just a mandate of the DOH but also by the various local government units -- provincial, city, municipal and barangay governments -- and other agencies like the UP College of Medicine, UP Philippine General Hospital (PGH).

The second chart has been repeatedly used by the pro-RH bill (now a law) camp. The advocates of that law in effect were saying that the DOH, LGUs, other agencies were very inefficient and wasteful in not reducing maternal healthcare, despite the tens of billions of pesos given to them yearly. Did the officials of these agencies only pocket the money that was meant to reduce maternal death? So there is a need to create a new law and new spending program to reduce maternal healthcare? Their argument was indeed lousy. But they won, meaning more money for various government agencies, plus additional regulations and interventions.

Population Control 17: China's Depopulation and RH Law

* This is my second guest post in antipinoy.com, posted the other day.
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China’s depopulation has begun. While it’s true that they still have a big number of younger workers, they also have a rising number of ageing people who need more healthcare, more pension and other retirement benefits. So the burden of taking care of the ageing people will really fall on the shoulders of the younger population.

The China communist government cannot simply  dispatch its hundreds of millions of bureaucrats, or robots, to take care of their oldies. 

A friend noted that the “inequalities in the distribution of the benefits of the fruits of its development will make China implode.” While this may be true, “more equitable” European societies are also slowly imploding. They sustain their forced equality only via endless borrowings, but those huge debts are now calling the kettle. For countries with declining working age population, there are three solutions: raise the retirement age from 60 to 65-70, more migrants, and/or more robots.

I read that in the US, there is no more retirement age, people choose when to stop working. This is good,  encourage people to stop being “employee forever” and become start up entrepreneurs and job creators themselves. While it is relatively easy to do this in the US, it is more difficult in in socialist China or some near-socialist European economies as government taxes and bureaucracies are high.

Is big population a liability to more economic growth?

The advocates of the recent RH law said YES, that is why they supported more government coercion — more taxes, more sex education, more forced but free services by OB professionals, etc. — to control the country’s population, especially that of the poor. The debate ended in favor of the lovers of more government coercion, but implementation is another issue.

The Malthusian alarmism of “we will have less land, less water, less food and even less radio spectrum bandwidth per person” as the population expands is wrong. There is zero limit or constraint to vertical space. Too many people die every year because there is too much rain water and flooding not because there is lack of it. And the main health concern now is more fat, more obese people than undernourished ones because there are lots of food and drinks. The number of cell phones and laptops are rising and yet internet speed is rising.

So the Malthusian population alarmism is pushed always by statists. Control inequality, control prices, control businesses, control population.

People are assets, not liabilities. The real liabilities — killers, rapists, thieves, land grabbers, carnappers, extortionists, etc. — both in the public and private sectors, that’s the proper role of government to control, to implement the rule of law. If the poor become construction workers or public market vendors or department store cashiers, so be it. They are working, they produce various goods and services. Government should not penalize and over-bureaucratize the poor if they become self reliant and independent.

Those construction workers, bus and taxi drivers, security guards of expensive buildings, malls, shops and villages, etc. – those useful people, they normally do not come from 1 or 2 children households, but from 4 or more children households. And the RH camp demonize the fast growth of the population of the poor.

Population control or population expansion, leave it to civil society and individuals. Government should step out of that concern. Instead, government should over-bureaucratize, over-regulate, over-control and over-penalize criminals ,whether rich or poor, whether in the private or government sectors.

Singapore, Japan, some European countries now are into government-sponsored population expansion, but there are not much takers. The governments for instance give allowance per child until 18 years old (Germany, etc.).

We are far from what China, Japan, HK, Sing, Taiwan, Europe, are experiencing of greying population. And that is precisely our strength — we have a high and young population, many of those aged people in Europe, Japan, etc. would be feeble or dead by now without the Filipino healthcare professionals assisting them. But the government and the bleeding hearts say that high population is wrong and hence, government-sponsored population control should proceed.

It would have been different if population control is done by civil society and individuals themselves — they buy those condoms, pills and injectibles themselves and distribute for free to the poor, put their money where their mouth is. But they did not. They went for national coercion and legislation, so that even people who do not believe their “bright idea” are now forced to finance their actually stupid idea.

Another friend noted that there are plenty of “jologs” among the poor, they just multiply fast then ask the government to take care of their kids. There is some truth to this, and many NGOs and the foreign aid/consultancy establishments hype up the problem, to get more public funding for their various “save the poor” contracts and projects.

But it is also true that many of the poor want to stand on their own and do not want to run to government and politicians whenever possible as they are simply being used by many corrupt politicians. Problem is that government gives them various bureaucracies if they start some micro entrepreneurship projects, so they go for unregistered, informal businesses, and are subject to harassment and extortion by the barangay, the police, and/or city hall bureaucrats.

There are more jologs in government than in the private sector. The most opportunistic, the shrewd and cunning among the population, are always attracted to politics and government. The honest ones do not need politics nor government position to help others, or to create jobs for other people.

One indicator if an idea is bright or stupid, is if it requires new legislation and coercion. If it does, then 90-100% it is a bad or even stupid idea.

For instance, some people want to help the poor have more food, so they simply develop their farms, or they put up carinderia and other cheap sources of food. They did not require a single lobbying, a single peso of tax money, to help the poor. This is one example of a good idea. In contrast, the RH law is an example of a bad idea.

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See also:
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
Population Control 16: RH Bill as HR, Coercion as Choice, December 13, 2012