Friday, January 19, 2018

Pictures from UP Diliman, 1985-1987

Mula sa baul ni Fidel Nemenzo at ibang mga friends sa UP, these photos strike nostalgia and happy memories. Below, in one of the group photos of the Independent Student Alliance (ISA) student party during the UP University Student Council (USC) elections. Among the people here: Agnes Camacho, Rowena Alvarez, Alan Ortiz, Marie Sharon Guerrero, Sheila Espine Villaluz, Doby Pineda, Jay Batongbacal, Alex Lacson, Ariel Nepomuceno, Bjay Angeles, Doyet Sevilla, Bong Belaro, Francisco Magno, Dulce Natividad, Sharon Dauz, Gilbert Caloza... 

ISA was formed around 1986 or 1987 as a 'third force" against the dominant student parties in UP Diliman. The nat-dems SAMASA and soc-dems TUGON. Many of the original members of ISA were former SAMASA member-organizations like UP Sapul, Alpha Phi Beta fraternity. Not sure if UP Buklod Isip was also former SAMASA member but they joined ISA. UP SURGE was a new organization, formed 1985 or 86 and also joined ISA.

Fidel Nemenzo, Dulce Natividad, Doyet Sevilla, Berting Garlitos (RIP), Kiko Magno, Ruben Coprado, Cresma Somera Reotutar, Lorenzo Ziga,  Ruena Bernardo, BJay Angeles, Jomar Oligario.

With Tess Ujano-Batangan (RIP), Mil Millora (RIP), Ted Te, Oggie Arcenas, Lisa Punongbayan, Dada Santos,...

Jay, Norman Roxas, Choy Libron. Norman and Choy were my roommates in Narra dormitory for one semester.

Sapul tambayan.

In one of the Kamia dorm "open house", non-dorm residents can visit and enter the rooms of residents who invite them.

Those were the days. We were young, wild and free :-)
Thank you for these photos Fidel, Winnie, other friends.

BWorld 180, Has East Asia liberalized its trade enough?

* This is my column in BusinessWorld last January 11.

Under a system of perfectly free commerce, each country naturally devotes its capital and labour to such employments as are most beneficial to each. By rewarding ingenuity… it distributes labour most effectively and most economically: while, by increasing the general mass of productions, it diffuses general benefit, and binds together by one common tie of interest and intercourse, the universal society of nations throughout the civilized world.

— David Ricardo, Principles of Political Economy and Taxation (1817)

Classical British philosophers and political economists were the pioneer thinkers in articulating the net benefits and advantages of free trade over autarky and protectionism. These include David Ricardo, Adam Smith (“A nation may import to a greater value than it exports for half a century… and yet its real wealth, the exchangeable value of the annual produce of its lands and labor, may, during the same period, have been increasing in a much greater proportion,”) and David Hume (“the increase of riches and commerce in any one nation, instead of hurting, commonly promotes the riches and commerce of all its neighbors.”)

Perhaps it is no coincidence that former British protectorates and colonies in Asia are among the most rabid free traders in the world such as Hong Kong, Singapore, and Brunei.

Among the important indicators of how free an economy to global trade and commerce are (a) the mean and average tariff rates, and (b) standard deviation of tariff rates, which show how wide the variations among tariffs are that indicate high protectionism of certain sectors compared to other sectors.

Hong Kong, Singapore, and Brunei have impressive numbers: zero or very low tariff rates and standard deviation is also zero or very low. This means that there is little or no favoritism and protectionism of certain sectors. As a result, consumers and local producers are given the greatest freedom to choose various products and commodities available from around the world to come into their shores.

Japan, Malaysia, and Taiwan have low tariffs but their standard deviations are in double digits. For their part, the Philippines, Myanmar, and Indonesia have declining tariffs and single-digit variations, which are good.

Thailand, Vietnam, and South Korea seem to have not liberalized fast enough because of their relatively high mean tariffs and high tariff variations (see table).

David Ricardo has articulated the classical definition and theory of “comparative advantage.”

This theory has a beautiful application for developing economies like the Philippines to avoid concentrating their resources — human, financial, and land, among others — on few goals like food “self-sufficiency” when they can diversify their resources and earn higher income from manufacturing, tourism, and other sectors.

These economies can then use surplus and savings to purchase food and other commodities from abroad, especially from neighbors that have better natural endowment in bigger food production.

From the numbers above, there is a mixture of results in trade liberalization by East Asian economies. Overall tariff rates have declined through time but tariff variations have also increased in some countries and economies.

We go back to choosing three pathways to trade liberalization: multilateral like World Trade Organization (WTO), Asia-Pacific Economic Cooperation (APEC), Regional Comprehensive Economic Partnership (RCEP) negotiations; bilateral like Japan-Philippines Economic Partnership Agreement (JPEPA); or unilateral like what Hong Kong, Singapore, and Brunei have done.

The best outcome would be via global and multilateral liberalization under the WTO but this is also the most difficult, most complicated, and most bureaucratic.

After 22 years (1995-2017) of regular global negotiations, there were no major achievements except the Trade Facilitation Agreement (TFA) which needs legislative ratification by all signatory countries.

Unilateral liberalization is the simplest and fastest route to take. Just consider the interests of local consumers and producers in general — to have the widest choices possible in terms of prices and product quality. More choices means more freedom, more savings and by extension, higher incomes.

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

See also:
BWorld 175, Trends in global and Philippine trade, January 05, 2018

Thursday, January 18, 2018

Interaksyon shutting down

Interaksyon's "Fat-Free Economics" column was my other home for two years, early 2012 to mid-2014. I wrote several dozen articles there with the support of my editor and friend, Arnold Tenorio. Am sad with this news... 

My first article in interaksyon, March 2012, Fat-Free Econ 1: Macroeconomics for Micro Concerns
My concluding paragraph:
"Main lesson: BIG government is bad for the economy. More taxation, more regulations and more bureaucracies often inhibit rather than encourage micro and corporate entrepreneurship and higher economic growth."

My last energy article there, January 2014, Fat Free Econ 53: WESM, Myths and Realities.
I debunked the claims that the big electricity price hike in December 2013 was caused by "collusion" by several power companies (hence, fake news).

Seems this was my last column in interaksyon, July 31, 2014, Fat Free Econ 55: The President's 5th SONA and Market-Oriented Reforms.

I concluded here, "The President is a Liberal, not a socialist like Bayan Muna or Akbayan, nor a populist like the other political parties. Let us expect more liberal and market-oriented policies from him and his team in his remaining year."

Goodbye interaksyon and thank you for the opportunity to spread the philosophy of limited/minimal government on those two years.

Tuesday, January 16, 2018

IPR and innovation 40, WHO health alarmism and IPR tinkering

Seven years ago, I briefly surveyed the various offices under the UN and I was surprised to see about 100+ different agencies. See UN bureaucracies -- too many! (December 20, 2010).

Among the huge and wide UN offices and bureaucracies is the World Health Organization (WHO). On its website, Media Center, News Releases 2017, these stories seem like we are still in the 90s or even the 80s, or the 70s -- there are many scary and alarmist stories in public health around the world until now.

It is already 2018 -- when illiteracy is already zero in many developing countries, when smoke signal and animal whistles are no longer used to communicate as hundreds of millions of poor people in developing and emerging countries now use smart phones with access to emails, facebook, twitter, youtube and other social media.

And the WHO and WB still declare that "half the world lack access to essential health services"? That measles "still kills 90,000 per year"?

Going back a few decades ago, the WHO was known for various health alarmism worldwide. Like the HIV/AIDS alarmism in the 80s to 90s and more recently, about NCDs (non-communicable diseases) alarmism.

Then the usual fare of the WHO -- blame directly or indirectly IPR and drug patents by innovator pharma and biotech R&D. Also blame free trade and FTAs for expensive medicines.

And I was surprised to see this.

"Global shortage of medicines and vaccines", wow. Since about 95-99% of WHO's essential medicines list (EML) are already off-patent, what stops the WHO and member-governments from mass-producing these drugs, directly or indirectly?

The WHO needs to shrink, both in size of bureaucracy and governments' funding. It has lots of health and economic global central planners that they want to plan-and-control many things and policies, forgetting that it was the private sectors and corporations' risk-taking that gave the world plenty of life-saving medicines since many decades ago.

See also:

Monday, January 15, 2018

BWorld 179, Federalism dream vs centralized government

* This is my article in BusinessWorld last January 5.

Repeated calls for federalism by the Duterte administration actually point to more centralization of the national government — the complete opposite of what they’re advocating.

Here are some examples.

1. National taxes have been rising, instead of declining, which could have helped prepare federal states to have their own income and value-added taxes, etc. Instead of lowering the top marginal income tax rate of 32%, it was even raised to 35%. Instead of reducing the VAT to 10% or 8% with few exemptions, the 12% was retained but many sectors were also exempted.

2. Expanding the number of departments and bureaus instead of reducing them. The Department of Transportation and Communication (DoTC) has become two departments — the Department of Transportation (DoTr) and the Department of Information and Communications Technology (DICT). Then there are proposals to create a Department of Housing, Department of Fisheries. A good federal set up is to abolish many existing departments (like NEDA, DA, DENR, DoH, DoT, etc.) and allow the state governments to create their own departments as they see fit, create, or expand local or state revenues to finance these state departments.

3. Forcing national legislative franchising like buses and taxi, instead of decentralized regional or provincial franchising. Speaker Pantaleon Alvarez and other House leaders are behind the proposal.

4. Reversing integrated public private partnerships (PPP) where government fiscal exposure is very limited to hybrid PPP where national government budget and foreign borrowings (especially China ODA) is much bigger. A meaningful federal set up will empower the state governments to deal with local infrastructure like airports, seaports, provincial tollways and inter-city MRT/LRT.

5. Centralized declaration of class suspensions. During the anti-martial law rallies in Sept. 21, 2017, MalacaƱang declared a Luzon-wide or nationwide class suspensions even if many provinces and cities did not even have scheduled rallies. Then during the PISTON jeepney strike in Oct. 16-17, 2017, MalacaƱang declared nationwide class suspensions, even if many provinces and cities did not even have planned jeep strike. President Duterte should have allowed the mayors and governors to decide, saying something like “the national government will step back from these decisions and it is up to the local governments to decide what’s best for their people.”

Beyond federalism plans contradicted by more centralization of powers and taxation, a long-term alternative would be for the Philippines to split into many new countries and allow these new countries to compete with one another in the field of taxation, governance, infrastructure, trade, and tourism to attract more investors and visitors from around the world. Peace and diplomacy will be retained as fellow ASEAN member-states as well as various multilateral formations and the United Nations.

Many existing Philippine island-provinces are actually comparable in size to existing countries and/or big territories (see table).

This is a far out view and may not be considered in the current decade but would appear more viable through time. Singapore will not be as dynamic and developed as it is now if it was just one of many states of Malaysia.

Under the current activities of the Duterte administration, there lies a danger that when federalism is finally enacted, local entrepreneurs and job creators will be walloped with both high national and high local taxes, fees, royalties and various mandatory spending. This will be a good formula to encourage more corruption and black market business operation, or get out of the country and do business elsewhere.

For the federalism plan to be more attractive to the people, the national government should learn to step back, to tax less, regulate less, bureaucratize less, build confidence among the people and investors in the provinces that indeed they will be given more leeway, more opportunities to craft their own political and economic identity.

See also:
BWorld 115, Centralization and federalism, March 23, 2017
BWorld 171, Global vs national tax reforms, December 29, 2017 

Sunday, January 14, 2018

Pol Ideology 72, You love capitalism

I am reposting this good article in Manila Standard by a friend, Eric.

You love capitalism
posted January 05, 2018 at 12:01 am
By Eric Jurado

You love capitalism.  Really, you do.

And you can’t stand big government. Really, you can’t

Don’t believe me? Then I’ll just have to prove it to you.

Do you use an iPhone? Android?  Macbook?  PC?

Read on a Kindle?

Watch TV and movies on Netflix? Videos on YouTube?

Shop on Amazon? Zalora?

Listen to Spotify?

Search on Google?

Send money on GCash? Coins?

Grab a ride with Uber?

Drive with Waze?

Book a room with Airbnb?

Are you on Facebook? Or Instagram? Or Snapchat?

You probably use many, if not all, of these things, and, if you’re like me, you love them. In today’s world, they’re practically necessities.

Where do you think they came from?

From entrepreneurs with great ideas and the freedom to test them in the marketplace. That is what is known as . . . capitalism.

Now consider some other things you probably do:

Have you been to the LTO?

Gone through security at Naia?

Mailed a package at the Post Office?

Called the BIR customer service line?

Or called any government office, for that matter?

What’s the difference?

Why is going to Uniqlo so fun but going to the LTO so painful? Because one has nothing to do with government, and the other is the government. One needs to satisfy its customers to survive and grow. The other doesn’t.

The purpose of government is not to create products. And we don’t expect it to. But if you thought about it for a few moments, you’d realize you don’t want the government involved in just about anything private business can do.  That’s because profit-motivated individuals have to work hard to please their customers—you. Government agencies don’t have to please anyone.

Call that BIR service line or any government service line, if you doubt me.

Can you imagine if Steve Jobs had to seek government approval for every new design of the iPhone? We’d have been lucky to get to iPhone 3G.

Look at Uber. Just a few years ago, summoning a private car and driver in a few minutes that would take you where you wanted to go was truly a service available only to the wealthiest people. But now, thanks to capitalism, private rides are an affordable option for ordinary people all over the world.  Until Uber came around, if it started to rain in Manila and you wanted to grab a cab, good luck. Too many rain-drenched people and too few cabs available. Uber had a better idea. Rain falls. Demand for rides spikes. Raise prices to give more Uber drivers an incentive to hit the road. Ride-in-the-rain problem solved.

Airbnb is another example. Only a few years ago, if you were going on vacation with your friends or family, hotels were just about your only option. But hotels are expensive and often don’t provide all that much in terms of space, amenities or interesting neighborhoods.

If you wanted to find out if individual homeowners were making their homes or condos available for a few nights, you’d have to scour internet postings.

But then Airbnb came along, giving anyone with a computer or smartphone access to over two million homes in 190 countries. You can find places with hot tubs and pools; or, if you’re on a tighter budget, you can rent a room, or even just a couch.

Government never could have done this. What motivation would it have? How would it even know we wanted services like Uber or Airbnb?  We didn’t know it, until risk-taking entrepreneurs made it possible. Thanks to capitalism. And no thanks to government which, more often than not, just gets in the way.


Because the government’s knee-jerk reaction is to regulate and control everything it can regulate and control. Otherwise, what would be the purpose of many government agencies and all those bureaucrats?

Cities across the globe are putting up barriers to slow down or shut down services like Uber and Airbnb. Making rules may be the only area where the government shows creativity. Economic growth has the best chance of happening in the absence of that rulemaking.

According to economist Adam Thierer, the internet, to use just one important example, was able to develop in a regulatory climate that embraced what he calls “permissionless innovation.” This approach to regulating allows entrepreneurs to meet their customers’ needs without first seeking government approval.

In sum, almost everything you enjoy using is a product of capitalism; almost everything you can’t stand is a product of big government.

So, do you love capitalism? Of course you do. You practice it every day. It’s time to preach it.

Eric Jurado is an independent investment banker and economist.

See also:

BWorld 178, Top 8 energy news of 2017

* This is my article in BusinessWorld last January 2.

This should have been a “Top 10” list but due to space constraints, I limited it to only eight, divided into four news stories each for global and national.

1 “Non-news” to many media outlets but good and big news to me: NO major energy catastrophes in 2017. No major oil spill, no gas blowouts, no reactor meltdowns, no major infrastructure destroyed by natural disasters, and energy prices did not rebound to their 2014-2015 levels.

2 In June 2017, the British Petroleum (BP) Statistical Review of World Energy 2017 was released and among the highlights of that report are: (a) China and US remain the planet’s biggest energy consumers, (b) increases in oil, natural gas, nuclear and renewable energies (REs) but decline in coal use, (c) for big Asian economies, coal use remain very high especially in China, India, Japan, South Korea and Indonesia (see chart).

3 In September 2017, the US Energy Information Administration (EIA) released its “International Energy Outlook 2017” and among its projections are (a) In 2040, fossil fuels (oil, natural gas and coal) and nuclear will supply about 83% of global total energy consumption; 8% from hydro and 9% combined from wind, solar, geothermal, other REs, and (b) coal use is projected to be stable until 2040 and declines in China to be offset by increased use in India.

4 In November 2017, the “America First Energy Conference” was organized by the Heartland Institute in Houston Texas to analyze US President Trump’s pronouncement of US global “energy dominance”. “Energy dominance” is defined on two key goals: (a) meet all US domestic demand and (b) export to markets around the world at a level where they can “influence the market.” The important lessons from the papers presented are that (i) the US can have energy dominance in oil, natural gas and coal, but (ii) US cannot and should not aspire to have dominance in nuclear and REs. It was a very educational conference and I was the only Asian in the conference hall.

5 Hike in excise tax for oil products and coal under TRAIN but zero excise tax for natural gas even if it is also a fossil fuel. Diesel tax will increase from zero in 2017 to P2.50/liter in 2018, P4.50 in 2019, and P6.00 in 2020. Gasoline tax will increase from P4.35/liter in 2017 to P7 in 2018, P9 in 2019, and P10 in 2020. Coal tax will increase from P10/ton in 2017 to P50 in 2018, P100 in 2019, P150 in 2020. There was successful maneuver by some senators, a known economist and some leftist organizations to spare natural gas from higher taxation, benefitting a big energy gas firm.

6 The feed-in-tariff (FiT) or guaranteed high price for 20 years for wind-solar and other renewables keeps rising, from only 4 centavos/kWh in 2015, became 12.40 centavos in 2016, 18 centavos in mid-2017 and petition for 22 centavos by late 2017 not granted. A pending 29 to 32 centavos/kWh by early 2018 is awaiting approval by the Energy Regulatory Commission (ERC).

7 Continued exemptions from VAT of the energy output of intermittent wind-solar and other renewables but stable fossil fuel sources were still slapped with 12% VAT under TRAIN. Government continues its multiple treatment of energy pricing: High favoritism for wind-solar, medium-favoritism for natgas, and zero favor for oil and coal.

8 Supreme Court issuance of TRO in the implementation of Retail Competition and Open Access (RCOA) provision of the Electric Power Industry Reform Act (EPIRA) of 2001. In particular, the SC TRO covered five ERC Resolutions from June 2015 to November 2016, affecting the voluntary participation of contestable customers (CCs) for 750-999 kW and many Retail Electricity Suppliers (RES) with expiring licenses cannot get new ones yet, reducing potential competition. Data from the Philippine Electricity Market Corporation (PEMC) show that as of Nov. 26, 2017, there were 28 RES, 12 local RES, 862 CCs for 1 MW and higher, and only 78 CCs for 750-999 KW. There should be thousands of CCs in the lower threshold, there should be several dozens of RES nationwide to spur tight competition in electricity supply and distribution.

Overall, EPIRA of 2001 was a good law that introduced competition, broke government monopoly in power generation, broke private geographical monopolies in power distribution. The RE law of 2008, SC TRO 2017 and TRAIN 2017 are partly reversing the gains of EPIRA.

See also:

Energy 105, When both world oil prices and domestic oil taxes are rising

Dutertenomics' tax-tax-tax implementation is off to bad timing. Raising oil taxes on already high and rising global oil prices -- $64 a barrel for WTI, nearly $70 for Brent -- is insensitive. But then again, even if the tax hike is P20 or P50/liter, the "money will go to the poor" naman daw is always a convenient, hollow, cavalier and opportunistic alibi.

"Diesel tax will increase from zero in 2017 to P2.50/liter in 2018, P4.50 in 2019, and P6.00 in 2020. Gasoline tax will increase from P4.35/liter in 2017 to P7 in 2018, P9 in 2019, and P10 in 2020. Coal tax will increase from P10/ton in 2017 to P50 in 2018, P100 in 2019, P150 in 2020."

"the DoF is often quoted as saying that “two million richest Filipino families consume 50% of oil products in the country.” This is one of the reasons why they pushed for high tax hike for oil products.

There are about 25 million Filipino families now. The DoF refers to the richest 2 million families, so the other 23 million middle class and poorer class Filipinos consume the other 50% of oil products.... I think the DoF displayed dishonesty and deception in making that claim to further justify the high oil tax hikes."

Among the lousy supporters of "more taxes for oil please" and among the chief rah-rah cheerleaders of tax-tax-tax is the Action for Economic Reforms (AER). See for instance,

"Excise taxes on fuel products will be justifiably raised after 20 years of non-adjustment to inflation except for fuel that is primarily used for air travel, which can only be maximized by those who have more disposable income."

Yes, poor farmers moving away from cow de carabao and using oil-guzzling tractors, moving away from manual harvest to oil-guzzling harvester-thresher combine machines should be penalized with higher oil taxes. Fisherfolks moving away from banka de sagwan and using motorboats to increase their fish harvest should be penalized with higher oil taxes. Great NGOs.

In one Senate comm. Hearing by Sen. Sonny Angara where I was also invited, the domestic shipping lines, airlines, bus lines, truckers, etc were saying the same thing -- if govt will push the high oil taxes, they will follow and obey the law but they will pass any price hike to the public. So even vegetables, fish, chicken, rice, etc consumed by the poor will experience price hikes. And DOF, AER, etc think this is fine and pro-poor daw.

LPG, from zero to P3/kilo. So the 11 kg LPG tank will experience P33/tank increase. The original DOF proposal was increase to P10/kilo or P110/tank. Even carinderias will also increase their food prices, or the less visible option -- serve smaller viand for the same price.

See also: