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Charter Change: Not about reliance on FDI – It’s about FREEDOM to Choose

For the life of me – I can’t fathom how someone could come to a conclusion that charter change is about relying on foreign capital – alone.

At the Macrolevel

Removing the 60/40 does not imply relying on FDI alone – it means having the freedom to opt for FDI when needed.

At the moment the Philippines has only two primary sources of foreign capital – the Philippine Stock Exchange and foreign loans.

By removing the 60/40 we add FDI on top of portfolio investments and foreign loans.

**

Another  question is raised whether removing the 60/40 will attract investors in droves.

The answer to that is another question – has retaining the 60/40 attracted investors in droves?

A follow up question would be – is there a difference in the quality of life between countries with open economies and those with closed economies?

For all the talk about call center operators – they earn more than the Pinoy schmoe employed by the protected Filipino businesses.

At the Microlevel

Another issue was that it’s useless to open the economy because most Filipinos don’t know how to use their money anyways?

The Philippine economy has producers and suppliers – and they are all Filipinos.

The producers (currently the oligarchy) are making a killing with a captive market – does their capture of the market mean the Filipino producers don’t know how to use their money? Well, maybe – because they need to be protected before they can make money. :D

Most Filipino buyers/consumers  on the other hand – don’t have enough money for their basic needs, don’t expect them to become investors overnight – that’s so unreal – for real . However, when there is surplus money people will tend to: a) consume some more; b) invest the money; c) save the money – in varying ways.

Clearly, these group of buyers will not receive massive capital infusions – which wasn’t the objective anyways. The objective was to have jobs so they can afford to pay for their needs instead of freeloading on tax money.

Moreover, just because they “don’t know how” to invest money still does not justify imposing economic restrictions. That’s akin to restricting toddlers from going to school because they don’t know how to read and write.

How does an open market teach you how to manage money? You make a lousy decision and you lose money. You make a good decision and you make money.  If you don’t even have money, much less have a market where you can hone your economic decision-making skills – how exactly are you going to learn the rudiments of investing – by listening to a college professor who can’t wing it in the competitive markets? Ain’t that rich?? :D If every Steve Jobs and Bill Gates listened to the conventional wisdom – they both will be just as conventional as any other schmoe off the streets.

What if I want to be the boss of me?

By all means be self-employed, be your own boss.

However, just because you wanna be self-employed does that mean that the economy should be restricted.

Why should the choices of people to be employed with a foreign owned firm have to be restricted just because you wanna be self-employed? It’s a nonsequitur.

Consider the following – if your business tanks, you have more choices of employers.

On the business side, with the entry of more foreign businesses, you have a potentially larger client base instead of having the oligopsony (this is a market in which there are only a few large buyers for a product or service; this allows the buyers to exert a great deal of control over the sellers and can effectively drive down prices) of the usual trapos and oligarch firms – in other words, diversification of sales channels.

Developing what? Protecting what?

By exposing the Pinoy to competition and making him face the repercussions of his decisions he learns to become more accountable. Believe you me, if you lose your money on a bad investment – you learn to manage your money better the next time around. Or at least, learn to mitigate the risks.

In putting up with the 60/40 we wind up protecting Pinoy mediocrity.

Nobody Loses in the Philippines – They Just Get “Cheated”

MANNY PACQUIAO LOST TO BRADLEY. Was it the number of congressman who flew to Vegas who jinxed the match? Was it the lack of focus and preparation by Manny? Was it because Bradley was inspired by Jessica Sanchez singing Uncle Sam’s anthem?

Frankly, I don’t give a fuck.

As far as am concerned, it’s one more pin to prick the bubble of Pinoy Pride with.

And before the onslaught about cheating and the Vegas mafia begins – let me say this:

If the Vegas Mafia made Bradley win… what makes Pinoys think – that Pacquiao won without the Mafia’s blessing?

Esep Esep :))))

Oh and by the way, a Pacquiao win does not make too much money, but a rematch does.

In your face bitches!

Is Culture Really the Issue Behind Corruption or Is It Moronic Regulations?

Imho, good governance refers to a government that is observing best practices in administering government resources and services.

However this poses a question when government attempts to impose governance on phenomena or behavior that shouldn’t be governed at all.

The framework can be presented as:

1. Default state is “free” – no regulation, no regulators to corrupt – no corruption.

2. A vested interest initiates regulation – “less free”

3. To enforce the regulation pushed by the vested interest – an enforcement agency is created.

4. Market forces realize the game being played by vested interests – and so do the regulators – the stage is set for an enabling condition

5. The vested interests make a humongous profit based on the skewed regulation – the regulators realize they are in for a ride – and connive with the the competition to the vested interests – voila …. “corruption” is initiated… and proceed to many iterations.

***

Question:

Is it the nature of men to be corrupt?

Or was it the regulation which created an artificial crime called “corruption”?

That’s how regulations lead to more corruption, more government restrictions, more taxes…

The answer therefore lies in questioning whether the legislation/regulation was warranted in the first place?

For example:

* The 60/40 restrictions
* The trade tariffs
* The FINL regulations

And if these regulations are not needed in the first place, then it stands to reason that – the answer lies not in more enforcement of these regulations – but in the abolition of said regulations.

What Can Be Done To Lower the Country’s Extremely High Power Costs That Keep Local and Foreign Investments Away

EXERCISE: OP-ED Analysis

Given this article from the Daily Tribune

http://www.tribuneonline.org/commentary/20111114com5.html

“PinoyMonkeyPride, AntiPinoy, and GetRealPhilippines are really insulting the Filipino intelligence if, like Senate President Juan Ponce-Enrile and House Speaker Sonny Belmonte, they think Filipinos of all classes don’t already know that the country’s highest power costs in Asia is the very thing keeping local and foreign investments away — instead of the restriction on foreigners from owning properties and corporations in the Philippines, who, it must be said, already own the local oligarchs here.”

****

It’s one thing to be a writer, writing about business.

It’s another thing to be a businessman, speaking about business.

According to Sergio Ortiz-Luis, president of the Philippine Exporters Confederation, investors, particularly exporters, were getting tired of waiting for the government to address their perennial problems.
The exchange rate policy of the Bangko Sentral ng Pilipinas, for example, had led many local exporters to either scale down their operations or close shop altogether as the strong peso has reduced their competitiveness in the global market, Ortiz-Luis explained.
“Our exchange rate is so erratic, very much dependent on government policy.
For exporters, it’s like walking on a tightrope. They are helpless and they can’t plan properly,” he said in a phone interview.
“We should really amend the BSP’s mandate. When they make their policies regarding the exchange rate, it’s like they’re not part of the Philippines.
They don’t consider the plight of industries. The BSP shouldn’t just control inflation, but also help in the development of the country,” he added.
Speculation by foreign banks on the fate of the local currency in reference to the US dollar, he said, should not be taken that seriously. Government policy-makers should put the country’s welfare, particularly its attractiveness as an investment destination, and the survival of local exporters on top of their priority list when making policy decisions.
The constitutional restrictions on foreign ownership of land, he said, were another thing that the government should “seriously” consider addressing.
Other issues that needed resolution were high power rates and the lack of streamlined fiscal incentives.
“These are things that we should have done 30 years ago. These problems persist and remain unsolved,” he said. In an earlier interview, Ortiz-Luis said the state-owned Power Sector Assets and Liabilities Management Corp.’s pronouncement that the discounted power rates for economic zone locators would no longer be extended was a huge turnoff for exporters.
This has actually led some exporters to shut down their operations here and transfer to China, Vietnam or Indonesia.
But the Department of Energy said it was studying ways to keep the ecozone power discounts in place, either by an extension of the memorandum of agreement for the Ecozone Rate Program or the provision of discounted rates under different terms and references.

******

Food for thought:

What Can Be Done To Lower the Country’s Extremely High Power Costs That Keep Local and Foreign Investments Away

1. Who owns the companies that generate electric power?
1.1 List electric companies by Region

2. Who benefits from the high power cost?

2.1 Direct benefits – revenue;
2.2 Indirect benefits – lesser competitors against local products and firms owned by oligarchy

3. Why are there only few companies that generate electric power? -
3.1 1987 constitution
3.2 Foreign Investments negative list – not more than 25% foreign ownership for public utilities

4. What can be done to increase the number of companies that generate electric power?
4.1 Is there enough local capital?
4.2 If there is not enough local capital – what can be done to increase capital?
4.2.1 – savings – is this the most efficient way
4.2.2 – foreign capital

At which point – it might be good to illustrate the business registration process – and how investments wind up in Vietnam instead of the Philippines.

Business Registration in the Philippines

Notes: Impact of Econ Lib and Implications to the Philippine Economy

Re-invent the wheel? NAH.

As certain quarters in the Philippines seek a gradualist approach to econ lib – such an approach creates an imperfect market that does not help at all.

*** This is a work in progress and contains a compilation of references and case studies on the impact of economic liberalization in countries such as Brazil, Poland, Chile. These countries took on the “shock therapy approach”.

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http://www.ide.go.jp/English/Publish/Download/Las/04.html

A Study on the Impact of Economic Liberalization in Brazil: 1995-2002

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The Politics of Economic Liberalization

http://pics3441.upmf-grenoble.fr/articles/sopo/Review%20-%20The%20Politics%20of%20Economic%20Liberalization.pdf

**********

The Economic Impacts of Air Service Liberalization

http://www.iata.org/whatwedo/Documents/economics/liberalization_air_transport_study_30may06.pdf

This study quantifies the economic impacts of changes in aviation policy and examines five case studies that validate the positive impacts of liberalization on economies. In addition, an economic model has been developed that can quantify the economic benefits associated with greater air service between virtually any two markets around the globe.

The study confirms that liberalizing air travel directly benefits economies by increasing GDP, employment, travel and tourism, and exports. Increasing air travel also leads to significant gains in the quality and quantity of direct service to various communities worldwide.

InterVISTAS-ga2 Consulting

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Democratization and Economic Liberalization in the Postcommunist World

http://cps.sagepub.com/content/40/3/254.short?rss=1&ssource=mfr

M. Steven Fish
University of California-Berkeley

Omar Choudhry
University of California-Berkeley

Abstract

How does economic liberalization affect political regime? Economic liberalization is widely regarded as inimical to democratization. The “Washington Consensus,” which generally endorses “shock therapy” and envisions a basic compatibility between economic liberalization and democratization, is widely disdained in social science. Many scholars hold that neoliberal economics depresses popular living standards and exacerbates socioeconomic inequalities, thereby compromising democratization. Focusing on the postcommunist region, this article tests this hypothesis. It examines the data that have been used to assess the relationship between economic liberalization and political democratization and presents analyses using more appropriate and differentiated techniques. The authors find that economic liberalization advances rather than undermines democratization. Using Engle-Granger analysis, they find that although economic liberalization has no discernible impact on democratization in the short term, democratization adjusts in the direction of a long-term equilibrium to which economic liberalization contributes substantially.

********

An Examination of Economic Liberalization Impact on Foreign Direct Investment
in Selected Developing Countries

http://www.ipedr.net/vol1/9-B00013.pdf

IV. CONCLUSIONS
Capital is a driver of economic growth and development
in all theories of growth. Based on this, one of the most
important apprehensions is for policy makers to absorb
adequate capital for financing projects. Then, absorbing FDI
is not avoidable for developing countries because of their
saving resource shortage compared with the capital needs.
For this, they employ some economic reforms including
economic liberalization in order to create suitable ground for
FDI inflows.

The purpose of present paper is to examine economic
liberalization impact on FDI in selected developing
countries. For this, first we summarize some ideas about the
potential determinants of FDI when choosing a particular
host country. A review of the main hypothesis and the
relevant literature suggests that the degree of economic

freedom in the host country could be a crucial determinant of
FDI decisions. Next, we use pooled data and panel technique
for countries including Brazil, Mexico, China, India, Egypt,
Singapore, Malaysia, Thailand, Turkey and Iran during
1995-2005. Results verify the hypothesis of present research.
In other words, in case of more liberalizing economy, more
FDI is absorbed by the developing countries. This result is
not surprising since economic liberalization moves the
economy toward market economy and brings about optimum
utilization of resources.

Based on other results, inflation has a negative and
significant effect on the FDI of the developing countries.
This result is expectable regarding that inflation rate is
among indices indicating economic stability of a country and
its increase has negative effect on FDI flows in to the
country. Coefficient of market size is estimated near zero
that indicates that it is less important than the main
determinant factors such as economic liberalization and
infrastructures in absorbing FDI for the considered countries.
Also, infrastructures have an important role in absorbing
FDI. Specifically, infrastructures such as roads, ports and
information systems enhance FDI inflows, as it is expected.
Result about wage indicates no significance for its
coefficient. It seems that the mentioned variables are more
important determinants than wage in view of MNEs.
Results obtained from this study have several policy
implications for the future. Specifically, if developing
countries are attempting to attract FDI, it would be more
efficient to focus on economic liberalization and to develop
their infrastructure rather than just reducing wage. Also,
regarding negative and significant effect of inflation on FDI,
these countries should provide a stable environment to
facilitate inflow of foreign direct investment

APPROACHES

http://en.wikipedia.org/wiki/Shock_therapy_%28economics%29

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SHOCK THERAPY: WHAT WE CAN LEARN FROM POLAND

http://prospectjournal.ucsd.edu/index.php/2010/11/shock-therapy-what-we-can-learn-from-poland/

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EARLY BENEFICIARIES:

* Foreign retirees who are already in the Philippines

* Foreign Companies/Individuals that are already in the Philippines who were forced into joint ventures by the constitution.

* The huge pool of underemployed nurses and medical professionals that can be absorbed by a medical tourism industry.

* A huge pool of engineers that can be tapped for R&D BPO.

Notes: Index of Economic Freedom, Form of Government and Governance Systems

A Work In Progress:

Comparison of 2011 Index of Economic Freedom World Rank, Form of Government and Internal Governance System.

Economic Freedom of All Parliamentary Countries

Comment: Economic Freedom is spread out.

Economic Freedom of All Federal Countries

Comment: Economic Freedom is spread out.

Economic of All Federal Parliamentary Countries

Comment: Economic Freedom is spread out.

Comment: Economic Freedom is spread out in the Top 20.

Discussion:

1. Economic freedom is distributed across all Parliamentary Countries.

2. Economic freedom is distributed across all Federal Countries.

3. Economic freedom is distributed across all Federal Parliamentary Countries. There are more Federal Parliamentary countries with limited economic freedom.

4. The Economic freedom Index is not affected by Form of Government and Internal System of Governance.

Recommendation:
Focus on getting Economic Policy which provides the most economic freedom

Note: Hong Kong is No. 1 – it’s not parliamentary nor is it federal – it’s Asian and also faced colonial occupation.

Sens Belmonte and Enrile are on the right track in focusing on the economic amendments to the 1987 Philippine Constitution.

Coming Full Circle

It has been more than a year since I started blogging.

Like any other endeavor in my life – blogging has a purpose. In my case, what started as a trivial stab at the pinoy cultural dysfunction, on my free time has taken me on a journey that took a hard look at the news, the politics, the economy – and my life experiences in the Philippines.

And so I come full circle to the question of who really is the Anti-pinoy?

Let’s turn this around – is there really such a distinct biological species thing as a “Filipino” or is the word a “social construct” of a biological entity called homo sapiens sapiens who happens find himself in the 7,200 Philippine islands?

I recall that in 1883, Friedrich Nietzsche published a book called Also Sprach Zarathustra in which he elaborated his ethical ideal, the Übermensch – a person who rejected the norms of society, living by his own moral code. The name came from the concept about ordinary humanity believing there would be no morals or reasons to live if there was no Other to define morality and reason. Transcending this illusion makes one an “over-man”

The question then is the anti-pinoy in reality – the Filipino as Übermensch?

Should one’s individual personality be defined by a vague amorphous definition of a “Filipino”? Is there even a value to fit the mold of the typical “Filipino”? What is the definition of a “Filpino”? Does it even matter to one purpose in life? Is your happiness defined by being as “Filipino” or advocating for an idealized “Filipino”?

Or is it about – improving one’s lot in life in the pursuit of personal happiness under the rule of law, economic freedom, and personal liberty? Does one necessarily have to be “Filipino” in order to find purpose in life?

I say that there’s more to life than being “Filipino”.

- Above all – more than being “Filipino” – the buck starts and stops with the individual – know thyself, learn to love thyself, and bring out the best in you.

When all are striving to be their best selves – Do you think we’ll have a crappy society? That makes too much sense to the Filipino – and is too much to ask from Juan de la Cruz.

What the pinoy wants is to have the “best government” as one that takes care of him from cradle to grave, with free lunch, and absolves him/her from any wrongdoing. The Filipino masses are averse to competition. They would rather take comfort in serfdom to the local oligarchy rather than step up and become free men. They would rather have patrons who dispense condoms, hospitalizations, concerts, sardines, trips – at the expense of someone else other than us.

The Filipino masses would rather go overseas and live the life of slave (to escape the life of a slave in the Philippines) – than open up the economy and be an active participant in a new world order – one that is transcended by nationality or ideology – the global economy, the global supply chain – while strengthening the local economy through sound market-driven fundamentals.

The Filipino has yet to learn the value of taking care of oneself because he has been made to believe that his only purpose in life is to become “a man for others”.

In doing so – the Filipino has lost the sense that before he can become a “man for others” – he must first become a man – a thinking individual who is fully aware of himself, his individuality, that before defining “others” – he must first define himself. What has been lost in translation is that the Filipino defines himself in terms of others, of his family, of his society – and not on his own terms. In doing so, the Filipino kills himself – his individuality – during the daily grind – trying so hard to conform to a dysfunctional society.

The Filipinos asked for it – they got it – keep on eating pagpag; watching wowowee; being ass wipes, helpers, drug mules, commercial sex workers. Tough luck – lovers of the welfare state will be eating craposis till kingdom come. Am not in the business of helping people who don’t want to help themselves.

Till such time my countrymen wake up from their stupor – there’s more to life than writing about morons. I am so out of the Philippines – and have no regrets – perhaps that I should have left the Philippines earlier and enjoy life where ever the road takes me – or where I choose to create a road, a path, a trail. To hew a path not for anyone else – but because it brings personal joy and happiness.

Au revoir, sayonara, hasta la vista bitches. To life writ large – it’s good to be back.

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