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Philippine Constitution Versus Economic Freedom

October 16, 2011

What is economic freedom and what makes it so important to the economic and social life of a nation? First of all, economic freedom does not mean anarchy, since most of its opponents equate it to the Libertarian anarchists’ political and economic agenda or ideal. In my own opinion, economic freedom simply means the freedom to survive. Every human being must survive to live, not the other way around, and economics is all about the study of human survival.

One of the loudest calls of free market advocates is “free the economy!” I’m glad that most Tea Party protesters, who call for limited government and the return to America’s founding principles, are picking it up. But why is there a need to unshackle the economy? Is it not supposed to be controlled and regulated since most, if not all, of the main players, namely, the businessmen, the investors, etc., are motivated by greed, as what the Occupy Wall Street hippies claim? At a time of excessive government intervention, protectionism and regulations, there’s a need to free the economy. But the main reason to deregulate and to decontrol is NOT purely economic; there’s a need to free the economy simply because survival requires freedom.

We have seen the result of Big Government or too much government regulation and intervention. The 2008 global economic crisis. The leftists and statists continue to claim that the economic downturn was caused by the free market system or too much freedom. Well, they can continue to evade reality, but they cannot escape the consequences of evading reality. Reality tells us that too much government intervention causes social and economic evils, such as higher unemployment, graft and corruption, violation or disregard of individual rights, social parasitism, culture of dependency, poverty, among others.

We’ve also seen the utter mediocrity of the enemies of freedom and capitalism. There are the leftists and/or statists who have been deeply trapped in their own delusion that the free market system caused and is causing economic crisis the world over, while there are some intellectually dishonest academics and pseudo-economists who claim that “there’s no such thing as a free market”.

But what’s this economic freedom?

Business Dictionary defines economic freedom as “The freedom to prosper within a country without intervention from a government or economic authority.”

Financial Advisory offers the following definition: “The freedom to produce, trade in, and consume any goods or services you choose.”

Eric Daniels wrote in Capitalism.Org the following definition:

Economic freedom is an application of political freedom. The most basic distinction at the heart of the concept of freedom is the distinction between voluntary action and compulsion or coercion. Where individuals can choose their thoughts and actions, where they are free from physical coercion, they are free. We operate from a negative definition of freedom–it means the absence of physical restraints that halt or forcibly redirect one’s thoughts or actions. In the economic realm, this means that economic freedom is the freedom to produce and trade goods and services according to one’s own judgment, unrestrained by the physical coercion or compulsion of others, including the government. One must be free to acquire, use, and dispose of private property. Individuals must be free to enter into voluntary contractual relationships. The root identification here is that no man has a moral right to stake a claim on the productive activity of another against his will.

Observe that most of the academic and periodical definitions of economic freedom usually pertain to economic matters and concerns like production, consumption, trade, business dealings, etc. Most of the available definitions focus more on economic matters. But what about about political freedom? Are economic freedom and political freedom at odds with each other? Or: are they mutually dependent?

Austrian economist Ludwig von Mises argued that political and economic freedom are mutually dependent. He wrote: “The idea that political freedom can be preserved in the absence of economic freedom, and vice versa, is an illusion. Political freedom is the corollary of economic freedom. It is no accident that the age of capitalism became also the age of government by the people.”

But there are certainly governments like Singapore that preserve a certain degree of economic freedom yet limit political freedom. Lee Kuan Yew is being regarded as Singapore’s economic reformer, but he’s notorious for limiting his people’s political freedom. The Singaporean government suppressed and continues to suppress free press, freedom of expression, and the right to criticize the government.

In the Philippines, while Filipinos still have the freedom to criticize anyone, including their own government, the country’s economy is being excessively regulated by laws and political/economic edicts. Foreign investors/businessmen are barred from owning/running economic ventures, lands and businesses without Filipino participation whereas Filipinos are allowed to own land and businesses in America and other countries.

Just imagine if America and the rest of the first world countries adopted the same protectionist policies in our Constitution. Just imagine if Filipino professionals were not allowed to practice their professions abroad.  I believe we’d end up sending more maids, gardeners, and manual laborers to rich countries.

Certainly, those geniuses who drafted the 1987 Constitution lacked the necessary imaginative skills, as we’re now one of the poorest countries on earth.

Ideas have consequences.

What we are today is the direct, logical consequence of the mediocrity and intellectual bankruptcy of those who engineered our society more than two decades ago.

The latest ranking of the 2011 Index of Economic Freedom is an indictment of what we have become since 1987. We’ve been ranked 115, behind Mali and Brazil, with the freedom score of 56.2, which means “mostly unfree”. The top ten freest economies of the world are Hong Kong, Singapore, Australia, New Zealand, Canada, Ireland, Denmark, United States, and Bahrain. Observe that these nations are the most successful in terms of economic gains and per capita income.

Here’s how 2011 Index of Economic Freedom measured the Philppines:

Business Freedom 43.4 -4.7

Potential entrepreneurs face severe challenges. The overall regulatory framework is burdensome, and the legal framework is ineffective, holding back more dynamic and broad-based expansion of the private sector.

Trade Freedom 77.8 no change

The Philippines’ weighted average tariff rate was 3.6 percent in 2007. Some high tariffs, import and export restrictions, quotas and tariff rate quotas, services market access barriers, import licensing requirements, restrictive and non-transparent standards, labeling and other regulations, domestic bias in government procurement, inconsistent and non-transparent customs valuation and administration, export subsidies, widespread corruption, and weak protection of intellectual property rights add to the cost of trade. Fifteen points were deducted from the Philippines’ trade freedom score to account for non-tariff barriers.

Fiscal Freedom 78.8 no change

The Philippines has relatively high tax rates. The top income tax rate is 32 percent. The top corporate tax rate is 30 percent. Other taxes include a value-added tax (VAT), a real property tax, and an inheritance tax. In the most recent year, overall tax revenue as a percentage of GDP was 14.1 percent.

Government Spending 91.0 -0.2

In the most recent year, total government expenditures, including consumption and transfer payments, held steady at 17.3 percent of GDP. Fiscal stimulus and restructuring of public enterprises have widened the fiscal deficit, which had almost reached balance in 2007.

Monetary Freedom 76.3 +3.6

Inflation has been moderate, averaging 4.7 percent between 2007 and 2009, and was holding steady in 2010. The government influences prices through state-owned enterprises and utilities and controls the prices of electricity distribution, water, telecommunications, and most transportation services. Price ceilings are usually imposed on basic commodities only in emergencies, and presidential authority to impose controls to check inflation or ease social tension is rarely exercised. Ten points were deducted from the Philippines’ monetary freedom score to account for measures that distort domestic prices.

Investment Freedom 40.0 no change

Foreign investment is restricted in several sectors of the economy. In many industries where foreign investment is allowed, the level of foreign ownership is capped. All foreign investments are screened and must be registered with the government. Regulatory inconsistency and lack of transparency, corruption, and inadequate infrastructure hinder investment. Dispute resolution can be cumbersome and complex, and enforcement of contracts is weak. Residents and non-residents may hold foreign exchange accounts. Payments, capital transactions, and transfers are subject to some restrictions, controls, quantitative limits, and authorizations. Foreign investors may lease but not own land.

Financial Freedom 50.0 no change

The Philippines’ small financial sector is dominated by banking. In general, the financial system welcomes foreign competition, and capital standards and oversight have improved. Consolidation has progressed, and non-performing loans have gradually declined. The banking sector is dominated by five large commercial banks. Two large state-owned banks account for about 15 percent of total assets. Credit is generally available at market terms, but banks are required to lend specified portions of their funds to preferred sectors. The non-bank financial sector remains small. Capital markets are centered on the Philippine Stock Exchange. The impact of the global financial crisis on banking has been relatively small because of the sector’s very limited exposure to distressed international financial institutions.

Property Rights 30.0 no change

Although the Philippines has procedures and systems for registering claims on property, including intellectual property and chattel/mortgages, delays and uncertainty associated with a cumbersome court system continue to concern investors. Questions regarding the general sanctity of contracts and the property rights they support have also clouded the investment climate. The judicial system is weak. Judges are nominally independent, but some are corrupt or have been appointed strictly for political reasons. Organized crime is a serious problem. Despite some progress, enforcement of intellectual property rights remains problematic.

Freedom From Corruption 24.0 +1.0

Corruption is perceived as pervasive. The Philippines ranks 139th out of 180 countries in Transparency International’s Corruption Perceptions Index for 2009. A culture of corruption is long-standing. The government has worked to reinvigorate its anti-corruption drive, but these efforts have been inconsistent. Reforms have not improved public perception and are overshadowed by high-profile cases frequently reported in the Philippine media.

Labor Freedom 50.7 -1.2

The labor market remains structurally rigid, although existing labor regulations are not particularly burdensome. Many of the country’s skilled workers have migrated to other advanced economies.

43 Comments leave one →
  1. homosapiens permalink
    October 17, 2011 3:38

    i’m just curious. what specific provision/s in the 1987 constitution you think that consequently caused the philippines to be ranked as “one of the poorest countries on earth”? was there any legitimate study conducted that equates the lacking of “necessary imaginative skills” in drafting the constitution to poor economy?

    the “2011 index of economic freedom” listed the philippines at 115th while china at 135th place. do you honestly believe that the perpetually sluggish economy of the philippines is doing a lot better than the world’s-second-largest-economy of china? because i don’t think that the philippines is more “successful in terms of economic gains and per capita income” in any way than china.

    • October 17, 2011 3:38

      If you understood some of the provisions of the 1987 Constitution, there are two terms that best describe our politico-economic system: PROTECTIONISM and WELFARE STATE.

      Now as to the specific provisions, you may start to dissect Article 2 of the 1987 Constitution (Declaration of Principles and State Policies). Of all the state policies in our Constitution (sections 7 to 28), I believe only Section 7 is consistent with individual freedom. It states: “The State shall pursue an independent foreign policy. In its relations with other states, the paramount consideration shall be national sovereignty, territorial integrity, national interest, and the right to self-determination.” On the other hand, I agree with the Charter’s state principles (from sections 1 to 6), as we merely copied them from the American Constitution. They are consistent with Republicanism and limited government.

      As to other provisions, you may choose to read what I stated here wherein I tackled at least 4 Constitutional provisions.

      As to provisions that support the country’s welfare statism, I tackled certain distorted, perverted rights here.

      As to provisions that establish economic regulations and protectionism, I’d only mention the 60-40 ownership arrangement, the total prohibition of foreign ownership in certain public utilities and ventures, as well as the prohibition on foreign professionals to practice their respective professions in RP.

      I tackled protectionism and welfare state in the following blog articles:

      https://fvdb.wordpress.com/2011/08/28/destroying-the-filipino-first-mindset/
      https://fvdb.wordpress.com/2011/08/22/pres-aquinos-politics-of-dependence-and-21st-century-plantation/
      https://fvdb.wordpress.com/2011/08/14/uncle-sam-to-pinas-scrap-protectionism/

      Oh yes! Our constitutional framers lacked the “necessary imaginative skills” in drafting the constitution. I somehow tackled here the reason why https://fvdb.wordpress.com/2010/10/30/constitution-framers-ignoramuses/

      Between China and the Philippines, I believe there are a lot of reasons why FDI is way higher in China. For one, China’s population attracts foreign investors despite its modified socialist system. Foreigners are allowed by law to have 100 percent equity in business in China. That is not allowed in RP. There are competitions among provinces in China for foreign investment. Many provinces relaxed their regulatory policies, lowered their tax rates, and reformed property rights in favor of investment to attract FDI. So these are the things that offset China’s socialistic measures. So between RP and China, there’s no doubt that foreign investors choose China or even Vietnam.

      But wait! China’s central planning is going to hurt its economy after its housing bubble fully pops up. Here’s a good video…

      • GabbyD permalink
        October 18, 2011 3:38

        “Foreigners are allowed by law to have 100 percent equity in business in China. That is not allowed in RP. ” this is not accurate.

        china and the philippines have similar restrictions.

        from the Foriegn investments act –>>> As a general rule, there are no restrictions on extent of foreign ownership of export enterprises. In domestic market enterprises, foreigners can invest as much as one hundred percent [100%] equity except in areas included in the negative list.

        China has a negative list too.

      • Pinoy Astro permalink
        October 18, 2011 3:38

        I have to disagree. Are you saying that Jollibee and SM in China are not wholly owned by Filipinos?

      • Pinoy Astro permalink
        October 18, 2011 3:38

        OK. To back my claim that you’re wrong, Gabby D.

        In China, they have the Wholly Foreign Owned Enterprise (WFOE or WOFE) which allows foreign investors to own, run and manage their businesses without having to consider the involvement of the Chinese partner. Source: http://www.wfoe.org/

        We don’t have that here in RP. Businesses must be partly owned by both foreigners (40%) and Filipinos (60%). Other ventures dictate different ratios.

        The foreign invested companies in China:

        The foreign investments are basically divided into direct investment and other means of investment. In terms of the direct investment, there are Sino-foreign joint ventures, joint exploitation and wholly foreign-owned enterprises, foreign-funded share-holding companies and joint development. The other means of investment includes compensation trade and processing and assembling.

        Sino-foreign joint ventures : they are formed in China with joint capitals by foreign companies, enterprises, other economic organizations and individuals with Chinese companies, enterprises, other economic organizations and individuals. The main feature is that the joint parties invest together, operate together, take risk according to the ratio of their capitals and take responsibility of losses and profits. The capitals and other assets from different parties are translated into the ratios of ownership. Sino-Foreign Joint venture must have a set term of operation. The liability for such business is limited to the investment to the business.

        Sino-Foreign Cooperative enterprises: also known as contractual cooperation enterprises, they are formed in China with joint capitals or terms of cooperation by foreign companies, enterprises, other economic organizations and individuals with Chinese legal entities and individuals. The rights and obligations of different parties are embedded in the contract. To establish a cooperative enterprise, the foreign party, typically, supplies all or most of the capital and technologies, while Chinese party supplies land, factory buildings, and useful facilities, and also some supply a certain amount of capital, too. Cooperative businesses must have a set term of cooperation. The liability for such business is limited to the investment to the business.

        Wholly foreign-owned enterprises: They are exclusively invested by foreign companies, enterprises, other economic organizations and individuals in China in accordance with laws of China . The wholly foreign funded enterprises often take the form of limited liability company.

        Foreign-funded share-holding companies: Foreign companies, enterprises, other economic organizations and individuals can form foreign funded share-holding companies in China together with Chinese legal entities. The share-holding company is formed by equal shares. Shareholders will take due responsibilities for the company according to shares purchased; company will take responsibilities for all its debts through all its assets and the Chinese and foreign shareholders will hold the shares of the company. The qualified enterprises can also apply to issue A & B shares in the Chinese stock market or listing abroad.

        Source: http://www.chinadetail.com/Business/InvestmentChinaCompanyOwnership.php

        Ergo, YOU’RE WRONG.

      • GabbyD permalink
        October 18, 2011 3:38

        pinoy astro

        pls read the Foriegn investments act.

        here’s the relevant line: “In domestic market enterprises, foreigners can invest as much as one hundred percent [100%] equity except in areas included in the negative list.”

        this is the PHILIPPINE FIA (1991)

      • Pinoy Astro permalink
        October 18, 2011 3:38

        That’s under Republic Act No. 7042. But it seems that you didn’t read the law. Or you don’t have enough legal knowledge to understand the law.

        Here are the limitations…

        Up to Twenty Percent (20%) Foreign Equity

        12. Private radio communication network (R.A. 3846)

        Up to Twenty-Five Percent (25%) Foreign Equity

        13. Private recruitment, whether for local or overseas employment (Art. 27 of P.D. 442)
        14. Contracts for the construction and repair of locally-funded public works (Sec. 1 of CA 541, LOI 630) except:

        a. infrastructure/development projects covered in R.A. 7718; and
        b. projects which are foreign funded or assisted and required to undergo international competitive bidding(Sec. 2(a) of R.A. 7718)

        15. Contracts for construction of defense-related structure (Sec. 1 of CA 541)

        Up to Thirty Percent (30%) Foreign Equity

        16. Advertising (Art. XVI, Sec. 11 of the Constitution)

        Up to Forty Percent (40%) Foreign Equity

        17. Exploration, development and utilization of natural resources (Art. XII, Sec. 2 of the Constitution) *4
        18. Ownership of Private Lands (Art. XII, Sec. 7 of the Constitution; Ch. 5, Sec. 22 of CA 141)
        19. Operation and management of public utilities (Art. XII, Sec. 11 of the Constitution; Sec. 16 of CA 146)
        20. Ownership/establishment and administration of educational institutions (Art. XIV, Sec. 4 of the Constitution)
        21. Culture, production, milling, processing, trading excepting retailing, of rice and corn and acquiring, by barter, purchase or otherwise, rice and corn and the by-products thereof (Sec. 5 of PD 194; Sec. 15 of R.A. 5762) *5
        22. Contracts for the supply of materials, goods and commodities to government-owned or controlled corporation, company, agency or municipal corporation (Sec. 1 of R.A. 5183)
        23. Project Proponent and facility Operator of a BOT project requiring a public utilities franchise (Art. XII, Sec. 11 of the Constitution; Sec. 2a of R.A. 7718)
        24. Operation of deep sea commercial fishing vessels (Sec. 27 of R.A. 8550)
        25. Adjustment Companies (Sec. 323 of P.D. 612 as amended by P.D. 1814)
        26. Ownership of condominium units where the common areas in the condominium projects are co-owned by the owners of the separate units or owned by a corporation (Sec. 5 pf R.A. 4726)

        Up to Sixty Percent (60%) Foreign Equity

        27. Financing companies regulated by the Securities and Exchange Commission (Sec. 6 of R.A. 5980 as amended by R.A. 8556) 6
        28. Investment housed regulated by the SEC (Sec. 5 of P.D. 129 as amended by R.A. 8366) *6

        —————–

        NOW, let me test whether you understand the law. KINDLY MENTION CERTAIN INDUSTRIES OR BUSINESSES IN WHICH FOREIGNERS ARE ALLOWED 100% EQUITY… Thanks!

      • GabbyD permalink
        October 18, 2011 3:38

        pinoy

        whatever is NOT in the negative list, can have 100% foreign equity.

        you just listed the negative list. (even the negative list is incomplete, there has been changes in the favor of more liberalization.

    • Pinoy Astro permalink
      October 19, 2011 3:38

      That’s funny. That’s why am askin’ you to give me some examples because I know you can’t think of any…

      So what are the industries and kinds of business wherein foreigners are allowed 100% foreign equity?

      • GabbyD permalink
        October 19, 2011 3:38

        everything else thats doesn’t fit the negative list. the negative list isnt exhaustive.

      • Pinoy Astro permalink
        October 19, 2011 3:38

        That’s funnier, Gabby D.

        The la is actually an oxymoron, if you don’t get it.

        What’s this “everything that doesn’t fit in the negative list”? Because let me tell you, I asked my lawyer friend if there are certain kinds of business that’s not in the negative list. He said, NONE.

      • GabbyD permalink
        October 19, 2011 3:38

        why dont u read the negative list, instead of relying on your friend?

        the obvious fact is that there are MANY foreign firms in philippine industry, in different industries.

        google it.

      • Pinoy Astro permalink
        October 19, 2011 3:38

        Just answer the question. You can’t, right? Why are so many foreigners using dummies in the Philippines? It’s because of the limitation. You’re so funny haha.

        If you read the negative list, you’d see that it covers EVERYTHING.

        So can you be more brave and courageous and tell me certain industries or types of business wherein foreigners are allowed 100% foreign equity?

        Don’t you have that brain and courage, dude? Just give me examples.

      • GabbyD permalink
        October 19, 2011 3:38

        i prefer not to.

        here’s a list of industries. http://en.wikipedia.org/wiki/List_of_companies_of_the_Philippines

        to help you start…

      • Pinoy Astro permalink
        October 19, 2011 3:38

        Because you can’t. You can’t even come up with a better link haha. The problem with you and others like you is that you don’t even have the courage to be honest. You don’t even have the bravery and courage and boldness to answer a very SIMPLE QUESTION.

        Again, kindly give me some examples of industries and businesses wherein foreigners are allowed by law to have 100% foreign equity?

        Because if you can, you can simply give me these industries or businesses instead of saying “I prefer not.” Because you can’t. Why do you exert so much effort to DELUDE yourself and TURN BLIND?

        Give me examples and that will end this discussion.

  2. homosapiens permalink
    October 18, 2011 3:38

    you clearly specified those provisions that you think have caused the philippines to be “one of the poorest countries on earth”. but you haven’t stipulated any legitimate study that equates the lacking of “necessary imaginative skills” in drafting the constitution to poor economy. i think you missed that. and then you highlighted “protectionism” and “welfare state” that according to you defines the 1987 philippine constitution. but even first world countries have protectionist policies which are driven by their selfish interests. so is protectionism really that bad? on welfare state, let me cite a few examples: switzerland, denmark, sweden, germany, belgium, austria, finland, netherlands, norway and united kingdom. these “free” or “mostly free” countries have some of the highest welfare expenditures yet they still achieve higher GDP per capita than most countries with less or almost non-existent welfare expenditure. additionally, empirical evidence suggests that most welfare states have lower poverty rates than they had before the implementation of welfare programs. so there is absolutely no truth in stating countries with welfare programs have the poorest economy.

    and you seem to misunderstood my point regarding the index. i wasn’t asking about the increasing trend of foreign investors in china since it’s a common knowledge that it has opened its doors to foreigners since the late 1970s. what I’m driving at is this. the latest figures show that china has greater GDP per capita than the philippines. the IMF list placed china at 94th while the philippines at 125th; and the world bank list placed china at 95th while the philippines at 122nd. but these facts are contrary to 2011 index of economic freedom. the list clearly shows that the 115th placer, philippines, is economically “freer” than the 135th placer, china, which suggests that the philippines is more economically progressive than china? now this is a big joke. oh I forgot to mention. the same index said that the 130th placer, bangladesh (one of the world’s poorest countries), and the 133rd placer, haiti (western hemisphere’s poorest country), are freer and economically better than china, the world’s second largest economy? this is even a bigger joke. see my point now?

    • October 18, 2011 3:38

      “what I’m driving at is this. the latest figures show that china has greater GDP per capita than the philippines. the IMF list placed china at 94th while the philippines at 125th; and the world bank list placed china at 95th while the philippines at 122nd. but these facts are contrary to 2011 index of economic freedom. the list clearly shows that the 115th placer, philippines, is economically “freer” than the 135th placer, china, which suggests that the philippines is more economically progressive than china? now this is a big joke.”

      —- I think you misunderstood me. The Index of Economic Freedom is just a barometer of countries’ efforts to relax their economic policies and improve their degree of economic freedom. I am not saying that it’s an absolute barometer. In fact, I disagree with one of its indicators like GOVERNMENT SPENDING. Heritage Foundation gives higher rating to countries with higher government spending, which what I disagree with. There should be lower government spending in the first place.

      Here’s what I said, which you clearly misunderstood.

      “The top ten freest economies of the world are Hong Kong, Singapore, Australia, New Zealand, Canada, Ireland, Denmark, United States, and Bahrain. Observe that these nations are the most successful in terms of economic gains and per capita income.”

      The phrase is “THESE NATIONS ARE THE MOST SUCCESSFUL…” The word “THESE” refers to the top ten freest economies on earth.

      As to those above 100, naturally they have to compete with each other in terms of investment. China may have been rated worse in economic freedom than RP, but certainly there are factors that make China attractive to foreigners (e.g., population, protection of foreign investors, its efforts to relax its business climate, etc.) despite its scary economic policies. In the first place, I believe that Philippines should have been above 140 because of its protectionist policies and foreign ownership regulations/limitation.

      The point of this post is, economic freedom is important, and it’s the only way for this nation to guarantee economic success.

    • GabbyD permalink
      October 18, 2011 3:38

      homosapiens,

      this is really about his beliefs than any proof per se.

      froi,

      i’m actually quite pleased that you are transparent in your motivations (i.e. propagation of your philosophy)

      • homosapiens permalink
        October 20, 2011 3:38

        gabbyd,

        i see what you mean. maybe he still needs time to figure out the difference between “personal beliefs” and “facts”.

  3. October 18, 2011 3:38

    “but you haven’t stipulated any legitimate study that equates the lacking of “necessary imaginative skills” in drafting the constitution to poor economy. i think you missed that.”

    — Let me tell you something. I don’t need a “legitimate study”. That’s what most leftists/statists say whenever they try to ask for proof. They’d tell you, “did you conduct a regression study?”

    The answer to those clueless questions should be: “Reality, morons! That’s the answer.”

    To be very frank, those who drafted the Charter didn’t just lack “the necessary imaginative skills.” Like I said in this post, they are IGNORAMUSES. They are INTELLECTUALLY BANKRUPT.

    Let me give you a number of reasons why that so-called study you’re asking for is irrelevant and why the drafters are intellectually bankrupt and ignoramuses:

    1. They don’t understand the proper, right concept of rights. I discussed that already. Please check this link.

    2. They don’t understand proper economics. That’s the reason why they drafted a Constitution that enshrines protectionism, welfare state, and BIG GOVERNMENT.

    3. They are statists and/or pro-mixed economy.

    4. They are pro-egalitarianism.

    5. They are politically correct.

    By the way, what kind of study are you talking about? I don’t think Economics and Pol Sci professors at UP have the brain and/or proper knowledge to conduct that study.

    As to China versus RP, I think a commenter named Pinoy Astro already tackled your problem above. Please check his comments. We do not allow 100 percent foreign ownership of lands and businesses in RP. In China, they have relaxed laws that allow Wholly Foreign Owned Enterprise. That makes a big difference.

  4. homosapiens permalink
    October 19, 2011 3:38

    no, it’s very clear to me. i don’t only agree that the index is not the “absolute barometer” as you said, but it is definitely not credible. its assumption that the country’s economic openness necessarily leads to better growth is unfounded and contrary to facts. according to american economist, jeffrey sachs (new york times best-selling author and one of time magazine’s 100 most influential people in the world), he found the “index of economic freedom” contradictory to realistic facts since countries with high rankings from the index such as switzerland and uruguay had sluggish economic performances, while china, with poorer rating had very strong economic growth. the index just doesn’t cut it. and this is the reason why i described it as a “big joke”.

    one thing more, you even disagreed to “government spending” as one of its indicators, and somewhat opposed with its rankings, so why did you even used that index in the first place if you don’t believe its entire content? it doesn’t make sense at all. and it only makes your point quite unconvincing.

    from my query on the legitimate study regarding the drafting-of-constitution/economic-performance correlation, you responded, “i don’t need a ‘legitimate study’.” so in other words there’s absolutely no study conducted by any expert that equates poor drafting of constitution to poor economy. well, i thought so, too.

    i think it’s safe to say that the economic policy of protectionism can at some point “protect” the country’s economic interest, and that welfare expenditures doesn’t necessarily degrade the economy to poorest level. as i stated before, most of the first world countries (particularly the member-nations of G20) impose protectionist measures, and that some “free” or “mostly free” countries (as ranked in 2011 index) implement welfare state programs that alleviates poverty incidence.

    • October 19, 2011 3:38

      “i think it’s safe to say that the economic policy of protectionism can at some point “protect” the country’s economic interest, and that welfare expenditures doesn’t necessarily degrade the economy to poorest level. as i stated before, most of the first world countries (particularly the member-nations of G20) impose protectionist measures, and that some “free” or “mostly free” countries (as ranked in 2011 index) implement welfare state programs that alleviates poverty incidence.”

      — I don’t think that kind of gibberish is founded on facts and sound economics.

      • homosapiens permalink
        October 20, 2011 3:38

        not founded on facts and sound economics? try reading this…

        The Wall Street Journal:
        “Despite a pledge by Group of 20 leaders in November to avoid protectionist measures, 17 of the countries have since erected new trade restrictions, according to a World Bank report. ‘With the global economy teetering on the abyss of severe recession, political pressures demanding protection from import competition to protect employment are surfacing with increasing intensity around the world’…”

        http://blogs.wsj.com/economics/2009/03/17/protectionism-on-rise-in-17-of-the-g20-world-bank-report/

        Do Social-Welfare Policies Reduce Poverty? A Cross-National Assessment:
        “This study assesses the effects of social-welfare policy extensiveness on poverty across 15 affluent industrialized nations over the period 1960-91, using both absolute and relative measures of poverty. The results strongly support the conventional view that social-welfare programs reduce poverty.”

        http://www.lisproject.org/publications/liswps/188.pdf

        also, try reading “Determinants of Relative Poverty in Advanced Capitalist Democracies by Bradley, D., Huber, E., Moller, S., Nielson, F. & Stephens, J. D.

        http://www.jstor.org/pss/3088901

        i’ve given you the excerpts from legitimate sources and their corresponding links. these are not “gibberish” for they are written in plain english so people who have difficulty finding “facts” and grasping “sound economics” can easily understand. enjoy.

      • October 20, 2011 3:38

        Protectionism doesn’t work. The Philippines is a very good example. Those are not credible sources. Protectionism is what most Keynesian and Marxist economists promote. If protectionism really works, then the Philippines should have been richer and more economically successful than Hong Kong, which is one of the freest economies on earth. North Korea, which is the best example of an absolutist protectionist state, should be more economically successful than the Philippines and other third-world countries in Asia. Use your logic and do not just depend on those funny sources.

        In America, it’s protectionism that made the Great Depression worse.

        From my blog:

        “Another proof that excessive government intervention caused the ‘real depression’ was when the Smoot-Hawley Tariff Act of June 1930 was implemented, which increased American tariffs to unprecedented levels. This statist act practically closed the American borders to affordable foreign goods, which would have benefited financially troubled Americans. American economists and historians claimed that the 1930s was the beginning of the ‘real depression’ and the crowning folly of the whole troubled period from 1920 to 1933.[xii][xiii][xiv]

        “According to American economist Benjamin Anderson[xv]:

        “Once we raised our tariffs, an irresistible movement all over the world to raise tariffs and to erect other trade barriers, including quotas, began. Protectionism ran wild over the world. Markets were cut off. Trade lines were narrowed. Unemployment in the export industries all over the world grew with great rapidity. Farm prices in the United States dropped sharply through the whole of 1930, but the most rapid rate of decline came following the passage of the tariff bill.”

  5. October 19, 2011 3:38

    “its assumption that the country’s economic openness necessarily leads to better growth is unfounded and contrary to facts.”

    — Where did you get that leftist claptrap? Economic freedom is what made rich economies like the US, Hong Kong, Singapore, Chile and others. They may not have total, absolute economic freedom, but the fact is, they maintain a higher degree of economic freedom that allows investment, free trade and indispensable economic activities that led to job growth and economic success.

    I’m not familiar with this Jeffrey Sachs, but I would be glad if you can give me his exact statement so I can offer my objective response.

    I disagree with certain indicators used by the Heritage Foundation, but one thing is clear, economic freedom leads to economic success, and that’s proven by the experience of Hong Kong, Singapore, Australia, New Zealand, US, Chile, among others.

    FYI, it is difficult to quantify a nation’s economic success. The data being offered by international think tanks like Heritage Foundation and Doing Business dot Org merely give us an idea about the economic performance and openness of nations. The first few paragraphs of my blog should have given you some idea that IT IS NOT about the data of the Heritage Foundation. It is, overall, about ECONOMIC FREEDOM. In fact, I could have used the data from DoingBusiness.org and other think tanks.

    To claim that “economic openness necessarily leads to better growth” IS unfounded and contrary to facts does not just demonstrate your lack of knowledge and ignorance, but also your lack of regard to real-world facts. If that’s the case, are you saying that economic regulations and protectionism (which is the opposite of economic freedom) is the determinant of economic success? Are you saying that your conclusion is backed by FACTS and SOUND ECONOMICS? Did you look at socialist countries that practice protectionism and regulations? China may be enjoying some sort of economic success, but it’s housing bubble is about to burst. You only have to read proper economic books to know and understand real-world facts. I cannot help you if you don’t even understand a very simple economic concept. You can only help yourself.

    • homosapiens permalink
      October 20, 2011 3:38

      jeffrey sachs have contested the index’s assumption that economic openness necessarily leads to better growth in his book, The End of Poverty: Economic Possibilities for our Time; published by Penguin Books in 2005. so if you want his “exact statement”, buy his book first.

      also, stefan karlsson of the ludwig von mises institute, criticized the index due to the fuzziness of many of the categories used to determine freedom. john miller, writing in dollars & sense, said the index doesn’t take into account the actions of governments to nurture business which leads to wealthy and/or conservative countries with barriers to trade placing high on the list, while poor and/or socialist countries with fewer restrictions on trade place low. while “left business observer” stated that the index has only a 33% statistical correlation with a standard measure of economic growth, GDP per capita.

      you see i have no problem with the concept of “economic freedom”. but i just can’t buy the questionable indicators and hit-and-miss rankings of “2011 index of economic freedom”. so if i were you, i will drop that index before it drags me down to economic oblivion.

      • October 20, 2011 3:38

        Of course. Like I said, there are many things to disagree with about the Index’s indicators.

        Like I said:

        “I disagree with certain indicators used by the Heritage Foundation, but one thing is clear, economic freedom leads to economic success, and that’s proven by the experience of Hong Kong, Singapore, Australia, New Zealand, US, Chile, among others.

        “FYI, it is difficult to quantify a nation’s economic success. The data being offered by international think tanks like Heritage Foundation and Doing Business dot Org merely give us an idea about the economic performance and openness of nations. The first few paragraphs of my blog should have given you some idea that IT IS NOT about the data of the Heritage Foundation. It is, overall, about ECONOMIC FREEDOM. In fact, I could have used the data from DoingBusiness.org and other think tanks.”

  6. homosapiens permalink
    October 21, 2011 3:38

    vincent: “Protectionism doesn’t work. The Philippines is a very good example. Those are not credible sources.”

    homosapiens: maybe in your “personal belief”, they’re not credible. but these legitimate sources speak for themselves. don’t get me wrong. i affirm with welfare state programs for they reduce poverty incidence as studies suggest. but i don’t totally agree on policy of protectionism. major economists oppose protectionism but i just find it hypocritical for first world countries, particularly the g20, to impose protectionist measures that they agreed to oppose. even usa opted to implement protectionist policies against china.

    http://www.reuters.com/article/2010/02/01/us-china-usa-trade-idUSTRE6103FK20100201

    these major economies only prove that “free trade” isn’t foolproof at all. and so if first world countries can impose them, why can’t the developing countries? i sense double standard.

    vincent: “Like I said, there are many things to disagree with about the Index’s indicators.”

    homosapiens: if you totally disagree, then why are you still promoting that index in this article? that’s contradictory, isn’t it? if you delete that index here, only then will i be convinced.

    • October 21, 2011 3:38

      Where are those studies? Do you understand the concept of protectionism? All regulations that bar foreign investors in favor of domestic or local investors are examples of protectionism. Those studies you may have read are junk studies or economics.

      Many countries in Europe, particularly the EU, are not having severe economic trouble not merely because of protectionism, but regulations and bad monetary policies.

      Again, like I said, if you moronic protectionism really works, the Philippines should have been economically successful. What happened since we adopted the protectionist Constitution in 1987? NOTHING! Except that we decline further.

      LOGIC! You need it. Do not just rely on studies. Try to use your mind.

      I don’t totally disagree with the Index. I somehow agree with its assessment of RP.

      • homosapiens permalink
        October 21, 2011 3:38

        again, if protectionism really is contrary to “free trade”, then why do first world countries still impose protectionist measures? since you can’t answer it, let me. it’s either free trade isn’t foolproof or they can’t “put money where mouth is”. simple as that.

        and i didn’t say protectionism works but welfare state programs do as legitimate studies confirm. but you don’t believe in studies and consider them as “junk” for the simple reason that they contradict your “personal belief”. right.

        speaking of “logic”, you once told “there are many things to disagree with about the Index’s indicators” like “government spending”, etc. and now you’re saying you “somehow agree with its assessment of RP”. you confirm a particular position while ignoring a significant portion of the argument? how fickle minded. fyi, you’re committing a logical fallacy called “cherry picking”. so please ask yourself what kind of “logic” are you talking about?

      • October 22, 2011 3:38

        First world countries like USA impose protectionist policies because they have liberal and statist politicians both in the Republican and Democratic parties. And they’re paying for a great price for doing so. However, they are still freer compared to poor countries like Philippines, Somalia, Cambodia, and other African countries.

        Again, if protectionism really works, then RP should have been a rich country.

      • Pinoy Astro permalink
        October 22, 2011 3:38

        homosapiens,

        i’m sorry but i find your logic flawed and hilarious. you’re trying to argue that first world countries became economically prosperous because of protectionism. that’s why they still impose protectionist policies. yes, there are indeed first world countries with protectionist policies, but protectionism didn’t make them rich. despite their protectionism, they are still freer and more attractive to business compared to poor countries with high degree of protectionism.

        go to usa, canada, new zealand and other first world countries and you can put up your own business, allowed 100 percent ownership and you can also practice your own profession if you’re a doctor, nurse, lawyer, engineer, etc. that’s not allowed in the philippines. so, yes! they have lower degree of protectionism, but it’s not protectionism that made them rich.

        actually i’m tired of reading ur utterly flawed arguments and reasoning.

  7. homosapiens permalink
    October 22, 2011 3:38

    pinoy astro,
    first, i didn’t send you any discussion invite because as far as i know, you’re not the author of this article. i only want to discuss with the one who composed this whole argument. second, i felt sorry for your inborn dyslexia. i didn’t say “first world countries became economically prosperous because of protectionism”. those were your words, not mine. so don’t put words into my mouth because i can only spit them to your face. third, i didn’t ask you to read my posts. if your mentally tired then get some rest at any mental asylum.

    vincent,
    you said, “First world countries like USA impose protectionist policies because they have liberal and statist politicians…” so you blame these few liberals and statists? you’re making it appear that these first world countries are actually protectionist countries, and that their pro-protectionism politicians have much stronger influence than the rest of the government. if so, then why do these protectionist countries are still into free trade? it doesn’t make sense at all.

    • Pinoy Astro permalink
      October 22, 2011 3:38

      i may not be the author but i’m part of the discussion. same with gabbyd. anyone may refute someone else’s arguments here.

      “i didn’t say “first world countries became economically prosperous because of protectionism”.”

      — but that’s where you’re to argue. you even said that economic openness is not backed by facts, etc. it’s either-or, bro. it’s either economic freedom or protectionism. that’s what you don’t get simply because you’re so naive. so what’s your point now? make it clear. you don’t even know what you’re talking about.

      as to the author’s arguments… again, you missed the point. it’s not about blaming those liberals and statists, kiddo! even the most free and open country’s got socialist politicians who proposed economic protectionism and regulations. that’s exactly the answer to your response. the point is, it’s not protectionism that made countries rich. it’s their economic openness and liberalization. and if some of these first world countries adopted protectionist policies, that does not mean it’s these policies that made these countries economically prosperous. in fact it’s the opposite. arguing with you is like arguing to a kid who doesn’t know basic concepts. it’s like arguing with a moron lol! you don’t understand these things if you don’t understand how economics works. that’s the truth.

      you can’t even answer why the philippines remains poor despite being very protective of its economy. or do you even know the philippine charter has a protectionist philosophy? perhaps you don’t. instead you look at first world countries whose protectionist policies pale in comparison with that of the philippines. compare the protectionist policies between the philippines and usa, great britain, germany, italy, and others. if you do, you’d see the difference.

  8. homosapiens permalink
    October 22, 2011 3:38

    pinoy astro,
    this was the complete statement – “its assumption that the country’s economic openness necessarily leads to better growth is unfounded and contrary to facts. “ – this line was describing the “2011 index of economic freedom” that vincent was “cherry picking” on, and it was not referring to the general term “economic freedom” that your crackpot head thought, idiot. geez, you’re dyslexia is worse than i thought. see who’s the moron now? lol

    vincent,
    if you won’t respond to my last post, then i respect your silence. i suppose you already hoisted your white flag.

    • Pinoy Astro permalink
      October 22, 2011 3:38

      now that’s funny. Whether it was an assumption of the index or any economic think tank, your claim that such an assumption is “unfounded and contrary to facts” is downright idiotic and clueless. where are those facts? do you understand the real-world facts, moron? it’s not just the index’s assumption that you’re trying to attack with your pea-brain. it’s economic openness or economic freedom. because it’s not just the assumption of the index (wherever you got that information). it’s the assumption of every pro-free market economist, imbecile.

      it seems that you don’t know what you’re talking about, you imbecile.

  9. homosapiens permalink
    October 22, 2011 3:38

    vincent,
    i know you don’t like discussing how your “cherry picking” on that dubious “index” leads your “logic” to eventual demise. but do you hear any dyslexic echo with moronic comebacks? oh never mind.🙂

  10. Pinoy Astro permalink
    October 22, 2011 3:38

    i think this is getting funnier lol! i don’t know ur issue with the blogger, but you begin to delude yourself. define “cherry picking.” i guess i know who’s cherry picking and who’s intentionally disregarding his opponent’s arguments and keep on making illogical, imbecilic points. it’s you. you’re just like gabbyd. try to review his posts above. he’s mentally retarded, i believe.

    i think i partly responded to your charged in my response above.

    I said:

    “Whether it was an assumption of the index or any economic think tank, your claim that such an assumption is “unfounded and contrary to facts” is downright idiotic and clueless. where are those facts? do you understand the real-world facts, moron? it’s not just the index’s assumption that you’re trying to attack with your pea-brain. it’s economic openness or economic freedom. because it’s not just the assumption of the index (wherever you got that information). it’s the assumption of every pro-free market economist, imbecile.”

    i don’t think anyone who thinks should respond to your delusion lol!

  11. homosapiens permalink
    October 26, 2011 3:38

    pinoy astro,
    what “issue” with the blogger? personal issue? geez, i’m just sharing my thoughts on the subject matter here. don’t dwell too much on your delusion or you might really end up in mental asylum. and to remind you, i’m arguing with the cherry picker, vincent. not you, dyslexic moron. lol

  12. bogz permalink
    November 1, 2012 3:38

    Protectionism? You rather read Bastiat’s Protectionism, or the Three Aldermen. The three Aldermen have their own businesses and competitors (of course). They need to lobby to the government to impose restrictions to goods coming from other country. That’s because foreign goods are more superior and have higher demands from local consumers than theirs.

    • November 1, 2012 3:38

      Yes, I read Bastiat. I consider him the greatest legal thinker and theorist of his time. Thanks for the suggestion.

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