Debating a Hardcore Welfare Statist
A comment on impeached Chief Justice Renato Corona’s statements during his impeachment trial that I posted online effectively generated reactions from members of a political Facebook group. Corona reportedly uttered the following words: “I’m no thief. I’m no criminal. I’ve done no wrong. But I am also no fool.” In response, I posted the following on this Facebook group:
Many people in the government have a very shallow, distorted understanding of corruption.
Corruption in the public sector is not merely committed by raiding government coffers. That’s just one form of corruption. It is also done by destroying the economy through unsustainable, impractical, destructive economic policies.
- Corruption can be committed by using one’s position to oppress or to steal the property of others (e.g., the Basa-Guidote case).
- Corruption can be committed by using one’s political power to increase stocks portfolio (and those of one’s family members and friends) through public-private business partnerships (e.g., the case of Gloria Macapagal-Arroyo).
- Corruption can be committed by encouraging a ‘Palamunin Culture’ and increasing welfare spending, thus draining the nation’s coffers (e.g., the ongoing cases of Greece and the Philippines).
- Corruption can be best committed by institutionalizing a culture of ‘sacrifice’ and ‘dependency on the state’ (e.g., the case of all regimes in RP).
- Corruption can be sustained and perpetuated by keeping the protectionist, oligarchic, welfare-statist status quo.
The MAIN SOURCE of the country’s graft and corruption is the 1987 CONSTITUTION.
A long-time member of that Facebook group said: “Well, I guess we are witnessing an “asian Greece” on its path to self destruction.”
That particular comment elicited a contrarian reaction from a Filipino freethinker named Bhavan Karnani, who made the following comment: “Asian Greece? With our improving credit rating? Really? Also the philippines has one of the lowest budgets for welfare as a percentage of GDP in the world. government spending on health care is only about 0.5% of the gdp for example.”
Thus started a lengthy Facebook debate about whether the Philippines has a very low welfare spending.
To bolster his argument, Bhavan Karnani added: “Also the philippines has one of the lowest budgets for welfare as a percentage of gdp in the world. government spending on health care is only about 0.5% of the gdp for example.”
Such a statement prompted me to make the following reply:
That’s interesting. But that could be easily shattered and destroyed with proper and logical arguments.
May I ask you something…
- What’s the current welfare spending of RP, and what’s the current rate or percentage of our spending visavis the GDP?
- Where is RP in the global ranking in terms of welfare spending? WHERE SHOULD WE BE?
- What’s the acceptable level of welfare spending?
- Where will we get the money to make our welfare spending at par with the world’s biggest welfare spenders?
And what’s your understanding of GDP? Is this a good barometer for a country’s welfare spending? Does it in any way pertain to government revenue? I’m very much interested.
Bhavan Karnani responded, saying: “The government budget is very low due to notoriously low tax compliance. I would like to see a modernization of the BIR and a strengthened drive to catch tax evaders. This has been done to some extent already, the government budget was up 14% last year without additional taxes and I’d like to see this continue.”
Very low? Are you familiar with the Laffer curve? So what’s your own ESTIMATE of the country’s supposed tax collection?
You said: “the government budget was up 14% last year without additional taxes and I’d like to see this continue.”
Well, for your information, the government may decide the amount of budget anytime… It could increase the budget and borrow money. That’s what the past regimes have been doing ever since. For instance, Gloria doubled our debt.
Bhavan Karnani there was a mistake, as he was referring to government revenue, not budget.
Elpidio, a long-time active member of the Facebook group, made the following observation of Bhavan’s arguments:
I have the impression that you are mixing concepts together. Let me try to differentiate them for you. The ideas applied in a welfare state are mostly based on socialistic ideals. The economic model of socialism is the central planning because it fits the concept of the “society/community” as the basic unit. But you and I know from the recent past that centrally planned economy does not work.
Finland, however, adopted the economic model of capitalism and free markets. Now, in order to make a welfare state work in practice, the government has to strictly regulate and tax the free market to such a high level that is good enough to fund the welfare system but not choke and kill the economy. The state is just PIGGYBACKING on the capitalistic free market economy.
So, the questions now are what comes first, what comes last, what supports what, and what is dependent on what?
So in your Finland example, answer these questions: Who developed the economy, the businesses or the welfare system? Did their welfare system develop their economy?
Bhavan Karnani answered: “To more than it is now. Like I said, we spend among the least in the world on welfare.”
My reply to Bhavan’s argument:
I suggest that you try to look at existing economic indicators. What actually creates wealth? Should the people depend on the government for welfare services? Or: should the government fix the economy thru sound, practical free market policies in order to attract more spending, which is the only way to create jobs and to make the people independent.
Welfare services DO NOT create wealth. They actually drain the economy. It’s the economy, student.
Bhavan Karnani said: “I think that is a very simplistic view of things, welfare, at least in the form of good public education has contributed greatly to finlands progress and welfare definitely contributed to eradicating poverty. Hong Kong developed rapidly, but did they eradicate poverty? They have horrible poverty problem where hundreds of thousands of people are living in “coffin homes.”
My reply: “It’s funny that you failed to realize it’s your own drivel that’s actually simplistic and without any basis. Are you saying only public education is a good form of education? Can you compare HK with Finland? What made Finland more economically prosperous than RP? Do you know? Did your welfare politics eradicate poverty in Greece? In Zimbabwe? In the Euro countries?”
Bhavan Karnani: “Yes I can compare Hong Kong with Finland. Hong Kong – rich but still high poverty. Finland – rich and little poverty. Lol. Obviously Greece had bad economic policies. Nobody is saying we should emulate greece.”
My reply: “Wow! The ignorance here is so creepy. Any proof? What’s your proof? It’s their (Greece) welfare programs and policies that killed their economy. It seems that you don’t understand the relation between welfare spending and economic policies. It’s the first (welfare programs) that determines the second (econ policies).”
From Elpidio: “Bhavan Karnani, have you ever thought that Finland might seem to maintain a welfare state because its current economy CAN AFFORD to support it. Because its current economy is relatively STRONG?”
Bhavan Karnani then appealed to statistics:
Look up the statistics, HK – 19% poverty rate.
And different countries have different criteria for evaluating poverty so to understand the poverty in Hong Kong you need something more descriptive than just a number.
So then we should stregnthen our economy, raise tax compliance then we can spend on welfare. I’m not arguing that we should boost welfare to finlands levels NOW. Lol.
Bhavan Karnani, where’s the 19% poverty rate? That’s not even a reliable source, coming from a leftist writer. I don’t understand what made you use HK to prove your point. HK also has its own welfare policies.
Are you suggesting that the only way to solve poverty is through Welfare spending? IF that’s your own solution, then, why did Greece fail? You don’t even understand what you’re talking about.
You said Greece’s economic policies failed. But what failed their economy in the first place? IT’S THEIR WELFARE PROGRAMS. Get your facts correct and stop attacking religion at FF.
Elpidio asked: “Bhavan Karnani, so, how do you strengthen the economy?”
Then I wrote the following:
Bhavan, let me ask you this then… How much welfare spending do we need to adopt or establish in RP in order to close the poverty gap? Tell us now and don’t simply run away…
You showed here that your model is Finland. Should we LEVEL our welfare spending with Finland’s WS? Is that your way out of poverty? That we should just throw money to the poverty problem?
Elpidio, you know this is worse than OPD’s parliamentary drivel lol.
Here’s his style:
- To prove his point that more welfare spending is good, he points at Finland whose economy is better than RP. Finland’s economy is more open and freer than RP’s.
- But when we try to point out how more welfare spending destroyed Greece’s economy, Bhavan Karnani would simply argue: ‘Well, the problem is their economic policies.” It seems that this guy doesn’t know the CONNECTION between welfare programs and econ policies. Every government program requires budget, and this cycle affects the country’s economic policies.
Bhavan Karnani, how did your welfare eradicate poverty in Greece? Look at the countries with absolute welfare like North Korea. Lazy people will always exist in any economic setting. You cannot force people to work and be productive. In a society with 1 million population, there will always be a population of lazy and unproductive people. You want to subsidize this lazy population with the wealth generated by the successful, productive social members?
Elpidio also made his own observation:
My impression is that Bhavan Karnani seems to have mixed up things a lot and have difficulty in differentiating concepts. Anyway, I am quite sure I know what he wants: Pinas should be a welfare state much like Finland and without collapsing like Greece (or the whole Soviet/Warsaw bloc in the recent past).
He has agreed though that a strong wealthy economy is the basic foundation of good things (including his welfare state).
So, my question to @Bhavan:
If you were in the position to make and implement policies (as a dictator or whatever), what policies are going to strengthen your economy and make your country wealthy?
Btw: to save us the useless back and forth, do not base your policies on hypothetical scenarios or wishful thinking. Base them on what worked and what didn’t in the past. Okey? So, game na. What are your policies?
Bhavan Karnani said: “Do you think hong kongs poor are lazy? many of them work their ass off, they just cant afford to live in a better place because wages are too low to pay rent. Many even dig through trash just to make end meet. They dont do that because they are lazy.”
My reply: “Bhavan Karnani, yes, it may not be available due to absence of reliable source or whatever. But that doesn’t prove anything. HK is the second freest economy on earth, but that doesn’t mean it has no population of lazy and unproductive people. In the Philippines, there are more poor people– those who live with less than a dollar a day- because of our failed economic policies. And you cannot simply fix that problem through modernized tax collection. And even if you TAX THE TOP 50 PERCENT of this country 70% of their income tax, you can never solve this country’s poverty problem. That’s a fact. You said: ‘many of them work their ass off, they just cant afford to live in a better place because wages are too low to pay rent.’ — LOL! What are you gonna do? If that’s your own reality, what are you gonna do? Confiscate the land properties of the rich and landowners and then distribute them to the landless? Wow!
Bhavan Karnani: “I never said that modernizing the tax system is the ONLY thing we should do, It’s just one step. Of course we should remove senseless regulations as well and open up the economy.”
To which Elpidio replied: “Bhavan Karnani, I am waiting for your policies…”
Bhavan Karnani said: “Of course we should remove senseless regulations as well and open up the economy.”
— LOL! And then increase welfare spending by how much? Let’s see if your policy could withstand reality…
Plus, what kinds of taxes are you going to increase? Would you add more taxes?
This is getting funnier…
Bhavan Karnani: “Right now, no. Boosting tax compliance should be a priority.”
Bhavan Karnani, since you’re trying to argue that HK’s welfare spending is just minimal… This might blow your mind.
From the story: “Education, social welfare and health care will account for $137 billion in total.
“According to Hong Kong Information Services Department, this will account about 56% of all recurrent spending in 2011-12.”
Walang-wala ang Pilipinas jan. Anong gusto mong gawin ng HK? Increase its welfare spending by 60 to 80 %?
Bhavan Karnani: “Minimal as a percentage of the GDP, duh. Hong kong is well know for small government. Small government means small welfare too.”
Bhavan Karnani: “Boosting tax compliance should be a priority.”
— Lol. Let’s say through that policy, your government’s tax collection increased by 60%. Is that enough to accomplish your welfare dream?
Because if you try to do the math, RP’s welfare spending, despite that collection increase, would still look meager compared to other countries’ spending…
Medyo nalilito ka ata. So kindly tell us your rate or percentage for education, health care, etc…
Bhavan Karnani: “Minimal as a percentage of the GDP, duh. Hong kong is well know for small government. Small government means small welfare too.”
— Yes, but didn’t you see the FIGURE? “Education, social welfare and health care will account for $137 billion in total. That’s more than P5 trillion in the Philippines. Your arguments do not match. Mas malaki pa sa budget ng Pinas, iho lol!
From Elpidio: “Bhavan Karnani I believe you sincerely feel you care for your countrymen and wants to help them. My question now is: do you think welfare policies will boost the economy of Pinas now? If yes, what particular policies are those?”
Better study the Laffer curve. Your tax collection method won’t work. Why? Compare RP and Singapore in terms of revenue collection.
RP levies many kinds of taxes, which include income tax, EVAT, estate tax, excise tax, tariffs, etc.
Singapore levies minimal tax rates. It has no capital gains tax. In fact, OECD considers Sing as a tax haven…
BUT… In terms of tax revenue collection, RP got 14.8% of its GDP (2011), while Sing also got 14.8%. Meanwhile, Hong Kong got 22.9% of its GDP.
What does that mean? It means that the Laffer curve works. If you allow more foreign investors, decontrol, and LOWER taxes or abolish some taxes, you’d collect more!
Don’t you see what’s wrong here? HK’s population is nothing compared with RP’s. That means RP is supposed to have more taxpayers. But HK beats us in terms of tax collection. It even has a higher level of welfare spending.
Why is that? Despite HK’s minimal taxes and little population, it has more taxpayers. And it can afford to spend big on welfare, particularly education.
Bhavan Karnani: “Your tax collection method won’t work. Why? Compare RP and Singapore in terms of revenue collection.” Lol. It already HAS worked, roughly 14% increase in goverment revenues last year, remember? To my knowledge the increase in revenues has continued this year as well.
Bhavan Karnani, please stop jumping from one strawman argument to another. Before you embark on dissecting the details of your strawman arguments, answer these fundamental questions first. These questions were asked at the early part of this thread but you kept dodging them.
- You mentioned Finland. What developed their strong economy, the businesses or the welfare system?
- You agreed that Pinas needs a strong economy to be able to fund the welfare state you envision. If you are in the position to make and implement policies, what policies will strengthen Pinas economy and make it wealthy?
- Do you believe that welfare policies will boost the Pinas economy?
Answer them first. If you keep on avoiding them, the rest of your argumentation is nothing but haphazard exercise in noise making.
Bhavan Karnani: “Numerous factors went into developing Finland, giving a choice of what developed their economy business or welfare is a childish oversimplification of things. Which is why I didn’t answer it previously. What policies will strengthen Pinas economy and make it wealthy? Open up the economy. Allow more foreign ownership in businesses develop infrastructure, improve the education system among other things…”
From Elpidio: “Bhavan Karnani, okey you gave your answers to nr. 1 and 2. I’ll give it the benefit of the doubt for now. Please answer question nr. 3.”
Bhavan Karnani: “I believe that welfare will improve the quality of life of filipinos and some forms of welfare such as education can boost the economy.”
Elpidio: “Bhavan Karnani, thank you. Now, to support your claim that the first question was an oversimplification. Please list those numerous factors that you said developed Finland’s economy.”
Bhavan Karnani: “The modernization of the BIR is ongoing and not all of it is “dole outs” they are currenly increasing the number of auditors from 2000 to 8000.”
Another Facebook member joined the discussion.
Joe Javellana made the following comment: “Bhavan Karnani “increasing the number of auditors to 2000 to 8000.” LMAO
Great we have more grease money collectors. Way to go! Don’t we already have enough people in the BIR? LOL”
Bhavan Karnani: “No, lol, they have to audit more than 30 million people. 2,000 auditors is enough for that?”
Joe Javellana: “Bhavan Karnani audit more than 30 million people? Ha ha ha ha How many people actually file their income tax return to the BIR? How many companies are actually registered with the BIR? I wonder if some of the informal settlers in the Philippines actually file their ITR or have ever stepped into the BIR’s office.”
Bhavan Karnani, since you refuse to give support to your claim, and refuse to give a direct answer to a simplified question, here is my take on it.
1. The welfare system did not develop Finland’s economy. A welfare system cannot create wealth. It merely consumes the fund being contributed by the business/economic sector.
Whatever factors you mean to have developed their economy, most if not all of them can be grouped into “business/economic sector” category.
2. I agree with your answers to nr. 2. But didn’t you notice that the policies you mentioned have nothing to do with welfare?3. You agreed earlier that economy comes first. But your answer to nr.3 suggests that you think welfare policies will boost the economy. Aren’t you sliding into a “chicken or egg” dilemma?
Besides, the only thing that educational system does is to produce people with diplomas, degrees, certification, and whatever. Where are they going after graduation? If your economy still sucks, who’s gonna employ them. Chicken or egg dilemma again? Does a horde of fresh graduates without employment boost the economy?You may refuse to answer again. That’s okey but don’t throw in strawman arguments.
Bhavan Karnani: “The welfare system is partly responsible for the great quality f life in Finland, and that, I believe is more important than just economic growth. I will discuss more later. Gotta go for now!”
LOL! How could Finland sustain its welfare system without economic growth? That’s reversing the cause and effect, comrade. You don’t even know the economic history of Finland. It did not start by distributing welfare. Finland, like Sweden, developed its economy through welfare reforms before embracing welfare state. My goodness.
Do you know a country that puts more importance on welfare than economic growth? It’s the Philippines. Another country is Greece. Why? The Philippines even borrowed money to pay for its welfare program instead of focusing on economic reforms.
by the way, since you’re so elusive that you don’t want to directly deal with the issues, the Failippines is NO Finland. Don’t try to fool yourself that by focusing more on welfare, the Failippines could improve the lives of the people just like Finland did. Again, you don’t even know the difference between Finland and RP. Let me educate you on this matter since it appears you don’t know the basic facts:
- Finland is more economically than RP. That’s a fact. Under the Econ Freedom Index, Finland was ranked 17th; RP was ranked 107th. Under the Doing Business ranking, Finland was ranked 11th; RP 126th. See the BIG difference, comrade.
- Finland levies lower tax rates, comrade. So the case of Finland rebuts your argument that taxation is the solution. It’s not, comrade. In Finland, the top income tax rate is 30.5 percent, and the top corporate tax rate is 26 percent. In RP, the top income tax rate is 32 percent, and the top corporate tax rate is 30 percent.
- Because of high public spending, Finland’s public debt has increased to 48.4 percent of GDP. Philippine’s public debt has hovered at around 45 percent of total domestic output. And because of our massive welfare spending, RP’s deficit has been over 3 percent of GDP.
- In other words, Finland could have not financed its growing welfare spending without having a slightly free and open economy. Every welfare program requires budget, comrade, and the money comes from the taxpayers. The government has no magic wand to create wealth out of nothing. Are you informed of that?
- If you focused more on welfare spending, comrade, you’d end up like Greece. The socialist politicians in Greece simply followed your ‘policy’. They believed that welfare “is more important than just economic growth.” Well, it’s because they’re all statist MORONS. That’s a fact.
- Also, a government that focuses more on welfare than on economic growth is like Zimbabwe. Heck! Robert Mugabe of Zimbabwe even thought that economic reforms and growth are not that important, so what what did to finance his welfare programs is that he MONETIZED debt. You know what that means? That’s what he did, and in just a very short span of time, his policy caused hyperinflation that ruined the lives of his own people. Those are moronic ideas by MORONS…
Perhaps that guy though the only reason why I oppose more welfare is taxation. It’s not. A lot of people don’t know the evil of welfare state. It does not merely increase taxes; it has more bad effects on the economy and the people’s lives and rights.
Welfare state can have following bad effects:
- Higher tax rates or more taxes.
- More regulations. This is the case of the Philippines, Greece, and other European states. Regulations could mean more revenue to the government in the form of regulatory tax burdens.
- Corruption. Welfare means giving more power to your politicians or regulators. That’s why foreign investors are afraid to invest in RP.
- Protectionism, which is also a form of regulation.
- Redistribution of wealth through progressive tax system. It punishes the wealthy for being too successful. And it encourages freeloading and dependency on the state.
- Higher deficit and more debt. This is self-explanatory. This has been covered by many economic studies. Higher debt could have a negative effect on the economy. Even the IMF agrees with this. —>> http://www.americanthinker.com/blog/2012/05/an_undergraduate_takes-down_paul_krugman.html
- It’s all about big government. This concept means more government welfare leads to more government powers to rule your life. The RH bill is a good case to study here. Before, the socialist lawmakers in Congress wanted to force businesses to provide RH services to their workers regardless of their capacity or incapacity to pay. As expected this bill was strongly supported by the leftists and the Filipino Freefarters.
Bhavan Karnani: “Deteriorating welfare state? Guess which country posted the fastest quarter on quarter growth in Europe in the first quarter of this year? Finland. Both the Philippines and Hong Kong spend very little on welfare as a percentage of GDP. The Philippines has one of the lowest rates of spending on welfare in the world, It is even lower than Hong Kong. I will give you the statistics when I have more timebut I looked this up before.”
LOL! Of course that’s so expected because the whole of the EU nations are all welfare states. Can you compare Finland with Greece and Portugal. The good thing about Finland is that LIKE SWEDEN, it adopted free market reforms before following the path of Greece. My goodness!
Now kindly respond to this… Puro ka naman hide and seek. A typical freefarter…Here’s the gist of your arguments:
1. You said we should focus more on welfare spending. To prove your point, you said that RP has one of the lowest welfare spending on earth. Then, why not show us the model (e.g., Finland or Sweden) to follow when it comes to welfare spending? Should we follow Finland’s public spending? How about Sweden? So, what percentage of the GDP should we spend? Tell US! TELL US AND DON’T GO AROUND THE BUSH! Tell us since you said our spending is one of the lowest in the world. Should it be 30%?
2. If you don’t want to increase taxes, since it appears you don’t know what you’re talking about, how much money would your efficient and modernized BIR collection system hope to COLLECT? How much? And is that enough to pay for all the increased welfare spending, which you’re rooting for?
Bhavan Karnani, puro ka drama. You said: “Both the Philippines and Hong Kong spend very little on welfare as a percentage of GDP. The Philippines has one of the lowest rates of spending on welfare in the world, It is even lower than Hong Kong.”— Why not show us facts. That’s why you need to respond to this… Puro ka “they spend very little.” Kakatawa ka na. You now sound like a broken record. The point is, should they spend at all? My point is NO!
Bhavan Karnani: “Among the countries with the highest quality of lif, most have very high welfare spending, and that in my opinion is what we should be striving for. Economic growth without improvement in quality of life is useless.”
Here’s what you should understand about basic economics… This is pure logic!
1. An economically prosperous country like HK and Singapore with few taxes and low tax rates is expected to have a VERY HIGH GDP! That’s ouput!
2. Since that economically prosperous country merely levies few taxes and low tax rates, it’s expected that it would only have a very low government revenue compared to its GDP.
3. Since that country has minimal government revenue due to its lower tax rates, it’s expected that its welfare spending would be very low compared to its GDP.
Now, the fact that HK’s welfare spending is 17 to 19% shows that it spends more on welfare!
You said: “Among the countries with the highest quality of lif, most have very high welfare spending, and that in my opinion is what we should be striving for.”
— This is funny and ignorant at best… Does that include Greece and Portugal?
Also, Cuba is said to have more than 80% government expenditure of GDP…
What makes those countries happy is not their big welfare spending. It’s their vibrant economies that make their people happy.
“2. If you don’t want to increase taxes, since it appears you don’t know what you’re talking about, how much money would your efficient and modernized BIR collection system hope to COLLECT? ”
It can improve a lot. Sadly a huge chunk of taxes owed in this country are not paid. revenues rose 14% last year and they are rising further this year, lets see how high it can go before we decide if we need more taxes.
“What makes those countries happy is not their big welfare spending. It’s their vibrant economies that make their people happy.”
Vibrant economies along with welfare and a good quality of life, which is why Hong Kong and Singapore are not in the list.
how about #1?
You said: “Sadly a huge chunk of taxes owed in this country are not paid. revenues rose 14% last year and they are rising further this year, lets see how high it can go before we decide if we need more taxes.”
— That’s not how economics works. Better study the Laffer curve. We have low collection compared to our GDP because there are fewer taxpayers. A taxpaying population is only produced by more investment and more economic activities. That’s a fact!
You said: “Vibrant economies along with welfare and a good quality of life, which is why Hong Kong and Singapore are not in the list.”
– Again, what you’re saying here DOES NOT CORRELATE. You’re again reversing the cause and effect. People are happy because their economy is working for them, not because of more welfare spending. My goodness. If that’s your DOGMATIC faith and belief, then why not look at Cuba and other countries with more than 70% to 80% welfare spending?