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That Protectionist Winnie Monsod!

July 14, 2012
  • NOTE: This is an updated version. An update was made to deal with some of Monsod’s assertions. I found out that some of her sources appear to be outdated and UNRELIABLE. Did she even bother to verify the accuracy and reliability of her sources?

Not all so-called economists properly understand economic realities. Economic ignorance is not merely a product of one’s failure

You've got so much blood on your hands, protectionists!

You’ve got so much blood on your hands, protectionists!

to understand statistical facts and economic indicators, but also a result of one’s embrace of collectivism and anti-reality ideologies. There are certainly highly schooled ‘intellectuals’ who base their wrong, anti-reality judgments on mangled ideologies or poorly conceived philosophies.

I now understand that the study of economics requires a reality-based philosophical viewpoint. Economics is not purely about the study of statistics and economic figures and numbers, which are merely the results of man’s economic activities. As one great economist argued in the past, economics is certainly not a study of material goods, services, and products—but a study of human actions. One should understand that statistics and economic graphs and figures are merely a representation of a particular source: human actions.

Objective economics requires a solid, reality-based philosophy, because most economic issues of today are primarily philosophical. For instance, the issue of protectionism, or whether a state must restrict foreign participation or the flow of foreign goods, is not merely economic or political; it is primarily philosophical. To approach this particular issue, one must have a strong, objective grasp of basic concepts, such as the proper function of government and individual rights, as well as basic principles, such as the principles of reciprocity in international law and free trade. One cannot approach these concepts using one’s crude economic knowledge, for these are at base philosophical issues.

A bad economist can always claim that protectionism is for the good of the native people because it adheres to the collectivist concepts of ‘social justice’ and Filipino First politics, but he/she certainly cannot trick or fake economic realities. It is now (and should be) commonsensical that today’s technology and globalization (which is the result of nations’ willingness to participate in global trade by relaxing their protectorate laws and embracing economic reforms and intellectual property rights) require that nations should be more responsive to the ongoing changes (economic and political) in the global marketplace. For example, from being a purely socialistic state under its past socialist regimes, China gradually embraced economic reforms and thus opened its economy to foreign investors. After joining the World Trade Organization in 2001, the Chinese government adopted certain principles of the free market, such as property and intellectual property rights, lower taxation, free trade, and the idea that market-players should be left free to make and apply crucial business judgments. But of course, China, politically, is not yet totally free due to its socialistic or dictatorial political framework. In reality and economically speaking, China is more economically free than the Philippines.

In the Philippines, the strongest advocates of protectionism and economic regulations are the country’s so-called intellectuals and oligarchs/cronies. The countries oligarchs and cronies (these terms should not be used interchangeably, I believe) strongly support protectionism because they are its economic beneficiaries. On the other hand, the country’s so-called intellectuals, who are mostly leftists and statists, provide strong pseudo-intellectual ammunition to the country’s protectionist movement. Ironically, most of these intellectuals denounce the “rich” for dominating the country’s economic battlefield. The rich, according to these protectionist intellectuals, benefit from our political system, which is true. They believe that the rich should be taxed more to serve what they call social justice and the greater good. Social inequality, they argue, widens because the rich become richer while the poor become poorer. This is the reason why they want more regulations to  moderate the rich’s insatiable ‘greed’.

But who is/are the ‘rich’ they’re talking about? Certainly not all Filipino rich achieved their success through dishonest means and political machinations. Certainly they’re referring to the country’s cronies and oligarchs. But did it ever occur to these intellectual MORONS that it is their pseudo-intellectual ammunition that helps these oligarchs and cronies maintain their corporate power/dominance? In reality, they are what Vladimir Lenin called “the USEFUL IDIOTS”.

For instance, so-called economist Winnie Monsod passionately denounced the Philippine Airlines (PAL) corporate abuses calling it “the exploiter of labor”. If this UP-educated statistician (not economist) would only try to understand that the most effective way to stop this so-called corporate abuse or “exploiting of labor” is to allow free market competition to flourish in the country. One needs to understand that it is our political system– our Constitution– that causes market monopoly or cartelization. All of our industries are monopolized by the dominant corporate few because of our protectionism. But first, the biggest monopolist is the Philippine government, which owns all GOCCs, government hospitals, more than 100 tertiary institutions, hundreds or even thousands of basic educational institutions, gambling facilities, public utilities, among others. Monsod should only try to compare the Philippines with Hong Kong or Singapore to see the difference.

In her latest opinion piece, Monsod claims dismantling our protectorate system is “not necessary”.  She is indeed a typical mediocre academic who naively uses the term “empirical evidence” to display a veneer of rationality and understanding. The truth is, Monsod is actually the “bad economist” Henry Hazlitt warned us about.

She opened her PDI column with the following lead:

“Concord, or Constitutional Correction for Development, was then President Joseph Estrada’s attempt at Cha-cha (Charter change). Estrada assured all and sundry that unlike the attempt of his predecessor (Fidel Ramos) at Cha-cha, his was not going to touch the system of government at all, but would “only” amend the economic provisions of the 1987 Constitution which limited the share of foreign investors in certain sectors (e.g. mining, utilities, transport and communications) and which, it was further asserted, was the reason for the relatively (compared to other countries) small foreign investment inflows into the country. Which resulted, it was then argued, in lost employment and growth opportunities. The conclusion: The restrictions on foreign investments were ANTI-POOR.”

I don’t give a damn about what Estrada or his minions thought of protectionism. I don’t care about their so-called defense of economic reforms. To me, amending the Charter’s economic provisions is just one thing. We have to dismantle, destroy, obliterate the Constitution’s welfare provisions. That is, we have to destroy our welfare state, which is bringing our already cash-strapped failing state to economic disaster. Amending the 1987 Constitution’s economic provisions would be futile without phasing out our welfare politics. The tragic experiences of Greece and other European nations strongly support my claim that welfare state is the enemy of economic freedom and progress. Certainly, Greece doesn’t impose the same 60-40 protectionism that our country currently implements, but it was destroyed by its welfare/socialistic politics. Dismantling our protectionism to attract more FDI while keeping our disastrous welfare politics would be like sending a bunch of foreign investors to a pack of welfare vampires. This is what Mrs. Monsod fails to understand.

Again, Monsod is trying to argue that economic freedom (translation: abolition of protectionism, political controls and economic restrictions) is not necessary. This UP-educated (so-called) economist claims that “no empirical evidence was presented” to prove that protectionism in the Philippines resulted “in lost employment and growth opportunities and that such “restrictions on foreign investments were ANTI-POOR.”

I guess this UP-educated academic is simply out of touch of reality. That she simply failed to see the very clear, obvious, patent, visible FACT that as this country miserably slipped into a higher degree of poverty due to lack of foreign direct investment, technology transfer and economic activities, many Asian nations, which were formerly socialists by definition, like China, Vietnam and now Myanmar, embraced free market reforms.

But since I don’t have enough time to waste on such an utterly ridiculous piece of crap, let me just reproduce my answer to a protectionist creature who also shares Monsod’s protectionism and failure to understand proper economics.

The following is my answer to a protectionist who shares Monsod’s version of RP’s economic/political reality:

What you don’t realize is that protecting our so-called local industries breeds CRONIES and OLIGARCHS that the leftists and people who favor protectionism hate and detest. Isn’t that so ironic? Pinoy leftists and statists (translation: those who favor protectionism and excessive government intervention) HATE and detest Filipino oligarchs like the Lopezes, Enrique Razon, Ayalas, Lucio Tan, etc. yet they’re too naive and clueless to understand that it’s protectionism and regulations of foreign investors that keep these protected cronies and oligarchs in government-backed corporate power.

For your information, China is more economically free than the Philippines. While former socialist countries like China, Vietnam and Myanmar opened their economies to foreign investors, allowing the latter to own up to 100% equity in business and land, the Philippines continues to limit foreign participation and discourages foreign investors due to rampant corruption in the government sector, high taxes, more regulations and restrictions.

Masyadong MAYABANG ang pinoy. What you don’t know is that even developed and oil-rich countries in the Gulf region like Saudi Arabia, UAE and others long understood that they needed foreign investors to prop up their economies. Saudi Arabia, for example, liberalized its economy and introduced business-friendly economic reforms to attract foreign investors. Today, Saudi Arabia enjoys more than $24 billion in FDI. Not only that, the Saudi government is determined to upgrade to TRIPS-plus (Agreement on Trade-Related Aspects of Intellectual Property Rights) through multilateral and bilateral agreements with developed nations (e.g., USA and EU) to attract TECHNOLOGY TRANSFER and more foreign investment in its pharmaceutical, technology and petrochemical industries. Why is Saudi Arabia, which is far richer and more developed than the FAILippines, doing this? Because its officials understand that it has no technical capability to create technologies; it can only acquire new and most-needed technologies through technology transfer, and technology transfer is made possible by establishing a business-friendly environment, embracing economic reforms and liberalization, and protecting intellectual property rights. No foreign investor in his right mind will ever invest in an economy that limits foreign participation.

What do most Filipinos, particularly professionals, do today? They migrate to developed nations, which allow them to enjoy things and rights (e.g., practice of their profession, ownership of land and business, etc.) that are denied to foreigners here in the protectionist FAILippines. In fact, FOREIGN INVESTORS SHOULD BAN RP. Economically freer nations like Hong Kong, Singapore, USA, Canada, Japan, among others should NOT do business with the Philippines. We’re being unfair. We limit foreign participation in our country, as foreigners are not allowed to own land and over 40% equity in business, when Filipinos do not face the same restrictions in many foreign countries.

Hanggang domestic helper na lang tayo. Mayabang pa tayo. BOBO na, NAGYAYABANG PA. Nothing will happen to our so-called rich and abundant natural resources because NO ONE in this country can convert them into new forms of wealth. Asahan mo yung mga taga-UP na mga sayangtists kuno? Good luck with that!

After years of protectionism our country achieved nothing but a higher degree of poverty, unemployment, and KAYABANGAN. A number of Asian countries learned from their socialistic past. China prospered economically after joining the WTO in 2001 and embracing economic reforms that attracted foreign investors. Singapore did the same. In fact because of Singapore’s less regulated economy, lower taxes (it has no capital gains tax and other taxes), and foreign-friendly business climate, billionaire and one of Facebook founders Eduardo Saverin decided to renounce his US citizenship and moved to Singapore.

Great leaders understood the role of marketplayers in improving a domestic economy. IDIOTIC, STUPID, MORONIC, DIPLOMA-TOTING FILIPINO TRAPOS know nothing but more papogi and pa-welfare effect. And many stupid Filipinos are buying their lies, including the BIG LIE that we must limit foreign participation to make Filipinos the master of their own land.

If there’s no “empirical evidence” to support the argument that protectionism produced “lost employment and growth opportunities”, then, Saudi Arabia, UAE, and even China should go back to their formerly protectionist states and conditions. What is very much clear is that  economic and political realities strongly debunk Monsod’s anti-reality, clueless economic gibberish.

Monsod said: “It is not known whether FDI causes the higher levels of income, or whether higher levels of income attract FDI.”

First, there are a lot of reasons why ‘enlightened’ nations attract more FDI. Some of these reasons include more investment, more business opportunities for locals, higher employment rate, technology transfer, etc. For example, despite being rich and economically stable due to its oil industry, Saudi Arabia is determined to attract foreign investors to fuel technology transfer by upgrading to TRIPS-plus (Trade Related Intellectual Property Rights). If protectionism has no negative impact on our economy, as Monsod claims, then why do stable/rich economies like Saudi Arabia scramble to attract foreign investors? Why don’t they just up their degree of protectionism, or just copy our 60-40 protectionism?

Second, there are a number of factors that determine higher levels of income, and FDI is just one of them. More competition in a market place has been proved to have an undeniable impact on income levels. Higher competition means more opportunities for the people. Higher competition also means companies would be forced to offer better compensation package and perks to attract competent workers/professionals.

What Monsod fails to understand is that dismantling protectionism is NOT enough to attract foreign investors. For even without protectionism (or a higher degree of the same), there are other factors that could effectively discourage foreign investors, such as high tax rates, excessive/intrusive welfare policies, interventionist economic policies/programs, etc. A higher degree of welfarism is the reason why investors/companies fled Greece despite not having 60-40 protectionism that our country implements. What I’m trying to say is that Monsod is merely looking at the impact of one economic activity (FDI) on one economic aspect (income levels) without looking at the whole picture.

What is clear and indisputable is that countries with high income levels do not impose our version of protectionism (60-40 and absolute limitation on foreign professionals to practice their professions). I would agree with Monsod’s FAILED arguments if she could give me at least ONE ECONOMICALLY STABLE NATION that imposes RP’s version/model of protectionism. Because as we all know, each nation has its own version of protectionism, and each version varies in terms of degree and implementation.

Monsod said: “Translation: Not all FDI will result in inclusive growth or in sustainable development.”

I need to see the research methodologies used in those studies she mentioned. Again, she’s only looking at one particular effect of foreign investment. Foreign investment produces not merely FDI, but technology transfer as well. Also she’s looking at FDI from a Marxist or Keynesian economic POV. You cannot merely reduce the benefits of FDI to statistical terms. FDI will certainly not result in “inclusive growth” or that Marxist concept of “sustainable development” if there are other factors (e.g., government intervention, welfare policies, higher government spending, high taxes, etc.) that effectively stunt or negatively affect such growth or development.

How can Winnie Monsod expect that “all FDI will result in inclusive growth or in sustainable development” with the presence of government-induced interruptive factors? And, how will statisticians or economists measure FDI’s impact on “inclusive growth” and “sustainable development”? I’d like to see their methodologies.

Monsod said: “Historically, FDI played only a minor role in the growth of most high-performing Asian economies. No need to translate.”

I conducted minor investigation and found out that Monsod’s source for the aforementioned statement was taken from this site. The source states:

Historically, while FDI may have positive externalities, it has played a minor role in the growth of most high-performing Asian economies:

  • 1967-1986 countries where FDI >5% of GDI were HK, Malaysia and Singapore. Countries where FDI <2% of GDI were Taiwan, Korea, China and Japan
  • More recently, Except for China and Singapore, FDI in East and SE Asia comprise <10%>”

Monsod’s claim/statement, which she borrowed from an UNKNOWN blog or study (???) covers 1967 to 1986. I don’t know if such a claim is backed by a reliable study. But certainly, a more recent study (dated 2002) by the IMF found that “China’s increasing openness to foreign direct investment (FDI) has contributed importantly to its exceptional growth performance.” It is worthy of note that China’s accession to the WTO was in 2001.

Also, here’s ONE PROOF that Monsod’s unreliable source is UTTERLY OUTDATED. Here’s a 2006 economic study commissioned by UNCTAD. It makes the following conclusion:

“No longer can it be assumed that FDI is mainly negative (as may have been a dominant perception in the 1970s) or only positive (as may have been a dominant perception in the 1990s). The type and sequencing of general and specific policies in areas covering investment, trade, innovation and human resources are all important. Appropriate policies to benefit from FDI include building up local human resource and technological capabilities to capture productivity spillovers.”

I suggest that Monsod’s questionable claims and sources should be critically, thoroughly investigated.

RELATED BLOG ARTICLES:

‘Bad Economist’ Winnie Monsod Versus Free-Market Capitalism and Freedom

Uncle Sam to Pinas: ‘Scrap Protectionism!’

Myanmar Now More Economically Free Than RP

Competition is Good; Regulation is Evil!

Destroying the ‘Filipino First’ Mindset

Capitalism and its Individualist Culture

Is Henry Sy an ‘Oligarch’?

The Folly of the Oil Deregulation Law and the Intellectual Bankruptcy of Its Statist Opponents

Blog Debate: On the Morality of Capitalism

Capitalism Defined

The Nature of Capitalism

The Fallacy of Capitalist Exploitation

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37 Comments leave one →
  1. GabbyD permalink
    July 14, 2012 3:38

    apart from the condescension, the conclusion you reach here is quite balanced.

    however, i dont think you and the UNCTAD agree on the “appropriate policies” to benefit from FDI.

    what specific policy would you recommend? pick one thing.

    • July 14, 2012 3:38

      Thanks for that very rare compliment, GabbyD. What specific policy should I recommend? I think it’s simple. Open this damn economy to foreign investors and abolish our welfare state policies.

      • GabbyD permalink
        July 14, 2012 3:38

        1) thats 2 things not one thing 🙂

        2) open this … to foreign investors is vague. surely, you dont mean that we dont have foreign investment at all.

        3) welfare state policies is even more vague. what is that?

        4) then, yes, i dont think you agree with unctad at all. if anything, unctad is very much open to an expanded govt role is seeking those technology externalities you mentioned through active policies.

        so its funny that you rely on unctad to butress a claim which you dont trully agree with.

      • July 14, 2012 3:38

        It can be more than that depending upon how you view the evils of welfare state. But it can be one: LIMITED GOVERNMENT, which is a very broad concept.

        ” to foreign investors is vague. surely, you dont mean that we dont have foreign investment at all.”

        — It is vague to those who don’t understand that context. That means remove protectionism (e.g., 60-40 ownership arrangement, prohibition against foreign professionals to practice their profession, and other protectionist policies).

        As to UNCTAD, I didn’t post that to manifest my agreement with their policy or whatever. I was merely showing that Monsod’s claims are outdated. Besides, that is NOT the focus of the paper. It merely says that FDI benefits nations. It’s funny that you don’t even know the context of that paper. Typical GabbyD LOL!

      • GabbyD permalink
        July 14, 2012 3:38

        “It merely says that FDI benefits nations. ”

        NO. it says it MAY benefit, depending on policy.

      • July 14, 2012 3:38

        Of course a nation benefits from FDI if it adopts the right policies. Even dictatorships like North Korea and Cuba received FDI from favored companies. If a country merely allows MNCs that offer bribe to government officials, then you do not expect FDI to benefit the nation’s economy and its people. It’s as simple as that.

  2. July 14, 2012 3:38

    I agree that for an economy to improve it has to adopt free market principles, and this has been demonstrated by the top ten countries under Doing Business Index and Heritage economic freedom index.

    In regard to GabbyD’s comments, I read the paper in question. The policies the paper talks about are the following:

    * Fiscal and financial incentives
    * Performance requirements
    * FDI promotion
    * Building industrial parks and export processing zones
    * Promoting clustering of industries using R&D and technology centres
    * Supporting training programmes
    * bilateral investment treaties
    * multilateral investment agreement

    Some of the above-mentioned policies are consistent with free market principles while a few pertain to government functions. The paper merely proves that FDI is important and that many countries are taking it very seriously, which is contrary to Prof. Monsod’s arguments.

    Or: would you like to argue that the paper does not refute Monsod’s arguments?

    • GabbyD permalink
      July 14, 2012 3:38

      jg,

      i think most of these, if not ALL, requires govt involvement. take bilateral treaties — that requires govts to negotiate, create rules about the scope of such rules on FDI, etc…

      diba?

      • July 14, 2012 3:38

        If that’s your interpretation then so be it. But is that the reason why that paper was included in the blog? What did the paper prove anyway?

        Would you like to argue that the paper does not refute Monsod’s arguments?

      • July 14, 2012 3:38

        Multilateral and bilateral treaties are consistent with free market principles. Nations have to ensure that the IP rights of their companies and entrepreneurs are enforced and protected in the country where they transfer technology or FDI.

        Fiscal and financial incentives is consistent with free market principles.

        FDI promotion is consistent with free market principles.

        The rest require government intervention, which appear to be minimal in scope. Again, the overall findings of the paper refute Monsod’s claim that “FDI played only a minor role in the growth of most high-performing Asian economies.”

        If I were to recommend FDI policies, I would offer the following:

        1. Lower taxes

        2. Giving tax credits to foreign companies

        3. Established sound monetary policy

        4. Protection of IP rights

        5. Established rule of law

        6. Combating corruption and bribery

        7. Cut processes in starting a business

        8. Less rigid labor laws

        9. Less intrusive government

        10. Permission to own up to 100% equity in land/business.

        Like the blogger, I disagree with some of the policies mentioned, but I am satisfied with the findings that refute Prof. Monsod’s arguments.

      • GabbyD permalink
        July 14, 2012 3:38

        jg,

        oh, the main point of the paper, which is “FDI may be beneficial (drive growth), IF…” is something that i believe most would sign on to, so i think that yes monsod’s column was a little simplistic. if pressed, however, i think monsod would also said that its possible for FDI to help, but we can disagree on the details. she obviously thinks that even if its possible theoretically, practically speaking, there is no shot.

        notice that even the paper quoted shies from specifics as to how to implement said policy in a specific context, or to rank how each specific policy helps.

        these details are crucial, and the devil is certainly in them. the unctad paper also agrees with that for sure (implementation is key).

        second, some of the reforms you mention arent mentioned in the paper. i ask you to shre on which papge does 100% ownership of land is mentioned. i ask you to share how important this reform is, if it is indeed mentioned.

        there is a huge amount of uncertainty about WHICH policies are important, and this is where the bulk of future research, and policy maker’s angst is at.

        now if you believe in some specific reform, then it behooves you to put in some evidence or even an argument, that helps you prove your point. this is why i pointed out to the blogger that its IRONIC to cite a paper whose recommendations you dont really believe in anyways.

        now, as to free market principles, this term is politically loaded and would be diffferent depending on who you ask. i agree actually that incentives by govt is consistent with free market principles, but OTHERS would strongly disagree.

      • July 14, 2012 3:38

        Everything boils down to whether the paper agrees or refutes Monsod’s argument. You haven’t answered me yet.

        Question: Would you like to argue that the paper does not refute Monsod’s arguments?

      • GabbyD permalink
        July 14, 2012 3:38

        but i did:

        “i think monsod would also said that its possible for FDI to help, but we can disagree on the details. she obviously thinks that even if its possible theoretically, practically speaking, there is no shot.”

        i went on to write that even the paper doesnt know WHICH POLICY to push for first (rank). all it says is that there is a SET of policies that are associated with growth and development.

        furthermore, monsod’s point was also on CAUSALITY. note that the unctad paper says NOTHING about causality between growth and FDI. in this sense, the paper and monsod are talking about 2 very different things.

      • July 14, 2012 3:38

        That’s not how Monsod argued. It is obvious that she’s against FDI. Are you saying now that the paper does not refute Monsod’s argument that “Historically, FDI played only a minor role in the growth of most high-performing Asian economies. No need to translate.”

        If so, what’s part of history is she talking about? Is it recent or outdated?

        What causality? Where did you get the idea that Monsod ever talked about “causality”? I find that assertion too funny. What made you assert that “the unctad paper says NOTHING about causality between growth and FDI.” Any proof to that assertion?

      • July 14, 2012 3:38

        Plus, do you know when “FDI played only a minor role in the growth of most high-performing Asian economies” (as claimed by Monsod)? WHEN?

        Does the paper support such a statement or argument?

      • GabbyD permalink
        July 14, 2012 3:38

        jg,

        like i said, the paper shies away from any kind of ranking! the paper isnt interested in the question about the relative ranking in a specific country’s development. its saying whatever you believe about FDI, its more nuanced and sophisticated than it is.

        see its section on FDI and growth. there is NOTHING THERE about the importance of FDI in east asian growth, or if its the main driver, or whatever.

        thats all the paper, said, at the end of the day.

      • July 14, 2012 3:38

        I don’t think you understand the purpose of the paper. Also, I don’t think you understand that ranking you’re talking about. But so what if the paper “isnt interested in the question about the relative ranking in a specific country’s development”? Will that support your defense of Monsod? Certainly not. The paper argues that there are levels of FDI and that there are certain policies that make it beneficial to nations. Monsod did not even tackle this. She simply relied on apparently obsolete sources.

        Don’t you understand that if “FDI played only a minor role in the growth of most high-performing Asian economies”, then why do countries have begun to realise the positive aspects of FDI and adopt certain policies to attract foreign investors?

      • GabbyD permalink
        July 14, 2012 3:38

        “why do countries have begun to realise the positive aspects of FDI and adopt certain policies to attract foreign investors?”

        i do understand that, and that is where the debate lies: which policies? froi is advocating some, others, something else…

        the philippines is also attracting FDI thru its own policies. we have fiscal incentives and export processing zones. the question is: should it do more? what more should it do?

      • July 14, 2012 3:38

        The policies that the blogger advocates is immaterial since the paper or any other recent literature proves that Monsod arguments are obsolete and no longer reflect the current economic trends and realities. That’s the point, I believe, why that paper was posted in the first place.

        Nobody is arguing that policies are unimportant or immaterial. THAT IS COMMONSENSICAL. Every Libertarian or advocate of free market understands that certain policies are needed to attract FDI.

        “the philippines is also attracting FDI thru its own policies. we have fiscal incentives and export processing zones.”

        Export processing zones are hardly NOT related to FDI. Do you understand what FDI means? But those fiscal incentives failed. What’s the current FDI figure in the Philippines? Do you know?

    • July 14, 2012 3:38

      Here’s what we need to do more: if export processing zones are such a good thing, why not make all of the Philippines, the whole country, an export processing zone? Get rid of tariffs, get rid of the Bureau of Customs, remove export taxes, etc.

  3. July 14, 2012 3:38

    Great blog, and very good discussions. GabbyD, I don’t see what is your point. Free market principles have been well explained for centuries. It’s another name for capitalism, and Adam Smith has described it very well in the 18th century.

    There are well-known measures of how much economic freedom there is in a large number of countries, and the Philippines has ranked “Mostly Unfree” (107th) in one of them for decades (see http://www.heritage.org/index/default).

    • GabbyD permalink
      July 14, 2012 3:38

      actually, i thought something similar to adam smith was what jg was advocating so i was confused when he said unctad’s findings are consistent with free market principles. but he was talking about industrial policy — something smith said nothing on.

      if you believe in govt set incentives, i dont know how you can reconcile that with adam smith’s writings, who said that govt involvement should be sparing and justified only on national defense/interest grounds.

      • July 15, 2012 3:38

        There you go GabbyD. What I really hate is when some lying cretins try to distort what I said to prove they’re right. I don’t have enough time to waste on such lying people.

        GabbyD: “actually, i thought something similar to adam smith was what jg was advocating so i was confused when he said unctad’s findings are consistent with free market principles.”

        I never said that. I never said that the “unctad’s findings are consistent with free market principles.”

        Here’s what I actually said: “Some of the above-mentioned policies are consistent with free market principles while a few pertain to government functions.”

        I also said: “Multilateral and bilateral treaties are consistent with free market principles. Nations have to ensure that the IP rights of their companies and entrepreneurs are enforced and protected in the country where they transfer technology or FDI. Fiscal and financial incentives is consistent with free market principles. FDI promotion is consistent with free market principles.”

        I think I said enough. I don’t think you’re worthy of my time.

      • GabbyD permalink
        July 15, 2012 3:38

        lying? no.its clear that your “free market principles”, whatever those are, are different from, say, adam smith’s principles. thats what i said then, and what i said to carlos above.

        its obvious that your principles and even carlos’ free market principles arent exactly the same.

        furthermore, you said “Fiscal and financial incentives is consistent with free market principles. ”

        which is definitely NOT consistent with anything adam smith said.

        maybe you and carlos and froi can talk and determine what free market principles are.

      • July 15, 2012 3:38

        It’s either your a liar or just out of your mind not to understand what I said. I don’t give a damn about what Adam Smith said.

        What particular things I said or mentioned that are not consistent with Smith’s principles? What are Smith’s principles? It seems you don’t even understand Smith is MORE STATIST than me. Funny! You’d understand what I said if you truly read and understand what Smith actually said.

        Do you know what “fiscal and financial incentive” mean? And how is that NOT consistent with FM principles? You don’t even know a thing about FM system. As much as possible, I don’t want to argue with someone who obviously don’t have adequate knowledge on the issue.

      • GabbyD permalink
        July 15, 2012 3:38

        “It seems you don’t even understand Smith is MORE STATIST than me. ‘

        awesome! if u tell the adam smith institute that, i’m sure they’d hire u on the spot.

  4. Jazz_from_the_South permalink
    July 14, 2012 3:38

    Very insightful Gabby D.

    However, for me it still boils down to good governance. I still strongly believe that as it is, our constitution is still amoral. Nowhere in the provision can you find that “dummy” corporations should represent the Philippines in the 60/40 investment sharing. Its just that SOME of the people (and their cronies) in the government found a way to rape our constitution for their personal gain.

    I think the reason businesses are not coming in is because of the experiences of other investors in the past. I may just be simplifying things, but I think these investors are intelligent enough to do research of what happened to the people who did some business with us. For as long as their interests will not be protected, don’t expect them to put their money to our country. And as long as we don’t have that integrity they can expect from us, it will be futile to wait for their businesses to come.

    On the other hand, be afraid if all of a sudden there’s change in our policy (read: open market, as you say). Chances are the VULTURES already figured out a way to go about it and RAPE us even more.

    • July 15, 2012 3:38

      No, no, no, Jazz. Your logic is flawed. Just ask yourself, if we remove the 60/40 provision, would the rent-seekers (“dummies” in your terminology) have anything left to suck their mouths on? Our 1987 Constitution, the way it is constructed, creates rent-seekers. It also allows corruption in the government because it does not allow us, the people, to sue the government. Instead, it created this monstrous ombudsman system whereby the government is supposed to be guarding itself from corruption! This is like asking the fox to guard the henhouse. Government officials are just like you and me. They are not saints: even if they start honest, this system has this ability to corrupt them.

      The kind of investors we attract with our onerous provisions (and it’s not just the 60/40 provision) are businessman who cannot compete in the free market, even shady characters. No honest businessman would deal with a government that allows rent-seekers to drain their profits.

      • Jazz_from_the_South permalink
        July 15, 2012 3:38

        You are absolutely right. And that’s why my premise is still be on the pretext of good governance. Let’s take the Bank secrecy law on dollar accounts. It was primarily to protect the identity of the account holder for their own safety. However, our politicians are using it to hide the bribes and kick backs that they are getting. The objective of that law may not be noble, but still to serve its purpose. Same thing with the current 60/40 policy.

        All I’m saying is even if we do update the existing policies, THEY will still find a way to circumvent it to serve their purpose. May not be immediate, but believe me they will find a way to do it, simply because they are wired that way.

      • July 15, 2012 3:38

        As to the bank secrecy law, I hold that it is justified and constitutional. However, I believe that with the kind of government and degree of corruption we have, a waiver must be made as a precondition to newly elected politicians in the future. This means that if you don’t want to divulge your dollar accounts, then do not run for a public office. However as to private individuals, I believe they entitled to secrecy bank law.

  5. Yondaime permalink
    July 15, 2012 3:38

    It’s plain and simple, Winnie Monsod implies that PHL gov’t doesn’t need FDI lol!

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