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Why RP’s Welfare State is Both Intellectually and Economically Bankrupt

February 21, 2013

Here’s one problem about the anti-reason, anti-science, anti-economics mindset of pro-RH law freaks: they don’t understand the impact of economic growth and economic transition (whether negative or positive) on population and people’s behavior.

Unfortunately (fortunately for the country’s leftists and do-gooders), we have Filipino economists and neo-Malthusians, like National Economic and Development Authority (NEDA) director general (translation: chief economic planner) Arsenio Balisacan, who have been urging  our government to aggressively curb or ‘mainstream’ population in order to force what they call ‘demographic transition’. Others use a more pleasant-sounding term– ‘demographic sweet spot’. This theory indicates social and economic shift from a pre-industrial to an industrialized economic system and is based on the observation that industrialized and developed countries have low birth and death rates due to their improved economic conditions.

Balisacan and many other UP economists argue that for our country to reach demographic transition, our government must adopt aggressive population control policies. These people are not economists; they’re quackonomists. It is people like them who help destroy the concept of economics. They observed that rich and developed countries have low population or that their fertility rates are below the replacement rate of 2.1, then, they crudely concluded that economic growth follows population decline. That for the Philippines to achieve economic growth, all it needs to do is actively control population by throwing money at the alleged ‘overpopulation’ problem.

They sincerely believe that we can also be rich and industrialized by simply doling out publicly funded condoms and contraceptives to the poor who must be prevented from producing too many unwanted babies. Their proposed road to prosperity is more welfare spending– that we can spend our way out of poverty and ‘overpopulation’. Yet the undeniable truth is, the envied first-world nations did not achieve economic growth by simply limiting the ability of their people to procreate. United States, Japan, Singapore, Russia, France and United Kingdom are rich and industrialized because of their relatively freer economies. While it’s true that all countries in the world are either socialistic or mixed economies and impose economic restrictions, these first-world nations fully allow and encourage foreign participation (both in investment and practice of profession). By contrast, the Philippines does not only limit foreign ownership of business and land; it also totally bans foreign professionals from sharing their knowledge and skills and practicing their respective professions.

With respect to demographic transition, what the country’s statist intellectuals fail to understand is that massive population drop occurred in the United States by the late 19th century, and it was not caused by contraception or modern birth control methods, but by individual choices and industrialization.

This study states:

“Paul Demeny of the Population Council points out that the drop to replacement-level fertility in much of the U.S. urban population by the late nineteenth century is not explained by “…people’s access to some superior contraceptive technology- `modern’ methods were yet to be invented —but was the result of individual motivation to keep fertility low.”

Modern-day economists need to revisit the validity and concept of this demographic transition theory. DT is just an effect, not a cause. Something causes it to happen. It’s just a model, not an economic tool or some kind of demographic/political formula. It’s neither a means nor an end. Economic growth is an end in itself. Social and economic changes took place in the US and Great Britain during the industrial revolution due to the shift from agriculture system to industrialization. Agricultural societies tend to have higher population because farming families need more children to help in the field. It was during the industrial revolution that women began to work. During this period, the advent of factories and manufacturing companies opened many job opportunities for women. This shows how positive or negative economic transitions can change people’s behavior, mindset or actions.

  • Economic growth = Positive economic change. This means more working women and that many women choose to have small family. This is how some parts of the United States achieved replacement-level fertility rate by the 19th century.
  • Economic stagnation/decline = Negative economic change. In a stagnant, poor economy, many women won’t have jobs and just stay at home. Men will also find it difficult to find jobs. The result? Rampant cases of early marriage, more cases of teenage pregnancy due to teenage joblessness, more time for couples to have sex, among others.

Balisacan’s and his ilk’s solution? Give the poor more condoms and make more Filipinos dependent on the government.

RP's economic dictator/central planner: Arsenio Balisacan

RP’s economic dictator/central planner: Arsenio Balisacan

The neo-Malthusians’ population control solutions bear striking similarities to the economic solutions of the welfare/statist economists. To statist economists like Balisacan and Winnie Monsod, their economic solution is mainly focused on distribution. They ask very obvious collectivist questions like:

  • how to ‘equitably’ mobilize resources to serve the ‘common good’
  • how to regulate industries to serve social and environmental justice
  • how to solve poverty
  • how much does a Filipino family needs to stay out of poverty?

With respect to the last question, NEDA offered the following estimation: P258.96 per day (P7,768.80 per month or P93,225.60 per year). Balisacan said that every Filipino household must earn these amounts to afford basic services like food, water and clothing.

As to the issue of poverty reduction, the economic planners offered the following usual mumbo jumbo numbers and statistical gibberish: “The country must reduce poverty incidence by 2 percentage points every year until 2015 to achieve the Millennium Development Goal (MDG) of halving poverty incidence.”

Pretty easy to solve poverty in the Philippines, right? Here’s their mystic formula: they’re trying to solve a reality-based economic problem with academic sounding platitudes and numbers, as if their consciousness is above, and can change, reality; as if their consciousness can twist, bend, shape reality according to their whims and wishes. Isn’t that how tribal leaders in the past tried to solve nature’s problems like drought and poor harvest? They simply uttered meaningless sounds and then offered their children or virgin sacrifices in a mystic ritual to appease their angry gods.

There’s only one word- one question- that one should offer to central planners and people who hold such an anti-reason, anti-science economic view: HOW?

Well, they might answer: through wealth redistribution and government laws.

In the Philippines, the sacrificial offerings to solve poverty and so-called overpopulation problem consist of able doctors, successful employers and high income-earning taxpayers.

Also, the central planning agency’s poverty indicator is highly political and crude. It is specific and applicable only to the Philippines, which is a third world country. In Hong Kong, a person is considered poor if he’s earning P25,000 a month (that was in 2005). In the United States, a single-person household is considered poor if his or her income is $11,170 or less.

The truth is, this poverty level/indicator system is a political tool usually used by political ideologues to justify the imposition of more taxes on those who earn more and to create more welfare programs to allegedly help the poor. Yet most of the collected taxpayers’ money goes to corrupt politicians and public officials.

If the government wants millions of families to get out of poverty, all it needs to do is revise the charter, guarantee economic freedom, lower taxes, abolish restrictions and anti-business regulations, downsize, privatize all government-owned and controlled corporations, and allow foreign investors and foreign professionals to be part of our team. This is what Singapore, South Korea, Japan and many other economic tigers did in the past. This is the only possible solution because the government- or the president- has no power at all to create jobs. What kinds of jobs does the government produce? Street sweepers? More bureaucrats?

The Philippines has the most expensive electricity in Asia because the power sector is currently controlled by a powerful cartel: the independent power producers. These power oligarchs face no competitors at all. Since they don’t have competitors, they have less incentive to innovate and to improve their services, and can increase prices by simply showing so-called market justifications.

We have poor and expensive internet access also because of lack of market competition in the telecommunications sector.

NEDA Director General Arsenio Balisacan should stop talking about solving poverty if he’s not willing to understand- or if he doesn’t know- what really creates wealth. He’s merely concerned about wealth redistribution, ignoring the crucial role of production. Balisacan is the type of welfare economist who tells you ‘you can consume/spend more than you make/earn’.

Economics is not statistics; it’s about human action, which is a purposeful behavior, according to Austrian and free market economist Ludwig von Mises. Its validity is based on the Laws of Identity and of Causality.

In economics, the Law of Identity– a thing is itself or A is A– tells that you cannot have your cake and eat it too. This means that you cannot spend/consume more than you earn/make. But this very elementary economic principle is what most countries, the Philippines included, have breached and tried to cheat or evade using non-objective, populist laws. Economists use statistics, graphs, charts, etc. to explain, show or illustrate a particular economic phenomena or issue. Statistics and economic formula are just tools, but these tools must be objective. That 1 plus 1 makes 2, not 5 or 7. Unfortunately, our government and its statisticians have been guilty of using non-objective economic tools to artificially improve the country’s economic performance and conditions for approval and popularity rating purposes.

On the other hand, the Law of Causality does not permit you to eat your cake before you have it. This means that wealth must first be PRODUCED before it can be DISTRIBUTED, REDISTRIBUTED, or LOOTED; that laws and legislation do not create wealth; that politicians are not producers.

We have heard a great deal about Balisacan’s and some government officials’ program to redistribute wealth and to mobilize the country’s resources. But the fundamental question that they stubbornly ignore is: AT WHOSE EXPENSE?

Ayn Rand explained why central planners and political ideologues (the mystics of muscle) declare war on the Law of Identity:

“As they proclaim their right to consume the unearned, and blank out the question of who’s to produce it—so they proclaim that there is no law of identity, that nothing exists but change, and blank out the fact that change presupposes the concepts of what changes, from what and to what, that without the law of identity no such concept as ‘change’ is possible. As they rob an industrialist while denying his value, so they seek to seize power over all of existence while denying that existence exists.

… “The problem of production, they tell you, has been solved and deserves no study or concern; the only problem left for your ‘reflexes’ to solve is now the problem of distribution. Who solved the problem of production? Humanity, they answer. What was the solution? The goods are here. How did they get here? Somehow. What caused it? Nothing has causes.

“They proclaim that every man born is entitled to exist without labor and, the laws of reality to the contrary notwithstanding, is entitled to receive his ‘minimum sustenance’—his food, his clothes, his shelter—with no effort on his part, as his due and his birthright. To receive it—from whom? Blank-out. Every man, they announce, owns an equal share of the technological benefits created in the world.

“Created—by whom? Blank-out. Frantic cowards who posture as defenders of industrialists now define the purpose of economics as ‘an adjustment between the unlimited desires of men and the goods supplied in limited quantity.’ Supplied—by whom? Blank-out. Intellectual hoodlums who pose as professors, shrug away the thinkers of the past by declaring that their social theories were based on the impractical assumption that man was a rational being—but since men are not rational, they declare, there ought to be established a system that will make it possible for them to exist while being irrational, which means: while defying reality. Who will make it possible? Blank-out. Any stray mediocrity rushes into print with plans to control the production of mankind—and whoever agrees or disagrees with his statistics, no one questions his right to enforce his plans by means of a gun. Enforce—on whom? Blank-out. Random females with causeless incomes flitter on trips around the globe and return to deliver the message that the backward peoples of the world demand a higher standard of living. Demand—of whom? Blank-out.”

Yes, we have high-ranking central planners and politicians who flagrantly practice what every high school student considers wrong or bad: counting one’s chickens before they’re hatched. We have welfare political officials who talk about doling out ‘free’ condoms and contraceptives, conditional cash transfer benefits, rice, food, etc. (although there’s no such thing as a free lunch, because some people pay for government services) while ignoring the issue of production. Who will pay for these services? Who will be sacrificed in the name of the greater good? In the case of the recently passed RH law, doctors and employers will be used as a sacrificial fodder for the poor and the collective.

This country will not only run out of money to pay for the government’s ever-expanding welfare state; it will also run out of competent doctors and professionals, productive entrepreneurs and top-earning taxpayers. The great wall that stands between our welfare state and the government’s populist programs is reality.

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2 Comments leave one →
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