January 6 entry

Better late than never. This was an entry I was working on on January 6, when I started to get sick. I was in the hospital from Sunday to Thursday (hence no blog for the past week). But this blog is back on duty now.

Saturday’s Inquirer editorial pointed out why the executive was wrong and where Philippine courts have been rather wimpy; the editorial quotes the Court of Appeals which said the VFA is not a “legal shield” for American troops, it is protection for the Philippines from foreign troops; though this is not how most people would understand it or even how the Senate understood it when it ratified the agreement.

Iloilo City Boy has a fascinating entry on public support for the Visiting Forces Agreement and the Senate debates on it prior to its ratification. Personally I believe the American government has been more reasonable -and respectful of Philippine law- than our own executive department has been. As the editorial put it,

As Undersecretary Zosimo Paredes, the often-criticized official responsible for overseeing the Philippine-US Visiting Forces Agreement (VFA), correctly said yesterday: The Palace took the law into its own hands. It had previously recognized that the custody issue was within the jurisdiction of the courts by filing the necessary pleadings. By effecting the transfer, stealthily and without a court order, the executive violated the law it was sworn to serve.

Black’s Law Dictionary apparently contains a definition that leads to the interpretation that a legal proceeding doesn’t end with sentencing, but with the appeal:

Any proceeding wherein judicial action is invoked and taken. Any proceeding to obtain such remedy as the law allows. A general term for proceedings relating to, practiced in, or proceeding from a court of justice; or to course prescribed to be taken in various cases from the determination of a controversy or for legal redress or relief.

And yet most Filipinos (including myself) would think otherwise. So it is it a peculiarity of the Philippine justice system? Eloisa Felicio Callender says the US is tempting fate and risking a reversal in our Supreme Court; I’m more inclined to agree with Rasheed Abou-Alsamh: the US is acting within its rights, the Philippines is wiggling out of its obligations, and a lot of heat is being generated, prematurely, in my opinion because two things are lacking: the United States has not spirited the convict permanently away, nor shown signs it would reject a defeat of the appeal; and the country ratified a treaty without insisting the other side view it as such, which is no one’s fault -or lookout- but the Philippines’. What no one wants to say is that on the whole, the VFA is working rather well, and serving the interests of Philippine justice to an extent impossible before.

What I think was utterly wrong was the President’s excuse that Smith had to be transferred so as not to continue displeasing Uncle Sam. That was licking the hand that slapped you. Also, the legal strategy of presenting the courts with a fait accompli, instead of properly petitioning the courts to uphold a particular interpretation.

The Bunker Chronicles proposes a price rollback instead of a wage hike.

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Manuel L. Quezon III.

22 thoughts on “January 6 entry

  1. I thought you weren’t able to blog because of the super slow internet connections, still I’m glad you’re back to good health.

  2. The Bunker Chronicles’ entry linked above mentioned what many economists treat as two competing processes:

    “fiscal or monetary discipline”

    A price rollback as enunciated would in my understanding partake of price controls under the auspices of a government authority. Thus, it would be a fiscal move. Then, let’s think about Namarco and the price controls in the past.

    While debates here in the US continue to rage about what made and kept the Great Depression in the 30’s one and longer, whether because of the slew of fiscal policies promulgated by government to supplant it or the more effective monetary policies that were not resorted to. Though hindsight is always 20/20, the scales of argument are tipping in favor of the use of effective monetary policies which subsequent depressions appear to show and validate.

    If this is one lesson that can be learned and applied under Philippine context, then maybe it should explore better monetary policies, rather than focus too much on fiscal policies.

    Mandated wage hikes are fiscal moves.

  3. Amadeo, correct me if i’m wrong but my understanding is that fiscal policy has to do with government spending so legislated wage hikes as far as it affects employees in the private sector cannot be considered fiscal policy. As for monetary policy, in the Philippine context, it was restrictive monetary policy (as dictated by the IMF and implemented by Marcos’ technocrats Cesar Virata and Jobo Fernandez) that caused the economy to collapse in the early 80’s.

  4. Mister E/”Bunker Chronicles” asks for a price-rollback, but he did not ask GMA to order the businessmen to roll back the prices. “Bunker” wants businessmen, out of the goodness of their hearts, to roll back prices on their own. His message “…to our businessmen; if you like to uplift the welfare of your workers (and I’m sure most of you really do), you can start by simply cutting back on prices of the goods you sell or the services you rendered.”

  5. Fiscal policy is the deliberate change in government spending, government borrowing or taxes to stimulate or slow down the economy. It contrasts with monetary policy, which describes the policies about the supply of money to the economy.
    Fiscal policy will include stimulating the economy (creating new jobs) by committing the government to fund an extra 3,000 kilometers of 4-lane highway, or the fast-track building of 300,000 new public schools. The (fiscal) policy may be to sell dollar-denominated 15-year bonds to fund the highway, or it may be to raise new taxes to fund the schools, or to pay off debt (in order to increase the creditworthiness rating of the country). Monetary policy includes lowering reserve requirements (which lowers interest rates and the cost of borrowing and which (hopefully) stimulates business activity). Monetary policy includes managing the amount of money in circulation (say, by the government printing more peso-bills, or the government open market committee buying or selling dollars or pesos) to maintain the exchange rate to be below 53pesos to 1 US-dollar or to keep long-term interest rates inside a target range.
    Policy applied in a timely manner strengthens the economy. The wrong policy can kill a sickly patient.

  6. UPn student,

    How true: “The wrong policy can kill a sickly patient.”

    Gloria Arroyo economics

    What’s right and what’s wrong with Gloria Arroyo’s economic policies that in spite of higher GNP growth more Filipinos are going hungry?

    While ‘positive’ economic indicators may show that the economy is stable and accelerating, ‘negative’ human development indicators are signs that the economy is on the wrong road, accelerating towards disaster.

    Gloria Arroyo’s ‘Dagdag-bawas’ economics: Borrow more,tax more to pay more debts; spend less for food, less for school, less for health.

    Gloria Arroyo’s ‘Pass-on’ Fiscal Crisis Management: Through more and higher taxes, the national government’s fiscal crisis is passed-on to family-households who now suffer from severe fiscal crisis that they have less for food and education.

    Gloria Arroyo’s ‘Instant noodles’ economics: Artificial economic-indicator enhancers, foreign-interest/monopoly status quo preservatives, attractively packaged but without real ‘nutritional value’.

    Gloria Arroyo’s ‘Fire sale’ economics: Patrimony at a bargain, opening up for grabs large-scale mining concessions, on-going gold/mineral mining operations at full-blast, tons of gold ores shipped out, unaccounted for, un-taxed.

    Gloria Arroyo’s ‘Red tide’ economics: China-Phil bilateral trade agreements – Communist China investments/loans/’grants’ for mining concessions, prime agricultural lands, control over strategic projects (Northrail, oil exploration, power gen, etc.)

    Gloria Arroyo’s ‘Toxic’ economics: The JPEPA – caregivers for toxic wastes exchange deal – best illustrates the hidden cost and harm of Gloria Arroyo’s multi/bilateral deals.

    Gloria Arroyo’s economic policies are unsustainable because they are inherently ‘toxic’ the long-term cumulative effect of which is fatal to many Filipinos and, if allowed to ‘succeed’, disastrous for the economy as a whole.

    May 2003, with a year to go, analysts speculate if GMA will survive until the 2004 elections. I suggested (broadcast emailed to columnists) then that the bigger question was how would the country survive GMA, in what condition would the country be by then? Now we ask, “Will GMA survive until 2010?” Again, I suggest, the bigger question is, “Will the country, will the Filipinos survive GMA?” (btw How many Filipinos died due to hunger, sickness, man-made, human-induced and natural disasters, aside from common crime and political killings, since GMA took over as acting-turned-cheating president? Record high? )

  7. CVJ, fiscal policy indeed has to do with government spending and taxation, but our interpretation should not be limited to that. In democracies, fiscal policy is exercised by its legislative body, the congress. For this reason, mandated wage hikes originate from it. Now, one of the common objectives of fiscal policy has been to redistribute resources. Don’t you think mandated wage hikes originated by the fiscal authority form part of its fiscal policy? Especially, as differentiated with the country’s monetary policies, in both instances with the US and the Philippines, installed by their central banking systems?

    UPn student, you are right that no government intervention was asked but I thought that I just couldn’t see how an across-the-board rollback of prices, even just for prime commodities needed by the general population, could happen without the government coming in. If the past is any indication, then that is the route it will have to go.

    Also, if we believe and practice free markets with its attendant concepts, then we have to accept that by and large, prices are determined by the markets and not arbitrarily. Unless, we inject subsidies or other means.

  8. Amadeo, thanks for the explanation. Defined in that manner, i suppose you’re right that policy on minimum wage could be considered part of fiscal policy. As to Bunker Chronicle’s call for a voluntary rollback, i appreciate what you and UPn Student say about how market forces determine commodity prices. However, my impression is that because of his background and family ties, he has some familiarity with the internal workings of the Chinese business community and, based on that, he believes that voluntary rollbacks are within the powers and prerogative of the business men. For this reason, i wouldn’t discount his recommendation outright.

  9. ay hala.. dun na lang kaya mag practice ng war games ang militar ng kano sa backyard ng malacanang.

  10. Great discussion here guys, I think I may have just learned a few economic terms along the way…

    But, businessmen are businessmen, and you can’t really blame them if they focus on the bottom line, that is of course why they are in business.

  11. Nick, i was thinking that Bunker’s suggestion fell along the lines of a corporatist arrangement which tempers, but does not eliminate the role of market forces:

    Corporatism as a form of organization of national political systems may be defined as a tripartite concentration of government, labor, and business, the last two represented by encompassing associations. All three partners are involved in the making and implementation of policy; institutions such as parliament play a comparatively minor role, as it is the executive that represents government.

    The essence of the corporatist bargain is that business supports policies geared to redistribution and full employment, and does not disinvest in response to these policies. Labor, for its part, promises not to make life difficult for business through strikes or other forms of militancy.” [Source: Deliberative Democracy and Beyond, John Dryzek]

    Since we have both a small community of big businessmen as well as established employers associations and labor unions, i think this might be feasible to implement over here if only we had a credible executive branch.

  12. Nick says “…businessmen are businessmen, and you can’t really blame them if they focus on the bottom line, that is of course why they are in business.” I will remove the word “blame” –my words will be that “… you should expect businessmen to focus on the bottom line, that is their responsibility”. The bottom-line focus is how the businessman can fulfill his financial obligations to his family, the way the businessman can meet his payroll, and the way to grow the business.
    I agree with Bunker in his belief that most Filipino businessmen do want to uplift the welfare of their workers. Businessmen, though, follow a simple model. Price-rollback for the greater good is not in this model; included is price-rollback because of increased competition or increased efficiencies. For example, Bill Gates had always been pricing Windows/Word/Excel according to the business-rules he has to deal with. He then uses his share of the profits on Windows/Word/Excel sales to donate to fighting malaria (and to his other favorite charities).

  13. When it comes to critical products such as medicine for AIDS (or tuberculosis or malaria) and education for the youth, price rollback for the greater good is definitely part of the model. The same holds true for businesses that operate in imperfect markets (e.g. the energy sector) or are influenced by cartels. It is all the more applicable to an environment such as the Philippines where wealth and productive capacity is concentrated in the hands of a few oligarchs.

  14. cvj… businesses do not roll back their prices for the greater good. For example, what happened with lowered cost of malaria medicine is due to Bill Gates (okay… Bill and Melinda). Bill Gates concluded that neither the United Nations nor the individual governments (despite their supposed concern for the greater good) were not doing enough in regards malaria medicine and other protocol. Bill Gates has doubled the amount of money being spent yearly on malaria eradication, and in so doing interjected economies of scale which allowed businesses to offer more drugs, but at a lower unit price. Bill Gates Foundation had also committed to buying malaria drugs production from certain Indian companies. With a guaranteed buyer for their output, the factories faced lower risks and hence were convinced to offer the drugs at a lower price.
    GMA’s solution to high energy prices is quite interesting. When Philippine refineries had to raise their prices because of higher cost-per-barrel of oil/raw material from Chavez’ Venezuela and other oil-producing countries, it was GMA, not the oil companies acting “out of the goodness of their hearts”, that resulted in a price-rollback of sorts. GMA used tax-money to flatten the price at the gasoline pump (by NOT collecting the sales-taxes). GMA did in practice what a Columbia University economics professor had proposed on a theoretical basis.
    I don’t know what the CBCP or the InC did to lower the cost-per-liter of gasoline.

  15. UPn Student, the view that man is purely a rational and selfish individual has already been disproven by scientific experiment. For this reason, we cannot rule out compassion as a motive. Businessmen can (and have) raise or lower their prices for all sorts of motives (greed, enlightened self-interest, altruism, spite). Relevant factors could include their sense of connection with the community as well as their time horizons. From what i understand, Bunker is 40 years old and is embedded in the Chinese-Filipino community and its practices, so i do not count him as a young naive dreamer. So, when he makes a recommendation that businessmen reduce their prices, i assume that he considers that within the realm of the doable.

    Kudos to Bill Gates for his generosity within the limitations of an unjust system. I think that’s his way of negotiating passage through the eye of the needle.

    As for Arroyo, by not collecting sales taxes on gasoline, it looks like she took the most expedient way out. Typical.

  16. cvj.. Obviously, you read Bunker differently from I did. Bunker did not say that he was a businessman, that he is lowering his prices to uplift his workers’ plight, and that he wants his follow-businessman to follow his lead.

    He said that he expected businessmen to lower their prices. [Bunker is a high-school teacher… do you think he is asking his school to lower the tuition and fees they charge students?]
    Bunker is a non-businessman who is saying that it makes sense for businessmen to lower their prices. Now Hugo Chavez… he’s over 50, so you won’t call him naive if H/C were to issue a Presidential Order “…for all businesses to lower their prices by at least 1%”. Will you applaud? Will you call him a dictator? Or will you say “He’s a crook… why ask for only 1%?”
    If GMA were to issue a Presidential Order “…for all businesses to lower their prices by at least 1%”. Will you applaud? Will you call her a dictator? Or will you say “she’s a crook… why ask for only 1%?”

  17. By the way… cvj… your comment about Gates buying passage through the eye of the needle is cute. But you’re not Protestant, so you would not know that buying passage ain’t kosher.
    Just kidding… though we do have differences in opinion about a few things.

  18. UPn Student, as experienced in the Soviet Union and other communist states, lowering prices by decree will only cause shortages and probably give rise to a black market. I’m thinking more along the lines of the corporatist model which i mentioned above where there is a voluntary agreement between business, labor and government.

    I’m not sure what Gates’ religion is, but i read somewhere that his wife is Catholic.

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