Friday, September 30, 2011


Contrary to the title above, I’m rather peeved with Amazon’s Jeff Bezos, springing on us four new fantastic products, including the first colored Kindle (Fire) for under $200. You see, I had just acquired a Kindle 3 Wi-Fi (now euphemistically called the ‘Kindle Keyboard’) for what I thought was a great bargain (below $120; at the time, Amazon sold it for $139 sans shipping), and had my friend from the US bring it with him to the Philippines.

But if I had only waited another two weeks to behold the new Touch model, I would have definitely chosen one of these sleeker, lighter and just-cooler-to-look-at units. I would have held out for another two months to the November 21, 2011 release.

It may not seem like it, but a year or two from now, people will abhor the Kindle Fire as a primitive tool, with newer models taking its place.

(How likely is it that a future model will be called the ‘Kindle Ice’?)


I guess the superseding of one’s gadgets is the price to pay for competitive, free markets: entrepreneurs are always anticipating how to better please customers, and customers are never satisfied with their lot. Which might seem bad and superficial; but then, what if we stopped ‘wanting more’ during the time of carriages, candlesticks and quill pens? And is it so shallow to desire the cure for cancer or AIDS?


I do have to take exception to Bezos’ statement that “there are two kinds of companies”:
those that work hard to charge customers more, and those that work hard to charge customers less
which is obviously a dig at Apple, whose iPad is more than twice the price of the Kindle Fire. It’s a great line, and I half-fall for it, even though I know that in economics, entrepreneurs can only charge so much before consumers shift preferences. And the ability to provide cheap products has more to do with sufficient capital accumulation and efficient processes than the kindness of businessmen. Are we supposed to believe that Amazon would be able to sell the same number of units if their products were priced higher?

Bezos’ quip is definitely a PR-catchy thing to say, but it’s just untrue. At best, we can take Bezos’ words to mean that he derives a mental satisfaction from providing such excellent products, apart from the financial remuneration (but so does Steve Jobs, I’m sure).


Having made that criticism, I admit to having acquired a bias for Amazon products, as opposed to Apple, Sony, Samsung, etc. First of all, there’s the potential-antitrust-suit advantage of purchasing stuff on the largest online store, Amazon. I love the free e-books and convenience of Whispernet downloading.

But more importantly, even as I kind of get caught up in the ‘technology race,’ I have fairly simple demands when it comes to this type of gadget: the ability to read e-books, and maybe a little internet capability. For my preference, the Kindle is most suited. I’m fairly sure many iPad readers can’t even read the alphabet, and that’s fine. 

The great Ludwig von Mises, who was born 130 years ago yesterday, termed this manifestation of different preferences among market players as “consumer sovereignty.” Freeing markets is a boon not just to the ‘profiteers,’ but their patrons.


All of a sudden, charter change or ‘Cha-Cha’ is once again a hot issue in the Philippines, with leaders of the House and Senate saying that they will be forming a constituent assembly to discuss and amend economic provisions (e.g. 60-40) of the 1987 Constitution.

Now the political aspect of the process ― possible insertions granting ‘P-Noy’ status of emperor and whatnot ― are things of which ordinary people are already cautious. I’d like to focus on the ‘threat’ of opening the country to foreign investments.


Back when I was a reporter, and covering the Arroyo incarnation of Cha-Cha, I myself seriously wondered about accountability of foreigners. Wouldn’t 100% foreign-owned miners get away with pollution? It didn’t assure me much when one of my interview subjects told me that it was all a matter of implementation of existing laws, and that Filipino firms were just as likely or unlikely to be exploitative.


Five years later, my whole perspective’s changed, where I don’t recognize the philosophical soundness or moral legitimacy of the Philippine Constitution, or any constitution, for that matter. Everything boils down to the recognition of property rights anyway, whether or not this is monopolized by the state (the sheer monopolizing already constitutes a property right violation, actually).

Yet if Cha-Cha makes for a radical freeing of markets to the degree that new foreigners come in, I’m all for it.


My former concern about regulation has given way to a realization that the concept of regulation need not be limited to an obvious legislative, monopolistic (let alone red-tape) sense.

The question itself ― to regulate or deregulate ― is misleading. Actually, the choice is between monopolistic (state) or competitive (private sector) quality standards. I am not claiming that property violations won't happen in a free society, but that choice of association is maximized in the absence of a monopoly on regulation.

How do electoral votes make for greater accountability as opposed to voting through one’s market purchases? In fact, the opposite, reduced accountability, is to be expected.

To the claim that it is naïve to think people will choose wisely for themselves, I simply point out it is much more naïve to expect good choices to manifest from a monopoly (whose mandate after all purportedly comes from the same unwise people). As I said just a few hours ago in my previous entry, either people know better, or they do not; monopolization per se is no aid in this regard.


Historical examples of pollution and land grabbing, such as in the industrial revolution, actually pertain to collusion between ‘private’ firms and the state, such collusion constituting cronyism. Wanton disregard of property rights is a throwback to mercantilism, not capitalism, the latter being defined in the negative: the absence of coercive institutions in social affairs.

If that isn’t your definition of capitalism, I trust nonetheless that your conclusion, of the goodness of removing the state in favor of property rights, would be the same.


The ultimate ‘regulator’ of firms is reputation. State cronies aside, successful businesses are those that recognize prevention of cause for negative feedback to be more valuable than simply escaping reprisal. Customers may not always count on reputation rather than the ‘safety net’ of punishing incompetence, but nonetheless respond better to businesses that provide guarantees and warranties. Case in point, eBay.

It isn't so much lawsuits but rather potential losses in sales that drive businesses to deliver on promises or to implement safety measures. Actually, lawsuits are threatening to firms precisely due to the implications to sales, and not so much for the court penalties. Companies know that things need not go to court, nor charges filed, to dissuade customers.

In short, what keeps firms in check? The profit motive.


With the possibility of eliminating the 60-40 restrictions on foreign ownership of firms looking bright, or at least brighter, it would help us to understand the concepts of regulation, quality control and due diligence independent of the state, so as to welcome the explosion of foreign investments wholeheartedly.


Sorry, medyo bomalabs ang pic. Layo e.
I just came from a forum held at Manila Tytana Colleges along Macapagal Blvd. in Pasay City, on the Metro Manila Earthquake Impact Reduction Study (MMEIRS). The event was organized by Prepare Manila, founded by my friend Anthony, and the International Association of Emergency Managers.

I think it would be more sane to wait till tomorrow to write on it, but my damned compulsive self is telling me to translate my short jots into a stupid blog article by tonight. Which brings us to this text you’re reading right now.

The speaker for the event was Dr. Renato V. Solidum, Jr., who is director of PhiVolcs. I enjoyed the discussion, wherein he briefed us about earthquakes: the basic science behind it, as well as the history, and  some of what to expect when “the big one” hits Manila. For a dumbass like me, it was quite enlightening.

  • The 1976 quake/tsunami that left about 6,000 dead prompted Marcos to create the National Disaster Coordinating Council.
  • The proximity of the moving fault (which makes for the earthquake) can be determined by whether the movement is vertical (above the epicenter) or horizontal (away from the epicenter);
  • In a study conducted by PhiVolcs, among others, two scenarios were determined, the worse one involving the West Valley Fault where an estimated 33,000 would be killed at magnitude 7.2;
  • In a tsunami, people along Manila Bay would have a one-hour lead time before the waves hit land.
Shit like that.


Solidum emphasized the importance of a “legal framework” by which building codes will make for structures that can withstand powerful earthquakes. Also important is the awareness of a community as to the dangers of an earthquake, for precautions to be made. Solidum quipped that people have to be “faultfinders” so as to determine the risks involved depending on the particular faults in their respective vicinities.


I’m such a hypocrite, you might say. What about all my anti-government free-market ramblings? Am I making concessions to a government agency? Walang kwenta pala yung dati kong sinasabi!

Actually, I am no less convinced that the services that PhiVolcs or other agencies provide can be better done sans government. To make sense of my appreciation of PhiVolcs and co., we still have to redefine the very notion of ‘public,’ which to most automatically means government involvement.


To the extent that government does not exclude private sector action, much good can still be done. I doubt that Solidum would shun the efforts of other private individuals to spread the message of disaster preparedeness. I am fairly sure he will welcome studies and assessments by private entities by which people can be better informed.

So we can say that when it comes to ‘competition,’ PhiVolcs officials may be quite open. And as I said before, even government scumbags can and do participate in society in a private capacity, to some degree.


‘Building codes’ shouldn’t automatically mean ‘government-enforced.’ Quality standards can only improve when specialists compete for viability, and competition means people see for themselves the wisdom of patronizing one or the other choice. Sure, members of ‘the public’ can be deceived into subscribing to subpar standards, but how does state monopolization per se make for wiser decisions and not worse ones? It couldn’t. 

Either people know better, or they do not. Try saying with a straight face, “Demanding patronage through violence makes for social benefit.”

Even in instances where bureaucrats apparently perform well or legislate ‘wisely,’ it is not the all-encompassingness or monopolism of their mandate that makes for such effectiveness; additional service providers from which to choose can only make for an improvement in this regard.


PhiVolcs is still a tax-funded agency, and this is something to lament. Can we really say that in the absence of coercive expropriation, people would not seek out services involving coping with natural disasters?

To the extent that bureaucrats are open to being funded voluntarily, and to the extent that people realize that voluntary funding is an option, there is hope for eliminating the state altogether. In a stateless (free) society, we can expect some ‘public officials’ to thrive in their respective sectors. It can only be for the better that the price system becomes fully operational; prices are the ultimate guide in the decisions of both producers and consumers.

Sunday, September 25, 2011


Much hullabaloo has been made of Philippine President Noynoy Aquino (Noynoy! Noynoy! Noynoy! or NNN) promoting coco water or buko juice.

“Nice one!” an admiring nationalist would say. “By promoting an industry that is ‘sariling atin,’ ‘P-Noy’ is improving the welfare of the people and the economy in general.”


But actually… how is it that the rise or fall of an industry hinges on the words of a bureaucrat? Could it be that NNN is merely latching on to an industry whose popularity is rising on account of increased consumer interest or the foresight of entrepreneurs who do have their means of marketing?

If NNN’s words are so valuable, why don’t we have him sit down and recite the names of all sorts of local industries for about an hour? Will this make for economic growth?


I guess we see how overvalued NNN’s role is in the ‘coco boom.’

But what about any direct subsidies for the proper planting, harvesting, etc. of coconuts? Can we deny that this will aid the Philippine coco water industry?

This is where we realize that there are no net gains from subsidies, nor from the endorsement of certain ‘Proudly Philippine Made’ products. Even if coconut output were to increase threefold, this would only be to the detriment of other industries from which resources were taken.

And even if ‘P-Noy’ encourages foreigners and locals to consume more buko juice, this would mean that other sectors would be that much less patronized.

(Sure, we could say that it’s no skin off the backs of Filipinos if foreign businesses earn less on account of more local profits, but taking into account the interconnectedness of all sectors undivided by national borders, there would still be no net gain)


Economies grow not by the improvement of any particular sectors. Growth is not about the mere shifting of resources from one sector to another. It’s about having consumer preferences accurately reflected via the pricing system.

It’s also about the saving of capital to make for future output; we could say that growth is about the shifting of resources, not from one sector to another, but from the present to a further point in time.


‘P-Noy’s’ involvement in the growth of the coco water sector, let alone the economy as a whole, is zero, if not negative (e.g. taxes, regulations, breathing space, etc.). If these big shots in government wanted to make an actual difference, it wouldn’t be by attaching their names to the achievements of private enterprise, but by extinguishing themselves.

Wednesday, September 21, 2011


So the Philippines’ Bureau of Internal Revenue (BIR), in spite of much criticism and protest, is pushing through with a measure that will expand the scope of those required to fill up an Annual Information Return (AIR). Under Revenue Memorandum Circular 40-2011, issued September 5, 2011, entities whose incomes are over P500,000 must fill up the more detailed form, as a means of stopping ‘tax cheats.’

For my take on the AIR, here’s an article I wrote early this year when the regulations were first thrust on an unwitting public.


And it’s a sign of the times when debt-ridden superpower US of A is enforcing stricter tax compliance affecting foreign financial institutions, including those in the Philippines. The Foreign Account Tax Compliance Act (FATCA) is meant to prevent tax evasion by US citizens with overseas accounts.

The world over, tax agencies are devising means ― excuses, really ― to drain wealth from the citizenry. This is related to the deficit-spending mentality, where focus isn’t on cutting costs, but on increasing coerced revenue.


But the inconvenience isn’t limited to the increase in taxes. We’re also dealing with confidentiality and privacy aspects, not to mention the feasibility of providing the information desired by governments. In the case of FATCA, the IRS is making the matter of transmitting sensitive information from foreign banks to be a *snap* of the fingers, when in fact the cost of the technological infrastructure required will run into the millions. And who’s going to pay Philippine banks for meeting IRS requirements by 2014?


It hasn’t taken that long for non-US banks to realize that it would be easier and cheaper to deny American citizens of accounts. This is bound to affect Americans’ decisions to immigrate upon retirement, and the Philippines, which is trying to sell itself as a retirement haven, is going to lose customers. It doesn’t even matter that pensions may be exempt; the very possibility of their coverage is going to affect banks’ decisions.


Both the US and Philippine governments are under the delusion that it is only through them that their respective citizens can be saved ― even though most problems were created by government in the first place. As long as private solutions ― which require a relinquishing of political power among the elite few ― are ignored, we’re going to hear more of these desperate measures, which are bound to become more and more absurd as time goes by and economies go to shit.

Friday, September 16, 2011


Looking over the paper this morning, it’s the usual stupid shit:

1. Doctors on the BIR watchlist. Healing the sick is so dishonorable, and they ‘defraud’ the government while at it too!

2. Pia Cayetano quoted as saying the RH Bill isn’t coercive; and I suppose the government is just ‘suggesting’ for you to go to prison if you fail to pay your taxes to fund their moronic programs?

3. Neal Cruz talking about how a ‘fair price’ for oil must be set, as achieved by allowing more industry players to come in.

Nakakabobo. Instead of bothering to deal with their moronic ideas, I’d rather discuss a more encompassing issue: monetary stability, and the role of gold in the international banking system.


Most are inclined to view gold and silver as opportunities for profit, but are wary of investing because the ‘bubble’ looks like it’s about to burst. Just look at the recent slide in gold prices up from $1,900 an ounce last week to the present $1,785/oz. level.

What’s more, banks like JP Morgan appear to be manipulating the price by heavily ‘shorting’ instruments related to precious metals. It almost looks like massive selling has been occurring in a coordinated manner. If the big institutions can manipulate the price like this, can gold and silver still be good investments?


When prices are manipulated so as to be below their otherwise ‘market’ level, this tends to increase demand for the good. So if gold should otherwise be at $2,000/oz. but is being held below $1,800, this makes for increased buying, which has in fact been propping up the gold price in spite of everything. Low prices make for buying opportunities.


But maybe JP Morgan and co. are intending to bring about ‘precious metals fatigue,’ where people just get fed up with the inability of gold and silver prices to rise, so that confidence disappears. To deal with such an argument, it is helpful to discard the gold-for-profit perspective, and adopt the ‘What-else-is-there?!’ one.

Gold is seen as a safe haven, precisely because currencies are besieged by depreciation and debt. Bonds require currency confidence, and stocks can only go so high before people realize that nominal gains are secondary.

Indeed, gold won’t make a profit for you, unless you invest ahead of the herd. And given that gold and gold-related investments constitute less than 1% of portfolios worldwide, a ‘bubble’ has yet to come.


Some might say that gold doesn’t have any real purpose, unlike food or electricity or whatnot. I think this is underestimating the importance of exchangeability, which money is meant to facilitate. A sound medium of exchange like gold makes possible the capital accumulation by which productive endeavors can be refined and optimized for efficiency.

If it weren’t for this ability to ‘store value,’ world output would not even be enough to sustain 10% of the entire population. So if we’re talking about ‘real’ value, gold is just about as ‘real’ as it gets. It may not be consumable, but it makes for a degree of consumption that is otherwise unattainable.


So if you have the means, do buy gold and silver. In a battle between large bureaucratized cronies and the free market, the latter eventually prevails.

Wednesday, September 14, 2011


Most of us, even the intellectually challenged Noynoy administration, recognize how unfair it is for people in provinces to be paying for the Manila-based MRT and LRT. This is used as justification for raising these rail transits’ fares by several hundred percentages.

(That most taxes are collected from the Metro is beside the point. We’re arguing in terms of principle here.)


Yet it isn’t that far a logical leap to see that paying taxes for programs from which you don’t benefit are unjust, and ultimately do not reflect preferences (which the government is hypothetically supposed to satisfy).

The reason the market works ―that is, to the degree that government is absent ― is because spending for yourself maximizes utility.


“But what about the poor? What about the sick? You heartless ignoramus!”

Even when it comes to charitable donations, one seeks to maximize the ‘social benefit’ of whatever cause they believe to be important. And so private charity, which nonetheless involves networks and organizational talent, is far more efficient and rational than anything accomplished by government, which is premised on looting against your wishes under pain of imprisonment/death.

Tuesday, September 13, 2011


The emerging popularity of gold and silver as substitutes for market-worthless fiat money is already attracting the attention of the Philippine government, which sees the precious metal continuing to rise by the end of the year, and beyond. 

Environment Secretary Ramon Paje voiced his concern over the environmental implications of increased demand for gold. Small-scale miners whose activities are harder to monitor (which threatens the ‘understanding’ between the big mining firms and the DENR folk) are said to be negligent in ensuring that the activities don’t pollute the surroundings. 


This looks like just another excuse to heap more regulations and fees on an already socialized industry. The proposed new regulations will be premised on government ownership of natural resources.

(If brought to its logical conclusion, however, this would mean the state owns the ‘natural resources’ contained in our bodies) 


The added bureaucracy will serve as a buzzkill for an industry that is booming precisely because of the follies of governments worldwide (including the Philippines; that the BSP hasn’t been as careless as the US and EU doesn’t mean its time won’t come). This typical attitude of “Where’s my cut?” will weaken the sector to the degree that it manifests.


In all of this, the most viable solution will be overlooked: ‘regulation’ via private ownership of lands and of the natural resources contained therein, which would ensure increased accountability for the respective properties better than any monopolistic (i.e. government) system. 

An all-encompassing overseer such as the DENR is in fact counterproductive and breeds corruption. But competition and the desire to sustain one’s property will mean the government relinquishing its claim to natural resources, the political likelihood of which is yet absent.

Wednesday, September 7, 2011


(NOTE TO READER: This is not intended as a polemic against what I see as an unjust, unwarranted and ultimately illogical concept that is ‘intellectual property rights’ and its sanction by the government. I merely want to share my personal ‘awakening’ experience. Take from it what you will.)

I don’t buy that many CDs anymore. I’m more selective nowadays, waiting for one of my favorite bands to release something (my copy of Symphony X’s latest album ‘Iconoclast’ has been in postal limbo for two months now). My reduced CD buying isn’t so much due to changes in technology, as it is due to a difference in my buying priorities. These days, I focus more on adding to my book collection, specifically, my collection of Austrian economics-related literature.

I noticed something similar about my CD and book collections: had it not been for my obtaining of ‘free’ copies of the items that I eventually bought, I would not have bought them at all. It almost seems paradoxical, but for the fact that there is a premium to owning the licensed ‘real deal.’ This is the case for anything really. Customer service can be a huge incentive to purchase an official copy of something that is also available in black markets. But in my case, it’s not like I had to call for technical difficulties. I just enjoy being able to patronize the things I love.

So I buy that which I can get for free anyway either illegally (‘pirated’ copies of music, audiobooks, etc.) or legally (free downloads of books as made available by; got to love them). Approximately three-fourths or more of my CDs were purchased on account of piracy. One thing is clear; this free flow of goods has been a boon for record companies and book publishers, as far as my spending behavior is concerned.


Back in the early 2000s, before even being aware of the free market philosophy (apart from the typical naïve ‘anti-capitalist’ notion), I procured ‘pirated’ merchandise with little qualms about it. Slowly, I developed my philosophy.

I’d hear family members say that the authorities shouldn’t be raiding ‘dibidi’ stalls and depriving the poor of such business. They shouldn’t be kept from the entertainment that eases their burdens somewhat. Even then, I recognized this as an unphilosophical, somewhat appeal-to-pity justification, if one was still under the belief that intellectual property (IP) actually existed. It would be like saying stealing is okay, if it helps the poor.

My reason for not opposing the trade of pirated goods had more to do with recognizing that this made for improved aesthetic quality in the music or movie industries. In the blog I used to manage back then (in which I was content with 10 page views a day), I made these in-hindsight-insightful comments, circa 2004:
These executives and ‘artists’ so worried about their profits diminishing don’t realize that they’re actually asking their buyers to be ripped off, or coaxed, in order to sell their product...
An [improved] taste in art is going to kill off these worthless works featuring these pretty people on the cover; a principle of survival of the fittest...
Rotten music, its essence, breeds piracy, in its being of little value. When one’s taste improves, it will be revealed what works are so pitifully pathetic and lacking. The improvement in quality of art is meant to go hand-in-hand with the producers being able to afford lowering prices.
In a Utopian society, even if a work is given to the public for free, if it is deemed worthy, it will be paid back to the artist in kind. There would be gratitude, expressed in material goods as well, for such works. Fortunately, nothing in the real world is so clear-cut and it is always a challenge, always a struggle, to release good art. Only in this world of rejection could innovative works come about...
The ultimate credo is rather simple, in fact obvious, albeit overlooked: PEOPLE BUY WHAT THEY WANT. Honesty in creation is the best bet for profit, and hit-or-miss, it is worth practicing.

So my philosophy back then didn’t reject IP as such, as much as it recognized that IP impeded improvements, innovation and an uplifting of aesthetic tastes. All the while, I was discovering these great bands whose limited marketing capital would have otherwise prevented me from even hearing about them. It was such a thrill to discover something that moved me so profoundly, and my response was usually to find a copy. Acquiring a credit card in 2005 did wonders for the manifestation of my desires (see if you can spot some guilty pleasures in the photo above!).


It was also around 2005 that I began to embrace free markets, bit by bit. My primary reference was Ayn Rand’s ‘Capitalism: The unknown ideal.’ Of course, she argued in it about the primacy of intellectual property, a primacy even over physical property, because it symbolized the intellectual achievements of man or some such flowery nonsense. There was always something that didn’t quite settle in me when it came to the ‘capitalist’ stance on IP. In my opinion, and from my experience as a music lover, there was a serious need to amend copyright laws, to limit its scope to what was ‘necessary,’ whatever that was.


Sunday, September 4, 2011


President Noynoy (Noynoy! Noynoy! Noynoy! or NNN) Aquino’s China trip is being hailed a success, what with him bringing in $13 billion worth of Chinese investments in the Philippines.

Heaven forbid that government steps out of our lives altogether, that people would not think to trade with one another, much less beyond borders and seas!


The truth is, government is not responsible for bringing in investments. They would come in anyway. All the government does is limit the contractors to those with political ties.

And looking at the figure ‘$13 billion,’ it is often ignored as to how efficiently this is spent, or more importantly, what was lost as a result of government interference. Government regulations, taxes and constitutional restrictions actually reduce investments, whether foreign or domestic, way beyond $13 billion. So we have no reason to say “Thank you” to the president, except if done in a very sarcastic tone.


Politics is the name of the game, even in the supposed ‘free market.’ Just look at NNN’s entourage, composed of tycoons and taipans; it is precisely this crony system that gives ‘capitalism’ a bad name. But the typical reaction of some Marx-inspired observer is to cry “Off with their heads!” to businessmen, even non-cronies. The real solution would of course be to free entrepreneurs of government meddling altogether.


And what’s with this 2012-2013 “friendly years” bullshit. The Inquirer is gullible enough to republish such a stupid Malacañang PR line. Friendly indeed, just look at the picture with NNN being massaged by China’s Wang Qishan!

Eto na naman, equating political relationships or partisan unity with actual ties between people. Not only does this not solve the boundary problem about the Spratlys, but it ignores that “friendliness” is nurtured by removing political barriers to trade between Chinese and Filipinos. Peace is about free trade, not diplomatic handshakes, as I said before.

Friday, September 2, 2011


At present, the free-market ideology is completely off the radar of most people’s consciousness. They may occasionally hear about free markets, and have their opinions on it (“There should be government safety nets and regulations” or “There must be a national plan to direct industry”), but if you dig just a little deeper, you’ll find that they are referring to a kind of state-sponsored market.

‘Capitalism’ to them is a connivance between the rich and the powerful, and they believe that if a ‘dog-eat-dog’ system were allowed to prevail, there would be much fraud, businesses would settle for cheap shortcuts as a means of profit, and workers will be paid next to nothing. And if only government were not corrupt, companies would be kept in line so as to truly be of service to the public, and to the country.


While these opinions may be definite, they are not the result of long hours of contemplation, but rather knee-jerk responses. The anti-market sentiment is a common first impression for most (including me), if only because they are aware that bad things do happen in this world. There seems to be a need for an institution designed specifically to stop bad things such as hunger and hatred from happening, and that institution is government. In addition, it’s just right for there to be some representative of ‘the people’ by which people can receive official awards or shake hands with big shots.


And if someone does study the matter more in-depth, they often do with their biases directing their learning, and with questionable methodology, so that their ‘educated opinions’ will be mere rationalizations of their prejudices. What’s more, their professors likewise affirm such viewpoints. And so we have most of the academe in support of the politically privileged, who naturally welcome the pro-state inclination of the ‘progressives.’ The media don’t know any better, and equate official expertise with sound reasoning, and so the large media institutions are just as entrenched in state worship.


I’ve been writing in this blog a lot this past year, and it’s not out of any sense that some intellectual tide is changing. I can make my points one by one, destroying each layer of falsehood as found in statist theory, only to find that many readers are not even of the proper frame of mind to comprehend me. There’s just so much BULLSHIT we’re fed every single day of our lives by the political elite (including media and other crony industries), and the elite themselves believe it, that I’m not any closer to making a difference in the world as when I started.

Just look at the comments in the article I wrote on the girl who was rewarded for saving a Philippine flag from a flood. I must thank the anonymous commenters, who are proving my point that the protective instinct towards country and flag is a throwback to violent savagery. That they are unaware of Bill Clinton’s 1992 presidential campaign slogan is forgivable.

If I make a point against protectionism, dismantling the logic of the notion of ‘Buy Filipino’ or ‘Give back to the country,’ this wouldn’t mean a thing if a person still clings to the notions of loyalty to the motherland and other statist concepts.

Challenge them to make an essential distinction between their nationalism and that of Nazi Germans, and their brains would short-circuit.


Nationalist: Well, I wouldn’t support the killing of minorities!
Me: Does that have to do with your allegiance to some nation, or because you recognize individual rights?
Nationalist: But my country would always recognize individual rights.
Me: And if it doesn’t, you would defect?
Nationalist: Yeah, only a Nazi-like country would oppose freedom.
Me: So you’re putting individual rights over the concept of nationalism after all. Isn’t it then redundant or irrelevant to salute a flag or put your heart to your chest for some stupid song, if it’s individual rights that are paramount?
Nationalist: My country deserves my respect.
Me: Who is your country then? Is it the dirt beneath your feet? Some person in Samar you don’t even know? Some spiritual entity comprised of each Filipino’s brain? Or is it really just this vague concept which politicians use to fool you into making sulong their programs? At best, the nationalistic images in your head provide an aesthetic thrill.
Nationalist: You, you don’t get it. It’s like this. You see, if it’s just us as individuals, we’re each like barbecue sticks, we can be broken one by one, but if we’re bundled up together, we can’t be broken… You see?
Me: You seem to be equating the state with community. So does forming a community entail the threat of physical harm if you don’t want to contribute taxes? If I’m not with you, I’m against you?
Nationalist: … You’ll never understand.



I’ve been watching Bloomberg TV recently, and it’s amazing how everyone is rooted in the Keynesian mindframe. To the news anchors, and the economists they interview, the ‘solution’ to the market doldrums is a matter of how much stimulus the US Federal Reserve is willing to accommodate.


Quantitative easing (QE), which is the euphemism for a central bank’s purchase of Treasuries so as to provide banks with liquidity to lend out, is made to be a matter of a kid asking for more sweets. We can only hope that the ‘grown-ups’ led by Ben Bernanke, a.k.a. ‘The Ben Bernank,’ will be so kind as to give enough ‘stimulus’ candy (QE3)!

To the mainstream media, there is virtually no limit as to how ‘benevolent’ the Fed can be. Other than price inflation that is. But then, the rise in prices is treated as a nuisance, to be avoided while nonetheless stimulating the market somewhat.


But what many don’t see is that a rise in prices is an inevitable consequence of monetary manipulation. You can’t have a jubilant stock market via QE without an eventual rise in the prices of commodities and in the cost of living. It is a fantasy to have ‘just the right amount of stimulus, but without heating up prices.’


And it’s not just a matter of prices rising to the same level as the monetary increase; there will necessarily be favored sectors who get more of the newly printed monetary notes, and this has implications on the employment level. The present high unemployment in the US is not just a matter of depositors being robbed due to the faulty investments made by the banks during the housing bubble; it’s about sectors being ‘stimulated’ without regard for actual consumer desires, so that in the end the poor business decisions are revealed.


We can trace the bailout and monetary-stimulus mentalities to John Maynard Keynes, who was canonized by the economics community upon his death in 1946, after which the policy of high government spending had its apologist-saint.

There are two particular models used explicitly or implicitly by economists today, whether they fashion themselves Keynesian or not. They are: the Keynesian cross, and IS-LM (Investment Saving-Liquidity Preference Money Supply).


The Keynesian cross basically assumes a direct relationship between spending and income/productivity, so that the more spending is done (facilitated by government, to counter the people’s silly fetish for saving, which is causing unemployment), the more incomes will be had for all.

The IS-LM model, meanwhile, says the same thing, but in a more roundabout fashion. The rate of interest can only go down so much so as to increase output. When that point is reached, people begin saving at a higher rate than they consume, the thriftiness of which prevents businesses from making money. Government must then step in, and promote spending, or spend the money itself, thereby circulating money around once more and ultimately ‘multiplying’ the wealth in a community!


Missing from such analyses is the fact that one’s holding of money in itself does not impoverish others, just as spending such money in itself does not enrich the spender. After all, there must be some utility in ‘hoarding’ money; otherwise there’d be no reason to maintain such a ‘fetish for liquidity.’ When spending-in-itself is adopted as a policy, this makes for wastage and no net gains, all the while forgetting that all future investment originates from a previous accumulation of savings. Coupled with the implications on employment due to quantitative easing, this spending-for-its-sake policy could bring no good, and in fact is precisely the cause of the grief we are experiencing in the markets worldwide.

There is a LOT more to say about Keynes and the business cycle. Sa mga interesado po, pakibasa na lang ang ‘Philippine central banking and the business cycle.’


One Keynesian analyst Linda Yueh had the temerity to quote Keynes’ famous “In the long run, we are all dead” as a justification for the Fed to launch QE full force NOW.

First of all, the context of Keynes’ quote, as far as I know, was in response to the economists who primarily concerned themselves with hypothetical long-run equilibrium conditions where all market distortions have been corrected. Keynes’ saying, that we’re all dead in the long run, was a plea to focus on the interim distortions, so as to adapt policy accordingly. In this, Keynes spoke meaningfully. But his particular brand of economics focuses on the other extreme, the short run, where the adverse effects of quantitative easing and monetary stimulus are not yet observable.

What is needed is the study of the medium run, where real unemployment and suffering happen. The best medium-term framework yet is that of the Austrian school of economics.


Yes, the time to act is NOW, but the HOW is equally important. Acting for the immediate future just to say that we acted will not exempt us from the tragic outcomes of Keynesian policy. As the three-year depression worsens, there is a need to focus on savings- and competition-oriented solutions, so as to bring about an overhaul of the fiat monetary system.