To next year’s president: Slash government

my Trade Tripper column in the 11-12 December 2015 issue of BusinessWorld:

Last Dec. 2, I spoke at the University of Asia and the Pacific’s Business Economics Club 2015 Year-end Business Economics Briefing. The theme this year was “2016: New Normal or New Mediocre.” It was apt, coming off a horrible 2015, even by merely using policy direction as sole standard.

And if public commentator Ben Kritz is to be believed, 2016 promises to be an annus horribilis. An assessment I happen to agree with.

In any event, the point I wanted to make in the Briefing was essentially threefold:

• Our foreign policy must flow from an effective domestic policy, for which experienced well trained leadership is vital;
• The traditional family institution must be protected for its vital social benefits, as well as economic significance and overall effect on the common good; and
• The need to cut back on government and put more responsibility (and choice) to the people.

Of the first, I need not dwell on, it being previously discussed in other articles for this column. What will be said is that many critical challenges will be faced by the next administration (perhaps so intended by the current one): managing a likely legal victory over China at The Hague in relation to our sea claims, a Moro Islamic Liberation Front disgruntled over perceived noncompliance of a possible implementing legislation with the Comprehensive Agreement on the Bangsamoro, and the ramifications of public courtship (as what happened during the Asia-Pacific Economic Cooperation meeting in Manila) for the Trans-Pacific Partnership over the Regional Comprehensive Economic Partnership.

On the second, I refer the reader to “Strong Families, Prosperous States: Do Healthy Families Affect The Wealth Of States?” (W. Bradford Wilcox, Robert I. Lerman, and Joseph Price; American Enterprise Institute, 2015):

“Higher levels of marriage, and especially higher levels of married-parent families, are strongly associated with more economic growth, more economic mobility, less child poverty, and higher median family income at the state level in the United States.”

Furthermore: “Violent crime is much less common in states with larger shares of families headed by married parents, even after controlling for a range of socio-demographic factors at the state level... This is noteworthy because high crime rates lower the quality of life and real living standards and are associated with lower levels of economic growth and mobility.”

Hence, this column urges people to vote for candidates that will do away with nonsense such as government subsidized contraceptives, gay “marriage,” divorce, and euthanasia; and instead support those that uphold the traditional marriage and the family. It’s really the socially and economically sensible thing to do.

On the last, it is really urged by this column (and will be a theme repeated throughout 2016) to move away from the paternalistic, socialistic form of government that crept over the country through the decades.

It comes with a cost: a proposed 2016 national budget ballooned to P3 trillion, representing a whopping 461% increase from 2000 and a nearly 300% from 2006. Add to that a nearly P6-trillion national debt.

And this will not be solved by better tax collection or increased personal income tax. Regarding the latter, as John Mangun pointed out, any non-insane increase would still only constitute 14% of the national budget.

The point is that whatever way our government goes regarding tax increases, a budget deficit will still result.

No. The best way for the Philippines moving forward is to really start cutting down the size of government, which now is a humongous 25% of our economy.

Right now, our welfare expenses (using the 2015 budget as benchmark) add up to 64%: this includes programs such as socialized housing, climate change, social protection such as the Conditional Cash Transfer, health care, and employment.

These are fine. But we’ll be far better off allowing the bulk of the responsibility to be shouldered by the private sector.

Cut the size of government, lower spending, lower taxes, allow people to keep more of their hard-earned money, and give them the power to choose which health care, school, business, etc., they want.

Cut the bureaucracy and allow our citizens the power to open and close up businesses as is needed, to hire and fire people, and give incentives for them to share their wealth (such as donations to charity) rather than coercively taking money through taxes.

Such policies are more democratic and empowering of Filipinos.

On the other hand (and again using the 2015 budget as benchmark), on the one job that government is really supposed to do, which is national security, we allocated only a mere 4.4%.

In a world where terrorists and secessionists abound, this is patently not enough. Increased military spending and beefing up our civilian police force should be encouraged.

Clearly, these things cannot be achieved overnight.

But those looking to vote in the next elections would do well seeking candidates that put their trust in the Filipino, encouraging personal responsibility, rather than in fat paternalistic bureaucracies.

Paying for the Philippines' new normal

my Trade Tripper column in the 9-10 October 2015 issue of BusinessWorld:

The problem is disconnect. The disconnect between what our current government leaders say (and swear to) and what they actually do. Like that presidential candidate who dismisses taking an oath renouncing Philippine citizenship as a mere scrap of paper. And this resulted in the Republic lurching from one reactive policy to another, the government imposing measures that are far detached from the people’s will or the national interest.

One symptom of the disconnect is the present Administration trying to (or at least acts like it wants to) direct people to the good life. But experience shows how unhinged this is from reality. And under our constitutional system, that shouldn’t even be government’s primary focus. Thus, the principles of “common good” (the individual’s right to human flourishing) and “subsidiarity” (the people deciding for themselves how to attain that common good), embodied in our Constitution, but which the ruling political class keeps ignoring.

Instead, our Constitution declares that our government really has one job to do: “to serve and protect the people.”

Thus, essential are the maintenance of peace and order, and the protection of life, liberty, and property.

Our government is not mandated to directly run the country, its economy, educate the youth, and develop society. That is properly the people’s responsibility. As far as those are concerned, including attaining a just social order and social justice, the government merely “recognizes,” “promotes,” and “develops” -- serving as an assist to the work primarily carried out by the Filipino people.

In short, the government is actually supposed to keep its efforts to the minimum, limited to fostering an environment where the people are free to properly do their thing. After that, the government should just keep out of the people’s way.

If you think the foregoing is a mere academic concern better confined to the classroom, think again. This Administration has expanded the reach of government to areas that should primarily be left to the people.

By doing so, insisting in interfering with business and education through more regulations, weakening institutions like the family and the Church, and acting like the “padrone” through billions spent on the Conditional Cash Transfer, this Administration now feels entitled to increase taxes to expand its powers even more.

So now, we have a proposed 2016 budget of P3 trillion, representing a whopping 461% increase from 2000 and a nearly 300% from 2006.

The government’s “underspending” 2014 budget deficit (which meant that, despite all the underspending for necessary infrastructure, our government still spent more than it earned) is P73.1 billion.

The foregoing is within the context of the Filipino paying among the highest income tax in Asia but with the lowest wage rates in the world for work hours deemed among the longest globally.

And this is not counting the fact that Metro Manila workers suffer the longest commutes due to the now internationally recognized as the world’s worst traffic.

And with all that money being taken from ordinary taxpaying Filipino citizens (aside from an external debt of P2.042 trillion and domestic debt of P3.856 trillion, resulting in an outstanding debt of P5.898 trillion as of August 2015), what does this Administration have to show for it?

One of the world’s worst airports, the world’s worst traffic, slowest internet speed; 23.2% unemployment (80% of which belong to the 18-34 age group), around 7% student drop out rates, nearly 26% poverty incidence; water shortage (amidst floods), huge backlog in issuances of drivers licenses and car plates and passports; and a deteriorating educational system.

In the end, the “just-let-the-government-take-care-of-you” cash dole-outs, the considerable unemployment/underemployment rates, and legislation like the Kasambahay Law (that demands a professional’s pay but without the need to work professionally), all provide a clear disincentive to work and fosters an entitlement culture that could only lead to this country’s social and fiscal bankruptcy.

Yes, we seem to have improved competitiveness. But even that proves my point: an examination of this year’s and the last Global Competitiveness Index reveals the uptick attributable to private sector efforts and held back by bureaucratic red tape.

And there are still the areas of special concern remaining unaddressed: Yolanda rehabilitation and the inability to give justice to the Special Action Forces 44.

And yet, quite insanely, on the one job this government is supposed to do -- to protect our people and territory -- it bafflingly waffles between apathy, incompetence, or the downright treasonous.

Thus our country bears increased incidence of crime, increased smuggling, unchecked rise of illegal aliens (estimated at 1.3 million, posing a threat to national security, as well as stealing employment), the confused legal/diplomatic “defense” of our territory vis-a-vis China, and the almost giving away of Mindanao to a supposed “Bangsamoro”. All messes clearly intended to be left to the following administration to clean up.

Hopefully, our next set of government leaders has had a better read of our Constitution. And respect the fact that words (and oaths) do matter.

Entitled unemployment

is my Trade Tripper column in this weekend issue of BusinessWorld:

There are now 12.1 million unemployed Filipinos. Malacañang apparently thinks it an appalling development. So much so that it immediately called for a press conference to announce that President Aquino wants his cabinet members to be “pro-active” in implementing “strategies with spatial and sectoral dimensions.” The problem is that it’s this government’s policies that “inspire” unemployment.

First: the myths. It is misleading to talk about “jobless growth.” As economist Nonoy Oplas pointed out, “The term ‘jobless growth’ is wrong. Growth means more or additional output from (a) more workers and entrepreneurs employed, or (b) the same number of workers and entrepreneurs producing more from the same input (ie, higher productivity). If (b) happens, then higher productivity people will create new jobs elsewhere.”

Finally, to blame unemployment on the recent natural disasters, including Yolanda, is to be disingenuous. The economic conditions for joblessness were already in place before that. Even Socioeconomic Planning Secretary Arsenio Balisacan would himself say: “We are on track with respect to our economic targets, but we lag with respect to our social outcomes.”

Which is something many economists and policy observers already noted about the Philippines’ recent economic performance: the skewed social policies effectively render whatever economic improvement we have to benefit only a few elite families. To the detriment of the greater part of our population, which fall under the poverty and hunger levels.

The 27.5% joblessness rate is tragic. It represents, in just one three month period, an additional 2.5 million unemployed Filipinos. It is wrong, however, as the left are wont to do, to blame trade liberalization and globalization. These proven economic drivers, which take place at the point of the border, have done their bit and these can be seen in the improved economic numbers. It’s the socialistic policies adopted by this government that make the poor remain poor.

Simply put: not only is this government lousy at creating jobs, it also encourages people not to work.

The disincentives to work are plenty: why work if you’ve been told by academics and policy makers that you’re entitled to receive money in exchange for nothing via the Conditional Cash Transfer? Why work hard if you have the Kasambahay Law that entitles you to a professional’s benefits but without the need to act professionally?

Oh, and by the way, because you’re poor you’re excused from following the law.

These policies, borrowing the words of New Jersey Governor Chris Christie, essentially tell people: “do not bother about wanting to work hard and acting with honor and integrity and ingenuity because we’ll take care of you.”

Olympic skater Michael Christian Martinez would have had greater chances of getting government support if he had sat on his butt all day, stayed content with mediocrity, and whined. Instead he unforgivably took initiative, worked hard, and showed talent.

This column has warned repeatedly about the dangers of an entitlement culture. Obviously, we do need social legislation to help alleviate our poor. But while you have Singapore allocating a huge portion of its budget on social protection, nevertheless, it will not tolerate squatting or any sort of criminality, with everyone encouraged (“compelled?”) to put in their fair share for Singapore.

Contrast that with the Philippines, where the extended family, immediate community, employers and the government are all expected to provide anything on demand but without any concomitant responsibility required of the citizen. “You don’t like the way we do our job? Fine, we’ll abandon it.” And screw duty or the rule of law.

To compound all that, to those Filipinos who reject a paternalistic, entitlement culture for the country, the government seems intent on proving that any smart and hard work they do are for naught.

To start, for a country of recognized talented people, we have among the lowest paid workers. In a 2012 International Labor Organization survey on employee income, out of 72 countries, the Philippines ranked 70th. That we lag behind Korea, Singapore, Hong Kong, Malaysia is old news. But then we also lag behind Bosnia, Jamaica, Serbia, Botswana, Mauritius, Kazakhstan, Syria, Mongolia, and India.

The foregoing is within the context of the Filipino working among the longest hours. And those work hours do not include the two- to four-hour commute to and from work that many Filipinos go through every day, commuting hours that will get longer (according to the government itself) by 55% due to 12 simultaneous infrastructure projects starting this month, all undertaken without any accompanying detailed vehicular, traffic rerouting, revised work hour, or public transportation plans.

For Filipinos who want to go into business, there’s congested traffic there too built by the government in the form of endless red tape (amongst the most tedious in the world). Add to that high energy, transportation, and raw material costs.

So much for the left’s and Karl Marx’s ideal society where workers can “hunt in the morning, fish in the afternoon, rear cattle in the evening, criticize after dinner.”

Really no to the Kasambahay Bill

is my Trade Tripper column for this Friday-Saturday issue of BusinessWorld:

Following my articles on the Kasambahay Bill ("No to the Kasambahay Bill," 14 September 2012; "Still no to the Kasambahay Bill," 21 September 2012), the feedback I received (whether in agreement or not) has consolidated in my mind the utter absence of necessity for such a law. The intended Kasambahay Law would merely encourage people’s sense of entitlement. It would also ridiculously abandon the idea that rewards should be based on merit.

The main problem of the bill is that it stands on a patently unfair generalization: that the middle class abuses, underpays, and commits violence against household help. But that is simply untrue. Most Filipinos that hire household help are decent people who, as per our culture, treat such help as members of their own family.

Furthermore, it quite significantly ignores the fact that existing laws already give sufficient protection to household help in a manner that took into consideration the very personal, practically familial, circumstance of Filipino house helpers in relation to their Philippine employers.

Aside from the Constitution and the preliminary provisions of the Civil Code, the latter also contains at least eleven articles specifically addressing household help (see Articles 1689-1699). Thus, household service "shall always be reasonably compensated. Any stipulation that household service is without compensation shall be void. Such compensation shall be in addition to the house helper’s lodging, food, and medical attendance." Also, the "head of the family shall furnish, free of charge, to the house helper, suitable and sanitary quarters as well as adequate food and medical attendance."

Not only that, if "the house helper is under the age of eighteen years, the head of the family shall give an opportunity to the house helper for at least elementary education. The cost of such education shall be a part of the house helper’s compensation, unless there is a stipulation to the contrary." And, notably, the "head of the family shall treat the house helper in a just and humane manner. In no case shall physical violence be used upon the house helper."

But there’s more: House helpers "shall not be required to work more than ten hours a day. Every house helper shall be allowed four days’ vacation each month, with pay." The employment can also only be terminated in a just manner, as specifically provided for in Articles 1697-1699.

As I kept emphasizing, maids that are found working well are compensated generously in this country. But we should not be idealizing them, their plight, or the poor in general. I received countless accounts from friends and readers who advanced transportation for new maids, only for them to not show up (along with the money), of maids who steal, or abandon the house or the employers’ children just like that, of maids who surreptitiously use landlines of their employer and leave the latter thousands of pesos in debt to the phone company.

Add the numerous incidents involving maids of working age who -- pleading ignorance -- carelessly destroyed clothes to be laundered, appliances, china, or food. But possessing higher education isn’t necessary to do work properly. Besides, how ignorant can they be if they can operate cellphones incessantly even during work hours? Notably, the problems I described are not even limited to Filipino employers. As one sociology paper found ("Sexuality and Discipline Among Filipina Domestic Workers in Hong Kong," American Ethnologist 1997, Nicole Constable): "Filipina domestic workers in Hong Kong are viewed as sexually threatening and thus in need of strict discipline."

And again this must be emphasized: the glossy generalization of household help and the negative generalization against the middle class ignore the fact that middle class employers practically have no remedy against erring or malicious maids. Sue them for damages? But with what money could the maids pay the damages awarded? Will the police be willing to hunt down maids who, because they simply felt like it, abandoned their employers? Besides, what is the need for a Kasambahay Bill if maids today are practically entitled to get away with any infraction or incompetence simply by uttering "’sensya na po?"

Of course we want to help every fellow Filipino. But that help must be done with clear eyes and rational thought. As noted economics commentator Nonoy Oplas pointed out: "There are different causes of poverty, there are different types of the poor, and there are different aspirations by the poor. Thus, ‘fighting poverty’ as if there is only one type of the poor, or as if the poor have only one aspiration, often results in expanding the lot of the poor, or creating new poor.’

If we must have such laws, let it be that which promotes accountability, responsibility, and merit. But if a Kasambahay Law (as it’s drafted now) gets enacted, then it would be better, particularly for those of the middle class, not to hire maids anymore. Better save your money and just do the chores you can do better anyway.

Still no to the Kasambahay Bill

is the subject of my Trade Tripper column in this Friday-Saturday issue of BusinessWorld:

When I wrote that article last week ("No to the Kasambahay Bill"; Sept. 14, 2012), I was expecting huge anger from the readers about the position and the arguments I made. Gratifyingly instead, aside from a few who expressed quite eccentric views, the overwhelming response I got was agreement to my objection to the Kasambahay Bill. This article is meant to clarify and further discuss why I believe the Kasambahay Bill, at this time and as it stands, is a bad idea.

Emphatically, the biggest objection is not merely the minimum wage requirement but fundamentally the idea of fairness, a fairness deserved as well by the employer. Again, this is not to go against the idea that a proper wage should be given for a proper day’s work.

A reader who agreed to my objection to the Kasambahay Bill, nevertheless, expressed discomfort at my seeming "generalization" of maids. My response was: not so. If there was any generalization made, it was made by the Kasambahay Bill of the middle class. And the generalization done was quite negative: that the middle class abuses, underpays, and commits violence against household help. But that is simply not true. Most Filipinos who hire household help are decent people who, as our culture makes pretty clear, treat such household help as members of the family.

This negative generalization of the middle class ignores the fact that middle class employers practically have no remedy against erring or malicious maids. Sue them for damages? But lawsuits cost lots and what money could the maids pay the damages awarded with anyway? Will the police be willing to hunt down maids who, because they simply felt like it, abandoned their employers? In fact, the system is so skewed against the middle class that, with just minimal exaggeration on my part, maids feel they are entitled to get away with any infraction or incompetence simply by uttering "’sensya na po."

But this negative generalization also ignores the fact, which I pointed out in last week’s article, that "ordinarily in this country, maids that are found working well are compensated generously." As one reader mentioned to me, because of their maids’ demonstrated loyalty and good work, their family went to the extent of funding their education and even took them to their Hong Kong vacation. Another reader said they funded the maid’s family business in the province. These stories cannot be overemphasized enough considering they (the readers’ families) themselves admitted are "not rich."

Clearly, the issue is not about withholding deserved compensation to the household help. It is about genuine fairness. And it is also "fair" to say that a lot of household help are "generally untrained, a good number of which work lazily or with a bad attitude." I quoted Beth Day Romulo’s 1987 book Inside the Palace: "The little maids who flood into Manila from their parents’ farms in the provinces are apt to be pleasant and honest, but also untrained, inefficient, unmotivated -- and clumsy." Note, she was writing from the perspective of a quarter of a century ago. But as one reader wrote to me, having grown up with maids in the house, he is bothered at the fact that the quality of maids (and the service they give) has steadily worsened through the years.

Obviously, there are abusive employers, as the recent newspaper headlines show us. But these abusive people are currently in jail, awaiting trial. What does that tell you? That there are laws currently in place already that protect household help for whom abuse is heaped.

The real objection to the Kasambahay Bill then, to repeat, is fairness: why give to maids, at considerable burden to the middle class, extra rights, professional’s privileges, and statutorily imposed compensation without requiring from them the commensurate professionalism and accountability?

One reader argues that the Kasambahay Bill actually will enable household helps to be responsible and professional. But that’s ridiculous. As anybody who actually managed people would know, you never give a reward or promotion in the hopes that such person will step up and match the reward or promotion. It never happens. It will actually encourage that person to continue behaving or working badly or even worse. Rewards, rights, privileges are given for good work or behavior already done and with the concomitant responsibility to keep doing so. To do otherwise is precisely to encourage a "paternalistic entitlement society."

If the Kasambahay Bill must be passed, it is suggested at the very least to strengthen the reportorial provisions of the Bill to help protect future employers. This means including a national computerized database for getting mandatory references before a maid is hired. That way, if a maid decides to unjustifiably abandon her employer, robs or steals, or does bad work, such maid can be immediately identified and perhaps "blacklisted." It will give a bare minimum of protection for the employer and encourage greater accountability for household helps.

No to the Kasambahay Bill

is the subject of my Trade Tripper column in this Friday-Saturday issue of BusinessWorld:

Beth Day Romulo has this marvelous book Inside the Palace (published by GP Putnam’s Sons, 1987), a colorful, witty insider’s look in the goings-on in Malacañang during 1970s and up to the early ’80s. But it also provides an interesting peek on how life was during that era and of the people that lived it.

Thinking of the Kasambahay Bill (which provides greater rights for household helpers), one particular passage of Ms. Day Romulo’s book came to mind: "Servants [in the Philippines] consider their employers ‘masters,’ and the relationship is far more personal than that of American or European help and their employers. Once the ‘master’ has taken a maid or houseboy into his family, he is in effect responsible… [for everything, ‘from heart attacks to broken hearts’] that no Western employer would be expected to deal with."

And she insightfully goes on: "The relationship between servant and master or mistress is not all roses… The little maids who flood into Manila from their parents’ farms in the provinces are apt to be pleasant and honest, but also untrained, inefficient, unmotivated -- and clumsy."

And from that one can understand my problem with the almost inevitable Kasambahay Law (presently House Bill No. 6081). I’ve always believed, to paraphrase Cardinal Newman, that "we have rights precisely because we have responsibilities." I do not see the merit of providing a group of people with extra rights just because politicians want to feel good about themselves or look good to the voters.

Why should household help, generally untrained as they are, a good number of which work lazily or with a bad attitude, be rewarded an array of rights while having done nothing yet to deserve them? Rewards are given for good work done, never in the hope that they will do it. And ordinarily in this country, maids that are found working well are compensated generously anyway, even moving on to have businesses of their own.

The Kasambahay Bill is actually an assault on that one sector of society that needs to be protected and nurtured if this country is ever to prosper: the middle-class. However, with proposals that household help be given minimum wage (not even mandatorily required by the ILO Convention 189 on Decent Work for Domestic Workers), plus 13th month pay, that they can’t (unlike confidential employees) be dismissed as needed by the employer, easy access (but without need for accountability) to dispute settlement, and so on just made it harder for the middle class to maintain household help. Only the rich can now afford to do so.

But the Kasambahay Bill also inordinately benefits the poor at the expense of the middle-class. Let’s face it, a lot of these maids are hired more out of charity by the employer (who most likely can do without them) than for their qualifications. But, aside from the fact that our culture demands that employers treat their household help as members of the family, suddenly they now have to be paid and treated like professionals as well. Now, that’s all obviously well and good. But only if these servants act like professionals themselves and be held accountable if they don’t.

But the Kasambahay Bill instead romanticizes household helps, thus practically containing no (actually none at all) workable provision that protects the interests of the middle class employer. Think of the situation wherein the middle class employer has to advance the transportation expenses of the maid, only to have that maid suddenly disappear upon arriving in Manila. Or of that maid abruptly leaving because she just got bored with her work or got rightfully reprimanded or was summoned back to the provinces because her parents impulsively got a sudden attack of sentimentality and missed her? What about the untold number of appliances, utensils, gadgets that they break, clothes ruined, cars scratched, food spoiled? What about those instances reported in the newspapers of maids or houseboys robbing or killing their employers?

What relief can a middle-class employer have? Hire lawyers and sue them? For what? Damages that they have no money to pay for anyway? If they disappear, will the police take the trouble to track them? Put them to jail on what charge and for how long must a trial go on before one gets justice?

I, for one, will consider to stop hiring any household help upon the passage of the Kasambahay Bill. On principle. Because I simply do not believe in the "paternalistic entitlement society" that our senators and congressmen are espousing. To paraphrase from New Jersey Governor Chris Christie, I do not agree when our politicians tell our people: "Do not bother about wanting to work hard and acting with honor and integrity and ingenuity because we’ll take care of you." True leaders never say they will take care of people. True leaders work to have people learn how to take care of themselves.