Monday, July 22, 2013

Is this your SONA?

At last, I am finished reading the 4th SONA of H.E. President Benigno Aquino III. It's my first time to really pay attention to SONA. It's a difficult reading for me up to page 25. Allow me to introduce my thoughts first based on the content itself. Then it will be followed by a personal remark and some responses from advocates of free market. 

Widespread Transformation and Inclusive Growth

Now I think, to some extent I got the context of what our President meant by "widespread transformation" and "inclusive growth". Taking the report at face value, this "transformation" and "growth" include the following:  

1. 8,581 sitios have been electrified

2. 28,398 families who are informal settlers now finally have or will soon have decent homes

3. From 503,521 TESDA graduates, 6 out 10 have found jobs

4. PPPP beneficiaries increased from 700,000 in 2010 to 4 million households in 3 years

5. Education - quality education, sufficient quantity of books, chairs, and classrooms, K12, price of textbook reduced from 58.00 down to 30.00

6. Agriculture - a. Rice Importation - In 2010, imported 2 million metric tons of rice; in 2011, 855,000 metric tons; in 2012, 500,000 metric tons; in 2013, 350,000 metric tons b. Coconut industry - intercropping as the solution to increase farmers' income i. If only coconuts, farmers' income would reach only 20,000 a year per hectare; add coffee, 172,400.00 per year; add bananas, 102,325.00 per year; add cacao, 89,000.00 per year. ii. In 2012, 5,500 hectares of land alloted for intercropping in 90 different locations iii. This covered 10,000 farmers iv. Target for 2013, additional 434 sites

7. Fisheries - contributed 193.65 billion to economy in 2012, storage facility in Bataraza in Palawan, and new piers, roads, and bridges

8. Hacienda Luisita - in February 2013, DAR has completed the list of qualified beneficiaries for land, turn over of lots will begin on September 2013

9. Health - 81% of Filipinos were enrolled in PhilHealth, expanded Z Benefit Package (poorest of the poor can now get free medical care, included illnesses are breast cancer, prostate cancer, acute leukemia, coronary bypass, and corrective surgery for holes and defective blood vessels in the heart), and fund for infrastructure - 33 billion to improve 4,518 hospitals, rural health units, and barangay health stations.

10. Disaster Preparedness - a. Geohazard Mapping and Assessment Program, identified 28 most vulnerable locations, completion of Geohazard maps for 496 cities and municipalities, remaining 1,138 covering every last corner of the country will be finished before the end of 2015. b. Project NOAH of the DOST, total of 525 automated water level monitoring stations and automated rain gauges have been installed in 18 major river basins throughout the country. c. Flooding in NCR - relocating informal settlers, filing cases against those who have obstructed waterways, and 6.2 billion to construct Blumentrit Interceptor Catchment area to be completed next year

11. Housing - 9,377 houses for victims of Sendong; 4,374 house more to be built; turning over a total of 53,106 houses to victims of Pablo

12. People in uniform - 47,850 houses, several thousand hectares of land in three military camps assigned for livelihood, additional income for the military and they can now participate in improving the economy, investment in national police (74,879 firearms, helps reduce election related crimes)

13. Peace - Bangsamoro Basic law, to pass it before the end of 2014

14. Legislation - among 5 (Sin Tax Law, Responsible Parenthood Law, Cabotage Law, Fiscal Incentives Rationalization Bill, Land Administrative Reform Bill), I look into Cabotage Law and I find it commendable. 

15. Proposed budget for 2014 is 2.268 trillion

16. Modernization of Armed Forces - Interesting equation (1 fighter jet = 6,580 house for soldiers and police force =2,000 classrooms), the govt. prefers to prioritize enlisted personnel's welfare than purchasing 24 fighter jets

17. MRT/LRT Fare - govt. subsidizes 25.00 per passenger in LRT and 45.00 in MRT. 

18. Traffic - 2.4 billion loses per day, Integrated Transport System, Metro Manila Highway, revisit PD 1113 and 1894

19. DPWH - there is now open competition for contractors, saved 18.4 billion

20. PPP - airports and Daang Hari

21. Tourism - created 3.8 million jobs

22. GOCC - a. PRA, 1996 to 2009 earned 76.02 million, in 2012, earned 1 billion, b. LWUA, in 2011, net loss of 950 million, in 2012, gross income of 870 million; c. MWSS, 2010, loss 34 million, 2011 earned 333 million, 2012, earned 2 billion 

23. Others - completion of roads and bridges left unfinished in previous administration, growth in semi-conductor industry, economic development in Iloilo, building of more power plants to adddress blackouts in Mindanao and the need for more energy as the economy grows, the case of NAIA 3, the end of transactionalism, reforms in aviation industry, and the benefits of CCT

Challenges to Overcome

But there are challenges to overcome in order to sustain the above widespread transformation and inclusive growth. And these challenges include: 

1. Need to increase the number of policemen and soldiers from 250,000, but the primary trouble is fund for pensions. a. No contributions have been made, but there are payments to make. b Funds from the national budget are being used for pensions. In 2012, 54.48 billion pesos were spent on pensions. This year, that figure will rise to 61.29 billion. By 2016, it will be at 80.64 billion. c. GSIS assistance is needed, using reclaimed lands to generate funds, d. Review of PD 1638 and RA 8551 

2. SSS pensions - SSS has accumulated an estimated 1.1 trillion pesos in unfunded liability, amendment of SSS Pension Scheme 

3. The anomalies involving Mr. Syjuco, PAGCOR, PNP, Bureau of Immigration, NIA, and Customs

Personal Response

As a student of free market, it is not easy to write a response to SONA. There is a tension between the ideal and the actual. How can you describe your ideal economic system if the existing system is too far from it? Despite of this reality, I just want to express the transformation/growth I like, the transformation/growth I don't like, and some questions in my mind. 

I like the electrification of sitios, the relocation of informal settlers, the construction of storage facility, the addition of intercropping, PhilHealth, the construction of Blumentrit Interceptor Catchment area, housing for typhoon victims, the contribution to economy of enlisted personnel through development of livehood program, the lifting of Cabotage Law, the "open competition" for contractors and the saving of 18.4 billion in DPWH, the development of airports, the priority given to enlisted personnels' welfare over fighter jets, the performance of GOCC, the development of Iloilo economy, and the end of transactionalism. 

The things I don't like include the increase of PPPP beneficiaries from 700k to 4M families. I see it as welfarism that is now causing great headaches among developed countries. I also disliked the increase of national budget. In 2012, the national budget was 1.816 trillion and 2.006 trillion in 2013. I am asking myself, why the national budget keeps on increasing in the passing of years?

Some questions in mind that need further clarification include Bangsamoro Basic Law, revisitation of laws, education, employment, MRT/LRT, and the pension of enlisted personnel who are retirees and will be retiring. 

Concerning Bangsamoro Basic Law, I just want to know its basic content.

Concerning laws proposed by our President to be revisited are PD 1113, 1894, 1638 and RA 8551. I think the first two have something to do with the construction of superhighway in NCR and the last two were related to retirees' pension. I still need to verify if my initial understanding is accurate. 

About education, I really don't know now the meaning of quality. Is it measured by length of years or by the quality of teachers and books' content? Yes, I consider the reduction of price of textbooks and increase in number of facilities as commendable, but as to quality, I don't know. This is because not a few critics have already voiced out that something is seriously wrong with existing educational system. 

Regarding employment, I just wonder about the accuracy of the report. Imagine 6 out of 10 from a total of 503, 521 TESDA graduates have found jobs plus 3.8 million jobs created by tourism. If this is true, in what way does it make an impact on the number of Filipinos going abroad searching for jobs? 

How about the government subsidy for MRT/LRT fares? I think the logic is true. All Filipinos including those who do not use MRT/LRT are actually paying for that subsidy. If this is true, then does it follow that more MRT/LRT passengers would mean more subsidy? Isn't this a misuse of public fund? I think, the inclusion of this in SONA implies an increase in MRT/LRT fares in the coming days. 

Another thing that disturbs me concerns SSS and the pensions of enlisted personnels. Similar problem is approaching the US though in our case, the government anticipates that the suffering of the next generation will occur 28 years from now.

In ending this personal response, I just wonder why almost nothing has been mentioned about our "modern day heroes", the OFWs. I am also puzzled why there is a complete silence regarding global economic crisis and freedom of information bill. I just could not avoid thinking that perhaps these issues are not that important.

Responses from Advocates of Free Market

One advocate of free market thinks that the picture below is a more accurate description of the economy:

In order to understand why free market thinkers' assessment is different from the mainstream, one needs to grasp first the content of Frederic Bastiat's "The Law" and Henry Hazlitt's "Economics in One Lesson".  

And I would like to conclude with remarks coming from other advocates of limited government, liberty, and free market taken from a Facebook Group. I asked them about their response to SONA and here are their answers:

FB - "Didn't bother. It was a nice day today so I went to the park."

ED - "Government will always be obsessed with GDP, GNP, whatever. True growth can be seen at the grassroots." 

PB - "No comment, I have my Fairy Tale book to keep me occupied hehehe" 

JA - "Recycled rhetoric." 

DA - "The usual statist bullshit. That pretty much sums all of 'em up."

One blogger wrote:

Colorful Rag - "I just no longer see a point in analyzing pabango speeches. You have to be either stupid or in denial to believe that this or any administration is the bringer of social progress in any positive sense. This year, there’s sure to be a flaunting of GDP growth, which doesn’t deal with economic productivity as much as it does price increases. I’m done with that."