Tuesday, December 27, 2016

IS #DU30 RIGHT IN HANDLING THE PROBLEMS OF THE PHILIPPINES?



This is in response to a question raised in Quora.
No. Duterte is totally wrong in handling the problems of the Philippines.
Failed Drug War Policy
The drug war is a failed policy which Duterte thinks he can win. Apparently he is on a quixotic campaign to prevent wider acceptance on the use of recreational drugs, even as Duterte is addicted to Fentanyl – a drug that is 50 times more powerful than heroin.
There already exists ample empirical evidence that the drug war – a policy started by Nixon in 1972 – is a failure that led to the congestion of the courts by filling it up with non-violent people who could have been otherwise productive contributors to the economy. More and more countries are reversing their drug policies and moving towards decriminalization and regulation. For instance, Portugal which has decriminalized drugs has successfully reduced drug addiction by 50%. Various American states such as Colorado, Washington, and Alaska have taken the step towards legalizing the use of marijuana for medical and recreational purposes – and have phenomenal outcomes including the departure of criminal drug syndicates because the market was no longer profitable when marijuana was legalized.
Just because there are lots of Filipinos who have a mistaken belief in a failed drug war policy – does not make the approach correct. All that really is rule of the mob. The Filipinos have yet to understand that all the drug war did is to create more death. From an economic perspective all that Duterte’s drug war achieved is to create an artificial scarcity that leads to higher prices of recreational drugs.
In plain and simple terms, Duterte’s role in the drug war is to esure the profits of the drug cartels.
Lack of Economic Policy
The myriad problems (poverty, unemployment, gross inequality) of the Philippines can be traced to a root cause – the absence of economic freedom.
Duterte’s economic team prescribes more of the same – more regulation, more taxation, and more state intervention.
Welfare State
This is not surprising as Duterte has cast his lot with the ultra-nationalists and socialists who vehemently oppose opening the economy to allow greater participation of foreign investors. The populist slogan of social justice which attracts the ignorant masses like catnip to a cat has not helped the economy in any way. Instead, Duterte’s team has bolstered the welfare state where more people are dependent on the money confiscated/stolen from productive people aka taxation.
The headlines are hogged by stories such as free education, free health care, and free irrigation. Filipinos have yet to learn the adage that there is no such thing as a free lunch as these “free” stuff are paid for by an increase in taxes.
As of writing, it is quite ironic that fuel prices have increased while the global price of oil is at a low time high, the culprit of course is an increase in fuel taxes. This in turn leads to lesser disposable income for Filipinos as they have to shell out more money for fuel. Businesses will also adjust prices to reflect this new reality. In instances where the state adopts price controls, businesses fold out and Filipinos end up without jobs and lesser choice of goods and services. In fact the Philippines GDP reduced by 3% at current prices and reduced by 6% at constant 2000 prices within 3 months of the Duterte regime’s takeover.
Instead of opening the economy so that people have more income to pay for their various needs, the Duterte regime perpetuates the duopoly and oligopoly of the oligarchs.
People therefore have to shell out more money for exorbitant electric rates, telecom rates, Internet rates, medicines, education, housing, and the like. This leads to a reduction of disposable income.
Inflation has also increased rapidly from 1.6 in June 2016 to 2.5 by November 2016 – a 56% increase. This means Filipino buy lesser goods in November for the same amount of money they had in June months ago.
Based on these measures, I conclude that the Duterte regime is severely mistaken in addressing the Philippines problems.

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