Deficit Spending Remains a Core Agenda, The Significance of Public Debate of Candidates for the National Leadership

 In the end the philosophy of the majority prevails. In the long run there cannot be any such thing as an unpopular system of government. The difference between democracy and despotism does not affect the final outcome. It refers only to the method by which the adjustment of the system of government to the ideology held by public opinion is brought about. Unpopular autocrats can only be dethroned by revolutionary upheavals, while unpopular democratic rulers are peacefully ousted in the next election—Ludwig von Mises 

 

Deficit Spending Remains a Core Agenda, The Significance of Public Debate of Candidates for the National Leadership 

 

Median Voter Theory Points to More Deficit Spending 

 

November 8, 2016, Reuters: With hours to go before Americans vote, Democrat Hillary Clinton has about a 90 percent chance of defeating Republican Donald Trump in the race for the White House, according to the final Reuters/Ipsos States of the Nation project. (italics added)

 

Guess who won the US Presidential elections in 2016, Trump or Clinton? 

  

Many people see debates of aspiring candidates as providing a glimpse of their governance programs should they win the coveted seat through elections.  

  

Though that’s plausible, debates are primarily about marketing. That is, the rhetorical propensities of the candidates are likely to cater to what audiences want to hear. And while there may be generalities, the differences are likely to be in the details. 

 

And unless parallel universes exist, we’d never know the extent of fulfilled campaign promises.  

  

And this context depends on the voting audiences concerned over political and governance issues. 

 

People have distinct reasons for voting for a particular candidate. Some are attracted to geographical associations, are loyal to the agenda promoted by their local government, some have vested interests, some are swayed by specific issues, crowd formation, peer pressure, and many more. 

 

Take Build, Build and Build. Because of its popularity, most candidates desire to continue with this program.  

  

In a voting system driven by majority or plurality rule, says the median voter theorem, the median voter’s most preferred outcome will be selected.  

 

Figure 1 

 

In this perspective, candidates would prefer to generate votes by accommodating the biases of the electorate. 

  

Interestingly, a candidate from the extreme left parted from this crowd, owing to the ramping up of debt. How ironic! 

 

And that is only from public work projects. Different candidates tout other public spending programs, as well.   

  

Here is the thing. Regardless of who wins in May, debt and inflation-driven deficit spending will remain a core agenda. 

 

As the late great American journalist Henry Louis Mencken once wrote,  

 

government is a broker in pillage, and every election is a sort of advance auction sale of stolen goods. 

 

H. L. Mencken, A Carnival of Buncombe, The Johns Hopkins University Press; First Edition (October 1, 1956) 

 

But our hunch is that deficit spending will be most aggressive on the candidates backed by the most vested interest groups. 

 

Three Reasons Why a Win by Candidates who Refuses to Debate are Dangerous! 

 

Another guess is that absentee candidates provide the most dangerous roadmap for the political climate post-Duterte regime. 

 

Why? 

 

To begin with, this election may be about the process of formality. 

  

Though the outgoing leadership may proclaim "neutrality," demonstrated preference exhibits that the core of his followers, representing a consortium of political dynasties, have cast their lots with the so-called favorite at the outset of the election process. Last week, a faction of his political party joined the endorsement of the "team favorite."  

  

Instead of inducing a bandwagon effect, my conjecture is that the overwhelming lead in the polls of the favorite may be about mind conditioning the public on the electoral outcome.   

 

Surveys like in the US national elections of 2016 tell us why statistics are vulnerable to exploitation. (see introductory quote) 

 

Aside from the consolidation of political dynasties across the nation to support "team favorite" with "whatever it takes," several crucial appointments and developments have come into the picture. 

 

The awarding of a business favorite to handle logistics of the electoral governing body. The recent designation of "friendly to the favorite candidate" officials of the same governing body. The supposed delay in the adjudication of the disqualification cases filed against the "favorite candidate" resulted in its dismissal. The court-packing of the judiciary could have been designed to ensure the defeat of any legal obstacles thrown against his interests. And a double standard appears at work, while the outgoing leadership cracked down on cigarette maker Mighty Corp and PAL for Php 30 billion and Php 7 billion in taxes in 2017, he washed hands on the unsettled Php 203 billion estate taxes of the family of the leading candidate last week, blaming the BIR instead. 

 

At any rate, unless a landslide win by the opposition occurs, the election may be over even before it began. 

 

The second may be about hubris. 

 

If assured of a victory, why undergo the excruciating process of exposing one's frailty to the public through competitive debates? 

 

Figure 2 

 

Why not use the inherent advantages of political dynasties to project positions of strength? 

 

For instance, the political and financial firepower of LGUs could bring about votes in specific localities. 

 

In February, public spending was down by 5.2% YoY. 

  

Interestingly, the disbursements of the National Government climbed by 9.5%, following a decline of 8.5% in January.  

 

In contrast, the growth of LGU allocations has been blistering! It jumped 29.7%, 24.65%, and 42.7% over the last three months. Why? 

 

The growth of cash in circulation has also been strengthening.  

 

It was up 11.7% in February, the highest level since March 2021, and has risen for three consecutive months from December, which has been coincidental with LGU spending! 

  

While the growth rate of cash has not been as vigorous as in the previous elections, high base effects could explain it. Nominal cash levels in 2022 have doubled from 2016!

  

Have money allocated to LGUs been used for bussing-in crowds, paying attendees, and defraying other costs of the political rallies? Could this be the reason why entrenched political dynasties have galvanized around the "team favorite?"

 

Also, have the seeds for the next rounds of deficit spending been sown? 

 

The last factor could be fear. 

  

  

American writer and political commentator, Walter Lippman splendidly observed, 

 

When men are brought face to face with their opponents, forced to listen and learn and mend their ideas, they cease to be children and savages and begin to live like civilized men. Then only is freedom a reality, when men may voice their opinions because they must examine their opinions.  

 

The only reason for dwelling on all this is that if we are to preserve democracy we must understand its principles. And the principle which distinguishes it from all other forms of government is that in a democracy the opposition not only is tolerated as constitutional but must be maintained because it is in fact indispensable. 

 

Walter Lippmann, The Indispensable Opposition, Atlantic Monthly, 1939 

 

If there is little or no toleration of the opposition, what would become of the next regime? Would "team favorite" expurgate all opinions critical of them? Will they deracinate the opposition? 

  

The debates are also about the qualities of statesmanship necessary to attain a political consensus, which ironically constitutes their "goal."  

 

Instead, the refusal to participate in debates implies the morbid fear of reaching out to the public, which implants the embryo of social repression. 

 

Are the cornerstones of intensified oppression, censorships, and social division, our future? 

Yours in Liberty, 

 

The Prudent Investor Newsletters 

 

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Nota Bene: The newsletter intends to apprise readers of the market conditions based on the information available at the time of the items’ writing, whose accuracy and timeliness of the issues concerned are subject to change without prior notice.   Solicitation to trade is neither intended by the contents. In the meantime, the discussion of occasional positioning on particular issues are opinions of this author.