Pork Barrel Scam Saga: Ferreting Out Corruption with Corruption

It’s is of no puzzle for me to see how the supposed corruption-free ‘good governance’ has been all the while a rigmarole or “smoke and mirrors”.

From today’s headlines at the Inquirer.net:

Former Sen. Joker Arroyo on Sunday accused Malacañang of attempting to deceive the public by lumping him together with 19 senators who received additional pork barrel amounting to P1.107 billion a few months after the Senate voted to convict then Chief Justice Renato Corona last year.

Arroyo found it strange that Budget Secretary Florencio Abad would now claim that the former senator’s office received P47 million worth of projects in February, eight months after Corona was ousted by the Senate sitting as an impeachment court.

Along with Senators Miriam Defensor-Santiago and Ferdinand Marcos Jr., Arroyo voted to acquit Corona of charges of betrayal of public trust and culpable violation of the Constitution for dishonesty in his statements of assets, liabilities and net worth.

Extending pecuniary favors to political allies from the Senate to the House of Representatives, from another Inquirer headline article:

Members of the House of Representatives received what senators got in extra lump sum funds from the Disbursement Allocation Program (DAP), albeit in smaller amounts.

Budget Secretary Florencio Abad said on Saturday that each representative received last year between P10 million and P15 million in DAP, a little known lump-sum budgetary item that pooled savings from unused budgetary items or lower-than-expected expenses of state agencies.

“The same accommodation we extended to the senators we also extended to the House representatives,” Abad said in a series of text messages to the Inquirer…

In the 15th Congress, there were 285 representatives. If 200 got P10 million to P15 million each, the total amount would be P2 billion to P3 billion.

A total of 188 House members (or twice the minimum one-third vote or 95 signatures needed) impeached Corona on Dec. 12, 2011. Some lawmakers complained that Majority Leader Neptali Gonzales II had told them to just put their name on the complaint although they hadn’t read the articles of impeachment against Corona.

Two days later, the Senate convened itself into an impeachment court. On May 29, 2012, 20 senators found Corona guilty of betrayal of public trust and culpable violation of the Constitution largely because he was untruthful in his financial declaration.

If true, then the Renato Corona ouster or impeachment of ex-Supreme court Chief justice, has all been about the proverbial “pot calling the kettle black” or ferreting out corruption with corruption or the rewarding of political constituencies with earmarks “extra lump sums” who voted or towed along with the President's desires. 

The end of such actions served nothing more than to raise poll rating approvals or populist politics in order to justify the administration’s expansionary government and political control over society.

This is just a validation of what I have been saying about the sham of ‘good governance’ from a new administration.

Commons sense tells me that immense elections expenses will need to be recovered and that the political baggage from assorted horse trading and backroom dealing with different and ideologically opposed political groups will suggest more of the same policies, but with a subtle difference-the distribution of power will be based according to the degree of political debts as perceived by the new leaders.

In other words, the only “changes” I expect to see post elections are personalities involved in dispensing public funds and controlling power (and not in the system dominated by cronyism and client-patron relations).

And the Pork barrel has been used as one of THE instruments for “assorted horse trading and backroom dealing” again from another article of mine:

So essentially, the Pork Barrel culture reinforces the patron-client relations from which the Patron (politicos) delivers doleouts and subsidies, which is squeezed from the Pork Barrel projects, to the clients who deliver the votes and keeps the former in power. Hence, the Pork Barrel system is essentially a legitimized source of corruption and abuse of power seen from almost every level of the nation’s political structure, an oxymoron from its original “moralistic” intent (unintended consequences). As the saying goes “the road to hell is paved with good intentions”.

The great the French classical liberal Claude Frédéric Bastiat warned at the Law of the mass delusions espoused by the public on the worship of the state-law-legislature (p.43)

One of the strangest phenomena of our time, and one that will probably be a matter of astonishment to our descendants, is the doctrine which is founded upon this triple hypothesis: the radical passiveness of mankind,—the omnipotence of the law,—the infallibility of the legislator: this is the sacred symbol of the party that proclaims itself exclusively democratic

Unless there will be massive orchestrated and coordinated coverups or whitewashing, expect to see the deepening and broadening of the scandal and a possible dramatic change in the sentiment of "radial passiveness" of domestic politics.

Yet the public should clamor for an independent non-partisan audit on earmarks (Pork barrel) of all incumbent officials (which should include previous tenures or positions) beginning with the highest to the lowest ranking. 

But this would signify a Herculean task of cleaning up the Aegean stable that would be met by stiff resistance and would likely extrapolate to a wholesale expose of how filthy the local political system operates.

Let me add that should today's inflationary boom be faced with economic reality, then this will compound on political woes endured by this supposed puritanical administration from the unraveling Pork Barrel scam saga. 

The Pork barrel scam is really peanuts to the stealth plunder from an inflationary boom which has in fact partly financed the Pork Barrel via zero bound rates

Philippine Politics: The Pork Barrel is Dead. Long Live the Pork Barrel.

In attempting to defuse a raging populist storm over the abuse of public earmarks allotted to elected leaders, the Philippine president surprisingly announced of the proposed abolition of the Priority Development Assistance Fund (PDAF) derogatorily known as the Pork Barrel. 

The Vera Files at the Yahoo.com neatly exposes on the administration’s doublespeak…

In Aquino’s own words, legislators will retain the discretion to “identify and suggest projects” for their districts under a new mechanism the budget department and Congress will hammer out.

The epitome of transactional politics, pork barrel, or simply pork, refers to appropriations and favors obtained by a representative for his or her district. The funds are discretionary in nature.

The new setup Aquino is envisioning will, in effect, not abolish pork but simply centralize the district funds—PDAF will likely just be given another name—under the executive department.

But, as important, what should be made clear is, PDAF is but one, albeit the most conspicuous, form of pork barrel.

Aquino’s speech is palpably silent on all other forms of pork barrel funds currently in the national budget that have likewise lent themselves to abuse and misuse: among others, the multi-billion-peso Public Works Fund (now called Various Infrastructure including Local Projects or VILP) in the Department of Public Works and Highways, those embedded in other government agencies such as the Department of Agriculture, lump sum appropriations and other discretionary funds.

These will remain intact simply because they have not of late been at the center of mind-boggling Napoles-like scams.

Not only is the proposal to abolish the Pork a cosmetic makeover, its impending centralization also translates to a concentration of political power to the President. The executive branch will now be able to choose which constituency will be favored (their allies, their voters and their interest groups) and which constituencies will not, thereby expanding their political 'imperial' control over the local governments. This serves as a roadmap towards dictatorship. 

Importantly, the Vera Report above points to the many other forms of Pork Barrel. 

In essence, pork barrel is like any government spending programs predicated on a politically mandated coercive redistribution of resources.  Such has only been differentiated by the forms of, and by the categorical accounting treatment of expenditures or redistribution.

This serves as more validation of the great Frederic Bastiat’s legal plunder at work.

And more from the same article:

But no amount of hue and cry over the decades from within and without the halls of Congress would move governments to get rid of pork barrel.

PDAF’s predecessor, the Countrywide Development Fund (CDF), would, in fact, be introduced in 1990 by Aquino’s mother, then President Corazon Aquino, for “soft projects” in addition to the Public Works Funds and similar funds.

The Commission on Audit’s special audit on the 2007-2009 PDAF is by no means the first and only audit of pork barrel money. A string of special audits on the CDF more than a decade ago had also uncovered “scams” involving legislators and government agencies, and the demand to abolish pork had been resounding for years.

As said before since the toppling of the Marcos regime, Philippine politics has revolved around the Pork Barrel system:

So essentially, the Pork Barrel culture reinforces the patron-client relations from which the Patron (politicos) delivers doleouts and subsidies, which is squeezed from the Pork Barrel projects, to the clients who deliver the votes and keeps the former in power. Hence, the Pork Barrel system is essentially a legitimized source of corruption and abuse of power seen from almost every level of the nation’s political structure, an oxymoron from its original “moralistic” intent (unintended consequences). As the saying goes “the road to hell is paved with good intentions”.

The warnings Roman orator lawyer and senator popularly known as Publius Tacitus (or Gaius Cornelius Tacitus) applies to the Philippine political setting [Annals 117]

laws were most numerous when the commonwealth was most corrupt (or the popular variant: The more corrupt the state, the more laws)

The Pork Barrel is dead. Long Live the Pork Barrel.

Frédéric Bastiat on the 10 Billion Pesos Philippine Pork Barrel Scandal

The unraveling Pork Barrel Scandal in the Philippine political system resonates on the admonitions of legal plunder by the great French classical liberal economist Claude Frédéric Bastiat in “The Law”

From the Philippine Daily Inquirer: (bold mine)

It’s not only Janet Lim-Napoles and her associates who will be on trial if the pork barrel funds scam reaches the courts—she’ll be dragging along with her the Philippines’ political and justice systems, Sen. Miriam Defensor-Santiago said on Friday.

Santiago made the remark as authorities entered the second day of a manhunt for the alleged mastermind of the P10-billion racket amid doubts that the lawmakers supposedly involved could be brought to justice

Bastiat: (bold mine)

When a portion of wealth is transferred from the person who owns it — without his consent and without compensation, and whether by force or by fraud — to anyone who does not own it, then I say that property is violated; that an act of plunder is committed.

I say that this act is exactly what the law is supposed to suppress, always and everywhere. When the law itself commits this act that it is supposed to suppress, I say that plunder is still committed, and I add that from the point of view of society and welfare, this aggression against rights is even worse…The responsibility for this legal plunder rests with the law, the legislator, and society itself.

From Today’s Inquirer headlines:

The COA report said that between 2007 and 2009, the Department of Budget and Management (DBM) released the following amounts: about P101.6 billion for various infrastructures including local projects (VILP); P12 billion for Priority Development Assistance Fund (PDAF) projects; and P2.36 billion for financial assistance to local government units (LGUs); and budgetary support for government-owned and controlled corporations (GOCCs).

Bastiat:

Legal plunder has two roots: One of them, as I have said before, is in human greed; the other is in false philanthropy…

Now, legal plunder can be committed in an infinite number of ways. Thus we have an infinite number of plans for organizing it: tariffs, protection, benefits, subsidies, encouragements, progressive taxation, public schools, guaranteed jobs, guaranteed profits, minimum wages, a right to relief, a right to the tools of labor, free credit, and so on, and so on. All these plans as a whole — with their common aim of legal plunder — constitute socialism.

From the first Inquirer article:

Santiago also took issue with President Aquino’s decision to continue to provide for billions of pesos in the Priority Development Assistance Fund (PDAF)—more derisively known as the pork barrel—in the proposed national budget for 2014.

“This entire scandal is the offshoot of kickbacks in pork barrel so, of course, the public began crying for the abolition of pork barrel,” Santiago said. “Yet the President refused to abolish it.  It’s the Office of the President that prepares the budget and it’s still there and he even defended it.”

Bastiat

Sometimes the law defends plunder and participates in it. Thus the beneficiaries are spared the shame, danger, and scruple which their acts would otherwise involve. Sometimes the law places the whole apparatus of judges, police, prisons, and gendarmes at the service of the plunderers, and treats the victim — when he defends himself — as a criminal. In short, there is a legal plunder…

This legal plunder may be only an isolated stain among the legislative measures of the people. If so, it is best to wipe it out with a minimum of speeches and denunciations — and in spite of the uproar of the vested interests.

Not to forget that the Philippine president has a pork barrel ‘earmark’ to the tune of at least Php 2.5 billion for 2014 and used Php 2.028 billion last year (Inquirer.net). DBM 2013 Philippine budget here, President's Pork barrel in 2012 here. We will hardly know if these declarations are accurate.

And as I wrote in 2008

So essentially, the Pork Barrel culture reinforces the patron-client relations from which the Patron (politicos) delivers doleouts and subsidies, which is squeezed from the Pork Barrel projects, to the clients who deliver the votes and keeps the former in power. Hence, the Pork Barrel system is essentially a legitimized source of corruption and abuse of power seen from almost every level of the nation’s political structure, an oxymoron from its original “moralistic” intent (unintended consequences). As the saying goes “the road to hell is paved with good intentions”.

Contra mainstream media and pundits who portrays today’s scandal in the framework of personality based politics, in the context of the great French classical liberal Frédéric Bastiat, it is the perversions of the law/s that has been rooted on legalized plunder that spawns all such malfeasances. 

There can hardly ever be ‘Good governance’ or corruption free government when “the law/s” in and on itself represents the principal source of corruption. 

War on Bitcoin as US Government Tightens Grip

INCREASINGLY desperate governments around the world will resort to various ways and means of preventing people from safeguarding their savings from legal depredation. Thus, the attacks on gold or even cash transactions or hoarding.

Bitcoins are now seen as a threat by the US government and will be subject to "regulations".

Notes the Zero Hedge (bold original)

Just six weeks after the US Treasury decided enough-was-enough with this upstart non-fiat, non-controlled-by-TPTB currency (and applied money-laundering reglations), US financial regulators are now looking for supervisory control over Bitcoin. As The FT reports, CFTC's Bart Chilton notes "it's not monopoly money - real people have real risk in these instruments," and  that regulating the controversial cyber-currency "is sure something [CFTC] needs to explore." Chilton's remit to regulate this "shadow currency" is predicated on it becoming a basis for derivative contracts as opposed to purely transactional (akin to the monitoring of physical oil transactions that can influence crude futures.) Since the Treasury's March decision, at least three North American companies have had their accounts seized by the banks but while this attempt to control the virtual currency follows the ECB's 'ponzi attack' last year, the 'regulators' may note that, "even if US regulations make it hard for Bitcoin businesses to operate in the US, that doesn’t mean it will make it difficult for people to use Bitcoin as a currency in the US. Bitcoin is a world currency."

The war over bitcoins showcases the volatile transition from the industrial age to the information age or the Third Wave.  

It is interesting to see how governments will try to close the gap between the digital marketplace, where the latter would be constantly innovating ahead, while the former will also be constantly in a chase over "controlling" innovations.

 

So far bitcoin has been in consolidation after the recent crash, which has coincided with gold-commodities

Harvard’s Carmen Reinhart: Pensions are Screwed, Higher Inflation is a Safe Bet

Harvard economist and professor Carmen Reinhart, who along with co-Harvard peer authored a book chronicling world crises in the bestseller, This Time is Different has recently been interviewed by the Der Spiegel. (bold mine, hat tip zero hedge)

On the real reason for negative interest rates and QEs… 

Reinhart: No central bank will admit it is keeping rates low to help governments out of their debt crises. But in fact they are bending over backwards to help governments to finance their deficits. This is nothing new in history. After World War II, there was a long phase in which central banks were subservient to governments. It has only been since the 1970s that they have become politically more independent. The pendulum seems to be swinging back as a result of the financial crisis.

Oops. Financing government deficits has indeed become the norm. This is an essential ingredient to the risks of hyperinflation

On the difference between today and World War II…

Reinhart: No, but after World War II austerity was easier to pursue, because you had a younger population and therefore less entitlements. Furthermore, military expenditure was easier to reduce. So, the build-up in debt we have seen since the crisis is very rare. Usually you get that kind of build-up when there is a war.

Why huge debt has been a burden…

Reinhart: I am not opposing this change, I am just stating it. You have to deal with the debt overhang one way or the other because the high debt levels are an impediment to growth, they paralyze the financial system and the credit process. One way to cope with this is to write off part of the debt.

Why governments resort to plundering of people’s savings by financial repression…

Reinhart: The technical term for this is financial repression. After World War II, all countries that had a big debt overhang relied on financial repression to avoid an explicit default. After the war, governments imposed interest rate ceilings for government bonds. Nowadays they have more sophisticated means..

Monetary policy is doing the job. And with high unemployment and low inflation that doesn't even look suspicious. Only when inflation picks up, which is ultimately going to happen, will it become obvious that central banks have become subservient to governments.

Financial repression policies only adds to the debt stock, real austerity is required.

Reinhart: No. Restructuring, inflation und financial repression are not substitutes for austerity. All these measures reduce your existing stock of debt. Unless you do austerity you keep adding to the debt. There is no either-or. You need a combination of both to bring down debt to a sustainable level.

Why we should expect higher inflation…

Reinhart: There are no silver bullets. If central banks try to accommodate and buy debt, there are risks associated with it. Somewhere down the road you are going to wind up with higher inflation. That is a safe bet -- even in Japan …

Again financing deficits heightens risks of hyperinflation.

Surprisingly Ms. Reinhart offers an implied Austrian school solution (except for the higher inflation advice)…

Reinhart: The best way of dealing with a debt overhang is to never get into one. Once you have one, what can you do? You can pray for higher growth, but good luck! Historically it doesn't happen -- you seldom just grow yourself out of debt. You need a combination of austerity, so that you don't add further to the pile of debt, and higher inflation, which is effectively a subtle form of taxation …

Why savers are screwed…

Reinhart: No doubt, pensions are screwed. Governments have a lot of leverage on what kinds of assets pension funds hold. In France, for example, public pension funds have shifted money from shares (on the stock market) to government bonds. Not because their returns are great, but because it is more expedient for the government. Pension funds, domestic banks and insurance companies are the most captive audiences, because governments can just change the rules of the game.

The morality of financial repression…

Reinhart: Let me be a little blunter: A haircut is a transfer from the creditor to the borrower. Who would get hit by a haircut? French banks, German banks, Dutch banks -- banks from the creditor countries. So you can see why this is politically torched. This is why it is not done, it's a redistribution. But ultimately it is going to happen, because the level of debt is too high.

The US will default too but by the inflation route…

Reinhart: Yes, but who are the large holders of government bonds? Foreign central banks. You think the Bank of China is going to be repaid? The US doesn't have to default explicitly. If you have negative real interest rates, the effect on the creditors is the same. That is also a transfer from China, South Korea, Brazil and other creditors to the US.

Why the system will keep continuing until it can’t…

Reinhart: Why do we have such low interest rates? The Federal Reserve Bank is prepared to continue buying record levels of debt as long as the unemployment situation isn't satisfying. And China's central bank will also continue to buy treasuries, because they don't want the renminbi to appreciate.

Quote of the Day: The Folly of All for One

And is not this the point that we have now reached? What is the cry going up everywhere, from all ranks and classes? All for one! When we say the word one, we think of ourselves, and what we demand is to receive an unearned share in the fruits of the labor of all. In other words, we are creating an organized system of plunder. 

Unquestionably, simple out-and-out plunder is so clearly unjust as to be repugnant to us; but, thanks to the motto, all for one, we can allay our qualms of conscience. We impose on others the duty of working for us. Then, we arrogate to ourselves the right to enjoy the fruits of other men's labor. We call upon the state, the law, to enforce our so-called duty, to protect our so-called right, and we end in the fantastic situation of robbing one another in the name of brotherhood. We live at other men's expense, and then call ourselves heroically self-sacrificing for so doing.

(italics original)

This is stirring quote, posted by Café Hayek’s Prof Don Boudreaux, is from Frederic Bastiat‘s 1850 treatise, Economic Harmonies  based on 1964 W. Hayden Boyers translation. Chapter 12, paragraph 21

Obama’s Fatal Conceit: Roster of Public Investment Disasters

The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.

F. A. Hayek’s famous quote from another landmark book “The Fatal Conceit: The Errors of Socialism” is best exemplified by President Obama’s horrendous track record in investing public funds in the private sector or the Keynesian dictum of “socialization of investments”.

Writes AEI fellow Marc A. Thiessen at the Washington Post (hat tip Professor Mark Perry) [bold highlights mine]

Since taking office, Obama has invested billions of taxpayer dollars in private businesses, including as part of his stimulus spending bill. Many of those investments have turned out to be unmitigated disasters — leaving in their wake bankruptcies, layoffs, criminal investigations and taxpayers on the hook for billions. Consider just a few examples of Obama’s public equity failures:

● Raser Technologies. In 2010, the Obama administration gave Raser a $33 million taxpayer-funded grant to build a power plant in Beaver Creek, Utah. According to the Wall Street Journal, after burning through our tax dollars, the company filed for bankruptcy protection in 2012. The plant now has fewer than 10 employees, and Raser owes $1.5 million in back taxes.

● ECOtality. The Obama administration gave ECOtality $126.2 million in taxpayer money in 2009 for, among other things, the installation of 14,000 electric car chargers in five states. Obama even hosted the company’s president, Don Karner, in the first lady’s box during the 2010 State of the Union address as an example of a stimulus success story. According to ECOtality’s own SEC filings, the company has since incurred more than $45 million in losses and has told the federal government, “We may not achieve or sustain profitability on a quarterly or annual basis in the future.”

Worse, according to CBS News the company is “under investigation for insider trading,” and Karner has been subpoenaed “for any and all documentation surrounding the public announcement of the first Department of Energy grant to the company.”

● Nevada Geothermal Power (NGP). The Obama administration gave NGP a $98.5 million taxpayer loan guarantee in 2010.The New York Times reported last October that the company is in “financial turmoil” and that “[a]fter a series of technical missteps that are draining Nevada Geothermal’s cash reserves, its own auditor concluded in a filing released last week that there was ‘significant doubt about the company’s ability to continue as a going concern.’ ”

● First Solar. The Obama administration provided First Solar with more than $3 billion in loan guarantees for power plants in Arizona and California. According to a Bloomberg Businessweek report last week, the company “fell to a record low in Nasdaq Stock Market trading May 4 after reporting $401 million in restructuring costs tied to firing 30 percent of its workforce.”

● Abound Solar, Inc. The Obama administration gave Abound Solar a $400 million loan guarantee to build photovoltaic panel factories. According to Forbes, in February the company halted production and laid off 180 employees.

● Beacon Power. The Obama administration gave Beacon — a green-energy storage company — a $43 million loan guarantee. According to CBS News, at the time of the loan, “Standard and Poor’s had confidentially given the project a dismal outlook of ‘CCC-plus.’ ” In the fall of 2011, Beacon received a delisting notice from Nasdaq and filed for bankruptcy.

This is just the tip of the iceberg. A company called SunPower got a $1.2 billion loan guarantee from the Obama administration, and as of January, the company owed more than it was worth. Brightsource got a $1.6 billion loan guarantee and posted a string of net losses totaling $177 million. And, of course, let’s not forget Solyndra — the solar panel manufacturer that received $535 million in taxpayer-funded loan guarantees and went bankrupt, leaving taxpayers on the hook.

Amazingly, Obama has declared that all the projects received funding “based solely on their merits.” But as Hoover Institution scholar Peter Schweizer reported in his book, “Throw Them All Out,” fully 71 percent of the Obama Energy Department’s grants and loans went to “individuals who were bundlers, members of Obama’s National Finance Committee, or large donors to the Democratic Party.” Collectively, these Obama cronies raised $457,834 for his campaign, and they were in turn approved for grants or loans of nearly $11.35 billion. Obama said this week it’s not the president’s job “to make a lot of money for investors.” Well, he sure seems to have made a lot of (taxpayer) money for investors in his political machine.

All that cronyism and corruption is catching up with the administration. According to Politico, “The Energy Department’s inspector general has launched more than 100 criminal investigations” related to the department’s green-energy programs.

Bottom line:

Politicization of investments almost always lines up in the pockets of cronies of political authorities, which have also been blemished by corruption (of course, political authorities are likely to have a share of politically mandated “beneficence”).

Worst, these so-called “investments”, which turn out to be grand sink holes, apparently ends up as added burden for taxpayers.

In effect, the public policy of “socialization of investments” represents transfers of scarce resources from the society (rich, middle class, and poor) to cronies by legislation. Talk about political inequality.

Not only has the above been a manifestation of pretentious and phony “top-down” knowledge by the political leadership, but such also signifies what the great Frederic Bastiat once warned about regarding “legal plunder”.

Philippines Moves to Ban Coin Collection

The Philippine government has expanded her version of financial repression

Using flimsy scapegoats, a bill has been filed to criminalize coin hoarding.

From Yahoo.com

Coin collectors beware.

Senator Manuel Lapid has filed a bill to penalize the hoarding of coins to avoid coin shortage.

Citing figures from the Bangko Sentral ng Pilipinas (BSP), Lapid said there should be around 17.34 billion coins--worth around P18.94 billion--in circulation. He said that would mean around 184 coins per Filipino.

"To enterprising crooks, this volume of coins in circulation is a goldmine. Recent valuation of the worth of the country's coinage suggests four of the coins are worth more than their face value if melted," he said in his explanatory note.

Lapid warned that melting down coins "along with the common practice of keeping coins in piggy banks, commercial undertakings such as the Automatic Tubig Machines which use coins for operation, video games machines and illegal numbers games, may threaten the sound circulation of coins in the country."

His bill defines coin hoarding as possessing coins of legal tender "beyond the requirements of his regular business as may be determined by the BSP."…

More from the same article,

Although coin collecting is allowed, the BSP can demand that people turn in all their coins within a month of declaring a coin shortage. Under the Lapid bill, "failure to make the surrender within the required period shall constitute coin hoarding."

The bill proposes a penalty of one year in prison and a fine of P100,000 "for every one thousand pieces of coins hoarded or a fraction thereof."

If passed into law, the bill allows the government to confiscate the coins for its own use.

Finally the admission…

The bill also proposes to allow BSP, in case of a coin shortage, to require all business transactions to be done in coins. "Any transaction to the contrary shall be considered coin hoarding," his bill reads.

"Though the day may be far when we may legally accept being given candies for change instead of coins, such a problem may not be remote as indicated by reports in other jurisdictions. It is thus imperative that preventive measures be put in place," Lapid said.

BSP has had a coin recirculation program since 2005 to address perceived coin shortages in some areas in the Philippines and to save money because the “intrinsic value of the coin is greater than its nominal value especially for the lower-denominated coins.”

First, government issues you the money to use, and then wants to dictate to you how much, and what medium, you should keep and use. If this isn’t an example of despotism, then I don’t know what else is.

Next, the Philippine government finally admits that “intrinsic value of the coin is greater than its nominal value especially for the lower-denominated coins” which means the government has been inflating the purchasing power of the local currency, the paper Peso, away.

Yet instead of maintaining monetary discipline, they chose to pin the blame, threaten to criminalize and perhaps actualize confiscation of the savings owned by the innocent citizenry. This should be a noteworthy example of arbitrary immoral laws.

Also, as predicted, inflationism’s alter ego has always been price control. The proposed banning of the hoarding of coins extrapolates to forcing people to keep coins in circulation, for imagined hobgoblins.

This also means forcing people to accept the coins at face value, which ironically they admit, has been worth more. So in essence, the Philippine government wants you and me to forget about prices and values or economics.

[Updated to add: I forgot to mention that what the government fears is that when the value of coins immensely widens from its face value, out of the effects of inflation, the tendency is for the public to hoard them. This is Gresham's Law at work which I mentioned earlier when Ron Paul talked about modern day coin debasement]

Yet setting up a strawman to justify the attack on the citizenry, through price controls, has long been a pattern of desperate politicians, as the great Ludwig von Mises explained,

in futile and hopeless attempts to fight the inevitable consequences of inflation — the rise in prices — are masquerading their endeavors as a fight against inflation. While fighting the symptoms, they pretend to fight the root causes of the evil. And because they do not comprehend the causal relation between the increase in money in circulation and credit expansion on the one hand and the rise in prices on the other, they practically make things worse.

Moreover, this represents an assault to the informal economy which operates mostly on cash (paper money and coins). This means that such law will become an instrument of subjugation and repression of mostly the poor (who don’t have bank accounts and who are most likely the major users of coins), the middle class, and importantly the political opposition.

Lastly, I am inclined to think that some vested interest groups have been pushing to keep these coins for themselves, of course, by forcing the public cough up on these coins through legislation.

The great Frédéric Bastiat in “The Law” warned

It is impossible to introduce into society a greater change and a greater evil than this: the conversion of the law into an instrument of plunder.

Confiscation of coins will not remove the effects of monetary inflation.

Yet by disallowing people to save through their preferred means and by confiscation of their savings means that such policy have the latent intent to destroy people's wealth.

China’s Political System Reeks of Legal Plunder

Internal political schism in China, highlighted by recent rumors of a coup attempt, may have been one of the main factors that has incited China’s political authorities to dabble with the latest gunboat diplomacy with her neighbors. The unfolding controversy over disputed territorial claims at Scarborough Shoal and the Senkaku Islands has most likely been meant to divert or distract the public’s attention from real political issues developing in China.

Yet the tensions being manifested in China’s political system has been exposing on the festering rottenness of the perversion of the legal system, which the great Frédéric Bastiat warned centuries ago, directed at repression and plunder of the resources of the population for personal benefit of politicians and their favored allies. He called this “legal plunder”.

Sovereign Man’s Tim Staersmose gives us a terse but splendid narrative of the political events brewing at China

I’m convinced that history will one day show that corrupt Communist party officials, in cahoots with shady developers and construction moguls, systematically plundered the Chinese economy, getting rich off the hard work and savings of the average person.

It’s been happening on an unimaginable scale… and the fuse for the whole rotten mess to explode may have just been lit with this Bo Xilai scandal. To review, briefly:

- Bo Xilai, the former mayor of China’s largest city of Chongqing, was once one of the rising stars of the Communist party and being groomed for a top spot in the Politburo.

- Wang Lijun was his police chief and right hand man.

- Together, Bo and Wang waged a high profile campaign to stamp out organized crime in the region, jailing and even executing supposed underworld bosses and corrupt businessmen.

(As it appears now, they may have simply been eliminating their competition.)

- The two had an apparent falling out, allegedly over evidence that Bo’s wife was involved in the death of British expat Neil Heywood.

- Heywood had been a longtime confidant of the Bo family. His death late last year was originally ruled as a heart attack, however there is now so much conflicting evidence that many are suggesting Heywood was going to come forward with extensive records of Bo’s shady business dealings.

- After being stripped of his rank by Bo, Wang went to both the US consulate and British High Commission seeking asylum in exchange for information about Bo’s impropriety. He was politely rejected.

- Bo has now been relieved of his powers amid a flurry of evidence and allegations that he and Wang siphoned off hundreds of millions of dollars from Chongqing’s economic boom and secreted the funds out of the country.

- Meanwhile Bo’s wife is under arrest for suspicion of murdering Mr. Heywood. Mr. Wang is also in the custody of Chinese authorities.

- Bo’s son, a lavish partier who attends $90,000/year graduate school and drives around campus in European supercars, is hiding out in the United States.

The top echelons of the communist party are now working overtime to snuff out the scandal lest their own financial dealings and personal dirty linen be aired in public.

But, they’re fighting an uphill battle. The rapid spread in China of micro-blogging services (like Twitter) mean that the party’s censors have a real battle on their hands.

Again the wonders of technological advances in today’s deepening information age has been facilitating the divulgence of the reeking corruption operating behind China’s “communist party system” which in reality is no more than state (crony-fascist) capitalism.

As Frédéric Bastiat wrote in must read classic The Law,

The delusion of the day is to enrich all classes at the expense of each other; it is to generalize plunder under pretense of organizing it. Now, legal plunder may be exercised in an infinite multitude of ways. Hence come an infinite multitude of plans for organization; tariffs, protection, perquisites, gratuities, encouragements, progressive taxation, free public education, right to work, right to profit, right to wages, right to assistance, right to instruments of labor, gratuity of credit, etc., etc. And it is all these plans, taken as a whole, with what they have in common, legal plunder, that takes the name of socialism.

Pretentions to solve social ills via socialist redistributionist policies are simply unsustainable, and the gunboat diplomacy will not excise the truth from unraveling.

UK’s Government Discourages Charity

We are often told that the private sector is instinctively greedy, and thus requires intervention to spread ‘charity’ and ‘compassion’.

Well, in the UK, acts of private sector charity or philanthropy will be penalized.

From Wall Street Journal Wealth Blog,

The U.K.’s new budget has ignited all manner of class warfare. Retirees say it’s a gift to the rich at the expense of the poor. The wealthy say it’s another attack on success and job creators.

But one piece has gone largely unnoticed: the limit on philanthropic giving. The measure would cap the tax relief for wealthy givers at 25% of their annual income, or £50,000, whichever is higher. It takes effect next year.

It’s similar to the Obama proposal, which would limit charitable deductions for high earners to 28% for couples with incomes of $250,000 or more or individuals with income of $200,000. The White House says limiting itemized deductions would shrink the deficit by $584 billion over 10 years.

The U.K. expects its measure (along with caps on business deductions) to result in $490 million in saved revenue.

“Giving shouldn’t mean you pay no tax,” according to the U.K. Treasury.

Yet charities say the plan would put a chill on philanthropic giving just as the U.K. government is trying to create a new culture of giving.

The “new culture of giving” is that the government forcibly takes what you own (by taxation), which in turn discourages acts of private charity (both by administrative limits and again by taxation--what you opt to donate will be taken instead).

And as the norm, governments spend these confiscated resources charitably on their pet projects (to the benefit of cronies and or to vote rich welfare dependents or for photo Op sensational projects).

This is not really new. It has been the nature of governments to undertake lawful plunder of the resources of the citizenry when so deemed politically expedient.

As the great Frédéric Bastiat wrote in The Law published in 1850

When does plunder cease, then? When it becomes more burdensome and more dangerous than labor. It is very evident that the proper aim of law is to oppose the fatal tendency to plunder with the powerful obstacle of collective force; that all its measures should be in favor of property, and against plunder.

But the law is made, generally, by one man, or by one class of men. And as law cannot exist without the sanction and the support of a preponderant force, it must finally place this force in the hands of those who legislate.

This inevitable phenomenon, combined with the fatal tendency that, we have said, exists in the heart of man, explains the almost universal perversion of law. It is easy to conceive that, instead of being a check upon injustice, it becomes its most invincible instrument.

It is easy to conceive that, according to the power of the legislator, it destroys for its own profit, and in different degrees amongst the rest of the community, personal independence by slavery, liberty by oppression, and property by plunder.

It is in the nature of men to rise against the injustice of which they are the victims. When, therefore, plunder is organized by law, for the profit of those who perpetrate it, all the plundered classes tend, either by peaceful or revolutionary means, to enter in some way into the manufacturing of laws. These classes, according to the degree of enlightenment at which they have arrived, may propose to themselves two very different ends, when they thus attempt the attainment of their political rights; either they may wish to put an end to lawful plunder, or they may desire to take part in it.

By preventing the private sector from engaging in philanthropic activities and by coercively taking their resources by law, who’s greedy now?

Inequality: Chinese Politicians Wealthier than US Peers

Wall Street activists and the left should look at this, wealth of politicians in China and the US have been ballooning

Reports the Bloomberg,

The richest 70 members of China’s legislature added more to their wealth last year than the combined net worth of all 535 members of the U.S. Congress, the president and his Cabinet, and the nine Supreme Court justices.

The net worth of the 70 richest delegates in China’s National People’s Congress, which opens its annual session on March 5, rose to 565.8 billion yuan ($89.8 billion) in 2011, a gain of $11.5 billion from 2010, according to figures from the Hurun Report, which tracks the country’s wealthy. That compares to the $7.5 billion net worth of all 660 top officials in the three branches of the U.S. government.

The income gain by NPC members reflects the imbalances in economic growth in China, where per capita annual income in 2010 was $2,425, less than in Belarus and a fraction of the $37,527 in the U.S. The disparity points to the challenges that China’s new generation of leaders, to be named this year, faces in countering a rise in social unrest fueled by illegal land grabs and corruption…

The wealth gap between legislatures holds with statistically comparable samples. The richest 2 percent of the NPC -- 60 people -- had an average wealth of $1.44 billion per person. The richest 2 percent of Congress -- 11 members -- had an average wealth of $323 million.

The U.S. figures come from a downloadable database on the website of the Washington-based Center for Responsive Politics. The U.S. figures are inflated because the database includes members of Congress who were retired or defeated in the 2010 elections as well as their replacements.

The wealth of members of Congress did increase at a higher rate than that of their Chinese peers in the most recent disclosures as U.S. equity markets outperformed China’s. The average wealth of the richest 2 percent of Congress rose 22 percent in 2010 from 2009. The Standard and Poor’s 500 Index rose 12.8 percent in 2010.

Funny how the news above attempts to paint the wealth of politicians as mostly derivative of conventional economic means.

In reality a significant portion of the wealth of politicians account for as economic and financial benefits from political inequality: the greater the political power over society, the more access to what Bastiat would call as “lawful plunder”.

From the great Frédéric Bastiat in The Law

Men naturally rebel against the injustice of which they are victims. Thus, when plunder is organized by law for the profit of those who make the law, all the plundered classes try somehow to enter — by peaceful or revolutionary means — into the making of laws. According to their degree of enlightenment, these plundered classes may propose one of two entirely different purposes when they attempt to attain political power: Either they may wish to stop lawful plunder, or they may wish to share in it.

Woe to the nation when this latter purpose prevails among the mass victims of lawful plunder when they, in turn, seize the power to make laws! Until that happens, the few practice lawful plunder upon the many, a common practice where the right to participate in the making of law is limited to a few persons. But then, participation in the making of law becomes universal. And then, men seek to balance their conflicting interests by universal plunder. Instead of rooting out the injustices found in society, they make these injustices general. As soon as the plundered classes gain political power, they establish a system of reprisals against other classes. They do not abolish legal plunder. (This objective would demand more enlightenment than they possess.) Instead, they emulate their evil predecessors by participating in this legal plunder, even though it is against their own interests.

It is as if it were necessary, before a reign of justice appears, for everyone to suffer a cruel retribution — some for their evilness, and some for their lack of understanding

Accounts of lawful plunder are manifested through gaming or manipulation of the laws to secure their self-interests, e.g. insider trading, anti-competition laws and etc…, crony capitalism, logrolling and or corruption through earmarks (pork barrel) or through other means.

The same Bloomberg article gives us some clues

“The rich in China have strong incentive to become ‘within system’ due to the relative weakness in the rule of law and of property rights,” Victor Shih, a professor at Evanston, Illinois-based Northwestern University who studies Chinese politics and finance, wrote in an e-mail.

Transparency International’s corruption perception index also gives us more hints…

China is perceived as more corrupt compared to the US which could partly explain the wealth inequality between Chinese and American politicians.

Bottom line: Unknown to most, (wealth or income) inequality mostly emanates from political actions, particularly instituted arbitrary laws which facilitates “lawful plunder” that works to benefit the political class, their cronies and their dependants at the expense of everyone else.

Laws create corruption, to quote the legendary investor Doug Casey, and corruption engenders laws.

Cartoon of the Day: Different Types of Looting

This caricature below is almost an exact depiction of what’s been happening around the world today. (hat tip Mises Blog Jonathan Catalan and Salt Lake Tribune]

Why Crony Capitalism Pays: The Cojuangco-PCGG-San Miguel Case

If one must understand why the ‘politics of plunder’ remains and will constitute as an important driver of the Philippine political economy all you have to do is to turn to the front page of today’s major newspapers.

The message: Crony capitalism pays!

Key passage from the news.

From the Inquirer, (bold highlights mine)

In their ruling, the justices observed that the government failed to offer clear evidence to prove that Cojuangco amassed his wealth illegally.

For example, the court said the nullification of the writs of sequestration against Cojuangco was valid because in some instances, the PCGG had failed to determine prima facie basis for sequestration.

This is a patent manifestation of the failure of government. The bureaucracy is venal and, either deliberately or inherently, inefficient and inept. And the legal system has been possibly subjected to manipulation by the political class.

As in the acquittal of the alleged culprits of the Vizconde Massacre case, the same legal ploy seem to apply—the letter of the law (technicalities) dominate the spirit of the law (intent) in the adjudication of these cases.

Again I quote the Wikipedia,

The letter of the law versus the spirit of the law is an idiomatic antithesis. When one obeys the letter of the law but not the spirit, one is obeying the literal interpretation of the words (the "letter") of the law, but not the intent of those who wrote the law. Conversely, when one obeys the spirit of the law but not the letter, one is doing what the authors of the law intended, though not adhering to the literal wording.

"Law" originally referred to legislative statute, but in the idiom may refer to any kind of rule. Intentionally following the letter of the law but not the spirit may be accomplished through exploiting technicalities, loopholes, and ambiguous language. Following the letter of the law but not the spirit is also a tactic used by oppressive governments. (bold emphasis on this paragraph mine)

Two, more passage from the adjoining Inquirer article...(bold highlights mine)

In 1975, Marcos authorized the Philippine Coconut Authority, the agency tasked with developing the coconut industry and whose board included businessman Eduardo Cojuangco, to use the funds to buy a bank “for the benefit of the farmers.”

The bank was First United Bank, later renamed United Coconut Planters Bank (UCPB). Cojuangco became its president and chief executive officer.

With the PCA and UCPB in their control, Cojuangco and his associates were able to buy firms and mills placed under the Coconut Industry Investment Fund(CIIF), a group of 14 holding companies whose assets included 47 percent of San Miguel Corp. (SMC). These assets were held by UCPB, the CIIF administrator.

This is just an example of the nature of rent seeking activities that emanates from state ‘crony’ capitalism.

From Nobel laureate James Buchanan, (bold emphasis mine)

If the government is empowered to grant monopoly rights or tariff protection to one group, at the expense of the general public or to designated losers, then it follows that potential beneficiaries will compete for the prize, so to speak. And, since by construction, only one group can be rewarded, the resources invested by other groups is wasted. These resources could have been used to produce valued goods and services. Once this basic insight is incorporated into the mind-set of the observer, much of modern politics can only be interpreted as rent-seeking activity

Or as author Frank Chodorov explained (The Rise and Fall of Society p.84) (bold emphasis mine)

in every age political power has lent itself to purposes that are uneconomic and antisocial, that it has never hesitated to purchase support with confiscated property. For the ancients it may be said that they conducted the business in a forthright manner, unadorned with moralisms; the Caesars did not invoke an ideology to cover up the real objective of "bread and circuses/' Today, political preferment and the augmentation of political power are accomplished in the same way—with subsidies of all sorts, paid for by taxpayers—but the business is conducted under a panoply of rectitude. Our politicians do not purchase votes, they advocate "social" programs. It comes to the same thing.

In short, politicians use ‘social programs’ to supposedly deliver public goods (service) supposedly for society’s weal, but eventually end up ‘gaming’ the system for their own personal benefits. Yet people hardly see through such prestidigitation. Worst, local laws can't seem to identify and provide the necessary corrective mechanism (social justice) on this.

This is also working proof of the time consistency of political issues or the capriciousness of public sentiment.

Post EDSA I, the public had passionately been for the pursuit of regaining ill-gotten wealth from ex-President Marcos and his cronies, and that’s the reason for the recovery suit. Apparently time dampened this desire. Legal dilatory tactics thereafter paved way for the clearance of what looks very much like obtaining resources via (Franz Oppenheimer’s) political means.

And that’s why lobbying, backdoor dealing, anti-competitive laws, getting elected into political office (having a political career) and other political artifices in the name of public welfare will be a potent political force in the Philippine society—the political-legal system fundamentally incentivizes these socio-political imbalances.

As libertarian author Albert Jay Nock wrote,

every assumption of State power, whether by gift or seizure, leaves society with so much less power. There is never, nor can there be, any strengthening of State power without a corresponding and roughly equivalent depletion of social power.

Bottom line:

This only goes to show that it’s a fundamental illusion for anyone to believe that elections will change the nature of the government—by putting in place people with so-called ‘virtuousness’.

As the above example show, arbitrary laws and a highly vulnerable and manipulable legal system will undo ‘virtue’. In essence, the problem isn’t about virtue, the laws signify the problem.

The current system rewards those who can effectively game the system via political-legal means. Such reward is an incentive to do more. And that’s why as I keep saying, the more things change, the more they remain the same….

Heritage Foundation’s Economic Freedom Scorecard For The Philippines

We’ve been told that elections would usher in important positive socio-economic changes.

But where things matters most, particularly economic freedom, there appear to be little signs of progress.

Here is the newly released Economic Freedom Index scorecard from the Heritage Foundation on the Philippines.

As one would observe, the Philippines falls BELOW the world average, and whose score has been nearly STATIC from the past administration until the present.

The Scoring Methodology: (all bold highlights mine)

Business Freedom

Potential entrepreneurs face severe challenges. The overall regulatory framework is burdensome, and the legal framework is ineffective, holding back more dynamic and broad-based expansion of the private sector.

[my comment:

These are symptoms of too many arbitrary laws and regulations which results to the onus of red tape, that increases the incidences of corruption and inefficiencies.

All these add to the business risk premium which raises the costs of doing business and the subsequent required investment hurdle rate.

Ever wonder why investment in the Philippines has lagged the region? And how unemployment rates remain high despite high level of educational attainment by the population?]

Trade Freedom

The Philippines’ weighted average tariff rate was 3.6 percent in 2007. Some high tariffs, import and export restrictions, quotas and tariff rate quotas, services market access barriers, import licensing requirements, restrictive and non-transparent standards, labeling and other regulations, domestic bias in government procurement, inconsistent and non-transparent customs valuation and administration, export subsidies, widespread corruption, and weak protection of intellectual property rights add to the cost of trade. Fifteen points were deducted from the Philippines’ trade freedom score to account for non-tariff barriers.

[my comment: protectionism results to inefficiency of resource allocation and crony capitalism]

Fiscal Freedom

The Philippines has relatively high tax rates. The top income tax rate is 32 percent. The top corporate tax rate is 30 percent. Other taxes include a value-added tax (VAT), a real property tax, and an inheritance tax. In the most recent year, overall tax revenue as a percentage of GDP was 14.1 percent.

[my comment: a double whammy for investments]

Government Spending

In the most recent year, total government expenditures, including consumption and transfer payments, held steady at 17.3 percent of GDP. Fiscal stimulus and restructuring of public enterprises have widened the fiscal deficit, which had almost reached balance in 2007.

[my comment: orthodox Keynesian policies for the benefit of the entrenched rent seeking political-economic class at the expense of society]

Monetary Freedom

Inflation has been moderate, averaging 4.7 percent between 2007 and 2009, and was holding steady in 2010. The government influences prices through state-owned enterprises and utilities and controls the prices of electricity distribution, water, telecommunications, and most transportation services. Price ceilings are usually imposed on basic commodities only in emergencies, and presidential authority to impose controls to check inflation or ease social tension is rarely exercised. Ten points were deducted from the Philippines’ monetary freedom score to account for measures that distort domestic prices.

[my comment: global inflation has been moderate and this has camouflaged or masked the imbalances from local state interventionism. Once global inflation rises meaningfully the ramifications of such imbalances will be magnified.]

Investment Freedom

Foreign investment is restricted in several sectors of the economy. In many industries where foreign investment is allowed, the level of foreign ownership is capped. All foreign investments are screened and must be registered with the government. Regulatory inconsistency and lack of transparency, corruption, and inadequate infrastructure hinder investment. Dispute resolution can be cumbersome and complex, and enforcement of contracts is weak. Residents and non-residents may hold foreign exchange accounts. Payments, capital transactions, and transfers are subject to some restrictions, controls, quantitative limits, and authorizations. Foreign investors may lease but not own land.

[my comment: embedded anti-competition policies all designed at propping up the economic interest of the elites combined with a legal system that is vulnerable to the influences of the same vested interest groups.

This should be a great example of what the great Frederic Bastiat’s calls as “legal plunder”

“Legal plunder can be committed in an infinite number of ways; hence, there are an infinite number of plans for organizing it: tariffs, protection, bonuses, subsidies, incentives, the progressive income tax, free education, the right to employment, the right to profit, the right to wages, the right to relief, the right to the tools of production, interest free credit, etc., etc. And it the aggregate of all these plans, in respect to what they have in common, legal plunder, that goes under the name of socialism.”]

Financial Freedom

The Philippines’ small financial sector is dominated by banking. In general, the financial system welcomes foreign competition, and capital standards and oversight have improved. Consolidation has progressed, and non-performing loans have gradually declined. The banking sector is dominated by five large commercial banks. Two large state-owned banks account for about 15 percent of total assets. Credit is generally available at market terms, but banks are required to lend specified portions of their funds to preferred sectors. The non-bank financial sector remains small. Capital markets are centered on the Philippine Stock Exchange. The impact of the global financial crisis on banking has been relatively small because of the sector’s very limited exposure to distressed international financial institutions.

[my comment: like all banking arrangements around the world a central bank led banking cartel. Only that this privileged industry has been fortunate enough to escape the latest crisis out of the bad experience from our own crisis episode.]

Property Rights

Although the Philippines has procedures and systems for registering claims on property, including intellectual property and chattel/mortgages, delays and uncertainty associated with a cumbersome court system continue to concern investors. Questions regarding the general sanctity of contracts and the property rights they support have also clouded the investment climate. The judicial system is weak. Judges are nominally independent, but some are corrupt or have been appointed strictly for political reasons. Organized crime is a serious problem. Despite some progress, enforcement of intellectual property rights remains problematic.

[my comment: similar to my outlook in Investment freedom]

Freedom from Corruption

Corruption is perceived as pervasive. The Philippines ranks 139th out of 180 countries in Transparency International’s Corruption Perceptions Index for 2009. A culture of corruption is long-standing. The government has worked to reinvigorate its anti-corruption drive, but these efforts have been inconsistent. Reforms have not improved public perception and are overshadowed by high-profile cases frequently reported in the Philippine media.

[my comment-that’s the outcome of a political economic structure which relies mostly on political distribution of economic opportunities]

Labor Freedom

The labor market remains structurally rigid, although existing labor regulations are not particularly burdensome. Many of the country’s skilled workers have migrated to other advanced economies.

[my comment-similar remark on business freedom]

Overall, on the hype of change from a new administration, developments appear to be turning out as we predicted: the more things change the more they stay the same.

It is important to remember that any major reforms must not emerge only in terms “personality based politics” or the illusion of good government but a change that espouses a society of entrepreneurs or economic freedom

As Ludwig von Mises once wrote,

Prosperity is not simply a matter of capital investment. It is an ideological issue. What the underdeveloped countries need first is the ideology of economic freedom and private enterprise.