Manny Pacquiao Didn’t Let Fans Down, Prodded by Media Fans Deluded Themselves

I empathize with boxing legend Manny Pacquiao for undeservingly feeling “guilty” over public pressures, following his stunning KO loss which he suffered from older Juan Manuel Marquez, a few days.

From MSN News

"The low morale, the sadness, I accept that. This is my job.... But the reaction of the Filipinos, the many who cried, especially my family, it really hurts me," he said in an interview on the GMA network.

The former eight-division world champion wiped tears from his eyes listening to his wife, Jinkee, make a tearful appeal on camera for her husband, who turns 34 next week, to hang up his gloves. 

Pacquio shouldn’t be so hard on himself. He lost because he is just human. 

A random one-punch shot, in a round which he so-dominated, at the last two seconds virtually changed the outcome to his opponents favor.

Nassim Taleb would have called this Pacquiao’s black swan.

Failure to adhere to reality has made Pacquiao’s loss unwarrantedly controversial. This is hardly about the lack of conditioned training, the charge on Marquez’s alleged use of steroids, and other rubbish attributions. Religion has even been absurdly imputed on this. Others have used this as pretext to try to impose political correctness on the contrasting opinion of the others.

He lost because he lost. He was at wrong place at the wrong time. Period. The rest of supposed 'expert' rationalization represents post hoc fallacy.

It has been my impression that the media has made the public believe that sheer nationalism or the force of nationalism by itself would lead to Pacquiao’s sustained invincibility, immortality and everlasting string of victories. 

Pacquiao’s decisive loss exposed such hogwash. In the same way, belief in extreme nationalism has been demolished after 60-78 MILLION lives had needlessly been lost due to World War II.

Pacquiao didn’t let his fans down. The fans have no one else to blame but themselves, for unduly placing extremely high expectations in his supposed ‘superhuman’ capabilities, and importantly, for falling prey into mainstream media’s hype. 

This is a great example of bubble psychology. The same lessons which will permeate and eventually apply to the Philippine capital markets.

As British essayist, critic, poet, and novelist Gilbert Keith Chesterton once sarcastically remarked, 

"Journalism is popular, but it is popular mainly as fiction. Life is one world, and life seen in the newspapers is another."

Reality simply dealt false dogmatism a rude and painful awakening.

EU Proposes To Ban the Family

From the Daily Mail

Books which portray ‘traditional’ images of mothers caring for their children or fathers going out to work could be barred from schools under proposals from Brussels.

An EU report claims that ‘gender stereotyping’ in schools influences the perception of the way boys and girls should behave and damages women’s career opportunities in the future.

Critics said the proposals for ‘study materials’ to be amended so that men and women are no longer depicted in their traditional roles would mean the withdrawal of children’s classics, such as Enid Blyton’s The Famous Five series, Paddington Bear or Peter Pan.

The document, prepared by the European Parliament’s Committee on Women’s Rights and Gender Equality, also suggests EU-wide legislation is needed to tackle the way women are depicted in advertising during children’s television programmes.

It further complains about the number of women in EU parliaments, and floats the idea of fixed quotas on a minimum proportion of female MPs.

The report says: ‘Children are confronted with gender stereotypes at a very young age through television series, television advertisements, study materials and educational programmes, influencing their perception of how male and female characters should behave.

‘Special educational programmes and study materials should therefore be introduced in which men and women are no longer used in examples in their ‘traditional roles’, with the male as the breadwinner of the family and the female as the one who takes care of the children.’

The proposal to regulate the ‘traditional’ family values which have been used as justification for gender equality legislation signifies an Orwellian dystopia where the state hopes to subsume family values for state values, impose state control over the citizenry to the individual level via indoctrination or through the control of people’s thought and speech, substitute dependency on the state and the disintegration of the family and the individual, and importantly, the worship of the state. 

[This resonates with the local version of ‘I am the start of change’ being subliminally impressed upon by politically controlled mainstream media to inculcate docility and conformity to the government through the abstract virtues of supposed ‘selflessness’ and through nationalism]

Yet these are signs of desperation from EU’s political elites whom have been groping for the preservation of their privileges and entitlements amidst the rapid deterioration of the incumbent parasitical political economic institutions.

Senkaku Dispute Controversy: News versus On the Ground Observation

Writes analyst Sherwood Zhang of Matthews Asia Funds (bold highlights mine)

It’s no wonder some pundits began calculating the potential economic impact that strained China-Japan relations may have on Japanese firms. But during my recent week-long visit in Shanghai, my on-the-ground observations following the protests left me feeling as if the concerns might be overstated. An executive of a Japanese restaurant chain operator told me that physical damage to the firm’s stores during the protest was actually quite limited compared to the impact that followed anti-Japan protests in 2005, which were sparked by controversies surrounding a shrine for Japan’s war dead. I also visited a popular Japanese retail store where customers were picking through the season’s new arrivals with no obvious concern for politics. In this globalized economy, boycotting Japanese business interests is no small feat as so many firms are intertwined. One Taiwanese leasing company I met with, which provides much-needed funding for small businesses in China, actually counts a Japanese financial institution as a strategic shareholder. These types of partnerships and joint ventures exist in nearly every sector in China, spanning food and beverage to auto manufacturing.

At the end of my trip, I noticed one last bit of encouragement—a wedding ceremony held at my Shanghai hotel. Seeing the photograph of a happy union between a Japanese bride and her Chinese groom on a television monitor in the hotel lobby gave me some hope for greater harmony between the people of China and Japan.

I have been pointing out that the Senkaku-Scarborough controversial disputes have been about concealed national political agenda and how the Chinese government has had a hand in agitating nationalist uproar, for reasons other than history and oil-gas-natural resources than as cover to or as distraction of the current economic woes, to suppress dissent and as pretext to inflate the system.

The world of politics is a world of smoke and mirrors.

Quote of the Day: The Ethics of Fascism

Fascist ethics begin ... with the acknowledgment that it is not the individual who confers a meaning upon society, but it is, instead, the existence of a human society which determines the human character of the individual. According to Fascism, a true, a great spiritual life cannot take place unless the State has risen to a position of pre-eminence in the world of man. The curtailment of liberty thus becomes justified at once, and this need of rising the State to its rightful position.

This is from Mario Palmieri in The Philosophy of Fascism 1936 (Liberty Tree).  

A alter ego of fascism is nationalism. 

From Wikipedia: Fascism ( /ˈfæʃɪzəm/) is a radical authoritarian nationalist political ideology

Senkaku Islands Dispute: Chinese Government Behind Anti-Japan Protest

It seems that the Chinese government may have a hand in the agitation, mobilization and organization of the nationwide protest against the Japanese over the disputed Senkaku Islands.

From the LA Times,

The last week's anti-Japan demonstrations in China have been a spectacular display of just how easily the ruling Communist Party can harness the power of protest.

In the aftermath of nationwide protests, in which mobs trashed Japanese-owned businesses and set fire to Japanese model cars, critics are questioning the degree to which the Chinese government fanned the flames as part of its dispute with Japan over an island chain both nations claim.

"It is obvious that this was planned," said Ai Weiwei, the dissident artist, who videotaped some of the protests. The 1989 pro-democracy demonstrations in Tiananmen Square were "the last time that the people themselves organized a real protest and then the government sent in tanks to crush them," he said.

Although there has been no evidence that police officers participated in the violence, in many cities they directed the public on where to protest and cleared streets to allow tens of thousands to mass. Many protesters interviewed Tuesday said they had been given the day off by employers to demonstrate. Sept. 18 is a traditional day of protest, marking the anniversary of the Japanese invasion of Manchuria in 1931.

These organized demonstrations, which in the Philippines is known as the “hakot” crowd, as I previously pointed out have merely been camouflages.

In reality these are most likely smokescreens to the worsening internal problems experienced by both countries and to the mounting interventionism being applied by the increasingly desperate political authorities.

The war rhetoric, expressed through nationalism, has been used to divert people’s attention, to suppress political opposition and to justify inflationism, as well as other interventionists measures being imposed on China and Japan's economy. 

Inflationism and the Senkaku Islands Dispute

At the Minyanville Jonah Loeb postulates 5 factors behind the intensifying Senkaku Island dispute between Japan and China, particularly history, resources (vast oil reserves), economic stakes, provocation by both governments and impact on US presidential elections.

First below is the an abbreviated timeline of the Senkaku Dispute, the complete timeline can be seen at the Globe and Mail here

-1996: The nationalist group builds another lighthouse on another of the islands. Several activists from Hong Kong dive into waters off the islands on a protest journey. One of them drowns.

- 2002: The Japanese ministry of internal affairs starts renting three of the four Kurihara-owned islands. The other is rented by the defence ministry.

- 2004: A group of Chinese activists lands on one of the disputed islands. The then prime minister Junichiro Koizumi orders their deportation after two days.

- September, 2010: A Chinese fishing boat rams two Japanese coastguard patrol boats off the islands. Its captain is arrested but freed around two weeks later amid a heated diplomatic row that affects trade and political ties.

- April 16, 2012: Tokyo governor Shintaro Ishihara announces he has reached a basic agreement to buy the Kurihara-owned islands.

- July 7, 2012: Japanese Prime Minister Yoshihiko Noda says his government is considering buying the islands.

- August 15, 2012: Japanese police arrest 14 pro-China activists, five of them on one of the islands.

- August 17, 2012: All 14 are deported.

- August 19, 2012: Japanese nationalists land on the islands without permission.

It is important to point out the current geopolitical troubles on Senkaku essentially got resurrected in 2010-2012 when Japan’s fragile post-Lehman economy got slammed by the triple whammy natural disaster (earthquake, tsunami and nuclear power meltdown) and as China’s economy has turned south in response to the diminishing returns of the 2008-2009 stimulus as shield to the post Lehman crisis.

Meanwhile, the Bank of Japan has resorted to ever increasing amounts of quantitative easing to save the beleaguered crony banking and finance, the nuclear industry and other zombie crony firms.

Yet like the Scarborough-Spratly’s island dispute I do not believe that this has been about history nor has this been about resources, but both ideas have been peddled as popular rationalizations for the standoff.

Jonah Loeb writes,

4. Both countries' governments are being provocative. Tokyo Governor Shoharo Ishihara, an outspoken character with a long history of anti-Chinese comments, sparked the dispute by launching a public fundraiser to buy the islands from their private owners, forcing the Japanese government’s hand as China fought back against Ishihara’s bid…

5. It could have a major effect on the US presidential race. More and more American politicians, especially those on the right, have been spinning some pretty harsh anti-Chinese rhetoric for a while, and that’s only increased since this dispute started. Mitt Romney claims that he will declare China a “currency manipulator” if he’s elected, and China is therefore as suspicious of the United States as it is angry at Japan.

It is true that politicians have been stoking inflammatory statements; a Chinese general recently said that China’s military should “prepare for combat”.

In reality these are most likely smokescreens to the worsening internal problems experienced by both countries and to the mounting interventionism being applied by the increasingly desperate political authorities.

In a speech Professor Joseph T. Salerno made this very important point. (bold highlights mine)

War has a number of advantages for the ruling class. First and foremost, war against a foreign enemy obscures the class conflict that is going on domestically in which the minority ruling class coercively siphons off the resources and lowers the living standards of the majority of the population, who produce and pay taxes. Convinced that their lives and property are being secured against a foreign threat, the exploited taxpayers develop a "false consciousness" of political and economic solidarity with their domestic rulers…

The war rhetoric have been used as opportunity to deflect public opinions to a foreign bogeyman as greater interventionism are being applied to the economy

Again from Professor Salerno

A second advantage of war is that it provides the ruling class with an extraordinary opportunity to intensify its economic exploitation of the domestic producers through emergency war taxes, monetary inflation, conscripted labor, and the like. The productive class generally succumbs to these increased depredations on its income and wealth with some grumbling but little real resistance because it is persuaded that its interests are one with the war makers.

The point being:

We thus arrive at a universal, praxeological truth about war. War is the outcome of class conflict inherent in the political relationship — the relationship between ruler and ruled, parasite and producer, tax-consumer and taxpayer. The parasitic class makes war with purpose and deliberation in order to conceal and ratchet up their exploitation of the much larger productive class. It may also resort to war making to suppress growing dissension among members of the productive class (libertarians, anarchists, etc.) who have become aware of the fundamentally exploitative nature of the political relationship and become a greater threat to propagate this insight to the masses as the means of communication become cheaper and more accessible, e.g., desktop publishing, AM radio, cable television, the Internet, etc. Furthermore, the conflict between ruler and ruled is a permanent condition. This truth is reflected — perhaps half consciously — in the old saying that equates death and taxes as the two unavoidable features of the human condition.

This leads us to central banking inflationism. Today’s interventionism has become more pronounced through central bank inflationism. And war financing has intrinsically been tied with inflationism.

As Mises Institute's founder Lew Rockwell recently wrote

Through this convoluted process – a process, not coincidentally, that the general public is unlikely to know about or understand – the federal government is in fact able to do the equivalent of printing money and spending it. While everyone else has to acquire resources by spending money they earned in a productive enterprise – in other words, they first have to produce something for society, and then they may consume – government may acquire resources without first having produced anything. Money creation via government monopoly thus becomes another mechanism whereby the exploitative relationship between government and the public is perpetuated.

Now because the central bank allows the government to conceal the cost of everything it does, it provides an incentive for governments to engage in additional spending in all kinds of areas, not just war. But because war is enormously expensive and because the sacrifices that accompany it place such a strain on the public, it is wartime expenditures for which the assistance of the central bank is especially welcome for any government.

In short war gives political cover for authorities to inflate the system.

Of course, again as I previously argued, the territorial disputes could be used as an election campaign propaganda.

War has always been used as opportunities to exploit society (through financial repression) and suppress internal political opposition in order to advance the interests of the ruling political class whose interest are interlinked with the politically favored banking class, the welfare and the warfare class.

The Senkaku Island dispute has been no different.

Information Age: Fly In Fly Out Workers

I have been saying that the information age will radically alter the way we do things.

Signs of such transformation can be seen in Indonesia where some foreign expats practice what Tim Staermose of Sovereign Man calls as the ‘fly in fly out’ work.

In the modern age, the concept of clearly defined national and supranational borders is a symbol of a bygone model made obsolete by technological and philosophical change. It’s amazing we still pay so much attention to them.

The Internet has made it possible to build relationships with people across the world who share your interests and beliefs, not the color of your passport.

Modern transport and telecommunication options make it possible for someone to live in one place and earn money in another… or in the case of large companies, to headquarter somewhere and earn money everywhere.

This trend is increasingly prevalent here in Bali as an increasing number of foreigners are making a permanent home here. To these new residents, national boundaries are becoming less relevant.

One group is called the ‘fly in fly out’ mine workers. Perth, Western Australia is in the midst of a mining boom, and it’s just three hours’ flight from Bali. Rather than pay the stupidly high costs of living in Australia, a growing band of miners are basing themselves in Bali. They fly down to Perth to work for 14 days straight in the mines (staying out on site), and then fly back to Bali for their 14 days off to relax with family and friends.

Given that it takes the typical Balinese one month to earn what a worker in Australia can make in a day, the cost of living in Bali is understandably MUCH lower… and in my opinion, is much higher quality.

The dual forces of the information age and globalization will usher in the growing obsolescence of the political flimflam concept called as “nationalism”.

Quote of the Day: The Myth of the Greater Good

The 19th-century British individualist Auberon Herbert addressed the issue of the “good of the greatest number.” He stated, “There never was invented a more specious and misleading phrase. The Devil was in his most subtle and ingenious mood when he slipped this phrase into the brains of men. I hold it to be utterly false in essentials.”

Why is it false? Because the phrase assumes as a given that a higher morality requires the violation of individual rights. Or in Herbert’s words, “It assumes that there are two opposed ‘goods,’ and that the one good is to be sacrificed to the other good — but in the first place, this is not true, for liberty is the one good, open to all, and requiring no sacrifice of others, and secondly, this false opposition (where no real opposition exists) of two different goods means perpetual war between men.” [Emphasis added.]

Herbert is relying on two intimately related theories: first, “the universality of rights”; and, second, “a natural harmony of interests.” The universality of rights means that every individual has the same natural rights to an equal degree.

Race, gender, religion or other secondary characteristics do not matter; only the primary characteristic of being human is important. A natural harmony of interests means that the peaceful exercise of one person’s individual rights does not harm the similar exercise by any other person.

My freedom of conscience or speech does not negate my neighbor’s. The peaceful jurisdiction I claim over my own body does not diminish anyone else’s claim of self-ownership. Indeed, the more I assert the principle of self-ownership, the stronger and more secure that principle becomes for everyone.

Only in a world where rights are not universal, where people’s peaceful behavior conflicts, does it make sense to accept the need to sacrifice individuals to a greater good. This is not the real world, but one that has been manufactured for political purposes.

Herbert explained a key assumption that underlies this faux world: the acceptance of the “greater good” itself. He asked, “Why are two men to be sacrificed to three men? We all agree that the three men are not to be sacrificed to the two men; but why — as a matter of moral right — are we to do what is almost as bad and immoral and shortsighted — sacrifice the two men to the three men? Why sacrifice any one… when liberty does away with all necessity of sacrifice?”

Herbert denied the validity of “this law of numbers, which… is what we really mean when we speak of State authority…under which three men are made absolutely supreme, and two men are made absolutely dependent.” Instead of accepting the law of numbers as an expression of greater good, Herbert viewed it as a convenient social construct, calling it “a purely conventional law, a mere rude, half-savage expedient, which cannot stand the criticism of reason, or be defended… by considerations of universal justice. You can only plead expediency of it.”

To whom was the social construct of conflict convenient? Why would a faux world of inherent conflict be created? By solving the manufactured problems, a great deal of power was transferred from individuals to a ruling class.

Herbert wrote, “The tendency of all great complicated machines is to make a ruling class, for they alone understand the machine, and they alone are skilled in the habit of guiding it; and the tendency of a ruling expert class, when once established, is that at critical moments they do pretty nearly what they like with the nation…”

Rather than solve a social problem, the ruling class had a devastating effect on the welfare of common people, who became “a puzzled flock of sheep waiting for the sheepdog to drive us through the gate.” Ironically, by claiming the collective was greater, the few were able to assume control over the many. The “greater good” devolved to whatever served the interests of the ruling class.

This is from Ms. Wendy McElroy at the Laissez Faire Books.

All the popular appeal to the emotions couched on (collectivist) 'nationalism' have been no more than vicious propaganda intended to uphold the interests of the ruling class.

Fighting the Last War: Can the Philippines Beat China?

A video circulating in the cyberspace tries to whip up nationalist sentiment by using the Korean war experience to suggest that “the Philippines can beat China” should any military conflict arise from the recent territorial dispute.

Heard of the axiom “Generals are always prepared to fight the last war”?

Such expression applies to the video. The video has been framed in the assumption that future wars will be waged in the conventional sense and thus the vaunted Filipino mettle will matter.

Well this would not only be a big mistake but is patently myopic.

We are not only in the information age but in the age of weapons of mass destruction (WMD), not limited to nuclear warfare (but also to various types of chemical, biological and other evolving warfare such as computer, robotics and etc..).

[As a side note, I will not deal here with the moral issue of whether Filipino lives lost and taxpayer expenditures in the Korean war had been justified or not].

And China has been part of the states armed with substantial nuclear armaments (from Wikipedia.org)

China has also in possession of chemical and biological weapons. I will skip on the military tale of the tape, nevertheless I have shown them here earlier

This simply means that the risks of the employment of these dreadful killing machines or instruments increases once a shooting war have been initiated.

For many, getting social acceptance means to make a big issue out of things they hardly understand.

Political correctness also means stirring up nationalist fervor when they know that someone else will get to do the bloody part of the political violence, whose major beneficiaries will accrue to politicians at society’s expense. Of course this assumes a limited shooting war.

And in case of a full scale war, this will like result to mass destruction of the society (whose families and friends of these agitators will also suffer). Of course these people can’t think through their emotions enough to understand the consequences of their advocacies or are shills for the politicos.

I am reminded by distinguished historian Arnold Toynbee who claimed that people whom have not experienced the horrors of war have the tendency to become provocateurs (or the generational war cycle).

The survivors of a generation that has been of military age during a bout of war will be shy, for the rest of their lives, of bringing a repetition of this tragic experience either upon themselves or upon their children, and... therefore the psychological resistance of any move towards the breaking of a peace ....is likely to be prohibitively strong until a new generation.... has had the time to grow up and to come into power. On the same showing, a bout of war, once precipitated, is likely to persist until the peace-bred generation that has been lightheartedly run into war has been replaced, in its turn, by a war-worn generation.

And it is why agitators of war should get themselves enlisted in the military and request to get assigned in the frontlines so they can practice on what they preach.

[Updated to add: Here is a list of the death toll of 20th century wars, given the capacity of destruction of modern weaponry--assume the worst for the new age warfare]

Of course I am not convinced that the regional territorial controversy has solely been about superficial claims to property or about resources but more about the concealed political agenda such as the advancement of the military industrial complex, and or even perhaps a smoke and mirror encirclement strategy against Russia as China’s regional economic and military policies seem like Dr. Jekyll and Mr. Hyde.

The more important way to promote peace and social cooperation is none other than through expanded trade.

As the great Claude Frederic Bastiat once warned

if goods don’t cross borders, armies will

Even Olympic Medals have been “Debased”

While I am a fan of sports, I am not a fan of the Olympics.

Olympics, for me, represents the politicization of sports premised on feel good nationalism, which are largely financed by massive expenditures of taxpayer money.

The economics of Olympics suggests that the popular games, except for some instances (e.g. LA Olympics), have incurred losses for the hosts. At worst, financial losses extrapolated to higher taxes.

Professor David Henderson notes of the Canadian experience,

That view is understandable because losing money has been the norm. When the Olympics were held in Montreal in 1976, for example, the loss amounted to $2 billion, which was $700 per Montreal resident. And remember that that was in 1976 dollars. That loss resulted in a special tax on tobacco because, you know, smokers are such fans of the Olympics.

And proof of the politicization of sports via the Olympics can be further seen through the medallions for the winners—where the content of the London 2012 medals has been materially debased or devalued.

Image from BBC.

The Zero Hedge points out (bold original)

As every Olympic athlete knows, size matters. The London 2012 medals are the largest ever in terms of both weight and diameter - almost double the medals from Beijing. However, just as equally well-known is that quality beats quantity and that is where the current global austerity, coin-clipping, devaluation-fest begins. The 2012 gold is 92.5 percent silver, 6.16 copper and... 1.34 percent gold, with IOC rules specifying that it must contain 550 grams of high-quality silver and a whopping 6 grams of gold. The resulting medallion is worth about $500. For the silver medal, the gold is replaced with more copper, for a $260 bill of materials. The bronze medal is 97 percent copper, 2.5 percent zinc and 0.5 percent tin. Valued at about $3, you might be able to trade one for a bag of chips in Olympic park if you skip the fish.

The devaluation of the Olympic medals just exhibits the natural or deep-seated impulse of governments to inflate, as well as, to break their own established rules or standards—sports or no sports.

Singaporization’ of Georgia: The Economic Freedom Model

A fundamental pillar for the deepening of the global wealth convergence trend is that developing or emerging markets are likely to loosen up on their economies from politics as opposed to the financially desperate developed nations.

Sovereign Man’s Simon Black seems bullish with Georgia, (bold emphasis mine)

One of the biggest reasons for this is that there is hardly any natural wealth in the country. Like Hong Kong or Singapore, Georgia has figured out that it can’t get rich by becoming a resource powerhouse.

Consequently, the last several years has seen what they call the ’de-Sovietization and Singaporization’ of Georgia.

Georgia has shot up in the ranks of international business… from slumming with the likes of Pakistan just a few years ago, to besting places like Estonia and Switzerland.

They’re doing it by tearing down worthless, extractive economic institutions and making things easy for business and investors.

At a 15% flat rate, for example, corporate taxes are essentially as low as Singapore or Hong Kong. Capital gains, in many cases, is zero.

Regulation has been reduced dramatically– registering a property or starting a business, for example, are easier in Georgia than just about anywhere in the world.

And with both a US and UK comprehensive tax treaty (sorry Canada, Australia, and New Zealand), Georgia could make an excellent place to establish a tax efficient international business structure.

Ultimately, its ease of doing business is going to be one of the major growth catalysts for this economy– just like Panama, Dubai, or Estonia before.

Georgia is surrounded by places that are marred in obscene regulatory minefields, Byzantine tax codes, and corrupt officials. In the future, this will make Georgia the natural choice to do business in the region.

What’s the point: Prosperity does not emanate from sheer resources. To the contrary, resources may lead to a resource curse—where economic growth has been impeded by the abundance of resources due to lack of competitiveness. This has mostly been due to cronyism, economic fascism and or state capitalism.

This applies to the Philippines whom has been blessed by resources but has failed to take off economically. Yet instead of focusing on what is needed, politics keeps diverting people's attention to the superficial.

For instance, having Scarborough or Spratly’s has NOT and will not lead to prosperity. This only shows how such political controversies are really a waste of time and energy.

More, such disputes serves only to stir up nationalism and increase the risks of military conflagration at the expense of everyone.

In reality, territorial disputes over supposed resources (which is more a propaganda than reality) represents a façade meant to protect the interests of domestic cronies than of the average Filipinos. (Guess who will get the service contracts for resource extractions once the dispute is settled?)

Add to that the interests of foreign military industrial industries.

What truly is required are reforms ala Georgia: Economic freedom or the Singaporization’ of the Philippines.

Politicization of the Entertainment Industry

While I am glad to see that the quality of singing artists seems to have immensely improved from participants around the world including the Philippines, it is sad to see that a recently concluded international popular singing contest seem to have been reduced to a specter of voting for nationalism. Such social signaling has dismayingly been ventilated all over social media.

Yet logic says that if the victor of such singing contest would be determined by such a manner of selection, instead of skills, then the winner would likely hail from the country that has MORE population, all things equal. And I guess that this has been the outcome. [Updated to add: the show's title itself and contestant eligibility rules limits participants to residents of the country where the show is held]

It’s even bleaker to see how political correctness has pervaded the local entertainment industry such that holier than thou groups seek out edicts or legislation through coercive government machinery to attempt to repress on the freedom of religion and of the freedom of speech-expression of the others. Yet such senseless protests over moralism also triggered exasperating traffics.

This just shows how politics has been dumbing down the public and how politics have turned away many people’s attention from productive activities towards unproductive and even confrontational groupthink fallacies or “us against them” mindset.

Quote of the Day: Hatred is the Essence of Politics

In politics and government, however, the institutional makeup fosters hatred at every turn. Parties recruit followers by exploiting hatreds. Bureaucracies bulk up their power and budgets by artfully weaving hatreds into their mission statements and day-to-day procedures. Regulators take advantage of artificially heightened hatreds. Group identity is emphasized at every turn, and such tribal distinctions are tailor-made for the maintenance and increase of hatred among individual persons who might otherwise disregard the kinds of groupings that the politicians and their supporters emphasize ceaselessly.

That’s from economist Robert Higgs.

Political hatred, which stems from group identity (us against them), is actually groupthink fallacy. People become easily manipulated when they surrender individual thinking to the collective.

I previously quoted a study at my earlier post, Groupthink fallacy has the following traits

1. Illusion of invulnerability –Creates excessive optimism that encourages taking extreme risks.

2. Collective rationalization – Members discount warnings and do not reconsider their assumptions.

3. Belief in inherent morality – Members believe in the rightness of their cause and therefore ignore the ethical or moral consequences of their decisions.

4. Stereotyped views of out-groups – Negative views of “enemy” make effective responses to conflict seem unnecessary.

5. Direct pressure on dissenters – Members are under pressure not to express arguments against any of the group’s views.

6. Self-censorship – Doubts and deviations from the perceived group consensus are not expressed.

7. Illusion of unanimity – The majority view and judgments are assumed to be unanimous.

8. Self-appointed ‘mindguards’ – Members protect the group and the leader from information that is problematic or contradictory to the group’s cohesiveness, view, and/or decisions.

These can be summed up to "seeking comfort of the crowds".

And politicians, mainstream institutions and media pander to the gullible public through groupthink fallacy (e.g. nationalism) by sowing hatred (us against them mindset) to advance their interests.

The Philippine Financial Markets Shrugs off the Scarborough Shoal Standoff

The financial markets and politicians backed by mainstream media apparently lives in two distinct worlds.

If one goes through the daily barrage of sensationalist headlines, one would have the impression that the Philippines must be in a state of panic. That’s because media has been projecting what seems as intensifying risk of a full blown shooting war over the contested islands, the Scarborough Shoal with China. And all these should have been sending investors scrambling for the exit doors, if not the hills.

But has such alarmism represented reality?

Of course by reality we rely on expressed and demonstrated preferences and not just sentiment. Over the marketplace, people voting with their money have fundamentally treated the recent geopolitical impasse as pragmatically nonevents.

The Phisix has been little change for the week but importantly trades at FRESH record high levels.

Meanwhile the local currency the Philippine Peso posted its SIXTH CONSECUTIVE weekly gains and has been approaching February’s high, whereas local bonds ADVANCED for the week, amidst the geopolitical bedlam[1]

Contrived Risks and Real Risks

There’s a world of difference between real risk and that of a pseudo, or may I suggest concocted, geopolitical risk.

Media has slyly been luring the gullible public into oversimplified “emotionally framed” explanations based on flimsy correlations which blatantly overlooks the behind-the-scenes causal factors[2]. Emotionalism thus opens the door for politicians to prey on the public by manipulating them through the foisting of repressive policies that benefits them at the expense of the taxpayers and importantly of our liberties. The recent call for nationalism via “unanimity” by a national political figure is just an example[3].

Politicians use fear or what the great libertarian H. L. Mencken calls as endless series of imaginary hobgoblins as standard instruments of social controls meant to advance their agenda or self-interests through the political machinery.

Aside from possible factors for the standoff, such as the smoke and mirrors tactic probably employed by China to divert the world from witnessing the brewing internal political schism[4] and or the promotion of sales for the benefit of the military industrial complex, it could also be that the call for “unanimity” may be associated with the domestic impeachment trial of a key figure of the judiciary where “rallying around the president” would extrapolate to the immediate closure of the case in the favor of the administration.

In doing so, the incumbent administration will be able control three branches of government and impose at will any measures that suits their political goals with hardly any opposition, all done under the sloganeering or propaganda of anti-corruption.

Yet the brinkmanship geopolitics in Asia, has not been limited to the controversial territorial claims in Scarborough and Spratlys, as well as Japan claimed Senkaku Islands[5]. Recent events includes the recent widely condemned missile test by North Korea, as well as, missile tests of former archrivals India and Pakistan[6]

Yet market’s responses to these events have disparate.

Pakistan’s Karachi index (KSE:100 orange) trades at the highest levels since 2009 and seems on the way to knock on the doors of the 2007 highs, whereas India’s BSE (SENSEX green) has struggled since peaking late February.

In short, the recent missile tests by both countries hardly influenced financial markets for the two South Asian giants.

The reason for this has been due to substantially improving trade relations[7] that has dramatically eased political tensions between them.

This validates the great free trader Claude Frédéric Bastiat[8] prediction centuries ago.

if goods don t cross borders, armies will

North Korea as the Real Geopolitical Risk

The North Korea-South Korea tiff cannot be seen in the same light.

Since the North Korea’s announcement of a missile test last March 16^th, South Korea’s KOSPI has been struggling. (chart from stockcharts.com)

The South Korean currency, the won, has also wobbled in the face of Nokor’s actions. (chart from yahoo.com)

Nokor’s largely embarrassing failed missile launch[9] last April 13^th has not deterred the new regime under Kim Jong Un from threatening to do another nuclear blasting test[10]

The fundamental difference from the abovementioned instances, including the unfortunate Scarborough-Spratlys affair, has been the near absence or the lack of trade linkages of Nokor which has not fostered social cooperation or goodwill with other nations.

Instead, Nokor’s despotic communist government’s survival has long been dependent on the ‘blackmail diplomacy’ in securing foreign aid. Yet uncertainty shrouds on the direction of Nokor’s foreign policy under the new leadership which appears as being manifested on the markets.

The good news is that so far there has been no sign of panic. This means South Korea’s consolidating markets could be digesting or has been in the process of assessing the political and security risks from Nokor’s new regime.

Otherwise if the worst option does occur, where posturing turns into armed confrontation the ensuing violence will spillover the world markets. But again Nokor has been more of a paper tiger than a real military power considering their dire economic status. A war is likely to cause the Kim regime to disintegrate under its own weight as famished and ill equipped soldiers are likely to defect to the South or a coup will force down the leadership.

The Free Trade Factor and Geopolitical Linkages

The same premise tells us why domestic politicians and media live in a different world from the citizenry. And this is why I hardly touch on mainstream news, except when scouring for the facts. I avoid from reading “opinions”, especially from so-called experts. That’s because mainstream’s opinions blindly represents the interests of the establishment[11].

China ballooning trade with ASEAN, which includes the Philippines[12], represents a very important deterrent from aggression.

As the great Professor Ludwig von Mises wrote in his magnum opus[13],

Man curbs his innate instinct of aggression in order to cooperate with other human beings. The more he wants to improve his material well-being, the more he must expand the system of the division of labor. Concomitantly he must more and more restrict the sphere in which he resorts to military action. The emergence of the international division of labor requires the total abolition of war.

So aside from her thrust to use the yuan as region’s foreign currency reserve as evidenced by the push for wider Free trade zone (including the ASEAN China Free Trade Agreement which began operations in 2010[14]) hardly squares with the bellicosity that has been publicly portrayed.

Free Trade agreements in Asia has exploded since China’s Deng Xiaoping opened China to the world bannered by the famous catchphrase “To get rich is glorious” (which according to some has been misattributed to him)[15]

Claude Barfield of the American Enterprise Institute points out that[16]

In 1975 there was one free trade agreement in the region but in 2011, there are now currently 245 free trade agreements that have been proposed, under negotiation or concluded.

Besides it is naïve to see events in the lens of a single prism.

An outbreak of military conflagration will likely draw in various major players that could lead to a world war, an event which hardly any party would like to indulge in (despite the politicians arrogant rhetoric), considering the today’s age of NUCLEAR and DRONE warfare, standing armies have been rendered obsolete, and mutually assured destruction[17] will likely be the outcome.

So aside from some missile tests by Asian countries, recently Vietnam hosted a joint naval exercise with US[18] while on the other hand China and Russia also recently completed naval war games[19]. While these may look like a show of force for both parties, they could also just be pantomimes.

Yet for me all these seem like watching a movie that gives you the vicarious effect, especially from the 3D vantage point. However when the closing or end credit appears or when the curtains fall, we come to realize that this has been just a movie.

So far the financial markets seem to be exposing on the exaggerations of the so called gunboat diplomacy, or perhaps too much of yield chasing activities may have clouded people’s incentives that has led them to underestimate such a risk.

While I believe the yield chasing factor has functioned as a substantial contributor to the current state of markets domestically and internationally, I also think that the local market has rightly been discounting the territorial claims issue for reasons cited above.

So unless politicians here or abroad totally losses their sanity, the issue over territorial claims will eventually fade from the limelight.

So be leery of politicians calling for patriotism or nationalism, that’s because as English author Samuel Johnson famously warned on the evening of April 7, 1775[20]

Patriotism is the last refuge of a scoundrel.

---

[1] Bloomberg.com Philippine Peso Completes Sixth Weekly Gain on Growth Outlook, April 27, 2012

[2] See The Scarborough Shoal Standoff Has Not Been About Oil April 16, 2012

[3] See Scarborough Shoal Dispute: The Politics of Nationalism April 28, 2012

[4] See China’s Political System Reeks of Legal Plunder, April 20 2012

[5] See From Scarborough Shoal to Senkaku Islands April 19, 2012

[6] Globalspin.blogs.time.com Will Pakistan and India’s Back-to-Back Missile Tests Spoil the Mood?, April 25, 2012

[7] Thehindubusinessline.com Pak may be allowed to invest in India February 16, 2012

[8] The Freeman.org Claude Frédéric Bastiat

[9] See See North Korea’s Failed Missile Launch Reflects on Dire Economic Status, April 14, 2012

[10] Bloomberg.com North Korea Poised to Rattle Region With Nuclear Blast April 27, 2012

[11] See The Toxicity of Mainstream News March 13, 2012

[12] networkideas.org China, India and Asia: The Anatomy of an Economic Relationship (Draft Copy) 2009

[13] von Mises Ludwig 4. The Futility of War XXXIV. THE ECONOMICS OF WAR Human Action

[14] Wikipedia.org ASEAN–China Free Trade Area

[15] Wikipedia.org Deng Xiaoping

[16] Barfield Claude TAIWAN AND EAST ASIAN REGIONALISM American Enterprise Institute, November 10, 2011

[17] Wikipedia.org Mutual assured destruction

[18] Telegraph.co.uk Vietnam begins naval exercises with the US, April 23, 2012

[19] Abs-cbennews.com China, Russia end naval exercises, April 27, 2012

[20] Wikipedia.org The Patriot Samuel Johnson's political views

Scarborough Shoal Dispute: The Politics of Nationalism

The Inquirer.net reports

As the dispute between China and the Philippines over Scarborough Shoal entered its 18th day Friday, Senate President Juan Ponce Enrile called on the nation to rally behind President Aquino in asserting the country’s sovereignty in the West Philippine Sea (South China Sea)…

At the hearing, Enrile explained that the dispute over territorial waters in the West Philippine Sea was not political.

“This is a national issue that requires the support of the entire nation, and we support the President on this,” Enrile said. There should be no deviation. “There should be unanimity of all Filipinos in supporting Malacañang regardless of political persuasion and affiliation on this particular issue,” he said.

“We must show the People’s Republic of China that in this particular issue, the Filipino nation is one in supporting the leadership of the Republic of the Philippines in asserting the sovereign rights of this republic and the Filipino people over the Scarborough Shoal and the Reed Bank, and all the areas the Republic of the Philippines occupy in the South China Sea,” said Enrile.

Say what? Asking for popular approval is NOT about politics?

The definition of politics according to dictionary.com

exercising or seeking power in the governmental or public affairs of a state, municipality, etc.: a political machine; apolitical boss.

of, pertaining to, or involving the state or its government: apolitical offense.

So seeking power in public affairs and or the involvement of the state IS political. And we have a national politician stirring up dangerous nationalist fervor with sloganeering based on untruths.

As George Orwell once wrote,

Political language…is designed to make lies sound truthful and murder respectable, and to give an appearance of solidity to pure wind.

As I earlier pointed out, the Scarborough Shoal territorial dispute has NOT been about oil or resources and which has mostly likely been about political DIVERSION amidst internal political divisions in China and or the PROMOTION of arms sales for the military industrial complex. Further it is not in the interest of China to provoke military conflagrations when she has been promoting her currency as the region's foreign currency reserve.

And the seeming insouciance of financial markets over the brinkmanship politics, expressed through the price mechanism, has limned on the perceived risk environment where political sensationalism has departed from people voting with their money. The Phisix closed the week at record highs while the local currency the Philippine Peso closed the week up at 42.37 and seems to be approaching the February highs.

In other words, what politicians sees as urgency that requires “unanimity of all Filipinos” which is being touted by mainstream media, seems to depart from the actions of the marketplace, where the latter sees the risks of a shooting war to be negligible.

Of course, politicians know that in case of a real military skirmish, they or their families will not be at the battlefront (they will most likely be ensconced abroad), thus their audacity to call for implied aggressive populist nationalism that might justify an armed confrontation.

Furthermore, considering that both Spratlys and Scarborough Shoals have largely been uninhabited or has no population, the main benefits over the disputed “resource rich” islands will likely accrue to the cronies and the interests of political authorities than that of the nation. Yet the masses are being conjured to fight for their interests via calls for pretentious nationalism.

The history of war, said Michael Rivero, is the history of powerful individuals willing to sacrifice thousands upon thousands of other people’s lives for personal gains.

Finally, the real target of these war mongers are our civil liberties and economic freedom.

As French historian Alexis de Tocqueville wrote,

All those who seek to destroy the liberties of a democratic nation ought to know that war is the surest and shortest means to accomplish it.

Thus, the call for nationalism over territorial disputes is like putting the proverbial lipstick on the political pig.