Democratic
socialism, then, is not a doctrine designed to protect the liberal
values of independence, autonomy, and self-direction that many on the
left still value to some degree. It is, on the contrary, a doctrine
that forces those of us who cherish those liberal values onto a
slippery slope toward tyranny.—Professor Sandy
Ikeda
In
this issue
Phisix
7,150: Prospects of a Strong Man Rule Sends Peso Tumbling, Why A
Shift to the Political Left Will Mean A Weaker Peso
-Prospects
of a Strong Man Rule Sends Peso Tumbling
-The
Political Economy of Leftist Governments Leads To Weak Currencies
-Canary
in the Coal Mine: Century Property’s Real Estate Sales Crash in
2015 as Debt Swells!
-Real
Estate Banking Loans Nears BSP’s Cap, What the Resurgence of Money
Supply Growth Implies
-Has
The Philippine Presidential Elections Been About An Angry Vote Or A
Bubble Vote?
-Philippine
Presidential Election’s Unseen Winner: None of the Above!
-Election
Surveys: To Trust or Not?
Phisix
7,150: Prospects of a Strong Man Rule Sends Peso Tumbling, Why A
Shift to the Political Left Will Mean A Weaker Peso
Prospects
of a Strong Man Rule Sends Peso Tumbling
In
defense of the status quo, a claim was made that the pesos’
predicament should be put in ‘perspective’. And that the
perspective of the anemic peso has been founded on a ‘regional’
dynamic.
So
let us play ‘spot the odd man out’ from the diagram below.
Since
the US
Federal Reserve opted to maintain their current policy stance
last week, the US dollar has been under siege against most major
currencies. Similarly the feeble US dollar has sent commodities
skyrocketing.
And
the fall in the US Dollar has likewise permeated to Asia. So the
regional perspective, contra to the unfounded assertion, has been a
weak USD and strong Asian currencies. That’s with the exception of
the Philippine peso and the Malaysian ringgit.
So
what has prompted the two currencies to resist or defy the regional
trend?
Domestic
factors apparently have been the most likely answer.
The
escalating corruption scandal involving Malaysia’s Prime Minister
has impelled Malaysia’s state owned 1Malaysia
Development Bhd (1MBDB) to
default on its $1.75 billion debt last week. While the USD myr
rallied following the announced default, the rebound wasn’t enough
to offset losses incurred at the start of the week. So the Malaysian
ringgit closed marginally down .1% or almost unchanged for the week.
This
leaves the odd man out, the sole Asian (Asian-East Asian) currency to
post a substantial loss for the week; the Philippine peso
While
I have suggested that the BSP’s window dressing of GIRs through
derivatives may have a culprit, last week’s actions points to other
more significant factor/s.
With
a week to go before national elections, uncertainties appear to have
cast a pall on the peso.
Popularity
of a self-proclaimed controversial leftist candidate recently zoomed
to the top according to the polls, against a field of aspiring
contenders for the highest national position.
This
is a showcase of the remarkable careening of sentiment by the voting
population to the political left.
And
such dramatic transition to the political left may have possibly sent
jitters to the some of the elites for them to panic buy the USD.
Based
on official data, the peso closed down by .51% or from 46.65 last
week to 46.89 last April 29 Friday.
However,
Bloomberg’s data on international trade of the Asian reveal that
the peso even fell further to 46.91 or down .57% in the US trading
session.
The
USD peso had been quoted last at 47.04-47.05 based on Google, Yahoo
and Investing.com. This means that unless the BSP intervenes,
Monday’s opening trade will likely be at range of the mid
46.90s-47.05.
In
short, there seems to be a real
panic out
of the peso. We should see if this dynamic holds next week.
The
Political Economy of Leftist Governments Leads To Weak Currencies
Weak
currency in the prospect of a leftist government should be a natural
outcome.
The
shift to the political left only indicates that the thrust of the
incoming administration will be to deepen
the politicization of the economy.
This
basically means bigger
government or political centralization at the expense of the already
constrained market economy.
Given
that government will assume a bigger role, then this means that the
rate of growth of government spending should rise faster
than the economy.
Therefore, fiscal deficits will only balloon.
Even
more, the
cost of financing a bigger government should translate to lower
economic performance.
First,
an
increase in the size of the government translates to more competition
with the private sector for resources, this should entail of the
‘crowding out’ of the private sector
(all things being equal). In short, the more
the transfer of resources to the government, the less resources
available to the private sector.
Second,
such
transfers would entail of less
efficient
use of resources.
The focus on consumption, particularly politically directed
consumption, will infer to more deadweight losses in the economy that
would lead to lower
productivity—and eventual decline in the standard of living.
Third,
the financing
of a bigger government will translate to higher
cost of doing business,
via increased taxes, higher inflation rates, larger political
compliance costs, regulatory obstacles and more corruption. This
extrapolates to a much higher
hurdle rate required for investments. And higher
hurdle rates will deduce to diminished investments.
Don’t
forget government’s survival depends on mostly expropriation of
resources from the private sector, through taxation and inflation
(invisible taxation).
Fourth,
the government
will likely decrease
participation of private sector in the economy through legislation.
The government will likely resort to the substitution of private
sector participation through nationalizations. Or that the government
will increase regulations and mandates that will raise barriers to
entry. So by picking on winners, the incoming administration may
essentially endow the privilege of political protection from
competition to select favored (rent seeking/crony) private entities
or to state owned enterprises.
And
nationalization of enterprises will likely focus on key industries
that will ensure the preservation of power of the new administration
and those subject to populist clamor. Financials and energy sector
are most likely candidates.
Fifth,
given the prospects of diminished role of the private sector, which
should put pressure on government financing, the
government will likely increase the recourse to financial repression
policies.
Financial repression policies will allow the government to capture
more resources or savings from the public indirectly or with less
political visibility.
Hence,
the government will not only resort to more inflationism combined
with more financial regulations, they would likely tighten capital
controls and reverse some of the recent liberalization activities
undertaken by the outgoing regime.
And
finally, since
deficits will
bulge, the government will have to raise taxes and or fund itself
with more debt.
Again, higher taxes in itself will not automatically weaken the peso.
For as long as it can be paid for by taxes, more debt will also not
contribute to the attenuation of the peso. The
debilitation of the peso will occur when government increases money
supply to directly monetize its spending, or, beyond the ability for
taxes, employ bank credit expansion to fill the spending gap by
purchasing government debt.
History
has shown that dictators here and elsewhere have such a ravenous
appetite on spending other people’s money. The last time the
Philippines had a strong man rule, the peso crashed by 81% in 20
years!
Worst,
the spendthrift strong man regime culminated with a balance
of payment crisis in 1983-1984
The
slomo boiling frog of the peso virtually sowed the seeds or paved way
for the mass diaspora of laborers, which today we call as heroes or
the OFWs.
Yet
the previous dictator, whom practiced oligarchic crony capitalism,
was hardly a leftist.
Today
should the leftist government prevail, they will be faced with huge
imbalances brought about by the previous two administration’s
financial repression—negative real rates policies—that inflated a
credit bubble which has been manifested in domestic asset markets
(property, stocks and bonds). Worst, a larger government in the face
of present economic maladjustments will deduce to a perfect storm.
Tinkering
with money always generate a boom first, such can be seen in the
Phisix 1970-1985 cycle. The boom which lasted from 1972 to 1978
culminated with a bust (blue bars).
Additionally
the current leading leftist candidate has even swaggered about
instituting a “revolutionary government” by “abolishing
Congress” and intends to amend the constitution, which most likely
will be used to convoke or usurp more power for themselves, with
lesser encumbrance from checks and balances.
I
am captivated by thought of the abolishment of Congress. However, in
replacement of what? A left dictatorship? This means to jump from the
frying pan to the fire!
The
modern day or contemporary versions of leftist governments have been
those that impose state capitalism or economic fascism.
State
capitalism is defined1
as “commercial
(i.e., for-profit)
economic activity “undertaken by the state,
where the means
of production are
organized and managed as state-owned
business enterprises (including
the processes of capital
accumulation, wage
labor, and centralized management), or where there is otherwise a
dominance of corporatized
government
agencies (agencies organized along business management practices)
or publicly
listed corporations of
which the state has controlling shares, or “private capitalist
economy controlled by a state, often meaning a privately owned
economy that is subject to statist economic
planning.”
On
the other hand economic fascism entails “economic dirigisme”2
or
“an economy where the government exerts strong directive influence
over investment, as opposed to having a merely regulatory role. In
general, apart from the nationalizations of some industries, fascist
economies were based on private individuals being allowed property
and private initiative, but these were contingent upon service to the
state.
In
short, modern
day leftist regimes are characterized by the state directed economic
activities through combination of state owned enterprises and
government dictated privately owned crony firms.
Of
course, pray that any “revolutionary government” by the new
administration will not be of the early twentieth century leftist
strain, similar to the Bolshevik
revolution and its offspring Lenin-Stalin’s USSR,
the Nazi
(national socialist) dictatorship,
Mao ZeDong’s Great
leap forward, Pol Pot’s "Democratic
Kampuchea" and others.
In
the twentieth century paragon, stock markets did not exist in the
said countries because property rights or private ownership were
banned in favor of collective ownership.
All
these indicate that when the perceive risks to private property
increases, capital flight would be an intuitive response to the
economics of leftist-dictatorship governments.
The
peso (blue) apparently dragged down the Phisix (red) which closed
down 1.32% over the week.
It
has been interesting to note that both the peso-Phisix appears to
have hit an inflection point where the USD php may have bottomed
while the Phisix may have climaxed.
The
inverse correlation of these two appears to have been reinforced.
Yet
it is sad, if not alarming, to see how populist politics has
fundamentally underwritten the peso’s downfall.
Canary
in the Coal Mine: Century Property’s Real Estate Sales Crash in
2015 as Debt Swells!
This
is just a short note on what seems as more proof of the deteriorating
conditions for the real estate industry in 2015.
The
annual report of high end property developer Century Properties has
shown of a shocking -28.38% collapse in real estate sales in 2015!
The
company blames this partly to accounting practices and a shortage of
new projects3:
For the year ended December 31, 2015, the Group recorded revenue from
real estate sales amounting to P7,751.3 million compared to P10,822.9
million in 2014. The decrease in real estate sales is attributable to
less revenue recognized in 2015 for projects that turned over in 2015
and prior years. A significant portion of revenue from these projects
were already recognized in 2014 and prior years. In addition, there
were less project launches in 2015
Yet
in the same report the company seem to say that the opposite, they
have lots of projects at work: The Company is currently developing
six master-planned communities that are expected to have 28
residential condominium buildings, three commercial buildings for
lease, and 934 landed houses, with a total expected GFA (with
parking) of 1,671,339 sq.m. In addition, the Company has agreed to
purchase 50% of the usage and leasehold rights of Asian Century
Center, an office building in Bonifacio Global City. Asian Century
Center is currently being developed by Asian Carmaker Corporation
The
collapse in CPG’s sales has equally been manifested by a 30% crash
in eps growth!
So
far, CPG has had the worst performance among firms in the real estate
industry in 2015. Yet the firm’s direction (falling top line which
has spilled to the over to the bottom line and soaring debt) has not
been in isolation but has only
reinforced what seems a formative industry trend.
In
addition, as CPG’s sales crashed, this has compounded on her cash
flow quandary for the company to significantly lever up on debt.
CPG’s long term debt alone has swollen by +34.8% in 2015.
CPG
looks like the proverbial canary in the coal mine.
Real
Estate Banking Loans Nears BSP’s Cap, What the Resurgence of Money
Supply Growth Implies
And
it has been interesting to observe that after a huge jump in banking
loans to the real estate sector in the last two months (which grew by
23.26% January and 25.45% in February), such sizzling rate of growth
seem to have moderated or fizzled back to its 2H 2015 levels in March
(20.22%).
The
share of loans to the real estate industry relative to the general
(production loans) economy now accounts for 19.6%. This basically
approaches the BSP’s loan cap for the sector! And this probably
explains the slowdown.
Of
course, I believe that the loans to the sector have been severely
understated. The race to build supply in the face leveraged vendor
financed sales has only led to cash flow deficiencies for MOST of
real estate companies. This means that the industry has to rely on
bigger borrowings to bridge finance everything from marketing, sales,
operations, debt servicing and expansion. CPG is an example.
This
implies too that loans incurred by the sector may have been channeled
through different unofficial routes excluding bonds, which may
include intra-company loans, unrelated company to company loans,
promissory notes/placements or the diversion of loans from the
reported BSP categorization, shadow banks and others, which may have
been used to circumvent such regulatory loan cap.
And
with the exception to banking loans to the financial sector, the rate
of growth of loans to other sectors moderated, namely trade,
electricity and construction. Loans to the manufacturing sector
crashed anew from 5.49% in January and 5.73% in February to only
1.84% in March. This hardly has been a sign that the manufacturing
sector has been growing.
Yet
the surge in banking loans to the financial sector could have been
used to finance speculative positions at the PSE.
Even
more, the rate of growth to the construction industry continues to
plunge.
At
still a hefty 22.89%, it has dropped to its lowest level since 2013.
(bottom window) The share of bank loans to the sector only accounted
for 3% of production loans.
While
this may partly be construed as diminishing returns on loan growth,
this can also be seen as moderation in construction activities. If it
is the latter then this leads us to a paradox, if construction
activities has been slowing (bolstered by
decline in 2015’s construction permits) then where has the
recent engorgement of real estate loans been channeled to? Had such
been used to finance frenzied speculative bids on properties (e.g. 3
bedroom Makati)? Or has current debt acquisition been more about debt
servicing?
Another
interesting take has been that the recent upside turnaround of credit
growth has likewise been manifested on M3 and thus CPI.
While
higher M3 will likely boost statistical GDP (money value of goods and
services) in 1Q, it will also have a lagged effect on CPI and other
real economy prices.
The
point here is that higher real economy prices will not only
eventually erode on profits (aggravating current conditions) but most
importantly sink the purchasing power of residents.
Additionally,
it points to a lower peso!
Has
The Philippine Presidential Elections Been About An Angry Vote Or A
Bubble Vote?
I
came across on a headline which attributes the current voting
sentiment in the Philippines as akin to a vote on US presidential
aspirant Donald Trump.
Funny,
but Donald Trump has NO
political track record or history to speak of. Having said so, he
hasn’t killed anyone as a standing politician. This is unlike one
of the popular candidates in the Philippines. And I have not come
across any article to claim that Mr Trump brags about or overtly
desire to kill people to accomplish political objectives. [As a side
note, I do not endorse any US and Philippine candidates]
On
the other hand, ALL Philippine national (presidential and vice
presidential) candidates are establishment politicians. The
difference is in the position; some are from local levels, some from
the bureaucracy and from the national levels.
In
other words, a Trump comparison is virtually off the rails for
Philippine conditions.
So
this hardly been about anti-establishment votes, but an election
composed of different establishment personalities with their
respective baggage of vested interest groups.
In
addition, piggybacking on the claim of the Trump like sentiment, the
argument stretches on the idea that this election would account for
an ‘angry’ vote.
As
previously noted, angry of what? Angry of the establishment’s boom?
Whatever happened to the statistical boom? Why has the boom not have
gravitated populist sentiment towards the incumbent? Why has there
been a pivotal shift towards the opposition or to the political left?
On
the contrary, I’d suggest that current sentiment has hardly been an
angry vote. Instead
it represents a bubble vote.
The
establishment
boom has warped or mangled people’s mindsets into imbuing an
ultra-short term orientation to embrace on knee jerk populist
solutions.
They must have watched too much of super hero movies as to lust for
the real world assimilation of the savior-super hero effect.
Worst,
current sentiment represents an expression from a substantial segment
of the populace for an
increasing desire to use of arbitrary violence through elective
dictatorship
or ‘strong man bubble’ to solve socio-political economic
predicaments. This attraction towards violence, at the expense of due
process, highlights on the deterioration of people’s moral fiber.
Basically,
current sentiment seems to have overturned on the lessons of two
people power events where political transitions had been nested on
the peaceful overthrow of the old guards.
And
that the appeal to violence seem to have emerged from grave
misperceptions of the supposed lack of ‘political will’ for the
‘enforcement’ of rules
This
only reveals that many people seem to think that enforcement has no
economic cost or consequences! Just where the heck, will the
government get resources to pay for ‘enforcement’? Manna from
heaven?
And
because absence of the costs, they see only beneficial social
consequences!
Such
are proofs that bubble mentality have only spread from the financial
world to the political sphere.
More
importantly, given that resources are scarce, just what should be the
order of priorities by the new administration in the allocation of
resources? Or just how will ‘enforcement’ take place?
To
focus on spending and action on political priority ‘A’ means LESS
spending and action on political priority ‘B’ or ‘C’ or ‘D’
to the nth. This is called opportunity
cost.
Yet
once the spending and action spread to a diverse field of interests,
say political priority A, B, C, D to the nth, then political
resources and actions will spread
thin!
Enforcement
dissipates!
And resources include people—bureaucrats, police and other
political agents who will be task to ‘enforce’.
And
the unsatisfied sectors, or sectors provided with less priority, say
political interest B, C, and D, will likely cavil and demand for more
share of spending and attention. So then we revert to the same cycle
of decrying lack of political will!
And
how will the new administration respond? By permanently silencing
them?
In
short, the notion that authoritarians knows of the interests of all
individuals (or even various interests groups) represents an
unalloyed fantasy.
The
enforcement of multifarious political aspects is a complex social
dynamic which cannot be reduced to simplistic rhetoric by demagogues.
Or
if authorities do not possess the grassroots or decentralized
knowledge, how can they resolve to satisfy the fierce competition
among various political agendas?
But
does it matter? In the world of politics, soundbites and images seem
to be good enough.
Yet
almost none have given a thought that uneconomic or unviable rules
will always lead to enforcement failures.
The
late great economic journalist Henry Hazlitt cited price controls as
example4
(bold added)
The
trouble is that their attempted legislative remedies turn
out to be systematically wrong.
It
is complained that prices are too high. A
law is passed forbidding them to go higher. The result is that fewer
and fewer items are produced, or that black markets develop. The law
is ignored, or finally repealed.
It
is said that rents are too high. Rent ceilings are imposed. New
apartments cease to be built, or at least fewer of them. Old
apartment buildings stand vacant, and fall into decay. Higher rents
are eventually legally allowed, but they are practically always
set below what market rates would be. The result is that tenants, in
whose supposed interest the rent controls were imposed, eventually
suffer as a body even more than landlords, because there is a
chronic shortage of housing. Wages are supposed to be too low.
Minimum wages are fixed. The result is that teenagers, and especially
black teenagers, are thrown out of work and on the relief rolls. The
law encourages strong unions and compels employers to "bargain
collectively" with them. The result is often excessive
wage-rates, and a chronic amount of unemployed.
As
shown above, most of social problems have NOT been about the
enforcement, but rather what mainstream applies as remedies to
economic shortcomings through short sighted LEGISLATED LAW.
As
American economist Armen
A. Alchian wrote5
(bold mine)
Economics
does not say any activities are bad and hence ought to be stopped.
It says if you want to restrain them, you can raise the price –
the cost of doing that action. Still, behavior in a
capitalistic system is, by definition, more difficult to control by
political authority because private property gives us more extensive
authority over our lifestyles. That
is why, whatever the legislated law, it does not follow that its
intent will be achieved. Legislated law is overpowered by
economic laws of capitalism, which often nullify or pervert intended
effects.
So political forces are more and more designed to reduce the
scope of private property rights, a bleak future.
Said
simply, unviable or uneconomic mandates or rules or regulations, even
when draconian enforcement has been applied are fated or doomed to
fail.
What
they do instead is to foster more social contortions.
Of
course, it has not only an been issue of uneconomical aspects, just
so to please the authority’s subjective moral standards, arbitrary
statutes may be designed to plunder, oppress and impinge unnecessary
violence on some segments of the political constituency
Example,
the policy of plunder through elections, from the great French
political economist Frédéric Bastiat6
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.
Oh, the unaccountable folly of the human mind! Oh, the deviousness of
greed! It is not enough that each of us tries to increase our share
at the expense of others; it is not enough that we want to profit
from labor that we have not performed. We even convince ourselves
that in the process we are sublime examples of self-sacrifice; we
almost go so far as to call our unselfishness Christlike. We have
become
so blind that we do not see that the sacrifices that cause us to weep
with admiration as we contemplate
ourselves are not made by us at all, but are exacted by us of others
Rings
a bell?
In
the twentieth century, tens
of millions of innocent people have lost their lives when
governments decided to impose stringent ‘enforcement’ predicated
on unfeasible, oppressive and thereby unjust utopian ideologies. I
hope this would not be the template for the next regime.
Also,
hardly anyone has given a thought that despite the electoral
demonstration by candidates to impose on their brand of ‘political
will’, politicians are human beings, where their actions will
likely be influenced by their subjective preferences, values and
sense of ethics that should aim to satisfy their personal Maslow’s
hierarchy.
Alternatively,
this means that those who aspire for power will have not only
cravings for socio-political power, but goals pillared on attaining
corporeal pleasantries and social rewards. Thus their actions will
likely evolve around placating agents who will supply these factors
to them. On the hand, they are likely to use repression to those whom
they see as a threat or to perceived competitors (or political foes).
Known
as the public choice theory, the halo effect from politicians will
prove to be a mirage. From the great economist James Buchanan7.
When
the very elementary step is taken to extend the behavioural models of
economics to apply to public choosers, to those who participate
variously in political roles, as voters, politicians, bureaucrats,
planners, party leaders, etc., the romantic vision that was essential
to the whole socialist myth vanishes. If
those who make decisions for other are finally seen as ordinary
persons, just like everyone else, how can the awesome delegation of
authority that must characterize the centralized economy be
justified?
In
other words, the idea of sincerity and down to earth personality
traits represents nothing more than a personality cult or a populist
delusion.
From
the realist aspects, all candidates have political baggage (vested
interest groups) to carry. And since there is no free lunch, there
will cost for those cargoes when the candidate wins.
All
these suggests that alarmingly, when the economic downturn surfaces,
considering
the ‘fragmented’ nature of Philippine politics, which has been
backed by the election of the plural minority, where the winner may
impose on radical ideological platforms, political risks may likely
evolve towards increased societal violence.
And
given the populist seduction for bloodshed, what stops the new
administration from provoking risk of war with neighbors?
People
with no real experience of violence think that violence may not
happen to them. So the seek violence to befall on others without an
inkling of the likely consequences these may occur even to them.
Bubbles
have made people believe that fantasies are real.
Bubbles
are never economically viable, so they always blow up. This applies
to political bubbles as well.
At
the day’s end, politics will never overrule the laws of economics.
Also
think of what the economic downturn from a bubble economy (legacy
from two administrations), the shift towards big repressive
government (prospective regime) and increased political violence will
do to the peso.
This
wonderful quote from the great dean of the Austrian School of
Economics, Murray N. Rothbard seems to reverberate8.
It
is no crime to be ignorant of economics, which is, after all, a
specialized discipline and one that most people consider to be a
"dismal science." But it is totally irresponsible to have a
loud and vociferous opinion on economic subjects while remaining in
this state of ignorance.
Philippine
Presidential Election’s Unseen Winner: None of the Above!
Philippine
democracy is supposed to represent a system that is based on the
election of plurality voting. In plurality
voting,
the winner needs only the most number of votes, and not a majority,
to get elected.
However
if one considers the overall picture, Philippine democracy is an
election of the plural minority.
And
to extend on the unseen fact, Philippine democracy muzzles the true
winners: the NONE of the ABOVE—the biggest plural minority.
Let
me cite the 2010 elections as example
In
the 2010 national presidential elections,
today’s outgoing president garnered 15.209 million votes or 42% of
the valid 36.139 million votes cast. Voter turnout was at 74.34% or
38.149
million. About 5.27% or 2.01 million were invalid votes. Total
registered voters then were at 51.292 million.
Census
data said that 60.3% or 55.5 million were at the voting age
population.
So
what does the data above say?
The
winning candidate accounted for only 29.65% (or a third) of total
registered voters and 27.4% of population at voting age (a little
more than a quarter of voting population). If one would use PSA data
the said ratio will decline more, although marginally.
Additionally,
registered voters who did not vote accounted for 13.143 million while
non registered voters at voting age totaled 4.21 million.
Therefore
non voters, who were registered, and non registered people summed up
to 17.535 million. That’s 2.144 million MORE than the winning vote!
The PSA data would imply for a much bigger margin.
And
one would hear the pronouncement that “the people have spoken”.
They haven’t.
The
fact that there had been more non voters (registered and non
registered) implies that “the none of the above” have actually
won!
In
2010, the non-voters were the BIGGER plural minority. This group had
opted to stay on the sidelines. Unfortunately, their voices had been
drowned out by the establishment whom has arrogated upon themselves
reality.
As
I previously asked9:
So
how can we adduce ‘people power’ when today’s Philippine
political exercise represents a vote of the plural minority?
Unless
voter turnout significantly improves and in spite of the current
drama, I don’t think such dynamic will change in the present
elections.
Voter
turnout appears to be in a decline since 1998.
Yet
the elected plural minority has imposed unseen costs
on the bigger plural minority, and more importantly, to the entire
population. For the current administration these costs are the huge
credit bubble, the weak peso, inflation, surging inequality and US
bases.
And
such costs appear to have backfired for the opposition to gain
significant sway on the odds of getting elected next week.
And
the cycle will only repeat. The loud minority will claim legitimacy
to dictate on and impose policies that will most likely injure the
majority.
Yet
elections are beyond cheering of personalities. Since actions have
consequences, social policies will all entail multifaceted
intertemporal costs. And the cost of the actions taken by such
leaders will be borne by the citizenry. And such cost represents an
externality: The externality of the delusions of social democracy
designed to justify the rule of the establishment elites.
As
author and assistant professor Jason Brennan trenchantly observed10
How
other people vote is my business. After all, they make it my
business. Electoral
decisions are imposed upon all through force, that is, through
violence and threats of violence. When
it comes to politics, we
are not free to walk away from bad decisions.
Voters
impose externalities upon others.
We
would never say to everyone, “Who cares if you know anything about
surgery or medicine? The important thing is that you make your cut.”
Yet for some reason, we do say, “It doesn’t matter if you know
much about politics. The important thing is to vote.” In both
cases, incompetent
decision-making can hurt innocent people.
Commonsense
morality tells us to treat the two cases differently. Commonsense
morality is wrong.
Because
I do not want to impose externality upon others, I join the silent
biggest plural minority.
Election
Surveys: To Trust or Not?
It’s
interesting to see people argue against trusting
surveys.
While I am with them in spirit, I really doubt if the reason they are
arguing has been due to the context of the disinformation, or if the
surveys simply don’t match their preferences/biases. Of course,
they never say it directly.
It
may be true that the intent of surveys have been to generate a
bandwagon effect.
On
the contrary, whatever the purpose, surveys have been proven to be
imprecise.
Let
me use this Wikipedia
page on 2010
elections as example.
Second
runner up Joseph Estrada was vastly underrated by both major domestic
pollsters. Yet Mr Estrada racked up 26.25% of the votes cast compared
to survey results of only 20%.
Importantly,
in the VP category, one pollster showed that the winner, the
administration candidate, had a huge margin over the opposition bet
37%-28%.
On
the other hand, the other survey showed of a miniscule .2% lead by
the opposition.
The
actual outcome was 42% and 40% in favor of the opposition.
Ironically,
both candidates are running again for the top spot.
The
variance can be partly explained:
Surveys
may indicate spur of the moment expressions—which may be fungible.
People
may also say one thing and do another, perhaps as part of social
signaling.
Surveys
may also be manipulated for whatever reasons.
If
people have been arguing over the credibility of election surveys,
then why trust the credibility of the government’s GDP which mostly
represents a statistics of an aggregated survey? Because the
government have no motivation to skew information?
Won’t
this signify as cognitive dissonance?
___
1
Wikipedia.org
State
capitalism
2
Wikipedia.org
Economics
of fascism
3
Century
Properties Annual
Report April 18, 2016 p.41 and 32-33 Edge.pse.com.ph
4
Henry
Hazlitt, The
ABCs of a Market Economy Mises.org April 29, 2016
5
Armen
A. Alchian “Economic
Laws and Political Legislation” from The
Collected Works of Armen A. Alchian
(2006) pages 604-605 of volume 2, Café
Hayek Quotation
of the Day…
April 29, 2015
6
Bastiat,
Frédéric Chapter
12 The Two Mottoes Economic Harmonies, Library of Economics and
Liberty
7
James
M. Buchanan The Collected Works of James M. Buchanan: The
Logical Foundations of Constitutional Liberty
Café
Hayek Quotation
of the Day…
October 3, 2013
8
Murray
N. Rothbard The
Death Wish of the Anarcho-Communists June 2, 2006 Mises.org
9
See
Philippine
Election Aftermath: Goodbye Illusion, Welcome Reality! May 23
2010
