Llewellyn H. Rockwell, Jr.:What We Mean by Decentralization

Decentralization is an important step to where Philippine democracy can be strengthened given its intrinsic diversity. This insightful article by Mr. Lew Rockwell, of the Ludwig Von Mises Institute enunciates why it has worked even on the private organizational level. Quoting the entire article…

What We Mean by Decentralization

by Llewellyn H. Rockwell, Jr.

The Kelo decision, in which the Supreme Court refused to intervene in the case of a local government taking of private property, touched off a huge debate among libertarians on the question of decentralization. The most common perspective was that the decision was a disaster because it gave permission to local governments to steal land. Libertarians are against stealing land, and so therefore must oppose the court decision.

And yet stealing isn't the only thing libertarians are against. We are also opposed to top-down political control over wide geographic regions, even when they are instituted in the name of liberty.

Hence it would be no victory for your liberty if, for example, the Chinese government assumed jurisdiction over your downtown streets in order to liberate them from zoning ordinances. Zoning violates property rights, but imperialism violates the right of a people to govern themselves. These Chinese government lacks both jurisdiction and moral standing to intervene. What goes for the Chinese government goes for any distant government that presumes control over government closer to home.

How is the libertarian to choose when there is a conflict between the demands of liberty and strictures against empire? The answer is not always easy, but experience and the whole intellectual history of liberalism suggest that decentralized government is most compatible with long-run concerns for liberty. This is why all the founders were attached to the idea of federalism: that the states within the union were the primary governing units, and the Bill of Rights was to protect both individuals and the states from impositions by the central government—even when liberty is invoked as a justification.

Just so that we are clear on this last point: the purpose of the Bill of Rights was to state very clearly and plainly what the Federal Government may not do. That's why they were attached to the Constitution. The states, under the influence of skeptics of the Constitution's limits on the central power, insisted that the restrictions on the government be spelled out. The Bill of Rights did not provide a mandate for what the Federal Government may do. You can argue all you want about the 14^th amendment and its equal protection clause by a reading that says it magically transforms the whole Bill of Rights to mean the exact opposite of its original intent is pure fantasy.

Back to the libertarian presumption in favor of decentralization. There are several reasons for it.

First, under decentralization, jurisdictions must compete for residents and capital, which provides some incentive for greater degrees of freedom, if only because local despotism is neither popular nor productive. If despots insist on ruling anyway, people and capital will find a way to leave. If there is only one will and one actor, you cannot escape.

Second, localism internalizes corruption so that it can be more easily spotted and uprooted. Along the same lines, local government corruption can be rather benign by comparison; it is easier, on a middle-class budget, to pay off the zoning board than to bribe the State Department.

Third, tyranny on the local level minimizes damage to the same extent that macro-tyranny maximizes it. If Hitler had ruled only Berlin, Stalin only Moscow, and FDR only Washington, the effects of their demented policies might have been contained. This is not only a utilitarian consideration. It means that evil people are prevented from violating the rights of people outside their jurisdiction.

Fourth, no government can be trusted to use the power to intervene wisely. With such power, central governments will always invoke good motives even when they are a mere mask for power grabs (as when the US invaded Iraq, for example). The typical path goes this way. An intervention takes place that might be celebrated by good liberals, such as the Lochner decision (1905) by the Supreme Court that invalidated New York's labor regulations. But once that power is gained, it is used to put a legal imprimatur on central planning and prevent local governments from finding an escape (the central planning of World War I was Lochner's daughter).

Fifth, a plurality of governmental forms—a "vertical separation of powers," to use Stephan Kinsella's phrase—prevents the central government from accumulating power. Lower governments are rightly jealous of their jurisdiction, and resist. This is to the good. In fact, the whole history of liberty is bound up with the glorious results of competing institutional structures, no one of which can be trusted with complete control.

To be sure, this does not mean that libertarians must be agnostic on the question of what government should look like. Law should protect person and property against invasive force. This principle applies in all times and in all places. But that does not mean that there must be a single law giver and enforcer. To maximize the chance that good law will prevail over bad, over the long haul, and prevent power grabs from the top, we need a multiplicity of legal forms.

Murray N. Rothbard had a nice phrase that he used to summarize this position: universal rights, locally enforced. Those two principles are frequently in tension. But if you give up one of the these two principles you risk giving up liberty. Both are important. Neither should prevail over the other. A local government that violates rights is intolerable. A central government that rules in the name of universal rights is similarly intolerable. Heaven on earth is universal rights, locally enforced. No, it's not here yet. That's why libertarians exist, to work for the ideal.

Now, there is another form of decentralization you often hear about. It comes from those who regret globalization in all forms, including multinational corporations and the like. They complain about the centralization of life in the modern age and long for simpler times. Here's the problem: the kind of centralization they regret is a result of voluntary decision-making in the marketplace. It is freely chosen centralization. Their plans for scaling back would requires massive coercion and bring about an economic calamity.

In matters of private association and market economics, libertarians can make no a priori decision concerning the best means to organize. Rothbard was a defender of multinational corporations and global trade, but he also saw that too much integration in the production structure is bad for business. Firms loose the ability to calculate their profits and losses when they are responsible for too great a degree of internal production for their own capital goods.

How does this impact the organization of other institutions in society, like church, extended family, civic associations, and ideological movements? Is centralization best or is decentralization best? The answer must be left to experience. The Catholic Church is centralized doctrinally but decentralized managerially. The family in the American context is not centralized between generations. Grandparents are there to dote, not rule. Civic associations take many forms, from national organizations to local ones.

Rothbard himself, in the course of experience, changed his view on the best method for organizing ideological movements. Early on, he was attracted to the idea of top-down management, with cadres and followers and cells of every sort. He saw that this worked for the Communists, so why not for the libertarians? He was right to say that nothing in libertarian theory prohibits top-down management insofar as it is voluntary and rooted in private property.

But later on in life, he changed his mind and wrote that he found serious problems with this model, and they are related to the same problems that appear with political centralization. In the Libertarian Forum, August 1981, he writes:

"I would like to take this opportunity to admit my previous error in calling for an ultra-centralist model for the [Libertarian Party]. Several years in the [LP] have soured me on centralism permanently. Putting the rule of the Party, or of the movement as a whole, into the hands of one man or of one tight group is a recipe for disaster. First, it means that if a few people sell out to opportunism, the rest of the movement is dragged along with it. But second, and more generally, even if the Machiners were a bunch of wonderful people, since they are not omniscient they are bound, as are all of us to make mistakes. And just as the mistakes of a government controlled economy can ruin a nation, so the inevitable mistakes of a tight ruling clique can ruin a party or a movement. I still think it absurd to think of decentralism as 'the libertarian' form of organization. How we organize is not a matter of libertarian principle, so long as we do not violate the non-aggression axiom. But it appears that neither radical decentralism nor ultra-centralism will work in any organization…. [M]oderation and balance should be our organizational mode."

How right he is! Imagine if the only forms of ideology available to us were those offered by Washington, D.C. organizations, with their hyper-policy focus and tendency to kowtow to the state. In intellectual life, we need a vast multiplicity of forms in order to check corruption and compromise. Even in the libertarian movement, we need diversity and experimentation, not centralization, command, and control.

In the organization of business, ideas, and life itself, Rothbard recommends balance and moderation. So we might articulate two Rothbardian principles. In public affairs, we need universal rights, locally enforced. In private and economic affairs, we need neither centralization nor decentralization, but moderation and balance, trial and error. To me, these formulations represent the height of good thinking, good law, and the good society.
_____________________________

Llewellyn H. Rockwell, Jr. (Rockwell@mises.org) is president of the Ludwig von Mises Institute in Auburn, Alabama, and editor of LewRockwell.com. See his Mises.org archive. Purchase his book, Speaking of Liberty. Post comments on the blog.

July 20, 2005 A Renewal of Confidence on the Phisix?

July 20, 2005 A Renewal of Confidence on the Phisix?

Today’s market activities was a pleasant surprise, the Phisix zoomed by 55.16 points or 2.92% powered by foreign capital accumulation on key heavyweight issues to lead Asia’s mostly buoyant bourses.

Foreign money accounted for nearly 70% of today’s turnover with net accumulation of P 105.331 million representing about 8.7% of total trades. Major heavyweights recorded significant gains led by San Miguel B shares up 7.44%, Ayala Corp higher by 6.77%, SM Primeholdings 4.28%, Ayala Land 2.59%, Globe Telecoms 2.4%, Bank of the Philippine Islands 2.04%, PLDT 1.96% and San Miguel A 1.02%. Only Metrobank among the 8 major issues recorded a decline, down 1.81% to 27.

Among the 8 major issues, foreign flows was evenly divided, nevertheless there were more inflows seen on a net basis to companies that accounted for inflows while the broad market benefited from the spillover. Second tier issues which benefited from the spillover buying included Jollibee Foods Corp. up 6.55%, First Philippine Holdings up 3.57%, Meralco B 2.08%, Petron Corp 1.66%, Aboitiz Equity Ventures 1.02% and Manila Water Corp. 1.53%, notably most of the operations of these issues were on either power or infrastructure.

Another noteworthy factor is that while advancers led decliners by more than 3 to 1, the broad market activities showed up with less interest from local investors as number of issues traded remained below the active levels. So far, it appears that the most of the buying activities had been directed towards the heavyweights and its peripheries. The ‘speculative’ issues are expected to benefit from a sectoral rotation if these perky activities persist.

Except for the Mining industry which was the only sector that recorded a slight decline, all other sectors were in the green led by the property sector up by 3.38% and closely followed by the Commercial Industrial Index higher 3.12%.

Renewal of confidence on the Phisix?

The chart above of the Phisix exhibiting today’s vibrant performance almost parallel to its early June outperformance. The current gains brings the Phisix back the key levels it previously lost which implies that the Philippine benchmark may be back on its secular upside trend.

Again in my view, today’s action emanates from the sanguine sentiment of global bourses (discussed in my weekly newsletter) which practically upstaged the antsy developments in the domestic political arena.

Benson

Japan Times Editorial: On the verge of decline

In the polemics of the migration economy, I’ve argued that industrialized nations have been experiencing declining fertility ratios that would pressure on such states to lift immigration barriers and thus encourage more migration flows. An example would be Japan, the article below is an editorial commentary from the Japan Times. While the article is reticent about immigration policies, it acknowledges the dire conditions of a shrinking population and pins their hopes on policy incentives for baby making. Because Japan is reluctant to open to immigrations out of cultural concerns it hoping that such policies would work. Good luck to them. My take is that they would be compelled to open their doors to immigrants sooner rather than later.

Japan Times Editorial: On the verge of decline

The countdown has begun ahead of Japan's plunge into a period of shrinking population that will have a serious impact on the nation's economy and society, especially the labor force and social welfare, including the pension system.

According to the Health, Welfare and Labor Ministry's statistics on population dynamics for 2004, about 1,111,000 babies were born in the nation that year, a record low since statistics were first compiled in 1899.

The number of births-minus-deaths also marked an all-time low at about 82,000. For the first time, the natural increase in the population came in below 100,000 (declining from 108,659 in 2003). Conspicuously, 25 of the nation's 47 prefectures saw a natural decrease in their population.

The fertility rate -- the number of children on average that a woman is expected to give birth to during her lifetime -- has recorded an all-time low for four consecutive years, with the rate for 2004 hitting a low of 1.2888, down from 1.2905 for 2003. The number of births in 2004 represented a decrease of about 13,000 from the previous year. These figures translate into a prediction that Japan's population will start shrinking in 2007 and decline to about 100 million in 2050.

The increase in the proportion of Japan's elderly people is reflected by the fact that the number of deaths has topped 1 million for two straight years, with the year 2004 registering 1,028,708 deaths, the second highest total following the all-time high in 1947, immediately after World War II. There were 30,227 suicides in Japan in 2004. Although the figure is about 2,000 fewer than in 2003, all members of Japanese society should be aware that this is an abnormal situation.

It is said that the fertility rate must be at least 2.08 for the population to level off or grow. In 1974, Japan's fertility rate fell short of 2.08 for the first time and has been on the decline ever since. The fact that the nation's fertility rate has continued to fall in the past decade indicates that various measures the government has taken since 1990 to give people the incentive to have babies have not born fruit.

For example, even as the number of nurseries has increased, they have not been of much help for many mothers who, due to the demands of shift work or long working hours in general, have difficulty finding nurseries that operate until the time they can come and pick up their children.

Statistics for 1990 came as a shock to the government as the fertility rate, at 1.57, fell short of the 1.58 registered in 1966, the year of the Fiery Horse in the Chinese zodiac. In such a year, many people try to avoid having babies due to the belief that girls born in that year will bring destruction to their husbands.

The trend of getting married at an older age continues. This means that, because most women in Japan have babies in marriage, more women are giving birth to their first babies at an older age, which naturally leads to a decrease in the birthrate. In 2004, the average age at which men married for the first time was 29.6; the corresponding figure for women was 27.8. For both sexes, the ages were 0.2 year older than in 2003. The average age at which women give birth to their first babies has gradually risen over four decades -- from 25.7 in 1965 to 26.7 in 1985, 27.5 in 1995 and 28.9 in 2004.

An official of the Health, Welfare and Labor Ministry says there is a good sign. While women aged 25 to 29 gave birth to 25,730 fewer babies in 2004 than in 2003 (for a total of 370,245), women aged 30 to 39 gave birth to more babies in 2004 than in 2003 -- 7,363 more for women 30 to 34 (for a total of 415,948) and 10,753 more for women 35 to 39 (for a total of 150,242).

These figures should be interpreted to mean that a generation of women that had postponed marriage and childbirth have started having babies. But this is unlikely to stop or reverse the downtrend in the total fertility rate.

Amid signs pointing to the start of population shrinkage, the government plans to set up a blue-ribbon committee to discuss measures to stop the downward trend. It will naturally come with financial incentives for married couples to have more children, such as fatter child allowances and tax breaks for families with children. But the committee should pay more attention to creating an environment conducive to the husband and the wife's jointly rearing their children.

In other words, both men and women should be assisted so that they can work and still have a family life. To achieve this, it may be necessary for the government to work out measures to encourage businesses to shorten working hours for both men and women.

The Japan Times: July 17, 2005
(C) All rights reserved

The Maid Exports; Misguided Perceptions About The Migration Economy

The Maid Exports; Misguided Perceptions About The Migration Economy

I recently received a forwarded email depicting the country as such in a miserable gloom and doom state and that we are surviving on ‘exporting maids’. The sophistry of the epistle is largely a political propaganda aimed at personality based politics rather than an objective view of economic impact of migration.

According to the Philippine Daily Inquirer ``Remittances from Filipinos working abroad in the five months to May rose 19.2 percent year-on-year to 4.0 billion dollars, the central bank said…Around 8 million Filipinos are working abroad, and the central bank expects them to send home as much as 9.4 billion dollars of their earnings this year, up 10 percent from last year.” Further it is also reported that some 500,000 workers left the country for higher paying jobs abroad.

Remittances today account for nearly 10% of the country’s GDP and has kept the economy afloat. These are usually spent by families and or dependents on food, clothing, basic utilities, shelter, education, health and other services. While it is true, that this is PARTIALLY an offshoot to the lack of jobs at home, I think the whole episode of migration is a GLOBAL PHENOMENON ARISING FROM THE GLOBAL DEMOGRAPHIC TRENDS rather than a simplistic ‘blame your government thing’.

Top 5 Remittances from Migrants

The table above courtesy of BBC, shows of the top 5 states with the remittance from migrants where even the emerging market growth ‘poster child’ India is shown as one of the major beneficiaries.

Migration is largely a function of division of labor, where declining fertility ratios in industrialized nations have brought about labor shortages thereby the attendant requirements to absorb emigrants despite some political and cultural resistance as seen by the recent France vote against the EU constitution.

Further, it is also a story of welfare states. With the aging population growing more than the working force, welfare benefit payouts are expected to exceed premium inputs leading to government budgetary imbalances or fiscal strains. This means that either the government increases its taxes, or cut benefits or provides incentives to its citizens to have more babies (e.g. Singapore) or allow for immigrants to fill the gap or a combination of the above.

This need for foreign workers could be exemplified by the direct hiring of nurses by United Kingdom http://www.nursinguk.nhs.uk/, where Filipina or Indian or Spanish nurses can apply online.

Demand will simply find its own supply. This is clearly evidenced by the mushrooming nursing and caretaker schools all over the country to meet the rising labor export demand. With the country’s surplus labor, the unemployed can all retool or reinvest in themselves to get a ticket out of the politically crazed country.

Put differently, even if the Philippines would have a ZERO unemployment rate, the migration flows to industrialized countries will CONTINUE depending on the opportunities presented by global demographic trends, the fiscal concerns of welfare states and most importantly the PRICE FUNCTION OF LABOR or the real wage differential considerations among the concerned nations.

Globalization supported by technological breakthroughs in information and communications has highlighted on the cost or price variable hence the emergence of the offshoring/outsourcing phenomenon and the growth story of emerging market economies. Labor therefore is not exempt.

Finally, the personality based government blame game is totally misguided simplistically believing that a change of administration will solve all the problems thereat.

Most citizens expect that government should provide for food, job, shelter, welfare, other social benefits and everything else under the sun. However, by doing so they fail to comprehend that HAND OUTS, DOLE OUTS AND OTHER SOCIAL BENEFITS DON’T COME FOR FREE. There is NO such thing as a free lunch! Either the government PRINTS more PESO or BORROW more DOLLARS or PESO to fill such requirements. The ramifications of such actions are higher consumer prices and or the debasement of the local currency which would effectively lead towards efforts to legally EXTORT more money from its tax paying citizens by the government and or benefit cuts. Such is the vicious cycle of continued dependence on government sponsored boondoggles.

In short, no matter WHO sits as the head of the country, more government presence to please short-term demands of voters who largely refuses to pay taxes equates to a lower standard of living.

Understanding and capitalizing on global dynamics is a far better approach than the fallacious and myopic moralizing on ‘Maid Exports’.

Denouement of the Political Tele-Novela? (Updated)

Denouement of the Political Tele-Novela? (Updated)

Such an incredible drama unfolds in the Philippines today, where its citizens, glued to the TV and radio, are practically mesmerized and awestruck by the rapidly evolving chain of events, mostly centering on who or what party calling for either the resignation or support of the embattled Philippine President GM Arroyo. The political imbroglio takes an episode out of a box office hit Telenovela where the audiences appear to come to believe on what they need to believe just when they need to believe it. The public, as some survey shows, believes that the incumbent president cheated her way to victory and the wiretapped conversations simply reinforces these beliefs. The effect is an erosion confidence to the leadership thereby creating the demand for her to be replaced. Beliefs, justified or not, are what determines or shapes today’s box-office hit, a sordid spectacle which is actually an embodiment of the Filipino culture whose proclivities are mainly on perpetuating intrigues, controversies and self-righteousness. A manifestation of James Fallows ‘damaged culture’? Looks likely enough.

Yet adding to the woes of the already poisoned politics we have several regional leaders from Bicol to Mindanao threatening to breakaway from the Philippines by establishing their own ‘republics’ if the PGMA is ‘forcibly ousted’, claiming that the Metro Manila based turmoil “are affecting the rest of the country”. The regional leaders argue that Metro Manila have unjustly usurped the power to remove the leaders when they were also part of the electoral exercise in the selection of the national leaders. These pronouncements simply highlights on the country’s divisiveness, something which may lead to unnecessary violence.

This is precisely why I am in favor of the voluntary resignation of the President, again NOT on legitimacy or moral ascendancy issues but on the heightened RISKS of the escalating political tumult turning violent or a possible plunge into chaos or a civil war, on the RISKS that adventurous and misguided elements may intervene to wrest the country’s leadership through unconstitutional means, on governance concerns which seems to leave the President ineffectual as constant bickering and assaults to the presidency would result to self-preservation moves instead of a salutary functional leadership, the continued demoralization of key government institutions as seen by the resignation of 10 cabinet members, RISKS of a lame duck presidency, political compromises in return for support that may erode judicious decision making and the continued fragmentation of the society.

The manifestations of all these tensions have been reflected in the financial markets which likewise could translate to future economic paralysis and a possible financial crisis, until a resolution to the country’s leadership could be arrived at. However, I also do understand the administration’s defense, the constitution’s basic rights of presumption of innocence until proven guilty or proof beyond reasonable doubt. This is what makes things entirely difficult. Perception versus legality, yet perception appear to have the upper hand on this case. Perception has in fact become reality.

The Public’s choice of governance is set on very high ideals yet bereft of reality. Corruption has always been a key issue. While I have noted in the past that the corruption and inefficiency seen in the present government is largely systemic in nature and less on personality traits, the “revolutionary government” paradigm as espoused by the leftist ideologues are outmoded and failed experiment (just look at the China, the defunct Soviet Union, Yugoslavia and East Germany) alternatives. Likewise, the ‘transitional government’ version proposed by the rabid ex President Joseph Estrada’s supporters is an utter charade, as it primarily aims to reinstate the disgraced leader or its protégés, more than the upliftment of the people.

It also seems that alot of experts fail to address the issues of corruption and inefficiency to MORE government. In fact, ironically most of the proposed solutions are geared towards the issue of MORE government. They mistakenly believe that efficient and corruption free leadership is merely due to personal credibility, integrity and competence. In a system where MORE government thrives, particularly, excessive legislation and regulation, superfluous bureaucratic layers, red tape and interventions, is a system that breeds the patron-client relationship, nepotism, rent seeking complex, cronyism and administrative bribery, or in short, the fundamental causalities of corruption. To aptly quote a local congressman, ``You can put the Pope in Malacañang, and he will still fail because the system will make him fail.”

What could probably be done is to improve on our democracy, to paraphrase Moeletsi Mbeki, deputy chairman of the South African Institute of International Affairs and the brother of South Africa's president, Thabo Mbeki, on his views of how to improve Africa, through a model that could empower “not just the political elite but private-sector producers as well”. Maybe just maybe, a shift to the Parliamentary form of government could be a step towards the much needed reformation.

With a cornucopia of resources and talents the country is blessed with, the public continues to deny its existence and rather focus on instant gratification, dramas and controversies. Until we know how to count our blessings, we are preordained to damnation.

Morgan Stanley's Daniel Lian: Philippines: Political Uncertainty Stirs Fiscal & Economic Reforms

Previously Morgan Stanley economist for Southeast Asia Daniel Lian saw bullish prospects in the country, today with a brewing political storm, Mr Lian, does a turnaround to cite a ‘decisively bearish political economy’ and sees significant headwinds for the country, quoting Mr. Lian’s entire article…

Philippines: Political Uncertainty Stirs Fiscal & Economic Reforms

Daniel Lian (Singapore)

Growth Expected to Retard

Several macro economic indicators point to a slowdown in economic growth in 2005, following robust momentum of 6.1% YoY last year. Government spending remains low, in line with the fiscal consolidation strategy. Meanwhile, consumption growth hinges on household spending (80% of GDP), supported by soaring remittances from overseas Filipino workers (the second-largest source of foreign currency following export earnings). Given the weak macro fundamentals of towering prices, high unemployment (11.9%) and reduced government spending on social development projects, the shield provided by these remittances is likely merely to delay the coming economic slowdown, in our view.

Another strong indicator of slowing growth is the decline in export growth. Exports are a key driver of GDP growth (50% of GDP). A slump in the global electronics cycle and falling demand from key export destinations – also adversely affecting other export-led Asian economies – are likely to lower both export earnings and allied private consumption significantly, in our view.

No Structural Change in the Deficit

We believe the recent improvements in the budget deficit are due largely to the continued squeeze in government expenditure. As a percentage of GDP, government spending has fallen from 19.6% to 18.7% in the period 2002 to 2004 accounting for 68% of the improvement in fiscal balances, as revenue collection has expanded by a mere 0.4% of GDP. In addition, what increase there has been in tax revenue has resulted from culmination of the cyclical upturn, whereby increased income levels have generated higher tax. However, the 1Q05 GDP slowdown to 4.6% YoY vs 6.1% in 2004 marked the end of this cyclical upturn, in our view, and we expect 2005 growth to shrink to 4% YoY.

The lack of structural improvement in the country’s fiscal accounts is reflected in the low tax effort ratio. Improving GNP in 2004, due to 6.1% growth in GDP and increased remittances from overseas workers, hasn’t improved tax revenue and the tax effort ratio remains low. Any positive impact from structural reforms to the tax structure would have been reflected in a rising tax effort ratio.

Heavy Debt Burden Raises Concerns

Another serious concern as regards the deficit is its unproductive use to finance consumption rather than investment. Government borrowing reached PHP 242.5 billion in 2004 to meet its financial requirements (27.5% of total expenditure). Thus additional tax revenue is required to cut the country’s dependence on borrowing and reduce the debt stock.

Persistent budget deficits since 1998 have resulted in the accumulation of both domestic and external debt (PHP2.0 trillion and PHP1.8 trillion, respectively, in 2004). The pinch has been the sudden surge in public-sector debt service payments. Interest and principal payments on the public-sector debt stock have doubled from 32.1% of total national government expenditure in 1998 to 67.8% in 2004.

Moreover, the Philippines’ ability to repay debt is considered low, because of its moderate growth path, high inflation and low saving rate. Poor tax collection is exaggerated by tax evasion, with corporates alone evading around 45% of taxes due (see our report Pulling Up Its Fiscal Socks at Last?, April 1, 2005). This makes it tougher to reduce the foreign debt burden. Consequently, government debt as a percentage of revenue exceeds 500%, substantially more than the country’s indebted Asian counterparts.

Fiscal Constraints Hamper Development Plans

We believe declining public expenditure could cause infrastructure investment bottlenecks, jeopardizing the Philippines investment appeal. Poor infrastructure increases the cost of doing business and reduces the country’s attractiveness to investors. Hence we think an increase in productive expenditure is required.

However, limitations such as high interest payments and the need to lower the budget deficit, are keeping productive expenditure low. The country’s soaring outstanding debt has raised its interest payment liability to 29.4% in 2004 and consequently lowered the share of other expenditure. The increase in the cost of servicing public debt has sharply reduced national government expenditure, particularly on social services (social service expenditure is reported to have fallen from 35% of total national government expenditure in 2000 to 23% in 2004).

Education, health and poverty and unemployment eradication programmes are among the public disbursements that are contracting to meet the government’s conservative expenditure targets. This has led to sluggish growth in the skilled labour pool and widespread unemployment (as high as 11.9%), forcing Filipino workers to seek jobs overseas. Moreover, high levels of corruption further increase the cost of doing business in the country.

Political Economy Is Decisively Bearish

Following Ms. Arroyo’s decisive electoral victory (she won by 1 million votes) last year and the commencement of her reform programme (which centred on raising sin taxes and VAT, as well privatizating the key state energy producer), the market turned decisively bullish on the Philippines. The economy’s relative outperformance since the beginning of 2Q04 and a small rebound in investment inflows have strengthened the bulls’ resolve that this story is finally turning around.

However, we remain cautious on the structural outlook (see Upgrading Growth and Upping the Ante on Reform, September 3, 2004). We were not surprised that President Gloria Arroyo upped the ante on reform or that she chose to focus on the fiscal sector – we view this as the primary structural economic malaise of the republic and a worthy priority for the government. Nevertheless, the financially strapped government has caused a significant drag on the country’s saving rate, and in turn slowed capital formation and economic growth.

We would note that, while fiscal reform is a critical first step, the structural impediments confronting the republic stretch beyond mere government finances. In our view, Ms. Arroyo must strengthen the rural development platform and engineer a new economic strategy that places emphasis on the long-term development needs of the urban poor, resources, SMEs, and the government and corporate sectors. We believe that Thailand’s dual track strategy, for example, has a lot of relevance for the Philippines. Concomitantly, Ms. Arroyo needs to overcome the institutionalized rent-seeking complex that permeates Philippine society. We also see a danger that the country’s powerful oligarchic interests could derail the President’s efforts.

The political events of the past three weeks strengthen our belief that the country’s structural impediments stretch far beyond mere economics. The oligarchs remain extremely powerful, and the market has begun to speculate over the political future of the President. Whether or not Ms. Arroyo survives this latest challenge, the country’s economic outperformance may already be coming to an end as exports across Asia are rapidly slowing down and the recent political uncertainty may once again hamper remittances and domestic investment. In a nutshell, we think the republic continues to face significant economic and political challenges.

Bottom Line: Political Uncertainty Stirs Fiscal and Economic Reforms

The Philippines’ two strong pillars of economic growth stand on unstable fundamentals, pointing towards an economic retardation this year, in our view. The Asia-wide export slowdown is likely to cause a drop in export earnings and allied private spending. Private consumption is being supported largely by overseas Filipino workers’ income, deferring an economic slowdown.

The low tax effort ratio implies that improving tax revenue has been due not to structural factors, but to the culmination of the cyclical upturn, with increased income levels generating higher tax and curbing the deficit. We expect this to fade with the slowdown in economic growth.

Successive deficits have led to the accumulation of a large debt stock and doubled the country’s debt service payments over the last six years. Besides a moderate growth path, high inflation and a low saving rate limits the Philippines’ ability to repay debt. Additional tax revenue is required to cut the dependence on borrowing and lower debt.

Interest payments on debt have lowered the share of productive expenditure on infrastructure and social development projects. A lack of such development programmes has led to sluggish growth in the skilled labour pool and higher unemployment. Moreover, rising business costs due to the lack of infrastructure facilities and widespread corruption make the investment climate less favourable.

While fiscal reform remains the critical first step, political events unfolding over the past three weeks strengthen our belief that the structural impediments stretch far beyond mere economics. Looking ahead, we perceive political uncertainties as well as significant economic challenges for the republic.

Learning from the Africans: World Bank Commentary: 'How to Empower Africans'

Learning from Africa’s experience

There have been numerous unsolicited advices on how the Philippine Government should be run coming from the extreme left to the far right, from establishing a rule of the proletariat to a military junta led ‘revolutionary government’. So far none of these political solutions seems to address how these forms of governance would uplift the domestic economy.

The article below by Moeletsi Mbeki, brother of South Africa’s president Thabo Mbeki, published in Wall Street Journal Europe and quoted by the World Bank writes of their experience; the structural ailments and proposed cures…something quite relevant to the Philippine experience. I guess we should take a leaf or two from them…

World Bank Commentary: How to Empower Africans

In a commentary published in the Wall Street Journal Europe, Moeletsi Mbeki, deputy chairman of the South African Institute of International Affairs and the brother of South Africa's president, Thabo Mbeki, writes that as the G8 summit approaches and the leaders of the developed world contemplate huge increases in aid to Africa, we must ask ourselves what has become of the billions of dollars already poured into the continent. Africa remains wracked by poverty and disease. At the root of Africa's problems are ruling political elites that have squandered the continent's wealth and choked its productivity over the last 40 years.

The list of abuses is long and impressive. African political elites have systematically exploited their positions in order to line their own pockets. They have given favors and won influence through the funding of huge loss-making industrialization projects. They have exploited the natural resources of their countries and then transferred profits, taxes and aid funds into their own foreign bank accounts at the same time that they ran up enormous debts to finance their governments' operations.

What were the results of those predatory policies? According to the World Bank and the International Monetary Fund, Africans are poor and getting poorer. The World Bank noted, "Despite gains in the second half of the 1990s, Sub-Saharan Africa enters the 21st century with many of the world's poorest countries. Average per capita income is lower than at the end of the 1960s. Incomes, assets and access to essential services are unequally distributed. And the region contains a growing share of the world's absolute poor, who have little power to influence the allocation of resources."

Successful development in Africa will not be achieved by throwing more fuel on the flames. Merely handing more aid money to African governments only reinforces the pattern of abuse. The key to development lies in a dynamic private sector. For a country to produce more, private individuals must generate savings and plow those savings back into the production process in the form of new and improved techniques, processes and products. Africa's private sector is predominantly made up of peasants and, to a lesser extent, subsidiaries of foreign-owned multinational corporations. But those groups are exploited by the unproductive political elites who control the state. Africa's private sector is powerless because it is not free to decide what happens to its savings. Were the peasants free to retain that surplus capital, they could invest it in improving their production techniques or diversifying their economic activities.

Future development in Africa requires a new type of democracy -- one that empowers not just the political elite but private-sector producers as well. It is necessary that peasants, who constitute the core of the private sector, become the real owners of their primary asset: land. Private ownership of land would not only generate wealth but help to check rampant deforestation and accelerating desertification. The so-called communal land tenure system, which is really state ownership of land, ought to be abolished. Moreover, peasants need direct access to world markets. The producers must be able to auction their own cash crops rather than be forced to sell them to state-controlled marketing boards.

Africa needs new financial institutions that are independent of the political elite and can address the financial needs not only of peasants, but of other small- to medium-scale producers as well. In addition to providing financial services, those institutions could undertake all the other technical services that are not being provided at present by African governments, such as crop research, extension services, livestock improvement, storage, transportation and distribution to make agriculture more productive. Such changes could for the first time bring into being a genuine market economy that answers to the needs of African producers and consumers.

African governments currently acknowledge the role of good governance in stimulating economic growth. However, they are still doing little to address the fundamental problem of the enormous power imbalance between the political elite and private sector producers. African governments must spend more time addressing that problem rather than impressing foreign governments, including those of the G8, with inflated accounts of democratization on the continent, writes Mbeki.

Moral Ascendancy, Legitimacy and Revolutionary Government

Moral Ascendancy, Legitimacy and Revolutionary Government

``A revolutionary government! There are two words which sound very strange in the ears of those who really understand what the social revolution means, and what government means. The words contradict each other, destroy each other. We have seen, of course, many despotic governments, -it is the essence of all government to take the side of the reaction against the revolution, and we have a tendency towards despotism. But such a thing as a revolutionary government has never been seen, and the reason is that the revolution-meaning the demolition by violence of the established forms of property, the destruction of castes, the rapid transformation of received ideas about morality, is precisely the opposite, the very negation of government, this being the synonym of "established order", of conservatism, of the maintenance of existing institutions, the negation of free initiative and individual action. And yet we continually this white black bird spoken of as ifs "revolutionary government" were the simplest thing in the world, as common and as well known to all as royalty, the empire, and the papacy!- Peter Kropotkin(1842-1941), known as “the Anarchist Prince”

When the still beautiful widow of the deceased defeated presidential candidate, Fernando Poe Jr. (FPJ), and movie icon to millions of adoring Filipino fans, Ms. Susan Roces Poe bellowed ``The gravest thing you have done is that you stole the presidency, not once but twice”, this statement made me wonder what the gist of the political crisis is all about.

While most pundits in the political spectrum imputes the adverb ‘TWICE’ to the Supreme Court’s ruling that have sealed the fate for doomed presidential hopes for the deceased aspirant-candidate, aside from the actual election exercise itself, ‘TWICE’ could have also meant that the first incident could have been the ascension of power by the present incumbent via the EDSA II revolt which ousted FPJ’s dearest friend, the disgraced former President Estrada.

However for both instances, it appears that the underlying motivation for the ‘TWICE’ word has LESS to do about the alleged cheating but rather MORE of as retribution to the personal affront by the couple after having lost the elections, cheated or NOT. In other words, the alleged cheating has been merely utilized as an excuse to expound on their desires for personal vengeance.

Analyst Ronald Meinardus in the Japan Times aptly writes that ``“You either win elections, or you are cheated," is a popular explanation in a country in which electoral fraud and vote manipulation remain a depressing routine.” In Philippine setting, it would be quite naïve for one to believe that election frauds are attributable to a single party who would be entirely culpable for any caper. In the local level alone, elections are usually conducted by the traditional ‘guns, goons &/or gold’ routine by the contending parties. Put differently, the question should not be the simplistic case of ‘if there is cheating’ but rather ‘has there been cheating enough to subvert the sovereign will of people?’

The recent wiretapped debacle underscores this relative conflict of perceptions…for the opposition the tapes represent as the absolute culpability of the Mrs Arroyo that she cheated, much as what was declared by Mrs. Roces-Poe and in the words of a Bishop ``The government has turned itself away from the people. It has lost moral and legal authority...it must step down to avert the imminent bloody confrontation growing out of the people’s sufferings.”

As to the defenders of the administration, to quote economist Solita Monsod in her latest article, ``are adamant in insisting that nowhere in those conversations can we find even a hint of an order from Ms Arroyo for Garcillano to cheat in her favor. Furthermore, they ask: How could the two possibly have been conspiring to cheat when by the time those conversations took place (May 25 and after), all the certificates of canvas, or COCs, (except for seven municipalities in Lanao Sur) had already reached Congress, and were beyond Garcillano's reach? In other words, how could Garcillano alter those COCs?”

It is further argued that the margin of votes between Mrs. Arroyo and Mr. Poe was about 1.1 million, such that even if the entire votes led by the President in Mindanao of about 400,000 were transferred to FPJ’s tally, the outcome would NOT have been altered. And to vouch for the validity of the electoral victory Malacañang claims that that NAMFREL, Parish Pastoral Council for Responsible Voting (PPCRV), the US embassy and over 100 foreign observers have confirmed that Mrs Arroyo won ‘fair and square’. In addition, that the opposition during the canvassing period had not file ANY case before the precinct and municipal levels to contest any anomalies but sounded all the fury of ‘manipulation’ during the canvassing of the COC or the Certificate of Canvass’s at the august halls of the Congress. Finally, that the Supreme Court twice affirmed the victory of the incumbent.

So which is which? Obviously in the perceptions game, the opposition has clearly gained so much ground to undermine the effectiveness of the incumbent’s governance who is left on the defensive, however, does the wiretapped hullabaloo, which is subject to arbitrary interpretations, serve as sufficient grounds enough to overwhelm the previous processes or evidences to justify the call on the administration as illegitimate?

Why has the impeachment case submitted by Atty. Oliver Lozano pooh-poohed by the mainstream opposition as a ‘MORO-MORO’? If it is thus illegitimate why haven’t the proper charges been filed to the courts of law by the mainstream opposition? As the Philippine Daily Inquirer correctly observes, ``The opposition thinks it won't be able to impeach the President because impeachment is a political process, and as far as the political configuration in Congress is concerned, everything is stacked against it. This is a defeatist attitude and foolhardy. Surely the President cannot be expected to chop her head off and offer it on a silver platter to the opposition. We simply have a lazy opposition.”

According to another bishop, ``The basis for [replacing Mrs. Arroyo] should be on legal and moral grounds. If there are questions and doubts [regarding the results of the 2004 polls] then the succession will also be immoral." Does the ‘hallowed representative of the God’ also imply that votes for the 12 senators, mayors, governors, and the local councilors which emanated from the same sacrosanct ballot on May 10 of 2004 be likewise considered as lacking the ‘legal and moral grounds’? What would be the basis for such distinction then? The words of Christ through them?

What if the current ‘consensus perception’, triggered and shaped by mostly emotions, are wrong? Doesn’t it do more injustice than what is called for? What then is morally ascendant? Is the proposed ‘national council’ to be chaired by former President Estrada to take governance once PGMA resigns as espoused by Senator Jinggoy Estrada morally ascendant?

Or what in particular would represent as legitimate, the mere fickle perceptions of the crowd? Wasn’t the 1987 constitution ratified by the overwhelming majority? So why the unjustified aversion towards VP Noli de Castro when he was duly elected in accordance to the 1987 constitution, and has not tainted by the recent wiretapping scam? Why then the clamor for a revolutionary government when the constitutional grounds provides sufficient provisions for leadership changes?

Where at least for President Estrada was delivered a semblance of due process via the impeachment process, what deviates today from then? Because he or she says so?

Former President Cory Aquino’s appeal to observe the constitutional process has been scoffed at by several quarters, mostly by leftist groups, including a defeated presidential candidate who said that even she benefited from it (which means that because she benefited then the opposition should benefit too!). Unfortunately for the evangelist turned politician, it appears that political ambitions has clouded his reasoning such that he promptly forgets that Cory’s revolutionary government was formed arising from the transition from an authoritarian ‘dictatorial’ government to a democratic one. Post EDSA II was likewise an extension of the 1987 constitution. Today, we essentially or technically have a democratic government don’t we? In transition, according to the self-righteous messiahs, to what type of government do we turn to?

Here is what former UP President Francisco Nemenzo has to say about the proposed provisional revolutionary government, “What we really need to do is call for a provisional revolutionary government…We have to reduce the power of the elite. Only then can democracy have a chance to flourish in this country.” Wow, the rule of the proletariat, which is typical of most of the Revolutionary Governments, as enshrined in the Marxist-Lenin doctrine.

Of course, there are some notable successful revolutionary paradigms pre Marxist-Lenin eon such as the American Revolution which was an independence movement against colonialist Britain and the French Revolution which was a movement against the French monarchy of King Louis and Marie-Antoinette, the rest contemporary revolutionary governments were largely anachronisms to economic development such as Sudan, El Salvador, Cuba, Lithuania, Libya and of course, as reminded by a dear client our favorite bugaboo Juan and Evita Peron’s rule of Argentina.

In short, the proposed revolutionary government simply means taking inherently bigger risks for something that does not guarantee the amelioration of our dire economic straits or for the satisfaction of the people but rather for the interests of the select few who intends to lead. Be careful of what you wish for.

As for me, I would prefer that the incumbent, encumbered by too much political baggage to govern effectively, pave way for a new beginning, a healing through the constitutional process and not because of legitimacy or ascendancy concerns which are all perceptions based, unless a dramatic reformation can occur (which would take miracle!).

In the perceptions game, one can do no better than thespian personalities with their histrionic acts who accordingly would move in the pursuit for the betterment of the ‘people’. Previously, they functioned to perk up the crowd for the politicians, while today, they are the country’s self-righteous saviors. This vividly reminds me of ‘two signs of times’ axioms, one, that ‘the Road to hell is paved with good intentions’ and second, Samuel Johnson, as one of England’s greatest literary figures once wrote, ‘Patriotism is the last refuge of the scoundrel’.

IMF: Statement by IMF Staff at the Conclusion of the Post-Program Monitoring Mission to the Philippines

For the buffoons, who incessantly attempt to portray the country as in a state of ETERNAL PERDITION, this statement from the IMF shows of the recent progresses and as well as the risks we face. Unfortunately, for the politically polluted mind, this development is a virtual anathema...probably the IMF is in cahoots with the present administration…any wiretaps please?

Statement by IMF Staff at the Conclusion of the Post-Program Monitoring Mission to the Philippines

The following statement was issued today in Manila by an International Monetary Fund (IMF) mission:

"A Post-Program Monitoring mission visited Manila during June 9-22, 2005. The discussions focused on the macroeconomic and structural policy issues facing the Philippines. The mission's findings will be reported to the IMF Executive Board in September 2005, but the preliminary assessment is as follows:

"Considerable progress has been made with economic reforms in the last year. The passage of the expanded VAT law marks a major breakthrough in the reform process. Other significant achievements include long-overdue increases in alcohol and cigarette excises and power tariff hikes that will substantially stem the National Power Corporation's (NPC's) losses. With steadfast implementation, this package of measures should permit a major stride towards balancing the budget, reassure markets about the authorities' commitment to tackling the fiscal problem, and create room for needed development expenditures.

"The economy has also performed well, with GDP growth boosted by surging remittances and new-found vigor in tourism and business process outsourcing. Although high oil prices weigh on activity, GDP growth of about 4¾ percent is expected in 2005. The fiscal deficit has been placed on a downward path through resolute control over expenditures, while revenue collection is being assisted by the current crack-down on tax evaders. Foreign portfolio investment has responded favorably to the better fiscal news, while a pivotal ruling by the Supreme Court on foreign ownership of mining projects has improved prospects for FDI.

"Nonetheless, there are a number of risks in the outlook, including the potential for further increases in oil prices and a softening of foreign demand for Philippine exports, as well as the continued potential for adverse developments in international capital markets. Moreover, recent events have demonstrated the sensitivity of the economy to political uncertainty.

"Inflation remains above target, reflecting in large part the impact of supply shocks, and will likely remain elevated in the near future as the impact of transport fare hikes and VAT reform filters through to prices. The mission welcomes the Bangko Sentral ng Pilipinas' (BSP's) stance, as indicated when the policy rate was last raised in April, that monetary policy will be used to manage inflationary expectations and contain the impact of any second-round effects on prices. Given that inflationary pressures are expected to remain, the BSP should monitor price developments carefully and take action as appropriate.

"Looking ahead, successfully implementing the fiscal reform agenda will be important for reducing vulnerabilities and initiating a virtuous investment-growth cycle. While a significant reduction in the fiscal deficit is in prospect for 2005 and 2006, additional fiscal measures, such as the rationalization of tax incentives, will be needed to ensure achievement of the medium-term plans to balance the budget. It will also be important to increase the VAT rate as envisaged in January 2006 and to sustain the courageous campaign being waged against tax evaders. Moreover, other parts of the public sector, such as the government-owned and controlled enterprises (GOCCs), should be monitored closely to avoid shifting the burden of fiscal adjustment disproportionately onto the national government.

"Another priority is to press ahead with privatization of generation and transmission assets in the power sector and to continue to strengthen the regulatory framework to attract needed new investments into the sector.

"The mission welcomes the encouraging developments in the financial sector with the ongoing implementation of the Special Purpose Vehicle (SPV) framework, and particularly looks forward to early passage of the amendments to the BSP Charter that will strengthen legal protection for bank supervisors.

"The mission also welcomes the recent improvements that have been made to the statistical data, including the progress in consolidating the non-financial public sector debt data. Efforts to extend these data to earlier years as well as to complete the reconciliation of debt flows and stocks will be useful.

"The IMF will continue a close policy dialogue with the Philippine authorities in the period ahead in the context of Post-Program Monitoring."

CaseyResarch.com: FALLACIES OF NON-SKEPTICS

Fallicies, from caseyresearch.com, to avoid...

FALLACIES OF NON-SKEPTICS

Optimist or pessimist, atheist or believer—whatever your life philosophy, it can never hurt to apply an ounce of skepticism to everything you read, see and hear. We stumbled over the wonderful “Skeptic’s Dictionary” at http://skepdic.com and found some fascinating phenomena everyone should be aware of.

Forer Effect/Barnum Effect

This effect, discovered by psychologist Bertram R. Forer, lends itself especially to the field of commercial fortune telling, astrology, the enneagram, etc. Forer found that people have a natural tendency to strongly identify with vague and generalized statements about themselves.

In 1948, Forer gave his psychology students a personality test and then gave each one the same evaluation, which he had copied from a newsstand astrology column. The “evaluation” was filled with platitudes such as “You have a need for other people to like and admire you, and yet you tend to be critical of yourself. While you have some personality weaknesses, you are generally able to compensate for them. You have considerable unused capacity that you have not turned to your advantage. Disciplined and self-controlled on the outside, you tend to be worrisome and insecure on the inside.” And so forth.

Forer asked his students to rate the accuracy of the evaluation with grades from 0 to 5, with 5 being an “excellent” assessment, and 4 a “good” one. The class average was 4.26. The test has been repeated many times over the decades, with an average of 4.2, or 84% accuracy.

Forer explained this phenomenon with human gullibility; the Skeptic’s Dictionary offers hope, wishful thinking, vanity and “the tendency to try to make sense out of experience” as explanations. It is also called “Barnum Effect” in reference to P.T. Barnum’s notoriety as a psychological master manipulator.

Concorde or Sunk-Cost Fallacy

The human tendency to throw good money after bad, even though it has become clear that there is nothing to gain. “When one makes a hopeless investment,” says the Skeptic’s Dictionary, “one sometimes reasons: I can’t stop now, otherwise what I’ve invested so far will be lost.” To us, this seems to be especially true for gambling of all sorts… which is why so many gamblers on a “bad streak” proceed to lose their shirts.

The SD explains such behavior as “a pathetic attempt to delay having to face the consequences of one’s poor judgment… a way to save face, to appear to be knowledgeable, when in fact one is acting like an idiot.”

Famous examples are Lyndon B. Johnson, who kept submitting troops to Vietnam, even long after he had determined that the war was a lost cause, as well as France and Britain financing the construction of the Concorde, a beautiful and great-working airplane, but financially a bottomless pit… in which the two countries nevertheless kept pouring their resources.

Texas Sharpshooter Fallacy

Named after the storybook Texan who shoots at a barn and then draws a bull’s eye around the bullet holes.

“Politicians, lawyers, and some scientists tend to isolate clusters of diseases from their context,” states the Skeptic’s Dictionary, “thereby giving the illusion of a causal connection between some environmental factor and the disease. What appears to statistically significant (i.e. not due to chance) is actually expected by the laws of chance.”

A good example is the 1999 New Yorker article by Dr. Atul Gawande, “The Cancer-Cluster Myth”. He describes various incidents of “neighborhood cancer clusters” that prompted official investigation. For example, in the ‘80s, the California farming town McFarland made headlines “after a woman whose child was found to have cancer learned of four other children with cancer in just a few blocks around her home.” Investigators found six more cases in the small town with a population of 6,400. The presumed culprit was a groundwater well contaminated with pesticides, which led to lawsuits against six chemical companies.

McFarland is not an exception, says Gawande, who cites other examples of neighborhood cancer clusters. But it’s a fact that clusters of disease—even those six or seven times higher than expected—in any one neighborhood may well be within statistically normal limits… especially with a hard-to-pin-down disease like cancer. In the case of McFarland, for example, it turned out that the eleven sick children had nine different forms of cancer. Even though it’s counterintuitive, stresses Gawande, clusters like this are most likely just a coincidence.

Most people think it’s strange when they toss a coin and heads comes up four times in a row, says the SD. But there is really nothing strange about it—in a series of 20 tosses, there’s a 50% chance of getting four heads in a row.

Remember: Reality can sometimes be stranger than illusion. Maybe that’s why so many people prefer the illusion.

***
The recent wiretapping controversy looks very much like the 'Texas Sharpshooter Fallacy'.