Philippine Corruption: Not Because Of Political Culture, But Due To State Capitalism

In watching the live coverage of the unfolding Libya unrest at the Al Jazeera.net, a news segment reported on the 25^th celebration of People’s Power revolution here, in the Philippines.

Al Jazeera interviewed a local political analyst who said that the People Power has not vanquished many of the deeply rooted deficiencies, primarily corruption, in the Philippine society mainly due to “political culture”.

This is a vivid example of misreading the effects as the cause.

Where the definition of Culture, according to wikipedia is “the set of shared attitudes, values, goals, and practices that characterizes an institution, organization or group”, this only means that what has been represented as “political culture” is actually the embedded incentives that has shaped “the set of shared attitudes, values, goals, and practices” of society.

Obviously, corruption as a culture didn’t emerge mainly from tradition or religion, but from arbitrary “noble sounding” anti-competitive and redistributive welfare laws which has underpinned the local political economic platform.

Given the social democratic ethos of the local society, where government has been romanticized as supposedly the nation’s “would be” saviour, and where the failure to attain government utopia has been attributed to the lack of virtuosity, then obviously, but unknown to many including the above expert, economic dependence based on non-price sensitive political distribution of resources only nurtures and feeds on corruption.

This is because society’s main energy have been directed towards lobbying, in order to secure politically granted economic rents, instead of competing to satisfy consumers via voluntary exchanges.

And that’s how corruption emerges—by determining society’s winners and the losers, the politically granted winners rewards or shares the rent with the political authorities.

So the maxim “it is NOT what you now but WHO you know” encapsulates the operating environment under the political culture of overregulation and patron-client based corruption or state/crony capitalism.

Thus the expectations of a virtuous government represents as no less than signs of ignorance of how the politics of violence has and will always be wielded. And that’s why we keep getting the same set of recycled leaders to the dismay of the many wrongheaded deluded idealists.

The only way to reconfigure “political culture” is NOT to elect or put to power a virtuous central planner, which is an illusion and a source of sustained frustrations, but to divert the energy or activities of the population from politics to productive voluntary exchanges.

We have to remember that governments comprise of human beings who suffers from the same flaws as everyone else, i.e. subject to personal biases, lack of knowledge, operates on preferred networks and comfort zones, has their own distinct and most likely flawed perception and interpretation of events and etc...

Importantly politicians and the bureaucrats are also self interested agents whom are subject to personal preferences and needs—career, self esteem or etc…

The only difference is that they have the mandate to use force over us.

So the power to control and the human aspect of supposed “public servants” makes them vulnerable to asymmetric (patron) exchanges with select economic clients.

Thereby the only way to eradicate corruption is by reducing dependence on political power as means to distribute economic opportunities, which alternatively also means expanding society’s reliance on the price based market system.

We can start with the junking of many of inequitable and protectionist laws and streamlining of the others.

In short, let the rule of law and respect of property rights prevail, culture will follow.

Remembering The Philippines’ People Power

In the midst of the ongoing string of upheavals in MENA, today, the Philippines celebrate our version of nonviolent revolution which also toppled a dictator, popularly known as People Power, an event that occurred in 1986 or 25 years ago.

And in the spirit of Étienne de La Boétie, the early proponent of nonviolent resistance and civil disobedience, I quote Dr. Antony Mueller’s poignant comment on the ongoing revolution in Libya,

All it takes for government to fall is not to follow orders. Just stop doing what you're being told and the state will wither away and dictators will stand naked.

Though yours truly was an avid participant of both People Power and People Power 2, I was lucky to be part of a portrait taken by a magazine for an airline called 'Mabuhay ' during People Power 2.

But no same luck or remembrance for the original People Power.

Example of How the Web Neutralizes Propaganda

At the Library of Economics and Liberty Blog, Professor David Henderson writes about the psywar recently employed by the US government through the New York Times.

He writes,

Glenn Greenwald has an excellent piece telling us what the New York Times essentially told us if anyone cared to notice: the New York Times admits that it enabled the U.S. government's lying about a CIA agent in Pakistan named Raymond Allen Davis.

The U.K. newspaper, The Guardian, broke the story but stated that some U.S. newspapers were aware of the facts too but hadn't disclosed them. The New York Times fessed up. Its reporters, MARK MAZZETTI, ASHLEY PARKER, JANE PERLEZ and ERIC SCHMITT, wrote:

“The New York Times had agreed to temporarily withhold information about Mr. Davis's ties to the agency at the request of the Obama administration, which argued that disclosure of his specific job would put his life at risk. Several foreign news organizations have disclosed some aspects of Mr. Davis's work with the C.I.A.

This exactly is what we talked about in The Web As Foundation To The Knowledge Revolution. I noted that

1. Government’s traditional medium in disseminating its political agenda has been through mainstream media. (Here, the New York Times)

2. Government will try to censor and manipulate information flow but will be negated by competing sources. (here, UK’s Guardian exposes the New York Times)

3. Democratization of knowledge or competing sources through the web has been responsible for the neutralization of propaganda.

Professor Henderson opens with this striking statement:

“Thank goodness for international trade and the web.”

We will see more of this in the future.

Incentives Driving People To Social Networking As Facebook

Adam Hartley at the MSN says that having thousands of Facebook friends don’t reflect on the friendship in the traditional sense because our capacity to have friends is limited.

Mr. Hartley who calls Facebook friend acquisition as “Friend Farming” writes,

According to evolutionary anthropologist Robin Dunbar, 150 is the largest number of people that you can share trust and obligations with, explains psychologist Dr Rebecca McGuire-Snieckus.

That magic number of 150 friends is thought to be a cognitive limit to the number of friends we can maintain, the psychologist adds. "While people can boast hundreds and thousands of friends on Facebook, Dunbar would say that it is impossible to feed and nourish all of these relationships."

So having friends in excess of the Dunbar 150 suggests that social networking has hardly been about friends but about something more.

Mr. Hartley adds, (bold highlights mine)

Recent academic research suggests there are four primary motivations for going on social networking - social (meeting friends, having an online community); information (finding jobs and useful knowledge); entertainment (FarmVille!) and self-status seeking. It is this latter urge that drives friend farming.

Well different people have different incentives to join Facebook or other social networks.

To my account, some of my non-traditional friends, who shares the same ideas, ideals, values or philosophy as I, have been a fountain of informational wealth. In short, I learn alot from them and I am very appreciative of that.

Of course shared interest also means an online community, which is what I have been saying all along as the vertical flow of communication and knowledge dispersion. People with shared interest can exchange ideas directly which results to increased knowledge. Local knowledge is now globalized through Facebook and Twitter. Our personal interests are channeled by niches or by specialization. We form tribes despite the geographical distance.

And there are others whom I also gladly got to know through online games.

And importantly, they connect me real time to my family wherever they are.

While it may true for some or for many where adding or farming friends could be a form of status signalling, I find the zeitgeist of social network sites as expanding the human experience.

And it is why social networking will change the way we live.

Quote of the Day: Innovation Drives Productivity Growth

Again here is another of Professor Donald Boudreaux’s provocative wisdoms, which makes my quote of the day... (bold emphasis mine)

Economic growth is overwhelmingly the proximate result of innovations that allow fewer workers to produce more output – thereby releasing that most precious of all resources, human labor, for use in producing goods and services that earlier were too costly to produce.

Philippine Competitiveness: Cut Capital Income Taxes

Duanjie Chen and Jack Mintz writes, (special thanks to Cato's Chris Edwards for this)

Many industrial and emerging countries have reduced their corporate tax rates over the last decade or so. The largest rate cuts were in Austria, Bulgaria, Canada, the Czech Republic, Germany, Greece, Iceland, Ireland, Italy, Netherlands, Poland, Slovakia, Turkey, Egypt, Georgia, Kazakhstan, Lesotho, Mauritius, and Singapore. America’s largest trading partner, Canada, cut its statutory corporate rate from 43 percent to 29 percent, which helped to bring down its effective rate from 44 percent to 21 percent, according to our calculations. Substantial cuts were also achieved in Australia, Belgium, China, Denmark, Finland, Korea, Luxembourg, Mexico, New Zealand, Taiwan, and the United Kingdom. Taiwan cut its statutory rate from 25 percent to 17 percent in 2010, and now has an effective rate of just 10.9 percent.

A number of countries are initiating or phasing-in further corporate tax-rate cuts in coming years, including Australia, Canada, Ecuador, Israel, Japan, New Zealand, and the United Kingdom. In some countries, such as Israel and Japan, these are straight rate cuts. In other countries, such as New Zealand and the United Kingdom, rate cuts are being paired with base-broadening measures. When these reforms are in place, the average effective tax rate in 2014 will be 18.0 percent in the OECD and 17.4 percent among all 83 countries.

Philippine corporate tax rate is at 32%.

It’s positive to note how the world has been trying to stay competitive by lowering tax rates. This has been consistent with the growth explosion of global trade.

I hope the trend continues in spite of the recent crisis. And it would certainly be positive if the Philippines joins this global bandwagon.

It’s one of the many things that can be done to incentivize capital formation, build on research and attract foreign direct investments that could lead to more jobs.

As a side note, I honestly detest the rubric “jobs”, but this has been the mainstream vernacular. I’d rather say “economic opportunities” which is where jobs come from anyway.

And I hope that politicians will stop diverting people’s attention over to education policies. Education hasn’t been the answer, a big number of unemployed have been college graduates. Instead, the Philippines need to be competitive.

Back to taxes, in the Philippines, on top of corporate taxes there are capital gains and final withholding taxes on dividends. So you have a double whammy on capital income. Is it not a wonder why investments are low? And the hurdle rate is high?

While my ideal scenario would be to abolish all these taxes, this isn’t likely to be politically palatable, so I would suggest to start with the reduction of corporate tax rate or get taxed once by abolishing either capital gains or the final withholding tax on dividends.

Of course, there are other many factors that could lead to competitiveness, such as repealing obstructive regulations and avoiding distortions from arbitrary interventions, but this would be a topic for another post.

Overall, competitiveness boils down to economic freedom.

Knowledge Revolution: Globalizing Education

Technology enhanced globalization forces are likewise enveloping the education industry.

This from Ben Wildavsky at the Foreign Policy (bold emphasis mine)

But over the long term, exactly where countries sit in the university hierarchy will be less and less relevant, as Americans' understanding of who is "us" and who is "them" gradually changes. Already, a historically unprecedented level of student and faculty mobility has become a defining characteristic of global higher education. Cross-border scientific collaboration, as measured by the volume of publications by co-authors from different countries, has more than doubled in two decades. Countries like Singapore and Saudi Arabia are jump-starting a culture of academic excellence at their universities by forging partnerships with elite Western institutions such as Duke, MIT, Stanford, and Yale.

The notion of just how much a university really has to be connected to a particular location is being rethought, too. Western universities, from Texas A&M to the Sorbonne, have garnered much attention by creating, admittedly with mixed results, some 160 branch campuses in Asia and the Middle East, many launched in the last decade. New York University recently went one step further by opening a full-fledged liberal arts campus in Abu Dhabi, part of what NYU President John Sexton envisions as a "global network university." One day, as University of Warwick Vice Chancellor Nigel Thrift suggests, we may see outright mergers between institutions -- and perhaps ultimately the university equivalent of multinational corporations.

In this coming era of globalized education, there is little place for the Sputnik alarms of the Cold War, the Shanghai panic of today, and the inevitable sequels lurking on the horizon. The international education race worth winning is the one to develop the intellectual capacity the United States and everyone else needs to meet the formidable challenges of the 21st century -- and who gets there first won't matter as much as we once feared.

Read the rest here

Two comments

In terms of education, people should focus on the general or macro trend more than just looking and interpreting localized developments. With the introduction of the internet, what used to be local has increasingly become global.

I’d also say that there is more to expect than just the above. We’re likely to see an explosion of web based education that would bring down the cost of education, which subsequently should increase demand for it. The vertical flow of knowledge and communication process will enhance the Hayekian Knowledge revolution, education will be part of it.

Moreover, the web will possibly rearrange or restructure many aspects in the education-job process such as decentralization and more diversification (curriculum), more specialized jobs, reconfigure recruitment and hiring process, adaption of new certification or recognition standards and etc….

Example Of How The Welfare State Destroys The Individual

This is a graphic example of how the welfare state destroys the individual or the intermporal effects (short term gain, long term costs) of welfarism.

Gerry Garibaldi writes [hat tip: Dan Mitchell] (bold emphasis mine)

Connecticut is among the most generous of the states to out-of-wedlock mothers. Teenage girls like Nicole qualify for a vast array of welfare benefits from the state and federal governments: medical coverage when they become pregnant (called “Healthy Start”); later, medical insurance for the family (“Husky”); child care (“Care 4 Kids”); Section 8 housing subsidies; the Supplemental Nutrition Assistance Program; cash assistance. If you need to get to an appointment, state-sponsored dial-a-ride is available. If that appointment is college-related, no sweat: education grants for single mothers are available, too. Nicole didn’t have to worry about finishing the school year; the state sent a $35-an-hour tutor directly to her home halfway into her final trimester and for six weeks after the baby arrived.

In theory, this provision of services is humane and defensible, an essential safety net for the most vulnerable—children who have children. What it amounts to in practice is a monolithic public endorsement of single motherhood—one that has turned our urban high schools into puppy mills. The safety net has become a hammock.

And this applies to the Philippines as well.

For instance, in terms of demographics and education, public schools relieve the personal responsibility of the “poor” to have children, since the entrenched impression is that the state provides “free” education. So family planning becomes less of a priority because of such skewed incentives. I have personally spoken to many ‘poor’ people whose brains appear hardwired to the state’s ‘free schooling’.

And this seems backed by statistics which shows that the highest fertility rate is seen among the poorest in the society.

And this also departs from the layman’s opinions who mostly see that the “poor people have less to do except make babies”.

Of course, I am quite sure that there are many other laws which contribute to the distortion of people’s behaviour. The essence of which are that these laws (welfare programs) essentially abdicate personal responsibility and are substituted for government dependence, with the provision that individual freedom is compromised or curtailed in return for “safety nets” and votes.

Furthermore, people hardly know that there is no free lunch and such law distorting behaviour will eventually lead to an entitlement crisis. Yet politicians and their apologists continue to sell promises which they don't intend to fulfill.

Free Trade As Unilateral Policy

A popular objection to free trade is when a nation's trading partner is perceived as having to apply mercantilist policies, then trade relations is seen as uneven. Thus the popular oversimplified political justification is to go tit-for-tat via "fair or managed trade" which is euphemism for implied protectionism.

This we say is wrong. Even under such conditions Free Trade should be a unilateral policy. Why?

As Professor Don Boudreaux lucidly explains, (bold highlights mine)

By erecting tariffs that dampen competition, mercantilism encourages home producers to become unresponsive and uncreative. By issuing subsidies paid for with higher taxes, government debt, or distortionary monetary policies, mercantilism helps exporters only by inflicting more-sizable damages on the nation’s economy writ large. By turning the national government into a bazaar for the buying and selling of monopoly privileges, mercantilism deflects entrepreneurial energies away from building better mousetraps and into building politically advantageous political connections. And by raising prices in the home market, mercantilism makes consumers poorer as well as makes producers who rely upon imported inputs less efficient.

Well said.

[update: Earlier what I thought as saving as in a draft, I mistakenly published-thus the garbled commentary]

Cognitive Dissonance: Associating MENA Political Crisis Or Oil Prices With Weak EM Equities

Listening to media and to their “experts” or to mainstream chitchats will give you a false impression of what’s been happening.

Some would claim the Middle East has been causing market turmoil.

On the other hand, others will claim rising oil prices has hurt the EM equity markets.

Let’s put into perspective the reality of the current situation as seen by the above chart. (pls pay close heed)

By the way, here is the time line of the MENA’s (Middle East and North Africa) revolt against autocracy.

The best view for this interactive chart is to go the Wall Street Journal here

The important point is to show you WHEN all these began—January 9^th. (you may want to include Algeria’s food riot 3 days earlier)

So what do all these tell us?

-The fall of emerging market equity prices began last December as OIL prices in general continued to climb. In fact, the initial downturn of EM equities coincided with the WEAKENING of oil prices. But oil reversed and rallied.

-Emerging equity markets has been on a decline WAY BEFORE the domino like political crisis in the Middle East and Africa (marked by the blue vertical line).

-Oil prices have been on the rise WAY BEFORE the MENA Political crisis

-The US S&P 500 has been on a winning streak and only materially declined yesterday.

So has rising oil prices and or the Middle East crisis has caused the decline in EEM? The answer is clearly NO!

The correlationship of the Middle East crisis, oil and Emerging markets appear to be tenuous, i.e. correlations have been starkly weak.

Yet to argue that Middle East or High Oil Prices equals WEAK global equities is no more than cognitive dissonance or in my terminology popular “superstitions” or in Taleb’s lingo, “Negative Knowledge”.

People are simply trying to grope for an explanation and would take any events to confirm or to read by the market’s action.

Instead the role played by the Middle East Crisis to the current EM equity infirmities has been as an AGGRAVATING CIRCUMSTANCE to an already existing condition.

Those who took action because of the alleged Tunisia-Oil-Equity relations are plain LUCKY, for the simple reason that to argue base on this premise has been simply false.

I’d like to further add that to my observation NO EXPERT PREDICTED this MENA political crisis to happen or unfold as it has today.

While the MENA crisis has been long overdue, and has been predictable, as current political structures and system are simply unsustainable, what has been unforeseen is the timing and the scale of contagion.

Take for instance, Dr. Marc Faber, as previously pointed out, rightly predicted on the weakening of the emerging market stocks in the end of 2010. But he didn’t foresee this political crisis unfold (although his prediction of an Israel-US air strike on Iran since has not materialized. Generally speaking, he’s been spot on).

So current conditions have only coincided or buttressed Dr. Marc Faber’s general perspective of the weakening of emerging market equities.

Bottom line: the MENA crisis serves only an aggravating circumstance, not the cause of weakening EM equities.

I’d like to add that MENA political crisis is an upheaval against dictatorship regimes whom had been US puppets.

Yet violence is likely to remain local, as the incumbent autocracy will stubbornly resist relinquishing power which they see as an endowed entitlement.

Nevertheless, it is a positive outlook to see people start to be appreciative of freedom or liberty, even if many have misplaced ideas about what constitutes genuine liberty.

In watching a live interview broadcast in Aljazzera, two Middle East experts seem to acquiesce on the root of the unrest: economics—where the current system has only channelled wealth redistribution to the privileged political class at the cost of the public.

However, in contrast to common impression about Islam Dr. Mark LeVine says that he’s been amazed by how Islam authorities have been urging people to revolt peacefully in spite of government actions.

So while there may be some risks of a militant Islam theocracy taking over, he thinks that this may be overrated.

I agree, people are starting to learn about the difference between top-down and bottom up political structures. Thus, this is no reason to be bearish.

Note: People believe whatever they want to, some to the point of deluding themselves.

I am interested in positive knowledge or what works. This means reading through all the facts rather than selectively taking in facts that only conforms to a preconceived conclusion.

Video: Repairing The Nation’s Balance Sheets By Limiting Growth of Government Spending

Cato’s Dan Mitchell has a nice video showing examples of the actual experiences of different nations in restraining government spending which has resulted to a reduction in budget deficits and likewise augmented their respective economic growths.

Says Mr. Mitchell,

These success stories from Canada, Ireland, Slovakia, and New Zealand share one common characteristic. By freezing or sharply constraining the growth of government outlays, nations were able to rapidly shrinking the economic burden of government, as measured by comparing the size of the budget to overall economic output.

Maria Lourdes Aragon: Another Celebrity Sensation From Globalization?

Just like Charice Pempengco and Journey’s Arnold Pineda before her, Canadian based 10 year old Filipina Maria Lourdes Aragon looks likely the next celebrity sensation as a result of the web enhanced globalization evolution.

This from OMG.yahoo

Lady Gaga was overcome with emotion after a video of a 10-year-old fan performing a flawless rendition of "Born This Way" hit the internet and Access caught up with Maria Lourdes Aragon to bring you all the details on this budding web sensation! …

Thanks to the wonders of modern technology, the Grammy Award-winning singer saw Maria's video tribute less than 24 hours after the young fan had posted it. Gaga then re-Tweeted the video to her followers early Thursday, writing, "Can't stop crying watching this. This is why I make music. She is the future."

The reason I have been pressing on this is to demonstrate how the web has virtually cut the geographical distance and directly connected people or increased social interactions without the traditional layers that would have limited discovery and access to required information.

And this isn’t just in seen in celebrities. Goods and services and most importantly ideas have likewise fluxed in such a horizontal manner where knowledge, which used to be localized, has now been globalized. In terms of knowledge, the world is now everyone’s oyster.

And this is why, in contrast to the obstinate views of top-down analysts and the ideological neo-luddites, the unprecedented spread of the People Power phenomenon in the Middle East and Africa, have caught almost everyone by surprise.

The internet, like the printing press, has and will serve as the most critical instrument for the spread of the Hayekian knowledge revolution or Alvin Toffler’s Third wave, as epitomized by the newly discovered celebrities bypassing traditional talent recruitment channels or as seen in the People Power near synchronous phenomenon in MENA.

These are structural changes occurring at the fringes which people hardly notices (yes they see the changes but they hardly understand its mechanics and implications).

Like it or not, these changes will inevitably shape our future (commerce, lifestyle, culture and politics).

The Middle Of The Road Policy Of A Local Free Market Group

I was delighted to learn about the existence of a “free market” group in the country, especially that it seemed to have several prominent members.

But when I read further and saw that the same group acclaimed or endorsed the leadership of the local central bank for “steering” the economy and for producing “low inflation”—my enthusiasm faded. I got turned off and dismayed.

Suggesting that central banks can “steer” the economy essentially destroys the free market principle. Doing so suggests that socialism is superior to the free markets. If central banks can steer the economy, then why the heck bloviate about free markets at all?

There are many aspects to quibble with central bank operations, but the most important facet is the manipulation of interest rates.

Tinkering with interest rates represents a form of price control that causes price distortions which subsequently produces bubble cycles. In addition, maneuvering interest rates impels for indirect redistribution: from savers and creditors to debtors.

So essentially a central bank that dabbles with interest rates does this to promote the local banking cartel, (banks are financial intermediaries so lowering of interest rates attracts borrowers or clients for the industry) at the expense of the other industries and the consumers.

So what’s the essence of free market here? What you have instead is a banking cartel buttressed by state capitalism that essentially privatizes profits and socializes losses. (You will see this when a crisis surfaces)

As for low inflation, policies have intertemporal effects. Previous low interest regime was not due to central bank policies but due to many factors as globalization and technology aided productivity gains. Today’s rampaging food and energy prices are an offshoot to manipulated artificially suppressed interest rates, which promotes simulated unnatural demand, that will cause another global, if not, domestic crisis.

Thus, crediting central banks for current policies represents a naive and very narrow time oriented viewpoint.

It is of no wonder why free markets precepts in the Philippines have been denigrated.

They are founded on tenuous framework, which frequently gets obfuscated with the social democratic platforms.

In short, the free market principle is severely compromised and selectively and conveniently applied. This also means that the accommodation of the middle of the road policies such as the endorsement of central banking is a misguided way to promote free markets. It would seem like the devil who uses the Bible in order to mislead Christian devotees.

As the great Ludwig von Mises wrote,

The middle-of-the-road policy is not an economic system that can last. It is a method for the realization of socialism by installments.

Video: 10 Core Principles of Classical Liberalism

Dr. Nigel Ashford of Senior Program Officer at the Institute for Humane Studies (IHS) at George Mason University, explains the 10 core principles of the classical liberal & libertarian view of society and the proper role of government (via learnliberty.org):

1) Liberty as the primary political value
2) Individualism
3) Skepticism about power
4) Rule of Law
5) Civil Society
6) Spontaneous Order
7) Free Markets
8) Toleration
9) Peace
10) Limited Government

Update: Read in the following link Ralph Raico's magnificent article on "Austrian economics and Classical Liberalism"

Here is the intro:

Classical liberalism — which we shall call here simply liberalism — is based on the conception of civil society as, by and large, self-regulating when its members are free to act within very wide bounds of their individual rights. Among these the right to private property, including freedom of contract and free disposition of one's own labor, is given a very high priority. Historically, liberalism has manifested a hostility to state action, which, it insists, should be reduced to a minimum (Raico 1992, 1994).

Austrian economics is the name given to the school, or strand, of economic theory that began with Carl Menger (Kirzner 1987; Hayek 1968), and it has often been linked — both by adherents and opponents — to the liberal doctrine. The purpose of this paper is to examine some of the connections that exist, or have been held to exist, between Austrian economics and liberalism.

Quote of the Day: Rape is About Power

On the sexual assault and beating CBS reporter Lara Logan suffered during the Egyptian Riots, writes Amanda Taub of Wronging Rights…

“the idea that Lara Logan was "more at risk" of sexual assault because she was attractive is laughable. I'd be interested to know what fuckability threshold women should stay below in order to be safe from rape. Could Logan have just added some thick glasses? What if she had spinach in her teeth? How about if she gained 20 pounds - then would she be safe from the mob of 200 people who apparently decided to subject her to a prolonged beating and repeated sexual assaults because her delicate beauty stirred their romantic longings? Give me a break. Rape is about power, not how cute the victim is.”

Indeed.

People Adapt To Climates, Intervention Not Required

That’s the message of Matt Ridley and Indur Goklany, as they write against relying on climate models to argue for political interventionism. (bold emphasis mine)

Was this because we controlled the weather? No. It was because we adapted to it. So even if extreme downpours do increase, death rates as a result of them will continue to decline so long as we continue to get more people access to roads, telephones, houses and information. It’s like malaria: it retreated rapidly in the twentieth century despite rising temperatures, and it will retreat rapidly in the twenty-first century despite rising temperatures.

As the above figure shows, globally the average annual death toll from all extreme weather events is about 35,000. Compare this to the hundreds of thousands of excess winter deaths that occur annually. Perhaps we should try to control winter before we tackle climate change! Oddly enough, while we may not be able to control the weather, in the U.S., millions have done the next best thing—they have migrated from colder northeastern climes to the warmer southwestern states. This, according to a paper in MIT Press’s Review of Economics and Statistics by econometricians Deschênes and Moretti, is responsible for 8%–15% of the total gains in life expectancy in the U.S. population from 1970 to 2000.

Read more of their splendid article here

Emergent Signs Of People Power In China

The Web based People Power revolution appears to have diffused into China.

From AP/Yahoo,

Jittery Chinese authorities wary of any domestic dissent staged a show of force Sunday to squelch a mysterious online call for a "Jasmine Revolution," with only a handful of people joining protests apparently modeled on the pro-democracy demonstrations sweeping the Middle East.

Read the rest here

I’m not sure if any People Power movement would sell to the average Chinese today, if China is indeed experiencing an inflation based economic boom. The next crisis (bust) would look fertile for this.

However, Austrian economist Dr. Antony Mueller is right,

You can't stop a revolution once it's time has come. Repression does not work in China just as it did not work in the Middle East.

China’s top-down political system and her attempt to bottom-up the economic system looks rife for a head-on collision course.

And it’s just a matter of time.

Capitulating Deflationists: It’s John Mauldin’s Turn

Like Nouriel Roubini whom I pointed out earlier, we see another deflationist throwing in the proverbial ‘towel’.

From ‘Fisherian’ John Mauldin,

It takes at least 12 months (or longer) for monetary policy to work its way into the economy. The current small rise in inflation is not due to QE2. That will show up later. It appears to me the deflation war, at least for the time being, is won (the next recession will bring that worry back). But now, it is time for the adults at the FOMC to stand up and say stop the printing presses.

More and more celebrity gurus appear to be capitulating.

Usury Prohibition: Medieval Crony Capitalism

During medieval Europe, the Roman Catholic Church via Pope Benedict XIV promulgated usury prohibition or Vix Pervenit: On Usury and Other Dishonest Profit—where charging interest rates on loans were condemned as a sin.

Guess who profited from the prohibition throughout those years?

From Mark Koyama* (hat tip: Café Hayek) [bold emphasis mine]

The usury prohibition created monopoly rents which made it possible for the Church, the state and international merchant–bankers to benefit from the suppression of usury. It was this shared interest that made the usury prohibition a self enforcing institution. It cemented a partnership between the leading merchant–bankers, secular rulers, and the Church, and because it shaped the beliefs and expectations of medieval society as a whole, it generated behavior that reinforced and perpetuated its own existence.

So the church integrated the role of the ‘baptist and the bootlegger’ which essentially converted her moral positions into laws that generated economic windfall for them. Of course, this was not restricted to the church , who acted as a political patron, but had to be backed by a vested economic client seen in “international merchant bankers”-manifestations of patron client relations.

In short, the usury prohibition laws engendered crony capitalism-the medieval ‘church’ edition.

Then and today, the nature of economic rent hardly makes any difference. Only the participants has changed.

*Evading the ‘Taint of Usury’: The usury prohibition as a barrier to entry

MENA Revolutions Are Not People Power!

That’s according to some pundits who claim that unfolding events in the Middle East and Africa have not accounted for as People’s Power.

They allege that these upheavals are politically organized aimed at destabilizing the existing regime for the benefit of some scheming insiders.

How valid are their assertions?

From today’s New York Times, [bold highlights mine]

In Bahrain, the day started out with a lull, as both sides appeared to have been rattled by the violence of the past week, in which at least seven people were killed. The leaders of the major opposition parties called off the protests for Saturday, telling the public to stay home in an effort to lower the temperature.

But in what appeared to be a measure of who controls the movement now, the people ignored their ostensible leaders. Marchers set out from villages and the city center and by midday converged on Pearl Square.

The police met them with tear gas and rubber bullets. Young men collapsed in the road and others ran for cover, but people kept coming.

The police fired again.

Then the government blinked, perhaps sensing that the only way to calm a spiral of violence that claimed more lives with each passing day was to cede the square to the protesters.

I guess the main concept of people power revolution to these pundits is one of outright bloodshed modeled after the early 20th century (highlighted by centralized political philosophies).

From the above account, nevertheless, they seem totally out of touch with present reality.

So much for top-down thinking.