Raiders of the Taxpayer's Money
How is the Philippine government going to avert a looming fiscal crisis, which has been mounting for years? Of course taxpayers will have to atone for the enormous debts run up by bureaucrats, legislators and managers of GOCCs. Others have pointed out that the best performing (and lightly taxed) sectors of the economy—exports and agriculture—deserve to assume a greater share of the burden. Shame on these people who do not appreciate the connection between little tax and high growth. [Full article]
Comments (14)
Thank you so much for writing this! I live in the Philippines and practically all hell is breaking lose here.
The government is attempting to solve our problem of having no money by spending more money! The Philippine Daily Inquirer says the President is planning on spending P6 billion on a food for the poor program!
We have no money and she wants us to have a WELFARE STATE?! Who is going to pay for this?!
The first time news of the impending crash hit, I wanted to ask mises.org for comments since its only the Austrian school that can save us from this Keynesian mess, but I couldn't upload anything, kept getting an error.
I have been urging my friends and neighbors to stop signing up for all these socialist bail-out-the-government programs that the State keeps coming up with (and incidentally spends more money on promoting and receiving nothing), and to start divesting ourselves of Philippine pesos and convert to a more stable foreign currency.
Unfortunately, everyone thinks that as long as we collectively stand behind the State, everything will be fine and that I am insane, unpatriotic, selfish, and heartless, for not wanting to risk my family's life savings on such idiocy.
Damn, I feel like I'm in an Ayn Rand story!
On the note of "a more stable currency," what do you guys suggest? I have most of my assets in silver and gold but these will be difficult to dispose in an emergency.
US dollars?
PRO: People here practically worship US dollars.
PRO: Better than the Philippine Peso.
CON: The Central Bank is now implementing new rules to prevent people from buying them (registration, must show passport, must have plane ticket, only travelers may buy dollars) and we need to go to the black market.
CON: Your money is backed by the same nothing ours is and by November, even I can see it losing value day by day...
CON: $100 bills are unacceptable in most banks.
EURO?
PRO: New currency, not much loss yet (for a fiat currency)
CON: Hard to get.
CON: Most Filipinos have no idea what it is.
UK POUNDS?
PRO: Stable (for a fiat currency)
CON: Hard to get.
Help!
Published: October 8, 2004 8:43 AM
RDC,
I'm sorry to hear of your plight. What you're suffering right now is what I imagine Americans and Western Europeans will be suffering in the future as no one will finance our governments' debt.
Regarding a stable currency: perhaps the nascent online gold accounts may be what you're looking for? You open up an account, exchange your money with one of many independent exchange services, and your account will then show how much gold (in troy oz.) that you own. If you want to buy anything through credit, or withdraw money in any currency available, it's a very easy process to do. The fees are a little high, but your money is backed by gold, and your bank account is located in a small, independent country, from which your government can not plunder your account.
There are a number of companies trying to get this going. They're listed below. And good luck to you and your family.
www.e-gold.com
www.e-bullion.com
www.goldmoney.com
Published: October 8, 2004 9:49 AM
Good article.
[Neophytes quickly learn that representatives are less interested in the sales pitch than the percentage cut in the transaction they will receive. A 40 to 50 percent rebate is an acceptable sum on anything from school supplies to medicines. Payments, made in cash, are usually transferred to the legislator or a designated third party at restaurants, hotels or homes.]
This is precisely how the Government of Canada works, although the rate of incidence and the percentage may vary by locale. Proportionate kickbacks are also handed out to the bureaucrats in the Ministry of Public Works who are overseeing the contracts. Perversely, government contracts from all federal ministries must be handled by the Ministry of Public Works - centralized corruption.
Financial analysts usually briefly mention Canada in favorable light, pointing out that the federal government has a balanced budget. But the truth is that the real spending, and the real fiscal distress, is happening at the provincial and local levels. Ontario - the largest and until now the richest province - has no way of balancing its budget without massive tax increases. Ludicrously, Ontario is considered to be a "rich province" which provides revenues to the federal government in order to redistribute to the "poor provinces" (every single other province except Alberta).
Filipinos are unsurprised to learn that their government is inefficient, corrupt and broke. Canadians are probably going to go into shock when they find out that no amount of "improved oversight" and "accountability" will save their beloved welfare programs.
A few months ago I heard an interview with a writer who had done some research on the Tennessee Valley Authority (TVA), a publicly owned electrical utility in the USA. He discovered that the corporation is insolvent, yet when he asked some Wall Street bond rating guys what was up, they told him they were unaware of the problems. My point is this: exposing corruption and fiscal problems in a third world country is all well and good, but it is really a Dog Bites Man story. Western investors probably have a lot more invested in corporations, cities, states and provinces in their own countries than they do in the Third World. Yet the story of the actual or pending insolvency of all these debt-laden entities is seldom told.
Published: October 8, 2004 10:05 AM
This is a great article. My wife (Filipino ex-pat) and I (American ex-pat) travel to and have business with the Philippines so we are quite familiar with the situation.
The Philippines has some of the worst infrastructure systems in the world - telephone, electricity,water and sewerage, roads are all poor when compared to other Asian countries and the Spanish speaking countries of South America (the Philippines is a former Spanish colony and has many of the same attributes of other former Spanish colonies). Unlike many South American and Eastern European countries there has been no real effort to privatize these infrastructure services. The services seem to be worse in Manila than the provinces. Phone service is frequently interupted as is electric service. Water frequently has to be trucked to homes since water pressure is frequently too low or non-existent. Raw sewerage is frequently channeled into canals and ultimately passes to the lakes and ocean. Garbage is disposed in empty lots where it is piled into large mountains of garbage. In spite of this the Filipinos are very friendly and intelligent people. It is like something out of an Ayn Rand novel.
Billions of dollars will be required to bring these basic infrastructure systems up to comparable international standards.
Published: October 8, 2004 6:11 PM
I like the prescription for national health:
Sell off government assets to pay as much debt as you can and then repudiate the rest of the debt.
Published: October 8, 2004 7:00 PM
From reading a few comments and from observing things here in USA, it seems that a few politicians are not crooks. If this observation is correct, why do taxpayers support such a system?
My guess is that's because taxpayers think that they have too much to lose. When that opinion comes into question, I suppose we can see a lot of changes which, not incidentally, will be far from peaceful.
Published: October 8, 2004 7:20 PM
Yes, like Dan De Roo says, the Digital Gold Currencies are the way of the future. My favorite is Pecunix -- they have the best security. Also look at http://www.allmart.ws and http://www.cambist.net for exchange services -- AllMart lets you use on-line gold to pay any merchant that takes a credit card (mises.org, for example!), and Cambist lets you mail out checks in exchange for gold. http://open2exchange.com is also very interesting.
Published: October 10, 2004 12:07 AM
It's unacceptable to try to wring blood from the Filipino taxpayer stone to pay these ridiculously high debts, but I find it hard to believe Austrians would advocate massive state fraud as a solution.
Perhaps instead they could turn over ownership of state assets to their creditors, abolish more government services, cut taxes, beef up their judicial system, and reform their corporate laws. That would open up the country to foreign capital investment, it could use the surplus tax revenue from the growth to pay down the debt.
- Josh
Published: October 10, 2004 3:34 PM
To Dan De Roo and Anonymous Coward...
Thanks for the suggestion, but e-gold won't work here. The Philippines is a cash and carry society and gold (and silver) grams are too valuable to use for daily items. A Philippine peso is equivalent to 0.0177683 US cents.
Most people here don't even like or accept credit cards and add extra charges if you persist. I need paper money... which fiat currency won't collapse too much in two years?
To Ohhh Henry...
Here in the Philippines, we don't put much stock in government so they always deliver our very nonexistent expectations. The rest of us solve our problems all on our own. Good news for all those anarcho-libertarians looking for an existing model (albeit de facto one).
Canadians have been trained to see the State as omnipotent, almighty, and supernaturally wise.
To Jacob Steelman...
Don't know where or when you last stayed here, but I haven't seen power interruptions or water shortages in almost ten years. Our current phone services (landline & mobile) I think are better than the United States offering cheap reliable services that even those on the poverty level can afford to own celphones.
Garbage is a problem though... find a way to make it profitable first, then we'll see it go away.
To Bud Wood...
You should feel so lucky. Most of our politicians are thieves, murderers, rapists, embezzlers, druglords, warlords, pimps, smugglers, and what not. Freedom of speech here depends on how bulletproof you are.
Our first gentleman steals public land, controls the national media.
Our vice president extorts money from corporations by threatening to "expose" trumped-up bad labour practices.
The President herself clearly stated once to my neighbour that she doesn't believe in the free-market.
To Wild Pegasus...
Man... you clearly don't live here. Nobody wants these government owned white elephants. You'd make more money dynamiting them and selling the assets to smelters.
Nobody in power will abolish anything, reform anything, or do anything because they are making billions skimming off the present system.
Contrary to popular belief, we have a lot of good laws, unfortunately nobody bothers to enforce them since it's more profitable to look the other way.
We don't have "surplus tax revenue" nor will have any in the future. What I see (now and in the future) are BMW's and Porches for all our officials' wives, mistresses, and children.
Why do you think the rest of us evade taxes? Either we keep our hard earned money or burn it in the street... which is the exact same thing as paying taxes. We don't benefit from it one bit.
Published: October 10, 2004 9:06 PM
Whoops... make that 1 Philippine peso = 1.77683 US cents
Published: October 10, 2004 9:09 PM
It's unacceptable to try to wring blood from the Filipino taxpayer stone to pay these ridiculously high debts, but I find it hard to believe Austrians would advocate massive state fraud as a solution.
Are you referring to Steven M.'s suggestion to "Sell off government assets to pay as much debt as you can and then repudiate the rest of the debt"? Presumably the repudiation part? The fraud was committed in the state borrowing in the first place. The only morally acceptable solution is to repudiate it -- I think the "sell off government assets to pay as much debt as you can" is the fraudulent part: those assets don't legitimately belong to the government, so it can't sell them.
Published: October 11, 2004 10:36 PM
RDC: Can you use foreign currencies? How about NORFED.org's silver-backed Liberty Dollar, then?
Published: October 11, 2004 10:37 PM
To Anonymous Coward...
The US dollar is pretty much worshipped here. It's recognisable and acceptable.
I use gold and silver the same way most people use long term time deposits... not as spending money except among friends and even then, not that much.
what I need is non-Filipino fiat paper currency that people here will accept... AND WON'T COLLAPSE FASTER THAN THE PHILIPPINE PESO.
The dollar is the default thing... but I'm not sure if it won't collapse after November.
I can't get Norfed here. And even if I did, the banknotes won't be acceptable to people.
The silver and gold liberty dollars on the other hand are simply worth their melt value and only will be accepted by smelters and coin collectors.
Welcome to the third world.
Published: October 14, 2004 7:41 AM
To Anonymous Coward...
The US dollar is pretty much worshipped here. It's recognisable and acceptable.
I use gold and silver the same way most people use long term time deposits... not as spending money except among friends and even then, not that much.
what I need is non-Filipino fiat paper currency that people here will accept... AND WON'T COLLAPSE FASTER THAN THE PHILIPPINE PESO.
The dollar is the default thing... but I'm not sure if it won't collapse after November.
I can't get Norfed here. And even if I did, the banknotes won't be acceptable to people.
The silver and gold liberty dollars on the other hand are simply worth their melt value and only will be accepted by smelters and coin collectors.
Welcome to the third world.
Published: October 14, 2004 7:41 AM