Why Higher Wages Make Economic Sense

Last May 1, the usual arguments of the business sector were unleashed with its central theme: No, business cannot afford wage hike. Beset with high cost and poor business climate, business simply cannot survive added cost of labor. How do we attract investments if we increase wages? Look at China and Vietnam. Didn’t they have a cheap labor policy? Aren’t they getting much more investments than us due to lower minimum wages?

As if the anti-wage-hike position isn’t entrenched enough, an army of economists follows with a recital of the dogma of “labor flexibility”. They say, wage level should be equal to the so-called “marginal productivity of labor” – which is economese for whatever the employer wants to pay them. Labor is supposedly not exempt from the law of supply and demand. Raising minimum wage will only increase unemployment, as it supposedly disallows all voluntary labor wage contracts that pay below the minimum wage. It will also introduce inefficiency in the labor markets, now faced with a "deadweight loss" due to the intervention of the government who will always fail to set prices right.

But why, if they are right, aren’t we attracting investments still? What explains Philippine firms’ low level of competitiveness? Why does unemployment remain high? The response has always been, never mind the workers, that it is not enough. Lower wages a bit more, then we’ll get the investments that would have gone to China. Lax regulations a bit more, and we’ll have more productive factories and viable businesses. Dismantle a little bit more unions, and businesses will be more efficient and will eventually increase their wages in the long-run.

This essay says enough.  It is high time that the government replace the failed “cheap labor policy” with a policy that increases wage income. In a time when self-rated poverty is worsening, prices of petroleum products remain high if not rising, and wages are not enough to even sustain a decent life for a family of five, no other proposal would be more just and fair than a proposal that increases the share labor gets from the economic pie.

The roadmap towards prosperity through increasing labor income is simple: Increasing wages will induce demand and increase labor productivity. Ensuring that workers are paid well, free to spend on non-basic commodities, and save for their future will facilitate the creation of a strong domestic market and large savings base which domestic banks can capitalize. Higher wages will increase capital-intensiveness of firms, increasing their productivity in the process. Rising corporate income will mean larger revenues for the government, which will pummel it back as welfare and unemployment support.

Let us elaborate.

Transforming the 'Southeast Asian Sea' into a 'Shared Regional Area of Essential Commons' by Rasti Delizo

Hence, the Southeast Asian Sea’s strategic mineral and aquatic resources cannot be claimed by just a few and in the name of ancient empires that have long ago disappeared into the library of world history.  In the context of today’s global environmental realities, the Southeast Asian Sea must by now be claimed by the many and in the name of a 21st Century world order shared by all of humankind. - Rasti Delizo

TRANSFORMING THE ‘SOUTHEAST ASIAN SEA’ INTO A 
‘SHARED REGIONAL AREA OF ESSENTIAL COMMONS’

RASTI DELIZO*
12 April 2012

The regionally contentious body of water predominantly known throughout Asia as the South China Sea can yet be transformed into a more mutually beneficial regional asset.  Geographically located in Southeastern Asia, this vastly huge oceanic area is a historically recognized maritime route which expediently acts as a gateway between the Indian Ocean and the Pacific Ocean.  Many governments currently acknowledge its vital importance due to a vast abundance of natural undersea resources with potential wells of alternative energy supplies.  And for obvious strategic reasons, this prime bio-diversity spot has long become a regional magnet of attraction to various littoral states and major powers surrounding the area.

As such, China, Taiwan and four ASEAN (Association of Southeast Asian Nations) member-countries are now contesting certain sections of the South China Sea for these same reasons. These territorial claims have characteristically alerted other powerful states and multilateral organizations to the pending disputes as they certainly have the potential to spark off a future military conflict.  Since such a war could further conflagrate the entire Asia-Pacific region and inevitably become a dangerous global threat, this overarching regional issue continues to remain a top priority question begging for an immediate solution.

Uganda be kiddin' me*: Kony 2012, Ugandan Oil Boom, and America's Next Bin Laden

A parody pic by a hadtodoittoo posted here.

Kony 2012 has been perceived by many as one of the most effective advocacy strategies in the recent age of viral memes and social networks. Created and launched by the non-government organization Invisible Children, it has a simple objective: to stop and arrest international criminal Josephy Kony of the Lord's Resistance Army in any way possible. It's strategy is simple as well: get as much international support to push the United States (and possibly other states - they are very ambiguous on this) to do its usual thing of saving the world. But an originally all-American movement, the mobilization of support will naturally target the US populace. It's tactic: a year long spectacle of raising awareness, selling campaign paraphernalia, lobbying and leveraging  important personalities, and finally, direct action on April - seemingly riding the fad of creative protest actions sparked by of Occupy Wall Street and the Tea Party.

Unfortunately for them, Kony 2012, which gained considerable success in its air war - million hits for its videos, #stopkony trending globally, and sparking a global discourse on Africa and the existence of Christian fundamentalist militias (not unlike that created by the joint US and Philippines forces during the late 1980s, but more on this later) - backfired. Various criticisms had been hurled, from the mild accusation of oversimplification and misplaced attention, to moderate criticism on its failure to highlight and expose Uganda's poor human rights record - in effect condoning or even supporting it, to a vicious assault on Invisible Children itself - exposing the fact that very little actually goes to Uganda and African nations. Then there is also its push for US intervention, which flies in the face of sovereignty issues and the reputation itself of the US military. There are more comprehensive criticisms here, here, and here. (All of these prompted Invisible Children to issue a reply here).

Invisible children graphic. Click image to see it.
Picture from the Guardian.

But, as we know, the issues can can still go deeper. For instance, we can think about how the Kony 2012 phenomenon is placed in the current political milieu. After all, Joseph Kony, the repressive Ugandan state, as well as "US-as-the-policeman-of-the-world" concept didn't emerge in a vacuum. There is always a historical and political context behind any phenomenon.

One of my most insightful friends Primo Morillo had this hypothesis about Kony 2012 and Uganda, a hypothesis I want to share with you. He proposed that Kony 2012's timing is impeccable - in fact, it coincides with the fact that there is recently discovered oil in Uganda. Verifying this assertion, I found out that there are indeed recent interests on a "Ugandan oil boom". This is what prompted me to write this post - which would center on Kony 2012 and the probable US interest on Ugandan oil amid rising oil prices, and its more important implication - that the US establishment is to create pretext for its petro-imperialism, similar to the demonization of Muammar Gaddafi. But I go further and propose that Kony is America's new Osama Bin Laden, meant to justify military intervention in resource-rich Africa.

Santiago's Bar Exam Result, UP Law Education, and the "Top Ten" Fetish

Recently, Sen. Miriam Defensor-Santiago was target of various attacks on her supposedly arrogance towards Atty. Vitaliano Aguirre of the prosecution team during the Corona impeachment trial. If we have been monitoring news, we may have already heard that Aguirre was cited in contempt after covering his ears during a tirade by Sen. Santiago, which included calling the prosecution team "gago" (stupid) for withdrawing the five of the eight articles of impeachment. While criticized for its perceived non-stellar performance, the "gago" (stupid) comment hurled to the prosecution was deemed by many as uncalled for, which may seemed to have given Aguirre the moral reason to reciprocate. Knowing Filipino's behavior towards perceived arrogance, Santiago must have already expected to be admonished publicly, even if she is simply acting out her extreme intolerance to what she perceives as incompetence.

But what troubled me is the propaganda pic below circulating in Facebook, apparently designed as an offshoot of the release of the 2011 Bar Exam results. It capitalizes on the fact that Aguirre got a higher score than Santiago:

An attack against Sen. Santiago circulating in Facebook. The one above is
circulated by a certain Ma. Stella A. Vizmanos 

The argument of the propaganda pic suffers from many loopholes. For one, difficulty in bar exams varies across the years. Compare, for instance, the 2001 and 2002 bar exams passing rate: 32.89% and 19.68% respectively. But let us leave it at that and focus on the essence: I don't think we should be equating achievement with grades, in law and in any other field. It gives a false impression to lawyers (as well as other students) that getting a high mark in the bar (or in any other exam) makes you a good lawyer (or professional). For all that people rant on her bar grades, Miriam is a recognized international and constitutional law expert. Prior to becoming elected in the International Court of Justice (ICJ), she was in fact a legal officer of the United Nations High Commission on Refugees.

This fetish on Bar Exam results as a barometer for a lawyer puts into light another issue, that no student from the University of the Philippines College of Law was able to make it to top ten in the recent Bar Examinations Result.

Corona and the Numbers Game (by Emmanuel Hizon)

Photo by Matikas Santos/INQUIRER.net photo.

Apologists of impeached Chief Justice Renato Corona asserted that they are not only winning the battle in the impeachment court but also the one that is being waged in the streets. This assertion stemmed from an alleged 7,000-strong pro-Corona mobilization that was held not long ago in front of the Supreme Court, and of late, a mammoth evangelical rally held at Luneta, which they said outnumbered all previous anti-Corona mobilizations organized by the different anti-corruption groups.

Minority action, one-dimensional

At first glance, the “big” pro-Corona rally held last February 8, 2012 in Padre Faura, which defenders of the chief justice boast and brand as the "true voice" of the public is somewhat impressive. But in retrospect, one can see that the said event is the action of a minority. Of course, the action of a minority is not necessarily wrong, that is not the intention of this piece. Rather, it wants to deconstruct the perception that is being peddled by Corona's spin masters that they are winning the numbers game in the streets.

Games, Politics, and Society

Should Syria continue its costly war against terrorism? Did Myanmar's junta make a good choice in letting Aung San Suu Kyi campaign for a parliament seat? Why did Ahmadinejad decide to disclose new nuclear projects amid apparent opposition of the US and NATO countries on its nuclear program? How will the Philippine Senate vote on the impeachment case of the Supreme Court Justice given the President's obvious preference?

The political arena is defined by such decisions on conflict and cooperation involving civilians, political parties, religious groups, social movements, corporations, and even revolutionary groups. The process with which one can arrive at a rational, well-thought-of decision in politics seems to be overwhelming, given the complexity of individual and social behavior. Several variables have to analyzed, and possible scenarios have to be completely scanned. To make things worse, the cost of wrong decisions can take a toll on lives, properties, and positioning. With all the complexity involved, is there a tool one can actually use to make political decision making easier?

Here comes "Game Theory" - a subfield in applied mathematics that deals with modelling "strategic situations" i.e. situations wherein an individual's success in making choices depends on the choices of others (Myerson, 1991). Emerging from the field of economics, game theory has been increasingly applied to analysis of political situations - gaining prominence during the Cold War between the United States and Soviet Union.

But game theory's application is not just limited in political science or economics. In fact, social morality and ethics may have evolved from social conventions that are, as will be explained later, "Nash equilibrium". For starters, check out the Saturday Morning Breakfast Cereal (SMBC) comic below:

  

That DVD Incident, Intellectual Property, and Innovation

This photo is being circulated in Facebook
 by a certain Jerry Ocampo. It may be part of
the systematic demolition job vs. Llamas.

This is related to an earlier article: http://bitly.com/plagiarismculture.

We all know that Presidential Political Adviser and known socialist Ronald Llamas is again the subject of another controversy – that of being caught buying “pirated” DVDs. We all know that he apologized (for putting the government in an awkward position) and that President Aquino announced that he will stay in office despite the protestations of the noisier members of the chattering class. But amid the brouhaha, the question of substance remains unasked: what should be our government’s policy on intellectual property?

Here is an unsolicited advice: the government can continue with the rhetoric against intellectual property “theft”, but it should be lax in its implementation. It’s simple: placate the international community by token efforts to address “piracy” (and even this can be staged – just set up a DVD booth and pretend to smash it in front of international TV) while letting the underground economy persist, providing millions of unemployed Filipinos a lifeline while keeping digital entertainment cheap.