John F. Kerry In The News

While it is still red-hot, allow me this rare opportunity at political punditry as the US mid-term election ushers its last 7 suspenseful days.

Campaigning in California, Sen. J. F. Kerry said the following before an audience of largely young college students:

"You know, education, if you make the most of it, if you study hard and you do your homework, and you make an effort to be smart, uh, you, you can do well. If you don't, you get stuck in Iraq."

In a nano-second, the whole world of media and blogosphere exploded like an unexpected IED.

The debris has not settled and cleared yet, since the ensuing crossfires from all sides continue to be exchanged. Sharp explosive retorts delivered in assumed righteous indignation and equally assumed justified anger fill the air.

So, let’s all move way from the scene of carnage and take a long and detached view.

Even if we assume that John Kerry hates or despises the military to the core of his soul, he is not going to articulate that publicly whether with subtle or not so subtle intent, or even comic inference. That would be as close to a political hara-kiri as one can get especially in these waning days of the frenetic campaigns. He is not the polished politician that everybody labels him to be if he does not know this.

So, let us take it for what it obviously is. He simply misspoke, using a badly constructed and limply delivered sentence. And culling from his subsequent pronouncements, an equally bad analogy of comparing not studying hard to the situation of a president who is waging a failed and protracted war in Iraq.

So, why is this happening to him?

He is supposed to be the clever and polished debater/speaker as proclaimed and shown during his last run for presidency.

Maybe, he was just plain tired and not thinking too sharply?

We, I’m sure, would have expected that kind of extemporaneous speech gaffe to come from a less gifted politician. Like a George W. Bush? Who, by the way, in his response, referred to the troops as “plenty smart”.

Since many of the people who read and analyzed the above Kerry statement believe that he was referring to the military as “stuck in Iraq”, including parents of soldiers, veterans, and many of their neighbors, he should just apologize to those inadvertently slighted. And get this entire thing behind and move on.

That shouldn’t be hard to do, even for a highly educated, intelligent, and experienced senator. Unless, there really is something more that Kerry is not publicly stating.

Four Horsemen of US Apocalypse? - Deficits. Medicare. Social Security. MedicAid.

If the United States government conducts business as usual over the next few decades, a national debt that is already $8.5 trillion could reach $46 trillion or more, adjusted for inflation. That's almost as much as the total net worth of every person in America - Bill Gates, Warren Buffett and those Google guys included.

This dire prediction comes from the GAO chief himself, the top government accountant.

Need perspective? Start tallying: all the houses owned by every American in every town and city, all the balances in deposit accounts, all the private vehicles, all personal valuables, etc., minus whatever every individual owes a third party - his bank, his neighbor, the garbage company, etc. I’m not sure if we should also include government assets like public buildings, freeway systems, parks, monuments, etc. But the current national debt of 8.5 trillion is dizzying enough to try to figure and comprehend.

BTW, there is an on-line US national debt clock that keeps track of this. If you are one who finds value watching grass grows, this one is a little better it grows faster and quicker.

Scary? Let’s add more scare factors, all originating from the same source, the GAO chief, Mr. David M. Walker, who is on a stumping tour till 2008 barking his message to any “boring” American audience willing to hear.

. . .just the interest payments on a debt that big would be as much as all the taxes the government collects today.

And every year that nothing is done about it, Walker says, the problem grows by $2 trillion to $3 trillion.

Medicaid and Medicare have grown progressively more expensive as the cost of health care has dramatically outpaced inflation over the past 30 years.

. . .a bigger deficit means a greater portion of each tax dollar goes to interest payments rather than useful programs.

Social Security will begin to run deficits during the next century, and ultimately would need an infusion of $8 trillion if the government planned to keep its promises to every beneficiary.

Unfortunately, the apocalyptic messages are hard to refute negatively.

So is the sky falling?

First, let us see. Social Security, Medicare and Medicaid translate loosely to government-subsidized social safety nets and government-provided health care. Aren’t these shades of the hallmarks of many European economies many progressives are prone to extol and desire?

Okay, so it is reported to us that Italy is on the brink of economic gridlock and the nascent Central European economies are reeling from heavy impositions coming from the EU parliament. And many EU economies suffer from anemic growth rates. But still, the world continues to spin and European countries continue to magnetize hundreds of millions of the world’s tourists to their shores.

All’s well? No really.

But what can be done United States-side?

GAO chief has short prescriptions for the looming fiscal crisis: Some combination of tax increases and benefit cuts.

Did he forget: bitter medicine for curbing runaway government spending to tame the Federal budget deficit?

What can he prescribe for the other twin, our trade or current account deficit?

There appears no easy and short answers and solutions on the event horizon.

Let’s pray Mr. Walker’s life span approximates that of the biblical Methuselah giving him ample time to extricate us from all these woes.

To his eternal credit, Mr. Walker refuses to lay total blame on any one administration, including the current one, but warns that if nothing is done expeditiously any claim by the current president to any legacy will be tainted by his inaction.

Mr. Walker ends: the status-quo is not an option!

OFWs: What They Can Do

Rediscovered my following essays originally posted to an email list group way back in late 2003. But on rereading are just as apropos now as then, especially with the recent selection of Dr. Mohammad Yunus, the father of micro-finance, as the 2006 Nobel Peace Prize winner.

Applying Applied Economics to Overseas Filipinos Case

Please allow me to put a different spin to all the inspiring inputs that you and the others have detailed in your and their posts.

But before anything else, having originally come from Mindanao, I would suggest that ascribing Filipino traits on a regional basis, in reality might be more conventional lore than fact. Thus, I believe it would serve well for all of us to point to them as simply Filipino traits, rather than qualities attributable to a particular regional area and its inhabitants.

With the foregoing set aside, I am of the mind that the individual overseas Filipino's ideal relationship to the old homeland, solely on the tangible level, can be plotted out using our standard double-entry accounting system. And in the process one can apply the practices of Applied Economics to bring relevant economic theories into actual practice.

For this particular purpose, the purely OFW Filipino may not be properly included since his/her intent is simply to earn abroad and spend locally. In the final analysis for them, no Philippine resources are permanently removed from the old homeland, since the "local investments" on each OFW are compensated with "earnings" returns.

But as you most eloquently advanced, most overseas Filipinos, most especially those who opted to permanently reside abroad, got to their present status initially or even subsequently using Philippine resources. Resources needed to file, apply, and get approval for their migration papers; transport/plane fare and related expenditures; financial resources needed for the initial months of job hunting, adjusting to new living conditions, etc; even skills and educational capabilities acquired in the old homeland, using local educational services, etc.; and more etc.

In fine, each affected overseas Filipino begins his new life in his new environs, owing a debt, a considerable debt to the old homeland. A debt, nonetheless, since it is reflected as a diminution to the overall value of the local economy. And for that reason, the country is rendered that much poorer and that much unable to provide for its own needs. In simple terms, the Philippines is poor because collectively it has very limited purchasing power. And this dearth of purchasing power is magnified and exacerbated by the millions of Filipinos who have participated in the ongoing exodus.

Fortunately, most of the debt can be quantified to a degree, even the skills and educational capabilities acquired and brought to bear in the new homeland to earn a living and participate in that country's prosperity. Is it not incumbent then for each concerned Filipino to make that accounting and to earnestly attempt to balance the books, if only for the sake of fairness and fair play? Love of country does not even have to be factored in. It's simply payment of debt, pure and simple.

To gauge the level of awareness to a similar issue, I once asked a group, directed specifically to those who opted to retain Filipino citizenship and thus, were still Filipino nationals and thus subject to all the Philippine laws pertinent to them, if they were still paying Philippine income taxes that were STILL REQUIRED THEN for every year of stay abroad. Only one took the challenge and answered in the affirmative. Admittedly, it was a hard and bitter pill to swallow. (Update: OFWs are now exempt from paying Philippine income taxes while earning abroad.)

In applying Applied Economics, the matter of sending consumer goods in balikbayan boxes to the old homeland may also be considered a rather counterproductive move economically. For every can of Spam sent, there is one less local luncheon meat product that may not be sold and consequently not produced, resulting in reduction of local capital inputs and labor requirements for such an item. Resulting further in lesser potential taxes to be collected. Needless to state, this is multiplied in the hundreds of millions of countless consumer items sent over all these years. An instance where the balikbayan box may be made tenable economically is when instead of consumer goods, capital goods are put into it, and thus will be used to produce more value and aid local productivity.

Why the dollar remittance should still be the preferred choice of contribution

Aside from being the most used and most acceptable currency in international commerce, the dollar is also most helpful to the Philippine economy. It not only keeps its international reserves in dollars, it also earns more through the process of foreign exchange conversion transactions. And if dollar remittances are channeled into the local banking system, as they should all be since it is required by law instead of through other "alternative" or black-market outlets, then the banking industry is that much more funded to lend money hopefully for more capital and productive projects. More dollars into the country also mean that the country is that much more financially able in importing hopefully again more capital goods for more production, rather than for more consumption.

These are a few of my personal but general and random thoughts on the matter of overseas Filipinos.

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It is very encouraging to get a positive response from this kind of talk, which as Ernie intimated is not as dramatic or eye-popping as the continuing saga of giggly (blank) and her well-rounded antics, and if I may add, not as consuming as all the political rumblings that have now taken hold of the entire country's consciousness. And even more so, because it originates from somebody who continues to cultivate his stakes in the old homeland, which in my agnostic view, is the more heroic stance rather than the more popular perception that leaving the country is, regardless of the motives or the urgencies. Pardon this little bit of heresy.

Lest we forget, what I say here, or most anybody else for that matter, cannot be anything new or earth-shaking, since most of these ideas should now be part of conventional wisdom and thus within reach of any thinking and well-meaning individual. Like prayers, what may be needed is to keep repeating and harping on them until action ensues.

In my own little ways, I do try to put into action as much as I am able to the ideas I enunciate here and thus, I do feel a certain comfort in bringing them out into the open. Thus, to pursue this line of discussion, here are more ideas and paths of action that are humbly recommended for the benefit of both homebound Filipinos and those overseas.

Arguably, every overseas Filipino must be feeling sorry for our beleaguered country; but I say, especially for those of us who have not undertaken any accounting and balancing of the book on homeland balance sheet, to feel instead a tinge of remorse. Feelings of sorrow could usually lead to bouts of depression and emptiness, or the like, but remorse normally leads to "restitution" to get into the path of resolution. Admittedly, many may feel a sense of helplessness toward really being able to assist. But this is not so, as we individually do have the means to be counted as able. And we will not necessarily be talking here about altruism, patriotism, charity, and other ennobling emotions, but strictly on the order of good and smart economic sense.

I for one am of the firm, though minority, belief that in the order of priorities set toward improving conditions in the country, Economics should take more precedence than Politics. Good governance cannot be expected to stand tall and stable under faltering economic conditions that have left many of the citizens, those who have not left the country, both hungry and angry, and of course, ignorant. Recent reliable stats peg the country's extreme poverty levels at 40-50%, with areas in Mindanao, especially in ARMM, registering 65% or more. It definitely could be worse now.

There is a common truism in macroeconomics that may be termed the rising tide theory and which is apt to our discussion. Simply stated it premises that while a rising tide will raise everything within its wake, the same may be said about raising the economic conditions of a place. A rising economic prosperity brings better education, more informed citizenry, better future expectations, and collaterally and inevitably, better governance.

What to do?

The Philippine Foreign Currency Deposit system has been in effect since the 1970's, though promulgating regulations may have changed over time. It is a known fact that dollar deposits are part of the deposit services of most CB-authorized unibanks, which are the commercial banks. Can euro-denominated accounts be opened, too? This I do not know but given the suddenly surging value of the euro against the dollar, one is inclined to believe it may soon be available, if not already. The ratio now hovers around 1:1.2 in favor of the euro.

What may not be common knowledge at this current time is that dollar deposits in the Philippines earn considerably more than, say, the US. A number of reasons may be attributable to his disparity but suffice it to say that such is the case at present.

Can the banking system in the Philippines be trusted? I can speak only for the two biggest private commercial banks since I worked with them for a time; and one was established in the 1800s. But the banking system should be one of the last bastions of stability and reliability in any country. Absent this and that country would be anathema, both locally and abroad.

These accounts can of course be opened while in the Philippines, but given the well-scattered branching of Philippine banks where overseas Filipinos congregate, it should not be a big stretch to assume that if there is a demand, these foreign subsidiaries of Philippine banks will only be too glad to open such accounts for such overseas clients.

No spare money to deposit?

Filipino community leaders abroad have always been unanimous in their praises for that model minority immigrant Filipino household that has out-earned most minority immigrant groups, and in some places, even outdistancing the majority group's gross take-home. That is the earnings side of the issue, now its time to upgrade the savings side of it. Americans are notorious for having an embarrassingly low propensity to save, and I suppose that necessarily includes the minority groups. This is where that spare money could originate.

The paycheck-to-paycheck reality, which admittedly is experienced by many, in my estimation, is borne more out of insufficient knowledge or tepid determination rather than due to compelling necessities. A lot of unnecessary expenses can be pared down, and for this the typical Filipino family, whether at home or abroad, is most adept and adaptable, or at least is malleable enough to be taught so or even forced to by circumstance.

A while back and here in the San Francisco area where the cost of living is arguably highest in the entire USA, I once tracked my actual living expenses, groceries and all, against periodic welfare payments made to recipients. I was quite amazed to realize how closely my family could have survived on those welfare payments. Just closely though, but not quite. Still, a surprisingly sobering revelation.

What are the advantages?

The expected advantages are legion. Here are some. Right off the bat after such an account is opened, more investible capital is injected into the economic mainstream, restricted only by the reserve requirements due this type of deposit liability. In other words, banks have a good portion of this deposit available for lending out to hopefully, productive endeavors.

Should the depositor instead desire to lend the money himself to a trusted relative, a partner, or whatever, to capitalize a business, the bank service of deposit hold-outs can be resorted to where a good portion of the deposit can be used to collateralize the loan, optionally including the partner/relative as co-maker. The dollar deposit remains untouched while the loan is released as a peso credit for both servicing and repayment. From experience, loans of this nature are normally much cheaper to secure and service compared to other types of loan.

What if the overseas Filipino needs funds from the account?

Just as the modes of inward foreign remittances to the country are quite easy, known and expeditious, so would the outward foreign remittances be. Again, once the demand is there, you can bet those foreign subsidiaries of local banks would be most willing to service them for a fee.

It is a sad commentary to point out that in the hinterlands of Mindanao and other blighted areas of the Archipelago, the local banking system which is supposed to fuel the engines of economic development, while continuing to maintain their presence there, have in droves retreated their local investments away from those areas into more urbanized areas where the expectations of profit are better. It has deteriorated to a point where they are not even able to plough back to their local economies, the same exact amounts of deposits that they rake him from those areas. At the very least, this is a huge slap against their avowed mission of pooling local deposits for investment locally. As illustrated above, this retreating trend needs not be irreversible since this new breed of depositors could determine to a degree where and how their deposits will be invested.

Amidst all these, results of studies upon studies about the poor and its predilections remain unheeded. By and large, THE POOR DO NOT NEED DOLE-OUTS. What they need is access to capital. The poor is not averse to paying back just debts/loans, they just need to be guided and taught how. Experts on micro-finance worldwide will only be too glad to furnish proof for these pronouncements.

So there you have it, on the rather long side. And we did not even touch on donations, contributions, or other normally commendable philanthropic devices that appear to be the path of choice nowadays. What we have envisioned is a gifting, that is not really a gift but an investment with expectations of reasonable returns, and which will keep on giving.

What Political Description Fits You Best?

Take this shortest political quiz from this site and find out where you stand.

My results show the following:

ACCORDING TO YOUR ANSWERS,
The political description that fits you best is...

CENTRIST
CENTRISTS espouse a "middle ground" regarding government control of the economy and personal behavior. Depending on the issue, they sometimes favor government intervention and sometimes support individual freedom of choice. Centrists pride themselves on keeping an open mind, tend to oppose "political extremes," and emphasize what they describe as "practical" solutions to problems.

The RED DOT on the Chart shows where you fit on the political map.

How People Have Scored
Centrist 33.26 %
Right (Conservative) 8.73 %
Libertarian 32.64 %
Left (Liberal) 17.45 %
Statist (Big Government) 7.92 %

Other Political Philosophies

Right (Conservative)
Conservatives tend to favor economic freedom, but frequently support laws to restrict personal behavior that violates "traditional values." They oppose excessive government control of business, while endorsing government action to defend morality and the traditional family structure. Conservatives usually support a strong military, oppose bureaucracy and high taxes, favor a free-market economy, and endorse strong law enforcement.

Left (Liberal)
Liberals usually embrace freedom of choice in personal matters, but tend to support significant government control of the economy. They generally support a government-funded "safety net" to help the disadvantaged, and advocate strict regulation of business. Liberals tend to favor environmental regulations, defend civil liberties and free expression, support government action to promote equality, and tolerate diverse lifestyles.

Libertarian
Libertarians support maximum liberty in both personal and economic matters. They advocate a much smaller government; one that is limited to protecting individuals from coercion and violence. Libertarians tend to embrace individual responsibility, oppose government bureaucracy and taxes, promote private charity, tolerate diverse lifestyles, support the free market, and defend civil liberties.

Statist (Big Government)
Statists want government to have a great deal of power over the economy and individual behavior. They frequently doubt whether economic liberty and individual freedom are practical options in today's world. Statists tend to distrust the free market, support high taxes and centralized planning of the economy, oppose diverse lifestyles, and question the importance of civil liberties.

It figures, for me. I am a registered Independent. Estimates show that 10% of the electorate are Independents.

Update:
Find out where Prof. Greg Mankiw stands.

Some Short Thoughts On The Upcoming US Elections

The US holds mid-term elections this coming November 7th, first Tuesday of the new month. A mere eleven days from today.

Positions up for grabs are from US Senators down to the lowest elected city official. Thus, there are technically no national referenda, but simply state-wide positions and issues to be contested and decided by the electorate. Though, during these very crucial and contentious elections, it might as well be an election or referendum on the current national/federal government.

All the issues being hotly tossed about, dissected, criticized, or defended are those that go beyond state boundaries. Issues that affect the entire nation, like the ongoing wars in Iraq and Afghanistan, illegal immigration, national or homeland security, ethical issues such as stem cell research, and of course, the state of the nation’s economy. No local issues with just local impacts here.

As individual voters then, it is quite easy to feel some degree of hapless confusion and helplessness in being able to affect the country’s direction based on the balloted choices for the upcoming elections. True, pundits like to deal on the long-term effects and repercussions that certain choices on the 2006 elections will have, still this sense of helplessness is felt especially in states where the odds and results are pretty much determined beforehand. Which candidates are assured to either retaining their positions or assuming their new positions.

Take California, for example, where I have resided for many years. This huge populous state is decidedly “blue” and thus, expected to vote Democratic. Not strangely enough, I have not heard much about the reelection campaign of one of the Democratic dynamic duo representing the state, nor from the virtual unknown Republican challenger from the opposite side. I am supposing, and I would be right on this, that it is as good a given that those two senators (Senators Feinstein & Boxer) will resume their exalted positions in the next Congress.

More than the hot contentious issues being debated and the hair-thin close races in many states, which have spawned ugly negative ads not seen in past elections, the main bone of contention for this election is the control of Congress. Which party is likely to wrest the majorities in both houses?

Right now, the Republicans hold sway in both branches of government, and one could say, even that of the third branch, the judiciary, through recent appointments successfully pushed through by the current administration.

But polls are showing the Democrats holding the upper hand in many contested states, as the election date draws nigh.

This will be the defining starting fight for this new century. Who will have control of the Congress, especially for the next two years, the remainder of the term for this lame duck administration? The president ends this second and last term and his sitting vice president has adamantly declared that he is not interested in the presidency.

Thus the presidential elections of 2008 will truly be a free-for-all, with no incumbent holding any kind of in-power advantage. And this will be the main event.

But on a much lowlier scale, I find myself for this election at an awkward position, having started a move of residence from one county to another. Thus, technically, I am still registered to vote in my old county, San Mateo, though I have spent considerable time in my new county trying to settle in.

Thus, for the few remaining precious time, I may have to acquaint myself with the candidates on the ballot, and the score of initiatives or propositions that will accompany the election.

And I must confess that the usually great fervor and honor felt during elections are a bit dissipated for this present exercise.

But I continue to be hopeful that collectively, the country will make the right decisions. Given the very pivotal role the country plays in the globe, it cannot afford to be complacent and nonchalant in its decisions and actions.

And as a last parting thought, the US in the midst of these very unsettling times both domestically and globally, finds its prominence and dominance challenged in all areas – politically, economically, and even militarily. It finds itself diminished in most areas even as it feverishly tries to defend itself against both just and unjust charges.

But these are not necessarily bad for the US. Maybe it is about time that other countries put shoulders to the plow and take up the slack. The US cannot be world’s policeman, defender, and deep-pockets country for eternity. Thus the emerging economic dominance of China, India, Singapore, and Australia, with the established participatory roles of Japan and the still consolidating EU, may augur well for a global future that today appears bleak and desolate.