Distributional vs Aggregate Gain

I came across Daphne’s narration of how people clog the bus door so as to be able to alight first, but ending up delaying everyone, including themselves. It immediately reflected me to the issue of distributional struggle and aggregate welfare gain.

The most glaring example is always free trade. Protectionist barriers benefit the inefficient steelmakers in the US, carmaker in Malaysia and farmers in France, Korea, the US and Japan. They remain in job. Their products can be sold at a higher price, or at a lower quality behind the tariff wall. But at what cost? This is made tenable only at the expense of consumers. The special interest group reaps the total benefit while the cost is spread across the country, such that it is still affordable to an average consumer. And we witnessed over the years to what extent these groups (or the people they mobilised) would stage violent protests in obstructing the WTO meetings to protect their turfs. Trade economists and trade negotiators are having tough jobs.

Other than import-competing industries, the special interest groups can be trade unions demanding higher than market-clearing pay, any party lobbying for subsidy, welfare beneficiaries advocating higher taxes on the rich, or the bus door crowders. They seek a larger distributional gain towards themselves, unaware that they are fighting for a larger slice of a smaller pie. Any market distortion necessarily reduces the potential gain at the maximum efficiency. As it turns out, the larger slice can be smaller than what they would get, had they stayed their course and grown a bigger pie.

To be sure, globalisation produces winners and losers. But the way forward is not to coddle the losers but to retrain the people and, if possible, prevent it - probably by education that geared towards improving employability. Here, the governments often help mitigate their short-term risks by redistributing wealth from a bigger pie (as a result of open economy). Moreover, even the benefit of a free trade between countries is often skewed. For example the US-Singapore bilateral agreement is surely more favourable to the latter. It is more of a gesture of amity for the US. For other cases, it invariably involves dispute over uneven gains.

The book "The Logic of Collective Action" by the late Mancur Olson (and his subsequent works) provides a fascinating account of the theory of groups. Also of relevance would be a commentary by Tan Khee Giap "Do the right thing, not what’s popular" (The Straits Times, 16 Jan 2007).

……………………………………………………..

My Reply to SeKi, on Nash Equilibrium:

The situation here fits, and we can think in terms of, a 2-person Prisoner’s Dilemma, where the Nash equilibrium is defect-defect while the optimal (but unstable) outcome is for both to cooperate. This optimal outcome can be achieved if there is iteration over time and communication between the parties. The tricky part is, iteration is actually sort of taking place, where the people witness for themselves everyday the outcome of their clogging the door. Perhaps the cause is a lack of communication between the passengers.

In free trade, WTO is the arena where countries engage each other in negotiations, so that everyone brings down their tariffs, so that everyone enjoys the fruits of division of labour. However, a problem of WTO is that it is too democratic, as in each country has a veto. A single recalcitrant player can literally hold the progress of the whole world. Frustrated by the slow movers, we see the flourish of bilateral and regional free trade agreements as a second best, to bypass the cumbersome process.

193 Responses to “Distributional vs Aggregate Gain”

  1. yew fai Says:

    While understanding your orientation on blogs, have to point out that “Do the right thing” was not first mentioned by Tan Khee Giap. It was first used by Russell Peters when he, as a fictional shopkeeper asks himself to be a man and “do the right thing”

  2. Yi Zheng Says:

    Haha.. u should “do the right thing” and have supplied the link. I miss it..

  3. Joel Domeng Says:

    We’ll maybe what this society need is a social overhaul… there is definitely an unequal distribution of gain and opportunity.. easy for us to say but once you step on the line of scurmage maybe you’ll have a glimpse of reality. Ever wonder why after all of these years, after all great philosophers with their great books and after all these many school of thoughts.. still we struggle for a piece of that pie. I too am pondering… hehehe…

  4. Prince Says:

    If my understanding is right you are in favour of globalization. Sincerely I am too.

    However my view is, a country should be able to dictate or rather decide what she wants to do. The people has to decide who they want to give this power to.

    Globalization as it is, is being forced on certain countries especially ASEAN.

    The developed nations has saturated their markets. Developing nations are next targets now. In fact globalization favours them than us.

    Of course if Malaysia has no avenue of developing i.e cannot sustain on its own then ths globalization is a windfall. On the otherhand, Malaysia has its own sustainability it is progressing but relatively slower than some neighbouring countries. Therefore a form of controlled intervention must be designed. That meaning Malaysia must be able to have the last say on any matter rather than making it a blanket open market

    But remember though cars are cheaper in Thailand, not everybody drives a Mercedez or daimler there. The economy still shows a vast gap between the rich and poor.

    When Japan was developing globalization played no role at all. Simply it was the hard work dicipline and the system Japan designed for herself worked fine.

    Of course the actual poblem for not developing as fast as the others or the people being subject to pay a higher price is not the non-availability of globalization to Malaysia. Its the failure of implementation of the plans. Corruption, cronism and those who are not qualified has been in charge.
    These facts had been highlighted internationally.

    These are fundamentals. Otherwise no matter if U.S pumpped in billions, Malaysians will happily enjoy and finish the green in acouple of years yet the economy will become worse.

    (Well this is my view only.)

  5. Elvin Says:

    VIVA PIT SENIOR to all!!!

  6. michelle Says:

    hello! i really admire your wits and your ability to communicate your thoughts. keep it up!

  7. Joel Says:

    Wonderful economic article. I am from the Philippines; I can relate to it. Keep on writing!

  8. mursalin Says:

    there,s nothing immortal in this world so just doit if you think you can cos’ chance will never come twice,,,,

  9. Wars Says:

    I think the call for change seems impossible unless the people concerned sees it themselves.

  10. -Eliza- Says:

    Well I think your definitely right but as for globalization,definitely its the third world country who will take the big advantage.especially when the country can not catch up with the fast pace of growing economy of other countries.Third world countries will always get the crumbs of that pie.

  11. SeKi Says:

    I’m from Indonesian.. Love ur article.. keep on writing friend..

    p.s: about the bus queue before.. what do u say about nash equilibrium?

  12. Yi Zheng Says:

    The situation here fits, and we can think in terms of, a 2-person Prisoner’s Dilemma, where the Nash equilibrium is defect-defect while the optimal (but unstable) outcome is for both to cooperate. This optimal outcome can be achieved if there is iteration over time and communication between the parties. The tricky part is, iteration is actually sort of taking place, where the people witness for themselves everyday the outcome of their clogging the door. Perhaps the cause is a lack of communication between the passengers.

    In free trade, WTO is the arena where countries engage each other in negotiations, so that everyone brings down their tariffs, so that everyone enjoys the fruits of division of labours. However, a problem of WTO is that it is too democratic, as in each country has a veto. A single recalcitrant player can literally hold the progress of the whole world. Frustrated by the slow movers, we see the flourish of bilateral and regional free trade agreements as a second best, to bypass the cumbersome process.

  13. paul Says:

    woooow!amazing ur blog,,,speechless(paul apilado from philippines)

  14. genelyn Says:

    haahay….nice blog kept it up for writing gen from philippines.

  15. KEV Says:

    we are all scholars and none of us oppose globalisation.
    the thing is US still dominate the world.
    US widespread of liberal democracy is just a gimmick.
    it has by far no where near creating what they call a liberal economy.
    US diplomacy will serve their ideology to spread their form of ‘US civilization’.
    A concept born by intercepting others culture thus threatening global peace and the economy.
    i think we can see more secularism in the global economy furthermore as superpowers stretch their muscles.This is,in turn their idea of capitalism-the survival of the fittest.
    The rising tide of China will definitely alter the way we live too.
    it is important for us to understand China and economic policies will be set based on China’s module of economic structuring.
    therefore,we must promote unilaterism not secularism with the chinese.
    and intermediate dialogue is needed to understand the essentials of a cross-culture economy and not just a bipolar or tripolar economy.
    in my opinion,i would like to conclude that as long as everybody gets into the ‘bus’,
    it is fine with who gets in 1st.
    When we are all in the ‘bus’,
    only then will we be able to get to where we want.

  16. jeannie Says:

    Great and interesting!

  17. erwet Says:

    Economic globalisation is taking place faster than social or political globalisation. People still have the mentality of protecting their own interest and fail to see the bigger picture. In the age of economic globalisation, we need to globalise our mentality too. Worse, tariffs are being used as bargaining chips at conference table.

    Can this be a fallacy of composition?

    I’m Indonesian studying in Singapore. Love what you write. Thanks for writing the article! ;)

  18. 'Adreee' Says:

    Hi..
    For some reason I always pictured ‘Free trade’ as a term where “the Winner Takes All” policy being rolled in a real economy. Hence the weak countries will be ruled over by the powerful.

    As an addition, a quotation said that “in the heart of Economy, lies nationalism..” if we refer to this part, it is evident that every player in WTO will fight for any policy that might gives their nation the BIGGest slice of the pie.

    Moreover, as posted by KEV, we see that Developed Countries still dominates the world’s economy. Given the assumption above, I might say, that Free Trade might be used as a vehicle where the developing countries will be in a relatively weak bargain position and the much Powerful countries has the freedom to press their own (national) interest to the rest of the players -everyone loves a BIg slice anyway-.

    Nevertheless, I thought that your sharply written article, always help me in evaluating my arguments and views towards what’s happening in the Global Economy.

    Keep writing then.

    Cheers…

  19. Ronny Says:

    whap

  20. lee Says:

    plug lang ako…

    i encourage everyone to invite me in friendster

    leexan_tazy13@yahoo.com
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  21. Ian Says:

    Unfortunately, short term immediate gain is always viewed as more attractive than long term fundamental growth. The latter takes a lot of work, sacrifice and soul-searching. Unless you were genuinely interested in bettering yourself so that you can hold your head up high, it’s far easier (especially when you’re only doing a job, possibly for short term contracts) to maximise what you can get today and hope you’re no longer there when fate catches up with your business.

    The difference between being an entrepreneur and an employee lies in the lengths to which you want to ensure the health of your organisation, and it seems that the whole world is being run by employees. Those who really own it, the rakyat, (of which the employees are part of as well) can just shake their heads. Put anybody in that position as an employee and he/she’ll automatically find it more comfortable to act as an employee.. society tends not to reward heroes, and is quick to crucify scapegoats.

    As long as you can get on that bus, does anything else matter? Humans are very short-sighted, and the Bible speaks of sowing, sometimes for others to reap. How likely is that to happen? Sow the seeds of revival, get blamed for all the short term pains, and then later on let your successor get all the glory when your plans pay dividends? Probably will only happen with the most wise Chinese Emperors, when they know their family and descendants will be the ones benefitting, and indeed in the Han and Ming Dynasty such measures bore a lot of fruit. For the rest of us under this modern, elected leadership, we can only hope that when the consequences catch up with the rest of us some miracle would have happened.

  22. ika Says:

    Actually free trade is made for US’s sake, they want capitalize all economy’s sources over the world. But they can’t get it, cause china or overseas china can stop their step. China is hard to defeat

  23. dud Says:

    fuck you… mabuti lang yan para sa inyo….

  24. Tan Says:

    One of the very few times I see an intelligent blog on Friendster. Keep it up.

  25. Opet Says:

    There is this crazy myth that the US is actually the one benefiting most from Globalization and Free-Trade. But this has to contend to a lot of reality…
    First of all, how do you qualify the statement “benefits more?” if you say it is in the volume of trade…the US is actually lagging behind Asia. In terms of the growth in the volume in merchandise trade by region, North America grew by 7.5% in Export, and 10% in Imports, while Asia grew by 15% in Export and 14.5% in Imports in 2004. In terms of the growth in the value of merchandise trade: North Americas value of Export grew by 14% and value of import grew by 17%. Asia on the other hand, had a 25% growth in Export value and a 27% growth in Import Value in 2004 (International Trade Statistics- WTO.http://www.wto.org/english/res_e/statis_e/its2005_e/its05_overview_e.htm)
    These figures clearly shows that using volume of trade and value of trade as the standard for saying the US is benefiting most out of trade, it is clear the ASIA is the one having all the fun.
    When we also look at the WTO ranking of the leading exporters and importers in the world, the US only ranks second to Germany as the leading exporter- CHina and Japan follows the US closely. In terms of Imports, the US ranks 1st, followed by Germany , China, and France. The US then is the biggest importer, not the biggest exporter. Dispelling the notion that the US is exploiting local markets. In terms of the growth in export and imports, CHINA and JAPAN has double digit growth in Export ( 35% and 20% respectively). The US only recorded a 13% growht in export. China also beats the US in import growth (China: 34%, US: 17%) If the US is so exploitative in trade, why is it lagging in terms of trade? If globalization is US exclusive, why is it that ASIA is having all the fun? Think abot it…

    Note: all figures can be found in the World Trade Organizations International Trade Statistics. Refer to link above.)

  26. Don Says:

    The key here is unity. If we still think of ourselves as “us” and everyone else as “them,” then we will never be able to have any kind of liberal economy, never ever. Because people still see the differences amongst themselves and divide themselves into groups (be it interest groups, cultural, etc). So when they see someone benefitting from free trade, they see it as their personal loss, when they should actually consider it as social gain. Especially if they are the ones losing their piece of the pie because of their own inefficiency, they easily deny the aggregate gain offered by globalization.

    Perfect example would be the European Union. The benefits of unity are endless!
    They stop killing each other (this is good enough reason for everyone that witnessed WW1 & WW2 to support the EU), they achieve economies of scale, they experience more growth, they become more efficient with no currency exchange costs, etc, etc.

    Hrmm, I hope I got my point across with my far from eloquent writing…

  27. iBro Says:

    Quoting previous comment:
    “While understanding your orientation on blogs, have to point out that “Do the right thing” was not first mentioned by Tan Khee Giap. It was first used by Russell Peters when he, as a fictional shopkeeper asks himself to be a man and “do the right thing”.

    It’s not Tan Khee Giap or Russel Peters who said it first.
    Perhaps there are ancient people who have said that.
    Problems faced by mankind is always the same. It’s just changed it’s form for ages.
    After thousands of years of civilization, mankind still haven’t learn much.

  28. Francis Josef Says:

    wow! great insights. I agree. However, it has always been the prerogative of those who weild power (those who block the bus door) to do just that. We feel bad because we can’t block the door ourselves. Nelieve me, if we have a product that we had developed over the years and had proven to be very important hence valuable to the world, of course we would protect it, heck we would even form a cartel (just like OPEC).

  29. chunson Says:

    wah… too deep la this blog.. hehe

  30. Orion Says:

    Prince, you’ve got some great stuff there…

    I do think though, that in the case of Japan, while Globalization as we know it today wasn’t happening, the Meiji Restoration “pre-empted” it by ensuring that instead of being forcibly globalized by a conquering foreign force, they would ADOPT foreign ways themselves in order to become powerful and “at par” with the conquering nations of Europe.

    The Meiji Restoration - similar to how Peter the Great of Russia decided to adopt Western Ways and similar to how Kemal Mustafa Ataturk also decided to reshape Turkey along Western European lines decades after - took it upon itself to Westernize themselves quite thoroughly.

    They copied systems used in Western Europe such as the Westminster Parliamentary System, they learned Western conventional military systems and procedures (the theme of the movie Last Samurai), and generally learned science and technology from the West. They got everyone wearing suits and ties reminiscent of the Victorian age in Britain rather than kimonos and got a lot of people listening to Mozart, Bach, Brahms, Liszt, and Italian Opera … Japan was - in many ways desperate to be “Western European.” That, however, did not prove to be a disadvantage.

    That they were so good at copying these systems even manifested itself in the form of the intra-elite debate that occurred in Meiji Japan when different factions were debating on which foreign language to adopt as their Official Language: English was in the lead, followed by French and German… Luckily, Japan’s economic situation had later become relatively advanced that they decided that they didn’t need to adopt a foreign language anymore in order to improve their society.

    Of course, they did their own modifications to whatever they borrowed, but the point is that Japan took the bull by the horns. Rather than waiting for globalization to be thrust upon them, they decided to preempt it and by the time World War II came about, Japan was - for all intents and purposes - considered “at par” with the rest of the Western Powers.

    Honestly, I don’t really see so much of a problem with economic disparity per se. What I do really care about is that the people who are in the bottom rung are at least able to meet their basic needs. That is more important than “economic equality” because seriously, with the differences in focus, determination, and desire to achieve economic excellence differ among individuals. The hardest working and most astute truly deserve the economic rewards they reap.

    Therefore, equality per se need not be the goal, but rather, ensuring that everyone or at least the greater majority be able to live fulfilling lives where they can at least meet their basic needs.

    Many developed nations may have somewhat egalitarian social structures, but economically, the gaps between the richest and the poorest actually tend to be even wider than those in newly developing societies. The issue in many developing (or underdeveloped) countries is really that many of those in the lower tier are unable to meet their basic needs. Improving the economies of such countries will actually still allow the already rich (and still hungry for achievement) members to become even richer, but having sustained and continuous economic development will ensure that those in the lower tier will be able to enjoy improvements in their lives.

    The gap between the richest members and those in the lower tier of a particular society may widen to such a high degree, but the real sign of improvement is whether those in the lower tier are able to live better lives on the whole.

    That’s why I personally do not use the “gap” between the richest and the poorest in society as a yardstick to measure how well a society is doing. I care about whether the poorest in the society are able to meet their basic needs.

    Let the richest become even richer if they so desire, even if the gap widens so much… But more importantly let the economic conditions improve so that the poorest can improve their lives so that they are able to live fulfilled lives where their basic needs are met.

  31. Ayu Says:

    Great Work…Keep it up!!

  32. danny Says:

    I like the topics on this blog.. and the comments too.. Free Trade.. we (Philippines) were forced to sign the WTO agreement because if we wont, IMF and the World Bank would give us a hard time obtaining loans (coz we belong to the third world, we always borrow).. IMF and WB favors only globalized countries.. we know that we cant survive in a hermit like isolation from other countries.. that is given..sad thing is we are not ready to compete yet so now we get to be the dumping ground of chinas goods (and products of other countries) we couldnt play our cards well because rich countries are good players..and they are not obliged to share anything..coz they do their own work and they deserve to get the rewards of their own work.., but the thing is they just involved us in this game, they have their silent blackmail mechanism

  33. Bani Says:

    We, Indonesians, say NO to IMF and CGI, no more LOANS, no more Fuel subsidies. All nations should do the same thing, don’t be bullied by those super-oh-so-rich-nations, we should cooperate and set-up a EU thingy like and do the same Tariff barriers alike so they’ll learn we can blackmail too.

  34. Opet Says:

    Danny, the Philippine Government just paid of $ 120M of its remaining IMF loan. This also takes us aways from their holds. Now, the government can have more sovereignty in macro fiscal and monetary policy because of the fact that we are our of the program. We are still a member of the IMF-WB but we are no longer obliged to follow everything they say to us. This means that the fear of many people about IMF-WB as a tool of neo-colonialism isn’t true. Country’s can get out of their SAP (structural adjustment program) and its predecessors. Its not mandatory at all. Secondly, you have to be careful in describing governments like firms who are competing in a global market place. Governments do not compete. Governments do not have a bottom-line, they cannot declare bankruptcy nor can they bail out. (Paul Krugman in “Beware the pop-economists”) Trade has a lot to do about comparative advantage and productivity, not competition. Evaluate a nation’s standing in trade based on those standards, not competitiveness.

  35. Nathaniel Says:

    We should study the ants.
    Solomon once said “Go to the ant, sluggard; consider her ways and be wise”

    Amazingly ants have “collective intelligence” which we human should learn from. With their “collective intelligence”. They do things that benefit the colony which in turn benefit themselves.

  36. destaclhloe Says:

    hola gracia

  37. Hor Says:

    The bottomline, if you are smart and intelligent, you will be continue to rulez over the poor…its the poor and middle class people who suffer….irregardless of whether there is globalisation or protection

  38. Rommel Says:

    One must think of the long run to appreciate the fact that mutual benefit among countries is not the primary goal of free-market globalization but instead the consolidation of developed countries’ corporate monopolies in countries and industries they have no control over yet. Primacy of consumers’ interest is the frequent appeal of free-trade apologists whenever they defend petitions to dismantle trade barriers but this seemingly good natured request proves to be detrimental to consumption per se. Entry of foreign competition destroys domestic industries in turn, making people out of work and penniless. The “efficiently” low price of quality foreign commodities won’t matter for as long as people are wandering around unemployed without the capability to buy. And let me also address the issue of people not understanding each other which is manifested by people “clogging” the bus. The fact is that plenty of people from across the globe understand the anti-imperialist struggle. And it is manifested by coordinated mass actions against WTO. People are not trying to take the larger piece of the small pie. They are trying to take their piece of the pie, the piece which is due to them, the piece which is controlled by the few.

  39. mike chemical Says:

    nice blog

  40. obgle no more Says:

    need to ask though. What’s your point? Favorable of the free trade? Or not?

  41. Rommel Says:

    let me add some other comments: 1) the WTO is NOT at all democratic. if it was, then trade policies that are outlined and implemented would be in favor of the majority of the member countries not the minority which comprises of the industrialized countries. the compromise offered by differential treatment is a myth, it does not cater to the fact that essential local industries will still be destroyed to pave way to “global integration”. equal implementation of trade policies is also a manifestation that the WTO is not democratic. Talks collapse when industrialized countries,considering that their not covered by SDT, refuse to liberlalize their agriculture sector. 2) the comment that IMF-WB’s clout over the philippines is over due to the fact that loans have been paid is based on wishful thinking and the lack of historical reflection. last i have heard the philippines still owe the IMF, but assuming that your information is correct,the SAPs already implemented are the built to make the domestic economy dangerously dependent on other countries. one example is the dergeulation of the philippine oil industry, the SAP implemented made the domestic economy hang on every whim of the international Oil Cartel. We may not implement SAPs in the future -which is certainly unlikely- still, the effects of prior SAPs reduced the Philippine Economy as an appendage of other stronger economies. the Semi-colonial character of the philippines remain.

  42. jennifer Says:

    busit kyo wla aq pakialam sa inyo!heheheh.

  43. Ian Says:

    Economics sure does play a major role in affecting the welfare of societies. Distribution of income or “a slice of the pie” is basically have to be justified by ones effort contributed to gain it. The lower class may not have a say in how much they ought to get. Therefore their just livelihood depends on public activist who is able to put themself in their shoes and fight for their rights. Although all these complex economic theories will make no sense to them, their side of the perspective must be taken into account. In the end the power lies in the powerful to act in what they think is just. And set policies not to only protect themself but the entire community. Its easy to say that we should not be part of the unfair system. But what if the the system is the only way i can secure another meal for my family. All unjust buffer from the system will be transmitted to them. Basically is sucking up and moving on. But again there is no perfect system. It has to evolved again and after, with lobbying and changing of policies. This kinda a summary of what i have gathered from all that have said. haha :)

  44. Opet Says:

    Rommel, the creation of artificial monopolies is not exclusive to globalization and the market system alone. In fact, the market system discourages the artificial concnetration of market power in a select few. When i say artificial, it is when government promotes it (state monopolies) or condones it (monopoly grants). In fact, as evidence will show, opening up a market dominated by monopolies or oligopolies will break them up and force them to re-structure and become more efficient. Look at the case of Ford and General Motors. These companies used to be huge and inefficient and worked as oligopolies with tacit collusion when the US car industry was not yet opened to competition (partly because there was no one to compete with yet). But look at where they are now? Toyota is over-taking them both in terms of company size. Ford and GM were forced to restructure their cost structure and to find more efficient ways to produce cars. This has resulted in the mergence of cheaper and better quality cars and the dismantling of Ford and GM oligopoly. Now the car industry is fun! =) The same is true with the Philippines and the Philippine Long Distance Telecommunications Company (PLDT) which enjoyed a state monopoly for almost 20 years in the Philippines. THey were inefficient and charged exhorbitant prices. But they got away with it because market power was artificially concentrated on them. But when Bayan Tel and other start-up phone companies entered when government dropped PLDT monopoly…PLDT was forced to shape-up and cut prices and re-structure cost. All these things happened because of how opening up a market makes things better. This is not an apology, so don’t call us apologists. =) hehehehe

  45. Karen Nicole Says:

    heloooooooo!!!!!!!

  46. Mohamad Says:

    Excellent work Yi Zheng. Hopefully, through collective efforts, we all can arrive to a better more comprehensive understanding of the matters disussed. Wish all of you all the best!!!

  47. sid Says:

    RELATIONSHIP 101
    there’s always a possibility that a person can get attracted to another,its human nature..its not wrong..but the reason why your in a commitment is for you to discipline yourself.. one may get attracted to numerous prospects as you dont nourish the feeling and wont do something about it..the borderline between cheating and faithfulness is to recognize the reality that you already have the person that can give you more than what you can get from the cheap thrills of attraction.. ^_^

  48. icy Says:

    a nice place.

  49. dudzzz Says:

    hhhhhaaaaaaaaayyyyyyyyy!!!!! no coment guyzzz…add nu nlng ko ah…dudzzzzz_373@yahoo.com

  50. genisis Says:

    hm…….. helo@!!!!!!

  51. Rommel Says:

    opet, regarding your comment on competition paving way for “efficiency”, i can still argue that liberalizing an industry can even increase the price of commodities and lessen its quality. take for example the deregulation of the oil industry in 1997. since the demand for oil products is relatively inelastic, there’s no stopping the big three from increasing the prices. even if there were new players, one could note from data that prices of oil products have rapidly increased afte7 1997 when the government waived its right to control the industry. Even the subjecting the price of education to market forces led to a wholesale marginalization of students in the urban setting. furthermore, the promise of private initiative (driven by profit) spreading formal learning to the rural areas did not materialize. note that State owned universities and colleges are less than 100 while the diploma-vending machines masquerading as private schools reaches up to approximately 1000. even your example PLDT-Bayantel did not make telecommunication accessible to majority of the areas in the Philippines, peasants in southern tagalog, fishermen in apalaya munti still dont have landlines. in addition, efficiency did not come in the wake of deregulating the education “market”, it can be seen that the scores of board examination has been declining in some courses, from accounting to nursing. All these, not to mention the effect on the other public utilities sector. If you would entertain the idea that this is brought by country’s lack of foreign competition then better think deeper. would you let your life be subject to foreign profit seeing what domestic capitalists have done to “serve the interests of its consuming countrymen”? i don’t think so. In the long run, competition only churns out a few if not one player. just look at the banking industry. number of bank outfits are dwindling. id rather have the government, which the majority makes accountable, hold and manage utilities, rather than individuals who would only answer to their private pockets.

  52. Malou Says:

    relationship 101 - wow that’s something very inspiring and i bow my head to that.” faithfulness” i too believe is one of the best quality a person must have…esp. if you are married

  53. anak Says:

    i sense that you are against protective policies and advocate globalisation.
    i do agree that global market offered by globalisation is good for poor countries. unfortunately, conditions set by globalisation agents (WTO, world bank, imf) prevent poor countries from taking the advantage of global market. deregulation, reduction of subsidies and stuffs will undermine new-born industries in poor countries (like indonesia), rather than strengthen and prepare for competition.
    note that the rising economies of the world make it by protecion, not by deregulation. China for example, only very recently joined WTO. She didnot liberalise her economy very much, even until now. you cant see any state companies privatised in China. China breaks every rule that pro-liberalisation organisations set. but despite all that, China has managed to grow rapidly.
    on the other hand, those countries who eagerly open up their markets and abandon protective policies, such as those in latin america, end up with severe finanzkrise.
    protection is necessary.
    here in bali, in the 80s, our government used to forbid local businessman to import chicken from neighbouring provinces, especially java, because balinese farmers could not produce chicken that cheap. balinese had to put up eating chicken at higher price, and lower qualitaet.
    this protection allowed chicken farmers in bali to grow big and become more and more efficient. now there is no such rule banning chicken import from neighboring provinzen, but balinese farmers are now strong enough for the competition, thanks to protective policies in the past.
    btw im an engineer, not an economist, so my arguments put forth here will very likely be flawed.

  54. anak Says:

    Opet, the same happens in Indonesia. Telkom Indo used to be one huge, yet inefficient monopolistic telecommunication provider. services were unsatisfactory. now as other providers are allowed to operate, competition forces telkom to make things better.
    this is one case where protection from the govt lulls and spoils, rather than improves. but there are other numerous cases in which the reverse is true.
    btw my previous comment was for yi zheng.

  55. saiba Says:

    natural lang as any other people’s able to say……

  56. KEV Says:

    everything has its pro’s and con’s.
    free trade makes the same sense.
    lets put it this way,
    you flip open the newspaper,
    you see news about China’s booming economy.its title printed in bold and a font size of 36.
    u filp the next page,u see a minor angle printed in smalll fonts with a story about Chinese farmers and their woe’s.
    psychologically,it created a mindset of how we see free trade.
    the thing is,humans often forget.
    working on the idea of capitalism,i find that disparity is actually doing more harm than good to the free market economy.
    the numbers are getting bigger yet still its capacity is just limited.
    disparity won’t bring any good to all.
    i think developed nations should encourage corporate giants to lend a hand in funding and providing resources in
    social development(schools, hospitals).
    after all,they are investing on human capitalism.
    why not teach someone to fish than giving fish??
    free trade,hopefully it will free everyone’s lives

  57. JONALEN Says:

    wow! anyway im jonalen from taguig city 17 year old how are you?
    let me be one of your friends can you be?

  58. aaron Says:

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  59. Doulan Says:

    To think of the matter of what you have presented will surely create an impact. Personally, it depends on how you approach the issue at hand.Globalization has its own positive and negative results on countries playing the game. Just like ballgames, there are lossers and winners. What is important here is not to compromise the benefits at hand for the common good in favor of personal concerns.

  60. CriSLeOnArd Says:

    PUTANGINA ANG GANDA NG BLOG MO! WOOOHOOO!

  61. edz Says:

    wew!! ang ganda ng blog mow!|

  62. Dar Andrew Says:

    In the Philippine context where most of the power that steers the decision-making process of the country is concentrated at the top of the economic hierarchy, we can experience protectionist policies where laws are made to be circumvented by those who hold economic power to protect their interests as the government try to make themselves appealing to the lower classes that would get them support to stay in power.

    Another thing is that the voting population of the country is inclined so much on their personal gains that they tend to vote people who are capable of giving them money or help them in other ways than to think of voting wisely so that they would not need the help of these traditional politicians in the future. These politicians are the ones keeping the economy low by not coming up with policies favorable to the majority of the people or the economic standing of the country. It may appear to be a slippery slope, but purgation of corruption from within would probably still be the answer to our poor economy.

  63. Dar Andrew Says:

    The voters relying on the small help that politicians extend to them must be wanting the bigger slice of a smaller pie.

  64. Ryan Says:

    thus, the the active participation of the government even becomes more important. my appologies to the leave-the-market-among-themselves advocates…

    when majority of the people beomes prejudiced because of the action of a few interest groups, government’s intervention becomes imperative.

    parallel with this is the present experience in world trade relations -characterized by the developed nations unfair trade practices. this is the best argument against the lassiez-faire theory.

    the developing nations’ governments should rethink their policies and should collectively push for fair trade rather then free trade and at the same time guard their economies against unfair trade which are prejudicial to their constituents.

  65. jamie Says:

    walang wenta

  66. melmel Says:

    I think globalization has its good and bad point…after all nothing is perfect in the world and fairness just dont exist in the world we live in today. Let just hope for the best and provide as much help to those who live in poverty due to economy globalization. Great article love it keep up the good work Yi Zheng.

  67. manuel Says:

    nice

  68. Leonard Says:

    You can write all about what should and what should not, but you can’t stop the world from behaving what it is. Theory doesn’t gel with what is practically happening on the ground.

    Do you understand why is it so difficult to do business in China?

  69. Cheng Says:

    A hideous lack of transparency, for a start. Ever seen Chinese audited accounts?

  70. Opet Says:

    Rommel… the problem with some people is in how they seem to think that a country or an economy should progress at even pace for everyone. It is always bad for many people to see income inequality, without necessarily asking what is so bad about it if the rich guy worked for it also? THe problem with many people is that they consider non-price factors such as inequality and the likes as problems that can be solved through the price system…that is asking too much. Yes, the entry of small players in the telecoms industry of the Philippines did not lead to the peasant poor getting phonelines…but is that really a negative effect of competition? compare the price of PLDT now and PLDT before? its at least twice as low. The lack of access to phone lines for the peasant poor is not a point against competition…businesses cannot force a price on you…nor can you force the firm to give you a product. Your take on the Oil-Deregulation…yes prices did increase, but because of the supply shocks in the international oil market. not because of shell, petron, and caltex in the philippines.

  71. lloyd Says:

    Hi guys!
    Just to share my thought on the matter at hand. I do believe that inequality is a natural law. Why? Imagine a country who has equal power and wealth distribution. Chaos isn’t it? In every nation, why is it that there are more poor citizens than rich? You might be inclined to think that it is because of goverment’s failure to manage, corruption or “Power Grab” - although it is true that this is a factor to a country’s economy. The answer my friends is “Pyramid”. Let me explain further. No nation will survive if the number followers are greater than the leaders. A pyramid wont stand up if the base is on top and the tip on the other end. Globalization can be a good thing coz it promotes open trade which leads to better foreign relations. It can be a bad thing also because big players will only eat up the small ones. Now if your wondering what happened to that bible verse where it is stated that men and women are created equal, well that is in the eyes of God…One last thing, i believe that no Einstein can understand the vast complexity of the world and the universe. Our daily lives is not based on text books but the other way around.

    Peace to ya’all.

  72. daisylyn Says:

    great

  73. alex Says:

    Nice blogs. Thanks for sharing.

  74. alex Says:

    You make my day.Thanks for sharing.

  75. Orion Says:

    Opet, I think our “friend” Rommel is coming from a perspective that is generally tainted by ideology and *ahem* dogma.

    (for Rommel) Re: Price of oil under regulation versus deregulation, it was said by many in my parents’ generation that the regulation of oil prices generally meant that the prices were much higher than what they were outside regulated markets (like the Philippines in the 80’s), but gave an impression of stability and “immunity to fluctuations.” It also required a huge number of monetary reserves backing it up, just as how doing a currency peg requires huge monetary reserves. As with any form of “regulation”, major and sustained upward spikes in the international price will not be supportable by the regulation and the regulated end-price will also have increase to reflect the new “extreme high” international market price.

    Deregulation, on the other hand, simply meant that the prices in the deregulated market would reflect the international prices and would fluctuate accordingly.

    My advice to everyone: Try to stay away from ideologies and dogma when looking at practical issues. Use reason, logic, common sense, and practical sense coupled with a voracious apetite for knowledge. …Read my blog on Enlightening the Elite.

  76. Gerald Says:

    hehehe wala eh

  77. Marichiel Says:

    its nice

  78. joward Says:

    kip up d gud work>>.

  79. Dzihnia Says:

    hi, i’m from indonesia. this is the first intelect-blog i ever read in friendster. very nice blog, keep it up, Yi Zheng! btw, i agree with orion. we must think about how to help the people who even cannot fulfill their basic needs. that’s what we call a challenge for humanity. it is not about economy per se. it is about humanity.

  80. Bryan Says:

    he is very unsatisfied boi in everything….

  81. Jane Says:

    Wow…
    yizheng,there’s sooo many people here..:P
    Really Appreciate your wits..:O

  82. dudzzz Says:

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  83. Jesenburge Says:

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  84. aeon flux Says:

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  91. roda mae Says:

    for that matter,i think we need economic leaders who have a sense of leadership and national vision… those who are after for the welfare of their subordinates, not those who are self-oriented…there must be an equal distribution of rights regardless of status and power… thus, we had to start it within ourselves’ let’s become more responsible… let’s fight for our right…

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  120. Andrew Says:

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  121. -cesna- Says:

    Life

    Life is just so simple, but human being makes it complicated.
    No worry about ur past life, just go forward for your future.
    With strength and patience you will face all your matters.

  122. -cesna- Says:

    Life

    Life is just so simple, but human being makes it complicated.
    No worry about ur past life, just go forward for your future.
    With strength and patience you will face all your matters.

  123. mR lei Says:

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  129. april Says:

    “I came across Daphne’s narration of how people clog the bus door so as to be able to alight first, but ending up delaying everyone, including themselves.”… the thought is alike to that of john nash or maybe daphne got her narration from some source relating to john nash… just a guess i haven’t read her blog…you should watch the movie a beautiful mind…”the blond in the bar” scene… by the way this is an interesting blog…here dwells a serious person of the future…that’s a compliment

  130. noel Says:

    Life

    Life is just so simple, but human being makes it complicated.
    No worry about ur past life, just go forward for your future.
    With strength and patience you will face all your matters.

  131. melody Says:

    it’s so good to be always happy!!!!!

  132. marielle Says:

    a great life is not about routine but doing something rare, to cherish and not to compare. to forgive , not to blame and to be loving w/out counting so laugh at your mistakes but learn from them. have fun w/your difficulties but overcome them….:)

  133. yurieh Says:

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  134. yurieh Says:

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  138. WILFREDOJR Says:

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  139. WILFREDOJR Says:

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  155. tian Says:

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  158. genesis Says:

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  159. tina Says:

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  167. Celine Says:

    good article. r u doing research on this topic?