why inequality is necessary
TRANSCRIPT
Why Inequality is Good and a
Faster Way to Fight Poverty
Bienvenido “Nonoy” Oplas, Jr.
Pres., Minimal Government Thinkers Inc.
Fellow, SEANET
Reaction to a presentation by Dr. Epictetus Patalinghug,
Albert Del Rosario (ADR) Institute forum on
“Poverty, Inequality and Inclusive Growth”
The Tower Club, Philam Life Bldg.,
Makati City, 12 August 2015
-- Friedrich Hayek, The
Constitution of Liberty (1960),
Chap. 3, “The Common Sense
of Progress”
“The rapid economic advance that we have come to expect
seems in a large measure to be the result of this inequality and
to be impossible without it. Progress at such a fast rate cannot
proceed on a uniform front but must take place in echelon
fashion, with some far ahead of the rest.
“In the long run, the existence of groups ahead of the rest is
clearly an advantage of those who are behind, in the same
way that, if we could suddenly draw on the more advanced
knowledge which some other men on a previously unknown
continent or on another planet had gained under more
favorable conditions, we would all profit greatly.”
-- Friedrich Hayek,
The Constitution of
Liberty (1960),
Chap. 3, “The
Common Sense of
Progress”
“The over-all speed of advance will be increased by those who
move fastest. Even if many fall behind at first, the cumulative effect
of the preparation of the path will, before long, sufficiently facilitate
their advance that they will be able to keep their place in the march.
“Improving the position of the poorest by giving them what we took
from the wealthy, would temporarily quicken the closing-up of the
ranks, it would, before long, slow down the movement of the whole
and in the long-run hold back those in the rear. All obstacles to the
rise of some are, in the long run, obstacles to the rise of all… To
prevent progress at the top would soon prevent it all the way down.”
Growth and innovation with more inequality leads
to more poverty alleviation
Source: Sec. Arsenio Balisacan, “The State of the Philippine Economy”,
UPSE-Ayala forum, Intercon Hotel, Makati City, January 29, 2015.
Life expectancy
from birth (years)
Source: ADB,
Key Indicators
for Asia and the
Pacific 2014
* PH, 1990-2000, life
expectancy rose by 1.6
yrs,; 2000-2012,rose by
1.8 yrs. At this rate, by
2015, Filipinos on ave.
can expect to live
around 69.2 yrs.
Country 1994 2004 2014 Expansion,
1994-2014
Expansion,
2004-2014
Singapore 30,875 50,876 82,762 2.7 1.6
Brunei 56,369 66,785 73,233 1.3 1.1
Malaysia 9,439 14,698 24,654 2.6 1.7
Thailand 6,029 9,052 14,354 2.4 1.6
Indonesia 4,015 5,696 10,641 2.7 1.9
Philippines 2,795 4,062 6,962 2.5 1.7
Vietnam 1,326 2,808 5,635 4.2 2.0
Laos 1,296 2,345 4,987 3.8 2.1
Myanmar n/a 1,908 4,706 … 2.5
Cambodia 753 1,514 3,263 4.3 2.2
Hong Kong 22,710 32,948 54,722 2.4 1.7
Taiwan 14,410 26,670 45,854 3.2 1.7
Japan 21,927 28,885 37,390 1.7 1.3
Korea 10,908 21,245 35,277 3.2 1.7
China 1,618 4,323 12,880 8.0 3.0
Australia 21,972 34,138 46,433 2.1 1.4
New Zealand 17,368 26,562 35,152 2.0 1.3
India 1,429 2,645 5,855 4.1 2.2
Per
capita
GDP,
PPP
values
in int’l
dollars
Source:
IMF,
World
Econ.
Outlook
2015
Question: “Are people better off in a free-market economy given the
wide disparities in wealth that might result?” Agree or Disagree…
Disagree Agree Disagree Agree
Vietnam 3 95 Germany 25 73
Bangladesh 13 80 US 27 70
S. Korea 20 78 Israel 26 68
China 18 76 UK 28 65
Malaysia 21 73 France 39 60
Philippines 27 73 Italy 31 57
India 14 72 Russia 38 53
Thailand 25 69 Greece 50 47
Pakistan 12 62 Spain 51 45
Indonesia 37 58 Mexico 43 44
Japan 51 47 Argentina 48 33
Source: PEW Research Center, Spring 2014 Global Attitudes Survey
Not that I’m a fan of these super-rich Filipinos, but many of them were rags to riches
people. Others from Spanish colonial descent. Many rich and big business names in
the 50s, 70s are now gone or not so rich compared to the new rich.
Concluding notes
• Equal people are not free and free people are not equal. The
enemy is poverty, not inequality per se.
• A government that’s big enough to give everything you want is
also big enough to take everything you have.
• The UN, various multilaterals and foreign aid, NEDA, etc. are
stirring the politics of envy in their continuous call to fight
inequality and forcing equality.
• Inequality due to economic and individual freedom will lead to
substantial poverty alleviation, innovation and job creation.
• Income taxes, personal and corporate, should go down
drastically. Efficiency and hard work is not a crime to be
penalized by high taxes.
• If government should create new welfare programs, it should
abolish or shrink old programs that do not work.
(L-R): HOR CPBD Director Manuel Aquino; ADB Senior Health Specialist Dr. Eduardo
Banzon; PIDS Senior Research Fellow Dr. Celia M. Reyes; Former NEDA Director
General Romy Neri; PIDS and FEF Fellow Dr. Vic Paqueo; ADRi Trustee and UP
Diliman Cesar E.A. Virata School of Business Prof. Emeritus Dr. Lingling Patalinghug;
ADRi President Prof. Dindo Manhit; First Director General of NEDA Dr. Gerardo Sicat;
RCBC Board Director Mr. Cesar Virata; Minimal Government Thinkers President Nonoy
Oplas and ECOP Co-Chair Ferdie Diaz.