First, the standoff at Scarborough Shoal exposes the Philippines’ lack of capacity to enforce its sovereignty over its EEZ and thus undermines the credibility of official Philippines statements that it “will secure our sovereignty.”
China is building up the size of its civilian maritime enforcement fleets and it is only a matter of time before China either dominates the fishing grounds off the west coast of the Philippines or a clash occurs between Chinese and Philippines vessels.
Second, the Scarborough Shoal incident has provoked a domestic outcry in the Philippines that is largely critical of the role its ally, the United States. Philippine Senators and Congressmen have berated the US for its inaction. So far the US has only released a statement urging “all parties to exercise full restraint and seek a diplomatic resolution.” Filipino elites have also been critical of the Association of Southeast Asian Nations (ASEAN) for not providing political support.
The domestic reaction in the Philippines reveals unrealistic expectations about its Mutual Defense Treaty with the United States. This treaty provides for consultations in the event “the territorial integrity, political independence or security of either of the Parties is threatened by external armed attack in the Pacific.” So far China has scrupulously avoided using force.
Third, from April 16-27, the Philippines and the United States commenced their 28th Balikatan (Shoulder-to-Shoulder) combined and joint military exercise. This was planned long before the Scarborough Shoal incident.
Balikatan involves two phases of simultaneous multiple exercises. The first phase focuses on humanitarian and civic assistance in Palawan, while the second phase involves field training exercises in Luzon and Palawan. None of the Balikatan exercises will take place outside the Philippines’ territorial waters including an exercise to defend and retake an oil rig captured by terrorists.
[PHOTO -Chinese goods are sold in Divisoria]
I strongly agree with the assessment that the Philippines showed its incapacity to enforce its sovereignty over its exclusive economic zone.
As already stated, China might have been trying to provoke the Philippines into starting a diplomatic, or even military, conflict. But we have to understand our capability, both militarily and economically.
In regard to military and economic capability, the indisputable facts are as follows:
- The Philippines is militarily inferior to China;
- The Philippines is also economically inferior to China;
- The main economic weapon– or the source of military fuel– of China is its attractive labor market that pumps up its centrally planned market economy;
These facts show that we cannot possibly win an arms race against China. However, this does not mean that we should bow down to China and simply surrender our territorial claims. There are possible options and solutions.
First, the Philippine government needs to prolong its discussions with China while focusing on its most crucial solution: economy. China is not the problem.
Our economy is the main problem. There can be no strong defense or military without a stable, strong economy. The second (strong economy) is the cause, while the first (strong military) is the effect.
We cannot reverse, or twist, the law of causality. Yes, this law certainly applies to politics, economics, or even military issues. It is universal; it applies anywhere, anytime.
The most important question that will guide our leaders in their quest for economy prosperity and stability (if ever they considered this solution) is: What is the primary source of wealth?
Practical economics tells us that the real source of wealth is not the government, but the private sector, and that wealth-creation is only possible under a system in which private individuals are free to produce, to trade, to employ, and to contract.
The freer the economy, the more people will participate in wealth-creation. Free economy means both local and foreign participants are free to do business, to trade, and to practice their professions. This is how all developed countries built their economies.
This is the history of the United States of America, the economic and military superpower built by immigrants. This is the history of Germany, Japan, Canada, Great Britain, South Korea, Hong Kong, Singapore, and even China.
China, for instance, did not become economically prosperous by keeping its Maoist past.
In 2001, China quickly transformed its closed economy into a market-socialist model by joining the World Trade Organization. As a new TWO member, China was compelled to open its economy to foreign investors and to protect property rights and intellectual property rights. In just ten years since its WTO membership, China became the fastest growing economy.
China’s fast-rising economy is the very reason why it was able to expand its military. In fact, China is even more economically free than the Philippines in terms of foreign participation.
Foreigners are allowed to own 100% equity in land and business in China. By contrast, the Philippines limits foreign investors’ participation, and totally bars foreign professionals from practicing their respective professions in the country.
Second, the Philippines needs economic freedom. It needs to institute radical free market reforms. However, this cannot be done without revising the 1987 Constitution, which mandates protectionism and economic interventionism.
The primary goals of this economic solution are as follows: 1) to grow the economy by attracting local and foreign participation; 2) to attract the brilliant minds to become part of our team; 3) to ensure long-term economic growth. This solution was deftly implemented by Singapore under the leadership of Lee Kuan Yew.
This economic solution offers a huge advantage to the Philippines because it is freer compared with China in terms of political freedom.
Both statistics and reports show that China is about to lose its millionaires, professionals and intellectuals in the next few years.
A survey published last year found that 60% of about 960,000 wealthy Chinese citizens with assets over 10 million yuan ($1.6 million) were either contemplating on leaving the country or taking steps to do so.
The top destinations are the U.S., Canada, Singapore and Europe. Many great leaders understand the importance of having a great number of professionals, inventors, scientists, and intellectuals in economic development and in building a socially and economically stable nation.
However, this solution would remain futile without concrete actions, which include:
- Elimination of certain taxes or lowering tax rates. Taxes that can be eliminated are income tax, estate tax, capital gains tax, property tax, community tax, and corporate income tax. The government may focus on consumption tax as its source of revenue. However, the elimination of taxes should be done in a gradual, cautious manner.
- Lower government spending
- Privatization. It is time to privatize all government-owned and controlled corporations.
- Legalize gambling and lottery. Allow both foreign and local entrepreneurs to run gambling and lottery businesses. Let them compete with each other.
- Allow 100% foreign ownership of land and business.
- Allow foreign professionals to practice their profession here. Allow foreigners to put up schools, media, public utilities, etc.
- Allow foreign investors to put up power companies and compete with Filipino-owned power utilities.
- Decontrol or deregulate by repealing economic regulations and restrictions.
- Allow private insurers and social security companies to compete with SSS and GSIS.
- Abolish certain government departments and agencies like DepEd, CHED, DSWD, DOH, national housing authority, NFA, DPWH, etc. But this should be done gradually.
- Abolish certain welfare programs like PhilHealth, government loan programs, subsidies, etc.
- More focus on our judiciary or court system, police, and military.
The main purpose of these concrete actions is to make the people independent. Welfare programs and services only make the people dependent on the government. With strong and healthy economy, the people will have more employment and business opportunities and they no longer need to rely on government freebies and services. The only proper role of government is to protect individual rights.
Third, the Philippine government may then focus on vital issues, such as the country’s legal system, the police force, and the military or national defense. With stable economy and independent citizenry, the government could then pay more attention to its primary functions: 1) court system to settle legal disputes, 2) police force to deal with criminals, and 3) and military to handle internal and external threats like civil war or invasion.
China may be a giant bully, but nothing is impossible under a free market system.
The best real-world model is Israel, which unfortunately is not a complete representative of free market system. The best thing about Israel is that it is more economically free compared with the Philippines, it embraces foreign professionals and investors, and it can afford to focus more on national defense because of its stable, strong economy.
According to CIA World Factbook, Israel recorded an unemployment rate of 5.6%, with $235.1 billion GDP, making it the 52nd wealthiest country in the world. Despite its relatively small population, Israel’s military is considered one of the strongest in the world.
Currently, China is the third biggest economy in the world, with GDP of $11.29 trillion in 2011.
This figure alone shows that we’re nothing compared with China. However, with free market solutions and reforms, we may be able to uplift our economic status in a matter of years. It is possible. Israel, which has been in conflict with the entire Arab world for decades, did it.
In fact, China did it 12 years ago. There’s no reason that this country cannot do it. Again, the problem is not China; it is our economy and the very people who incompetently run this already bankrupt nation.
ABOUT THE The Vincenton Post
This site is owned by Froilan Vincent (his chosen name). The blogger’s real name is Froilan Vincent D. Bersamina.
The Vincenton Post is formerly called Ideological Soup.
This transition is not merely lexical; it is primarily intellectual and philosophical.
This blog is dedicated to the promotion of individualism, laissez faire capitalism, and the philosophy of Objectivism in the Philippines, a country which is a product of history.
In order to have a definite national direction, a nation must have a rational intellectual leadership. This country must be guided by a rational individualist philosophy whose metaphysics is objective reality, whose epistemology is reason, whose politics is capitalism, and whose ethics is self-interest.
Without a rational culture, education system and ‘national consciousness’ that are hinged on the concept of individualism, this nation cannot achieve a “new renaissance.”
This blog banners the value of Honesty, Objectivity and Integrity.