Day 2 of Conference 2016

Sorry readers, delayed posting of Day 2, EFN Asia Conference 2016 in Manila last November….

New FNF-PH Country Director Wolfgang Heinze delivering the welcome remarks for Day 2.

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Below are some tweets under #efnasia2016

(1) From ruben dieckhoff ‏@rdieckhoff, 22-23 Nov 2016

“All politics is local.” To save free trade/globalization you have to win the battles at home first says @barunsmitra

@razeensally wonders whether you can keep up economic growth while trampling on human rights of the citizens

When political families move from controlling to owning companies this is neo-cronyism and eventually fails. See: Arab Spring

.@laveeshbhandari: how you can be free without education? Highlights susceptibility to populism for people who feel left behind

First protect dignity and rights of all individuals. Then start talking about economic liberty. Strong stance by @LoeningMarkus

(2) from FNF Philippines ‏@FNFPhilippines, 22 Nov 2016

Peter Perfecto: There is a tendency to rely heavily on the business sector, but there is only so much that business can do.

Dr. Laveesh Bhandari: There are enough laws that try to inhibit crony capitalism, but they very rarely get implemented.

Fred McMahon: The real driver of poverty reduction is not CSR, but economic freedom.

Fred McMahon: You cannot find a stable democracy that does not have a high level of economic freedom.

(3) Barun Mitra ‏@barunsmitra  22 Nov 2016

The discussion over basic rights and freedoms, have got confused by including entitlements and aspirations: Nick Sallnow-Smith

#EFNAsia2016 Rich & poor nations, high & low growth ones, democracies or not, across the world are experiencing populist nationalist upsurge

(4) Others:

Akash Shrestha ‏@aaktung  22 Nov 2016

“In an economically free society, you only get ahead by making other people better off” – Fred McMahon.

PichuLo ‏@pichuuu  22 Nov 2016

Random thought:How can local small and medium enterprises compete if we’re pushing for the free market to gain economic freedom?

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FNF Philippines ‏@FNFPhilippines  21 Nov 2016

Wan Saiful Wan Jan: Definitions of human rights vary. What may be HR violations to some can be another’s sole income source. #efnasia2016

Armin Reinartz ‏@Armin_Rz  21 Nov 2016

#TPP is dead. Trade agreements fail because of protectionist attitude, not #HumanRights provisions, Dr. LEE Taekyu,KERI Korea #EFNAsia2016

Siegfried Herzog ‏@biberacher  21 Nov 2016

Free Marketeers keep having to play catch-up to Human Rights concerns that are framed in a way hostile to markets #efnasia2016

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My own tweets:

Economic #freedom means freedom of individuals to acquire, own, control, sell, donate private #property

Rising #inequality per se not prob but poverty. If poverty declined but inequal increased, fine. It’s not good to stop excellence.

Some consider child labor as HR violation but some households, it is necessary. If sole breadwinner is gone, young need to work.

Corporate branding will help global firms stay the course in #HumanRights and econ freedom protection, respecting #ruleOfLaw.

VP @lenirobredo was here day 2 #efnasia2016 conf. She talked abt rising inequality. Actually poverty declined, many poor became middle class.

No planner would know every indiv preference… Invasion of others’ freedoms, Liberal people end up illiberal – Nick Smith, LRI

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Middle income trap at Business 360

1* This is my article for the December 2013 issue of Business 360, a monthly magazine published in Kathmandu, Nepal.
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Economic freedom is a major factor for an economy and its people to move from a low income country (LIC) to middle income country (MIC), and ultimately to a high income country (HIC).

People need to be given enough leeway to be creative and innovative in introducing new products and services to their consumers, resulting in continuous and endless process of innovation and healthy competition among the various players in the economy.

This fact is among the lessons drawn from the two-days Economic Freedom Network (EFN) Asia  conference in Bangkok, Thailand in October.

2Among the prominent speakers of the conference was Dr. Razeen Sally of the European Center for International Political Economy, also a vising faculty at the National University of Singapore (NUS). He said that  a poor country or LIC must “get the basics rights” to catch up with growth. Among such “basics” are 1st generation reforms, “product market liberalization.” This includes the following:  macroeconomic stability in fiscal and monetary policy, rule of law and property rights, free international trade, and good skills and education of the people.

The next generation reforms are more structural and more complicated.  They are the “factor market liberalization” reforms.  Increasing globalization and free market does increase income inequality among the people. While this is a natural economic result, this is also a political challenge how to face this reality and find ways to address it.

Penalizing more efficient, hard working people via higher taxation, more business regulations and restrictions is not the way to do it. Rather, it is encouraging those in the lower end of society to keep working. They may feel “poor” when in fact, their economic status is already comparable to the upper middle class of a LIC or even a MIC.

In the last session, I was one of four rapporteurs for the four discussion groups on other issues raised during the conference. Among the issues raised in our group was shared by Dr. Chung-ho Kim of Freedom Factory Ltd. in Seoul, that many  people in HICs like S. Korea  feel and complain that they are poor, despite the high standard of living they enjoy compared to what the poor in low income and middle income countries experience.

I made this chart in my report on stage that day.

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Middle income is broadly defined as having a per capita GDP income at purchasing power parity (PPP) valuation of between $3,000 to $16,000  per year. Thus, an economy with per capita GDP of only $3,000 or less for many years is said to be caught in a low income trap shown by growth path AB. Economies which have been stuck at $16,000 or less per capita GDP for several years is said to be caught in a middle income trap, shown by growth path AC.

There are several factors why an economy can be stuck at AB or AC path. Foremost of which are: lack of economic freedom of the people — where a big portion of the economy is held by a few oligarchs or business cronies of high political leaders or monarchy. Another reason is the lack of the rule of law, where rules are applied differently to different people due to arbitrary powers of lawmakers.

These two factor can also contribute to a retrogression of an economy from a lower  middle income to an LIC and go back to low income country. Or for an HIC to become an MIC.

The way some member- economies of the European Union are being managed, it is possible that they might plunge into growth path A’E someday, meaning may fall back to MIC status. When entrepreneurs are shacked by too many taxes and regulations, either they will experience production shrinkage or quit altogether, migrating to another country where their economic freedom is more respected. Heavily regulated country will experience more debt and fiscal constraints as the number of net tax payers will flatline if not decline.

Whether aspiring to move a status, ensuring the economic freedom of the citizens and limiting the role of government to enforcing the rule of law and protecting property rights, are the basic ingredients of success.

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