Monday, April 4, 2011

Fruits of State Resource Management: The Case of Pasig River, Manila Bay and Makati Area Slums

Public property can be seen as one type of interventionism. The most pollution happens in public land because government does not have an incentive to take care of its property. As a result, those on the perimeters of the public land are affected. People living on the side of roads, seas, and rivers suffer from the pollution that is encouraged. Just look at Pasig River. Huge amounts of money and effort were expended to pressure the government to 'do something' about the dying river. And even now the its pH level is just enough for fish to survive. We would likely see little or no outcry if that river was privately owned. The owner would make use of it in the most profitable way he can think of, which means that resource will be used in the most socially optimal way. Even if the government successfully cleans Pasig River, it would still remain an idle resource slowly accumulating pollutants again.

Pollution is encouraged when the resource has no owner, i.e. public property.

Recently, there has been news of a residential community urging the government to cleanup the shores of Manila bay. As a result, 130,000 squatter families will be displaced without relocation. Here we see another effect of public property, the creation of conflict between different groups of people. The poor cannot find work because of the minimum wage and are made dependent on government urban planning schemes. They end up in public land that are then leased to those who have political pull. If private property were respected, then the homesteaders (the first to imprint his mark as owner) of the shores of Manila Bay would become the rightful owners. The squatters who now stay there would not have been made dependent and treated as expendable by politicians but would have found employment at a wage matching their level of productivity.

Public property not only encourages pollution, but creates conflict between different groups of people. The government relocates slum dwellers to areas which are polluted due to its own mismanagement. Now their homes are going to be demolished because of the whims of those with political pull.

In a free market, poor urban areas would be bristling with commerce because of employment opportunities provided by capitalists. Wages would be bid-up through competition between different capitalist employers vying for labor power. The relationship between rich and poor would be mutually beneficial, give-and-take, value for value. It now be very different from the situation now where wage controls restrict employment opportunities and the location of the urban poor is arbitrarily determined by government zoning. If the minimum wage, urban planning and welfare schemes were abolished, the poor would either find employment in the city or move to areas where the cost of living is low or in the peripheries of the city. Government urban planning creates disorder, leading many to wonder why there are slums not so far away from large banks and 5-star hotels like in Makati. It gives the impression of an inherent conflict of interest between the rich and the poor, with the former gaining at the expense of the latter. How is it that there can be cooperation across long distances, as in the case of foreign capital investment putting upward pressure on wages in China, but not amongst individuals a few kilometers away? This is the destructive power unintended consequences of interventionism. It makes enemies out of neighbors by outlawing mutually beneficial employment through the minimum wage on the one hand, and promoting dependency through welfare on the other. This economic and social inequality is then exploited by the Left to promote Marxist class struggle theory which only make the problem worse. The last thing slum dwellers need is a false ideology.

Most of the slum dwellers are unemployed or work in undeveloped extra-legal economies. Why aren't the rich in Makati 'exploiting' the nearby slum dwellers by making them work for low, but higher than pre-existing, wages? The answer: The government makes it illegal for them to do so.

Under conditions of capitalist freedom, the shores of Manila Bay would be de-socialized ( 'privatization' is misleading) and the residential community living nearby would own shares to it. The squatters, since they are also victimized by government intervention, could also be given shares, albeit less since they are 'late-comers'. The government would not be paid anything. Voluntary arbitration (not political pull) would settle the matter with equal representation of the two groups and conflict easily relieved. Private property is the best means man has discovered to solve conflicts. A society, for it to be considered civilized, must recognize it.

To contrast, 130,000 families are going to be driven to the streets just so to waste tax-payers money on cleaning up the shores of Manila Bay, unproductive land which will eventually accumulate pollution in the future. Not only is this insensitive, it is un-capitalist and uncivilized.


  1. FFF, it's good that you resumed blogging. Keep them coming. Four Filipino free market blogs are doing good in the global traffic rank. I wish to see this blog joining them. There should be more voices and publications for the free market perspective in this part of the planet.

  2. Thanks Nonoy. I have more time to write now since its summer.

  3. Yes write more. It will take just a few months then alexa will pick up your blog and give it a global rank. Then you can analyze where your audience are from, what topics they search more often from your blog, etc.

  4. So sweet. Trickle down, hm? Laissez faire comes down to social Darwinism and the automatic formation of oligopoles. Without a strong and resilient democratically ruled public sector oligarchs ultimately hijack the political process and shape laws, legal processes and political structures according to their likes. The weakness of anarchism is that it is not egalitarian but leads to the rule of a few strong and the suppression of the majority. The Philippines had the additional disadvantage to start out into capitalism as a country ruled by oligarchs and the dices have been loaded in their favor from the beginning. Free wheeling forced-growth capitalism is not only unjust, it also is logically flawed to the bones and eventually leads to planetary suicide. The tragedy of the commons... does it hold up to empirical evidence? It doesn't, because the commons, in traditional settings, have never been unregulated. The issue is one of culture and one of enforcement. Among the richest and cleanest countries in the world with arguably the highest standards of living are the north-western European social welfare states (sans the UK, which is going down the drain with all its marvelous attempts to copy US libertarian ideology). Even the poor are living an ok life, can send their children to school and college, have free full coverage health care. The rivers are clear, the air is clean, beaches are not littered, the prison population is low, crime rates are low... Laissez faire economy leads to what you see in the Philippines and other countries in SE Asia, who are responsible for the continental size North Pacific garbage patch. What you need is enforcement, public utilities, a proper social welfare and health insurance system, public utilities that deserve the name, cartel regulations that deserve the name, separation of church and state (and private businesses and state). People still defending Laissez faire ideology either think they themselves benefit from it (i.e. they usually already are among the tiny group of benefactors of de-regulation), or they are quasi-religious believers who pay no attention to empirical evidence, i.e. the real world. What I find fascinating is that selfish human beings more often than not act and decide against their own interest - without benefiting anyone else that is.