EGALITARIAN| Again, why social market in federal Philippines Fav Radio News Center

EGALITARIAN| Again, why social market in federal Philippines Featured

SOCIAL market as the famous politician-economist James Buchanan describes is a desired political and market order. More so, it solidly stands on the principles of efficiency

and effectiveness of functions of a small and proximate government. The small government principle refers to the logic of delineated functions. This however is different from the devolved functions as stipulated in the Local Government Code; these are those powers and functions which are primary and exclusive to a defined tier of a government.

Then again, political order may end up taxing heavily its citizens more than the services it provides. Citizens are willing to pay tax as long as they know where the taxes are going, certainty of amount, and that they benefit from it. This is the cannon law of taxation. Thus, spending of government is associated with the tax, and the activities of its citizens coincide with the size of the economy.

Size of the government refers to the public spending it has to do to achieve relative competitive advantage. These are the public spending on physical, social and institutional. If a government has constituency belonging to middle to low-income class, then the government is expected to be big. Meaning, it has to spend more for health, bridges, police and security, education; all that which improve conditions for greater access and participation of citizens. Then the government will focus on market-support initiatives. Market-support spending are competition-based public expenditures. These are spending for local producers’ ability to compete in the international market by virtue of creating scale production.

The model is just simple. The government has to improve the conditions of its people, restore dignity of work and sense of active citizenship. The formula is also simple; it is keeping tab that there are those who are weak and strong; if let on their own, the strong will abuse the weak. By this account, the formula is to pull up the weak to an economic situation where they can engage freely. On the other hand, the strong must also be supported to create anew and actively produce to increase options in the market. Their property rights, return on innovation and productive engagement are as much protected. Developed countries went through a cycle that we do have now.

Japan did this by shifting from heavy technology to portable electronics, after the war. Then they devalued their currencies to make their exports attractive in the international market. Back home, they improved their systems by introducing Kaizen and Quality Control models. Singapore after separating from Malayan Peninsula decided to create their own nation. They decided to focus strength on their unique feature. They have their strategic location and their people as two resources which made Singaporeans stand taller than the rest. Then there is Germany as well. After the shameful defeat, they decided to protect every life; enthused respect for dignity in every person. They also produced reliable and durable market goods at the same time improved their social institutions. All the examples reveal that strong investment to improve conditions of the individuals will surely pay a lot in the future. It is understanding inclusive growth in its true meaning.

However, there is a clear limit. The limitation is the understanding that the government can only do as much, it can facilitate competitive environment but cannot make it. A competitive environment’s other half is the work of the individuals who believe in the system.

The government protects property rights, encourages innovation, and provides incentives for investment. These are features of capitalism; then again, this country cannot succumb to it alone. Free market leaves the weak and the helpless on their own. Total capitalism cannot be all good for the country. Our culture accelerates the downside of it. We have already too much of regulatory capture, rent-seeking and rent-creation that plagued bureaucracy with corruption.

Huge government spending is the only way to address the number of homeless families, very poor health conditions, high hunger incidence, chronic uneven development, high vulnerability to disaster due to climate change, low productivity, poor manufacturing sector, uncompetitive agriculture sector, massive poverty. This public spending should be viewed in both lens of accountability and responsibility. The government is responsible, yet the people are held accountable. These are vague words unless put in proper format. Social market can address this with its political and market features.

Social market provides solution by creating a big push for growth through a strong government that quells monopoly, destroys regulatory capture, and makes the playing field even. The big push targets the small and medium enterprise to make them competitive. Then the agricultural players are organized into clusters to increase market power. Economies of scale are achieved by the production units. Then human capital investments are ensured through spending on health and education. With highly productive human capital comes employment with effective wage. To a large extent, desire for better, secure and comfortable dwelling is achieved by ordinary households. Then the positive cycle continues. The formula works in other countries, among our neighbor nations. This will also work for us. Social market economy will work in this country under the system of federalism.000
Read 2048 times Last modified on Wednesday, 12 July 2017 11:37
Rate this item
(0 votes)