Presentation on competition policy and the role of the state

Last week, I was one of four speakers on the Asian Legal Business (ALB) and Thomson-Reuters’ forum on the Competition Policy.

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I started with the World Economic Forum (WEF) Global Competitiveness Index (GCI) 2016 report.

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Performance of some ASEAN countries and neighbors. The Philippines’ overall rank has declined by 10 even though the decline in score was not that big, from 4.39 in 2015 to 4.36 in 2016. This means that some countries have significantly improved their scores relative to the Philippines.

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I also showed the various government agencies that give various permits and/or franchises. A franchise is often a monopoly for X number of years, slide borrowed from Andre Palacios’ earlier presentation at the PES conference.

Here are examples of government agencies that create monopoly or oligopoly privileges.

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The first law, a body in motion will remain in motion unless an external force is acted upon it; a body at rest will remain at rest unless an external force is acted upon it. The second law, the third law…

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I asked this question at the audience, true or false? A few said True while none said False.

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Two hands. Which one provides real welfare to the people?

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Conclusions: 

1. Very often, the purpose of government is to expand government.

  1. Newton’s 3rd law of motion revised: For every govt intervention, there is an equal opposite distortion.
  1. Improve market efficiency and competition not so much what govt. should do/subsidize but rather, what govt. should NOT do  Less bureaucracies, taxes, fees, regulations, prohibitions.
  1. Not so much good governance of BIG government but less governance.

 

  1. Heed Adam Smith’s ‘invisible hands’ of the market, not Keynes’ ‘grabbing hands’ of the state.

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From left: Andre “Raj” Palacios (moderator) of the Competition Review Committee (CRC), Moy Tayao of UST Pol. Sci. department, me, Thomson-Reuters Manila head, Henry Schumacher of the European Chamber of Commerce, and Raul Fabella, Chair of the CRC, also of UPSE.

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