Why Private Business Investments Work Better Than Government Business Investments

Okay, this is not me saying that the government shouldn't invest. Rather, this is a call that for the government to have money -- it must realize that it's private business investments that will give the government more money (through taxes) and NOT government investments. 

Take a look at this video and see the difference between government investors and private investors. You have private enterprises and government enterprises. One is about railroads and the other is about the first flying machine. Now, do a comparison of the results. The government enterprise shows how entrepreneurs James J. Hill and the Wright Brothers built their wonders WITHOUT government aid. So what really happened? If you noticed the difference between the private investors (Hill, Wright brothers) and the government-sponsored ones (Union Pacific Railroad and Samuel Langley) -- it's with the usage of money. Government sponsored ones risked the taxpayers' money (which in turn those paid by the government weren't careful enough because it wasn't their money) in contrast to the private investors who were using their money. 

If you used your money then think -- would you be more reckless? Rather, any wise investor would learn from their past mistakes with finances and be more careful next time. It reminded me of how I'd be more careful lending someone money that's mine vs. how I foolishly lent someone that much money which wasn't entirely mine. The amount of recklessness with money that's not exclusively yours vs. someone else' money can make a difference. That's where the difference lies. Langley's two highly expensive and failed experiments caused much taxpayers' money. The Wright brothers didn't cause the government a single cent to make the first airplane. Rather, the government spending only came later to buy airplanes from the Wright brothers after they had mass-produced the airplanes with their own money. 

The same can be said about the 4Ps program in its so-called quest to eradicate poverty. While it does have conditions attached to it but most of it is in name only. In reality, the 4Ps program has become what I'd call as beneficiaries are just waiting for a shower of gold coins. Many people fail to meet the conditions such as children remaining in school or check-ups but they get their money anyway. In truth, 4Ps isn't a job creation mechanism. Rather, it has made more Filipinos lazy as a result. Besides, if you started reading rags to riches stories then you will realize one thing -- these entrepreneurs didn't get out of poverty with government bailouts. Rather, they worked their asses off in order to make their ends meet. When Tony Tancaktiong became a middle-class ice cream shop owner -- he didn't get any dime from the government. Lucio Tan worked as a janitor to pay for his tuition fees and not get government money to pay for it. Henry Sy's venture had him do all sorts of odd jobs until he at least made his first successful business. These men didn't receive 4Ps.

Yet, some stupid 4Ps-obsessed old man who considers himself all so wise because of his age says, "But 4Ps aim is not to make everyone billionaires but to make sure everyone can eat three times a day." But what makes anyone eat three times a day is job generation and 4Ps DOESN'T aggregate demand or make jobs. It only makes people dependent on the government for bailouts. How do you create jobs? It's by businesses! Businesses employ people and they don't necessarily sell at first. He says, "How can businesses have customers if there's no 4Ps?" The answer is that the businesses would hire the poor to do jobs like manual labor such as the manufacturing sector. The people hired in the manufacturing sector will get paid to do manual labor. The recent TRAIN tax law makes people who earn only up to PHP 250,000 for an entire year tax exempt. The people who are hired by businesses to do jobs such as work as salespersons, janitors, clerks, and manual laborers get their jobs. They get employed and they can start to get paid. They start having more spending power for their necessities such as rice, fish, and vegetables. 

So why is Mar Roxas' plan to get farmers into 4Ps dangerous? The answer lies again in this fact, "Governments make poor investors." Roxas' plan is stupid for this reason. Put poor farmers into 4Ps and they will start waiting for a shower of gold coins from the government. However, let's start a livelihood program to teach farmers how to fish rather than give them fish (which is hopefully in Manny Pinol's agenda) then at least farmers can start to learn more methods. But just teach them how to fish then stop giving them fish. If farmers themselves get their lands back from the government and they are taught how to farm better -- they can certainly become private investors. Keeping the forests and farms intact is part of having a good investment. It's because no farms and forests mean no continuous sources of raw materials for production. These farmers when they start to invest in making quality crops as private investors -- they can continue to feed other private investors in the process.

The question also lies, "Can the government run the economy?"  If you watch this video then you will find out that the government's role in running the economy is simple. Lower taxes (Isn't that what TRAIN tax is doing?), government spending on stuff like badly needed infrastructure projects and having policies that will encourage private investment. But the question is how can there be more private investments when there are too many Filipinos needing jobs than Filipino businessmen? Again, the government runs the economy through economic policies.  One of the worst provisions of the "beloved" 1987 Constitution is the 60/40 policy -- something that continued the crony capitalism done during the Marcos Years. Don't hate the Marcos Years if you love economic protectionism. It's because economic protectionism leads towards crony capitalism.

How many times do I need to stress the fact that foreign investors aren't here to invade the Philippines or any country for that matter? First-world countries didn't self-industrialize as a certain Heneral Lunatic claims. If there's any reason why South Korea is now suffering from exporting jobless South Koreans in certain sectors -- it's because the blue collar industries are under economic protectionism and not because of the country's long history of free trade. America's collapse is not because of its long history of free trade as some stupid American who looks like Peter Griffin suggests -- it's because of stupid programs like Obamacare(which is similar to 4Ps), George W. Bush's excessive spending and more economic protectionism that has undone the American economy. You can examine how free markets have further enriched countries such as Singapore, Taiwan, and China out of their poverty-driven states. It was through free markets that got them out of their state of poverty by providing jobs and evolving their local businesses.

Besides, foreign investors aren't only an invitation to threats but also to opportunities at the same time. The reality is that it's the oligarchy that will threaten small-sized and medium-sized businesses. Foreign investors can actually help evolve the small-medium enterprise by providing more services and more customers. Local banks can grow by getting more deposits from foreign investors than just by relying on local investors alone. Local businessmen can now get better suppliers which in turn can cause them to spurn lousy local suppliers. Competent local suppliers can increase their scale by providing not only for local businesses but also for foreign businesses too.

That's why it's important to have reasonable regulations towards private industries. Without private industries then what will feed the government in the form of taxes? Without private industries then how will people get jobs since the government itself can't employ everyone? Think about that!