Why Inequality is Good and a

Faster Way to Fight Poverty

Bienvenido “Nonoy” Oplas, Jr.

Pres., Minimal Government Thinkers Inc.

Fellow, SEANET

Reaction to a presentation by Dr. Epictetus Patalinghug,

Albert Del Rosario (ADR) Institute forum on

“Poverty, Inequality and Inclusive Growth”

The Tower Club, Philam Life Bldg.,

Makati City, 12 August 2015

-- Friedrich Hayek, The

Constitution of Liberty (1960),

Chap. 3, “The Common Sense

of Progress”

“The rapid economic advance that we have come to expect

seems in a large measure to be the result of this inequality and

to be impossible without it. Progress at such a fast rate cannot

proceed on a uniform front but must take place in echelon

fashion, with some far ahead of the rest.

“In the long run, the existence of groups ahead of the rest is

clearly an advantage of those who are behind, in the same

way that, if we could suddenly draw on the more advanced

knowledge which some other men on a previously unknown

continent or on another planet had gained under more

favorable conditions, we would all profit greatly.”

-- Friedrich Hayek,

The Constitution of

Liberty (1960),

Chap. 3, “The

Common Sense of

Progress”

“The over-all speed of advance will be increased by those who

move fastest. Even if many fall behind at first, the cumulative effect

of the preparation of the path will, before long, sufficiently facilitate

their advance that they will be able to keep their place in the march.

“Improving the position of the poorest by giving them what we took

from the wealthy, would temporarily quicken the closing-up of the

ranks, it would, before long, slow down the movement of the whole

and in the long-run hold back those in the rear. All obstacles to the

rise of some are, in the long run, obstacles to the rise of all… To

prevent progress at the top would soon prevent it all the way down.”

Growth and innovation with more inequality leads

to more poverty alleviation

Source: Sec. Arsenio Balisacan, “The State of the Philippine Economy”,

UPSE-Ayala forum, Intercon Hotel, Makati City, January 29, 2015.

Progress, prosperity, and rising life expectancy…

despite rising inequality

Life expectancy

from birth (years)

Source: ADB,

Key Indicators

for Asia and the

Pacific 2014

* PH, 1990-2000, life

expectancy rose by 1.6

yrs,; 2000-2012,rose by

1.8 yrs. At this rate, by

2015, Filipinos on ave.

can expect to live

around 69.2 yrs.

Country 1994 2004 2014 Expansion,

1994-2014

Expansion,

2004-2014

Singapore 30,875 50,876 82,762 2.7 1.6

Brunei 56,369 66,785 73,233 1.3 1.1

Malaysia 9,439 14,698 24,654 2.6 1.7

Thailand 6,029 9,052 14,354 2.4 1.6

Indonesia 4,015 5,696 10,641 2.7 1.9

Philippines 2,795 4,062 6,962 2.5 1.7

Vietnam 1,326 2,808 5,635 4.2 2.0

Laos 1,296 2,345 4,987 3.8 2.1

Myanmar n/a 1,908 4,706 … 2.5

Cambodia 753 1,514 3,263 4.3 2.2

Hong Kong 22,710 32,948 54,722 2.4 1.7

Taiwan 14,410 26,670 45,854 3.2 1.7

Japan 21,927 28,885 37,390 1.7 1.3

Korea 10,908 21,245 35,277 3.2 1.7

China 1,618 4,323 12,880 8.0 3.0

Australia 21,972 34,138 46,433 2.1 1.4

New Zealand 17,368 26,562 35,152 2.0 1.3

India 1,429 2,645 5,855 4.1 2.2

Per

capita

GDP,

PPP

values

in int’l

dollars

Source:

IMF,

World

Econ.

Outlook

2015

The goal is to fight poverty, not inequality per se

Question: “Are people better off in a free-market economy given the

wide disparities in wealth that might result?” Agree or Disagree…

Disagree Agree Disagree Agree

Vietnam 3 95 Germany 25 73

Bangladesh 13 80 US 27 70

S. Korea 20 78 Israel 26 68

China 18 76 UK 28 65

Malaysia 21 73 France 39 60

Philippines 27 73 Italy 31 57

India 14 72 Russia 38 53

Thailand 25 69 Greece 50 47

Pakistan 12 62 Spain 51 45

Indonesia 37 58 Mexico 43 44

Japan 51 47 Argentina 48 33

Source: PEW Research Center, Spring 2014 Global Attitudes Survey

Not that I’m a fan of these super-rich Filipinos, but many of them were rags to riches

people. Others from Spanish colonial descent. Many rich and big business names in

the 50s, 70s are now gone or not so rich compared to the new rich.

Concluding notes

• Equal people are not free and free people are not equal. The

enemy is poverty, not inequality per se.

• A government that’s big enough to give everything you want is

also big enough to take everything you have.

• The UN, various multilaterals and foreign aid, NEDA, etc. are

stirring the politics of envy in their continuous call to fight

inequality and forcing equality.

• Inequality due to economic and individual freedom will lead to

substantial poverty alleviation, innovation and job creation.

• Income taxes, personal and corporate, should go down

drastically. Efficiency and hard work is not a crime to be

penalized by high taxes.

• If government should create new welfare programs, it should

abolish or shrink old programs that do not work.

(L-R): HOR CPBD Director Manuel Aquino; ADB Senior Health Specialist Dr. Eduardo

Banzon; PIDS Senior Research Fellow Dr. Celia M. Reyes; Former NEDA Director

General Romy Neri; PIDS and FEF Fellow Dr. Vic Paqueo; ADRi Trustee and UP

Diliman Cesar E.A. Virata School of Business Prof. Emeritus Dr. Lingling Patalinghug;

ADRi President Prof. Dindo Manhit; First Director General of NEDA Dr. Gerardo Sicat;

RCBC Board Director Mr. Cesar Virata; Minimal Government Thinkers President Nonoy

Oplas and ECOP Co-Chair Ferdie Diaz.