Should ISIS operate the toll roads?

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Mike Wootton

Mike Wootton

Well here we go again, having loaded P2,000 into the e-pass last Wednesday and having incurred toll fees of P1,320, I see now that according to the RFID machine my balance is minus P163. It happens continually and is virtually impossible to check; “Oh it’s the delay in posting Sir,” “the machines are not accurate,” etc. etc. The same thing happens in Hong Kong, I believe, with the settings in the computerized charging system being “not quite right.” Deliberately or just an honest mistake?

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Although I am an investor, I am not really a fan of capitalism as any regular reader of this column will well know. But perhaps it is not so much that I am not a fan of capitalism, more that I just don’t like the way in which it operates, it is unfair, promotes greed and immorality. The controls that have to be in place and which have to operate effectively in the developed economies in order to prevent cheating are exceptionally rigorous, and even so they sometimes don’t work in the public interest. In less developed economies such as the Philippines the controls just don’t work at all due not only to regulatory capture but also the proclivity on the part of the powerful (and plenty of others!) to consistently not do what is right.

I saw an amusing satirical view of ISIS (the Sunni Muslim terrorist organization) the other day, and now I can’t find it again, but from memory: “ISIS are being considered for a World’s Most Successful Business Award. This prestigious award is given to organizations that have demonstrated an ability to grow and succeed very quickly in any part of the world. Goldman Sachs spokesman Leo Abrahams said that he was looking forward to an upcoming ISIS IPO on the New York stock exchange. “ISIS are a young enthusiastic organization, which, with government support, have made tremendous progress in Iraq and Syria over a period of only a few months, gaining an income of anywhere up to $2,000,000/day, equipped with and using the latest modern high technology and even setting up corporate social responsibility programs in areas under their control to provide water, education and electricity services.” “Their success is unparalleled” he added, “I am certain that the offering will be considerably oversubscribed.” As he left the conference room two of his bodyguards beheaded several members of the audience.

Smile though we may, well at least I did, that is how it is. Who really cares about what is right, better just to make money and capture the competitive edge, somehow or other; in fact, even better if there is a monopoly situation or at least a workable cartel; ISIS have certainly achieved a monopoly position in their areas of control. Legalities can sometimes be a bit of an inconvenience to the rapacious capitalist but these can often be circumvented with the help of clever lawyers and I’m sure that ISIS don’t pay too much attention to the regulations and bureaucracy.

Capitalist practice in less developed economies with weak governance is a tragedy the scale of which is easily measurable. That local investors here in the Philippines expect returns of anything between 25 and 30 percent is simply outrageous, given bank interest rates of 1 or 2 percent a year. How can any honest business produce returns of this level anywhere? No wonder there is lots of hot money [a net inflow of $500 million or P21.5 billion in August alone]playing around on the PSE. But it doesn’t stay, it just comes in and slightly more eventually goes out inflating the worth of the local shareholders, and raising their expectations to a ridiculous level in respect of any long-term investment on a playing field tilted at about 800 against long-term foreign money.

Neither Syria nor Iraq is a well-developed economy and, indeed, as in the satirical piece above the success of ISIS can be spun as an attractive investment proposition, but there may well be some personal risk in actually getting your hands on the dividends!

Capitalism and morality are not compatible so rather than encouraging yet more “capitalism Philippines style” through wholesale privatization and the PPP schemes, which have fortunately yet to get off the ground, government should keep hold of infrastructure and utilities until such time as local business evidences its ability to behave with at least some degree of morality.

Mike can be contacted at mawootton@gmail.com.

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