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[av_heading heading=’The cost of politics’ tag=’h3′ style=’blockquote modern-quote’ size=” subheading_active=’subheading_below’ subheading_size=’15’ padding=’10’ color=” custom_font=”]

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Sunday, February 19, 2017

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EARLIER this week, Ifugao representative Teddy Baguilat shared his insights on the economic repercussions of the proposed reinstatement of the death penalty. According to Baguilat, reinstating the death penalty will deprive the country of some of the trade-related privileges it currently enjoys under the General Scheme of Preferences (GSP).

“If you are able to meet 40 indicators on human rights,” Baguilat said, “and one of them is the abolition of the death penalty, then you get certain privileges in your exports to the European Union (EU). It’s not a sanction, but you lose your incentives. Opportunity costs.”

The GSP Baguilat is referring to is a preferential tariff system, which according to Wikipedia, “provides for a formal system of exemption from the more general rules of the World Trade Organization.”

What he’s basically arguing here is that Philippine exports to the EU will become more expensive if the government reinstates the death penalty, which will lead to fewer sales, which in turn will lead to a weaker export sector (at least in relation to the EU).

This probably feels like the EU is imposing tariffs on the country, but it’s not. Instead, it would be more accurate to say that Philippines-EU trade relations will revert back to an earlier, pre-GSP arrangement (assuming the death penalty is reinstated).

Now, from a purely economically outlook, this is certainly a bad thing. If we go by free trade dogma, more trade is always better than less trade. Therefore, reinstating the death penalty is a bad thing from a purely capitalist point of view because it prevents the country from selling our products.

However, from a political point of view, the issue becomes murky. The loss of GSP trading privileges may be viewed as a cost (perhaps a hidden cost) of the Duterte Administration’s policies and agendas. However, such costs are ultimately irrelevant if his policies succeed tremendously, because a less crime-prone Philippines will attract additional investments and capital.

This is an important point to consider, because political and social issues can be expressed in economic terms. Laws and programs can be thought of as investments in the sense that they will yield profits and dividends only after a certain period of time. Also like investments, they cost time, effort and capital, and like many investments, they have the potential to succeed or fail, offer returns or even create new opportunities.

In the case of the death penalty, supporters will argue that the reduction of crime will increase investments into the country, thus covering the costs that our export sectors will suffer due to the loss of the GSP. On the other hand, those who oppose the death penalty will argue that the death penalty will not reduce crime, thereby making the point that the costs of the death penalty are real, whereas its benefits (reduction and prevention of crime) are not.

Which camp is correct? Going by our investment analogy, the consequences and outcomes will decide that. One of the virtues of the capitalist is his pragmatism, and sometimes, that should be our attitude towards contentious issues as well.

This may sound callous, but cost-benefit analysis is a very effective tool for decidability, and should be treated as such, even for morally contentious issues like the death penalty. If the death penalty helps the Duterte administration deliver on its promises then it should be considered a net benefit for the country. If not, then we should be critical of its costs, including the loss of GSP trading privileges./PN 










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