Philippines vs China


It seems that we can boil down the legal conclusion of the arbitral ruling as based on only two key questions.

One, what is an island? A rock is not an island. So there. Even if China builds up a rock, it still cannot become an island. It may be a feeler island, but still that’s not an island in the legal contemplation of international law. UNCLOS says that artificial islands are not properly islands. (Otherwise, any oil rig can claim to be an island!)

And there’s the economics of islands. Under UNCLOS (Art. 121(3)), only natural formations that can sustain economic life on its own, can have maritime zones, such as an Exclusive Economic Zone (EEZ).

Two, what is an archipelagic state? It is one composed of many islands. PH is archipelagic. China is not. It appears that China conceded its status as a coastal (non-archipelagic) state when it signed the UNCLOS because the UNCLOS classifies countries in only two ways — archipelagic or coastal. The Tribunal ruling, in para. 573, categorically restates that China is a coastal state.

The answers to these two questions determine the EEZ, which is 200 miles from the coastline of a non-archipelagic state; and 200 miles from the archipelagic baseline of an archipelagic state. The baseline is a point-to-point boundary that encompasses or includes the islands of an archipelagic state.

An outlying island in the South China Sea, even if it could be claimed as territory of China, cannot result in an expanded EEZ based on archipelagic baselines because China is not an archipelagic state. (Consider the following related question: Can the US consider the waters between Hawaii and Los Angeles as “internal waters” using the archipelagic baseline approach? The answer is in the negative because, like China, the US is not an archipelago.)

The EEZ of an outlying island is 200 miles around that island because such an island is treated like any other land territory (Art. 121(2)). The EEZ cannot extend beyond the 200 miles (beyond this, there would be continental shelf (something else) or open international waters (high seas)). And an EEZ could be delimited if competing EEZ’s from other nearby states exist.

The ruling states that the disputed territories are not at all islands, and therefore cannot provide China an EEZ. Practically all the major disputed territories are inside the EEZ of the Philippines because it is an archipelagic state. Therefore, even ‘rocks’ can be useful to the Philippines, if they are located within the EEZ based on the archipelagic baselines of the Philippines. These useful rocks include Scarborough Shoal, Second Thomas Shoal, Johnson Reef, McKennan Reef, Hughes Reef, and Mischief Reef. Some of the disputed rocks are outsize the EEZ of the Philippines.

An important caveat is that territory and sovereignty are matters of international law not subject to the UNCLOS. Nonetheless, disputes relating to the EEZ are pointedly the subject of the UNCLOS.


EEZ means maritime zones (not necessarily territory in the usual ‘conquest’ or ‘historic’ sense) that we can, under international law and UNCLOS, consider as usable only by us. We can, by negotiation, lease or allow others to use the EEZ, but the extent to which the Philippine Executive can do this is governed by the 1987 Constitution.

NB: The map of PH EEZ is from Wikipedia.

PH EEZ Screen Shot 2016-07-14 at 2.07.29 PM


How economists approach history

If only to inspire economics students to study history, and how to apply economics to solve historical puzzles, here’s an example of a very interesting study.

In this work, Douglas Allen and Peter Leeson explain the economics of warfare in the medieval ages, focusing on the technologies of the long bow versus the short bow.

Perhaps, perhaps, one can conclude that major human endeavors, including war and struggles for power, are drivers of innovation.  This echoes the idea of ‘creative destruction’ from Josef Schumpeter.

EC 12 Pointers

Additional FAQs on Chapters 6-7 of Backhouse

  1. According to David Hume, why is manufacturing valuable? Could this view apply as well to agriculture? Discuss.
  1. In Adam Smith’s works, what did he consider as duties of government, which could not be relegated to the working of the market system or the Invisible Hand?
  1. Who invented the law of diminishing marginal utility?
  1. Who was the first to use a diagram to explain how demand and supply determine the market price?


Futuristic Economics

In this lecture, we will mainly explore the question of how economists know what it is they know.

First, for reference, we have the following dictionary definitions:

Science: Knowledge gained through experience; Observation, identification, description, experimental investigation, and theoretical explanation of phenomena. (Root: Latin, scientia, knowledge.)
Phenomenon: A fact perceptible by the senses.
Experiment: A test made to demonstrate a known truth.
Empirical: Based on observation or experiment.

Philosophy: The study of the fundamental nature of knowledge, reality, and existence, especially when considered as an academic discipline.
Metaphysics: The branch of philosophy that treats of first principles.
Ontology: The branch of metaphysics dealing with the nature of being. It addresses the question of what kinds of things exist.
Epistemology: The theory of knowledge, especially with regard to its methods, validity, and scope. Epistemology is the investigation of what distinguishes justified belief from opinion.

Religion: A cause or activity pursued with zeal or devotion.
Logic: The study of the principles of reasoning.
Art: Discipline that does not rely on the scientific method; creative or imaginative activity.

Second, some “tickler” questions, for which we will not necessarily have an answer:

What is thought or thinking? If it is defined as “mental activity,” where does this activity take place? If it takes place in the brain, can animals with brains think? What about plants? Can they think?
Can a machine think? Can it learn? For example, Facebook and Google collect data about how their users behave. Do the algorithms inside the servers of Facebook “think”?

Okay. Let’s get down to some business for today. Continue reading “Futuristic Economics”

Was Rizal a ‘Nationalist’?

We have been taught to equate Rizal with nationalism, or with love of country.  But do we know what he meant by the word? One noted Filipino historian tried to summarize Rizal’s views on the matter.

It turns out that Rizal would be secretly reviled by very many today because he defined and equated nationalism with sacrifice.

But ‘sacrifice’ was not the usual blood and guts, as in the subsequent wars, but of an altogether different kind. Sacrifice meant earning one’s nationalism the way a boy scout earns his badges: through practice, practice, practice. No short cuts for the little guy in the western hat and morning coat. If you want to be a proud Filipino then you studied hard, worked hard, took it on the chin, and did all this with little obvious glory. Self-serving social network hubris and blather won’t count at all. And obviously, trapo corruption, epalisms, rent-seeking cum corporate social responsibility and PR trickery would get the JPR smirk, if he had any.

How many who wear their ‘nationalism’ on their sleeves today will pass the Rizal test? I’d bet that you can count them on your fingers, and that may well be generous.

‘Free’ markets and ‘fairness’

There’s a new good book by John Tomasi, an even better review by Deirdre McCloskey, and a so-so-reply.

Methinks the point can be (perhaps overly) simplified to a Schumpeterian one:  A ‘free’ market is one that incites innovation, and ‘fairness’ comes out at the back end as an unintended consequence, though not in the sense set up by Adam Smith and taught in economics.

Perhaps there’s another point too.  ‘Fairness’ can be divorced from efficiency, but efficiency can be helped by understanding the public-vs.-private goods distinction, and the role of institutions (market vs. non-market) in this regard.

Reversible error

The law school dogma is that the Supreme Court cannot commit reversible error.

Wrong, according to Rene Saguisag.  The people can reverse.  Here’s an excerpt:

I share the view that we cannot add to constitutional qualifications. Hence, my reservation on bank waivers. Total obliteration of any zone of privacy, the right to be let and left alone, is the aim? Only the rascals who park their money in their children’s names, for instance, may go to, and remain in public life. The JBC can set policy and may ask for the transparency vow. We, the people, have the right to know.

Sandbagged Rene is to get the credit for the new transparency? We might as well thank Osama Bin Laden for our anti-terrorism law and safeguards.

Happy Independence Day!