Erle Frayne D. Argonza
The Social Weather Stations or SWS just recently conducted its regular national survey on hunger, with the alarming conclusion of growing poverty incidence. A 20% hunger rate was the bleak turn of the survey, which is indeed gruesome to the stomach given the economic boom years.
It seems that the only people benefiting from the economic boom are the likes of SMC’s Ang, PLDT’s Panganiban, Noynoy cronies and intellectual prostitutes, and the likes. It’s almost a year now since Noynoy Aquino was installed to the presidency, and so we may need to begin to assess whether His Excellency’s dispensation had fared well in alleviating poverty and in putting an end to insurgency that has been caused by hunger and poverty among all causes.
I am reflecting back on the agenda expectations I had during the campaign period, chief of which was the physical economy as crux of campaign. Do we have a physical economy frame that takes down hunger effectively, or do we have a hodge podge economy so badly integrated and managed by incompetent prostituted intellectuals?
[Philippines, 08 April 2011]
PHYSICAL ECONOMY IN RP’S 2010 POLLS
Erle Frayne D. Argonza
The debates by presidential candidates have been reverberating the media audiences in the country for couples of weeks now. The issues have ranged from those that are social policy-oriented (subsidies to poor, health, education, housing, jobs) to macro-economic policies (sustaining growth, accelerating development) and moral policies (corruption, reproductive health). Some articulations of foreign policy were also heard from the competing gentlemen.
Seemingly confusing in their broadness, somehow the various forums for the debates (not actual debates but simply presentation of each one’s opinion about policy questions) did give a semblance of information-based campaigns by enthused candidates. This is already quite a departure from previous polls when debates were sparse and superficial, and should be lauded by observers.
What this analyst, who is a public policy expert, wishes to see clearly in the debates is the economic issue of whether to highlight the physical economy policies versus the virtual economy in the management of jobs and wealth creation by the next government. I raised this same question in the last presidential poll in the USA that pitted Senators Obama and McCain in a neck-to-neck fight. I shared my own assessment then that Sen. Obama resonated nearest to a physical economy inclination and should be supported by USA’s voters.
To reminisce a bit, the national economies saw the radical ascent of Reaganomic policies of privatization, deregulation, liberalization, and reinforcing policies beginning in 1980. Such policies led to the rapid integration of nations into a global economy, liberalized the cross-border flow of financial and monetary assets, and eventually led to the predominance of the ‘virtual economy’ based on predatory finance.
In the mid-90s, the Philippines saw its investments structure alarmingly imbalanced, with 86% or 6/7 of total comprising of portfolio capital, and only 1/7 or barely 16% in real or physical economy investments inclusive of FDIs (direct foreign investments). As early as 1989, I already raised the alarm bells that excessive radical liberalization of the economy could jeopardize the financial sector in the short run and lead to an economic collapse that could be far worst than the 1984-86 Depression of the Marcos era.
When a situation comes that the virtual economy dominates over the physical economy (agriculture, industry, S & T, transport) and subordinates the latter, a bubble is created. A bubble economy is one that grows on the basis of speculations in stocks and predatory operations of financial derivatives (secondary debt papers traded in the global market), and is bound to collapse when a burst comes since it isn’t based on tangible goods.
Surely enough, when the bubble burst in Thailand in June 1996, the ‘butterfly effect’ of a mini-flapping of wings created a storm across a vast region. We then dubbed that crisis as the ‘Asian financial meltdown’. The economies and financial institutions that had the greatest exposure to portfolio finance suffered the most.
The worst was yet to come though, as the USA had to wait for 2007 before it would experience its own crash, a catastrophic crash that spread to Europe and Japan (twas barely out of a decade-long recession). The same bubble economy and its predictable burst led to the crash, a recession that hasn’t fully retreated yet. Europe is still in flames today (watch the financial flames in Greece, Spain, Finland), while Japan remains as flat as it was during its 10-year crisis (1994-2004).
The fact of the matter is that, in a virtual economy, the predatory financiers (bankers included) gain the most, while the people pay the price for the collapse. And the payment comes in the form of ‘stimulus package’ that are derived from tax revenues. So the equation is that financiers run away with the massive loot, and the people pay for the cost of the looting crime. The culprits then run away largely unpunished, while the people face the punitive flames of massive business closures, retrenchment, unemployment, and bad debts.
In my book Fair Trade & Food Security (Kaisampalad publication, 2005/07), I emphatically stressed that we have to reverse the free market and free trade policies to be able to regain economic wellness. Reversal means we have to go back to the principles of regulated economy (production, trade, distribution, consumption), and replace free trade with fair trade in our international trade.
Strong regulatory frameworks, coupled with strong institutions and good governance, will redound to bringing back the physical economy into place. With the economy based on the physical or real economy, this country and any country for that matter will weather any economic storm both local and global. There is ample funds to pay national debts, balance the budget, fund social programs, create jobs, and increase wages.
Among all presidential candidates, only that of Senator Manny Villar so far resonates the strongest in terms of echoing the physical economy. This resonance could be explained by the fact that the noblesse legislator immersed himself in housing & infrastructures for the longest time of his life as an entrepreneur, and only fractionally engaged in speculative engagements. Besides, he was witness to the maelstrom on the realty sector caused by the bubble burst of ’97, a burst that wasn’t of his own making as it was the maneuverings of George Soros & pals via currency attacks (monetary markets) that led to the meltdown.
I hope you would agree with me that the slogan for this year’s polls would be: “It’s the physical economy, stupid!”
[Philippines, 19 March 2010]
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