POVERTY: PHILIPPINES‘ ACHILLES HEEL

Erle Frayne D. Argonza

Poverty is the Achilles’ heel of the Philippine state, and will be so for at least two (2) more decades. Amid the appreciable growth the economy has sustained so far, with the national economy doubling in just eight (8) years during the incumbency of president Gloria Arroyo, poverty remains very high.

If we go by the yardsticks of the United Nations Development Program (UNDP) and the World Bank, the Philippines has been performing fairly well on wealth production as a whole, so much that the country graduated to a middle income status by the turn of the century. No more a poor economy by world standards, yet the country’s poverty increased from 28% in 2001 (when Arroyo took over the presidency) to 33% today (per latest government statistics).

Paradoxical, come to think of it, that while the economy has been growing and had moved to middle income status, more people have become poorer. Tough, very tough, is the task of mining for the ‘gini in the bottle’ that would reduce poverty considerably to a negligible 5% or less, a level that is easily manageable and where state and communities can simply decide to fully subsidize the remaining poor.

Whether the Philippines can meet the UN’s Millenium Development Goal of cutting poverty by half in 2015 seems much clearer now to social forecasters: the dream is elusive and unattainable. Not even if the economy will double again from mid-2009 to 2015 which is a most likely development.

The Philippines’ poorest happens to be the rural populations, notably the fisherfolk sector where malnutrition runs the highest rate (2/3 of children/families). Rural population is now down to 34% or 1/3 of the population, while the urban peoples comprise 66% or 2/3. Urban to rural poverty ratio is 1:2.5, meaning that for every 1 poor person in the cities & towns, there’s an equivalent of 2.5 persons in the countrysides.

The message is clear to the next government (formed by the new president after the May polls this year) that the attack zone on poverty should be the rural population. Both antipoverty and anti-hunger programs should be initiated at very high levels in the countryside to be able to bring down total poverty by a large degree.

Failure to solve rural poverty in the long run redounds to perpetuating insurgency. Even if the present insurgent groups would concur peace pacts with the state, new insurgent groups will emerge again in the foreseeable future should the rural folks remain paupers.

Urbanization is now moving up, and with its growing eminence has come the rise of new cities. Citification has seen the incomes of communities treble by leaps and bounds, thus permitting the same communities to spend on infrastructures and social development.

Left to themselves, without massive migrations from rural folks, the cities can accumulate enormous income surpluses to solve unemployment, poverty, and malnutrition (both hunger and obesity). Philanthropic groups consequently rise from civil society and market players, and boost surplus production for solving poverty.

However, such is not the case even as the migration of the poor from the countryside to the cities continues in steady waves. So this brings us all back to the challenge of solving poverty right at the backyards where the poorest are most concentrated. This means that the food producers shouldn’t be left out in the development game, even as rural development should be brought to its next level.

Goal-wise, the realistic target is to reduce poverty from 33% in 2009 to 25% by 2015, or an average of 1.33% reduction per annum. Means-wise, an appreciable mix of good governance, right socio-economic policies, and strengthening of institutions would do a long way to bring down poverty altogether in the short run.

Urban population will grow to 70% around 2015, while rural population will go down further to 30%. With lower rural populations to manage by then, there is no more reason for government not to be able to do something to solve poverty. And we say government, because the increase in poverty largely came from governance-related factors such as poor absorptive capacity (to handle large budgets), inefficiency, graft, poor inter-governmental coordination, and low political will to pursue audacious solutions to daunting problems.

In 1989, this analyst wrote an article “Prospects of Poverty Alleviation in the 1990s,” a piece that I delivered as a symposium lecture at the University of the East (Prof. Randy David was also a speaker). At that time, poverty was a high of 49%, while urban to rural poverty was 1:2.1.

Since 1989, we have seen poverty reduced from 49% to its present level of 33% (a 5% increase since 2001 though), although rural poverty moved up paradoxically during the same period. Poverty reduction is not really impossible, as evidenced by the huge reduction across a 20-year period. Bringing it down further to 25% by 2015 is a doable target.

So let us see how the nation will fair under the next government of the republic (after May polls), when we see a new set of political leaders and cabinet members installed to power. As I’ve mentioned in earlier articles, my standpoint is that a nationalist coalition, such as what the present candidate Sen. Manny Villar, is most equipped with policy paradigm and tools to deal with the Achilles heel of pauperism, aside from the competence and visionary acumen of the noblesse senator.

By nationalist, I mean that of moving towards a regulated market and fair trade, with high propensity for ‘physical economy’ policies. We can no more return to the days of liberalization policies that saw the economy crash down in ’83-’85, stagnate for a time and grow again before hitting the next recession in ’97, and finally move up to middle income status only after a turtle pace struggle taking three (3) decades.

Liberalism and its propensity to be pro-Big Business and Big Landlord is a big no in our fight against poverty, whether in the Philippines and other nations of the globe. In my country, nationalism is the antidote paradigm and social technology watershed to reverse decades of liberal policies and solution to poverty. I’ve been echoing this theme since my teenage years yet, and remains steadily anchored on it.

[Philippines, 20 March 2010]

RE-ECHOING ROOSEVELT’S ‘PHYSICAL ECONOMY’ SOLUTIONS TO GLOBAL FINANCIAL COLLAPSE

Bro. Erle Frayne Argonza y Delago

My beloved country remembers the late Franklin Delano Roosevelt very well. It was his presidency that paved the way for preparing the Philippines as an independent state, by first granting the country the status of a commonwealth with its own constitution (1935 Constitution), and by permitting such domestic government to prepare the legislative measures and policy environment for a future independent state (granted independence in 1946).

Roosevelt’s regime also paved the way for the developmental paradigm that would propel the Philippines along the road to industrialization (we now term this as Import-Substitution Industrialization). The paradigm, based on the works of previous thinkers Alexander Hamilton, Friedrich von List, and the exemplar development policies of Abraham Lincoln, puts great stress on the ‘physical economy’ as the foundation for a prosperous and mighty economy in the long run.

Roosevelt further went on to cogitate that colonialism should fold up after the war, and that all former colonies must follow the road to development and prosperity, this being the road to genuine international peace and cooperation. The international doctrine of Roosevelt became the foundation for post-war cooperation, and buttressed the founding of the Bretton Woods agencies whose mandates were propelled precisely by the physical economy framework, the need for undertaking development in the former colonies, and the need to regulate national currencies via fixed exchange rate backed by the gold standard.

The current circumstance is now too remote from the ‘physical economy’ policy regime of the post-war era. Economic liberalization policies led to globalization and the galvanization of the ‘virtual economy’ based on predatory finance. The ‘virtual economy’ had led to de-industrialization, agricultural decay, decline of S&T, and deteriorating infrastructures in the most affected economies, and had fragmented developing states into ‘failed states’.

The global financial system created by the relentless liberalization of financial, fiscal and monetary policies across borders, had already collapsed and is beyond salvation using the present intervention tools that now seem to be burnt out tools altogether. A global conference must be convened most urgently to carve out a new financial architecture based on a ‘physical economy’ framework, and to decisively criminalize predatory finance.

Below is a press release of relevant notes on the global financial collapse, by the economist Lyndon LaRouche.

[27 July 2008, Quezon City, Metromanila. Thanks to the Executive Intelligence Review database news.]

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LaRouche: Financial System Is Dead, Cannot Be Saved
July 13, 2008 (EIRNS)—This release was issued today by the Lyndon LaRouche Political Action Committee (LPAC).

With the U.S. and British financial press full of wild speculation about how the Bush Administration is going to intervene Monday morning, to bail out Fannie Mae and Freddie Mac, Lyndon LaRouche today issued a sharp, preemptive warning: "The financial system is already dead. It cannot be saved."

LaRouche expanded: "If any of the reports of a planned bailout of the two big mortgage lenders, by the Treasury Department or the Federal Reserve are true, I say, 'Forget it.' Any such efforts to delay the funeral of the present global financial and monetary system will only make matters worse. A bailout will cause an accelerated hyperinflationary explosion, far worse than the hyperinflation that hit Weimar Germany in the autumn of 1923. Back then," LaRouche continued, "Germany had a gun pointed to its head. The gun was called the Versailles Treaty, and Germany had no choice. Today, the United States has a choice. I spelled out the choice in numerous recent locations."

LaRouche cited his recent call for the Federal Reserve to immediately raise interest rates to 4 percent, as a stop-gap measure to prevent a massive flight of institutional capital from the banking system. He demanded that this move be accompanied by clear statements from the Fed that there will be no more Bear Stearns-style bailouts of the speculative bubble. Instead, the Fed will protect the chartered Federal and state banks, through bankruptcy reorganization, on the model of what Franklin Roosevelt did, when he first took office in March 1933, and faced the same kind of collapse of the banking system that we face now. "Only, today's crisis is orders of magnitude worse," LaRouche added, "due to the massive leveraging by the banks and other financial institutions."

LaRouche warned that Bush Administration and Fed officials, like Hank Paulson and Ben Bernanke, may be on an "ego trip—unwilling to admit that they have failed miserably. But the reality is that they, like the George W. Bush Administration, have failed, with wretched incompetence. For one thing, they failed to reverse the Alan Greenspan monster bubble, which is now blowing."

LaRouche added that there is no way to even estimate the magnitude of the financial bubble, that has now blown. "The collapse of Fannie and Freddie means the end of the system. And that has already happened, and nothing can be done, within the rules of the current system, to solve that problem. We can keep Fannie Mae and Freddie Mac alive, but only through actions reforming the system, in terms echoing the precedents of President Franklin Roosevelt, that in ways appropiate for the actual conditions of today.

"The only alternative is to implement my three-step solution to the crisis," LaRouche concluded. "If the so-called leadership in Washington is unwilling to do that, then this financial system, and, by extension, these United States, are finished. It may be a tough reality to swallow, but it is the only reality that there is."

Lyndon LaRouche will be delivering an international webcast on Tuesday, July 22, 2008, at 1:00 p.m. (EDT). The webcast takes place on the first anniversary of LaRouche's July 25, 2007 Washington, D.C. webcast address, in which he announced that the financial system had already crashed. Days later, the collapse of Countrywide, and other major mortgage lenders, and the blowout of Bear Stearns, illustrated that LaRouche was 100% correct.

US WATCH: TRANSPORT U.S. BACK TO PROSPERITY

Erle Frayne Argonza y Delago

The final feature of the US ‘real economy’ worth featuring is transportation & communications. This is among the most productive sectors that produce real wealth, contrasted to the ‘casino economy’ of predatory finance that produces wealth from out of wealth itself, producing really nothing worth our value. Broad as it is, let me focus on the transport sector.

Time was when the railway industry took off, inducing growth as soon as the railways hit the West. The continental divide among the US states was bridged quickly, intra-trade exponentially increased. Soon enough, foreign trade also increased in leaps and bounds as maritime shipping grew and matured quickly, making US articles of trade be exported to all corners of the planet.

Trains, ships, airplanes, automotives, trucks, heavy equipment, tractors, and other state-of-the art prototypes came out of America’s workshops to propel growth not only in the US but in other countries as well. “Made in the USA” products became household words everywhere, including my Wild Wild West province of Cagayan in Northern Philippines, precisely due to the miracle of the transport sector that was broadly a facet of the ‘real economy’ of America. I was a child in the 1960s and early 70s when the “Made in the USA” was chic and almost a cult-level cliché.

That era now is now consigned to the dustbins of a remote past. Sure, America still produces state-of-the art transport prototypes. But look, railways have stagnated (is there a mag-lev there now?), automotives are shrinking by the day (laying off and displacing thousands of top quality industrial technicians), while the cutting edge technology for almost all prototypes, save for military transport, have already been surpassed by Asia.

McCain and Obama should better do their homework and understand the catastrophic future that awaits America if the transport sector remains neglected and ceaselessly ravaged inch-by-inch by the infernal fires of predatory finance. The policy makers there better salve the ailing sector quickly, and get back those laid-off topnotch industrial technicians to work before they lose every iota of motivation to even get involved in the sector they grew up with but which rejected them (how traumatic!).

If there’s any sector to begin with, it’s railways. Better renovate the railways, and establish maglevs in all the major continental routes of the US. And quickly take the initiative to establish cross-border maglevs with Canada and Mexico. Later, establish maglevs connecting Alaska with Russia via Siberia, thus connecting US to the Asian land mass.

Sorry for sounding ‘interventionist’, fellows in America. We Asians are as concerned with your economy as you are, and we would want your economic leadership to again rise to the fore. If America does that, other nations will then move on, propelled by growth in the ‘real economy’ because America is doing so. Failing to do that, the economic baton will transfer to Asia, and it will crash our hearts to see our fellow Earthans of America sinking in esteem by the day, because of their collapsing prosperity.

We are all siblings on Earth, this is certain, that’s why we share words of wisdom about your economic conditions. May you finally have a reform-oriented President comes this coming electoral contest.

[Writ 07 June 2008, Quezon City, MetroManila]

US WATCH: ECONOMY’S REAL VALUE

Erle Frayne Argonza y Delago

Great and mighty is America’s economy! America can buy the whole earth and feed all the world’s people! Americans are the world’s wealthiest, they can buy any and all guys outside the borders!

What delusional arrogance from some demonic Pied Pipers! The USA’s GDP ended up at $12.5 Trillion last year, though some indicator massage could yield a higher figure of $13.5 Trillion (using Purchasing Power Parity or PPP). Measure this against the Gross World Product of GWP of $59 Trillion more or less, end of 2007. Estimates by experts is that the US contributes to 22% of the GWP, and ditto for the EU.

That figure of $12.5 Trillion, fellows, is simply the ‘nominal value’ of the US economy. Nominal and real are two different categories in economics. Granting that the ‘virtual economy’ based on financial speculation has been the one that raised values of commodities and services in the USA, the ‘nominal value’ is actually inflated, rendering the ‘real value’ at a much lower level.

Do recall when the stock market crashed in 2001. At that time, the psychological benchmark was 10,000 points at the Dow Jones. Each point in the Dow Jones then was approximately $1 Billion worth. A decline of 100 points means $100 Billion pared off from the economy, or at least the virtual economy. The stock market eventually crashed down to 7900+, which made my own hair rise with horror all over my body.

The stock market then stayed for a time at the 7,900-8,300 points, for couples of months, before it again steadily climbed. For simplification, let us use the figure of 8,000 points as the lowest level that the economy can crash down to, the rock bottom. That is around 77% of the 10,000+ benchmark more or less.

That figure, fellows, is the rough estimate of the ‘real value’ of the US economy. If we multiply 0.77 by $12.5 Billion, this yields $9.63 Billion. That’s the real figure, the real value, the real score of the US economy. If we convert this to PPP, this will rise a bit to $9.8 Billion more or less. The remaining balance of $3 Billion, to complete the $13.5B –PPP, is all ‘casino economy’ value, all speculative value and nothing more.

So now, going back to a previous question, where and how will the USA get funds to pay for $50 Trillion worth of debts? Do the electoral bigwigs in America possess with them the proper framework to comprehend and recommend practicable solutions to America’s ailing debt crisis and overall economic malaise?

I wish you American voters will do your own deep inquiries about the depth of your problems. The health of the global economy is being endangered by the impending US economic collapse, a fire that can easily burn out the EU as well (this fire had already begun there in fact). When both the EU and USA are in economic collapse or ‘fire function’, the entire global economy will catastrophically fall in deep quagmires.

[Writ 05 June 2008, Quezon City, Metromanila]