Holy avocado – $48B or PhP2T in public spending for 2013!
Is this the right question? Whose growth are we talking about? The 1% who control the rest of the economy – that’s who!
That’s a useless kind of growth. But wait – before I get ahead of myself. First let’s look at the premises of Aquino’s economic fraudsters.
Reasons Why Philippines Lags Behind Its Neighbors
Arsenio Balisacan, secretary-general of the National Economic Development Authority (NEDA), noted that the Philippines lagged behind its neighbors because of:
- “very slow” infrastructure development
- human capital development
- education
- health
- agricultural productivity a
- manufacturing and
- industry sectors
The solution therefore, according to the Philippine government… is throwing more public money into these public services.
Where’s government gonna get the money?
The government will get the money from:
- * Fees (clearance fees ad nauseam, port fees, airport fees, bus terminal fees))
- * Taxes (sales, property, withholding, “sin”, remittance, road use tax, VAT)
- * Tariffs
- * Monopolizing the currency supply – to include printing more paper money and restrictions on trading of precious commodities such as gold (ergo – “illegal mining” – it was legal to trade in precious commodities – or use it as alternatives mediums of exchange)
- * Borrowing money – issuing public bonds (which have to be repaid by taxpayers)* Printing money – buying up public bonds (risk of inflation)
Where will government spend the money?
Like Santa claus the PHL government will yank out a laundry list of public spending on infrastructure, social and economic services like schools, rural electrification, irrigation, roads and bridges and on the conditional cash transfer program.
Is it true that the Philippines lags because of low public spending?
Let us compare the public spending levels of the Philippines neighbors through the GFCE -
A comparison of the Philippines Government Final Consumption Expenditure as % of GDP with the region’s most dynamic and developed economies does not support the justification for more public spending.
The fact of the matter is that the public spending level of our most prosperous neighbors are either at the same spending level if not – even lower than us.
The GFCE of Singapore, Hong Kong, and Vietnam disputes the justification of Senator Drilon, Finane Secretary Purisima, and Budget Secretary Butch Abad.
Vietnam’s public spending as % of GDP is at 5.4% – for a socialist state – that’s one helluva difference from Cuba at 37.5% of GDP.
Singapore’s public spend is at 10.2%.
Hong Kong’s public spend was 8.4% in 2010.
The world average was 18.6 in 2010.
Philippines versus Singapore, Hong Kong, and Vietnam – Best Practices
Education
Take for instance – education, which recieved the chunk of the pie. Of course, it makes for good politics. How can you be such a scrooge and deprive the poor children of public “free education” by not spending on public education? Well, the Philippine government restricts the operation of foreign-owned schools. Singapore and Hong Kong fill the domestic gap by allowing foreign-owned schools to operate in the country.
Education in Singapore and HK is expensive. But people can afford to pay for education. Fact is HK’s universities have long waiting lists. The education market is quite diverse – and globally cosmopolitan.
Infrastructure Development
Infrastructure development in HK and Singapore? Obviously there was more development even with lower public spending! In the Philippines you have the road user’s tax, the airport terminal fees, and all the philippine government contracts – that range from lousy cost over-run infrastructure at best – or plain vaporware.
Health
Health? The Philippines still has a long way to go against the sex transplanting surgeons of Thailand! Kidding aside – the hospitals of Singapore and Hong Kong are among the best staffed, best equipped in the region. The Philippines faces a glut of medical professionals – a dearth of hospitals – and a large population with minimal access to health care.
Agricultural Productivity
Agricultural productivity? Whose productivity are we talking about? What has the DA – and its agencies – NFA, SRA, PCA done all this years really? Ask for more subsidies; more farm to market roads to nowhere; restrict the trade of sugar, rice, coconuts and other agricultural commodities – and increase costs to consumers and taxpayers while protected/”accredited” traders get away with huge margins at the expense of farm gate prices – because the government prevents farmers from exporting their products and forces farmers to sell to “government accredited” buyers only.
There’s no incentive to sell and produce more when your products are being bought by NFA middlemen at rip-off prices. The low farm gate prices reduces productivity – Mr Balicasan. Allow Filipino farmers to trade globally without DA interference – and you’ll see jumps in agricultural productivity. Money – in farmer’s wallets – not the government – will spur agricultural productivity.
And the trend still continues – any bad day in Singapore, Hong Kong – is still better than any best day in the Philippines – infrastructure wise.
How to Achieve More With Less Public Spending?
These countries were able to achieve more with less public spending. While our neighbors observe fiscal austerity as a matter of principle – the leaders of the Philippines pratice stupendous extravagance with money they did not even work for. No sir the money was made – in the scorching deserts of the Middle East; the unforgiving concrete jungles of New York, Tokyo, and London; in the pirate infested seas of the Somalian coast; in the hospices, hospitals, nursing homes of California; in the daily grind of Filipinos from Aparri to Jolo. All the government did was to show up and ask for taxes, make you wait in long lines – under the guise of helping you (actually – it’s goverment and its cronies help itself to your money! wake up!!!).
The Secret Ingredient – Free and Open Markets
But wait – how exactly did Hong Kong’s public budget provide more with less – and fulfill the Christmas list of Balicasan, Drilon, Abad, and Purisima – at lower public spending levels proposed by the dear leaders.
Our wealthiest neighbors rely on the market mechanisms – not government spending. As was mentioned during the presentation of Hong Kong’s 2011 budget – by Hong Kong’s Budget department
Compare that to the pathetic justifications of Balicasan, Drilon, Abad, and Purisima.
The data shows that our wealthiest and most vibrant neighbors have LOWER IF NOT AT PAR WITH PUBLIC SPENDING AS % OF GDP of the Philippines.
Mister Balicasan – the Philippines lags behind its neighbors – particularly Singapore and Hong Kong, and rising Vietnam – not because of low levels of public spending but due to low levels of foreign investments!
That Mister Abad and Mister Purisima are advocating more public spending despite of contrary evidence – makes one wonder about the plausibility that these are just alibis to generate revenue for protected interests – at the expense of consumers and taxpayers.
Don’t Expect New Outcomes From Same Old Uncompetitive Economic Policies
In 2013, even if the the cabal of Abad,and Drilon will impeach all the Justices of the Supreme Court and empty the coffers of government, the Philippines will:
- Continue to have the highest unemployment and poverty among the ASEAN6;
- Continue to be the least competitive among the ASEAN 6
- Continue to be the most corrupt in the ASEAN 6
- potential of having the lowest GDP per capita among the ASEAN 6
- Face more inflation
- Face more unequal income distribution
- Face more poverty
- Face more underemployment
- Face more public debt
- Face more taxes, fees and regulations
- Face perennial low foreign investments – (Isuzu Philippines just served notice it might follow the lead of Ford Philippines and close shop)
Here’s another American saying for Aquino – “Don’t throw good money after bad” – particularly tax money!
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