It’s that time of year again when Filipinos will profess their love of justice, freedom, and democracy. Shout your throat to a hoarse with “Cory Cory Cory”, wear yellow, attend a “yellow” concert full of aging lotharios singing cover songs, speak in the vernacular – and have a good time.
The thing is, after the crowds and confettis are gone – when it is time to pay the bills – how has “people power” affected ordinary people?
In the case of the Philippines, 25 years after “people power”, poverty is still extremely widespread in the Philippines – 45% by Pulse Asia’s reckoning – a high 45% poverty which had Aquino bragging that the Filipinos are less poor.
In the case of Egypt, one year after removing Hosni Mubarak, the generals are still in charge, the economy remains restrictive, and after all the euphoria and shouting in Cairo – Egyptians are still facing the very same economic conditions when Mubarak was still present.
Just like the Philippines under Marcos, Egypt had a highy centralized economy that was punctuated by state economic planning.
In 1991, Egypt relaxed many price controls, reduced subsidies, reduced inflation, cut taxes, and partially liberalized trade and investment. Manufacturing became less dominated by the public sector, especially in heavy industries. A process of public sector reform and privatization has begun to enhance opportunities for the private sector. Agriculture, mainly in private hands, has been largely deregulated, with the exception of cotton and sugar production. Construction, non-financial services, and domestic wholesale and retail trades are largely private. This has promoted a steady increase of GDP and the annual growth rate.
In 1999, the GDP per capita of Egypt stood at $3,000. By 2010 it had grown to $6,200. The Philippines GDP per capita was $2,351 in 1999. By 2010 it had grown to $3,920. In that twenty year period, Egypt’s GDP per capita had increased more than twice, while the Philippines is sputtering and couldn’t break past twice it’s performance in 1999. Egypt’s GDP per capita is the sort which makes Filipinos get on the plane and stay there even if Egypt was imploding.
Still, the pace of liberalization is not enough. Egypt’s vested interests pulled the plug on Mubarak’s liberalization programs. The parallelism with Philippine presidents who fall when they call for changing the charter to allow FDI is quite uncanny. Erap calls for liberalization – he goes down. Arroyo calls for liberalization – he goes down. Mubarak – was on the path to liberalization – he goes down. Just like the Philippines, Egypt’s transition from a planned economy into laissez-faire economy got diverted and hijacked by the hit men of corporatism aka crony capitalism.
One year into the Egyptian spring, Egyptians are more aware that politics has does not put food on the table nor provides for the family. Filipinos, however, have yet to be aware about the economy – as they are more engrossed with escapist entertainment fare. Thus, while Egyptians clamor for more economic freedom, Filipinos call for more “escapism” – to flee into beauty pageants, boxing tourneys, impeachments – and what not.
A typical flippax Pinoy would most likely say the Egyptians should count their blessings because they have higher GDP-per capita than the Filipinos. That’s a cop-out – there is a right time for being happy with blessings – this one isn’t one of them. It appears, the Egyptians understand clearly that economics makes the day – and are back in Tahir square.
Remember EDSA? I’d rather not. Why? Because nothing has really changed in the Philippines. It’s the same old oligarchs and hacienderos. EDSA wasn’t a revolution – it was retrogression – and Pinoys still haven’t learned this up to today. And until the economics lessons are understood, expect the Filipinos to keep on dreaming, wishing upon a star – oblivious to the fact that the star which grants wishes are in their hands – and not in the soiled hands of the Philippine government.
And so as EDSA draws nearer – it will be a good time to reflect on the bankruptcy of our government, our economy, our leaders – and most of all, ourselves – we, the Filipino.
Let us have an honest-to-goodness dialogue – are we proud of what has become of our country? Hell no – it’s not something to be proud of. There’s lots of work to be done. Enough of wasting scarce resources on farcical impeachment proceedings – it’s time to finish the unfinished business of EDSA – economic freedom!
The Philippine government has recently signed agreements with the different governments in the Middle East and North Africa supposedly to “protect” Filipino workers. I always maintain that if we sincerely want to “protect” the Filipino worker – keep them home, keep the jobs at home, let the investors come in and provide the jobs so we don’t have to send our fathers, mothers, sons and daughters to the vagaries of living overseas. Our people have been reduced to cattle to be traded overseas – this is not daang matuwid, this is daang demonyo – the path of EDSA, a legacy of serfdom.
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About the Author
Economics, besides being a dismal science, is certainly a convenient scapegoat-villain in the greater scheme of things. And, given the free markets’ aversion to things such as “control”, “subsidy”, and protectionism, no wonder it is not a hit with the oligarchs here. Add to that, economics describe and prescribe things that are “material” in nature, so that the neo-frayles of today despise them as well. In the end, you get a hellhole that is the Philippines.
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Jay Reply:
February 9th, 2012 at 9:10 pm
People have used boogeymen stories for years. What about foreign interests controlling our resources they say? I do believe in the free market but I also believe its success goes with good management and laws of course. However, leave it to the current young generation of would be politicians to look into this. The spirit and habits of the old will just rub off on them.
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When Nazi Fuhrer Adolf Hitler of Nazi Germany, and Joeseff Stalin, of the Soviet Union, signed a non-aggression Treaty, in the beginning World War II , Hitler told his aide: Albert Speer : ” It’s just a piece of paper, I signed.” Two years after, the signing…Hitler invaded the Soviet Union. Do you think that those paper signing will protect our Filipino OFW slaves?
EDSA was a Fake revolution…Cory Aquino was a Feudal Oligarch…Enrile was a Marcos Crony. Ramos was a Marcos General…Most of the supporters were from the Oligarchy and political opportunists…
Our problem is the transition of our Feudal Monopolistic Oligarchy system of government to a government, where we can all share the wealth of the nation. A few families, are the only ones sharing the wealth of the nation, for themselves…
The removal also of family political dynasties and provincial warlords…It’s a very hard job…but, it can be done…
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Hyden Toro Reply:
February 6th, 2012 at 3:43 pm
The protection of her family’s ownership of the Hacienda Luistia, was the reason Cory Aquino went into politics…The Cojuangco family supported the Huk movement…this resulted in the selling of Tabacalera’s Hacienda Luisita, to them…then, after they got the ownership of the Hacienda Luisita. They supported the NPA insurgency movement by paying revolutionary taxes, and providing arms…now, they want to reverse the Corona’s decision of the Hacienda Luisita, by impeaching Corona…a good case study for students on why a Feudal Monopolistic Oligarchy system in a country cannot transcend itself from its own quagmire…
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“Mubarak – was on the path to liberalization – he goes down.” –Hooboy, did you just suggest that the people of Egypt revolted against Mubarak after 29 years becuase of his liberalisation policies?
“Just like the Philippines, Egypt’s transition from a planned economy into laissez-faire economy got diverted and hijacked by the hit men of corporatism aka crony capitalism” — Why would ‘corporate hit-men’ oppose laissez-faire policies when fewer regulations are exactly what corporations want? They certainly dont send billions worldwide on lobbying to governments for more central planning.
Also, crony capitalism was coined to describe Bush jr’s administration, which pursued (successfully) a decidedly laissez-faire economic doctrine. You’re using the worst aspects of the very neoliberal economics you propagate to scare your readership…into supporting neoliberalism in the Philippines. The level of cognitive dissonance in your rhetoric is harrowing, and your constant condescension towards the filipino people such delicious irony. The comments on this site used to be the only worthwhile part of this site, good for a laugh, but they seem to have dried up, driven away by your boring, repetitive tirades no doubt.
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BongV Reply:
February 6th, 2012 at 5:02 pm
corporatist hit-men don’t want regulations that allow competition – what they like are regulations that “protect” them from competition.
are the egyptian masses the only players in the Arab spring?
again – crony capitalism is a word that was used even during Marcos time – that’s even before Dubya’s term. attaboy talaga oo
Crony capitalism is a term describing an economy in which success in business depends on close relationships between business people and government officials. It may be exhibited by favoritism in the distribution of legal permits, government grants, special tax breaks, and so forth.
Crony capitalism is believed to arise when political cronyism spills over into the business world; self-serving friendships and family ties between businessmen and the government influence the economy and society to the extent that it corrupts public-serving economic and political ideals.
Under Market socialism, or any other mixed economy, the political sector is more powerful and possesses more influence compared to a free-market system where the government sector remains small and therefore provide less opportunities for businesses to seek political favors. The larger the government budget and the more the economy is regulated, the more opportunities for cronyism exists.
The term “crony capitalism” made a significant impact in the public arena as an explanation of the Asian financial crisis.[1]
corporatism is NOT laissez-faire capitalism
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if you are looking for “fun” posts – try ABS-CBN – there they will pander to the pinoys, like the morons they are
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ricelander Reply:
February 8th, 2012 at 8:56 am
bongV, how about the chaebols of South Korea and zaibatsus of Japan? Marcos’s crony capitalism was an attempt to imitate those models, some say.
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BongV Reply:
February 8th, 2012 at 9:03 am
the questions boil down to –
1 – how does this affect consumer choices? does it increase or reduce cost to consumers
2 – how does this affect taxpayers? does it increase or reduce tax?
3 – has the impact of consumer prices and taxes – vastly improved the quality of life? has there been *lifestyle inflation*?
I heard businessmen are worried with the latest development in the impeachment trial. Har har har. Bank accounts?
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a legacy of serfdom.
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so why did FVR did not fall when he initiated the liberalization of the philippines, in which in compare to the other president he is not as influencial in terms of money. and he is a close friend of the aquino’s and relative of the marcoses????
The value of EDSA is different to what happen to the philippines and the filipino people in the last 25 years. The stupidity, boastfulness and ignorance of the filipino in the succeeding years is nothing to do with that revolution.
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BongV Reply:
February 8th, 2012 at 6:51 am
liberalization – without amending the constitution and removing the 60/40? you gotta be kidding – expecting new results from the same old restrictive constitution?
just because FVR called it liberalization does not mean – it was… just look at the FINL – that’s not liberalization – that’s restriction
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ricelander Reply:
February 8th, 2012 at 8:51 am
FVRs liberalization was trade liberalization. The idea behind was to force local industries to become efficient and competitive by exposing them to global competition. But to transform local industries into an efficient competitive force, you need massive investment on expansion, technology upgrade and so on and so forth plus cheap energy and other costs. With restrictive investment climate plus high energy cost, of course our industries folded up instead Manufacturing accounts for the biggest value added to an economy. Kumbaga sa tinapay, siya yung leavening agent na nagpapalaki ng todo sa tinapay. Our manufacturing is dead… kumbaga hindi na umaalsa yung tinapay kung kayat maliit na nga lalo pang lumiit
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Jay Reply:
February 9th, 2012 at 9:18 pm
@Ricelander
While our neighbors have inklings of manufacturing to at least pull off R&D projects for their own countries like Thailand, Singapore and Malaysia. Japan went through it after the war and went on a high end focus in the 80′s on. Korea also started and shifted gears by 2000′s. Even if the Philippines tried to make use of their homegrown think tanks, there is no future for further development due to lack of manufacturing.
wenden Reply:
February 12th, 2012 at 1:44 am
however bong it was the start and the country is moving forward (maybe you didnt noticed it because you were too young at that time) and doing so many of the local companies folded up because of the competition. my question is why FVR didnt fall ? instead many longed for his leadership because that is the time that we are considered to be the next tiger economy. Consider this he even stop the concepcion, ayala, cojuangco, lopez in gaining more ground and still why he didnt fall instead you example Erap? he is one of the stupid president. Mubarak there are no tyrant person to last on the seat of power and well yes arroyo but i dont think so…that her downfall is caused by her liberalization program maybe to one way or another.
and do you think if we take out the 60/40 provision foreign investor will come to our country?there were many disgruntled people in the philippines (including you) that the foreign investor would believe that our country is a manufacturing haven………there would be an advantage and disadvantage towards that provision and it take time to fully implement it.
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BongV Reply:
February 12th, 2012 at 9:26 am
wenden:
near the end of his term, FVR advocated charter reform to remove the 60/40 because he realized the structural flaws of the constitution’s economic policies – what he got was the usual bullsyet of the yellowtards – that he was just out to extend his term – the same yellowtard bullsyet raised against Estrada and Arroyo when they opened the topic of charter reform
of course, the pinoytards – bought the argument hook line and sinker – and here lies the Philippines today – sick man of asia, bristling with mendicants and freeloaders who feel entitled to helping themselves with tax money
balutpenoy Reply:
February 8th, 2012 at 7:45 am
What is the legacy of EDSA? here is another look on the past 20 or so years, in comparison with a neighbor of ours:
http://www.mb.com.ph/articles/350663/thailand-and-the-philippines-a-study-in-contrasts-in-devt
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wenden Reply:
February 12th, 2012 at 1:28 am
balutpenoy…………….your attached file is a comparison of two different country in terms of economical status, it is a country’s struggle towards economic excellence…..we encountered political unrest, calamities, stupid president. but it is not what really the legacy…….one of the EDSA legacy is unity toward toppling down the regime, to stop the killing, to stop injustices. What happen to country’s economy is the mistake of the other leaders. Maybe the word unity is one of the disregarded legacy if this latest generation. …….well to some point (a few) read other writer in this blog.
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BongV Reply:
February 12th, 2012 at 9:28 am
yeah… toppling down the Marcos regime.. so it can be replaced with the oligarchy regime…. from the frying pan – straight to the fire….
pinoys went to EDSA so that today they can eat pagpag, be punaspwet, pokpok. drug mule, and the world’s butt of jokes
People who think that the true legacy of EDSA are completely delusional because they think it is “true democracy” but what 1986 EDSA really did is bringing Feudalism and Medieval life into 21st century and many have been blinded by the “Aquino B——- System, Cojuangco B——Network” that the the only thing you will hear are lies which are being forced to the throats of many as “truth” and showbiz non-sense. The 60/40 system in economics did brought changes… to the oligarchs as it made them richer, but for the common people, it only brought more hell to their lives.
I am starting to think that the Meralco power hike is just a scheme as it would give oligarchs more money which came from the masses’ power bills and makes pathetic excuses to convince people to raise power bill and make it legitimate. And as for education, they do not spend any money to improve and even try to remove a major subject from the curriculum because for oligarchs, if you keep the masses dumb, you can control them easily and make lies appear truth to them. They want everyone to be stupid.
1986 People Power Legacy = Idiocracy
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woohoo. Looming economic collapse? Thanks, prosecution team and noytard senatongs.
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true enough, we were lied to by the media, our history textbooks, and were made to believe that we are a democracy when in fact this country is ran by Oligarchs.
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Erap calls for liberalization – he goes down. Arroyo calls for liberalization – he goes down. Mubarak – was on the path to liberalization – he goes down. Just like the Philippines, Egypt’s transition from a planned economy into laissez-faire economy got diverted and hijacked by the hit men of corporatism aka crony capitalism.
-Human rights violation, graft and corruption,betrayal of public trust,plunder,election sabotage.(Zzzz)
You are so correct BongV, everything that happens on our leaders, society, and the entire planet has something to do with government’s economic policies. It is not true that Erap was ousted because of Jueteng and corruption issues. It’s not true that GMA was disliked by so many people because of corruption, election sabotage, betrayal of public trust, etc. It is also not true that Egyptians revolted
against Mubarak because of human rights violation and oppression of freedom. They are all victims of corporatist hit-men. I feel very sad for these unsung heroes. These are leaders with untainted credibility and unquestionable integrity. Even BongV’s country (the U.S.),EU, and other nations supported these corporatist hit-men in order to topple Mubarak. Mubarak didn’t even commit a single crime against these people. How wrong are these nations… I couldn’t agree more on this article. One of the best articles in the world! Morepower to you, BongV.
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BongV Reply:
February 9th, 2012 at 11:55 am
all these “crimes” you mentioned – are for the most part – artificial crimes.. and the rest have their roots in economics
take for example, corruption – when you create more regulations – you also ensure that there will be vested interests which will exploit loopholes – and connections – remove the regulation, remove the agency, remove the crime – free the market
take for example, smuggling of rice – remove the regulations which create “smugglers”, allow consumers to buy from lowest cost, allow farmers to sell to buyers who pay the best prices
take for example, smuggling of sugar – remove the regulations which create “smugglers”, allow consumers to buy from lowest cost, allow farmers to sell to buyers who pay the best prices
take for example, smuggling of onions – remove the regulations which create “smugglers”, allow consumers to buy from lowest cost, allow farmers to sell to buyers who pay the best prices
human rights violations – take place as an outcome of economic competition for scant income generating resources – open the economy allow more revenue sources – and reduce the pressure – and reduce the human rights violations
of course, the media which is owned by vested interests – don’t want the competition – and raise red herrings – which morons swallow hook, line, and sinker – and these morons – provide the materiel for AP
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Ozneh Reply:
February 9th, 2012 at 12:35 pm
If you want the government out of the market, who will oversee whether businessmen are playing by the rules or not? I mentioned in your previous article that the government intervenes in the markets through laws and regulations. You said that competition erodes high prices because consumers will have a choice. What if predatory pricing is involved wherein a firm sells their product below cost in order to shut down their competitors and create barriers to entry? This will lead to monopoly by the said firm which means that they now have control over the price of their product (called price-makers). Who’s going to correct the situation if the government won’t intervene?
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Ozneh Reply:
February 9th, 2012 at 12:51 pm
take for example, corruption – when you create more regulations – you also ensure that there will be vested interests which will exploit loopholes – and connections – remove the regulation, remove the agency, remove the crime – free the market
-Corporations can still lobby to the government when it comes to awarding of contracts. If the government has to choose what corporation they want in a specific project, the best briber wins. There will always be a process in selecting which corporation should get the contract and there will always be persons in authority to make the decision.
BongV Reply:
February 9th, 2012 at 1:12 pm
the only way for a monopolist practice predatory pricing and sell at a loss is if he is subsidized by government …
without government subsidies – selling at a loss is unsustainable – will lead to eventual bankruptcy – and new companies who have better management will take over the market – no need for government
BongV Reply:
February 9th, 2012 at 1:47 pm
Heto pa… on predatory pricing…
The Predatory Pricing Myth
By: Gerard Jackson | Sun, Sep 14, 2008
The meddling Rudd has once again revealed his economic illiteracy by accusing supermarkets of predatory pricing. What is being asserted is that these companies will lower their prices until their competitors are driven out of business, at which point the supermarkets will charge monopoly prices for their goods. Yet those who make this charge are never able to provide evidence to support it — and that includes Rudd. And there’s a good reason for that — there is no evidence.
Everyone knows that when a company lowers the prices of its products demand will increase. If a company engages in predatory pricing then it will have to increase output to meet the additional demand. This means its costs of production will rise. The greater the demand, therefore, the great will be the company’s additional costs. And the bigger the firm the greater will be its costs because of its larger investments in capital goods. In addition, as price is just one aspect of competition it would have to lower prices to a point that would overcome other competitive forces, adding even more to its losses. With respect to prices, it has been pointed out that there is no way to distinguish between a ‘predatory’ price and a competitive one. He went on to state:
…to attack as predation a policy that delivers goods to buyers at a low price may be to attack an honestly competitive price of a promotional sort. A policy to deprives buyers of the opportunity to purchase at lower prices today in the belief that protecting firms from the low prices of rivals today keeps more firms around “tomorrow”, and that this assures buyers of lower prices to tomorrow, is wrongheaded. (Harold Demsetz, The Economics of the Business Firm, Cambridge University Press, 1997, p. 165).
Another thing that is always overlooked is that any firm engaging in predatory prices endangers its other markets. It cannot raise prices in those markets to offset its price-cutting strategy because it would lose market share. Moreover, it might very well find that its lower prices will attract customers way from its other branches thereby raising even further the cost of its predatory-pricing strategy. This leads to the conclusion that localised price-cutting strategies are not sustainable.
It’s also argued that the “predatory” company uses its monopoly to builds up an arsenal of spare cash to fund its price-cutting war. But if the company is a “monopoly” then why does it need a predatory policy? Assuming that the company is big enough to accumulate large reserves then these reserves could only have come from profits. Meaning that if it is that efficient it has no need to engage in predatory pricing. In any case, this raises several points.
As the company cannot know how long its competitors can hold out it cannot possibly know how long its reserves will last. (This uncertainty forms a serious obstacle to any policy of predatory pricing). As Demsetz explained:
Pricing below cost to deter entry imposes great losses on the incumbent firm than on the would-be entrant, since the former loses much on its large market share while the latter loses practically. (Ibid. P. 165)
Any company considering embarking on a course of price cutting knows that potential competitors need only wait for the company to raise its prices before they enter the market, which they can do at a discount by purchasing the bankrupted rivals’ facilities*. This would put a severe damper on any temptation to raise prices above the level at which it had operated before implementing a predatory policy.
Those who make allegations of “predatory” behaviour implicitly assume that once a firm becomes a huge concern its efficiency makes it invulnerable to competition. But if this is so, why does it need to be predatory? Every firm started small, and no firm — regardless of size — is immune to market forces. This is a fact that even recent economic history can attest to. One only has to think of IBM or David Jones, for instance, to see the truth of this. As Professor Coase pointed out, companies will continue to expand until the costs of doing so exceeds the benefits. Sabotaging this process will keep living standards lower than they would otherwise be.
Supermarkets provide ample evidence of this fact: they introduced superior management and distribution techniques and technologies which cut costs and prices and offered an unprecedented and ever-growing range of goods and services, generating more employment (indirect as well as direct) and creating external economies from which we have all benefited.
In a free market — regardless of what critics assert — it is the consumer who rules.
Ozneh Reply:
February 9th, 2012 at 1:29 pm
Wikipedia’s definition of predatory pricing:
In business and economics, predatory pricing is the practice of selling a product or service at a very low price, intending to drive competitors out of the market, or create barriers to entry for potential new competitors. If competitors or potential competitors cannot sustain equal or lower prices without losing money, they go out of business or choose not to enter the business. The predatory merchant then has fewer competitors or is even a de facto monopoly, and hypothetically could then raise prices above what the market would otherwise bear.
-Predatory pricing is temporary, once the company met it’s goal of eliminating competition, it now has the power to make their desired price. Also, how would new companies takeover if the predatory merchant is creating barriers to entry because of excessive low prices?
-Predatory pricing is anti-competition and it will only exist if the government will keep off their hands.