In order to understand the serious and grave economic problems confronting Philippine society, it is imperative to know the meaning, in the deepest sense, the key economic terms.
Let’s start with “inflation,” which in general we know as the phenomenon of rising prices and eroding purchasing power of the Philippine currency.
The following data shows clearly the extent of inflation.
Exchange Rate: Php6.780 = $1, as of April 26, 1972; [Php3.90 = 1$, as of November 8, 1965, Php6.435 = 1$, as of December 20, 1970; Source: International Economics, The Chinese University of Hong Kong, 2000].
Rice/kilo – Php1.40
Cooking oil/small can – 1.20
Sugar/kilo – 1.09
Egg/piece – 28 centavos
Pork/kilo – 9.00
Galunggong – 2.00
Alaska evaporated milk/big can – 1.10
Minimum fare – 20 centavos
1986 (after 14 years)
Exchange Rate: Php20.530 = $1, as of December 31, 1985; [Php19.030 = $1, as of December 31, 1985].
Rice/kilo – Php4.00
Cooking oil/small can – 10.00
Sugar/kilo – 7.00
Egg/piece – 1.20
Pork/kilo – 34.00
Galunggong – 25.00
Alaska evaporated milk/big can – 4.50
Minimum fare – 1.00
Inflation Rate = +-300%
2011 (after 25 years)
Exchange Rate: Php43.325 = $1, as of September 20, 2011
Rice/kilo – Php30.00
Cooking oil/small can – 45.00
Sugar/kilo – 40
Egg/piece – 4.00
Pork/kilo – 180.00
Galunggong – 100
Alaska evaporated milk/big can – 35.00
Minimum fare – 8.00
Inflation Rate = +-350%
What factors contribute to inflation? Higher prices of imports from industrialized and advance capitalist countries, overspending by government institutions and their subsidiaries, over spending on infrastructures that often benefits foreign investors, gargantuan military budget, nonsense tourism budget that benefits multi-national corporations in the hospitality and gaming industry, pork barrel allocations, and other non-productive endeavors. To finally hammer the final nail to the coffin, scarce domestic supply of certain goods due over exportation (like sugar and copra), hoarding, smuggling, over pricing of certain import commodities in the case of medicines, fertilizers and other agricultural implements marketed by transnational corporations.
When a country is plagued by inflation, its products, including export, become costlier. This becomes disadvantageous to exporters who are often than not are foreign firms or local companies attached to multinational corporations; this will inevitably compel them to pressure government to effect devaluation of the Philippine currency (lowering the value of the peso). Two peso used to be the equivalent to one dollar. When the peso was devalued soon after Diosdado Macapagal won the presidency, in 1961, exchange rate became Php3.90 to 1$. In 1982, it was Php8.50, and in 1983, Php14.00 to 1$.
In order for the country to earn dollar, our countrymen has to be prostituted to go abroad to be enslaved as beast of burden, we export sugar, coconut/copra, fruits, garments, lumber, and handicrafts even some is in shortage. The dollars earned are spent by the Philippines on imports and reserve for foreign investors because government has a guarantee that their peso profits can at anytime be exchanged into dollars to be sent back to their home country.
In the event of devaluation leading to inflation, government inevitably has to incur loans to patch up budget deficit, so that the direction of our economic development or erosion is determined not by our leaders but the International Monetary Fund, the World Bank, and other multinational creditors and financial oligarchs.
To continue deluding us with their false claims of progress and prosperity, the technocrats and so called economic experts who are in command of our economy (who are actually IMF-World bank boys), point to steady increases in the Gross Domestic Product (GDP), the Gross National Product (GNP) and per capita income.
Gross Domestic product (GDP) is the total monetary value calculated at market prices of all final goods and services produced within the country in one year, minus net income received from abroad. In the case of the Philippines, it is very difficult to determine what part of the GDP is Filipino because so many industries are foreign owned and controlled.
Gross National Product (GNP) is the total monetary value of the products and services produced by the country over one year: Gross Domestic Product (GDP) plus (+) all incomes that accrue to residents of the country from their investments in foreign countries minus (-) incomes that accrue to foreigners as a result of their investments in the country.
Per Capita Income is the total Gross Domestic Product (GDP) of a country divided by the Total Population.
In the Philippines, the poorest country in Asia next to Bangladesh and any other Third World Countries, GDP (Gross Domestic Product), GNP (Gross National Product), and Per Capita Production are all deceptive measures of economic development or prosperity because they do not in any way account for inequality in the ownership of the means of production and in the distribution of income derived from such means (resulting to exploitation of wage labor and in equitable distribution of wealth). Thus, the Philippines may register fantastic and superlative increases in all three indicators and yet, majority of Filipinos or the citizenry are extremely poor and therefore are not benefiting from economic growth.
In fact, the present World economic down-turn/crisis is affecting the people in terrible terms. There is a recession domestically, in the United States of America and the whole of the West, which means a general slackening in economic activity as reflected in rising unemployment and excess productive capacity in a broad spectrum of industries.
The misery of the Filipino people will be intensified by government’s callousness still to dole out budgets towards uncertain results, allocation of pork barrels, non-practice of frugality and austerity measures by over spending on tourism advertisements and promotions, uncontrolled price of electricity, water, gasoline, and other basic commodities, over taxation to patch-up budget deficit, and still without temerity and propensity to incur more loans from the IMF and World Bank. Why not get rid of pork barrel and stop the insanity of incurring more loans which the Filipino people can no longer pay even in a thousand years?
To quote a thought to ponder:
Those who take the meat from the table teach contentment; those for whom the taxes are destined, demand sacrifice; those who eat their fill speak to the hungry of wonderful times to come; those who lead the country into the abyss, call ruling too difficult for an ordinary men. -Bertolt Brecht
Issues Without Tears, Volume II
International Economics, Chinese University of Hong Kong
DELMAR T. TACLIBON Files, MBA, PhD.D.A.