Magkaisa tayo at itayo ang ekonomiyang tunay na Piipino!

Folio of Economic Articles

(For the Continuing Education of NEPA Members and Other Filipinos)

NEPA's ECONOMIC  VISION & PRESCRIPTION: Progress and Protection From Within

STATEMENT ON THE RICE CRISIS: 'The Looming Full-blown Rice Crisis-- A Key Indicator of Decades of Economic Mis-Governance'

FOUR DECADES of the “Philippine Political Economic Drama” from Marcos to Macapagal-Arroyo, 1966-2008, saw the the central theme of economic governance in the Philippines as the mainly foreign-investment- led economic programs. The ironic gauge to the “success” of such governance is how the incumbent President is now trying to “sell” Philippines at the expense of the integrity of our ecology and culture, at the expense of our food security and posterity. Therefore, the obvious premise is the callous readiness to destroy our Economy of the Commons/Communities in our vast forests, minerals, aquatic and fishery resources. and so forth.

          Due to this neglect of the Filipinos right in our native land, the diaspora of overseas contract workers emerged and peaked. It totally displaced Community of the Economy of the Commons as the common people flocked themselves in the cities for their socio-economic survival. These became the residents of the ghettos of informal settlers in Metro-Manila, under the bridge, LRT/MRT, and so forth. Those less aggressive choose instead to form a community that is dependent upon the wastelands of a tyrant urbanization- industrializatio n, i.e. Payatas and Smokey Mountain Lands . At present, the statistics indicate that (8) out of (10) Filipinos have already experienced hunger. Today, the government made a formal announcement that our rice stocks are only good for the next 54 days. .

          A close scrutiny of the economics of the rice industry in the country -- especially since the chemicals-laden “Green Revolution” and “Masagana” increased the expenses of our farmers, killed our native varieties and poisoned our soil programs -- reveals the economic ordeal of ordinary farmers. They worked on the ricefields everyday. They bought chemical inputs to farming, burying them in debt with the local banks. They got trapped in a kind of soil whose nutrients have been hardened by the petro-based chemical fertilizers and pesticides. The tilapia, dalag and snails that grew in the rice farms and brought in extra income got poisoned by the chemicals. The farmer spends a total of P18,000 to P20,000 in inputs per hectare, not to mention the interest payments to banks and other creditors. Amost nothing is left as profit from their farming operations. Left with near-empty sacks after all the deductions at harvest time, the magsasaká has become the poor magsasakó, those who feed the nation have become the hungriest. .

          Most of our rice farmers operate on a break-even situation. This is the reason why most of them are gradually leaving farming behind in search of a better income in the cities. Yet, over the decades, this trend in the countryside created a phenomenon of massive migration into the cities. .

          The reason why farmers in more developed societies are better off than our farmers in the developing world is precisely the lack of needed support of government in technology, credit and market stabilization program like post harvest modernization and others. Farmers in the richer countries have received subsidies from their governments, covering both production and instances of market failure. This is not to include the reasonable interest payments charged to their loans. In the Philippines , if there are funds earmarked to support farmers, much has been “lost” due to graft and corruption of government bureaucrats. The fertilizer mega-scam of recent fame comes to mind. .

          When will the Philippine government finally put a stop on the policy of dependence on imported rice for stabilization of supply rather than use enough of our resources in a comprehensive program to develop the production, market and financial capabilities of our rice farmers. We have brilliant laws like the Agriculture and Fisheries Modernization Program. But, we are so slow in calibrating the situation with the right priorities of governance. .

          Therefore, the rice crisis, that is expected to go full-blown two months from now if government is not able to respond well enough, is just on more indicator of more complex problems. The bottom line of this problem is whether this government could put the right pro-Filipino priorities and could be strong enough to dare defy the foreign overlords and put the agenda in the table of All the President’s Men. .

On behalf of NEPA President Faustino G. Mendoza, Jr.
and the entire incumbent NEPA Board of Directors,

Dr. Ernesto R.. Gonzales
Spokesman and President-elect,
National Economic Protectionism Association (NEPA)

Pateros, Metro Manila
April 10, 2008

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Statement for New Year 2008

'People Can't Expect Any

Economic Relief in '08'

By Dr. Ernesto R. Gonzales, Ph.D.

NEPA Spokesperson and Lead Economist

January 1, 2008

(Dr. Ernie Gonzales, who was a fellow of the London School of Economics in AY2004-05 and headed the economic section of the National Research Council of the Philippines, has been an active member of NEPA since 2003 and has been its lead economist. He was recently appointed the organization's spokesperson. His "C-N-E Resources" framework (that is, managing well each and the synergy of three types of resources – cultural, natural and economic) has been guiding NEPA’s analyses and thrusts since it was published by the Asian Social Institute as his doctoral dissertation. This significant contribution to Philippine economic discourse has been republished by the London School of Economics. He is also chairman of the Lambat-Liwanag Network for Empowering Paradigms and former director of the Social Research Center of the University of Sto. Tomas.)

IT HAS BEEN a common belief that Economics is the discipline that would boost up the Philippine Nation out of the protracted national poverty, where eight out of 10 Filipinos now are already experiencing hunger very literally. Many people-- men of the streets, media people as well as national leaders – had put economics at the pedestal, lambasting “check and balance” forces in society as the culprit beneath the so-called ineffectiveness of the “Sacred Economic Cows” Policies of the Gloria Macapagal Arroyo administration, like Expanded Value Added Tax, untouchable policies like minimum wages, contractualization of Philippine Labor, foreign investment and trade of recycled industrial waste of our rich neighboring countries which dovetailed with “toxic wastes” flow into the country as well as the special flagship economics preference to Mining, and allowing the flow of 'recycables,' which are toxic wastes, into the country.

Because of these economic policies, the paralysis of the economic take-offs towards the dimensions of equity and sustainability were impaired. Advocates, specially those of the neo-classical origins, successfully edify a “firewall” with the convincing power that we have to wait till these forces of “economic growth” are transmuted into the general well-being of the general public. Meanwhile, half a century has passed and nothing has really trickled down to the well-being of our people. Quite the opposite, the result has been a galloping poverty that spreads like a national disease.  Note well that we have changed presidencies, undertook revolutions to change presidents, but none of these presidents ever changed the economic fundamentals which pushes Filipinos to poverty. Therefore, can we expect anything from the elections of 2010 if these economic policies are left unchanged?  No, unless there are essential and drastic changes.

If no drastic economic changes will be effected outside the walls of both the Neo-classicals and the Marxian social analysis, then, we will now have to take the place of Bangladesh as the poorest nation in Asia today.

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What are these necessary changes in the economic policy in this country to make an upturn possible?

·   Transition of policy of the Government from level of survival and sustenance to that of living wages, including the eradication of the contractualization.

·   Passage and implementation of pro-environment economic policies to protect the ecology based communities in the Philippines, like fishing villages, upland tribal societies, and so forth.

·   Repeal of the consumption-based value added tax law in favor of the production- and wealth-based system of taxation.

·   Repeal of the anti-Filipino economics policies of the Republic of the Philippines.

We have no reason to expect any which clique within the power elite to pursue or even willingly allow these changes. In this context, really sincere and able leadership has still to emerge from the ranks of the citizenry in grassroots communities and organizations all over the country to galvanize the people to undertake all the necessary constructive activities and fiscalizing functions, to revive the noble bayanihan-type interlinkages, cushion the effects of the above-explained policies, and eventually push the Philippine to real recovery and progress.  Such prospects stand to be only reason for us to celebrate the coming of the New Year.

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Economy Analyzed

The Economy of the Few,

By the Few, and For the Few

By Dr. Ernesto R. Gonzales, Ph.D.

Member, NEPA Economists Circle

(Dr. Ernie Gonzales, who heads the economic section of the National Research Council of the Philippines, has been an active member of NEPA since 2003. His "C-N-E Resources" framework (that is, managing well each and the synergy of three types of resources – cultural, natural and economic) has been guiding NEPA’s analyses and thrusts since it was published by the Asian Social Institute as his doctoral dissertation. This significant contribution to Philippine economic discourse has been republished by the London School of Economics. He is also chairman of the Lambat-Liwanag Network for Empowering Paradigms and director of the Social Research Center of the University of Sto. Tomas. The following article was carried in The Sunday Times in its issue of November 9, 2003.)

TWENTY-TWO years ago, Dr. Mahathir bin Mohammad became Prime Minister of Malaysia. At the time, our Divisoria was a lot better physically, compared to Kuala Lumpur. Upon retiring, Mahathir leaves behind a Malaysia that is now able to negotiate squarely with the richest and most powerful countries in the world. Malaysia has indeed attained NIC-hood, the status of the newly-industrialized countries.

Sixto Roxas, a noted economist, recently talked before the Kilusang Makabayang Ekonomya at a meeting held at the Club Filipino. He revealed that his talk was actually the same piece he delivered when he was installed as chair of the National Economic Council of the Diosdado Macapagal government in the 1960s. His message was very clear, namely, that nothing significant has happened ever since up to now..

Dr. Bernie Villegas, dean, School of Economics, University of Asia and the Pacific, presented during the Society of Catholic Social Scientists Philippines (SCSS) symposium on October 23 that the lessons we must learn from the just-retired Mahathir is that the best model for an economy is to get out of the “Latin American Trap,” The Latin American Trap is is distinguished by its dependence upon the failed dogmata of macroeconomics principles.

Fifty-seven years from the restoration of Philippine independence in 1946, we find ourselves in a situation of frustration and the realization that we have not done anything right after all. The prevailing tendency is is to point a finger at persons instead of at institutions as the culprits behind our economic failure. Institutions are managed through prescriptions from scientific study of society, economy, polity and ecology. When all these have failed, one can only see the human person as the limiting factor. But man is not like inanimate institutions.

He is a human being. As a human being, he must be a moral person. As a moral person, he right in the eyes of God. If he is morally right, he cannot do wrong to his fellowmen.

I believe that the spirit behind Mahathir’s bumiputra, the policy that placed Malaysians first and foremost, is his love for Malaysia and Malaysians.

This is the great spirit spirit behind the colossal business and economic infrastructures that he has built for Malaysia and the Malaysians.

In contrast, our situation in the Philippines may be described with accuracy as an economy of the few, for the few and by the few, instead of the Philippines for the Filipinos. This is a highly immoral situation if we go by the documents of Vatican II of the Catholic Church.

Vatican II says:

“…economic development…is not to be left to the judgment of the few individuals or groups possessing too much economic power, nor of the political community alone… it is likewise necessary that the voluntary initiatives of individuals and of the free groups would be integrated with state enterprises and organized in a suitable and harmonious way . Nor should development be left to the almost mechanical evolution of economic activity not to the decision of public authority.

Malaysia for Malaysians. Or bumiputra. This explains why Mahathir was so effective in his economic policy that had mobilized the Malaysians. When he became Prime Minister, he said: “You made me Prime Minister of Malaysia. Thus, this government will work with the Malaysians for the good of Malaysia.” True to his word, the entire Malaysian bureaucracy was shaped by bumiputra whereby the rime Minister and the bureaucracy worked as one. This made the whole of Malaysia work as one for all Malaysians.

In the Philippines, in contrast, the many work for a privileged few. Thus, the poor pay taxes mostly through indirect means, but most of the rich do not. Aliens enjoy tax bonanzas so that we may be able to have more of them enter our economic system. Upon entering the economic system, they work for themselves and not for the Philippines. Moreover, when a Filipino exports from the Philippines, he gets zero tax rebate. In our society, depriving our laborers of their right to security pf tenure is being tolerated. Although it is not legal, labor contractualization is now widely practiced in this country, and the labor authorities act as if they see nothing and hear nothing. The poor elect leaders to run government; as soon as elected, these leaders forget the poor. They run government so that they could serve themselves and the interest of the rich.

When a Filipino wants to create something for himself, he has to contend with the rigors of a patent system that favors the interests of the rich. Sometimes the products of his poverty are sold to the buyers of intellectual property abroad at the expense of the poor Filipino. When the Filipino tries to free himself using the forces of the marketplace he is asked to pay many kinds of taxes: withholding tax, value-added tax, corporate income tax, and the perennial income tax. Moreover, he is asked by the bureaucracy to construct facilities beyond his financial capability.

When the funds of government run dry, foreign loans are drawn and spent for the benefit of the rich. Yet, it is the poor who must pay back those loans up to the point of depriving himself the amenities be ought to have.

One of the strongest cries of the citizenry at EDSA-2 was contained in the fourth cornerstone of governance promised by Mrs. Gloria Macapagal-Arroyo: moral recovery. But moral recovery is not the job of government; it is a work that can only be done by a leadership with a human heart. What shapes the human heart is the higher system of beliefs held dear to one’s self, like God. All those who profess leadership, whether in the House of Representative, the Senate, Malacañang, the Supreme Court, I industry, the Church, in “civil society,” so-called, or in NGOs, must have his heart properly anchored in a belief system from which flows moral leadership.

What is wrong in the national economic system cannot be corrected by another erroneous economic policy. It can only be corrected by human heart that genuinely cares for the poor and is truly interested in the welfare of the nation in general and not just for a small segment thereof. For such an objective, manipulation and hypocrisy just won’t work.

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Responsibility of Leadership

Post-EDSA Presidencies

Behind Economic Dysfunction

By Dr. Ernesto R. Gonzales, Ph.D.

Member, NEPA Economists Circle

(Dr. Ernie Gonzales, who heads the economic section of the National Research Council of the Philippines, has been an active member of NEPA since 2003. His "C-N-E Resources" framework (that is, managing well each and the synergy of three types of resources – cultural, natural and economic) has been guiding NEPA’s analyses and thrusts since it was published by the Asian Social Institute as his doctoral dissertation. This significant contribution to Philippine economic discourse has been republished by the London School of Economics. He is also chairman of the Lambat-Liwanag Network for Empowering Paradigms and director of the Social Research Center of the University of Sto. Tomas. The following article was carried in The Manila Times in its issue of February 16, 2004.)

THE CRISIS that engulfs the Philippines right now, i.e., from 1986 to the present, is rooted in the sad fact that we did not have, not do we have now, a leadership that has a clear vision of what is good for the country.

A further aggravation comes way of our being the only country in the world whose national economy is no longer owned by its citizens. At present, more than 90 percent of the Philippine economy are now foreign-controlled despite a constitutional limitation of foreign equity to only 40 percent.

A case in point, to highlight our assertion, is the recent ruling of the Supreme Court (c. Jan. 29, 2004) declaring unconstitutional and void several provisions of R.A. 7942 (the Philippine Mining Act of 1995) as well as its implementing rules and regulations. The High Court further ruled that the 1987 Constitution limits only to technical and financial assistance that which can be provided by foreign firms in large-scale exploration, development and utilization of the country's minerals, petroleum and mineral oil, and not ownership at all.

The other side of this colossal looting which is legalized in our bureaucratic system, is the massive extent of graft and corruption which devoured our financial resources to the tune of P609 billion from 1995 to the year 2000. This is just a little lower than the proposed budget pf P862.6 billion for 2004, but it is a whooping 29 percent of it. The World Bank estimates that $2 billion a year is lost to corruption in this country. The Ombudsman estimates that a total of P100 million is lost daily since 1988.

Records show that 80 percent of road infrastructures at present were constructed during the presidency of Ferdinand Marcos (Sicat, PIDS, 2002)  This means that only 20 percent of the total road networks were constructed after him, by the Aquino, Ramos, Estrada and Arroyo administrations. What is worse is the fact that while Marcos had only borrowed a total of $28 billion up to the EDSA Revolution I, the succeeding presidents had borrowed collectively three times what Marcos had borrowed, but were able to construct less than what President Marcos had built for the country. Therefore, the oft-circulated coffee shop joke becomes a truism indeed that Ali Baba had already left the country but his 40 thieves were left behind in the Philippines.

It is very ironic that behind the financial debacle of our country are our former presidents who dismally failed in their governance and remain a scourge in the present life of the Filipinos. The anomalous PEA-Amari deal during the time of President Ramos had already been declared null by the Supreme Court, yet we are still waiting  for people to be put behind bars on this case. The Kamag-anak, Inc. during the time of Aquino had put their hands in many lucrative business concerns, yet no restriction was exacted from them. The great financial piracies of the Estrada administration had brought the house down to disastrous levels from where it would be difficult to recover even with a flaunted 4-percent economic growth in this administration.

The latest book published by the Philippine Institute for Development Studies entitled "Economic Crisis Once More" (edited by Laberte, 20001, 2002), presents sufficient authenticated data demonstrating the fact that the Philippines encounters economic crises in a rhythmic pattern every seven years. A study of the data and their dates of occurrence support the conclusion that the economy plummets at every turnaround in Philippine presidencies.

Another shameless economic plunder is the fact that while poorer Filipinos finance the operations of government by way of taxes, collected from workers, locally employed or under contract overseas, those who eat the biggest slice in the economic pie of the country are given tax holidays. For instance, a foreign company that earned a total of $8 billion last year, was not even required to pay taxes to the government.

The comedy of errors in the Philippines is that we abhorred dictatorship in politics, but accepted such in our system of economics. In the Philippines, no agency of the Philippine government could undertake programs without the approval of the National Economic Development Authority (NEDA). While there is complete autonomy in the system of political leadership in the country, there is no such freedom in the system of the economy. In the process, the politicians become the guardians of the economic status quo in the Philippines.

These frustrating and crippling shackles of our economic life must be unlocked by whoever will be our leader in 2004. This leader must be able to craft a system of economics for the country that takes cognizance not only of our inherent characteristics and talents as highly resourceful and inventive citizens, who must therefore be given the breaks in entrepreneurship, but most also be cognizant of our rich natural endowments and geographic advantages as a country of islands.

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Statistics and Surveys

Star Report: 'Economic Growth'

Not Being Felt By the Poor --SWS

By Helen Flores

Reporter, The Philippine Star

November 21, 2006

THE INCREASING hunger incidence in the country showed that economic growth in the last two years is not being felt by the poor, the Social Weather Stations said Monday.

The SWS, in its report titled "SWS Quarterly Surveys on Poverty and Hunger Show the Emptiness of GNP," said it based its conclusions on their quarterly hunger and poverty surveys.

"The continuing series of quarterly SWS national surveys, which have hunger ranging from 12 percent to 16.7 percent of families in the four quarters of 2005, and from 13.9 percent to 16.9 percent in the first
three quarters of 2006, show the emptiness of gross national product as an indicator of economic well-being," the SWS said.

The survey firm said that "a great challenge to meaningful economic research is to determine why hunger actually worsened tremendously despite GNP growth of recent years."

Hunger declined in the period of 2000 to 2003, adding "the rate of inflation of food prices, for instance, deserves examination as a determinant of hunger," it added.

The SWS said the subjects of hunger and poverty in Filipino families are regular components of the SWS reports.

They are statistically tracked on a quarterly basis, in order to match the periodicity of the National Income Accounts, and released punctually as a public service, it added.

The SWS said the nationally-representative SWS statistics now cover 61 consecutive quarters for poverty since 1992 (74 data points over 1983-2006), and 34 consecutive quarters for hunger since 1998.

"In particular, it is not true, as claimed by some quarters, that they only cover urban areas; indeed, they show that rural hunger exceeds urban hunger, and that farming-sector hunger exceeds that in other sectors, as has been the pattern in innumerable studies of poverty," the SWS said.

At least 1.4 million Filipino families or 20.3 percent of the estimated 6.7 million rural households experienced involuntary hunger at least once in the past three months, the third quarter SWS survey showed.

The survey which was conducted from Sept. 24 to Oct. 2, also reported that 14.8 percent or 1.6 million of the projected 10.6 million urban households experienced hunger incidence.

The availability in the Philippines of a series of national-level statistics on poverty and hunger for an extensive time is a global innovation, it added.

The SWS said the measurement of poverty by the Self-Rating approach was piloted in Batangas in 1974, and applied in Metro Manila in 1981, and nationally in 1983 for the first time, and annually or oftener starting in 1985.

"The SWS Self-Rated Poverty Thresholds (medians of P10,000 in Metro Manila, P6,000 in the Balance of Luzon, P6,000 in the Visayas, and P5,000 in Mindanao, per family per month for home expenses, as of September 2006) are reasonable, indicating that the SWS surveys' high proportions of poverty are not due to household heads' exaggeration of their economic needs," the SWS said.

"Survey responses on family experience of hunger are just as reliable as, for instance, responses on personal work, on which unemployment statistics are based; to downgrade the SWS measures as mere "perceptions" of hunger is wrong, as well as cruel and unfeeling.

"Recent survey trials by the Food and Nutrition Research Institute (FNRI) to assess hunger by means of very similar survey questions have resulted in similarly high proportions of Filipinos suffering from hunger."

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