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“LET bygones be bygones.”
Nobel Laureate in Economics Paul Samuelson cites
this from an economist (Adam Smith) in his classic primer Economics
which won him the Nobel Prize. He uses the quote to wrap up his
discussion of marginal analysis and profit maximization. Here’s
the full passage.
“Let bygones be bygones. Don’t look
backward. Don’t moan about your sunk costs. Look forward. Make a
hard-headed calculation of the extra costs you’ll incur by any
decision and weigh them against the extra advantages. Cancel out all
the good things and the bad things that will go on anyway, whether
you make an affirmative or negative decision on the point under
consideration.”
Samuelson continues: “This disregarding of
bygones is extremely important, and most successful decision makers
practice it intuitively, even if they have not had a formal course
in economics.”
In a given situation, one asks what is the cost
of one decision against competing decisions. Then what are the
benefits. “Economic Man will choose that option which will cost
least and bring in the most benefits.”
The current shortage and rising prices of food,
particularly of rice, is a problem confronting not only the nation
but also the world. Each nation makes decisions on the basis of its
own problems but these must also take into account the decisions of
other nations.
One can only imagine the disaster that would
result on a decision to freeze exports of food not only by those
suffering a shortfall in food production but also regular producers
in order to protect their own populations.
The Philippines has its own peculiar problem and
situation. With elections coming in two years, the political
opposition welcomes developments that could be blamed on the
administration. For a while, all the negative implications of the
rice crisis were being laid on the government’s doorstep. The
standard burden of the song was, if the administration was doing its
job properly, we would not have the troubles we now face.
It just happens that what we are suffering today
is a result of decisions made by other countries particularly the
developed and industrialized ones. Oil being the lifeblood of
industry, the major industrialized nations of the West do not want
to be held hostage by Middle East oil, so they embarked on a major
development of biofuels. This meant not only cutting down on acreage
used in the production of food and using these for raw materials in
the manufacture of biofuel but also in using food itself, such as
corn, in the production of oil substitutes.
In the Philippines, have we already considered
the implication of using part of our sugar production for ethanol or
of coconut oil for diesel fuel?
The specter of hunger and food riots may impact
negatively on the administration of President Gloria Arroyo but her
term is ending in two years. And the impact of the food crisis will
be on the administration that will come to office in 2010.
Forcing Mrs. Arroyo out of office today will
only transfer the food problem to the ambitious politician who is
going to take over from her. Not only that, it will probably just
scuttle the efforts being done by the administration to alleviate
the present crisis. Never mind what has been done before the present
and past administrations. Something has to be done to ease the
crisis of our people now.
Today, the media are replete with what is being
done about the rice crisis which in our version is the lack of
government rice at P18.50 per kilo. There is, so far, no shortage of
rice per se. There is only a shortage of cheap National Food
Administration (NFA) rice which, in addition to the poor whose rice
needs have to be subsidized, there is panic buying and speculation
to buy and hoard NFA rice in the hope of making a profit when the
real shortage comes.
The government is trying various ways of solving
this problem with the usual political critics hoping to build up the
makings of a people power to drive President Arroyo out of office.
It is no wonder why her latest approval ratings,
a new record low, only made page 5 of one of the newspapers most
critical of her. Changing horses in midstream is not a rational way
of meeting a crisis. The ambitious politicians will always say they
can do better but the people who are going to suffer their mistakes
are not ready to gamble on standard political promises.
A more rational option is for everybody to
cooperate with the government until we surmount or alleviate the
present crisis and resume politicking when the time comes for this.
But if what we have for stateswomen and
statesmen are just glorified dogs in a manger, we will badly need to
return to One who was born in one.
opinion@manilatimes.net
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