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A debt trap is like a mouse trap—once caught in it,
one hardly gets out if at all. At least a mouse trap only catches
mice. For people in a debt trap, it can be crippling like a terminal
illness. That, my friends, is a major cause of the situation we are
in.
The national debt we owe is
well-known. About one third of our annual budget goes for the
payment of debt including interest. Some studies show that our total
repayments over time have since exceeded our total obligations. We
continue to be beholden to creditors.
The funny thing is that while
countries and agencies commit aid for the country’s development,
the debt backdoor trap we are in takes more than what is given up
front and trumpeted as partnerships. The real ties bind when a
determined effort is made to cut down and finally do away with
unending loan payments that ought to go to social services that
develop human potential and therefore, growth and stability.
This article is about a more
devilish form of debt trap. It is the debt of the worker who borrows
from his next paycheck and his future bonuses to pay for present
basic needs. It is a question of low wages or the high cost of
utilities? It is both that contribute to low purchasing power.
No matter how much we increase
salaries, it will never be enough to cope with daily realities
because increasing salaries is inherently inflationary, meaning, the
increase in salaries also translates to an increase in basic prices.
At current levels, our minimum wage is one of the highest in the
region and makes us less competitive in this aspect.
The real option is to work for
efficiency in our food production from the primary producer through
the distribution network to lessen spoilage and decrease food
prices; to speed up transport by rationalizing the different modes
from tricycles, jeepneys, buses and LRT/MRT, expanding alternative
transport systems like rail and water systems, cutting down on fuel,
manpower and equipment costs by improving travel times and
declogging traffic by weeding out colorum and undisciplined drivers
and the other initiatives by Chairman Fernando, and lowering housing
costs by putting in place a land use policy and working out a
tamper-proof and expedient land registration process.
Even with constant wages, the
lowering of expenses necessarily increases purchasing power. A large
part depends on the individual consumer. A middle class family with
both husband and wife working can still be caught in the trap with
multiple credit cards loaded with “utang” and amortizations on
nice houses and nicer cars and all other bills tacked on to strain
resources and to prevent building up of savings.
Note how the word “utang”
used to carry such a high social stigma. Nobody wants to make
“utang” or be an “utangero.” Nowadays, loans of every
conceivable kind tempt people to acquire things deemed essential to
a good life. Taking out a loan is a socially acceptable phenomenon
subject to regular rantings over merienda only to end with a
collective sigh.
The number of court cases
involving bouncing checks, collection of accounts or estafa is an
indication of the extent of the collective debt trap we are
in—personal debt, household debt, corporate debt, national debt.
We live with debt and die in debt.
In a capitalist society, debt has
a function. It is meant to leverage assets in whatever form for
future productive capacity and higher returns. In the Philippines,
debt is used for consumption and that is the worst financial sin
that can be committed. The first thing to do is to realize that you
are in a debt trap and start really feeling bad about it for you to
stand up and do something about it specifically one debt at a time.
This will lead you out (and the country as well) of the debt trap
and bring you to the really good life.
Don’t be a mouse, get out of
the trap and start living.
Mabinihall@gmail.com
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