• The wish-list economy

    6

    ONE of the unintended consequences of presumptive-President Duterte’s having only a vague idea of what his Administration’s economic program should be is that it runs the risk of being misdirected. A missing plan leaves a vacuum to be filled by political pressure, well meaning or otherwise; sensing this, everyone seems to have a wish list.

    Following the wrong one, or the wrong combination of items from different ones, will be a sure recipe for more of the same Aquino-era disjointed growth and inequality. No one wants that, because if it worked the first time, then there wouldn’t be so many business or other advocacies listing so many things that need attention.

    It’s not that the items are unimportant; Duterte and his economic team should listen to everyone’s wish list, and give them all a little thought. But the Administration must be careful not to fall into the same trap its predecessor did of trying to make economic policy popular. One thing that characterized the Aquino Administration’s economic management was its short-term outlook; policies and actions were directed to those things that would have the soonest and most public results, which did achieve some things, but not nearly enough—and certainly not enough of the things that actually mattered.

    The fundamental problems of the Philippine economy—the broad issues for which there is a near-unanimous consensus—should be the focus of the new Administration; the economy as it actually is, instead of what the new President supposes or wants it to be, which was one of the bigger flaws of the last President. It makes for another wish list, but one that covers most, if not all, the narrower concerns.

    The biggest problem is not poverty, but income inequality; narrow the income gap, and poverty naturally decreases. The second problem is the low productivity of the country’s agricultural sector; it doesn’t matter how large the sector is, if it does not provide a good return, it will compromise any other growth the country can manage. The third problem is basic infrastructure; this, at least, is one thing most everyone, including the new leadership, seems to agree on. In terms of infrastructure, it is difficult to know where to start, because the country needs everything—transport infrastructure, power infrastructure, and communications infrastructure. The fourth issue, and this is one that no Administration has been able or even willing to substantially address, is to reduce labor export; it probably cannot nor should not be eliminated entirely, but just like the agriculture sector, provides a poor return in relation to the resources devoted to it.

    How the new Administration would approach those four basic issues is subject to debate; there are likely several workable options for every individual problem. Narrowing the income gap and reducing poverty would likely best be served by priorities that strongly support MSME development; focusing on business-friendly economic policy and at the same time, limited direct assistance to the bottom rung of society ignores the vast economic gulf in between, which is where most of the country’s producers, workers and consumers can be found.

    Agriculture, another area where successive administrations have been largely unsuccessful, requires some completely new thinking. The new government should explore ways to encourage technical development of agriculture. Unfortunately, that will also probably require a shift from the quaint populist vision of the small Filipino farmer to something a little more industrialized, and if that is the case, that might also require the country to let go of the notion of land reform.

    Infrastructure is one area that has been given extensive attention, and so just about any approach will probably result in positive progress. If a priority of needs has to be made, however, then the government should probably focus on power first, then the communications infrastructure, land transportation—roads and rails—and finally, connections to the outside world, airports and seaports.

    Reducing labor export is politically the most dangerous issue to tackle because unless there is a clear alternative—or to put it specifically, adequate domestic employment opportunities—any move to curtail or modify the current OFW model will be seen as an attack on livelihoods. And not all OFW employment is low-value; the Philippines should definitely aspire to not be a supplier of janitors and nannies to the rest of the world, but our seafarers and skilled workers in other fields bring more to the national collective than just their earnings, and they should be encouraged.

    Whatever the new government does, an important thing those hoping for real progress should keep in mind is that results—real results with lasting effects—will take time. There’s no magic bullet, and even if everything is going well and being done correctly, six years will not be enough to turn this country’s economy into something that resembles a reasonable benchmark like Malaysia. But if there is clear progress and direction by then, Duterte will have achieved much more than the one he replaces, and whatever else can be said, we at least won’t feel he’s wasted everyone’s time.

    ben.kritz@manilatimes.net

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    6 Comments

    1. Ben,
      To early to judge Duterte but in my personal assessment he will address your pessimistic view on the different infrastructure development. Most probably Duterte is different from the previous occupants of Malacanang because of his high commitment to development. He transformed Davao into vibrant city due to his good track records. Time will tell that your apprehension will vanish and realize the real change of Duterte administration.

    2. The Phil has or is approaching the point in time where the absolute number in poverty are multiplying faster than the ability of the local economy to grow to alleviate it. As time passes and even greater numbers are in poverty, the more prolonged and difficult the problem becomes. We are at the point wherein control of population growth needs to be discussed when addressing poverty.

    3. The way I see, Digong is not a scholar type person who understand complex problems but by using his common sense which he is always did, he can manage our country fairly and better than clueless Pnoy administration.

    4. I disagree. It is not income inequality that is the problem. It is poverty. China has a large income inequality. They have the most billionaires but the government pushed the investors to put in the money to create more jobs and more business. All these will not work if we cannot control the growth of our population. We are now more than 100 million by the way it s moving, it will grow faster. In banking it is called compounded interest.

    5. Don’t worry, ka digong will produce good results because ge has the support of the people across the board.

      • Basilio Fernandez on

        Support of 49% of the voters (remember the 61% who did not vote for him) and bravado is not enough, concrete plans and subsequent results is needed and the Filipino people will expect nothing less!