• A welfare state for the Philippines?



    Difficult to know whether or not it is fake news [of which there appears to be so much about]or real news, or wishful thinking, but there are “news items” recently about free college education and free medical services in the Philippines. To provide such services free of charge, or at minimal cost to the user would be a very good thing to do, if it could be afforded! Both medical care and education are important elements of a welfare state founded on the principles of Otto von Bismarck, the German Chancellor in the late 19th Century.

    A welfare state is one in which the government provides pensions, medical care, education and unemployment benefits to the people. It was originally a strategy to form a middle way between communism and laissez-faire capitalism. Well, laissez-faire capitalism is certainly encouraged in these neo liberal economic days —free markets reign everywhere and at the cost of everybody, to transfer money from consumers straight to the pockets of the shareholders. Prices are set on what the market will pay rather than on any basis related to the actual cost of production.

    Well-designed taxation policies would ensure that government had enough money to provide the social support services needed by its citizens in order to provide a life of appropriate quality and security.

    A welfare state is a levelising thing, which in effect transfers money from the better off to cover the needs of the less fortunate members of society. The problem is, it is a very expensive thing to operate. The UK National Health Service costs around GBP139 billion [P8 trillion] a year, or 9 percent of GDP for a population of 64 million people. Over time, in order to counter the scale of budget increases, the range of its ‘free of charge’ services has been reduced, with patients now having to pay some prescription charges and for things like eyeglasses and false teeth.

    The UK budget for tertiary education is now at about GBP5 billion [P300 billion], which has been declining gradually since the 1960s, when all tertiary education was government-funded and students even got grants and accommodation paid for by the state. Changes in policy stimulated by an ever-increasing number of students have brought about the situation where educational fees are generally not government supported, the GBP15,000-20,000/year fees must be paid by the students.

    The Philippine health sector is mostly run for private profit, as is the higher education sector. Government expenditure on health is about P100 billion and total expenditure, including patients’ own payments [which account for more than half of total expenditure], insurance scheme payments and grants, takes the total up to P526 billion, or 4 percent of GDP. Malaysia, which operates a mixed public/private system, allocates the equivalent of P220 billion for government funded health care for a population of 30 million people. The Philippine government spending on healthcare is about one-sixth on a per person basis of that in Malaysia.

    The Philippines could not afford to put into place a full welfare state system without some very radical rethinking on taxation and the type and level of service that would be provided in, say, the medical and higher education areas. A government budget of P1 million per year per person for health to support a welfare state level of service would just be too much to contemplate. There is money in the Philippines, judging from the lifestyles of some people and the amounts that are headlined in corruption scandals it could be a lot—the problem is it’s in places that do not lend themselves to social support!

    It looks like there is no way in which the Philippines would be able to provide free medical care to its citizens, nor for that matter, free tertiary education—the numbers necessary to support such well-intentioned initiatives are too big. It would be very difficult to even borrow the sorts of amounts of money necessary—the recent Chinese offers of loans and investment at US$24 billion would cover for the provision of free medical services to the population for about a month!!

    The money needed to provide free education and free medical care can only be generated by a buoyant, well managed and properly prioritized national economy, which requires as much job and money-creating investment as can be obtained.

    Mike can be contacted at mawootton@gmail.com


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