‘Bobo’ (stupid) economics
The Philippine economy is in a slowdown mode. It expanded by just 5.6 percent in the second quarter this year, down 1.1 percentage points from the robust 6.7 percent gain in April to June of 2014. The 5.6 percent, however, is an improvement, from the 5.0 percent growth in the first quarter of this year.
On a per semester basis, the economy expanded by just 5.3 percent in the first half this year, down .9 percent from the 6.2 percent registered in January-June 2014.
In terms of Gross National Income (GNI), that is, including income from abroad, the slowdown was more dramatic. GNI grew by just 4.6 percent in the first half of 2015, down 2.1 percentage points from the 6.7 percent GNI growth in the first half of 2014.
Why did the economy slow down?
Blame Agriculture Secretary Proceso Alcala. In at least two State of the Nation Addresses (SONAs), President BS Aquino III bragged about having self-sufficiency in rice. It was a lie. The lie was fed to him by Alcala who paid more attention to smuggling than to honest-to-goodness effort at boosting rice production. This is the same Agriculture secretary who BS Aquino thanked in his sixth and last SONA last July. Alcala and Kiko Pangilinan were supposed to have, according to BS Aquino, “sown reforms already bearing fruit in the agriculture sector.”
What reforms? What fruits?
The real score: Agricultural production declined by 0.5 percent in the second quarter of 2015, a dramatic decline from the 1.1 percent growth in the first quarter of 2015, and from a robust 3.4 percent growth in the second quarter of 2014. Without the negative growth of agriculture, economic growth during the second quarter this year could have been higher, instead of the listless 5.6 percent—all of which was contributed by Industry (2.1 percentage points) and Services, 3.5 percentage points.
On the expenditure side, aside from services—which is basically retailing, banking, trucking and even call centers —consumer spending or household consumption contributed 4.1 percentage points or 73 percent of the 5.6 percent GDP growth. Government spending contributed just half a percent (0.5).
Strong consumer spending could mean households received the remittances from their relatives abroad (that’s Services) or withdrew their money from the banks (that’s Services), boarded a decrepit train (that’s Services) or hailed a taxi with a fast meter (that’s Services), and went shopping in the malls (that’s Services) or ate in their restaurants (that’s Services) or watched a movie (that’s Services). During the period, households probably received an early pre-Christmas balikbayan box (that’s Services).
What the strong consumer spending amid a slowing economy implies is that Filipinos have a virtually good for nothing government. Daang Matuwid has no meaning for them. People are being left to their own devices.
So if any economic growth is taking place at all, it is no thanks to their government. From 2011 to 2014, the BS Aquino government refused to spend P529 billion, a figure which former Budget Secretary Ben Diokno describes as mind-boggling.
You know the meaning of not spending more than half a trillion pesos? At P2 million per job, not spending P529 billion is equivalent to not creating 264,500 jobs. Also, with that kind of money unspent, the government could have modernized the decrepit MRT3 ten times over and reduce commuting time from three hours, one way, to just ten minutes! That is why the more than 400,000 train commuters of MRT3 should organize themselves and storm Malacañang, the presidential palace, because that is where the buck stops. BS Aquino has plenty of money. He knows it. And he is not spending it for the good of the people.
Did you now that among the major countries of the Asean (Philippines, Singapore, Malaysia, and Thailand), the Philippines has the poorest quality of overall infrastructure, the poorest quality of road infrastructure, the poorest quality of railroad infrastructure, port infrastructure, air transport infrastructure, as well as the worst quality of electricity and the worst quality of Internet service. And BS Aquino calls that Daang Matuwid!
People have only themselves to thank for if the economy is moving at all, amid the stupidity, the incompetence, the corruption and the lack of vision in this government.
We have actually what I call a bobo economics. It is an economy that moves by the sheer gravity of consumer spending, if sometimes mindless spending.
I liken the economy to a massive iceberg in the middle an ocean whose waters are warming and rising—thanks to global warming.
The law of physics demands that the iceberg move itself—because of gravity and inertia in motion. Because the economy is pushing itself, thanks to its size—100 million consumers (the 12th largest on earth); $25 billion in annual remittances (the second largest in the world), somehow growth is taking place.
Because growth is taking place, the government starts to think it is responsible for the growth. It starts bragging. It starts to lie.
It’s no different from a rat on top of the iceberg. The rat notices that the iceberg is moving. It starts thinking it is the one responsible for the movement and claims credit for it. The rat thinks he is great. He tells the nation he is great. He tells the world he is great.
What BS! Remember that in 2016.