Bu-lat-lat (boo-lat-lat) verb: to search, probe, investigate, inquire; to unearth facts Volume 2, Number 22 July 7 - 13, 2002 Quezon City, Philippines |
A Reaction to Sonny Africa’s Article: ‘Philippines 2002: Beaten, Broken and Busted’ Bulatlat.com, which normally publishes letters to the editor and reactions on its “Feedback” section, posts a reaction by a reader, Gary Santos, as a separate item. The reaction to “Philippines 2002: Beaten, Broken and Busted,” an economic situationer posted two weeks ago and written by Sonny Africa, Bulatlat.com contributing editor, is published below unedited. In an accompanying letter, Mr. Santos apologizes for coming out strong but otherwise hints that that’s his style. We requested Sonny for a rejoinder which follows this reaction. – The Editor By GARY SANTOS I
have pondered for years, as many of us have, why the Philippines has had much
less economic development and political stability than other countries in the
region. And while in this pondering, I come across the commentary of Sonny
Africa that starts off citing statistics using a period that, purposely or
inanely, covers the Asian Financial Crisis. In fact, he stops in the year 2000
where GDP growth had bottomed and did not bother citing the positive effects of
growth up to Q1 2002 even if the statistics are available. Worse, he takes
advantage of a statistical distribution (share of income by class) whose
computation he probably doesn't understand as it merely is supposed to show what
percent of families earn more relative to other families. The
key word here is "relative". It doesn't show whether the income of the
top or bottom or the middle class increased or decreased. In fact, income in
real terms increased across all classes if one goes survey by survey throughout
the period cited. Using the same Income and Expenditure Surveys, the average
family income adjusted for inflation increased by 30% over ten years or 3% per
year adjusted for inflation. "The
rich have it good even in bad times!", he says. Sonny, everyone in this
country was hit by the financial and political crisis. And, if you wait a little
longer, you might find that poverty incidence in the Japan and the U.S. will
soon increase just as dramatically as anywhere in the world should the
macroeconomic forces at play go against them. Interest payments on Japan 's debt
are now about 15% of its government's expenses. And, that's at interest rates of
2-3%! Should the rating agencies further downgrade Japan's debt which stands at
130% of GDP (ours is about 70%) and interest rates rise to 5% or more imagine
what that will do their debt repayment capabilities. Also, Japan is in
debt-deflation. What
this means is: prices are dropping which makes companies less profitable which
increases the amount of debt going bad, making less money available to banks for
new lending which further depresses asset prices (which hit the rich more than
anyone else) which reinforces more deflation. This, by the way, Sonny, is what
we experienced in less magnitude during the period you cited and it had nothing
to do with internal policies or politicians. It had to do with world economic
and political events. Sonny would have been better off with a thesis involving
the effects of globalization on our country and the unpreparedness of the
international monetary system to control capital flow. But,
let's examine the things said in the article: He belittles the 3.5% growth we
experienced in 2001 and 2002. He belittles the growth of agriculture which
covers 60% of our citizenry. Obviously, Sonny, you have no farmer roots as you
would appreciate more irrigation and funding no matter how meager it has been.
He doesn't think the return of foreign investor confidence is necessary probably
because he thinks the country has enough capital for development. Forget the
Malampaya natural gas project which will bring down to 25% our dependence on
imported oil? Etc. etc. he says and ends with "All these supposedly
[sarcastically said] show that the economy is reaping the benefits of structural
reform measures." Sonny, all this was said for local consumption to boost
confidence so that things won't get worse. It's an economic school of thought
that even if macroeconomic conditions are fine, if there is no consumer
confidence, things will not come together. Ay, Sonny, pakibasa ang basic
economics mo uli. Swerte ka na hindi na-under kay Monsod sa U.P. Balita ko
terror siya. Second,
the country needs foreign capital because we don't have enough capital for
investment and job creation. Our savings rate is too low because we were capital
challenged in the first place and made more so by the events during the Marcos
regime and while things were going gung ho prior to 1997, the Asian financial
crisis hit. What do you want, Sonny, the Banko Sentral to free reserves, buy
back bonds, print money? Baka umiyak ka kapag tumaas ang mga halaga ng
bilihin. Or, worse, write another piece and blame it on someone else. Third,
maybe you will just agree, Sonny, that we have too many opinionated kids that
only seek to criticize and destroy but have no concrete, positive things to
suggest. I suggest you sit down, study some more before you publish something
for public consumption. Why eBalita decided to print such high school level
drivel escapes me. Two decades of imperialist globalization? Foreign capital is
bad, huh, Sonny? What if we have one of those structural changes that you
belittle like allowing Filipino Americans to own land and they do buy despite
people like you blabbing away, you don't think that is good? Tali ang pera nila
dito, pare ko. What if we have another structural reform like dual citizenship
and more come back with their savings? 1,000,000 Filipinos with $100,000 savings
each is $100,000,000,000. That's $100 billion! Enough to pay off all of our
foreign debt and more to boost. It will probably result in inflated asset prices
flowing into general inflation if done in one year. But, if done over time as is
likely to happen, the economy will be able to absorb it to the benefit to all.
That's ALL Filipinos
including the poor your article did no help for as it just sought to kick
anything it saw in front of it. This kind of foreign capital won't be the same
as foreign funds buying into our stock market then selling and repatriating the
money back. It will be like equity money being invested in a company. One of the
reasons why the US dollar has been strong is because they allow foreigners to
buy land. Capital just flowed into the US over the past two decades of
imperialist globalization into their stock market, bond market and real property
market and all of that boosted consumer spending with the wealth that capital
flow created. Kasi, Sonny, when capital flows into a currency it has to go into
a financial asset or a real asset. When they buy a financial asset like a bond,
the price of the bond goes up and interest levels go down. When they buy land,
the Filipino who is the seller gets a return on his capital since price has gone
up and land as an investment becomes liquid again. Understand?
Artificially-boosted growth spurt impossible? O, papayag ka pala. Make
up your mind, do you want foreign capital or not? If they do come back, it will
be no thanks to you, Sonny. But, why use the qualifier "artificial"?
You did not explain what artificial meant. Was it in the sense of fake? As far
as I know, real pesos was paid to me when I sold stock market shares bought by
those "imperialist foreigners". It made me feel richer and I bought a
new air conditioner from a company that employed a Filipino and which sourced
its inputs from Filipino made steel and motors. The likelihood of international
upheavals? So, what does have to do with kawawa naman ang Pilipino? Kawawa
ang mundo, 'ka mo. Besides, did you consider that we were once in the top
ten gold producing countries in the world? Did you consider that if the price of
gold goes up closed down mines may resume production and new mines may spring up
creating employment in depressed areas, boosting spending as gold is sold to the
Bank Sentral in exchange for pesos? Maliit pa na bagay na ito, sa ngayon. But,
look at Q1 2002 Manufacturing output and get a clue of what is happening.
Admittedly, things in the international front are not going our way. Our markets
abroad are weak (Japan) or are weakening (the US) and it will be harder to
attract capital - artificial or otherwise. But,
what good did your article do? Why didn't Sonny just stick to criticizing the
corruption that permeates society? In fact, I wonder, since Sonny's article just
served to demoralize, maybe he was paid to write the propaganda? No genuine land
reform? How old are you Sonny? I was demonstrating in Plaza Miranda while you
were probably just a probability. I've seen genuine land reform implemented.
Look at the general Calamba area. Ask around. Go to the DAR. (Have you done this
simple thing?) Go to Laguna, Cavite, Batangas and Rizal and find out how many
millionaire farmers were created. Kulang ang reporma sa lupa? What about
property rights, Sonny? And, how are you going to fund these purchases? Do you
want to just grab land? Say so because you just say "no genuine land
reform" without telling us how to implement your brand of land reform and
continue to mouth the Marxist-Leninist-Mao line. Kapitalista na si Mao, hindi
mo pa ba alam? How would you feel if I just grabbed that PC in front of you
so that you can't write anything anymore? I promise to keep it for someone who
can write something constructive. You
say: "Despite decades of rhetoric asset- and wealth-distributing agrarian
reform has yet to take place. Agricultural development has dispossessed rather
than liberated the peasant majority. Nor is there a long-term strategic plan for
developing the domestically-grounded industry needed to create jobs and to
accumulate capital. Health services, education and housing have always been
sorely lacking." So sigue nga, how now brown cow? And while you are
at it contact Gemma of KASAMA in Sta. Maria, Laguna and introduce yourself to
her telling her how you got her name. Tell her of your thesis that there was no
true land reform. Sigue nga. I challenge you to take the time out before
you open your mouth again. Perhaps, Sonny ought to drop his class division
rhetoric and consider that the truth may lie elsewhere. Perhaps, Sonny, you
ought to consider that what we are experiencing is the natural effects of a
political/power vacuum resulting from the fall of the Marcos 1966 to 1986 regime
and that it takes time for a society so handicapped to recover. I
know it has been 17 years since EDSA, a long time but part of my pondering,
Sonny, had to do with the Filipino psyche, it had to do with people like you.
And, people like me who are incensed enough to react to put a stop to it. But, I
do so with a purpose. Think about it. Lastly, I think it is about time that
internet publications like eBalita and like Bulatlat.com take some journalistic
responsibility. It is easy to write when there is anonymity. Harder when your
real names and places of publication are there for everyone to see. Is this the
character of journalists that will take over? If so, maybe Sonny you are right
and I am dead, dead wrong. Gary Santos Cc: eBalita c/o Mr. Or Ms.
"m" Sonny’
Africa’s Rejoinder This
is a reply to the reaction sent by one of Bulatlat.com's accidental readers,
Gary Santos, to the article "Philippines 2002: Beaten, Broken and
Busted" which came out two weeks ago. On
statistics The
first issue raised concerns the choice of time and alleged selectivity. Actually
the growth and employment data do include the latest available data (i.e. first
quarter 2002 growth and April 2002 employment). And it would've been very
misleading to leave the years of the Asian financial crisis out because how the
country is affected by such events precisely depends on the government's
economic policies. "World economic and political events" may be
largely beyond any single country's control in the short-term but how any
particular country is affected depends entirely on the "internal policies
and politicians" in place. Consider for instance how China was least
affected and how Malaysia was able to temper the worst effects. Also,
Gary may not be aware that different official data are updated at different
times and with different frequency. For instance, the Family Income and
Expenditure Survey comes out only every three years - i.e. 1985, 1988, 1991,
1994, 1997, 2000, 2003... - and this is the standard source for household
poverty and income data. The article cites the latest 2000 data. Growth data is
quarterly and employment every Jan-April-July-Oct (the most recent data was also
cited). In other cases, such as with regional comparisons, the data for other
countries is hard to come by so adjustments were made according to what's
available. In
any case I wonder what "positive effects of growth up to Q1 2002" he
means because unemployment was at record highs last year and, most recently, in
April this year (data for which were provided). Besides, the country's economic
problems are long-standing and dropping a year here or there doesn't really
change the basic analysis much. It's
also worth affirming that what Gary calls "income share per class"
(actually it's by decile, more accurately) really does measure the share in
total income and not the "what percent of families earn more relative to
other families" he claims. Total income is divided according to what each
decile or tenth of the population earns. In any case, the relevant section
actually just asserts that the changes in income shares show how inequity
worsened which is a result that is very much supported by the data. There is no
claim as Gary seems to think on whether "the income of the top or bottom or
the middle class increased or decreased." The fact of gross and worsening
inequity is also significant because it qualifies any claims of increasing
average incomes - averages conceal how the richest disproportionately benefit. A
little knowledge is a dangerous thing For
the rest of the critique, the basic limitation is a tendency to over-interpret
particular details where they are, either: 1) simplistically extrapolated to
become overarching phenomenon; or 2) seen one-sidedly out of the context of
their total impact. Erroneous reasoning like this has elsewhere resulted in such
silly thinking like the "end of history" or the info tech-driven
"New Economy". Take
agrarian reform. It's very easy to pick out pockets of agrarian reform where
land was distributed and support services given and farmers made better off. But
if these are just pockets then it can't be claimed that "genuine"
agrarian reform has taken place. After some three decades of land reform (since
PD 27), less than 5 million hectares has been distributed (or some 60% of CARP's
8 million ha. target). Yet even that is an inflated figure. The
DAR pathologically records land as "distributed" even if they still
haven't been registered in the name of the farmer beneficiaries in the registry
of deeds. There is also double-counting of accomplishments, for example when
collective ("mother") CLOAs distributed in one year are counted and
again re-counted when re-distributed the following year as individual CLOAs.
There are also mounting reports of CLOAs sold or revoked from farmer
beneficiaries - with land subsequently reconcentrated in landlords or usurers -
or converted even during the 10-year prescriptive period under Sec. 27 of RA
6657. There is already much evidence that a statistically random walk in the
countryside will yield a bigger number of poor landless peasants than
"millionaire farmers" - i.e. there is no true agrarian reform. The
question of foreign capital is an example of the second error. How to look at
foreign investment? Between 1961 and 1998, for instance, there was US$8.4
billion in foreign direct investment. But there were also US$9.5 billion
remitted as profits, earnings, dividends, commissions, fees and royalties, for a
net outward flow of US$1.1 billion. There also hasn't been any substantial
technology transfer, the simple proof of which is that virtually all of the
country's manufactured inputs, machinery and equipment (including aircon parts)
are still imported - as it has been for decades. Yes there was access to export
markets but, as the article asks, what was gained by the domestic economy? The
point is that foreign investments should only be allowed to come in if there are
clear and lasting benefits for the country, sooner if not later. And the extent
to which the country will benefit from foreign investments depends on government
policies. Ensuring unrestricted outward capital flows, not requiring substantial
technology transfer or local content, overly generous fiscal incentives and
subsidized infrastructure, etc. all just drive potential gains to rock bottom. Inaccuracies It's
also inaccurate to say things like the Malampaya natural gas project will
"bring down our dependence" on imported energy. Energy giants
Chevron-Texaco of the United States and Royal Dutch/Shell evenly split 90%
ownership of the US$ 4.5 billion project. The 10% balance is taken up by
state-owned Philippine National Oil Corporation (PNOC) which, however, is
already planning to sell this to undisclosed foreign buyers. This will lead to
the bizarre result that the country will be buying its own natural gas - the 2.6
trillion cubic feet of natural gas reserves in Malampaya off Palawan - from
foreigners. It's the foreign investor-friendly Mining Act of 1995 that's
probably to blame for this. It's
important to realize that being geographically in the Philippines does not a
Philippine enterprise make. Likewise, Intel and Texas Instruments being in the
country doesn't really make us a high-tech electronics exporter - these U.S.
firms just happen to be here in export enclaves. This is why the job creation,
imported inputs and industrial development figures cited in the article are
important. Non-enclave industries are more integrated in the jobs and production
chain of the domestic economy, not unduly reliant on imports. Similarly
with the development meaninglessness of the (true) statement that the country
has been among the world's top gold producers. But the real question is: all
that mining for whom? Mountains were leveled, forests cut down, rivers polluted
and farmlands poisoned. Whole villages were displaced, families made sick,
livelihoods lost, and opposition brutalized and killed. Yet after all that,
mining communities remain among the poorest in the country. There isn't any
development because the mining industry is captured by foreign mining
corporations and local elites. In the end a handful of companies profit
enormously while those who work hardest remain stuck in harsh, arduous and
tedious toil and live in toxic-contaminated communities. Also,
capital has been flowing into the United States for a very large number of
reasons. So many reasons, in fact, that to say that allowing foreigners to buy
land is one of the reasons for strong dollar is really just a hard-sell pitch
for allowing foreigners to buy land in the Philippines. Basically though, it's
meaningless to take such specific economic policies (as on land ownership) out
of the incredibly different economic contexts (like the United States and the
Philippines) they're going to be implemented in. To
take just one factor inapplicable to the Philippines, the dollar is the dominant
currency because its value in terms of other currencies is expected on the whole
not to fall even when its economy is functioning at full capacity. Why? Well
because it's the United States with all its attendant imperialist economic,
political and military might. Finally,
it's also important to have a more than partial understanding of the nature and
damaging effect of financial bubbles. Business press-like lamentations about the
uncontrollability of capital flows are going to be little more than lip service
if there remains an undue admiration of equity and bond markets. It's common
these days for people to uncritically admire how financial wealth is
"created" outside of an appreciation of how the volatile nature of
today's unrestrained financial markets cause major dislocations in the real
economy of jobs, production and investment. Doesn't
follow There
are also non-sequiturs. There's nothing stopping Filipinos - nor, indeed,
foreigners - from bringing their $100,000 savings into the country (and if the
argument is just on a flimsy ground like that, dual citizenship is reduced to
foreigners wanting to have their cake and eat it too). Belittling government's
glowing accounts of agricultural growth isn't belittling agriculture on which
some 70% of Filipinos directly and indirectly depend on - it's belittling
government's half-hearted efforts at developing agriculture, including
insufficient irrigation. As
well as false premises. Why would someone seeking to profit from US$100,000 in
savings invest in a company in the Philippines when it's more profitable to play
financial markets (which is exactly what most moneyed people are doing now...
like Gary and his stock market shares)? What "economic school of
thought" is built around the explanatory variable "consumer
confidence"? And so on. Sometimes
it's unpleasant to be confronted with facts that you're unaccustomed to. But
facts are facts. Gary also railed about how the article had "no concrete,
positive things to suggest." Anyone more open to the facts would perhaps
also see that simply stopping with everything wrong being done now is the first
and most important "concrete, positive" thing to do. Only when that's
done can we begin to move forward. Bulatlat.com We want to know what you think of this article.
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