During the last midterm elections a losing senatorial candidate attempted to pass himself off as an economist by spinning his platform around two basic concerns he imagined would be of such importance that by presenting himself as an economic messiah, the pathetic traditional politician that he was, he might regain his lost stature and rebuild his shattered credibility.
On the campaign trail he was wont to pepper his spiel with a generous amount of economic drivel which, for most of his wet market audience, sounded like rocket science.
For all intents and purposes, it could very well have been astrophysics since the purpose was to simply present an expert with all the answers. Never mind that an ever lengthening trail of incompetence negated the imagery of economic competence. In the vernacular it was all “recado” and “palabok.”
He focused on employment and retail prices.
Both made sense in his mind since he claimed fatherhood of the business process outsourcing sector (BPO). As for consumer prices, at the time he threw his proverbial hat into the midterms ring, inflation had been on the rise and seizing the opportunity, despite an eventual and drastic fall in prices, he remained adamant and maintained these were unaffordable. His flawed analysis and an elitist attitude would eventually cost him the race.
His misconceptions on the economy are however understandable and, on those, he does not have a monopoly on myopia.
Allow us to analyze the economic aspects he focused on and by doing so, trace how others seem to harbor the same misconceptions on consumption-driven markets that condemn us to constantly perpetuate failure.
Among the drivers of gross domestic productivity (GDP) is household consumption. The mathematics of the GDP expense method show consumption expenditures lead to productivity. Simply put, the more people consume, the higher the GDP growth.
When the public consumes less then GDP declines and there is less productivity. Since the multiplier is identified as “household” consumption, this refers to the private sector’s purchasing power.
Under the Aquino administration of which the loser candidate was an important lieutenant, government infrastructure expenditures were practicality moribund as was agricultural spending. This indicates that the ballyhooed GDP growth must have come from consumerism or household consumption.
Sticking to such myopia the loser politico, as well as a lot of people, remain focused on the political importance of purchasing power and prices.
The second focus is on BPO as a job generator. Relate this to consumer empowerment and a flim-flam politician’s flawed formula following a BPO “fatherhood” and the centrality of BPO in our economy.
In the last 25 years, rather than industrialize, local businesses spawned a “quick buck” economy where payback is abbreviated. Sadly the trade offs were in the industrial and manufacturing sectors. Rather than build factories we sold imported cars, built BPO offices and shopping malls.
When our economic twin, Thailand, ranked 24th on the Competitive Industrial Performance Index (CIPI) measuring industrialization performance, during the Aquino administration, our CIPI ranking deteriorated by almost double Thailand’s. Ironically, neighboring Vietnam, albeit once devastated by 20 years of continuous war, ranked higher in the CIPI.
Given these relative rankings, it is unfortunate that the two economic focal points — consumption and BPO employment — that the loser candidate chose to found his candidacy on are the same that local businessmen base economic development on.
Their malls and its surrounding property development, BPO office spaces, power plants, casinos, car dealership, high-end vehicle sales and telecommunications roll-outs all focus on marketing and sales that simply increase consumption. Among our dominant local taipans, relatively few invest in manufacturing, and fewer still, export. Unfortunately, there’s a painful lesson to be learned here where we might never rank higher in the CIP Index.