The Duterte administration has embarked on a “Build, build, build” program that is expected to trigger a construction boom in the country for the next 10 years. The President has committed to spend $180 billion for this program.
The government intends to build at least 75 flagship projects, including six airports, nine railways, three bus rapid transits, 32 roads and bridges, four seaports, four energy facilities, and 10 water resource projects.
Economists expect these projects to generate massive employment. First, the construction boom itself will generate jobs. Second, the faster movement of goods and people resulting from the projects’ completion will spur the growth of businesses and increase employment nationwide.
The Asian Development Bank foresees that the Philippines will enter “a golden age for economic growth” this year, in part because of this intended government spending binge.
Will this “Build, build, build” program finally be the solution that will lift millions of Filipinos out of poverty? Don’t bet on it.
The President will commit the mistakes of his predecessors if he relies on massive government spending as his sole strategy in reducing poverty. We’ve experienced various degrees of this scheme in the past, with virtually no effect on the level of poverty in our country.
No matter how massive government spending is going to be, the wealth that will be generated will go to hardware owners, architects, engineers, contractors, lawyers, and other entrepreneurs and professionals who have backward or forward business linkages to the new government projects.
Increased government spending will create or expand wealth entirely for the economic class already endowed with capital or professional know-how.
In addition, the wealthy are the prime beneficiaries of modernized roads, airports and seaports because of their frequent travels for work and leisure, and the upgraded facilities will bestow efficiency in their businesses.
Massive government spending on infrastructure will certainly increase available jobs for construction workers and rank-and-file employees. But the effect on the lower economic class is just to increase the number of jobs that pay minimum wage. It never leads to significant increases in the salaries of ordinary workers in the Philippine setting. It does not generate excess income for laborers that will enable them to become business owners or professionals who can benefit from the wealth multiplication generated by the increased spending.
This is the reason increased government spending in the past has merely resulted in reducing the ranks of the “food poor,” but has not dented the overall number of poor people who survive on subsistence income. This is also why the gap between the rich and the poor is getting wider because the rich are getting richer while the poor remain poor.
For an economic program to become truly inclusive — one that reduces poverty — the government must fund programs that will bestow the poor with capital, know-how, and opportunities, as well as unshackle them from unfair business and employment practices.
Toward this end, the government must fund the free college and vocational programs in public educational institutions, provide free meals for poor kids in public elementary and high school, implement free irrigation for farmers, and make reasonable loans easily accessible for small entrepreneurs.
The government should also end unfair “endo” contracts that disempower ordinary employees, and criminally prosecute traders who manipulate the price and supply of farm products, or engage in smuggling, to the detriment of farmers.
Increasing government spending for infrastructure will only pump-prime the wealth of business owners and the income of prosperous professionals. It is time for the government to pump-prime programs that will enable the poor to escape from the quagmire of poverty.
A golden age for economic growth is not enough. Let there be a golden age to end poverty.
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