The Economist (a great magazine, you should read it weekly — as you should this column, of course) had some very interesting statistics in its Sept. 15 issue:
“Global life expectancy in the past 175 years has risen from a little under 30 years to over 70. The share of people living below the threshold of extreme poverty has fallen from about 80 percent to 8 percent and the absolute number has halved, even as the total living above it has increased from about 100 million to over 6.5 billion. And literacy rates are up more than fivefold, to over 80 percent.”
Dead by 30? All of you, I suspect, would be dead by now. Pretty frightening, isn’t it?
The change was brought about, in great part, by globalization, by opening up markets to free and fair competition, but doing so in a measured way. Trump is going the wrong way, Brexit is going the wrong way. Both are going backwards.
Yet Trump is not entirely wrong, and “not entirely” still matters. He’s right that China has stolen American ideas and has subsidized some of its industries. But a blanket tariff is absolutely the most stupid way to go. It will do great harm to the world’s economies.
You only protect industries where there’s strong reason to do so, and only for a limited time, until the industry can be brought into world competitiveness. Any protection should be time-bound and nonextendable, so that the involved sector is forced to perform.
The first one that comes to mind in the Philippines, where a number of protections still exist, is that old perennial — rice. Rice should be open to anyone who can supply it, whether locally produced or imported, and can do so at the lowest cost. We should be paying P17 per kilo, which is what a Vietnamese housewife pays. Not the horrendous P35 per kilo Filipinos pay. But if we open the borders, Filipino farmers will go out of business. They need protection, but only till they can competitively produce. Not forever.
So getting rid of the NFA and applying a reasonable tariff for a reasonable time, maybe declining gradually over that time, is the smartest move Congress could make this month. Come on, Congress, just do it. The funds from the tariff should be committed to making the farmers and the logistics of rice delivery competitive. The NFA should maintain a buffer stock for emergencies — no other role. No permits, no nothing, just a tariff.
Another one on the table at the moment is sugar. Like rice, it is uncompetitive in its production, processing and delivery. But the situation can be fixed. Getting rid of the Sugar Regulatory Administration, just like the NFA, needs to be done. It should get out of controlling the market and let the market players do it themselves.
This has been proven to be the most effective and efficient way. Open imports to anyone, but apply a tariff on sugar and products where a principal component is sugar, and funnel some of the money into bringing the industry to world standards. I wouldn’t give the entire tariff to improving the industry, because much of the problem is government policy, which costs nothing to change, and antiquated machinery and methods, which the private sector should fund of its own accord. But some tariff support is necessary for now; a technical working group can work out how much and for how long.
As I highlighted last week, agriculture is our Achilles’ heel. It is holding back our economy and our people. Rice and sugar are two of our biggest agriculture subsectors, and with the biggest problems.
So bring rice and sugar into the real world, open up the markets to anyone who wants to be in them, with protection for local production only through the means of tariff. I’m sure the finance department would welcome such tariffs, and I think even The Economist would approve of them. If they’re time-bound, they would lead to more productive industries.
Unlike rice, though, sugar is an ingredient in many other products that are produced locally. It needs protection from cheaper imports that are able to access cheaper sugar. So, not just sugar itself, but products with sugar in them need protection for now.
The ideal would be no tariff on both products, but that’s just not realistic for now. Still, that must be the ultimate goal.
The end goal should be a better life for all those people who can now live beyond 30 and would like to eat. And all those under 30, too, of course.
E-mail: wallace_likeitis@wbf.ph