Realistic economic history

The word “realistic” means “true to life.” Economic history is realistically rendered when its narrative is backed up by statistics that are plausible to the general public.

Gross National Product (GNP) is a most misleading indicator.  Most economic histories start by citing GNP, because it is the sum of value-added in the nation’s production, and thus, in principle, the total income earned in such production. When divided by the population (i.e., made per capita), it is the potential income of each Filipino if only the whole sum could be equally shared by everyone.

In “Imaginary sharing is not enough” (12/2/17), I reported: “In every single year since 1998, income and consumption per capita never declined. All in all, from 1998 to 2016, income per capita grew by 88 percent, and consumption per capita grew by 74 percent. There was substantial progress indeed, in the imaginary shares.”

The great inequality in sharing of income is confirmed by the recent admission that the trend in real wages of ordinary workers has been flat. The Labor Force Surveys had been tracking wages all along, but its wages-series was exposed only in February 2018 (“The stagnation of real wages,” Opinion, 3/3/18).

Official unemployment is low because what it actually measures is idleness. The poor cannot afford to be idle. Those without real jobs are three times as many as the idle unemployed (“Realistic statistics on joblessness,” 3/3/17).

Up to 2014, more Filipinos were losers rather than gainers, in quality of life.

Despite steadily growing GNP per capita, most people then were feeling worse off than the year before, according to the SWS surveys.

Only since 2015 have gainers dominated over losers (“Six quarters of societal progress,” 7/30/16). Since 2009Q3, optimism for the coming year has  regularly exceeded pessimism by 20+ percentage points (“Six optimistic years,” 1/2/16).

Due to the cruel poverty line, the officially-poor are less than half of the families who feel poor. “The official minimum daily food menu that had been in place since 1992 was cruelly downgraded, to eliminate milk for children, meats, fried foods, and fruits aside from one banana. Viands were limited to (boiled) fish and vegetables.” (“Poor and near-poor,” 10/11/14).

As a result: “Official poverty in NCR became a miniscule 2.4 percent as of 2009, the first year of application of a freshly reduced official poverty line (see “The lowering of the official poverty line,” 2/12/11). It was 2.6 percent in 2012, and 2.7 percent in 2015, pretending that metro poverty has been virtually gone for 7 years already (see “Is poverty gone in NCR?”, Opinion, 2/19/11)” (“Unrealistic official poverty,” 11/12/17).

Official poverty falls smoothly only because its estimates are triennial. Poverty actually moves jaggedly; it is affected much more by inflation than by economic growth. Being volatile, it should be measured frequently.

The bottom-up approach enabled this report: “Super-typhoon Yolanda was so devastating that it raised Self-rated Poverty by 3 points, Self-rated Food Poverty also by 3 points, and Hunger by almost 1 point, according to the Social Weather Survey of December 11-16, 2013” (“Poverty, hunger and Yolanda,” 1/25/14).

Hunger steadily increased in 2003-10, but got over the hump recently (“Hunger: the recovery continues,” 7/25/15).

To inform the public about the true status, distribution and trends of economic wellbeing, the indicators of basic concepts should be: (a) defined realistically, (b) measured regularly, and (c) published openly, whether favorable or unfavorable to some sectors of society.

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