Wednesday, November 14, 2018
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The problem is poverty

/ 05:18 AM November 08, 2018

I’ve been accused of being too positive about this administration. But after the ineffectual rule of the last one, someone who promised decisions was a relief. And anyone who’d break the “trapo” mold was earnestly needed.

I have traveled a lot, and read extensively. What is happening around the world is this rejection of the way democracy has been hijacked by elected officials who believe promise is action, and talk gets things done. It doesn’t.

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I look at President Duterte and his administration not from the narrow view of my day-to-day life, but on how the country is doing compared to others. People complain of inflation as though it’s out of control, and a horrendous increase one can’t live with. Well, as I showed in an earlier column (“A balanced view,” 9/20/2018) it’s quite moderate when compared to Philippine history. And it’s quite moderate when compared to other countries, such as Angola’s 20 percent, Argentina’s 31 percent, Egypt’s 20.9 percent and Libya’s 28 percent. In Venezuela, it’s a staggering 52,000 percent!

The real problem isn’t inflation, it’s poverty. If everyone had a decent job, they’d be able to afford the higher cost of goods and services.

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It’s the same with the exchange rate. We are complaining over a 7-percent drop this year. Well, I was in Turkey last week, and the fall has been 25 percent so far this year. The tourist industry is very happy. Ours should be, too, and certainly the OFWs in countries where the US dollar has held up. The exporters should be, too. So far this year, Indonesia’s rupiah has dropped by 11 percent, while Vietnam’s dong declined by 6 percent against the US dollar.

How about interest rates? I can remember when they were more than 20 percent. They are now down to between 5 to 7 percent. In Argentina, it’s about 17 percent. In Indonesia, it’s 11 percent, Myanmar 10 percent, Timor Leste 13 percent, Vietnam 7.8 percent and India 7.7 percent.

I’m in Italy as I write this, and its economy is in shambles. Its debt pile is growing and credit rating agencies have warned of downgrading the country’s credit rating, which would raise the cost of borrowing. This would constrict the Italian economy’s capacity to expand and stimulate business activities. Do we want that? Because it would happen if we removed the excise taxes in TRAIN 1, as some have called for.

Pakistan has beseeched the International Monetary Fund  for a bailout, while Sri Lanka turned over its biggest port to China because it couldn’t pay the loan. China could now control international trade if it wanted to play nasty.

Country after country is experiencing serious problems politically and/or economically. The Economist warns that “emerging markets are in trouble, and the world could be heading for recession.” The Philippines is not heading for recession, and if the world does, the Philippines will be one of the least affected — as we saw during the Asian Financial Crisis of 1997 and the Global Financial Crisis of 2008.

There are countries with far worse leaders than Mr. Duterte. Erdogan is turning Turkey into a Muslim-dictated caliphate, while Thailand is under military rule. There’s the ongoing civil war in Syria, which has resulted in more than 5 million Syrians fleeing the country as refugees. There’s also serious political unrest in a number of African countries where the people are truly suffering. America has Trump.

I can put up with Mr. Duterte’s swearing and idiosyncrasies, because I position them within a world where they’re really quite moderate deviations. We are in a country that is firmly democratic, economically stable and gradually improving.

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The huge underlying problem is poverty. Just far too many people are suffering from not having enough for an even halfway decent level of living. Poverty has declined only marginally over the years. And it’s only worse when compared with our regional peers. In the late ’90s, Thailand’s poverty incidence was at 40 percent, now it’s down to 8 percent. In comparison, the Philippines’ poverty rate has changed very little—21 percent in 2015 from about 25 percent in the late ’90s. Across East Asia, poverty incidence was about 37 percent in the late ’90s, and now down to about

18 percent.

The Philippines is reducing poverty far too slowly. How to give all Filipinos a decent livelihood is the problem.

E-mail: wallace_likeitis@wbf.ph

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TAGS: inflation, Like It Is, Peter Wallace, Poverty
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