The heartless concern for GDP
To meaningfully tally the economic devastation caused by Supertyphoon “Yolanda,” one should count the numbers of people, not the money value of production, affected.
As of Nov. 21, the National Disaster Risk Reduction and Management Council reported 4,011 persons dead, 18,567 injured, and 1,602 missing. My guess is that these numbers are incomplete, and that more casualties will eventually be discovered; being precise is not an urgent matter, however. The NDRRMC also reported 4,397,901 persons displaced, of whom 387,036 were in evacuation centers, and 709,255 homes damaged, of which 364,887 were totally destroyed. Whether these are counts or estimates is not worth quibbling about.
The bulk of the suffering is in Eastern Visayas, which has always been one of the poorest regions of the Philippines. The survivors of the initial onslaught lost most of their meager livelihoods, along with the crops, implements, and other assets that were destroyed. Their economic recovery will take much time. The generous assistance of the many various donors, both personal and institutional, private and government, local and foreign, is very much appreciated by the Filipino people.
I think that bankers, by thinking in terms of Gross Domestic Product rather than numbers of people, are understating the scale of the economic disaster. One editorial (“Massive cost,” Inquirer, 11/19/2013) said: “But while the region severely affected by Yolanda will see its economy declining by as much as 8 percent next year, the overall economic impact on the country is expected to be minimal. Finance Secretary Cesar Purisima said the economic damage in the mostly agricultural region would likely cut a percentage point off GDP growth in 2014. Private-sector economists are agreed that the impact of Yolanda on fourth-quarter growth will be modest. While the affected region is home to about 20 percent of the population, its contribution to the national economy was smaller at only 12.5 percent of GDP, according to Purisima.” A report, “Typhoon’s impact on economy not so bad, say analysts” (Inquirer, 11/21/2013), has Credit Suisse saying that “[t]he affected areas account for a relatively small proportion of GDP, so the impact on headline GDP is likely to be small and manageable.”
The reason all these “experts” from banks, such as Citibank, Nomura, and Hongkong and Shanghai Bank, are enamored of GDP is this: It is the aggregate money value of goods and services produced within the national territory. The greater the GDP, the greater is the aggregate volume of business transactions, and the better for bank profits, because they are financial intermediaries. The sector that always gains from any growth in GDP is the banking industry.
Bragging about rapid growth in GDP is acting as though the gains will trickle down to the poor; but that has not been happening, and bankers should know it by now. Similarly, if GDP is apt to fall due to a natural disaster, minimizing the fall is pretending that the losses will be absorbed by the rich, which is just as unlikely.
If, on account of Yolanda, 1,000 poor workers each lose P100 of income per day, is it likely that 10 companies will each volunteer to sacrifice P10,000 of profit per day in order to subsidize the workers in the meantime? If 1,000 poor families lose their homes each worth P10,000, is it likely that one rich family will volunteer to liquidate a P10-million home in order to provide them with shelter?
Redistribution from rich to poor does not happen naturally, or by an ordinary market mechanism. It must be brought about by government policy, say by using revenues from ability-to-pay taxes to finance services that directly benefit the poor.
Curious numbers. As of the NDRRMC situation report of 11/21/2013, the number of “persons affected” by Yolanda was 161,760 in Biliran and 428,877 in Eastern Samar. But per the May 2010 census, there were exactly 161,760 persons in Biliran and 428,877 in Eastern Samar. That does not seem like sheer coincidence; if the report-maker made a snap judgment that 100 percent of the population (of three years ago) suffered, she/he should simply say so.
In Leyte, the sitrep puts the number affected at 1,844,452 million, of which 276,468 are from Tacloban City in particular. Yet it counts only 31,032 houses damaged, either totally or partially, of which only 382 are from Tacloban. This looks like a case of incomplete reporting of house damage.
In Daanbantayan (at the northern tip of Cebu island), the sitrep puts houses damaged partially at 40,193, and those damaged totally at 24,230, for a total of 64,423. Yet it puts the “persons affected” by Yolanda at only 37,449. How can there be more houses affected than persons affected? As of the May 2010 census, there were only 74,897 people in the town; were there at least 64 houses for every 75 people?
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The SWS hunger report for the third quarter of 2013, published last Tuesday in BusinessWorld, showed a decline of 4.8 points in the national proportion of hungry families, from 22.7 percent in June to 17.9 percent in September. This resulted from large decreases of 10.0 points in the Visayas and 9.3 points in the Balance of Luzon, combined with small increases of 0.6 of a point in the National Capital Region and 5.3 points in Mindanao. Will the Yolanda event of Nov. 8 show a reversal of the Visayan situation in the fourth quarter? We shall see.
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Contact SWS: or [email protected].
