New economic advisory group for PBBM

PBBM ordering a crackdown on hoarding on major basic commodities from rice to sugar, uncovering billions worth waiting in bodegas for higher prices before being released into the market. Now when these are released fully, we can expect a major impact on the lowering of prices and inflation. Unlike the measures being undertaken by the neo-liberal economist who have been given control of the economy since 1986 and never allowed our economy to rise to self-sufficiency.

These executive actions from Malacañang will have more telling effects on the market prices and consumer price index than the ironically inflationary anti-inflation interest rate escalation being instituted by the economic neoliberals in charge of our economy since Cory Aquino started installing them in 1986. The policies are inflationary as they hurt business, admitted by the BSP chief headlined “Borrowers feeling pinch of rising bank lending rates, says BSP” in the papers.

Hurting businesses leads to slow down of production and distribution of goods, slow down of economy, jobs losses which make goods out of the reach of those suffering these consequences. Hence, all economies using the neoliberal paradigm of allowing the market to deteriorate using tightening of the supply simply creates more misery and digs the hole deeper for the economy to fall through. The illusion of controlling prices is just that, illusory.

Two different economic paradigms

Food prices in the Philippines have been shooting through the leaking roof already eaten away by general inflation. 99.9 percent of our hapless Filipinos suffering the high prices don’t know the whys and wherefores of their hopeless situation. When we try to explain the real reasons, they dazed by the concepts needed to grasp the reasons for the economic difficulties. The idea of “neoliberal economics versus physical economics” is simply too alien to them.

The vast majority of Filipinos only begin to understand inflation when they see it in their food items go up in cost, but they don’t understand that the food prices are among the last to reflect inflation. It actually starts with other hike in prices of other things, like fuel and electricity, like the cost of money (or bank borrowing that drives the whole economy, etc. Some economies like China and Vietnam are escaping the inflation dilemma today, how? Filipinos can learn something from them.

Let’s start with electricity prices of the two countries I mentioned and compare them to the Philippines. I have just updated on this: Vietnam, VND (Dong) 1,916/Kwh ($0.085 or PHP5.73/Kwh); China, RMB0.810/Kwh (or PHP4.55/Kwh); Philippines per Meralco official post, PHP10.4612/Kw. Philippine power rates is at least double that of electricity rates in Vietnam and China. The inflation rate of Vietnam today is 3.14% and China same period is at 2.7 percent while the Philippines inflation rate is at 6.3 percent -- also double.

What accounts for the low power rates in China and Vietnam, contributing to lower inflation rates in comparison with the Philippines and most of the rest of the world – especially when contrasted to the US where inflation rate today is 9.1 percent and electricity rates are on the average $0.146/Kwh or PHP8.20/Kwh. China and Vietnam’s power companies are not-for-profit, state-owned enterprises unlike the Philippines, the US and most of the rest of the world which is based on the profit-seeking model.

Power, FDI, jobs

This power or electricity ownership mode and the low or high prices they offer sets of a series of many consequences, one of them is its impact on productivity, competitiveness, investments and jobs-generation. An Aug. 26, 2022 news from Vietnam which was posted on FB headlined, “Tech firms shift operations from China to Vietnam where FDIs is on the rise”, one comment from the Philippines asked, “Why not the Philippines?” – It’s clear that one reason is the high-power cost in the Philippines.

From 2022 reports: China, “Foreign direct investment in China has grown 17 percent year-on-year to 798.33 billion yuan ($117.56 billion) in the first seven months...”; Vietnam, “...foreign investment cooperation for the 2021-2030 period. FDI inflows into the country continue to make great momentum with US$14 billion arriving in the country in the first half of 2022. Jul 1, 2022; Philippines, “Total foreign investments (FI) approved in the 2nd quarter of 2022 amount to PHP46.23 billion ($812-million only, less than $1B).

Diokno’s economic philosophy is neoliberalism, or new liberal economics which believes the government intervention is evil and the private sector, the “market”, is the force for economic good (never mind if it breeds monopolies, duopolies and oligarchy and plutocracy). Marcos Sr. was state-interventionist, until the UP School of Economics was overtaken by Rockefeller and Ford Foundations, Solita Monsod, Cory Aquino took over government and institutionalized these neoliberal economists.

This public-service versus profit-driven economic modes are behind the success or failure of the economies of societies, and the Philippines has chosen the wrong mode for the past 30 years.

Neoliberals have different politics but same mind.

Speaking of Monsod, daughter Katrina is being built up as a new poster girl or legal-economic wisdom, the Inquirer headlining her as “Law expert says protectionist provisions needed in Constitution”, i.e. against foreigners. What she omits is that the exploiters are Filipino oligarchs like his father’s employer the Lopezes when he was hired as director of the Lopez owned Meralco before. It’s not just the Constitution, it’s a whole socio-economic-political paradigm that needs to change.

The neoliberal economists have had a hold on all the governments from the time of Cory Aquino to the present because even the presidents that came after the Yellow-era feel they have no option but to go along with the neoliberal paradigm. The private banders-oligarchs control the economy and politics because the first Aquino presidency changed the monetary board from a majority of state representatives to private representatives, and the state lost control of the entire system thereafter.

The oligarchs anoint or constrain the president with their money that comes from privatized assets of the state (power, water, infrastructure, etc.) that they use to control media which they use to control the voters, in a vicious cycle of parasitic extraction on the economy and the people to control the people. How to get out of the cycle is the challenge.

Nationalist, physical and socialist economic advisers needed.

PBBM can start broadening the country’s economic options by establishing an alternative economics advisory group, maybe it can be called a think tank, the President and his other Cabinet members can hold economics brainstorming to see alternatives to the neoliberal economists that have been ensconced in government economics institutions the past 30-years and have just produced more of the same annual failures to keep up with the progressive economies of ASEAN like Vietnam.

Organizing an economic advisory group of nationalist, physical and socialist economists to give him options to ponder and consider is not a difficult project, and it should not be controversial because the neoliberals are still firmly in place comforting the oligarchs and mega-bankers who could create immediate destabilization in cahoots with their controlled politicians if they wanted to. It should start with a healthy debate on the best economic paradigm for the nation.

Editor’s note: The opinions expressed in the foregoing article are solely the author’s and do not reflect the opinions and beliefs of the Philippine News Agency (PNA) or any other office under the Office of the Press Secretary.