Featured Post

MABUHAY PRRD!

Saturday, January 28, 2012

Indeed the economy, professor!

by Peter Wallace

I’m amazed that Gloria Arroyo still lives in a fantasy world. I’d have thought hospital arrest might have brought her back to reality. It appears not. If her title of a report she recently released (It’s The Economy, Student) was meant to imply she was teaching us about economics, then we’d all fail. I’m not questioning that she made some good economic decisions. She did—but not to the grandiose levels she claims. And the reported corruption of her regime negated much of it.

I destroyed her supposed accomplishments published in major dailies (in September last year and previously in January 2010) in my analysis entitled FAIRYLAND and A FAIRYLAND—ALL OVER AGAIN. It seems I must do it again. I find it more and more improbable she could ever have got a doctorate in economics. I didn’t, but I can certainly analyze facts and figures more cogently than she seems able to.

I know I’ll anger the fewer and daily fewer adherents to her but they’ll eventually see the reality. Or at least I hope they will (some are friends) as the reality becomes overwhelmingly evident.

Her second paragraph, the first is so obvious you can’t even imagine why it was said: a rise in incomes reduces poverty. Duh? But her second fosters the myth of a 7.9 percent growth she created before she stepped down (2nd quarter of 2010). She completely ignores that there was no growth (1.5 percent) a year ago, so the base was artificially low. The 2010 number was just recovery back to normal. If you average for 2Q ’09 and 2Q ’10 it’s 4.7 percent for each period, and that’s what reality says it was. There wasn’t a sudden, sustainable growth in manufacturing, or agriculture, or anything else. Just recovery to the historical growth pattern.

Then follows her boast that RP was “one of the few that managed positive growth”, but if you assume, as you should, that government has only marginal impact on international trade, but has, or can have considerable influence on the domestic economy that boast collapses.

If we take exports and imports out of the GDP equation and just focus on the domestic factors look at what we find: Vietnam’s domestic economy (C+G+I) grew at an impressive average of 9 percent over the ten years, 2001-2010. Singapore’s grew 6.1 percent, Malaysia’s 5.9 percent, Indonesia’s 5.1 percent. And the Philippines was down there with Thailand, at 4.6 percent and 4.3 percent respectively.

Even if we take into account international trade we get a similar picture—the Philippines down near the bottom of the heap only Thailand (again) growing slower at 4.4 percent versus the Philippines at 4.5 percent. Thailand suffered more (down -2.3 percent GDP in the world eco crisis of ’09 vs the Philippines at +1.1 percent).

Singapore, Malaysia and Thailand recorded GDP fell as a result of the ’08-’09 global economic turmoil. Not us because we weren’t sufficiently connected to the world. And not because of some miraculous management by the President but because of the reverse, her inability to make the Philippines world-competitive, and do more business with the world.

As to roads and bridges... come on! Of course some were built. In 9½ years there had to be, but the expenditure on it all was the lowest amongst the Asean group in terms of both total spending and as a percent of GDP, by a significant factor. She spent less on infrastructure than any other leader in the region—in dollars and percents. And she allotted less than that engineer, Fidel Ramos. It was an annual 3.5 percent of GDP under Ramos, a miserable, and totally unacceptable, 2.3 percent under GMA .

And making the competitive comparison you know where the Philippines was. Not just at the bottom, but way down at the bottom. I hate to bore you with numbers, but you’ve got to see it to get the clear message. Gloria spent an annual average of US$2.6 billion during the 2000 to 2009 period, or 2.3 percent of GDP. Malaysia spent an average of US$7.6 billion/5.4 percent of GDP, Indonesia US$10.3 billion/3.4 percent, Vietnam US$ 4.9 billion/9 percent, Thailand US$10.8 billion/6 percent.

That is the real face of “achievement” that occurred in her administration.

She bragged about the more than 7 percent growth recorded during her term. But wait, what kind of growth was it? Did it help all, or just a few? It’s not easy to measure, but one number that gives some indication is the GINI number. This shows how much discrepancy there is between the rich and poor. A figure closer to zero indicates a more equal income distribution. You want to be approaching zero where everyone is more or less equally wealthy. By the way the 2010 GDP of 7.6 percent was just recovery from a low base while the 7.1 percent posted in 2007 (the only other year where there was such a number) was because of a drop in imports which created a double negative that artificially inflated GDP growth. Again, it wasn’t sustainable, real growth.

In our FAIRYLAND -ALL OVER AGAIN report, I mentioned that GMA succeeded in improving the country’s GINI coefficient from 0.481 before her presidency to 0.448 in 2009. Still, that’s far worse than Vietnam’s 0.378, Indonesia’s 0.394, and Thailand’s 0.425. Income distribution is more equal even in least developed Laos (0.326) and Cambodia (0.407). The Philippines was at the bottom of the heap at the end of her term.

Education facilities? Arroyo claimed that 100,000 new classrooms were constructed under her term and improved the classroom-student ratio to 1:39 for elementary and 1:55 for high school from: 1:45 and 1:65 in 2000. Again, as we emphasized in our 1st FAIRYLAND report these are far from the recommended 1:25 classroom-student ratio so that pupils can be properly educated. Also, the ratio goes as high as 1:79 for primary and 1:82 for secondary in some schools in Metro Manila. Worse there needed to be two shifts in some areas to achieve those figures.

The absolute number of the unemployed rose during her term: 3.5 million in 2000 vs. 4.2 million in 2009 using the same definition, not fudging it with a definition change as she did. And that doesn’t include (because no statistics) the Filipinos who fled overseas because there were no jobs here. These are government, “her government” numbers, so she can’t dispute them.

“Hundreds of thousands of families liberated from want during my decade at the helm of the nation” 19.8 million were in government-defined poverty in 2003 (based on the recently-revised poverty figures), 23.1 million were at the end of 2009. SWS’s self-rated figures were even worse, 43.8 million in 2000 vs. 45.2 million in 2009. So, yes maybe hundreds of thousands were liberated, but millions were worse off. Does that sound like liberation to you?

I could go on, but it’s a waste of time. Her administration was a failure in all the measures that count. Both in comparing the numbers at the start of her term against those at the end. And, more importantly, against our competitors. The quality of life of a greater number of Filipinos was worse when she left than when she entered (while our neighbors’ people were better off).

By the way, Gloria’s poor reputation didn’t appear out of thin air, it was built on event after event. There were just too many questionable deals (20 on my list) for her to be innocent of all them. Maybe you can falsely accuse someone of one or two events through Machiavellian machination, but 20? Maybe she’s innocent of some, but surely not 20. And why none of them resolved. Innocent people rush to prove their innocence, the guilty try to delay. 20 were delayed.

I’m not denying she did some good for the economy, she did, but it was not at the distorted levels she claims, and as it was less in most measures than our neighbors in a competitive world then the end conclusion must be that she failed as a CEO. That would be the case in a corporation; it’s the case for a country too.

Sad, she had all the potential to be a great leader.

(Published in the Manila Standard Today newspaper on January 27, 2012.)

No comments: