Impact on the Philippines

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Impact on the Philippines Alternatives
COMBATING THE DESCENT INTO DEEPER CRISIS
IBON Foundation10 February 2009
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Main points

• Philippines is entering a long period of
  stagnation severe crisis
• Government is dishonest about the state of the
  economy
• and deceitful about supposed efforts to cope
  with the crisis
• The people need relief real development
• Immediate relief
• Discarding failed policies
• Strategic aspirations

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Global crisis the Philippines
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Imperialist crisis recession
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Global economic crisis the Philippines

• Impact on a semifeudal semicolonial economy?
• Note experience in 2000-2001
• US bubble burst in 2000, growth fell from 3.7
  (2000) to 0.8 (2001) global slowdown
• In Philippines
• Exports growth collapsed 19 (1999), 9 (2000),
  negative 16 (2001) Foreign investment fell 84
  to US355 M (2001)
• Unemployment soared from 9.8 (1999) to 11.1
  (2001)
• Remittances declined slightly by 0.3 to US6,031
  M (2001)
• Remittances from US fell in absolute terms

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Deepening Philippine crisis
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Deepening Philippine crisis

• Drastically slowing economic growth
• 2008 growth slowed in 60 of economy
• 2009 Will fall to less than 3 which is less
  than half growth in 2007
• Worst joblessness in countrys history is rising
  even further
• 2008 10.7 million unemployed underemployed
• 2009 Could rise to some 12-13 million
• Of which at least 5 million outright jobless
  (increase of 900,000)
• Retrenchments, less job creation, deteriorating
  quality of jobs

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Deepening Philippine crisis

• Falling real incomes worsening poverty
• 2006, at approx P110 or less per person per day
• Poor families 13.9 million (official 4.7 M)
• Poor Filipinos 70 million (official 27.6 M)
• 2008 Incomes lost almost 10 of value due to
  inflation
• 2009 Worsening poverty due to joblessness and
  falling incomes more driven to poverty
  deepening poverty for poorest

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Globalization has made economy weaker more
vulnerable

• Imperialist globalization was all about
  monopoly capital profiting from the Third World
• Plundering the Philippines
• Cheap labor ex. OFWs, export-oriented
  manufacturing, call centers
• Cheap natural resources ex. coconut products,
  fruits vegetables, minerals
• Monopolized markets ex. power, oil, water
• Debt speculation ex. foreign debt, aid,
  portfolio investments

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Globalization has made economy weaker more
vulnerable

• Internal vulnerability Shrinking shares of
  manufacturing agriculture in the economy
• Manufacturing smallest since 1950s
• Agriculture smallest in countrys history
• Domestic economy poorly equipped to deal with
  crisis
• Shrunken productive base for generating jobs
  incomes
• Weakened domestic ability to consume invest

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Globalization has made economy weaker more
vulnerable

• External vulnerability Unprecedented dependence
  on low value-added exports, one-sided foreign
  investment overseas remittances
• 84 of exports to just 10 countries
• 77 of FDI from just US, EU Japan
• 88 of remittances from only 10 countries
• Source countries are all seeing drastically
  slowing or even negative growth
• ? Externally-triggered downturn since 2008
  beginning of another long period of stagnation
  severe crisis

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Gross government neglect
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Chronic worsening crisis

• Globalization policies have worsened economic
  backwardness resulted in false development
• Yet govt is maintaining these policies which will
  keep the Philippines as merely
• Provider of cheap labor
• Source of cheap raw materials
• A market to dominate monopolize
• Chronically dependent on foreign debt capital

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Sham resiliency plan or sustainability plan

• Reported plan/package P330 billion
• P160 B increase in 2009 natl govt (NG) budget
• Including dole-out PPPP cash transfer program
• P40 B corporate/individual tax breaks
• P100 B off-budget infrastructure fund (GOCCs,
  GFI, private sector)
• P30 B additional benefits to GSIS/SSS/PhilHealth
  members
• Alternative livelihood programs, jobs
  placement services loans

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There is no pump-priming

• The P1.4 trillion national government (NG) budget
  for 2009 is not a pump-priming budget
• Second smallest share of NG spending to GDP in at
  least two-and-a-half decades (approx 16.1)
• Unexceptional increases in
• Total NG expenditure (9 real growth)
• Larger growth in 2007, 2000, 1997, 1995, 1994,
  1990, 1989
• Total non-debt expenditure (8 real growth)
• Larger growth in 2000, 1997, 1990, 1987

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(No Transcript)
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The plan is mere spin, pretense propaganda

• Recycling repackaging what was already there
• i.e., 2009 NG budget, corporate tax breaks,
  off-budget infrastructure fund
• Meaningless ineffectual measures amidst general
  economic crisis
• i.e., False job placement, livelihood programs,
  loans
• And even narrowly targeted only at newly
  displaced what about millions of jobless and
  tens of millions of poor even before worsening
  of situation?

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The people must guard against being made to bear
burden of adjustment

• Business groups government pushing for lower
  pay, reduced benefits, more uncertain work and
  outright layoffs
• Imperialist powers will push to further open up
  Third World countries through more
  globalization policies
• Ever a vent for their crisis
• Administrations cha-cha offensive
• A maneuver to remain in power longer
• surrendering last remaining legal barriers to
  foreign exploitation of the countrys human and
  natural resources

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Genuine relief development
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Real stimulus needed

• Premises are situation of deep/widespread
  poverty vast inequalities in wealth, income
  assets failure of free market policies of
  globalization
• Main objective stimulate failing consumption and
  production
• Through
• Immediate relief not just for recently displaced
  but for as much of long-suffering as possible
• Preserve current jobs
• Public sector (e.g., no rationalization)
• Private sector (e.g., no retrenchments, no
  wage/benefit cuts)
• Quickest job creation
• Immediate wide-ranging agrarian reform
• Public works for productive rural infrastructure
• Sustainable job creation and development
• Real agricultural development
• Building national industry

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Immediate relief The people must get far more of
the social services and economic share long
denied them

• Restore real per capita social services spending
  to at least 1997 levels
• Additional P205 billion (education), P36 billion
  (health) and P5 billion (housing)
• Support consumption
• P125 across the board nationwide wage hike
  P3,000 increase in government salaries
• Protection against formal/concealed cuts in
  wages, salaries benefits
• Remove VAT on food oil products
• while increasing taxation of wealth, luxury
  goods services, unproductive assets
  transactions

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Immediate relief The people must get far more of
the social services and economic share long
denied them

• Shift public spending to labor-intensive and
  basic rural infrastructure projects that directly
  improve peoples livelihoods
• Ex. P100 billion not for a few big projects but
  small irrigation systems, farm-to-market roads
  and post-harvest facilities
• Free public resources
• Stop debt payments and cancel odious and
  illegitimate debt
• Cracking down on corruption
• Reducing spending on military and war which just
  feeds human rights violations

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Radical economic reforms back to basics

• Agrarian reform agricultural development (ex.
  GARB)
• Land to the tillers, extension support services
• Cooperativization modernization
• National industrialization (ex. National
  Industrial Plan?)
• Filipino industry is possible
• .. and essential for jobs, incomes, capital
  accumulation, technology sustainable growth

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Radical economic reforms back to basics

• Ensure gains from foreign trade and investment
• Protect the Philippine economy
• Reverse trade investment liberalization
• Control repatriation of FDI profits, dividends,
  royalties
• Support Filipino agricultural industrial
  producers
• Real technology transfer
• Filipinization eventual nationalization of
  vital and strategic industries and utilities
• Banking, finance and fiscal policy
• Mobilize and allocate resources towards national
  agricultural, industrial social development
• Crackdown on pervasive wasteful spending and
  bureaucrat corruption
• Oppose financial services liberalization that
  imports of toxic fund management and speculative
  models

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Strategic aspirations

• We are in a period of historical significance
  amidst crisis, building a more just, equitable,
  humane peaceful world
• Lessons about the limits/nature of monopoly
  capitalism
• Intrinsic crisis of overproduction
• Inbuilt poverty, inequality, exploitation
  oppression
• Imperialist wars of aggression conquest
• Build on the experience with progressive
  economics such as in socialist countries
• Broad-based sustainable growth
• Societys resources used for the peoples welfare
• Combating joblessness, hunger, disease lack of
  knowledge

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