Driving growthBy Aurelio O. Angeles
Philippine Daily Inquirer
Our country is marked by dichotomies.
The most enduring dichotomy is this: the few rich who are gaining greater control of the economy and the many poor who are growing more impotent through the years.
No, this article is not about politics but plain economics. As a subject of economics, this disconnect is a hallmark in monetary policies, past and present.
If we are to drive growth in our economy, we must bridge this disconnect with plain, old-fashioned approaches—humility, courage, love of country.
Hallmark of disconnect
Here are a few versions of this hallmark of disconnect.
On September 13, this headline came out: “BSP keeps its policy rates unchanged.” The news stated that BSP would keep the rate of 3.75 percent per annum for borrowing and 5.75 percent per annum for lending to banks.
Its reason for doing so, according to the news item, was the benign inflation rate that was well within target. I quote the news item: “Guinigundo said inflation, which averaged 3.8 percent in August, might have already peaked, making further policy-rate adjustments superfluous.”
On interest rates
Changing interest rates by basis points is a familiar terminology in big banking. It is real BIG DEAL for the BSP, fund managers, investment bankers. Let the BSP raise these annual rates to 5 percent and 7 percent, or reduce them to 3 percent and 5 percent, and we will see mountains of funds jolting across borders.
But what is this BIG DEAL to the greater population of people in urban and rural areas? They cannot borrow from banks and, if they can find a willing lender, must pay interest rates from 3 percent to 10 percent per month or 36 percent to 120 percent per annum.
See the disconnect?
And yet, when our BSP talks in media, we get the idea BSP’s interest interventions impact on the greater number of Filipinos—not just the rich who own and control the wealth of our nation.
What is the point? Since the BSP has its hands full with interest rates, how about getting really effective by making funds available to the greater number of people found in SMEs in urban and rural areas that will bring interests down? How about giving importance to the greater number of Filipinos in policy making and implementation?
Did you know that, when the BSP talks about an average inflation rate of 3.8 percent, it is talking about price indices based on a pre-conceived basket of commodities for a typical Filipino?
But who is the typical Filipino? Are the products in the basket representative of what the greater number of Filipinos buy and consume from day to day? Sorely we will find that the “typical Filipino” of the price index does not exist and the basket contents are nowhere close to the items you, they and I buy from day to day.
Here we will find another dichotomy between the few rich who buy most of the commodities and whose interests get reflected in the basket and the poor, though many, who buy much, much, much less.
We will also find this disconnect between the basket of goods carried by the theoretical typical Filipino and the basket of goods you, they and I carry from day to day. And yet, this inflation rate is the be-all and the end-all of monetary policy.
What is the point? Let the BSP use a basket of commodities that is representative of the greater number of Filipinos. After all, if BSP wants meaningful policies, it must implement policies aimed at the benefit of the greater number of Filipinos.
Who does BSP think its constituents, anyway? Can BSP bring about national stability and growth by disregarding the greater number of the people?
Road of disconnect
Here is another disconnect, more glaring and practical. It is about the traffic that hits people daily along Katipunan Avenue in Loyola Heights during school days.
This traffic may not be about monetary policy, but it surely shows how economic growth can be frustrated because people are not enough men for others and how powerless most people are.
If you are driving along Katipunan Avenue coming from White Plains and are on the way to UP, you will pass a fly-over built to avoid the traffic at the intersection of Katipunan Avenue and Aurora Boulevard. There are two sides to the road—the Ateneo side and the National Bookstore side.
When you get off the end of this fly-over, count the total number of lanes of Katipunan Avenue.
Yes, there are 12 lanes—five lanes along the side of Ateneo and seven lanes along the side of National Bookstore.
Then as you pass by Gate 2 of Ateneo, you will find the total number of lanes on both sides reduced to nine—four lanes along Ateneo and the five lanes on the side of National Bookstore. You will also notice this peculiar fact: the missing two lanes along National Bookstore have been added to the lanes along Ateneo.
Here is another fact: after Ateneo, Katipunan Avenue widens again to 11 as it passes Miriam University and to 12 as it reaches the entrance to La Vista.
Now you know why you have an undesirable feeling when you pass Katipunan Avenue along Ateneo.
Can’t government widen the road? Of course, it can. However, Ateneo must give up its land through government expropriation.
Why doesn’t the government expropriate and Ateneo sell the land to retain the number of lanes at the end of the fly-over for the interest of people passing the road?
The answer to the question touches government and societies serving as “men for others.”
The answer involves the dichotomy between the powerful few who can get away with what they want and the powerless many who must bear the traffic daily.
The answer also pertains to the dichotomy between knowing what must be done and actually doing what must be done—two parts in the great divide that we all must connect to attain growth not just for the powerful and wealthy few but also the greater number of Filipinos.
(The article reflects the personal opinion of the author and does not reflect the official stand of the Management Association of the Philippines. The author is the President of Filipinas Multi-Line Corporation. Feedback at firstname.lastname@example.org. For previous articles, visit map.org.ph.)
Short URL: http://business.inquirer.net/?p=89752