At 52%, this is a record high for the Duterte administration, and last happened in December 2014. The figure means that most (median) of the 12.2 million poorest families in the Philippines are living on less than the national threshold of P10,000 monthly, which in itself is a ridiculous amount to keep even a family of four together.
The data show that it is not uncommon to see a steep rise in self-reported poverty. Steep rises have occurred for all past administrations. However, it also appears that those sharp increases did not go on for more than just a few (possibly three) quarters. Though this is only the second quarterly poverty rate increase under Duterte since Q2, the next quarter is crucial as it appears prices are still expected to rise.
Note, however, that poverty is at a historical low for Metro Manila, the seat of political action in the country. The increase is rather due to sharp increases (12 points) in "Balance Luzon," plus the five points in Mindanao, where poverty has always been intense and is currently at 65%.
Previously in this blog I highlighted that the national poverty rate has been going down. Apparently it's only because of what can be called the "NCR-Luzon effect." This makes sense as most direct investments probably just end up there. Meanwhile, life for those in the Visayas and Mindanao is very hard at best. The economy is clearly not working for all, and is clearly a result of government's failed policies at the national level, or lack of it.
An article from Nextshark reveals the condition of workers at The Landmark, as narrated by an applicant on Facebook. Original article here. The applicant has since made some of her personal posts private, apparently due to intimidation from some.
Landmark is quite a sneaky entity. It functions as the department store section of other malls like Ayala, which only has "boutique" sections. It is far from "high end" as the article suggests, but it sits just close to places like Greenbelt. For Ayala malls, it also functions as the "food court" section.
Ayala apparently "outsources" all the dirty work to a provider like Landmark, to cut costs and pass on operational risks. It's no wonder their employees are neglected -- it appears to be their owners' exact business model. But Landmark is not the only culprit here.
Retail trade accounts for around P2 trillion in value in the Philippine economy, or some 13% of the GDP, but their workers get low pay. "Contractualization" is probably still rampant. And as seen here, they also get very bad treatment.
All of this is just a reflection of the trajectory that was designed by our economic managers who bought into the "globalization" hype -- neglect your own agriculture and manufacturing/industrial sector, turn your vast lands into malls, force the displaced farmers and industrial workers to become sales personnel, import the food and goods you no longer make at home, and sell them in the malls you built. If you really want out, you can leave your family and become an OFW, and your government will only be too happy to export you instead in return for the dollars. Note that this is the exact same policy that Rodrigo Duterte continues to uphold.
Meanwhile, the mall owners -- the Ayalas, Sys and Gokongweis -- are cream of the crop of the Philippine upper class elites. It is wealth that is founded on their own country's lack of an independent economic policy, deceit and workers' despair.
There may be several ways to address this whole problem. (The only real solution, really, is to rethink humanity's love affair with Capitalism, but since that probably won't happen anytime soon, let's look at more immediate options.)
In the very near term, if the retail elites think that the trajectory of global economy is now irreversible, they should at least make an effort to treat their workers decently as human beings. But if they won't do that, it's time we socialized the malls. The workers -- salesladies, food crew, haulers, etc. -- work their assess off for them. Why shouldn't they get a fair share based on what they contribute?
In 2012, Leo Panitch and Sam Gindin
published The Making of Global Capitalism: The Political Economy of American Empire. The subject matter of MGC is Capitalism itself -- how
it works, the institutions that run it, the crisis it spawns -- and
the state that holds it all together, the United States.
It is a mammoth of a book, the life's
work of two scholar-activists who have devoted their entire lives to
the socialist cause. It is a must read if one has to be up to date on
the subject. (And In a Left community that hardly updates its
dogmatic understanding of things, it's even more relevant.)
In the Philippines, probably much of
the Left's understanding of the workings of Capitalism is tied to the
single most dominant paradigm still plying its trade in the country,
the paradigm of Imperialism.
According to this understanding, the
current capitalist stage is one characterized by an American state in
a crisis of overproduction which drives it to look for
"semi-colonies" where it could export goods and capital to,
to make up for the saturation of its markets at home. The paradigm
also points to a logical conclusion of imperialist wars, as many
different capitalist/imperialist powers supposedly battle it out for
global dominance.
Much of this is outdated. A key point
Panitch and Gindin make is that the American economy is far from
saturated. American consumer spending is unparalleled in the world
(and is in fact a key growth driver for the global economy for having
a population with a very high purchasing power, and which is a
recipient of much of the world's exports).
On the other hand, it is equally
counterproductive (if not dangerous), to still be fixated to a
pre-World War II view of the world in the face of one glaring reality
-- global capitalism at present is in fact upheld by all the major
industrialized nations, and to make capitalism work they all look to
a singular leader -- America. The most developed nations' leadership
has in fact been institutionalized through the formation of the G7/G8
-- one of whose primary tasks is to ensure harmony in the global
financial system.
Global finance
This latter cooperation for the sake of
the financial system is inseparable from global capitalism,
especially because the system is under constant threat -- not from
overproduction but from financial crises.
According to the authors:
"The unresolved dilemma for
all capitalist states today is how to both stimulate the economy and
regulate financial markets so as to limit increasingly dangerous
volatility without undermining the ability of finance to play its
esential role in global capitalism."
Put another way, capitalism's central
contradiction is that to keep on stimulating the economy, it allows
for the activities of finance which eventually threatens the system
itself by eroding regimes of value. Financial crises cannot be
predicted. We do not know when the next Dotcom Bubble or the next
Subprime Mortgage Lending Crisis will occur, and there is only so
much that regulators can do to keep profit-seekers from unwittingly
conjuring the next crash. (In many cases, the policies that once
checked finance have themselves been removed to accommodate more
profit-making.)
So finance is integral to -- and
inseparable from -- the working of Capitalism. It oils up the wheels
and sprockets of global economic activity. But its bullish activity
breeds financial crisis. In a financial crisis, assets – bonds,
stocks, currencies -- dramatically lose their value. This eventually
results in a widespread slowdown in economic activity.
The coordination of policies especially
among the most advanced capitalist states is thus important in
managing global finance, and in containing crisis when it does
eventually arise. Policies relating to capital risks, reserves,
lending ratios (the Basel accords), financial liberalization, and
liquidity during periods of crisis all have to be coordinated.
Perhaps part of what this means for us
in the Left is to endeavor to have a very deep understanding of the
financial/capital markets, to be able to show just how irrational the
entire system is. Just as the Left periodically tracks statistics
relating to poverty and wages, so should it record movements in local
interest rates (from the Bangko Sentral) and hot money flowing in
from abroad (a.k.a. "portfolio investments").
At present, global capitalism is a
creation of a global capitalist class led first and foremost by one
state, the United States of America. Its current agenda is to promote
capitalist production in the entire globe; exploit or/and develop new
markets; and maintain international regimes of value especially in
times when the financial system makes a mess of itself. The global
Capitalist system is run by the Federal Reserve, the de facto central
bank of the world. Together with the US Treasury, it conducts US
monetary policy which is the global basis for short-term economic
policy everywhere else.
Philippine setting
Another danger of looking at capitalism
from an overproduction/market saturation perspective is that the Left
would cling to the hope that some final rupture will eventually occur
that will finally end the rule of global capital. It is very unlikely
that that will happen. As Panitch and Gindin showed, one remarkable
phenomenon that occurred during the last crisis, in '07-'08, was how
quickly the governments of the G20 lined up in support of the United
States in helping avert further potential economic loss.
But what insights can MGC offer the
Philippine Left in relation to its own local situation, and in the
context of Philippine political realities, for example the current
Menace in Malacanang?
Perhaps we will need to understand how
Philippine economy is currently integrated to the international
capitalist system, especially to international finance. From the
perspective of global Capital, the Philippines is basically a
low-income nation that offers cheap, English-speaking labor whose
economy is ultimately propped up by a long-standing labor export
policy. It should hardly be an inviting site for hot money/portfolio
investments, although this is something that the Left should probably
guard against.
But perhaps one of the things that need
to be pointed out is that Philippine economic development is not
materializing not because there are international Capitalist forces
preventing it from doing so. In fact, it could instead probably be
sufficiently argued that it is in the interest of global capital to
see the local economy grow, so that it becomes a broader market for
higher-end exports. Rather, economic underdevelopment will have to be
blamed on the local class interests that no longer care about such
worthless cases as national economic development. Economic
development necessitates land reform, something never palatable to
the local (landed) ruling elites.
But at the same time, it will be in the
top interest of global capitalist elites to not rock the local class
alignments in the Philippines that in the end are their own
caretakers for their own economic interests in the country. It is in
this context that for as long as Rodrigo Duterte is a faithful
steward of global Capital in the Philippines, he can count on
continuing his activities, including killing citizens, with impunity.
All the Western powers will eventually turn a blind eye -- except for
the occasional token condemnation.
In the final analysis, Third World
governments are really nothing more than the local stewards of global
Capital. As such, they have only one role: to ensure that the system
of private property, financial liberalization and regimes of Value
are protected. All other tasks, such as the niceties of human rights
and "good governance" are a mere bonus -- and are in any
case done not for their own sake, but in aid of the smooth running of
the international system as a whole. Marcos was, after all, a son of
a bitch. but he was "[their] son of a bitch."
Panitch and Gindin mention that it is
the contradictions that emerge within, rather than between, states
during times of severe economic crisis that show the openings for
political action. Whether one of the future political battles will
get to tackle the unmaking of the irrationalities of capitalism in
this part of the world is one local democratic socialists should
decide. xxx
Bourgeois economics has a fetish with the national GDP (gross domestic product), a number which represents economic production. Quarter after quarter, journalists, economists, policymakers, and the local elites join together to hear the most recent GDP number from the government, hoping from anywhere near 6%-7% growth each time.
The notion is that higher GDP growth is better, and lower GDP growth sucks. GDP growth is supposedly better for all of us. That may be true, but it is important to know what the economy is actually made of.
In 2016, going by current prices, the Philippine economy based on PSA data amounted to some P15 trillion (not considering a category called "Public Administration and Defense; Compulsory Social Security" for which I could not find data).
Our Top 15 economic activities and their worth at current prices in 2016 are as follows (in millions):
1. Retail Trade
2,056,789
SERVICE SECTOR
2. AGRICULTURE SECTOR
1,397,615
AGRICULTURE
3. Construction (Private)
1,359,660
INDUSTRIAL SECTOR
4. Food manufactures
1,347,029
INDUSTRIAL SECTOR
5. Renting and other Business Activities
969,128
SERVICE SECTOR
6. Education
557,836
SERVICE SECTOR
7. Banking Institutions
529,041
SERVICE SECTOR
8. Wholesale Trade
508,306
SERVICE SECTOR
9. Ownership of Dwellings
485,451
SERVICE SECTOR
10. Construction (Public)
465,995
INDUSTRIAL SECTOR
11. Real Estate
444,319
SERVICE SECTOR
12. COMMUNICATION
377,092
SERVICE SECTOR
13. ELECTRICITY
373,196
INDUSTRIAL SECTOR
14. Non-bank Financial Intermediation
371,342
SERVICE SECTOR
15. Chemical & chemical products
356,133
INDUSTRIAL SECTOR
What do we produce as a country, then?
A lot of the activity is in a category called "Retail Trade" within the Service Industry. Retail trade means nothing more than selling goods. According to the 2013 Annual Survey of Philippine Business and Industry (most recent), establishments within this category are engaged in activities such as retail and wholesale in household equipment (appliances, etc.); food, beverages and tobacco; and specialized items.
Retail sale in a category called "non-specialized stores" according to the PSA employed the largest number of workers among all Philippine industries, with 130,834 employees at the time. For their troubles, workers in the sector (which include "salesladies" in malls) received an average of P11,260 per month.
We are basically a nation of malls, salespeople and construction workers that receive low pay. And a lot of the wealth really comes from people renting out the capital resources that lie firmly in the hands of the elites, whether land, buildings, telecommunications infrastructure and electricity.
Another conspicuous detail is that our logical economic base, agriculture, amounts to a only around 9.3% of the economy by current value. And because we failed our economy at its base, it follows that we also do not have any serious industrial manufacturing capability, especially in machineries (which is among our top imports), industrial chemicals (not just chemicals for producing soap and shampoo) and electronics (beyond making chips for export, which return to us as finished goods in the form of cellphones and laptops). We have a Communication service sector, but not an industrial manufacturing sector dedicated to this. At this point, one can see the folly of arguing for a mining renaissance in the Philippines -- all of that raw material will only be exported, because we have no serious industry within to use them on.
Meanwhile, Rodrigo Duterte has vowed to up government spending in infrastructure (our No. 10 economic activity) during his administration. Earlier in his campaign, he said he would espouse Philippine industrialization and pay attention to agriculture. Of course, those were the days. Almost a year later, not even a hint of any industrialization plan has been made, and we still import rice, our staple, by the ton.
Next time they give us the numbers on GDP growth, we should ask -- growth for who?
Research group IBON said that the 7.0% growth in the second quarter of 2016 and 6.9% growth in the first semester are the weakest in the past five election years and challenge the Duterte administration. Bold changes in economic policies are needed to achieve sustained higher growth, said the group.
According to IBON, the growth rates in gross domestic product (GDP) so far this year compare poorly with previous election years. Second quarter growth this year is lower than in 2013 (7.9%), 2010 (8.9%), 2007 (7.6%), and 2004 (7.7%). First semester is also lower than in 2013 (7.7%), 2010 (8.7%), 2007 (6.9%), and 2004 (7.5%). This indicates weaker economic fundamentals that weakened the overall impact of the election spending stimulus.
IBON added that the second quarter growth results virtually confirm the country’s economic slowdown and whole year 2016 growth is likely to be slower than the recent peak of 6.9% growth in 2013. The economy has to grow by at least 7% until the end of the year to even just match its performance in 2013. But post-election quarterly growth is usually markedly slower and there have only been two election years in the post-Marcos period, in 1995 and 2001, when growth accelerated rather than slowed, the group noted.
Recent relatively rapid economic growth has not made much of a dent n the country’s high joblessness and chronic poverty. The prospects for the majority of Filipinos can only worsen with slowing growth, IBON warned.
Farmers and fisherfolk have it worst off, the group observed. The agriculture sector has already been losing some 73,000 jobs yearly over the course of the Aquino administration and this is down to just 11.3 million. Comparable employment data for the year so far is not available but the negative 3.3% agricultural growth in the first semester could mean over a hundred thousand jobs more lost, according to IBON.
The group stressed that the Duterte administration and its economic team needs to take the long view. Beyond mere quarter on quarter or even year on year figures, the economy remains on a trajectory of exclusionary growth and underdevelopment. The administration has a convincing electoral mandate and has often expressed its bias for the poor and being unafraid of foreign and domestic elites.
These need to be reflected in a bold economic program that breaks land monopolies, gives substantial support to agriculture and rural development, and unleashes farmer productivity, said IBON. It also needs national industrialization. This means actively building and supporting Filipino industry even if this unsettles domestic oligarchs and will be opposed by foreign investors preventing the rise of Filipino industrial competition. These are needed for sustained higher growth that improves the lives of millions of Filipinos, the group said. ###
