Thursday, October 30, 2008

The U.S. financial crisis and the Philippines’ economic debacle
The Center for People Empowerment in Governance (CenPEG)
ISSUE ANALYSIS No. 14 Series of 2008

Having produced only disastrous results, economic management can no longer be left in the hands of an elite corps of bureaucrats and technocrats who ape lock, stock and barrel models purposely to make corporate profits bigger at the expense of workers, farmers, and other marginal sectors.

By the Policy Study, Publication and AdvocacyCenter for People Empowerment in Governance (CenPEG) September 29, 2008

The opposing views proliferating in the media on whether the U.S. financial meltdown will have an extensive impact on the Philippine economy are expected and time may help settle this debate. By zeroing on the element of “impact”, however, these divergent views – voiced largely by economic authorities, bankers, and financial analysts – only miss the truth about the country’s economic anchors, a core issue that is hardly touched every time a financial crisis in the U.S. happens. They forget that neo-liberalism, enforced in most parts of the world by U.S.-led global capitalism, has left billions of people more marginalized and their lives more miserable by the day.

The Philippine economy has been fettered by prolonged unequal ties with its former colonial master – the U.S. - and by being made an appendage to global capitalism. This imbalanced relationship takes its roots, among others, in post-war onerous impositions, one-sided trade agreements, bitter debt payment programs, and unilaterally-enforced credit arrangements.

At the heart of this historical imposition is the Philippine presidency and its economic generals who have perpetuated this unequal relationship for decades, keeping the Philippines always at the receiving end of global capitalism’s periodic crisis. The current U.S. financial crisis – a result of the unregulated speculative financial sector leading to a housing mortgage mess and credit crunch – should compel everyone to reject this inherently disastrous economic model and work toward an independent, people-oriented economic policy.

'Dark age'

To begin with, the Arroyo government is lying through its teeth when it assures the business community not to fear as the country will ride out America’s financial meltdown even if this has all the makings of a second Great Depression or what European groups call a modern “dark age.”

However, as early as January this year, even the International Monetary Fund (IMF) foresaw the Philippines and the rest of Southeast Asia – and other developing regions - as bearing the brunt of the global impact from a major economic slowdown in the U.S. The recession, the Fund said, will trigger a stiffer export competition from China at the expense of the Philippines and other export-driven countries in the region such as Thailand, Indonesia, and Vietnam.

Making a similar forecast, the economic intelligence center Euromonitor projected that the Philippines and other countries in Southeast Asia heavily dependent on exports to the U.S. will be hit by the economic slowdown as the export demand by the world’s biggest economy declines.

Indeed, the U.S. remains a major destination for Philippine exports. About 20 per cent of the country’s exports go directly to the U.S. Another 50 per cent of the exports go to Japan, China, Hong Kong, South Korea, Taiwan, and Malaysia but these are actually components assembled into products that end up in the U.S. market. All these mean that cuts on the U.S. export demand could be potentially devastating to 70per cent of the country’s exports.

Aside from export manufacturing, highly dependent on the U.S. market are the information technology-enabled industry and the business process outsourcing (BPO) sector. In 2005 these accounted for 90 per cent of BPO export revenues and over two-thirds of foreign equity.

At the receiving end

Each time the U.S. economy tumbles, the Philippines and the rest of the world are bumped aside. Being in the clutches of the U.S. economic hegemony since colonial times, however, the Philippines is at the receiving end of the crisis of capitalism that America passes on to small, developing countries and emerging economies.

To recall, America bought the Philippines from Spain at the end of the 19th century in the period of U.S. capitalist expansion and its conquests for market, cheap labor, and raw materials in Asia Pacific. A strong lobby mounted by U.S. producers against Philippine exports during the Great Depression of the 1930s led to the transition that ended with the granting of independence.

But the grant of independence in 1946 was conditioned upon onerous agreements that tied the Philippines to a “free trade” allowing the unrestricted entry of U.S. exports with parity rights for American citizens to exploit the country’s natural wealth, and own properties and strategic industries.

Emerging from the war in control of more than half of the global wealth and awash with trade surpluses, America had to keep the Philippines and other countries in its grip where it could dump its excess commodities, exploit their cheap raw materials, expand finance capital operations, and extend a new-found military hegemony. Accordingly, national security doctrines during the period emphasized the importance of maintaining a pro-U.S. government in the Philippines that would guarantee America’s over-arching economic and military objectives.

Over the next 60 years, the Philippines’ economic dependence on the U.S. gave birth to treaties and policies allowing the entrenchment of U.S. strategic enterprises and investments, the export of raw commodities, heavy reliance on foreign investments, and the elimination of protectionism.

This neo-colonial structure maintained the system of landlordism and a bourgeoisie that depended on the plunder of natural resources and export of cheap raw commodities. As a result, the local economy became lethargic and generally backward, unable to shield itself from the rise and fall of an increasingly globalized economy where modern agriculture, a strong industrial base, and protective barriers are the keys to survival.

Bitter prescriptions

Imbalanced trade, a weak manufacturing base, and heavy borrowings further resulted in the accumulation of foreign debt that made successive and corrupt administrations accommodating to bitter economic pills prescribed by the IMF and World Bank.

Under the regime of the structural adjustment program (SAP), up to 50 per cent of the national budget went to automatic debt servicing, regressive taxes were increased while social services were reduced, and strategic public corporations went to private hands many of them TNCs.

The government’s commitment to globalization and World Trade Organization (WTO) led to the deregulation of the oil industry. Import liberalization displaced the country’s small producers while tens of thousands of workers lost their regular jobs due to labor-only contract system.

These economic policies took shape in the midst of the periodic crisis of contemporary capitalism battering the U.S. and other capitalist countries. Holding neo-liberalism with a sacred aura, the country’s economic strategists laughed off criticisms from progressive groups that this “new” capitalist paradigm was designed to bring relief to the leading capitalist economies at the expense of the Philippines along with other emerging economies.

Champions of neo-liberal globalization have shown no empirical evidence to support their claim of “equal playing field” and economic growth. On the contrary, neo-liberalism has lost its appeal as it has only widened the gap between rich and poor the world over. Today, nearly three billion people – half the world's population – are living on less than two dollars a day. Conversely, the richest 2 per cent of adults in the world own more than half of global household wealth.

Poverty and unemployment

Here at home, claims of economic growth based on GDP cannot hide the unprecedented increase in the number of poor Filipinos by three million (2003-2006), with the total conservative number of poor now 27 million. Current increases in the prices of oil and food products aggravated by the adverse impact of the U.S. meltdown will likely increase the number of poor several times in the coming years.

Meantime, about 4.1 million people are jobless with the country facing a 10.8 per cent underemployment record in 2007. At least 3,000 Filipinos leave the country everyday in search of jobs abroad. There are other grim statistics about the Philippines human development rating that will make it hard to see any positive signs of success attributed to government’s neo-liberal policies.

The management of the country’s economy is a serious responsibility that should be grounded on the people’s rights and well-being, above all else. Having produced only disastrous results, economic management can no longer be left in the hands of an elite corps of bureaucrats and technocrats who ape lock, stock and barrel models purposely to make corporate profits bigger at the expense of workers, farmers, and other marginal sectors.

Clearly, the most recent financial crisis in the U.S. has dealt a mortal blow to the failed but deadly practices of neo-liberalism the world over and undoubtedly lays the groundwork for the crafting of alternative policies more responsive to the needs of the powerless and marginalized in our societies. We can start right here in our country by working for the end of the destructive and rapacious rule by the elite and building people-centered democratic governance.

Tuesday, October 28, 2008

Blogpost from a Filipina overseas worker in Switzerland
Sunday, October 26, 2008

You shall not molest or oppress an alien,
for you were once aliens yourselves in the land of Egypt.

(Ex 22:20)

I remember the first time when my mother left us to work abroad. I was young then and we were left in the care of our minders. It was temporary and only lasted a month. When it happened again when I was 15, I still couldn't comprehend how a mother could leave her children in search of money. It lasted almost two years. In my youth, I reasoned that I didn't need the money but her presence. I spent many nights crying and hating the fact that we had to be in that kind of situation.

I am only one of millions who experienced this. The Philippines has 1 in 8 people who go abroad. That's 10 million people and if multiplied by the families it affects, it could reach 50 million people. There are families who have been separated for more than 25 years.

But due to economic reasons, it has become almost a national strategy to send out people so that the Filipinos could search for greener pastures abroad. The remittances of the Overseas Filipino Workers or OFWs has kept the Philippine economy afloat that they have been called the country's "new heroes."

But what do the OFWs go through when they're abroad? I have been witness to the attempted suicides, abortions and predicaments of the OFWs when I was in Abu Dhabi. I remember the blood stains of an abortion on the carpet that I spent hours trying to scrub off. I saw a bloodied wrist as it was getting bandaged after a suicide attempt. I heard the many horror stories and saw the lashes in the women's prison when a young Filipina (almost my age 15) was hit on her bare back 100 times with a reed leaving red blood marks on her skin because she had killed the man that raped her. Rape was common and yet the women kept it to themselves because they had to send money back home for their families. I saw the cramped quarters of the takas or runaways whose employers had abused them.

I am now in Switzerland and I am still privy to the many stories of broken homes, mistresses, depression and wayward children back home because of lack of adult supervision. It haunts me that families have to be apart because parents seek to provide a better future for their children, a brighter tomorrow that they couldn't have imagined if they had stayed back home.

But I understand now, I am an OFW myself. I am sending home money to my family and I am far away with only friends to call family. It is difficult and it is still painful but I have learned to live with the situation because as a migrant here, I am treated with respect and dignity.

I reflect on the reading for today in Exodus. It is not the first time that people have left their countries of origin in search of better tomorrows. To reiterate Dr. Manuel Dayrit's talk during the Workshop on Migration and Development a few weeks ago, we weren't the first to migrate, it was the Jews, then the Africans and the massive exodus of all the nations. And migration had a spiritual aspect.

And in those times, migrants were treated unkindly and unjustly, oftentimes becoming slaves. These days, there's the Universal Declaration of Human Rights and what Atty. Cej Jimenez calls for is that migrants' rights be included in the basic human rights. Everybody needs to be treated with dignity and that migration is not dealing in commodities but in human persons.

There are three different types of aliens or strangers.

1. One is to be feared – those that are deemed to be dangerous and are a threat to society.
2. One that needs to be taken cared of – like the victim in the story of the Good Samaritan.
3. One to be respected – like the Good Samaritan.

This is the line of thought of the Couples for Christ thrust to build the Church of the Pilgrim. When the Jews were slaves, they not only brought themselves but also their faith. Each pilgrim or migrant brings with himself his culture and his belief system. Thus, migration does not only have an economic or political value but also a spiritual face. It is in those times that introduction to the one God – Yahweh – began. And from then on, whenever a believer travels, he spreads the Good News or spreads his belief. And because migration is rampant, there is a need to build a Church for the Pilgrim and to take care of the spiritual needs of the migrants.

Since we are all pilgrims on this earth, one way or another, we should not forget to remember that we should treat strangers and aliens with the utmost respect befitting a human person and a person who is created by God in His image. In today's Gospel, we are reminded that the greatest commandment is to love God with all your heart, mind and strength and also to love our neighbour as God has loved us.

This call brings us the challenge of loving every person in need and not to oppress anybody because if we were in their shoes, we wouldn't want to be taken advantage of or to be subjected to ill-treatment. We would like to be respected and to be treated as human beings worthy of living with our dignity in tact.

Tomorrow marks the day of a week-long forum on migration and development. Many nation states will come to Manila for the Global Forum on Migration and Development and will deal with issues relating to the many migrants who have made the world a smaller place because boundaries are blurred. Let us continue to pray that migration will become a migration out of choice and not out of need. And that if we are faced with becoming migrants that people will treat us with dignity and if we meet migrants that we will answer the call to love our neighbours as God has loved us.