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Marooned
on a desert island, famished, with nothing among them
save for a can of soup, the engineer, the bishop and the
economist pondered how they might pry open the sealed
can.
Desperate, a pragmatic engineer, Rodolfo Lozada Jr.,
searched for a tool. He found none. The prelate,
trusting in divine intervention, bowed and prayed that
the can might miraculously open by itself. Nothing
happened. Finally, Mrs. Arroyo, in typical economist
fashion, simply assumed that the can was open.
Needless
to say, the three starved.
While no
personal inferences are intended, this joke reflects the
disparity between reality and the world of economics.
Another—this, painfully laughable—illustrates the same.
A
reputable economist declared that she would not join
public protests because “[Gloria] Arroyo has done good
[sic] with the economy.”
Another
columnist, similarly bent, wrote “the economy is so
good.” Joining the women, Albay Gov. Joey Salceda showed
the gross domestic product’s (GDP) unprecedented
7.3-percent growth under his old mentor. Others pointed
to the decline of external debt-to-GDP ratio from 68.3
percent to 36 percent. Never mind that the E-VAT
painfully burdened on consumers and provided repayment
liquidity while the global dollar devaluation accounted
for the rest.
Some
cited our per capita income of $913 to show the
economy’s results. Unfortunately, sectoral incomes and
its standard deviations indicate a concentration on
services and not on the more populous agriculture and
manufacturing sectors.
While
others cited bloated foreign reserves to show good
economic governance, its girth actually resulted from a
trade slowdown as the manufacturing slack required less
imports and, thus, produced less.
Obviously, there are alternate perspectives from which
to view GDP. One pegs prices and computes aggregate peso
amounts. Often quoted, this is illusory. It dismisses
the number of people affected and its growth does not
mean that the greater public feels what aggregate
statistics measure.
For
example, the agriculture, fisheries and forestry sectors
grew by only 5.1 percent; the industrial sector, 6.6
percent; while services grew 8.7 percent.
Unfortunately, our work force is concentrated in the
agriculture and industrial sectors. Doctors, lawyers,
national broadband network peddlers and call-center
agents comprise services. They are substantially better
paid, but fewer. Worse, in services, capital formation
is weakest.
The
greater public’s detachment from 7.3 percent explains
why nothing is felt despite claims of phenomenal GDP.
When
incomes rise yet the poor get poorer, the social volcano
percolates. In an incendiary environment, this
disparity, obfuscated by callous affectation and inane
advertisements declaring progress can be felt, is
insulting.
If GDP
grew 7.3 percent, yet, for most, growth is a mere 5.1
percent, then the greater public is alienated from “so
good” economics. This explains the statistical board’s
data where more now languish below the poverty line, the
rich-to-poor fault line widened and prices rose faster
than family revenues. If Mrs. Arroyo thinks the
countryside will remain placid, then she, too, is
dangerously detached from reality.
GDP is
also analyzed via expenditures that produce it. In 2007,
the principal drivers sans statistical discrepancies
were government consumption and capital formation. The
momentary changes in these between 2007’s second and
third quarters indicate an election-related influence,
albeit, woven into campaign spending, annual growth was
10 percent and 9.3 percent, respectively.
Unfortunately, the manufacturing and industrial sectors
were dismal. With export growth at 3.1 percent and a
negative 5.4-percent imports growth, net trade was
negative.
Mrs.
Arroyo’s 6-percent yearly growth in personal consumption
is alarming when scrutinized. Before closing 2007, food
expenses accounted for 56.1 percent, growing by 6.6
percent. Fuel and utilities expenses quadrupled to 4.3
percent from a previous increase of 1.4 percent. In a
banana republic, inflationary food and utilities
expenditures comprise the highest costs and proportions
of household expenses. Less is spent on education. Zero
for investments.
Quarterly personal consumption grew by 7.42 percent;
government spending, 6.79 percent; and capital
formation, 7.49 percent.
Unfortunately, the fourth-quarter statistical
discrepancy was unusually high at P224.52 billion, or
300 percent the average of P75.21 billion for preceding
quarters. Previously, the highest statistical
discrepancy was in the third quarter at P121.23 billion.
2007’s fourth quarter nearly doubled that. Relative to
2006 where the average quarterly statistical discrepancy
rose by only 46.08 percent, 2007’s increased by an
abnormal average of 74.68 percent, thus contributing a
high 62.07-percent year-on-year average statistical
discrepancy growth.
Normally, reports come after the first quarter or are
more definitively reported at midyear after
discrepancies are reconciled. Statistical discrepancies
in national-income economics are the differences between
GDP measured on the sectoral output side against those
on the expenditure side. Because these do not occur
simultaneously and there are sectoral reporting lags as
well as data garbage, discrepancies occur.
For one,
spending data takes longer to complete. We wonder what
officials do when not filing fingernails or kidnapping
witnesses. In 2007, the weighted average response rate
was 79.4 percent for responses taking 90 days.
Manufacturing had a 69.1-percent lag over 90 days, while
agriculture, an 80 percent lag.
If
statistical discrepancies increased by an average of
74.68 percent and its fourth-quarter statistics
ballooned 300 percent over the average of previous
quarters, then discrepancies are possibly Mrs. Arroyo’s
strongest economic drivers.
Where
the greater public is detached from productivity, for a
government founded on illegitimacy, absurd as it seems,
having a discrepancy as its strongest driver actually
makes warped sense in Arroyo’s “so good” economy. |
