Why the stock market matters

PHILIPPINE politics, particularly during the campaign season, has always been about voicing the strongest populist views possible. Populism—appealing to the interests, hopes and fears of the general population—is a proven political tactic. It works.

This technique is based on a pushback against the status quo that has “failed the people.” Even as the anointed of the outgoing administration, there is always something to criticize to enhance a candidate’s chances of gaining more votes. Either past elected officials have not put in place a vitally needed program or that program needs to be expanded. But the specifics are always a little fuzzy.

Voters will easily buy into arguments that there is a need for greater childhood nutrition programs. With unemployment and underemployment a continuing problem in the Philippines, a candidate must emphasize that he or she is concerned about this issue.

But a populist platform with an emphasis on the so-called past performance works best with the lower economic groups and those that have been, or think they have been, marginalized. However, these people make up the bulk of Filipino voters.

The voting “intelligence” of this group is always demeaned by the elite that always think they know what is best for the nation. But these people are only sometimes ignorant, not dumb.

They, too, see the multimillion-peso fast-food restaurant in their neighborhood—where they might not afford to eat at—and wonder how one could achieve the goal of ownership. The populist politician, though, tells them that their goals are only achievable through the government. However, we know that no person was ever given the opportunity to own a Jollibee store because of the government and the politicians. But that is all that the poorer classes are given as a lifeline to hang on to, and that is a disgrace.

What you will rarely, if ever—and never to the “poor”—hear our populist candidates talk about is where actual job creation comes from—and it is not from the government.

The Philippine stock market is in trouble right now and not a single candidate has mentioned what is going on in the global financial markets. Of course, they have no control over stock prices. However, the capital markets —debt and equity—are critical for companies to raise funds for expansion. If capital expenditures for 2016 are reduced, then job creation and economic growth will also go down.

The next president—whoever that person might be—better start preparing for what the government will do to make up the potential shortfall in private- sector spending through the rest of 2016. The stock market is like an inverse blood-pressure test. The lower the stock market goes, the less healthy private-sector spending will be.

If you want more jobs and economic growth, the government must do whatever it can to keep the private sector healthy.

Image credits: Jimbo Albano

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