Here are a few quotations that I particularly like.
“The curious mind embraces science; the gifted and sensitive, the arts; the practical, business; the leftover becomes an economist.”—Nassim Nicholas Taleb, PhD. “An economist is an expert who will know tomorrow why the things he predicted yesterday didn’t happen today.”—Laurence J. Peter, PhD.
“The master-economist must possess a rare combination of gifts. He must be mathematician, historian, statesman, philosopher.”—John Maynard Keynes; Master-Economist, B.A.
The most dangerous man in the world is someone who has nothing to lose followed by the man who has something to prove. Both would be willing to tear off their left arm and beat you to death with it under the right circumstances.
Jean Valjean, the protagonist of Les Misérables, spends 19 years in Toulon prison to feed the near-starving children of his sister. Mega novelist Stephen King had his first published book Carrie rejected 30 times.
However, in this day and age, an “academic economist” who has never had to meet a payroll, figure out how to make a company turn a profit, or sacrifice the family’s well being for the sake of the business is the greatest danger.
An “academic economist” is a person who has learned about how an economy comprised of workers, business entrepreneurs, producers, and consumers by reading a book. And that book has been written by another “academic economist” who has never had to meet a payroll, figure out how to make a company turn a profit, or sacrifice the family’s well being for the sake of a business.
As I have said countless times, the two subjects that the average person knows little about is the human body and health and money and how an economy properly functions. Therefore, persons who can—with some apparent credibility—present themselves as experts can be listened to without much questioning or objection. That is dangerous.
Currently, inflation is a much greater problem than low or no economic growth. Inflation is like looking into the small bag of rice that is still in the cupboard and finding it filled with maggots. Inflation is saving for a rainy day and when that day comes it is not rain; it is a typhoon.
For the last months, the US academic experts have been saying that their current inflation is “transitory,” meaning it will soon go away. It won’t. Fortunately, the Philippines’s economic advisors and those with economic authority—the BSP, the DOF and Neda—can be trusted because they understand “Filconomics.”
The “book” says there are three types of inflation: Demand-Pull, Cost-Push, and Built-In inflation. The first two make the sari-sari store owner raise prices to adjust.
However, the consumer adjusts equally quickly by changing buying habits. Transitory.
“Built-In inflation” or systemic is not transitory and can be a result of prolonged “Demand-Pull, Cost-Push” that the consumer is unable to adjust to. That is what is happening in the US. You cannot just stop buying meat, vegetables, and gasoline if labor shortages are increasing wages and oil prices are up 48 percent in a year.
The increasing price of crude oil fuels Philippine inflation. However, and this is something that the academic economists do not understand about the Philippines, we can adjust almost overnight. Demand and supply will always—if the government does not interfere and screw things up—equalize. And because of the huge number of small participants producing goods and services for the economy/consumers, here is what happens.
Diesel prices up? Throw several more kilos of talong on top of jeepney to sell in Manila rather than raising prices and losing demand and sales. An extra pig on the truck pays for the diesel price increase too.
Certainly, there are great concerns. But unless Covid goes crazy, 2022 will be a good year.
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