Do people remain ignorant because they cannot find the information needed to increase their knowledge? Or do people avoid becoming properly informed so that their worldview remains unchallenged?
This definition comes from investopedia.com, which, in full disclosure, I used to write and edit many of the definitions that they use. “The balance of trade is the difference between the value of a country’s imports and exports for a given period”.
Like most ideas in economics, that is straightforward. All of the following headlines are true. “Trade gap widens on import surge.” “Trade deficit worsens as exports fall flat.” “Trade gap more than double in July 2018.”
Then comes the whining and maybe even a Senate inquiry, since actually writing laws seems to have become a secondary purpose to “investigating” things. They might start with this fact: “Balance of Trade in Philippines averaged a deficit of $343 million per month from 1957 until 2018.”
During the past 28 years since January 1990, six presidents have led the Philippines. The country has experienced 10 of the worst storms in history—measured by damage—costing some P14 trillion or five times the average annual government budget during that period. Mount Pinatubo erupted as the seventh-largest volcanic event in history. We have witnessed “people power,” attempts by members of the military to take over the government by force, and countless killings because of the insurgencies. Political chaos has been and is always waiting in the shadows.
The year-end annual economic growth has varied from a negative 0.58 percent to a positive 7.63 percent. The exchange rate of the Philippine peso to the US dollar has been as high as 23.85 and as low as 56.28.
Of the 343 months beginning January 1990 to July 2018, how many posted a positive trade balance? Half? 100? The total number of months with any amount of trade surplus is 48. The longest period of zero trade surpluses was between 1990 and 1998 with another zero period between January 2016 and July 2018. The best trade balance period was—during and after the Asian Financial Crises—between 1998 and 2002 when 31 of 48 months had a trade surplus.
For the 72-month period from January 2010 to January 2016, the Philippines generated a trade surplus eight times. Here is the point and it sounds like a love song. Through the good times and through the bad times, the Philippines has “always” run a trade deficit or at least 86 percent of the time. It is completely fair and valid to say that the trade deficit has exploded since January 2016 during the Duterte presidency. But it is also fair and valid to say that, during the presidency of Joseph Estrada between May 1998 and January 2001, 27 out of 32 months (85 percent) generated a surplus.
In the United States there are approximately 5,000 cardiothoracic surgeons who can do open-heart surgery. There are approximately 21,300 people employed as “economists.”
Either the US needs more economists than heart surgeons or it is far easier to be an economist there. Probably the latter. “Economic expert” may be the fastest-growing informal profession in the Philippines today.
The trade balance is only one of many factors to measure economic health and wealth. Further, the balance or imbalance between imports and exports— “Why can’t we export more?”—is not the critical issue.
When the nation must consistently import enormous amount of goods that it cannot produce, the critical question is “Why?” Let the Senate investigate that fact and maybe even provide some solutions.
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E-mail me at mangun@gmail.com. Visit my web site at www.mangunonmarkets.com. Follow me on Twitter @mangunonmarkets. PSE stock-market information and technical analysis tools provided by the COL Financial Group Inc.