Why is the Philippines Poor?


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Why are there long lines at the NAIA of Filipinos waiting to leave the Philippines (many permanently)?  Why are there so many slums and squatter colonies even near extremely affluent neighborhoods like Ayala Alabang Village?  Why are easily treatable diseases like tuberculosis and cholera still killing thousands upon thousands of Filipinos annualy?  Why do a majority of Filipinos rate themselves as poor or struggling economically?

There are many well-worn reasons why life is hard (“Mahirap ang Buhay”) for many Filipinos, reasons that range from the insulting and racist to more practical and commonsensical ones.  We’ve already heard of the “Juan Tamad” justification used by the Spaniards to denigrate and put down “native” Filipinos.  This has always been a suspect justification since the Filipinos could not have been ALL THAT LAZY if they built the hundreds of forts and churches during the Spanish days.  Moreover, the Spanish were hypocrites for calling natives lazy in not wanting to do the work that the Spaniards themselves did not want to do.  Besides, take most Pinoys out of the Philippines and you see a hardworking person with a residence and a car after a few years as attested to by our immigrants in the US, EU, Canada, Australia, and other countries.  It is NOT our nature to be poor.

One key answer lies in our ECONOMIC POLICIES.  Some are even encoded in our Constitution.  These policies ensure that only a FEW Filipinos reap the benefits of our economy and foreign remittances.  MANY of the “hirap ng buhay” we Filipinos feel can be fixed relatively easily through certain changes in our economic policies:

1) Reducing tariffs — This will lower prices and force local producers to be more competitive instead of “hiding under the saya” of anti-competitive and anti-import customs laws.  Greater price competition favors the consumers and gives them greater choice while forcing producers to become more efficient and more profitable (if they become more competitive) due to the expanded market.

2) Reduce or eliminate the VAT accompanied by a reduction in inefficient/wasteful/corrupt government departments — Let’s face it, many government programs were established supposedly to help “the poor” but actually operate to line the pockets of bureaucrats and politicians.  How many “Farm to market” or “hog farm assistance” or “Fertilizer assistance” or “disaster relief” bills and initiatives have you heard?  Did the intended beneficiaries become better off?  No.  It’s time to get rid of these and let people SPEND the money they would be otherwise paying for VAT.  That’s a 12% expansion of the economy.  That means more jobs and lower cost of living.

3) Abolish the minimum wage — The minimum wage prices unskilled and less skilled workers out of the labor market while leaving workers susceptible to inflation.  Everyone loses.  If these laws are abolished, there will be more people employed and price hikes will decrease or prices may even drop.  Why?  Producers cannot charge more than the market can bear.  Also, this allows the Philippines to be more competitive with its Asian neighbors.  Statistics show that the rate of unemployment (including underemployment) has gone up since minimum wage laws were passed.

4)  Outlaw age discrimination — This practice by employers effectively increases the pool of unemployed in the country and distorts wage scales.  It also penalizes those who need jobs the most–more mature workers with families to support.  By outlawing this practice, wages will stabilize and employers can benefit from the added experience of more mature workers.

5)  Amend or repeal the “economic nationalism” provisions of the 1987 Constitution.  These provisions prohibit foreigners from owning more than 40% in communications, transportation, land, and other industries.  This effectively starved these key local industries of foreign investments.  What’s the result?  High housing prices, high transport prices, little to no competition, and bad service/products.  These industries need more competition.  More competition means more companies which means more jobs.  It also means higher levels of service, lower prices, and greater selection.  In the end, local companies win because more people will buy their industry’s products and services due to low prices.

Many of our economic problems are based on economic policies that we, through our government, chose.  We just need to choose policies that have proven to be successful in other countries who lifted themselves out of poverty.

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Photocredits:  Steveconover.info


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