Skip to main content

The Trust Me Bro School of Economics Has Proof Econ Cha Cha Will Worsen Inflation, Please Read


As the talk about economic charter change continues, I would like to point to the claim by Rep. France Castro of the ACT Partylist. Her claim says economic charter change or econ cha-cha will allegedly worsen inflation. What's the point with Castro? I will share this excerpt from The Inquirer:
The IBON Foundation has rightly pointed out that if foreigners dominate our educational institutions, media, utilities, and other essential needs such as food, energy, and resources, it will not only infringe upon our fundamental rights but also jeopardize our ability to ensure our own interests are protected,” Castro said.

She also stressed that the cost of living is already high, even without foreign dominance in the economy.

The public should also be wary of pro-big business and pro-foreign policies such as privatization, deregulation, and liberalization, which, according to Castro, burden poor Filipino consumers.

“We also cannot overlook the potential consequences of foreign goods and services flooding the market, displacing our local producers and consumers who have been neglected for far too long,” she added.

Once again, Castro is quoting from the IBON Foundation. That's why I've run into some business administration students on Facebook and mocked them, "Seriously? You're a business administration student and you believe them? You believe in Sahod Itaas Presyo Ibaba?" Sahod Itaas Presyo Ibaba (read here) means increasing salaries while lowering the prices. I even talked about basic accounting and only got a Haha reaction, meaning they found it funny. Come on, basic cost accounting is that simple. To have higher salaries, you need to raise the prices of goods because businesses will need more money if they need to raise salaries. I'm not surprised that restaurants have raised their prices the moment their services improved.

I refuse to take the IBON Foundation as a real economic think tank (read here). That's why I even wrote an article about how the IBON Foundation possibly represents FDI in their articles. I recalled that article and I wonder if Castro herself thinks that FDIs involve Filipino women having sexual relationships with foreigners, more foreign debt, and OFW remittances. How can I take economic thinking that believes in the late Carlos P. Garcia's Filipino First Policy, which has no place in the rising Asian Century (read here)? 

Solons that actually blasted the Makabayan bloc

Fortunately, some representatives blasted the ridiculous claims of Castro. Here's an excerpt from Manila Bulletin:

The claim of the Makabayan bloc that economic Charter change (Cha-cha) would worsen inflation in the country simply doesn't add up, House of Representatives members have said. 

These solons include House Majority Leader Iloilo 1st district Rep. Janette Garin, Quezon City 4th district Rep. Marvin Rillo, and Lanao del Sur 1st district Rep. Zia Alonto Adiong, who faced House reporters in a press conference Thursday, March 7. 

“Will economic Cha-cha cause an increase in inflation? Ang sagot ko po, pasensya na po sa mga nagsabi, pero isa po yang malaking kalokohan at kasinungalingan. Bakit? Tila binibigyan natin ng maling pag-intindi ang taong-bayan,” Garin said. 

(My response to that, and I apologize to the one who said, but its a big ruse and lie. Why? We're seemingly giving the wrong interpretation to the people.

“Kaya kung mayroon man nanlilinlang sa atin na economic Cha-cha ay tataas ang inflation, pasensiya na po but it’s a big lie,” she added. 

(If someone is trying to deceive us that economic Cha-cha will drive up inflation, I'm sorry but it's a big lie.

Garin says the primary objective of the economic amendments to the Constitution is precisely to encourage the influx of foreign direct investments (FDI), which will result in competition in the market. 

“Napakasimple lang noon eh. Kapag may kompetisyon, bababa ang presyo. It’s as simple as that. Huwag na natig linlangin ang taong-bayan. Siguro iyong iba, hindi naintindihan anong meaning ng inflation. Ang ibig sabihin noon kapag tumaas iyon tataas ang mga bilihin, ganon iyon, tataas ang presyo,” she explained. 

(It's very simple. If there is competition, prices will go down. It's as simple as that. Let's not deceive the people. Maybe the others don't understand the meaning of inflation. What it means is, if it goes up, then prices of goods will go up.) 

“Paano tataas kung marami ang nagbebenta? Kapag may economic Cha-cha, ang ibig sabihin ay bukas at magkakaroon ng kompetisyon,” she added. 

(How will prices go up if there are many players? Economic Cha-cha means openness and presence of competition.) 

Rillo and Adiong echoed the stance of Garin. 

The challenge should also include getting support for their claim from first-world countries

Years ago, there was the Heneral Luna page that said something ridiculous. The claim was that first-world countries didn't progress through accepting FDIs but through the national industrialization program. If that claim were true, why are uncharted islands, still underdeveloped? Some claim that FDIs have ruined this and that country even if it was a foreign loan or a lack of restraint. Singapore's secret to its success isn't just about the country accepting FDIs. It's also about the Green Singapore Policy. They say that they've got evidence? However, all the "evidence" that opponents of econ cha-cha have are more concentrated on the development economists of the Philippines, who just talk and talk without proof.

That's why I love to tell them "Go tell that to Singapore!" Why do I say that statement? Lee Kuan Yew School of Public Policy (LKYSPP) founder Kishore Mahbubani doesn't just say things. Mahbubani, a faculty member of the National University of Singapore (NUS), has been a United Nations (UN) diplomat and long-time participant in the World Economic Forum. That's something I believe that Atty. Hilario G. Davide Jr. didn't participate at all during his tenure as a UN diplomat. I want some NUS faculty members to be invited to the Philippine Senate hearing. If possible, invite Mahbubani to a Senate hearing and make sure Davide Jr. also joins it.

On the contrary, after reading From Third World to First (which is often used to criticize the Marcoses), has LKY give this good advice:

Pages 57-58

After several years of disheartening trial and error, we concluded that Singapore's best hope lay with the American multinational corporations (MNCs). When the Taiwanese and Hong Kong entrepreneurs came in the 1960s, they brought low technology such as textile and toy manufacturing, labor-intensive but not large-scale. American MNCs brought higher technology in large-scale operations, creating many jobs. They had weight and confidence. They believed that their government was going to stay in Southeast Asia and their businesses were safe from confiscation or war loss.

I gradually crystallized my thoughts and settled on a two-pronged strategy to overcome our disadvantages. The first was to leapfrog the region, as the Israelis had done. This idea sprang from a discussion I had with a UNDP expert who visited Singapore in 1962. In 1964, while on a tour of Africa, I met him again in Malawi. He described to me how the Israelis, faced with a more hostile environment than ours, had found a way around their difficulties by leaping over their Arab neighbors who boycotted them, to trade with Europe and America. Since our neighbors were out to reduce their ties with us, we had to link up with the developed world-America, Europe, and Japan-and attract their manufacturers to produce in Singapore and export their products to the developed countries.

The accepted wisdom of development economists at the time was that MNCs were exploiters of cheap land, labor, and raw materials. This "dependency school" of economists argued that MNCs continued the colonial pattern of exploitation that left the developing countries selling raw materials to and buying consumer goods from the advanced countries. MNCs controlled technology and consumer preferences and formed alliances with their host governments to exploit the people and keep them down. Third World leaders believed this theory of neocolonialist exploitation, but Keng Swee and I were not impressed. We had a real-life problem to solve and could not afford to be conscribed by any theory or dogma. Anyway, Singapore had no natural resources for MNCs to exploit. All it had were hard-working people, good basic infrastructure, and a government that was determined to be honest and competent. Our duty was to create a livelihood for 2 million Singaporeans. If MNCs could give our workers employment and teach them technical and engineering skills and management know-how, we should bring in the MNCs. 
Page 66

Our job was to plan the broad economic objectives and the target periods within which to achieve them. We reviewed these plans regularly and adjusted them as new realities changed the outlook. Infrastructure and the training and education of workers to meet the needs of employers had to be planned years in advance. We did not have a group of readymade entrepreneurs such as Hong Kong gained in the Chinese industrialists and bankers who came fleeing from Shanghai, Canton, and other cities when the communists took over. Had we waited for our traders to learn to be industrialists we would have starved. It is absurd for critics to suggest in the 1990s that had we grown our own entrepreneurs, we would have been less at the mercy of the rootless MNCs. Even with the experienced talent Hong Kong received in Chinese refugees, its manufacturing technology level is not in the same class as that of the MNCs in Singapore. 

Pages 68-69 
If I have to choose one word to explain why Singapore succeeded, it is confidence. This was what made foreign investors site their factories and refineries here. Within days of the oil crisis in October 1973, I decided to give a clear signal to the oil companies that we did not claim any special privilege over the stocks of oil they held in their Singapore refineries. If we blocked export from those stocks, we would have enough oil for our own consumption for two years, but we would have shown ourselves to be completely undependable. I met the CEOs or managing directors of all the oil refineries-Shell, Mobil, Esso, Singapore Petroleum, and British Petroleum on 10 November 1973. I assured them publicly that Singapore would share in any cuts they imposed on the rest of their customers, on the principle of equal misery. Their customers were in countries as far apart as Alaska, Australia, Japan, and New Zealand, besides those in the region.

This decision increased international confidence in the Singapore government, that it knew its long-term interest depended on being a reliable place for oil and other business. As a result, the oil industry confidently expanded into petrochemicals in the late 1970s. By the 1990s, with a total refining capacity of 1.2 million barrels per day, Singapore had become the world's third largest oil-refining center after Houston and Rotterdam, the third largest oil trading center after New York and London, and the largest fuel oil bunker market in volume terms. Singapore is also a major petrochemical producer. 

To overcome the natural doubts of investors from advanced countries over the quality of our workers, I had asked the Japanese, Germans, French, and Dutch to set up centers in Singapore with their own instructors to train technicians. Some centers were government-financed, others were jointly formed with such corporations as Philips, Rollei, and Tata. After 4 to 6 months of training, these workers, who were trained in a factory-like environment, became familiar with the work systems and cultures of the different nations and were desirable employees. These training institutes became useful points of reference for investors from these countries to check how our workers compared with theirs. They validated the standards of Singapore workers.  

Singapore's rise from a tiny slum into one of the best cities today is an economic miracle. Other countries soon followed such as Vietnam and China. Some say Singapore only opened to FDIs because of their lack of natural resources. Guess what? Vietnam is rich in natural resources but followed Singapore economically, even if it remains a Communist state. Vietnam's success with Doi Moi gives the University of Economics-Ho Chi Minh City (UEH) its credibility. China followed and created Socialism with Chinese Characteristics, under the regime of the late Deng Xiaoping. What became an excuse for the Philippines not to learn from Singapore even before the execution of Flor Contemplacion?

I'd like to add that I'm skeptical whenever people say the phrase, "Study shows." It's effortless to stay studies show and the studies cited need to be revised. Anybody can say studies show and cite examples from organizations like the IBON Foundation and the League of Filipino Students. Anybody can say that studies show and cite examples backed up with credibility. That's why this challenge is if those who claim that econ-cha cha can worsen inflation, can back it up with studies from the best universities from first world countries. 

Popular posts from this blog

Filipino First Policy Linked with Crab Mentality

Having sea crab yesterday or just eating crab, I always think of that old commercial in the 1990s. It was called, "Iwasan ang crab mentality." or "Avoid crab mentality." This makes me recall a scene when I was a child. I saw a pail full of mud crabs (called alimango in Filipino) and if one crab got out, the others pulled it down. The TV commercial showed how if the crabs got together, they could all escape their grizzly fate of becoming eaten for human consumption. Chefs are just lucky crabs pull each other down. However, it also shows that the crabs would rather all be cooked together than let that crab escape.  Unfortunately, crab mentality is one of the biggest problems in the Philippines. It's not all that unique among Filipinos. However, it doesn't Filipinos should ever take comfort in engaging in a crab mentality, just because other people do it . Here's an interesting excerpt from Inquirer   by Jerry Peres de Tagle PhD: Studies in human behavior ...

It's a Common, Broken New Year's Resolution Among Filipinos to Do Better with Their Finances and Economic Knowledge

Happy New Year, right? There's this statement in Cebuano that says, "Sa Disyembre nag lipay-lipay. Sa Enero, naglikay-likay." For non-Cebuano speakers, it means, "Enjoying all December. Fleeing in January." It's because of the bad habits that are common during the Christmas season. I wrote an entry talking about when a Merry Christmas leads to an Unhappy New Year . After Christmas vacation, it can be common to talk about New Year's Resolutions. Sadly, there are resolutions meant to be broken or resolutions on paper only. Several people finish high school, go to college, get a job, but never gain the necessary knowledge of economics and finances. Instead, they continue to live the same habits year after year. Even worse, the same foolish behavioral patterns get passed down f rom parent to child to grandchild. Still stuck with financial habits that put one in a financial dodo The New Year starts and it can get funny. I tend to hate December because of the ...

Rejoicing Over Filipino Businesses Getting 100% Ownership Abroad While Crying Over FDIs Getting Allowed to Own 100% Ownership

The Philippine senatorial elections are on, right? One of the many things candidates (regardless of party) need to hold is the need for economic reform. As  I continue discussing economic charter change, several objections are held. One of the objections is allowing 100% FDI--a subject often subjected to mockery. These mockeries can range from promoting colonial mentality, selling the Filipino to foreigners, borrowing money from abroad (which is definitely not investment, read here ), or even the ridiculous notion that FDI includes Filipino women dating foreigners (read here ). This time, I would like to address another hypocrisy. This time, it's all about Filipinos who rejoice that Filipino businesses are investing with 100% FDI ownership. All the while, this is crying foul when there's a law passed that will allow foreigners to own 100% FDI ownership , in the Philippines. This is a meme to expose the hypocrisy. Jollibee has 158 branches in Vietnam, which I assume happened bec...

The Recent Microsoft Global Outage Should be a Wake-Up Call to the Philippines' Need to Fix the 1987 Constitution's Economic Flaws

The Express Tribune The recent Microsoft Global Outage was caused by Crowdstrike. Since I'm no IT or CS expert--it's better if I let them talk in the news. From BBC News , here's a detail from Crowdstrike that reveals the root cause of the problem has been systemic with an update: This is still a little unclear. CrowdStrike is known for producing antivirus software, intended to prevent hackers from causing this very type of disruption. According to CrowdStrike boss George Kurtz, the issues are only impacting Windows PCs and no other operating systems, and were caused by a defect in a recent update . "The issue has been identified, isolated and a fix has been deployed," he said. "This is not a security incident or cyber-attack." What exactly was wrong with the update is yet to be revealed, but as a potential fix involves deleting a single file, it is possible that just one rogue file could be at the root of all the mayhem. Thankfully, those who created th...

Is Vietnam Getting More FDI Inflows than the Philippines, Because of Its Supposedly Better Fight Against Corruption?

Discussing international marketing or world economics with boomer Filipinos can be painful. Some people still believe in the Filipino First Policy. I cite Vietnam as an example of why economic charter change (called econ cha cha) should be done. Some people cite that Vietnam's increase in FDI is because of the fight against corruption. I don't deny Vietnam has a crackdown on corruption. I don't deny that fighting against corruption helps the economy. However, fighting corruption without the proper tools and not having economic development, is useless. Fighting corruption isn't a panacea or cure-all either.  Spanking is part of child discipline, not the whole of child discipline. People who only spank but never teach right and wrong, render spanking ineffective . Instead, look at Vietnam's economic policy vs. the Philippines' economic policy. Some people blame the following for the Philippines' lack of foreign investments, some things Vietnam also suffers fr...

Trying to Plan Out What to Do as a Bull Market Starts

I was laughing just thinking about ignorance about the bear and bull markets. Yes, we know about social media gossipers (seldom called a marites in Filipino) tend to spread gossip. I ran into several people panicking when the Philippine Stock Exchange Index (PSEi) was mostly red. Others would panic but Warren Edward Buffett recommends, "Be fearful when others are greedy. Be greedy when others are fearful." That's the best market timing. Some people do cost averaging because it's practically less risky in contrast to lump sum investing. Buffett recommends that non-technical people should periodically invest in a low-cost index fund over a period of ten years.  Now, the Philippine Star has an article by Wilson Sy, where the first paragraph talks about the Philippines' entry towards the bull market : Most stock markets have undergone a dramatic shift to start the year, transitioning from a bear market to a bull market. Peak inflation, a slower pace of interest rate h...

When the Education Cares TOO MUCH About Grades, Schools Produce Idiots Instead of Intellectuals

During the pandemic, I was left in limbo thinking about my poor performance under K+10. It was something to think about that a classmate of mine who was both a summa cum laude and an honor student, ended up posting on his wall, "Students cheat because the education system cares more about grades instead of learning." The class salutatorian of our batch even commented about the good old days. I always had that feeling of insecurity and envy towards people better than me. But as Warren Edward Buffet would say, "Don't hate successful people. Learn from them instead." One of them is currently a teacher and the other is in Canada. I thought about my insecurities especially when I used to believe I was descended from a fine scholar and my family was a family of scholars.  I remembered the time I was taking MBA and got conned. I was asked, "Is that what MBA taught you?" I got touchy and ended up admitting, eventually, that I was only taking MBA for the presti...

My Personal Opinion on the Recent Universal Robina Incident

I was doing some news readings and I found out about the death of a certain Stephen Corilla. The incident happened in the Universal Robina Corporation's factory in Mandaue a few days ago. It really chilled my bones to read these details which I'll share from Sunstar : POLICE are set to investigate a food and beverage plant in Barangay Tabok, Mandaue City after one of its workers was killed on duty while cleaning a pulverizer machine Thursday afternoon, June 2, 2022. Cpl. Glenn Bordalba of the Mandaue City Police Office Station 3 in Barangay Basak who is leading the investigation told SunStar Cebu Monday, June 6, that they will visit the Universal Robina Corp. (URC) Mandaue City plant in Tabok on Tuesday, June 7, to investigate the matter. Bordalba added that they have not started the investigation yet as they were not allowed entry to the site by the URC management after the incident was reported to them. An approval from the corporation’s consultant is needed for the police to...

My Experience with Tealive Cebu at the Ayala Central Bloc

I have tasted several foreign-owned tea shops. My first experience with tea shops was with Chatime (read here ). Now, I heard of this new coffee shop (or tea shop, take your pick) called Tealive. At first, I thought it was Taiwanese but when I Googled it--it was Malaysian. It made sense that the company uses only Halal-approved ingredients  since Malaysia has a huge Muslim population. The founder is Malaysian-Chinese businessman Bryan Loo of Loob Holdings. Loob here also means inside as the Tagalog language also derives from the Malay language. Tealive would later head to the Philippines. It would be like getting Filipinos closer to their Malaysian heritage after all.  The branches in Cebu include SM City, SM Seaside, and Ayala Central Bloc. The one I ate was at Ayala Central Bloc. Someone gave me a taste of their sandwich and their signature coffee. I was pretty much impressed that I decided to dine in there. I went to try their lychee tea and chees burger. For a note, their ...

Getting Stingy at the Cost of Fire Safety?

March is fire prevention month, right? If there are people who are too extravagant then I'd like to talk again about stingy people (read the article here ). I've tried growing up with the stingy vs. extravagant extremes. Some people become stingy even with the necessities. It's one thing to deny a child a children's party since it's a want . It's another thing to deny a child stuff they need all in the name of saving money . Even worse, some people may be more than stingy enough to ignore fire safety. A stingy person just wants to save. It's almost like the story of the Miser and His Gold or The Rich Miser . I really find these stories entertaining at the same time, irritating. The first story has the miser who hid his gold under the ground. Some people today are too distrustful of banks and investments. The second story has a rich man who even dresses in rags, denies his son's shoes, had his wife cook some cake only for him, and was so greedy he had it ...