#SahodItaasPresyoIbaba Economics' Bad Accounting

I would like to apologize in advance to my readers. The picture I'm presenting is in Tagalog, and not all my readers speak Tagalog. I would translate the picture's text into English for convenience. It says:  

• "Ano ang bumubuo sa mga presyo?" means "What comprises the price?"
• "Gastos ng materyales" means materials expense
• "Gastos sa kasangkapan" means depreciation expense
• ""Gastos sa pasahod" means salary expense
• "Kapitalista" means capitalist
• Renta is well, rent
• "Kayang pababain ang presyo" means "Prices can be lowered".
• It says that capitalists (industrialists, landlords, bankers) and elitist governments are part in the gross profit.
• Get rid of excise taxes (either permanently or temporarily) for the prices of goods and services.
• In the times of crisis, in the burden of sacrifices, we need to be watchful for capacity. Whatever savings for times of difficulty by the workers and countrymen, they aren't crutches for the wast, but it's become a rope around the neck.

The Bukluran Ng Manggagawang Pilipino (literally Coalition of Filipino Workers) says that prices can be lowered. Okay? Well, have they ever bothered to look at an accounting statement or are they engaging in academic dishonesty? 

Business & Plans

Reviewing basic cost accounting should really refute the idea. For one, the gross income is computed by deducting the revenues from the cost of goods sold. Is it me or do people who engage in #SahodItaasPresyoIbaba economics mistake revenues for profits (read here)? How can the profits belong to the workers when the overall profit is what's left of well, the gross profit minus all expenses (which includes salaries) and taxes? Sadly, it's common to hear people in the Philippines who rejoice over high sales thinking it's the profit. What do you expect from people who would rather listen to gossip and engage in personal attacks? 

Their definition of gross profit is wrong. Since when did net profits of capitalists, rent, interest expense, administrative expenses, and income tax comprise the gross profit? Can they show me a basic accounting textbook that says that the formula for gross profit = net income of capitalists + rent + interest expense + administrative expense + income tax? They may only be able to get it from the MARITES School of Business and Economics (read here). 

A simple definition of gross profit is:

Gross profit is a company's profit after deducting the costs associated with producing and selling its products or services. It's also known as sales profit or gross income.

Gross profit is calculated on a company's income statement by subtracting the cost of goods sold (COGS) from total revenue. It's important to note that gross profit differs from operating profit, which is calculated by subtracting operating expenses from gross profit.

They may try to dismiss Investopedia because it's for them, some capitalist conspiracy. However, nothing can change the fact that gross profit is calculated by total revenue minus cost of goods sold! What they say comprises the gross profit is well, deductions that will soon come after the gross profit. Did they even consider that salaries are part of the deduction? That's why #SahodItaasPresyoIbaba economics doesn't work. Sure, there can be a reduction of production costs in other ways. One can have economies of scale and get more affordable materials, why not? If the utility costs go down due to supply and demand--the overall cost goes down. However, salaries may increase again when there's a higher demand for labor (read here).  

No business can ever operate without any surplus profit

 

For one, we need both profit organizations and non-profit organizations.  For starters, the Tech Target describes the non-profit organization as:

A nonprofit organization (NPO) is one that is not driven by profit but by dedication to a given cause that is the target of all income beyond what it takes to run the organization.

Because of this, NPOs receive tax-exempt status from the federal government, meaning they don't have to pay income tax.

Nonprofit organizations are often used for trusts, cooperatives, advocacy, charity, environmental and religious groups. Many, but not all, NPOs have paid staff in management positions; almost all use volunteers.

Unlike for-profit businesses, NPOs have no owners and any surplus profits after operating expenses are used to further its goals instead of being distributed between members or employees of the organization.

In short, a non-profit organization still needs profit, but it's main intent isn't profit. NPOs would still require surplus profits after operating expenses, to further their goals. It's not distributed among members or employees. In short, the profits don't belong to the workers, by default, unless the company owner/s have given certain workers certain privileges. It's because salaries are part of what is deducted from gross income. Without profits, these NPOs couldn't improve or expand their operations. It costs money to pay for utilities, maintain a server on their website, hire technical personnel, and pay their workers!

Based on what BMP is doing, they're telling us to ignore basic accounting. Lee Kuan Yew (who died in 2016) even said, "You make profit a dirty word and Singapore dies." Well, I wonder if organizations like Migrante International want ot make it a dirty word, so Singapore dies. It's probable because of their sentimentalism and #JusticeForFlor--still believing that Flor Contemplacion (who was executed in 1995) was innocent. It's already been 30 years since Flor was hanged and proven guilty. Some people will still hold to the narrative of what may be convenient. It's like believing that Francisco Juan G. Larrañaga et al did the crime, even when the evidence says that someone else could've been responsible for the Chiong Sisters going missing!

Once again, that's why I don't take the likes of the IBON Foundation and BMP seriously. Why should I take them seriously? It's something people attack me because I linked them to this blog, and I'm using Blogspot. I don't know if I should get a free domain or what. However, they may praise Atty. Teodoro Casiño's WordPress blog or KMP's Blogspot. Ironic really, considering that WordPress and Blospot are owned by American "imperialists". They'll probably just say they're "forced to participate in it" because the foreigners "unfairly" own the means of production (read here).