Yes, it's been a day since Typhoon Tino. It was a stormy, scary time, and I thought about how expenses were piling up after I was hit by Typhoon Odette. Thankfully, I had contingency savings at that time. However, with Uswan moving upwards and entering another area of the Philippine Area of Responsibility, I considered the issue of emergency savings. I thought about how Christmas can be the most stressful time of the year, with issues such as traffic caused by last-minute Christmas shopping. This time, I thought about some not-so-surprising statistics on Filipinos. It turns out that only 2/10 Filipinos have enough emergency savings.
This should be considered disturbing, and this is another thing I failed to consider in my younger, more foolish years, according to the Philippine Star:
Commissioned by insurance firm EastWest Ageas, the PURPLE Report conducted by consumer intelligence company NielsenIQ showed that most Filipinos only have P50,000 in emergency funds.
With 30 percent of salaries going to basic household expenses, many Filipinos find it difficult to save for emergencies.
Despite this, Filipinos recognize the importance of being prepared.
The report showed that 52 percent are concerned about the health of their loved ones and 24 percent are worried about critical illnesses and high medical costs.
Preparing for emergencies by saving is often hampered by economic pressures like inflation and income instability.
I have the tendency to blame the lack of discipline as a huge factor as to why the Philippines never progresses. Until now, I may no longer remember the face of that annoying female working scholar, I still remember how she blames the rich for her family's poverty. However, we need to consider the cause-and-effect cycle. If there's one certain thing--disciplining the poor is close to impossible. Some people steal not because they're malicious but because they're starving. Instead, it would be time to take a look at another issue--the Filipino First Policy--as to why only 2/10 Filipinos truly have emergency savings! This corrects another misconception I had for years, that the Philippines isn't improving because Filipinos are barely prepared. Instead, most Filipinos are barely prepared because the Philippines isn't improving!
The Filipino First Policy is actually hurting, not helping the Filipino
I would never undervalue the 1987 Constitution. It dismantled the legal framework of a repressive regime and established the democratic institutions we enjoy today. For this, I am grateful.
The 1987 Constitution was crafted with the best of intentions. It sought to put the Filipino first in all aspects of governance and to level the playing field amongst sectors and peoples. But it is far from perfect. It failed to consider the importance of foreign capital and technologies and the stiff competition we would have to face to obtain them. In short, its economic provisions were short-sighted.
So despite the Constitution’s patriotic bravado, reserving certain industries exclusively for Filipinos (or a Filipino majority) worked to our peril. It deprived the nation of valuable foreign investments, technology transfers, tax revenues, export earnings and jobs.
The Constitution’s restrictive economic provisions stunted our development for 36 years. From 1987 to the close of the century, Singapore, Malaysia and Thailand leapfrogged in development on the back of a deluge of foreign direct investments (FDIs). During that period, the Philippines’ share of regional FDIs lagged at a pitiful 3 percent in good years and 2 percent in normal years.
From the year 2000 up to the present, Vietnam and Indonesia took their fair share of FDIs, leaving the Philippines further behind. The country’s intake of foreign investments is less than half of what Vietnam and Indonesia realize. No surprise, our exports have also been the lowest among our peers. The lack of investments in manufacturing capacities have left us no choice but to export our own people.
Imbedded in the Constitution are industries in which foreigners are precluded. These include agriculture, public utilities, transportation, retail, construction, media, education, among others. Further, the Constitution limits foreigners from owning more than 40 percent equity in corporations. Foreigners are barred from owning land too. These provisions caused us to lose out on many investments which would have generated jobs, exports and taxes. Not too long ago, we lost a multibillion-dollar investment from an American auto manufacturing company that chose to invest in Thailand instead. We lost a multi-billion smartphone plant by Samsung, who located in Vietnam.
Sure, the Public Service, Foreign Investment and Trade Liberalization Acts were recently amended, allowing foreigners to participate in a wider berth of industries with less rigid conditions. But it is still not enough. The Philippines remains the least preferred investment destination among our peers.
Our flawed economic laws are the reason why our agricultural sector has not industrialized and why food security eludes us. It is also why our manufacturing sector has not fully developed. It is why we lost the opportunity to be Asia’s entertainment capital despite our Americanized culture (Netflix located its Asian headquarters in Singapore, Disney in Malaysia, MTV in Hong Kong and Paramount Studios in Taiwan). It is why our education standards are among the lowest in the world. It is why many industries are oligopolies owned by only a handful of families.
As for the form of government, I am willing to give the federal system a chance. Let’s face it, the current presidential system fails to provide the checks and balances for which it was intended. Senators and congressmen still vote according to party lines, albeit in a much slower legislative process. So yes, I am willing to try a new form of government because 36 years of insisting on a flawed system is insanity.
The world has changed since 1987. Our Constitution must keep up with these changes if we are to be competitive. This is why I support Charter change, except in the extension of term limits of public officials.
It's been the same problem. Honestly, can anybody give me a sample paper that has first-world countries praising Atty. Davide or Garcia? If that paper exists, maybe it's from Venezuela or North Korea! I read through From Third World to First, and the late Lee Kuan Yew (who died in 2016) even mentions the following on pages 304-305:
Something had seriously gone wrong. Millions of Filipino men and women had to leave their country for jobs abroad beyond their level of education. Filipino professionals whom we recruited to work for Singapore are as good as our own. Indeed, their architects, artists, and musicians are more artistic and creative than ours. Hundreds of thousands of them have left for Hawaii and for the American mainland. It is a problem the solution to which has not been made easier by the workings of a Philippine version of the American constitution.
It's crazy how people keep quoting LKY over Marcos but never get his economic advice. Selective outrage much? For some, such as the Flor Contemplacion crybabies of groups like Migrante International or the Makabayan Bloc, probably teaching the same level of hatred, to hate Singapore, because the nation "murdered" Flor, who was, by the way, convicted by a superior justice system than the Philippines! Who am I going to listen to? Naysayers like Teodoro "Teddy" A. Casiño and Atty. Colmenares of Bayan Muna, or am I going to listen to people who truly handled Singapore? In fact, even Communist Vietnam's General-Secretary Nguyen Van Linh and the economics minister at that time, the late Nguyen Duy Cong (who died in 2018), created the Doi Moi reforms for Vietnam.
As stated by the Philippine Star earlier, we really need to look into these factors:
- 30% of salaries are going to household expenses
- Economic pressures like inflation and income stability
The basic law of supply and demand is universal
- When supply is up and demand is down, prices decrease.
- When supply is down and demand is up, prices increase
- When supply and demand are met, it's an equilibrium
- There's such a thing as elastic and inelastic demand
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| Graph taken from CFI |
Supply and Demand in the Job Market
Similar to the markets of goods and services, job markets also follow the supply-demand mechanism. When the quantity of workers demanded is equal to the labor force available (the quantity of supply), the job market reaches its equilibrium point, and wages can be determined.
The wage level rises when the demand is greater than the supply and lowers when the supply exceeds the demand for workers. However,wages cannot always move freely. There is often a floor determined by the government, which is known as the minimum wage.
When the equilibrium wage is above the minimum wage level, introducing a minimum wage will not lead to a major impact on the job market. When a minimum wage is established at a level higher than the equilibrium wage, the quantity of demand will fall as businesses will instead try to control their labor costs by reducing the number of employees.
The quantity of supply increases as there are more active job seekers motivated by the higher wage level. It forms a gap between supply and demand and thus, leads to unemployment. Despite this drawback, the minimum wage policy can provide both economic and social benefits. By increasing the wages of low-income workers, the government can reduce its spending on social programs to support these individuals and relieve the economic inequality at the same time.
How can there be more jobs in the Philippines if there are barely any investors? If there are barely any investors, we need to think, "How many Filipinos are willing to establish businesses to drive demand up?" The reason why it's called an oligarchy is that the big businesses in the Philippines barely have competition. This also raises another issue, that because it's an oligarchy, the bottlenecks are:
- The scenario where the demand for a certain product or service is high, while only a few businesses can ever supply what's demanded. This means that supply is low as a result of fewer businesses that provide or produce the service or product!
- Because businesses are forced to serve too many people, they must raise prices to cover up the costs. However, because they are overworked (ex., the need to provide public utilities), it's the very scenario that creates the scene of expensive, low-quality services. You shouldn't expect lower-priced, high-quality services when the supply is low and the demand is too high.
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