The Benefits and Costs of Economy and Economic Growth

ANTO COMETA

The Philippines’ economy over the last 10 years could be referred to as a cyclical unsustainable nation. To be more precise, the economic crises that the country has experienced have ranged for more than a decade, but the last 10 years could be considered as a milestone in the country’s devastating condition.

What are the goods and bads of an economy? In Bertell Ollman’s article - Market Economy: Advantages and Disadvantages[1] he discussed the seven main characteristics of a market economy in which both benefits and costs go together. The first characteristic is that people could buy the goods and services they want (or need) only if they have the money to buy for such. Second, Money is a necessity of life – actually this is a fact that no one could contest. Third, In order to acquire money (to suffice the first characteristic) people are forced to do and sell anything. Fourth, the objective of production and investment is to maximize its profit and not to satisfy the social needs. Fifth, the control over those who produce the wealth of the society is no longer carried out but through money and the conditions of a certain task that an individual accepts in order to earn. Sixth, allocation of limited goods is based on money and not through coupons or the basis of who worked harder and longer as well as who needs more than the other. Lastly, In view of the fact that no individual is held back in doing or trying to become wealthy, people gets the notion that each individual gets what they economically deserve.

Economy or the growth in the economy should lead its people to an elevated or at the least a decent living. Growth is already positive in theory or by definition and ideally it should be, but there are several implications when growth is combined with something that concerns the welfare of people and various institutions, such as a country’s economy.

When we say there’s growth in the economy what are the benefits that the people or the country gets? The primary advantage of the growth in economy in terms of the real GDP Per Capita is that the living standards of people improve. In the aspect of labor and employment, this only means that there’s an increase in the employment or reduction in unemployment. In an ideal economy, labor should be at full employment. According to Milton Friedman,[2] full employment means the lowest level of unemployment that can be sustained given the structure of the economy.

On the business side, it provides a higher business confidence which gives a positive effect on both local and global stock markets as well as to small and medium enterprises. And as for the government, this only means one thing (or maybe the other which is quite rampant in the country) – greater fiscal dividend. Since economic growth boosts revenue coming from taxes, the government could spend more money to finance (more) projects.

Growth in the economy however, does have several negative impacts or inevitable consequences particularly for third world countries having a market economy such as ours. One of the disadvantages as an economy grows is the risk of inflation. If the demand for the goods and services increase rapidly (thus affecting the cost to go down rapidly as well) in contrast to the long run productive potential, this could put pressure on the interest rates to rise which results to the loss in the competitiveness of domestic businesses in international markets.

Another, which is directly related and is much applicable in the country’s condition, is that as the economy grows, growth in social-economic inequalities also increases. Unequal distribution of the benefits from the economic growth in terms of profit allocation widens the gap between the people who has the more purchasing power to acquire goods and services as compared to those who have less. The tendency of rich people to become wealthier and the poor increasingly befalls to intolerable poverty. This could also mean increase in gaps between regions in the country which are unreached (or left) by economic reforms and projects as compared to those that are.

At the labor sector end – the risk or increase in workers exploitation. The most feasible movement of businesses to increase its profit is to increase its production and decrease its work force. This could be done either by labor downscale or cut back in employee benefits. Wealth accumulation is a prevalent behavior among the elite (primarily business owners) in order to maintain their stature. Wealth accumulation is a negative behavior and one of its manifestations is the unwillingness to allocate profit to capital. There are several ways to allocate or convert profit into capital. One is to improve the means of production by increasing technology, resources, and manpower. Another is to increase the labor wages to improve employee morale and therefore an increase in production.

The attributes outlined above suggest that in a market economy such as ours, the society’s or the economy’s survival is based on how we could maximize the capacity and resources to generate the means to suffice the necessities (at the least) of individuals (or the nation) and minimize the effects that go along with those.

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[1] Bertell Ollman, Market Economy: Advantages and Disadvantages, Oct 1999, http://www.nyu.edu/projects/ollman

[2] Milton Friedman, Natural Rate of Unemployment, http://www.huppi.com

A Brief Assessment of the Status of Philippine Economy – Is It Growing or Groaning?

ANTO COMETA

Based on the figures released by the National Statistical Coordination Board (NSCB), from the year 2005 to 2006 the country’s GDP Per Capita has increased from 14,186 to 14,653 (in constant 1985 prices),[1] having a growth rate of 5.4% for the fiscal year 2006.[2] Early this year (2007) the incumbent Philippine President, Gloria Macapagal-Arroyo in her public statement announced that the first quarter of the current fiscal year (2007) had a 6.9% growth rate which outstripped last year’s performance. Moreover, Q1 of 2007 had the highest growth rate experienced over the past ten years. Does this entail that the Philippine economy is growing?

In any country or economic society, increase in the growth of the economy could be deemed as something positive. However, we have to carefully examine the country’s sources of economic growth and to which degree it affects the country’s economy in general in order to classify if indeed a certain country’s economy is growing.

How can we say that a certain economy is growing? According to the general definition of economic growth – “it is the increase in value of the goods and services produced by an economy. It is conventionally measured as the percent rate of increase in real gross domestic product or GDP. Growth is usually calculated in real terms, i.e. inflation-adjusted terms, in order to net out the effect of inflation on the price of the goods and services produced. In economic, "economic growth" or "economic growth theory" typically refers to growth of potential output, i.e., production at "full employment," which is caused by growth in aggregate demand or observed output.”[3]

If we look closely at the essentials that directly influence the growth of the Philippine economy we would see that there’s a disparity between the figures and the real situation of the country. Let’s focus on the labor sector of the country. According to the survey conducted by the Labor Force Survey (LFS), as of October 2006 the rate of Labor Force Participation is 64.0%, this figure is lower than 2005 which was 64.8%. However, the Employment rate has increased from 92.6% (As of Oct 2005) – 92.7% (As of Oct 2006).[4] What does this imply? In an article written by Dave Llorito, a noted journalist and researcher focusing on globalization, international trade, business, politics, and public policy affecting urban life, environment, and agriculture stressed that the drop in Labor Force Participation rate from 2005 was an indication that a considerable number of Filipinos opted not to be part of the labor force either because they don’t expect to find a job or they are under (or over) qualified for a specific work. He also stated that the decrease in the underemployment rate was the result of people who got better jobs for the year 2006 were the people who are already part of the labor force.[5]

The growth of the labor and employment sector is a good indicator of the current economic condition a country. The current state of the Philippines reveals that there are a lot of local companies - particularly small and medium industries closing down, downsizing or being bought out by either a larger company or a foreign entity. Increase in foreign investments specifically business process outsourcing (BPO) in the country only suffices the short term and micro level provision of the country’s economic stability. This may appear beneficial in the country’s economy. However, we have to understand the scheme behind outsourcing. The prime mechanism behind every outsourced company is cheap labor. Outsourcing companies do place a high priority in the cost of operations of its business. In order to stay in the industry they must be at the forefront of the movement in the global sourcing market. The current outsourcing industry trend does not promise any stability for the Philippine market since there are a lot of Asian countries particularly China (which opened its door recently to the global market) that is more competitive in terms of labor cost effectiveness.

There are a lot aspects or factors that need to be taken into account in order to adequately say that a certain economy of a country is growing. If I were to base the real GDP Per Capita as the main indicator of the average standard of living of Filipinos as a result of the country’s economic condition, it would be far fetch to assert that the country’s economy is growing even if we base it on the premise that over a decade, the current fiscal year’s growth has been the highest. I guess it would be safe to assume that the country’s economic growth is far beyond mounting.

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[1] National Statistical Coordination Board (NSCB), GDP Figures - National Accounts of the Philippines, 1996-2006, http://www.nscb.gov.ph

[2] National Economic Development Authority, Growth Rate Figure - Gross National Product at Constant 1985 Prices (annual Percent Change), 2006, http://www.neda.gov.ph

[3] Definition of Economic Growth, Wikipedia the Free Encyclopedia, http://www.wikipedia.com

[4] National Statistical Coordination Board (NSCB), Statistics - Labor and Employment, Oct 2005 – Oct 2006, http://www.nscb.gov.ph

[5] Dave Llorito, Philippines Without Borders - Alternative views on the Philippine economy, politics, governance, culture, media, and globalization, Is the Philippine economy hallowing out?, Dec 24, 2006, www.davidllorito.blogspot.com

Uncertainty

ANTO COMETA

The title of the entry may sound profound or reflective, however, it’s not. Well, perhaps at some point it is since I was the one who wrote the content, but the rationale behind is more of a favor (or trade) rather than an insightful topic.

My sister has been pestering me for days about writing a one-page paper for her class, that’s the last requirement that she has to pass in order to complete the subject. I always tell her that I’m quite busy with a lot of work related matter, besides that’s her school requirement not mine. I’m done with those things years ago. Every night when I come home, she would always ask me if I have done the paper that she was requesting, I said no. It was a Thursday night or should I say Friday morning when I was on the dining table about to finish some work related stuff when she for the nth time approached me and asked if I was done with what I’m doing, that was about 1:00 in the morning.

At that point, she was not asking anymore, she was begging me to do it. I didn’t know that the deadline of the paper that she was asking me to write was that day, which was approximately 9 hours from the time I finished the stuff that I was doing. She just gave me a general idea on what I should write; a ship sailing in the sea while the sun is setting as a representation of her life or something like that.

Before I agreed to it, I told her that there should be something in return. Of course I have to be compensated at the least for the work that I would be doing. It’s apparent in business and economics even in alchemy, the law of equivalent trade.

At first she was quite hesitant of accepting the deal; I could foretell that she was thinking that the barter might be too costly. At any rate, she couldn’t say no since it’s only a few hours away before the deadline. After several minutes of stalling she agreed to the deal and asked me as to what would be the trade, my answer… two sticks of cigs.


Uncertainty

A lonely vessel traveling the vastness of the sea while the sun sets. It’s tiring and at some point a bit distressing to think that you are in the midst of nowhere, where the probability of getting lost is quite high and God knows where you might be unearthed.

My life has been in great turmoil since I realized that reality has been pounding me, and those which I deem as happy moments seized to exist and are just make-believe visions of my childhood.

I have encountered a lot (as in a whole lot) of difficulties such as family related problems, school troubles and personal dilemmas. Even until now, I am still encountering those but this time I have learned how to handle those problems. These difficulties that I have experienced equipped me with skills and awareness in which I strongly assert could only be gained by undergoing such. All through the years of experiencing these hardships, I guess it’s adequate to analogize that my life is like a ship or a vessel traveling the enormity of the sea of my existence, which is most of the time very unpredictable, you’ll never know what you might encounter.

I almost gave up on every fall that I suffered, I could not even keep track as to how many those falls were, all I know is that every failure and disappointment that I had, made me more human and much more tougher. It’s a realization that at the end of the day, every fall you endured makes you more dedicated to do things the right way.

The journey would definitely stop, it might be uncertain while at the course of the travel but when you’re nearing towards the end, catching sight of your destination, you would realize that it doesn’t matter how long you have traveled or the hardships that you have endured throughout the voyage. What counts is that you’re still on the course and nearing towards the destination. Actually, I can’t really say that once I have reached a certain goal, my journey has ended, just like any other vessel particularly those commercial ones, their journey doesn’t stop once they’ve reached their travel destination, after their stop, they would sail again and once more travel the waters of uncertainty toward their next destination.

Pornography As Your Bread and Butter

ANTO COMETA

Just a disclaimer, the title of the post doesn't allude to or suggest that I'm into the profession of engaging or at the least directly generating a sexually oriented material that is not considered acceptable to the viewer, or any material which can cause sexual excitement. I just want an eye catchy header for this particular web blog entry and not to depict that the content of the post could provoke feelings of lust for those who would be reading this or even generate a controversial socio-political issue that could make critics raise their eyebrows.

It has been a while that I got on board to this web services company which by far is the best company that I had (currently, still employed and has no plans of resigning for at least three years or so). Anyway, let’s have a back track; several months ago I was employed as a brand manager at the same time a TV program producer for a certain television network. My work back there was quite tedious (since they made me work for at least twelve hours a day for six days a week for three business units, and according to the person whom I directly report to that the TV program that I was managing should not be my priority and that I should not allot a day for the program since it was not earning a single cent) not to mention that the people I worked for were very dim-witted and at the same time snooty. After a month of working, I just realized that I was not meant for the job that they gave me (to give justice to the company I worked for).

Prior to resigning, I got several calls and e-mails from the companies where I applied for certain managerial job posts. But a certain e-mail caught my attention. It was an e-mail from an HR staff whereby the content stated that I would be interviewed by their expat CEO. Well, I was not surprised that I would be interviewed by the head of a company, but what astounded me was that when I replied to her e-mail, she e-mailed back in less than five minutes (that was quite fast). On the day of the interview with the CEO, I was late for more than an hour (the reason was that I don’t know the street in Makati where their building is), that was quite embarrassing but I did apologize for being late. We talked for almost two hours, and towards the end, he discussed the tasks of the post their company was offering if ever I would be employed. It was not that clear to me until the time I got on board and did certain things online which most people would deem hedonistic.

After weeks of training and eventually engaging in some online adult related stuff (off page SEO initiatives), I just realized that I'm not that perverted and that browsing more than 3,000 adult sites (a general term used for websites that contain adult content such as pornographic images among others) in a span of a week was not that really enjoyable. Moreover, I just realized that there are a lot of sick fetishes (which in my standards are very repulsive) that certain people are fond of.

My family except my mom knows that I’m working for a company which caters to adult related sites. I don’t want to disclose to her that I’m currently working for a company that provides pecuniary services to adult related sites. I guess this is due to the fact that my mom is a Christian (partly, I am too) and that if she would know that I’m engaged into something related to that, she would definitely ask me to immediately pass my resignation letter to my superior.

Personally, I really don’t like pornography (although I have to say that at some point I got hooked browsing some interracial adult sites and have watched free video clips) but I guess if your profession requires that you have to do several things for that, which is contradictory to your personal moral standards, I would say that you have to detach yourself from such self-indulging activities and just focus and tell yourself over and over (reckon as if it’s a mantra) that it’s just part of your work.