The spiralling of the peso to levels not seen in 12 years is alarming may pundits, many of whom use their large followings on social media to hawk imported goods or foreign-branded goods. These social media marketers face a possible hit on their online income streams if the traders of their goods themselves face dips in demand and start to consider cuts in spend on marketing activities — such as propping up the lifestyle of Twitter “influencers” with freebies.
Twitter ‘influencer’ Rod Magaru working his magic on his followers.
It is also important to note how these “influencers” have encouraged an unsustainable consumerist lifestyle amongst their legions of millennial followers possibly contributing to an economy with an unhealthy dependence on consumption for growth and an enormous appetite for imported consumer non-durables that neither contribute to labour productivity nor improve the financial wellbeing of ordinary Filipinos.
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Even more important is how these Netizens now use their followers, many of whom followed them for their lifestyle content, to disseminate their personal poltical views. This is a dishonest activity in a way in that it exploits a captured audience acquired in a misleading manner.
Social media product influencers, in this regard, are unreliable as commentators on political and social issues because they are saddled with inherent conflicts of interest that likely colour their perspectives. If, for example, the tide of public outrage of the moment shifts to a brand they happen to be endorsing, would this topic be a no-go-zone for their social “commentary”?
Social media ‘influencer’ Noemi Dado doubles as both a poltical pundit and a product endorser.
Filipinos should start being a bit more discerning of the “influencers” they choose to follow and whose positions on crticial issues they choose to subscribe to. Big Media, itself, has been criticised for not giving enough coverage to the plight of workers on strike against food manufacturing giant NutriAsia Group owing to this company being a top spender on broadcast media advertising. Social media “influencer” Noemi Dado, for her part, is a vocal advocate of the “rights” of these striking workers — which leads one to wonder if Dado would have been as vocal had NutriAsia been one of her social media “consulting” clients.
Many of these “influencers”, themselves, had long been proponents of “citizen journalism” as an alternative to Big Media. In the earlier days of social media, these “influencers” were very persuasive in their assertion that social media platforms like Facebook and Twitter democratised mass communication and provided a powerful platform for “independent” discourse that would give Big Corporate Media a run for their money. It’s high time that these “influencers” be, themselves, scrutinised and evaluated on whether their own use of these platforms are truly consistent with their personal “advocacies”. Indeed, with unprecedented freedom and access to powerful tools of persuasion extended to more Filipinos by technology comes more responsibility to be vigilant of those who have come to be adept in the use of these tools. Perhaps it is possible that they themselves have become part of the very Establishment they once sought to disrupt.
benign0 is the Webmaster of GetRealPhilippines.com.
The whole ecomony is doomed man.
I agree. The peso is dropping through the floor because people who know something about economics (ie., everyone except Duterte and his cabinet) have judged the adminstration’s policies and found them wanting.
The bankers and the businessmen know exactly what’s going to happen to a country that spends money it doesn’t have on things it doesn’t need. I’m referring here to large public-works white elephants and crowd-pleasers funded by unsustainable levels of taxation, not the Filipino propensity for spending his entire salary on a smartphone, but fundamentally they’re the same phenomenon.
It’ll be interesting to see how this pans out. My guess is that sometime around 2040 the Americans and the Chinese will settle their differences and dice this country up between them. On the bright side, Mindanao will probably become independent because neither of them will want it.
Lol tell that to the Asian Tigers. Some of them have currencies lower than us. They spent on “white elephants” to support industrialization. They have high cost of living but in spite of all that bask in high HDI and per capita GDP. I do wonder what exactly you want the Phils to become, if you even have any vision for it all. I think it is better not to criticize without any clear idea about what should be done instead.
Guest makes a good point. There are many infrastructure investments that just need to be undertaken and are not subject to the same ROI computations of the sorts one would do if it was a private sector venture.
The risk inherent in these loans are only offset by a collective resolve to make good on a commitment to make productive use of whatever was built using these funds. The alternative is one where fear and lack of confidence in the future overcomes any wherewithal to invest in large infrastructure projects.
I’m not sure what point Guest is making. The Philippines, as you pointed out yourself, is utterly dependent on imports – not just goods, but the currency to buy them with, both being obtained essentially by exporting labor. In other words the exchange value of the peso is of critical importance because the Philippines has no internal economy.
How does Guest think the country can “industrialize” (a debatable goal in any case) if it has no functioning schools, no functioning system of land rights, no functioning justice system (see the Sereno debate), no proper banking system, a hopelessly inefficient tax/social security system, and a society that doesn’t grasp basic moral precepts like “thou shalt not steal” and “thou shalt not bear false witness”?
“Industry” doesn’t just mean factories and offices. It’s a accumulation of all kinds of social capital and bureaucratic support that the Filipino doesn’t even comprehend.
Strong economies – such as the ones Guest alludes to – are strong internally. Self-sufficiency is neither possible nor desirable, but they are strong in the sense that their citizens trade with each other. Filipinos, by and large, do not. Because they cannot. There are few Filipinos producing anything of value, and few Filipinos who could afford (in peso terms) those few things that are produced here. Possibly the only thing that there’s a big local market for is housing and construction, and that’s because you can’t import land or houses or roads. Hence the massive political power wielded by (for example) the Ayalas, and the massive corruption in public works.
All that being the case, there’s no point in undertaking infrastructure investments. In order to make roads (for example) profitable, there must be a functioning economy capable of using them efficiently. No such thing exists, and there is no plan for creating one. So any such infrastructure would be pointless: there would be no return on investment.
On top of that, you have the Filipino propensity to steal anything that’s not nailed down, so whereas other countries might raise a modest amount of tax money and spend it on high-quality public works, the Philippines raises large amounts of tax money and delivers disgustingly inadequate public works … because 40, 50, 60% of the tax take “leaks”.
>> collective resolve to make good on a commitment to make productive use of whatever was built using these funds
Resolve is not enough. There are plenty of Filipinos would would like to contribute to their country but cannot. I elucidated the reasons in my comment above: the rules of the game are explicitly designed to shut down any productive entrepreneurial activity, and to punish those making a privately-funded contribution to the country.
I’ve mentioned several times that the Philippines is one the few remaining overtly Fascist nations: the core of Fascism is that all economic activity is created by or guided by the State, for the benefit of the State, and private enterprise is permitted only inasmuch as it submits to that goal. Individual achievement is punished.
So perhaps that answers Guest’s question: I would like the Philippines to put aside its pro-Fascist ideals, and think more about how individualism can do more for the country and for personal fulfilment.
Foreign loans, foreign investments, foreign everything. This dependence on foreign capital is what makes the Philippines vulnerable to currency exchange volatility and that dependence transcends governments. It’s an addiction that is common across just about any Philippine government over the last several decades.
Certainly, but it happens because Filipinos are given no incentive to do anything else – and in fact are actively discouraged from showing GENUINE Pinoy Pride.
Why would anybody in their right mind start a business here when the BIR (and other assorted predators) will be right on your back asking not just for an affordable slice of the pie, but the majority of your profits? Why would you want to deal with hours and hours of soul-destroying form-filling and ‘seminars’ just to get that all-important Mayor’s Permit? It’s not worth it. Anybody with any sense just stays poor. That way, the government will leave you alone.
There are very simple ways to fix this, but it won’t be fixed because fundamentally the country is run for the benefit of well-connected predators. They have no problem selling out their country – and I stand by my prediction, it WILL be raped and dismembered by powerful nations eventually – as long as they have nice houses and cars in the meantime.
Arent there any PH top economists who are a-political and who can tell/say which way the Philippines should and must go to and how?
@Robert: there aren’t many economists who are “apolitical”. Knowing what will happen if you do X, Y and Z is one thing; deciding what OUGHT to happen is another thing.
I suspect there are two aspects to current government policy:
– As I said before, Duterte is a Filipino. He looks at the world like a Filipino. He’s never really experienced or understood what makes successful countries successful. In fact his definitions of “success” and “failure” are probably completely different to the definitions you or I would recognise. That’s the depth of the Filipino delusion – they think they’re ALREADY the best in the world. There aren’t any big problems to fix, just little adjustments.
– Most Filipinos think of nobody except themselves. Therefore the point of a government job is to make yourself rich. The point of getting a government contract to build roads is to make yourself rich. There is no other aspect to consider. In other words, there is no government: simply a whole bunch of individuals using government machinery to make themselves rich.
So it doesn’t matter if some economist somewhere tells Duterte that if he does X, then Y will happen. Nobody cares about facts. They only care about how much they can steal today. Even if Duterte genuinely wanted to “stamp out corruption”, for example, how is he going to do that when corruption is a core value of every Filipino?
Former Court of Appeals Associate Justice Mario Guariña III has a very well-written article in relation to what you are saying.
“Economic nationalism: voices from the past”
http://opinion.inquirer.net/78722/economic-nationalism-voices-from-the-past
Would you agree , that, for the Philippine economy to grow, we need to adopt economic nationalism, as an economic policy at this time, accompanied by national industrialization!
@Visitor: Was that addressed to me?
That article is a typical victim-mentality portrayal of foreigners being the sole reason for Filipino failure, while simultaneously admitting that economic nationalism (also known as Fascism, as I said above) just collapsed under its own weight around 1950.
As I said above, Fascism is precisely what you DO NOT WANT. The reasons are many, but fundamentally governments are not good at directing economic progress. They never have been; no government in the history of the planet has ever driven economic growth all by itself.
Apart from anything else, that isn’t what governments are for. In the view of most of the civilized world, the purpose of a government is simply to keep the peace – to enforce some basic rules so that everyone can play nice together.
There is no either-or choice to be made here. You don’t need to be dependent on foreigners, nor do you need to depend only on yourselves. The essence of prosperity is CO-OPERATION, a philosophical concept that Filipinos have enormous trouble with. You need to work with each other, and with outsiders.
The basic economic underpinning is “comparative advantage”: there are some things you can do best by yourselves, and some things that other people can do better. For example, if you have toothache, you go to the dentist, don’t you? You don’t read a dental textbook and try to figure out what to do all by yourself. On the other hand, if you’re an electrician, you don’t bother to call in another electrician if your house wiring needs an upgrade.
Likewise with trade. There’s nothing WRONG with buying, say, car engines from Japan. If they make the best engines at the best price, it would be madness to try to make inferior engines at a higher price (which is, in fact, what Filipinos try to do). If you do that, it frees up time and money to focus on things you’re good at, and what you’re good at will evolve over time.
There have been other articles on national industrialization, such as one from Manila Times. So far, a left group, IBON Philippines, is the most vocal promoter of this. I however find this one of the few left things I tend to agree with, because it focuses at least on making more manufacturing businesses in the Philippines, instead of just services and consumerism. Manufacturing has been considered one of the important industries for a more stable economy in what I’ve read so far.
@Chino, I’m also of the same inclination and I’ve written a few articles espousing the need for Filipinos to revisit the notion of producing what one consumes rather than rely on “international trade” to put up a veneer of “economic growth” on what is really a sorry excuse for a modern economy that is, at its core, bereft of any self-sustaining ability to create and grow its own capital base.
A focus on manufacturing should be qualified with a clear definition of the right kinds of manufacturing industries. Such a definition should exclude mere labour-added-value manufacturing operations like these shoe and tennis ball factories and the ship-in-ship-out semiconductor and toll manufacturing operations that are in the Philippines solely for its enormous supply of cheap labour.
The industries development efforts need to focus on should be high in design-added-value and their contribution to the expansion of a good foundation of a fixed and durable capital base. Productivity gain should be measured and “gains” that are mere outcomes of accounting trickery and currency and purchase power differentials should be eliminated so that only true and tangible productivity gains (actual increaes in tangible economic value output vs input costs) are tracked and rewarded.
These endorsers should stick to their products endorsements. Being so one-sided in their political views makes them so obvious as political endorsers (read: paid hacks) as well.
The Japanese Yen is low in comparison to the U.S. dollar. I don’t see Japan falling into a recession. Our peso is tumbling down against the U.S. dollar. This means, the OFWs who are earning U.S. dollars, have the financial advantage. I believe the “alarmists” in the opposition, have found a way again to hit Pres. Duterte on his economic policies. Infrastructures are needed. They are the “lifeblood’ of the nation.
On the side of the social media people, sidelining as products endorser. It is not a crime to, sell goods and earn a living, and do blogging at the same time. However, if people think you have a conflict of interest; then, find other ways to earn a living. Some of us, are gainfully employed; and we blog in the social media, at our free time. We don’t sell any products, but we sell our services, not in conflict with what we write in the web blogs.
Everybody must earn a living first and foremost !
These alarmists are really funny sometimes. I saw somebody complain about the price of fuel complaining that even during the fuel crisis back in 2013-2014, the price of fuel wouldn’t get so high. I wanted to tell her that the high prices are intentional because we are being taxed and then to thank her for her contribution to our nation’s coffers.
Inflation is still within the projections made by NEDA and BSP. I’m not worried. I don’t like a consumerist lifestyle anyway and I have OFW family members 😉 Times are good.
@Marius
Inflation (i.e. the spiraling of the peso) is caused by having a much greater money supply in the economy. The more money people have, the less they can buy with that money. In other words, prices are rising, because people are getting richer. Honestly, I’m not going to complain about that.
If you want inflation to go down, promote the ethic of saving and non-consumerism. Prices will go back down. Be an example to others while you are at it.
In the meantime, government continues to monitor basic goods to make sure that nobody is taking advantage of the situation. So far, no adjustments have had to be made. You can stop panicking now.
I’m familiar with the theory, and it’s true in the sense that Fisher’s equation is true. However it can’t have any practical relevance to inflation for the simple reason that the population do not know (indeed cannot know) what the money supply is, or what the aggregate output of the economy is. People-at-large therefore cannot be winding their prices up and down in response to the supply of money, at least not with any consistency or accuracy. Since inflation is not constant across all goods, and historically money supply can vary within quite a wide band with no obvious impact, the theory is clearly incorrect (or oversimplified).
It only becomes true when the population DO gain solid information about the money supply (eg., government printing money to fund grandiose public-works projects) and/or are highly pessimistic about the economy for structural reasons (eg., high taxes). The result is not inflation but runaway hyperinflation.
Money only has value because people have confidence in the institution that printed it. When they lose faith, the value evaporates.
Having said that … I got the feeling the article was referring to exchange-rate issues, not inflation as such. In that case, foreign reserves are a critical factor for manipulating the exchange rate, which I suspect is why the gov’t encourages Filipinos abroad to keep those dollars flowing back home (not sure if you’re aware, but overseas workers have to go to seminars in which they’re told that, if they don’t send a big chunk of their pay back home, they’re BAD PEOPLE).
Incidentally, I get the feeling that M0 money is deliberately throttled in this country, possibly due to some misguided policy driven by the money-supply theory.
If this is just about the exchange rate, we have much less to talk about. As the article points out, this means that high exchange rates affect foreign goods. For the consumer, this is meaningless because I can’t think of any essential commodity (except rice) that has to be imported. That the increase in prices of some of these consumer goods are literally “3rd world problems of the elite”, and these problems don’t get any of my sympathy.
Absolutely everything is imported. The Philippines is incapable of making anything useful. “Made in RP” is an even stronger signal not to buy something than “Made in China” – it’s a cast-iron guarantee that it’ll be either unfit for purpose right from the get-go, or it’ll break within three days.
Rice is one of the few things that ISN’T imported … at least not legally. The BOC spends most of its time enforcing rice-import quotas (it spends the rest of its time thieving). The declared reason for this protectionism is to “protect our rice farmers from unfair competition”, but the actual reason is to preserve the massive profits being made by the rice rajahs.
The most critical import is hard currency. Without that, the peso would collapse on the forex markets. The Philippines literally has no global value to anybody except as a source of warm bodies to sit in call centres, or cleaning floors.
Marius,
so probably same applies for PH demographers?!?!
Economists have studied the matter deeply and thoroughly and so they (can) work as advisors for the government same with demographers about what to do and how to deal with increasing population. And finally advising the government how to adapt/change/alter governmental policy.
With apolitical, I meant that economists who are NOT affiliated/associated with any political party.
I really wonder what top economists can do in the Philippines. It seems to me they can as well stay unemployed if nobody uses their skills and knowledge.
Whether they are affiliated or not, they’ll be accused of political bias in the course of doing their jobs (same as Sereno), because sometimes doing your job means taking a political stance.
For example, if you note that the Philippines just has TOO MANY PEOPLE, and that they’re breeding faster than the economy is growing, what do you do about that? Two possible answers:
1) How wonderful that there are so many Filipinos in the world! They can go out and spread the word of God to heathens, and become nurses and carers to those in need [I have actually read this argument, in the Inquirer, IIRC].
2) If we want to stop Filipinos descending into a cycle of poverty, poor parenting, and genetic regression, we need to promote birth control and shut down the nonsense from the Catholic Church.
Those two answers are highly political. The demographers can tell you how big the population is and how fast it’s growing. They’re really not the right people to decide what to do about that, or how.
Marius,
When I tell you that it is better to brush your teeth three times a day, every day because then your teeth will stay strong, stay white and the cost of going to a dentist will be low or even zero, then what is political about that?
But it is up to you what you will do with my suggestion/recommendation/advice. But at least you were informed/told. And I am not the person who will say: “I told you so”
Demographers can plot/extrapolate what will (or what can) happen in case the population keeps on growing at the same pace as it did the last few decades (margins of error included). There is nothing political about that. Actually it are facts. Especially when a government (no matter which political party is in charge) does not change its policies regarding population growth.
Demographers are able to forecast how big Metro Manila will grow/be in 2020, 2025, 2030, 2050 and what the consequences will be. Examples: more pollution, higher emissions of CO2, shortage of potable water due to higher demand, traffic, more/higher unemployment, etc etc etc. Really, there is nothing political about that. Only the measures (change in policy) that has to be taken are political.
To add:
“Those two answers are highly political. The demographers can tell you how big the population is and how fast it’s growing. They’re really not the right people to decide what to do about that, or how.”
I dont think it is the job of demographers to tell a government HOW to solve it. They can just resort to tell the consequences and then let the government respond by changing tactics or to change nothing.
The demographers can put some pressure on the government by going public with their findings and tell (TV, radio, newspapers, magazines, social media) journalists so that the public is informed as well. When the government then still decide to do nothing, they (any current government) will be – maybe – punished when the next elections are coming.
One is either self-appreciating or self-depreciating. There is no middle.