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Impact on the Philippines & Alternatives: COMBATING THE DESCENT INTO DEEPER CRISIS IBON Foundation 10 February 2009 Main points 1. Philippines is entering a long period of stagnation & severe crisis 2. Government is dishonest about the state of the economy… 3. … and deceitful about supposed efforts to cope with the crisis 4. The people need relief & real development • • • Immediate relief Discarding failed policies Strategic aspirations 1. Global crisis & the Philippines Imperialist crisis & recession Global economic crisis & the Philippines • Impact on a semifeudal & semicolonial economy? • Note: experience in 2000-2001 • US bubble burst in 2000, growth fell from 3.7% (2000) to 0.8% (2001); global slowdown • In Philippines: • Exports growth collapsed: 19% (1999), 9% (2000), negative 16% (2001) + Foreign investment fell 84% to US$355 M (2001) • Unemployment soared from 9.8% (1999) to 11.1% (2001) • Remittances declined slightly by 0.3% to US$6,031 M (2001) • * Remittances from US fell in absolute terms Deepening Philippine crisis Deepening Philippine crisis 1. Drastically slowing economic growth • 2008: growth slowed in 60% of economy • 2009: Will fall to less than 3% which is less than half growth in 2007 2. Worst joblessness in country’s history is rising even further • 2008: 10.7 million unemployed + underemployed • 2009: Could rise to some 12-13 million • Of which at least 5 million outright jobless (increase of 900,000) • Retrenchments, less job creation, deteriorating quality of jobs Deepening Philippine crisis 3. Falling real incomes & worsening poverty • 2006, at approx P110 or less per person per day: • • • • Poor families – 13.9 million (official: 4.7 M) Poor Filipinos – 70 million (official: 27.6 M) 2008: Incomes lost almost 10% of value due to inflation 2009: Worsening poverty due to joblessness and falling incomes: more driven to poverty + deepening poverty for poorest “Globalization” has made economy weaker & more vulnerable • Imperialist “globalization” was all about monopoly capital profiting from the Third World • Plundering the Philippines: • Cheap labor – ex. OFWs, exportoriented manufacturing, call centers… • Cheap natural resources – ex. coconut products, fruits & vegetables, minerals… • Monopolized markets – ex. power, oil, water… • Debt & speculation – ex. foreign debt, “aid”, portfolio investments… “Globalization” has made economy weaker & more vulnerable 1. Internal vulnerability: Shrinking shares of manufacturing & agriculture in the economy • Manufacturing smallest since 1950s • Agriculture smallest in country’s history • Domestic economy poorly equipped to deal with crisis • Shrunken productive base for generating jobs & incomes • Weakened domestic ability to consume & invest “Globalization” has made economy weaker & more vulnerable 2. External vulnerability: Unprecedented dependence on low value-added exports, one-sided foreign investment & overseas remittances • 84% of exports to just 10 countries • 77% of FDI from just US, EU & Japan • 88% of remittances from only 10 countries • Source countries are all seeing drastically slowing or even negative growth 3. Externally-triggered downturn since 2008 beginning of another long period of stagnation & severe crisis 2. Gross government neglect Chronic & worsening crisis • “Globalization” policies have worsened economic backwardness & resulted in false development • Yet govt is maintaining these policies which will keep the Philippines as merely: • Provider of cheap labor • Source of cheap raw materials • A market to dominate & monopolize • Chronically dependent on foreign debt & capital Sham “resiliency plan” or “sustainability plan” • Reported plan/package: P330 billion • P160 B increase in 2009 natl govt (NG) budget • Including dole-out PPPP cash transfer program • P40 B corporate/individual tax breaks • P100 B off-budget infrastructure fund (GOCCs, GFI, private sector) • P30 B additional benefits to GSIS/SSS/ PhilHealth members • + Alternative livelihood programs, jobs placement services & loans There is no “pump-priming” • The P1.4 trillion national government (NG) budget for 2009 is not a “pumppriming” budget • Second smallest share of NG spending to GDP in at least two-and-a-half decades (approx 16.1%) • Unexceptional increases in: • Total NG expenditure (9% real growth) • Larger growth in 2007, 2000, 1997, 1995, 1994, 1990, 1989 • Total non-debt expenditure (8% real growth) • Larger growth in 2000, 1997, 1990, 1987 The “plan” is mere spin, pretense & propaganda • Recycling & repackaging what was already there • i.e., 2009 NG budget, corporate tax breaks, off-budget infrastructure fund • Meaningless & ineffectual measures amidst general economic crisis • i.e., False job placement, livelihood programs, loans • And even narrowly targeted only at newly displaced – what about millions of jobless and tens of millions of poor even before worsening of situation? The people must guard against being made to bear burden of adjustment • Business groups & government pushing for lower pay, reduced benefits, more uncertain work and outright layoffs • Imperialist powers will push to further open up Third World countries through more “globalization” policies • Ever a vent for their crisis • Administration’s cha-cha offensive • A maneuver to remain in power longer… • … surrendering last remaining legal barriers to foreign exploitation of the country’s human and natural resources 3. Genuine relief & development Real “stimulus” needed • • • Premises are: situation of deep/widespread poverty + vast inequalities in wealth, income & assets + failure of “free market” policies of “globalization” Main objective: stimulate failing consumption and production Through: 1. Immediate relief not just for recently displaced but for as much of long-suffering as possible 2. Preserve current jobs: • Public sector (e.g., no “rationalization”) • Private sector (e.g., no retrenchments, no wage/benefit cuts) 3. Quickest job creation: • Immediate & wide-ranging agrarian reform • Public works for productive rural infrastructure 4. Sustainable job creation and development: • Real agricultural development • Building national industry Immediate relief: The people must get far more of the social services and economic share long denied them 1. Restore real per capita social services spending to at least 1997 levels • Additional P205 billion (education), P36 billion (health) and P5 billion (housing) 2. Support consumption: • P125 across the board nationwide wage hike & P3,000 increase in government salaries • Protection against formal/concealed cuts in wages, salaries & benefits 3. Remove VAT on food & oil products… • … while increasing taxation of wealth, luxury goods & services, unproductive assets & transactions Immediate relief: The people must get far more of the social services and economic share long denied them 4. Shift public spending to labor-intensive and basic rural infrastructure projects that directly improve people’s livelihoods • Ex. P100 billion not for a few big projects but small irrigation systems, farm-tomarket roads and post-harvest facilities 5. Free public resources: • Stop debt payments and cancel odious and illegitimate debt • Cracking down on corruption • Reducing spending on military and war which just feeds human rights violations Radical economic reforms: back to basics 1. Agrarian reform & agricultural development (ex. GARB) • Land to the tillers, extension & support services • Cooperativization & modernization 2. National industrialization (ex. National Industrial Plan?) • Filipino industry is possible… • .. and essential for jobs, incomes, capital accumulation, technology & sustainable growth Radical economic reforms: back to basics 3. 4. Ensure gains from foreign trade and investment • Protect the Philippine economy • Reverse trade & investment liberalization • Control repatriation of FDI profits, dividends, royalties • Support Filipino agricultural & industrial producers • Real technology transfer • Filipinization & eventual nationalization of vital and strategic industries and utilities Banking, finance and fiscal policy • Mobilize and allocate resources towards national agricultural, industrial & social development • Crackdown on pervasive wasteful spending and bureaucrat corruption • Oppose financial services liberalization that imports of toxic fund management and speculative models Strategic aspirations • We are in a period of historical significance – amidst crisis, building a more just, equitable, humane & peaceful world • Lessons about the limits/nature of monopoly capitalism • Intrinsic crisis of overproduction • Inbuilt poverty, inequality, exploitation & oppression • Imperialist wars of aggression & conquest • Build on the experience with progressive economics such as in socialist countries • Broad-based & sustainable growth • Society’s resources used for the people’s welfare • Combating joblessness, hunger, disease & lack of knowledge Salamat po Please sign on People’s Statement on the Global Crisis www.politicaleconomy.info