Where do we go from here?

Alan Greenspan, the maestro of the American economy, seems to have lost his touch. After reducing interest rates for the seventh time in eight months, it seems the American Central Bank has run out of tricks to get the US economy back on its feet. Beyond indicating its readiness to make further reductions if necessary, the Americans seem at a loss on what to do next. According to the latest issue of Newsweek, "the prospects have never been bleaker."

Unfortunately for Southeast and East Asia outside of China, the American economic malaise is wreaking havoc on all our economies too. No one ever thought the US market would stop buying the computers and other electronic products produced by Asian factories. This heavy reliance on external demand – mainly from the United States – has done our economies in.

The worst is yet to come. After the US economy finally recovers, China will most likely reap the benefit more than any one of us in Asia. Because of its strong domestic economy, China’s manufacturing base is hardly affected by the crisis. China will be in a good position to take advantage of any rebound in the American market. Even now, export processing plants in Southeast Asia are starting to relocate to China. So, what are we to do? Where can we turn to?

Notice how Asian leaders from Thaksin Shinawatra of Thailand to Megawati Sukarnoputri are talking of looking inward. Developing our domestic economies seems to be the only way to go. Lifting our poverty stricken countrymen in the countryside and giving them buying power is politically savvy. It is also the only viable way out of our current economic mess.

Globalization will be there to continually harass our export sector and provide stiff competition to our domestic industries. But unless we drastically improve the buying power of the majority of our people in the countryside, consumer buying power will remain anemic for goods and services, local or imported.

There must be something the ASEAN can do as a region to widen the market for everyone by combining our resources and potentials. Ironically, it is China which is planning to benefit from AFTA by establishing manufacturing plants in Vietnam. Some amount of planning coordination is probably called for so that among its members, Asean is able to maximize the benefits of manufacturing and trading among one another. Together, we have quite a sizeable market size. The big problem is extensive poverty, and that means very little buying power.

Beyond Asean however, each country will have to work out its own plan on how to fight poverty and uplift consumer buying power. For us, we have to think up of some viable way of transferring financial resources from the city to the countryside. Because the peasantry will use such money on basic needs, financial resources entrusted to them will produce the most bang, so to speak, for the domestic economy. Financial resources left in the urban areas are likely to flee to foreign shores or be spent on non-essentials that benefit foreign industries.

Perhaps we should look into using portions of the funds generated by the banks trying to comply with the 25 percent portfolio requirement of the Agri-Agra Law by buying government bonds, to revitalize the rural banking system. This is better than having a government agency lend directly to farmers. It also helps farmers finance their farm input needs without having to go to the usurious traders who have kept them in bondage. Lower costs to the farmers will, hopefully, translate to lower food costs to the consumers. It will also make local produce price competitive with imports.

We can also spend funds allocated for pork barrel projects for farm infrastructure that will help bring down the cost of food to the end consumer. Congressmen and senators can still get credit for the infrastructure project but there should be rhyme and reason for the expenditure. Right now, anything goes and that also opens up the process to corruption and waste of scarce resources.

The point is we must improve the consumer purchasing power at the countryside because that is where most of our countrymen live. Unless they have the wherewithal to buy goods and services, our economy isn’t going to be worth much to anyone.

Conceptually, lending money to the farmers shouldn’t be much of a problem if the proper mechanism is in place. If the experience of the various microfinance NGOs are any indication, the poor are good credit risks with as high as 98 percent repayment rate. They need to be given a chance to break free from the age old hold of poverty and usurers. What is good for social justice and equity is also good for economic development.

Money laundry

Here’s an e-mail from Gabriel Manalac on one of the hottest issues today: money laundering.

The biggest "money launderers" come from:

1. The grafters in government sector, and

2. The tax evaders in private sector

The only way to neutralize the crime of money laundering is to abolish unconditionally – by legislation, the secrecy and absolute confidentiality of peso and foreign currency deposits. But by doing so, our leaders and legislators must be so terrified at the thought of opening-up a "Pandora’s box" that identifies money launderers who might turn out to be peers and friends in their own backyards, and political patrons and friends in business in the private sector.

Ahh... there’s the rub.

Is there anyone from Malacañang, Congress or Senate sponsoring such a proposal?

Cannibals

Here’s something from Marilyn Mana-ay Robles.

Five cannibals get appointed as programmers in an IT company. During the welcoming ceremony the boss says: "You’re all part of our team now. You can earn good money here, and you can go to the company canteen for something to eat. So don’t trouble the other employees".

The cannibals promise not to trouble the other employees. Four weeks later the boss returns and says: "You’re all working very hard, and I’m very satisfied with all of you. One of our cleaners has disappeared however. Do any of you know what happened to her?" The cannibals disavow any knowledge of the missing cleaner.

After the boss had left, the leader of the cannibals says to the others: "Which of you idiots ate the cleaner?" One of the cannibals raises his hand hesitantly, to which the leader of the cannibals says: "You FOOL! For four weeks we’ve been eating team leaders, managers, and project managers and no one has noticed anything, and now YOU have to go and eat the cleaner!"

(Boo Chanco’s e-mail address is [email protected])