The highly developed countries continue to win the war against poverty through the use of a highly lethal and effective weapon against this scourge of mankind – and that is the creation of jobs for the people. Jobs enable people to earn money to sustain themselves and provide for themselves and their families a better quality of life.
Job creation is a concern and function of both government and the private sector. It begins with the training and schooling of the individual to enable him to acquire the requisite skills to be employable or the skills to manage his own business, in the case of the self-employed. After the training process comes the actual employment of the now skilled citizen or the setting-up of a business or enterprise of the now skilled businessman who would employ people of his own.
All this needs money to undertake.
Our present program for skills development, beautiful in concept as they are, could not take off at full acceleration because of the inadequacy of financial support. Likewise, our businesses and enterprises which shall hire the skilled workers need access to long-term, low interest credit facilities with minimum equity requirement on their part and maximum credit extension so that the employers can effectively manage their businesses and make them grow and prosper. Just as important, there must be a financial program for government support for SMEs as well as micro enterprises which play a direct and pivotal role in the employment of our people. The key is for the government lending institutions not to profit by way of the interest on loans made available to SMEs and micro enterprises but for government to instead recoup its loan investments by way of the taxes that will later on be collected from the transaction taxes generated by the products of these business entities.
In both instances of skills training and the setting up of businesses, capital is the most essential component – capital being simply money. With sufficient money, our people can be properly trained and businesses that employ people can be properly put in place.
During the Great Depression of America in the 1930’s President Roosevelt launched a massive job creation scheme he termed the New Deal Program. The New Deal was simply a program to build all the infrastructure and utilities needed by the United States to develop. This program entailed the building of all interstate highway for a period of 12 years in Roosevelt’s time and for 25 more years starting in Eisenhower’s presidency. This massive thrust at erecting America’s infrastructure and utilities practically employed every American who was employable. Then came the Second World War. Almost everyone was employed for the war effort as the men went to fighting fields while the women at home manned the factories to produce the war armaments and arsenal to win the war against the axis powers.
Fortunately for us, we need not engage in war to create jobs for our people. All we have to do is to institute a program to finance the construction and the setting-up of all the country’s infrastructure and utilities, that is, roads, bridges, highways, ports, airports, houses, markets, hospitals, power and telecommunications. The pursuit of all these developments will entail the employment of the mass of our unemployed and underemployed people and raise their quality of life.
It is very surprising, thus, and disheartening as well, that our monetary authorities cannot seem to grasp the lessons of the New Deal of then Pres. Roosevelt as well as the instructive lessons of our now prospering neighbors like Japan, Korea, Singapore and now, Malaysia. The lesson is indeed simple. First, we must finance a comprehensive training program for all our citizens. Secondly, we must see to it that the prospective employer is supported to expand his business and to create more job opportunities. These basic programs can be made possible only with the monetary support of government, not in trickles loaned out at high interest rates and payable in the short term, but in long-term, low-interest credit facilities using local currency.
I cannot believe that this simple policy of lending to our government by our own Central Bank to enable government to build all our infrastructure and utilities is not being supported with long-term, low-interest local currency loan facilities. The nagging question asked is how come we do not employ this simple mechanics of borrowing against future taxes by floating 30-year long-term, low-interest bonds with at least a five-year grace period so that government can harness the money effectively and have the necessary time to pay back the bonds in the form of taxes that are certainly going to be collected through time anyway.
All these ideas are not new. It only takes a kind of determination and political will for both the Bangko Sentral and the government working in tandem, to make it happen. It seems, rather, that our monetary authorities are working against the interest of the people by not adjusting their policies to conform with and emulate what has been already successfully done in the developed countries where they created their own local money to finance their development. After all, all currencies worldwide are no longer metal based but merely draw their strength from the strength, in turn, of the economy of the issuing country.
In the end, the puzzle of solving poverty, with us since days of old, shall remain unconquered without a full understanding and implementation of how a country can create jobs for its people and erect in place in the infrastructure and utilities essential for development.
(You may write your comments/suggestions at 15/F Equitable Bank Tower Paseo de Roxas, Makati City or through e-email at rgroxas@lawyer.com)
(Editor’s note: Atty Roxas is writing a limited series of articles dealing with financial matters and other important business topics.)