Changes in the condition of the poor: The best economic indicator

According to the article "Leading economic index points to growth" appearing in the Business World issue of March 9, 2004, "the economy will likely pick up at a faster pace this quarter"as shown by "the latest leading economic index (LEI)."

The LEI, the article explains, "is a measure developed jointly by the National Statistical Coordination Board (NSCB) and the National Economic and Development Authority (NEDA) to aid planners by providing them a glimpse of where the economy is headed in the short term."

The LEI is computed using 11 leading indicators – consumer price index (CPI), tourist arrivals, number of new business incorporations, stock price index, money supply, electric energy consumption, imports, wholesale price index (WPI), exchange rate, hotel occupancy rate, and terms of trade index.

Of the 11 indicators, four of them (that is, CPI, WPI, terms of trade index, and exchange rate) would have to decline for the economy to grow. On the other hand, the seven other indicators (that is, tourist arrivals, number of new business incorporations, stock price index, money supply, electric energy consumption, imports, and hotel occupancy rate) generally move up before an increase in gross domestic product (GDP) is seen.

The article then concludes that the latest LEI shows that "the economy will likely pick up at a faster pace this first quarter."

Without meaning to demean the attempt of government to monitor and forecast the state of our economic development through the listed 11 economic indicators, we doubt very much the integrity of such approach. In a country, such as the Philippines, where the gathering of accurate and true data is a perennial problem, the statistics obtained for the cited 11 indices become highly questionable and doubtful. Even so, the existence, if not prevalence, of the underground economy, smuggling included, precludes the gathering of precise data and statistics to serve as a truthful basis for economic forecasting. At best, we can only concede that the economic forecast from the data obtained on the 11 indices will be merely prognostic or suggestive, but certainly not factual. Besides, the LEI approach to the determination of the state of the economy is such an impersonal mechanism that the ordinary Filipino cannot comprehend or even relate to.

There is, we believe, a more realistic and accurate approach to determine the economic state of our people that is more direct and meaningful to the individual Filipino. We are referring to the more indicative poverty line approach as contrasted with the LEI mechanism.

Under our proposed poverty line approach in the monitoring and evaluation of our present economic state, we suggest that each barangay all over the country identify the actual persons and families living below or at the threshold of the poverty line. Then, these people thus identified do not become mere statistics but have now a human face and form. By this method, the actual economic situation of the needy individual can be evaluated, compared and tested against his actual lifestyle a year or so thereafter. Through this mechanism of monitoring the actual progress or digression in the life standard of all our countrymen living at the economic borderline can we genuinely evaluate the real state of the economy of the country as a whole.

On the part of the government, the private business sector and the religious groups, this will be a concrete challenge to help and support the named and identified poor Filipinos to extricate them out of their shackled poverty.

This is not to absolve, though, the poor from his primary responsibility to himself. Indeed, to start with, but without meaning to debase our brothers and sisters in want, it is the poor themselves that largely cast this dismal lot upon themselves. Born poor, and thus with an economic handicap already, they could not or did not realize that they had to help themselves even more. Using their lack of finances as an excuse, they failed to acquire the skills, knowledge and education that would have made them employable and be productive members of society, instead of the burden that they are now. Many remain idle, lazy and even resigned to their state. The worse of them enter the dark world of crime and criminal syndicates. The love and passion for work and learning is lost in them and, in their minds, everybody else is to blame but themselves.

To be sure, there are happy exceptions of those who, despite their grinding poverty, through sheer devotion to learning and work, were able to extricate themselves from their earthly hell and are now respectable and exemplary members of society. To them we doff our hat in salute. The bulk, however, remain ever as poor.

While the poor person is mainly responsible to himself, a humane and caring society cannot and must not escape equal responsibility to help the less fortunate. The government, the private sector and the religious group must bring about a more favorable climate and environment to enable our needy countrymen to rise from their poverty.

In this respect, and by way of an aside, it does not help that the religious sector appeases the poor and their state of poverty by making them believe that on account of it they shall inherit the Kingdom of Heaven. Poverty is not a good thing or a reward to something better. It is a social disease and malaise that must be excised if our brothers and sisters will ever experience a bit of Eden now, on earth.

As for government and the private sector, we urge them to take a gigantic leap to provide the skills, education and training to the mass of our poor bretheren. Adult and out-of-school skills acquisition programs must be broadened in scope so that the unemployed can become employable. In this regard, emphasis must be given to the special skills and training that Filipinos are in demand for overseas such as in the areas of nursing, caregiving, computer operations, mechanical and electronics technology, construction, and seamanship. The private sector for itself must employ more of our labor force and pay them with a salary that enables them to meet their basic expenses for comfortable living with some amounts still to spare as savings for investment. Government, for its part should take the lead in embarking on massive construction and build-up of the infrastructure and utilities all over the country which will create a tremendous demand for labor and jobs.

In the end, as always, all these programs, laudable as they are, cannot be pursued without the proper and adequate financing to successfully embark and complete them. And, as we have been stressing ad nauseam, the only way to finance them is not through foreign borrowings that only exacerbates our international debt situation, but through local financing via internal borrowings from the central bank of new money through bond floatations secured against future taxes. We must finance all our capital and investment requirements now even by borrowing against our future income. An appropriate support in the war against poverty demands no less such an immediate and comprehensive response now.

Having identified the government, the private business sector, the church, and the individual himself in the fight against material want, we can broaden our collective armory even more if the civic and business organizations, such the Rotary, Lions, Jaycees, PCCI, FINEX, MAP and the like, actually adopt the poor in a particular barangay or community and support them by financing their expenses for skills acquisition and their subsequent entry into the family of the gainfully employed.

Adopting, thus, this poverty line approach instead of the impersonal and loopholed ìleading economic indexî, we are able to actually monitor, evaluate and study the progress of warm human bodies – named and identified Filipinos – who are in the threshold of poverty, and at the end of the day be able to know for certain if they have been nursed to economic health, with a decent life, as our programs and their self-help meant to achieve.

You may write your comments/suggestions at 15/F Equitable Bank Tower, Paseo de Roxas, Makati City or through e-mail at [email protected])

(Editor’s note: Atty. Roxas is writing a limited series of articles dealing with financial matters and other important business topics. He is available for speaking engagements on the subject matters of his articles.)