It really is economics, baby!

A reader suggested that my column be moved from the business section to the opinion pages because of the large amount of political material I carry. Then again, the reader realized that politics and economics are so inter-related in this country. I might add, not just in this country but everywhere.

Take the shock and awe results of recent referenda in France and Netherlands on the European Community Constitution as well as the local elections in Germany’s North Rhine Westphalia region. The voters delivered a strong message to their leaders that they are mad as hell because of their economic present and they are fearful of their economic future.

I would be surprised if even one percent of French and Dutch voters took time to read the thick EU Constitution. Nevertheless, the voters were visibly angry in the BBC and CNN interviews I caught. Having been just there, I can understand why they took it out on the new EU Constitution. "Old" Europe is very worried and angry that its way of life is being threatened by the expansion of the One Europe concept. They voted their fears.

For instance, the single currency regime is being blamed for a lot of their economic difficulties. In Germany, consumers resented how merchants used the euro’s introduction as a convenient means of raising prices. When the euro was introduced, it took about two German marks to get a euro. But what used to sell for one mark was priced for one euro, effectively raising prices. On the other hand, salaries were more accurately computed, meaning, salaries bought less, effectively decreasing standard of living.

Then, because there is now just one European Central Bank based in Frankfurt, monetary policy became a one size fits all kind of thing. Italy, which used monetary tools to keep its economy competitive in the past, no longer had this means. Worse, the euro became overvalued in relation to the dollar. Now, the Italians are blaming the single currency for causing a serious recession.

Unemployment was a big factor in the German case. Because of existing labor laws, German labor has priced itself out of the market. Ordinary Germans sees the One Europe idea as a threat in terms of competition from lower cost labor in the new EU member states from Eastern Europe. It is also this same fear of labor competition in an expanded EU, one that could include Turkey, that made enough French and Dutch voters mad or scared enough to thumb down the Charter.

The political concept of One Europe was fine until it started to negatively affect traditional economics in "Old" Europe. Economics will drive the political future of One Europe. The moribund European economy will have to drastically improve soon because everything appears to now be at stake.

It is the same thing happening here too. There is so much civil unrest because there are so many unemployed people with valid gripes and nothing better to do than rally in the streets. Those with work are unhappy with high prices and low incomes. And communist-inspired agitators are taking advantage of the messy situation to win supporters.

People generally couldn’t care less about jueteng. And people suspected as much as the "Gary tapes" revealed way back in June last year, when the results were declared. These political scandals are not the ones driving the pressure to oust Ate Glo as much as her seeming inability to cope with the economic situation. Jueteng and the "Gary tapes" are just additional reasons why people are giving extreme measures a second thought.

Economic issues are driving the politics of this nation and political uncertainty affects economic prospects. We have to break the vicious cycle somehow. There are only two options on the table: either Ate Glo shapes up and starts being the leader we need or extreme politics takes over.

June 12 Holiday

What aggravates Ate Glo’s problem with credibility is Toting Bunye’s inability to tell it like it is. Until recently, I considered Toting respectable. But lately, he seems to be having a problem with telling the truth.

Take this simple case of the June 12 holiday. Some weeks ago, Toting’s office issued a press release saying that Monday June 13 will not be a holiday because the business sector has complained about having too many holidays. Then last Friday, Malacañang issued a proclamation declaring Monday a holiday, justifying the Monday holiday as part of the administration’s holiday economics theory of boosting tourism.

They are taking the people for fools. We all know they declared Monday a holiday because the situation was tense last Friday and they didn’t want to have all those students back in school and adding to the problem. So, what is so difficult in saying that contrary to the earlier announcement, Monday will be a non-working day not just because that’s what the law provides but also because it would allow some hotheads to cool down?

Holiday economics? If that were so, they should have announced that way in advance so people can make plans. I had an invitation to go to Boracay for last weekend and I might have gone if I knew Malacañang would change its mind about Monday. The problem with Malacañang these days is that they are obviously in panic and no one thinks before speaking… or releasing wiretapped CDs. Bad!

Reader Reaction

Reader Juan Deiparine of Toril, Davao City, sent this reaction to our column last Monday.

I agree. Just when we’re beginning to see a bit of light at the end of the long, dark tunnel (it’s been seven long years since we saw any sign of a glimmer), we are about to shoot ourselves in the foot again. Letting Gloria Arroyo, our micro-managing and leadership-challenged President, finish her term is, unfortunately, the only option we have for maintaining some stability and economic growth in the next few years.

Among our Southeast Asian neighbors, it is only the Philippines that has been unable to crawl out of the hole of the Asian Crisis of 1997. Thailand, Malaysia, and even Indonesia, have been doing much better. And although high oil prices in recent years have been a factor, our problems are largely due to our own political infighting and our not being able to present clear economic policies.

Despite Ate Glo’s shortcomings, I do wish her administration well, if only for the good of all Filipinos. I do wish her administration would concentrate on the following programs in the next few years:

1. Energy — Formulate policies in order to be less dependent on foreign oil. Ever since Cory Aquino’s administration, we have neglected developing renewable power resources. We should also encourage more exploration and drilling for oil and gas. Public outrage against public utilities distributing energy is totally misplaced. A coherent Energy Policy is very necessary to maintain stable energy prices. It should focus on the sources of energy and not grandstanding about the high cost of fuel and power and regulating these.

2. Debt Relief — Now that the G-8 countries seem to have found a soft spot for debt relief and condonation, we should make moves for debt relief. If they could condone $50 billion of Iraqi debt and $50 billion of African debt, we could make moves along those lines. Argentina was also able to restructure their massive debt and get a condonation of sorts by having a large part of their sovereign bonds redeemable at 30 cents to the dollar.

Debt relief would free up a large part of our budget for capital expenditures and public works. Of course, the devil is in the details and pursuing this could be tricky. However, there have been precedents and Ate Glo should make capital of her goodwill with the G-8 in order to state her case. Of course, that would take chutzpah and leadership but desperate times call for desperate measures.

I mention only these two because I believe that, if they are vigorously pursued, they could return large dividends in a relatively short time. And they could make us less vulnerable to unpredictable swings of interest rates and energy prices in the world market.

With more development and more stable energy prices, I am sure there will be less focus on "jueteng" or other petty issues.

Digressing, don’t you think that, if true, GMA’s conversation with Commissioner Garcillano is another instance of micro-managing? Shouldn’t she have left taking care of the grisly details to a subordinate?

I thoroughly enjoy your column. You manage to make me think and to laugh at the same time.

Here’s A Quickie

>Here’s Dr. Ernie with a quickie.

The morning after their honeymoon, the wife said to her husband, "You know, you’re really a lousy lover!"

The husband replied, "How would you know after only 30 seconds?"

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