Productivity, not wealth

By Dean dela Paz

It is easy to be negative when we realize we have lost control of our destinies and good fortune. Ironically, textbooks in the carefree days of our youth declared we are a rich nation. However, given the challenges facing us, the rise in poverty, the increasingly vulnerable middle class, and leaders apparently clueless, it is more introspective to ask just how poor we are.

Between the fourth and sixth grade, in either social studies or history, textbooks taught the Philippines were rich in natural resources. That there was gold in yonder hills, precious minerals underneath, and our seas, rivers and lakes were teeming with fish. We equated abundance with being rich and being rich with being wealthy. The transitional logic however comes to a dead stop as reality steps in. The halting truth is that, despite the abundance, we are not a wealthy nation.

A stone’s throw from our third-grade classrooms was a squatter’s colony sprouting like rocky outcrops at the edge of the hill where our school ended and Marikina City began. Never mind what the textbooks taught. If we were a rich nation, the view outside did not show it. The debate had been settled way before the fifth grade.

Now, beyond high school and Economics 101, there is not much debate given the hunger and poverty indices we’ve learned since.

Between being rich in resources and being wealthy, there is a great expanse. The Gini Coefficient measuring the gap between the rich and poor does not quite reconcile the galactic distance from the textbook declaration to the poverty outside. Unfortunately, catalyzed by corruption and continuing plunder unrecorded by any textbook, the poverty in the streets is fast becoming the poverty inside our homes.

It behooves us to seek passage, an elusive wormhole, or bridge that transports from poverty to at least a decent level of subsistence.

Education has always been the convenient answer albeit now spun as a dirty word by dropouts. It has become crusted cliché and replaced by social media. The University of Tiktok, Facebook and Viber are more efficient educators that serve to sink us deeper into dearth and damnation.

Note economies in the African continent blessed with abundant resources albeit continually cursed with poverty, hunger and even starvation. Note oil-producing Venezuela whose per capita gross national product falls below the global average.

Note also inherent political instability in these nations, indicating an explosive relationship between economic strife and aberrant political reality. Sri-Lanka run by one political dynasty is an example.

Hence, rather than define wealth based as a function of abundance, economists use a measure both quantifiable and compelling.

We often hear the term Gross Domestic Product (GDP). Employing GDP rather than textbook abundance compels transforming assets into inclusive productivity.

Now focus on our productivity. Remember the last administration borrowed over P9 trillion to increase productivity, thus compelling us to ask if those debts were spent productively.

Apparently not. Crashing from $3,664.79, per capita GDP in 2020 at the start of the pandemic fell to $3,298.83. Our developmental twin, Thailand, despite having gone through recent coups registered over 200% higher at $7,189.04. Econometric modeling forecasts our long-term per capita GDP at $3,300.00, a token $1.17 difference or a loss of over P20,428.25 per person from $3,664.79.

Often, officials brag and ballyhoo GDP growth – the percentage change from a lower GDP. Unfortunately, positive percentages ignore our GDP fall was deep if not deepest among ASEAN. It is an understandable obfuscation of an inconvenient truth. Our fiscal deficit was deepest. Our debts, the fastest growing. Ironically, ignoring recessions that diminish GDP and now a historic 6.10% inflation rate nearly 300% higher from 2.39% in 2020, we can now add bull to brag and ballyhoo.

The predilection to crow growth is palpable apologetics. Or a brazen snow job. Real GDP remains diminished by increasing unemployment, poor wages, high prices and low manufacturing and agricultural productivity – all indicative of macroeconomic failures aggravated by cronyism, corruption, and the unkindest cut, deception, and self-delusion.

(Dean dela Paz is a former investment banker and a managing director of a New Jersey-based power company operating in the Philippines. He is the chairman of the board of a renewable energy company and is a retired Business Policy, Finance and Mathematics professor)