BACKBENCHER
Rod Kapunan
9/17-18/2011
Deregulating portfolio investment
If Karl Marx condemned capitalism for alienating man from his labor, maybe he had his consolation, for then, capital was used to mass produce goods to create additional wealth. Today, the capital he condemned has become an instrument to create a much bigger surplus value in an economic system fueled by usury and monetary trading.
Like the workers whose labor was reduced to commodity by the value of their wage, today the capitalists are seeing their capital reduced to commodity by a new class called “money traders” to produce a much greater profit without producing a single product! Thus, if the workers lost control of labor as their property to the capitalists, the capitalists today are losing control of their capital to the usurious money traders!!!
This explains why the usual economic plans for development and industrialization with the government spearheading in constructing strategic industries to serve as base in generating capital, in giving incentives and protection to the manufacturing industry, or in embarking on import substitution were all stultified because the deregulation of interest and the convertibility of the local currency to any foreign currency resulted in the melting of whatever local capital the country could use to create wealth.
To ensure that the new system of money market trading would work unimpeded, the international oligarchy, through the same financial institutions of the World Bank and the IMF, insisted that countries, as a condition for financial assistance, have to pass another law that would strictly prohibit the government from regulating portfolio investment.
Although most of these foreign-imposed laws again take their cover of enticing investment, the bottom line remains that to allow these international hustlers disguised as foreign investors to enter freely, the country paradoxically has to assure them that they are free to take out or remit not just the whole amount they invested, but including the “juice” generated out of that unorthodox method of investment wholly confined to stock and money market trading. That guarantee was made to assure that money traders could bring in and out unhindered their unique commodity.
That then implanted the rules on how to convert our economy to one big casino. But unlike the casinos in Las Vegas, Monaco and Macao where it would take gamblers a zillion dollars to bring to its knees the “dealer,” here our government practically assured them of winning.
One good example is our grant of that humiliating tax exemption to portfolio investors, while treating harshly our own who are engaged in the actual business of trading and production. This has put the government on the defensive, and unable to explain why, despite the huge capital inflow that is recorded and traded daily in the market, the economy continues to slide down to the precipice of bankruptcy.
The casino economy
Capital holders then began to rely more on gambling their capital than in using them to invest in production. It is gambling, much that the trading of money with other currencies bears profit out of intangible transactions, yet it rapidly grew alongside with the decline in production. Having its own realm of demand and supply, countries became helpless in fending off the depreciation of their currency much that their money became more and more dependent on how its value would command at the stock and money market, and not that there has been an increase in production, or positively that people have more money to buy.
Realizing that indeed gambling is lucrative, the government decided to put up its own casinos. In every major city, gambling casinos sprouted like overnight mushrooms. Casinos proved to be profitable because the rate of return is astronomical that the revenue from gambling is almost gaining parity with the revenue generated by the remaining government-owned and controlled corporations. Time will come that instead of taxes and duties, the government will be depending more on proceeds from gambling for its annual budget. That then would put truism to the saying of “only in the Philippines!”
Poor man’s credit card
Before those credit cards were peddled by those neatly-dressed salesmen similar to what vendors do to sell their cheap wares on sidewalks, only a few enjoyed that emblematic seal of financial exclusiveness. They were honored by international banks, and their card denotes they have solid cash deposits, or to put it differently, liquid at all times. Thus, American Express, Visa Platinum and Master Card became their identification as indeed belonging to that “super-select” entitled to be billeted in five star hotels, to enjoy a vacation in first class resorts, to spend time on luxurious cruise ships, or to dine in exclusive clubs and restaurants.
With the legalization of usury, credit cards were soon “doled out” that almost everybody has it now. Banks have to repackage the system to suit to the demands of the wage earners without telling them they were walking straight into the gauntlet of a debt trap. By creating a poor man’s version of a credit card, the banks were in effect tapping a reservoir of funds that could reduce to puny the amount they traditionally collected from the so-called “super-select.” The instrument of credit card made easy for the middle class wage earners to buy expensive items and appliances they could not otherwise afford to pay in cash. The easy installment plan was their gambit.
However, what these eager-beavers failed to foresee is that there was no way they could pay the credit they obtained by the purchase of those goods inside those big malls. Many of them were awakened to find out they were already nose-deep in debt. The logic is simple: the cost of goods they purchase kept on increasing every minute because of interest plus the cost of inflation, while real wages kept on decreasing. It would not take a genius to compute the formula why many of them ended up bankrupt. Aside from the interest and charges, the charges themselves bear interest and computed on a compounded basis.
It is not even a question that their wage remained static, but of the fact that the real value of wage was moving much faster towards the opposite direction. It therefore came as no surprise to see why almost 70 percent of those who were gypped into getting those credit cards failed to pay their obligation. Many ended up poorer than before with the less fortunate losing their dwelling, their car, their appliances, encountering marriage problems, and at times ending up in court answering estafa cases filed by the usurer's collecting agency represented by shoddy law firms.
(rodkap@yahoo.com.ph)
