Potemkin economics

DIE HARD III

Herman Tiu Laurel

2/8/2013

Daily Tribune

The Potemkin village is an idea of a fake village built only to give a false impression of a brightly lit and prosperous place with vibrantly painted facades but with nothing behind them. The phrase symbolizes an apocryphal settlement supposedly erected along the banks of the Dnieper River in Crimea to fool a then touring Empress Catherine II that all was going well within her realm.

Today, the local and global enthusiasts for the neoliberal economy of the Philippines have been creating such a Potemkin Village around it, ballyhooing a 6.6-percent gross domestic product growth that is actually only growth in debt, taxes, "hot money," smuggling, and privatization — all of which have entailed net losses of about 400,000 jobs, the continuing erosion of public assets (such as public hospitals as well as state-owned power plants, among others), and increasing costs for Filipino taxpayers and consumers.

The World Bank (WB) is the latest to get into the act of erecting and gaudily painting this Potemkin economy, announcing that the "Philippines is Asia's rising tiger," as bannered in various newspaper headlines the past few days. I wonder if any Filipino can still be taken in by the WB's con games, given that its prescriptions have invariably proven disastrous for the country and the common folks' lives. Notably, the most notorious of these — having been accompanied by blackmail — was the Epira (Electric Power Industry Reform Act), a piece of legislation that gave us the "highest power cost in Asia" that created a major disincentive for foreign direct investments (FDI) into the country.

The first wave of trumpeting began two weeks ago; but by the second week the realities behind the ballyhooed growth began to dawn on all. It was with the insistent reiteration of the facts by such economic think tanks as the Ibon Foundation and our own financial forensics consultant, Hiro Vaswani, of KME (Kilusan para sa Makabansang Ekonomiya), as well as a handful of columns like this space that exposed the acclaimed growth as being no growth at all, and which was, in fact, even contrary to the most significant component of any economy — jobs generation.

When the adverse consequences of the current economic "gains" were understood by more and more Filipinos, economists from the Establishment began reluctantly agreeing with the critics and skeptics of this Potemkin economics. Caught "Noynoying" on the more vital aspects of the economy, such as employment and real productivity, PeNoy's Budget Secretary Butch Abad was compelled to admit the economy was "non-inclusive" in its growth. Then, the International Monetary Fund, followed by the WB, also echoed the same.

But do they really mean what they say — that they really want a more inclusive economic system? If so, then they would have to call for a reversal of economic policies, away from the orthodox "free trade" economics and back to the national development economics that nationalists advocate. To create jobs and income for the population, domestic industries must be developed, nurtured, and promoted — a stark contrast to the dictum of globalists for the Philippines to rely on imports even for its basic needs while exporting its manpower and raw materials to earn dollars for these imports.

The globalists continue to sell debt to the Filipinos on the back of the myth that the Philippines is capital starved. But how can that be when we have a GIR (gross international reserves) surplus of $27 billion (with $89 billion in reserves vs $62 billion in foreign debt) and our Bangko Sentral ng Pilipinas (BSP) holds at least P1.7 trillion in Special Deposit Accounts (SDAs)? Bear in mind that SDAs are deposits that are ready for lending; but since there is no long-term government plan for spurring investments in industry and agriculture, the only rush we see is in condominium development. Worse, instead of funding domestic "physical" economic growth, the BSP even chooses to invest in low-yield foreign T-bills.

Clearly, in order to sustain their continuing plunder and looting of the country's wealth and labors through extraction and repatriation of economic surplus or profits (as these are otherwise called), the snake oil salesmen (of globalization, liberalization and privatization) must keep the eyes of the public on the Potemkin village of growth.
If there are those in government who really want actual, physical economic investment and prosperity, they could begin with a serious plan to halve power rates to equal the rest of Asia's tariffs.

Attaining justice in the power sector may well mark a beginning for overall change in the economy. Even as we don't see much hope in winning many legal battles given the prevailing system, with our will to fight, we can certainly bring this to the people for final judgment.

(Tune in to 1098 AM, Tuesday to Friday, 5 p.m. to 6 p.m.; watch GNN's HTL show, GNN Channel 8, Saturdays, 8:15 p.m. to 9 p.m., 11:15 p.m. and Sunday 8 a.m., and over at www.gnntv-asia.com, with this week's topic, "From Oakwood to Congress: Trillanes and the Magdalo's Journeys;" also visit http://newkatipunan.blogspot.com)