Arroyo's bankrupt and deceptive economic policy
Prof. Jose Ma. Sison National Democratic Front of the Philippines Chief Political Consultant
December 30, 2007
Gloria M. Arroyo, the fake president, keeps on babbling that
her regime is propelling the Philippines to become a "first world
country". She is obviously lying. In utter subservience to the US-dictated policy of
"neoliberal" globalization, she has worked against the line of national
industrialization and genuine land reform and has aggravated and
deepened the agrarian, pre-industrial and semi-feudal character of the
Philippine economy. She has worsened the backward and impoverished
"third world" conditions of the Philippines. The US and other foreign monopoly capitalists have
collaborated with such local exploiters as the big compradors,
landlords and the corrupt bureaucrats represented by Arroyo to
denationalize the economy and prevent its industrial development
through the so-called liberalization of trade and investments, the
privatization of public assets and anti-social deregulation at the
expense of the working people, women, children and the environment.
The Arroyo regime has misrepresented as "development" the
consumption-led and debt-ridden growth of the economy. It has used
domestic and foreign borrowing to finance and abet the growing trade
and budgetary deficits and to conjure the false illusion of economic
growth. It wastes public funds through overpriced and graft-ridden
infrastructure projects and the purely parasitic expenditures for the
military and bureaucracy. The Philippine economy remains dependent on the production of
agricultural and mineral raw materials, which are being exported at
greater volume but at lower prices. At the same time, agriculture has
become lopsided, as production of staple food is neglected and food
products are dumped on the Philippines from abroad under the policy of
trade liberalization. Thus, the country has become a net food importer.
The low value-added semi-manufacturing for re-export provides
little net income because of transfer pricing and the heavy amount of
imported components. The large-scale export of women and men (now more
than 10 per cent of the population) as overseas contract workers is the
result of the worsening underdevelopment and lack of job opportunities
in the Philippines. It has become the biggest source of foreign
exchange income although at great social cost to the country.
The Arroyo regime has deliberately raised the value of the
peso by grabbing and undervaluing the foreign exchange earnings of the
overseas contract workers, by increasing the foreign debt through
program and project loans and the sale of bonds in the commercial
market and by attracting portfolio investments, structured dollar loans
and Japanese yen in the carry trade. The national debt keeps on increasing because there is no
real development base for reducing the trade and budget deficits. The
attempt of the regime to increase revenues has dismally failed because
of the underdeveloped, bankrupt and depressed condition of the real
economy, the policy of trade liberalization and the unbridled
corruption that allows tax evasion and raids on the treasury. The
Arroyo regime has been auctioning off state assets to foreign vultures
in combination with local vultures who are cronies and close relatives
of the Arroyo couple.
What is in store for the Philippine economy in 2008? The
underdevelopment and chronic crisis of the Philippine economy make it
extremely vulnerable to the current financial crisis and recessionary
trend being generated globally from the US. These have started to have
a severely adverse impact on the Philippines. The Filipino people will
undergo unprecedented economic and social suffering in terms of rising
unemployment, decreasing real income, soaring prices of basic goods and
deteriorating social services.
The US and global demand for both the Philippine raw-material
exports and semi-manufactured re-exports will contract because of the
continuing industrial decline, reduced employment and recessionary
trend in all the imperialist countries. US economic growth is expected
to go down to less than two per cent from the usual level of around 3
per cent. The thirty OECD countries are expected to have an average
growth rate of less than 3 per cent from the usual level of more than 5
per cent.
The US consumer market has drastically contracted because of
the decline of regular employment and incomes as a result of the series
of attacks on the US working class. Under the piratical banner of
neoliberalism, the monopoly bourgeoisie has pushed down the wage level,
cut back the social benefits and eroded the democratic rights of the
workers. It has undermined the US consumer market and caused the crisis
of overproduction to recur.
And yet many of the workers were inveigled to engage in stock
speculation through easy credit and to let investment managers raid
their pension funds during the high-tech bubble in 1995-2000. The
bigger scam came when more workers and other people were drawn to far
easier credit for consumption during the housing bubble from 2001
onwards. In the wake of the ongoing mortgage meltdown, the American
consumers are without savings and are deeply indebted.
The mortgage meltdown has acquired global dimensions because
US mortgages were repackaged and sold as financial products under such
fancy names as "structured investment vehicles" and "asset-backed
securities" to foreign banks and investment houses. Since August this
year there has been an epidemic of write offs and write downs,
involving the evaporation of more than USD 400 billion. This is
expected to result in the tightening of international credit by USD two
trillion as federal and commercial banks become more prudent in
lending.
But the financial crisis generated globally by the US is not
only about the mortgage meltdown and the necessity of writing down or
writing off "asset-backed securities" by foreign banks. The US national
debt has risen so fast from the level of USD 5.7 trillion in 2001 to
USD 9.1 trillion at present. It is expected to rise to the level of USD
10 trillion before Bush steps down. The US has abused confidence in the
US dollar as the global currency . The US trade deficit has rapidly grown to the annual level of
more USD 850 billion because of the US industrial decline and
outsourcing of consumer goods, such as those produced in China, India
and Southeast Asia. The US budget deficit has also grown rapidly
because of the tax cuts to corporations and the wealthy and the
unbridled spending for the Pentagon and the wars of aggression. The
Pentagon budget has risen to the annual level of USD 600 billion and
the costs of the Iraq war have gone far beyond the officially admitted
level of USD 500 billion for "operations" and are already in the range
of USD one to two trillion if related costs are taken into account.
The abuse of international credit by the US to cover trade and
budget deficits has led to a rapid decline of the dollar and to
pressures for an international credit crunch. The dollar decline is
generating defensive responses from such big US creditors like Japan,
China and the oil producing countries. To play safe, they are gradually
reducing their dollar positions in favor of other currencies or a
basket of currencies. The financial crisis of the US is serious enough
to start undermining the standing of the US as the sole superpower in
economic and politico-military terms, as the main engine of global
economic growth and as the global market of last resort.
In 2008 the underdeveloped and semifeudal Philippine economy
will face serious problems in relation to the export of raw materials
and the re-export of low value added semimanufactures in a shrinking
global market as well as in relation to the securing of new loans and
selling bonds to service the accumulated debt and finance the import of
oil and other critically needed goods. The international credit
standing of the reactionary state will be further degraded as its
difficulties to repay the public debt and collect revenues become
obvious.
As the international reserves will decrease conspicuously, the
Arroyo regime will not be able to conjure the illusion of economic
growth and raise the value of the peso against the US dollar and other
major currencies. In the real economy of the Philippines, the working
people and middle social strata will be beset by intensified
exploitation, increased poverty and misery and the heavier weight of
oppression. The social discontent and people's resistance will further
spread and intensify. ###
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