About 15 years ago, I reviewed the income levels of the Philippine population with a significant amount of research and was shocked at the findings then. If I recall correctly, some 9-10% of the population then were classified as being part of the A/B/C socio-economic classification, whatever that really means. The rest of the population fell into the D and E category. Essentially, things were pretty bleak then. Fast forward to today, and using the government’s own comprehensive FIES (Family Income and Expenditure Survey) and latest survey of 2006, and the story has gotten even bleaker. I write this post simply to outline either facts, or with some basic analysis, my own estimates of where things are. It is always an interesting topic at dinner parties, gatherings, etc. since I find that most locals don’t have a very good understanding of the poverty levels and who is in what category, and for foreigners, it is almost always an eye-opener just how difficult the economic situation is for over 80-85 million people in the Philippines.
I have no idea who created this rating of one’s assets/income, but essentially I gather it is usually used for marketing and business purposes. It is important to note that it is NOT only based on income, but rather includes assets such as homes, vehicles, possessions, etc. Thus, at the “upper” levels say A and B, the individuals counted as part of that level are not only among the higher income generators, but they have assets as well. For those in the “lower” bands E, it is more likely that they not only have very low income levels, but typically will have few assets as well. If you read this blog post, it explains rather well how income levels are broken down in different classifications, and it is where I get the latest percentages I use as a jumping off point for this post. Essentially, based on Pulse Asia’s classifications, they estimate that categories “A/B/C” make up just the top 7% of all families in the Philippines, while another 67% fall into the “D” category, and 26% are in the “E” category. In 2006, it was estimated that there were roughly 17.4 million families total at an average of 5 people per family, totalling 87 million for the country as whole.
Marketman’s Running Survey
In the survey I am running (or if you read this later, survey that I ran), it seems some 40% of readers actually think the Philippines is POORER than it is, in other words, a fairly negative sentiment. Some 24% of you got it right, with roughly 86-88% of the families earning less than PHP25,000 per month for a family of 5. But approximately 36% of you were varying degrees of being overly optimistic, and believed that many more families earned more than they actually do. Okay, so hold this thought for a moment. Roughly 87% of all families in the Philippines, representing 75.7 million people, are living on less than PHP5,000 (USD110) per month per person on average in income.
How much does it take to lead a decent, but probably “lower-middle class” existence? This is just my personal opinion, but for a family of 5, including several younger children, this is MY ESTIMATE of what is needed to lead a lower middle-class existence:
Food and related expenses (5 people x 3 meals a day x 30 days x P50) = P22,500
Shelter (either rent or amortization and upkeep and all utilities of an owned property) = P10,000
Transport/Telecoms (commute to work, no car, possibly motorcycle, load, phones) = P4,000
Education (1 out of 3 kids in modest private school, others in public school, uniforms, books, etc.) = P5,000
Clothing, Personal Hygiene, Other Expenses = P3,000
Medical/Health/Emergency Expenses = P2,000
Other miscellaneous Expenses = P3,000
TOTAL MONTHLY EXPENSES = P50,000 for a family of 5.
Note that this is likely a family in the city, rather than a provincial domicile, but the breakdown is illustrative. Note that there is little in the budget for eating out, a movie, a death in the family, furniture, equipment, internet, cable, etc. This is a pretty sparse existence by any measure, whether local context or international definition of a “middle class” and the total is still PHP50,000 per month. So what percentage would a family like this be in the scheme of things?
Income Level Breakdown
Top 1% of population or roughly 174,000 families of five people made an average of P122,000 per month or higher. The TOP 1%! If you look at the roughly estimated top 8,500 families, I figure they make roughly P500,000-600,000 per month in income on average. In other words, if your annual income for a family of 5 is roughly PHP6-7 million, then you can say you are in the Top 99.95% of income earners in the Philippines.
The Top 10% or roughly 1.74 million families of five made an average monthly income roughly PHP55,000 per month. However, this data is skewed due to the real big income earners in the group, and if you did indeed make P50,000 or so a month for a family of 5, that would actually place you roughly in the top 6-7% of the entire nation. In other words, a whopping 93% of families or so LIVE BELOW the PHP50,000 “lower-middle class” budget I outlined above. This also, by the way, translates into the top 7% being the A/B/C. And everything below that is D and E. If you were a single income earner, and you did NOT support anyone else, and you lived in the city and made say PHP20,000 per month say at a call center or as a bank teller or executive secretary, you would be solidly a B+/A- on the socioeconomic scale. I just find that amazing because I think if you asked these folks if they felt they were in the top 3-4% income earners in the country, they would vehemently disagree. But I am a numbers guy, so they better believe it…
Just to keep going, the 10.01-20th percentile earns an average of P24,333 per family of 5 per month.
20.01-30th percentile earned an average of P17,083 per family of 5 per month.
30.01-40th percentile earned an average of P13,000 per family of 5 per month. This is roughly just above minimum wage level. So if you know someone who is the sole breadwinner and is earning at minimum wage in Manila, with just a few other benefits, and supports a family of 5, then they could proudly (?) say they were in the top 30-40% of the Philippine population in terms of income.
Finally, at the bottom 90.01-100th percentile, families of 5 earned a simply shocking P2,667 per month or just P18 per person per day, barely enough 3 packs of instant noodles, or rice and one simple viand for the entire day (with no money for ANYTHING else).
What do I take away from this data? And I am intentionally removing any political color or commentary about specific candidates, rather trying to stick to the broader implications…
1. As a nation, income wise, we are incredibly poor by any decent measure. Not the poorest in the world, in fact, ranked 121 out of 180 countries tracked by the IMF in 2009, based on nominal GDP per capita. Surprisingly, we are ranked lower than Iraq, Indonesia and Bhutan and are just slightly ahead of Bolivia, Guyana, Moldova and Sudan. More importantly, perhaps, is that our income levels and relative ranking among nations have declined over the past 50-60 years, in a downward spiral with such disastrous consequences. What used to be hailed as the the second or third richest country on the Pacific Rim 50 years ago is now a so far behind Japan, Singapore, Hong Kong, South Korea, Malaysia, Thailand, China(!) and Indonesia. And nipping at our heels are Vietnam (a socialist state closed to the world for decades!), Laos and Cambodia. And while some would argue income from 4+ million OFW’s are not counted in GDP, I suspect without the over $12 billion in funds sent back to families in the Philippines, the FIES data would sink further south…
2. Most readers of this blog are probably in the top 1 – 3 % income levels in the country. I say that because when one makes a comment about elitism, I think it is useful to realize people are quibbling about a relatively small spread of income earners. If you have access to a computer, were educated to read and speak in English, and have an interest in food or an occasional rant, you are probably making more than you think, relative to rest of the population. I realize there are differences between billionaires and mere millionaires in the top 1/10th of 1 percent, but get real, the issue is really how to bring the bottom 97% or a portion of them up further on the income side.
3. Because of the magnitude of the problem, with some 76 million people earning P5,000 per person on average per month or LESS, it is SIMPLY IMPOSSIBLE WITHIN THE NEXT 12 YEARS to eradicate poverty completely. IMPOSSIBLE. And anyone who says they will do it is LYING, period. For the sake of illustration, let’s just say for a moment, that you increased the income levels of some 90 million people (including population growth) by P10,000 per month on average just to get them to a more decent level of existence. That would mean 10.8 TRILLION more in annual income. That is equivalent to 3.5 times the CURRENT TOTAL INCOME generated in the Philippines. Ergo, this is simply impossible, or at best, highly improbable over the next 12 years. So the reality is that we need to stay focused FIRST on building or expanding the middle class, from say the 95th percentile down to say the 80th percentile. Unfortunately, that leaves out 80% of the population. This isn’t a shocking idea. Or a novel one. It is a realistic and practical one. It is the path South Korea took. It is the path China took, racking up 8-10% annual GDP growth for 20 years in a row or so and yet a huge proportion of their population is still poor, it is the path India is taking, as well. It won’t sit well with the general voting public, but it is likely the most REALISTIC progression of things.
4. To expand that middle class, government and business will have to foster a climate that ENCOURAGES investment, which by definition also means we MUST attract capital from abroad, because we can’t generate enough locally. To do that, we need to do a whole host of things such as curbing corruption, improving infrastructure (telecoms, electricity, roads, water, etc.), encouraging real competition, fixing the judiciary, improve education, etc. etc. etc. And we must do this while we have NO MONEY to pursue the programs, or at least little money, since we are currently incurring a P300B+ deficit. As a corollary to this, the bottom 80% of the population has to be given basic food, shelter and medical care, which frankly, appears to be impossible to do, numbers wise. And personally, I think there is no choice but to seriously curb population, at almost ALL income levels. Anyone who says we DON’T have a population problem is simply absurd, in my opinion. It will be decades at least before massive improvements in income will even begin to filter down to the poorest segments of society, what more if population growth is unbridled…
5. For 70-80% of the voting population who are poor or very poor, their immediate concern is how to get enough to eat. How to have access to clean water. A roof over their head. Some education and medical care. But really, what they are thinking about first and foremost is simply getting enough calories to survive. As an aside, now I also know why noontime tv shows are what they are… So you can totally see why the Presidential elections are NOT a major concern for them right now. They will vote, because they have traditionally voted and it is a wonderful trait, but they will not likely dissect the issues as I have tried to do here or columnists will do ad nauseam over the next 4-5 weeks before election day. But having said that, this election is CRITICAL. It will determine to a great degree who will have a chance to take on the challenges facing all of us. It will determine whether we see more of the same and a further decline for the nation, or a bottoming out and hopefully noticeable improvements over the years to come. Whoever wins the election will have a tremendous set of tasks ahead of them.
6. Finally, as a sad observation, I can now fully appreciate why so many Filipinos are “abandoning ship”, heading to greener pastures either for temporary work contracts or to emigrate permanently. I believe we are losing a huge percentage of our potential “middle class” with educated, driven, hard-working folks opting to seek their fortunes/lives elsewhere on the planet. I absolutely cannot blame them one iota for abandoning their home country and providing incredible productivity and income in their new adopted homes. I lament the fact that this is happening, but I can completely understand why this is so. And 60% of the readers of this blog are predominantly Filipinos based abroad.
ARRGH. I have probably gone on far too long. If you are reading this line, kudos to you for wading through the entire post. As you can see, the country faces a real uphill climb. And we all need to do our part to help. Let me end it there. :)
For more on the FIES surveys, check out this link.
Back to regular food programming in a few days, I am traveling in the meantime and will be checking comments, but since I have no laptop, will not be doing too many posts… Thanks.
You didn’t go on too long, MM. I actually want to read more of what you have to say. If only our politics were centered on issues such as these, what a difference it would make! It is indeed shocking to realize that I am so far up in this socio-economic scale. On a more depressing note, it does make me wonder, with the proliferation of bars, beerhouses, and videoke bars al over the city, where do people get money to spend on these establishments? A cut from their children’s education perhaps? I’ve seen one too many minimum wage earners with families to support get hooked on getting drunk on a regular basis, I really don’t know how their families survive.
OT but interesting nonetheless, I’ve forgotten where I read a piece where someone lamented that we Filipinos love to point out that we were second only to Japan and ahead of South Korea in the 50’s to illustrate how rich we were, while south Koreans do the same to illustrate how POOR they were! Talk about a skewed view of things…
Hi MM – thank you for a very well written, coherent and detailed piece. I have not read an article on this theme that delivers the argument with the same sense of urgency or clarity you deliver in any of the main newspapers here in years. Which is a bit telling. The falling off of the Global economic and political radar of the Philippines post World War 2 is a tragic story. It would be good (idealistic?) to think that whoever wins the election will make a mark in the sand and say enough is enough we have to be better than this.
chrisb, I didn’t delve into it in this post but when I looked at what the D/E segments spend on, the poorest segments, spend a noticeable percentage on cigarettes/liquor more than education or other essentials, if I am not mistaken. But food was still top of the list. But yes, it is a depressing picture. And I could go on for hours more but that’s better done at a dining table, not in a post. :)
Adam, thanks for that. I wrote this in 1.5 hours, wanting to post before I leave on a business trip. I could write several of these in a few days time, and I too lament that I read so little along these lines in the mainstream press as well. Coming up with practical and realistic ideas to improve things has never really been a problem, it’s having the leaders and political will to get them done that gets in the way. I have provided ideas to Presidential candidates in two previous elections, one where the candidate won, and another where he lost. I did it simply because I hoped they would run with some of the ideas…not many did. But I continue to hope for the better. I would rather see someone with balls implement even just a few of the ideas raised to signal we are now on a new path… But as it says on one of my favorite t-shirts, a gift from a good friend… “Choose Frustration Over Indifference” and the day I am totally indifferent, I will sadly probably be packing my bags and headed elsewhere.
Thank you for taking the time to deal with this and inform us all. Most of us I think, really do feel that The Philippines face an insurmountable mountain of problems. Income disparity is one among them.
Thank you for this reminder again.
I am glad you touched on overpopulation in point #4. For sometime, people I know, and including myself, have erroneously believed that corruption is the main issue behind the Philippines’s alarming spiral downwards. But that was before I saw the numbers.
I appreciate this post in the sense that it really drills down the country’s poverty issue in real numbers. I am truly shocked the country is even ranked lower than Iraq, Sudan or Moldova.
As the NY Times always says of bestsellers…”A real page turner!”
If I really wanted heartbreaking drama—this is it the ultimate, Marketman.
I am lost for words…
I live on Leyte where I help with a charity. The population growth here is staggering. We’ll go to poor barangays or barrios and see a family with 8+ children, neither parent employed, kids are emaciated, and yet the parents still manage to get cigarettes and tuba (coconut sap wine).
If the Philippines doesn’t get a handle on its exploding population, there is nothing that can be done. And, honestly, this means that community leaders need to start up to the religious leaders and simply say “condoms are a must”.
As it stands now, especially with the Catholic Bishops Council saying that condoms lead to promiscuity and immorality, it’s game over for the PI. What I would say to the bishops is simply this: if you think that condoms lead to more sex, go look at the number of children. The people are having rampant sex already.
I’m sorry, when a family can’t afford to feed even a few children, the 9th child is NOT a blessing. The child and its siblings suffer, starve, have a harsh life.
The Bible says we should be fruitful and multiply. Well, seriously … TAPOS NA! We did it. What’s next?
You are extremely adept at numbers. You should have been a candidate, wise
and honest. I agree with you regarding overpopulation and poverty . The future is bleak no matter how you dice it.There is no way, I can earn $20,000 monthly income had I stayed.
You have done us a great favor . Please continue to enlighten us.
MM…your post is actually kinda bitin!
and yeah, agree with James…it has always been a wonder seeing a financially struggling couple having more kids than they can ever afford to feed…it’s like they don’t think what they will feed their offspring as long as they have sex…and that the CBCP is again forgetting the law..separation of church and state…their opinion shouldn’t sway our lawmakers for fear of not getting their blessing come election time! It’s already downright harrowing seeing tv documentaries of emaciated children in our country, but what’s more daunting is the fact that the parents don’t do anything beyond extraordinary to better their situation!
and yes I know I belong to the A/B/C socio-economic group and shouldn’t blame the poor families their plight, but I know several people who have succeeded above and beyond poverty, so I know it can be done!
my mom’s parents are great examples,they never attended high school (WWII broke out),and yet they have succeeded in sending all 5 children to college
the only thing here is, I really hope and pray,people start to think hard and deep which politicians will start the reform our country needs
oh great, just when i think everything’s looking up, here’s another depressing thought before i go to sleep. it can’t all be that bleak and gloomy. let’s believe in our country (and our countrymen) a little bit more okay?
some additional reading.
As one of your readers based abroad, I too, feel bad about my countrymen leaving their homes to earn their keep in foreign lands. I never saw myself in a similar situation 15 years later after paying my taxes hoping for a better future.
It didn’t get any better by any measure, health, education, security, finance, you name it. Frustrated, yes, because we were already on a good footing decades ago and could have done better than our neighbor countries but still blew it.
Indifferent, no, how can one just turn away?
I have never ached for my country like I do now and I have realized how jaded I had become only after waking up in a different place among different people.
It is a relief knowing people like you understand why Filipinos leave home.
If only we don’t have to..
Hoping to see you all in better times ahead.
Your article explains why 25% of my high school class of 1959 have chosen to settle overseas. It is also interesting that virtu ally all of the top students emigrated. At the recent 50-year reunion, I noticed that everyone who lived overseas had a comfortable retirement or current job, while there were some economic casualties among those who stayed. However among those who stayed, there were some extremely successful people, far more afluent than any of those who went oversea, beyond imagination.
I think, on balance, I made the right decision for my family, in leaving for Australia.
I came across a book analysing the economic growth of South Korea, and it mentioned that in the 50s the Philippine economy was considered admirable by some Korean economists.
How have we lost our way?
I agree with Chrisb and Denise — this post is NOT too long and yes I feel it’s BITIN pa nga eh. Thank you for sharing the facts and for taking the time to write this very educational post.
i totally agree with this…if you said, MM, that for a family of 5 you need 50k, then you’ll probably need around 20k for two people per month (that is if you only eat php50/meal). my partner and i are (thank heavens) well above this mark but we’re feeling only a little bit comfortable with our finances…basic stuff and just a few luxuries here and there. we work our butts off but we don’t even have the guts to get a car or finance a better home because we still feel that we’re not earning enough.
and after tallying our incomes/expenses last year, we found that we’re around 35k poorer in 2009 than we were in 2008. and yet we both got salary increases in 2009!
Thank you for writing this post, MM. My parents emigrated to the US right after I graduated from high school. While being very proud to be Filipinos, they saw the writing on the wall, so to speak, and knew that if there was any chance for their children to succeed it would be in another country. This plight really saddens me and makes me appreciate all the sacrifices my parents made to ensure my (and my siblings’) success.
thank you, MM. this is very well-written and insightful, and you made is all understandable to the ordinary reader. i agree, it is crucial that the next President knows and is firm about his priority programs. i believe, too, that government cannot do it alone, so that a lot of NGO/private sector support is in oroder, no matter how small, in varying methods, as long as all efforts head towards the same direction. baby steps, giant steps..they all will make a difference.
Thank you for the explanation. How is it that such logic and common sense is lost on all the politicos. I bet that if you have all would-be public officials read this article, they will all be scratching their heads in confusion. They have simply no idea how critical our country’s health is. Working overseas is a constant thought of mine, though I am still here hoping for a better tomorrow. For 50K a month, you have to be in an executive position at least. (or so I think).
Hoping you write more articles like this MM!
Thanks for this entry, MM. Your numbers and info clearly illustrates the no. 1 problem of the phils is over population. I was watching a talk show a couple of nights ago where the guest was dr. e cabral of the DOH. What she said that stuck in my mind and really was hair raising for me was that the holding population of the phils. is at 120+M. this is the max population that the phils can hold and feed on its own resources. at the present, the phil population is at 85+M and fast increasing by the minute. can you imagine what life would be like in the phils after 10 or less years from today? Pilipinas, tumayo ka na at kumilos. matagal ka nang gising, tama na ang muni-muni at diskusyon ng mga usaping walang kwenta at walang direksyon. Gusto mo yatang mamatay ng dilat and mga mata sa gutom. as long as the church is meddling with the affairs of the state, the phils cannot move forward. God help us all.
Actually, the family of 5 will need to earn much more than P50,000 since the expenses are made using after-tax income. At 30% income tax, the family has to earn at least P70,000 pre-tax. For a two-income family, that’s P35,000/head. With our country losing so many manufacturing business, I wonder how many people can our remaining industries & businesses pay that?
Also, I find our country imposes too much taxes. Between the 30% income tax and EVAT, the government must actually take more than 50% of the citizen’s income. What’s left will really just go to the basics.
On population control…. I met an ex-Barangay Captain of Sampaloc who ran a program offering free condoms, free vasectomies & free ligation back the 80’s. He said most of the poor don’t take it. The men give the condoms to their kids to use a toys. The reason they don’t use it is because it reduces their “pleasure”.
I got the creeps when I heard this reasoning. So absolutely selfish & self-centered. No concern that he might produce children nor thought of the responsibilities that go along with it! If a potential parent (and since they don’t use a condom, they will surely become a parent many times over) will not accept some sacrifice of his pleasure then what kind of values will he teach his children?!
I hope things are different now than in the 80s but given the population growth, I would suspect the thinking is still about the same.
Interestingly, this experience was the tipping point for the ex-barangay captain. He decided to immigrate to the US soon after.
Wow. That is an exceptionally written eye opener, MM. I know we are financially handicapped as a nation, but I have not realized the scope in terms of your numbers. I know a lot of domestic helpers here and their salaries per month range from S$350-450, depending on length of service. Ofcourse they do not take home the entire amount as employers deduct some miscellaneous fees, ‘vale’, and their personal expenses; however, most of them remit Php5-6K a month to their families. Which is part of the 87% of your statistics.
I am so sorry leaving the Philippines, and had a very tough time adjusting to living abroad, BUT I have my children’s future to consider and they are better off- in terms of environment, education, medical-wise – to be here now. Maybe in 20 years, when the kids are grown, my husband and I will return home.
Great, great post MM! I have never realized how fortunate my family is. The numbers you gave are just so disheartening. Henceforth, hubby and I will actively campaign for Noynoy and Mar so in our own little way we can influence the elections. Also, those belonging to the 1-3% should give more in charity to somehow bridge the gap.
Thank you very much for this article MM and I applaud you!
There are two points for me that really are the most important to remember. The first is that the Philippines can’t go from poor to middle class in a few years. This kind of change really is something we have to work continuously for over time. I think you could really drill down into this and see how we are not just poor materially but also in mindset.
Secondly, we really have a population and family planning problem. That is why for me, a candidate’s stand on family planning is a make or break for me in deciding if that person is one I will vote for.
Wow. Well-written, detailed and clear post MM! Now, I understand why a lot of people are leaving the country and opting to live as second-class citizens abroad.
MM, did you account for remittances? Are OFWs still part of the top percentiles?–and any investments made from their remittances haven’t helped, even a little bit?
overpopulation and lack of good basic education. chicken and egg story.
From a perspective we often don’t talk about:
“It is disturbing that the policy errors that have led to our present state are hardly mentioned in the presidential debates. It is unfortunate that we are not taking advantage of the current international economic crisis that has dragged down our local economy to debate the wisdom of the policies of globalization and liberalization that have brought us to this impasse. Yes, the issues of corruption, management experience, and bureaucratic reform that dominate these debates are vital, but unless the winning team has the courage to reverse 30 years of failed neoliberal economic policies, the country will remain in the economic doldrums, unable to take off, with poverty possibly rising to the point of no return.”
Why fighting corruption is not enough
Thanks for the post MM. I wonder what kind of WORLD we’ll be in come 20 years from now. Would you believe Madame President’s birthday wish was that our country will reach FIRST WORLD status in 20 years(The Inquirer.net 4/0610). I say a family of 5 will have to dig deeper into their pockets by that time.
well-written sobering post MM. i didn’t realize how much of the population is in the D/E levels. instead of feeling disheartened, i hope it would motivate more people to move to action. another good read is the ADB document Poverty in the Philippines: Causes, Constraints and Opportunities found here:
MM, it was well written…a painful truth though.
This is a very good read, and a really enlightening one. It’s very inspiring for those of us who are still very patriotic and would want to see change. You’re right it is impossible to eradicate poverty within the next 12 years. Not one man can do it, but if we were to stand together as a nation, I believe there is still hope. Maybe not within the next 12 years, but sometime after. Some of us does not trust the government and corruption and that may hinder us from donating anything that we may feel like we need to give, but there are a lot of NGO’s and reliable Foundations out there, that still makes a difference.
Connie C, I completely disagree that our path of “globalization” etc. is the wrong one. Even China, Vietnam and India are on it. I am not a fan of Walden Bello’s point of view on this issue. But then, I am a capitalist. :)
Talking about being a capitalist…The Philippines, has gone Galt years ago, sending off its most advantaged youths and its most promising adults to foreign countries, because working and living in it is fairly close to impossible. Ok, I’m liberally skewing the Galt movement, so that it fits what is happening in PI. China’s economic boom started when they opened up to free trade and started a capitalist economic reform, their politics on the other hand can be left up to debate.
Nice post MM! I think the issue on population needs to addressed immediately by whoever it is that will be (un)fortunate enough take the reigns from GMA. But will he be strong willed enough to take on the Catholic Church and other moralists? I think we have been living in the dark ages long enough with regards to the population issue.
Thank you for your post, MM. I agree with what you said, ” Anyone who says we DONâ€™T have a population problem is simply absurd, in my opinion.” It’s so true and sadly, low income families are the ones with lots of children!
thanks mm for this post. it’s striked me harder just now that my house staff is only earning half a fraction of what we make as a family of three. i have always wondered how can a meager salary provide for a family of 5… and many times when i think of their plight, i know that i can only do so much to change their lives. i mean, i can be very generous to them but i know i cant reverse their present socio-economic conditions instantly.
A very insightful post indeed. It is just sad that poverty in our country is sometimes viewed as just an issue and a fodder for political platforms and discussions. Poverty is a painful reality and I admit that most of the time I avert my eyes or even forget to give my share to those in need. I am now working in a strange country away from my wife because my income back home was never enough. I am working 6 days a week with only Skype, Facebook, Marketmanila, and all other possibly Pinoy stuff online to tether me back home. I decided to work away so that I can see some of my dreams come into fruition because when I was still back home, I was killing more dreams than working on them being real.
Being away is a painful experience but this is a far easier sacrifice compared to what most Filipino families who do not have anything to eat endure daily and like most of us here I believe that our country, with right leadership, will soon be what was once a great country.
Sir this post was a gift. Thank you very much!!!!!!1
Good post MM. Good that you pointed out how Korea did it.
We also need to improve our love for our own country like the Koreans did.
If the Filipino people truly love their country, they would not let any Arroyo like candidates run any part of our country.
They are like the Mafias, just because they’re feeding their family, their friends or kababayans or are generous and helpful to all of them does not mean that the money spent on all those are ok. It is stolen, like how the mafias steal and rob others.
If my own father steal lots of money to give me a good life, education etc.. I would not take it because if I did, I will be a mafia too.
I look at the Arroyos picture, man they look evil, GMA smile is so evil. She is drunk, intoxicated, with so much lust for money and power.
Only blind, insensitive people could not see and feel how unaffected the Arroyos are to what happened in Maguindanao. She wasn’t appalled and as if the ugliest known massacre didn’t happen. the same goes for those working around her. I would quit, resign and go on retreat and ask for forgiveness.
Gloria Punggok Macapagal Arroyo is a shame to her father. I wish Mr. Diosdado has given her more love, though she has the face only a mother could love. Mr. Miguel Arroyo married her for power and money as he is one hungry vulture too. Why would a good looking guy marry an ugly woman. She sure doesn’t have a good heart and a pretty face. Go figure people!
To all GMA’s cabalen, shame on all of you. Just because she builds nice stuff in your area, it doesn’t make her stealing ok. She steals from others. She treats the rest of the Philippines like a step child. (because she wasn’t given enough love when she was a child, go ask around)
How can you be proud of a thief, a liar. People around her say she works hard all the time. Sure, for her own benefits. She is evil, and evil works in evil ways.
MM, there’s got to be a better way of economic development other than the one we are pursuing. China and Vietnam have mixed economies with the egalitarianism of a socialist government (albeit suppressing their labor force and political dissent, China especially) and the dynamism of the “capitalist” system in the cities were they are posting record growth but then, also beginning to show wide disparities in income. These countries are also not hostage as many deeply indebted countries like the Philippines are to the structural adjustment policies of WB/IMF which have not alleviated poverty in the more than 50 years of their existence.
We have a long way to go but the discussion among our policy makers in regard to a new paradigm of development ( and not to label it as socialist or capitalist) is in order, I feel.
It would also help to attract investors if we Filipinos learn to appreciate and be proud of our country most of the time instead of always highlighting all the negative things. I’m not saying that we don’t have problems. It’s just that if I were a foreigner, a country, where the gov’t is always being criticized by its own citizens, does not look like a good place for me to invest in.
I met a Singaporean who always joined her husband in his business trips to the Philippines. She truly liked the country and was even encouraging fellow Singaporeans to visit. But with all the negative publicity, she said most of her friends do not want to come here.
I am in no way a numbers person, but this post, I understood. Great explaining MM. You’ld make a good university professor.
@ Lava Bien I think those statements about GMA’s looks are rude, crude and uncalled for.
Thank you for this very enlightening matter. I hope our future politicians can probably- with the premise that these politicians enter politics to help the madlang people: they would probably:donate their salary to the people and stop corruption once and for all.
about point#4, from a business standpoint, cheap imports are killing us. just imagine the cheap goods being sold in divisoria, 168 mall etc. people are going gaga buying cheap goods, but thinking about it in the long run, medium scale businesses suffer immensely because of this… businesses are closing left and right, and this translates to jobs lost for many, etc etc… domino effect so to speak. it is common knowledge that the customs is being “controlled” by top gov’t honchos, (ok, i won’t say who in particular)… it is in GMA’s time that it has become so “garapal”, (persistent rumors say that in every shipment that comes in, a certain percentage is given to these top gov’t officials, that’s why they turn a blind eye in regulating these imports, as the more shipments come in, the more they can “collect”) that’s why cheap imports flood our market. while some may say that competition helps our local industries improve, what’s happening is the total opposite… cheap goods from china are being brought in by the thousands of containers per month, flooding our market, while local products are being outsold in the market… thus killing many businesses.
one more problem is the BIR. revenue collectors are living lavish lives, while milking businessmen dry. as a taxpayer, it hurts our pockets to shell out taxes from our meager take home pay, and yet we don’t see our taxes put to work
doing clean business here has become so hard. if let’s say you’re operating a small store, and you’re religiously paying VAT for every purchase and sale. while your competitor next door could offer cheaper prices to customers because he doesn’t pay or under-declares everything to escape VAT. this scenario is more often than not experienced by too many a businessman. although not explicitly being talked about, this is common practice, translating to lesser revenues for the gov’t
we need a clean leader to spearhead us to the right direction. let’s hope that may 10 will be the start of something good for all
MM, such an insightful post! truly an eye-opener
Excellent post. May I ask you Marketman how the vast Philippine underground economy impacts the above numbers ?
Have you ever considered running for some kind of political office?
Thank you for excellent most insightful post, MM. Where to start, ano? family planning, education – that would be a good start. thank you too, dear readers, for all the brainpower and heart shared in this conversation.
This made me cry. :( I love the Philippines so much. It breaks my heart. You educate me in so many ways MM. you’re my favorite blog.
Hi MM, Happy Easter!
I agree with you that a big population, especially if poor, is a major problem. But I disagree that its control ought to be the first focus to improve the wealth of the county.
This is the impression some readers seem to have taken out from your post. I am sure as a ‘capitalist’ that is not your priority too. But I will return to this later.
Rich countries have a population problem too! Western European countries’ and New Zealand’s fertility rate have gone down so much that – without immigraton – they will not have enough market or enough young people to support the social programs for their rapidly aging population in the near future. (Russia is in a specially bad way with vodka and illness actually reducing the population by 40% in a few decades.)
The key point I wish to make is that, even without active population control measures, countries who become rich suffer a decline in fertility rates. Maybe the couple becomes busier and having more children becomes more a liability than the assets they were in a farming situation.
Note that this is fact even if we compare urban versus rural communities in the Philippines. With basic economic reasoning, Filipino couples in Manila decide to have fewer children, on average, than their counterparts in the barrios. Likewise, emigrant Filipino families also have fewer children, living in a more economically demanding milieu overseas, than their counterparts in the home barrios. Couples will make the decision to reduce fertility, without prompting, if it makes sense for them to do so economically from being in business or generate savings for their own future.
Another point I wish to make is a comparison between China and India today. Ceteris paribus, i.e., other conditions remaining the same, India is forecast to overtake China in wealth as a total economy by 2030 – 2050 because the successful one-child policy in China in earlier decades will reduce the size of the local market in that period despite big increases in per capita income.
Literally, China will become old before they become truly rich or first world given the demographic data. India, if it is able to find productive work for the young from the fertility rate – the so called demographic dividend – and if it is able to successfully absorb the rural population (still 67% today compared to the Philippines 40+%) into a productive one, will become richer than China.
So, while mathematically, a smaller divisor will result into a higher quotient, on average, or a larger per capita income the net result of population control today is a smaller total economy in the future.
There are more important practical problems on the ground for the total economy (and not just for the already rich who are the main beneficiary of a population control program; as with, paradoxically, a first priority program against corruption.)
The China story above is cautionary. Population reduction, from lower fertility rates, as automatic result of nations becomes richer is a documented historical fact. (Even the U.S., without immigration, would have a very slowly growing total population without the energy and dynamism of the new immigrants.)
For me, instead of population control as focus, the challenging problem is how to open up the economy for more opportunities and free up the energies of the people so that, because it makes sense, they prefer to try their luck and engage their efforts at home.
I see the continuous migration as a symptom of other problems here; the solution may take strong political will as below. Unfortunately, all candidates seem to be comfortable with the policy of ‘exporting the poor and unempowered’ to take advantage of the remittances that ensue instead of changing policies to make use of such exported talent, energy and strength.
Historically, it does not need to have all the people take the lead here. It may take even just a handful of true innovators and entrepreneurs instead of the license magnates and rentier tycoons that seem to comprise many of our traditional business leaders.
The business environment here seem to cause a degeneration. For example, MVP was very entrepreneurial coming back from Hongkong in the late 1980s but has since gunned for with double barrels for new investments with franchises in toll roads, water systems and mass media. Of course, PLDT and Smart remain innovative and, hospitals and healthcare, is work in progress.
The Ayalas also innovate with telcos, green real estate, and phone banking in microfinance together with the traditional businesses.
Aargh, as you say, I’ve gone on too long. But a final word on political will. in 1978, Deng Xiaoping decided to discard many of the traditional tenets of communism – and go against the recently dead Mao – to free up the energy of the Chinese people. By 1992, results were already in evidence. Now the benefits of such change is very clearly visible. We do not need to reinvent anything, we just need to follow the example of others.
Definitely, focusing on population control first is the wrong priority. We are better off in setting up policies to open up the economy and to use the energy of everyday Filipinos (by inviting more competition to the cozy rentiers, for example) that they exhibit overseas all the time.
I’d like to share this link from Brad Delong, the linked articles are relevant to ConnieC and MM discussion.
The relevant paragraph is below but I suggest reading the links,
Michael Kremer convinced me the answer was “yes.” Now Dani Rodrik weighs in:
Dani Rodrik’s weblog: Does China make it harder for other developing countries to make it?: Yes, according to FT’s Alan Beattie. He writes in today’s FT:
Being a developing country used to be easy. You followed leaders – Japan, Hong Kong, Taiwan, South Korea – up a well-trodden ladder from agriculture through manufacturing to services. Starting with tilling the soil, you moved on to turning out T-shirts, then toys, then tractors, then television sets, and ended up trading Treasuries.
The rise of China has made that less straightforward. Not only is the first rung harder to reach, thanks to the hundreds of millions of rural migrants to Chinese cities still willing to work for low wages stitching garments, but also exports of goods from China’s coastal industrial fringe are rapidly becoming more sophisticated, threatening those halfway or more up the ladder. While the shoemakers of Italy and the steelmakers of Pennsylvania may complain loudly about Chinese competition, those with more to worry about are middle-income Asian countries geographically and economically close to the Middle Kingdom. So what is a poor developing nation to do?
There are two schools on thought on this, as Beattie notes. One thinks that government cannot possibly do much and they better get out of the way, after taking care of the usual list of fundamentals of course:
For countries such as the Philippines, without a big arsenal for public investment, policy recommendations from most business people for competing with China involve no magic elixir. Governments should improve logistics, infrastructure, the business climate and education; try, possibly, to spot specialities emerging and support them, but otherwise get out of the way. They warn against governments crashing into the market having decided what the economy is likely to be good at and then promoting it at all costs.
Giancarlo, yes, I completely agree that China is a hard act to follow. And for the most part, we haven’t even tried. Our manufacturing sector is weak and we attract little foreign investment (relatively) for most areas of manufacturing. Likewise we have lost our edge on such things as furniture and crafts except at say the higher design end. Instead, we have grown services, and provide labor to the world. I suppose there are still lots of areas that we can expand in, but will need serious thought and investments in education including language skills, possibly some agricultural segments, tourism, etc. etc. It’s all such a complex amalgamated problem, but there are solutions, albeit complicated I am sure.
On another thought process overall, I would argue that the peso is incredibly overvalued, and if it were say at P60-70 to the dollar, it might counterintuitively be better for the economy in the long run. But then we would have to worry about a HUGE foreign debt that is denominated in U.S. dollars for the most part…
Marvin, I agree with many of your thoughts, and I don’t think population is the only priority, I just stated that I thought anyone who thought it wasn’t important was absurd. As for the current set of presidential candidates, there are several who have stated publicly that population was not a problem, and I would personally strongly disagree with that. There are few, if any notable examples of countries with population densities such as our own that were able to pull out of the econoomic doldrums without a serious effort to curb population growth. China did it, Indonesia did it, and I think even India slowed its population growth over the past 2-3 decades, in tandem with other efforts to help improve their economies.
Here are the annual population growth rates of population (including migration) from this website:
Global Rank, Population Growth Rate, Country
62 1,96% Philippines
85 1.55% India
106 1.29% Bangladesh
119 1.14% Indonesia
129 0.98% Vietnam
149 0.66% China
Thanks. I don’t feel bad saying all those to somebody who doesn’t feel bad about what she and her family does. Pangit na nga pangit pa ang gawain. Saying all these ain’t a crime, what her family does is. Maybe I’ll feel bad and say sorry to her later. Sya muna, to our people.
Id’ say go back to farming people, especially those who are from the country side. We are raising kids who idolize money, fame and power. I wish we could teach our youth to be more productive without the glamour of the corporate environment.
Kids, learn how to be a smart farmer (a business man and entrepreneur) or do something with your hands other than pressing and pushing videogame buttons and keys. For the adults who can teach extra skills to our youth, please do. We need more sane mentors.
Giancarlo, yes, we simply cannot follow what China is doing. We can’t in many ways as MM has pointed out.
When everybody tries to do the same thing, then it gets to a saturation point where one asks, who will be the market? It is akin to the new establishment that becomes successful only to be imitated by many others and pretty soon nobody makes it.
We have seen the failures of centralized socialist economies and the rapaciousness of capitalism with its booms and great busts ( the Great Depression and what we are currently experiencing). Perhaps it is time to get out of the traditional neoliberal thinking and consider alternatives geared more towards an internal market and self sufficiency. Perhaps it will be baby strides in a poor country like the Philippines but it will be a start in a new direction.
Proponents of the deglobalization paradigm assert that a “one size fits all” model like neoliberalism or centralized bureaucratic socialism is dysfunctional and destabilizing and diversity as in nature should be expected and encouraged. The alternative path will depend on the â€œvalues, rhythms, and strategic choices of each societyâ€. This thinking is not so new as John Maynard Keynes said , “I sympathizeâ€¦with those who would minimize rather than with those who would maximize economic entanglement between nations. Ideas, knowledge, art, hospitality, travel â€” these are the things which should of their nature be international. But let goods be homespun whenever it is reasonably and conveniently possible; and, above all, let finance be primarily national.”
We all want development, but development for whom? Hopefully the rising tide will lift all boats, not just the luxury liners.
magic word: EDUCATION!
voter, slum child, politician… everybody needs decent education!
the more you are educated, the more you can take matters into your hands…
never rely on others (including your local politicians) to simply lift you out of poverty…
even if we had the top 100 politcians in the world, it wouldn’t be enough to create an economical wonder within the next two generations…
filipinos will need to learn that it takes everybody’s sacrifice to even have a slight hope for change, someday – some might not even see that day, but they can help seed the crop that our children’s children hopefully will be able to reap…
“… oh, the philippines… wonderful beaches, great food, nice people… a pity they’re so poor!”
… and that’s one of the nice things you hear..! :-s
MM…. I Hope you dont mind if I comment.
Having being born and brought up in Bombay (Mumbai), INDIA, in the D and E socio-economic classification. I think I would be more than qualified to comment how to rise up from that level to the A/B/C level.
My Father’s only vice from the time I can remember was drinking black tea with sugar, many times a day.
My mother being a house-wife prioritised two things education and religion, we are Roman Catholic. She taught us cleanliness is next to Godliness. And that all humans are created equal. Also that there is always someone out there who is smarter than us.
That Background planted my feet firmly on the Ground.
I began working as a Typist when I was 15 years old, after completing High School with a mediocre Grade, because I wanted to have the same things that my more affluent friends had. At the same time I completed my Graduation from Bombay University, with a Pass Class, since I knew from experience that the World is its own University. I saved 50% of my meager income, supplanting it with wheeling and dealing in FMG (fast moving goods).
Fate intervened and I was offered a job in the UAE and started working in the Accounts of a Multinational, without paying a single Peso for recruitment.
The glitter and gold of UAE was dazzling and I spent most of my salary on clothes and partying.
Reality was we did not own a House,that put me back on track. I was able to take a interest free loan from my company, where 50% of my salary was deducted, and put it up as downpayment for a 1,250 Square Feet apartment in the suburbs of Greater Bombay. I have since, lived and worked in the UAE since the past 24 years.
The secret of success is Endurance.
My Advice to those young readers of this blog who are in the D and E socio-economic classification, Prioritise your spendings. If you think the only way is to be a OFW, once you get there, put by 50% of your income, try to buy/build a house in the Philippines. Dont be dazzled by all that glitters.
Learn to cook.
Dont get involved with get rich-quick schemes. Invest 5% of your savings in Monthly Investment Plans connected with Funds investing in the Stock Markets which are quoted, and you can exit quickly or switch to Money funds with short notice.
Dont get involved with Women, but if you know a woman loves you, marry her and be faithful to her, she will be your support and your strength.
Do Get involved with religious organisations like the Legion of Mary or Singles for Christ, you will be supported by your Community.
Take up the challenge to rise up in life, dont expect freebies. There is really no free lunch, especially from your Political Leaders. My Sister in Law once got a Scholarship and wanted to go to University of the Philippines, but Cory Aquino told her, I can send 5 students like you to other universities with the same amount of money which I will have to spend on you alone, but today she is a Successful CPA, CPA reviewer, Chair of Financial Management at a Mendiola prestigious college.
It is only your determination and endurance that will make you successful.
Correction to my previous comment : My Sister in Law wanted to go to Ateneo University.
I’m an economics grad student, currently trying to develop an outline for proposals for a dissertation that may be tangentially related to what’s discussed in this post, and I just want to say: thank you very much for this post. I’ve been tracking the numbers for some time now, so I’m not unfamiliar with the staggering inequalities you’ve presented here, but every so often one needs to read essays like this to renew, full-force, the sense of urgency and need that should drive us to keep working for change in this country.
Again, thank you for writing this.
I am sad to read all these factors that put the majority of the Philippine population in the world’s lower economic strata. The question for me personally is what I am doing to help in my own small way to not perpetuate such a situation.
Service- Learning comes to mind. So many young Filipinos here in California are not aware or refuse to be aware of the home country’s situation. Altruism is not even in their vocabulary… We need to do something… Perhaps if the young Filipinos are made aware of what they can do in their small personal ways to help out, we maybe able to help a few, but in the least raise the personal educational standards of those involved in service-learning.
Ok, getting off my soap box now. :)
To many problems!!!!!! Maybe lets try to follow these arabs, they pray many times in a day. They were blessed with oil and gas.
For Japanese and Koreans, they work so hard.
Don’t ever forget, absolute power corrupts absolutely. And you can see this from the top all the way down. I was once married to someone who was idealistic in terms of politics. Until he got posted in Malacanang (from DFA) and did not wish to leave those hallowed grounds regardless of who was on the throne.
I’m not an economist and this article gave a very basic and crystal clear picture of the local situation. You may be a capitalist MM but what about being an academic capitalist? The people will really have to fight back in terms of corruption as well as doing the right thing for everyone not just for one person.
Before someone retorts vis-a-vis my location, I am where I am because I have to survive and support family.
dragon, I think an honest capitalist with a heart is probably one of the best ways to go… :) I write that with a bit of a smirk of course. I think being Warren Buffet or Bill Gates, who were self-made, lived relatively modestly and probably rather honestly, made oodles and oodles of money, and who then GAVE most of it away for good causes is definitely a model I would rather emulate than say a local billionaire or two who made it in a slightly more questionable manner, whether through drugs, monopolies, tobacco/liquor, corruption, manipulation, etc. The original super wealthy in the U.S. and elsewhere (railroads, mining, oil, etc.) weren’t as “clean” as say the modern day billionaires that made it mostly on intellectual capital and its offspring…
I know MM did not mean for this posting to be a political discussion but I feel the issue of poverty cannot be divorced from its root cause or causes, among them, if not largely due to it , is a system that is designed to concentrate the wealth among the few and who really call the shots in government and policy making . It took me a while to understand this . Many including MM will disagree with this thinking.
In the past 30 years, income has shrunk for majority of the people with greater concentration of wealth among the few.
â€œGlobal capitalism has created social inequality on a scale that is completely and utterly insane. There is so much wealth and so much poverty, there is excess and there is hunger. Consider the following figures. According to a research paper by UNU-DER in 2008 the richest two per cent of adult individuals own more than half of all global wealth, with the richest one per cent alone accounting for 40 per cent of global assets. In contrast, the bottom half of wealth holders together hold barely one per cent of all global wealth. â€¨â€¨It is this extreme accumulation of global wealth in the hands of very few people which has produced the current crisis and which will eventually lead to the collapse of the global economy if we fail to redistribute global wealth.â€ Andreas Wittel ( Global Policy Forum)
Consider the challenge to a leader who wants to do best for the country and its people. While we are trying to find the candidate who may have a good agenda for leadership, an agenda for change driven by values such as fairness, equality, solidarity, and social justice but is held hostage by his funders and the principal architects of policy making. In the last US presidential election for example, the Obama campaign received a record $89 million from Wall Street. Is it then a wonder that the banks mainly responsible for the big financial crisis were bailed out while the general population and taxpayers who rescued them faced nearly 17 % unemployment and many lost their homes to foreclosure? Notice these banks are now making megaprofits and their executives receiving fat bonuses.
In a recent article by Noam Chomsky :
he writes: â€œAdam Smith concluded that the â€œprincipal architectsâ€ of policy in England were â€œmerchants and manufacturers,â€ who ensured that their own interests are â€œmost peculiarly attended to,â€ however â€œgrievousâ€ the effects on others, including the people of England.
Smithâ€™s maxim still holds, though today the â€œprincipal architectsâ€ are multinational corporations and particularly the financial institutions whose share in the economy has exploded since the 1970s.â€
â€œThe architects of policy are also at work on a real shift of power: from the global work force to transnational capital.â€
We can talk about population control, corruption, political will, etc. but unless we address the bigger picture or seek new alternatives , more suited to our situation,
poverty for most people is here to stay.
BTW, MM, I shared this link on my facebook page- I rarely enter anything on it but this was just too good and too important for me to pass up and not pass on. I hope you don’t mind if I share your wisdom.
dragon, sure go ahead and post on facebook. Oddly, I didn’t expect this incredible response to this post, it hit a nerve obviously.
Connie, you are right, I did not mean for this to be a political discussion, but to address your point, a quick check suggests that wealth concentration in the U.S. has surprisingly not changed dramatically in the past 24 years, see this link. And had you read the link in the main post on Philippine wealth concentration, it hasn’t changed much either locally, actually got a teeny weeny bit better in the most recent period reviewed. So my point is this. First, I would look at concentrations on a NATIONAL basis, as I do not expect countries who are rich to bail out countries that are poor. I realize that seems harsh, but I do think if we want to think of ourselves as being part of a nation, then we have to strive to reach our own solutions, knowing we live in a larger global context. Second, the data you point to does outline stark inequalities, but those are inequalities that have existed for hundreds of years, and through which nations have risen and fallen economically. England, the one used in your example, DID manage to develop and bring the vast majority of its citizens to a decent level of income and existence. The United States did so during a period of 200 years as well. Canada the same. Australia another. etc. etc. Third, it is a known fact that the poorer segments of society, here and elsewhere, those least able to feed and house and clothe their offspring, are the ones having the most number of kids… so population growth is an issue, but not in all segments of society equally. Fourth, the more the poorer, disenfranchised, likely then less educated (though not necessarily so) segment of the population grows, the harder it is to find solutions to the problems at hand. I do not think population is the only problem, but it is a major component and needs to be part of the solution. If I had a bit more time to do more research, I would tell you if in fact wealth globally has in fact become much more concentrated over the past 300-500 years, by country. It is unfair to present a picture of “higher global wealth concentration”, inevitably pitting a few wealth western nations data together with/against just a few countries which had explosive population growths (China, India, Pakistan, Bangladesh, Indonesia, etc.) over the past century or two. National wealth concentrations are fairer indicators of how things are going… Even anecdotal examples of huge English country estates with lots of poorer subjects or Southern U.S. plantation owners with thousands of slaves suggests that extreme wealth concentration on the part of a few was probably with us for many centuries at least…
Lastly, on emulating Bill Gates & Buffet: true they are worth emulating in most ways but they definitely did not live modestly (comparative to their wealth and income, sure but not in general terms). To be specific, to build a US$100M home in the 90’s is in NO way modest (even in present terms). Sorry for nitpicking on this seemingly minor point but in view of the subject matter, poverty…
My whole family could have been included in the economic Level F now if my parents didn’t decide to leave Philippines 27 yrs ago. It’s sad and it breaks my heart knowing that our country’s economy is sinking lower and lower every year.
Thank you MM for kindly considering my point, but please allow me to respond to a couple of issues. It is not necessarily expected for countries to bail out a poorer country but the onerous prescriptions for debt payment for example can be modified or outright debt forgiveness is granted in extreme situations as in the case of Haiti saddled by the debt of slavery, its kleptocratic dictatorship and climate change.
In the article you cited, it mentions the widening disparity in income in the US since 1979.
â€œAlthough overall income had grown by 27% since 1979, 33% of the gains went to the top 1%. Meanwhile, the bottom 60% were making less: about 95 cents for each dollar they made in 1979. The next 20% – those between the 60th and 80th rungs of the income ladder — made $1.02 for each dollar they earned in 1979. Furthermore, the Times author concludes that only the top 5% made significant gains ($1.53 for each 1979 dollar). Most amazing of all, the top 0.1% — that’s one-tenth of one percent — had more combined pre-tax income than the poorest 120 million people (Johnston, 2006).â€
And yes, the disparity in wealth has been there for centuries, again, due to concentration of wealth and power which we hopefully want to change. I might add that England, Canada and Australia all have social programs in place to take care of the less fortunate including some type of universal health coverage and so we do not see the level of homelessness and poverty seen in a rich country like the US.
Forgive my rather basic and elementary view on this whole thing.
Having lived in the US, Bangkok, Melbourne, I like observing everything that goes on around me whether it affects me directly or not. I like learning from life.
One thing that stikes a strong chord with me is the fact that in countries that have strong social programs support the less priveleged, those in need, etc., it is moreoften than not abused (I deserve it, why should I have to work hard the gov’t can take care of me-I’ve paid my dues, etc) and at the expense of hardworking legitimate tax payers. And all of a sudden because of this support, poverty ‘disappears’ and countries like ours are thumbed down because of obvious and severe poverty. To a certain extent it is great when your tax money can pay for your medicines or buy you food when you aren’t earning (not by choice), but these kinds of programs create a different breed – an ugly breed.
I would rather see obvious poverty, such as ours, harsh as it may seem, than see invisible poverty (poor person pretending to be rich) so the collective could be deemed rich? What happens if and when these social support programs are taken away? For some reason, I perceive this to be Darwinian: survival of the strongest/fittest – part of evolution.
Just thinking out loud, not necessarily aiming to contribute (sorry)…
All filipinos should go outside the Philippines especially the young ones, educate yourselves then bring it back home. Share your knowledge and expertise back home.
Mahirap ng mauto ng mga local politicans at magnanakaw ang educated sa ibang lugar (street or school education).
Send your kids to Europe, Middle East or South America ( a lot better – mas maganda pa mga chicks hehehehe) but they must come home (or most of them must come back as global migration is nothing new)
the really distressing figures (if the FIES data are not enough to make one weep) are in the NCSO poverty survey. the poverty treshhold is placed at P11,459 annual family income in 2000, P12,309 in 2003 and P15,057 in 2006. given that threshhold, the poverty incidence is 27.5 percent in 2000, 24.4 percent in 2003 and 26.9 percent in 2006. in absolute numbers, the poor families are 4.146 million in 2000, 4.02 million in 2003 and 4.677 million in 2006.
NB. Based on the government’s definition, a family (presumably averaging five members) that earns more than P1,250 a month is “not poor.”
sorry, correction, the P11,459, P12,309 and P15,057 are annual per capita – not family – poverty threshhold. so the P1,250 a month in tailend note should be multiplied by five, giving P6,250 a month, to get the family income threshhold
I agree with dragon’s view on social programs, much of the social programs here in the US start with good intentions and does some good, the problem is that it makes the citizens who use them become profligates, and the government that handles the programs- corrupted thieves. The road to hell is paved with good intentions is it not? On the other hand, not helping those in need is utterly appalling in my point of view.
Since we are talking about dirt poor, my grandmother’s family out of Tokyo was destitute right after the war (WWII) ended, with no aid from the government, they raised themselves out of poverty by saving… i.e. By grinding fish bones to be boiled down and eaten, to reuse pretty much everything they had. My point in saying this, is that people need to learn to do things for themselves without the aid of politicians first and foremost to get themselves out of poverty, arguably politicians will promise almost anything to be elected-the proof is usally in the pudding- nothing gets done afterwards. But then with the corruption in PI the way they are, even that might be close to impossible. I agree with Lava Bien to send out your kids for education (for now), but the hardest and the most effective way would be to reform the educational system in PI (my point of view), but if you think that’s bad, wait until you go to certain schools here in NorCal. There are quite a few schools in the urban areas (Philippines) that are good, but for those who can’t afford them let alone send their kids out to other countries, what happens to their bright minds, their future?
I would have actively supported a leader who could openly rebuke the Catholic Church, because a lot of our backward ways still stems from the church – contraception, one of those things. Meron ba sa mga presidentiables? Now if only Carlos Celdran would run for office or Flavier (where is he?)…Don’t get me wrong, I am a Catholic. But the government should learn to run separately from the Church.
I find it sad that the ordinary income would not even suffice to live a decent life. But, surprisingly, a lot of people do manage. And I don’t know how they do it. Maybe one thing is that they live together with in-laws and siblings to save on household costs. But I think living together and not learning to be truly independent has a lot of downside as well.
I cannot blame those who have gone abroad. I am one of them. Sometimes you need to distance yourself from home to truly appreciate it. It has its perks, I can travel without having to get a visa. I get to learn from people who actually had the time to think of other things aside from when the next paycheck is. You only grow when you have your basic needs satisifed. But I dream pa rin – that someday I can go home for good and bring back what I have learned from living here.
I still believe there is hope. We have been at par with Singapore before. And the ‘masa’ are learning to vote wisely na. No more voting for an artista who only knows how to pose.
@ Ana (Adobodrice.com). I hope you’d pursue your dream of settling back home. I hope we all could. New minds for the new Philippines. Just look at what MM did, western educated and now helping and giving back to our people.
@ j, yeah better education for the filipino youths, then send them out hehehehe.
There was a Eastern saying (not sure where I read it). “Tell me where you’ve travelled and I’d tell how smart (or wise) you are” [but don’t travel like the Arroyos, it won’t make you smart]
Hi MM, real good work here. Clear perspective, insights are more encouraging rather than lamenting. Thanks and God bless you more!
I believe moral value/s recovery should be the first and foremost of Philippine agenda on road to rise up. I believe too many (not all) from our socio/economic strata (A to E) are morally degraded, corruptions in various form and levels can be seen from common ordinary people in market place to streets, to the educated and elite, police to military, from shanty to the Palace. Inherent filipino values were lost: no more respect to self and others, no more delicadeza. Moral, social, political and perhaps even religious decadence can be witnessed everyday.
Secondly, the need to educate young generation and even our present laborer to go for higher standard or quality. Scholarships to qualified and willing students…. blah and more. ;D
Our economic situation is greatly damaged by corruption rather than any any factor/s.
@jody, about underground economy’s effect to those stats, Here not readable stats, but, I think ( I’m no economist, just ordinary pinoy, no I’m not business person either) it somehow help the cash flow from u-ground businesses to hand to mouth existence of many in D/E, the gov’t has no benefit. But what’s worst impacting our economy are cash from corruption in all levels of Gov’t. It may help and have temporary effect in cash flow as these crooks spend their stolen cash, but the more they steal the more our country is in deeper (irrecoverable?) debt.
moral values and education…
More power MM! I’ll vote for MM! :D
@Lava Bien – that’s why I frequent this blog, more than drooling on food from home, MM and what he does is a source of inspiration – even his ranting. I love that quote. Travelling is one of my passions (though can’t afford to do it enough). How I wish every Filipino can travel. Here, everyone goes abroad at least once a year. Whenever we go out of our country, we go out into the uknown. Away from our comfort zone and learn to appreciate what is different. There is so much to learn from other people and the experience, I believe too, will make us wiser. Pero most of us are still trying to get food on the table, only natural that that takes priority.
Dragon, j: I agree that there will be people in any society who take advantage of the dole and in some instances provide a disincentive to work. On the whole however, we have to provide a social net for the good many of the people willing to work but are unable to find jobs, lose their jobs due to illness or simply being laid off and become destitute.
In many societies, Europe, Russia, Japan and China for example, what spurned the revolutions were the great income disparities and control of wealth and power during the periods of feudalism, oligarchy and warlordism. In France , the rallying cry during the French revolution was Liberte, Egalite, Fraternite. These countries have realized albeit pursuing different paths of development that extreme disparities in wealth and power and poverty breed unrest and are simply unsustainable. Note also the high crime rate in many poor countries.
We have seen the failures of both centralized socialism and capitalism, the latter exemplified at its worst by the greed in Wall Street. Yes , there are many problems to tackle in what are seemingly apparent ( population explosion, the Catholic hierarchy, “moral decay”, corruption, government ineptness, miseducation; MMâ€™s readers have mentioned them all) but the bigger reason and well hidden by those who are in control ( thru media, socioeconomic policies, uncritical education and thinking, etc) and is not figured in many discussions is the root cause of the problem, the control of wealth and power by the few.
Until we realize and confront the power of global finance and transnational corporations controlled by the nameless, faceless few, and seek a new direction more appropriate for our country and other poor countries as well, we will be unable to get out of this rut. Perhaps it is time to examine and consider the virtues of deglobalization.
So Ultimately, we draw the conclusion that we must take the reins of our destiny into our hands.
Our Leaders be damned. Whoever becomes President, cannot do anything in the short term.
We can wax and wan on the merits of different political systems and what ought to be done.
But ground reality is that only we are in-charge of our destinies, and help as many people as possible, like MM is doing.
Jack Hammer: If you are interested in alternatives outside the traditional developmental policies, see post #93 https://www.marketmanila.com/archives/if-you-could-ask-them-just-one-question.
How we get there is the challenge.
Oops, re #73,I meant SPURRED not SPURNED the revolution.
MM – have you considered publishing this article sa isang nationwide newspaper where a lot more people will be able to read it and hopefully learn from it? truly, it is time for our nation to wake up and NOW is that time – not tomorrow, not later. Thanks.
@connie c: my gripe is not with the few – however, human nature is that the few will become a herd and that’s when the problem starts really. Naturally, humans modify their behavior based on the current circumstance. That’s why those who are on the dole (usually but not all) do not exert as much effort. A lot of migrants here in Australia (that I am aware of) end up being on various government support.
I believe in providing the tools rather than giving the product and in teaching to fish rather than giving fish…
Yes dragon, I agree, but the providing and the teaching ought to be done in tandem. In Cuba, for example, where education is free, the young folks who opt out are sent to camp where they work and earn their keep, but this is not to say that their system is necessarily what I am advocating.
I wanted to cry after reading this. It made me sad but we all know what you’ve written is true. We don’t need to look far to know people who live in poverty.
Before we blame anyone, let’s individually ask ourselves what we have done to improve not just our situation but that of others’ as well, and by others I don’t mean our children, which is usually the reason given by those who migrate, i.e. “I left for greener pastures so I can give my children a better future.” We should also ask ourselves how much we improved on our family’s situation. Many of the rich were richer simply because the past generations worked harder and accomplished more. Maybe they aspired for more, too. Rich people should also educate their kids on how wealth can generate good for the common welfare and maybe rich kids can be more altruistic.
As for those who smoke and drink with the little cash they haveâ€”and not to forget, gambleâ€”if you were in their shoes would you save instead? They have to see a workable plan, a light at the end of the tunnel, before they will live sensibly.
Incidentally, only 21 of the people who have commented so far are in the Philippines. Does this mean the rest are not Filipino citizens, past or present? Or are the 21 in the Philippines not Filipinos themselves (aside from myself, but I’m the 22nd of 80)?
Bel, the post went up just before Holy Week break, so the vast majority of folks who got to read it first and comment were domiciled abroad. Though I am guessing that most of them are Filipino in ethnicity, though possibly not in citizenship anymore. Also, some locals who use company internet may register as coming from abroad but they sit in local offices, so the locations are not entirely accurate. This blog’s readership is 60% based outside the Philippines and 40% based here, so that should be a more accurate gauge of readership…
Thanks for sharing this. I was studying this around a decade ago and came up with similar conclusions. I’d like to add that it is also a global phenomenon. For example, try this site:
We’re looking at a world where around two-thirds of human beings survive on only a dollar or two daily, and where the income gaps between rich and poor have been growing significantly.
Also, it’s not just income and poverty levels. For example, the unemployment rate reported usually refers to the percentage of of people who became unemployed from the previous month. It doesn’t include undermeployed people or those who still haven’t found jobs. In which case, actual unemployment may be 20 to 30 pct.
The same goes for national income, which includes consumer spending. In the U.S. and RP, it’s 70 pct of economic growth. In addition, we’re looking not only at increasing sovereign debt but increasing total debt, fueled by increasing production and consumption needed to maintain a middle class lifestyle. Facing that is peak or declining oil production for two-thirds of oil-producing nations, 25 pct of topsoil destroyed, around 40 pct drop in fishing, and declines in various species, from honeybees to butterflies to even blue-fin tuna.
In general, we are looking at a combination of resource shortages (esp. for oil and various minerals), debt-ridden economies, and environmental damage combined with the long-term effects of global warming.
MM… If I may reply to
@Connie C, United States
Connie, I am not an economist nor an entrepreneur, nor as you will see from my comments on this current post and the post you mentioned, interested in Globalization or De-Globalization.
You cannot change the world or have revolutions. Revolutions only serve to remove the current oppressor and put in his place a new Oppressor.
I am not sure of your background, but am aware that you are speaking from a position of superiority since you are already well-off and resident in the US.
I believe real change should occur at the grass roots level, i.e. at home. When our stomachs are empty we do-not think about saving the world. We need to be fed.
I can only quote Mahatma Gandhi : You must be the change you want to see in the world around you.
Jack Hammer: I am a retired professional who spend 3-5 months of the year in the Philippines where my husband and I own a home. I am very much engaged in my small Filipino community when I am there doing little projects ( as editing and translating a training manual from English to Pilipino ) that will be helpful at the barrio level.
I hope I do not sound superior. It was my political awakening during the Marcos dictatorship when I learned something about political economy and the root causes of our ( the Philippines is very much in my heart) problems though I have resided in the US since the 60’s. My husband and I never meant to stay here but we felt returning to the Philippines after post graduate education and training during the Marcos years was not a good idea. I take it upon my self to study, learn and try to think outside the box. As Madame Solita Monsod states , ” Be informed”.
I only mentioned revolution to place things in historical perspective. And you are right, the changes that are more lasting are those that come from below though many times they threaten the establishment and therefore cause for persecution as we witness the continuing human rights violations in the Philippines.
What I shared here in MM’s blog was what took me a while to understand and realize as I was once a very traditional and apolitical person.
And funny, the quotation I end my emails with is exactly the same words of Mahatma Gandhi you quoted above and I try to put it in action whenever I can.
if the top 10% of fiilipinos make P55,000 a month, i wonder where it will be once we remove the top 40 richest filipinos (2008) whose total assets are worth over $140 BILLION or over 6.3 TRILLION pesos
1. Henry Sy – $3.1 billion
2. Lucio Tan – $1.5 billion
3. Jaime Zobel de Ayala – $1.2 billion
4. Andrew Tan – $700 million
5. Tony Tan Caktiong – $690 million
6. John Gokongwei Jr. â€“ $680 million
7. Eduardo Cojuangco Jr. â€“ $610 million
8. Enrique Razon Jr. â€“ $525 million
9. George Ty â€“ $435 million
10. Inigo & Mercedes Zobel â€“ $430 million
11. Manuel Villar â€“ $425 million
12. Emilio Yap â€“ $420 million
13. Vivian Que Azcona â€“ $360 million
14. Beatrice Campos â€“ $325 million
15. Luis Virata â€“ $270 million
16. Oscar Lopez â€“ $240 million
17. Andrew Gotianun â€“ $235 million
18. Alfonso Yuchengco â€“ $200 million
19. Mariano Tan â€“ $195 million
20. Manuel Zamora â€“ $130 million
21. Menardo Jimenez – $129 million
22. Gilberto Duavit â€“ $127 million
23. Alfredo Ramos â€“ $126 million
24. Jon Ramon Aboitiz â€“ $125 million
25. Felipe Gozon â€“ $110 million
26. David Consunji â€“ $105 million
27. Rolando & Rosalinda Hortaleza â€“ $90 million
28. Eugenio Lopez III â€“ $85 million
29. Betty Ang â€“ $80 million
30. Tomas Alcantara â€“ $75 million
31. Lourdes Montinola – $68 million
32. Salvador Zamora â€“ $67 million
33. Philip Ang â€“ $63 million
34. Wilfred Steven Uytengsu Sr. â€“ $55 million
35. Enrique Aboitiz â€“ $50 million
36. Frederick Dy â€“ $49 million
37. Bienvenido R. Tantoco Sr. â€“ $45 million
38. Jesus Tambunting â€“ $40 million
39. Manuel Pangilinan â€“ $39 million
40. Marixi Rufino-Prieto â€“ $30 million
and in the top 10 2009 list (top 40 not yet available)…
– henry sy is richer by $700 million, moving from $3.1B to $3.8B
– lucio tan is richer by $200 million, moving from $1.5B to $1.7B
– andrew tan is richer by $150 million
– john gokongwei is richer by $40 million
– tony tan caktiong is richer by $20 million
– eduardo cojuanco is richer by $50 million
– enrique razon is richer by $95 million
– manny villar is richer by $105 million
– george ty is richer by $85 million
obviously, these 40 guys and maybe another 60 others (rounding up the top 100), seem to be holding maybe 90% of ALL our money. is this the case in most countries, rich or poor? is this scenario typical? or would this be unique to our country. because i think there’s something terribly wrong with this ratio.
and as i look at the names on this list, they’re mostly businessmen and i assume their assets were not acquired through graft and corruption. which tells me that maybe graft isn’t at the very root of our problems, its the distribution of wealth. either that, or my top 100 owning 90% of our money assumption is wrong.
@jules winnfield, This old article of Jose Almonte, the National Security adviser of Pres. Ramos, I think has something to agree with your view, And I quote …
“Despite the well-known political volatility, the basic problem is excessive stability â€” the continuance, over many decades of a political-economic system that has enabled a small elite to control social wealth, not through its possession of capital, its industry, or its entrepreneurial skill, but through its effective monopoly of political power.”
“The oligarchic control of political power has prevented the true democratisation of the Philippines – despite the introduction of modern electoral processes and the establishment of representative institutions.”
“Right now, a tiny upper class sits atop a populist volcano of the clamorous poor. And because few public institutions work properly, citizens must depend overly on the quality of our transient national leadership (the Philippine President may serve only one six-year term).” https://opinionasia.com/PoliticalturmoilinthePhilippines
This maybe OT, to the extreme possibility, if some camp(left or right) of our society got fed up with our socio/economic/political problems or perhaps have to push their own selfish agenda worse to worst may be in our path somewhere around the bend or two. (am just speculating or creating just a ghost???)
If only we could start a movement to create a revolution similar to Connie C’s insight the Cuban example, ” In Cuba, for example, where education is free, the young folks who opt out are sent to camp where they work and earn their keep, but this is not to say that their system is necessarily what I am advocating.”
Maybe, just maybe, establishing non profit NGO educ. institution, “…where education is free, the young folks who opt out are sent to camp where they work and earn their keep…” I hope some, if not all of the top 100 riches people in the Philippines will buy the idea and give part of their wealth, and who knows even pinoy or or still pinoy at heart in other nations will move into the revolution.
I’m just dreaming… ;d ! I’m sorry, MM I know this is not my blog. I’m carried away dreaming.
jules, some thoughts…
I actually just looked up the Forbes top 10 in the U.S. and the Forbes Top 10 for the Philippines and did a ratio to total GDP of their respective countries. For The U.S., the 10 richest individuals aggregate net worth is equivalent to roughly 1.72% of the entire country’s GDP in 2009. For the Philippines, the same ratio is roughly 7.0%, so yes, the top 10 individuals/families in the Philippines, based on that singular piece of data, do appear to “hold more” of the national pie. Of course the U.S. is a big pie with a large middle class.
More of concern to me however, is that these lists are mostly done based on “listed companies shares” as that is what Forbes can actually refer to as a “source”… I think the real numbers vary dramatically for the “real” Top 40 and there are lots of less obvious names that would creep into the list. I can think of several names that would CLEARLY be in the top 20 or so names but who do not appear as their assets are more quiet, including vast tracks of prime property, holdings abroad, etc. There are some names on that list that are unlikely, and are based purely on the value of stocks of corporations they are linked to. Having said that, MANY of the names in the list are self-made millionaires/billionaires who only made it in the last generation or two, so the feeling that the same elite have held a tight grip on assets is simply untrue. In the past 100 years, the business elite have displaced traditional wealthy families whose main source of wealth was land-related. So there has been a changing of the guard as it were.
Needing “only” $30 million to make the Top 40 list is, unbelievable as this may sound to some of you, just way too low in my estimation. Some folks have apartments and houses and estates and buildings abroad worth that much alone.
While Jules mentions that most of these folks on the list are businessmen, I think politicians and others with money/assets escape the radar screen as their funds are probably less obvious…. And the businessmen probably wouldn’t have survived unless they played along with the games people are wont to play in a country riddled with corruption…
As for the income figures raised in the post above, the top 1% of families accounted for roughly 254B in income, or roughly 7-8% of the total income of the Philippines. For the top 10% of families, they accounted for roughly 36% of all income in the Philippines. Not quite the concentration you allude to, but highly concentrated nonetheless.
Jules, here is more, I just did the same analysis for Hong Kong, and the 10 richest in Hong kong account for a total net worth of some $88.6 billion according to Forbes Magazine, and the total GDP of the Special Administrative Region (SAR) was $215Billion, according to the World Bank, so the top 10 individuals net worth as a percentage of the GDP is a whopping 41%, so FAR MORE concentrated than the Philippines, and HK is generally viewed to be quite wealthy and successful…
The Bible indeed state that we should go forth to be fruitful and multiply, but I’d like to point out on the sequence of the words. It said be “fruitful” first and then multiply not the other way around. just a thought…
This is a very good presentation of the ginourmous problem we have in the Philippines. I posted it on my Facebook and made a thought provoking comment about poverty, wealth, population and responsibility.
Do you plan to publish this or something similar on the national dailies? I think it is a very good idea. You will be able to enlighten a lot of Filipinos.
Thank you for sharing.
Hi MM, I was just scrolling down my facebook homepage when I saw your link posted by Dragon. It is my first time to read your blog and I find it very interesting and it educates me as well. Scrolling down the comments posted by others, I can feel the concern of true Filipinos for our country. Thank you very much MM for sharing your wisdom, and for those who shared their thoughts as well.
If you are wondering how it is in other countries, in the US for example:
â€œOver recent decades,, we’ve seen in the United States the most massive redistribution of wealth in world history â€œ-
â€œâ€¨â€¨This redistribution has been taking dollars out of the pockets of average Americans and stuffing them into the pockets of the power-suits and wheeler-dealers who sit in America’s corporate executive suites and play money games on Wall Street.â€¨â€¨â€
â€œJust how massive has this redistribution — up the income ladder — actually been?â€¨â€¨ In 2006, 90 percent of American families took home less than $104,000. Families in this bottom 90 percent made, on average, $30,659. That’s 2 percent less than the bottom 90 percent of American families averaged, after adjusting for inflation, back in 1973.â€
â€¨â€¨â€ since 1973, the wallets of Americans at the top of the income ladder have been swelling monumentally. The top 1 percent in our country, analyses of IRS data by University of California economist Emmanuel Saez indicate, have seen their incomes more than triple. The incomes of the top tenth of 1 percent — taxpayers who averaged $6.3 million in income in 2006 — have more than quintupled.â€¨â€¨â€
â€œassume that none of this redistribution had ever taken place,â€ and â€œassume that we had the same exact distribution of income in the United States today as we had back in 1973.â€¨â€¨If that were the case, where would average Americans be? The simple answer: Much better off than they currently areâ€.
â€œ if the average American family in the bottom 90 percent were today getting the same share of the nation’s income as the average bottom 90 percent family received in 1973, this average family would now be taking home in income over $10,000 more per yearâ€
On Taxes and Tax Laws:
â€œThe rich were paying taxes on their income over $400,000 at a 70 percent rate when Reagan entered the White House. Right now, on that income, they pay taxes at no more than 35 percent.â€¨â€¨And that’s before loopholes. After exploiting loopholes, our richest pay taxes at about half that rate. In 2005, for instance, the top 400 income-earners in the United States took home an average $214 million. They paid only 18.5 percent of that in federal income tax.â€¨â€¨
â€œ Don’t America’s workers contribute to the success of the American economy? Just since 2000 alone, the productivity of workers in the United States has increased a hefty 18 percent, notes the Economic Policy Institute. Yet incomes for working Americans aren’t now even keeping up with inflation.â€¨â€¨That’s the real penalty for success in the U.S. economy today. But if you’re sitting way at the top of America’s economic ladder looking down, this penalty can be awfully hard to see. â€œ
I forgot to add:
“What work do we value most?”
“In 2009, the worst economic year for working people since the Great Depression, the top 25 hedge fund managers walked off with an average of $1 billion each. With the money those 25 people â€œearned,â€ we could have hired 658,000 entry level teachers. (They make about $38,000 a year, including benefits.) Those educators could have brought along over 13 million young people, assuming a class size of 20. Thatâ€™s some value.”
The Preposterous Reality: 25 Hedge Fund Managers Are Worth 680,000 Teachers (Who Teach 13 Million Students)
By Les Leopold, AlterNet
@jules, your math is way off. No way is the total on your list anywhere near $140bn.
@marketman, I believe comparing the forbes top 35 or 40 americans would be a fairer comparison in order to take into account the difference in population size which would bring the american number to 3%. In comparison Li Ka Shing’s net worth accounts for 10% of Hong Kong’s GDP, Wee Cho Yaw 2% of Singapore’s GDP, Carlos Slim 5% of Mexico’s GDP, the top 10 Indians account for 12%, top 3 Malaysians 11%, Top 2 Swedes 10%. One caveat though is that we should be comparing net worth to total assets and not to GDP. Unfortunately I can’t get any figures for the Philippines but for other countries: USA top 20% owns 85%, Switzerland top 10% owns 71%, Denmark top 10% owns 65%, France top 10% owns 61%. In the United States the top 1% owned 30% of the wealth in 1855 and 45% in 1935 it went down from there until the 70’s before picking up again and is now back to late 1930’s levels. Given that I often hear how the Philippines is extremely well-endowed with natural resources, I would think that our percentage would be lower.
I would also like to draw interest to the pareto principle https://en.wikipedia.org/wiki/Pareto_principle named after the Italian economist who in 1906 observed that 80% of wealth in the countries he surveyed were owned by 20% of the population. It even applies to subsets of the income range so that of the top 10 wealthiest people on earth, the top three own as much as the next seven put together.
My point is that gross inequality in wealth is not necessarily a barrier to economic growth nor to uplifting the living standards of the lower quintiles as can be surmised from the experiences of other countries.
Personally I think there’s been some under-reporting of income in the survey, because if nominal GDP is $161bn, using the income approach to GDP, then the numbers don’t jive. If the top 20% of the population’s income only comes to $42bn and the top 20% account for 80% of total income, where does the rest go? Gross Operating Surplus and Mixed Income usually account for less than 40% of GDP so what happened to the balance? The logical conclusion could be under-reporting of family income. I mean going by the survey, the income of the top 1% of the philippine population only accounts for 3%of gdp while the top 10% accounts for 20%, considering that labor income usually accounts for 60% of gdp, then the top 1% and 10% accounts for 5% and 33% of total income respectively, hardly unequal compared to the united states’ 21% and 61%. Clearly income is being understated in the survey.
@Connie C, It’s only redistribution if the government takes from certain groups of people and distributes it to another group, usually through taxes.
American wages remained stagnant because of the opening up of China and India. The two massive countries had a huge supply of labor and a deficit of capital. As basic economics would tell you, the end result would be stagnant or declining return on labor for developed countries couple with an increase in the return on capital which is exactly what happened. While a few million americans saw their income remain at a measly $30k, hundred of millions of workers in China and India where uplifted from poverty. From earning a measley $1 a day they’re probably earning around $5 a day and growing. Surely you wouldn’t begroove the average chinese or indian worker for earning an extra few dollars a day at the cost of the american worker still stuck at $30k a day.
As for the hedge fund managers, they usually get a percentage of the profits they earn plus they’re usually invested in their own funds. The bottom 25 probably lost their shirts and their jobs. Hedge funds didn’t cause the crisis and they didn’t get bailed out so why should they be singled out? Who would you get to decide what work we value most, should we set up a committee? Should they decide who gets paid how much? How about who gets to produce what or who should consume what, should we form a committee for that too?
jon, thanks for that, great stuff. I agree the best comparison is net worth to total assets, but as you state, I couldn’t find the latter for the Philippines, so thanks for adding it for other countries. I also agree that the inequality in wealth is NOT a barrier to development. And yes to the pareto principle… after working for over a dozen years in consulting, it did apply to many of the situations we examined.
so ano ang gagawin ng pamahalaan para dumami ang nasa middle class?
I worked in the Philippines before leaving to seek greener pastures abroad. I paid my taxes (or rather it was taken from my salary) dutifully. Suffice to say that my taxes pay for all the services that are given freely to the poor and the needy. My taxes( along with the rest of the tax payers) pay for everything from the maintenance of the streets to the salaries of the government officials whose mandate is to preserve and uphold the general welfare of the Filipinos.
I balk at the audacity of all the candidates posing as champoins of the poor… what about me? I am not poor! I can still pay taxes right? I am still employed! I can still make ends meet with the meager means given me…and yes! I refuse to be poor!!! As long as my faculties are in order i will wage war against poverty that threathens my family on a daily basis! i refuse to be championed by these politicians!
Can anyone of them tell me how they intend to increase the number of the middle class/ tax paying sector? Did anyone of them ever mention a strategy to increase our ranks so that the burden of maintaining our flagging economy can be distributed among a greater number of people? Did anyone ever acknowlege the fact that we do not need to hand dole outs(free medicines, free uniforms, free school supplies) had it been that everyone can support themselves decently in the first place?
I am not being anal when i say that the money being leached out of my pocket to “help” the poor and enrich the ” middlemen” can be used better so that the poor can be taught to help and feed themselves.
While a lot of legislation has been passed to favor the underprivileged ( and I laud the government for that) I cannot help but wonder where the government will get all the money to actually finance these proposals and sustain it in the long run. I do agree that while their intention is noble, they seem to lack understanding that manna does not rain from heavens these days. They need to come up will strong solid mechanism to translate their good intention into self-sustaining programs with better income generating methods than increasing taxes levied to the few millions who can still (thankfully) work and earn a decent amount of money, thus be able to pay taxes.
At the rate we are going, how do they plan to sustain these programs when the people in need of these programs are growing exponentially? Did anyone of them really studied their figures and made projections? Or does everyone in our government believe that numbers are beyond them? How do they plan to curb population growth? This is at the core of the problem. Our resources are finite but our needs are rapidly increasing due in direct proportion to our increasing population. Anyone saying that economic problems are not related to our population are either ignoramuses or hypocrites! I say let them literally feed, clothe, educate and shelter ALL these people instead of just praying for them and let us see if they can really put their pockets and hands where their mouth is!
Dont get me wrong. I am a catholic. But i practice prudence when it comes to having children. I refuse to be saddled with the emotional baggage of not feeding my kids right/ enough, or not sending them to school becuase we do not have the means.. or that our means is stretched to its limits that i cannot give them what is their due.
Finally, instead of exporting people, has anyone thought of any way to generate decent paying jobs in this country? no, by the way.. jobs are not enough… CAREERS. HOw do they intend to increase companies that provide not just employment but a way forward for people to reach their aspirations? How do they intend to generate employment that does not exploit our impoverished circumstances by turning us into machines that work on the same tasks day in day out and expect us to enjoy the same until the day we die? How does the government intend to solve the increasing practice of “casual/ contractual” workers and increase job security and tenure for everyone?
Can any decent candidate step up and answer my questions truthfully?
Yes sir/ maam; I AM NOT POOR! You cannot buy my vote. You cannot impress me with your jig. I cannot be swayed by your promise of more freebies in the future because i know that i will be taxed to the bone so that you can fullfill your promise. I am educated so please do not further embarass yourself by offering me promises because i know they are far fetched. Do not even bother to quote anecdotes from books and other heroes for i am way past that already. Just offer me a way forward..a rational one; and be quick about it too becuase i haven’t got all day for you.
But before you answer me let me remind you that i will jot down notes.Nay ! i will record this conversation. I will hold you to your word… Open your mouth only if you can deliver results and not just words.
Jon, the hedge funds issue is just an illustration how the risky games played by a few can affect a lot of people.
In the late 1990s, the hedge fund Long Term Capital Management, run by the brightest minds in the financial universe (including Nobel laureates), had over $100 billion in assets only to find themselves with $4 billion in capital. â€œWhen that upside down pyramid began to crumble, the effect was systemic. So systemic that the Federal Reserve, fearing a major meltdown of the financial markets, forced Wall Street banks and investment houses to bail out the fundâ€™s investors. Some economists argue that risky gambling by hedge funds did not cause the current crisis. But no one has conducted an impartial investigation into that question.â€
As one financial expert stated:
â€œPersonally, I do not care whether hedge funds and other pools of unregulated funds gamble in opaque derivatives rated by incompetent ratings agencies. But I do want them to fail when their bets go bad. Nor do I want them to be rescued in the event of a run to liquidity. If they are leveraged and cannot come up with cash, they should fail. It will be painful for their creditors. So be it, the more pain, the better. That is the downside to private property. Greed is good, but must be balanced by the fear of failure. Without failure there is no fear.â€
Shall we call that social justice?
In the book, â€œIt Takes a Pillageâ€ by Nomi Prins, a former managing director at Goldman Sachs, she outlines how risky loans, layered securities, immense borrowing and leverage using these loans and securities as collateral, the greed for money while getting their stratospheric bonuses , their influence on politicians to bend policies to their advantage and financial deregulation ( with repeal of the Glass-Seagull Act of 1933) are some of the reasons that nearly destroyed the American economy and its global reach and how these affected the lives of millions of people:losing their homes and inability to retire at the usual age of retirement, are only a few examples. And now taxpayers are paying for the bailouts and creating a lot of misdirected anger here in the US.
I might point out that countries somewhat shielded from the effects are countries who are delinked from the world financial market, such as China and India.
While being wealthy and successful is not immoral, some reining in of influence and power is needed for true participatory democracy to flourish.
Perhaps,then, in the best of all possible worlds, we can really address and value some of the important issues relevant to the â€œcommon taoâ€ such as the right to health, education and to breathe, as in being able to eat three meals a day.
I meant economic and social justice na rin, issues of fairness.
Connie, the government didn’t bail LTCM out. The Fed brought together the heads of the top 16 banks and told them that a fire sale of LTCM’s assets would not be in their best interest so they agreed to lend LTCM $3.5bn to facilitate an orderly liquidation. No taxpayer money was spent so how could it be called a bailout? The banks acted out of self-interest and saved themselves and the public a lot of money. Warren Buffett in fact offered to takeover LTCM but John Merriweather was reluctant to sell to him because Buffett was poised to make a killing so the deal didn’t go through.
The bankers didn’t own the banks, shareholders got wiped out as well. It was a regulatory failure, not a failure of the free market system. We also have to look at the other side of the coin, people who took out mortgages they couldn’t afford because they thought property prices would continue to go up, so they planned to flip the property in a few years, making a tidy profit. Banks in Canada, Spain and Australia didn’t get affected even if they were part of the global financial system because of better regulations restricting leverage. China is part of the problem, it’s pursuing a mercantilist policy. It maintains an undervalued currency and recycles those dollar reserves through the global financial system encouraging bubbles to form.
There are varying views on what are man’s inherent rights. I, personally, would go with John Locke who said that man “hath by nature a power to preserve his life, liberty and estate, against the injuries and attempts of other men.” Universal education is a recent phenomenon, states pursue it because the perceived benefits to society seem to greatly surpass the cost.
Jon, on the hedge fund issue, I did mention that the â€œFederal Reserve, fearing a major meltdown of the financial markets, forced Wall Street banks and investment houses to bail out the fundâ€™s investorsâ€.
And I think there is no quibble on the unfettered market that breeds the kind of greed we saw and are still seeing in Wall Street.
Lastly, perhaps the admitted failure of the free market can best be illustrated during the congressional hearing at the end of 2008 on the collapse of the financial market when then Fed Chairman Mr.Greenspan was summoned to testify as to what had gone wrong, with Congressman Waxman pushing him in this dialogue:
Waxman: â€œ you had an ideology, you had a belief that free, competitive — and this is your statement — â€œI do have an ideology. My judgment is that free, competitive markets are by far the unrivalled way to organize economies. We have tried regulation, none meaningfully worked.â€ That was your quote. You had the authority to prevent irresponsible lending practices that led to the subprime mortgage crisis. You were advised to do so by many others. And now our whole economy is paying the price. Do you feel that your ideology pushed you to make decisions that you wish you had not made?â€¨
â€¨Greenspan: Well, remember, though, what an ideology is. Itâ€™s a conceptual framework with [sic] the way people deal with reality. Everyone has one. You have to. To exist, you need an ideology. The question is, whether it is accurate or not. What I am saying to you is, yes, I found the flaw, I donâ€™t know how significant or permanent it is, but I have been very distressed by that fact.â€¨
â€¨Waxman: You found a flaw?â€¨
â€¨Greenspan: I found a flaw in the model that I perceived is the critical functioning structure that defines how the world works, so to speak.â€¨
â€¨Waxman: In other words, you found that your view of the world, your ideology, was not right, it was not working.â€¨
â€¨Greenspan: Precisely. That is precisely the reason I was shocked, because I had been going for 40 years or more with very considerable evidence that it was working exceptionally well.”
As someone put it, the dazzle of free markets (during the periods of euphoria) has blinded us to other ways of seeing the world .
some more reading materials.
15 Mind-Blowing Facts About Wealth And Inequality In America
btw, Connie I’m with jon on the LTCM other issues. The failure was mostly because of the regulators. They let their idealogical problems with regulation get in the way of doing their job.
can i share this also in my facebook wall?
jhyng0409 yes, please feel free to link to this post on your facebook, the more who read it, the better I suppose. Thanks. :)
I would like to know what your solution about corruption and red tape. Correcting clerical erros takes weeks and requires lawyers. In the mean while no job since birth certificates are haphazzerdly written. Requirements for absurd number of documents to apply for a simplest jobs. Education that costs just to graduate high school. The is so much ingraned back rubbing and family hiring family. That kind of stuff needs to be cleaned up from within the government. Sorry about the rant, but i been reading about this issue for a while, and talking to friends who tell me stories. I seen corruption in my own country when i grew up and moved to USA, I kow how it can deblitate the ability for the goverment to work for the people. There is a slow but perfect old japanese film that is just the kind of stuff Modern Philipines is facing now “Ikiru” by the Akira Kurosawa
where are the datas come from?
Many of the blogs were informative, but none offered solutions. I understand there are no easy ones, but what is the poverty stricken to do in the meantime? I believe, we should never lose hope, that population explosion is a real problem but it should not be the main focus ( I have seen big families who worked hard to move up in the socio economic status ,with EDUCATION). All should look up to pray, get on their knees and pray often. God is in control. Moving on with my point, I appreciate the bloggers who offered some tips – make education available to all, start with the farmers’ children, use creativity, save money however little, recycle, use public library and educate yourself so the politicians can’t fool you anymore, learn how to read and be a voracious reader, (include the Bible in your daily readings). I’d like to see blogs who offer resources where the poor can get assistance, both in Metro Manila and the provinces. I have inherited a parcel of agricultural land that have tenants living in it. Any advise you can give me on how to deal with them fairly based on our Agricultural law? Thanks in advance. God bless you.
MM the preliminary results for the 2009 FIES is already in the census website. Care to update this post or create a new post with the 2009 FIES?
giancarlo, thanks, found the data, will look at it soon…
what if the so called very poor people without jobs be hired as volunteers (with minimum pay) to work in developing the unused agricultural areas available which i believe is more than enough. enacting laws for such purpose might help rather than controlling population by providing condoms or other contraceptives which would promote immorality. RH bill budgets and probably savings from corruption can finance this kind of endeavor. sacrifice and discipline that is religiously practiced will do it. yes, mathematically we seem to be hopeless but look at the open agricultural (or idle land) areas available, the money that goes to corruption, and the vast population that has no work. let’s make our poor brothers productive and soon they themselves will control their family size. and for sure soon our morality level will go up too. Thank you.
Filipinos in the Philippines throw around the label “Class C” around too loosley I guess based on your analysis. Crab mentality, corruption, weak politicians, laziness, and overpopulation can all be blamed for the country’s poverty.
I am but a humble government employee here with a salary grade 18, that translates to 31T a month. I drive a runned down and tattered 17 year old car and I rent an 30 sq m apartment. I have no kids yet. If ever i have one I could only afford to have one or two. I always considered my salary to be pathetic, then your eye opener blog came along. I never knew thAT my measly salary belongs to the top 4% of our population. I have always categorized myself as belonging to class C or D. It never seizes to amaze me how the real class C or D survive with less than 5T . It wouldnt be surprising to find people of this class to have more than 5 family members and yet their offspring look healthy although filthy with liquid snot running down their noses . In spite off, it appears that they are doing a splendid job in making ends meet. However an eyesore they maybe they do have the right to be here. I just hope that our leaders find work for the 80 million pair of hands we possess. I pray that the population growth rate would work to our advantage someday. In the mean time we are stuck with it and we do have to deal with it.
This post is very interesting. Let’s face it, this country is has an even bigger problem in the next decade. For those who are still here in the Philippines like me who haven’t traded yet their Philippine passport for a Philippine visa, the problem is with the society itself. We’ve lost faith in our country and instead of sticking with each other to keep it afloat amidst all this political turmoil and corruption, we instead resorted to moving ourselves and our families elsewhere. Imagine how many skilled and talented Filipinos have now been lost and many more are coming. Look at just what happened for the last 3 years, our skilled nurses going abroad, doctors laving their profession to work abroad and what’s worst, around half of the college students have taken nursing with one intention, TO GET OUT of this country. I don’t see any hope for the future of this country.I’m just happy that I will most likely not see this country when it goes for the worst turn. God, I just hope we wont turn to another Haiti.
I just want to mention that you can read these numbers, and they do not lie, but you need to look at why the numbers have become like this. Why has the economy of the great country of the Philippines dropped to the point of being so low while their Asian neighbors seem to be rising economically?
yes, look at these numbers and use them as an alarm to wake up. But without quoting other respondents and their comments I will yes, it is things like corruption that has created the economic perils of the Philippines. Not alone, but definitely a good part of the reason.
Infrastructure has lagged behind your Asian counterparts. People with money and or power were not concerned with growth. Tita Corey, rest her soul, understood growth and what was needed to sustain it and ensure the economy of the Philippines would survive, but she was fought on every level and ended up fighting corruption and and proving to not be a strong leader to know how to fight it. And in the end we find corruption with in her family as well.
When people min power are more concerned with keeping their stature of prominence and wealth instead of taking the risk to do what is right, or they are not willing to do what is right m but put themselves in a position of power without acting, they become part of the problem and not the solution. Tita, your not here to defend yourself, but you were that person that did not stand up to be a solution facilitator. You backed down from the corrupt powers that be.
The Philippines need to build infrastructure, remove corrupt members of the judiciary system and eliminate politics that surrenders to terrorism or that is fueled by powers that seem to beget influence from groups tied to crime and or terrorism.
Without the infrastructure, communication, data systems, transportation systems, etc, etc, as well as creating a climate that produces foreign investment as well as corporations coming in to the Philippines, you can expect more of what you have now. Which is a further downward spiral of your economy and the health and well being of your people.
I can give a simple example of corruption in the Philippines. I know a young lady that took a job in a post office. She worked full time and her salary was only 3,000PHP per month. This was in 2010-2011. Now I know the government has a minimum wage law. Her pay fell way below that standard. And to think that is a position regulated by the federal level of government of the Philippines.
Just saying. But why would an outside investor want to invest into that sort of atmosphere? I think the numbers speak volumes, but the underlying reasons might just be the corruption and the lack of leadership. Or maybe it is a lack of balls. In which case you should stay the hell out of the palace.
I visited the PI just last month and was terribly shocked at the unbelievable poverty, filth, pollution the country is suffering from. How very sad indeed to see children rummaging through garbage to help their parents earn a living. I felt incredibly sad and helpless and came home with anxiety attacks. I don’t recall the PI being this poor, granted I left the country over 30 years ago. All I can do is turn shock and disbelief into something tangible by supporting a few squatter’s children so they can go to school, not much I know but something I can do to help…
To hear that the PI now is economically worse off than Iraq, Indonesia and Bhutan is surprising. I just hope that it won’t turn into countries like Haiti and Somalia. Oh, the pictures of sheer poverty and the smell of open sewage are still so fresh in my mind.
I’m amazed how so many Filipinos get offended when we talk about our country’s downward spiral. It’s as if we’re being disloyal by highlighting the country’s problems. How can anyone not feel compassion when going to places like Manila, Cebu and even the provinces? The saying, “see no evil, hear no evil, speak no evil,” comes to mind, which means by willfully turning a blind eye to the situation, one won’t have to be involved in the situation, i.e., help with what you can.
Dear God, please help the Philippines. Thank you so much for writing the above article.