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Philippines: Asian’s Next (Surprising) Tiger?

By Shlomo  Maital

                          Philippines

  According to Richard Javad Heydarian, who teaches political science and international relations at the Ateneo De Manila University,    “Philippines — along the likes of Mexico – has transformed into one of the most promising emerging markets in the early-21st century.”

   This is astonishing, because just six months ago, Philippines was hit by a devastating typhoon.  Despite this, it has averaged 7% GDP growth in the past 2 years!   This is close to China’s rate.

    Notes Heydarian:

       “Under the stewardship of the Aquino administration, there has been greater commitment to “good governance”, as exemplified by the ongoing anti-corruption initiatives and investigations. Host to about $300 billion in untapped mineral reserves, Mindanao is poised to benefit from large-scale foreign investments amid an increasingly promising peace process, which has paved the way for the establishment of the Bangsamoro state.  No wonder, given our country’s youthful population, natural resources, myriad of tourist attractions, and huge reserve of skilled labor, it has become fashionable these days to talk about the Philippines as the new tiger economy of Asia.”

   Emerging market economies in   China, Brazil, Russia, and India all have been grappling with inflation, slowing growth, and policy paralysis that undermine decades of robust economic expansion,  Heydarian notes.

    According to Bloomberg, “Gross domestic product rose 7.2 percent in 2013, the Philippine Statistics Authority said in Manila today, after gaining 6.8 percent in the previous year. That was the fastest two-year pace since 1954-1955.”

   A major problem with this stellar growth is that it is not trickling down, and is not benefitting the working classes.  This is a common phenomenon in emerging market countries.   Heydarian writes,  “Poverty and unemployment figures have hardly changed, while inequality is intensifying.  Few major businesses swallow newly-generated growth, while the majority of the population is yet to benefit from the recent economic boom.”

   Can Philippines sustain its growth?  Many Filipinos work abroad; their remittances fuel high domestic consumption. There has been a real estate boom as well, and a boom in services.  A fifth of the Philippine government’s national budget goes to debt service, leaving too little for health and education.

   Philippines can leverage a pro-China strategy, pulling in investment that may leave Vietnam and Indonesia, in the wake of anti-China sentiment.  Philippines too has maritime disputes with China, but seems to have handled them wisely.  If other southeast Asia nations let the left-brain emotions govern their right-brain logic,  Philippines stands to gain.

    Could we perhaps hope that Philippines will finally build a world-class airport?  Manila has been voted recently “the world’s worst airport”.  Filipinos and travelers deserve better.

 

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2013: Tough Year for Workers, Great Year for Billionaires

By Shlomo  Maital

Gates

       Last year, 2013, was not too great for the working people of the world. Unemployment remains high in most countries, especially the U.S. and Europe,  and is highest among the youth.  Economic growth is stagnant in the U.S. and EU.

   But guess what.  It was a GREAT great year for billionaires.  According to Forbes magazine, which carefully documents (and generally worships) the super-rich,  there are 1,645 dollar billionaires in the world —  268 more than the previous year, an increase of 17 per cent.  The world’s billionaires owned wealth totaling $6.4 trillion, up from $5.4 trillion a year ago, a 19 per cent rise!

   The total wealth held by only 1,645 persons, $6.4 trillion, is bigger than the GDP of any country, except the U.S. and China. 

    Who tops the list?  Well, it’s Bill Gates again, with personal wealth of $76 b. (mainly through Microsoft stock).  And here’s the point.  Bill Gates isn’t TRYING to make money any more. In fact, he’s working very hard, with his wife Melinda, to GIVE AWAY his money effectively and impactfully. 

     So, to those, like Financial Times’ Chris Giles, who want to refute Thomas Piketty’s findings —   answer this.  How can you deny, that great wealth perpetuates itself, and grows itself, at huge rates of increase, even when the owners of that wealth aren’t even trying to add to it? 

    America has the most billionaires, 492 of them;  China is a surprising second, with 152, and Russia, third, with 111.   America has   1.55 billionaires per million people;  China has  0.11  billionaires per million; and Russia has  0.77 billionaires per million. Most of Russia’s billionaires stole the assets that rightly belong to the Russian people. 

   So – dear Bill Gates:   It certainly is true that if you’re born poor, it’s not your mistake, or your fault.  And the way the world is, chances are very high, you are born poor.  But Bill,  if you die poor, which is what happens to most poor people, it definitely DEFINITELY is not your mistake.  Because the world is enormously tilted toward those who already HAVE money.    Fact.  And your wealth is proof.

    If you die poor, it is because those who control $6.4 trillion of the world’s wealth,  which they accumulated on the backs of hard-working people, are using it to generate more and more and more wealth, and hang onto it,  instead of using it to help others without money get more of it.  Bill Gates and Warren Buffett are exceptions that prove the rule.

     And Chris Giles?   What else would you expect from the Financial Times?

Blog entries written by Prof. Shlomo Maital

Shlomo Maital
May 2014
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