Those who protest against the tax reform law that Congress passed and the President signed into law just a few months back should hold their horses.
There are those who call for amendments this early because it is the cry of the hour, with inflation rates reaching 4.5 percent, likely going up to 5 percent in May. Senators, especially the reelectionists who need to file their certificates of candidacy this October, are the loudest, understandably.
But whether they would actually amend the law, especially on the fuel excise taxes, or are just letting off their usual steam for pogi points in the day’s media in aid of reelection, is something predictable. They won’t.
But the noise makes people remember them as bleeding hearts, sympathizing with them and not deriding them as crybabies.
There are also those who protest because it is their profession of choice to protest anything and everything government does or does not. These are the ones who many classify as “red.” They see red in everything government does. They did it with Cory, with FVR, with Erap, with GMA, with BSA, and now with PRRD.
They pine for a socialist utopia that even their former “lodis”—Russia and China—have junked because economic reality always transcends political ideology.
Why, even Cuba has mellowed, and North Korea, which is more feudal than socialist, is beginning to see the light.
Yet most everybody genuinely feel and live the inflationary pressures of life in today’s Philippines.
But putting the blame on TRAIN is flogging a horse too much for all the wrong reasons.
The cost-push inflation we now experience is due to external factors mostly: the oil price spiral, which means that even if we did not have TRAIN exacting excise from oil products, pump prices would still rise. Of course TRAIN earns for government a pretty penny from the taxes, but we have experienced the same pump prices years and years ago. We can, and will survive this.
The peso value vis-à-vis the US dollar is a function of the latter strengthening, while our economy is still an import-dependent one where foreign exchange is much in demand while we still do not earn enough from our exports. It is an aberration that we must correct, but that takes time, and capital investments which we need from foreign sources.
When we had local capital in the ’60s and ’70s, we frittered these away, or the uber-wealthy brought it to foreign lands while engaging in luxurious lifestyles that would make the royal families of Europe drool with envy. So now we need external capital in the form of foreign investments.
But we are competing with the rest of the developing world for such foreign investments. And the biggest dampener on the entry of such is the woeful state of our infrastructure. South Korea, which the President is visiting as we write, and Taiwan invested heavily on world-class infrastructure, and their population also experienced growing pains, from “low” wages to “high” prices, but look at where they are now.
So the Duterte administration has to Build, Build, Build. It is programming expenditures far higher and more ambitious than any government before it. And it cannot rely purely on foreign assistance or loans, both because the supply of such is not infinite, and the demand from all other countries is infinite.
That is why government cannot let go of the TRAIN, nor remove some of the coaches of the train.
Oil prices affect almost everything. Not just the cost of gasoline or diesel that moves people and cargoes, but also electricity, and construction costs. Almost everything is negatively affected by high oil prices, including food, whether locally grown or imported, or parts thereof imported, such as canning and packaging.
But then again, high oil prices cannot be forever. Soon it will abate, because of the law of supply and demand. And as we write, the jeremiads of doom who predicted 100 dollars per barrel are correcting their figures.
What worries me most is food prices. To be sure, government has to take the blame for the price of rice. We have discussed this in so many previous articles on this space, and need not belabor the high cost of incompetence or wrong timing, even personal animosities taking precedence over national interest.
But rice has a demonstration effect on other food products. When the staple goes up, so the others will find reason to follow. Not to mention the fact that transport and storage costs are really going northward, tied up to oil and power costs.
And this is what hurts the poorest of the poor most. Sure we have the 4Ps as safety net, but even that is affected by higher food costs.
There are no short cuts, unfortunately. Rice prices will be trimmed (read that as incrementally cut) when NFA imports come in. But then again, the monsoon is upon us, and typhoons are just around the corner. As we said, when your timing is bad, the effects are lingering.
Don’t expect much from the private sector’s “commercial” rice. The farmers will demand more for their produce, and perhaps rightly so. The international market is also acting up.
So agriculture has to produce, produce, produce. Not necessarily rice, but fish and vegetables, poultry and meat. Higher present prices should goad our agricultural sector to produce more, profits being better.
But Build, Build, Build will produce Jobs, Jobs, and more Jobs. In the end, the best antidote to inflation is greater employment.
So will TRAIN rain on Duterte’s parade, such that it needs to be scrapped?
Nope.
We just need to tighten our seatbelts while the going gets rough. The air pockets and the bumps will yet dissolve.
But always, the soothing voice of the captain or the purser is important to calm down our nerves. And government, in the case of TRAIN and the cost-push inflation, is failing to communicate.
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Our belated birthday greetings to Senator Panfilo “Ping” Lacson, who turned “50” last Friday, June 1. And congratulations too on his “legal” acumen displayed in the plenary just before the “sine die.”
MacArthur said “old soldiers never die, they just fade away.” Ping does not seem to be fading away.