Our economy needs a stimulus

A labor leader interviewed on a nightly newscast said the country's economy would benefit from the P125 monthly wage demand because it will stimulate the economy. That will put money in the hands of the masses and they will use it to buy essentials such as food and clothing. The economic activities generated by the wage hike will more than compensate local industries for the additional labor costs in terms of increased sales.

It is difficult to argue against this logic. All things being equal (which is never the case), that makes good macro economic sense. What is more, it is also socially responsible because it will make life a little better for the masa.

A minimum wage hike may even be better than a tax cut because only a few affluent Filipinos account for the bulk of our tax collection and putting money in their pockets may even exacerbate our foreign exchange rate problem. Giving the masa spending power, on the other hand, stimulates the economy because they buy necessities that are mostly locally sourced.

But then again, a legislated across the board minimum wage hike may be the last straw that will break the back of small and medium scale businesses. Rather than put money in the pockets of the masa, this may throw them out of work and thus add to their misery.

A few who are lucky enough to work for the companies who can afford an increased minimum wage may benefit, but it may also make our labor rates grossly uncompetitive with countries like Vietnam. It will also make it more difficult to create jobs to employ the millions of jobless. It seems to me that job creation and job preservation are more logical priorities.

Besides, many of the larger corporations are already paying their employees above the minimum wage. A legislated minimum wage hike will create a crowding effect that will put pressure on these companies to maintain the gap between their higher than minimum wage scale and the new legislated minimum wage. Based on what I have heard about the state of corporate profitability these days, even the large companies may not have the financial muscle to move salary scales up without jeopardizing their financial health.

I understand that even the large multinational marketers of consumer products are going through rough sailing. They have cut advertising expenses by about 25 percent, something they have never done in past economic downturns. Usually, they even intensify advertising exposure to capture market share. Now however, they are faced with an overhang of inventories and are more concerned with conserving cash than anything else.

In the past, the stimulus needed to perk up economies in decline comes from increased government spending. That's not really possible now with our fiscal deficit problem unless an effective tax collection system is quickly put in place. Filipinos will also have to be patriotic enough to want to pay the proper taxes. Politicians and bureaucrats must also declare a moratorium in raiding the treasury for personal benefit. Hell will probably freeze over before all these happen.

So how do we stimulate the economy if a wage hike is not feasible, nor effective? I guess if I knew, I'd be President of the Republic with a doctorate in economics. But I am just a lowly journalist who dabbles in economics for mental calisthenics. With the mental firepower behind our economics PhD in Malacañang, they should have some ideas. But they are pretty shy about them.

The most obvious to me is for every citizen who can afford it, to go out there and buy Filipino made products from the countryside. That puts money directly in the hands of the masa. Even in the US, it is the ordinary consumer who provides the economy the stimulus to keep the economy from keeling over. But this must be a massive and conscious movement on our part to make it work. We must also realize that every little bit counts.

Maybe government agencies should make it easy to link local buyers and local producers. I was in a meeting the other day with a business club that was deciding on what kind of Christmas gift basket to buy.

These are the baskets where you put in a bottle or two of wine, cheese and other goodies that are given to business associates and clients for the Christmas holidays.

There were these straw baskets that looked pretty and of high quality and the price was right. But when I asked where it was made, the answer was China. The obvious next question is, why not use baskets made here. The answer was the local ones presented didn't look as good, were twice the cost of the Chinese baskets and they couldn't supply the quantities needed by the deadline specified. I suggested that they look harder for a local supplier. I don't know if they will be successful.

If we cannot be competitive with China in something as simple as a straw basket, could there still be hope in this country? I honestly don't know.

La Mesa benefit

Bad as things might seem, there are people who nevertheless do not tire of trying to make a difference. Gina Lopez is one of those who keep busy trying to make this country a better place to live in. She is forever trying to mobilize public support for such causes as fighting child abuse, strengthening the quality of child education and lately, of trying to reverse the trend towards environmental degradation.

On Oct. 2 and 3, Gina is organizing a fund raiser for her effort to reforest the La Mesa Watershed. And she knows who to tap: The baby boomers among us with some disposable income and a hunger for nostalgia. She has scheduled a series of dinner concerts featuring a cast of musical and theater talents at the Rockwell Power Plant rear lobby on Oct. 2 and 3.

The Oct. 2 concert will feature Ryan Cayabyab and friends – Joannie Feliciano, Janet Basco, Lani Mercado, Nanette Inventor, Mon David, Richard Merck, Chad Borja, Dulce and Verni Varga.

On Oct. 3, it will be Broadway in the 60s with Jamie Rivera, Isay Amador, Robert Sena, Raymond Lauchengco, Pinky Amador, Leo Valdez and Toti Fuentes on the baby grand.

Tickets are available at Bantay Kalikasan, ABS-CBN Foundation Building in Mother Ignacia, Quezon City, Rockwell's Dish, Page One, all Gourmet Café branches and at the Bantay Kalikasan booth on the ground floor of Rockwell's Power Plant. The retro theme that brings us all back to the 60s and 70s should be a good way for the troubled baby boomer to forget the crises of today by going back to the fun days of our youth.

And let's not forget we are helping reforest the essential watershed that provides our water needs in this crowded metro area of Greater Manila.

Three's a crowd

Speaking of going out and having fun, here's something from reader Chito Santos.

The boyfriend said, "We’re going to have a GREAT time Saturday. I’ve got three tickets for the show."

"Why do we need three?" asked the girl.

"They’re for your father, mother and kid sister," he replied.

(Boo Chanco's e-mail address is [email protected])