For all the hype about the robust economy of the Philippines and the much-publicized strength of the Philippine currency, the Filipino homeland is failing badly what this writer calls the “Burger Economics” (BE) test. This test refers to my burger-based analysis of a nation’s economy, where its strength depends on how many “double cheeseburgers” a minimum-wage worker can buy with his daily wage. Hopefully, this “BE” test will replace someday the “Gold Standard” being used by economists throughout the world. Perhaps this theory will be known someday as the “Burger Standard” of an economics theory.

Yes, Filipino national leaders flaunt the supposed strength of the Philippine peso and mock the weakness of the American dollar. But according to my “BE” test, an American minimum-wage worker can buy between six (6) to seven (7) double cheeseburgers at most American fast-food chains with his one-hour pay (net of taxes and social-security contributions). Most double cheeseburgers sell for a measly one-dollar. On the other hand, Filipino minimum-wage workers can hardly buy six (6) regular burgers (one patty, without the cheese) for his whole day’s pay (gross pay without any tax or social-security deductions). In other words, the lowly American worker can buy some 48 cheeseburgers for a day’s net pay while the Filipino worker can buy only six regular burgers for the same eight-hour gross pay.

So, how can the dollar be weak and the peso so strong? This writer thinks that the whiz kids of the Philippine Departments of Finance and Budget, the Central Bank and the Office of the President should go back to school and take again Economics 101. Or they can seek the counsel of Felicito C. Payumo and ask him to teach them the basic principles of economics. Mr. Payumo was a three-term congressman from Bataan and former chairman and administrator of the Subic Bay Metropolitan Authority.

Writer's Notes:

The RP government should push my “Steakhood Movement”

proposal that might be able to change the Philippine economy for good.

To read more about it, please click on Steakhood Is Better than Statehood and Steakhood Movement (Part Two).

Mr. Payumo wrote recently a column in the Philippine Daily Inquirer, entitled “My OFW Daughters and the Rising Peso.” (Copyright 2008 Philippine Daily Inquirer. All rights reserved.) Here are excerpts of his piece:

QUOTE. I

asked myself "if my daughter who has no dependents immediately felt the effect of the rising peso, what about the dependents of the rest of the 8.2-million Overseas Filipino workers?" That's 10-percent of all Filipinos, and assuming they each have five dependents, they would number 41 million or nearly 50 percent of our total population. And the profile isn't pretty. Household and related workers category topped the list at 28 percent of land-based new hires. This was followed by construction workers (14 percent), and factory workers (14 percent). The rest are in the service industry with professional, medical and technical workers in the minority. An estimate of OFW money flows puts $11.2-billion (80-percent of total official remittance) for living expenses, medical and educational expenses, house construction and improvements, and consumables. The majority are unable to set aside for savings or investments. And this was before March 2004 when $1 exchanged for P56.36. Since then the peso has strengthened so that the OFWs and exporters have lost 26.5 percent of their income. Today, the value of the dollar is about P41. That means for every $100 they receive, OFW dependents now get P1,500 less.

But what about the cost of living? When I checked, the general price level had increased by 43.1 percent from March 2004 to October 2007, with year 2000 as a base. The sharpest increases were noted in fuel, light, water and services (79 percent), pushed obviously by the increase in crude oil price. Food and beverage prices which account for half of the consumer basket rose by 37 percent.

What do these all mean? It means that our OFWs and their dependents, which account for half of our population, are being hit by a double whammy of decreasing incomes and rising prices.

No wonder, everyone throws his two cents' worth on how to alleviate their plight--from having a fixed exchange rate for OFW remittances (in effect a subsidy, but who would bear the cost?), or a forward cover (which very few OFWs avail of), to prepaying and refraining from taking dollar loans and switching to borrowing in pesos, to suspending collection of the EVAT for fuel, as suggested by Sen. Mar Roxas (which makes the most sense) as EVAT is directly borne by the end-consumers, that is, the masses.

The response from the government is, unfortunately, a tepid one—a one-percent reduction of the tariff on fuel imports by oil companies at certain trigger prices. Not only does it come too little, too late—it is misdirected. It is the oil companies who will benefit from the tariff reduction, as a militant labor group observed, so much so that President Macapagal-Arroyo will have to tell them to pass on the savings to the consumers. The Department of Finance opposes the suspension of the EVAT because that would mean P54-billion in foregone revenues. It fears that the budget deficit will increase and this may trigger increase in prices. But what can be worse as inflationary trigger than a direct tax such as the EVAT on rising oil prices borne directly by the masses? As to the concern on foregone revenues, the Bangko Sentral ng Pilipinas has lost that much amount already in defending the dollar!

Meanwhile, we can only cry with our OFWs. Yet we hail them as our heroes. But then, praise is cheap. UNQUOTE.

Would you believe – per Mr. Payumo’s report – that the Central Bank of the Philippines spent some P54-billion “in defending the dollar,” so that the American currency would not lose more of its value?

Perhaps the Philippine government should have spent that amount in buying cows for farmers’ cooperatives, so that they could push my “Steakhood Movement” of a proposal that might be able to change the Philippine economy for good. To read more about this proposal, please click on the following hyperlinks Steakhood Is Better than Statehood and Steakhood Movement (Part Two).

In the final analysis, the OFWs would not mind having “cheap” praises for their supposedly being the Philippines’ modern-day heroes. This is, if only prices of prime commodities paid by their dependents in the Philippines were cheap or reasonable enough. # # #

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