Anytime the idea that government does not create jobs or economic growth is offered, suddenly there is a huge swarm of opinion, like gamu-gamo covering the nearest light bulb. From all sides of the political and economic thought spectrum comes the opinion that people would be starving in the streets wearing banana leaves for clothes if not for government.
The facts that might show—maybe there are failures of government—are met with the old song that the problem is the people who are running government, and not the government itself. When the question shifts to the specific examples of what government is doing, and all these wonderful things are asked, the common answer is roads and bridges.
While it is certainly true that the collective action of providing both services and infrastructure through government is important, we are constantly caught fighting the storm of trying to find the balance between the public and the private sector. There are positives and negatives to both sides.
But that still does not address the issue of the role and impact of government on economic growth and the wealth creation that is supposed to result from that growth.
“What is your economic platform?” is a question that has been asked frequently during the presidential campaign. The answers always center on some project or proposal that can be pie-in-the-sky or even specific. Perhaps, the most usual and seemingly sensible answer is that government can create the environment for a better economy. There is always something about “making it easier for the private sector to do business.”
Looking back at the Philippine economic growth after a presidential election, the growth has always gone up since the days of Fidel Ramos. Annual GDP growth was higher after a few months of Presidents Ramos, Estrada, Arroyo and Aquino taking office. In fact, not a single Philippine president since 1992 has been elected at the peak of an economic growth cycle, which came in 1989, 1996, 2005 and 2009.
Interestingly also, the same is true of the Philippine stock market. No president was elected at a stock- market peak. Either Philippine presidents are very smart or all of them are very lucky.
American senator and presidential candidate Barry Goldwater said this about the government’s role in the economy: “Economic energy must be released from government strangulation if individual freedom is to survive.” His idea was that an individual’s liberty rests on the individual’s ability to economically prosper and succeed.
Perhaps, then, what the voter should be looking for is not the promises of building great infrastructure projects or even making it “easier to do business.” Maybe it is simply asking, “What is this candidate going to do for government to allow me to make myself wealthier?”
It might be that multi-billion peso project or insuring that everyone has a free chicken in every pot. Usually, though, it is the little things at first that add up to big things in the future, like a few less potholes in the road rather than superhighways.
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E-mail me at mangun@gmail.com. Visit my web site at www.mangunonmarkets.com. Follow me on Twitter @mangunonmarkets. PSE stock-market information and technical analysis tools provided by the COL Financial Group Inc.
1 comment
Since my elementary days, or 29 years ago, I have been walking the same rough road going to school. I will cite this as an example on how infrastructure projects haven’t reach far flung villages.