There’s no secret that inflation is really hitting. While Noynoy can be attributed for some degree of economic success via 29 important economic amendments regarding foreign investors — he ended up screwing up also by not abolishing 4Ps. It’s just like how former president Barack Obama helped the American economy yet made the mistake called Obama-Care. In short, giving handouts is not good for the economy. Why should be Philippine government be giving fish instead of teaching Filipinos how to fish
Some crazy 4Ps obsessed old man said in defending his stand said, “How can they fish if they don’t have money to buy fishing equipment?” Here’s the problem — he’s taking fishing too literally. If people are offered jobs do they bring their own equipment to work or does the boss provide their equipment? I guess he took fishing too literally. He thinks that 4Ps is needed for economics because foreign investors won’t come without 4Ps. Yet one thing he ignored is that Lee Kwan Yew and Deng Xiao Ping didn’t make their poverty-ridden countries rich via social welfare programs
How can 4Ps actually contribute to inflation? I remembered how it’s asked that if the government prints money they why pay taxes? The 4Ps obsessed old man says that 4Ps is self-funding. It’s making me think about him and maybe he fantasizes that 4Ps will be supplied by a shower of gold coins. So how can this self-funding work? The “solution” may be in what he thinks — let the Philippines print more money for 4Ps and give it to the poor and it will come back 3x per family. However, such logic won’t work.
How can printing more money actually devalue it? Here’s what Economics Help
has to say about how printing more money can lead to depreciation:
By printing money they devalue the currency in three ways:
- Firstly, printing money tends to be inflationary. Higher inflation makes a country less competitive leading to relatively lower demand for their exports and hence currency.
- Secondly, increasing the money supply enables the Central Bank to buy more foreign currency, which drives down the value of the domestic currency.
- Statement of intent. By promising to print money and keep currency low, it discourages speculators from buying that currency as it is less likely to be a good bet.
While depreciating a currency can be a good thing (ex. inviting more foreign investors) but it can also backfire in this way. If there’s so much debt and the currency value is so low — the country’s ability to pay its debt will be close to impossible. 4Ps would also end up helping devaluing the money because there’s too much coins and notes — meaning that the money is becoming more worthless. 4Ps’ magic three times turn and 5.88 multiplier effect are all but socialist fantasies. How sure is that 4Ps obsessed old man that the 4Ps will be bought on necessities? He hasn’t even found any return worth three times the amount after “investing” the money in 4Ps. Printing more money to support 4Ps will be one good reason why such program will not help in fighting inflation.
Here’s the problem also with believing that 4Ps is necessary for foreign investors to arrive. As I mentioned earlier — neither Lee nor Deng carry out a welfare program. Also, same crazy 4Ps obsessed old man isn’t aware that foreign investors are not necessarily there to sell their products. Some of them are looking for a cheaper source of labor. They may be establishing factories but they are exporting the product somewhere else. If people keep receiving 4Ps then what’s the use of having foreign investors in providing more employment opportunities when they keep receiving handouts from the government?
So how can inflation be fought? Well, a president can’t always have power over it. As said, U.S. President Donald Trump is really screwing up the American economy one way or another with overspending and the trade war with China. The U.S. dollar weakening is not a good sign for the world economy since many currencies trade with it. The Philippine peso and U.S. dollar exchange rate can cause inflation to happen. You can’t expect President Duterte to suddenly use TRAIN law to stop the trade war, right? However, TRAIN can be modified to lowering excise taxes on gasoline (since its prices do contribute to inflation) or to repeal the excise tax as a safety precaution. Also, President Duterte should really first push on removing all barriers to foreign investment first over everything else. Noynoy’s 29 economic amendments did help the Philippines but not’s not enough — it’s more than time to remove all unreasonable restrictions to foreign investors to help fight inflation via supply and demand control.
So how will abolishing 4Ps be good for fighting inflation? Remember PHP 70 Billion worth of taxpayers’ money is wasted on a mendicancy program. Why not allocate that money for agriculture and economic programs? Why stop with Noynoy’s 29 economic amendments when you can actually go further than that? After all, you want the prices of agricultural goods to go down then why not invest in agricultural improvement
? Why not get that budget to improve the roads and bridges to the farmlands so transportation can be more efficient? All that money shouldn’t be wasted on handouts. Instead, it should be allocated to economic and agricultural programs to help the Philippines.