Now that an economic bubble burst in the West, it’s not hard to imagine how the vulnerable economies of the developing countries in the East can be blown away to pieces as a consequence. Right now, we don’t see that happening as yet, following the violent burst of the housing bubble in the US that sent unprecedented volume of worms all over Wall Street crawling out to expose themselves in daylight, at the disgust of everyone except those greedy financial crooks with shredded moral fiber that coughed them out in the first place. It seems that the reduced strength of their gut juices, fermented from excessive supply of greed-raked wealth, is no longer a viable environment for the worms to thrive. But all these talks about what I consider as the US adopting a ‘self-preservation’ strategy to address the financial crisis that brought down the world financial fortress is scaring the hell out of me. Take this article for example:
http://www.nytimes.com/2008/12/22/opinion/22krugman.html?em
I have always been an admirer of Prof. Krugman, and so, it becomes more distressful for me to read an article by the Nobel Laureate bearing a sunny prospective for the US, but of gloomy note for the developing countries, including mine. Although I agree to most points made by Prof. Krugman, including that about the necessity of US closing the gap in their trade deficit by becoming more self-reliant, thereby, creating much needed job opportunities and stimulating local productivity, I fear about what that would do to countries of weaker economies that are, in one way or another, tied to the US through globalized economy. Add to that the utter inability of allegedly corrupt governments, such as that of Gloria Macapagal-Arroyo’s in the Philippines, to respond to the pressing need of creating local jobs, and it becomes even gloomier.
Right now, there are many Filipino college graduates who work in Call Centers, through services outsourced by American companies, whose college preparations are much advanced than what a Call Center usual job requires, but they take the job anyway out of necessity - to survive. Still, a sizeable Filipino work force is employed in companies that export commodities to the US and to Europe. When services outsourcing are stopped and importation lessened by the US, I wonder how the multitude of Call Centers and export company workers would take the blow. In the case of the Philippines, I wonder how much effort is being exerted in cushioning the blow for the common Filipino, especially those living below poverty line. I wonder if it is just wishful thinking to imagine Gloria Arroyo’s government working out a long-term and sustainable solution to the awful ripples of this category 5 financial crisis that is about to hit the Philippines, rather than figuring out how much more public fund is left for them to fish into their pockets and how are they going to do it with the remaining time they have in the government!
In the manufacturing front, I wonder what will become of the present manufacture output of China. If the US cuts on its importation of Chinese goods, where would China peddle the low-cost commodities it produces in order to sustain its own economic growth? I fear that Chinese goods find their way to China’s neighboring developing countries with weaker and less competitive manufacturing arm. In fact, they are already starting to dominate the Philippine market these days! The last time I shopped for a pair of flip-flops in the second biggest mall in the Philippines, it was impossible to find Philippine-made ones! Instead, I saw more than a dozen variants of flip-flops, all bearing the "Made in China" tag. The store manager advised me that if I really wanted a pair of Philippine-made flip-flops, I could probably find them in the sidewalks by the marketplace! Now, that's not even ironic - that's outrageous! He explained that it’s not a question of quality or lack of creativity in Filipino products that's making it doubly hard for them to find their way into these big malls, it's all about cheap. It's cheaper for big stores to import in bulk from China than to buy in smaller volumes from Philippine manufacturers. And if these stores are to keep their thousands of employees in the payroll, the choice is clear - cheap! He summed the problem as the inability of Filipino manufacturers to respond to growing demands for manufactured goods. And because the Chinese manufacturing arm is built to provide the then voluminous demands of the West, it would be hard for countries of weaker manufacturing arms, like the Philippines, to compete when China decides to 'invade' their local stores with its cheap produce. Again, add to that the willingness of corrupt governments to sell their countries’ future to the highest bidder rather than improving the capabilities and competitiveness of local manufacturers, just to feed their maniacal need to feel the pleasure of excessive wealth in their pockets, and we have a potentially grim situation.
If only governments of developing countries, take the present global financial crisis as an opportunity to work out a long-term economic strategy that will build a more sustainable and resilient financial architecture, it would be a welcome ray of hope in the midst of this economic gloom that we are experiencing today. About a couple of months ago, when all the stock markets in the four corners of the planet were crashing left and right in an unprecedented speed and breadth, evoking panic everywhere, I remember seeing Prof. Jeffrey Sachs – another prominent and respected economist, graced an interview in a cable network news. He advised that Asian developing economies should figure out a way to strengthen themselves where they will not be fully dependent on the more developed Western economies so they can effectively shield themselves from a financial crisis in the West. After watching the Indonesian stock market freefalling all morning and closing on midday after a horrendous crash, I dismissed Prof. Sachs’ remarks that day as arrogant and insensitive, in spite of my admiration for him. But now that the dust has settled, and the world is looking at the financial catastrophe with shorter wave of panic, what he said made sense. I guess, it’s a part of a corrupt government’s ploy and irresponsible acts to bring some sense of false security to its people by tying its economy to a robust Western economy albeit engulfed in a menacing bubble, bailing itself out from the responsibility of building a strong local financial architecture. And when the bubble bursts and financial crisis errupts, it's very convenient to point to the West and just leave the citizens on their own to wallow in misery. And then, when nobody is looking, feed itself to the people’s coffer. The only difference with the Arroyo government is that it feeds its corrupt self with tax payers' money to gross obesity even when people are protesting, and dying of hunger and hard labor! Talk about worm-infested all-bubbly fermented gut!
Happy Christmas!
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