Crisis certain

EDITORIAL

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10/06/2008

The United States-brand of capitalism is crumbling, so goes an extreme interpretation of the current turmoil in the world’s biggest economy, yet the assessment is far from exaggerated.

The world is currently witnessing a crumbling edifice, like how people witnessed the Twin Towers going down in smoke and dust on Sept. 11, 2001.

Unlike the past event, however, the US government cannot run after visible opponents at this time nor will it dare identify the enemy as it is not ready to admit that laissez faire capitalism is an even worse enemy than its axis of evil, circa 2001.

Many blamed corporate greed for the financial disaster that had, or is threatening to topple down economic icons in the US.

Even a costly $700 billion bailout package that the US government had arranged, which would place on US taxpayers’ shoulders the cost of reviving its distressed symbols of capitalism, is not considered a guarantee to cut short an impending crisis, except to stem the bleeding at this time.

Economists are already considering the US in recession that would make the rescue package an exercise in futility under a vastly weakened economy.

Europe is already succumbing to the contagion emanating from the US as some of its financial giants are also fighting for survival.

Asia largely remains unscathed from the developing crisis and is now being considered as having an economic engine that can run on its own even if the US economy falters.

Sadly, such is not the case for the local economy as the country’s leaders had inextricably linked the country to big economies for survival.

The local economy generates its main income from exports and remittances.

Exports, despite the more than $50 billion generated last year, mainly depend on imported inputs, meaning more than half of what is being earned are also being used to pay for the purchase of raw materials from abroad.

With the weakening global economy, an export slowdown is expected. From a 10 percent growth rate in the past few years, export receipts are expected to shrink to a four percent growth this year.

What can be said as a boom sector in the economy is the export of labor, from which the country earns a clean $1 billion or more a month but this, too, is expected to take a hit once the US goes into full recession.

A major global slowdown would mean cuts in business operations and the first casualties would be expatriates since most country’s shrinking labor market would have to absorb their own workers.

But already, even before the Wall Street crash, with the Philippine economy slowing down, too many shops have closed down. How many more workers can be absorbed by companies that will continue to run?

That’s where the difference between most countries and the Philippines lie.

Gloria has chosen the easy path of shoving Filipinos out of their homeland and earn the essential foreign currencies rather than develop programs to build a robust local economy to absorb Filipino labor.

Gloria goes out of her way to praise Filipinos working abroad, calling them heroes, thus making the younger generation emulate the practice of leaving the country to find decent work.

For Gloria, sending Filipinos to work abroad lessens the pressure on her in terms of unemployment and earning foreign currencies needed for the country’s trade.

The trade off, however, will be realized now that the western world is starting to keel over.

While most of Asia will likely shrug off the effects of the turmoil, the Philippines, with its weak domestic economy, may be an exception.

When Gloria’s proclaimed heroes, the contract workers, return home for good, no welcome awaits them.

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