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Fire the economic managers

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THE worsening of the country’s inflation to a rate of 6.1 percent in September, from August’s 5.3 percent — after repeated boasts by government just two months ago that it was under control — should jar President Ferdinand Marcos Jr. into making a decisive move 14 months into his administration,

He should fire what is emerging as an ineffective and spineless economic management team. This includes the Agriculture secretary himself; he should appoint ASAP a full-time Agriculture secretary.

I really can’t fathom why Marcos insists on clinging to that job when the chaos at that department is institutionally one of the biggest reasons why rice prices have been rising, which in turn is the main component — 20 percent by some estimates — in the measurement of inflation. But that share of rice prices to inflation is merely a statistical construct. The reality is that the increase in rice prices, the country’s staple food, triggers increases not just for other agricultural products but in other processed food products as well. Workers cite the rise in rice prices as justification for asking for higher wages (even in the form of “allowances”), which would increase the production costs that capitalists pass on to consumers.

Marcos holding on as Agriculture secretary himself for 14 months now points to one of our economic team’s shortcomings: they have failed in one of their most important responsibilities, which is to provide the President with sound economic advice. And if Marcos ignores their advice on such a crucial issue as appointing a full-time Agriculture secretary, they should resign their posts, both to emphasize to him the gravity of the problem (of holding on to the post) and, hopefully, for the President to appoint a new team that he will listen to.

There are two other Marcos decisions that show he is not listening to them: they, therefore, should resign on their own since they are giving him the imprimatur for bad decisions.


First, nearly all economists and even bankers say the establishment of the Maharlika Investment Fund (MIF) was, at best, untimely at this period and, at worst, won’t generate capital for development projects as it is too small to attract investors. Yet the economic managers kept their mouths shut, with Finance Secretary Benjamin Diokno himself actively saying it was an excellent idea.

Several months after the MIF was established by law, P100 billion in government funds were recently siphoned from the Land Bank of the Philippines and the Development Bank of the Philippines to form its seed capital. With no foreign funders expressing interest in it, what this government did was merely to remove that much amount of funds from the two institutions and freeze these in some bank or banks — at a time when we need funds to stimulate the economy.

Philip Medalla, former Bangko Sentral governor, expressed the reality of MIF: “I really thought that there’s no wealth to manage. According to the rules of accounting, any money that goes [into the fund] is taken from somewhere else. Since somewhere else is financed by borrowing, then that’s clearly borrowing. Either that or someone else will suffer.”

Price cap

Second, Agriculture Undersecretary Domingo Panganiban — probably confused that he was still living in the martial law era — told Marcos Jr. that he should impose a price cap on rice, a move that goes totally against economic principles in a free-market economy. Diokno, a professional economist before with a PhD in that discipline, and his colleagues said it was a good move. The reality is that the price cap was ignored by most retailers, with many, however, happy that they were given P15,000 ayuda for their supposed sacrifice in selling rice “at a loss.” Trade Secretary Alfredo Pascual, a former UP president, dutifully tried to please his boss, inspecting rice prices in wet markets. His time would have been better used if he just browsed the websites of online behemoths Shopee and Lazada to find out if they are still unabashed venues for fake products.

I’ve covered Diokno starting at the closing years of the martial law regime when he was with a group of unafraid, idealistic UP economists that exposed the purported economic mismanagement of the Marcos Sr. regime. He has been in government for more years than in the academe, first as President Corazon Aquino’s Budget undersecretary, then as Budget secretary under three administrations, as central bank governor from 2019 to 2022, and then as Marcos Jr.’s Finance secretary — traditionally the head of the government’s economic team.

Having held high-stress jobs since the Cory Aquino presidency, at 75, Diokno, I would think, has served the country with flying colors — but enough. As Finance secretary, Diokno sits as ex-officio chairman of over a dozen government corporations that he should have the stamina to listen attentively through boring board meetings. I suspect that with the many political battles he has fought and so many attempts at bribery, he has fended off, Diokno has become jaded in the eyes, lost the fire in the belly, that he prefers to hold on to his high-paying job rather than disagree with Marcos.

We need at this time, especially with an apparently hard-headed president, the top economic manager, to be as close to Marcos as he remains true to the principles of his discipline, which is economics — and as energetic as Diokno when he worked under Duterte. (see table)

Misery index

One set of measures that indicates that Marcos needs to overhaul his economic team is the so-called misery index, which is simply the sum of the unemployment and inflation rates. It is a logical but rough rate to measure a nation’s well-being or lack of it: more people without work means more miserable people, while even more people are at work, but the salaries they receive aren’t enough to buy the things they need.

From the start of Marcos’ watch in July 2022 to August 2023, the misery index averaged 11.7, double that during President Duterte’s term of 5.6 points. To compare this to two of our neighbors, for Indonesia, for the same year, it is 7.9, and for Vietnam, it is just 5.7 for 2022. (See my July 12, 2023 column, “How ‘miserable’ are we, compared to others, and to past regimes?”)

While per month the index has gone down from 11.6 in July at the start of the Marcos administration to 9.7 points in August, it has been stuck at that level and is likely to worsen with the uptick in inflation these coming months and with very little decrease in the jobless rate.

Marcos’ 11.7 misery index is the third highest in 25 years. The most miserable year in that period, going by the misery index, was during President Estrada’s term in 1998, when Diokno was the budget secretary when the index was a high 19.5.

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This Post Has 4 Comments

  1. France Corbeil

    Time for Philippines to diversify their alimentation, foods… Rice 3X a day is not healthy. Ounce a day, it plenty. Philippines can live with so many various veggies, fruits and meats. It’s time to adapt and decide for various foods, and that is not Jollibee or McDonald’s! In 10 years, Philippines will be independant and in better health.

  2. Dorina S. Rojas

    The concept of misery index is somewhat new to me and I am still grasping the basics, but I feel sad and disappointed that in even in our misery index we really look miserable. What happened to some survey I read that our country ranks high among the happiest country index as perceived by the Filipinos here? Maybe you can write something about this Sir.

  3. Laurence Siao

    President Estrada was no longer in office in 2008.

    1. Ira

      Thank you for catching that, we have edited.

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