War and Business

For the soldiers, their business is war. Every time their is war, they are given the chance to prove themselves, thus a chance for a promotion. So for them it is good to have war. Well, in the first place, what they are here for.

In reality though, the business of war is not coherent with the business environment. In Mindanao where I am based, investment comes a trickle because of the age old conflict between the moros and the government. The businessmans pragmatism dictates that it is never wise to invest in war torn areas. And in the broader spectrum, any conflict, affects the investment potential of any country.

War affects everybody. And my daily, or shall I say, minute by minute, attention to what is happening in my community affects even my blogging. Natural instict dictates that blogging should never come ahead of self preservation. After the MILF attack in Kauswagan and Kolambogan, and other parts of Mindanao, we are at hightened alertness day and night. Afraid of the possible attack from the rebels, I never focus on posting in this blog, which is about business and economics. I must admit though, that I have been posting regularly with my other blog that deals with my political and social aspiration, specially about my Mindanao.

Now that I am posting again, this may mean that things are back to normal again. Amidst this war, of struggles for self determination, of struggles from Manila Centric control, there are business enterprises. Today, it is business as usual.

War and Oil

America destroyed Iraq with the lame excuse of liberating its people from the evil. One of the result is high oil crisis.

The other day Russia another oil producing country bomb Georgia with the excuse of liberating its people. I don't know how much oil Georgia has, but there is very important oil pipe line that traverses the country, and war such as this would surely affect the price of oil.

Venezuela and Indonesia should watch out. Oil now a days has become the magnet of war and foriegn invasion. This is true other parts of the world, in Africa and even int the underdevelop provinces of the Philippines, Mindanao where governments forces and insurgents are at war, partly because of the believed oil deposit in the island.

Blessed are those who have no oil, for they shall not inherit the wrath of the greedy.

Economic Forum

In a recent economic forum hosted by ANZ,

The hot issues are: subsidy
VAT
Government Spending
Wages
oil prices/ food prices

Panelist, who are mostly academic economist, tried to somehow clear the uncertainties by somehow providing incisive analysis of the present day economic crunch. As an ordinary citezen, I had a hard time following their discussion, and I found little economic wisdom which I could apply to my daily economic struggle.

However, with the help of Greg Mankiw's "10 second macro economic review';

GDP = Consumption + Investment + Government spending + Exports - Imports = C + I + G + X - M.

I could somehow understand what the government economist are trying to tell about the importance of investment. And how pump priming are being equated to Government spending.

Indeed, when the government provides assistance to the poor constituents, in form of money or in kind, the short term effect would be the fullness of the stomach. The C in the GDP equation however will hardly be affected since the majority poor will still have no money to spend. And as ordinary person on the street, I will lost more earning opportunities when I wait for government assistance to come. And more of the aid will go to the pocket of the officials than to us poor constituents. The programs are not delivering the desired effect.

Micro-lending for example. My understanding about its effect is that it does not help the less fortunate the way the proponents expected. People are not becoming entrepreneurs, rather, they are becoming micro-creditors. Goverment spending in this form have a significant impact on the upper class who have access to the GFI's and other financial institutions. It may perhaps affect the year end GDP, but it will not be of great help in curving poverty. (There should be a study on the real effect of CARD, KMBI and other similar programs, on the lives of the poor constituents. Did the program made their lives a lot better?)

Wage and salary increases. The 20 pesos wage increase and the 10 percent the government employees recieved have been wiped out by the 12% inflation. But an increase is an increase, without it they should be 12% percent in deficit. I agree with the experts that it is impossible for all business enterprises to icrease wages for certainly many will close shop. And that increase, if forced to those who could somehow make ends meet, will push the prices of the products upwards.

So with the increasing food and fuel prices, what should the government do? One thing that it could do is not to imposed new taxes. It could retain the VAT, because removing it would mean fiscal problem and the consequence of balooning budget deficit is even worst. As a small fish, I don't mind paying the VAT, but I mind the increasing food prices, and fuel. However,fuel prices, is something that is not within the control of our national leaders, so we have to swallow this bitter reality. Food on the other hand is something that within their control, and it is not a long term problem. With correct approach, in 4 to 6 months, the food prices would go down. We will not be poorer in 6 months of high food prices, we are already poor, and surviving is already a way of life. The answer as everybody knows is increase productivity. The government should be more creative here because providing the support to the small farmers will not solve the problem. We will have more of the same productivity if the focus will simply be on improving the infrastructure, input aid, credit or financial assistance. That will not result to a sustainable and greater productivity.

Perhaps the answer is in commercial/industrial food production. Dole, DelMonte or San Miguel are example of this kind of farming. Rice farming should be transformed towards this format, and farmers will become incorporators instead of being just ordinary farmers.

This is a long term solution, but a long term solution is what we need. I don't believe that the filipinos are dying. The economic condition in the 80's is worst than today, but we manage to survive. One of the small things that we ordinary citezen could do is not paint a negative image of our situation.

I may not have enough money today, but I am not poor. I could still find solution to my daily needs, and I could still send my kids to school. I could still buy my medicine. In short, help the people to focus more on what they can do. And they could do it.

The Economics of Living in the Province

Living in cosmopolitan centers have its upside and downside. More and more people are migrating towards the urban centers which c ould mean that for most people, the upside far outweighs the downside.

Economics. This is the greatest concern for the greatest number of people. You can't think if you don't eat. Even if you are not using your brain, economics needs will push you to do something to survive. In the metropolis, economic opportunities is better. "What will I do in the province?" Has become a standard querry of those used to the life in the city.

If you are a top notch ceo, what business orgnization will give you the opportunity to exercise your skills and knowledge. Living in the laid back community will make you a hermit, if not, atrophy will takes its toll. Fair enough.

Cost of living in the city is not a problem. The laws of economics will take care of the difference. Income level will rise commensurate to the social cost, the physiological cost, psychological cost, and the environmental cost.

Living in the province, you will have none of those cosiderations. Low income is fair enough because one has to endure less stress, less pollution, less travelling time which means more time with the family (than in the car). This also means less health related expenses.

When time comes for those enjoying the provincial providence, to send their kids to college (where the best schools is always located at the heart of the mega cities), the disparity of income becomes an issue. Unless one is living in the province but owns thousand of agricultural land which is into commercial farming, then sending kids to the metros will make a dent to financial stability. Imagine a small town businessman sending his son to study economics in Harvard.

However, if you are dreaming to establish a conglomerate to challenge Henry Sy, or are dreaming of unsetting Warren Buffet at the top of the money list, then the province is the wrong place for you. Move to New York and fight tooth and nail with Donald Trump.

I am not sure if the world of Berners-Lee will someday break this imbalance. Maybe W.Buffet will soon be challenged as shown by the Indians, the Russians, or a Mexican.

Greatest Modern Day Thinker

Recently I was reading some article about the greatest modern day thinker. The question is very intriguing that it created so much interest thus varied responses. One blip though that is not too difficult to miss is the geographic identification of those nominated. Hawkings, Friedman, Einstein, Sowell, Ayn Rand, Berners-Lee, Andreessen, with Gandhi being the exception.

I'm even wondering whether the Japanese suceeded in their pursuit of excellence without thinking, of whether not a single soul from 2.5 billion chinese and indians are capable of thinking. Or perhaps it is a third world reflection of intellectual allofness.

Or maybe, just maybe, less developed countries like the Philippines don't do so much thinking, the very reason why it remained underdevelop.

I tried to answer the question, nonetheless, just for its cents worth. Who really is the greatest modern day thinker?

First I have to define what is a thinker, and second what modern day means.

Let me start with the second. Modern day. If it means present day then it is very difficult to give justice. If it means the last 50 years, then we could somehow glimps on some and see who they are. So let us define modern day as the last 50 years.

What is a thinker? Do monks think when they meditate? most likely they do. A cyclist is said to make millions of decisions while on bike so it means the cycling cyclist is a thinker (and think of it, they train for about 8 to 10 hours a day). And how about the chess player, the computer hacker, they are all thinkers. If the question means the thinker who has the greatest enfluence on our lives; or the thinker who have change the way we see things like copernicus or Darwin; then we could narrow it down to fields of expertise like politics, physics, economics, mathematics; then narrow it down by placing geographic bounderies like western thought, eastern. Because it is hard to compare the chinese scholar to an american scholar, specially if they are covering different diciplines.

Having nominated no one in particular, I think the greatest thinker of all is the flat screen in front of you