6. Too much Jam today. No more jam tomorrow
This has always been an inviolable principle – for businessmen and for economists. You cannot have your cake and eat it too. You either save the money, invest it, or spend it.
Societies that seek high levels of instant gratification and are willing to borrow against future incomes to achieve it have more often than not suffers inflation and stagnation. This goes for Latin America, United States, and unfortunately the Philippines.
We have low levels of savings, either households, or the government. Rich countries like the Untied States are in trouble not because they are not earning enough, but they are spending too much. We unfortunately have ignored the hard work ethic, but have chosen to follow the profligate practice of Uncle Sam. At least Philip II invested the money on explorations, we spend it on consumption.
Like the United States, our GDP is all about consumption, while GDP of countries like Singapore or China are about investments.
There is no way you can have a balanced budget with politicians on board. You come up with 1 billion of money, and congress will instantly come up with at least 20 billion worth of ways to spend it.
Sale of government corporations are used to cover the deficit. For companies, it is almost like you sell a building, and use the proceeds to pay for your party, and give everybody a few thousand pesos. Next year, you have no more building and nothing to show. When you do that, your GDP this year will grow, but your national wealth will sink, and you will have less GDP next year.
Most money either end up in politician’s pockets, or in projects that are for populist purposes, not something that will give returns in the future.
May 18th, 2010 at 10:47 pm
[...] Government cannot spend its way to Prosperity 5. No Country ever became prosperous because of aid 6. Too much Jam today. No more jam tomorrow 7. The way to lower population growth is to give jobs and security to women 8. Having Rich [...]
May 20th, 2010 at 4:18 am
This article is almost similar to the ” the government cannot spend its way to prosperity”.
May 23rd, 2010 at 4:01 am
I believe though that the reason for Populist Economics is because most, if not all politicians, are inevitably preparing for their “Re-Election” they want to be the ones to get credit for their work (and sometimes the credit of other people’s work), so they come up with ways and means to show their so called “help” towards the country in the form of Short-Term help, which doesn’t contribute to the development of the Philippines in the Long Term
What we need are politicians who are loyal to the country rather than loyal to themselves, unfortunately the politicians who are loyal to the country are the ones with the smallest wallets. How Ironic is that?
July 16th, 2010 at 10:41 pm
You mean Jam-by ba? yeah i agree.. she’s too much!! papansin.. hehe