Gloria Arroyo’s distorted version of reality shows how detached her regime is from the people who face worsening poverty and hunger. But empty propaganda about economic growth will not quell the deteriorating political crisis that engulfs the country today.

Arroyo proclaimed Thursday (March 27) that the “real story for 2008” is that the economy grew by 7.3 percent last year, the fastest in three decades, and that the Philippines is on track to become a First World country. She attributed such milestone to “tough” decisions she made including increasing and expanding the taxes that people pay like the 12 percent value added tax (VAT). But she assured the people that the benefits of a robust economy will soon “trickle down” on them. Arroyo also dismissed the raging political crisis as “noise” that does not need to interfere with economic progress and reform.

The statement was issued by Arroyo immediately after the Supreme Court (SC) issued its 9 – 6 decision upholding the argument of former National Economic and Development Authority (NEDA) secretary Romulo Neri that his conversations with Arroyo on the anomalous broadband scandal is covered by executive privilege. With this victory in the SC, Arroyo now goes on a propaganda offensive anchored on her supposed achievements in turning the economy around.

Meaningless economic growth

What Arroyo refers to is the growth of the aggregate production of the various economic sectors. Economics is not only about the creation of wealth but more importantly, how such wealth is equitably distributed. Equitable wealth distribution is ensured through the generation of sufficient and productive jobs in the domestic economy, decent wages and income, and availability of reliable social services, among others. These must be carried out through programs and projects by the government because without them, economic growth becomes meaningless to most people, in particular the poor. Yet, domestic job creation, decent wages and income, and reliable social services have been neglected and compromised by the Arroyo regime.

Job scarcity remains alarming and has been described by the think tank IBON Foundation as the worst in the country’s history. The January 2008 Labor Force Survey (LFS) of the National Statistics Office (NSO) shows that around 9.6 million Filipinos are either jobless or underemployed. The number of unemployed is much higher than official figures because of flawed methodology and distorted employment definition that the NSO uses in the LFS.

Meanwhile, those who managed to land a job are not assured of a decent and sufficient income. In Metro Manila, for instance, the daily cost of living per family is pegged at P806 as of December 2007 based on data from the National Wages and Productivity Commission (NWPC). But an ordinary worker receives only P325 to P362 per day. This means that most families with one wage earner can only fulfill 40 to 45 percent of the amount needed to meet their daily food and non-food needs.

No wonder that amid a supposedly vibrant economy, poverty continues to worsen in the Philippines. The number of poor Filipinos has increased by 3.8 million between 2003 and 2006, data from the National Statistical Coordination Board (NSCB) show. Again, such poverty figure, while already high by any standard, is grossly understated. For the government, a person with around P41 per day is not considered poor.

Poor and jobless, the people rely on social services that the government provides such as health care, education, housing, etc. But social services are lacking as well in spite of the increased taxes that the people are forced to shoulder. Since the RVAT (reformed VAT, which raised the tax from 10 to 12 percent and further expanded to include oil and power, among others) was implemented in 2005, tax revenues have jumped by an average of 18 percent in 2006 and 2007 or more than P159 million per year. However, this did not translate to better social services as debt servicing continues to eat up a huge portion of the country’s resources. In 2006, for instance, IBON noted that payments for interest and principal were equivalent to around 87 percent of total revenues, an all-time high.

Worse, these debts include odious and illegitimate debts like the botched national broadband network (NBN), Northrail and Southrail projects, the cyber education project, and others that have been hugely bloated by kickback and commissions of corrupt government officials.

More hardships

The SC decision may have seemed to bolster the earlier claim of national security adviser Norberto Gonzales that the worst of the political crisis is over and that Arroyo has survived the $329-million NBN corruption scandal. But the battle in the SC is not yet over, as various sectors now prepare to question the decision. At an initial vote of 9 versus 6, and with the strong dissenting opinions led by SC chief justice Reynato Puno, there is reason to hope that the SC decision may still be reversed and compel Neri to expose Arroyo’s involvement in the broadband scam.

And unfortunately for Arroyo, the worsening economic hardship, intensifying, repression and persistent corruption allegations will continue to feed social unrest and fan political instability. The worst is yet to come for the embattled regime.

Already, the rice crisis is stimulating more instability as rice prices shoot up to unprecedented levels in March and are projected to increase further to around P40 a kilo in the coming months as supply becomes tighter. In the last five weeks, the pump prices of oil products have jumped by P2.50 per liter, forcing transport groups to ask for a fare hike. Bayan has projected that petroleum prices could reach as much as P50 per liter and LPG, more than P700 per cylinder tank, by yearend if no price intervention is done by the government. Meanwhile, Meralco is asking for another round of increases in its power rates.

Trends indicate that the worsening economic hardship will persist and intensify in the coming months. Unprecedented oil price increases, almost simultaneous hikes in the prices rice and other basic food items, utilities, etc will continue to erode wages and income. At the global level, the looming US recession has yet to take its full impact on the local economy. But once it does, expect a serious production slowdown that could mean higher unemployment and poverty.

There are also no signs that Arroyo will depart from her current pro-market and anti-people economic policies. She could not afford, for example, to let go of the regressive VAT. While the VAT contributes to high prices of basic goods and services, it is also the most reliable source of revenues for the bankrupt regime. On the other hand, Arroyo is pushing for more liberalization and privatization of rice importation in the country. If implemented, this could further worsen the rice crisis as local production is further discouraged and private traders jack up retail prices.

More unrest

Meanwhile, the repression of the Arroyo regime of legitimate protests for economic and political reforms is becoming more vicious. The brutal dispersal of protesting workers in front of the Labor department on March 6 shows the readiness of the regime to use more violence to preserve itself. But this only fuels the people’s outrage and determination to fight for justice and reforms.

Furthermore, the public perception that corruption under the Arroyo regime is chronic remains pervasive and will continue to hound Arroyo. A Pulse Asia survey in October 2007 shows that Arroyo is perceived by most Filipinos to be the most corrupt president. This has been confirmed by a recent survey conducted by the Hong Kong-based Political and Economic Risk Consultancy (PERC) that ranked the Philippines as the most corrupt country in Asia.

The combination of worsening poverty, increasing repression, and continuing efforts to cover up corruption provides the condition for the lingering unrest and more protests.

The people will not remain passive amid the current political turmoil. They will take action once they realize that their plight is being aggravated by the wrong economic policies, repression, and corruption of the Arroyo regime. This will further strengthen the growing movement calling for a change in the national leadership and for meaningful political and economic reforms.