Please think about this...

Capital Formation for Philippine Economic Development

I just had breakfast today with a Vietnamese visiting professor at the university where I am teaching. We had a good conversation on a lot of things, including politics in the Philippines and Vietnam. We saw similarities especially in the graft and corruption aspects in government. We also saw some differences.

It turned out that Vietnam is really growing fast economically and has surpassed the Philippines. According to her, Vietnamese politicians are very corrupt too. They take government money for themselves and invest it in businesses for their families. That is self-interest.

However, equipments are bought and factories are built. This action creates an increase in capital formation for their industries that propel economic development. Jobs are created, people have incomes and can buy other goods, the demand for which will increase. These goods with increased demand will have to be produced and create more jobs. Simple enough, in words at least.

So, while the goverment leaders in Vietnam are corrupt, they channel the money back to the local economy in the form of factories, equipments and machines that produce goods for people to enjoy and employment for these same people so they will have income to buy other things they like.

Now I recall our trapos. They are corrupt as well. But the first action they do after getting government money is buy several cars, a couple of palatial homes, travel abroad, have a couple of mistresses, or outrightly put the money in overseas banks. These activities do not create jobs in the long run like factories. There is no increase in capital formation in economic parlance. Therefore, no economic development.

So while the Vietnames corrupt politicians help develop their economy by investing, our corrupt politicians do not, by engaging in conspicuous consumption. The corrupt Vietnamese politicians sacrifice their current consumption of material things and invest in capital formation. This action benefits the future generation. The more capital they raise, the faster their development would be.

The corrupt Philippine politicians on the other hand, would use their loot in buying material things and enjoy life right away. Life is too short not to enjoy it. But this will not do good if we want to see a better Philippines. We are too deep in consumerism. As I see it consumerism leads to corruption and corruption fuels consumerism.

My message last year was that if we can sacrifice current consumption for future gains, maybe the Philippines will be okay, 50 years from now.

This is what happened to Korea. My Korean professor in graduate school told me Koreans are one of the most corrupt people in the 60s but turned their country around and it became one of the tigers in Asia, next only to Japan. Capital formation is the key and the idea of a common good for the future, not for the present. Now their kids' generation is enjoying the fruits of their sacrifices.

Is our generation ready for that sacrifice? I mentioned last year it may take sacrifices from 2 or 3 generations before we can be like Japan. Invest instead of consume for now.

Hence, elect those we think could guide our country not only for the next six years (their term of office) but beyond. The scientist group and the industrialist group would be a formidable partners in development.




Bro. Jerry Amoloza, PhD
Bloomington, Illinois USA
Email: jamoloza@yahoo.com
Website: http://www.bloomingtonillinois.com/