First it was high prices and “galloping inflation” — something the Philippines’ community of snowflake “activists” screeched about. Now everybody’s panties are in a knot over crashing rice prices at the farmgate. So what is really behind the movement of prices? Just last year, resident economics “expert” JC Punongbayan fixated on the nuances in the way inflation was calculated in a bald attempt to tie what were then pitched as the Philippines’ “economic woes” on the administration of Philippine President Rodrigo Duterte…
Punongbayan explained that the PSA has been using 2006 as the base year to compute inflation for many years and the annual changes in prices are calculated using this benchmark. Using 2012 as the base year, government presented the lower figure of 5.2%.
The common and lazy wisdom of that time was that these price movements were a direct result of the government’s Tax Reform for Acceleration and Inclusion (TRAIN) law and “economists” like Punongbayan were backward-engineering their “analyses” from, what to them, was that hasty foregone conclusion. The Center for Media Freedom and Responsibility (CMFR) report which cited Punongbayan’s “analysis” stated:
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So far, apart from the president’s word about the economy in the doldrums, government economists seem hesitant to admit some of the troubles that may have been caused by the new tax policy or even other problems that have not been sufficiently addressed.
At the core of the misguided theses of sophomoric “economists” like Punongbayan is the moronic idea that presidents are the primary causes of macro economic performance. He goes about “proving” this by exhibiting graphs of economic metrics like “inflation” lined up against timelines of presidential terms. Unfortunately this mere correlation of data points is not enough to prove causal relationship between the movement of inflation and sitting presidents. Punongbayan falls for a flaw in reasoning common amongst wet-behind-the-ears “analysts” — concluding causal relationship on the basis of mere correlation.
Interesting enough, Punongbayan’s most recent “analysis”, now that the price of rice is plummeting, has nothing to do with the TRAIN law that they had made their whipping boy last year. His conclusions are now a bit more circumspect.
First, we’re coming from a period of unusually high rice prices. Around September last year farmgate prices were actually rising by as much as 19%. This was due largely to the near-depletion of subsidized rice, which propped up commercial rice demand and prices.
To be fair, macro inflation figures can only be analysed using a more general “basket of goods” approach whereas the above are the details surrounding a specific commodity. However, that merely highlights the folly in relying on the economic “analysis” of people who instinctively apply biases to the approach they apply in sifting through the data. Indeed, the “plight of the poor” is often used to frame most of these schoolboy analyses — something even the CMFR resorts to in order to spice up their reports:
Even those who support the tax reforms mandated by TRAIN lament its poor implementation which did not consider the need to protect wage workers and even the middle class, not to speak of the really poor.
Fast forward to today and we now find Punongbayan applying a more cautious approach to tagging the government as the source of all the economic “evils” Filipinos are supposedly experiencing now. The fashion statement of the day amongst Opposition “activists” is a trendy lament on the plight of Filipino rice farmers who are now beset by the prospect of the price of their produce crashing below production costs. Punongbayan rightly cites the Rice Tarrification Act as having the unsurprising effect of “[inundating] the market with cheap rice from abroad”. Nonetheless, Punongbayan suggests…
Lower rice prices are especially good news for the poorest fifth of Filipino households, who consume as much as a fifth of their budgets on rice alone. (By contrast, the richest fifth of households spend only about 5% of their budgets on rice.)
Rice tariffication was also touted as a way to combat last year’s runaway inflation. Figure 2 shows that most regions are now experiencing rice deflation, with prices decreasing the most in Soccsksargen, Caraga, and Davao.
The good news is that it seems schoolboy economists like Punongbayan are gaining a bit of adult perspective over longer timeframes that go beyond their campus experience rather than relying on lazy textbook-case “analysis” of data they downloaded from sketchy sources focused mainly on “interpreting” mere correlation. “Thought leaders” should be particularly careful when issuing their thoughts to the public — specially if they or their employers insist on branding them as some sort of economic Oracle.
benign0 is the Webmaster of GetRealPhilippines.com.
10 Replies to “Rappler “economist” @JCPunongbayan is growing up!”
Rice deflation. Bwahahahaha!!
Price movements are now considered “flations”. ~facepalm~
TRAIN is an absolute joke. While there are one or two improvements buried in there, the vast bulk of TRAIN is still predicated on the idea that it’s the government’s job to “drive development”, and that private enterprise is run by scheming crooks, who need to be kept on a short leash by They Who Know Best.
TRAIN pays absolutely no attention to the basic structural problems that hobble the Philippine economy – that is, the very existence of disastrously corrupt quasi-private organisations like the BIR and BOC – whose explicit purpose is to extract as much wealth as possible from ordinary people and shovel it into the pockets of the ruling classes. Of course, you wouldn’t really expect it to.
The Philippines is dependent on foreign countries to feed itself…we still have to implement the full Land Reform Program, to solve the rice importation problem.
Using the “mambo jumbo” calculation of some so called :”economist” , does not give us reliefs, that prices of basic commodities, go up and down like the ocean tide. My money has lost its purchasing power.
Those idiot Politicians in the Congress and Senate are dealing with Homosexual Rights. They should be dealing with these economic issues, instead. Widespread graft and corruption, also lead to inflation. Because , the money that is used for the development of the country, end up in the pockets of politicians and government officials.
We should hang all these crooks in the government. This will reduce inflation !
Oh boy where do I even begin?
“The Philippines is dependent on foreign countries to feed itself…”
Are you talking about the OFW program that is making the Philippines dependent on foreign countries? Then why not consider removing 60/40 and let foreign companies invest here with the option of 50% ownership or 100% ownership. Of course, this doesn’t mean that they are allowed to do what they want. They still have to pay taxes and follow rules if they don’t want to be deported.
“Those idiot Politicians in the Congress and Senate are dealing with Homosexual Rights. They should be dealing with these economic issues, instead. Widespread graft and corruption, also lead to inflation. Because , the money that is used for the development of the country, end up in the pockets of politicians and government officials.”
“We should hang all these crooks in the government. This will reduce inflation !”
Well, let’s face it. May I know what’s your solution to getting rid of inflation. Do you even know supply and demand and what powers up the oligarchs? It’s because of a LACK OF COMPETITION that causes these oligarchies to become oligarchies. Do you intend to maintain 60/40? If so then you’re part of the problem as well!
Hang everyone of these corrupt politicians? Well, even if we do hang them all tomorrow but a lack of good economic and political policies will just perpetuate the problem.
I hope you realize you’re just presenting band-aid solutions!
I am talking to all. OFWs, importing rice, importing our basic needs, and corruption, incompetent and stupid politicians, etc…
It is not my duty to formulate, what needs be done to get rid of inflation. I am not an Economist. Supply and demand can trigger inflation. So, we must manufacture what we need. We must be self sufficient in our rice supply…Who made the Oligarchs too powerful ? It was during the Aquino Cojuangco political axis era that made the Oligarchs powerful. They are Oligarchs themselves. They owned the Hacienda Luisita,,, they are “in bed” with: the Ayalas, the Lopezes, the Lucio Tans,the SM Sys, and other Filipino Oligarchs and Chinese business people… etc…these people have a control of our economies
Hanging all the crooks, is the first step of the solution. And, this is not a ” band aid” solution..,this is a long term solution. Once the greedy crooks are gone, we can have the revitalization of our economy…
These are practical solutions; not on economist’s solutions of “mumbo jumbo” economist terms, that ordinary citizen like me cannot understand !
Now give me one particular Country in this world that doesn’t depend nor even trade with other Countries 🙂
Vatican…does not trade anything, except religion….its income depends on your contributions every Sunday…
The “Invisible Hand” by Adam Smith is nothing more but the hands of the elites who control the “supply and demand” who control the market and therefore control the prices of all commodities. And one thing that the elites will always have is “greed” and greed causes corruption.
bzzztt! economics pre-dated Adam Smith.
even in the days where actual governments have not existed yet, economies thrive. markets thrive.
“bzzztt! economics pre-dated Adam Smith.”
I guess that’s why he was able to analyze the economy with more clarity.