The truth about poverty

The screeching opposition came out crowing the other week over an observation by the President’s economic adviser, the redoubtable Governor Joey Salceda, that hunger has gone up from 11.4 percent in 2002—the year before President Arroyo took office—to 20.3 percent by 2009.

By themselves, the numbers would alarm anyone. Coming from the governor, they carried added sting—although anyone who knows Joey wouldn’t be surprised, since he is a gentleman who always speaks his mind. As one of the President’s favorite former students and a respected analyst before entering politics, his opinions carry professional and political weight.

However, I happen to know that the comment about hunger came from a hundred-slide presentation about the economy that the governor had prepared earlier for an audience of senior businessmen. Amid the sea of good news that flooded the slides, the bad news about hunger stood out by itself—the proverbial exception that proves the rule, as well as attesting to the governor’s impartiality.

Unfortunately, the hardest thing to find is impartiality in the middle of a Philippine campaign season. Salceda’s comment was immediately picked up and brandished as proof positive that the President had done all the wrong things with the economy. Never mind 36 straight quarters of growth, more roads and bridges built than the previous three presidents combined, a ratings upgrade in the middle of a global recession—none of this counted with the usual crowd of inquisitionists.

There are various ways to put the seeming bad news about hunger in the right context. Let me start with the easiest one—showing the reader another set of numbers that point to an entirely different conclusion. Look at the accompanying time series for self-rated poverty, as tracked by Social Weather Stations over decades ever since the Marcos era.

It may quickly be seen that self-rated poverty has slowly but steadily declined over the years, from nearly 74 percent of households towards the end of the Marcos years, down to 62 percent in 2001 at the start of the Arroyo term. On the President’s watch, the decline in self-rated poverty continued even more sharply, coming down to only 46 percent by the last quarter of 2009.

So what are we to make of this situation where hunger is going up but poverty is going down? Both findings are the product of subjective self-assessments by the respondents. At the very least—and until our friends at SWS enlighten us about it—we can only conclude that the picture is a lot more complicated than it seems. Certainly it can’t be claimed as gospel truth that things have gotten worse for the most vulnerable of our countrymen on this President’s watch.

We can also talk about the distinction between economic growth and the equity of income distribution, making the point that it is possible—sometimes even inevitable—to have more growth with more income inequality, the latter being the source of more hunger. My young friend National Economic and Development Authority director Dennis Arroyo reminded me of the “Kuznets curve”, which shows that income inequality increases during the initial stages of economic growth before it later starts to come down.

On the other hand, it is not possible to have less income inequality without more growth. A shrinking economic pie simply means fewer and smaller slices for everyone. In other words, had we not avoided the recession last year, or had we grown more slowly than we actually did, our problems with hunger and income inequality would likely have turned out even worse.

A third line of discussion might bring up the responsibilities all of us have towards the hungry among us—because hunger is not just government’s problem to deal with. For her part, the President used much of the proceeds from E-VAT over the years to launch a whole rafter of social services and safety net programs, from conditional cash transfers to cheaper rice and medicines to scholarships for the poor.

But what about the private sector? If we look at our top businessmen— according to other slides in Salceda’s presentation—we would see that the Top 1000 Philippine companies earned total net profits of P3.1 trillion from 1996 to 2008. But of this amount, two-thirds were paid out as dividends and only one-third was reinvested.

This leads us to ask: How much of this very high dividend payout found its way, through the charity of the privately wealthy, into the lives of the needy and hungry among us? One might also ask: If more than just one-third of corporate profits had been reinvested, how much more could businesses have expanded, more jobs been created, and the productivity and incomes of labor been improved?

These questions bear answering in the event that many of those same wealthy businessmen go around complaining about how government isn’t doing enough about poverty and hunger. As the old saying goes, those who live in glass houses… –Gary Olivar, Manila Standard Today

gbolivar1952@gmail.com