Category Archives: economy

N-words

Nigger is the N-word. It is politically incorrect to mention it. It is an unpopular term. There is another N-word today: nationalization. Before I proceed, let me first write about other political terms which start with the letter-N. Remember the post about the R-words?

NA – Nursing Association. Most of the Registered Nurses of the Philippines are working abroad. There are many Filipino Nursing Associations outside the country. Alumni gatherings are held in countries where there is a large concentration of Filipinos. UP Alumni groups pa lang eh, napakarami na sa Tate. The United States employs thousands of Filipino nurses, both young and old. Thus it is no longer surprising to hear reports of Nepalese health practitioners who are hired by provincial hospitals to work in the Philippines. We need to import doctors and nurses already.

NB – National Broadband Network. National Broadcasting Network. Noise Barrage. The NBN-ZTE was a controversial project of the Arroyo administration. The project’s objective was noble but it was tainted with corruption. It was later cancelled to minimize public outcry. It cost the political fortunes of Ben Abalos and Romulo Neri. The scandal also produced star witnesses: Joey de Venecia and Jun Lozada.

The NBN channel is a government-run TV station. It used to be known as PTV-4. It only run shows which are not critical to the administration. Only politicians and their few hirelings loyally and reluctantly watch NBN. Some Filipinos watch it to view Lotto results. Sino ang nanonood ng Dial M ni Manoling Morato? Aminin. NBN gives public broadcasting a bad name.

The most famous Noise Barrage protest action in the Philippines took place in 1978. The metro-wide noise barrage demonstrated the widespread resistance to the Marcos regime. Noise barrage actions are still effective today.

NCEE – National College Entrance Examination. Hindi ko na ito inabot. My batchmates took NSAT or National Secondary Achievement Test. During college I wrote a paper criticizing standardized examinations. I still believe that standard tests are inaccurate and unnecessary indicators of learning. Once upon a time I was an advocate of the “de-schooling society” movement.

ND – National Democracy. Those who struggle for national democracy (with a socialist perspective) are called Natdems or ND for short. Natdems are revolutionists. Natdems are Maoists. The ND movement remains an important political force in the country. It is the most consistent and formidable alternative and moral force for change in the Philippines. Others are just noisy derivatives.

NGO – Most of them are peopled by genuine and educated idealists. Many of them are sincere activists. Unfortunately, there are NGOs which are established mainly to tap the funds of big foundations or to defeat the organized party of the working classes. David Harvey warns about depending too much on NGOs:

“The NGOs have in many instances stepped into the vacuum in social provision left by the withdrawal of the state from such activities. This amounts to privatization by NGO. In some instances this has helped accelerate further state withdrawal from social provision. NGOs thereby function as ‘Trojan horses for global neoliberalism’.”

Arundhati Roy delivers the same warning about the “NGO-ization of resistance”:

“NGOs give the impression that they are filling the vacuum created by a retreating state. And they are, but in a materially inconsequential way. Their real contribution is that they defuse political anger and dole out as aid or benevolence what people ought to have by right.

“They alter the public psyche. They turn people into dependent victims and blunt the edges of political resistance. NGOs form a sort of buffer between the sarkar and public. Between Empire and its subjects. They have become the arbitrators, the interpreters, the facilitators.

“In the long run, NGOs are accountable to their funders, not to the people they work among.

“NGOs have funds that can employ local people who might otherwise be activists in resistance movements, but now can feel they are doing some immediate, creative good (and earning a living while they’re at it). Real political resistance offers no such short cuts.

“The NGO-ization of politics threatens to turn resistance into a well-mannered, reasonable, salaried, 9-to-5 job. With a few perks thrown in. Real resistance has real consequences. And no salary.”

Nu – Nuclear energy is a hot topic again in the Philippines because of the proposal to revive the Bataan Nuclear Power Plant. I’m now convinced that it is not wise to build nuclear power plants in the Philippines, which is located in the Pacific Ring of Fire. Instead, the government should build more windmills, and geothermal and hydroelectric power plants. Convert BNPP into a tourist attraction, or a science complex.

Other Southeast Asian countries are also planning to build nuclear power plants. Elsewhere in the region, North Korea has successfully launched a long-range rocket a few weeks ago. Ominous signs of troubled times? Countries willing to adopt nuclear technology in anticipation of oil price surges? Nuclear energy to slow down global warming? Nuclear missiles in preparation for poverty and recession wars in the world? Am I too gloomy?

Nationalization – I refer to the proposal of prominent U.S. economists to nationalize “zombie banks.” It seems the term nationalization is getting more popular today. Some neoliberal economists insist that the proposal to nationalize financial institutions is “not Bolshevik but pragmatic” approach to deal with the economy that is “near depression.” Tingnan ninyo, sila (kayo) rin pala ang magpapanukala ng nasyonalisasyon.

Another aspect of the current N-word is related to the protectionist measures included in the stimulus plans of several countries. Buy America. Buy Malaysia. Buy _____________ fill-in-the-blanks protectionism. Before, economists are allergic to trade protection proposals. Today, they can’t resist suggesting these “unorthodox” measures.

Ang masasabi ko lang: Pula, pula ang kinabukasan. Sa mga nagdududa, kayo ay, ika nga ni dating Bise Presidente Spiro T. Agnew ng Estados Unidos, mga "nattering nabobs of negativism". Uy, panay N-words yun ha.

Surviving the recession

The global economic recession is spreading gloom and despair everywhere, but the human spirit cannot be easily defeated. Many are trying hard to cope with the crisis. Bloggers are offering survival tips to their readers. Businesses around the world are adopting new strategies. Some are even profiting from the crisis.

In Japan small and medium enterprises which process raw materials are profitable today. Fast food outlets, e-commerce service providers, and the pachinko gaming industry are doing well too.

Many companies are hoping to make money from the stimulus plans in their countries. Part of Thailand’s stimulus plan covers the distribution of checks worth US$55 to every low-income worker. The beneficiaries can use the checks to purchase items at McDonald’s, KFC, Pizza Hut and 18 other major business outlets in the country. KFC even awards 20 pieces of free chicken to stimulus beneficiaries who exchange their checks for store coupons.

Some airlines are increasing their flights to service returning migrant workers. For example, Philippine Airlines increased its operations in the United States and Canada, which can be interpreted as a sign that more and more retrenched Filipino migrant workers are now returning home.

Condom sales are on the rise too as people want to prevent pregnancies during the recession. This is good news for condom makers but bad news for countries with declining birthrates.

Instead of reducing the workforce, some companies in the Philippines are adopting shorter workweek hours. Because of low occupancy in their buildings, some landlords in Manila are lowering the rates for office space. A Japanese company in South Korea used its savings and accumulated profits over the years to protect the living of its workers.

Retail chain Ponto Frio in Brazil has an ingenious campaign to attract customers. The store provides free insurance to shoppers in case the latter become unemployed in the future.

Roshni Mahtani, founder and editor of http://www.theasianparent.com, suggests that small businesses can save money if they give up office space, use open source software, replace traditional phone connections with Skype, hire interns, conduct virtual meetings and maximize social media marketing.

How are individuals around the world coping with the recession? The crisis is obviously affecting the physical and mental health of many workers. This explains why gym and yoga studios are overcrowded in Singapore. Singaporeans who want to release the economy-related tension, and those who have been retrenched, are now spending more time on exercise.

A Bulgarian weekly asked its readers how the crisis is affecting them. Some answered they have stopped watching TV since the news is depressing. Some have more time to read these days while others have taken more interest in the rest of the world.

A worker in Qatar discovered that the financial crisis can somehow solve shopping addiction. She now spends less time buying consumer goods due to delayed paychecks.

In Brunei bloggers are criticizing bankrupt individuals who wanted to receive surplus funds from zakat collections. The paying of zakat, one of the pillars of Islam, is an act of giving up a percentage of one’s wealth to the needy. Many were surprised that Bruneians with big credit card bills, automobile loans, and personal loans attempted to tap the zakat funds.

There are those who are so overwhelmed with money problems that the only solution they can think of is to commit suicide. It is sad to learn that more than 70 diamond polishers in Gujarat, India, committed suicide after losing their jobs.

Others have chosen to fight. Investors, mainly in Antigua, who lost their money after U.S. billionaire Allen Stanford was charged with investment fraud banded together and formed a coalition to recover their wealth. The Stanford Victims Coalition created a website to update other members about their case.

Because of the recession, some are learning to appreciate the basic laws of doing business like providing first-rate service to customers. A Brazilian popcorn seller has won recognition for his creative ways of doing business. He has already given many lectures on entrepreneurship.

Agriculture is popular again among Japanese youth and celebrities as more people search for economic activities that have stronger foundations than the financial sector.

Cambodia has reaffirmed its reliance on agriculture to promote economic growth. A Lao economist believes that the “agriculture-based, self-sufficient nature” of the country’s economy will protect Laos from the global financial crisis. The economist added that “people who live in industrialized countries live in fear of losing their jobs because they can’t grow vegetables and raise animals as people can in Laos.”

In Jamaica leaders of 21 private sector bodies have formed a pact of cooperation to offset the impact of the worsening global economic conditions. They have relearned the value of creating a “social partnership dialogue” between the government, opposition, labor, business and civil society.

Many bloggers are advising their readers about the importance of innovation, creativity and the cultivation of inner strength. The last point is crucial since the prospect of solving the global economic malaise in the near future is dim.

Bubbles, bailouts and stimulus plans

Identifying the economic woes of the United States is crucial, but we should also understand that other countries are also grappling with bankrupt companies and shrinking economies. Many countries are also implementing their own stimulus plans. Bloggers around the world are discussing the bubble economies, bailout of banks and stimulus plans of their countries.

The global effect of the bursting of the bubble economies in the developed world was sudden and devastating. In Bangladesh there was a housing bubble tied to the country’s reliance on remittances sent by overseas workers. Now that migrant workers are returning home because of mass layoffs in Europe and the United States, the property boom in Bangladesh has come to an end.

Cambodia was also experiencing a property bubble. South Koreans are Cambodia’s biggest investors. Since South Korean businesses have been badly hit by the financial crisis, many of them have already pulled out of their real estate investments in Cambodia.

Elsewhere, Jamaica’s dollar-earning bauxite industry has shed hundreds of jobs already because of the downturn in U.S. car production. The Caribbean financial crisis originated in part from the sharp drop in methanol and real estate prices.

In Antigua, the face of bank fraud is U.S. billionaire Allen Stanford who has been charged with investment fraud. Stanford has considerable investments in the Caribbean. Romania’s lending bubble is familiar because it is almost the same credit bubble which burst in other rich nations.

Brazil’s economy is affected by low consumer spending in the United States and Europe, which are Brazil’s biggest markets for its export industries. Recent reports have shown that Brazil is now the second most affected country by the crisis.

The immediate reaction of many governments to the financial crisis was to rescue the large ailing banks. Bank nationalization schemes have been enforced in some countries, like Iceland and Kazakhstan. Even mainstream U.S. economists are proposing the temporary nationalization of the country’s struggling banks. Trinidad and Tobago banks were rescued not just by their government but also by governments from neighboring countries.

Is nationalization a wise economic decision? Should bankrupt companies receive government assistance? The opinion of bloggers is divided.

Some are open to the idea of nationalizing certain businesses if it can stabilize the economy. Recognizing that orthodox economic prescriptions have so far failed to reverse the declining economy, some writers have expressed willingness to accept bold measures like the nationalization of the banking industry.

But others are vehemently objecting to government initiatives to revive failing companies. They believe the politicization of large financial institutions is counterproductive. Others want the government to euthanize these firms which they blame for creating the global financial mess. It does not help that prominent companies like AIG which received government funding have angered the public by distributing hefty bonuses to their executives.

If bailouts are rejected by many individuals and groups, stimulus plans are demanded by the public. To assure their constituents that something is being planned or done to revive the economy, governments around the world are drafting various economic stimulus packages.

Hungary, Turkey and Indonesia will implement tax reforms. Taiwan has signed a controversial trade agreement with China and several Southeast Asian nations. Hiring street sweepers is part of the Philippine stimulus plan. Mongolia has unveiled a 1.5 trillion tugrik stimulus plan (US$980 million) – but critics claim the program is only intended to cover the budget deficit.

It seems that Russia is relying on “gunpowder economics” for its version of a stimulus plan, as it sold a greater number of weapons last year. Part of Czech Republic’s stimulus program involves spending on energy efficiency projects such as heat-proofing public buildings.

China’s central government has announced a four trillion yuan stimulus package (US$586 billion dollars). But some analysts are worried that corruption and poor infrastructure projects will cause the failure of the stimulus plan. In Cambodia, it is the opposition which has suggested a stimulus package. Predictably, the government rejected it.

Malaysia has recently launched its second stimulus program. Named a “mini-budget,” this stimulus plan has generated a lot of discussion, but also criticism, in the country. Spain and Italy have each launched three stimulus packages.

There are analysts who reject the wisdom of “stimulucrats.” They believe that government intervention in the economy is dangerous. They are worried that unrestrained public spending will hurt taxpayers in the long run. But a ruling party which does not offer any rescue plan to revive the economy is certain to encounter defeat in the public opinion polls. It is no longer wise for bureaucrats to promote the self-regulation of markets. The era of big governments will stage a comeback this year.

The economic crisis is now a global contagion. There are global bubbles, bailouts and stimulus plans. The United States has no monopoly on economic hardship and economic thinking in the world. While the economic woes of the United States are understandably the most recognizable, we should also study the economic conditions of other countries.

Useful things

“The production of too many useful things result in too many useless people.” – Karl Marx

DVR. Digital Video Recorder. The Comcast brochure promises that “Happiness is only a power button away.” With DVR, consumers can improve their TV viewing habits. DVR allows users to record their favorite shows, pause live TV, view an instant reply, rewind memorable scenes, and play programs in slow-motion. The brochure adds: DVR owners “can pause live TV while they answer the phone or get the pizza delivered.” Comcast empowers their customers by giving them choice (hundreds of news and entertainment channels), control (record 20 hours of high-definition programming), and convenience (watch shows when you want it).

Ideally, DVR can record Frasier, Cheers and Monk episodes while I’m out of the house. Then, after hours of web surfing, I can relax at night by watching these recorded shows. I can pause the TV if I want to prepare a midnight snack. I can skip the TV ads by fast forwarding the program. Fantastic! This is control, choice and convenience. This is happiness. This explains why more and more households are selecting cable companies with DVR services.

Still surprised why many residents of America are obese? Still wondering how politics has been reduced to spectacles (like watching the Obama inauguration)?

Technological advancements have revolutionized transportation and communications in the world. Complex processes have been simplified, distances were shortened, and travel has become faster. We are able to save time. Now, there is more time to pursue other meaningful activities. But what kind of activities are we exploring during our free time? Are we trying to solve scientific experiments? Are we developing theories about climate change, origins of the universe, and the end of philosophy? Are we debating about capitalism, socialism and democracy? Are we getting more involved in community affairs? Or do we feel liberated (and happy) enough sitting in front of the idiot box?

Our mobile phones, laptops, and GPS gadgets allow us to save time so that we can go home early to our family and friends. Unfortunately, we use our free time to watch TV.

Click. There was a time when we used different verbs to describe what we are doing or what we plan to do everyday. We switch on/off the lights. We rotate or dial the numbers on the telephone. We pump the kerosene. We eject the tapes. We write letters. We wash our clothes. We push buttons. We pull the trigger. We flip, swipe, spin, roll, mix, shuffle, press, squeeze. We slide, kick, jump, hop, bounce, punch, throw. We walk, run, jog, swim, lift, crawl. We huddle, cuddle, snuggle, kiss, embrace, cling, grasp.

Today, we click. Most of the time, we click. Left-click. Right-click. Double-click. Fast click. Silent click. We click things to make something happen. We click to communicate with fellow human beings. We click to punish criminals. We click to express our creative thoughts and emotions. We click to experience life. We click to use our imagination. We click to impose our dogmas. We click to affirm our faith. We click in order to act. We click to make others act. We click to make someone else suffer. Click. Click? Click!

Maybe it is convenient. It is easy to remember: click. It is a simple task: click. It is fast: click. It is safe: click. It is powerful: click. It is dull and stupid: click. One word to rule the world: click. One sound heard around the globe: click. One verb to control the behavior of all: click. I click therefore I am. I am therefore I click.

Etc. A bluetooth headset allows you to connect to your mobile phone and computer wirelessly and hands free. (Look Ma, no hands!). Convenient device for multitasking drivers. Is multitasking possible while driving? Yes, ofcourse. Driving and drinking is possible at the same time. It is common to see individuals talking to themselves while driving or walking. They are not loonies. Most likely, they are busy professionals who have little time to talk to simpletons like us or to appreciate the beauty of our post-industrial surroundings. The bluetooth headset promotes efficiency but discourages genuine interaction, communication, and human relationships.

The automatic carwash is convenient for many drivers. It is cheap, effective, and fast. Drivers can accomplish other tasks while waiting inside their cars. Like listening to radio? Playing PSP? Reading a book? Texting? Twittering? Finishing papers? Changing diapers? Many car owners are so busy with their work (especially those with 2-3 jobs) that they no longer have the time or the energy to clean their cars on weekends. It would have been a nice activity to bond with children or their pet dogs.

The Global Positioning System (GPS) is a gift from the friendly military establishment. We civilians are now using GPS for navigation purposes. Who needs big street maps and old persons to guide us in reaching our destination when we have the GPS? Why stop and ask the locals about driving directions? Why trust the advice of friends when the GPS is more reliable? Why remember natural landmarks when GPS is more accurate? Ignore your instincts, surrender to the wisdom of the GPS. Getting lost is an adventure. Asking people for directions (talking to people) is not scary. And do we really need to reach our vacation hotel as quickly as possible? What about the idea of enjoying the nature trail? We should recalculate our travel priorities.

TV captioning is annoying. If you’re deaf, use it. If you need to research something about a program, TV captioning would be helpful. But if you want to be entertained, don’t use it. If you miss a dialogue, ask your family or friends. If you’re alone, forget the urge to know the missed dialogue. It’s part of the fun of watching TV. Why do we need to know the whole script of the program? Most of them are trash anyway. There are lines which are best not translated or transcribed for the TV viewers. There are times when you have to interpret the TV drama or movie based on your understanding of the scenes.

Perhaps the Catholic Church is correct. We need to go on hi-tech fasting. Turn-off the gadgets once in a while. Reject the “prefabricated amusements” (Kingsley Amis’ term) offered by hitech companies. Feed our souls and minds, not our gadget-dependent bodies.

“All savages are too much occupied with their own wants and necessities, to give much attention to those of another person.” – Adam Smith

Recession causing global discontent

The Wall Street crash and the collapsed housing industry in the United States are the aspects of the global recession that have been most highlighted. Without belittling these unfortunate economic disasters, we should also take note of other effects of the crisis that people around the world are witnessing and experiencing every day.

For example, the economic downturn is forcing many South Koreans to change or abandon their travel plans. This has affected the tourism industry in Brunei, which is a favorite destination of many South Koreans. Because of declining numbers of global tourists, Egypt’s tourism workers are complaining that their salaries are not being paid on time.

Decreased consumer spending in the United States has also brought down the demand for garments made in Bangladesh. This has weakened the garments export industry of Bangladesh, which employs a large number of the population. Bangladesh exports its products mainly to the United States and the United Kingdom.

In Russia, the financial crisis is signified by reduced government spending on healthcare. In Japan, the recession has become evident through reports showing reduced department store hours, a slump in car sales and an increasing presence of jobless and homeless persons in temporary facilities, parks and even Internet cafes.

The economic freeze became literal in Ukraine as hot water was shut off in much of Kiev for a week last December because of unpaid water bills. Ukrainian blogger Evie reported that residents couldn’t even wash their dishes because the water in the taps was literally freezing.

Hong Kong, a tower of strength in the global financial community, was shocked to learn that the stocks of HSBC Holdings crashed to their lowest level since 1995. The shock was personified by a TV commentator who shed a tear while reporting the unbelievable plunge in the bank’s stocks last week.

The global recession is forcing many people to behave in strange ways. In Latvia, four special guard dogs in a state prison were killed to save public funds. In prosperous Singapore a disgruntled senior citizen, angry at not receiving a red envelope containing US$135 traditionally given at Chinese New Year, set a lawmaker on fire. Bloggers from Jamaica and Trinidad and Tobago have observed that many people are now keeping their money under mattresses instead of depositing them in banks.

Even language has not been spared by the recession contagion. In Kazakhstan the word “crisis” is now perceived as a taboo, especially by government ministers. In Japan, asking “What are you up to now?” and “Are you married” have become taboo questions because of rising unemployment. In the Philippines, the government has redefined the meaning of unemployment. If you are jobless but not actively looking for work, you are not considered as unemployed by the state.

The current economic crisis has worsened social inequalities in many countries. It is not surprising that public unrest has gripped both rich and poor nations. In Russia disgruntled citizens launched “dissenters’ marches” in the cities of Moscow and St. Petersburg last December. A drivers’ protest in Vladivostok was significant because the media openly discussed the prospect of unrest in Russia and the protesters were ordinary citizens who had refused to join opposition-led marches in the past.

As more Russians are becoming dissatisfied with the economy, the Russian president has unleashed a preemptive legal strike – the Russian criminal code was modified to allow the instant prosecution of persons who instigate “mass disturbances” and “diversions.”

Recession-related protests are erupting in different parts of the world. There was a general strike in France and wildcat strikes in Britain in January. Protesting Greek farmers clashed with riot police last month. More than 600 labor protests were registered in Egypt last year. In Singapore, investors protested in the streets when big Wall Street banks crashed last October.

Riots broke out in the French overseas departments of Guadeloupe and Martinique as people protested against skyrocketing prices. In Guadeloupe, the slogan of the rioters was “Let’s gather to fight against all sorts of abuses.”

More than 10,000 people participated in the so-called Penguin Revolution in Latvia in January. The protesters disliked the statement of the prime minister, who compared Latvians to penguins who stick together during severe winter storms.

Over the past few months, the financial crisis has engulfed much of the world and created disastrous economic consequences. The full impact of the global economic recession has not yet been felt. The number of jobless, homeless, hopeless and angry individuals and groups in the world is expected to swell further. This promises to be a very difficult and dangerous year.

Curious commodities

“Modern man is so surrounded by nothing but impersonal, lifeless objects that he becomes more and more obliged to accept the idea that he is living in an anti-individualistic social order.” – Georg Simmel

Credit card. If you want to rent a car in the United States, you need a credit card. You may have bundles of cash but credit card is required. Your ATM debit card may be loaded with a large amount of money, but your request for a car service would still be refused. Credit is indeed king. Companies are less interested in the available cash in the card. They are more concerned about your credit history. If you have established consistency in paying your credit, you will be able to purchase more commodities. A good customer is a person with a large credit. Kapag mas malaki ang utang mo, mas marami kang mabibili. A successful individual is someone with multiple credit cards.

Credit cards are efficient identification cards of the 21st century. Suspects can be located through their cards. Individuals can be questioned by the police if they purchase controversial commodities. Companies can determine the personalities, preferences, and shopping habits of their customers through credit cards. Eduardo Galeano puts it best: I owe therefore I am.

Credit cards are magic keys which make it possible for both rich and poor consumers to buy expensive things. Cards are used to buy cars, plane tickets, home accessories, and almost every available commodity in the so-called developed world. Online and phone shopping can be done only through the use of credit cards. Virtual money for virtual shopping.

Hindi pwedeng kuripot kapag gagamit ng credit card. Many victims of identity theft are those who do not use their cards often. To protect their identities, individuals have to swipe their cards in superstores as frequently as possible. Cardholders are obliged to buy, consume, and unleash their materialistic appetite or else….

Garbage bag. In the past we burn or bury our trash. There was also a time when we just throw our leftovers in the rivers or seas. The tides will sweep it away anyway. Waste disposal has not changed: our trash are still buried, burned and even discharged in the seas. But the process of hiding our garbage has become a little complex. Others do the odious task of handling our junk. We are outsourcing the difficult and unwanted responsibility of burying our garbage. Our participation is limited to the dumping of trash bags in garbage containers and trucks.

Because everything ends up as trash, garbage bags (some call it kitchen bags) have become a necessary item in the modern world. It is a curious reminder that every human being on the planet produces waste which we cannot properly handle. It signifies the overproduction of redundant commodities. We produce disposables, not goods. It shows that waste is the main product of the modern economic system. Others have argued that globalization’s legacy is the establishment of throw-away societies.

Trash bags are popular but underrated commodities. Everybody needs them but nobody wants to keep them. Their purpose is to be discharged as quickly as possible. They are hastily delivered to waiting dump trucks since they contain our dark, smelly, and everyday secrets. We are what we throw; and we don’t want others to look inside our garbage. Unfortunately for us, garbology is an established academic discipline.

Modern trash bags are funny. Some of them are advertised as powerful bags with an odor shield which could neutralize smell. Some are even scented. (We use vanilla-scented trash bags). Who will smell these bags anyway? The garbage men? Scavengers in the dumpsites? We deceive ourselves by believing that producing trash which does not smell is possible. Garbage without garbage. Waste without odor. Life without risks. Politics without politics….

Then there are the green bags for those who are proud of their politically-correct lifestyles. They segregate their trash; they recycle and reuse (but they don’t reduce since they always buy green things). Unfortunately, when garbage bins are collected, the green bags will be mixed with non-greens. At dumpsites, the greens will finally lose their privileged status. And it will be revealed that the so-called green bags are manufactured not to save the fragile ecosystem but to assure the earth-loving and guilt stricken consumers that producing waste can also become an environmental activity.

Recession suit. Wanna buy a suit? An Italian clothier is selling suits with a price tag of $43,000. That’s right, $43,000 (Forty-three thousand dollars). Convert it into pesos. Surprised? Here’s more surprise: The clothing company sold 30 suits last January. What is so special with these expensive suits? According to the clothier, the suits are made from rare fibers such as vicuna, pashmina and Qiviuk.

Is there really a recession in the United States? Probably the "elite of the elite" who bought the suits were not victims of Wall Street-Madoff ponzi scheme. But even if they have the money to spend on luxurious items, is it wise to spend $43,000 for a suit?

When progressives lambast individuals for buying things we don’t need in life, they refer in general to the rise of consumerism in society. But in this case, progressives need to be more specific and literal in their criticism. No one needs $43,000 suits. That amount of money is already more than the annual income of a minimum wage earner in recession-hit America.

Economists are criticizing the undeserving poor for buying houses which they couldn’t afford to pay. These subprime loans became so huge which led to the collapse of the housing industry in the country. But at least the poor bought something which they really need in life. A house is a basic necessity. Who is the more unreasonable human being: The poor worker who bought a modestly priced house for his/her family or a (filthy) rich banker who bought a $43,000 suit for himself?

Still surprised why America’s economy is declining?

News report about the infamous “recession suit” can be read here.

Hello Philippines: The gains and downside of the call center industry

Philippine President Gloria Arroyo is confident her country can weather the economic storm brought about by rising food and fuel prices. Arroyo said the Philippines will endeavor to generate compensating gains on the asset side of the economy through the soft commodities it can export. The president was referring to the Business Process Outsourcing, or BPO, industry.

Outsourcing refers to the handing over of specific business processes of big companies from the United States and Europe to outsiders, mostly Asian countries, to cut costs and rationalize operations. The call center sub-sector is the major component of the BPO industry, but other BPO services include transcription, software development and digital content.

Nobody expected the BPO industry to flourish in the Philippines. But it is now recognized as the country’s sunshine industry. Close to 300,000 Filipinos, most of them in their 20s, are employed by BPO companies. Last year, the industry generated US$4.9 billion in revenues.

India is the undisputed global leader in outsourcing investments. But the Philippines is catching up. In 2007 the Philippines was named “Offshoring Destination of the Year” by the United Kingdom’s National Outsourcing Association.

It its 2008 Asian Contact Centre Industry Benchmarking Report, Callcentres.net said the Philippine BPO industry will grow by 23 percent. This figure is remarkable compared to that of Malaysia, which is growing only at 17 percent; Singapore, 8 percent; Thailand, 15 percent and India, 10 percent.

Why is the Philippines an ideal investment destination for BPO companies? The Philippines has a large labor pool of college graduates. The Philippines also offers the third lowest cost of operating a call center seat in the world next to India and China.

The Philippines plans to grab 10 percent of the world market for outsourcing operations by the year 2010. The Business Processing Association of the Philippines is optimistic about the prospects of the BPO industry. According to its projection, BPO companies will employ more than 900,000 workers and revenues will reach US$13 billion in the next three years. BPO companies are also expected to contribute to 6.5 percent of the nation’s GDP

It also has an interesting study about the direct and indirect benefits of the BPO industry to the Philippine economy. In 2010 BPO companies will spend US$5 billion in annual salaries and benefits, 2.4 billion Big Mac meals will be consumed, 230,000 middle-class houses will be built, 10 million iPods will be sold, 190 million Bench jeans will be used, 1.2 million indirect jobs will be created and 700,000 classrooms will be constructed from tax earnings.

Challenges

The Philippine BPO industry needs an additional one million recruits in order to sustain its high growth. Industry players and scholars recognize that there are various obstacles to achieve this goal.

They cite the "insufficient quantity of suitable and willing talent to fuel growth, lack of office space to achieve BPO target expansion, and persistent perception of Philippines as a high-risk investment.”

Prof. Jorge Sibal quoted a 2005 study which identified the prevalence of natural disasters, security threats, data theft, high levels of corruption, slow government bureaucracy, high electricity costs, expensive telecommunications systems and the digital divide in the country as factors why the Philippines is losing competitiveness.

To address the deteriorating language proficiency of students, President Arroyo mandated the use of English language as the medium of instruction in schools. Today, 82 percent percent of offshoring and outsourcing operations take place in Metro Manila. To remedy this overconcentration in the nation’s capital, the government has listed 24 cities as the next-wave centers of the BPO industry. The Cyber Corridor program was also strengthened to help transform the Philippines into an Information Technology-enabled government in Asia.

Not sustainable

Despite being a consistent dollar-earner for the Philippines, some economists believe the BPO industry does not contribute much to the progress of the nation.

Dr. Edgardo Espiritu, an economist and former government minister, cautions the current administration against relying on the BPO as a "major driver of sustained growth." He is worried that call centers make the Philippine "growth prospects too dependent on foreign economic cycles." He warns that BPO investments do not offer much opportunity in terms of technology transfers and linkages with other domestic industries. He notes that the BPO industry has a "limiting effect on the development of human resources in terms of acquiring new learning and skills."

The Philippine Institute for Development Studies cites the case of India whose expansive BPO industry seldom creates intellectual property for Indian firms. Instead of focusing on the BPO sector, the group urges the government to continue supporting the manufacturing sector, “which is the true engine of economic growth.” The Philippines is the only country in the region whose manufacturing sector has declined in the last twenty years.

Analyst Philip M. Lustre Jr. has also warned that the projected victory of Democratic candidate Sen. Barack Obama in the U.S. presidential elections could weaken the demand for outsourcing services. He thinks that an Obama victory “could lead to a policy shift which could mean a combination of heavy taxes for U.S. firms that export jobs to Asian markets and tax incentives for those firms that keep them in the United States.”

Labor issues

BPO companies may be offering higher salaries but they also confront labor issues. Former BPO employees cite the “lack of career path, uninteresting work and below industry-rate remuneration” as among the reasons why they left the industry.

Since the United States is the biggest market of BPO industry, this requires call center operations during the evening. The call center sub-sector is changing the nightlife of Manila. Bars, restaurants and convenience stores are open every morning to accommodate the night workers. Graveyard shift workers are exposed to many health risks. Many workers complain of fatigue, disorientation and disturbed sleep. Medical specialists point out that disrupting the internal body clock can cause manic depression and heart problems.

BPO employees are also deprived of "socialization opportunities" with family and friends. Dr. Pradnya Kulkarni, who writes for United Press International-Asia, adds that young BPO workers, who receive high salaries, do not have the maturity and emotional capability to handle their wealth. This "sudden wealth syndrome" has led to such high-risk behaviors as loose sexual practices, drug addictions and alcohol abuse.

There is almost no labor union in BPO companies. BPO employees admit that there are many companies which discourage the formation of labor unions.

A 2004 study highlighted some of the frustrating work conditions encountered by call center agents: "Aside from working at ungodly hours, some work at the computer 7.5 hours a day, giving the same answers to the same questions. Workers are exposed to racist and insulting remarks and are not allowed to retaliate or hang up without the team leader’s permission. When dealing with an irate caller, they have to read a script three times to warn the caller of their improper behavior before they can drop the call. Worst, they are not supposed to be Filipinos when they talk to their callers."

Boon or bane?

Aside from nursing, call center jobs will remain the most popular career options for young Filipinos in the next few years. The BPO sector has provided financially-rewarding job opportunities for young graduates to remain in the country. To a certain extent, it helped in limiting the brain drain problem of the Philippines

In order to remain competitive, the Philippine BPO industry needs to focus on innovation. The government has to protect current incentive regime, simplify incentive process and expedite data protection regulation.

But it is also dangerous to exaggerate the importance of the BPO industry. The government should put more emphasis on propelling the domestic economy as a whole rather than making public institutions and laws serve the needs of BPO companies.

It is not certain how long outsourcing will remain a profitable industry. Foreign firms can decide tomorrow if they want to shift outsourcing operations somewhere else. If that day comes, what is the alternative employment for English-speaking and insomniac call center agents? (July 2008)

Philippine BPO Workforce

Employees

2004

2005

2006

2007

2010

Contact Center

64,0000

112,000

160,000

198,000

331,000

Back Office

15,000

22,500

36,000

40,156

299,000

Medical Transcription

4,300

5,950

7,675

16,824

124,764

Animation

3,000

4,500

6,500

7,000

41,000

Software Development

10,000

12,000

16,000

29,188

75,000

Engineering Design

2,000

2,800

4,400

8,000

21,000

Other services

2,200

3,500

5,000

 

29,000

Workforce

100,500

163,250

237,175

 

920,764

Source: Business Processing Association of the Philippines

Philippine BPO Revenues

Revenues

2004

2005

2006

2007

2010

Customer Care

1,024

1,792

2,680

3,600

5,296

Back Office

120

188

280

398

2,392

Medical Transcription

46

76

107

197

1,744

Animation

52

74

97

105

759

Software Development

170

204

272

423

1,275

Engineering Design

34

48

68

152

357

Other services

29

46

65

 

377

Revenues $ Million

$1,474

$2,419

$3,457

$4,875

$12,199

Source: Business Processing Association of the Philippines

    Annual BPO salary in Asia

Country

Average Salary ($)

Thailand

4,874

Malaysia

5,199

Singapore

16,884

India

2,862

China

2,539

Philippines

3,964

Source: Callcentres.net

Unmasking poverty

Links: Medical tourism in Indonesia. Advantages of working in Brunei. Impact of Western culture in Laos. Soldiers using Buddha amulets in Thailand.

Myanmar: Long prison terms for dissidents, a post written for Global Voices. Read the French translation.

The Philippines is a poor country. But it seems it is not too poor to qualify for debt relief programs. International finance institutions classify the Philippines as a middle-income country because of its overseas remittances. There is a disconnect between what economists measure and what ordinary Filipinos experience everyday. The alchemists, este, economists, insist that OFW money is proof of economic growth, prosperity. But in reality it signifies dependence, economic bondage, and domestic poverty.

The government, global capital, and their paid mercenaries are doing everything to mask the extent of poverty in the Philippines. To preserve the oppressive status quo, it is important to deceive the people about the grand failure of capitalism in uplifting the conditions in a backward society (read: semifeudal, semicolonial) like the Philippines.

Since it is impossible to hide the truth of poverty in the country, the apologist-pimps concoct various academic hubris to distort the meaning of poverty as we know it.

Politicians often twist words when they discuss poverty. For example, OFWs are now called expats by President Gloria Arroyo. Government agencies redefine economic terms to minimize poverty incidences. For instance, if you’re jobless but not looking for work, then you are not considered unemployed. During a public hearing, a congressman asked the NEDA about the basis of its statement which claimed that more than 80 percent of VAT revenues were paid by the rich. The NEDA representative said that those who earn at least seven thousand pesos a month are considered rich by the government.

Another tried and tested formula is to physically eliminate the poor. Painted walls were built near the highways to hide the dwellings of the poor during the Imeldific days. The MMDA uses Gestapo tactics to deny the poor of opportunities to earn a living in the streets of Metro Manila. Relocation programs do not cease. In the past, Manila’s urban poor residents were relocated to Quezon City, Cavite, Bulacan and Laguna. Smokey Mountain did not disappear; it was transferred to remote Payatas. Soon Payatas and the urban poor communities around it would have to be removed as well since they have become too close to Quezon City’s rising business centers and middle class subdivisions.

There is a new strategy. Well, it is an old ruthless tactic which has been somewhat modified today: Kill the defenders of the poor. Liquidate the activists so that the rest of the population will think twice before challenging the authorities. It works in many ways but in the end it is ineffective.

Poverty indicators: 1970s

What is then the extent of poverty in the country? If the government is to be believed, at least 30 percent of the population are poor. It is definitely a conservative estimate. To measure poverty, economists cite numerous statistics: daily cost of living, minimum wage, inflation, family expenditures, GDP.

There are many good articles exposing the government manipulation of numbers to minimize poverty in the country. I will focus on poverty studies during the 1970s. My primary source is an article written by Edna Formilleza of De La Salle University.

During the early 1970s, one way to measure the poverty threshold was to determine the budget for an inexpensive food basket, as determined by the Food and Nutrition Center. A sample of an official inexpensive menu during that time: tomato egg salad, sweet potatoes, plus five kinds of vegetables. (Walang instant noodles? Hehe).

Here are some selected national poverty indicators in 1973

– 69.9 percent, poverty incidence in the Philippines
– 28.3 percent, households with electricity
– 63.8 percent, households with water pump
– 41.3 percent, households with toilets
– 72.6 percent, households using wood or charcoal for cooking

In 1975 the subsistence standard of living includes “the cost of a basket of goods and services providing nutritional, shelter, health, and educational requirements for the inter-generational survival of the family.” The following are considered as absolute minimum requirements of living:

1. Shelter and clothing for protection against the elements;
2. Health care needs to prevent and recover from diseases prevalent in the community;
3. The level of education necessary to achieve literacy;
4. Abilities and skills needed for minimum degree of social, political and economic participation;
5. Two changes in garment per person per year;
6. Schooling up to Grade VI for children;
7. Inputed cost of rent

In 1978 the NSDB (DOST ata ngayon) and MSSD (DSWD ngayon) conducted a poverty study in the city of Manila. Urban poor residents along Philippine National Railway tracks and esteros were interviewed. Here are some of the findings:

– 42 percent of household heads were unemployed
– 60 percent of household dwellings were shanties (barong-barong)
– 30 percent use public toilets
– 30 percent use ballot (wrap) system for their toilet facility
– radio was the most popular type of communication medium, followed by newspapers and comics

Sen

Last year, I was able to read Amartya Sen’s Inequality Reexamined. His arguments are compelling: Measuring low income and income gap to determine poverty level are restrictive in assessing inequality. Sen said “neither approach pays attention to distribution of income among poor.” Even among the poor living below the poverty line, there are those who are poorer than others.

His proposal: “Poverty is better seen in terms of capability failure than in terms of failure to meet the basic needs of specified commodities… to be poor is to have an income below what is adequate for generating the specified levels of capabilities for the person in question.”

Sen is advocating equality of capabilities, not equality of opportunities. He believes it is more practical and correct to judge inequality in terms of the capability to achieve and the freedom to pursue well-being. Possession of primary goods/high income does not guarantee achievements of well-being. Some would have more capability and freedom to pursue their well-being than others.

Sen argued that achievement in capability has to be sought in public policy.

Special economic indicators

Is there a link between leg appeal and prosperity? Writer Caroline Bird notes that skirt sales dropped in 1921 and 1929 – which were periods of economic recession in the United States. Skirt sales rose in 1927, during World War II, and 1965 – which were prosperous times. On the other hand, it has been observed that lipsticks and cupcakes are selling well during hard times.

There is a Big Mac index and Coca Cola index, why not a Starbucks index? Daniel Gross of Slate writes:

"There’s a pretty close correlation between a country having a significant Starbucks presence, especially in its financial capital, and major financial cock-ups…Having a significant Starbucks presence is a pretty significant indicator of the degree of connectedness to the form of highly caffeinated, free-spending capitalism that got us into this mess.

London has 256 Starbucks. Madrid has 48. Paris 36. South Korea has 256. Manhattan alone has nearly 200. Hong Kong has more than 100. Kuala Lumpur has more than 30. Singapore has 57 Starbucks

"There are many spots on the globe where it’s tough to find a Starbucks. And these are precisely the places where banks are surviving.

"In the entire continent of Africa, I count just three (in Egypt), We haven’t heard much about bailouts in Central America, where Starbucks has no presence. South America’s banks may be buckling, but they haven’t broken. Argentina, formerly a financial basket case and now a pocket of relative strength, has just one store. Brazil, with a population of nearly 200 million, has a mere 14.

"Italy hasn’t suffered any major bank failures in part because its banking sector isn’t very active on the international scene. The number of Starbucks there? Zero. And the small countries of Northern Europe, whose banking systems have been largely spared, are largely Starbucks-free. (There are two in Denmark, three in the Netherlands, and none in the Scandinavian trio of Sweden, Finland, and Norway.)"

Ilan ba ang Starbucks sa Pilipinas? Isama pa diyan ang ibang mga tindahan ng kape.

These indicators are interesting and funny but they do not explain the roots of our economic woes. A semifeudal society like the Philippines is always in crisis; that is why the conditions for waging a revolution are always present. Para yang mga ulat trapiko sa TV at radyo: Kailan ba walang trapik sa Metro Manila tuwing umaga’t hapon?

Related entries:

Debt experience
Poverty and system losses
Pikit kape

Recession and its discontents

Links: A playcenter for the elderly in Brunei. The coffee industry of Laos. A stampede in Indonesia where people are queuing for alms. Indonesia’s anti-porn law.

Southeast Asia: Impact of Financial Crisis, a post written for Global Voices. The New York Times links again to my post about the Preah Vihear ownership dispute.

The Hollywood film Night at the Museum ends on a happy note: the series of bizarre events in the Museum of Natural History tickled the curiosity of New York residents which led more people to visit the museum. Film critics note how the ending of the film mimicked real life: The box-office success of the film also led to a better museum attendance.

There is another example of reel life becoming real: Ben Stiller was hired as the museum’s night guard in order to replace three veteran night guards. The workload of three regular workers was delegated to a single worker who was younger, stronger, but probably less eligible to receive fringe benefits. This is what companies are doing today. They are rationalizing operations. To borrow the words of Spiderman’s uncle, corporations are downsizing in order to upsize their profits.

The hiring of the night guard was symbolic – he represents the modern worker. The veteran night guards who had to retire represent the old workforce. They symbolize the regular workers who are being replaced by contractuals. Workers who receive full benefits are already endangered species in the world.

In the film, the night guard watches over exhibits and waxworks portraying cavemen, cowboys, warriors, dictators, adventurers, and other historic figures. Should regular workers of the 20th century be archived/displayed in the museum as well?

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The Great Depression during the 1930s did not create poverty in America. Writer Caroline Bird (The Invisible Scar) clarifies a relevant point: “(The Crash made us see, in a binding flash of insight), that the Depression did not depress the conditions of the poor. It merely publicized them. The poor had been poor all along. It was just that nobody had looked at them.”

The Wall Street crash has publicized the extent of poverty in rich America. Suddenly, there are homeless middle-class citizens, hungry children, and jobless professionals. Finally an admission that widespread poverty exists in society. Finally a recognition of the worsening conditions of the urban poor.

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A simple explanation of the US housing bubble:

Johnny Pitts is a bus driver who bought a house in 2005 worth $430,000. His mortgage payment is $3,730 a month (plus more on taxes and insurance). His monthly salary is only $4,000. A couple pays $5,000 monthly for their mortgage. Their combined monthly salary is also $5,000. (San Francisco Chronicle, September 19, C3.)

Now we know why foreclosure cases are rising. And another consequence: increasing number of homeless Americans.

During the Great Depression, poverty camps were called Hoovervilles – maybe as a protest against then US President Herbert Hoover. Hoovervilles (or better, Bushvilles) are back today. Tent cities are spreading across America. According to the National Coalition for the Homeless, 61 percent of local and state homeless groups reported a rise in homelessness since 2007.

Officially, there are 666,000 homeless Americans (January 2007). But this figure is conservative. The Department of Housing and Urban Development did not include those who stayed with relatives or friends, and those who are living in campgrounds and motel rooms.

In short, dumadami ang NPA sa America.

******************************

According to the California Job Journal (September 21), the unemployment rate in California rose to 7.7 percent in August, the highest level since 1996. Nationwide, the economic crisis has eliminated 605,000 jobs.

According to the Wall Street Journal (September 16, A3), the financial-services industry had shed more than 11,000 jobs in New York and 20,000 in London. The fate of 25,000 workers of bankrupt Lehman remains uncertain.

Luxury shopping stores, restaurants, hotels, fashion and entertainment have benefited during the boom years on Wall Street. Banks are also big sources of city tax revenues. What will happen to the world’s financial centers, especially New York and London? Both cities are dependent on the financial-services industry.

*****************************

Because of fewer job options, young Americans are joining the military. The 2008 recruitment target of the military was met as early as last month. It seems the weak economy is an advantage for the army’s recruitment goals.

Crime, particularly property theft, is expected to rise in the coming months. This is good news for America’s Prison-Industrial complex. In recent years or decades, the expanding prison system has benefited the US economy. It created new and permanent jobs, stimulated production, and increased the demand for more efficient security gadgets.

The recession will not just lead America to shop for new wars abroad. It will intensify repression at home. It will lead to more American minorities behind jails.

*******************************

Bush and company approved a bailout plan for bankrupt Wall Street banks. The government has money to spare for Wall Street but it has allotted little for social welfare. Public schools are suffering because of the fiscal crisis. Many California classrooms are overcrowded and teachers were fired because of budget problems. For example, an Algebra class in a Union City school had 20 students last year; today there are 43 students in the class. Fourteen teachers were removed because the school could not pay their salaries. (San Francisco Chronicle, September 12, A1)

Meanwhile, the bailout beneficiaries are not changing their spending habits. They approved hefty bonuses for their outgoing disgraced executives. And they continue to indulge in luxurious living. Days after a bailout was approved for AIG, the company executives and salespeople met in a Southern California resort. The company spent $200,000 on rooms, $150,000 on meals, $23,000 in spa expenses and $7,000 on golf. ((San Francisco Chronicle, October 8, A15)

Hindi na nahiya ang mga ito. Napaka insensitive. Ordinary Americans are losing their jobs, homes, and pension money, and these Wall Street executives could still afford to meet in a luxurious resort.

Related entries:

Bees and economy
Selda
Labor pains

China milk and Wall Street scandals

Links: Southeast Asia’s tallest waterfalls. Myanmar-China jade trade. Coconut milk recipes in Vietnam and Thailand. Sabah Bloggers Gathering 2008.

Several infants have died and thousands were hospitalized in China after drinking milk products contaminated with melamine, a dangerous industrial chemical. The Chinese government admitted that Chinese companies may have exported the tainted milk products. Consumers and health agencies from around the world are now rejecting Chinese milk products.

On the other side of the world, several financial institutions in Wall Street have filed for bankruptcy. Other big U.S. banks are expected to close down as well due to mounting bad loans and subprime losses. The federal government has readied a financial package to rescue these ailing banks.

Is there a direct link between the China milk scandal and the Wall Street crash? Perhaps not. But they are similar economic disasters which expose the downside of corporate globalization.

The drive for profit may have led the Chinese milk manufacturers to mix the harmful melamine chemical with their products. They endangered consumer welfare and violated business ethics in order to reduce production costs.

On the other hand, various U.S. credit agencies ignored banking rules and common sense when they approved housing loans to persons who couldn’t afford to pay their financial obligations. To prevent losses from these unpaid mortgages, banks created artificial financial instruments and traded them in the market.

It is safe to assume that Wall Street executives were aware that these speculative activities would undermine the stability of the market. But it seems the temptation to earn super profits was difficult to refuse.

Chinese milk companies and Wall Street were able to break the rules because of inadequate regulation. Health inspectors in China bungled their jobs. The U.S. government was unwilling to regulate the big transactions on Wall Street.

Economic damage, and deaths in the case of China, could have been minimized if both the Chinese and U.S. governments had intervened early and swiftly when the problem was still manageable. Chinese officials were informed about the tainted milk issue two months ago but they didn’t order the withdrawal of milk products from the market. They didn’t warn their citizens about the health hazards of drinking the contaminated milk. They didn’t stop the shipment of milk products to other countries.

When foreclosure cases in the housing sector began to rise a few years ago, the U.S. government should have devised an emergency plan to help homeowners and to assist the banking sector. But it didn’t act. It refused to tap public money to save the homes of its citizens. Instead, it expected the glorified market forces to fix the problem.

The financial mess got worse. Now the government will be using billions and billions of taxpayers’ money to bail out Wall Street. Thousands will still remain homeless but Wall Street executives will get their hefty paychecks.

The negative impact of the China milk and Wall Street scandals was felt worldwide, thanks to a globalized economy. Chinese milk and milk-based products are exported to almost all countries because they are less expensive. The melamine-infested milk from erstwhile socialist China is the “specter that haunts” the world today.

The Wall Street crash led to the weakening of other financial centers in the world. Global stock markets went down. The decline of the U.S. banking sector has affected the economies of small and big nations alike. It is not only the U.S. economy which is under threat of recession; global capitalism is in serious trouble.

But interestingly, the global impact of the China milk and Wall Street scandals has revealed the world’s dependence on the economies of China and the United States. The world needs China’s cheap goods and the stability of the United States, the world’s biggest consumer market.

Governments cannot afford to ban Chinese goods despite the spotty record of China’s export industry. China produces most of our daily needs, from toothpaste to bed pillows. In the same way, the world cannot ignore a bankrupt United States. The fall of capitalist America will trigger a global crisis.

Whether we like or hate China and the United States, they should be part of the solution the moment we decide to reform the global economy.

Did the world gain something from the China milk scandal? It remains to be seen. But it is promising to note that there are renewed discussions about the importance of breastfeeding, especially in the developing nations. Trade officials are now imposing better safety standards on Chinese export goods. It is hoped that China will improve the working conditions in its manufacturing sector.

Did the world gain something from the Wall Street crash? It is debatable whether the bailout program will be good or bad for the U.S. economy. Definitely there will be new banking regulations. Governments around the world are now reviewing their economic policies, especially those that concern the financial sector.

What is the symbolic relationship of the China milk scandal and the Wall Street crash? By providing the capital which fueled the economic investments in China, Wall Street somehow triggered a chain of events which led to the untimely deaths of numerous infants. Wall Street’s “fictitious capital” produced tangible results which the world’s poor had to bear.

For many people living in poor countries, the U.S. financial crisis looks and sounds too vague on TV. Few people understand what liquidation, credit crunch and subprime really mean. If the U.S. economy is falling, what are its concrete consequences which the global poor have to fear?

The infant deaths caused by melamine-tainted milk in China gave the public an image to visualize the horrific consequences of unbridled corporate globalization. Capitalism which obeys few or no rules leads to bankruptcies, homelessness and infant deaths.

Related entries:

Breastfeeding in the Philippines
Viagra and capitalism

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Total recall. It is reasonable to single out China for producing unsafe and low quality products. But production glitches and undermining of consumer welfare are inherent in capitalism. Labor is given low priority (low wages, unpaid benefits, appalling working conditions) since the profit drive is the primary concern of capitalists. Thus it is no longer surprising to read about these product recalls in the United States:

– 600,000 Simplicity brand cribs which are already in stores can lead to infant entrapment and suffocation;
– 20,000 children’s metal water bottles in San Francisco can pose as choking hazard to young children
– 223,000 SlyDog dog leashes can pose a serious risk of injury
– 57,000 Fairy Dust pendants and candle charms contain high levels of lead
– 330,000 pairs of Circo Rosette bobbie socks can pose a choking hazard to young children
– 190,000 MacGregor folding soccer goals and Mitre folding soccer goals can pose a head and neck entrapment or strangulation hazard
– 25,000 Apeks second-stage scuba regulators and 6,000 Titan DIN first-stage scuba regulators can pose as drowning hazard
– 73,000 Vaio TZ-series notebook computers can pose a burn hazard
– 24,000 Wolf gas ranges can pose a burn hazard
– 322,000 MYO Belt headlamps can pose a burn hazard

Source: San Francisco Chronicle, September 21, 2008, C2