In review and in prospect
The idea, for example, of funding infrastructure with debt is based on the assumption that said infrastructure will pave the way for economic development that then generates the funds to service said debt. When a debt-funded asset is not productively utilised, the result is a no-brainer: poverty. Simple, right?
As such, debt is not necessarily bad. It is only bad when the thing that we acquire with it is not turned into an asset. Indeed, “vice president” Leni Robredo famously expressed her fear of debt with regard to a proposal to build a rail service linking her home province in Bicol to Metro Manila that would require loans to finance its more than Php170 billion price tag…
“First of all, it’s debt. Very huge, P171 billion. That’s very huge,” said Robredo, who is a native of Naga. “Our fear is we might get stuck in a debt trap like the one experienced by Sri Lanka,” she said.
In essence, Robredo is expressing a lack of confidence that Filipinos will successfully harvest at least 170 billion pesos in economic value from such a rail link over the term of the loan — which means, as she rightly pointed out, it is practically certain that we’d be stuck with that debt with nothing to show for. That’s a fair enough assessment of Filipinos’ capability to make good on a commitment not just to pay that debt but to make that debt a whorthwhile commitment. Examples of how debt-funded projects have impoverished Filipinos abound, after all.
So, yes, for a society to develop into a modern and prosperous one requires that these fundamental capabilities be in place in order to mitigate the risk inherent in putting capital to work. Indeed, if we examine the histories of the economic development of the world’s great nations, the above three would be the common denominators at work. Closer to home, the late Singapore leader Lee Kuan Yew focused on just these three things for the most part of his half-century effort to leading his country to greatness.
From what we have seen so far, the Philippine National “Debate” has also failed to come up with a roadmap along these lines simply because the quality of the discourse has never elevated to a level that tackles these fundamental challenges. Perhaps it is because, in a society of small minds, the topic of choice is always people rather than ideas. Small wonder that the Philippines remains doomed to make the same mistakes over and over again.
Last week's blog posts
Economic pitfalls that the Philippines must avoid
December 11, 2022 by The Unpopular Opinion
"It is also noteworthy that countries trapped in the middle income classification have a sluggish manufacturing sector. Numerous factors can be attributed to this trap, which includes but is not limited to populist policies..."
December 10, 2022 by benign0
"Coming from a supposed lawyer, an insistence that evidence plays second fiddle to personal opinion is borderline oxymoronic."