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Money and Numbers

Brynner the KingDuterte said that algebra is useless. Filipinos should learn business math. I think he is wrong. King Mongkut of Siam, of the famous “The King and I” starring Yul Brynner, was a dictatorial man in real life and on screen. But there is a scene where the English teacher tells him of the importance of algebra and he orders everybody to learn it. Could that be the reason why Thailand is quite prosperous?

But Duterte also has a point somehow. Maybe we – and I include myself as a Pinoy – don’t know how to use what we learned properly. I have done advanced mathematics in school, but often failed to manage my money properly, until I learned by doing. So I did not REALLY learn my business math – which in the end is just addition, subtraction, multiplication and division – and occasionally percentages. Because there are five steps to learning:

  1. understanding how something is supposed to work
  2. understanding how to be able to do it
  3. actually being able to do it
  4. applying it in reality
  5. mastering it

Mastering something means you apply it well. During a bad phase in my business I had to juggle my money, and first started by making notes, then a simple excel sheet and finally a cashflow sheet with expenses and income forecasts. Now I really know why I am doing it and how to avoid the danger zone. The classic Filipino educational system is a lot about theory and not about applicability and effects. The BBL draft I think shows this weakness. Back to money.

Talking about Money

“Mukhang pera” is a bad word in Filipino. It means money-faced. Some Filipinos say “pera lang iyan”. It’s just money. In the original abundance of the islands I guess it may not have mattered. But now where many people do not live in the barrio anymore, it does. Many Filipinos have debt issues. Some are gamblers. Many LGUs are in debt. There often have been budgeting issues.

It has dawned on me that many discussions in Philippine politics nowadays are about money. Here are some interesting articles from Joe America’s blog:

Money for Nothing

JapaneseIssuedPhilippinePeso-ObverseWhat surprises me is how many people believe that Jejomar Binay can give everybody in the Philippines the benefits he has given to Makati residents. It is clear that Makati is rich. The Philippines probably would go broke if he did what he plans to do. OK the national budget is 3 trillion pesos. Sounds like a lot of money. But divide 3 trillion by around 100 million Filipinos – keep things simple. Makes around 30 thousand pesos per Filipino a year.  That is around 600 Euro only. According to statistics government spending is around 16% of GDP. Not really much.

If one looks at other countries, the USA spends around 25% of its GDP for government, Australia around 35%, Switzerland around 30%. So you need to have the money first to be able to spend it. Common sense. There is I think a lot to be learned in these matters. There are those who think the government can print money. But it can only do so, very generally speaking, in proportion to the goods and services produced locally.

Otherwise you have inflation and your money loses value against other currencies. That is bad if you are importing a lot and/or have a lot of debt to other countries. Common sense I would say makes it logical that countries that produce more goods and services by themselves are more stable. One just has to look at prosperous countries like Japan, Korea, Switzerland, Australia, Canada to see that they have a lot of their own internal economy.

Burglars codesCollection and Distribution

Moving to another topic. It is well known that it can be hard to collect debts from some Filipinos. That many who earn salaries are dependent on loansharks for one reason or the other. But this is quite astounding:

  • That the BIR had a steep uphill fight in the last few years to improve collection efficiency
  • That the SSS has a lot of money uncollected according to the SSS article and others
  • That the money from the sale of Fort Bonifacio allegedly just vanished in thin air

On the distribution side, Pantawid Pamilya gives families ATM cards so that they can get their benefits from what I have gathered. But recently someone with 4Ps money was robbed in Albay – obviously it is paid out in cash also. Cash is of course always dangerous. It is not always traceable.

Important Questions

So there are a number of things that should be looked at to understand the money and the numbers better when it comes to the Philippines:

  • how much money is coming in (collections), being spent internally (costs) and being distributed like SSS and 4Ps?
  • how many taxpayers, how many SSS and GSIS members, how many beneficiaries of SSS, GSIS, 4Ps?
  • how much money is uncollected? BIR and SSS? How much money is not disbursed or liquidated?

In case of real freedom of information or FOI, these could be the first questions to be looked at. The details derive from the broader questions.

Some Observations

Just some observations as food for further thought:

  • In Germany, a lot is done via bank transfer. Tax offices demand quarterly advance payments, one fourth of expected annual income tax, from businesses. Businesses with employees have to submit electronic lists, I think to tax and social security offices – I am self-employed so I am not sure about this. As a former employee, I know that social security, health insurance and withholding tax are deducted from the gross monthly income, only the net income is paid out. Employers must transfer these contributions very quickly to the right institutions or risk a fine.
  • As for social security, unemployment pay or pension payments, everybody has a bank account and gets his money via bank transfer and then ATM card. There is a law that forces banks to give even poor people at least a basic bank account. Usually the very poor have a postal bank account or one at the local savings bank or rural bank. No cash and no cheques as far as I know.
  • One the personal money side, the Hanns-Seidel Foundation of Munich is helping the Philippines in the area of micro-finance and micro-enterprise development. This is good to make people depend less on loansharks and build their own existence, hopefully getting them out of poverty. Very many sari-sari stores close quickly because money is not properly managed from what I have heard so far. How financial literacy can generally be improved is a very significant question, especially among adults. Are there any DSWD programs for this? Does K-12 address it?

There is in my opinion not only much potential for leakage and inefficiency in the present Philippine system. But obviously a lot more for fraud and corruption, and persistent poverty.

Irineo B. R. Salazar, München, 1. February 2016

16 comments to Money and Numbers

  • karlgarcia

    http://www.quezon.ph/2008/10/15/apology-not-accepted/comment-page-1/#comment-971344

    hvrds
    October 15, 2008 at 12:32 pm (UTC 8) Link to this comment
    Back to the future by the head of the European Central Bank.

    While MLQ 3 noticed the same beggars in the same place for the last 14 years.

    Why are they invisible to the government?

    Close to thirty years after the virtual shut down of the Bretton Woods Institutions Jean Claude Trichet calls for a look at Bretton Woods arrangements again.

    That in itself is a sea change caused by the almost collapse of the worlds financial system. Off course he cannot come out and say openly to change the dominance of the dollar and its dangers now very apparent.

    Trichet Calls for Return to the `Discipline’ of Bretton Woods

    By John Fraher and Gabi Thesing

    Oct. 15 (Bloomberg) — European Central Bank President Jean- Claude Trichet said officials reshaping the world’s financial system should try to return to the “discipline” that governed markets in the decades after World War II.

    “Perhaps what we need is to go back to the first Bretton Woods, to go back to discipline,” Trichet said after giving a speech at the Economic Club of New York yesterday. “It’s absolutely clear that financial markets need discipline: macroeconomic discipline, monetary discipline, market discipline.”

    Some European policy makers are pushing to tighten oversight of markets after the past year’s credit squeeze culminated last week in the biggest stock sell-off since 1933. British Prime Minister Gordon Brown has suggested the most sweeping rethink of global financial architecture since U.S. and European officials met in Bretton Woods, New Hampshire, in 1944. The rules they drew up there governed much of the world economy for the following 30 years.

    “Creating stability by adapting frameworks that have worked historically can improve credibility and hence the effectiveness of policy stabilization measures,” said Lena Komileva, an economist at Tullett Prebon Plc in London. “This idea may gain traction with policy makers.”

    At Bretton Woods, nations agreed to fix exchange rates, establish the International Monetary Fund and start the process of rebuilding Europe’s economy in the aftermath of World War II by encouraging coordinated economic policies. Brown said national regulators must coordinate their work and banks should be pushed to disclose more trading positions.

    `Exceptional Circumstances’

    “If we don’t have discipline, then we are putting into question the functioning of the market economies and the functioning of our financial markets,” Trichet said.

    Asked whether the escalation of the financial crisis exposed shortcomings in the global monetary system, Trichet said central bankers have “been up to their responsibilities in these exceptional circumstances.”

    Trichet and U.S. Federal Reserve Chairman Ben S. Bernanke are struggling to restore order to credit markets after the collapse of Lehman Brothers Holdings Inc. and $638 billion in writedowns make banks reluctant to lend. The ECB and the Fed last week cut interest rates in tandem and this week agreed to flood the financial system with dollars.

    Trichet suggested that slowing growth in the 15-nation euro region may curb inflation, paving the way for more rate cuts after the ECB reduced its benchmark by 50 basis points to 3.75 percent.

    `Downside Risks’

    “There has been a materialization of the downside risks to growth and we have to take that into consideration in all respects, and particularly as regards the influence that it has on the upside risks for price stability,” Trichet said.

    He indicated that recent market turmoil was partly a consequence of the deregulation that occurred after Bretton Woods’ demise. That was triggered in 1971, when inflation forced the U.S. to abandon the dollar’s peg to gold, an anchor of the system, heralding the era of floating exchange rates.

    “The explosion of the first Bretton Woods in a way could be interpreted as a rejection of discipline,” said Trichet.

    Brown, who has pushed for a decade to strengthen the hand of international authorities overseeing the financial system, said Oct. 13 in London that “we must devise new rules for a world of global capital flows” just as the founders of Bretton Woods “devised rules for a world of limited capital flows.”

  • karlgarcia

    http://www.quezon.ph/2008/10/15/apology-not-accepted/comment-page-1/#comment-971344

    hvrds
    October 15, 2008 at 12:32 pm (UTC 8) Link to this comment
    Back to the future by the head of the European Central Bank.

    While MLQ 3 noticed the same beggars in the same place for the last 14 years.

    Why are they invisible to the government?

    Close to thirty years after the virtual shut down of the Bretton Woods Institutions Jean Claude Trichet calls for a look at Bretton Woods arrangements again.

    That in itself is a sea change caused by the almost collapse of the worlds financial system. Off course he cannot come out and say openly to change the dominance of the dollar and its dangers now very apparent.

    Trichet Calls for Return to the `Discipline’ of Bretton Woods

    By John Fraher and Gabi Thesing

    Oct. 15 (Bloomberg) — European Central Bank President Jean- Claude Trichet said officials reshaping the world’s financial system should try to return to the “discipline” that governed markets in the decades after World War II.

    “Perhaps what we need is to go back to the first Bretton Woods, to go back to discipline,” Trichet said after giving a speech at the Economic Club of New York yesterday. “It’s absolutely clear that financial markets need discipline: macroeconomic discipline, monetary discipline, market discipline.”

    Some European policy makers are pushing to tighten oversight of markets after the past year’s credit squeeze culminated last week in the biggest stock sell-off since 1933. British Prime Minister Gordon Brown has suggested the most sweeping rethink of global financial architecture since U.S. and European officials met in Bretton Woods, New Hampshire, in 1944. The rules they drew up there governed much of the world economy for the following 30 years.

    “Creating stability by adapting frameworks that have worked historically can improve credibility and hence the effectiveness of policy stabilization measures,” said Lena Komileva, an economist at Tullett Prebon Plc in London. “This idea may gain traction with policy makers.”

    At Bretton Woods, nations agreed to fix exchange rates, establish the International Monetary Fund and start the process of rebuilding Europe’s economy in the aftermath of World War II by encouraging coordinated economic policies. Brown said national regulators must coordinate their work and banks should be pushed to disclose more trading positions.

    `Exceptional Circumstances’

    “If we don’t have discipline, then we are putting into question the functioning of the market economies and the functioning of our financial markets,” Trichet said.

    Asked whether the escalation of the financial crisis exposed shortcomings in the global monetary system, Trichet said central bankers have “been up to their responsibilities in these exceptional circumstances.”

    Trichet and U.S. Federal Reserve Chairman Ben S. Bernanke are struggling to restore order to credit markets after the collapse of Lehman Brothers Holdings Inc. and $638 billion in writedowns make banks reluctant to lend. The ECB and the Fed last week cut interest rates in tandem and this week agreed to flood the financial system with dollars.

    Trichet suggested that slowing growth in the 15-nation euro region may curb inflation, paving the way for more rate cuts after the ECB reduced its benchmark by 50 basis points to 3.75 percent.

    `Downside Risks’

    “There has been a materialization of the downside risks to growth and we have to take that into consideration in all respects, and particularly as regards the influence that it has on the upside risks for price stability,” Trichet said.

    He indicated that recent market turmoil was partly a consequence of the deregulation that occurred after Bretton Woods’ demise. That was triggered in 1971, when inflation forced the U.S. to abandon the dollar’s peg to gold, an anchor of the system, heralding the era of floating exchange rates.

    “The explosion of the first Bretton Woods in a way could be interpreted as a rejection of discipline,” said Trichet.

    Brown, who has pushed for a decade to strengthen the hand of international authorities overseeing the financial system, said Oct. 13 in London that “we must devise new rules for a world of global capital flows” just as the founders of Bretton Woods “devised rules for a world of limited capital flows.”

  • karlgarcia

    http://www.quezon.ph/2008/04/21/it-doesnt-compute-revised/comment-page-3/#comment-789236

    hvrds
    April 23, 2008 at 11:48 am (UTC 8) Link to this comment
    The greatest historical event that had the most unintended consequence (unless one is a true Christian)was the invention of the steam engine. Some would point out to the Copernican discovery.

    The split between science and religion. Reformation and enlightenment.

    Today once again the digital revoltuion is being compared to that first seminal event in human history – the industrial revolution. Division of labor and specialization.

    The division of labor and the specialization of it is now mobile and flexible.

    Plus today we have the strains of the Bretton Woods System that had collapsed since 1972 and allowed to fester into what could become the mother of all economic downturns. Principally caused by the lack of a neutral international currency.

    James grant a fiancial analyst correctly pointed out recently that the United nations is an oxymoron and all States wish their currencies to be weak. (It serves them well in international trading) Except for the Phjils. which is still stuck in the ways of the gold standard.

    Governments, businesses and the labor force which are essentially economies that fail to recognize and adopt will be obliterated. That is the inevitability of history.

    The comparativwe advantage of the pinoy is that he is flexible but he has no self esteem as he has no history to ground him.

    There is no WE…..

    The two most important documents of the U.S. experiment in the practice of representative government has the word WE…. There was no broad based plebiscite/referendum to decide on the Declaration of Independence and the Constituion. It was the plutocracy that decided on the two documents.

    However they were (not all them) smart enough to know the limits of absolute power and initiated for themselves a system of checks and balances on absolute power and diluting that power amongst the representaives of Congress.

    There would be no tyranny of the majority nor of the minority that would be allowed to stand. That was the basic principle and ideals behind the documents.

    That was their basic theoretical belief. The practice turned out to be problematical but the same abiding principles bound up the union time and time again.

    Today the U.S. is a bi-polar reluctant empire. If it wants to remain number one it has to remain an empire.

    The strains of their unitary imposition of monetary imperialism is now rocking the planet. The perversion of the Keynesian based national financial system has been extended by pure political will and off course their military force onto the world by the forced acceptance by the underdeveloped and emerging economies of the dollar standard. The word’s of former Treasury Secretary of the U.S. John Connally ring out today as never before.

    “The dollar is our currency but it is your problem.”

    • http://philippinediaryproject.com/1936/03/06/march-6-1936/
      Diary of Francis Burton Harrison
      March 6, 1936

      Palting, who is an Ilocano, says of his people that they are never satisfied without some sum of money in the bank, while the Tagalogs spent everything they had “for tomorrow we die.” (Fable of the ant and the grasshopper!) He is insistent on a thorough reform of the Post Office bureau here; and also demands that something be done to prepare for the reception here of the Filipinos about to be repatriated by the United States.

      Doria called at Malacañan on Mrs. Quezon by appointment but Mrs. Rodriguez who speaks only Spanish seems to have gummed the conversation. Mrs. Quezon said she had cut out half of her trip to the East Indies because Junior was not well. She came back from Singapore on an uncomfortable freighter; and now complains about the inconvenience of accommodations for her at Malacañan Palace. Commended the social custom at Government House in Singapore, where all guests left immediately luncheon was finished.

  • https://archive.org/details/ppbsindeveloping00garc

    Planning Programming Budgeting System

    PPBS in Developing Countries
    a masteral thesis of my dad

  • The algebra scene BTW was not in the original movie but in the sitcom https://en.wikipedia.org/wiki/Anna_and_the_King_%28TV_series%29 also starring Yul Brynner.

    I think it was in the episode “Chulalongkorn’s grades”. But the text remains true and the I like the picture of King Mongkut from the movie a lot more.

  • Hahaha, I won’t tell a soul.

  • Added the link to the Albay robbery of 4Ps money, where one can see that DSWD is giving the right instructions to avoid such things:

    “The suspects hogtied the employees of Smart-Natco where (sir) Allan and his female officemate begged for their precious lives. The female employee was even hit on her face and head by the suspects and taken her personal money including gold bracelet,” Barnedo said. She added that she was also supposed to get P3,750 from the aid payout.

    Due to this incident, DSWD officials told the local conduits tapped by Land Bank of the Philippines to get security assistance from the authorities specifically in far-flung towns to avoid similar incidents from occurring.

  • Binay had a golden toilet seat.

    He practices his math by plusing the toilet.

  • Binay will give 30,000 to each of us then learns that the debt is past 7 trillion.

    He will have to take 70,000 from each of us.He will just wont tell us yet.

    • Bill in Oz mentioned the high inflation rate in the late Marcos period. It seems too much money was being printed. The Bangko Sentral complex at East Avenue / EDSA was built at that time, from what I gather, it was the first time pesos were printed locally, used to be in England before – I remember how Juana mentioned that he had a lot of fresh peso notes with him when he was on the way to Hawaii. Printing too much money – in olden days kings “debased the coinage” by putting less valuable metal inside – is a way of stealing money from the people by devaluing the currency. Schröder promised income tax cuts and fulfilled his promise starting 1998 – I was one of the fools who voted him because my income bracket was affected – but raised all kinds of other taxes, so in the end everything was much more expensive, not much benefit from cuts.

  • A most interesting read, and thanks for the citations. I’ve discovered I learned more about English by taking Latin than I did in English, and more about reason by taking math than doing what anyone said to do. I also think all systems analysts should all have PhD’s in conceptual order, for all the decisions trees and nested do loops they’ve had to figure out. These define one’s personal style of thinking.

    I had not thought of Philippine education as theoretical, but I suppose that does not conflict with a rote style of teaching. Missing is the great in-between, the place that calculates or engineers how trees become the best kind of forests. Problem solving, the calculation of risk, gaining consensus without hating those who have other ideas. The benefits to community (and self) from the disciplines of honesty and consideration of others. I’ve come to detest rote education as I watch my son work page after page of arithmetic problems after it is proven in three cases that he understands the concepts involved.

    Sigh. I lost track of where I was going with this conversation, but appreciate your getting me started. Nice writings you are doing these days.

    • Welcome. The strongest in terms of conceptual order in the Society of Honor is Edgar Lores. I try to learn where I can and also help others learn in the process.

      The application side is sorely missing and the aspects you name are important. Maybe there should be these kinds of exercises for Filipino children:

      1. A group of let’s say 15 kids is given a defined problem to solve within one hour. To prepare them for the Senate.

      2. The same group is given a fundamental but realistic issue to give their opinion on in one week. To prepare them for the Supreme Court.

      3. The same group is asked to find a leader, and think of a government program within one month for a defined country. To see the work of President and Cabinet.

      I made a mistake in dividing 3 trillion by 100 million. It’s 30 thousand pesos. Not 10 thousand pesos. But don’t tell anyone. I will correct it quietly. 🙂

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