AILING ECONOMY: Yeah! What Now?

The world’s economy is in trouble. The population, both the consumers and the producers, need prescriptions on how to survive. Consumers need comforting words to calm their worried souls. Producers need resuscitation from reckless game of extravagance and greed.

On July 11, while having my morning walk, I passed by a queue of people outside IndyMac Bank in Pasadena, California. Their faces and tones showed anger and apprehension. This was the first sign of economic problem in my locality. The US federal government stepped up and took control of the bank to calm the livid depositors. More banking and lending businesses followed suit. On Friday, October 3, a 700 Billion dollar bill was quickly signed by President Bush to bailout the ailing US economy.

Similarly, European economy has been in trouble. Associated Press reported on Sunday, Oct. 5, that European governments are scrambling to save failing banks. Germany held crisis talks to avoid distressing the entire economy after Hype Real Estate AG collapsed. Belgium’s Fortis NV is also in shaky ground. Iceland government and banking officials have also discussed a possible rescue plan for its overstretched commercial bank (see Prof. Piggington’s Econo-Almanac for Landed Poor website, Oct. 5)

In Asia, children are getting sick. Before, it was from lead-tainted toys and mercury-treated Tilapia fish from China. Now, it’s from food products with milk ingredients. The Chinese economic greed and quick-rich scheme led them to add melamine to their food products to boost protein content. It is now becoming a global concern. In fact, on Oct. 2, an independents laboratory, which was commissioned by the Philippine Bureau of Food and Drugs (BFD), positively tested melamine in 8 of the 14 food products that were imported from China. A sign of good governance, BFD also ordered two meat products to be tested. Surprise, surprise! One of the two meat products was found to be melamine-positive. The laboratory owner said that the meat could have come from livestock, which were given melamine-tainted feeds (ABS-CBN 5 News, Oct. 3). It’s comforting, though, to know that the Chinese government had stepped up its investigation. Finally, it had detained 6 suspects from Hothot, Mongolia, China’s main dairy-producing area (ABS-CBN 5 Online News, Oct. 6).

Who is to blame for this economic crisis? Certainly, the producers or the business corporations! Government has to be blamed. And… even the consumers have to take a little of the blame, too.

Business is a complex web about production, distribution, and exchange of goods and services. Production is dictated by demand; profit is dictated by producer’s greed. Without a stringent governance of the government, profit-driven producers will always attempt to circumvent the government regulation to get rich as quick as possible. That’s how informal economic network, like sweatshops and subcontracts, have proliferated. The main producers do not mind how products are produced. They just wanted to have the goods out in the market. Subcontractors do not mind how they produced the goods. They just wanted to meet their production quota to meet the producers’ demand. With both informal and formal economic network operating and humongous tons of products circulating the complex global economy, the problem cannot be detected easily. So, gone are the days when economics adamantly preaches “quality control”. Look what’s happening to the Chinese exported products! It seemed that quality control was never imposed!

Government considers cities or urban areas as sites of concrete operations of economy. Certainly, it regulates business owners. Nevertheless, like the producers, some government employees are also driven with their insatiable need. They are easily tempted or blind-sided with grease money that businesses offer them. Definitely, these government employees are aware that something fishy are going on. They know that subcontracting exists in the periphery, but they just don’t take these informal networks seriously until the problem is blown right in their faces. The oversight would later be blamed on lack of personnel to go around due to downsizing or whatever.

Consumers have to take the brunt of this ailing economy, too. Except for those who are buying goods and services for a dire need, many are taking the bait from the producers to satisfy their needs even beyond their purchasing power. They know they cannot afford a bigger house or whatnot, but they take the bait, anyway, so as to keep up with the Joneses. At the end of the day, it is the poorest of the poor and the honest consumers, who are victimized with unscrupulous business transactions between the producers and the government, and between the producers and the irresponsible consumers.

What now?

We need our government to be stricter with their governance. We need the government, who looks at the welfare of the ordinary and honest citizen day in and day out, and not when a crisis is already present. We need a government who strictly regulates the salary cap of business executives. We need the government, who are strict in overseeing their executives, as well as the ranks-and-files. We need producers or business corporations, who are fair and honest in producing their goods and services. Lastly, we need for the consumer to live within their means and for the poorest of the poor to be extra careful in consuming the goods and services offered by the market.