The Effective Money Runaround Rate

Now before I launch into this economic treatise, let me state clearly that my post graduate degree is in radio and television arts. Macro to me means a kind of elegant knitting. Oh, sorry. That is macramé. Micro means little. I mean it means small, not little. But it means lots to economists. It is smaller than mini. You can't wear it as a skirt to church.

My hypothesis is that the Philippines is about to launch into a period of very strong economic growth and join the ranks of respected Asian powers.

Here's why.

The nation has a godawfully large number of people. That is the way economists with degrees from the George Carlin School of Economics would put it. The females give birth like turtles, only they don't put their eggs in the sand where crocodiles dine. They hide them where a zillion little hunters have to swim upriver looking, looking, looking. However it is done, it is done well. Swarms of hungry mouths are being generated efficiently. Let no one deny that the Philippines is productive in at least one area. Families hatch 8 or 9 or 10 kids each. It is stunning if you do the math. The Philippines will surpass the US in population about five months into 2053.

And given the effect of seas that are a meter higher at about that time, the land area of the Philippines will shrink roughly 26.738%. We are talking big squeeze here, especially considering most of the mountains have been  cleared for a parking lot (Joanie Mitchell, where are you when we need you?), but the paver has not yet arrived, nor the cars, and the mountains are running into the sea in huge churning brown floods with each passing storm. The Philippines has some 7,000 islands and 436,815 rivers. Some rivers are short, and short-lived, but boy howdy do they know how to take a mountain down. And sometimes a village along with it.

Marketing executives look at all the crying, hungry mouths in the Philippines and exclaim  "Now THAT is a market if we can only figure out how to sell into it." Well, you do that by selling things really really cheap, because the earning power of the parents of those hungry mouths is the gross personal income of the Philippines divided by 46 million workers. Or 797 pesos a week. So if you run a restaurant, you scrape together a couple of old coconut lumber tables with warped plywood tops, slap on one coat of really cheap paint, and you borrow some plastic chairs from Lola and a grill from Uncle Armando. Buy the cheapest meat you can find and grill up a batch of barbequed whatever, and boil up a pot of whatzit.

You price the stuff for other people without money, people's whose stomachs have been time tested for resistance to every virus and bacteria known to man. And probably some wholly unknown bugs, from dining on that which has multiplied in irregular fashion on the edge of a garbage dump used for fertilizer for the banana trees.

The thing about this broad, economically thin market is that people don't spend much on wasteful discretionary stuff like push-up bra's or Happy-Day erection medicine or a new ski-doo. They spend it on food, and maybe a new pair of slippers when the other pair gets way floppy. The money they spend on food goes to the people who grow the food. Or they spend it on transportation, usually locally, so maybe 5 pesos for a tricycle ride. Most of that money goes directly to the guy schlepping that trike up and down the hills.

Now this is where I get sophisticated on you. Focus! Focus! That portion total expenditures "E" that goes directly to local labor I shall tag "G", as in grain. That part of expenditures which goes to fertilizer or product or out of the market,  off the reservation, or to China, I shall refer to as chaff, or "C".  Now:

G = E - C

The money that gets recycled in town is R, where:

R = G/E

When R approaches 1.0, then all the money being spent in town for labor is itself also being spent in town for labor. It takes maybe a week to cycle through each time. So that money is doing a lot of sweat on its own, running through town again and again, week after week.

Now in the US, R may be around .20. In Russia, maybe .35. In the Philippines, outside of Manila, I scientifically estimate that the average R is .84.

Therein rests the key to the forthcoming boom.

It only takes a little additional money fed into the broad laboring masses to really get local economies humming.

I figure my own measly investment in my home town, now approaching, oh, P 5 million, has single-handedly converted the berg from underdeveloped to developing. Modern is right around the corner if I can get my richer big brother to pack his retirement income over here.

So the 5% growth being recorded in the Philippines now (oops, 3.4% last quarter thanks to those stinko failing European states), against a worldwide growth of maybe 0.1%, augers well for the Philippines. The effective money runaround rate (that is a sophisticated economic expression unknown to most laymen) is maybe 4 times as great as those so-called modern states. So the pesos here fairly hum. It is only a short distance from poverty to prosperity.

With enough "trickle-up" of the money, the Philippines might develop a real middle class in some place other than Makati and all those housing subdivisions owned by Senator Villar.

So buy Multicabs and Jeepneys, not Mitsubishis. And hire a lot of low-paid helpers, because they spend money efficiently.

And get more foreigners imported. Work their money. Work it like crazy.

It is the patriotic thing to do.