How to stop or solve the poverty in the Philippines?

[RemohDude]

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Poverty is a "CEASELESS" problem in our country...even if they'll change the Phil. Constitution...kinaIya na gyud na nato mga pinoy ang pagka garboso ug masinahon..

[Tarmac]

Mr Tarmac,
you joined this debate with unfair accusations against hyperwage theory, and its foundations and its logic.

what i did was point out to you that your statements are "mere conclusions". not based on evidence, not based on logic, not based on common sense, not based on self-evident ideas.

And in pointing out my supposed incorrect statements did not even bother to read my posts closely enough to see that the "errors" were never even committed in the first place.

Trying to put one point into context should not be equated to trying to undermine the entire argument.

[foolonthehill]

Rickflag

why dont Sony Phils sell TV for only P1,000?
Because their accountants know the details of profits and losses, as you said, and that is why they find it only logical and self-evident to sell TV's at say, P10,000 and not P1,000.

The same with hyperwage. Once the law is set: minimum wage of maids is P20,000, and the TV salesclerk should be around P30,000, what do you think the accountants will do?

Using your own arguments, mr rickflag, the accounts will include the new salary in their cost of operation.

The companies sell using the "cost plus profit" method. And they will not sell it at P1,000.

Is that very clear?

The competitors, facing the same set of laws, about min. wage will adjust accordingly, and their selling price will be almost similar. Agree?

This is the case of the oil companies facing the same input cost of oil in the world market. thats why they have almost the same selling prices of gasoline.

Agree so far? No conflict here between economists and accountants, so far. agree?

Problem: If the price of TV was P10,000 when the saleclerks salary was P6,000, what will be the new price of TV if the new salary of the salesclerk will be P30,000? Will it be 5x, or P50T?

the answer? according to hyperwage theory, the answer is P10T, not P50T. (our cellphones, tv, laptops, etc are already higher than in Singapore, Hong Kong or Taiwan.. so do you really expect price of Nokia or Sony to be 500% higher than Singapore?)

This is the non-linear function emphasize by the Hyperwage Theory and this is the first concept that made me think that Hyperwage Theory is not as crazy as it first seems.

Mr, rickflag, read the book, it's free. but the ideas there are worth billions of economic wealth for this country and all third world countries.

The new poor will be a better poor. And the quality of public hospitals, police cars, city halls, roads, street lights, canals, educational facilities will be better bec govt will get MORE VAT taxes and more INCOME taxes.

that is just an initial aspect of Hyperwage Theory. The more you read it, the more self-evident the theory becomes.

after reading the book, I said, why didn't somebody think of this before?

That to improve our economy we will not lower the cost of operations but INCREASE the cost of operations! (wages, specifically! This is contrary to normal economics taught in textbooks.)

Only a genius can take the opposite side and make sense out of it.

in Running a business salary is just one of the expenses. you still have to add up other expenses like materials and overhead cost plus you still have to pay tax. in our taxation class before if i remember correctly the tax is about 20-40% of your gross sales. take note, gross sales so you haven't deducted your expenses yet. Economist see the situation from a Macro level, but Accoutants know the details of the profits and losses. the problem with the Economic theories is sometimes they are too broad and encompassing as if simplifying everything. plus in giving salaries you have to consider the market factor too. kung daghan available workers then dili pod sila ka demand high salaries because of competition. just like you can't sell your products at a very expensive selling prices if you lots of competitions.

raising the salaries of our workers will just mean higher cost for everything. parehas ra gud na nga kung moadto ka ug states dako tuod paminawon imo sueldo kung i convert nimo to peso pero you have to spend in dollars man pod so ma offset ra.

kanang businessman nga moingon nga losing makatuo baya ko ana kay ako bossing sa una ingon ana na. manghuwam na lang money para i sueldo namo. the problem is ang ubang tao man gud kung kita ug mag kotse, moingon dayon nga dato nang tawhana. wa kahibaw nga napuno diay sa utang ug ga data data pa sa iya kotse.

Peace I am just airing my opinion.

[foolonthehill]

First casualty
What is the first thing that happens when I propose that the salary of the domestic helpers, currently, P2,000 shall be increased to P20,000 (US$400 at US$1=PhP50), or P770 daily?
Or that the salary of a fresh college graduate should be P70,000?
What is the first casualty of the Hyperwage Theory? The moment we hear of the P20,000 (US$400) minimum wage, we stop thinking.
Our minds are the first casualty of Hyperwage Theory. Our brains stop working. Closed minds; hopeless country.

[foolonthehill]

Copy and paste from the e-book



The Hyperwage Theory of Economics
The Hyperwage Theory is a theory of higher purchasing power. It is not single number or amount, it is a policy, it is a strategy.
The minimum wage shall be set to a level that shall give purchasing power to the minimum wage earners, including domestic helpers.
Currently, the domestic helpers have almost zero purchasing power and worse, they are not even covered by the minimum wage law.
A hyperwage resulting in real purchasing power will stimulate domestic demand which in turn will stimulate production which in turn will stimulate employment.
This domestic demand, under the power of the economic multiplier, will result in increased production of goods or services which in turn will result in more employment in a positive upward spiral.
The theory rests on the proposition that Hyperwage does not automatically result in the same proportion of hyperinflation in a Third World country.
For instance, a ten-fold increase in the wages of the domestic helpers will not necessarily result in the same ten-fold increase in the prices of goods and services.
Furthermore, a ten-fold increase in the domestic helper’s wages does not also automatically mean that all wages of the other workers will be increased ten-fold across the board; only the minimum wages of the lowest worker, which is the domestic helper, is fixed.
The other wages such as wages for sales clerks and bank manager will adjust according to market forces. The logic for this is that many goods and services in Third World countries are already being sold at First World prices.
This theory is applicable only to Third World countries, not to First World countries.
Under the current economic theory, the discussion on minimum wage is limited to issues such as whether or not moderate increases in minimum wages will result in higher inflation or more unemployment.
Furthermore, under the current theory, all economists agree that if the minimum wages were raised to a very high level (not a merely moderate increase), supposedly, there will be massive unemployment.
On the other hand, under the Hyperwage Theory, the minimum wage is considered as the central factor of the Third World economy.
Thus, this is the only theory available that places the primary responsibility of redeeming the country’s economy in the hands of the minimum wage. Not on interest rates, not on exchange rates, not on foreign investments, not on monetary levels, not on forms of government, not education, not on taxation structure. The latter are a secondary factor.
The Hyperwage Theory is the only theory that addresses, by way of chain-reacting proximate causes, many externalities and non-economic social problems such as population control, inefficiency, corruption, brain drain, underdevelopment of intellectual capital, separated families due to overseas work migration, underdeclaration of business income taxes, and the slow justice system.
In short, the Hyperwage Theory purports to be the panacea with an actionable plan to solve the economic problems of a Third World country.
For discussion purposes, the minimum wage shall be set to be P20,000 per month for domestic helpers.
This is US$400 at $1=PhP50, or PhP770 per day based on a 26-day month, or PhP77.00 per hour based on a 10-hour day for domestic helpers, or $1.50 per hour.
In Hong Kong, the minimum wage of the domestic helper is about PhP25,000. We don’t have to equal that amount.
If we set our Hyperwage to P15,000 only, then there’s still the temptation that our teachers will go to work in Hong Kong as domestic helpers because the P10,000 difference is still a considerable amount.
I figured paying P20,000 to our domestic helpers will prevent the brain drain to Hong Kong.
Thus, the PhP 20,000 level ($400).
Fresh college graduates should earn about PhP70,000 per month or $1,400 per month or $6.70 per hour.
This is deliberately set comparable to Hong Kong and Singapore to avoid the labor wage arbitrage that is causing our school principals to work in Hong Kong as domestic helpers.



Typical Range of Wages under Hyperwage ($1=PhP50)

Job

Monthly (PhP)

Monthly ($)

Hourly (PhP)

Hourly ($)

Note

Domestic Helpers

20,000

400

77

1.5

10-hr day
Janitors

22,000

440

85

1.7

8-hr day
Factory Workers

25,000

500

96

1.9

Sec/Sales clerks

50,000

1,000

192

3.8

Fresh college

70,000

1,400

269

5.4

Middle Managers

150,000

3,000

577

11.5

Bank Managers

200,000

4,000

769

15.4

Note: Throughout this book, the data tables use the currency conversions at the time the data were first published in 2005. In mid 2008, the exchange rate was $1=PhP43. However, for simplicity we use $1=PhP50 to make PhP20,000 = $400, a round figure.

[foolonthehill]

----------------------Excerpts----------------------------------

Paradigm
So, I ask you: Did your brain stop working immediately? Did the minimum wage of P20,000 (US$400) (P770 daily) for domestic helpers - not sales clerks, mind you – trigger your automatic transmission-line fault relay into a trip-off?
Did you instantly exclaim, “That’s baloney, that’s wishful thinking, that’s impossible?”
This is what I mean. The moment you tell yourself that it’s impossible, that means you tell your brain to stop working. You do not even attempt to think of the possible consequences. How do you know it’s impossible? Knee-jerk reaction? Academic brainwashing? Small-business-will-collapse bogey?
The most common reaction by economists is: “There will be hyperinflation!”
The rejoinder of the Street Strategist: “So what? Does that scenario paralyze your thinking process? Why, what happens under hyperinflation? Have you really thought about it, or you’re just mouthing the inert textbooks and professors?”

[foolonthehill]

Education vs. innocence
Contrast this: The Nobel Prize economists have a preset reply, therefore, they don’t have to think anymore. Due to their high education, for them, hyperinflation is terra incognita.
Remember that the Street Strategist is an aborted economist, therefore, he does not know what happens under hyperinflation.
For the Street Strategist, it is an economic twilight zone where his intellectual innocence does little to remind him he is committing intellectual hara-kiri.
Don’t worry, we will dwell on this later. Suffice it to say, the Street Strategist found heaven for the Hyperwage Theory in the twilight zone of economics.


- excerpt-

[foolonthehill]

--excerpt-

Butterfly metamorphosis
In my book Strategy Myopia, I wrote an article “The Metamorpher,” which exemplifies my propensity for thinking along the lines of metamorphosis. Pursuing along the same wavelength I would like to invite you to keep an open mind to the Hyperwage Theory.
In effect, what I’m saying is that we are like caterpillars in the caterpillar world in the book Hope for the Flowers. Whatever we do, as long as we think of ourselves as caterpillars we will never achieve our destiny which is to become butterflies. In turn, butterflies are the hope for the flowers to bloom.
Pursuing the analogy economically, as long as we don’t make that quantum leap to hyperwage levels, whatever we do will be useless, a mere maintenance of the status quo.
This is the reason why for the last hundred years or so, the poor countries became poorer in a negative downward spiral while the rich countries became richer in a positive upward spiral. But that’s jumping the gun. I’ll discuss all these issues later.
You might think of the Hyperwage Theory as crank economics, but keep an open mind until after I have completed my exposition.
Some of you will be asking for empirical data, I’ll attempt to provide some along the way.


- excerpt -

[foolonthehill]

- excerpt -
Marxist vs. capitalist
During one radio show, some leaders of the militant labor and cause-oriented groups reacted that they liked the Hyperwage Theory but that their asking price for labor is only for an increase of P125 daily.
Many reacted to say that I’m a communist or a Marxist. That’s completely wrong. In fact, I am a capitalist, and I base my pricing of labor from a capitalistic point of view.
The Marxists merely pluck out a figure from some NEDA statistical table without thinking of its effect to the entire economy or to the world economy.
On the other hand, I use market-based figures. That’s why our figures are completely different and disparate. In fact, I started from looking at the world economy then all the way to the household economy.

- excerpt -

[foolonthehill]

- excerpt-

Survival vs. profitability
Yes, I’m not kidding. I started my thinking process from a macroeconomics viewpoint, on a world-wide basis until I ended up with the domestic helper’s wages.
The Hyperwage Theory was conceived from a completely capitalistic approach. The thinking process was completely different.
The militants are demanding for their wages for their survival, and despite their pro-poor sentiments, they have excluded the domestic helpers.
That’s not really pro-poor is it? The businessmen, the wage boards, the economics professors, the government policy makers, and even including the president are working from the bottom up. They only want to solve the economic issues.
On the other hand, I was analyzing the world economy and arrived at a conclusion that for the profitability of the entire country, not merely survival of the laborers, we must give them the minimum wage that they deserve, and I am forced by my theory to include domestic helpers.
I am analyzing this top down. I wanted to solve not only the economic issues but also the non-economic issues.



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