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Business

Give back to society

DEMAND AND SUPPLY - Boo Chanco - The Philippine Star

“The rich are no longer willing to support the societies they inhabit.” This was the conclusion of Guido Alfani, a professor of economic history at Bocconi University in Milan in a recent New York Times Opinion guest essay. He has studied the Western world’s wealthiest people over centuries and found that today’s super rich have changed.

Alfani notes that today’s rich are more reluctant to contribute significantly to help address the costs of economic and social stresses like COVID, the worst pandemic in a century. He said this is so different from the Italian plague of 1630 to both world wars – when the rich dutifully offered financial reserves in times of dire need.

This change has serious consequences for all of us, Alfani warns. He said that in the past, when the rich appeared to be profiteering from such plights (or have simply been suspected of doing so), society has become unstable, leading to riots, open revolts, and anti-rich violence.

In the US, the wealth gap has been widening, with the top income earners experiencing significant gains in wealth compared to the rest of the population. The stock market, after initial declines in the early stages of the pandemic, rebounded in many places, benefiting those with substantial investments, particularly in technology companies.

On the other hand, many people in lower-income brackets suffered job losses, reduced income, and financial insecurity. The pandemic disproportionately caused widespread layoffs in sectors, such as hospitality, travel, and retail.

It is more or less the same story for us in the Philippines. The wealth gap has been widening, too, for quite a while. Gains in economic growth measured by the GDP have mostly gone to the upper economic class with the majority gaining little to nothing. The latest SWS survey revealed that 71 percent of Filipinos feel life got worse or stayed the same.

And since the ruling elite, political and economic, are calling the shots, the tax system cannot be reformed enough to make the upper class pay more as a percentage of their income or wealth compared to the working classes. A taipan takes the bulk of his annual income as dividends subject to 10 percent tax vs 35 percent for salaries of the working middle class.

Because the rich are not inclined to pay their weight in taxes, our government ends up borrowing heavily, which the non-rich eventually pays. Even the dirt poor pays quite a bit of taxes in terms of VAT on all that they buy, from food to medicine, and gasoline that affects their transport fares. As a percentage of income, the poor could be paying more than the taipans.

At least in the Philippines, many conglomerates stepped up to help during the pandemic. Among others, ICTSI of Ricky Razon, First Philippine Holdings of the Lopezes, and San Miguel through Ramon Ang volunteered to build isolation areas for patients, buy vaccines from abroad and made sure the needs of their stakeholders from employees to communities were addressed.

Indeed, private sector initiatives during COVID helped cover up many shortcomings of government. But a good amount of the vaccines they imported were wasted, because DOH delayed approval for use even after the US FDA, with better resources for evaluation, had already approved. More than 31 million shots or P15.6 billion worth of COVID-19 vaccines were wasted according to an official PNA news report, quoting DOH officer-in-charge Maria Rosario Vergeire.

Perhaps, the private sector should do more to address other shortcomings of government, including those in education and healthcare. Costs can be deducted as legitimate business expenses anyway. This is a good way to make sure money to pay taxes is used for the intended purposes instead of being lost by the government’s incompetence and corruption.

A good example is San Miguel dredging major NCR rivers more efficiently and at a fraction of the cost usually incurred by DPWH. And all the costs are absorbed by San Miguel.

There is a suggestion by a volunteer group of Fil-Am doctors for the conglomerates to sponsor health clinics in underserved areas of the country, including the funding costs of having available medical staff. The recently announced cancer hospital put up by Ayala is a step in the right direction, specially if it will help cover the costs of indigent cancer patients.

Then, there is the property sector that has been earning mega profits, but gives little back to society. Building condos for the elite to park their extra cash isn’t the best way of deploying our country’s scarce capital resources. Look at condo buildings at night and see how many windows are lighted and realize most units are dark, unoccupied, built for speculation.

Property companies could do what they do best, build affordable housing that’s accessible for urban workers. Or they could do better, like an idea I heard from Tommy Osmena.

Tommy thinks we need a call center city where a call center agent can finish college and get a master’s degree without resigning. How? The agent will attend class, work, and dorm in the same building or area. No time wasted in commuting. Work time based on US time. School hours will blend to work time in a seamless manner. School load may be stretched out to reduce stress on the student.

The objective is to crank out trained manpower to bring us to the next level of BPO work. Otherwise, AI will throw most of our BPO workers out of jobs because AI can now do a lot of the work our agents are doing at a fraction of the cost.

Unless we train and gear up to meet demand at a higher level of BPO work, we can lose a good part of a very vital dollar earning industry, one of only two legs of our economy we have been depending on.

Giving back to society is a self-preservation strategy for the rich. And enough of token philanthropy. A partnership among the haves and the have nots of society is the only way we can feel secure that we will not all be losers in the end.

 

 

Boo Chanco’s email address is [email protected]. Follow him on X or Twitter @boochanco

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