Saturday, May 9, 2009

Economics 101 – as practiced by a priest

This writer found himself sitting (in a family reunion) next to a priest who had successfully built a lovely church – some call it a cathedral. He was narrating that he had moved on to another job running a retreat center in another diocese.

He must have established his financial savvy within the Philippine Catholic Church hierarchy given that his new role mirrors two previous assignments – to fix the financial problems of the retreat center. They had to let go a dozen employees before he arrived and yet in barely a year he has covered his annual budget, paid down half of the debt of the center, upgraded the living quarters (that can accommodate over 200), built a garden chapel and upgraded the huge garden itself, stopped the cost overrun in the kitchen, has begun to upgrade the center’s dining room menu and is currently working with a culinary institute to educate the kitchen staff – he does not want any more complaints about the food they serve. In addition, he has incremental funds to do charity work.

How did he raise the revenues of the center? He went on a road show to several schools to promote the retreat center and as his volume went up he offered volume discounts – the retreat center is now a truly income-generating enterprise. To fund his capital expenditures, he did a similar road show to several prominent, wealthy Filipinos replicating previous successes in two parishes.

How did he stop the kitchen cost overrun? He subjected the staff to inspection before they leave from work and found to his dismay that they were bringing home center supplies; he told them they could eat anything in the kitchen but they were not ever to take any home. He also reassigned the task of buying kitchen supplies to the religious from the lay staff explaining that he wanted the religious to learn every task in the center because in future they would run it.

To address the needs of the poor families around the center especially those of school age, he negotiated with a school to organize an extension program and give them subsidized education. But he wanted to ensure that the families were committed to the education of their children so he had them pay a token sum. Likewise he negotiated with a bookstore to provide subsidized books and supplies.

How did he learn all this? He said he had spent time in Italy, the UK, Canada and the US and in all the churches he had worked with, money was the fundamental requirement.

This writer told him if he were in the private sector, he would be a successful sales manager, finance manager if not general manager. In jest he said, if he were in private business, he would love to be a sales manager.

Can we laypeople learn from this priest? That nibbling the edges won’t cut it? For instance, how can we reasonably bring Philippine poverty (at over 25%) down when our GDP per person is a low $3,400? That is a mere 22% of Malaysia’s ($15,700) and 39% of Thailand’s ($8,700); and consequently, their poverty is at an enviable 5% and 10%, respectively.

We have embarked on numerous laudable efforts: from housing for the poor to micro-financing to entrepreneurship. And while homegrown or cottage industry can tide families with sub-par incomes over it will not in their aggregate compensation for our meager exports (of $50 billion) nor raise our revenues to over $150 billion to match Thailand’s or Malaysia’s exports.

What else do we need to do? The lesson of the Great Commandments comes to mind – we don’t have to stop the good deeds we do but we must not overlook the overarching deed? Or if that is too biblical we can take refuge in Pareto’s Principle?

Since we cannot reduce our population, the only way to raise our GDP is to drive revenues, e.g., exports – Malaysia’s and Thailand’s exports alone are bigger than our total GDP, which is less than $150 billion. At our current GDP level we can expect poverty to remain at alarming rates?

Is this the cancer staring us in the eye? Radical surgery and chemotherapy (like driving export revenues) is not easy? But we have to do it – we have no choice, e.g., move up from intermediate to final products which will require a lot of effort and time worth expending? We cannot let over 25 million Filipinos live in poverty on the one hand yet on the other – in our heart of hearts – we know we can do better? (To put this number in perspective, it is more than the entire population of Romania and more than half of the population of Ukraine, both poor Eastern European countries – both more recent entrants to the free-market system and still struggling to right their economic ship.)

1 comment:

  1. It's good to know we're thinking along the same lines. You can check my blogsite, I've just published a book titled, A Nation's Blueprint to True Prosperity: Antidote to Financial Meltdowns, which you might like. It's available in all major bookstores too. It's the product of 37 years of research & hands-on learning. God bless!