“Policymakers have to make the agonizing determination whether the involved social and political costs are so high as to render a project or program unacceptable.”
Making economic policy decision is not easy. There are two principal reasons for this. One reason is that economic policymakers have to choose between different technological approaches to the implementation of a project. The other—and possibly more consequential —is the costs that Philippine society at large has to bear as a result of the project’s implementation.
The current tempest regarding POGOs (Philippine online gaming operators) is yet another reminder that government projects or programs yield costs as well as benefits to the Philippine economy and that all protests and programs must, wherever possible, undergo rigorous cost-benefit analysis to determine whether the potential benefits to the Philippines economy are commensurate with the costs to be borne by the Philippine society as a whole.
The cost-benefit analysis may determine that the costs — social as well as political — are more or less commensurate with the benefits to be derived by the economy. That would be acceptable, and economic decision-making can proceed on that basis. Or the analysis may conclude that a proposed project or program will yield much benefit to the Philippine economy, while exacting little cost from Philippine society. That would be the best situation for economic policymakers.
Unfortunately, a low-cost-high-benefit situation is a rarity, and economic policymakers usually find themselves having to make decisions regarding projects or programs that bestow benefits on the Philippine economy, but give rise to high costs —often not easily quantifiable — on Philippine society. In such instances, the policymakers have to make the agonizing determination whether the involved social and political costs are so high as to render a project or program unacceptable.
The POGO imbroglio is the most recent example of the tough decision-making that economic policymakers often have to do. A serious cost-benefit analysis of the POGO Industry weighed the billions worth of revenue received by the Philippine Amusement and Gaming Corp. (PAGCOR) against the illegal activities that the Philippine National Police (POP) and the Presidential Anti-Organized Crime Commission (PAOCC) say the POGOS are engaged in—such as human trafficking, sexual exploitation, physical abuse, kidnapping, espionage, extortion, digital fraud, tax evasion and money laundering. To say that the social cost from the POGOs’ presence in this country outweighs the economic benefits they have brought in is to grossly understate the direness of the situation.
When President Ferdinand Marcos Jr. delivered his State of the Nation Address (SONA) last week, he apparently listened from his three economic managers. The Secretary of Finance, Secretary of Budget and Management and Secretary of Socio-Economic Planning had recommended the closing down of the POGO industry. Secretary Ralph Recto, for one, said that the social cost exacted by the POGO industry was too great; Secretary Amenah Pangandaman had said that the economy did not need the POGOs.
PAGCOR should be introduced to the concept of cost-benefit analysis. There is no place in economic management for projects and programs whose benefits come at too high a social cost to Philippine society.
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