Lies, statistics, and indexes

is my Trade Tripper column in this Friday-Saturday issue of BusinessWorld:

Homer Simpson once insightfully said: “you can come up with statistics to prove anything. Forty percent of all people know that.” Or, as Disraeli more artfully (and quite purposefully) puts it: “There are three kinds of lies -- lies, damned lies, and statistics.” This article isn’t, however, a rant about numbers. Rather, it’s about the fact that, like all things in life, economic figures need to be tested and read within a proper context.

So, for claims that we’ve experienced 7.1% growth and that corruption is on the way out (after all, “kung walang corrupt, walang mahirap”), then one has to wonder how come our people seem to be feeling a whole lot poorer. Just recently, BusinessWorld reported: “A Dec. 8-11 survey found 54% of the respondents, equivalent to 10.9 million households, claiming to be poor. The result is up seven points from August’s 47% (estimated 9.5 million families) and also higher than the 52% average for 2012.”

This level of self-rated poverty is “substantially greater than the official poverty rate of 26.5% (equivalent to 23.14 million individuals) as of 2009. Self-rated food poverty was said by the SWS to have also worsened by nine points to 44% (8.9 million families) from 35% (7.2 million) in the previous survey. The figure is also higher than the full-year average of 41%.”

Perhaps it’s because it is true that “kung walang corrupt, walang mahirap.” Transparency International clarified its findings in the Corruption Perception Index that “with a score below 50, the Philippines is still classified as a highly corrupt country, belonging to the bottom 1/3 in the ranking.”

Explaining that the apparently “improved” score of 2012’s 105 compared to 129 (for 2011) and 134 (for 2010), Transparency International said that “CPI Methodology was initially designed in 1995 when data sources were still scarce. After almost 18 years, it was due for an upgrade to adapt to the growing number of sources, to make aggregate computation of scores more simple and allow accurate comparison of results from year to year. Previous methodology did not allow this and yet this was the way the public interpreted it. Therefore, ranks and scores for CPI 2012 and previous CPIs including 2011 are not comparable. A change in score from 2011 does not reflect a change in perceptions of corruption between the CPI 2011 and CPI 2012. The CPI 2012 score is different from the score on the CPI 2011, for all countries in the Index (unlike in previous years where countries’ scores showed little change from year to year). The difference in scores in most cases is driven by the change in methodology and does not reflect a change in perceptions of corruption in any given country. Therefore no conclusions can be drawn from a change in score between the CPI 2011 and the CPI 2012.”

Which essentially means that, after all that drama regarding the impeachment trial and attempts to remove certain local officials, we’re still where we are so far as corruption is concerned. If you want more information on the state of Philippine corruption, see http://www.transparency-ph.org/2012/12/understanding-the-philippines-cpi-2012-score-rank/.

Incidentally, Mr. Michael Mundo of the Makati Business Club was kind enough to send this clarification: “The World Economic Forum’s Global Competitiveness Report 2012-2013 released last September 2012 ranked the overall quality of Philippine infrastructure at no. 98 out of 144 economies from no. 113 out of 142 countries in the 2011-2012 Report and also no. 113 out of 139 countries in the 2010-2011 Report.”

Indeed, as the 2012-2013 Global Competitiveness Report itself declares that, despite “positive trends, many weaknesses remain to be addressed. The country’s infrastructure is still in a dire state, particularly with respect to sea (120th) and air transport (112th), with little or no progress achieved to date. Furthermore, various market inefficiencies and rigidities continue, most notably in the labor market (103rd).”

The problem areas, if one can call it that, includes diversion of public funds, government regulations (particularly the bureaucratic nightmares involved in starting a business), dispute settlement, and science research and innovations. Also needing greater attention are deaths relating to tuberculosis and malaria. Which makes it really shameful why we’re so intent in pouring billions into contraceptives when many Filipinos are still dying, in this day and age, from such old diseases.

Finally, the Philippines ranked 97th (out of 177 countries) in the recent Heritage Foundation’s Economic Freedom Index (see http://www.heritage.org/index/country/philippines), putting the country in the “mostly unfree” category. Significantly, aside from pointing out that “heavy bureaucracy discourages dynamic growth in investment,” the Index noted that the “judiciary remains susceptible to political interference and does not provide strong and transparent enforcement of the law, undermining prospects for long-term economic development.”

But, as Princeton’s Robert George puts it: “limited government, economic growth, rule of law, and the preservation of democratic self-government” -- cannot be maintained “while letting the institution of the family erode and collapse.”

So much for the wisdom of the RH law.