No, Aquino, Heavy Traffic Does Not Reflect A Good Economy

Correlation does not imply causation.

But hey, there's no use explaining that to anyone. PNoy's communications group seems to have such a brilliant PR and marketing team that they know exactly how to spin something like heavy traffic as a reflection of a good economy. And the sad fact? There are those who will believe this.


Broken Window Fallacy:

But the correlation vs causation isn't even the most important fallacy reflected here. In his book Economics In One Lesson, libertarian economist Henry Hazlitt discusses the broken window fallacy at the very first part, a term popularized by the classical liberal Frédéric Bastiat's in his book That Which Is Seen And That Which Is Not Seen

This fallacy illustrates how destruction, or allocating money to rebuild from destruction, is not actually a net benefit to society. Simply put, if I throw a brick at my window, it implies that it's good for the economy because it will stimulate certain sectors of the economy like window builders, glass builders, etc.

Lord Keynes Himself

And you hear this kind of argument from most educated economists most of the time. And this is all because Keynesianism or Keynesian economics as popularized by John Maynard Keynes prescribes this in his doctrines are at the core of almost all economics courses from undergrad to doctorate level. 

As puzzling as it sounds, they see good in in things like war or natural disaster because it will boost GDP. In the same manner, traffic means you consume gas and will eventually have to maintain and spend for your vehicle or that public transport is making money. There is stimulation that leads to high consumption that leads to a good economy. The same Keynesian rhetoric in almost every scenario. 

But you see, there is another side to the coin.

The Austrian School of Economics:

If you don't even know Keynes or F.A. Hayek, it really says a lot about how much  you know about economics. And, obviously, many are engrossed by all this clutter I call folklore economics. Many times, I find myself just shutting my mouth because it's almost impossible to arrive at conclusions from arguments that are not based on real economic principles and political philosophies. As a prerequisite, I would recommend the PBS documentary The Commanding Heights (a title that references Lenin's speech about the State controlling key sectors of the economy) as a good introductory video:

The Commanding Heights Episode 1: The Battle of Ideas

But because I know the attention span of most of you will not be able to bear how seemingly boring the above documentary is (although, I swear, I highly recommend it), here's a short 10-minute parody rap video that summarizes the differentiations of the economic philosophies of Keynes and Hayek (obviously I'm on Hayek and the Austrian School's side):

But What Good Economy?

We see good news all over focusing, again, on what Bastiat referred to as That Which Is Seen and That Which Is Not Seen. We still rely so much on foreign remittances. Foreign investment and job creation is not only prevented by heavy red tapes and regulations but also by the constitution itself. Growth is not inclusive, as you usually hear in the news. Growth is only for the rich as the poor get poorer and the middle class unable to save because of inflation (see also On Wage Labour and the Invisible Tax).

Growth is almost only limited to Imperial Manila. Oligarchs remain empowered while most provinces remain stagnant. And the problem is systemic and constitutional.

Back To Heavy Traffic:

That's why in my article Treatment Vs Cure: Addressing the Economic and Social Issue of Heavy Traffic in Metro Manila, I go backwards unlike the President. I look at improving the economy by decentralizing power and abolishing discouraging laws that prevent both foreign investment and local new players to enter the market, especially in provinces, to mitigate congestion. And from there, not only will heavy traffic be lessened -- society's quality of life in general will greatly improve.

Honestly, I just hate traffic so much because it wastes so much time. In fact, contrary to what the president is saying, it is detrimental to the economy. What do you think makes more sense? 


  1. Heavy traffic is an indication of how inefficient the traffic system is. It's true even in terms of information(bandwidth), or even something as trivial as a beer bottle. When there is something causing the traffic to go bad(mishandled traffic system, someone hogging the bandwith through torrent downloads, bottlenecks), this makes the progression of the contents slower.

    Also, contrary to what the President said, heavy traffic costs affected companies money. Less workers getting to work on time causes reduced productivity. I have absolutely no Idea where the President found that sort of garbage.

  2. Thanks for this post leading me to Commanding Heights. I am now watching it. Very interesting.


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