Economic pace and space (Sabong News)
Author
Ser Percival K. Peña-Reyes
Date
MAY 27 2022
“Pace and space” is a popular trend in basketball today. It is worth recalling that before 1979, every shot in basketball, no matter the distance, was simply worth two points. When the three-point line was introduced in 1979, the three-point shot was merely a novelty shot, and teams still heavily favored dominant low-post players over outside shooters and guards. Thus, a big man who could post up was often the most valuable player to a team. This trend continued its dominance until the mid-2000s, when coaches such as Mike D’Antoni and Erik Spoelstra introduced the concept of “pace and space” into the game.
In essence, “pace and space” is an offensive philosophy that revolves around pushing the ball up the floor as quickly as possible while spreading the floor with three-point shooters in as many positions as possible. For example, under Steve Kerr’s mentorship, the Golden State Warriors have an elite playmaker in Stephen Curry, who is surrounded by undersized three-point shooters and a center whose main responsibilities are to run the pick-and-roll, collect rebounds, and protect the rim. Using screens set up by supporting players, the primary ball handler tries to attack the paint, set up the roll man, or dish out to a shooter on the perimeter when a wing defender comes to provide help defense.
So, in basketball, pace refers to the speed at which a team executes its offense, while space refers to the optimal placement of players that will give scorers the best opportunities and the hardest coverage for defenders. Similarly, in economics, pace can refer to the speed at which the economy grows, while space can refer to the room created in the public budget that allows the government to provide resources for various desired purposes without jeopardizing the sustainability of its financial position or the stability of the economy. Recent pronouncements by government officials somehow allude to a “pace and space” strategy aimed at strengthening a Philippine economy that is struggling with pandemic scars, externally driven inflation, and huge debts.
Regarding pace, as Socioeconomic Planning Secretary Karl Chua notes, the government will continue stimulating aggregate demand to prevent stagflation, which is the unfortunate combination of high unemployment (stagnation) and high inflation. The United States, for instance, is already experiencing such an episode.
Hopefully, robust economic growth that outpaces externally driven inflation can be achieved through Executive Order No. 166, which spells out a 10-point policy agenda to accelerate and sustain economic recovery: 1) strengthening healthcare capacity; 2) accelerating and expanding the vaccination program; 3) further reopening the economy and expanding public transport capacity; 4) resuming face-to-face learning; 5) reducing restrictions on domestic travel and standardizing LGU requirements; 6) relaxing requirements for international travel; 7) accelerating digital transformation through legislative measures; 8) providing for enhanced and flexible emergency measures through legislation; 9) shifting the focus of decision-making and government reporting to more useful and empowering metrics; and 10) preparing for pandemic resilience in the medium term.
Regarding space, reelected Albay Rep. Joey Salceda notes that the next administration must find ways to shore up revenues to sustain the stimulus program and pay off debts to preserve good credit ratings. By his estimates, the government needs at least P325 billion in new revenues each year to cover principal and interest payments (P144 billion and P181 billion, respectively) for debts incurred during the pandemic. He warns that budget cuts are not a wise option if the government wishes to sustain growth. Also, borrowing more to cover past borrowings will mean a downward spiral to fiscal hell, as creditors will likely impose higher interest rates.
According to Rep. Salceda, it would be best to focus the limited budget on agriculture (to contain inflation) and social safety nets and get growth from foreign direct investments, which amendments to the Retail Trade Liberalization Act, Foreign Investment Act, and Public Service Act aim to attract. The next administration also has much political capital to quickly enact smart tax and economic policies to address the debt problem. Additional tax revenue sources could include the digital economy, gambling (notably e-sabong), high-end goods, and plastic bags. Programs that strengthen tax enforcement (Run After Tax Evaders, Revenue Integrity Protection Service, and Run After The Smugglers) could also be pursued more vigorously.
Indeed, as the “pace and space” philosophy suggests, the country needs to make all the three-point shot attempts that it can quickly manage to create to boost investor confidence, maintain good credit ratings, reduce the debt overhang, and preserve future growth prospects. The gameplan must be executed well.
Dr. Ser Percival K. Peña-Reyes is the Associate Director of the Ateneo Center for Economic Research and Development. He thanks his friend and Ateneo Grade School classmate, Mr. Larry Alexander N. Fonacier, for valuable inputs to this article.
