How to prepare yourself for a (possible) breakdown of the Philippine economic machine

This article was written as partial fulfillment of the requirements in Organization and Management. Some parts of this document cannot be found in the submitted paper.

For a very long time, I have had this question in the back of my mind: If the Philippines is filled with 7,107 islands filled with lots of natural resources and is populated by hardworking people who possess extraordinary God-given talent, we should be one of the richest countries in the world, right? But how come we still succumb to being one of the poorest countries in existence?

Ray Dalio’s How the Economic Machine Works is a 30-minute well-animated web video which is (somehow) based on a 263-page draft of a paper of the same name from the same author. Described as “another boring video” by one of my classmates, it gives viewers a very clear picture of the basics of any economic system. That video helped me understand the fundamentals of how the economy works in general — down to how an individual’s actions (which can be as simple as buying a beer) could affect the society’s economic framework as a whole.

How can we use what we’ve learned in our current situation, given that its relevance is growing in light of the biggest events in the Philippine economy — the tax reforms spearheaded by the TRAIN act, and the surging rate of inflation which brings the power of the Peso to an all-time low?


Examine yourself

Take a moment to examine your spending habits and their effects on you. There are many spending habits that most of us tend to do, from asking a friend to pay the total bill instead of splitting up the bill among everyone, to deciding to buy a new dress/shoe/gadget/etc. on the spot because it’s on sale and you don’t want to miss it, right? Also, check if you spend on something big, not because it’s important and you need it, but it’s because you want to impress everyone around you. Finally, check your credit — you should be able pay off all of your debts (loans, credit cards…) on time.

Don’t let the cycle consume you

Even if you can’t clearly wrap your head around Dalio’s framework of debt cycles, one thing that you should be able to do is to manage your money effectively. Don’t make yourself work for your money, make your money work for you, and make sure that you and your money are ready for the worst.

Even if you can’t understand why inflation causes the price of siling labuyo to hit Php 1000 per kilo, you must take this as a reminder to cut back on your spending, especially on things that you can live without. Spend as less as you can on your basic needs, but not to the point of starving yourself, of course.

And no, participating in “get rich quick” schemes and investment scams is not a way to make your money work hard for you. Trust me, you don’t want to cry when that money fades away to nothing, if things turn for the worst.

Improve yourself… and your country

Here’s a saying from my mom: “the only thing that anyone cannot steal from you is education.” Studying or not, take every opportunity to learn something new. Hone your skills, because you’ll never know when you might use them to save someone’s life or change the world. Learn from your mistakes, and use these as a stepping stone to improve yourself. You’ll never know when one of your skills could help you get a raise or start a profitable business venture.


To wrap things up, the best we can do for now is to prepare ourselves for the worst. This is our chance to examine ourselves and our spending habits, to cut down on spending on things that we don’t need and to hone our skills for a better future. I hope that our future selves will be happy for us because we did not put our already scarce resources to waste.

Ross Dominic Cercado

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