It is not surprising that the head honcho of the Ayala group, one of our tycoons, has acknowledged the role of OFWs in our economy:
Given the magnitude of OFW remittances (over $15 billion in 2008) we have been blessed to overcome whatever ails our economy.
As we now know these remittances have been the driving force behind our consumer-driven economy. And thanks to our tycoons, the Ayalas, Cojuangco and company and the taipans, they have turned this source of capital into an active investment machine.
Yet our tycoons recognize that while they have the ability to pursue aggressive investments, they can still use capital from foreign sources, which they have done, i.e., we are still capital-challenged compared with our neighbors, the Asian Tigers. In other words, we have room to, say, double our current investment levels and we would only be matching the Asian Tigers. And we need greater investments in order to sustain and strongly drive our economy and meet the needs of our people.
As our tycoons continue driving their investments to respond to the demands of our consumer-driven economy, they have joined the ranks of Forbes’ wealthiest.
But what about the country itself, how can we elevate ourselves economically?
Should we mirror the model demonstrated by our tycoons? And that is, subscribe to the belief that investments and foreign partners engender greater productive activity, GDP and wealth creation?
Or does our culture or ideology or our nature as a people put us in a different school from our tycoons?
For example: human nature may cause us to take a slack in our efforts to drive our economy. Just like the Dutch who earlier on relied heavily on their extraction industry only to learn that they needed greater efforts to sustain their economy, e.g., establish a stronger manufacturing industry. In other words, why even think of driving and sustaining a country’s economy when it has a fairly good source of income? And so The Economist magazine coined the term “Dutch disease”.
Even America is suffering from their own “Dutch disease” and that is their heavy reliance on foreign capital to cover their capital shortfalls given their credit-card culture; which they have recognized as unsustainable.
The investor/philanthropist turned philosopher George Soros has an exhaustive treatise about human nature that he spelled out in his latest book, “The new paradigm for financial markets”.
He claims that his interest in philosophy dates back several decades when he was penny less (“I have touched bottom”) and “waiting to be admitted to the London School of Economics”. He read and was influenced by Karl Popper, later reinforced by his study of Aristotle and his own life experience.
In so many words, he says our cognitive function cannot be divorced from our own view of what we consider reality such that our understanding is not a pure outcome of our thinking but colored by our culture, ideology and other biases. George Soros, in his own words:
To drive home the point, Soros maintains that:
What lessons can we learn?
“Ayala said OFWs might remit less next year, but by sheer numbers alone and the reality that they are scattered all over the globe would probably serve as buffer for dollar inflows to help the Philippines withstand the global financial crisis.” (Business Mirror, Nov. 19, 2008)
Given the magnitude of OFW remittances (over $15 billion in 2008) we have been blessed to overcome whatever ails our economy.
As we now know these remittances have been the driving force behind our consumer-driven economy. And thanks to our tycoons, the Ayalas, Cojuangco and company and the taipans, they have turned this source of capital into an active investment machine.
Yet our tycoons recognize that while they have the ability to pursue aggressive investments, they can still use capital from foreign sources, which they have done, i.e., we are still capital-challenged compared with our neighbors, the Asian Tigers. In other words, we have room to, say, double our current investment levels and we would only be matching the Asian Tigers. And we need greater investments in order to sustain and strongly drive our economy and meet the needs of our people.
As our tycoons continue driving their investments to respond to the demands of our consumer-driven economy, they have joined the ranks of Forbes’ wealthiest.
But what about the country itself, how can we elevate ourselves economically?
Should we mirror the model demonstrated by our tycoons? And that is, subscribe to the belief that investments and foreign partners engender greater productive activity, GDP and wealth creation?
Or does our culture or ideology or our nature as a people put us in a different school from our tycoons?
For example: human nature may cause us to take a slack in our efforts to drive our economy. Just like the Dutch who earlier on relied heavily on their extraction industry only to learn that they needed greater efforts to sustain their economy, e.g., establish a stronger manufacturing industry. In other words, why even think of driving and sustaining a country’s economy when it has a fairly good source of income? And so The Economist magazine coined the term “Dutch disease”.
Even America is suffering from their own “Dutch disease” and that is their heavy reliance on foreign capital to cover their capital shortfalls given their credit-card culture; which they have recognized as unsustainable.
The investor/philanthropist turned philosopher George Soros has an exhaustive treatise about human nature that he spelled out in his latest book, “The new paradigm for financial markets”.
He claims that his interest in philosophy dates back several decades when he was penny less (“I have touched bottom”) and “waiting to be admitted to the London School of Economics”. He read and was influenced by Karl Popper, later reinforced by his study of Aristotle and his own life experience.
In so many words, he says our cognitive function cannot be divorced from our own view of what we consider reality such that our understanding is not a pure outcome of our thinking but colored by our culture, ideology and other biases. George Soros, in his own words:
“Our understanding of the world in which we live is inherently imperfect because we are part of the world we seek to understand. There may be other factors that interfere with our ability to acquire knowledge of the natural world, but the fact that we are part of the world poses a formidable obstacle to the understanding of human affairs.”
To drive home the point, Soros maintains that:
“The financial crisis was slow in coming, it could have been anticipated several years in advance.
“It had its origins in the bursting of the Internet bubble late in 2000. The Fed responded by cutting the federal funds rate from 6.5 percent to 3.5 percent within the space of just a few months. Then came the terrorist attack of September 11, 2001. To counteract the disruption of the economy, the FED continued to lower rates – all the way down to 1 percent by July 2003, the lowest rate in half a century, where it stayed for a full year. For thirty-one consecutive months the base inflation-adjusted short-term interest was negative.
“Cheap money engendered a housing bubble, an explosion of leveraged buyouts, and other excesses. “
What lessons can we learn?
- Given our inability to raise capital at competitive levels, how do we raise capital?
- Do we simply reject foreign capital because we don’t want foreigners to own a chunk of our economy?
- Given our inability to pursue world-class research and development, how do we acquire state-of-the art technology to be able to develop competitive products and services?
- Do we simply reject foreign-sourced technology?
- Given our inability to accelerate infrastructure development, how do we raise productivity, efficiency and competitiveness?
- Do we simply reject foreign participation?
No comments:
Post a Comment