Tuesday, May 31, 2011

The cycle of life – the why of development

With the miracle that is Singapore people would have an opinion on Lee Kuan Yew – good, bad or indifferent? The writer remembers seeing the young Lee personally overseeing the construction of the Singapore Zoo. And today he may be waking up in the heart of Eastern Europe but wouldn’t miss the news about Lee Kuan Yew’s resignation. Would the younger Lee address the issue of transparency more proactively – ‘benevolent rule’ in this day and age is passé? And which is why the West always had issues with Singapore?

The past is to learn from; the present is to live in with the learnings from the past; and the future is to bring the hopes from the learnings of the past and the present? Having been around the block the writer has had a ringside view of the ‘’cycle of life’.

In the Philippines decades ago, one of the first functions in one company he had to attend was a retirement dinner. But it was like run-of-the-mill; so he wanted to reduce its frequency without being insensitive to the honorees. It shocked his assistant until he said: “I cannot, even if you pay me, hear myself saying almost the exact same thing so many times a month”, and she giggled. And everyone then realized that there was a way to ‘reform an old-standing tradition’, making it an even more fitting event. As a rule, people in the company had to publish their calendars in advance; and one time a Japanese colleague requested the writer to stop by Tokyo because Japanese value their service awards – and if he’d do the honors. ‘Indeed, life’s milestones must be celebrated!’

Before traveling to Manila last January, the writer and wife visited two elderly friends in their apartments in Manhattan. No matter how much the tandem of Cuomo and Bloomberg had to cut their budgets, it was delightful that caring for the elderly was still affordable. And the attending nurses explained how the system worked. They had a team that would visit several times a week . . . and the joy in the faces of their patients said it all. With such positive vibrations the writer didn’t even believe they were on their deathbeds. (May they rest in peace!)

In global business MNCs are heavily invested in managing the ‘cycle of life’. Succession planning is a time consuming process yet regarded as very smart investment, pioneered perhaps by General Electric. Jack Welch, a GE ex-CEO, was known to have spent half of his time in succession planning. And the process is as severe if not more so with products and brands and with markets. The unwritten rule: nothing is permanent. [Everything turns to ash?] Being young once afforded the writer the chance to encounter 3 MNC CEOs. And it’s a wonderful feeling that today folks he called ‘young people’ are behind the company . . . while he collects his senior citizen (Metro Rail) ticket at an ATM in Grand Central Station. And it’s honor system: you stick your credit card and punch ‘senior citizen’ and bingo. And it also works in movie houses: while the writer keeps to the notion that he doesn’t look like one they still hand him the discounted ticket. [Research confirms that societies with ‘a low-trust level’ are generally underdeveloped.]

And the cycle of life goes on. Recently, his Eastern European friends showed him the new R&D lab of their latest venture. And said one: ‘This is the kind of investment you expected from us, and we’re proud of it’! From a cottage industry in the middle of nowhere occupying an old dilapidated ex-communist structure – which even the locals would deride – they are now an MNC, in the short period of 8 years. And in the Philippines we’re still debating about the same old issues from decades ago? We really don’t like foreign investors or MNCs? But ex-socialists have themselves become MNCs? We Filipinos ought to look forward to being MNCs ourselves? There is no rule that says ‘no’? Nations develop for the common good – not stay put?

How the writer would wish he’s running from school anticipating the joy when he sees his mother simply being home? Before flying to Eastern Europe, the writer and wife had to house-sit for the daughter and son-in-law who were out of town. Waking up on their first morning and after successfully brewing his first cup of coffee, the writer remembers the first time his parents stayed over in their new house in the Philippines, and the daughter was just nine. Mother was fumbling in the kitchen, after waking up before the maids did. (May she rest in peace!)

Monday, May 23, 2011

Hierarchy, permanence . . . and parochialism

RHIP – Rank Has Its Privileges! Could our mindset be leaning to our instincts of hierarchy and permanence – thus our seeming inability to adapt to the times? And adaptability is one of the elements of developed institutions highlighted by Prof Hutchcroft in dissecting our institutions, speaking at a recent gathering in Bacolod?

Hierarchy and permanence especially in a parochial society won’t be hospitable to transparency – and so some sectors are pushing the FOIA with the Aquino administration? But our challenge goes beyond the ‘freedom of information’? Our comfort zone, unwittingly, is to shut extraneous forces out and perpetuate respect for hierarchy and the acceptance of permanence? Unsurprisingly, the church thrives and oligarchy, too? While the Church wants to address transparency especially as it relates to sexual abuse, its efforts are deemed still opaque in the West? Hierarchy tilts to opaque; on the other hand, transparency brings openness and fairness – and thus competitiveness? And somewhere along the line is our confusion, and why we struggle with competitiveness?

And so while the world economy has gone global we’re still of two minds – or hearts? But because of our compassion we recognize that beyond the church and oligarchy is poor Juan de la Cruz? The latter being the underdog finds a soft spot in our heart – and even gives legitimacy to insurgent elements, claiming to protect the poor? But to rock the boat is pointless and thus the option is to acquiesce – finding consolation that as a society we are in a state ‘equilibrium’? Everyone is in their right place . . . except the country – because what we have in fact attained is the ‘lowest-common denominator’? When the 21st century demands a ‘culture of excellence and innovation’?

For decades Detroit labored yet failed to satisfy this new culture especially because the US auto industry was founded on the ‘command and control’ model – synonymous to a former GM CEO and management guru? Its attendant environment had set off demands for labor fairness and protection . . . until the industry turned uncompetitive? The Japanese (and soon the South Koreans?), having taken over industry dominance, demonstrated that the better model is that of a ‘high-commitment work system’ – i.e., manufacturing teams are vested with authority and every person is an equal and thus highly committed to the success of the enterprise, which likewise stepped up its investment in technology? Invariably new US car manufacturing operations are adopting the contemporary model in state-of-the-art facilities sprouting in the South, and abandoning Detroit and its old mindset?

The global community in the meantime continues to raise the mantra of innovation. And as innovation spreads it opens new markets and opportunities for investment, e.g., China and India. And in India a Western auto maker has introduced the concept of a ‘modular car’, where damaged external parts could be replaced rapidly and inexpensively, thus eliminating the need for repairs – not uncommon given the density of India’s thoroughfares. And so while India has a long history in car manufacturing one industry titan saw it fit to buy the Jaguar and Land Rover brands – to stay abreast with progress and innovation. [China has its own challenges, global leadership demands a new set of responsibilities – but China’s leadership over the short-term must keep an eye on social stability as opposed to transparency? But as nations and people evolve, and as the Singaporeans displayed in their recent elections, they would want to be treated like adults? Which is likewise manifested by current events in the Arab world?]

It is the 21st century and we have seen how college kids if not drop outs could change our way of life as we know it? Thus progressive enterprises organize teams instead of relying on the formal, hierarchical structure, especially with innovation and product development initiatives. But nations and cultures are not as flexible? And the challenge, in our case, is to raise our consciousness of the barriers we need to overcome – our comfort zone being largely characterized by hierarchy, permanence and parochialism?

We would not want the Asian tigers to continue to corner investment funds that move around whenever there are perceived growth opportunities? When push comes to shove investors would still bet on markets that are committed to competitiveness – unfortunately despite professed Western values like human rights, for instance?

Friday, May 20, 2011

Where coherence comes from . . .

Could our consciousness to be competitive be on-again, off-again? And so every now and then NAIA 3 is front page news – or power, water and other basic infrastructure issues? We recognize the benefit of creating a ‘brand that is the Philippines’ and understand the imperative of having a ‘good product’ behind the brand? It is important then that we raise our consciousness to be competitive – i.e., we have to arrest our underperformance against our neighbors? Otherwise such performance would become our brand – i.e., ‘perception is reality’? Brands are easy to destroy but utterly difficult to build. For instance, President Aquino alone can’t make the PPP (private-public partnership) succeed – it is how we bring coherence in our enterprise that is paramount so that the outside world sees that we’re focused on rebuilding our economy and our country, and thus would bet and invest in the Philippines?

In 2007 the ADB collaborated with our economists and put together a scholarly assessment of our economy, ‘Philippines: Critical Development Constraints’. It is available online. And their diagram (Figure 1.1) says it all: Investment – or the lack of it – is at the core of development/underdevelopment! [What a surprise?] The good news is we now have ‘Arangkada Philippines 2010’: “[It] contains measures on how to realize the projected $75-billion foreign direct investments and 10 million jobs in the next 10 years from seven priority industries”.

The people behind ‘Arangkada Philippines 2010’ are periodically updating us on the progress of our efforts – yes, it is us, not just them? And still we may choose to talk about condoms, the positives of a large population, maximizing OFW remittances, raising tax collections, etc.? What about the core of our underdevelopment, investment? In short, are we focused like a laser . . . so that we can execute and get things done and done right with coherence: who will do what, when, where, why and how? Major endeavors demand single-mindedness – but does our psyche find comfort in ‘retail politics’, i.e., all politics is local where every wish has to be appeased? Sounds like Washington or California – which are descending into chaos? Where is their coherence?

We can’t keep our eye off the ball – i.e., investment – given that the 21st century is a highly competitive and globalized economy? And it cannot be driven from the commune like China did before – nor can it be characterized as a barangay or LGU economy’ – which fortunately works for the few, i.e., ‘the insiders’ or ‘The Boys Club’?

And given our frustrations we want to pitch our own solutions to the country’s woes that we firmly believe are spot on? The Pharisees and the scribes thought they were spot on too – adhering to their 300 tenets yet unconcerned about coherence?

He must have scratched his head when asked if it was okay to work on the Sabbath – given his response? And as they kept bugging him he had to give them the KISSKeep It Simple, Stupid! – and laid down the Great Commandments? Do we need the second coming? A close family friend would always say that we, Filipinos, are the chosen few and thus the second coming?

Through the magic of technology the writer is able to keep abreast with how his Eastern European friends are doing. And whether he is present in person or virtual, they would still break into a chuckle despite hearing KISS for many years. And so they developed a ‘go-to program’ – and labeled it “KISS” – to get them focused on what matters whenever they’re in a bind: it could be resolving why a new product offering missed its sales target for the month, or how to bring margins to budget numbers or how to conclude an acquisition process and not let it drag. ‘Being too close to the trees and missing the forest’ is something they swear by! How quickly ex-socialists could learn ‘transparency and check-and-balance’ – and, as importantly, coherence?

Tuesday, May 17, 2011

Kudos to DTI

Thank God for the seeming consistent and continuing efforts of DTI to pursue pragmatic trade and economic development. We need that resolve if we are to have the wherewithal to take a quantum leap for Juan de la Cruz, for the common good? It appears we seriously want to develop markets beyond our shores? We typically encounter news about the downsides of international trade; yet the DTI appears to be doing their homework and have set timelines for the requisite trade negotiations with other nations?

Trade is not defined by one’s weakness but by one’s resolve – something we can learn from the Asian tigers? Pragmatic trade and development goes beyond ‘Filipino abilidad’ – our ‘default instinct’? It is pursuing investment, technology and innovation; and talent, product and market development – which are all available to everyone? Every Asian tiger started with none of them but did not allow their deficiencies to define them, again confirmed by China’s latest trade surplus? We need to wrap our head around this reality so we don’t end up like Mosley – or worse, reminiscent of the least effective shepherd from the parable of the Talents?

We’ve talked about the narrowness of an economy reliant on OFW remittances? And recognizing how limited our options are, we have to harp on maximizing the use of these remittances or the imperative of efficient tax collection? They are both truly positive initiatives and are correct, yet insufficient? Our economic pie (or average income) can’t feed a flock of 100 million? What we need is a coherent road map to development. Good enough is not good enough in a highly competitive globalized economy – or even when Ateneo or La Salle put their teams together? We need to step up to reality with the urgency demanded by our downward spiral – i.e., we keep dropping in every global-rankings index translating to increasing poverty? The ratings are like scores, it is how we play the game that is reflected in these scores – i.e., dissecting the scores helps but they are not the meat?

Our challenge requires a true paradigm shift, not pressing the few old buttons that make up our comfort zone? The efforts of DTI would fail if we sign more trade agreements yet are stuck with the same, old mindset? Our current investment capacity – including investments of our major local industries and OFW remittances – would not suffice and translate to the acquisition of state-of-the-art technologies; or the attainment of competitive advantage in innovation, talent, and product and market development? They are what we require – the imperatives – to play and win in the global-market arena, or if trade agreements signed by the DTI are to work for us?

Wishful thinking won’t cut it in the 21st century? It did not during Biblical times when the master took to task the shepherds who failed to leverage their God-given talents? The current state of the global economy makes our challenge more daunting. And indeed the West is the main culprit. Both the Great Depression and the Great Recession, at their core, are outcomes of human greed – not that different from why Adam and Eve were driven out of Eden? Bottom line: these are times when we have to dig deep for the human spirit, not retreat and be an island unto ourselves? We simply don’t have the means and to stick with our bolos is foolhardy?

There is no magic to global competitiveness – but it demands plenty of resolve! And as we speak the writer’s Eastern European friends are pulling together their game plan to further accelerate their geographic expansion efforts. It will be driven by a stable of ‘global brands’ – for which they are coupling the requisite elements of competitive investment levels, acquisition of state-of-the-art technologies, and stepped-up innovation in product and market development. Over the last several years, they have been assembling world-class talents to bring to bear on this major enterprise. Clearly this was not their mindset when socialism supposedly thrived in this part of the world. On the other hand, given our frustrations, we think there are versions of the free market that are less demanding? There is no free lunch?

More Filipino enterprises ought to pursue the lead of Universal Robina Corporation and commit to marshalling the requisite elements of global competitiveness? As the writer’s wife – born to an entrepreneurial family – would explain, ‘we Filipinos don’t distinguish ‘cost from investment’? And we reap what we sow?

Thursday, May 12, 2011

Another professor dissects our institutions

Last year it was Prof Michael Johnston from Colgate University in New York, now it is Prof Hutchcroft’s turn, from the Australian National University. Both talk to our weak institutions owing to patronage politics, among others? And as a prominent business leader shares with the writer, ‘our way of life puts the personal above most things that principle suffers’? It’s the accepted norm and we simply pay the price? It’s the 21st century and the Philippines still can’t meet international airport standards, a microcosm of our larger economic problems? And there’s a long list of fiascos to explain our failings in major development efforts to the detriment of Juan de la Cruz while undermining our credibility in the global community – and thus the least preferred by investors?

Prof Paul Hutchcroft (speaking at the recent Bacolod City conference of the Philippine Political Science Association) lifts from Samuel Huntington’s 1968 work to define effective institutions as being “characterized by capacity, coherence, autonomy, and adaptability”. [Inquirer.net, May 5th] Put another way, we don’t have the capacity to build institutions because we lack coherence – and it sets in motion a host of other elements that could go wrong? And they could range from setting a vision and translating it into concrete goals and on to our execution efforts?

Enter the politicians (in fairness, many are dedicated): In a sea of confusion and incoherence, the natural outcome and common denominator is patronage? In short, it is through patronage that a semblance of coherence is established. Enter the oligarchs: First their core business then anything and everything where they could put their finger on – and in a country starved of most elements of development that could mean from power to water to roads to rails to telecommunications, etc. Yet the lack of coherence persists?

For example, we still don’t have a reliable power supply; Juan de la Cruz is yet to be guaranteed clean, safe, drinking water; there is still very little to show in our rail system; and, of course, telecommunications make the few players go to the mat – and fight it out for control if not monopoly? Where is the coherence in industrial efforts or the platform for development? And in our system of patronage whoever feels left out would have one goal and one goal alone, revenge, pull the country down? Who cares if the country’s basic infrastructure system is paralyzed and backward?

And we continue to cheer the successes of individuals and groups – who are in fact the insiders or, as one columnist would label it, The Boys Club? In fairness many of them are legitimate. Where the failed system thrives is in our support of an inward-looking economy, under the guise of patriotism – yet we’ve messed up our natural resources that we have less than 20% of our forests left? [Where is the authenticity, as one priest would ask?] We’ve shut foreign investments and technology out that the Asian tigers embraced? The outcome: we’re the losers, plain and simple? And now we’re struggling to adapt to the conditions we’ve brought upon ourselves – underinvestment, backward technology, innovation laggards, uncompetitive products and a very limited market?

We can’t find coherence because we have not developed the sense of community? And it brings to mind the work of Bernard Lonergan, SJ; and The Lonergan Institute – so far in a dozen locations around the world including Manila. “Through education and research the institute is using Lonergan’s understanding of human consciousness, of human development, and of human community; and implementing Lonergan’s thought and concern for the ‘human good’. Lonergan has a unique paradigm of interdisciplinary collaboration among economists, ethicists and theologians.”

Our bishops are challenging the clergy and the laity to effect societal change – and lift the sectors that have been marginalized by the narrowness of our economy. And one initiative they could support is ‘Arangkada Philippines 2010’ – “[It] contains measures on how to realize the projected $75-billion foreign direct investments and 10 million jobs in the next 10 years from seven priority industries”. It is the only platform to date that would give us a chance to feed a flock of 100 million – while the debate on the RH Bill would in fact add to our incoherence? How do the private and the public sectors embrace the imperative of community? How could the Bishops support the enterprise – of the thought and concern for the human good?

Sunday, May 8, 2011

Changing course . . .

We are truly obedient, patient, accommodating and resilient people? And we believe in fate? And we take them as positives proud that they are inherent in our culture – differentiating ourselves from the liberal, amoral West? But did the West somehow reinforce our fatalism – through a church where “bad people” must fear God?

The writer comes from a typical Filipino family whose life revolved around the parish. And unsurprisingly a sister is a nun – among the different claims of the family, save holiness? It’s a big family; and the writer learned that the monsignor had advised the parents: “God would provide” – i.e., responsible parenthood was heresy? And so, recently, the writer was jolted: “It’s senseless to have a big family today”, said his father. The writer meets the nuns in the sister’s convent and believes that they wouldn’t take the father’s current view against him? Thus he’s not surprised to read a column by a Filipino cleric explaining the teaching of the Church about pluralism, quoting from Vatican II – yet many would find it sacrilegious, that he ought to disrobe? Has our faith unwittingly frozen us in time – making the idea of ‘changing course’ next to impossible? The Enlightenment is reality – man has gone to and been back from the moon? And after 52 years and $750 million, a team from Stanford University confirmed that Einstein got it right – with his theory of gravity, general relativity, i.e., of black holes and the expanding universe, NY Times, May 4th.

Are we, in the ongoing debate within the Church, leaning towards those uncomfortable with ‘doing theology’ – because of our belief in infallibility, e.g., the “imprimatur” behind the Baltimore Catechism or the Commandments of the Church? A friend – a deacon and a serious student of philosophy and theology – explains that debate has characterized the Church since the time of the apostles. The writer remembers how our belief was shaped by the ‘Baltimore Catechism’? And it was not until the 80’s that, as some priests (e.g., Fr Richard Rohr, OFM) would explain, the Church leadership acknowledged that it was made up of white, older and European (and some North American) men? Yet there is a ‘theology of pluralism’, and the Church ought to be “more responsive to experience and sensitive to the reality of the moment”? [J. Dunne/D.F.Pilario, Back to the rough grounds of praxis, 2005.] But that would be like pulling teeth in a culture of ‘hierarchy, permanence and infallibility’ – i.e., too liberal for a conservative faith?

And so while we talk about the poor (who have no access to innovations from the West like we do) and live out our Christian charity, we keep to our comfort zone even when the reality calls for changing course – for example, to create a broad-based economy? But we’re here for the ‘afterlife’ and thus to change course isn’t compelling – more compelling, especially for the poor, is to be obedient, patient, accommodating and resilient? And so we would find comfort in charity-giving – and livelihood programs, our interpretation of ‘teaching how to fish’?

But we’re not only here for the ‘afterlife’? We have a ‘present- not a distant-God’ who knows more about our needs and desires – i.e., he is the power behind our prayers, and why there’s only a pair of footprints in the sand? And indeed Christ is about humanness, i.e., flesh and blood, suffered excruciating pain – both physical and psychological – and died? And broke bread with tax collectors, usurers, prostitutes, and sinners in general – despite being divine? Arguably, ‘he is [not just] divine – period (!)’? He is not the poster boy of the ‘country-club culture’, that is, exclusive? He was out to reform his Jewish heritage, dogma-bound and hostile to outsiders – i.e., a heritage no matter how rich and proud could use reform? He wasn’t for an economy that was skewed and cheered the few? He was and is about more than ‘teaching how to fish’? He is about ‘abundance and wellbeing’ – as the apostles witnessed when their nets came close to breaking point or at the wedding at Cana? He is about creating a broad-based economy – or an inclusive economy in its truest sense, not reflective of a hierarchical structure?

Is our challenge then to be “more responsive to experience and sensitive to the reality of the moment” – and recognize that we’re economic laggards if not yet a basket case, for example? And in the global free-market arena there would be winners and losers – a reality that calls for the human spirit, not fear? Given we grew up with the Parable of the Talents – and as Lech Walesa would remind the Poles, “Do not fear” and “Change the face of the world”! [John Paul II]

Thursday, May 5, 2011

Déjà vu . . . in Egypt

After Tahrir Square the writer wonders if Egypt could be playing out like the Philippines. Just like People Power – when he was stranded in Singapore – he likewise missed 9/11. He was then traveling from Alexandria to Cairo with a French colleague, who was driving . . . Then his cell phone rang . . . and in no time brought the car a halt: “You may want to call home, my wife’s on the phone, there’s something going in New York, she saw it on CNN. And it was déjà vu: stranded briefly in Cairo then shuttled to Paris, until New York quieted down for flights to resume. [The world remains volatile – the Arab world is in flux. Will the capture and death of Bin Laden raise or diminish the threat of terrorism? And closer to home, they talk of a possible unrest in Thailand?]

Egypt finds itself “united (WSJ, Apr 21st) in this bewildering period . . . by the conviction that ousted President Hosni Mubarak, sons Gamal and Alaa, and their friends fleeced the country. Thousands have come back to Cairo's Tahrir Square in recent weeks to demand justice . . . [and thus] put the three Mubaraks in 15-day custody for questioning. Steel oligarch Ahmed Ezz and other confidants were already in jail. Corruption indictments came down Sunday against former Prime Minister Ahmed Nazif and his finance minister, Youssef Boutros-Ghali. All these men claimed to champion economic reform. So, not surprisingly, people are now hostile to it . . . Any new elected government will likely be pushed to provide jobless benefits and boost fuel, food and other subsidies—what passes for welfare in a developing country. With privatization off the table probably for years, there's talk of building up "national champions," large, usually state-owned companies that demand monopolies, tariff protections and other perks . . .”

It’s a pity – adding insult to injury? Economic reform is the common denominator among the Asian tigers and new economic powers, China and India. Even East Germans who are still a long ways away from reaping the fruits of reform and unification remain committed. But the leadership and the cronies appropriated the spoils of economic reform unto themselves – making people hostile to the ‘goose that lays the golden egg’?

Crony capitalists deserve to be rebuked, yet the backlash carries a price. It keeps investors and capital away. And it poisons the political atmosphere, pushing off already overdue changes necessary to meet the great expectations of better jobs and wages. What's too often overlooked is that the foundations of capitalism are those of democracy as well: rule of law and an independent judiciary, a private sector able to thrive free of state favor or caprice, competition and open borders for goods, people and capital . . . To the public at large, Gamal Mubarak symbolizes obscene wealth for the elites, while roughly half of Egypt lives on less than $2 a day and can't read or write. "Egypt did very well—just for 100 people," says protest organizer Abdullah Helmy. As Russia showed in the 1990s, privatization without proper domestic competition and rule of law enriches insiders, enrages the rest, and yields limited economic benefits . . . There's a democratic imperative to market reform. The military, secular elites, the Islamists and now Peron-style populists are no friends of political pluralism. Growing economic opportunities and middle classes can help guard against reversal. South Africa and Turkey are good examples of imperfect democracies bucked up by strong, competitive economies. As scholar Valerie Bunce noted in the context of post-communist Eastern Europe, liberalization helps to "disentangle political power from economic resources and thereby constrain the state, empower society and create competitive political and economic hierarchies." [ibid]

What’s the curse of Marcos-style crony capitalism? Did it cut us by the knees – the political will to push reform for a better life for the Filipinos has been upended? We’ve accepted and internalized a very narrow economy as destiny, reduced to moving a few pieces on the board? It does not take a genius to see how slippery that slope is – and why our downward spiral is confirmed by one international-rankings index after another? Thank God for the ‘resiliency’ that we have to develop – or the pain and the loss of human dignity for millions of hungry Filipinos would be hard to bear?