Saturday, July 21, 2012

“A system is only as strong as its weakest point . . . “

Europe is trying to deal with the euro crisis one problem at a time. That approach is doomed to fail,” The Economist, 23rd Jun 2012. The quote reminds the writer – who was fortunate to have him as a mentor – of the late Anacleto del Rosario, an educator and considered the first Filipino marketing consultant, and who (in the early 70s) brought to the Philippines Louis A. Allen’s “The profession of management,“ and Edward de Bono, who originated the term lateral thinking, and exposed Filipinos to creative thinking.

It also suggests system or model thinking – which, however, does not mean “dotting all the i’s and crossing all the t’s.” And a good model we currently have is “Arangkada Philippines,” developed by the JFC (Joint Foreign Chambers). It is a simple model designed to generate $75 billion in foreign direct investments, focused on 7 strategic industries that would generate incremental GDP of over $100 billion and millions of jobs – i.e., these industries will spawn intermediate businesses and activity; and why investment has a greater multiplier effect than consumption. We have to keep attracting and driving investment and technology instead of making do with livelihood programs, indeed a characteristic of a failed economy and the unwitting condescension of our cacique culture. ["Arangkada" is not presented like the Balanced Scorecard model that international agencies have adopted and also by our public sector; but many successful global enterprises are biased to simpler models. And the writer while with his MNC employer piloted Balanced Scorecard in an Asian subsidiary before adopting a simpler model. Simply, the private sector has a bias for execution, i.e., it is keen to embrace the spirit and intent of a model and, as importantly, deliver its promise. Many foreign observers, when they say that in the Philippines we don’t have the rule of law, are reacting to our complex culture – i.e., we seem to forget the spirit and intent of even fundamental laws, especially because of our hierarchical instincts, compounded by “pakikisama” (to belong) or compassion, or is it misplaced compassion?]

And not surprisingly, we have yet to demonstrate a total commitment to “Arangkada Philippines” which is the most promising economic model we’ve had – given that after half a century we’re still underdeveloped? Are we mirroring the failed response of Europe to the euro crisis – and that is, we have been dealing with our economic underdevelopment one problem at a time, and that approach is doomed to fail? And it starts with recognizing that the reason we are unable to attract foreign investments is because our subconscious is indeed parochial? And which is why we have ourselves to blame if we continue to perpetuate crony capitalism and our cacique culture? But within that complex instinct is more complexity. We don’t embrace foreign investors but because of “Pinoy pakikisama” we have embraced Indonesian foreign capital represented by a Filipino. And more to the point, we ought to be embracing technology and innovation driven investments if we are to be relevant in the 21st century! [As the Iraqis have realized, “Consumerism alone will not drive the economy, analysts say . . . This is consumption; this is not production . . . Many investors are looking for guaranteed government contracts . . . and that dependence . . . raises questions of crony capitalism,” USA Today, 16th Jun 2012.]

Europeans continue to be turned off by American certitude yet recognized that a Bill Gates and a Steve Jobs would most likely come from America. And as the writer would explain, it is similar to the perception that Europeans know their wines more than the Americans. And this sophistication is represented, for example, by Daniel Libeskind, the architect of the new Freedom Tower or the New World Trade Center at Ground Zero. While a naturalized American, he was born and grew up in Poland. And as the wife would note, in Europe a staircase is designed as a work of art while in the US it is designed for efficiency and safety, for instance.

And so George Soros would say about the euro crisis: Social events . . . have thinking participants who have a will of their own. They are not detached observers but engaged decision makers whose decisions greatly influence the course of events. Therefore the events do not constitute an independent criterion by which participants can decide whether their views are valid.” [George Soros Remarks, Festival of Economics, Trento, Italy, 2nd Jun, 2012.] Does it also explain why we’ve had a failed economy?

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