Monday, December 10, 2012

Critical of the model that we love

When all is said and done, ours is a borrowed page: the US trickle-down economics? Admittedly there are aspects of it that we hate and those that we unwittingly love? The dichotomy wasn’t lost to Mahathir when he spoke at UST sometime ago. And in his case the one thing that he learned to love is their capacity to invest and bring technology. Simply, Mahathir urges us to discriminate instead of shooting ourselves in the foot? He dislikes the West, particularly George Soros who raided the ringgit, but he craves their wealth and technology . . . and can use them.

We inadvertently subscribe to US trickle-down economics and thus miss that the condescension – or American arrogance – that comes with unfettered free enterprise mirrors our cacique structure? We had the 1% anomaly even before Occupy Wall Street dreamt of it? The human condition, as in greed, travels with ease and so even Europeans, long critical of US-style capitalism, succumbed to it thus aiding and abetting the collapse of the global financial system? And worse, their banks were more vulnerable than US banks.

And it makes Mahathir truly prescient; and being a doctor it was not surprising given his training in cause and effect? We may not be unanimous about the role of government versus that of the private sector in economic development. But we ought to be more perturbed about our failure in power generation; we appear nonchalant because the private sector (or our favorite big boys) would do what is good for Juan de la Cruz? PSALM wallows in debt. Does that mean we’re getting closer or farther away from fixing our energy dilemma? Our neighbors, on the other hand, knew that government had to provide leadership in economic developed as exemplified by Singapore and Malaysia? And both Lee Kuan Yew and Mahathir bin Mohammad offered us unsolicited advice.

The problem with US trickle-down economics when applied to PHL is that we don’t have the infrastructure and the ecosystem of a developed economy like the US. And thus the flaws of their model don’t represent our own challenges. The issue of inclusiveness in a US environment versus ours is not the same. Our inclusiveness challenge is largely due to our underdevelopment. [Yet we have produced billionaires that have dominated our economy and thus its lopsidedness. And because of their influence – that could be owed as much to our acceptance if not embrace of a hierarchical structure – we have become party to protecting oligarchy via the closed economy that has characterized PHL and thus starved of foreign investment and technology.] We ought to be comparing ourselves to neighbors that were once poor like Thailand: they have appreciably reduced poverty simply because they are more developed than we are, i.e., their GDP per capita (at purchase price parity) is $9,500 against our $4,100. [And poverty to us means making less than one or two dollars a day. In the US poverty thresholds are used depending on the size of the family and the ages of the members: for example, in 2012, a family of five, with two children, their mother, father, and great-aunt, has a threshold of $27,010; and the family is classified as poor if it misses said threshold.]

When we compare apples to apples, our concern must be to drive our economy. Simply put, we have to focus on building our economy like our neighbors have done. And it starts with basic infrastructure – from power and beyond – and prioritizing the pursuit of strategic industries and their requisite ecosystem or clusters as economists would call them. For example, the seven strategic industries identified by the JFC (Joint Foreign Chambers) must be our concern, meaning we must set up the support industries that will make these strategic industries viable. Agribusiness is one of them. Beyond talking about a “comprehensive agrarian reform program,” we must be focused on making agribusiness a viable economic undertaking – from the inputs to the outputs and ensuring that throughout the process they are efficient, productive and competitive.

Because of our inability to step up to the plate, we’re confusing our challenges and not surprisingly are in a maze that shouldn’t be there in the first place: CCT, land reform, minimum wage legislations, etcetera have not made a dent in our poverty efforts! Why? We keep taking our eye away from the ball!

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