Monday, June 3, 2013

Why we’re amazed is what’s amazing

"Poverty unchanged despite economic growth," screams a news report that represented the headlines of the day, 24th Apr 2013. What is amazing is why we're amazed! Have we been led to believe that we should expect something different? Given that our GDP per person is a tenth that of developed economies, it would take a generation for PHL, at a constant 7% growth (at current prices and exchange rates), to be a developed economy, as international institutions have indicated many times before. And they have not been shy giving us unsolicited advice? But Juan de la Cruz is simply stubborn – “matigas ang ulo”?

And perhaps to keep our sanity, we like to look at the glass as half-full – when the unfortunate reality is it is 10% full and 90% empty and that’s how deep a hole we’re in? And so one local paper has been constantly drum-beating every effort that it picks up from the positive side of our ledger. But as one senator once said, “Been there done that” – we would register some good growth but have yet to sustain it?

My late mother trained to be a teacher unlike her father who was a CPA; so I would try to explain to her that revenue has to be netted out because of the attendant expenses; and similarly an asset has to be discounted by any liability. Juan de la Cruz can’t just all be “pa pogi”? As a boy I would hear my grandfather remind his oldest son, who was a forester and worked at a government agency extending agricultural credit, that subsidies would make sense if the underlying undertaking was designed to be sustainable. It was the first time that I heard the word subsidy and I had no clue what they were talking about. But looking back, he in fact predicted that land reform would fail! And it was after one of those Sunday lunches when this conversation occurred that my grandfather then said to me: "Don't be a politician because they steal, and don't be a lawyer because they lie." [A high school graduate, he never took up accounting but sought to be allowed to take the board exam, passed it and became a CPA. He looked up to Rizal and was a Mason, but his children were all baptized Catholics, my grandmother being one.]

I am today the least surprised when candidates would promise to fix the economy. The reality is we are perpetuating our “cacique culture” – a hierarchical system and structure? I could only cringe to hear hushed comments on the extent vested interests are funding our elections, clearly no different from the US – and why like an American Jesuit who is a Manila resident, I haven’t also exercised my right to vote in US elections. [Freedom works both ways; and in developed nations it’s not surprising to find a lower percentage of voter-turnout – “fool me once you are a fool, fool me twice then I am a fool”. I hold dual citizenship and can vote in PHL elections too.] But there is one glaring difference: the US can fool around and get away with it – but PHL can’t. (Although the display of hubris and greed by the financial sector appears to have inflicted so much damage that the world is still reeling from the Great Recession.)

Indeed we can’t. But because we like to cling to what we call our culture – largely driven by parochialism and a hierarchical system and structure, i.e., the cacique culture – we can’t put the basics of nation-building or the foundation of an economy right? How out of synch are we from the 21st century world to crow about OFW remittances, for example, when we should abhor it? But because of our “caste system” we don’t even bat an eye? (With due respect, Cardinal Tagle did when he was archbishop.)

We could decree that gambling can be an open field but not energy, as an example? But we’re now stepping up infrastructure – yeah, great, but with the same half-dozen big boys sharing the spoils? But we have lots and lots of small businesses – to the extent of 90% of businesses. Again, great! But they only account for 30% of GDP – because we don’t measure up to the yardsticks of the 21st century globalized, competitive world. We are way behind in investment, technology and innovation as well as in the development of talent, products and markets.

Simply, dominance and oligopoly equals a lopsided economy – and precisely why talk of inclusive growth is mere rhetoric?

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