Sunday, September 29, 2013

The elite class never had it so good . . .

And at whose expense? “The World Bank said the number of unemployed and underemployed Filipinos may jump to 12.4 million by 2016 even if the economy would be able to sustain its current growth pace. Last year, the country’s unemployed and underemployed stood at 10 million, with the latter accounting for 7 million . . . 14.6 million jobs in the formal and informal sectors . . . need to be created, sustained or improved in the next four years.” [Philippine Daily Inquirer, 13th Sept 2013]
But of course, “More Filipinos are able to buy brand-new cars these days . . . indicative of the country’s improving economic condition . . . The number of cars sold by dealers across the country totaled 180,000, up by 40,000 units from the yearly average of 140,000 from 2006 to 2011. The growth of the auto industry was due to the improving economy, wherein more people are now able to buy cars” . . . BPI Savings Bank was optimistic that more cars would be bought this year as the economy continues to be rosy.” [Inquirer Mindanao, 13th Sept 2013]
That is why it’s called the “Dutch disease” – it gives us “a high” that shuts out and undermines community sense? It means being blind to the reality and fundamentals of the economy? Is it reflective of our “gated-community mentality” and why we can’t connect the pockets of development to the broader economy? They won't connect because there is no infrastructure – both hard and soft – to begin with . . . And we haven’t established a vibrant industrial base . . . I am writing this in Ukraine, in a Cossack-inspired smallish hotel, perhaps once a mansion. And the bust of Lenin is all around, including in my room – where the pencil holder has the picture and signature of Lenin stenciled too. And the irony is the Ukrainians have been learning – and not without the pains – the ropes of free enterprise. We just completed a business review and our local folks signed up to the marching order to multiply the size of their business; and to present it in the budget review in a couple of weeks. Translation: they have seen blood from their competition – two Western MNCs – and must move in for the kill; and that calls for stepped-up investment.
Ukraine’s population is half PHL’s and the GDP per person is $7,500, versus our $4,500. And just like PHL, it is a high-consumption economy at 70% of GDP – great for my friends’ consumer-products business. But it is still a poor country (a second-rate nation like Poland is more progressive) and so people think that their economy stinks and aren't reveling – like we (the elite class) are in the Philippines? The wealthiest Ukrainian is in the energy business [sounds familiar?] and is into retail as well, with malls and supermarkets in several Eastern European countries.
In this city they have heavy pollution because of the metal industry – which they are proud about being a full-circle business: from mining to metal products, and all the way up to space technology. It is a government-owned enterprise that sells services to countries that need, say, weather satellites up in space. Unfortunately, the industry plus the big wheat and sunflower-export businesses won’t suffice to cover their prohibitive (signed by the ex-Prime Minister who is now in jail) imports of gas from Russia; the latter has been playing games with them, selling gas cheaper to the Germans. Russia wants to keep them under their thumb, a great way to win friends and influence people.
Over cocktails they asked what I thought about their economy: “If your oligarchy will move from controlling the local economy to learning to be competitive, you would be wealthier – i.e., extract blood from global competition, not from their own people. For example, your industry model could be Honda. Honda is beyond a car business and is in the engine and motor enterprise. Given that you can power planes and rockets, you can power the smallest grass-cutter to the largest Boeing or Airbus jets – and over time move beyond the engine business.”
We were outdoors in a restaurant by the Dnieper River, but it was a touch cold. Fall is coming, but not to worry, precisely why vodka is their staple. The waiter, noting that I was sipping my drink (not the way it’s done by the locals!), offered to wrap me with a blanket. I was just reviewing my notes: their poverty rate has gone down to 24% from the previous 35%. And the elite class never had it so good . . . from the anecdotes the regional manager shared about oligarchy, including in neighboring countries. Just like PHL, it must be fun visiting those countries – which I promised.

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