Wednesday, October 9, 2013

Bottom-of-the-pyramid > farms-to-market roads > pork

That’s a simple way to illustrate why compassion can be misplaced. When we focus on the bottom-of-the-pyramid we could unwittingly be perpetuating our cacique culture. As the pork barrel scam clearly pointed out, everyone and his uncle would raise their hands “to help” the poor yet end up helping themselves. And why this blog talks about Pareto's 80-20 rule. (Clinton today may mean Hillary but “it’s still the economy, stupid!”) And it wasn’t surprising Francis would say that while John XXIII saw the “maximum dimension” he focused on the fewer impactful initiatives. Clearly Vatican II was an illustration of that. Ergo: the “vital few” is universal – and it applies even to the scribes and Pharisees? Will Juan de la Cruz ever get it?
And in the midst of poverty, we thought MNCs were evil out to exploit the masses? “Down with MNCs” (from my student days) came back when I read that a Philippine business icon was positive about 2015 – i.e., he expected their businesses to prosper even more with ASEAN’s bigger market. Yet Singapore, Malaysia and Thailand would run rings around us given they dominate 70% of ASEAN trade. Have we learned our lesson yet – i.e., not only the West and oligarchy could be MNCs?
My Eastern European friends have rapidly learned Western MNC skills especially because they're an FMCGC (fast-moving consumer goods company.) Poor countries like those in Eastern Europe mean families spend whatever little they've got mostly on food and consumer products. But some of these countries have less poverty than PHL. Thus one would shake his head reading about a Philippine bank equating sales of more cars to a good economy instead of saying “the business of the bank was good!” It had nothing to do with a prosperous economy; it had to do with human needs – and the "Dutch disease"! Our over $20 billion in OFW remittances support the economy and make our CB smelling like a rose. It’s called “sound economic fundamentals” – similar from before derivatives exploded? And why the WB and ADB wanted us to focus on manufacturing. Is it any wonder JP Morgan, for example, was to settle mortgage probes in the billions of dollars? [Disclosure: As a US market investor I've stopped reading bank reports long ago; straight to the recycling bins they'd go.]
Indeed, even at the bottom-of-the pyramid, people need to survive, and then some. And Maslow’s hierarchy of needs captures why they would sacrifice even a bit more to indulge on something more desirable. And my Eastern European friends today now would laugh with me as the iPhone 5S sold more than the cheaper 5C during the first weekend of its launch – that included China, not just the US. They would remember when I asked who among them had smartphones and designer jeans; and most of them did! Yet they claimed when I first arrived ten years ago that they were poor Bulgarians!
Figuring out the prognosis of the business in consumer goods is not rocket science – i.e., comparing consumption per capita and GDP per capita essentially defines the market potential when arrayed side-by-side in a universe of countries; and even pinpoints where to focus, i.e., Pareto’s 80-20 rule. Of course, my friends had to first learn and invest in product development and that marketing and R&D are Siamese twins; the key being to develop products across the value-addition chain to be able to compete in different markets – emerging, developing, developed.
What about the economy? First and foremost, an economy needs a strong foundation; not oligopoly, but infrastructure. When the requisite infrastructure is present foreign investors would have the confidence to bet and invest in manufacturing, in technology, in innovation, in education and training, in product and market development. Precisely what the world saw with the Asian tigers. It will not happen overnight – and there are no shortcuts. A clear vision, transparency, focus and discipline are a must. We can’t continue spiraling down the abyss – given our corrupt culture while proudly protecting our cacique masters and blocking foreign investment and technology and innovation and education and training and product and market development! We’ve been jostling for excuses especially “kuro-kuro” which may be fun while completely missing the common good, reducing poverty – i.e., our national income or GDP remains Third-World?
We’ve denounced MNCs instead of learning to be one too (and ASEAN is clearly a vehicle) because we’ve been in bed with oligarchy; one day we’re proud of them and the next, we’re angry? When we hear a business icon talk about the bottom-of-the-pyramid, it has nothing to do with a prosperous economy but a prosperous business. And India has seen it lately as their economy stalled again – while the Brahmins continued to prosper. The concepts of “an inclusive economy” and “bottom-of-the-pyramid” were developed by Indians. And it is not surprising given their hierarchical system and structure. But they still must address their weak economic foundation like we do in PHL.

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