Thursday, July 30, 2015

Problem-solving: what it is, what it is not

Problem-solving isn’t prescribing solutions per se. For example, a pendulum swinging the opposite direction may or may not be the answer. But water seeking its own level is a fundamental given. And shooting from the hip may fulfill an urge but miss the mark. Yet to procrastinate is not the prescription either. But what about distinguishing the need from a want to begin with? Is that among the principles we ought to embrace?

The science of medicine is a model in problem-solving – and cause and effect. The human body may be a most complex system yet to be a patient one would marvel at “the magic” of medicine. How could looking into a select few vital signs [akin to Pareto's principle] be the key to the magic? In this day and age of computing and communications, there is a parallel universe in “big data” and analytics. And the select few vital signs would be arrayed in a “dashboard.” It’s no different from the dashboard in our cars. And we can take the different monitors for granted until we get an alert: “slow down” or “low gas”.

We were recently orienting a new sales manager in New York that we hired with my Eastern European friends. “It is always pleasant to hear something positive. Yet we want to hear it too when there is something unpleasant. For example, to pick up speed, we're not about slowing down.” And over the course of a few weeks, the new person understood what it meant. “I needed that,” she would exclaim, after hearing “that is terrific.” 

The moral of the story. There is a wide abyss between problem-solving and problem-solution. For instance, “ideology” could undermine the problem-solving process. Because pursuing a want can be adrenaline-pumping even when we missed defining the need.

And what we call the familiar could in fact ignore the select few vital signs – and make us cut corners. Which is not to discount the sense of urgency. Urgent or deliberate, the model doesn't change as George Clooney demonstrated in “ER.”

Do we want to or do we need to be a parliamentary system? A structure like a parliamentary system is a means – or an option that we want – not necessarily the need of PHL? What PHL needs is to be a developed economy, a First-World nation?

There may indeed be more success stories around a parliamentary system but just like in people, not everyone needs a heart transplant, for example. If indeed we need a heart transplant then we better get it.

Do we need direct democracy? Did the party-list system add/not add to our chaos (owing to crab mentality)?

Every discipline if not interest group has been throwing their two cents; does it mean we want to do brain surgery and a heart transplant and then some? Juan de la Cruz is the patient, not PHL.

PHL has been blessed with so much except that Juan de la Cruz messed her up? He is the cause; and an underdeveloped, poor and a more fragile Philippines is the effect. Yet we are all pointing fingers and washing hands, no one is owning up? 

The private sector may need big data, for example, but that’s just one side of the coin. There is the imperative of analytics. And it starts with defining the select few vital signs.

Translating that to PHL, to be inclusive doesn’t equate to crab mentality. To be inclusive is to commit: (a) to be egalitarian, not hierarchical; (b) to good governance, not political patronage; and (c) to be competitive, not oligarchic. But we’re not predisposed to stepping up to the plate because that would go against the grain – of our culture?

If the church is throwing her two cents on our “inclusiveness dilemma,” should we as the faithful pause and figure out if it is Caesar that we face? It is not necessarily God although we may need a Higher Being to: (a) dismantle hierarchy and become egalitarian; (b) slay political patronage and promote good governance; and (c) undo an oligarchic for a competitive economy. In other words, “inclusive” demands hard work even when prayers help – e.g., “to die to one’s self” as those in Christian communities would express it?

A people that is committed to true inclusiveness by definition would elect the right leaders. Because they are value- or principle-driven. And a developed, First-World nation is not characterized by ‘learned helpless’?

“Learned helplessness occurs when an animal is repeatedly subjected to an aversive stimulus that it cannot escape. Eventually, the animal will stop trying to avoid the stimulus and behave as if it is utterly helpless to change the situation. Even when opportunities to escape are presented, this learned helplessness will prevent any action. While the concept is strongly tied to animal psychology and behavior, it can also apply to many situations involving human beings.” []

And so we don’t want Imperial Manila and will “redistribute the national budget, 80 percent of which should go to LGUs, and only 20 percent to be spent by Manila”? That may be what LGUs want – and swing the pendulum to the opposite direction – but what is the true need? ‘Water seeks its own level’ is true even in the US – as in the east and west coasts – as it is in China – represented by Beijing, Shanghai and Guangzhou. And it’s consistent with Pareto’s principle.

The need is to be a developed economy. And it demands visionary and strategic leadership, which we can appreciate if we peel off our parochial bias and benchmark against the Asian Tigers. We don’t have to reinvent the wheel but internalize the imperatives of: (a) infrastructure; (b) a strategic industry base; (c) investment (beyond local, i.e., including FDI); and (d) technology and (e) innovation; and (f) people, (g) product, (h) supply chain and (i) market development.

A developed or First-World nation or economy would have the requisite revenue streams, and not be reliant on manna from heaven. Such revenue streams are imperative to pay for education and health services and fund social programs like CCT, among others, without resorting to more debts; and, as importantly, to feed the cycle of investment and sustain continued growth and development.

Consider: “Annual ranking finds Philippines more ‘fragile’ second year in a row,” D. E. D. Saclag, Business World, 19th Jun 2015. “THE PHILIPPINES slipped for the second time in a row in the latest Fragile States Index that ranks countries on levels of instability and the pressures they face, as its performance worsened in more than half of a dozen measures. The country placed 48th out of 187 countries in The Fund for Peace’s annual ranking after scoring 86.3 out of a possible 120. Swaziland occupied the same spot . . .”

“The Philippines’ performance this year put it in ‘high warning’ category along with 26 other countries like Russia (65th with a score of 80.0), Laos (55th, 84.5), as well as Angola, Cambodia and Lebanon (tied in 41st spot with scores of 88.1, 87.9 and 88.1, respectively).”

Problem-solving isn’t prescribing solutions per se. It is first distinguishing what we need from what we want. And then discriminating between cause and effect.

Tuesday, July 28, 2015

Sacred cows, status quo and reality

“Sacred cows at the NHCP (?),” Katrina Stuart Santiago, The Manila Times, 18th Jul 2015. “What I do not get, and have been unable to wrap my head around, is how anyone can discuss the Torre de Manila issue without actually reaching the bottom line: the National Historical Commission of the Philippines (NHCP) gave DMCI permission to build that monster of a structure behind the Jose Rizal Monument in Luneta.”

“[M]odernization will not be easy, because the interest groups that resist reform are powerful, organized, and focused—while reform’s potential beneficiaries are weak, scattered and distracted.” [Fragmented into self-interested factions, they are unable to lead nation forward, JUAN T. GATBONTON, EDITORIAL CONSULTANT, The Manila Times, 11th Jul 2015]. “Our next President must find ways of harnessing Filipino idealism—particularly that of our young people. He must point us toward a national purpose. He must set out a series of national goals that will engage our civic spirit.

“Right now, we have no individual, no institution responsible for wider public interests beyond those of the individual and the family. We as a people need to develop a national ‘vision’—a shared preconception of the national future—and a set of national goals that everyone accepts.”

“International business groups have advised the Philippines to re-examine some of its policies to attract the inflow of more foreign direct investments (FDI) in the country. The American Chamber of Commerce of the Philippines (AmCham) has expressed concern about the slowdown of the country’s FDI inflows in recent months.” [Foreign business groups urge review of FDI policies, Richmond S. Mercurio, The Philippine Star, 20th Jul 2015.]

“‘So I think that’s a reason for some re-examination about what the Philippines has been doing. There are still more reforms needed, it is a competitive world we’re living,’ Forbes said. He said it is important for countries in Southeast Asia, being the region with the fastest growing economy in the world, to get the most in foreign investments.

“‘Foreign investment in Vietnam is quite remarkable. It is now the number one exporter in this region to the US and is capturing the lion’s share of the relocation of investment from China. The Philippines can capture more,’ he said.”

“In the early years of a unified Vietnam, the government pursued disastrous experiments with collectivized farms and bans on private enterprise. The country’s leaders changed course around the time the Soviet Union collapsed, embracing the market economy, a pillar of the very system they had fought to defeat.” [Capitalist Soul Rises as Ho Chi Minh City Sheds Its Past, Thomas Fuller, The New York Times, 20th Jul 2015]

“Since then, Saigon, a freewheeling bastion of capitalism before 1975, has returned to its roots with vigor . . . If, for the Americans, the war here, in which 58,000 Americans and as many as three million Vietnamese died, was on some level about keeping Vietnam safe for capitalism, it turns out that they need not have worried. Capitalism here churns relentlessly, aided by what Ted Osius, the United States ambassador, calls ‘the most entrepreneurial people on earth.’

“Last year, 78 percent of registered companies in Ho Chi Minh City shut down, according to government statistics, as the country was emerging from a debt crisis. But the creation of new companies has since gathered pace; so far 26 percent more new companies have been formed this year than in the same period last year. City planners here speak approvingly of the intense competition and the constant cycle of corporate failure and rebirth.

“The name cards of government officials still say ‘Socialist Republic of Vietnam,’ but their talking points would bring a smile to Adam Smith . . . ‘Weak companies will fail; that’s normal,’ said Tran Anh Tuan, the acting president of the Ho Chi Minh City Institute for Development Studies, a government planning agency. ‘They can learn from failure. That’s a good way to develop.’”

That is how the Vietnamese define the real world! And how do we, Pinoys? “FILIPINOS ARE, by nature, optimistic. This was again validated by the results of a Social Weather Stations survey showing four out of every five Filipinos were confident that the Philippines could join the ranks of ‘developed’ countries.” [Optimistic people, Editorial, Philippine Daily Inquirer, 21st Jul 2015]

“What was worrying about the results of the survey was that many of the respondents had a very restricted view of what a ‘developed country’ is, associating the term to access to affordable education and job opportunities. In fact, three out of 10 respondents replied ‘yes’ when asked if they thought that the Philippines was already a ‘developed’ country. While seven out of 10 opined that the country has yet to reach this status, half of the respondents believed that the country could attain it within 3-10 years.

“Past SWS surveys have shown that Filipinos are always optimistic about their future, but never with the quality of their lives for the past year from the date of the survey.”

“By advocating the very questionable ‘Filipino First’ policy, the Constitution and the laws deriving from it have given to the Filipino elite who have the monopoly of capital in the Philippines the monopolistic or oligopolistic control of vital industries, especially in the public utilities sector. The poor never benefit from ‘Filipino First’ policies . . . They benefit from the employment generated by those who can invest risk capital, whatever the nationality.  With very good intentions, those who are afraid that our natural resources and domestic markets may be ‘exploited’ by foreigners have actually encouraged some Filipino entrepreneurs to inflict their poor quality of services or goods at higher prices on tens of millions of hapless Filipinos.” [Misguided Nationalism (Part 1), Bernardo M. Villegas, Manila Bulletin, 19th Jul 2015]

What’s wrong with us, asks a columnist? We don’t want to be an island unto ourselves and be cut off from the real world? We don’t want optimism to be a fa├žade for fatalism? We don’t want to confuse faith and governance? “Give to Caesar the things that are Caesar’s and to God which are God’s” is not an American invention! And we don’t want to struggle facing the 21st century where change is the only thing constant? Even the pope questions the mistaken notion of the absoluteness of the Vatican and keeps battling the Curia!

At the end of the day, it is family, church, school, government and society at large that form our traits and values or culture. And we don’t want them to be failed institutions stuck with sacred cows and the status quo shielding us from the real world?

And the risk is real: “Annual ranking finds Philippines more ‘fragile’ second year in a row,” D. E. D. Saclag, Business World, 19th Jun 2015. “THE PHILIPPINES slipped for the second time in a row in the latest Fragile States Index that ranks countries on levels of instability and the pressures they face, as its performance worsened in more than half of a dozen measures. The country placed 48th out of 187 countries in The Fund for Peace’s annual ranking after scoring 86.3 out of a possible 120. Swaziland occupied the same spot . . .”

“The Philippines’ performance this year put it in ‘high warning’ category along with 26 other countries like Russia (65th with a score of 80.0), Laos (55th, 84.5), as well as Angola, Cambodia and Lebanon (tied in 41st spot with scores of 88.1, 87.9 and 88.1, respectively).”

We want to be in good company, not in “high warning” category? To benchmark against the Asian Tigers and commit ourselves to be the next one? In the meantime we can’t just celebrate our strengths, talk about assets and not liabilities. That is, if we want to measure our true net worth, as accountants would tell us. In the same manner, social scientists won’t just recognize the driving forces, and not the restraining forces, if an enterprise or society wants to move forward. And we had to reach the age of reason before we were introduced to the Sacrament of Penance.

Is that how a SONA should be defined? In the private sector, it’s called a SWOT [strengths, weaknesses, opportunities, threats] analysis, a navigational tool.

Wednesday, July 22, 2015

Where are we?

“Corruption has plagued the poverty-stricken nation of 97 million for decades, fostered by a culture of impunity by powerful politicians, businessmen and their allies, weak law enforcement and a notoriously slow justice system.” [US wants to seize $12.5-M Napoles assets, Patricia Lourdes Viray,, 15th Jul 2015]

“The Justice Department will not allow the United States to become a playground for the corrupt or a place to hide and invest stolen riches," Justice Department Assistant Attorney General Leslie Caldwell said. . . Napoles purchased properties and other assets in the US to disguise and enjoy her ill-gotten wealth.

“The FBI is committed to ensuring that the U.S. financial system is not used to launder the proceeds of foreign bribery schemes. Nor is the United States a safe haven for the fruits of corruption," FBI Los Angeles Field Office Assistant Director in Charge David Bowdich said.”

We should take that as the indictment of Juan de la Cruz, not that the US is helping us fight corruption? 100 million of us must take responsibility, including our elite class even when we see them as a class unto themselves?

“What are we doing wrong? We can all agree that our political system is essentially flawed: It is designed to favor the moneyed, the popular, the established. There will be time to discuss this, and other structural causes such as unchecked population growth.” [Filipinos, what are we doing wrong (?), John NeryNewsstandPhilippine Daily Inquirer, 14th Jul 2015]

“But today I am more interested in Filipino habits, in ways of doing, that, like inclement weather, prevent progress from taking off. Herewith, four deadly habits: [1] We think that the rules are not fixed, and that anyway they do not apply to us. [2] We see what is wrong but believe nothing much can be done anyway. [3] We are inconsistently, selectively, proud, to the point of racism. [4] We lack national ambition.”

So where are we? “Poverty to linger despite robust growth,” Ben O. de VeraPhilippine Daily Inquirer, 18th Jul 2015. “Despite the faster economic growth enjoyed during the past few years, the poverty rate in the Philippines will still be high as the gap between the poor and the rich widens, according to the Economist Intelligence Unit (EIU) . . . By 2019, the Philippines will remain one of Southeast Asia’s poorest economies . . .”

Indeed, “Corruption has plagued the poverty-stricken nation”! “The Catholic Bishops’ Conference of the Philippines (CBCP) wants a Bangsamoro Basic Law (BBL) that is rooted in social justice and the Constitution, allows self-determination among Muslims, Christians and indigenous peoples in the proposed substate and respects the nation’s territorial integrity and sovereignty . . .

“In a series of pastoral statements issued at the end of a three-day plenary assembly on Monday, the CBCP maintained its impartiality for the various drafts of the charter for the proposed Bangsamoro region pending in the Senate and in the House of Representatives . . . The CBCP also addressed the challenges of the K-12 program, especially to the poor . . .” [Bishops bat for BBL based on social justice, Jocelyn R. Uy,Philippine Daily Inquirer, 14th Jul 2015]

That sounds encouraging. Should the CBCP also address corruption – again – like Francis did? “Pope: Corruption is gangrene of people,”Agence France-PresseAssociated Press@inquirerdotnet, 13th Jul 2015. “‘Look what happened with ideologies in the last century … they ended in dictatorships, always,’ . . .  applause ringing out in response during the gathering attended by Paraguayan President Horacio Cortes. In a question-and-answer session, he denounced corruption, which plagues several countries in South America. But perhaps to avoid offending his hosts, he stressed that it was a recurring problem ‘among all peoples of the world.’”

“‘This country knows what needs to be done. We just have to do it,’ SGV & Co. Head of Tax and General Counsel Wilfredo Villanueva said.”[PHL only ‘half-open’ when it comes to FDI, Bianca Cuaresma, Business Mirror, 15th Jul 2015]

We know what needs to be done. Will parochial bias and comfort in the status quo mean we’d struggle to define and embrace the common good, a purpose higher than self or family – or the capacity to change the world?

“A weakening peso would do little to boost the country’s stuttering export sector, according to a new central bank study, which stated that policymakers should focus on cutting power costs and improving infrastructure. The Bangko Sentral ng Pilipinas (BSP) said the country’s export sector’s failure to move up the value chain had little to do with currency dynamics.” [Gov’t urged to focus on infra, cutting power cost, Paolo G. MontecilloPhilippine Daily Inquirer, 14th Jul 2015]

“‘Other factors that influence the trade balance are macroeconomic fundamentals, business climate, ease of doing business and productive capacity,’ a working paper by the BSP’s Center for Monetary and Financial Stability showed. The study noted that supply-side factors might be putting a constraint on production and, subsequently, on export performance. In this case, an appropriate policy is to strengthen supply-side factors (such as infrastructure, logistics and overall business climate) to support a country’s competitiveness, the study said.

“Philippine Confederation of Exporters (Philexport) earlier this month said the peso’s depreciation should help the country catch up in terms of competitiveness with trade-oriented peers in the region. According to the BSP paper, local exporters should not expect changes in the peso’s value to be the lynchpin for success. The BSP said the government should instead be pressured to ramp-up reforms that aim to help the country’s business climate.”

This blog has discussed the imperative of a sense of purpose that would then inform the principles critical to nation building. And we can ignore being principled at our peril. It is consistent with the characteristics of liberal arts which was discussed by a professor and cited before in this blog. As a private-sector practitioner, the writer is witness to how it plays out in the real world. And admittedly, the hard part is erecting the ecosystem that will respond to the premise.

Moreover, the Western educational system is founded on linear thinking, which is reflected in a course syllabus, for instance. And it doesn’t hone the ability to visualize and form a vision far out into the future. And hence the emergence of lateral thinking, which facilitates connecting the dots. Or how Steve Jobs would define creativity. [Today Apple is the private-sector benchmark. But Steve Jobs recognized that Apple would become commonplace; it can’t match the classic works from the masters. And change will be the constant. Sadly, we Pinoys struggle with change.] Still, ideologies as referenced by Pope Francis would miss the mark because silver bullet is a myth. And the world is witness to how an ideology played out in former Soviet satellite countries and how Vietnam followed China's capitalist path. And where are we Pinoys?

There are benchmarks – including the Asian Tigers – that can guide us. But that is again the hard part for a proud Pinoy. Benchmarking is not swallowing something hook, line and sinker. But we’re not only proud, we also believe in Pinoy abilidad! Yet it isn’t surprising when our prescriptions would be akin to a silver bullet with a parochial character? And it explains our inability to adopt best practices, for example?

And add to that our compassionate heart – that like nationalism can be misplaced? Even among justices it holds, and which CJ Panganiban calls “kinship.” We can't be objective with friends and relations. Or with the poor. Yet the Asian Tigers started out poor. Poor is not a barrier. It is the effect, not the cause. And we keep barking at the wrong tree?

Without the requisite ecosystem, poverty is the expected outcome – i.e., given our meager average income, there isn’t enough to go around. But because we live staring at poverty, it’s a struggle to internalize fundamental givens? And so we would fall into the trap of ‘learned helplessness,’ be in bed with political patronage and oligarchy, the big patrons of the war on poverty? And that explains the vicious circle that has held us hostage.

And with kinship, the expected outcome is our mockery of the rule of law? Where are we?

Sunday, July 19, 2015

Politics, yes; but nation-building?

Ambivalence if not confusion. That’s how social scientists would characterize our traits and values. “‘We really are not friendly to foreign investors,’ University of the Philippines School of Economics Prof. Ramon Clarete said, citing instances of confusing and incoherent government regulations.” [PHL only ‘half-open’ when it comes to FDI, Bianca Cuaresma, Business Mirror, 15th Jul 2015]

Ambivalent. Confused. Incoherent. Whenever we focus on family we earn brownie points even when the mirror image is negative? Take political dynasty. Is it a reflection of a ‘personalistic’ culture and an inward-looking, self-serving bias and the struggle to define the common good? And our response? To have sectoral representations, for instance, even when their reasons for being are suspect? Is it a reflection of ‘crab mentality’ and chaos?

From fixers to expedite one’s driver’s license to the non-availability of car license plates, for example? That is not what we’re bringing to the 21st century that is highly globalized and competitive? What we ought to bring is the desire to change the world, not to preserve the status quo: (a) a hierarchical system and structure; (b) nurtured by learned helplessness; (c) by politicians gifting caddies with a round of golf and cellphones, senior citizens with adult diapers and Viagra too? Have birthday cakes gone out of fashion? In exchange we’d eliminate terms of office? Do we have the next Marcos in our midst?

But one can be altruistic! Which was running in this writer’s head listening to young Asian-American playwrights from Ma-Yi read excerpts from their works (while we were gathered at a friend’s place by Washington Square in Manhattan.) And they were incredible! They’d appeal even to hard-to-please New Yorkers, spoiled by world-class arts in their many forms.

The Ma-Yi website reads: “Founded in 1989, Ma-Yi Theater Company is a Drama Desk and Obie Award-winning not-for-profit 501(c)(3) organization whose primary mission is to develop and produce new and innovative plays by Asian American writers . . . [It] has distinguished itself as one of the country’s leading incubators of new work shaping the national discourse about what it means to be Asian American today.

“Ma-Yi” is the term used by ancient Chinese traders to refer to a group of islands that is known today as the Philippines . . . We chose this name in recognition of the vibrant culture that existed in Ma-Yi, prior to the coming of the colonizers from the West . . . There were traders of the country of MA-YI carrying merchandise to the coast of Canton in the seventh year of Tai-ping-shing-kuo.”

As friends from Ma-Yi explained, because of their mission, institutions like Yale and Brown would introduce their students to Ma-Yi. And one shouldn’t be surprised with the quality of their output.

And what do we read back home? Thankfully, we have pundits that point us in the right direction so that we don’t take our traits and values for granted? “Taking stock of the hopefuls,” Adelle Chua, The Standard, 13th Jul 2015, First of two parts; “If Grace decides not to run…,”Danilo S. Venida@inquirerdotnet, 13th Jul 2015; “Fragmented into self-interested factions, they are unable to lead nation forward,” JUAN T. GATBONTON, EDITORIAL CONSULTANT, The Manila Times, 11th Jul 2015.”

“Let’s not get distracted by the antics of the personalities – let’s instead put them under scrutiny to see if they can indeed take on the challenges of one of the toughest jobs there is. And then let’s do the math – devoid of soundbites, emotional appeal and other distractions . . . This problem has been noticed by management professionals and academicians, as well. In mid-2003, the Management Association of the Philippines . . . embarked on a project that . . .  would look into what a Philippine president must be . . . The team eventually narrowed down the ‘must’ roles to five: Navigator/ Strategist, Mobilizer, Servant Leader, Captivator and Guardian of the National Wealth, Patrimony and Law and Order. Each of these roles were defined and clarified, with the behavior and competencies associated with each role fleshed out . . . More on the five roles in my next column.” [Chua, op. cit.]

“Transcending politics is the challenge that a transformative leader must confront in the current Philippine milieu. There is too much of toxic and elitist politics. A viable formula to be able to take the challenge will have to be concocted. Changing the mindset of Filipinos toward a global orientation with local footing needs to be pursued. The landscape is changing; the soul must change as well. The aspiration for the common good will have to be highlighted. The support for Poe is likely to swell in the coming weeks. The goodwill can overflow. May that goodwill ignite the sought-after social transformation of all, by all, for all. Let it be the revolution.” [Venida, op. cit.]

“Middle-class Filipinos take pride in the civil liberties they enjoy; but to a great extent Philippine democracy still is permitted only by the broadly equal dispersion of power—which makes it imprudent for any leader or group to try to overpower the others.

“And modernization will not be easy, because the interest groups that resist reform are powerful, organized, and focused—while reform’s potential beneficiaries are weak, scattered and distracted.

“Our next President must find ways of harnessing Filipino idealism—particularly that of our young people. He must point us toward a national purpose. He must set out a series of national goals that will engage our civic spirit . . . Right now, we have no individual, no institution responsible for wider public interests beyond those of the individual and the family. We as a people need to develop a national ‘vision’—a shared preconception of the national future—and a set of national goals that everyone accepts.” [Gatbonton, op. cit.]

In an earlier posting this blog discussed the imperative of sense of purpose not only in private-sector pursuits and even more importantly in nation building. That is, if we want to overcome the perils of a relatively young democracy and underdevelopment. We can be better than South American countries?

“Pope: Corruption is gangrene of people,” Agence France-PresseAssociated Press@inquirerdotnet, 13th Jul 2015. “Look what happened with ideologies in the last century … they ended in dictatorships, always,’ . . .  applause ringing out in response during the gathering attended by Paraguayan President Horacio Cortes.”

“In a question-and-answer session, he denounced corruption, which plagues several countries in South America. But perhaps to avoid offending his hosts, he stressed that it was a recurring problem ‘among all peoples of the world.’

“As he had done on previous stops during his trip, first in Ecuador, and then Bolivia, Francis called for an end to poverty—also endemic in the region—and lamented today’s consumer society.

“‘Putting bread on the table, putting a roof over the heads of one’s children, giving them health and an education—these are essential for human dignity, and businessmen and women, politicians, economists, must feel challenged in this regard,’ Francis told the gathering of business leaders, politicians, labor union leaders and other civil society groups.

“Wealth creation should not be ‘only for the benefit of a few,’ he said to more acclaim, and must be extended to ‘each citizen, without exclusion.’ He urged political leaders not to ‘sacrifice human lives on the altar of money and profit . . . In economics, in business and in politics, what counts first and foremost is the human person and the environment in which he or she lives,’ he said.”

Does the pope understand the imperative of an ecosystem better than we do? Because connecting the dots isn’t second nature to man? Which is what creativity is about, not Pinoy abilidad! For example, wealth creation in an oligarchic economy is meant to benefit a few. On the other hand, wealth creation in the Asian Tigers came about because their leaderships demonstrated commitment to nation building – beyond self and family – which demands connecting lots of dots.

Thursday, July 16, 2015

Competitiveness; not a culture of entitlement

In an earlier posting this blog talked about PHL pursuing a Japan Inc. (or Singapore Inc. or China Inc.) model by focusing on and establishing a competitive platform via the 7 industry winners from the JFC. But beyond that, why competitiveness even when it means that there will winners and losers? Because in the real world there is no free lunch! Surprise . . . surprise . . . it took us more than 20 years to pass a competition law! Still, “The Philippines is among the more restrictive economies in the Southeast Asian region when it comes to foreign direct investments (FDIs), a recent study by the Economic Research Institute for Asean and East Asia (ERIA) showed.” [Philippines among most restrictive in SEA on FDI, Danessa O. Rivera, The Philippine Star, 2nd Jul 2015]

Can we reconcile our ambivalence notwithstanding the demands of the real world? Or is it about Pinoy abilidad – which informs our perspective of freedom and democracy and by extension the free market? In a highly globalized and competitive 21st century world, it is conviction not ambivalence that matters.

What about compassion? Compassion is in the dismantling of an oligarchic economy, tossing the values inherent in a hierarchical system and structure! Yet we don’t need Robin Hood but a system that is more egalitarian, not patronizing. We can’t have a competition law on the one hand and be inward-looking – and among the restrictive economies – on the other! In other words, political patronage and oligarchy are the first in line in our culture of entitlement. Yet we took it for granted because it is our normal? As the Greeks rather belatedly realized!

“Search for top ASEAN companies launched,” James Loyola, Manila Bulletin, 7th Jul 2015. “We are working towards strengthening SMEs in our country. They are the backbone of our economy,’ said PLDT Chairman Manuel V. Pangilinan, who heads ASEAN BAC Philippines.”

Does it ring a bell? “The so-called ‘MVP’ group of companies—dubbed after the initials of its public face and chief executive Manuel V. Pangilinan—has emerged as one of the biggest conglomerates in the country today, its newest and the most aggressive. Yet the real ownership of this vast conglomerate has been kept hidden from the public eye. Until now.” [The Indonesian billionaires behind the ‘MVP Group’: UNMASKING AN EMPIRE, RIGOBERTO D. TIGLAO, The Manila Times, 2nd Jun 2015; First of a series]

“The conglomerate is dominantly owned and controlled by Anthoni Salim, 66, heir to the fortune of his late father, Soedono, who was the biggest and closest crony of the late Indonesian strongman Suharto during his 33-year regime. “MVP” has miniscule shares in the conglomerate. That the group has strived to make it known by that name, as will be explained in this series, is for a specific purpose.”

Is that Pinoy abilidad? We’re neither here nor there? We keep/don’t keep FDIs out? Is it the root of Philippine corruption that explains our mockery of the rule of the law?

“An increase in competitiveness translates to more investments, jobs, wealth creation and the widening of the middle class. This is why the NCC role is crucial to national development. The current board has done an impeccable job not only in terms of improving competitiveness but more so in showing us how to effect reforms quickly and effectively. This is why the current structure of the NCC, including its private sector representatives, should be spared from any changes in government leadership. With luck, they can start on Gameplan 4.0 to put the country in the top 10% of global competitiveness ranking.” [The National Competitiveness Council: the silent champion of change, Andrew James Masigan, Manila Bulletin, 7th Jul 2015]

Can we in fact aspire to be in the top 10% of global competitiveness ranking? Not if we keep playing games? “A new competition law at last (!),” Francis Ed LimPhilippine Daily Inquirer, 25th Jun 2015. “It took Congress more than 20 years to pass a competition law. I vividly remember having attended Senate committee hearings presided by former President GMA as a senator in the early 1990s. Since then, I took special interest and got involved in the formulation of the law, having practiced antitrust law when I worked in a law firm in Washington, D.C. and being of the belief that we need a good one for the country.

“The antitrust bills that found their way in Congress proposed to adopt different policy approaches—from the very strict ones to the very liberal ones. After several Congresses, our present Congress passed what I think is a balanced version that takes into account the welfare of the consumers without sacrificing the need of our businesses to expand to make them competitive with their counterparts in the region.”

Will the new competition law be able to deal with Pinoy ambivalence? But we mean it this time? “PH creates 2 innovation hubs, targets at least 20 start-ups,” Bernie Magkilat, Manila Bulletin, 7th Jul 2015. “The creation of the innovation hub will be a critical component in the drive to boost the Philippines’ ranking in the Digital Evolution Index (DEI), which ranks countries in terms of their readiness for the quickly expanding digital economy.”

“The Philippines is one of the so-called “break-out” nations in the recent global DEI study conducted by the US-based Fletcher School at Tufts University, using data from 2008 to 2013. The country stands alongside China, Malaysia, Thailand, and Vietnam as one of the ‘rapidly advancing countries’ in the global digital topography.

“The Philippine innovation center is patterned after the innovation districts around the world – the likes of Silicon Valley in the United States, Block 71 in Singapore, and MaGIC in Malaysia. It aims to foster the advancement of technology and innovation in the country with critical support from the government, the academe, and the private sector.

Can we celebrate yet? “Doing business beyond borders,” Cielito F. Habito, No Free Lunch, Philippine Daily Inquirer, 23rd Jun 2015. It takes shedding the common inward-looking, defensive posture of many of our firms, in favor of an aggressive outward-looking one, to realize that many of us are creating ghosts where we could otherwise be finding ‘gold mines.’”

“Wanted: enabling government,” Cielito F. Habito, No Free Lunch, Philippine Daily Inquirer, 16th Jun 2015. “We actually have a law—Republic Act No. 9178 or the Barangay Micro Business Enterprise (BMBE) Law of 2002—that seeks to attract small businesses with less than P3 million in assets to come out from the shadows of the informal or underground economy . . . That is all good in theory, but it turns out that in most places, the BMBE Law is the best-kept secret in town, especially in the city or municipal hall itself. In our own barangay office, no one has even heard of it (or at least that’s what the people there claimed).”

What can we learn from the private sector about competitiveness? An ambivalent athlete who can’t put his heart in his sports can’t be a champion. In other words, we are either a restrictive economy or a competitive economy. Yet winners – in good times and in bad – in a truly competitive market are those responsive to man’s well-being. It is not art for art’s sake. Or technology for technology’s sake.

The technology of Samsung, for example, is as good as if not better than the iPhone. But how come Samsung seems to be missing a beat? Apple products have been conceived from the middle-class upbringing of Steve Jobs. It was his partner, Steve Wozniak, who was the techie. But Jobs knew he wasn’t the only one who wanted to change the world. He grew up with other kids tinkering with gadgets that could open endless possibilities. And he wanted to create a tool – that today we call an Apple – that would help people change the world.

What is competitiveness then? It starts with an idea like that of the desire to change the world. But even an idea needs investment. Steve Jobs sought investors for his venture while he and his friends developed the technology for the Apple 1. And then they had to learn and equip themselves to create other innovative products – meaning, self-actualizing or responsive to a person’s rational, emotional and experiential needs. And it didn’t stop there. They had to develop a supply chain like no other, and the local and global market for Apple. And today we have the Apple Store and the iTunes online store.

That’s a competitiveness path that we need to internalize: from an idea to investment to technology to innovation . . . to people, product, supply chain and market development.

Saturday, July 11, 2015

Will reality hit home?

“To be sure, governance that is effective, legitimate, and responsive provides untold benefits, especially when compared to the alternative: inefficient governance, cronyism, and corruption. But the focus on governance reform has not proved nearly as effective as promised in fostering development.” [THE GOOD GOVERNANCE TRAP, Jomo Kwame Sundaram and Michael T. Clark*, PROJECT SYNDICATE, Business World, 29th Jun 2015]

“The case was flawed from the beginning. The indicators used were ahistorical and failed to account for country-specific challenges and conditions, with cross-country statistical analyses suffering from selection bias and ignoring the interlinkages among a wide array of variables. As a result, the World Bank badly overestimated the impact of governance reform on economic growth.

“In fact, this governance-focused approach may have actually undermined development efforts. For starters, it has allowed international institutions to avoid acknowledging the shortcomings of the new development orthodoxy of the last two decades of the 20th century, when Latin America lost over a decade, and Sub-Saharan Africa a quarter-century, of economic and social progress.

“Herein lies the real problem with the good-governance agenda: it supposes that the solution to most policy and political dilemmas lies in compliance with a set of formal process-oriented indicators. But experience over two decades shows that such directives provide little practical guidance for solving the technically, socially and politically complex real-world problems of economic development.”

Translation: A major undertaking demands an ecosystem, both soft and hard elements. In the case of the Philippines when this writer first looked into why we’ve been unattractive to FDI and underdeveloped and our people poor, what jumped out was how deficient our investment levels were. Yet we were desirous of “fighting poverty.” And indeed the World Bank proudly supported CCT. But we needed the hard elements, as importantly, like investment!

Invariably, good governance is a must. Given our deficits in infrastructure, it is common knowledge that corruption has undermined PHL infrastructure development efforts for decades – and, not surprisingly, kept FDI away!

We need the hard elements as well. For instance, the JFC, working with a cross-section of Philippine society, developed the 7 industry winners. Indeed investment must be prioritized! It is not rocket science but science nonetheless – i.e., the Pareto principle, an econometric model. In other words, we can’t be adopting unfettered free market – and rely solely on fiscal and monetary policies. Which in the case of the Philippines was hijacked by political patronage and oligarchy.

While a select few would invoke patriotism as they cornered major infrastructure projects, the reality is Juan de la Cruz continues to suffer from poor infrastructure – from commuting to and from work (or school in the case of children) to the inadequate and the most expensive power supply . . . and beyond. An oligarchic economy shuts out the outside world and holds Juan de la Cruz hostage! And how do we respond? That we are among the happiest people! Resiliency or parochialism – that comes hand in glove with hierarchy and subservience?

“Herein lies the real problem with the good-governance agenda: it supposes that the solution to most policy and political dilemmas lies in compliance with a set of formal process-oriented indicators.” [ibid.] As a private–sector practitioner, the writer lives with this reality: the distinction between being process- and outcome-oriented. Even in the public sector outcomes must be defined to justify budgets and programs. But when governance doesn’t set and embrace a shared purpose from the get-go, how will the bureaucracy manifest the imperative?

As the Asian Tigers proved, government must play a role in establishing a vision for a nation. And that is to move from Third- to First-World. And that presupposes a model like Japan Inc. or Singapore Inc. or China Inc., defined by a leadership that demonstrates strategic thinking: (a) it calls on the people to embrace and share the vision or purpose for the nation; (b) that would then necessitate learning self-responsibility – because of the imperative of division of labor; and (c) which then demands mastery.

That is an example of how good governance can be spelled out. In short, it is not about compassion per se and paternalism and the requisite populism. That was what both Lee Kuan Yew and Mahathir Mohamad lectured us Pinoys. And that we didn't have to love the West but we must seek their money and their technology if we are to move from Third- to First-World. And a mechanism has been offered by the JFC via the 7 industry winners. But we know better – i.e., that political patronage and oligarchy are supreme?

And how do we reconcile our notion of faith and freedom and democracy when we value a sheltered life and parochialism? That lends itself to a hierarchical system and structure – and why we are unable to demonstrate innovation and competitiveness? Does the Church reinforce the notion? What about the elite class that dictates our cultural norms? Not surprisingly, we remain underdeveloped and poor?

What else can we expect?

“A first-time Philippine senator who is the adopted daughter of a film star is edging out veteran politicians as the preferred candidate to replace President Benigno Aquino, even before she’s declared her intention to run.” [Film Star’s Daughter Wins Fans as Possible Philippine Leader, Karl Lester M YapClarissa BatinoCynthia, 29th Jun 2015]

“Grace Poe, 46, was picked by 12 of 23 analysts and bankers in a Bloomberg survey this month as the best choice to steer the Philippine economy after Aquino leaves office a year from now. Vice President Jejomar Binay, 72, got three votes, while four chose Interior Secretary Mar Roxas, 58.

“Poe, whose senatorial bid was backed by Aquino, combines a compelling life story with a relatively new political career unblemished by scandal. Abandoned as a baby at the steps of a church in Iloilo city and raised by Fernando Poe Jr. -- famous for roles where he fought for the masses -- Poe’s perceived honesty resonates in a country whose biggest priorities are fighting corruption and building infrastructure.

“‘Aquino gave us a second chance to be a tiger economy,’ said Jonathan Ravelas, chief market strategist at BDO Unibank Inc. in Manila. ‘But we aren’t there yet. The next president has to have the will to stop corruption and boost infrastructure. In the case of Grace Poe, people perceive her as honest, somebody who will protect the anti-corruption drive.’

“More than half the respondents in the Bloomberg survey predict economic expansion of at least 6 percent will be sustained in the next 10 years. The biggest priorities economists, bankers and academics picked out for the next government were infrastructure investment and protecting the anti-corruption drive.”

Poe is what we probably need for good governance, assuming she does not follow the path of other celebrities – that first made us giddy but today can only regret? And beyond good governance, as pointed out by the respondents to the survey, is the priority of infrastructure investment. And even beyond is to develop Philippine Inc.

Can she do that? Sadly, our elite class that continues to define our cultural norms will influence her. And that is when she would make the first misstep? In other words, would we embrace a totally new perspective and mindset where political patronage and oligarchy won’t again hijack leadership?

In a democracy, we get the leadership that we deserve!

[*Jomo Kwame Sundaram is coordinator for economic and social development at the Food and Agriculture Organization of the United Nations. Michael T. Clark is special adviser on international governance at the Food and Agriculture Organization of the United Nations]