Saturday, October 31, 2015

Free market and connecting the dots . . .

Indeed democracy is messy that even in the US a minority of 40 in the House held the democratic process hostage. And US historians would reference Madison and the framers of the Constitution – it was never meant to be “it’s my way or the highway.” It’s childishness – akin to a kid in a candy store: that’s mine, that’s mine, and that’s mine!

The writer saw it when his family moved to the US. The culture needs adult supervision; and friends that belonged to the non-voting population (e.g., a 50% voter-turnout wasn’t uncommon) would introduce the writer to the reality. But then again, man is irrational and, not surprisingly, a new branch of economics has emerged: behavioral economics. Even the Vatican isn’t spared: A Whiff of Intrigue as Vatican Disputes ‘Unfounded’ Report on Pope Francis’ Health, Laurie Goodstein and Gaia Pianigiani, The New York Times, 22nd Oct 2015.

Does that absolve us Filipinos that we are childish in our own way? Not really given our backwardness compared to what the Asian tigers have reached – i.e., moved from Third-World and drastically reduced poverty!

Despite the free-wheeling atmosphere of a free market, visionary and strategic leadership is demanded – as in Japan, Inc. or China, Inc. or Singapore, Inc. Freedom is not free. Freedom must be defended . . . and pursued. And why development presupposes maturity. It is not unfettered free market. A nation can pull in different directions at its peril. And we don’t have to go very far: think Mindanao!

Over the weekend the writer had very positive feelings about news reports he read: “Inclusive growth gains ground . . . Subic Freeport adjudged best in Asia . . . Cebu’s quiet rise to NIE-hood . . . NEDA draws up Filipino 2040 long-term development plan . . . We need to create a stronger sense of ourselves as a distinct people . . .”

But then again, how do we connect the dots?

“We may have a Philippine state, but not yet a Filipino nation. For us the diffusion of national awareness—the incorporation into the national community of all sectors of our population—is still a work in progress . . . We need to create for ourselves a more rounded kind of nationalism—a forward-looking nationalism focused on the effort to account for ourselves as a people—and to claim our place of dignity in the world community.” [INDEPENDENCE WITHOUT NATIONALISM: We need to create a stronger sense of ourselves as a distinct people, Juan T. Gatbonton, Editorial Consultant, The Manila Times, 17th Oct 2015]

“[T]he Vietnamese, won their freedom unequivocally. So that, at the end of sacrificial struggles against the Chinese, the French, and the Americans, they could turn, undistracted, to the work of growing their economy and redeeming themselves from poverty… [W]e Filipinos, even in the age of globalization, remain ideologically protectionist. Hospitable we may be as a people; but we keep foreign investors at arm’s length. We keep our economy heavily regulated, though we’re forced to export people instead of products.

“We all realize there’s no escaping structural change in our political, economic and social institutions. But what direction should change take, and how is it to be organized? Certainly we must speed up market opening and reduce the costs of doing business, if our country is to catch the new wave of growth building up in East Asia . . . Not only are we among the poorest: we’re also among the most unequal.”

And how are we dealing with these challenges? “The central bank has had several milestones in the last five years in its promotion of financial inclusion. Its most recent was in July when it launched the National Strategy for Financial Inclusion (NSFI) – a key component in the government’s drive to ensure inclusive growth across the country. . . The NSFI, to some extent, could be considered as the government’s most comprehensive effort towards financial inclusion.” [Inclusive growth gains ground, Lee C. Chipongian, Manila Bulletin, 18th Oct 2015]

“Beginning in 2008, the government has been implementing the conditional cash transfer (CCT) or “Pantawid Pamilyang Pilipino Program” (4Ps) initiative aimed at eradicating poverty in the country by investing in health and education. This is one of the government’s most visible efforts in pursuing inclusive growth. As of June, 2015, the 4Ps operates in all 17 regions in the Philippines and has registered nearly 4.5 million household-beneficiaries with disbursements amounting to P17.8 billion.

“[T]he 4Ps have been highly effective, to wit: increased school attendance (the number of out-of-school children declined to 5.2 percent in 2013 from 11.7 percent in 2008 or around 1.7 million children); enrolled 36,003 beneficiaries in state universities and colleges as of June, 2015; and covered 4.4 million beneficiaries under the National Health Insurance Program.”

Another positive news reads: “The Subic Bay Freeport, has been recognized as the best in Asia by a publication of London’s The Financial Times. Subic Bay Metropolitan Authority (SBMA) chairman and administrator Roberto Garcia said the freeport was declared as Asia’s overall winner in the Global Free Zone of the Year 2015 award while also receiving commendations for infrastructure developments and reinvestment. Emerging as overall winner . . . is a significant indicator of Subic Freeport’s level of competitiveness among other zones in the region.” [Subic Freeport adjudged best in Asia, Richmond S. Mercurio, The Philippine Star, 18th Oct 2015]

And there is one more: “The entire nation has a stake in Metro Cebu’s success and we should do all we can to support it. After all, this is a region that has a clear vision of what they want to be by the year 2050. Cebu’s hopes and aspirations are embodied in its master plan called Mega Cebu 2050. Their impressive development road map can be viewed in this website:” [Cebu’s quiet rise to NIE-hood, Andrew James Masigan, Manila Bulletin, 18th Oct 2015]

“In the same manner as a parent invests in their most talented son, government must prioritize Cebu’s infrastructure development by channeling more of its infrastructure budget to it. Urgently needed are a storm water and sewerage management system, Automated Guideway Transits and Light Railway Trains to get in and around the city center, bulk water supply and the expansion of its seaport, to name a few.

“Cebu is giving us a chance to industrialize – something we foolishly bypassed in the past. They have done so not so much by government design but through good planning and sheer hard work. Through them, the nation has a clear shot to join the ranks of the NIE’s and partake of the benefits that come with it. All Cebu needs is infrastructure. Government must give it to them.”

And finally, “The National Economic and Development Authority (NEDA) is preparing a medium-term development plan or long-term vision, aptly called Filipino 2040. It will be evidence-based or a product of nationwide consultations as well as existing data and targets, such as the Philippine Development Plan, the Millennium Development Plan (MDG), and the Sustainable Development Goals (SDG).” [NEDA draws up Filipino 2040 long-term development plan, The Philippine Star, 18th Oct 2015]

“SocioEconomic Planning Secretary Arsenio M. Balisacan said the intention is to craft a medium-term plan based on the aspirations and dreams of the Filipino for a better life. A nationwide survey and consultation has already started, while another group is doing technical work on various topics, themes that are amenable to policy change, like health, education, environment, innovations, and other social issues’ The plan will be for a period of 25 years since it will take several years and administrations to achieve what Balisacan calls ‘a modern nation.’ ‘No single administration can transform a poor nation into a rich nation.’”

That’s encouraging. But one caveat to heed from the private sector would be: keep it simple lest such a big plan collapses under its own weight.

With all that said, how do we in fact connect the dots? It starts with visionary and strategic leadership, not transactional and retail and populist – which has defined us? Our GDP per capita remains meager – and explains our persistent poverty. The Asian tigers became tigers not because of CCT-like initiatives – with due respect to the Central Bank – but by driving their economic output aggressively via investment and industrial development . . . And looking outward, not inward and insular and parochial, which is what country must be. No man is an island!

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