Sunday, August 13, 2017

Sub-optimization mindset behind PH underdevelopment

“Sub-optimization is a situation where a processprocedure, or system yields less than the best possible outcome or output, caused by a lack of best possible coordination between different components, elements, parts, etc.” []

This is not the first time the blog raised sub-optimization – aka “pwede na ‘yan” – as a barrier to PH growth and development. And it boils down to our inability to demonstrate foresight – and why community and the common good is alien to us.

“But as the old Bob Dylan song goes, the times are a-changin’. There are at least four trends [(a) unemployment rate; (b) deployment of OFWs has slowed down; (c) quality of domestic jobs improving; (d) the economy is growing on a broader base, both on the supply and demand sides] in the economic data that suggest growth is getting more inclusive, and benefiting a wider range of our people, including the poor … These are indeed clear signs of more inclusive growth. We must have been doing something right in the past several years. Whatever it was, we need to keep doing more of it.” [Inclusive growth is finally happening, Cielito F. Habito, NO FREE LUNCH, Philippine Daily Inquirer, 8th Aug 2017]

In other words, given OFW remittances and the BPO industry bring roughly $50-B or 17% of the economy, we must be doing something right. And we need to keep doing more of it.

A consumption economy (that accounts for 73% of GDP) like ours generates what economists call the multiplier effect of investment – though not to the extent an investment economy does – and at the end of the day, it explains why the economy has been growing in the 6%-7% range; as well as our lead in industrial production growth of 8.4%, against Vietnam’s 83% of PH, Malaysia – 50%, Indonesia – 42%, Thailand – 37%.

Oishi, Jack ‘n Jill and Jollibee (foods) and Islander (flip-flops) are popular, successful and growing Philippine brands and businesses, to name just a few, and they benefit from our consumption economy – and are among those behind the uptick in investment. Although Islander can learn from the others by thinking regional, if not global, and compete against global brands like Havaianas.

As the blog has argued, we must learn to look outward and forward, not keep to our backward, parochial and insular instincts. Take investment in fixed capital which represents the supply side of the economy, how do we compare against our neighbors? Ours stand at 22.3% of GDP while Thailand is 108% greater than PH; Vietnam – 115%; Malaysia – 117%; Indonesia – 148%.

That is what the blog means when it talks about our need to rapidly erect an economic platform that is world-class – i.e., to overcome decades of deficits in infrastructure development, industrialization and innovation and competitiveness.

Figure out if indeed ours is an inclusive economy given our income per person (GDP at PPP) which stands at $7,700 when Indonesia is 152% better than PH; Thailand – 218%; Malaysia – 353%. And we cannot celebrate that Vietnam is behind us at 83%. Vietnam beats us in FDI (183% more) and exports (443% greater) and the compounding effect will leave us in the dust.

Those are staggering numbers that we must overcome and they explain why it will take a generation even at 7% GDP growth for PH to truly be an inclusive economy. And that is assuming we get our act together to keep that pace of growth. And the blog has pointed out the obvious: the generation of the writer is toast!

Consider: “The flow of Japanese investments has started to slow down in the Philippines, blamed partly on certain policy changes such as the government’s pivot to China and Russia.

“Preliminary data from the Japan External Trade Organization (Jetro) showed Japan’s outward foreign direct investments (FDI) in the Philippines plunged 56.6 percent in the first five months of the year to $561 million.

“On the other hand, Japan’s FDI in other Southeast Asian countries like Vietnam, Thailand and Singapore increased by double digits in the same period.” [Japan investments plunge 57%, Richmond Mercurio, The Philippine Star, 8th Aug 2017]

In other words, for a guy playing catch up, we truly know how to mess things up. Consider too: “Is MRT 3 hopeless (?),” Boo Chanco, DEMAND AND SUPPLY, The Philippine Star, 11th Aug 2017.

“That visit to Clark and the news that BCDA’s Vince Dizon is all set to bid out construction of the airport very soon is good news. Vince PMed me to say that the ‘Terms of Reference’ or ‘TOR’ will be released this week. Interest has been expressed by 12 parties, all foreign and with experience in building airports. 

“More specifically, the pre-bid conference is set for Aug 22; opening of bids on Oct. 28 (two months to prepare proposals); award to be made on Nov. 28; groundbreaking on Dec. 19 and first quarter 2020 for turnover of the facility. Since it will be on a turn-key basis, there will be no money problems to delay execution.

“Back in Manila, it is back to reality. Is the MRT-3 hopeless?  A recent column of my colleague, Jarius Bondoc, seems to indicate it is. Our last hope, the new Chinese-made trains, is a no-go.

‘The 48 coaches from China bought by former DOTC Sec Jun Abaya at the cost of P3.8-billion in 2013 is a total waste. Jarius reported that the coaches are 3,300 tons too heavy. Specifications were for a weight of 46,300 tons for the 48 coaches. What the Chinese manufacturer delivered totaled 49,600 tons.

‘The new units cannot be driven up the hundred-million-peso jack for periodic inspection and upkeep of the bogey frames, wheels, and brakes. There is no space at the depot to install a new jack just for the faulty trains. Mechanics have no elbowroom to repair or replace crucial under-chassis parts.

“I suppose this means they are back to square one.”

“Here's why your attitude is more important than your intelligence,” Dr. Travis Bradberry, World Economic Forum, Industry Agenda, 9th Aug 2017; Dr. Travis Bradberry is Coauthor of EMOTIONAL INTELLIGENCE 2.

“When it comes to success, it’s easy to think that people blessed with brains are inevitably going to leave the rest of us in the dust. But new research from Stanford University will change your mind (and your attitude).

“Psychologist Carol Dweck has spent her entire career studying attitude and performance, and her latest study shows that your attitude is a better predictor of your success than your IQ. Dweck found that people’s core attitudes fall into one of two categories: a fixed mindset or a growth mindset.

“With a fixed mindset, you believe you are who you are and you cannot change. This creates problems when you’re challenged because anything that appears to be more than you can handle is bound to make you feel hopeless and overwhelmed.

“People with a growth mindset believe that they can improve with effort. They outperform those with a fixed mindset, even when they have a lower IQ, because they embrace challenges, treating them as opportunities to learn something new.”

This is not the first time the blog spoke to the growth mindset. In our case, do we in fact value being static as opposed to dynamic? We appear to be in the Benedict camp, does it mean we don’t buy the theology of Francis?

“What Is the False Self (?),” Richard Rohr’s Daily Mediation, 7th Aug 2017. “Your egoic false self is who you think you are, but your thinking does not make it true. Your false self is a social and mental construct to get you started on your life journey … It is largely defined in distinction from others, precisely as your separate and unique self. It is probably necessary to get started, but it becomes problematic when you stop there and spend the rest of your life promoting and protecting it.

“Jesus would call your false self your ‘wineskin,’ which he points out is only helpful insofar as it can contain some good and new wine. He says that ‘old wineskins’ cannot hold any new wine; in fact, ‘they burst and both the skins and the wine are lost’ (Luke 5:37-38). This is a quite telling and wise metaphor, revealing Jesus’ bias toward growth and change. ‘The old wine is good enough’ (Luke 5:39), says the man or woman set in their ways.

“The false self, which we might also call the ‘small self,’ is merely your launching pad: your appearance, your education, your job, your money, your success, and so on. These are the trappings of ego that help you get through an ordinary day.

“Please understand that your false self is not bad or inherently deceitful. Your false self is actually quite good and necessary as far as it goes. It just does not go far enough, and it often poses and thus substitutes for the real thing.

“The false self is bogus more than bad; it pretends to be more than it is … If people keep growing, their various false selves usually die in exposure to greater light. That is, if they ever let greater light get in; many do not.”

“Why independence, if the slaves of today will be the tyrants of tomorrow? And that they will be such is not to be doubted, for he who submits to tyranny loves it.” [We are ruled by Rizal’s ‘tyrants of tomorrow,’ Editorial, The Manila Times, 29th Dec 2015]

“As a major component for the education and reorientation of our people, mainstream media – their reporters, writers, photographers, columnists and editors – have an obligation to this country . . .” [Era of documented irrelevance: Mainstream media, critics and protesters, Homobono A. Adaza, The Manila Times, 25th Nov 2015]

“National prosperity is created, not inherited. It does not grow out of a country’s natural endowments, its labor pool, its interest rates, or its currency’s value, as classical economics insists . . . A nation’s competitiveness depends on the capacity of its industry to innovate and upgrade.” [The Competitive Advantage of Nations, Michael E. Porter, Harvard Business Review, March–April 1990]

“Learning and innovation go hand in hand. The arrogance of success is to think that what you did yesterday will be sufficient for tomorrow.” [William Pollard, 1911-1989, physicist-priest, Manhattan Project]

“Development [is informed by a people’s] worldview, cognitive capacity, values, moral development, self-identity, spirituality, and leadership . . .” [Frederic Laloux, Reinventing organizations, Nelson Parker, 2014]

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