Saturday, July 21, 2018

Perfection, indeed, is not of this world

“Thanks in part to Mr. Trump himself and in part to the multiple dysfunctions that brought him to the White House, America is becoming a source of bad ideas rather than good ones, of polarization rather than problem-solving and, bizarrely, of parochialism rather than cosmopolitanism.

“America has become a source of bad ideas, polarization and parochialism.” [The special relationship once enriched Britain’s politics. No longer, Bagehot, The Economist, 5th Jul 2018]

Are the Brits with their own plate full given the confusion that is Brexit piling on the former colony? “In … ‘The Wealth of Nations,’ Adam Smith argued that trade barriers and protections offered to dying industries will not, in the long run, serve the interests of the people. On the contrary, they will lead to an ossified economy that will splinter in the face of competition. President Trump seems not to have grasped this point. His protectionist policies resemble those of postwar socialist governments in Europe, which insulated dysfunctional industries from competition and led not merely to economic stagnation but also to a kind of cultural pessimism that surely goes entirely against the American grain.

“Conservative thinkers have on the whole praised the free market, but they do not think that market values are the only values there are. Their primary concern is with the aspects of society in which markets have little or no part to play: education, culture, religion, marriage and the family. Such spheres of social endeavor arise not through buying and selling but through cherishing what cannot be bought and sold: things like love, loyalty, art and knowledge, which are not means to an end but ends in themselves.

“About such things it is fair to say that Mr. Trump has at best only a distorted vision. He is a product of the cultural decline that is rapidly consigning our artistic and philosophical inheritance to oblivion. And perhaps the principal reason for doubting Mr. Trump’s conservative credentials is that being a creation of social media, he has lost the sense that there is a civilization out there that stands above his deals and his tweets in a posture of disinterested judgment.” [What Trump Doesn’t Get About Conservatism, Roger Scruton, The New York Times, 4th Jul 2018]

It brings Bertrand Russell to mind, “Make your interests gradually wider and more impersonal, until bit by bit the walls of the ego recede, and your life becomes increasingly merged in the universal life. An individual human existence should be like a river — small at first, narrowly contained within its banks, and rushing passionately past rocks and over waterfalls. Gradually the river grows wider, the banks recede, the waters flow more quietly, and in the end, without any visible break, they become merged in the sea, and painlessly lose their individual being.” [Bertrand Russell on what makes a fulfilling life, Maria Popova, brainpickings.org, 3rd Jul 2018]

And here’s a perspective from a naturalized (or non-native) American: “For me, ‘sure’ is the most beautiful American word. Not yes I’ll do it, or maybe, but sure I will. It’s forward-leaning and risk-embracing. It signals the space that Europe lacks. It captures America’s spirit.

“Nowhere else is becoming somebody else so easy. There is space, still, to be free. Sure there is. The divisions between those who came first and those who came later are fungible.

“Or so, on July 4, I want to believe. This will not be another American century. Old structures that worked are giving way to something as yet indiscernible, with its share of menace. All this may induce a sense that the American idea is lost.

“But that idea has always been fought for — through slavery, the Civil War, Jim Crow, the Great Depression, McCarthyism, Vietnam. America healed from these lacerations. It cohered: E pluribus unum.

“In this time of tribal smallness, never shrug at the assault from on high on the American idea, flawed as it has always been. In 1938 … the German writer, defined democracy as ‘that form of government and society which is inspired above every other with the feeling and consciousness of the dignity of man.’

“Beyond all the current indignities inflicted upon it, America will be, uplifting once more in its imperfection.” [America Never Was, Yet Will Be, Roger Cohen, The New York Times, 6th Jul 2018]

Put another way, the American idea is bigger than Trump. But what the world and Americans especially must not forget is that among the dysfunctions that brought Trump to the White House is the global financial crisis of 2008 – more precisely its genesis, i.e., greed – that the world is yet to fully put behind. In more ways than one, Trump successfully packaged the crisis to define his campaign: Make America Great Again.

“Andrew Lo [Professor of Finance, MIT Sloan School of Management; Director, MIT Laboratory of Financial Engineering] believed that the crisis was about more than economic forces. In his mind, a human element was at play, most notably the emotions of greed and fear of the unknown. As Lo stated in his House Oversight Committee testimony:

“During extended periods of prosperity, market participants become complacent about the risk of loss—either through a systematic underestimation of those risks because of recent history, or a decline in their risk aversion due to increasing wealth, or both. [T]here is mounting evidence from cognitive neuroscientists that financial gain affects the same ‘pleasure centers’ of the brain that are activated by certain narcotics. [P]rolonged periods of economic growth and prosperity can induce a collective sense of euphoria and complacency among investors that is not unlike the drug-induced stupor of a cocaine addict. The seeds of this crisis were created during a lengthy period of prosperity. During this period we became much more risk tolerant.

“In other words, ‘we’ became greedy. [T]his greed was spurred on by ‘the profit motive, the intoxicating and anesthetic effects of success.’

“When everything began to collapse, our greed then turned into fear. What we feared … was the unknown—in this case, who and what we owed, what our assets were worth, and how bad things really were.” [The Global Financial Crisis of 2008: The Role of Greed, Fear, and Oligarchs, Cate Reavis, MIT Sloan Management, 16th Mar 2012]

But is Trump missing something in his definition of MAGA? Consider: “To remain competitive, and to give low- and high-skilled workers alike the best chance of success, economies need to offer training and career-focused education throughout people’s working lives. [And] efforts [are] being made to connect education and employment in new ways, both by smoothing entry into the labor force and by enabling people to learn new skills throughout their careers. Many of these initiatives are still embryonic, but they offer a glimpse into the future and a guide to the problems raised by lifelong reskilling.

“Quite a lot is already happening on the ground. General Assembly, for example, is just one of a number of coding-bootcamp providers. Massive open online courses (MOOCs) offered by companies such as Coursera and Udacity, feted at the start of this decade and then dismissed as hype within a couple of years, have embraced new employment-focused business models. LinkedIn … bought an online training business, Lynda, and is now offering courses through a service called LinkedIn Learning. Pluralsight has a library of on-demand training videos and a valuation in unicorn territory. Amazon’s cloud-computing division also has an education arm.

“Universities are embracing online and modular learning more vigorously. Places like Singapore are investing heavily in providing their citizens with learning credits that they can draw on throughout their working lives. Individuals, too, increasingly seem to accept the need for continuous rebooting … Meanwhile, employers are putting increasing emphasis on learning as a skill in its own right.” [Lifelong learning is becoming an economic imperative, The Economist, 12th Jan 2017]

Lifelong learning is consistent with the growth mindset that the blog has raised time and again. And the challenge will remain overwhelming if we Pinoys can’t overcome our instincts that hierarchy and rank are destiny.

And the challenge doesn’t get any easier. “In terms of global competitiveness, the name of the game is soft skills. Having strong government institutions and appropriate infrastructure are now givens for rapidly progressing economies like those in ASEAN. What will set apart the good from the great is the quality of its work force — their skills, their adoption to new technologies, their aptitude in the sciences, and culture of innovation.

“To this, government must focus on making the next generation of Filipinos more astute, competent, creative and skilled. It must also create an environment that is conducive to invention and innovation.

“We operate in a very competitive region and the Philippines needs to step up its game in no less than revolutionary ways to secure a place in tomorrow’s world.” [How competitive is the Philippine economy today (?), Andrew J. Masigan, Numbers Don’t Lie, BusinessWorld, 8th Jul 2018]

And not to forget, “If we want to make the Philippines more attractive to investors, we need to make sure that the market is fair. If we build a level playing field—they will come. No sensible player would want to join a high-stakes game that is rigged against them.” [Playing fair to court investors, Arsenio M. Balisacan, Competition Matters, BusinessMirror, 10th Jul 2018]

Is our market unfair? If the global financial crisis of 2008 was brought about by greed, what about the state of our market? Does it come with the territory, where we love tyranny?

Greed dates as far back as Eden. And indeed, to add insult to injury, the world suffers from tyranny as well. Remember the Arab Spring and Syria and Iran and Libya? And Africa and Latin America? What about Turkey, Russia and even the Philippines? The list goes on.

Yet humankind has demonstrated its genius and brought marvels through the centuries. And isn’t it time we Pinoys step up to the plate – if not now when?

Learning, curiosity and motivation – critical for us to keep growing and be dynamic – cannot come from isolation, and parochialism and insularity. They come from challenges that we must face – and why innovation and global competitiveness has defined the 21st century; and why the Chinese know that they must modernize or perish, and that automation is irreversible – that in turn build character.

The path of least resistance as in “pwede na ‘yan” that we’ve taken for decades – and eschewed industrialization – is why we’re the regional laggard.

But let’s get back to Trump. If people in the West, including Americans, aren’t applauding him, it is because they see him as misrepresenting the American idea. Of course, his base which represents the minority sees otherwise. He plays to them – and forget about what he takes beyond what he gives – which translates to the tyranny of the minority … and feeds polarization and parochialism. Not surprisingly, the US no longer is the benchmark for global competitiveness. It has its work cut out for Uncle Sam.

Conversely, it must be a lesson for us Pinoys that hierarchy and rank aren’t destiny – and why empires come and go – and no one is stopping us from traversing the journey from poverty to prosperity. And that means getting our act together.

Sadly, we love tyranny and appear powerless, married to the status quo and the vicious circle it produces. The evidence? We’re still fighting poverty – forgetting charity triggers pleasure, an established finding in neuroscience, and fortifies hierarchy – despite the lesson Asian Tigers gave the world, i.e., rapid development catapulted them from third-world to first-world. And we’re even adding another layer of complexity, system of government. Which Asian Tiger showed us that success model? Or should the question be, what planet are we from?

“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]
Now I know why Paul dared to speak of ‘the curse of the law’ (Galatians 3:13). Law reigns and discernment is unnecessary, which means there is little growth or change in such people. When you do not grow, you remain an infant.” [Faith and Science, Open to Change, Richard Rohr’s Daily Meditation, 23rd Oct 2017]
“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]

Sunday, July 8, 2018

Is China a study in dynamism?

And Singapore too? Consider this news report: “In a study by researchers from Stanford and Yale-NUS college in Singapore—a collaboration between Yale University and the National University of Singapore—soon to be published in the journal Psychological Science, researchers examined ‘implicit theories of interest.’

“[T]hey measured the effects of fixed versus growth mindsets—belief in inherent interests as opposed to those that are developed—to determine how our convictions influence learning and resilience.

“Based on the latest findings, people who have a fixed mindset—the almost mystical belief that passions are revealed to us magically—seem to be less curious and motivated than those with a growth mindset, who understand interests unfold as a process.

“This latest study builds on the work of Stanford psychologist Carol Dweck, who has written a great deal about the benefits of a growth mindset. She worked on the new study as well. Dweck’s previous research has shown that people who perceive of themselves as works in progress, who believe in the possibilities of development rather than the fact that we’re all born with inherent fixed traits, tend to be happier, more motivated, and more successful.

“In this [growth] mindset, the hand you’re dealt is just the starting point for development. This growth mindset is based on the belief that your basic qualities are things you can cultivate through your efforts …” [“Find your passion” is bad advice, say Yale and Stanford psychologists; Be wildly curious, Ephrat LivniQuartz.com, 26th Jun 2018]

And here’s the news from China. “Beijing’s vision of Made in China 2025 — the ambitious state-driven plan to retool China’s industries to compete in areas like automation, microchips and self-driving cars — is not being pushed just by the Communist Party’s top leaders. Instead, the drive is also coming from the bottom up: from the businesses and cities across China that know they must modernize or perish.

“The modernization may not happen in 2025. In fact, it may be long after that. But China will get there, mostly because it has to.

“If Made in China 2025 were a car, the engine has started and it’s definitely moving along … The city was automating well before Made in China 2025 came out in 2015 … but the policy provided [is] a clear direction.”

“The biggest trend in manufacturing is that automation is irreversible … No doubt many Chinese companies will fail in their effort to upgrade. Made in China 2025’s other goals, such as building up world-class microchip industries or self-driving cars, remain out of sight for now.

“Yet when it comes to manufacturing … Made in China 2025 will succeed partly because the effort is bigger than Beijing. Chinese companies and local government officials are determined to climb the value chain so they will not fall into obsolescence.

“The best Washington can do is to make sure its policies help American companies stay ahead of the game.” [Why Made in China 2025 Will Succeed, Despite Trump, Li Yuan, The New York Times, 4th Jul 2018]

That’s quite a dig on the US. What about us in PH?

Consider: “‘Do not compare yourself to others. If you do so, you are insulting yourself’. Ignore for a moment that one of history’s most reviled people—Adolf Hitler—said that because it does makes sense. We tell our children not to be envious of other people because what we see in others does not tell the whole story.

“On almost any category we can always find someone else who is ‘better’ than we are and someone who is ‘worse’ than we are. Comparisons are never valid enough to be taken too seriously, as the world rarely offers a fair and level playing field.” [‘The Philippines is worse than…,’ BusinessMirror Editorial, 1st Jul 2018]

What should we make out of this Editorial? Here is another local perspective: “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 to report events, accurately and fairly, with all sides in a controversy or an ongoing debate on major issues well covered and represented.

“As a rule today, this does not happen. The current rules governing mainstream media are imbedded in the following indelible principles: First, protect the interests of their owners and those whom their owners support. Second, on issues that do not affect their owners, media persons, as a rule, are practitioners of “envelopmental journalism” and the ACDC principle (attack and collect, defend and collect), meaning whoever gives the money could see their names and ideas in print or in radio or television. Third, partisanship and bias are the names of the game. If you belong to their crowd you can get your name in the newspapers, radio and television, even if your activities and ideas are inane or stupid or both. Fourth, there is no serious discussion of ideas. Fifth, there is no in depth knowledge of events and their implication on the life of the people. Sixth, there is no effort to educate the people. Seventh, there is stress on idiotic entertainment and game shows. Eighth, never mind ideas, just know whether he holds public office; it makes no difference whether his ideas are idiotic or insane, quote him.

“In plain and simple words, there is celebration of documented irrelevance.” [Era of documented irrelevance: Mainstream media, critics and protesters, Homobono A. Adaza, The Manila Times, 25th Nov 2015]

If it isn’t obvious yet, the blog is about reinventing ourselves. And why postings end with the quotes below. And as it continues to argue, the challenge every organism face is development. It is the natural law. And that creation is dynamic not static. Especially in a hierarchical culture, static is preserving rank and privilege. Which is incongruous to the interdependence that is the universe and its ecosystem.

As the blog constantly raises, even religious dogmas were upended by Christ himself, e.g., as in what the Sabbath is and isn’t. And in nation building, development means moving from underdeveloped to developed. Which translates to the journey from poverty to prosperity and reinforced by the parable of the talents. Development isn’t evil nor inhuman or unchristian. It is the natural law.

In a recent posting, the blog discussed what net worth is, i.e., the yield after we discount our liabilities from our assets. And benchmarking is also not a new topic. If we are to understand innovation and global competitiveness, we must learn what benchmarking is and isn’t.

It is not about being envious of Singapore or China but an imperative to traverse the journey from underdeveloped to developed or from poverty to prosperity – i.e., to pick and choose the best practices of success models and not be fixated on their weaknesses, given that this world is not about perfection.

The Japanese, the South Koreans and more recently the Chinese (and even Vietnamese) demonstrated the value of benchmarking. It is beyond disassembling a submarine or a German car as the Japanese did to advance their knowledge in technology and into something more profound as in Deng picking the brains of Lee and Mahathir, i.e., to beg for Western money and technology. 

It is what the social science calls “unfreezing” – i.e., to unfreeze whatever is set in the mind – to give room for learning and curiosity and motivation. And once they have been absorbed, to refreeze the new mindset. It is at the core of development. Because to develop is to evolve and change – and be dynamic not static.

Consider: Our mindset is set and stuck with OFW remittances and the BPO industry that despite a major effort to develop and pursue Arangkada it has no room to accommodate and learn and be curious and motivated about the pursuit of industrialization as in the JFC’s seven industry winners. Because “pwede na ‘yan” made us embrace the vast consumption cum local economy it created, including a bigger middle class and a handful of billionaires.

It is a disease – our own Dutch disease – that fails to recognize that development is not to preserve the status quo. Which in the case of PH is preserving rank and privilege – nurtured by political patronage and oligarchy – with a little help from us in the elite class.

“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]

Now I know why Paul dared to speak of ‘the curse of the law’ (Galatians 3:13). Law reigns and discernment is unnecessary, which means there is little growth or change in such people. When you do not grow, you remain an infant.” [Faith and Science, Open to Change, Richard Rohr’s Daily Meditation, 23rd Oct 2017]

“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]

Sunday, June 24, 2018

Kicking up a perfect storm – wittingly or otherwise

But we believe we’re being patriotic by cherry-picking our positives forgetting that there is such a thing our accountants call “net worth.” Yes, we can’t keep advertising our assets – that we’re the fastest growing economy in the region, forgetting that in grade school we learned about fractions and the laws of small and big numbers; and as mind boggling is our/our economic managers’ inability to acknowledge so that we don’t keep falling into the trap of “pwede na ‘yan” that behind our vast consumption economy aka our own Dutch disease and why we can’t move up to the next level is the remittances of over 10 million OFWs and the BPO industry and PH newest “industry,” gambling – and sweeping our liabilities under the rug. And our net worth is aptly described as: we’re the regional laggard.

Why? Our neighbors like the Asian Tigers through visionary leadership saw what the future can be like and figured out how to traverse the road from poverty to prosperity. And over the nine years the blog has been around, it appears we still haven’t stepped up to the plate to recognize and acknowledge what our neighbors have done. Sadly, the blog is sounding more and more like a broken record. Because it hates to simply say, “I told you so.” Because he is intimately aware that it takes efforts. 

The writer saw how his former MNC-company changed despite being a 200-year old enterprise and how his Eastern European friends in a matter of 15 years transformed themselves – born and raised as socialists under communist rule – to be an innovation- and globally competitive-driven enterprise able to thrive in the 21st century. Yet, neither was a cakewalk. 

Consider: (a) “The lesson for us ought to be clear: We must keep our eye on the ball, as there’s still a lot of catching up to do,” ‘Beyond ‘PiTiK,’Cielito F. Habito, No Free Lunch, Philippine Daily Inquirer, 12th Jun 2018; (b) “Taxation by LGUs emerging as a key TRAIN concern,” Elijah Joseph C. Tubayan, BusinessWorld, 19th Jun 2018; (c) “Foreign chambers blame TRAIN uncertainty for flat FDI outlook,” Janina C. Lim, BusinessWorld, 19th Jun 2018; (d) “Philippines losing digital edge — IMD,” Janina C. Lim, BusinessWorld, 20th Jun 2018.

The bottom line: We’re neither here nor there. And what is our response? “Now the BSP is saying they expect more dollar outflows and they are blaming it on our trade imbalance. They are expecting the value of the country’s imports to outpace what we earn from exports by over three times its original forecast.

“The BSP is now saying the country’s current account would likely end the year at a deficit of $3.1 billion, or a 342-percent increase over the original deficit projection of $700 million announced in late 2017. Exports are seen growing by 10 percent and imports climbing by 11 percent YoY.

“But the central bank is saying not to worry because this large deficit will be propped up by service-related inflows and the entry of more foreign capital. That’s optimism bias again.” [Optimism bias, Boo ChancoDEMAND AND SUPPLY, The Philippine Star, 20th Jun 2018]

Of course, we’re doing more. “President Duterte is expected to issue a memorandum circular ordering concerned government agencies and requesting Congress to fast-track removal of foreign investment restrictions that require legislation, the country’s chief economist said Thursday.

“Socioeconomic Planning Secretary Ernesto M. Pernia told reporters that the upcoming presidential order will complement the moves to liberalize the foreign investment negative list (FINL), which is also pending the President’s approval.” [Duterte to ask Congress to rush removal of foreign investment limits, Ben O. de VeraInquirer Business, 16th Nov 2017]

So, has President Duterte issued the circular? And beyond the circular, what are our next steps? We have a perfect storm, remember. We need more than a circular. We need the building blocks of the 21st century ecosystem. Yes, rapid infrastructure development is fundamental especially given we’re at least 50 years behind. And the administration’s mantra of “Build, Build, Build” is spot on. Yet we cannot eat a mantra. And we appear stuck and can’t move forward. Que sera, sera!

In the meantime, what are we doing about rapid industrial development? [“Focus on key industries could double FDI — AmCham,” Janina C. Lim, BusinessWorld, 21st Jun 2018] It is not about making PH the gambling Mecca and calling it an industry. We don’t have to choose between drugs and gambling. 

And it’s beyond MSMEs. Because we need to simultaneously learn innovation and global competitiveness. Recall our neighbors were able to leapfrog the rest of the world because they begged for Western money and technology.

Yes, including Vietnam. Note that “7 million tons of bombs had been dropped on Vietnam, Laos, and Cambodia – more than twice the amount of bombs dropped on Europe and Asia in World War II.” [libcom.org]

How badly did we suffer from Spain, the Americans and whoever else? People get over it. Like we have embraced the Japanese and remain proud of our Spanish heritage. It’s called moving from a fixed mindset to a growth mindset – aka dynamism.

As the blog keeps saying, the road to prosperity is an exercise in building the requisite ecosystem, not a perfect storm.

Yes, our “culture” or way or life is what is kicking up this perfect storm. That we are parochial and insular. That we value hierarchy and paternalism. That we love tyranny and embrace political dynasties and oligarchies for dispensing the spoils of patronage.

And it also explains why we have the Mindanao problem – and why despite being called the gates of hell the notion of imperial Manila continues to rankle – and why we can’t find peace. Imagine how long ago since China embraced capitalism and we’re still negotiating with PH rebels to get us into the time machine that embraces decades-old assumptions? It explains why we can’t grasp how the Asian Tigers left us in the dust.

It has nothing to do with the system of government. [“It … would be counterproductive if we go into a new government system and we’re starting from square one,” Business groups want policy stability amid shift to federalism,” Camille A. Aguinaldo, BusinessWorld, 21st Jun 2018.] See above re taxation by LGUs. And we will have more of that in a federal system. And see below re perceptive judgment why we can’t seem to figure out if we’re coming or going. It’s reflective of our adolescence in nation building and development.

On the other hand, Trump fails to understand that industry as in manufacturing has traveled to Asia – no different from the first industrial revolution which the Britons themselves brought overseas given the opportunities they saw; and history repeated itself when US companies (including the writer’s) brought money and technology to China – while the US has become a service economy … and must then move the technology revolution up to the next level. And engaging China in a trade war isn’t going to flip the scenario. And the latest casualty being General Electric, one of the titans of the original 30 industries (which will be down to “seven against six tech firms, five financial institutions, three drug makers, three consumer-product companies, three retailers and an entertainment giant,” Yahoo Finance, 20th Jun 2018) represented in the Dow Jones Industrial Average formed by Charles Dow in 1896.

Trump comes from America, still the largest economy in the world. They can afford the misstep. But can we in PH continue to be the regional laggard? Which brings to the fore the concept of perceptive judgment that the blog has discussed as well as visionary leadership. The latter is the common denominator in the case of the Asian Tigers, the writer’s old MNC-company and his Eastern European friends.

What about perceptive judgment? The imperative to succeed was the motivation of the MNC-company and the Eastern Europeans. The former was driven by a threat of a takeover that it wanted to fight. And for the latter it was the eight years they were in the red. And in both cases, the personal experience of going through both failing and successful efforts rounded out their confidence knowing full well there is a way forward to prosperity.

Which brings us back to PH. We need to seek a visionary leadership as well as gain personal experience beyond failing efforts, that is, successful efforts in pursuit of community and the common good. We’ve had too much focus on oligopoly that it has become our success model. And given its symbiotic relationship with politics they can only perpetuate patronage and a culture of impunity. If we haven’t figured that out yet, it will get worse before it gets better for Juan de la Cruz.

“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]

Now I know why Paul dared to speak of ‘the curse of the law’ (Galatians 3:13). Law reigns and discernment is unnecessary, which means there is little growth or change in such people. When you do not grow, you remain an infant.” [Faith and Science, Open to Change, Richard Rohr’s Daily Meditation, 23rd Oct 2017]

“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]

Tuesday, June 5, 2018

Metro Manila – What an ecosystem isn’t

Imagine if the solar system mirrors Metro Manila, do we think there will be the phenomenon of photosynthesis? Will there be life on earth? If Boracay is a cesspool, what about Manila Bay?

The blog has raised that the dynamism and oneness of creation is reflected in its ecosystem. And conversely why we persist to be underdeveloped and poor. And why linear thinking or looking at a silver bullet (is that what the war on drugs is?) to solve our woes will keep sinking us down the abyss. And why unemployment in the US can’t be compared with unemployment in underdeveloped Philippines.

More to the point, the US being a well-developed nation has a well-developed ecosystem too. And we can start with its (a) political system – because we Pinoys are consumed by politics. A tyrannical Trump is held in check by people from his own party and conservative pundits, among others. And there is the element of (b) infrastructure albeit it can afford updates and upgrades. As well as (c) industry and (d) innovation and global competitiveness.

In other words, classical economics – as in monetary and fiscal policies – when done right has a knock-on effect on the economy in a developed economy like the US. “The last time the unemployment rate remained below 4 percent for a sustained period was in the late 1960s.” [Unemployment Rate Hits 3.9%, a Rare Low, as Job Market Becomes More Competitive, Natalie Kitroeff, The New York Times, 4th May 2018]

Of course, we cannot forget California. “California recorded another milestone … one reflecting a prouder facet of the state’s success. If the state were an independent country, its economy would rank as the fifth-largest in the world, ahead of Britain’s (which has been crawling lately). California held that spot once before, but it slipped a bit during the Great Recession a decade ago.

“California’s economic success underpins the state’s audacity and its defiance of President Trump. It is an invisible buttress when the governor and attorney general harangue the Trump administration … for basically going to war against the state of California.” [The Pleasure and Pain of Being California, the World’s 5th-Largest Economy, Thomas Fuller, The New York Times, 7th May 2018]

But let’s get back to the Philippines. Reads a column, “Eight former Finance Secretaries support TRAIN 2.” The long and short of it is TRAIN is a tax reform legislation, lifted from classical economics. On the other hand, how much drumbeating is there behind “Arangkada” today? 

Six years ago, there was this news report, “Gov't not moving fast enough, say foreign chambers,” Max V. de Leon, BusinessMirror, 27th Jan 2012. “The government only managed to start implementing about 55 percent of the 471 policy recommendations that the Joint Foreign Chambers (JFC) forwarded to MalacaƱang a year ago to spur economic development and boost investment inflows.

“It means that we are going forward but not fast enough … The JFC recommendations are important because right now, the foreign investors are passing us by … if all the recommended changes were followed, the country could attract as much as $75 billion in foreign direct investments.”

In engineering and project management, there is such a thing as “organizing in parallel” – as in PERT-CPM. It is a great example of how to overcome linear thinking – and move towards lateral and creative thinking. 

Which brings us back to the ecosystem. With due respect to our economic managers, for decades we’ve relied on classical economics, precisely why the Asian Tigers pulled the rug from under the rest of the world. They understood the imperative of creating an ecosystem. Think of Singapore being more competitive than the US.

More than the system of government, what the Asian Tigers and before them the US had was visionary leadership. And the blog singled out FDR, Lee, Mahathir and Deng. These leaders had lots of foresight. That their journey from poverty to prosperity can be characterized by such forward-looking initiatives as infrastructure development, industry and innovation and competitiveness. And which taken together mirrors an ecosystem.

While Metro-Manila is what an ecosystem isn’t. If indeed there is imperial Manila, explain why it has been called the gates of hell? Because our string of leaderships did not demonstrate vision and foresight. Our infrastructure is third-world and we are not an industrialized economy that is founded on innovation and global competitiveness.

We need a master plan of an ecosystem for Metro Manila and beyond – or from Hacienda Luisita down to Calabarzon. Not because JICA says so but because we needed one at least 50 years ago. But we will never have a master plan if patronage and a culture of impunity – leadership after leadership – would reflect who we truly are.

Beyond infrastructure development, as the JFC pointed out, we can [and must] attract as much as $75 billion in FDIs. [Note the collective wealth of our 12 billionaires totals $55.3-B.] We need this magnitude of investment so that we can compete with the likes of Vietnam and Thailand.

We lag Vietnam’s exports by over $140-B and Thailand’s by $175-B. And what are we talking about? MSMEs? They thrive when there is an industrial base that is robust. Not even our billionaires can raise the kind of numbers we badly need. 

And what about financing for subsistence farming? What we need is a massive agro-industrial initiative like the one that was reported to be under consideration for Central Luzon within the framework of the JFC’s seven industry winners. And, yes, then small farms effectively organized consistent with economies of scale and geared for world-class productivity will flourish. It is not new. Our neighbors have done it. Tossing “crab mentality” is key.

Sadly, man sees what he cares to see and why reality is elusive. And why the blog often discusses our “culture” or way of life. For example, given our parochial and insular instincts, we take such stark deficits (against Vietnam and Thailand) for granted instead of a challenge – an existential threat – and why underdevelopment and poverty have come to define us: losers not winners.

Which is not new to the writer. He has encountered such perspectives in emerging and developing nations as well as developed ones where older enterprises failed to stay abreast with technology especially disruptive ones. Or for failing to move their products and/or services up the value chain to respond to ever-changing human needs. It also explains the 1-percent phenomenon, i.e., when the 99% suffer from lack of personal experience on the challenge at hand that their perceptive judgment is suspect.

Where is our foresight? We’re talking poverty and livelihood, not generating the wealth we sorely need via the requisite ecosystem.

If war-torn Vietnam can do it, why can’t we? And why the blog has argued that we must toss “crab mentality” and pursue rapid development consistent with the demands of Pareto and the 1-percent phenomenon. And that means starting with Luzon (as above) plus Cebu, Davao and Cagayan de Oro.

And leverage the top ten export industries because we have the most knowledge in them and can move up the next level much faster, i.e., the pursuit of innovation and global competitiveness. That means the right product portfolio that is scaled up the value chain. The caveat: our industry must intimately understand human needs – that they are ever-changing because of the imperative to raise their well-being, and not be a candidate for extinction.

Which we Pinoys are courting given our fixed mindset instead of a dynamic and growth mindset. That beyond the here and now of poverty, we mustn’t forget to leverage man’s greatest gift compared to the rest of creation, i.e., foresight. And when we think of the ecosystem the buzz word that is inclusion falls short because creation is about oneness.

Sadly, PH not only Metro Manila is what an ecosystem isn’t. 

“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]
Now I know why Paul dared to speak of ‘the curse of the law’ (Galatians 3:13). Law reigns and discernment is unnecessary, which means there is little growth or change in such people. When you do not grow, you remain an infant.” [Faith and Science, Open to Change, Richard Rohr’s Daily Meditation, 23rd Oct 2017]
“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]