Stop and smell the roses

“Beautiful Keukenhof Gardens, the largest and most spectacular flower gardens in the world, where a sea of multicolored tulips stretches out over the flat Dutch landscape as far as the eye can see,” reads the flyer of the 11-day tulip time river cruise the wife and writer took recently. 

Indeed, it’s spectacular! And instead of strolling around Keukenhof to feast on the tulips the writer says to the wife, “let me find a place to sit … to stop and smell the roses.” Being color blind, he is especially starved of green. And why he feels liberated whenever he’s taking in an abundance of green – more so a sea of multicolored tulips.

And so, for the first time since the blog came into being 9 years ago, it was orphaned for over 2 months. Let’s see where we left off. Thanks toinquirer.net for picking and keeping a blog post in cyberspace – for 9 months and counting – that talked about foresight like the latest one that appeared in the blog’s website.

And over the past several weeks, the writer read news reports as though he was simply a consumer.

Over the lifetime of the blog we Pinoys have witnessed the typical cycle of our way of life. President Arroyo became history with the election of President Aquino. And President Duterte will become history too? Unless he puts a RevGov in place?

And certain quarters are entertaining the thought. In the meantime, our economists are saying PH exports will most likely miss the goals this year – and over the medium-term as well. And every May 1 we talk about “Jobs, Jobs, Jobs.” It’s like a broken record. Ditto for poverty and food security.

In the meantime, we are debating TRAIN-2 and the reality of “Build, Build, Build.” As well as which airport proposals will become reality. Not to forget the “crises” we continue to confront: energy, water, traffic, etc., etc.

Which brings us back to foresight. To our opinion makers: Over the lifetime of the blog, we have all been opining. Yet the reality is despite a consistent GDP growth rate in the 6-7% range – principally driven by OFW remittances and the BPO industry – it will take us a generation to see the light at the end of the tunnel. And given we are mostly of the same generation, many of us will be gone, and PH will still be a poor underdeveloped nation. 

It’s interesting to note that in the US, someone had the audacity to write: “How baby boomers broke America.” [Steven Brill, Time Magazine, 17th May 2018]

The writer started his career in the Philippines 50 years ago, spending 20 years before moving to New York (as an expatriate in an MNC.) And since retirement, 15 years and counting (as a volunteer consultant at the instance of USAID), he calls Sofia his second home. And what we read back home about emerging, developing and developed economies are realities he has personally experienced.

And they bring back memories of Econ 101 – with images of the hammer and sickle that meant a centrally planned economy against that of the Star-Spangled Banner and the US, which from its Constitution was established as a mixed economy. 

Where does foresight come in? The jeepney comes to mind. Our love affair with the jeepney has morphed into compassion, i.e., it means jobs, jobs, jobs. Consider: 50 years ago, the leadership of Bulgaria created the blueprint of a subway system in Sofia, the capital – a teeny tiny city compared to Metro Manila.

And on weekends the wife and writer would enjoy the breeze commute from the metro station near their apartment to either the city center or one of the malls.

One story the writer’s Bulgarian friends like to hear repeatedly is how his former MNC company grew to be 4 times bigger: after deliberately restructuring the business and cutting its revenues in half and focusing on its core, largest and most profitable brand to fend off a takeover attempt. And through his tenure he participated in this growth journey. 

And his friends, to their credit, are on their way to repeating history – without the need to scale back the company in half but multiplying the largest business, the home market, four-fold having expanded beyond their borders. 

And what a great joy the wife and writer would share every time they visit the homes of these friends. Because the contrast from 15 years ago is a virtual time warp. Imagine a crumbling communist-era apartment building in a town that time cruelly left behind against that of a 21st century condominium in a residential development put up by a German developer in the capital city. It would fit right among the desirable communities in suburban New York. Think of evolving from an emerging to a developing to developed community over a period that is not even a generation.

Ever since they geared up to join the EU, these friends developed an outward-looking mindset. Because it meant living with Western competition. Which is why the writer was tapped to assist them in the first place. They had to learn what it means to move from a closed, centrally planned economy to one that is open, competitive and global.

It was not a cakewalk. And why the blog constantly addresses our “culture” or way of life: We are parochial and insular. We value hierarchy given the expected paternalism that comes with it. And we value patronage and rely on political dynasties and oligarchies that dispense its spoils.

And more to the point, we can take our instincts for granted yet how do we develop the sense of foresight when we’ve created set ways within our own isolated world? The Brits call it “island mentality.” And why Brexit had to come, sooner or later.

Disclosure: The writer is teeing up the concept of “reflective judgment” as a characteristic of knowledge in humans. “That reflective judgment skills can be influenced by education but with no significant effect; that personal experience could determine the effect to which one may possess better reflective judgment skills.” [Johnson, David D., Dualistic, Multiplistic, and Relativistic Thinking as it Relates to a Psychology Major; 1994, Honors Theses, Paper 202]

The thesis explains the polarization in the US, for example. Consider: Ideology, rational or not, reflects an either/or mindset – you are of my tribe or not … thus a foe. Recall “the world is flat.” Or how Christ responded to the question on working on the Sabbath. And Christ also talked about the oneness of creation, including foreigners … and sinners.

In the above-referenced study, religion is the most profound example of dualism. Not surprisingly, there is such a thing as “intifadas” – and for that matter, the Crusade. And why ideologues had to crucify Christ, who is about forgiveness and love as Francis would remind the world. Of course, man can reject such unconditional love, as in the distinction between the good and the bad thief.

In any case, the reality is we are all from Africa. Imagine cramming 7 billion people on the continent of Africa. Migration in fact reflects the dynamism of creation. Think of the universe being a 24/7 dynamic phenomenon. And of the solar system, including photosynthesis, that demonstrates the oneness of creation. And there is a word for it, “ecosystem.”

Which brings us to the concept of a fixed mindset versus a growth mindset – or linear thinking and lateral thinking and creativity. Put another way, the world isn’t meant to be an either/or – as in black or white. It is in living color and in constant motion.

Simply put, creation equals creativity. Which is how Franciscan theology explains dynamism. It is not about rationalizing morality. Consider: we’re in the 21st century yet the dynamism of the Trinity lives on via the Holy Spirit – not unfamiliar to born-again Christians. Which also explains our capacity for discernment, i.e., we’re created in the image and likeness of the Creator.

Which brings us back to economics or business. Think of bean counters or managing the P&L versus managing the business. Or managing the GDP as opposed to the economy.

Bean counters like to see that the numbers add up and when costs are beyond budget they make certain things fall in line. It makes logical sense except that managing the business means something much broader and grander, if you will. It is creating an ecosystem that mirrors a virtuous circle. How? Constantly upgrade if not innovate to elevate the performance of the products and/or services that make up the top or revenue line – to raise man’s well-being.

And foresight demands that beyond quarterly profits – for which Wall Street has been pilloried – is the imperative of creativity, i.e., innovation and global competitiveness, which drives the revenue line. And it is where the relevance of personal experience – beyond education – comes into play.

Consider: Those of us in the business of opining have been prescribing cures for development even when PH has never been a developed economy. See above re the limitations of education. And consider: How many dissertations in business graduate education meant for an idea to succeed as a new business ever get off the ground?

And our mental model of a successful enterprise is principally that of oligarchy and/or monopoly. Which explains why the wealthiest Pinoy is in retail – a low-margin business compared to high-value added enterprises – but dominant in the local market. On the other hand, how many Western retailers are in decline? Because in the broader global market, retail’s (i.e., brick and mortar) inherent low margins cannot compete against Amazon, for example. 

And it brings us to why we cannot meet our export targets – and why we suffer from our own Dutch disease, the reliance on OFW remittances and the BPO industry instead of a globally competitive industrial base. And until we learn to manage the economy beyond managing the GDP, we will be the regional laggard.

We are not focused on creativity or the top line or the products and/or services that can compete beyond our shores. Which explains why innovation and global competitiveness is alien to us. It takes personal experience – to which the writer’s Eastern European friends attribute their success – to learn the trade and compete at world-class levels.

It also suggests the reality of the Pareto principle and the 1-percent phenomenon. We cannot be everything to everybody. Fifty industry road maps, for example, are an exercise in futility. Not even Germany can win with 50 industries. 

And it also explains why we see structure as the solution to our problems – as in federalism. In the 80’s the Western world realized structure was the problem not the solution. Remember the bad word “restructuring”? Even Western companies with subsidiaries in the Philippines weren’t spared.

Japan Inc. had overwhelmed Western enterprises – because of the gap in productivity and quality – as Western business structures turned into the dreaded word, bureaucracy, i.e., inflexible, ineffective and unproductive. What more of the public sector?

But we saw ourselves – or more precisely Filipino employees of MNCs – as victims of restructuring. Productivity and quality weren’t near and dear to our hearts because we weren’t an industrialized economy in the first place. We only saw the negative outcome of restructuring.

And as an economy we have an even bigger challenge: What products and services must be the focus and platform of a PH industrialization effort? Because we are yet to figure out what the global market is about as well as what human needs are about. To successfully compete in a globalized competitive world, we must create an ecosystem, i.e., a virtuous circle.

If we are looking for that one word, it is development. And until we recognize what we are missing, we shall continue to talk about jobs, jobs, jobs … and poverty … and food security ... like a broken record. 

Which brings us back to the Pareto principle and the 1-percent phenomenon aka the law of big and small numbers – its inverse being “crab mentality.” And why we’ve been left behind in: (a) infrastructure development; (b) industrialization and (c) innovation and global competitiveness.

Think of Kurt Levin’s “force field” theory. And smartly manage the two opposite forces working for and against change. Given two-thirds of the PH economy is generated by Luzon – from Hacienda Luisita down to Metro Manila and Calabarzon – and thus driving economic development, we must leverage this strength and not stifle it.

On the other hand, we must raise development efforts in the rest of the country as warranted – i.e., recognize the reality of the Pareto principle and the 1-percent phenomenon – and not rob Paul to pay Peter.

Which brings us back to the unsolicited offers for new airports and the upgrade of NAIA. If we were a global private enterprise, we will celebrate the reality that 2/3 of the economy is generated by one contiguous area. Because it is easier to drive an undertaking that generates such scale. It is the laws of physics. And this is where big data and analytics come into play. And why the writer was delighted to read about the idea of creating a vast agro-industrial zone in Central Luzon.

The bigger and the sooner we can drive the revenue line of the PH economy the greater and bigger our GDP per person will become. It doesn’t matter where it comes from. The bigger the economic pie or output the bigger the tax base. But we don’t see that. What we see is the need to spread out the spoils of taxation even when our tax base equates to that of an underdeveloped poor economy. It is minuscule for our needs. 

Consider: TRAIN is meant to raise tax revenues from 17% to 20% of GDP. In driving growth, that is only one piece of the equation. The other piece is to raise the tax base – i.e., focusing on rapidly increasing the products and services PH produces via a hard-nosed industrialization effort – so that the ultimate tax take of government will increase much, much greater.

Yet we want to embrace federalism because it is the be-all and end-all ... without figuring out how to enlarge the economy? See above re: (a) managing the GDP as opposed to the economy or managing the P&L versus managing the business; and (b) reflective judgment.

The blog isn’t promoting the idea of neglecting the rest of the country. For example, if we add Cebu, Davao and Cagayan de Oro to Luzon, they make up the bulk of the economy. And we can replicate the model that will rapidly drive economic output in these three areas. And that means: (a) rapid infrastructure development, including modern airports except that we need more in Luzon; (b) industrialization and (c) innovation and global competitiveness.

It presupposes tossing “crab mentality” and embracing the priorities dictated by the demands of rapid development aka the Pareto principle and the 1-percent phenomenon. Sadly, we as a people haven’t personally experienced such rapid development undertakings that we can only succumb to “crab mentality” that in turn explains our inability to move beyond an underdeveloped economy and nation. 

Beyond development we must develop our sense of foresight. Indeed, it is an uphill battle. What we should pray for is a leadership that is endowed with vision. FDR comes to mind (for transforming the US from an agriculture to an industrial economy on top of overcoming the Great Depression and saving Europe from its propensity to engage in destructive wars) or closer to home, Lee or Mahathir or Deng (for making Asia the home of economic tigers.)

What about Duterte? See above re our “culture” or way of life. It explains why we have been running around in circles. Think of the last 50-70 years. And it doesn’t appear we’re predisposed to shifting paradigm. And we want to pray for that too.