“Isang kahig, isang tuka”

Translation: “one scratch, one peck; a poor, hand-to-mouth existence.” [https://www.tagaloglang.com/kahig/]

What about a “shortsighted and dysfunctional” PH to describe the moral of these two articles? (1) ‘Too many’ populist moves, former state economic planner warns, Elijah J. C. Tubayan, BusinessWorld, 27th Aug 2018; (2) Metro traffic authorities must produce efficient results,Editorial, The Manila Times, 27th Aug 2018.

“We have too many of those populist but economy- and business-unfriendly policies,” Ateneo de Manila University professor Cielito F. Habito said during the Ateneo Economic Briefing 2018. 

‘Why do you have to give free tuition to everybody when we already have a good law in place that says give free scholarships to promising, needy students? But then again they wanted to have a popular-looking law that everyone gets free college education …

‘That is a tremendous price tag that is impacting government finances … Mr. Habito also cited RA 10969, or the Free Irrigation Service Act, which exempts farmers with up to eight hectares from paying irrigation service fees.

“The Development Budget Coordination Committee late last year also flagged fiscal risks posed by the increase in salaries of soldiers and policemen, as well as in Social Security System pension payouts by P1,000 across the board that has cut the fund’s actuarial life by 14-17 years.”

That is probably meant as a very limited enumeration of the social programs that we take as positives because of the war on poverty – that makes us even proud given our Christian heritage. 

Isang kahig, isang tuka. Why? Because we see poverty as destiny that “development” is not in our psyche? Unsurprisingly, ours is a short-sighted and dysfunctional system? Pero hindi ma-gets ni Juan de la Cruz?

The reality is, as the blog has discussed before, foresight is a scarce commodity [which is a recent finding in the social science; yet confirms that visionary leaders are few and far between] and why the world is witness to Brexit and MAGA, for example.

In other words, Bongbong Marcos or Macagapagal-Arroyo or before her Estrada or even Duterte (father or daughter) can’t claim visionary leadership. Why? We all grew up sheltered. See below re our culture. It explains why we haven’t demonstrated the leadership qualities like those of Lee or Mahathir or Deng.

The challenge the blog continues to pose is why have our neighbors defied the conventional wisdom? If we still believe we are smarter than them we better wake up. To think logical and linear does not equate to the ability our neighbors demonstrated. We still believe monetary and fiscal interventions are all we need? And, of course, the war on drunks in tandem with the war on drugs? We need greater imagination than all of them combined.

Nor is it as easy as saying that all we need is to take out the restrictive economic provisions in the Constitution or move from a unitary to a federal system. How come? We can’t execute otherwise we would not be the regional laggard. We have been reduced to “puro daldal, satsat, sitsit.”

In a recent posting the blog commented on the challenges raised by two of our respected economists: (1) our inability to appreciably raise exports; and (2) failure in governance. But these are not brand new like Metro Manila traffic – which incidentally also exists in Cebu.

While we are delighted about the big pluses of the new Mactan airport and the new resorts in Cebu, a bit of a pause will tell us that Cebu suffers from third-world infrastructure like Metro Manila. And so we believe upgrading NAIA on top of Clark will be manna from heaven? What about connecting the dots? Luzon – from Hacienda Luisita down to Calabarzon – accounts for two-thirds of the economy. And needs the bulk of the infrastructure efforts we can muster, including two airports.

In other words, if Cebu, Davao and Cagayan de Oro each needs an airport, Luzon needs two. But beyond that, we need an industry master plan to exploit the scale of its economy. We have to move beyond OFW remittances and the BPO industry. Think Arangkada. Is Arangkada still talked about? Ningas kugon?

Of course upgrading NAIA is infinitely better than turning it into another mall. Who ever thought that badly needs a hole in the head? Talk about Metro Manila traffic. Or is this an influence of the success of our retailers – given our consumption economy? But we need more than consumption, we need investment in world-class industry if we are to become an export powerhouse.

In other words, there is a reason why we are the regional laggard. It is beyond our shortcomings in exports and good governance and Metro traffic and NAIA and Clark and free tuition and exemption from irrigation fees, etc., etc.

Let’s start with foresight. While it is a scarce commodity, are we in fact undermining it because of our instincts? Yes, to assume poverty is destiny is an example. Think Tatang Sy. Or think development; it is an exercise in learning foresight. Which is why our parents sent us to school and why we do the same for our children.

It is the law of nature. Why is it so insurmountable to Juan de la Cruz? And it boils down to our “culture” or way of life: “We are parochial and insular. We value hierarchy and the paternalism it brings. And we rely on political patronage and oligarchy given the spoils they bestow. That when all is said and done, we bite the bullet – aka a culture of impunity.”

Gising bayan!

“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]

“Be dead in the water …”

“If something is dead in the water, it has failed and it seems impossible that it will be successful in the future: So how does a governmentrevive an economy that is dead in the water?” [https://dictionary.cambridge.org/us/amp/english/be-dead-in-the-water]

And here are views from two of our respected economists: (1) Why can’t we export more (?), Cielito F. Habito, NO FREE LUNCH, Philippine Daily Inquirer, 17th Aug 2018; (2) Governance failure across the board, Solita Collas-Monsod, GET REAL, Philippine Daily Inquirer, 11th Aug 2018.

How about recognizing that we’ve long suffered from our own “Dutch disease”? If we struggle to figure out the analogy, is it because we don’t connect the dots and imagine and visualize an ecosystem?

And why the blog constantly speaks to critical and creative thinking. For example, we know – and should our economic managers do a soul-searching for failing to educate our people on what a GDP growth rate means beyond the numbers and think of data analytics borrowed from information technology? – that OFW remittances and the BPO industry are the drivers of the economy. And in more ways than one they gave us robust GDP growth rates for several years. That some of us even predicted boom times which is but a classic “pwede na ‘yan.”

Yet, neither generates the kind of multiplier effect (of investment) as industry does – especially one that is founded on innovation and global competitiveness. In other words, these economic drivers that also produced a handful of Pinoy [Forbes-ranked] billionaires don’t have the legs nor the horsepower to make us regionally much less globally competitive. Which is what generates wealth in the 21st century and creates jobs and in the case of our neighbors drastically reduced poverty.

And why we must think ecosystem. Or more precisely, not a perfect storm or a vicious circle, but the opposite, a virtuous circle which is what an ecosystem is. Think of our “culture” or way of life, a constant reminder from the blog: “We are parochial and insular. We value hierarchy and the paternalism it brings. And we rely on political patronage and oligarchy given the spoils they bestow. That when all is said and done, we bite the bullet – aka a culture of impunity.”

It explains our failure in governance ... which in a democracy is self-government, a government of the people, by the people and for the people. And why the blog always speaks to Juan de la Cruz.

And why can’t we export more? In a recent posting the blog raised the falling out between Steve Jobs and his friend Steve Wozniak, the latter who was the real techie being the engineer, while Jobs was the college drop out. Because Wozniak couldn’t imagine and visualize beyond the obvious – which to him is: “didn’t we just set out to create a great personal computer”? But to Jobs Apple was more than the obvious.

Think how legal luminaries behind the Con Com were criticized because “The protectionist, isolationist and fearful terms of the 1987 Constitution, of the 1935 Constitution even, were essentially maintained.”

With due respect to our economists, we cannot solve a problem in isolation. Think of the war on poverty, the war on drugs and the war on drunks. We are a product of our imagination – sadly reflected in our inability to progress from third-world to first-world. And we can only go as far as we can imagine the future. We need forward-thinking if not visionary thinking and leadership.

For example, to be able to export, we must think innovation and global competitiveness. Not livelihood. Pinoy friends keep telling the writer that we are inherently entrepreneurial given practically 99% of our registered enterprises are MSMEs. That is again classic “pwede na ‘yan” – because they are more like livelihood undertakings.

As someone from the DTI shared with the writer, “You know, once an exporter gets a big order, the next thing you hear is the family is in Europe on a grand holiday; and you know where the money comes from, the operating funds of the business; so they are undermining the enterprise from the get-go.” As our accountants will tell us, we can take money from a business via retained earnings, that is, the surplus that is set aside … but only … after the operating needs of the enterprise are earmarked.

Surprise! “In the first half of this year … most of our top 10 export products dropped at double-digit rates, including chemicals (-44.4 percent), coconut oil (-28.9 percent), ignition wiring sets (-27.5 percent), and bananas (-13.2 percent).

“It’s well worth examining why. For coconuts and bananas, the problem has been traced to large-scale destruction from the “cocolisap” pest and Panama disease (Fusarium wilt), respectively, which agriculture authorities have failed to handle promptly and adequately. For nonfarm exports, we need to study more closely whether the problem has been on the demand or supply side.

“In past articles, I’ve pointed to at least two things we may be doing differently from our neighbors that could explain our export gap with them. One, we have traditionally failed to provide enough support to our exportable high value farm products. For one thing, research and development support has been highly inadequate, even for our export mainstays of coconut, bananas and mangoes. For decades, we have lacked a coherent and well-funded national strategic plan for these crops.” [Habito, op. cit.]

A national strategic plan? As some would know, the blog has raised Arangkada incessantly. Question: why aren’t our economists addressing this attempt to step up to the plate of industrialization? The JFC pulled a cross-section of society together and offered Arangkada – and it is one of the very few times we tried to connect the dots. And for the umpteenth time, it is how Steve Jobs defined creativity.

But neither the Aquino nor the Duterte administration supported it. Is it because we truly cannot imagine and visualize an ecosystem – because of our lack of foresight, inability to change and a backward-looking mindset?

And what about governance? Our exportable high value farm products were appropriated by political patronage and oligarchy, which translates to a culture of tyranny and privilege as opposed to innovation and global competitiveness. We can’t solve a problem in isolation ... and must recognize the imperative of a virtuous circle. To consider otherwise is insanity.

And what about supply and demand? In the 21st century, if we are outward-looking, we will readily figure out that it is yet again a function of innovation and global competitiveness. Which demands research and development but not only. It must be part of a coherent ecosystem. And the analogy is simply: humans need oxygen and we know how it is supplied via the ecosystem.

In other words, R&D starts with human needs such that innovation is not innovation for innovation’s sake. And why the blog has repeatedly narrated how Steve Jobs created the iPod – i.e., that music is the way to the soul. And it was Apple’s first successful attempt to break away from the Mac.

And as we know the iPhone followed the iPod. And again, it was simply to pull together technologies – the cellphone and MP3 – that were already around. Surprise! And it is a glaring demonstration of how to move up the value chain and of a formidable platform to accommodate a range of apps that will address more human needs – the open secret behind Apple’s success – including health related. And so which enterprise is the first one-trillion-dollar enterprise?

Is that how we think … or why we can’t grow even our top 10 exports?

Yes, we must get serious about exports ... and we need good governance to boot. But they don’t come cheap. They come from foresight and visionary leadership ... and demand not a perfect storm or vicious circle but a virtuous one.

And in a democracy the government is Juan de la Cruz … who can take it for granted and pay the price.

“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]

It’s called “insanity”

That has reference to “We’re still ‘kulelat,’ Cielito F. Habito, NO FREE LUNCH, Philippine Daily Inquirer, 10th Aug 2018.” We quote Einstein all the time but have yet to internalize what we mean.

And Ciel’s concluding lines say it all: “All told, we have not gained any ground relative to our neighbors. In some ways, we’re even more kulelat than ever. Yes, we seem to have achieved so much—but, alas, it’s still far from enough.”

Why? We don’t play baseball like we used to, and probably no longer appreciate what “stepping up to the plate” means.

Consider: “I was wrong, totally wrong. I had confidently predicted that the consultative committee would be forward-thinking and liberal in its devolution of a new, modern constitution.

“Then I read the economic section, and my disappointment was vast. The protectionist, isolationist and fearful terms of the 1987 Constitution, of the 1935 Constitution even, were essentially maintained.

“Mass media will be ‘limited to citizens of the Philippines.’ I watch CNN every morning beamed from Atlanta into my house. There are no borders in media anymore. This is a country that supports freedom in an open society and with a free press, so how can it put limits on that? The internet didn’t exist in 1987; it does now. There are no media borders anymore.

“The committee added a modifier — that law can change the capital requirement. But why should that be necessary? We need to send a message in the Constitution that this is an open, welcoming society, not one scared that foreigners might dominate industries. Believe me, after 44 years here, I know that they can’t. Filipinos can match anybody without need of artificial protection.

“Making it worse, if a foreign business is allowed by law, a Filipino must manage the business. Why? Do we have enough managers with the requisite specific experience? For startups, we don’t. I, as a foreigner, came here to build a factory after eight years of training and experience in the industry. How could a Filipino without that experience have done it?

“It’s the same narrow thinking for public utilities, an area we all recognize as needing massive capital and innovative technology, if for no other reason than to accelerate the administration’s ‘Build, build, build’ program. What is the committee afraid of? Even the major Filipino companies in public utilities do not object. So who are they protecting?” [They didn’t understand, Peter Wallace, LIKE IT IS, Philippine Daily Inquirer, 9th Aug 2018] 

Does it remind us of the jeepney? And why the blog constantly raises that it reflects our mindset: lacking in foresight, unable to change and backwardness. Why? “So who are they protecting?”

A culture of impunity, that is what. And why the blog never tires of calling out our “culture” or way of life: “We are parochial and insular. We value hierarchy and the paternalism it brings. And we rely on political patronage and oligarchy given the spoils they bestow. That when all is said and done, we bite the bullet – aka a culture of impunity.”

The real challenge we have lies in our perceptive judgement, where there is a body of knowledge that says: It takes personal experience – in development, for example – to train the mind from dualism or either/or thinking as in ideology to multi-dimensional thinking and finally relativism. Think Einstein’s theory of special relativity (while Newton’s laws assume that gravity is an innate force of an object that can act over a distance) not our knee-jerk of impugning morality upon hearing the word relativism. And it explains why we have repeatedly failed to demonstrate foresight and forward-thinking. And likewise, to be outward-looking.

Put simply, we cannot learn innovation and global competitiveness until we start doing it – think Nike or Nancy Reagan – via an industrialization initiative. We can’t simply be opining about AI when we lack the personal experience. It applies to our backwardness in infrastructure development. That’s why we’re reduced to “puro daldal, satsat, sitsit.” Note it has nothing to do with age but personal experience and why tots are more adept with digital devices.

And Bill Gates found that out too with kids in India. Give them a computer and even with no training nor formal education, simply because they just do it, they rapidly become tech savvy. Gates must have sensed how it would play out being a college dropout. Think of Jobs and Zuckerberg too.

Surprise? Consider: The blog has pointed out our bias toward expertise – confined to a discipline – which is consistent with our hierarchical instincts as in certain callings rank higher. And so it has argued that we need to learn from critical and creative thinking: no one perspective can win against an array of perspectives.

The history of Western or American industry says it all. Following World War II manufacturing was preeminent as a discipline. The world needed goods to rebuild and those that were involved in producing war-related products had a leg up. As it was in Japan, Germany and the UK, for example.

And General Motors was the model, a copy of the armed forces’ “command and control” culture. It was how the world understood leadership. Not surprisingly, Eisenhower, the “victorious supreme allied commander in Europe in WWII,” was elected US president in November 1952.

But then Procter & Gamble saw the limitations and the bureaucracy inherent in a command and control system. And created Brand Management and tapped the Harvard Business School to fine tune the new discipline. And hence brand managers became general managers of their brands bypassing the bureaucracy of the GM model.

Dynamic tension of course occurred between the disciplines of manufacturing and brand management. But then the economic cycle is another reality enterprise had to deal with, enter the finance discipline. And it had its own hiccups. From mandating across-the-board cuts in expenses, for instance, it moved to zero-based budgeting. And then to reclaim its preeminence, the finance discipline led the efforts to restructure companies. Beyond the economic cycle was the emergence of Japan Inc that turned Western enterprises second rates quality-wise. And so quality management took center stage.

Then information technology arrived. And the US was able to overtake Japan – whose once dominant electronics brands also fell behind those of South Korea. And the coming of the digital age made the global competitive arena even more daunting.

That meant pulling the different disciplines together to be on the same page and not working at cross purposes ... Still progress aka change kept coming which is best exemplified by Moore’s Law ... that since 2016 we’ve had 10 nanometer chips, just about the limits of miniaturization ... until the next innovation.

And unsurprisingly, the Western educational system has lagged behind. Think perceptive judgment – that is derived from personal experience. And it explains why in the region, Philippine education is the regional laggard too – magnified by our parochialism and insularity. For example, Singapore has collaborations with Duke and Yale universities. 

Collaboration, brainstorming, design thinking, teamwork … are words we know. And the blog has discussed that Edison pioneered the modern-day team-oriented R&D to drive home the point. 

But in the Philippines whenever we talk of a major undertaking as in constitution-writing or economic development, we think expertise in law or economics. And why the blog often speaks to design thinking, the model that captures the innovation magic of Silicon Valley. Clearly, it is counterintuitive.

Even the then young Steve Jobs and Steve Wozniak that started the partnership behind Apple had a falling out. Because Wozniak – the real techie being the engineer, akin to our experts in constitution-writing and economy development – could not imagine and visualize an undertaking beyond the obvious, as in creating a great personal computer. But to Jobs Apple was more than a great personal computer. And that is where visionary leadership comes in. 

Visionary leaders are few and far between; and in the Philippines it is what we must be searching for, not make do with “pwede na rin ang trapos” as in the case of Marcos, Estrada, Macapagal-Arroyo or even Duterte. If we struggle to figure out the jeepney analogy, is it because we can’t connect the dots and imagine and visualize an ecosystem? It takes an ecosystem to leapfrog from the jeepney to an efficient public transportation system. And it will take visionary leadership to connect the dots and leapfrog PH from third-world to first-world.

And the lack of personal experience in development will weigh down even more on major undertakings we pursue ... Until we learn to follow the footsteps of our neighbors and cease reinventing the wheel. That is why there are best practice models. Smart enterprises “steal them shamelessly.” And that is a quality-management lingo, not something to be ashamed of.

And so it will get worse before it gets better if we don’t step up to the plate. Yes … We’re still “kulelat.”

“The sad fact is that, today, we remain very much the kulelat; in some indicators, we now lag even farther behind. Let’s look at a few indicators to see what I mean.

“Up until about 10 years ago, Indonesia had a lower average income (GDP per capita) than we did, making it last, and us fourth, among the Asean 5 in average income. Last year, Indonesia was already 12 ranks (113th) ahead of us in the World Bank listing of 184 countries …

“In 2005, we had the lowest export earnings among the Asean 5 with $41 billion, trailing Indonesia, which earned $86 billion (Thailand had $110 billion, Malaysia $141 billion, and tiny Singapore, $230 billion). We still did better than Vietnam’s $32 billion then. Last year, 12 years later, our $69 billion from exports trailed behind Indonesia’s $169 billion, with the gap having more than doubled to $100 billion from just $45 billion in 2005.

“Vietnam had already overtaken Indonesia with $214 billion in exports, having grown its exports nearly seven times in the last 12 years. Our total trade was deep in deficit last year, with imports exceeding exports by $27.4 billion. But the rest of the Asean 5 saw trade surpluses, from Indonesia’s $11.8 billion to Singapore’s $45.5 billion.

“We had $10.1 billion in net foreign direct investments last year, slightly edging Thailand and Malaysia’s $9.1 billion each—but well behind Vietnam’s $14.1 billion, Indonesia’s $22.1 billion, and Singapore’s $63.6 billion.

“We had the worst annual inflation (4.8 percent) as of the second quarter this year, as our neighbors ranged from Singapore’s 0.2 percent to Vietnam’s 3.8 percent. We also had the highest joblessness last year at 5.7 percent, versus Thailand’s 1.2 percent, Singapore and Vietnam’s 2.2 percent, Malaysia’s 3.4 percent, and Indonesia’s 5.6 percent.” [Habito, op. cit.]

Yet … what is the national agenda that we’ve embraced for decades? It’s called insanity.

Gising bayan!

“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]

A “necessary reform …”

That’s lifted from the “Editorial,” Philippine Daily Inquirer, 6th Aug 2018. “While the timing of TRAIN 1’s implementation could have been improved, in the case of TRAIN 2—a key reform measure that Presidents Estrada, Arroyo and Aquino all tried to push without success, due to well-entrenched lobbies—the right time is now. But for it to work, the proper spadework must be done.

“What economic managers can do is to ensure that the bill presented to Congress will not result in higher consumer prices but will clearly redistribute the tax burden to 3,000 companies that should be pulling more of their own weight. But the Palace economists shouldn’t stop there. The Filipino public needs to understand what the bill is about and what its long-term benefits are. 

“The regiment of technocrats that crafted TRAIN 2 would do well to fan out and engage the citizenry more fully and transparently in this regard, without dismissing their concerns as ‘bellyaching’—as Budget Secretary Ben Diokno once characterized public criticism of the inflation spike.

“The second phase of the administration’s tax reform package is, in truth, a tax cut for all companies registered in the Philippines; it proposes to reduce their corporate income tax rate from the current 30 percent down to 25 percent.

“This proposed tax reduction will benefit about 1 million registered corporations, from conglomerates all the way down to the smallest ‘mom and pop’ operations. In theory, the billions of pesos that companies will save in tax payments will almost certainly be used for another round of investment activities to expand their operations and, thus, create more jobs.

“Unfortunately, these tax cuts are not free, and someone has to pay for them. Under the proposal, that ‘someone’ will be an estimated 3,000 companies currently enjoying tax perks under over 200 special laws granted by a motley assortment of 14 state agencies. These tax-free benefits were meant to help them gain firmer footing during their startup years, but some of these companies have been enjoying the perks for three decades now.”

Let’s get back to reform. Has Juan de la Cruz internalized what reform is? Google is a good go-to reference if not arbiter. Reform: “To make changes in something – e.g., a social, political, or economic institution or practice – in order to improve it … To bring about a change in (someone) so that they no longer behave in a … self-destructive manner … To mend one's ways, change for the better, turn over a new leaf.”

There is a body of knowledge that says humans have three brains: the brain-brain, the heart-brain and the gut-brain. And change is next to impossible when we cannot bring it down from the intellectual level to the heart and to the gut. Think about the jeepney.

It is the greatest example of our lack of foresight, the inability to change and backwardness – where we undermine progress and development given our faulty perceptive judgment. It’s about cause and effect, i.e., unemployment and poverty in an underdeveloped nation are the effect of underdevelopment, not the cause.

Think of how our neighbors brought global poverty drastically down while we’re stuck in the war on poverty. Yet we know how to define insanity. And the blog has repeatedly discussed the “growth mindset” imperative to progress and development as opposed to the “fixed mindset” that has defined Juan de la Cruz.

Consider: We’ve taken it for granted that economics is the be-all the end-all of development. Yet we know what brainstorming is. For example, the “6 thinking hats” of creative thinking says there are typically six perspectives to deal with a challenge. Not one. Think ecosystem ... and connect the dots.

And we pay lip service to reform because we take our “culture” or way of life as gospel truth. And would rather blame others than ourselves – i.e., our colonizers, the MNCs, the politicians, the oligarchy, etc., etc. Put simply, reform presupposes “change”, to no longer behave in a self-destructive manner and to mend one’s ways to improve our lot and not be the regional laggard.

Reform cannot occur within a shortsighted and dysfunctional system. With due respect to our economic managers, “Build! Build! Build!” + Train 1 + Train 2 won’t suffice to connect the dots from poverty to prosperity.

Even when underpinned by the war on drugs or the war on drunks. As the blog has argued, the road from poverty to prosperity has been traversed by practically every one of our neighbors in the region. While we keep reinventing the wheel. Why? Parochialism and insularity are instinctive to Juan de la Cruz.

Remember OFW remittances and the BPO industry that are the drivers of the economy  ... because we’ve been kicking the can of Arangkada, as Marichu A. Villanueva in her column, COMMONSENSE, will remind us. “A stop-gap measure,” The Philippine Star, 8th Aug 2018. “Now we, too, have to bear the brunt of surging inflation as a consequence of a consumption-led growth, which is the weakest source of economic development for a country.

“This is the sad reality we have been living with through these years after the ambitious plans in the past to industrialize the Philippines were abandoned.”

The blog has often discussed how Steve Jobs moved from the Mac to the iPod – by pulling together [or connecting the dots; which is how he defined creativity] technologies that were already around. Or how Beethoven pulled different sounds – big and small – to create a unique Beethoven signature. Both had foresight, a vision of a new creation. And beyond forward-thinking they were outward-looking.

Outward-looking? Think FDIs. How does one truly attract enormous investments? Why does Singapore always get a windfall and we get the crumbs? Think Jobs and a Buffett will come along. 

Consider: “Warren Buffett's Berkshire Hathaway can't seem to get enough of Apple. A regulatory filing released on Saturday showed that the conglomerate added 2.67 million shares to its stake in the first quarter, which was worth nearly $50 billion as of June 30. Berkshire Hathaway owned approximately 246.5 million shares at the time, or 5.1% of the company's outstanding shares.

“Assuming Berkshire Hathaway hasn't bought or sold more share since then, the stake was worth $51.3 billion in early trading on Monday, making it by far the most valuable slice of any company Buffett is invested in.” [Warren Buffett's Berkshire Hathaway now owns a whopping $50 billion-plus stake in Apple, its largest in any single company; Akin Oyedele, Business Insider, 6th Aug 2018]

Investors like people go with winners. Think Ateneo versus La Salle. Or think being the first trillion-dollar enterprise.

“In 1997, Apple was on the ropes. The Silicon Valley pioneer was being decimated by Microsoft and its many partners in the personal-computer market. It had just cut a third of its work force, and it was about 90 days from going broke, Apple’s late co-founder, Steve Jobs, later said.

“On Thursday, Apple became the first publicly traded American company to be worth more than $1 trillion when its shares climbed 3 percent to end the day at $207.39. The gains came two days after the company announced the latest in a series of remarkably profitable quarters.

“Apple’s ascent from the brink of bankruptcy to the world’s most valuable public company has been a business tour de force, marked by rapid innovation, a series of smash-hit products and the creation of a sophisticated, globe-spanning supply chain that keeps costs down while producing enormous volumes of cutting-edge devices.

‘It was on the rocks,’ Mr. Jobs later recalled. ‘It was much worse than I thought.’

“Mr. Jobs slashed 70 percent of Apple’s product plans, commissioned the company’s ‘Think Different’ ad campaign and reimagined how it put its products together.

‘We’re trying to get back to the basics,’ a weary Mr. Jobs said in a 1997 internal meeting with staff. A video of the meeting posted online later showed him sporting shorts and sandals. ‘The question now is not: Can we turn around Apple? I think that’s the booby prize. I think it’s: Can we make Apple really great again?’

“The focus on simplicity became a hallmark of Apple, from the way Mr. Jobs dressed — jeans and black mock turtlenecks became his uniform of sorts — to the way his products operated to the eventual look of his company’s retail stores.” [Apple Is Worth $1,000,000,000,000 –Two Decades Ago, It Was Almost Bankrupt; Jack Nicas, The New York Times, 2nd Aug 2018]

The referenced video can be accessed on YouTube: “Apple Confidential Steve Jobs on 'Think Different' Internal Meeting Sept 23, 1997.” It is a great example of foresight and visionary thinking. If it isn’t obvious yet, the writer has referenced Jobs and Beethoven and Einstein often – but not only in the blog but over the 15 years he has been guiding his Eastern European friends.

But that is straying away from PH. So let’s get back to PH. But before doing so, here’s what The Economist says about “animal spirits”: The colorful name that Keynes gave to one of the essential ingredients of economic prosperity: confidence. According to Keynes, animal spirits are a particular sort of confidence, "naive optimism". He meant this in the sense that, for entrepreneurs in particular, "the thought of ultimate loss which often overtakes pioneers, as experience undoubtedly tells us and them, is put aside as a healthy man puts aside the expectation of death". Where these animal spirits come from is something of a mystery. Certainly, attempts by politicians and others to talk up confidence by making optimistic noises about economic prospects have rarely done much good.

How do we measure against the yardstick of “animal spirits” given how we’ve approached development for decades? Development is beyond economics as in the tools of fiscal and monetary policies. And beyond infrastructure development, rapid development demands industrialization that is geared to innovation and global competitiveness. And they are alien to us. Why?

Sadly, we don’t have the “naïve optimism” that Keynes speaks to. As the blog has argued, “We are parochial and insular. We value hierarchy and the paternalism it brings. And we rely on political patronage and oligarchy given the spoils they bestow. That when all is said and done, we bite the bullet – aka a culture of impunity.”

Not surprisingly, these are examples of what we come across in our media: (1) The quality of justice, Boo Chanco, DEMAND AND SUPPLY, The Philippine Star, 6th Aug 2018; (2) Gloria Arroyo, master of Machiavellian politics; Oscar P. Lagman, To Take A Stand, BusinessWorld, 6th Aug 2018

“As Filipinos, we ought to be nationally embarrassed that we have to depend on the US justice system to do the job our own judicial system should have done. It happened before with some of the Marcos cases. It is happening again now with the Napoles case.” [Chanco, op. cit.]

“As vice president, she saw no evil and heard no evil, when she, as the titular head of the opposition, was duty-bound to take issue with President Estrada’s hollow programs, self-serving policies, and dubious acts. She refused to take a stand on the many issues confronting the nation, choosing instead to only stand and wait — for Erap to self-destruct, physically or politically.” [Lagman, op. cit.]

Try to count the number of times we come across the word “reform” in our dailies or while watching TV.

Gising bayan!

“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]