That is a paraphrase from Paul Krugman’s "When MAGA fantasy meets rust belt reality,” The New York Times, 29th Nov 2018. What is left unsaid is that the country or its leadership must have a strong sense of foresight otherwise it will be hard put to look far out into the future.
Does Singapore come to mind? If that’s a tough act to follow, what about Vietnam … or Cambodia or Laos?
In the spirit of Christmas, let’s digress for one moment:
(a) Watching the Miss Universe over dinner here in New York brought this family back home knowing that Miss Philippines was a favorite to win. And the fact that she became Miss Universe 2018 and the fourth one to do it made it all the more special. Congratulations to Catriona Gray!
(b) And especially us men to thank the women in our lives who knew that the way to a man’s heart is through the stomach. Because we shall be feasting on them over the holidays.
Over 30 years ago, before the family relocated to New York, the wife didn’t own the kitchen. And it’s typical and why it isn’t unusual to have a kitchen to show off and another one we call a “dirty kitchen.” That’s the cook’s domain and where she prepares the food for the family. The señora is not expected to cook.
But American homes aren’t designed for señoras, the kitchen is the center of the home and right beside it is the family room. And the wife is the center of attention as she runs the kitchen even as she multitasks between the two rooms. And this señora had a baptism of fire. As in: She burned the kitchen.
Didn’t the blog say a few times that man was pronounced by the Creator to be good? And it clearly includes women. And today the husband at every opportunity brags about the wife’s rabo de toro which she picked up instinctively in Sevilla; her cod, Lisbon; spaghetti alle vongole in Italy; and Caesar salad, Le Cirque, among others.
Yet the daughter followed the tough act. That with the son-in-law, they have friends raising their hands with or without an invite. Only in New York!
With that very personal story of one tough act after another, let’s get back to Vietnam, Cambodia and Laos:
“Among Asian exporters, twenty grew the value of their exports in the 5-year period ending in 2017 led by: Cambodia (up 158.2%), Afghanistan (up 125.7%), Vietnam (up 100.8%), Timor-Leste (up 85.5%), Bangladesh (up 64.1%) and Laos (up 60%).” [http://www.worldstopexports.com/top-asian-export-countries/]
Is ideology driving these Asian countries whose exports grew over the above-referenced period? What do we make of the following perspective then? “Neoliberal economists, who worship in the altar of free trade, love to make theoretical constructs on the basis of assumptions under an imagined world of perfect competition.” [Industrial Policy – Hallelujah (!), Rene E. Ofreneo, BusinessMirror, 13th Dec 2018]
Does this look more like a balanced view: “As we build Dream Philippines, we probably should be smarter than to lean too much to any given side. We should put into play the best elements of the free market, such that it delivers for us the accomplishments it has wrought in many other parts of the globe. But we should be equally discerning in guarding and even actively fighting against some of the negative consequences that untrammeled free markets can bring about.” [Proceed with eyes wide open, DR. JESUS ESTANISLAO, SWIMMING AGAINST THE CURRENT, Manila Bulletin, 13th Dec 2018. Disclosure: The writer learned his Economics 101, a required course in the MBA program, from Dr. Estanislao.]
Vietnam, Cambodia and Laos are among the countries per the McKinsey study that have outperformed PH over the last 20 years. Forget about the Asian Tigers, they have been running rings around us for 50 years. To be sure, there will always be hurdles along the way – the road to nirvana is straight and narrow … and why men are separated from the boys.
Are these countries because they are forward-looking better able than PH to set the requisite economic policies ... and stick to them?
Let’s get back to Krugman. “Why was the vision of revived manufacturing nonsense? Talking about what Donald Trump doesn’t know is, of course, a vast task, since his ignorance is both broad and deep … Running America isn’t like running a family business. It has to be done by setting broad policies and sticking to them … So Trump’s promise to restore U.S. manufacturing was doomed to fail.
“You might wonder where his confidence came from … The answer, probably, is the Dunning-Kruger effect: inept people are often confident in their abilities, because they’re too inept to know how badly they’re doing.”
How does that square with PH reality that we are underperforming against Vietnam, Cambodia and Laos, among others? Enter Fitch: “We have (a) lower per capita income and (b) weaker governance and (c) business environment indicators ... compared to our peers."
More to the point, why are we the regional laggard?
Should that be the question we must ask ourselves instead of being distracted by conflicting ideologies? And why the blog introduced “perceptive judgment.”
That perceptive judgment suffers when there is lack of experience, e.g., experts can detect what rookies can miss. Likewise, when ideologues and relativists don’t traverse the continuum across these two extremes, they too can suffer from lack of experience.
And there are two fundamental dimensions we gloss over and why we can’t seem to get a good handle on our predicament:
(A) Innovation and global competitiveness are defining the 21st century. Sadly, neither is up our alley. Unsurprisingly, we are left to talk about ideologies and access to finance and government support, among others, but not the animal spirits. There is no free lunch. Does it also explain why our Chinoys dominate PH economy?
And why the blog often talks about:
(i) Our sheltered upbringing – i.e., parochial, insular, hierarchical and paternalistic – and its consequence, a culture of impunity; and (ii) The treatise of Peter Gray, psychology professor emeritus, Boston College: The experience gained from failures and setbacks builds resilience. And why children must be given the opportunity to experience failure and realize they can survive it. Treating them as fragile makes them so.
Think of the startup enterprises that developed apps that were then grabbed by the Big Four (Amazon, Apple, Facebook and Google) and for which they paid in the billions.
And here we are, talking (again?) import substitution, that the focus of manufacturing must be local given we’re over 100-million strong consumers, and to supply the likes of SM.
God bless us. As an economist profoundly expressed it, “I cry for you, Philippines!”
What to do?
It comes back to our fixed mindset. We must learn to develop our sense of foresight and imagine and visualize PH as a developed, wealthy, first-world nation. Not a third-world, underdeveloped, poverty-gripped nation.
And why we in the elite class must take responsibility. Our individual successes cannot make up ever for a cellar-dweller nation.
Consider: Juan de la Cruz = The poster boy of the fixed mindset = Us, the elite class. It is our privileged status that explains why we’re stuck in this fixed mindset. Why sort out the contradiction in our Christian upbringing? Hierarchy = Absolute Power = Absolutely corrupt. Remember Padre Damaso?
(B) We know that given: (a) our restrictive economy, (b) poor governance, (c) parochial instincts and (d) reliance on hierarchy, patronage and oligarchy … that we are in fact breeding and nurturing tyranny.
Consider: “The country was one of the original world champions of human rights, and has a resounding Bill of Rights in its Constitution … Now it’s become a leading light of another alliance altogether — the world’s antihuman rights club. For shame.” [In the line of fire, Editorial,Philippine Daily Inquirer, 12th Dec 2018]
But let’s get back to Vietnam.
Why is Vietnam outpacing PH? For example, our export numbers are pathetic at US$48.2-B against their $214.1-B. If Vietnam is neoliberal we better be one in a hurry?
Still we are proud that our GDP growth rate is in the 6%-7% range. But Vietnam is doing as well at 6.8%. While our GDP per capita is still greater, that will not be for very long. Consider: Their FDIs are at $129.5-B compared to our $78.79.
What about our manufacturing uptick or industrial growth of 7.2%? Vietnam is ahead at 8%. And though the gap appears narrow, note that theirs are driven by exports – which is more than 4 times ours – and so our unemployment and poverty numbers suffer as a consequence ... and why we’re the regional laggard.
But let’s push back and point to the rising tide of right-wing populism in the US and Europe, a backlash to globalism? Because we have a global outlook? Yet we are injecting federalism in the local mix – and worse adding more complexity, a no-no when undertaking a complex undertaking to begin with, to our decades-old challenge of underdevelopment – when system of government isn’t a common denominator amongst the nations running rings around PH.
And why the blog often talks about Kurt Lewin’s force field theory. And a great example is the scale of economic output generated by Luzon, specifically from Hacienda Luisita down to Calabarzon, i.e., two-thirds of GDP. If we understand data analytics, we will exploit that power.
The outcome will deliver a greater knock-on effect on PH economy than any greenfield efforts in other parts of the country – while pump-priming them to follow suit and, more directly, build on the linkages the Luzon initiative will unleash.
Think of how China and foreign investments first focused on the three metro areas of: Guangzhou, Shanghai and Beijing. And Guangzhou by itself demonstrated such knock-on effect. Are we learning from the China experience … or do we just want China as our preferred foreign investment? To paraphrase Dr. Estanislao, are we proceeding with eyes wide open? Do we recall the ZTE fiasco under GMA?
Is plunder our new normal? And why we can’t set broad policies and stick to them? In Metro Manila we are today literally overrun by Chinese nationals … and in Mindanao too!
Simply put, instead of the JFC’s seven big industry winners, PH economy is driven by: (a) OFW remittances, (b) the BPO industry, (c) gambling and (d) the war on drugs. And the latter two feed on drug running and money laundering?
To add insult to injury, we keep to a restrictive economy. But on a wink and a nod, Indonesian ... and now Chinese interests will hog the limelight in PH industry. Whatever happened to character, conviction, integrity, moral fiber, rectitude and uprightness, for example?
And we wonder why we aren’t attracting greater FDIs?
But let’s get back to Lewin. His equation captures our concerns about Mindanao too: Where there are barriers to the enterprise, they must be addressed and fixed. It is no different from portfolio management. And the answer is not federalism but data analytics. Allocate resources to generate the greatest synergy not to arbitrarily set aside precious tax money for politicians and local lords to undermine community and the common good. That institutionalizes crab mentality. Which is why we are the regional laggard in the first place.
Why don’t we instead lower the number of poor Filipinos, lower than the entire population of Australia, before we worry about wealthy nations and their follies as in right-wing populism? [Is Brexit coming or going? What about Trump? First he was a fraud now his entities are under criminal investigations. It’s called the rule of law, alien to us Pinoys? What’s the latest from our legislators post the three cases of plunder that is not plunder? And the pork that is not the pork?]
And that means we must be up to speed re economies of scale which is key to rapid wealth generation. Recall that America has had this advantage – being a single market of over 300 million – over fragmented Europe and why the EU came into being.
In other words, we Pinoys can’t keep that blinder called crab mentality because it undermines community and the common good.
Consider too this imperative of the hardy mindset – “dibdib” in the vernacular: Focus on situations where we have influence over not where we have little if any control; you have control only over yourself, you must be the one to change. Develop a problem-solving attitude: why are you unable to succeed in your efforts? That’s from Robert Brooks of Harvard Medical School.
Which brings us to the concept of modern math, of sets and subsets: If the global economy is the set, then PH economy is the subset. To be sure, beyond the economic elements that apply to us, there are those at the level of the “set” that can cause us worry. But let’s cross the bridge when we get there. In the meantime we can get our house in order; and given the experience we will gain, perceptive judgment shall then work in our favor.
The last 50 years say we haven’t done a good job managing our economy much less our nation.
And we have our work cut out for us: Why are we the regional laggard? Why is Vietnam outpacing us? What broad policies must we set … and that we must stick to?
So that we overcome the Fitch admonition: “We have (a) lower per capita income and (b) weaker governance and (c) business environment indicators ... compared to our peers."
Gising bayan!
The family joins me in wishing everyone a truly Merry Christmas and a Prosperous New Year!
“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]
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