Matching Trump’s folly makes us a bigger fool

Tribalism explains the lunacy behind Trump’s supporters like Sen. Susan Collins of Maine: “I think he has learned from the (impeachment) case.” It didn’t take 48 hours for Trump to dismiss the comment: “I did nothing wrong. It was a perfect call.”

The good news for America is that these supporters are in the minority, albeit a slim one. And that some pillars of the conservative movement have demonstrated that they aren’t spineless.

The bad news is that it amplifies the imprudence of America in spades. If not reversed, it can erode the very foundation of its strength, that is, its economy – $21.429 trillion. 

It drives its military might. It spent $693 billion on defense in 2019, compared to China’s $175.4 billion, and Russia’s $61.4 billion (2018.)

The wealth of America is why Americans call the U.S. president, the leader of the free world. It also explains why people are riding on Trump’s coattails. “He who has the gold rules,” is how an American friend tells the American golden rule.

In the case of the Philippines, we always talk about the need to attract foreign direct investment, because we are the least able amongst our neighbors. On the other hand, the U.S. has no problem attracting investment – that is, financing the large U.S. current account deficit.

Why?

(1) “To benefit from the highly developed, liquid, and efficient U.S. financial markets, and the strong corporate governance and institutions in the United States – although both perceived strengths of the United States have shown some vulnerabilities during the recent financial market turmoil.

(2) “To diversify risk, especially if returns in U.S. financial markets have little correlation with performances in their own country’s domestic financial markets.

(3) “Investors outside the United States may put their money in the country because of their strong linkages with the United States, through trade flows or such measures of ‘closeness’ as distance, inexpensive communications, or sharing a common language.

“The most significant factor is the financial development of the U.S.

“Specifically, countries with less developed financial markets invest a larger share of their portfolios in the United States, and the magnitude of this effect decreases with income per capita.

“For example, with a well-developed bond market as the cross-country average – about the level of development in South Korea – then China’s predicted holdings of U.S. bonds would be about $200 billion below their current level.

“Countries with fewer controls on capital flows and more substantial trade flows with the United States also invest more in U.S. equity and debt markets.

“And, return differentials are essential in predicting U.S. equity (but not bond) investments because foreigners invest more in U.S. equities if they have had relatively lower returns in their equity markets.

“Finally, despite strong theoretical support, it appears that diversification motives have little impact on patterns of foreign investment in the United States.

“The bottom line: As countries around the world continue to develop and strengthen their financial markets, this will gradually reduce this critical driver of capital flows into the United States.

“These adjustments would likely occur slowly, though, because the development of financial markets, especially in low-income countries, is a long process.

“More worrisome, because the liquid and efficient financial markets of the United States are a significant impetus behind U.S. capital inflows, anything that undermines the perceived advantages of U.S. equity and bond markets could present a severe risk to the sustainability of U.S. capital inflows.

“For example, the U.S. sub-prime crisis and continued turmoil in U.S. financial markets already may have undermined this perceived ‘gold standard’ of financial markets, and the risk of a sudden increase in poorly thought-out regulation may aggravate these concerns.

“If countries with less developed financial markets begin to question the relative advantages of U.S. financial markets, this could lead to a more rapid adjustment in U.S. capital inflows, global imbalances, and asset prices.” [https://www.nber.org/digest/aug08/w13908.html]

In other words, Uncle Sam hasn’t fully recovered his bearings from the sub-prime crisis. It is no longer an inclusive economy because the financial services sector, instead of paying the price for their role in the crisis, came out of it laughing their way to the bank.

Of course, technology is another factor. It has redrawn the profile of the U.S. economy after China became the manufacturing hub of the world. That took away middle-class jobs, especially in middle America.

It was a long time coming beginning with the “manufacturing and quality” challenge from Japan, Inc., during the 80s, when the U.S. had to rapidly develop a technology-service driven economy to keep its economy growing. Think software and personal computers.

Simultaneously, it restructured and re-engineered corporate America to make it more agile and competitive, including the acceleration of its drive to globalize and capture market shares overseas. [Recall how the Asian Tigers exploited this, followed by China, by begging for Western money and technology. While we Pinoys celebrated Marcos and the New Society, proud of our parochialism and insularity. Sadly, that was when the AEC was evolving to leverage economies of scale at the regional level. Yet, after Marcos, we chose to shut the door even more courtesy of the post-Marcos Constitution and trumpeted our sovereignty. But we never learn. It is like ignorance in leadership. To pull rank is the absence of leadership. To invoke “sovereignty” is senseless when it nourishes tyranny. Recall the fixed mindset versus the growth mindset and the imperative to forward-think.]

Note that Wall Street manages the pension funds of Americans with half of the people invested and thus putting pressure on the market to perform. [This is explaining why Americans vote with their pocketbook. For example, the stock market’s performance in 2019, if it continues through November will be good news for Trump.]

In other words, Wall Street has a social contract with the average Joe and why it assumes it is the center of the universe. Even the sub-prime crisis shared a similar social dimension given politicians egged Wall Street to support a housing campaign for low-income Americans. 

Sadly, money is the source of evil; too much money nurtures greed as in predatory lending.

Still, the erosion of its manufacturing base explains why Americans that weren’t equipped skill-wise for the new economy suffered despite the benefits to them of low inflation and lower prices, especially of consumer goods sourced globally. 

For example, Walmart, the largest U.S. retailer, became a big importer of Chinese-made products to complement its “everyday low pricing” mantra, the foundation of its past success.

Of course, no one remembers the 80s anymore. [Because the universe never stops. Man is the “true” measure of himself. In other words, man’s need is ever-changing because his challenge never ceases. For example, he will respond once again. Think technology.]

Enter, Trump. He promised to fix the problems of middle America, as in America first: Make America Great Again (MAGA.)

But New Yorkers knew him – as a fraud – and so they could only shake their heads to witness how middle America bought into Trump’s rhetoric. In other words, Trump is not the answer.

And an emboldened Trump behaves no different from a despot. Unsurprisingly, he’s in bed with them.

The long preamble before the posting got to this point is by design. Because the Philippines is not the U.S., and Duterte isn’t the leader of the free world. If Trump’s idiocy can undermine the foundation of a superpower like the U.S., even more, it will ruin a developing country like the Philippines.

Former Federal Bank leaderships have warned about Trump politicizing the FED no different from how he flaunts the rule of law. 

“More than 1,100 ex-DOJ employees call for Attorney General Barr’s resignation. The Justice Department faces allegations of succumbing to pressure from President Donald Trump.” [USA Today, 16th Feb 2020]

Trump brought the White House the egregious practice from his business enterprise with a little help from his legal team. Think Michael Cohen: “Michael Cohen, President Trump’s former lawyer who pleaded guilty to tax, bank, and campaign finance crimes, reported to prison.” [The Washington Post, 6th May 2019]

Unsurprisingly, the court ruled against the misconduct of his charity foundation and had to shut down. Likewise, he had to cough out a significant sum to settle the case against the Trump University for bilking poor people wanting to learn how to earn a living by getting into the property industry. 

One gets the drift when one finds out that Trump has thousands of court cases. Unsurprisingly, he never released his tax returns, forgetting that the U.S. presidency is not royalty nor an autocracy.

And that practice is mirrored by the Trump administration: “According to an ongoing tally from the Institute for Policy Integrity, under the Trump administration, agencies have lost more than 90 percent of their cases.”

Yet, the administration keeps pushing the envelope, all the way to the Supreme Court. “Agencies must ‘offer genuine justifications for important decisions, reasons that can be scrutinized by courts and the interested public,’ Chief Justice John Roberts wrote in his majority opinion, in one case. ‘The explanation provided here was more of a distraction.’” [‘We Knew They Had Cooked the Books,’ Robinson Meyer, The Atlantic, 12th Feb 2020]

Matching Trump’s folly makes us a bigger fool. In other words, Duterte’s rhetoric may impress Juan de la Cruz, but it will only keep investors away. Despite our robust GDP growth over several years, our FDI pot remains the smallest in the region except for Myanmar and Cambodia. 

Which brings us to the constant theme of the blog, our instincts: We are parochial and insular. We value hierarchy and paternalism and rely on political patronage and oligarchy that ours is a culture of impunity.

Whether it is poverty or trade or foreign relations, these instincts are at the core of why we are like a fish out of water. And this fixed mindset explains why we are the regional laggard. In other words, we can’t develop a growth mindset and learn to forward-think with a fixed mindset.

“The economic cost of transportation in Metro Manila has risen to P3.5 billion pesos a day, and the situation can get worse to P5.4 billion a day by 2035 without the needed interventions” per JICA.

On the other hand, we will spend P101.8 billion in 2020 for the 4Ps (or conditional cash transfer) to address poverty. If we take the P3.5 billion a day or the economic cost of transportation and translate that to five working days a week over 52 weeks, that equates to P910 billion. In other words, we waste nine times more on the economic cost of transportation. 

Indeed, “talk” is cheap when it comes to poverty because we take comfort in what is “obvious and logical,” given our fixed mindset.

Yet, if we only turn Philippine poverty on its head, we will recognize that it is the effect of underdevelopment. For example, one can do a similar back of the envelope and add up OFW remittances, the output of the BPO industry, and tax reform within the framework of our service-consumption economy. We will still lag an industrial-investment economy.

It explains why Vietnam is poised not only to overtake us but Singapore as well.

Where do these all bring us? They reinforce our hierarchical and paternalistic bias – and why we are more at home and want to be friends with autocratic nations where tyranny resides – that we can’t sit across the table with pluralistic countries where transparency reigns. It explains why we keep taking the wrong turn at the fork. 

Consider: For all the chaos of the impeachment saga, Washington’s institutions had held up. The official policy towards Ukraine and Russia remained officially unchanged. Ukraine was still America’s ally. Russia was still an adversary. In much of institutional Washington, the president was strangely the outsider. Another $400 million in aid to Ukraine for 2021 was budgeted and came with strong bipartisan backing from Congress. [The Washington Post, 14th Feb 2020]

In other words, did Sen. Collins learn from the Trump impeachment?

Then recall Trump’s idiocy, undermining the rule of law, and in bed with despots. We Filipinos can match such folly and be the bigger fool.

Gising bayan!

“Why independence, if the slaves of today will be the tyrants of tomorrow? Moreover, 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]

"You have to have a dream, whether big or small. Then plan, focus, work hard, and be very determined to achieve your goals." [Henry Sy Sr., Chairman Emeritus and Founder, S.M. Group (1924 - 2019)]

“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]

We are the establishment, and we are the problem

We are the establishment – the chattering classes that also broadly represent the elite class.

Think of the last eleven years (the period the blog has been in existence), and if we care to ask ourselves, can we claim that we don’t possess a “fixed mindset”? In other words, has our worldview changed?

For example, we know that the Constitution explains why ours is a closed economy. Some of us can assert that we can pick up the phone and speak to the powers that be – because we are the establishment.

Of course, we now say that there is consensus that we must undo the restrictive economic provisions of the Constitution. That is why the blog has raised the challenge of a “growth mindset” and the imperative to “forward-think.” What do we do? Do we wait? If not, now, when?

To forward-think may sound “innovation-speak,” although Jeff Bezos calls it a “simple” mind trick, which he did as he contemplated leaving his Wall Street job many years ago. He began by imagining what it would be like to start his own company. “The best way to think about it was to project my life forward to age 80,” [by picturing his life that far in advance, the decision to quit his job on Wall Street and start an online bookstore became immediately apparent]. [https://apple.news/ACZ3YMQlWRQafdZe5_V2Ydg]

Likewise, the blog has brought up some fundamental givens in neuroscience, i.e., the chamber of the brain that does linear, logical and quantitative work is well developed but the one that is responsible for lateral and creative thinking as in connecting the dots is not.

We can all feel the relief; we aren’t talking about IQ per se.

So, the blog has challenged our economic managers, i.e., because of our lack of experience in development – especially the multidisciplinary approach, thus our perceptive judgment – we did not run with the ball of Arangkada.

Classical economics is laissez-faire, as in trickle down. And that is how we grew up. But then came the Asian Tigers, and then China, and most recently, Vietnam.

Let’s take Thailand and Vietnam so that we don’t just give up as we did on Singapore, being too far advanced.

Still, Thailand and Vietnam are no pushovers versus the Philippines because of their progress in export development. Thailand’s exports are almost five times bigger than ours, and Vietnam’s are about 4.5 times.

In other words, “Build, Build, Build” and managing inflation and tax reform and promoting POGO because of its impact on the property market, among others, will not close the gaps ($187-B vs. Thailand and $166-B vs. Vietnam) in our export performance, the key driver of the economies of our neighbors.

Here’s what the financial institution, HSBC, tells investors: “Vietnam has a sliding scale of investment incentives for new businesses that consider the size of the investment, the number of employees, and the location of the company. 

“Some foreign manufacturers are also investing in more sophisticated manufacturing in the country, with Samsung planning to open research and development centers in Hanoi, and Apple reportedly considering a similar move.

“These developments foreshadow a gradual evolution from high-volume electronics manufacturing to more highly skilled manufacturing techniques and applications over the next five years.

“This will enable Vietnam to stay ahead of the competition from South Asia, overtake Malaysia, which has traditionally been a manufacturing hub for MNCs and continue to be the go-to destination for diversifying production from China.

“Newer markets like Myanmar and Cambodia can undercut Vietnam on labor costs. However, they cannot offer Vietnam's advantageous geographic location next door to China, or compete with its fast-improving infrastructure, overall ease of doing business, and political stability. 

“Vietnam also has a growing number of trade agreements, including the restructured Trans-Pacific Partnership, and free trade deals with both the European Union and South Korea, which are vital to the electronics sector.

“Both Thailand and Vietnam are already advancing their manufacturing base, processes, and skills, but opportunities are rife for new investments to facilitate the process of transition from simply training workers to developing better infrastructure integration.”

We are playing catch up big time. Yet, every initiative we crow about doesn’t go beyond the obvious. Or what we believe is logical. [See above, the fundamental givens in neuroscience.]

Consider these examples, among others:

(1) C-5 was obvious and logical to ease Edsa traffic; instead, we created two monsters.

(2) Comprehensive land reform was to be another feather in our cap, yet poverty and mediocre agriculture productivity persist.

(3) OFW remittances were supposedly manna from heaven.

(4) The BPO industry will be the engine of our service economy and, just like the OFW phenomenon, will address unemployment and poverty. What happened?

Everyone has his or her example of such interventions, all being obvious and logical. We now know what reality is.

(1) We are decades behind in infrastructure development. No one even wants to come near C-5 and Edsa, for example. So, the writer wanted to experience this reality and drove through these monsters and now deserves a Manila souvenir t-shirt: “I survived Metro-Manila’s monster traffic.” 

But he now knows firsthand how we waste billions in productivity and deserve being the regional laggard. We must stop talking about poverty. “Talk” is cheap.

Beyond Metro-Manila traffic, we know we are decades behind in developing our water source, among others. Why?

(2) Rural poverty and inferior agriculture productivity will continue to define us.

(3) If we want a joke for the day amid our reality, read how we continue to spin the virtues of overseas employment for Filipinos. The media is complicit here too. Can this be the area where our economists can provide guidance?

For example, instead of focusing on how our service-consumption economy and tax reform and inflation management can sustain economic growth, they can pave the way for a new paradigm, an industrial-investment economy. See above the gaps in our export performance. 

Arangkada and the DTI are looking at industries that can give us a quantum leap. Our economists can dissect these industries and identify which will provide the biggest bang for the buck. And that can drive how we prioritize investments and which technology to tap. That can include countries and foreign companies we must woo.

Which in turn, should tell us how to prioritize infrastructure projects and other critical (not everyone and his uncle) sectors that taken together will provide us a robust platform to drive economic development and prosperity. (Of course, that is a broad-stroke idea. Yet, in the private sector, these broad stokes have turned into world-beating initiatives worth billions of dollars.)

It should then give our economists the wherewithal to influence media and government on our national agenda. We don’t need a Ph.D. dissertation that is more for course credit than execution.

(4) We don’t like the BPO industry to be left behind by innovation. Even our call centers aren’t bulletproof. Yes, we are a cheaper alternative to US-based call centers. But the latter is more productive because of language, English is native to them. An American friend is relocating to Manila to train our people on American small talk, which may do the trick. Still, we must move up the value chain if we are to compete and win in this industry.

As the blog has pointed out a few times, the simplest model to guide us to traverse the road from poverty to prosperity is to think of the GPS model: (a) Where are we? (b) Where do we want to be? (c) How do we get there?

By now, we should be able to figure out that the biggest hurdle in this process is our blinder, and why we can’t honestly answer the question: Where are we?

Consider our instincts: We are parochial and insular. We value hierarchy and paternalism and rely on political patronage and oligarchy that ours is a culture of impunity.

Unsurprisingly, we would instead conflate the problems of the world. We would instinctively point to the weaknesses of the West or the downsides of 21st-century technologies. 

Why? They come from our hierarchical and paternalistic bias. We rank lower and are entitled to protection from wealthier Western powers; otherwise, we are resentful, thus our criticisms. Yet, we can turn our ego need on its head and acquire a positive worldview: Aha, the West is vulnerable, we can be as good if not better than them.

There is a moral to the David and Goliath story. Let’s look at Singapore or the leadership of Lee or Mahathir or Deng.

It also explains why our perspective of MSMEs is limited to livelihood undertakings. There is a fundamental reason the writer signed up to be a development worker in the most impoverished nation in Europe. And that is why the message he stressed at the outset is, “you are in this business because you believe you can be competitive against Western global behemoths. If not, you ought not to be in it.”

Similarly, it explains why we kicked out the US military. Do we realize now (learning from the Trump impeachment) why Ukraine relies on American military aid, to the tune of $400 million? Ukraine housed the USSR’s version of NASA in its heyday. They still are in the rocket business, putting satellites up in space for other countries’ needs like weather monitors or communication transmission. Disclosure: The writer has a Ukrainian friend who was a rocket scientist under Soviet rule. Today he runs the Ukraine business plus five neighboring countries of his friends. He did not turn into a managerial talent overnight. But he developed very quickly.

And we think we can rapidly build our military infrastructure – more than Ukraine can – without relying on the West?

Our short-sightedness is not to be ashamed of and minimized. To be growth-oriented and to forward-think aren't characteristics that are a dime a dozen. They are exceptions. 

What we need is to recognize that ours is a fixed mindset so that we can begin to unfreeze our minds to accept and accommodate a new paradigm. See above industrial-investment economy, for example, that will seek out technology, including countries and foreign companies.

The poor may be too deep in survival mode that they may have no room to forward-think. 

But we in the chattering classes and the establishment aren’t – except of course if we want to protect the status quo because rank has its privileges – and can hone our capacity to forward-think.

The ball is in our court.

Gising bayan!

“Why independence, if the slaves of today will be the tyrants of tomorrow? Moreover, 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]

“You have to have a dream, whether big or small. Then plan, focus, work hard, and be very determined to achieve your goals.” [Henry Sy Sr., Chairman Emeritus and Founder, SM Group (1924 - 2019)]

“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]

Reactive and transactional

Is to be proactive and to forward-think in our psyche? On the other hand, does “Pinoy abilidad” explain why our instincts make us reactive and transactional?

How do we tee up the question: Which countries should be our friends?

But before we get too far, let’s restate what the blog calls our instincts: We are parochial and insular. We value hierarchy and paternalism and rely on political patronage and oligarchy that ours is a culture of impunity.

In other words, how do the dots connect? Or why did our neighbors leave us behind? First were the Asian Tigers and then China. More recently, it was Vietnam.

Whether we seek to move forward, progress, and develop – from a third world to a first-world nation – or want to figure out who our friends should be, we will most likely fall on our instincts. And it explains why we keep taking the wrong turn at the fork.

Put another way, that is why there are winners, and there are losers. That is why the blog introduced the concept of perceptive judgment – we are a product of our experience. Look at how Singapore continues to demonstrate global competitiveness even when compared to the US. Singapore counts among the winners; while we’re among the losers. 

For us, where rank has its privileges, that is a bitter pill to swallow. We instinctively look at the world from our prism, but the rest of the world won’t care less because we’re no competition.

Singapore from day-one geared itself to be a developed nation. But how did they do it? They did not look inward but outward. Mahathir saw what Lee did, and so when Deng came to seek the counsel of Lee and Mahathir, both said, “Beg for Western money and technology.”

They are the best examples of how to be proactive and to forward-think.

The blog is going on its 11th year. It has sounded like a broken record to those familiar with it.

In the meantime, and for the longest time, we continue to argue that America, for example, cannot be trusted as a friend. And China should be our friend. Did we say Russia, too?

In a recent posting, the blog raised the distinction between tyrannical systems and those based on pluralism. It builds on the concept of a growth mindset versus a fixed mindset. It has also discussed what the universe is like, i.e., it is dynamic, not static. It follows the essence of creation. 

Sadly, that won’t resonate when transparency is not valued, where hierarchy and paternalism rule as in a caste system, and entitlement, not personal responsibility reigns.

If we want to reach even beyond, for example, the advent of AI or artificial intelligence, will we again fall into our fixed mindset? Robots must not replace humans; otherwise, unemployment and poverty will characterize the world. But how can that premise stand when today despite the Philippines being the exception (given our sins of omissions and commissions) the world, especially our neighbors, has seen poverty declining in a significant way as progress and development accelerated?

Consider: When the motor age arrived in the western world at the beginning of the 20th century, many conservative intellectuals opposed the increase of motor vehicles on the road. Those increases removed space for pedestrians, made walking more dangerous, and brought a tremendous increase in pedestrian deaths caused by car collisions. [Wikipedia]

When the writer first saw the factory of his Eastern European friends, they didn’t expect his reaction. “If you want to be competitive to a Procter & Gamble or a Unilever, you must recognize that you cannot stay with those manual packing lines and manually stack boxed products on pallets. They are the ones geared for robotics.”

Seventeen years later, they proudly showed the writer their latest state-of-the-art facility and how robots do these two operations precisely. [See below they started as a micro-enterprise.] Because they have today seven factories as opposed to one, they have lots more employees, and their margins are on the rise that in 2019 their profitability more than doubled over the prior year.

Their capital expenditure is likewise escalating, by an impressive compounded annual rate well above 20 percent because of their ever-widening global market. Unsurprisingly, the EU Competitiveness Commission recognized them as a model as early as 2011. But why the recognition? [If we continue to struggle and question whether the free market is consistent with the dynamism of creation and the universe, then it follows, we can accept the Philippines being left behind by our neighbors. China today is a superpower not because it turned its back to the free market.]

And what is the secret? A growth mindset and forward-thinking: when they started as a micro-enterprise, they never saw it as a livelihood undertaking (as Juan de la Cruz would, limiting his desired outcome, as in shortsightedness.)

And because they have stepped up to the challenge of innovation and global competition, they have a dozen multimillion-dollar brands plus a constant stream of up-and-coming newer ones. See below the modern R&D. With the month of January 2020 already behind them, the year promises even more excellent results, i.e., they will over-deliver on their plans and budgets. 

We’re in early February, how can the writer speak to the future? Consider: The family was in a resort in Brgy. San Rafael, and had just flown into Puerto Princesa on 31st Jan. The writer did not make a call to a bookkeeper because they don’t have one. But technology tells him every day, and wherever he is in the world, where the business is and through analytics, he can pinpoint the specific piece of the enterprise that must either be exploited or fixed and advise individuals concerned accordingly.

Let’s have a little history at this point: The first sea-going sailing ships were said to be developed by Austronesian people from Southern China and Taiwan. It led to the Austronesian Expansion at around 3000 to 1500 BC. From Taiwan, they rapidly colonized the islands of Maritime Southeast Asia, then Micronesia, Melanesia, Polynesia, and Madagascar, eventually colonizing a territory spanning half the globe. [Wikipedia]

Today, the biggest navies with over 400 ships are North Korea, China, and the US. [Business Insider] What happened? From 3000 to 1500 BC, sea-going ships were in their infancy, which is what AI is today.

What is the point? It’s again about the growth mindset versus the fixed mindset. “We lose control of AI if we give machines fixed objectives. What we want are machines that are beneficial to us, i.e., a sort of binary relationship and not a unary property of the machine. It’s a property of the system composed of the machine and us that we are better off in that system than without the machine.” [Stuart Russell, leading artificial-intelligence (AI) researcher, University of California, Berkeley, and author, Human Compatible; Penguin Random House, October 2019]

In other words, innovation is not for innovation’s sake. It must be responsive to ever-changing human needs.

Those into ERP or enterprise resource planning systems like SAP know what a system of machine and people is like, as in big data and analytics. It has raised the quality of their decision-making processes, planning and budgeting, and delivering results. They likewise feed on the ability of enterprises to pursue innovation and global competition.

The bottom line: Connecting the dots starts from the imperative to be proactive and to forward-think and goes full circle to innovation and global competitiveness.

On the other hand, we Pinoys go by our concept of nationalism, i.e., parochial and insular, and our reliance on economics as the primary tool to sustain economic growth. For example, why the deafening silence on Arangkada? 

Sadly, it reveals where we’re at in our perceptive judgment. On the other hand, it could be a great learning platform to hone forward-thinking. If our economic managers are listening, we can use neuroscience as we traverse the road from poverty to prosperity.

Recall the role played by the multidisciplinary approach to innovation. Edison pioneered it in what is now modern R&D – and reinforced by breakthrough dissertations and patents in science and technology.

“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]

But we need visionary leadership like a Lee or a Mahathir or Deng. Otherwise, we shall remain stuck in tradition, as in “Pinoy Kasi.”

We cannot afford to let the world leave us in the dust. We cannot remain reactive and transactional.

Yet, the blog will sound like a broken record, a voice in the wilderness, if Juan de la Cruz can’t wrap his head around our instincts. Neither perfection nor permanence is of this world. That we’re stuck in our fixed mindset can only mean we are like a fish out of water and why we keep taking the wrong turn at the fork.

Gising bayan!

“Why independence, if the slaves of today will be the tyrants of tomorrow? Moreover, 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]

“You have to have a dream, whether big or small. Then plan, focus, work hard, and be very determined to achieve your goals.” [Henry Sy Sr., Chairman Emeritus and Founder, SM Group (1924 - 2019)]

“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]