Consider our biases: We are parochial and insular. We value hierarchy and paternalism and rely on political patronage and oligarchy that ours is a culture of impunity.
Sadly, precisely because they are inherent, we take these biases for granted – if not virtues.
In a previous posting, the blog spoke to our value of hierarchy and paternalism. These are two sides of the coin of “entitlement” – and that it translates to a caste system. The bottom line: aristocracy, because it has no monopoly of “innovation,” undermines the best thinking of man – which comes from diversity and pluralism, the best example being the innovation culture of Silicon Valley.
And because hierarchy and paternalism equate to entitlement, they nourish and perpetuate parochialism and insularity.
Consider: “Thanks to our economic managers across administrations, our country’s debt-to-GDP ratio is now a mere 41.5 percent, having peaked at nearly 75 percent in 2004.
“With relatively lower trade-to-GDP and debt-to-GDP ratios, we may yet emerge less scarred than many other economies when COVID-19 finally blows over.” [A fragile world economy, Cielito F. Habito, NO FREE LUNCH, Philippine Daily Inquirer, 20th Mar 2020]
Recall how we celebrated every time there was a slowdown in global trade because we’re not export-oriented?
Then consider what Vietnam has done: “Samsung Electronics posted 74 trillion won (US$65.7 billion) in sales in Vietnam in 2018, accounting for 28 percent of the Southeast Asian country’s gross domestic product (GDP). The sales figure in Vietnam amounted to 30 percent of the Korean tech giant’s total sales in 2018. Analysts say that these figures mean that Vietnam has solidified its position as the biggest production base of Samsung Electronics, outclassing China.” [http://www.businesskorea.co.kr/news/articleView.html?idxno=29966]
With due respect to Ciel, our paradigm won’t move one bit because of our parochialism and insularity. Who is the regional laggard?
There are at least two reasons why our debt-to-GDP ratio is a mere 41.5 percent. Have we forgotten the two drivers of the Philippine economy, OFW remittances, and the BPO industry? They are a windfall that makes us able to manage inflation, currency, and the debt ratio. Likewise, it manifests that we have been afflicted by the “Dutch disease,” if we don’t own it altogether yet.
The bottom line: we are the regional laggard because ours is a service-consumption economy. It requires lower investment and, unsurprisingly, generates underdeveloped levels of per capita income. That then explains the poverty we like to address given our supposed Christian heritage, but wrongly – to paraphrase the priest in his homily admonishing against dole-outs but to instead live a Christian life, referenced in a prior posting.
Why wrongly? We maintain aristocracy – aka our value of hierarchy and paternalism. Yet, we mouth that “inclusiveness” is a must.
Let’s digress a bit to build on the topic of Christianity. A Jesuit priest introduced the family to Franciscan theology. Like everyone else, he is working from Fordham, which is his home. And since no one can attend mass because New York is in lockdown, for this Sunday, he emailed his homily about the “deep encounter between Jesus and this man born blind. That the blind man’s admission of his blindness and darkness is in contradistinction to the Pharisees.”
It recalls the Franciscan theology against dualism, as in either/or, which can best describe the Pharisees. On the other hand, the Franciscans value mysticism to describe the prophets, including Jesus, that valued tradition and yet criticized the scribes and the Pharisees.
We aren’t prophets, but if we are to raise the dismal state of Philippine higher education, we need to develop more significant intellectual curiosity. It demands honest-to-goodness efforts. Recall from a previous posting; even Harvard graduate students can use intellectual curiosity. Here, we again have an uphill battle.
So, let’s resume the theme of the posting.
What about the problem of the world? We are not a significant participant, so why are we even talking about it? We are a nonentity as far as the world economy is concerned. But it won’t isolate ourselves from COVID-19 – despite being a minimal player, i.e., we can’t perpetually shut ourselves out of the global travel and leisure industry or even consider it because tourism is supposedly one of our key sectors.
The reality is that tourism is low-hanging fruit and why the blog has discussed Greece and Spain and Italy as significant tourism players yet cannot keep up with wealthier nations that are stronger industrial-investment economies.
Let’s tackle another point in Ciel’s article: “The World Bank warned in its Global Economic Prospects report that the risk of a new global debt crisis was at hand. It noted that four waves of debt accumulation had occurred over the last 50 years, and the current wave that started in 2010 appears to be ‘the largest, fastest and most broad-based increase’ in global borrowing since the 1970s.”
Recall the Global Recession of 2008 and the Keynesian prescription the world heeded. In other words, the magnitude of global borrowings was to mitigate the recession. And it is not a mystery; economies go through – boom and bust – cycles.
For example, “The Fed last cut rates near zero in December 2008, during the financial crisis, and kept them at that historic low until the end of 2015.” [NPR]
What is left unsaid is that greed was behind the subprime mortgage loans that bankers developed into financial instruments called derivatives and then transacted globally despite their knowledge that they had no value? And because of their global character, the bust was comprehensive as well despite the liquidity from this low-interest era. Hence, the 2008 Great Recession has stalked the world to this day. For example, the US ceased to be a manufacturing economy and thus the rise of populism that elected Trump.
In other words, the human condition – and it is not limited to greed, think what Hitler brought – can wreak havoc. For example, Czarist Russia. Or the despots the world today faces with the migration phenomenon they created – with a little help from the lies behind the Iraq War. The rush to seek asylum, beyond migration, that pushed the UK to Brexit – and other nations to the right as well – is another example.
There is no Great War at hand, but if we add the current pandemic to what’s on the world’s plate, there is a de facto war. And these are the times that try men’s souls. And that is the dramatic way to usher dynamism.
Because especially for us, Pinoys, to be dynamic, is not a given. In a recent posting, the blog discussed Arangkada and AmBisyon. They are to guide our economic development efforts, yet both are foundering.
And with the pandemic, we are again grappling with more “must-dos,” but until we dig deep into our hearts and souls, we will not turn into proactive and forward-thinking people and nation.
There will be an economic slowdown. It will add more complications to our already confused state of mind. Consider: We are in our unending debate to address the restrictive provisions of the Constitution. There is also the issue of Federalism and the war on drugs. What to do with POGO?
Even the most significant economy, America faces daunting challenges. For example, here’s Wikipedia on the recent recessions in America or before we count the upcoming one courtesy of the pandemic:
“Early 1990s recession in the United States: After the longest peacetime expansion of the 1980s, inflation began to increase, and the Federal Reserve responded by raising interest rates from 1986 to 1989. That weakened but did not stop growth, but some combination of the subsequent 1990 oil price shock, the debt accumulation of the 1980s, and growing consumer pessimism combined with the weakened economy to produce a brief recession.
“Early 2000s recession: The 1990s once were the most prolonged period of growth in American history. The collapse of the speculative dot-com bubble, a fall in business outlays and investments, and the 11th Sept attacks brought the decade of growth to an end. Despite these significant shocks, the recession was brief and shallow.
“Great Recession: The subprime mortgage crisis led to the collapse of the United States housing bubble. Falling housing-related assets contributed to a global financial crisis, even as oil and food prices soared. The crisis led to the failure or collapse of many of the United States’ largest financial institutions: Bear Stearns, Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, as well as a crisis in the automobile industry. The government responded with an unprecedented $700 billion bank bailout and $787 billion fiscal stimulus package.”
The Great Recession continues to haunt the world, even when Japan and Europe had negative interest rates. And very recently, this month, March 2020, “the Fed cut its key interest rate near zero – in coordination with efforts to buttress the global economy by the Bank of England and the Bank of Japan.” [NPR]
What about the global value chain? “Observers attribute this chain reaction to the rapid rise since the turn of the century of global value chains (GVCs) or the phenomenon where different countries share in the production process. Rather than confine the range of production operations to the same location, GVCs spread them across countries, sourcing component goods and services from where they are cheapest.” [Habito, op. cit.]
No one says we must be limited to this enterprise. Or if we are to be part of the chain, let’s benchmark against Vietnam. It is the manufacturing hub of Samsung’s electronic manufacturing in the region. We are not in a race to the bottom.
Benchmark. Benchmark. Benchmark.
In other words, we cannot sweep aside what the 21st century is about, i.e., innovation and global competitiveness. We gloss this reality over precisely because we are too weak and unprepared for this century. And why are we? Because of our parochialism and insularity. Why was Vietnam able to make a name for themselves despite being more impoverished than the Philippines?
And there are other industries that if we can only look outward and forward, we can become a crucial player. And that is why the blog continually speaks to the writer’s Eastern European friends. They had to make a very significant shift in paradigm – from socialism under Soviet rule to a free enterprise undertaking as an EU member.
And after being a failed micro-enterprise for eight years, they are today a key player in an industry dominated by Western global behemoths. As those familiar with blog know, they came out stronger from the Global Recession of 2008 and will again come out stronger from the current 2020 pandemic.
The blog is in its 11th year. And it can only sound like a broken record because its reason for being is to understand and react to the worldview that has rendered us a weak economy, and embarrassingly, the regional laggard.
And it has raised the challenge of perceptive judgment, which comes from experience. We have been going around in circles, especially those of us in the chattering classes because we lack the expertise in development. On the other hand, our neighbors have a wealth of experience, having traversed the road from poverty to prosperity. [Those who watched the BBC interview of the South Korean foreign minister to share her nation’s efforts to combat the pandemic can’t help but be in awe with her sophisticated worldview, and she mirrors the many facets of their success story as a nation.]
And the writer has dealt with them – as well as from other parts of the world – over many years. There are things they do differently from us. For example, these people are not perfect. Still, there are things they do differently.
Parochialism and insularity are universal. Still, it is a matter of degrees. Recall Lee and Mahathir told Deng to beg for Western money and technology. Again, it is a matter of degrees.
Why are we the least able to attract foreign investment among the neighbors? See above; we rely on political patronage and oligarchy – or “a government run like ‘hell’ by Filipinos.”
Other people, to a far higher degree, have the instinct to look outward than we do.
And these experiences explain how the writer reacts to the worldview that embarrassingly turned us into the regional laggard.
Likewise, if we reread the above recent recessions in America, the reference period coincides with the time the writer was outside the Philippines doing global business.
But he spent the first 20 years of his career in the Philippines so that he can speak to Juan de la Cruz and the world as well.
He participated in figuring out the way forward and acting upon the challenges presented by APEC, NAFTA, the EU, and the fall of the Soviet empire.
And as we speak, he is again directly involved to decipher and respond to the unfolding 2020 pandemic selling Eastern European manufactured products in the New York metro area – where competition is not for the faint of heart. They come from a supply chain that covers several countries, including technology and equipment and materials. In other words, they are part of the circle to address and mitigate the pandemic, including committing sums of money for the purpose.
But the writer’s friends with his guidance created the chain themselves and are not just a passive element – as we in the Philippines perceive the “global value chain” and thus have no say in global trade. Then think of how Vietnam did it. They looked outward to tap foreign money and technology.
Recall the analogy to photosynthesis. It illustrates how to create a sustainable and competitive global enterprise as well as the challenge of innovation, which starts with the ethos of raising the consumer’s well-being. Globally successful enterprises don’t mirror aristocracy. They rely on diversity and pluralism to understand the consumer as well as diverse teams to create innovative products and services.
In sum, the lesson of dynamism stands out from these decades of experience. Which isn’t surprising given this universe is dynamic. And man has lived through this reality. Think of Adam and Eve, if not the Great Wars.
Sadly, dynamism is foreign to us Pinoys. We are parochial and insular. We value hierarchy and paternalism and lack the perceptive judgment our neighbors have under their belts – a product of their experience through the journey from poverty to prosperity.
Why are our habits and instincts hard to break?
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]
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