How do we leapfrog into the 21st century?

But first, why? Why must we leapfrog into the 21st century?

Consider: “The Philippines is now the biggest borrower of the World Bank, the multilateral lender.” [“Worrying debt risk,” EDITORIAL, Philippine Daily Inquirer, 1st Nov 2021]

“The World Bank’s annual report for the fiscal year ending 30th Jun 2021 showed that its total commitments to the Philippines of $3.07 billion were the highest among all country borrowers. The World Bank reasoned that the Philippines had the biggest financing shortfall in the East Asia and Pacific region in 2020 and was thus among the countries that benefited from its fast-track facility for emergency COVID-19 response.”

Why the worry in the above Editorial? “The Philippines cannot afford to go through the same severely constricting measures adopted in 2020 to address the crisis which tanked the economy. And it will no longer have the same borrowing capacity to finance its responses while already trillions-deep in debt. That will be the most significant risk facing the next administration.

“The debt-to-GDP ratio, which reflects an economy’s ability to repay its obligations, is expected by the government to settle at 59.1 percent at the end of this year—the worst in 16 years. Before the pandemic, the debt-to-GDP ratio was at a record-low 39.6 percent in 2019.

“There is, however, another more considerable component of the Philippine debt picture that is increasingly worrisome, especially for the administration that will take over after the May 2022 elections. This year, the national government’s outstanding debt had swelled to a new high of P11.92 trillion as of end-September this year.

“It was up 27.2 percent from P9.37 trillion a year ago. Latest data from the Bureau of the Treasury showed that domestic borrowings, which accounted for 70.4 percent of the total, grew by 30.3 percent to P8.39 trillion. In comparison, foreign debts jumped by 20.4 percent to P3.53 trillion.”

But why do we have to take on such enormous loan burdens? “The twin goals of ending extreme poverty and promoting sustainable prosperity. This development is beneficial because those loans will finance infrastructure projects and developmental programs in education, public health, and poverty alleviation.

“Besides healthcare and vaccine financing, the World Bank also extended loans for the Philippines' conditional cash transfers, customs modernization, disaster resilience and recovery, peace-building in the Bangsamoro Autonomous Region in Mindanao, and various agricultural projects.”

What is missing in the above Editorial? 

Recall that the blog has spoken to the basics of an equation: There are two sides to an equation.

We know where we need money, but we have yet to recognize (a) where and (b) how to generate revenues. Revenues – or national income or GDP – bring in money, not tax revenues, and tax revenues are a function of national income.

Can we pause – and ponder that reality? 

Firstly, we rely on political patronage because they hold the strings to the national purse, i.e., taxes revenues.

And secondly, what is driving our national income? (1) OFW remittances and (2) call centers. Not our top companies and tycoons that we lionize. Recall that their combined revenues can’t match Samsung Vietnam or the $60 billion from (1) and (2).

The bottom line: political patronage and oligarchy are two sides of the same coin. [And what Marcos did was over the top, he appropriated both sides of the coin.]

And so, what do we expect? 

And it comes back to 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.

It is sickening to hear our instincts – and it is because we can’t seem to get off our rut.

In other words, ours is a fixed mindset. And our instincts – aka our caste system – nourish and perpetuate the status quo. And it is worse, it is our value system, and that is why we are bystanders – to Juan de la Cruz as he goes in a downward spiral.

But how can we undo our caste system if we can’t internalize freedom and democracy and the egalitarian ethos?

The “common good” comes not from a caste system but an egalitarian ethos.

Even competitiveness comes from an egalitarian ethos, as in respecting the “hierarchy of human needs.” In other words, developing products is not R&D per se but an undertaking to raise a person’s well-being.

In other words, we are a perfect storm until we recognize this universe’s character – i.e., dynamism and interdependence. We cannot live in an alternative universe, and that is why Facebook is under attack from everywhere, and they allowed themselves to be the platform of an alternative universe.

But we can’t shift paradigms if we don’t first recognize our challenge – and we can’t keep our heads in the sand.

This country is in a downward spiral.

But to overcome our “sabog” instinct, we must learn to synthesize our cares – the outcome we seek, beyond the output we value, as in the crab mentality (or robbing Peter to pay Paul) – into a simple need: We want to traverse poverty to prosperity rapidly.

How? Benchmark. Benchmark. Benchmark. Beg for foreign money and technology.

It is a crucial benchmark that we ignored – for the most extended times – and why we never (a) understood, (b) accepted, and (c) internalized how our neighbors became Asian Tigers – and left us in the dust.

What other dots do we need to connect? It again comes down to our instincts.

And it explains why to this day, despite claiming that our independence dates back farther than what we used to celebrate – 4th of July – we haven’t understood the distinctions between a hierarchical and an egalitarian ethos.

We mouth the word “democracy” – and freedom – yet entertain doubts because we believe it’s a foreign or Western concept. Yet, we study Greek philosophers, and the West picked up “democracy” from history – because history repeats itself.

And as the blog has raised several times, it is a mirror image of Christianity. It is about the common good – aka the Great Commandment, or the golden rule, colloquially – as demonstrated by Christ, not personal failings.

Unsurprisingly, Pope Francis reiterated that Biden could receive the Sacrament of the Holy Eucharist despite his support for abortion rights – especially given it is not absolute but qualified. In other words, it is about “cognitive development,” which the scribes and Pharisees didn’t possess.

The theology is not binary. Let’s dissect it: If heaven or hell is not a place but a state of mind, how does humankind translate it to the real world? Recall the story of creation: “On the sixth day, God designs the land creatures, creates the first human couple, and completes the entire creation. In and of itself, an individual ‘creation’ may be good, but it is excellent when it can contribute to a larger interdependent ecosystem. The whole is greater than the sum of its parts.”

And it comes back to humankind being in the image and likeness of the Creator. In other words, Juan de la Cruz is not an idiot, as Padre Damaso assumed.

Unsurprisingly, he is capable of discernment. And St. Ignatius taught Christians how to do it, the mantra being, “God helps those who help themselves.” And that came even before social scientists discovered the 3C’s of the hardy mindset.

And this is where even in America, right-wing extremism ignored the egalitarian ethos. Why? Because of their claim – and a la the scribes and Pharisees – to hierarchy, as in knowledge and holiness.

And as we keep missing the turn at every fork, we like to inject “Pinoy abilidad” – and manifest our rank in the caste system.

That is why we like to believe that democracy is the root of Philippine poverty. We allow – beyond Padre Damaso in our psyche – Juan Tamad and Bondying too.

We have confused (a) the faith we proudly profess and (b) the universe; they are about an egalitarian ethos.

What is the North Star? We want to traverse poverty to prosperity rapidly. And what is the benchmark? Beg for foreign money and technology.

That is why the blog posed a challenge to the discipline of economics, our economic managers, think tanks, and even our tycoons.

We must shift paradigms and leverage the science of thinking, i.e., forward and lateral, instead of logical yet linear and incremental thinking. Translation: We cannot rely on (1) OFW remittances and (2) call centers to drive this economy even if we rack our brains with fiscal and monetary interventions. Nor is a dissertation calling for a laundry list of initiatives the answer.

That’s why we must learn to embrace the imperative of “leapfrogging” into the 21st century. That’s how every neighbor did it and why the West was awed and labeled them Asian Tigers.

We are deep in the abyss. A 6%-7% GPD growth rate will not cut it and CREATE and SIPP will not, either. And Build, Build, Build is one dot to connect, but it is not the be-all and end-all.

And so that we don’t fall into the academic trap that isn’t in sync with the real world, recall why Steve Jobs figured out how innovative companies can continually develop a portfolio of competitive and marketable products.

In our case, we must figure out how the Vietnamese – and the Asian Tigers before them – attracted the likes of Samsung smartphones and Apple AirPods – and most recently, car manufacturing and export, with their enormous revenues, and put poverty in the rearview mirror.

Policy-making as we know it can no longer be the norm in the 21st century. Those metrics put out by international institutions don’t also get to the heart and spirit of the efforts. Of course, they are logical. But they also yield linear and incremental outcomes.

Look at how we have addressed the challenges of competitiveness. We go over the checklist in those metrics – as in rote learning.

We miss the insights when we succumb to rote learning.

That’s why the blog raised the challenge to the next president. Put in a call to Bill Gates, the CEO of Apple and Samsung, and Warren Buffett. And ask, Why aren’t we able to attract businesses the size of Samsung and Apple into the Philippines?

And I am speaking from my former role representing Western investment with the Chinese and the Vietnamese.

“We need more capital than the one you are putting up, i.e., your factory and brand and marketing efforts. We must capture 20 percent market share to go head-to-head against that other Western brand, and they have that much share that we must match sooner than later.”

And the response? “That is all we can afford. We will agree to limit the partnership to a contract manufacturing agreement, and you can create a holding company that you can own 100% and invest whatever you need. And we will even invite other Chinese businesses to be part of your holding company under a similar contract-manufacturing agreement.”

Translation: That’s how swiftly technology transfer happens when one begs for foreign money and technology, and why our Pinoy logical yet linear and incremental thinking has consigned us to the cellar.

Consider: Where does Philippine investment incentive thinking come in a scenario like that? Or even CREATE or SIPP. They are way off base.

The president of the Philippines must get it from the horse’s mouth. Bureaucrats cannot conceive a scenario like the above.

Or try Vietnam: “You can forget about signing this joint venture if you cannot come clean with your accounting books, and you are keeping the second set of books that is too obvious. We have been in this business for 200 years, and you cannot present bogus financials.”

Recall what the blog said about the challenge to the Philippine president: To preside over Philippine Inc. by doggedly pursuing commercial success, innovation and be a paragon of good governance, not a culture of impunity.

The bottom line: Our economic disciplines, economic managers, think tanks, and even our tycoons, must figure out how to leapfrog national income or GDP by $200 billion to match the firepower of our neighbors and invest in the building blocks of nation-building, e.g., education, healthcare, among others.

In other words, we must rack our brains to figure out the must-have income streams – the vital few instead of the trivial many. And that means doing our homework: What industries and products will yield the most revenues? And that must be the foreign investment and technology that we must lure into the country.

But we must connect the dots. Which among the industry road maps we are working on must be prioritized? And then map or trace backward to figure out the requisite infrastructure that we must put in place. Critical undertakings are subsets of more significant ones.

We cannot be all over the board.

How do we leapfrog into the 21st century?

And leverage the 3C’s of a hardy mindset: Challenge, Commitment, Control?

Recall that the blog keeps raising the distinctions between a “fixed mindset” and a “growth mindset.”

And we can’t shift paradigms if we don’t first recognize our challenge, and we can’t keep our heads in the sand. 

This country is in a downward spiral.

But to overcome our “sabog” instinct, we must learn to synthesize our cares – the outcome we seek, beyond the output we value, as in the crab mentality (or robbing Peter to pay Paul) – into a simple need: We want to traverse poverty to prosperity rapidly.

How? Benchmark. Benchmark. Benchmark. Beg for foreign money and technology.

It is a crucial benchmark that we ignored – for the most extended times – and why we never (a) understood, (b) accepted, and (c) internalized how our neighbors became Asian Tigers – and left us in the dust.

Gising bayan!