Why we are in deep doo-doo

The post is a rehash from December 2021, “We are in deep doo-doo.”

Consider what we read in our media, counting from PNoy to Du-30 and BBM.

“We can go into denial mode, but that can mean we shall keep missing the turn at every fork.

“In other words, a vicious circle does not happen by accident. It is the convergence of various miscarries.

“We’ve been kicking up a perfect storm.

“That's why the postings would often reference the blog’s genesis.

“In the 80s, my old MNC-company chose me to be the regional manager over colleagues, including Australians and Canadians. We were supposed to be the most sophisticated nation in the region. And I owe it to that impression – by the outside world, especially the Americans – that we would be the next “big thing.”

“But what happened?

“Let’s hold it right there.

“How did we become the regional laggard when we were supposed to be the next “big thing”?

“We can only point to our instincts: We are parochial and insular. We value hierarchy and paternalism and rely on political patronage and oligarchy; ours is a culture of impunity.

“That is one heck of a barrier: We ceded the region to our neighbors and then to the world and became the supplier of low-skilled labor. The biggest insult I hear from my introduction, especially in Europe, is that I am a New Yorker, not a Filipino.

“On the other hand, we celebrated the OFW phenomenon.

“And recall that several years ago, at the Ateneo and UP economic briefings, I questioned the manufacturing uptick our economists and “economic managers” were celebrating. We are a consumption-service economy. That is our reality, irrespective of what the manufacturing numbers were saying. It’s called context. And no financial mumbo jumbo would suffice.

“And our instincts, again, get in the way. “Context” deserts us because of our crab mentality. It comes from Pareto, whose principle influenced economics. In other words, we can’t distinguish between the “vital few” and the “trivial many.” Or between “drivers” and “enablers.”

“Then consider: If we can’t even admit to ourselves that we blew it, where would we get the courage to change, to reinvent Juan de la Cruz?”

Let’s hear from Ciel Habito: “Our economy remains trapped in the vicious cycle of a limited internal market constraining the economy’s growth, leading to low average income and extreme poverty, bringing us back to the little internal market.

“The new government simply must give focused and determined attention to this abysmal export performance, as in it lies the key to solving the major perennial challenges our economy keeps facing, namely: (1) lack of quality jobs, (2) low incomes and high levels of poverty, and (3) higher prices, especially of food, leading to wide food insecurity and malnutrition among our poor—in short, the basics of “presyo, trabaho, and kita.” [“Doing a Vietnam,” Cielito F. Habito, NO FREE LUNCH, Philippine Daily Inquirer, 31st May 2022]

The good news is that we’re not alone. For example, governments and economies, including America, are yet to leverage neuroscience.

In other words, people think “activity” – or procedure, if not system – instead of “outcome.”

Unsurprisingly, Daniel Kahneman, a psychologist, won the Nobel Prize in 2002 for his work, “Thinking, fast and slow.”

“Its main thesis is that of a dichotomy between two modes of thought: “System 1” is fast, instinctive, and emotional; “System 2” is slower, more deliberative, and more logical. The book delineates rational and non-rational motivations or triggers associated with each type of thinking process and how they complement each other.” [Wikipedia]

Every time we elect a new president, we wax poetic and take it for granted that finally, we shall triumph.

We’ve been the regional laggard for the longest time. What are we thinking?

And we can ask it from the Americans too.

Consider: “Why Are We Still Governed by Baby Boomers and the Remarkably Old (?), Yuval Levin, The New York Times, 3rd Jun 2022.

“We lack grounded, levelheaded, future-oriented leaders. And like it or not, that means we need a more middle-aged politics and culture.

“Many American institutions seem locked in battles between well-meaning but increasingly uncomprehending leaders in their 70s. And a rising generation, in their 20s and early 30s, bent on culture war and politicization and unconcerned with institutional responsibilities. Our politics has the same problem — simultaneously overflowing with the vices of the young and the old and so often falling into debates between people who behave as though the world will end tomorrow and those who think it started yesterday. The vacuum of middle-aged leadership is palpable.

“There are politicians of that middle generation — i.e., members of Congress and governors, even our vice president. Yet they have not broken through as defining cultural figures and political forces. They have not made this moment their own or found a way to loosen the grip of the postwar generation on the nation’s political imagination.

“A middle-aged mentality traditionally has its vices. It can lack urgency, and at its worst, it can be maddeningly immune to both hope and fear, which are essential spurs to action. But if our lot is always to choose among vices, wouldn’t the temperate sins of midlife serve us well just now?

“Generational analyses are unavoidably sweeping and crude and no one is simply a product of a birth cohort. But in our frenzied era, it’s worth looking for potential sources of stability and considering what we have too much of in America and should want to demolish and be rid of and what we do not have enough of and should want to build up."

We’ve been the regional laggard for the longest time. What are we thinking?

Consider: “Being the best performer in ASEAN and East Asia, the Philippine economy’s impressive 8.3% Q1 GDP growth has brought the economy to pre-pandemic levels (Q1 of 2019 and 2021) and has likely kindled greater optimism among firms.” [“Economic reopening seen bolstering growth into Q2 — FMIC, UA&P,” BusinessWorld, 1st Jun 2022]

In other words, our economic briefings – past and present – have one thing in common: The glass is half-full.

On the other hand, this is what Americans read: “A middle-aged mentality traditionally has its vices. It can lack urgency, and at its worst, it can be maddeningly immune to both hope and fear, which are essential spurs to action.”

Will that explain why we have been in a downward spiral compared to our neighbors?

“Liberal governance has developed a puzzling preference for legitimating government action through processes rather than outcomes.” [“What America Needs Is a Liberalism That Builds,” Ezra Klein, The New York Times, 29th May 2022]

Consider: “Balisacan seeks to balance infra with social spending,” BusinessWorld, 1st Jun 2022.

“INCOMING Socioeconomic Planning Secretary Arsenio M. Balisacan said that he will seek a review of “Build, Build, Build” infrastructure spending and seek to strike a balance between erecting public works and alleviating poverty.”

But haven’t we prioritized poverty alleviation all this time?

Even The Economist gives us credit for the effort: “Since 2008, the Philippines has run one of the world’s biggest and most successful welfare schemes: the Pantawid Pamilyang Pilipino Program, or the 4Ps. It provides cash grants to poor households that comply with certain conditions, such as sending their children to school and attending health checks. The program covers over 4m households or about 20% of the population. By 2015 it had helped lift 1.3m Filipinos out of poverty, a threshold the government set at around 12,000 pesos ($230) per month for a family of five in 2021. School enrolment for children in 4Ps households is near-universal.” [“Rodrigo Duterte’s drug war pushed poor families deeper into penury,” The Economist, 2nd Jun 2022]

But why can’t we put poverty in the rearview mirror like our neighbors?

“The new government must give focused and determined attention to this abysmal export performance; it holds the key to solving our economy's major perennial challenges.” [Habito, op. cit.]

And here’s what the economic managers have to say: (1) “Diokno touts ‘promising economy’ to investors,” BusinessWorld, 1st Jun 2022. (2) “Incoming Trade Secretary Pascual focused on expanding MSME markets,” BusinessWorld, 1st Jun 2022.

“Mr. Diokno said the Philippines is currently in a demographic sweet spot, with a young cohort entering the workforce.

“The country has a younger population compared with the rest of the world. It has a rich talent pool, having an annual average of 750,000 graduates across disciplines, forming a deep workforce pool of 45 million (who are) well-educated and industrious. In an aging world, having a population with a median age of 25.7 is an asset,” Mr. Diokno said.

“Moreover, the Philippines’ location is favorable for critical markets, situated at the heart of major trading routes.

“At the height of the pandemic, we didn’t sit idly by and wait for the virus to recede. Instead, we pushed for game-changing reforms. We continued to invest in physical infrastructure and human capital. That will improve the Philippines’ competitiveness, boost its productive capacity, and make it an even more attractive investment destination.”

Let’s hear it: “Liberal governance has developed a puzzling preference for legitimating government action through processes rather than outcomes.” [Klein, op. cit.]

“We need to focus on MSMEs. Those small businesses that closed due to the pandemic must find a way to start their businesses again,” Mr. Pascual, the incoming Trade Secretary, said.

“We will (also) help them have the capability to participate in the bigger market through e-commerce. So, we also need the capacity for digital transactions, accounting, and record-keeping, aided by digital technology.

“Mr. Pascual said he plans to prioritize improving the mix of job skills available to serve better the information technology and business process outsourcing (IT-BPO) industry.

“The industry is one of the country’s top earners, but it stands to improve to fulfill its potential.”

Question: Aren’t these the same initiatives that the economic managers during the PNoy administration touted? Moreover, did we not create scores of industry road maps to ensure their execution? But why are we back to square one?

Our bias to paint a positive picture of the Philippine economy reinforces our caste system and undermines our “mantra” of “inclusion.”

We are replicating the US monetary and fiscal blueprint. They have attained economic equilibrium while we have not; we are a developing economy driven by the OFW phenomenon and the BPO industry – neglecting to pursue industrialization for decades.

And that shortsightedness explains why we did not proactively pursue infrastructure development – while proud of population growth and the resulting consumption economy. Today, our urban areas are more unlivable than Delhi, for instance.

Of course, the Americans messed up their economy too when the financial sector went overboard – as in, greed – by creating the subprime lending programs, e.g., derivatives.

What to do?

Our instincts gave us a contrary worldview to our neighbors and the Nordic countries.

We are parochial and insular. We value hierarchy and paternalism and rely on political patronage and oligarchy; ours is a culture of impunity.

Recall that Lee, Mahathir, and Deng, for example, focused on industrialization – begging for Western money and technology. And so did the Nordic countries.

And why the blog has the banner, “Philippine Economy: Reinventing ourselves.” That is beyond infrastructure development and poverty alleviation. And beyond the OFW phenomenon and the BPO industry.

In other words, we have to look beyond “activity” – or system or procedure – and think “outcome.”

Are we surprised why Lee proudly spoke to Singapore about moving from third- to first-world?

To be “first-world” must be the outcome that we seek – so that we can (a) learn to forward-think, (b) distinguish the “vital few” from the “trivial many," and (c) “drivers” from “enablers.”

That presupposes learning to move across the “binary” to “relative” thinking continuum.

Let’s hold it right there.

Is the above challenge beyond us, given our instincts? We take it for granted that rank has its privileges. For example, how can we internalize the distinctions between a growth mindset and a fixed mindset? Is that why our neighbors – if not the world – have left us behind?

If the US has embarrassed itself with its politics – and undermined its standing as the epitome of democracy and the free market – it is because polarization feeds on binary thinking, as in the extremes of “right” and “left” wings.

We can go into denial mode, but that can mean we shall keep missing the turn at every fork.

In other words, a vicious circle does not happen by accident. It is the convergence of various miscarries.

We’ve been kicking up a perfect storm.

Gising bayan!