Can we problem-solve?

Two articles can test if indeed we can problem-solve: (1) “Learning from our neighbors,” Richard Heydarian, Philippine Daily Inquirer; (2) “Eight Times Opinion columnists revisit their incorrect predictions and bad advice,” The New York Times.

The Times explains the article: “It’s not easy to admit you got something wrong. But here at Times Opinion, we still hold on to the idea that good-faith intellectual debate is possible, that we should all be able to rethink our positions on issues, from the most serious to the most trivial. It’s not necessarily easy for Times Opinion columnists to engage in public self-reproach, but we hope that in doing so, they can be models of how valuable it can be to admit when you get things wrong.”

And from our very own Richard Heydarian: “Three key leadership lessons I discussed with folks in Seoul. Primarily, we need, in the words of a Korean business leader, “clean and forward-looking” leadership. As Mahathir told us during a conversation on the sidelines of the conference in Seoul, incorrigibly corrupt leaders can end up poisoning society by spawning a whole culture of corruption, beginning with their very election to office.

“The strongman Park Chung-hee, whose brutal rule coincided with our own Marcos, was not only far less corrupt than many of his counterparts. He also helped build modern South Korea by effectively bullying the country’s oligarchs into becoming global industrial giants.

“Instead of building his cronies and drowning in shameless decadence, Park coaxed and cajoled the landed elite into shifting into risky yet strategically essential ventures, which benefited from the state’s initiative-taking trade and industrial policy.

“Mind you: Today’s largest shipbuilders and chip-makers in the world used to produce toothpaste and garments in impoverished South Korea.

“Second, we need leaders who invest in the country’s human capital. Our hosts didn’t forget to remind us of the contributions of Korean leaders, including the American-educated Syngman Rhee, to solid educational institutions. Korea’s public-school teachers, for instance, are among the best trained and best-paid civil servants worldwide.

“Lastly, we need truly dynamic leaders. For instance, Mahathir shared how many of his best policies, which contributed to the industrialization of Malaysia, were “plagiarized” from the best practices he observed in other countries.

“Moreover, Korean leaders tend to be anticipatory, constantly assessing challenges and opportunities in the global economy and regional geopolitics.

“This may partly explain why South Korea’s leaders tend to age significantly when in office, given the pressure of performance from a demanding electorate, which has little tolerance for incompetence and corruption.

“Interestingly, other countries are also learning from the Philippines, but not exactly for the best reasons. Over the news, I heard Sri Lankan analysts discuss the potential return of the Rajapaksa brothers, who recently fled to exile following a people power revolt in Colombo, after noting the return of the Philippines’ most notorious dynasty to Malacañang.”

Can we pause – and ponder?

Why can’t we move this nation forward? Can we problem-solve?

Consider 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.

“Interestingly, other countries are also learning from the Philippines, but not exactly for the best reasons. Over the news, I heard Sri Lankan analysts discuss the potential return of the Rajapaksa brothers, who recently fled to exile following a people power revolt in Colombo, after noting the return of the Philippines’ most notorious dynasty to Malacañang.”

News item: “Banks move to declare Davao’s Dennis Uy in default after missed Clark lease payments.” [Philippine Daily Inquirer, 23rd Jul 2022]

“Banco de Oro Universal Bank, the country’s largest private financial institution, moved to foreclose on the loan collateral of Dennis Uy of Davao late Friday. That’s the opening salvo in a series of moves that — depending on the ability of the controversial businessman to settle his obligations in four days — could lead to the largest corporate default in Philippine history.

“The Inquirer learned that BDO, which has provided the bulk of the financial muscle for Uy’s acquisition spree during the Duterte administration, sent a foreclosure notice to the businessman’s flagship holding firm, Udenna Corp., in a bid to force him to the negotiating table and agree to an orderly settlement.”

Why can’t we move this nation forward? Can we problem-solve?

Consider 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.

Between the election of BBM and the fate of Dennis Uy, do we see how our culture of impunity plays out?

And the onus is on us, the Philippine elite and chattering classes, to step up to our cognition challenge?

But we can’t respond to the challenge because unwittingly, per Daniel Kahneman, a psychologist and Nobel prize winner in economics in 2002, we are stuck in System 1 – intuitive yet biased “fast” – thinking that we can’t move up to System 2 – conscious or “slow” thinking.

And it applies to all people, including experts in their respective fields. And in our case, such expertise is our license to pull rank.

For example, our experts and cause-oriented groups can’t help but pander to populist sentiments and, in the process, even overextend our bias by conflating other nations’ challenges.

We don’t have to be experts to recognize that growth and development go in stages. That’s why we give adolescents elbow room to grow. On the other hand, we like to conflate our fate as a nation with that of more developed countries.

We are an underdeveloped economy and should be looking at our neighbors. See above; learning from our neighbors – because they successfully traversed the road from poverty to prosperity in recent times. And are held in awe by the rest of the world as economic miracles. Specifically, they put poverty in the rearview mirror.

On the other hand, we like to look at the West and raise their shortcomings, especially poverty and inequality.

We have a structural problem that we can’t grasp that we keep tripping ourselves, as we’re a disaster waiting to happen.

For example, while we pander to populist sentiments, we also worry about our debt ratio. Why? We can’t see beyond the paradigm of prudent fiscal policies. But that is just one data point concerning our economic managers.

Now that the debt ratio is over 60% post the pandemic stimulus, we are again shouting “fire.” The over $50 billion Juan de la Cruz brings in via remittances and call centers brought our obligations to less than 50%. Without the said economic driver, no tax-rationalization efforts would even be in the cards.

In the same manner that we justify the 4Ps, the pandemic stimulus was no different in putting Juan de la Cruz’s body and soul together. We better get off our high horse.

One more time with feelings: We cannot take credit away from Juan de la Cruz and turn around to patronize him. That is blatant “adding insult to injury,” another expression of our culture of impunity.

Have we forgotten about “self-government”? We brought upon ourselves that we are the laughingstock of the region.

Let’s get back to the debt ratio. One data point is a fallacy, as in linear thinking.

Consider: Singapore’s debt ratio is over 100% against our 60+% yet has a triple A credit rating. Moreover, Singapore’s GDP per capita is $93,400 against our $8,000. And their exports are $600 billion against our $80 billion. And their forex reserves are $280 billion to our $82 billion.

Why are we between “a rock and a hard place”?

Why? 

As Kahneman points out, the availability of the “rule of thumb” – or heuristic – helps explain how some issues are highly salient in the public’s mind than others. Matters retrieved easily from memory tend to be of relative importance to the public. And this is determined by the extent of coverage in the media.”

Can we pause – and ponder?

See above; we need (a) clean and forward-looking leadership, (b) invest in the country’s human capital, and (c) genuinely dynamic leaders.

Recall this quote from an earlier posting: “Leadership” is taking people from where there are to where they have never been before.

“That’s why populism per se is not the answer to the challenge of development. Sadly, because of “Pinoy compassion,” we constantly fall into its trap and why the world has left us behind.

“We know the jeepney is an excellent example of Filipino ingenuity. Unfortunately, if we had the leadership today, we would have an efficient public transportation system. Or, if we had one, we would have had a blueprint to bring us from the comprehensive agrarian reform program to global competitiveness in agribusiness.

“Recall how Lee Kuan Yew spoke to Singapore about moving from third-world to first-world. In other words, he defined the problem faced by Singapore not by the symptom of poverty but by the recognition that it was a third-world economy and nation.

“Beg for Western money and technology said Lee and Mahathir to Deng.”

See above: “Mahathir shared how many of his best policies, which contributed to the industrialization of Malaysia, were “plagiarized” from the best practices he observed in other countries.”

Here are more quotes from prior postings: “Industrialize. Industrialize. Industrialize.

“It was amusing to read so many misinformed opinions from otherwise intelligent observers regarding President Junior’s veto of the law providing “perks” for the Bulacan airport economic zone. They thought the airport project, which had already broken ground, was a goner.

“That’s because Ramon Ang of San Miguel is an enigma to policy wonks and business rivals. He doesn’t make business decisions the way they do. He takes risks others won’t dream of taking. It’s partly jealousy too. They can’t accept that the upstart Tondo boy, who has not taken an economics course and with no MBA from some fancy foreign business school, is doing better than they are.” [“Airport economic zone,” Boo Chanco, DEMAND AND SUPPLY, The Philippine Star, 8th Jul 2022]

Consider: “THE NEW growth targets set by President Ferdinand R. Marcos, Jr.’s economic team are achievable if the government will continue to reopen the economy, address its debt burden, and pursue aggressive infrastructure spending.

“The Development Budget Coordination Committee (DBCC) on Friday approved the medium-term macroeconomic assumptions and fiscal program for 2022 to 2028. The DBCC set the gross domestic product (GDP) growth target at 6.5-7.5% this year, lower than the 7-8% given by the previous administration. However, it expects a 6.5-8% growth from 2023 to 2028, higher than the previous administration’s assumption of 6-7% from 2023 to 2025.” [“Marcos economic team’s targets achievable — experts,” BusinessWorld, 11th Jul 2022.]

“That is what the blog calls logical yet linear and incremental thinking. And it comes from a lack of experience in development to match our neighbors.

“Let’s bring it up one more time: “The economic development of the Pearl River Delta Economic Zone took off explosively. The region’s GDP grew from just over US$8 billion in 1980 to more than US$89 billion in 2000 and US$221.2 billion in 2005. During that period, the average real GDP growth rate in the Pearl River Delta Economic Zone exceeded 16 percent, well above the People’s Republic of China’s national figure of 9.8 percent.

“Since the onset of China’s reform program, the Pearl River Delta Economic Zone has been the fastest-growing portion of the fastest-growing province in the fastest-growing large economy in the world. In the process, a region that was once largely agricultural has emerged as a manufacturing platform of global importance. It is a world leader in producing electronic goods, electrical and electronic components, watches and clocks, toys, garments and textiles, plastic products, and various other goods.” [Wikipedia]

“Why is that over our heads? Answer: Our caste system – expressed in our value of hierarchy and paternalism – consigns us to mediocrity.”

“Our caste system explains why we can’t get beyond System 1 thinking above.”

Those familiar with the blog may recall how often it speaks to “forward and lateral and creative thinking” and learn to overcome “logical yet linear and incremental thinking.” And the latter comes from our lack of experience in development.

Unsurprisingly, we can’t grasp the simple model the blog never fails to discuss, the GPS model: Where are we; Where do we want to be; How do we get there.

“Think of the (1) jeepney, (2) comprehensive agrarian reform program, (3) 4Ps, (4) OFW phenomenon, (5) call centers, (6) party-list system, and (7) Mandanas law, among others.

“They respond to the “here and now.” Sadly, this universe is in constant motion and expansion. It explains why the world has left us behind. For example, this century demands innovation and global competitiveness.”

Can we internalize this challenge in the Philippine elite and chattering classes? “Eight Times Opinion columnists revisit their incorrect predictions and bad advice – and reflect on why they changed their minds,” The New York Times, 22nd Jul 2022.

Can we problem-solve?

Gising bayan!