In the company of Lao PDR

“The Philippines’s CRI (Commitment to Reduce Inequality) performance was dismal, as we ranked 102nd out of 161 globally and 19th out of 25 in East and the Pacific. Furthermore, we were 106th in public services spending, 104th in taxation, and 92nd in labor rights and welfare. These rankings put us second from the bottom, ahead only of Lao PDR, among the nine ASEAN member countries included.

“One area that needs more attention is enacting reforms that will encourage investments and structural change in our economy so that we create high-paying jobs and better entrepreneurial opportunities are available across the country.” [“Jobs generation: A tool for fighting inequality,” Sonny M. Angara, Better Days, BusinessMirror, 28th Oct 2022]

“The government of Laos, one of the few remaining one-party communist states, began decentralizing control and encouraging private enterprise in 1986. Economic growth averaged more than 6% per year from 1988-2008. Laos’ development has more recently been amongst the fastest in Asia, averaging more than 7% per year for most of the last decade.

“Nevertheless, Laos remains a country with an underdeveloped infrastructure, particularly in rural areas. It has a basic but improving road system and limited external and internal land-line telecommunications. Electricity is available to 83% of the population. Agriculture, dominated by rice cultivation in lowland areas, accounts for about 20% of the GDP and 73% of total employment. Recently, the country has faced a persistent current account deficit, including falling foreign currency reserves and growing public debt.

“Laos’ economy is heavily dependent on capital-intensive natural resource exports. The economy has benefited from high-profile foreign direct investment in hydropower dams along the Mekong River, copper and gold mining, logging, and construction. However, some projects in these industries have drawn criticism for their environmental impacts.

“Laos gained Normal Trade Relations status with the US in 2004 and applied for Generalized System of Preferences trade benefits in 2013 after being admitted to the World Trade Organization earlier in the year. Laos held the chairmanship of ASEAN in 2016. Laos is in the process of implementing a value-added tax system. The government appears committed to raising the country’s profile among foreign investors and has developed special economic zones replete with generous tax incentives. Still, a limited labor pool, a small domestic market, and corruption impede investment. Laos also has ongoing problems with the business environment, including onerous registration requirements, a gap between legislation and implementation, and unclear or conflicting regulations.” [Laos - The World Factbook (cia.gov)]

We keep that company, not Vietnam, China, or the earlier Asian Tigers. And it brings my mother to mind: Tell me who your friends are, and I will tell you who you are.

Her other constant reminder is: Honesty is the best policy. She attended the Philippine Normal School but did not have the chance to practice because of WWII. Still, she wanted me to learn leadership, so she had me join the Boys Scouts in high school. She failed to develop my study habits, and I was indolent.

I grew up with the rest of the neighborhood kids, playing in the streets after school. Fortunately, I demonstrated a knack for leadership by teaching the kids how to play softball, and we became the regular entertainment during school breaks.

I am no longer surprised that I kept the company of “winners, not losers.” Over the four years of high school, whatever groups of boys I led were the models – winning competitions as a matter of habit. Yet, it is not about winning per se. It is how we play the game, i.e., honesty is the best policy.

My Eastern European friends did not disappoint. If you want me around, you must commit to transparency, no ifs, and buts. In a region that woke up to Soviet-style tyranny, they stand out. We kept a new factory mothballed for a year instead of acquiescing to the demand for grease money – to be hooked to the power source. When we had our first trailer truck of products into Ukraine, we asked the driver to turn around instead of paying his way through.

Unsurprisingly, the country is proud of my friends and recognizes them as model exporters, generating 70% of revenues from exports. 

Conversely, why is the Philippines in the company of Lao PDR?

News item: “World Bank: Philippines has one of the widest wealth gaps in East Asia.”

Here’s another one: “PHL urged to focus economic policy on keeping middle class prosperous. Income inequality did not begin to decline until 2012. It is still high: the top 1% of earners together capture 17% of national income, with only 14% shared by the bottom 50%.

“It’s no longer just economics. We must open our eyes and focus on a bigger canvas, not just economic indicators. Still, most social, political, and other inequality indicators frustrate our efforts to build social cohesion and unite people around certain reforms.”

We must open our eyes and focus on a “bigger” canvas.

Consider: “I am happy to note that the Philippines has just survived the worst pandemic and economic crisis of the last 100 years.

“COVID-19 infected four million Filipinos. About 64,000 died. Another 60,000 died, but their cause of death didn’t attribute to COVID—an act of dishonesty during a time of grave peril.

“In the third quarter of 2022, the economy continued its frenetic growth after coming from a crippling 16.9 percent decline in the second quarter of 2020—the height of the pandemic.

“Since then, the economy pulled itself up, registering a remarkable 12.1 percent jump (Q2 2021) before steadying at a robust pace of 7.0 in Q3 2021, 7.8 in Q4 2021, 8.2 in Q1 2022, 7.5 in Q2 2022, and 7.6 in the third quarter this year.

“The 7.6 percent third quarter GDP growth beat everyone’s expectations.

“Against that happy backdrop, let me cite among the best CEOs who did spectacularly in the last two years and nine months.” [“The best,” Tony Lopez, Virtual Reality, manilastandard.net, 16th Nov 2022]

We must open our eyes and focus on a “bigger” canvas.

Why can’t we? 

(1) Because of the Philippine caste system, we cater to the top 1% that, in turn, shower us with paternalism.

(2) Moreover, we grew up emulating the economic model of the West despite decades of contrarian ways demonstrated by our neighbors. In other words, the West did not have to focus on a giant canvas because they had already traversed the journey from agriculture to industry. But we are too “ivory tower” to recognize the pitfall.

On the other hand, our neighbors had a straightforward mantra: Begging for Western money and technology. In other words, they knew they had to leapfrog the development journey and be first-world economies sooner than later. 

In the meantime, given our logical yet linear and incremental thinking, we love analysis; but have not developed the big-picture view to learn analytics. Said differently, it is beyond us to reimagine the Philippines as a first-world economy.

Even more fundamentally, while we like to do our homework and sweat it out doing project studies and plans, we can’t “execute.”

“Our government finds it difficult to execute good plans and programs. Many agencies end the year with unutilized budgets. It is clear the taxpayers are not getting their money’s worth,” wrote Boo Chanco.

The blog is surprised the least. Recall that several times it asked, how many dissertations ever “see the light of day”? Or what happened to the scores of industry road maps we proudly developed? 

Or where are we with AmBisyon and Arangkada? 

Recall, too, that when I assisted a Ph.D. candidate with her dissertation, I was appalled at the number of dissertations I scanned that won’t ever get it to first base in the real world.

And so we had to revise the professor-approved outline, and after I said I would only assist you if you committed to pursuing a real-world challenge. Today, the once Ph.D. candidate is the global marketing director of a famous brand that can traverse the value chain of the product category instead of being stuck as a niche brand. How? She had to embrace the hierarchy of human needs, being the bedrock of innovation.

Conversely, given our mantra of 6%-7% GDP growth, please consider how much hubris we exude. Yet, we can’t provide Juan de la Cruz with the basics of water, food, and electricity. Then we turn around and claim we can’t industrialize because Philippine electricity is too expensive.

How badly do we need a hole in the head? 

Translation: If our economic managers are listening, as our legislators and “think tanks,” there is not one iota of justification – nada – for a nation of over 115 million not to provide the basics of water, food, and electricity.

We must not only put the BOI in the crosshairs to match the Pearl River Delta Economic Zone or the Samsung Vietnam partnership but also rack our brains to get Juan de la Cruz the basics of water, food, and electricity.

Not because that is easy but because it is hard. Think of the Kennedy moonshot speech.

We are too “ivory tower” to think out of the box — nor execute.

Thinking outside the box demands different skill sets, which we can’t acquire given our instincts, expressed in the Philippine caste system. That is why the blog has repeatedly raised the challenge of benchmarking against best practice models.

But the “ivory tower” won’t let us look outward, too. We’re stuck into the Western model of poverty and jobs – and “inclusion.”

Yet, decades of failed interventions must teach us a lesson. From CARL – the comprehensive agrarian reform law – to the 4Ps, to the OFW phenomenon, to call centers, among others, we failed to visualize the “bigger” canvas.

The bottom line: We are lost and can only see the trees but not the forest.

It is motherhood to say we must “encourage investments and structural change in our economy.

Instead, we must get ahead of the curve by visualizing economies of scale. Economies of scale must trump the Filipino crab mentality. And that means undoing the value hierarchy and paternalism, which perpetuates political patronage and oligarchy – and the perfect storm in our midst. 

Begin with the end in mind – to clear the cobwebs in our heads. Think of the seven habits of highly effective people by Stephen Covey. For example, Be Proactive.

And the rest goes: Put first things first; Think win-win; Seek first to understand, then to be understood; Synergize; Sharpen the saw – or continuous improvement.

Moreover, we are yet to internalize 21st-century skills: Critical Thinking; Creativity; Collaboration; Communication.

The problem with “critical thinking” is that it is too abstract. But there is a way to digest it, and it comes from the elements of cognitive development: dualism or binary thinking, multiplicity, and relativism.

In other words, to internalize critical thinking, we must recognize that the real world is beyond “binary thinking.”

The bottom line: Our best is not good enough. We are proud to be among the fastest growing economies doing 7% GDP growth, yet we are cellar dwellers. We are in the company of Laos.

At the rate we are going, the challenge Juan de la Cruz faces is way beyond our capacity.

We can’t settle for the status quo. Very soon, we shall find ourselves too deep into the abyss that the only thing left is for us to keep sinking.

We are in the company of Laos. How much deeper do we want to sink?

Gising bayan!

Why can’t we overcome the tyranny of hierarchy?

It is a function of our values – and why we rely on political patronage and oligarchy.

To add insult to injury, we’ve taken the credit away from Juan de la Cruz, who brings over $50 billion in remittances – and call center revenues – to our coffers.

With the pandemic no longer a serious threat, we are proud that Q3 2022 GDP is up 7.6%.

Then consider: In 2021, Vietnam’s poverty (per ADB) was already down to 1.2%, with the Philippines’ still at a staggering 23.7%.

But let’s hold our breath: Given our blinders – an inward-looking bias – we can’t see that Vietnam did 13.67% (Q3 2022 GDP.)

Can we look in the mirror? 

Why can’t we overcome the tyranny of hierarchy?

In other words, we are a classic perfect storm, a dysfunctional system – call it an infirmed economy or nation.

Of course, we can celebrate the economic rebound especially given the horrors brought by the pandemic. But it is irresponsible and a disservice to forget our structural challenge for the umpteenth time: The Philippine economy relies on the OFW phenomenon and call centers.

Indeed, we must move up the value chain from call centers to IT. We can look up to Ireland, but given the enormous disparity in population – less than 6 million to our over 115 million – PH GDP per capita won’t even come close to Ireland’s.

Granted that the fifteen wealthiest Filipinos saw their treasures rebounding with the GDP, it is not the answer to Juan de la Cruz’s abject poverty – nor his learning poverty.

Local businesses don’t meet the character of the 21st century, i.e., innovation and global competitiveness. Conversely, they grew up in a protectionist, if not rent-seeking, setting. And it explains why innovation is foreign to us.

On the other hand, look at Vietnam. They went to bed with Samsung and competed successfully globally.

Beyond binary thinking, the Vietnamese have internalized multiplicity and, even more profoundly, lived through relativism. In other words, they’ve moved up the cognitive development curve. That a solution will fall short absent “context.”

Should we cry when our economic managers – and the Philippine elite and chattering classes – can’t stop talking about the 6%-7% GDP growth mantra? 

It is the classic insanity defined by Einstein.

Why does the blog often speak to my Eastern European friends? The two global crises – the 2008/9 great recession and the 2019 pandemic – saw their business take quantum leaps. They generate 70% of revenues – mirroring the profile of my old Fortune 500 company – outside their home market.

But recall where they started. The Soviets turned their nation into a godforsaken place like their other satellite states. And remember what the wife said when we first arrived, “Why are we in this godforsaken place?”

And one will only appreciate what that means in the psyche of the Ukrainians. How else to explain the measure of humankind? How did the Ukrainians turn the tide of the Russian invasion in their favor?

How can our economic managers, legislators, think tanks, the Philippine elite, and chattering classes rationalize the dire situation of Juan de la Cruz – that we can’t move beyond a service economy?

It is defeatism.

“The biggest mistakes in economics are failures of imagination. It reflects an assumption that today’s regime will last forever. It never does. Change is coming. Get ready.” [The Economist, 6th Oct 2022.]

How does a “discipline” fight “failures of imagination”?

Those familiar with the blog may remember how often the blog speaks to innovation, being beyond R&D. And why, when I first arrived in Eastern Europe, we set up the business units to cover both R&D and Marketing. Moreover, we trained the brand managers on “horizontal leadership.” They don’t need formal authority to win the rest of the organization’s support of their brands.

Free enterprise is about principles, not rules. Recall that from the beginning, I purposedly disabused the minds of my friends. And to demonstrate how it plays out in the real world, I agreed to run the sales force – to set up the regional and then global structure – for only two years. 

You will not embrace the principles of free enterprise if you keep relying on me as though I am a demigod. You will trip and fall flat on your face, but that’s how best to learn a trade – by experience.

But that means learning the basics of “self-government,” which is the heart of freedom, democracy, and the free market.

We Filipinos can be critical of democracy because we hew closer to autocracy – in the continuum of authoritarianism to freedom. In other words, we reflect binary thinking – and the failure to move up the cognitive development curve.

Consider: Will (a) incompetence and (b) tyranny explain why despite over 400 (and counting) export processing zones, we could only generate roughly $80 billion in exports in 2020 – when Vietnam did over $280 billion?

Why incompetence? The BOI was born in 1967. Consider: Vietnam was at war for 20 years, from 1955-1975. In other words, why haven’t we developed the competence to attract foreign investments despite 55 years of experience?

The BOI also predates the Pearl River Delta Economic Zone by 12 years. It was at the heart of the China economic miracle.

Why did we allow our BOI to fall behind our neighbors?

(1) Because of our parochialism and insularity, we don’t benchmark against best practice models. 

(2) Moreover, we are too academic in crafting our initiatives. We are too “ivory tower” that we miss the context, the “acid test,” which is called the real world. 

But we still don’t get it. 

Why can’t we overcome the tyranny of hierarchy?

How do we rationalize our incompetence? “Becoming a manufacturing hub like China or Vietnam is out of the question, what with our expensive power cost, inefficient logistics, and bureaucratic red tape standing in the way. Neither can we do it through agriculture, considering our weak cooperative structure, politicized agricultural policies, and outdated farming methods?” [“Capitalize on our workforce; lessons from Ireland,” Andrew J. Masigan, THE CORNER ORACLE, The Philippine Star, 16th Nov 2022]

Whom should we blame? Ourselves? Because of the tyranny of hierarchy, we raised barriers to FDIs.

Should we abolish the BOI, PEZA, and the Department of Energy – the Department of Agriculture and the public sector, too – for incompetence? And instead, focus on creating the ecosystem for a world-class service economy.

Before we get any further, how can we undo incompetence in the two sectors – industry and agriculture – via a focus on the service sector?

Doesn’t incompetence run across our endeavors and undertakings – as an economy or nation?

Can we problem-solve?

If top companies and over 400 export processing zones can’t put the Philippines on the path of innovation and global competitiveness, what more of MSMEs? 

The Philippine caste system, wittingly or not, consigned MSMEs to livelihood projects that they can’t overcome a fixed mindset — dynamism and context be damned. 

Consider our instincts, reflected in the Philippine caste system: We are parochial and insular. We value hierarchy and paternalism and rely on political patronage and oligarchy; ours is a culture of impunity.

What to do?

Should we step back and hold our breath?

If we are doing a restructuring initiative to address our predicament, we will have to brush up on how humankind learned to get from point “A” to point “B.”

Think of the Kennedy moonshot speech: “We choose to go to the Moon in this decade and do the other things, not because they are easy, but because they are hard; because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one we intend to win, and the others, too.”

Kennedy demonstrated several qualities confirmed by science: (a) the 3C’s of a hardy mindset, (b) the elements of cognitive development, and (c) the imperative of an ecosystem.

Those familiar with the blog will recall the characteristics of a hardy mindset: Commitment. To be involved with others and to experience a sense of purpose and meaning, how ordinary people can do extraordinary things.

Challenge. It is to appreciate that change rather than stability is the norm, take new or difficult situations as opportunities for learning, and the importance of thinking “outside the box.”

Control. Focus on situations where we influence, not where we have little if any, control; you have control only over yourself; you must be the one to change. Develop a problem-solving attitude; why can’t you succeed in your efforts?

What about the elements of cognitive development? (a) dualism or binary thinking; (b) multiplicity; (c) relativism.

Without the benefit of experience, students find comfort in binary thinking. And as they move on, they begin recognizing multiple options when addressing a problem. And with experience, they learn that relativism presupposes “context.”

A solution can be off-base if it ignores the context.

Let’s get back to Kennedy: We chose to go to the Moon this decade and do other things, not because they are easy, but because they are hard.

Does the word “hard” register in our psyche? Or are we the personification of Juan Tamad?

Moreover, we can’t send a man to the Moon if we don’t create an ecosystem that will “connect the dots.”

Let’s get back to Juan de la Cruz. We can translate the above concepts into familiar lexicons.

Take a paradigm shift or think out of the box. Or consider the GPS: Where are we; Where do we want to be; How do we get there?

Where are we?

Consider: Will (a) incompetence and (b) tyranny explain why despite over 400 (and counting) export processing zones, we could only generate roughly $80 billion in exports in 2020 – when Vietnam did over $280 billion?

That is where we are. Instead of running away from our shortcomings, we must own them; otherwise, we can’t begin to embrace dynamism. We must not forget that we are a subset of this dynamic universe in constant motion and expansion.

In the meantime, we are not demonstrating a hardy mindset. Because of the tyranny of hierarchy, we rationalize incompetence – by throwing jargon like “our competitive advantage is our people.”

That is a fallacy. If our competitive advantage is our people, we can problem-solve and not be the regional laggard – with Juan de la Cruz suffering the consequences of abject poverty and learning poverty. And let’s not forget that Philippine education is behind our neighbors.

“Philippines needs to improve its education system. It isn’t just a Swiss business school that thinks the Philippines needs to improve its quality of education. The Philippine Business for Education (PBEd) says that while the state of education nationwide has progressed in terms of accessibility, it still has a long way to go when it comes to the delivery of quality learning for the success of every learner.” [Philippines needs to improve its education system | The ASEAN Post]

Where do we want to be?

We want to be a first-world economy. That is the context beyond 6%-7% GDP growth.

Note that Vietnam’s poverty is down to less than 2% against our 23.7%. And population-wise, the two countries are over 100 million strong. In other words, our benchmark should be Vietnam, not Ireland, with less than 6 million people. We need tons of blue-collar jobs beyond white-collar ones.

What about the imperative of an ecosystem? “Becoming a manufacturing hub like China or Vietnam is out of the question, what with our expensive power cost, inefficient logistics, and bureaucratic red tape standing in the way. Neither can we do it through agriculture, considering our weak cooperative structure, politicized agricultural policies, and outdated farming methods?”

That hypothesis is a fallacy. It demonstrates the tyranny of hierarchy.

In other words, we must: (a) Fix the incompetence of BOI, PEZA, the Department of Energy, and the public sector. We must match Vietnam’s export prowess, raise the caliber of Philippine logistics and fix bureaucratic red tape; (b) Fix the incompetence of agriculture and outdated farming methods.

Note the word “fix” in (a) and (b) above. “Fix” must translate to “no ifs and buts.”

How? Kennedy demonstrated several qualities confirmed by science: (a) the 3C’s of a hardy mindset, (b) the elements of cognitive development, and (c) the imperative of an ecosystem.

Why can’t we overcome the tyranny of hierarchy?

It is a function of our values – and why we rely on political patronage and oligarchy.

To add insult to injury, we’ve taken the credit away from Juan de la Cruz, who brings over $50 billion in remittances – and call center revenues – to our coffers.

In other words, we are part of the problem, not the solution.

We are a classic perfect storm, a dysfunctional system – call it an infirmed economy or nation.

Gising bayan!

Why is Juan de la Cruz resistant to change?

“We must first acknowledge that our resistance to change comes from our instincts, reflected in the Philippine caste system.

“We in the Philippine elite and chattering classes can dictate to Juan de la Cruz to accept the infamy of being the regional laggard and suffer the consequences of abject poverty and learning poverty.”

That’s a quote from the previous posting. But do we agree or disagree? Aren’t we the regional laggard? Isn’t Juan de la Cruz suffering from abject poverty and learning poverty?

Then consider: “Becoming a manufacturing hub like China or Vietnam is out of the question, what with our expensive power cost, inefficient logistics, and bureaucratic red tape standing in the way. Neither can we do it through agriculture, considering our weak cooperative structure, politicized agricultural policies, and outdated farming methods?

“Our competitive advantage lies in our people. Hence, we must make the necessary investments to sufficiently capacitate the next generation of Filipinos.

Consider: “The Irish government was keen to understand which skills would be in high demand in the next 20 years. They identified electrical engineering (EE) and information technology (IT) in anticipation of the computerization boom. Remember, this was the decade when Apple, Microsoft, and Oracle were born.

“The Irish government invested in forming the best curriculum money can buy, even if financial resources were tight. They built Regional Technical Colleges in far-flung towns to make EE, and IT courses available to all. Simultaneously, they re-purposed many of their universities to specialize in EE and IT and attracted thought leaders in the field to form its faculty.” [“Capitalize on our workforce; lessons from Ireland,” Andrew J. Masigan, THE CORNER ORACLE, The Philippine Star, Nov 16, 2022]

Andrew Masigan builds on the Bernie Villegas article, “IT-BPM drives inclusive economic growth: A timeline.”

“Becoming a manufacturing hub like China or Vietnam is out of the question, what with our expensive power cost, inefficient logistics, and bureaucratic red tape standing in the way. Neither can we do it through agriculture, considering our inefficient cooperative structure, politicized agricultural policies, and outdated farming methods?”

Why is Juan de la Cruz resistant to change?

Why are we reliant on OFW remittances and call centers? Of course, they drive the 6%-7% GDP growth that makes Filipinos proud.

But that is why the blog asks, what is the context? Juan de la Cruz suffers from the infamy of being the regional laggard and the consequences of abject poverty and learning poverty.

What are we missing? Several things.

First, we are stuck with binary thinking. How we define competitive advantage is too academic. But then again, we can’t see beyond “binary thinking” that we ignore the “context.” And because we are missing the context, we can’t develop options that will create a robust ecosystem. Think of why humankind thrives and why we must think forward to mirror the ecosystem we call photosynthesis.

Secondly, recall that the bedrock of innovation is the hierarchy of human needs. Because innovation is foreign to us, we define it as IT or technology related. The “hierarchy of human needs” starts with the physiological needs of Juan de la Cruz.

We cannot put body and soul together if we keep falling into the trap of binary thinking. For example, that electricity is too expensive in the Philippines.

We are over 115 million, while Ireland is less than 6 million people. In other words, we must ensure that Juan de la Cruz satisfies his physiological needs – water, food, and electricity.

But that is why the blog faults us in the Philippine elite and chattering classes. There is no escaping the imperative of electricity especially given the magnitude of the population.

Constrained by the metric of 6%-7% GDP growth, we can’t forward-think.

Consider: We have over 300 export processing zones generating exports of nearly $80 billion. In other words, we suffer from the lack of economies of scale electricity-wise, for example. If we establish the context as we need incremental exports of $200 billion to match our neighbors, the next thing we must recognize is to toast the crab mentality. And that will open our eyes to economies of scale.

Enter: Pareto principle. In other words, we must then figure out the two or three foreign investments and technology we must attract. If Samsung generates $50 billion in exports for Vietnam, consider TMCC plus two more that will produce $100 billion for the Philippines. That will give our power industry the economies of scale to invest in lower-priced electricity. If our oligarchy is scared, we must look outward and look for power companies that can do it. 

Let’s digress a bit and talk about electricity costs in Eastern Europe and how economies of scale come into play. Recall that my friends started with one dilapidated former communist production facility. Today, they have twelve robotic facilities. Yet, given economies of scale, they are pursuing an alternative electricity supply, i.e., solar. There is an upfront cost, yet the payback will be quick.

In the meantime, we can’t simply tell Juan de la Cruz that we cannot give him low-priced electricity. But that means we must overcome the tyranny of hierarchy – that we value and why we embrace oligarchy.

The bottom line, we must address the physiological needs of Juan de la Cruz. We need to feed more than 6 million people – the population of Ireland.

But let’s dissect the Irish model. 

For example, we don’t have to “reinvent the wheel” and instead build on what we have. UP and Ateneo are our best universities, yet their rankings against the rest of the world are abysmal. Given their history, we can assume they can be better in STEM.

But we can’t just “reform” UP or Ateneo. We like the word reform when we must figure out the “context” of our challenge. For example, we must benchmark against Singapore or Hong Kong universities. Parochialism and insularity have consigned us to the cellar. 

And recall what George Gorospe (SJ) said about our culture. That Ateneo can instruct their students about dynamism, i.e., “reality” is beyond any human experience or system. Yet, the home and the workplace pose a conflict. For example, the best local employers are our oligarchy. Recall that I worked with one for eight years.

Would I have learned “innovation and global competitiveness” if I had retired from a Philippine oligarchy instead of my old Fortune 500 company? 

What about UP? UP is known and proud of the academic freedom it engenders. But we also know that “freedom” per se can undermine the common good. And that is why we are critical of the Americans – and their unfettered free enterprise.

What if UP moves from academic freedom to “dynamism”? In other words, we are a subset of the universe in constant motion and expansion. UP must then keep pushing the envelope. It means it must be ahead of the curve. For example, a world-class university must overcome the “ivory tower” and be real-world-oriented.

Two separate anecdotes – in Singapore and Japan – come to me whenever dynamism is the topic. Yet they said the same thing: It bothers us that the next generation of our people no longer manifests the drive of their elders.

Why dynamism? We Filipinos cannot problem-solve because we have the benefit of hierarchy – and Juan de la Cruz favors us by submitting to tyranny.

Of course, we say it in different ways. For example, we see the glass as half-full. That smacks of hubris, given the infamy and abject poverty that Juan de la Cruz suffers. And so we want a model that replicates Ireland with less than 6 million people when we are over 115 million strong.

And there is another caveat. The IT field is not a slam dunk.

I’ve spent most of the last 20 years in Eastern Europe, where IT is like religion.

Consider: “Progress Completes Acquisition of Telerik and Expands Executive Management Team, Dec 02, 2014. Acquisition Extends Leadership.

“BEDFORD, Mass.--(BUSINESS WIRE)-- Progress announced today that it has completed its acquisition of Telerik (Bulgaria), a provider of tools and technologies to address the entire application development lifecycle. The acquisition builds on Progress’s strong heritage of rapidly enabling developers to create data-driven devices and platform applications. Through this acquisition, Progress will now provide comprehensive cloud and on-premise platform offerings that would allow developers to rapidly create beautiful applications driven by data for any web, desktop, or mobile platform.

“Progress acquired Telerik for an aggregate purchase price of approximately $262.5 million.”

In other words, Eastern Europeans have a leg up in the IT field, and we have much catching up to do.

You can click on the following links to better appreciate the hurdles we face:

Why you should consider outsourcing software development to Bulgaria (nearshorefriends.de)

Nearshoring Europe - Nearshorefriends GmbH - ABOUT US

Develop, Deploy & Manage High-Impact Business Apps | Progress Software

Latvia and Bulgaria did it, so why can’t the UK encourage female engineers? (theconversation.com)

Bulgaria With The 2nd Largest Percentage Of Women Scientists and Engineers In the EU (trendingtopics.eu)

Why Explore Bulgaria To Set Up Your Next Center Of Excellence | Zinnov

Why is Juan de la Cruz resistant to change?

We must first acknowledge that our resistance to change comes from our instincts, reflected in the Philippine caste system.

And why ours is a culture of impunity. How do we overcome “impunity”? Not by reforming the three branches of government. In other words, reform is like going through a checklist. The “context” must be to own our shortcomings and embrace dynamism.

That means overcoming resistance to change. For example, how can Marcos embrace dynamism when they have to protect their power and wealth? Think of Putin and Xi. They want the status quo of autocracy. It comes with power and wealth.

In the meantime, we in the Philippine elite and chattering classes can dictate to Juan de la Cruz to accept the infamy of being the regional laggard and suffer the consequences of abject poverty and learning poverty.

Gising bayan!

“The biggest mistakes in economics are failures of imagination.”

“It reflects an assumption that today’s regime will last forever. It never does. Change is coming. Get ready.” [The Economist, 6th Oct 2022.]

Can we hold it right there?

Why can’t we in the Philippines embrace dynamism? What would be its personality if the Philippines were a “brand”?

The blog has raised our instincts – reflected in the Philippine caste system – a zillion times: We are parochial and insular. We value hierarchy and paternalism and rely on political patronage and oligarchy; ours is a culture of impunity.

We’ve ignored the assertion. Yet, our inability to move beyond “regional laggard” is often an indictment.

In other words, in fairness to the discipline of economics, our “failures of imagination” aren’t confined to the field.

What happened to Juan de la Cruz?

We never understood the fundamental givens that we are a subset of the universe, this world – that is dynamic and interdependent.

For example, the hierarchy of human needs is not static but a continuum. And so is the challenge of leadership.

And the outcome of the continuum of human needs and leadership is harmony – i.e., the common good, characterized by dynamism and interdependence.

The bottom line is a virtuous circle. And why the Creator said that “Creation is good.”

Consider the continuum of leadership, i.e., from autocracy to democracy. Rizal described what happened to Juan de la Cruz: he who submits to tyranny loves it.

Can we hold it right there? And should we ponder why even in education, we’re behind our neighbors?

In other words, if we don’t recognize the starting point of Philippine education, we better be prepared for generations of national decline.

The debate between autocracy and democracy reflects one’s static posture. And the more we veer to tyranny, the more we can’t figure out the fundamental given – the dynamism and interdependence of our world.

Take our reliance on political patronage and oligarchy.

Of the fifteen wealthiest Filipinos, eleven come from “diversified” businesses. What does that mean? It confirms our reliance on oligarchy.

When an enterprise can embark on a slew of undertakings, it reflects the inequality of the economy.

In other words, competitive advantage is of no moment. And it explains why “innovation” is foreign to us.

Recall that the blog describes the 21st century as one of innovation and global competitiveness.

How should we respond?

Recall how we said the Philippine underground economy understated our real GDP. And then we celebrated the OFW phenomenon and, more recently, call centers. Not to forget that much earlier, we proudly embarked on CARL, the comprehensive agrarian reform law. And today, we are well into implementing the mechanics of the supposed LGU “sustainability” – unmindful of the risk of undermining the “common good,” e.g., economies of scale.

Consider: “The Philippines may never catch up with our East Asian neighbors in manufacturing and agribusiness excellence.”

Of course, dynamism and innovation are foreign to us, given our backwardness.

Can’t we see that we are closer to tyranny – in the continuum of tyranny to democracy – given our reliance on political patronage and oligarchy?

In the process, we did not gain the experience that comes with traversing poverty to prosperity as our neighbors did.

For example, innovation and global competitiveness don’t have to start from ground zero. That is why the blog distinguishes the academic world from the real world.

The Asian Tigers demonstrated that tapping suitable foreign investment and technology will give an economy or nation a leg up.

The most recent example is Vietnam. “The Philippines may never catch up with our East Asian neighbors in manufacturing and agribusiness excellence” – because we are too academic in our perspective.

“Vietnam continues to strengthen its relationship with Samsung. On 2nd Jul, Bac Ninh province granted an investment license to Samsung Display Co. Ltd for its US$1 billion project in the Yen Phong Industrial Park. This investment comes from large-scale investments by the South Korean tech giant.

There is no free lunch, so the “Bac Ninh province will cover part of the worker’s training costs. Samsung Display expects to hire around 8,000 workers. For every worker, the company will receive VND1.5 million (US$70.5) – or VND12 billion (US$564 thousand) in aggregate. However, this plan will only begin once the province receives taxes from Samsung. The province will issue these payments yearly until the fund is empty.” [Vietnam Briefing, 7th Jul 2014.]

We have over 300 export processing zones, but we have not understood the Pareto principle, which is a reality in the case of our neighbors.

In other words, our economic managers, legislators, think tanks, and we, in the Philippine elite and chattering classes, better look outward and learn from Vietnam, China, and the earlier Asian Tigers.

But we must first acknowledge that our resistance to change comes from our instincts, reflected in the Philippine caste system.

Recall the numerous examples the blog spoke to over a dozen years about other people’s predisposition to change.

My old Fortune 500 company hired a handful of us — as change agents — into the most significant subsidiaries when it was a takeover target, acknowledging that they had to change. In the case of the Philippine subsidiary, we attained “preferred employer” status two years after I joined. Also, we preempted the biggest competing brand from gaining a foothold in the Philippines.

And we in the region led the upgrade of the company’s planning and budgeting model, and I showed the change for the entire global enterprise. And the newer model proved valuable as we did restructure initiatives in different countries while expanding investment across emerging economies like China and Vietnam as well as India and Russia.

And with a much sharper eye into how the future must look, we fortified our global market leadership in our most significant brand. 

Change is not the sole prerogative of the West; this will be my 20th year supporting my Eastern European friends. In other words, people born and raised socialists under Soviet rule can learn and excel in the free market – no ifs and buts.

While my wife and I had just returned to New York, I left my friends on the cusp of another enviable period. During the global financial crisis of 2008/9, they killed a brand of the most significant competitor from the West that elevated them to a formidable competition.

Post the pandemic and the economic havoc it wreaked; they are again showing the way to competition both East and West. And that is notwithstanding the Russian invasion of Ukraine — where the business is growing in leaps and bounds.

Consider: Today, they have over a dozen brands innovating and bringing up the value chain and twelve robotic production facilities while expanding to make room for ever-increasing demands. Visitors, especially from the West, are in awe that supposedly backward Eastern Europeans can give them a run for their money. Recall that twenty years ago, they had not registered a profit – going eight years; and operated out of one dilapidated former communist structure.

The bottom line: When an undertaking faces a daunting challenge, failure is not an option. Think beyond binary thinking and learn multiplicity and relativism, the elements of cognitive development.

How? Think of why humankind thrives in this universe, i.e., through the magic of photosynthesis. And we can bring that down to earth by translation, i.e., creating an ecosystem that will ensure Juan de la Cruz thrives and not be subject to hierarchy and paternalism. And reliant on political patronage and oligarchy.

That is the problem we have in the Philippines. We in the Philippine elite and chattering classes can dictate to Juan de la Cruz to accept the infamy of being the regional laggard and suffer the consequences of abject poverty and learning poverty.

“The biggest mistakes in economics are failures of imagination. It reflects an assumption that today’s regime will last forever. It never does. Change is coming. Get ready.” [The Economist, 6th Oct 2022.]

That is why “experience” matters. The longer we can’t experience progress and development, the more we can’t internalize the elements of cognitive development. That beyond dualism or linear thinking, there is multiplicity and relativism available to us.

In other words, “context” will escape us when we rely on logical yet linear and incremental thinking, absent experience.

For example, how many have read the seven habits of highly effective people by Stephen Covey, yet countless can’t internalize them?

Take “Begin with the end in mind.” That is another way to express “context.”

Consider: Why can’t we get over the World Bank endorsed of 6%-7% GDP growth despite our inability to create an ecosystem that mirrors that of our neighbors? In other words, we rely on “services” instead of “industry.”

Or think of “multiplicity” versus linear thinking, i.e., what combination of “services, industry, and agriculture” would yield a robust ecosystem? A competitive economy can’t rely on logical yet linear and incremental thinking akin to the standard of the dissertation in the academic world.

“The biggest mistakes in economics are failures of imagination. It reflects an assumption that today’s regime will last forever. It never does. Change is coming. Get ready.”

Why can’t we in the Philippines embrace dynamism?

What happened to Juan de la Cruz?

We never understood the fundamental givens that we are a subset of the universe, this world – that is dynamic and interdependent.

Gising bayan!