“Change is the only constant in life.”

Those familiar with the blog may recall the above quote from Heraclitus.

“The Greek philosopher is best remembered for his cosmology, in which fire forms the basic material principle of an orderly universe. Though he was primarily concerned with explanations of the world around him, Heraclitus also stressed the need for people to live together in social harmony.

“He complained that most people failed to comprehend the logos (Greek: “reason”), the universal principle through which all things are interrelated and all-natural events occur, and thus lived like dreamers with a false view of the world.

“A significant manifestation of the logos, Heraclitus claimed, is the underlying connection between opposites. For example, health and disease define each other. Good and evil, hot and cold, and other opposites are similarly related.” [Wikipedia]

Then think of the Chinese philosophy of Yin and Yang.

Then consider: “A new macroeconomic era is emerging. What will it look like?” The Economist, 6th Oct 2022.

“If markets stop working smoothly, impeding the flow of credit or threatening contagion, central banks may step in; already, the Bank of England has done a U-turn and started rebuying bonds, cutting against its simultaneous commitment to raise rates. The related belief that central banks will not have the resolve to follow through on their tough talk is behind the other big fear: that the world will return to the 1970s with rampant inflation.

“In one sense, this is alarmist and over the top. Most forecasters reckon inflation in America will fall from 8% to 4% in 2023 as energy price rises ebb and higher rates bite. Yet while the odds of inflation going to 20% are tiny, there is a glaring question about whether governments and central banks will bring it back down to 2%.

“To understand why then look beyond the hurly-burly to the long-term fundamentals. In a significant shift from the 2010s, a structural rise in government spending and investment is underway. Aging citizens will need more health care. Europe and Japan will spend more on defense to counter threats from Russia and China. Climate change and the quest for security will boost state investment in energy, from renewable infrastructure to gas terminals. And geopolitical tensions are leading governments to spend more on industrial policy.

“Yet even as investment rises, demography will weigh ever more heavily on prosperous economies. And as people age, they save more, and this excess of savings will continue to depress the underlying real interest rate.

“As a result, the fundamental trends in the 2020s and 2030s are for “bigger government” but still low “real” interest rates. For central banks, this creates an acute dilemma. To get inflation down to their targets of roughly 2%, they may have to tighten enough to cause a recession. That would incur a high human cost in job losses and trigger a fierce political backlash. Moreover, if the economy deflates and ends up back in the low-growth, the low-rate trap of the 2010s, central banks may once again lack enough stimulus tools.

“The temptation now is to find another way out: ditch the 2% inflation targets of recent decades and raise them modestly, say, 4%. That will likely be on the menu when the Fed begins its strategy review in 2024.

“This brave new world of somewhat higher government spending and slightly higher inflation would have advantages. In the short run, it would mean a less severe recession or none at all. And eventually, it would mean that central banks have more room to cut interest rates in a downturn, reducing the need for bond-buying and bail-outs whenever anything goes wrong, which together cause ever-greater distortion of the economy.

“Yet it also comes with significant dangers. Millions of contracts and investments written on the promise of 2% inflation would be questionable, while mildly higher inflation would redistribute wealth from creditors to debtors. Meanwhile, the “promise” of a moderately “bigger” government could quickly spiral out of control if populist politicians make reckless spending pledges or poorly execute state investments in energy and industrial policy. And morph into bloated vanity projects that drag down productivity. Central banks’ credibility will fall if the goalposts keep moving.

“These opportunities and dangers are daunting. But it is time to start weighing them and their implications for citizens and businesses. The biggest mistakes in economics are failures of imagination that reflect an assumption that today’s regime will last forever. It never does. Change is coming. Get ready.”

“Change is the only constant in life.”

Why can’t we be like the Asian Tigers? Or China? Or even Vietnam?

Don't we recognize that our focus on jobs and poverty failed miserably? In other words, why does Juan de la Cruz suffer the infamy of being the regional laggard – and the consequences of abject poverty and learning poverty?

Recall the elements of cognitive development. Sadly, we’re unable to move beyond dualism or binary thinking – when multiplicity and relativism are available to us.

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

Here’s something from the Vietnam Briefing, 7th Jul 2014. “Samsung to Build US$1 Billion Plant in Vietnam.”

“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 multiple large-scale investments by the South Korean tech giant.

“The new plant will supply small displays for Samsung’s smartphones and tablet computers and is expected to be the world’s largest Samsung factory [of its kind.]

“Samsung has been able to negotiate exceedingly favorable conditions from the Vietnamese government for building this new factory – Vietnam is keen to attract more high-technology companies. According to the company’s investment license, Samsung will receive numerous concessions from Bac Ninh province.

“The province will use its funds to support the Yen Phong Industrial Park construction. The Provincial People’s Committee has approved a [50 percent income] tax rate reduction for the company for three years after the initial four-year tax exemption expiration and a nine-year 50 percent tax reduction. A 50 percent Land Use Fee (46.28 ha), which is about VND286 billion (US$13.5 million.) (Samsung received similar financial support for its previous plant).

“Bac Ninh province will also 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) and VND12 billion (US$564 thousand). However, this plan will only begin once the province receives taxes from Samsung. The “province” will issue these payments every year until the fund is empty.

“Samsung’s key partner in the plant building is the Viglacera Construction Company. The plant is to begin operations in the first quarter of 2015, with a monthly production of four million units, increasing to more than 15 million units in 2020. This project will provide employment opportunities for 2,500 people in 2015 and 8,000 in 2020. As a result of this billion-dollar project, Samsung expects to earn US$1.5 billion in 2015, US$4 billion in 2018, and US$6 billion in 2020.

“South Korea is Vietnam’s second largest foreign investor, behind Japan. Every province in Vietnam has its policies related to foreign investment. Manufacturers flock to Vietnam because of low wages, a young labor force, and generous tax benefits. Still, they are all geared towards creating a more favorable business environment and beneficial investment deals for foreign investors.

“The case of Samsung makes clear how serious the country is in attracting high levels of foreign investment. It is also clear that the government is continuing forward with its plan of moving from an economy based on low-end manufacturing to a value-added high-technology economy.”

Here’s The Economist again: The biggest mistakes in economics are failures of imagination that reflect an assumption that today’s regime will last forever. It never does. Change is coming. Get ready.

Disclosure: The Economist subscribers know that the newspaper periodically invites them to webinars with a request to help frame the discussion.

For the referenced article, here are quotes from what I submitted: “If the world order is in flux, where is our head if we are even to begin figuring out the challenge? In other words, should we consider asking the question, is our impulse to react to this seeming chaos?

“If the world is in flux, what is “reality,” and are we equipped to deal with it? A Jesuit, George Gorospe, defined reality as beyond any human experience or system.

“Simply put, nothing should surprise us. But how come humankind is in a state of shell shock? The Webb telescope is instructive per the scientists behind it: “We humans are connected to the universe. We’re out of the same stuff.”

“In other words, our world is dynamic and interdependent. And we learned that in grade school from the photosynthesis phenomenon.

“The universe was born almost 14 billion years ago. And we don’t have to strain to conclude that these two elements – dynamism and interdependence – explain why our world order is in flux.

“Two of the most brilliant human beings, Einstein and Jobs, dabbled in the universe. To them, innovation is the natural order of things.

“For the UN to remain relevant, as we humankind must recognize, it must embrace such a definition of reality.

“How has humankind evolved? We have gone a long way from being cave dwellers. Humankind is smart enough to make its world prosperous.

“Why did the Soviet empire collapse? Because people realized that its system was not synonymous with prosperity. And so, globalization flourished.

“But why has that sense gone out the window? Because wealthy nations and people decided to go against “reality.” Take the financial crisis or the great recession of 2008-2009.

“If the bankers displayed unmitigated greed, the average person was at the center. Americans, for example, kept raising their standard of living beyond their means. But that is not unique. The Greeks and Hungarians, too, chose to live beyond their means.

“And the consequences are apparent in the emergence of far-right populism. Think also of Brexit. And MAGA.

“And because prosperity is like a bell curve – not everyone can be mega-rich – the one-percenters wanted to protect themselves. And the more populism snowballs, the more they want to be wealthy.

“Unsurprisingly, despotism and oligarchy flourished beyond Russia, especially in former Soviet satellite states.

“And in protecting their wealth, they had to consider their safety and security. Think of Putin and Xi. Will they start a nuclear war?

“Isn’t their wealth and prosperity far more significant – as far as they are concerned – that smoldering the world to smithereens isn’t on the cards?

“The UN must therefore stop and ponder. What is the latest iteration or definition of “reality”?

“How do we reinforce the dynamism and interconnectedness of the universe?”

Readers of the blog must be sick and tired of the above submission – because the blog keeps raising them.

Then consider: “IT-BPM drives inclusive economic growth: A timeline,” Bernardo M. Villegas, Human Side Of Economics, The BusinessWorld, 8th Nov 2022.

“The Philippines may never catch up with our East Asian neighbors in manufacturing and agribusiness excellence. The hope is that President Ferdinand Marcos, Jr. will assign a high priority to this most crucial sector as he has given to the objective of food security.

“The Philippines, though, together with India, have all the competitive advantages of a young, growing, and English-speaking population to be one of the top countries in the world in the BPO-IT sector.”

Why can’t we be like Vietnam or the Asian Tigers? Or China?

Why does Juan de la Cruz suffer the infamy of being the regional laggard – and the consequences of abject poverty and learning poverty? Don't we recognize that our focus on jobs and poverty failed miserably?

Recall the elements of cognitive development. Sadly, we’re unable to move beyond dualism or binary thinking – when multiplicity and relativism are available to us.

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

“Change is the only constant in life.”

Gising bayan!