“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!