Stream of consciousness . . . Gearing for AEC

Wikipedia: “It is a narrative device used in literature “to depict the multitudinous thoughts and feelings which pass through the mind. Another phrase for it is “interior monologue.” The term "Stream of Consciousness" was coined by philosopher and psychologist William James in The Principles of Psychology (1890): “consciousness, then, does not appear to itself as chopped up in bits ... it is nothing joined; it flows . . . In stream of consciousness the speaker's thought processes are more often depicted as overheard in the mind (or addressed to oneself); it is primarily a fictional device.”

Is PHL ready for Asean integration? “House Speaker sees PHL ready for Asean integration.” [Business Mirror, 30th Dec 2013]

“Earlier, President Aquino said these economic bills should be prioritized to help the government to attract more foreign direct investments and sustain the country’s robust economic growth, as well as to fight corruption. [Belmonte] said: We have a very long list of economic bills, and we are really trying to cut it down to a realistic level.” [A]mong these bills are the priority bills of President Aquino, such as the Cabotage law, the Fiscal Incentives Rationalization bill and the Land Administration Reform bill.”

“Moreover, the House leader said the country’s global competitiveness should also be supported by the private sector . . . “Greater competitiveness will allow us to attract the much-needed investments that will create many jobs and opportunities for our people.” This is why, he said, the public and private sectors should work together in establishing the right set of policies and laws that will impact upon key socioeconomic areas.”

“As the House leader elaborated on the Asean goal to establish itself as “a single market and production base with free movement of goods, services, labor and capital by 2015,” he, however, said this will be an occasion for fresh opportunities, as well as challenges. “To enable our country to attract more foreign direct investments, I continue to make representations to discuss possible amendments to the restrictive economic provisions of the Constitution. I firmly believe that relaxing the provisions on ownership of land, utilities, educational institutions and mass media will bring in investments that will create much-needed jobs,” he said.”

What the Business Mirror article confirms is that while the Indonesians have gone ahead with specific initiatives to attract investors, we are yet to get to first base still held by our stream of consciousness? With due respect to President Aquino, we are lucky that Speaker Belmonte is farther down the pike in his thinking. But the president is right; the economic bills should be prioritized.

But we need tangible interventions and initiatives to flesh that out. For example, we need to zero in on establishing investment-level goals otherwise all the talk would just be that, talk? Haven’t we talked ad infinitum about raising foreign direct investments, for instance? What levels must we set to generate a major bump in economic output and thus raise our average income (or GDP per capita) of $4,500? Who will do what, when, where and how – will we get there?

Competitiveness is beyond policy or competition policies and laws. To leapfrog our efforts, we better dig up the JFC’s seven industry winners. Because for PHL to write a competitiveness policy with very little experience in regional or global competition, we would again be mired in the legalese – but the test of pudding is in the eating? Don't we have tons of policies and laws yet we’ve remained deficient – very deficient, in fact – in the rule of law?

Put another way, we should pull out all the stops and support an intervention like the JFC’s seven industry winner – which apparently is a product of transparency, i.e., a cross-section of society was involved in its crafting? At this point, that is the quickest way for PHL to learn the ropes of regional if not global competition. We can’t wait for 32 or 50 industries to move from the roadmap phase to actually producing and marketing products in the region. In the private sector, it is called test marketing – and from where they learn how to fine tune their business plans.

We are not crafting a dissertation that may never see the light of day in the real world, we are putting together an actionable plan that will focus Juan de la Cruz on the building blocks of an economy, which we've failed to do over several decades? For example, energy is fundamental to an economic activity and thus must be given prominence. We can't just say we must prioritize; we must spell out our version of the two Great Commandments. That is the acid test of whether we indeed successfully prioritized our economic development initiatives. Simply put, if we were in the private sector, we are not drafting the corporation's by-laws but are developing the business model. And the simpler the better; because the key is to focus everyone on the strategy – and is a straightforward communication that empowers the people to execute accordingly.

For example, Warren Buffett would simply say it as “buy low and sell high.” In many globally successful enterprises, it is “innovation, innovation, innovation.” Which for PHL could translate to: “PHL: competitive in investment, infrastructure and industry.” Why? Those are the three very critical areas where we lag the region – and we can use the discipline of keeping our eye on the ball. And how could we flesh that out? Whether it is the Constitution or oligarchy that is responsible for our pathetic investment levels, we must turn it upside-down. And the same must apply in infrastructure development – which we must accelerate – and in industry – where we must focus on the vital few where we could attain global competitiveness.

Our biggest stumbling block is we've remained an underdeveloped economy for so long and don't have a track record in the pursuit of the common good? The evidence: everyone has his priority initiative, a sure formula for disaster, as in the outcome of crab mentality?

Revisiting our institutions

“Education schools . . . don't see their job as training teachers. They see their job as creating professional identity . . . While most programs could say they had classroom management as part of their curriculum, classroom management strategies rarely received “the connected and concentrated focus they deserve.” What's more, “instruction is generally divorced from practice (and vice versa) in most programs, with little evidence that what gets taught gets practiced.” [Joe Nocera, What is good teaching, The New York Times, 16th Dec 2013]

Not surprisingly, the private sector has raised the Western educational system as an issue. “The American work force has some of weakest mathematical and problem-solving skills in the developed world. In a recent survey by the Organization for Economic Cooperation and Development, a global policy organization, adults in the United States scored far below average and better than only two of 12 other developed comparison countries, Italy and Spain. Worse still, the United States is losing ground in worker training to countries in Europe and Asia whose schools are not just superior to ours but getting steadily better . . . The lessons from those high-performing countries can no longer be ignored by the United States if it hopes to remain competitive.” [Why Other Countries Teach Better, The New York Times Editorial, 17th Dec 2013]

If Americans can stand up to the reality that its “work force has some of weakest mathematical and problem-solving skills,” could we Pinoys do the same? My Eastern European friends, despite my sense of them generally having stronger mathematical skills than what I saw in the US, accepted the reality that they also needed better problem-solving skills. And even their math-related skills were put to a test as they applied to sales forecasting and long-term planning, for example – which, of course, demand other competencies. And so they have embraced education and training as a constant. 

Economic development which is central to nation-building is like any development efforts, it demands maturity, hard work – and then some. And while at the macro level it is the collective success of private enterprise that will nurture and sustain the broader economy, the predicate is clear: industry must invest in education and training at the enterprise level, precisely what progressive global companies have done over the last few decades.

And invariably their experiences would confirm the shortcomings of the Western educational system. For example, young interns and new hires would immediately recognize the gap between what they learned in school and what the private sector demands, for instance, in marketing. In industry, it is taken as general management which translates to horizontal leadership and financial accountability. It simply means that the old command-and-control structure doesn't apply. Because in today’s fast-changing world, what is demanded is a constant rearranging of groups into self-organizing teams that are cross-functional and multi-level such that the old formal division of labor and hierarchical structure are incongruous. For example, global companies could be developing and test marketing a new product idea in three different countries and thus would render the formal structure moot.

What about economic development? In PHL, we are input-driven, which is fine until we get to the endpoint. For example, in economics there is the input of policy as in fiscal and monetary policies; and employing a set of such policies has yielded 6% to 7% GDP growth for PHL over the recent past. But as we now know, those numbers have had no major impact on the output – that of our average income of $4,500. At this level, we clearly are an underdeveloped economy and so PHL poverty remains at such alarming levels. On the other hand, if we are to be output-driven, the desired outcome is to be a developed economy and that means an average income in the $30,000 to $50,000 range; and it would take at least a generation for us to get there even at a 7% compounded annual GDP growth rate.

Ergo: an impressive growth rate of 7% is moot – make that 8% and the prognosis doesn't change – given how deep we are in the hole! And so the questions we must ask then are: Where are we? Where do we want to be? How will we get there? We are at $4,500 in average income. We want to be at $30,000 at a minimum. [At the half-way mark poverty would have eased but methodically building the foundation is imperative to get to nirvana.] And we can't run away from reality. PHL poverty is as hard and fast as our underdevelopment.

But with over $20 billion in OFW remittances that we generate with zero efforts other than the blood, sweat and tears of OFW families, the Western financial services sector is blowing our horn for us – because we are the solitary economy with such a healthy foreign exchange reserves that prop the economy, thus a haven for hot money but which can come and go anytime. Yet we don’t get the FDIs for long-term investment as explained in this blog. 

And how will we get to be a developed economy – or how are others doing it? The first step is to open the economy to foreign investment and technology. And if these investments are to come, we must accelerate infrastructure development. And then, so that we are not dissipating time, effort and resources, while free enterprise says every entrepreneur could do his or her own thing, the government can play quarterback and focus industry to a handful of businesses where we could attain global competitiveness – like the seven industry winners the JFC teed up, for example.

To achieve a quantum leap in PHL economic output, we need investment, beyond OFW remittances and even the property boom! And despite the slew of investment-rating upgrades, we’re still the least able to attract investment. Consider: PHL gross investments at 19.4% versus Thailand at 28.5% and Vietnam at 28.2%. Consider still the stock of foreign direct investment in PHL at $30.38 billion against Thailand’s $185.7 and Vietnam’s $73.71. Ergo: we are no different from a two-stroke motorbike racing against 4- and 6-cylinder turbo-charged cars! We can brush that aside at our peril?

And what about the formal structures that are high up in our value system? To be globally competitive, we can’t have the formal structures (see above re self-organizing teams) getting in the way – like the way Messrs. Roxas and Romualdez demonstrated it at the height of Yolanda. In the private sector, those guys would have been hanged! And to drive home the point even more, government should have pulled out all the stops to support the likes of the JFC’s seven industry winners. But as Mr. Roxas and Mr. Romualdez demonstrated, our instincts and our mindsets may be anachronistic that they have no place in the 21st century? 

And which is why our culture is a consistent theme of this blog. For example, are our institutions undermined by our way of life? Do we need to revisit and reset our assumptions – from family to school to church to the public and private sectors? Could the Binays learn from the mayor of QC who reportedly accepted a traffic violation ticket and then promoted the apprehending traffic aide? We instinctively take things personally and pull rank? What about our “kaklase,” are they “licensed to kill” too, like family? And while we're proud of our schools, even in the West, the educational system has failed to meet the needs of a fast changing world? Meanwhile Pope Francis has challenged our understanding of our faith? And as one columnist put it, “nationalism doesn't create jobs”? And when we throw in political patronage (as in Ps 300 – Ps 500 million in election contributions?) and oligopoly into our cultural mix, what do we have – a failed economy, if not yet a failed nation?

It appears that the Editorial of Manila Standard Today (27th Dec 2013) offers a prescription: “Making PH attractive . . . “Economic Planning Secretary Arsenio Balisacan is pushing to amend a Palace directive to liberalize foreign investment and prepare the Philippines for the Asean economic integration in 2015. The government, he said, must shorten the negative list under Executive Order 98. The revisions largely cover the practice of foreign professionals in the Philippines and overseas interest in some businesses.”

“Foreign investment creates more jobs and results in the transfer of technology that makes industries more efficient. The Philippines, thus, must open up the economy more and adapt to change, if it wants to keep pace with its more affluent neighbors.”

But where is the editorial coming from? “The Philippines, despite having the second-fastest economic growth in Asia, is one of the least attractive investment sites in the region. An outdated Constitution and the parochial mentality of some political leaders have made the Philippines least desired by foreign investments in this part of the world.”

“Pseudo nationalists, who are just out to protect the economic interests of the landed few and the present oligarchs, try their best to maintain the status quo. The resistance of the political leadership, which includes President Benigno Aquino III, to change the Constitution and liberalize the economy further has allowed other Asian neighbors to progress ahead of the Philippines.”

“Indonesia, in contrast, is making moves to allow higher foreign investment in several sectors of the economy to boost growth and woo back foreigners who left during recent market turmoil. The Southeast Asian nation is opening up foreign investment in power plants, ports and airports and the pharmaceuticals industry . . . Indonesia is revising its “negative investment list,” which restricts foreign investment in areas considered sensitive. Jakarta hopes to expand the economy by increasing foreign ownership in airports, sea ports and toll roads.”

Ergo: it is not about destiny; we hold the future in our hands . . . And another neighbor is showing us how? 

Our two lives . . .

“Women's Rights Advocate Paid Her Nanny Three Dollars An Hour,” Gawker.com, 15th Dec 2013: “An Indian diplomat who championed women's rights is being criminally charged in New York for paying her female nanny $3.31 an hour and lying about it on the woman's visa application. [She] was arrested and handcuffed this week as she dropped her daughter off at a Manhattan school. Although [she] was actually the acting head of the consulate at the time of her arrest, the United States is denying diplomatic immunity, saying that visa fraud isn't covered under the Vienna convention. In addition to the women's affairs part of her job title, [she] has repeatedly put herself out in the press as an advocate for “underprivileged” women’s rights. According to the US Attorney's office, however, [she] was doing the opposite at home. Authorities say she helped her nanny fill out fake visa forms which said [she] was paying her $4,500 per month, or $3,927 a month more than the woman's actual $3.31-an-hour salary, which they documented in a secret contract.”

From Salon.com, 18th Dec 2013: “The AFL-CIO urged MSNBC hosts Wednesday to defy “fear and concern” and break their silence about NBC’s alleged anti-union “hypocrisy.” None of the five high-profile progressives they’ve targeted – Rachel Maddow, Al Sharpton, Lawrence O’Donnell, Chris Hayes and Ed Schultz – has so far directly and publicly addressed allegations that NBC-owned Peacock Productions exploited fear tactics and legal tricks to avert unionization. NBC and the five hosts did not immediately respond to Wednesday morning inquiries, or to prior requests for comment over the past week.”

“These hosts have a particular responsibility,” AFL-CIO organizing director Elizabeth Bunn told Salon. “They have respect and they have clout that producers alone don’t have, and they’re part of the larger progressive movement.” She said the five anchors were “uniquely positioned to hear the stories of what their parent company is doing to workers, and broadcast that to the larger American public.” She urged them to follow the “inspirational example” of workers at Peacock Productions – a company that produces some MSNBC programming – who’ve chosen to take collective action.”

Indeed, we live our two lives. And every now and again, the two women in my life would remind me that it applies to me too. For example, my daughter’s Christmas letter reads: “A Kantian Christmas . . . Admittedly, with minimum self-examination, I fail Kant's stress test on a daily basis. (And Dan, this letter doesn't change a thing about . . . what I want for Christmas). But please don't allow my personal failings to upset certain facts that remain. Each action has an outcome. Each inaction has an outcome. Can we all act or abstain in the same way and sustain that outcome . . .”

But beyond my wife and my daughter, it has been Pope Francis that has consistently been providing us the mirror to remind us of our two lives. And so he is the first to admit: I am a sinner. Pope Francis doesn’t need us to echo his thoughts. Yet I religiously keep to this blog, soon to be on its fifth year, and my daughter reminded me why – and it could in fact remind freedom-loving people what freedom is about – when she quoted Mandela: "I can rest only for a moment, for with freedom come responsibilities, and I dare not linger, for my long walk is not yet ended."

My family joins me in wishing one and all a blessed Christmas and a joyful new year!

Just the tip of the iceberg

This is about the increase in Meralco's charges. But I would establish the premise through my favorite third party if only to bring the emotions on the subject a few notches down . . . The one reality with my Eastern European friends that has endured – and where I have a ringside view – is constantly seeing the tip of the iceberg . . . and reminding ourselves that underneath the obvious is something more horrific. To paraphrase Einstein, “I have no special talent, I just stay with a problem longer” – and which we translated to organizing classroom sessions so that indeed we would stay with a problem longer.

But so that the culture in the company doesn’t retract to the command-and-control disease of the formal structure where everyone abdicates because authority has all the answers, a big chunk of a brainstorming session is carried on by the players closest to “where the action is.” And so, for example, I would stand up and leave. In the meantime, we would flash on the screen a PowerPoint template of three engaged gears – with the gears representing the units that, in synergy, must deliver the desired outcome. Yet there are challenges that would unsettle them: “are you not joining us?” “No I am not,” would be my standard reply. And I would add: “do you think my daughter would have taken it kindly if I was there every time she was with friends?” And then almost in a flash the group would get a great sense of relief and confidence as one would intone: “Keep it simple! We must stay with the discipline of the fundamentals.”

We were in a resort in Phoenix, looking out to the desert-golf course from the balcony (my wife wanting to show a visiting brother around and get away from the wintry weather in New York and, of course, to get in at least a round of golf), when I read about the protests against the increase in Meralco's charges. I had been going through my in-box and was still wearing a grin after reading the monthly reports of my Eastern European friends; and despite the turmoil in Ukraine, the business in the region continued to be robust, with a very pronounced upward trend. But the one from Hong Kong gave me the biggest thrill, being the baby in our portfolio. “The discipline and investment in the fundamentals are paying off. We had the highest share of voice (local TV commercials) in the category during the campaign period, and the cost per unit was thus drastically reduced. That is on top of our print advertising, aggressive sampling program and in-store activity. We're also working with Hong Kong University students to evaluate our efforts. In the meantime, the velocity of the business is in an accelerated pace.” [The examples of two different parts of the world say a mouthful: competitiveness is not a function of exchange rates and tariffs and even distances and friends or foes. They matter but are manageable, i.e., great products override barriers. In PHL, competitiveness is still a function of monopolies and oligopoly that thrive in political patronage – and we wonder why we’re in the pits?]

What do they have to do with the increase in Meralco's charges? There are tactical or short-term problems and there are strategic and long-term problems. PHL has been reduced to a reactive being consumed by “retail politics” – some, and they ought to be hanged, even making “pa-pogi” points while people suffered in Tacloban – instead of nation building? We have been conditioned to seek populist solutions and are well down the road in pursuit of “the lowest common denominator” – thus in a race to the bottom, if we’re not there yet – with no sense of the pursuit of excellence, as in the common good! And not surprisingly, a legislator proudly suggested for the government to forego the VAT on the increased Meralco charges. It smacks of our reality: a dole-out culture given our cacique, hierarchical system and structure where paternalism is the yardstick even at the supposed august body that is the Senate? Where is leadership going to come from? Isn't legislation meant to put us on the right course, to attain the common good?

Why do we have an energy crisis – because we’d rather stick our head in the sand? This crisis was a crisis at the time of President Ramos; and every economist interested in the Philippines as well as the international institutions and foreign banks, and analysts and investors, etc., etc. have raised the challenge time and time again. The fallout: we are the least able to attract FDIs! If PHL were a prisoner, we would be in death row – for being recidivists?

I talk about my Eastern European friends because their mindset wasn’t that much different just eleven years ago. When they were first introduced to the discipline of the fundamentals, they thought it was purely a Fortune 500 lingo. Yet from a business model that said “we could only sell products at 50 euro cents because we're poor Bulgarians,” they have evolved to: “only great products will do; we must ‘own the store’; and there will be no compromises.” In today’s fast-changing world, business models must succinctly and sharply communicate the enterprise’s reason for being. It must give the organization and its people the confidence to do what they do for a living. Contrast that to the days of strategic planning when an enterprise would have several 3-inch binders – or bibles – that spelled out their business plans, and where only a select few had the authority to discern their chapters and verses. Unfortunately, the public sector still reflects that model; and, not surprisingly, inefficiency is commonplace thus conducive to compromises – and at its worst, corruption and a culture of impunity?

In fact early on the business model of my friends was simply: “margins, margins, margins.” Because when I arrived they shared their dilemma: we are able to sell our products but aren't profitable – thus the sustainability of the enterprise is suspect. “This is a simple business; we shall make things and sell things. But we shall make not things per se but competitive things that will find markets beyond your shores. We shall learn why Edison said, “I want to see a phonograph in every American home,” or why Gates wanted “a computer in every home,” or how Jobs figured that an “Apple responds to the 21st century lifestyle.”

Unfortunately, in the Philippines, hierarchy rules; and we play by their rules and the outcomes are represented by Meralco's increased charges. And which is just the tip of the iceberg. And so we run around like a headless chicken, clueless that we live in a rigged system.

The evidence: the restrictive economic provisions of the Constitution, the neglect of basic infrastructure, starting with energy and beyond, bypassing industrialization, failure to support the JFC's seven industry winners, among others – while a handful of billionaires prosper in a sea of poverty . . . It brings to mind how dreadful the world viewed oligarchy in countries like former Soviet satellite states, including Putin's Russia – and thus have bailed out from what was once a BRIC economy . . . Can PHL rightly claim moral superiority or the hubris exuded by our elite class? Are we beyond redemption?

Crab mentality . . . is anarchy

We window-dress it with words like comprehensive, holistic, inclusive and the like yet the outcome for PHL has been anarchy? Google: “anarchy – a state of disorder due to the absence of authority; lawlessness, nihilism, chaos, tumult, turmoil; the absence of government and absolute freedom of the individual . . .” Thus beyond the good intentions of our “kuro-kuro” we have unwittingly brought the nation to a grinding halt? The evidence: the restrictive economic provisions of the Constitution (and thus PHL is the least attractive to FDIs, and technology); neglect of basic infrastructure (from energy onwards); bypassing industrialization; and the inability to support the JFC’s seven industry winners, among others? Question: how can we be other than a poor nation under those conditions? Pope Francis must have asked a similar question:  how can we be true to our faith when we take faith and mercy for granted and are doctrinaire; and thus he “has expressed an intention to reorganize and overhaul the Roman Curia, the bureaucracy that governs the church.” [Pope replaces conservative US cardinal on influential Vatican committee, the New York Times, 16th Dec 2013]

And given our cacique, hierarchical system and structure; and because of the state of lawlessness in our midst, those at the top lord it over Juan de la Cruz – i.e., PHL is a culture of impunity, indeed! News items: Cartelized power; SMC seeks power monopoly in Bicol; Power cost surge to hamper PH economy; House to revisit EPIRA; and 20 lawmakers, 4 govs told to vacate posts . . . 

Why are we poor? Because we have yet to grow up and own up? As my Eastern European friends have learned, freedom and democracy presupposes maturity, hard work – and then some. And just like them, we could use the following prescriptions – instead of dismissing outside views outright and looking elsewhere to lay blame on for our shortcomings?

From: Report| McKinsey Global Institute; A new dawn: Reigniting growth in Central and Eastern Europe; December 2013: “From the early 1990s until the onset of the global financial crisis, in 2008, the economies of Central and Eastern Europe established a record of growth and economic progress that few regions have matched. Emerging from decades of socialism, [these countries] became standout performers in the global economy. Their inherent strengths were unleashed as state-owned industries were privatized and labor reforms implemented, attracting a flood of capital and foreign direct investment that drove productivity improvements and per capita GDP growth.”

“Yet these economies—like the United States and Western Europe—have struggled to regain momentum since the end of the recession. Despite their underlying intact strengths, such as highly educated yet inexpensive labor forces, they need to modify their economic models to restore the . . . annual growth rates of the pre-crisis years. The region must emphasize investment-led growth, expand high-value-added exports, and increase both foreign direct investment and domestic savings. For this strategy to succeed, the nations of Central and Eastern Europe will also need to build the foundation for growth, including infrastructure improvements, accelerated urbanization, regulatory reforms, institution building, investments in labor-force skills, and efforts to encourage R&D and innovation. In addition, these economies must address the aging of the workforce by raising the labor-participation rate of women and younger workers.”

“The new growth model: The global recession exposed certain weaknesses in the growth strategy that had propelled Central and Eastern European economies before the crisis. These weaknesses included very high consumption (on average, about 80 percent of GDP from 2005 to 2008) enabled by unsustainable levels of borrowing. Easy lending standards helped create real-estate bubbles . . . ; prices . . . rose by three and a half times from 2000 to 2007. Moreover, since at least 1995, overall savings in these economies failed to cover investment: national savings rates averaged 19 percent of GDP, while investment generally hovered at around 24 percent. The region depended on foreign direct investment, which collapsed during the crisis and has only partly recovered. In addition, trade was overly concentrated on Western Europe and a handful of categories, such as autos. And despite strong flows of foreign direct investment, outlays on machinery and technology were modest in many sectors.”

“A new growth model would expand exports of higher-value-added goods and services, increase productivity in lagging domestic sectors, and finance growth with renewed foreign direct investment and higher savings . . .”

That is what “the end in view” ought to be for this region of the world. But in PHL we have yet to learn – and practice – to move beyond linear thinking? In the meantime, we have descended into anarchy because we sincerely believed crab mentality is Christian-like – i.e., comprehensive, holistic, inclusive? Wrote a New York Times columnist: “[Pope Francis] had lifted the church ‘above the doctrinal police work so important to his predecessors.’ Well, they didn't get the memo in the suburbs of Philadelphia,” read: the Philippines? [Frank Bruni, The New York Times, 14th Dec 2013] “Don't let the perfect be the enemy of the good,” says Pope Francis.

What about AEC? Where are we? Where do we want to be? How will we get there?

“There we go again” comes to mind after reading a columnist that threw in the glass-is-half-full argument? Didn't we say that with OFW remittances – as we bypassed industrialization? This blog was inspired by my Eastern European friends that have lived through the EU economic integration. And the above McKinsey Report says a mouthful, but nothing about the glass is half full. “Attracting a flood of capital and foreign direct investment” was the first benefit of the EU to these countries because they opened their economies! And where is PHL in attracting FDIs? We remain the least attractive to FDIs and we know the reasons why yet we've kept our head stuck in the sand! But The Lord will provide? We've been taking the name of The Maker in vain since Padre Damaso? That is where we are? We have a handful of companies that are geared to be regionally competitive but Singapore, Malaysia and Thailand control regional trade to the extent of 70%! While we haven't even demonstrated the resolve to support the JFC's seven industry winners, for example! That is where we are? These Eastern European countries have fast-tracked infrastructure development and we have not! That is where we are? 

Where are we, again? If we can't look in the mirror, how can we establish where we are? And how can we figure where we want to be given the chaos and the lawlessness around us? Ergo: we are clueless how to get to where we want to be because we haven't even defined it in the first place?

“Don't let the perfect be the enemy of the good”

Pope Francis didn't claim originality but could it be one interpretation of Pareto's principle? And the thought of picking and choosing brings to mind the “Serenity Prayer” by Reinhold Niebuhr (1892-1971), an America theologian: “God, give me the courage to accept with serenity the things that cannot be changed. Courage to change the things which should be changed, and the Wisdom to distinguish the one from the other . . .” Acknowledged [c/o Wikipedia] as one of the most influential thinkers (in public affairs) in the 1940's and 1950's, his words have been quoted and compiled. 

In PHL is picking and choosing a no-no? For example, our bias is for comprehensive, holistic and inclusive such that we assumed that we could address inequality via a land reform program that was “comprehensive” as in CARP, only to find out that it wasn't comprehensive after all? My wife and her siblings inherited a rice farm in central Philippines, and for several years now, they've been trying to help the tenants to own their respective shares. Yet, the latter have been unable to commit to any arrangements for one reason or another, their debts owed middlemen being one of them. And my wife could only sigh, “How could they be free from such bondage.”

In fairness, it is human nature demonstrated as early as the biblical times by the scribes and Pharisees, and in more recent times captured succinctly by Niebuhr: “The tragedy of man is that he can conceive self-perfection but cannot achieve it.” While the educational system as we know it has taught the world linear thinking; and not surprisingly, our economic plans, for instance, have been models for their comprehensiveness – such that a neighbor like Thailand adapted them. “Poverty is a complex problem that needs a comprehensive, multipronged, multisectoral solution involving many stakeholders . . .”[Government: Poverty reduction slow, threatens MDGs, Business Mirror, 9th Dec 2013]

Don't let the perfect be the enemy of the good, so says Pope Francis. Translation: Or you will succumb to crab mentality or simply be frozen to inaction – as in the restrictive economic provisions of the Constitution or the neglect of basic infrastructure, starting with energy, or bypassing industrialization or failure to support the JFC's seven industry winners? [And why a consistent theme of this blog is the imperative to prioritize.] And running out of parties to blame, we couldn't help but conclude that the global community especially the developed nations are playing bully in global trade at our expense? Of course they are! Aren’t we going to do the same thing if we were in their shoes – or why do we tolerate social injustice as in the PHL cacique, hierarchical system and structure? But we grew up expecting perfection from the world around us courtesy of Padre Damaso?

My Eastern European friends are a consistent theme of this blog because they're relatively new to free enterprise – and grew up expecting inevitability and helplessness courtesy of their communist masters. And over the last eleven years, they've committed themselves to pursue the promise of a market economy; yet they recognized at the outset that they could trip or unwittingly undermine their own efforts. “We appreciate your praises whenever we deserve them . . . but please tell us whenever we are astray. We are learning and are proud of our ourselves, but we're relative newcomers to free enterprise.” And so while we have mutually defined my role as akin to a navigator, there were times when I had to roll up my sleeves. 

But it was not different when I was with my old MNC company. After a few subsidiary business reviews or even regional meetings, for example, where “action points” were minuted, there was no certainty that the desired outcomes would materialize and so follow up visits were called for – and certainly rolling up sleeves was demanded; and in extreme cases restructuring had to be pursued. And so anticipating challenges became the route to nirvana – meaning, equipping people and the global organization with the skills-set to become truly globally competitive.

What has that got to do with PHL economy? For example, strategic planning, as a tool in the pursuit of an enterprise, has long been discredited and so was management by objectives, among others. And the reason simply is that they became an end in themselves – when it was the thinking not the mechanics that was supposed to be the magic. For example, a business model can't be static and must constantly be challenged and renewed to be relevant to a fast-changing world. Yet in its heyday, strategic planning was construed as bible-making, thus evergreen, until the likes of IBM and Xerox found themselves adrift. [And indeed Einstein was ahead of his time: “the value of education is the training of the mind to think and not the learning of many facts.”]

Still, if we Pinoys could get our act together – i.e., learn to prioritize and overcome crab mentality, which in its strictest sense is anarchy – we could get this nation going. “It matters not how strait the gate, how charged with punishments the scroll, I am the master of my fate: I am the captain of my soul,” so quoted The Economist to profile Nelson Mandela. [“Invictus,” William Ernest Henley (1849-1903)]

Throwing darts or “kuro-kuro” (in Filipino)

It seems “kuro-kuro” goes beyond our confines after foreigners jumped into the fray and gave their two cents about what ails PHL economy? It was like watching a Pacquiao match to read how we Pinoys reacted to a foreigner expressing concerns about a bubble. Still, when all is said and done, despite being the fastest growing economy in Asia, save China, Philippine poverty reduction remains elusive? Not surprisingly, while many of us vehemently disagreed that “our economic growth is a bubble in disguise” [7 reasons why PH economic growth is not a bubble in disguise, Philippine Daily Inquirer, 3rd Dec 2013], there is agreement that “POVERTY reduction in the Philippines has remained slow despite the country’s economic success in the past few years.” [Government: Poverty reduction slow, threatens MDGs, Business Mirror, 9th Dec 2013]

Bubble or no bubble, we remain a poor country? And why is that?

“Poverty is a complex problem that needs a comprehensive, multipronged, multisectoral solution involving many stakeholders. It is a daunting challenge, to say the least, but this is one we are determined to meet head on . . . [T]he country’s growth is not sufficient to reduce poverty . . . It’s a difficult problem but it is quite clear that the problem is inequality, that’s the problem.”

“Other economists agreed and said the slow progress made by the country in reducing poverty is rooted in the lack of decent jobs by millions . . . [T]he slow progress in reducing poverty would likely cause the Philippines to fall short of its commitment to halve poverty by 2015 . . . To improve poverty, job generation is key. To generate more jobs, investments are key. Also, public provisioning of goods and services have to be efficiently targeted . . . [T]he government must strive to increase available jobs [which] could usher in inclusive growth and reduce poverty in the country.  Efforts to curb corruption and inefficiency must also be put in place . . .The NSCB said among the reasons the pace of progress in terms of reducing poverty has been slow is that there were seven major natural disasters that hit the country between 2009 and 2012, which cost the economy some P96.25 billion.” [ibid.]

“Where did the economy’s growth so far this year come from? Where have we done better, and where have we done worse? Is our economy’s growth still too dependent on consumption spending fueled by remittances from overseas? Or is investment becoming a more important source of demand to induce greater production? And finally, was the growth inclusive, that is, did it have wide participation and benefits among Filipinos, especially those with less in life?” [Cielito F. Habito, Latest economics ups and downs, Philippine Daily Inquirer, 9th Dec 2013]

“Has growth been inclusive? The fastest-growing sectors (translation: those where incomes are growing fastest), with growth rates exceeding 15 percent, have consistently been financial services (banks and insurance) and real estate, renting and business activities (which includes business process outsourcing). At the other extreme is agriculture, on which the bulk of our rural population, and on which the jobs of an estimated two-thirds of our workers depend directly or indirectly; here, outputs and incomes shrank. That should be clue enough.”

The litany of our challenges thus goes: how do we address inequality; how do we create millions of decent jobs; how do we curb corruption and inefficiency; how do we attract more investments; how do we make public provisioning of goods and services more efficient and targeted; how do we mitigate the impact of natural disasters; and should we focus on agriculture where the bulk of rural population is and on which two-thirds of our workers depend directly or indirectly? 

But what is “the end in view”? Where do we want to be? It is not the input but the output or the outcome that will determine if we are where we should be? But first things first; our average income (or GDP per person) is a mere fraction compared to developed economies. And closer to home, benchmarking against Malaysia or Thailand should in fact explain why we remain poor? These neighbors opened their economies to foreign investments and technology and thus have, like wealthier Singapore, generated competitive products and services to dominate regional trade – and raised their average income several fold compared to PHL. 

But we have very little appreciation, if it is not altogether nil, of the power of competitive products, including those derived from agribusiness? Yet what economists call the “multiplier effect of investment” could largely be traced to competitive products and the support industries they spawned – and thus forming the network of an ecosystem. In other words, because competitive products win in the marketplace, they nurture and sustain the broader economy.

For decades we were in denial, patting ourselves on the back given our inward-directed consumption economy that was in fact driven by OFW remittances and more recently augmented by BPOs. The reality: we were suffering from our own “Dutch disease” – i.e., we had our head stuck in the sand? 

If “Pinoy abilidad” means taking our eye away from the ball – and indulging in “kuro-kuro" – indeed PHL poverty shall define who we are? And so while agriculture accounts for a big chunk of our population, for example, and where poverty is most pronounced, our real challenge is to focus on generating marketable – spelled competitive – products because producing commodity-type, basic produce does not give us competitive advantage. Every other country does that. And didn't we assume land reform was the be-all and end-all? And it also applies to manufacturing: to simply say we must revive manufacturing doesn't cut it! [And why a consistent theme of this blog is “thinking.” The educational system taught the world linear thinking yet the challenges we face in the real world demand critical-thinking skills, for example.]

But it gets worse given our track record? Didn't we set a very ambitious tourism goal because it was a natural, a no-brainier – that it would create millions of jobs – yet we could not get our ducks (i.e., infrastructure) in a row? Because we could not muster the political will . . . It's the interest of a few rich people against an entire nation, to paraphrase the slotting problem at NAIA? [And if we were a nation where the rule of law resides, that would be criminal? Or why JPMorgan had to cough out $13 billion?] And it extends to our inability to address the restrictive economic provisions of the Constitution; the neglect of basic infrastructure, including power; bypassing industrialization, etc. “Argue less, accomplish more . . . We have a glut of problems to tackle . . . Stop bickering and roll up your sleeves. Don't let the perfect be the enemy of the good . . .” [Pope Francis, The People's Pope, Time magazine, 11th Dec 2013]

There is a season for everything, to paraphrase a biblical passage; and the plight of Juan de la Cruz demands more than indulging in “kuro-kuro”?