Monday, August 27, 2012

Our worldview and economic prosperity


Senator Angara must be lauded, together with a group of young Filipino intellectuals, for creating the Angara Center for Law and Economics – which "aims to raise the standards of academic research and policy studies – a think-tank, Filipino at heart, global in outlook, grounded in research, and oriented toward innovation." Specifically, they "are coming together to study how the country may prosper through good law and economic policy-making." [Manila Bulletin, 29th Jul 2012] [What was not highlighted in the article is if the Center would pursue what a Filipino friend, an intellectual herself, would call a “symbiotic relationship with industry,” for example, the lack of which apparently is why UP, despite the requisite population of PhDs, ranks relatively lower against the rest of the world.]

The Executive Director of the Center, Dr. John V.C. Nye, came to our consciousness a year ago: One kaklase P-Noy should listen to,” was how Boo Chanco titled his piece of 8th Aug 2011, The Philippine Star. Dr. Nye isn’t like most economists we have met… he takes a stand and ordinary mortals can actually understand him. That’s because he doesn’t scare people off with esoteric econometric models and formulas but talks about the real world – the impact of elites, special interests and institutions on a country’s economy.”

Dr. Nye said he doesn’t understand why we have so many laws that bar the entry of foreign investment that would create jobs here in the country. We are so afraid of having foreigners exploit our labor at home but we don’t seem to mind letting foreigners exploit them abroad, he observed. Thinking global is the way to create jobs for these workers at home, he stressed . . . We . . . have policies like high minimum wages and strict employment protection in the industrial sector that prevents industry from absorbing more workers and thus spark the economy’s transformation. That is also why the unemployment rate for college graduates is higher than those with less education . . . Extreme nationalism, he said, turned the nation inwards in the 50s and 60s. Like Argentina, we basically raised the cost of capital and destroyed investment . . . Dr. Nye denounced what he sees as a marriage between nationalist and populist thinking with the interests of the elite in preserving restrictions to global competition. It is only global competition that can break the stranglehold of the traditional oligarchs on the economy, he stressed. This is specially so because we have weak institutions and arbitrary enforcement of rules . . .

Dr. Nye was realistic enough to acknowledge that the path to reform is difficult because entrenched interests will fight to keep their privileges . . . He also thinks we should be cosmopolitan… find ways to involve international players not beholden to local interests. We should encourage regional competition and increase market access so that different businesses are involved. Then, don’t be fixated on legal details . . . Finally, he called on us to always look outwards. Filipinos, he said, are not afraid of the world, so why not let more of the world in? By allowing more globalization, you will keep Filipinos working at home and not have to send them abroad. And he said, he is making these points from the perspective he has of world economic history… of how winners and losers are made of economies through time.”

This blog’s reason for being is to challenge Juan de la Cruz – to reinvent himself – and can thus relate to how Dr. Nye marries the real world with the body of knowledge from his field of expertise. But where is the writer coming from? He is a practitioner that has worked with folks from the region during the decade they were labeled Asian tigers, and over the last ten years with Eastern Europeans. And in both these parts of the world people have pursued purposeful development (admittedly far from perfection) notwithstanding their history or their culture or whatever. And Dr. Nye is effectively challenging us to revisit our long-held beliefs – or to reinvent ourselves in the writer's lingo. But can we when we take them as a given because they represent our culture? For example, how do we contemplate the point Dr. Nye makes re the elites when in our hierarchical culture we defer to them? And that reality is best demonstrated by our power crisis, with special interests behind the industry? Or even the thought of bringing down economic barriers in favor of foreigners? Or being outward-looking when parochialism is second nature to us? These are questions to Juan de la Cruz, beyond President Aquino, because we need a new perspective not only from our leaders going forward. And as Miami’s Fil-Am coach Erik Spoelstra says, “one’s heritage or background should not matter . . . the world is changing.”

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