A nation does not turn on a dime overnight. We were building up the crescendo – in a race to the bottom, aka regional laggard – over decades.
And I share the blame – I should have known better.
My old MNC-company had much faith in the Philippines. The local company was among the top ten subsidiaries – among over two hundred markets worldwide.
And to the bosses, this connection to the Philippines was even personal. During WWII, the Japanese incarcerated the general manager of the subsidiary at UST, and Filipino employees visited him every day to ensure adequate nutrition. Right after the war, with the company facility in utter disrepair, he assembled an insurance claim assisted by his Filipino employees. [He would climb the corporate ladder and became the international division president, the more profitable side of the business than the US domestic one.]
He used the insurance proceeds to build the subsidiary’s first factory, then a trading enterprise. Unsurprisingly, on his 80th birthday, he chose to celebrate it in the Philippines. And we in the local management threw a birthday bash at the Manila Polo Club, his old hangout, with old friends on the guest list.
In the 70s, this American company had a very rough patch and was on the verge of being taken over by a prominent European investor (with a wealth heritage.) He loved its flagship product but sensed it lost its focus – it had amassed over a hundred brands in unrelated businesses. He was not shy about his observations and told the company’s management, “either you shape up or I will buy you out.” But his heart was with the company. And the CEO heeded the advice.
Fast-forward to the Philippines. The company drew a restructuring plan that called for selling over a hundred brands – almost all of them. And to ensure the few brands left can make up for lost revenues, the mindset of the enterprise had to change – totally and completely. And so, New York instructed the top ten subsidiaries to hire “change agents.”
And I was one of them. And it became my ticket to become a regional manager – over peers from the region plus colleagues in Australia, New Zealand, and Canada. Before NAFTA, Canada was a great experience, as were the other two for regional managers, i.e., to learn the developed markets.
That was when I should have sounded the alarm bell in the Philippines. For example, the company built its first Asian robotic factory in Thailand, then called the “Detroit of Asia.” [And the board of directors, with their spouses, saw it fit to attend its inauguration. But the Philippines was still top of mind that their first stop on the trip to Asia was Manila and billeted them at the Manila Hotel. We gave them a quick tour of Manila that included a helicopter ride over Taal lake.]
And when the company established a shared services group to implement an enterprise-wide information-technology function, it picked KL. It did not stop there. We put up a regional technology center in Mumbai, among other investments across the region. Recall that as the Asean Economic Community evolved, the Philippines lost out to its neighbors.
Why did we ignore all the warning signs?
That’s why the blog points the finger at us – in the elite class. We never lost out to Juan de la Cruz. We continued to pull rank. Why won’t we reinforce our parochialism and insularity when we had all the comforts within our gated communities – and send out kids to the best schools in the world?
In the meantime, “Filipino children born in the last ten years are at a disadvantage even before entering the workforce. Due to educational standards that have plummeted, today’s average Filipino has become intellectually inferior to his counterparts from Asia, Europe, and North America. Unable to compete, this will relegate the Filipino to be the manual laborers of the world unless we get radical reforms into motion. It is a national tragedy.
“The average Filipino student has an average Intelligence Quotient (IQ) of 86 compared to an IQ of 108 for the average Singaporean, South Korean, or Hongkonger. Filipino children have the lowest IQ in ASEAN, below that of Myanmar, Laos, and Cambodia. It’s safe to say that our youth are among the least future-ready on the planet.
“Most worrying is that a whopping 69% of Filipino students believe that their level of intelligence is a given. Only 31% believe they can improve if they work hard.” [“Plummeting education standards: A national emergency,” Andrew J. Masigan, Numbers Don’t Lie, BusinessWorld 9th May 2021]
Sadly, this tragedy did not happen overnight.
That is the reason why the blog carries the title “Philippine Economy: Reinventing Ourselves.”
Consider: “How does a country become prosperous (?),” Senator Sonny Angara, BETTER DAYS, Manila Bulletin, 9th May. “A country becomes prosperous when it gets its act together.”
The real question Juan de la Cruz must ask is, “Why can’t we get our act together?”
Recall the treatise of Princeton psychologist Daniel Kahneman, the 2002 Nobel Prize winner in Economics – for his groundbreaking work in applying psychological insights to economic theory, particularly in the areas of judgment and decision-making under uncertainty.
He postulated two operating systems in the brain, (1) automatic and (2) conscious.
Then recall the blog never fails to raise our instincts: We are parochial and insular. We value hierarchy and paternalism and rely on political patronage and oligarchy that ours is a culture of impunity.
In other words, our instincts – best described as our caste system – can explain our automatic dismissal of the West until we find ourselves between a rock and a hard place. [And why we can’t wrap our head around the mantra that our neighbors embraced, “Beg for Western money and technology.”] Think of China’s adventurism in the West Philippine Sea. And we, including those behind media editorials, justify our ambivalence in our foreign relations, be it with China or America or whoever.
And part of that comes from what Rizal articulated, i.e., he who submits to tyranny loves it. We can’t figure out how to relate to the world, as in the freedom-loving people instead of the tyrannical ones. Why? Because our values of hierarchy and paternalism get in the way.
We cannot get our act together because, in more ways than one, our caste system makes us believe that our respective ranks are a given, and only a minority thinks we can improve by hard work. Ours is the classic “fixed mindset.”
Here’s a quote from an earlier posting: “Recall Bill Gates: “Our genes influence our intelligence and talents, yet they can develop. Suppose you mistakenly believe that your capabilities derive from DNA and destiny rather than practice and perseverance. In that case, you operate with what Dweck calls a ‘fixed mindset’ rather than a ‘growth mindset.’ Our parents and teachers exert a big influence on which mindset we adopt—and that mindset, in turn, has a profound impact on how we learn and which paths we take in life.” [Carol Dweck is the Lewis and Virginia Eaton Professor of Psychology at Stanford University. Dweck is known for her work on mindset. She was on the faculty at Columbia University, Harvard University, and the University of Illinois before joining the Stanford University faculty in 2004. She is a Fellow of the Association for Psychological Science.]
How can we then get a grip on the challenges of this century – characterized by innovation and global competitiveness? In other words, we’re facing a complex world.
Consider: “Economic complexity refers to the productive know-how or knowledge held by society as expressed in the products and services it offers. Using a mixture of big data, network analysis, and creative visualizations, this concept of economic complexity is the best indicator, determinant, and driver for whether a country prospers or not.
“The central thesis is that a given area — be it a city, a province, a state, or an entire country — becomes prosperous when it can produce and trade a diverse array of products and services that are complex and uncommon (or not ubiquitous). The better an area can accumulate productive knowledge and leverage such knowledge, the more likely it will develop and flourish.
“An economically complex society has two basic characteristics: (1) an accumulated sufficient level of productive knowledge spread across many economic actors; (2) they’ve successfully organized themselves, i.e., established the environment where diversity can recombine this knowledge into actual products and services.” [Angara, op. cit.]
Recall this quote from an earlier posting: “In other words, we must overcome ‘pwede na ‘yan’ and think state-of-the-art in agribusiness. And even our top companies must also recognize how Vietnam overtook the Philippines. For example, we’re into chips while they are the regional manufacturing hub for Samsung smartphones and Apple AirPods. Why can’t we move up the value chain? We have no industry laurels to sit on!”
Let’s hold it right there.
Suppose we are to accelerate our growth and development as an economy and nation. In that case, we must learn to focus like a laser despite the imperative to assemble and pull together several elements.
And our top exports must be in our crosshairs. That is why the blog keeps speaking to the Asian Tigers. When we focus like a laser as they did, we can learn the ropes and comprehend the complexities that come with the enterprise.
But we don’t have to go it alone. That is why the Vietnam example is very instructive. For instance, they would not have learned the technology behind the Samsung smartphone or the Apple AirPod at the pace they did if they chose to start from scratch. Think of China too, and the rest of the neighbors.
Is going it alone the mindset of our economic managers?
Recall my old MNC-company. We had to tap an outside technology to win the technology race against our competition. And my Eastern European friends have won partnerships with Western raw material providers behind their top three brands. And the next one is coming along. Unsurprisingly, they turned into giant killers.
Our parochialism and insularity run the gamut that we keep shooting ourselves in the foot. We can’t operate in a vacuum. This universe is dynamic — and interdependence reigns.
Should we again pause and ponder?
Are we finally waking up – and getting our act together?
“Gov't leads whole-of-society efforts for economic recovery,” Editorial, Manila Bulletin, 6th May 2021. “At a job summit convened by the task group of the National Economic Recovery Strategy held last Labor Day, the country’s top economic managers rallied business, industry, and civil society leaders in adopting a whole-of-society approach to economic recovery.
“Socio-Economic Planning Secretary Karl Kendrick Chua pointed out that the government has allocated P2.5 trillion, or 14 percent of the country’s gross domestic product (GDP); of this amount, P2 trillion will come from the 2021 General Appropriations Act or the national budget approved by Congress.
“Additionally, the government is spending P478 billion in fiscal measures this year including (1) P317 billion from the Bayanihan to Recover as One (Bayanihan 2); (2) P23 billion Social Amelioration Program 2 for the National Capital Region, Bulacan, Cavite, Laguna, and Rizal or the NCR Plus; and (3) P138 billion tax breaks to all enterprises under the Corporate Recovery and Tax Incentives for Enterprises (CREATE) law.
“Trade and Industry Secretary Ramon Lopez underlined the urgency of job recovery and job creation measures, including a wage subsidy equivalent to P8,000 per month for a maximum of three months to affected workers through the payroll system of establishments that closed or suspended operations due to the pandemic. As of February 2021, some 4.2 million Filipinos were jobless, record-level unemployment arising from the pandemic’s crippling effects.
“There is a need for retooling and upskilling programs to address shifts in the labor market and ensure a future-ready Filipino workforce. As the pandemic has accelerated the pace of digital transformation, the government must assist those dislocated to rejoin the workforce in other productive areas.”
But what is the bottom line?
We have lots of balls up in the air. And we are playing catch up. Sadly, we are yet to demonstrate that we can “walk and chew gum at the same time.”
Here’s again a quote from an earlier posting: “Sustainable development must mirror an ecosystem, the best model being the photosynthesis phenomenon. And it is characterized by interdependence. Plants and animals — and humankind — need more than oxygen to thrive in this universe. And Juan de la Cruz needs more than political patronage and oligarchy to become prosperous.
“Indeed, sustainable development is not a cakewalk — and demands setting priorities (aka the Pareto principle) while organizing in parallels, i.e., “the ability to connect unrelated questions, problems, or ideas from different fields.” [Christensen et al., “The Innovator’s DNA,” Harvard Business Review, December 2009]
“It is a dynamic of several elements — best exemplified by the concept of sets and subsets — and not one-dimensional as in hierarchy and paternalism.
“Put another way, and we must overcome the crab mentality and value personal responsibility for the common good. Forward-think and seek learned optimism.
“Benchmark. Benchmark. Benchmark.
“The purpose of benchmarking should be to get a broad background of an area of knowledge, plus knowledge of state of the art and who is advancing it, and what principles drive the challenge or problem.
“Benchmarking research is the process for rapidly learning the essence of the desired field of knowledge with interest in finding the leading edge.” [University of Delaware]
We in the Philippine elite class may have the smarts, but we’re still the regional laggard. We must accept our limitations.
Gising bayan!
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