Context: We must get ahead of the curve

In a prior posting, the blog spoke to “context.” And that, understandably, we want to celebrate “wins” – even small ones – given that we are the laughingstock of the region. It is vital for our self-esteem and gives us the courage to forge on.

And we may be carrying lots of “psychological baggage” that, to be philosophical, is the mechanism to cope and overcome negative thoughts.

It would explain why we crafted a constitution restrictive of foreign investment and then overruled Juan de la Cruz and kicked out the US military. 

And given our inability to shake off poverty, our economic managers find themselves in the “frontline,” telling us that “we’re doing fine.”  

Sadly, that’s how we get ourselves “out of context.” For example, the blog advanced a “desired outcome” for Juan de la Cruz, i.e., “to traverse poverty to prosperity rapidly.”

But we’re beggars – and we can’t be choosers. In other words, destiny: We pigeonholed Juan de la Cruz as a fragile enterprise.

And that’s why we keep tripping all over and taking the wrong turn at the fork.

“Finance Secretary Sonny Dominguez has been upbeat about prospects for the economy. Indeed, a DOF undersecretary mocked some analysts for their pessimistic outlook on the economy's recent growth.

“Still, the job is not complete. Sec. Sonny urges Congress to complement the enacted reforms and pass the measures to ease restrictions on foreign participation in the economy, amendments to the Public Service Act, Retail Trade Liberalization Act, and Foreign Investments Act. All these will improve the country's standing in mobilizing more foreign capital to the country.” [“Back in business,” Boo Chanco, DEMAND AND SUPPLY, The Philippine Star, 17th Dec 2021]

Let’s hold it right there.

Recall that the blog has kept raising the imperative of benchmarking against best-practice models. To be logical yet linear and incremental is why we are the regional laggard.

And this is the 21st century. Even America finds itself losing its hegemon power. Of course, it was from its own doing. It ceded the moral high ground that it won with the collapse of the Soviet empire with the financial crisis of 2008.

“The Global Financial Crisis of 2008: The Role of Greed, Fear, and Oligarchs,” Cate Reavis, MIT Sloan Management, 16th Mar 2012.

“Prolonged periods of economic growth and prosperity can induce a collective sense of euphoria and complacency among investors that is not unlike the drug-induced stupor of a cocaine addict. The seeds of this crisis came during a lengthy period of prosperity. During this period, we became much more risk-tolerant.

“In other words, ‘we’ became greedy. This greed was spurred on by ‘the profit motive, the intoxicating and anesthetic effects of success.’ When everything began to collapse, our greed then turned into fear.”

And then Trump fed on that fear, preaching nationalism, an inward bias that China and Russia salivated. And Biden does not have the leadership or competence to turn the ship around. 

Those that read the blog may recall that when the wife and I first arrived in Eastern Europe, I established our “social contract” explicitly: Freedom and the free market are not about rules but principles. You must commit to transparency, or I’m out the door.

But let’s get back to the Philippines. Between the Asian Tigers and China, and most recently Vietnam, why can’t we benchmark against their successes?

That is why the blog keeps raising our instincts: We are parochial and insular. We value hierarchy and paternalism and rely on pollical patronage and oligarchy that ours is a culture of impunity.

Consider the dynamism, especially of this century that The Economist calls “the era of predictable unpredictability.”

In other words, if “Pinoy abilidad” failed us before, all the more between now and the foreseeable future – because Juan de la Cruz spells status quo.

We must get ahead of the curve.

And we in the Philippine elite and chattering classes must show the way; otherwise, we won’t ever overcome our fixed mindset. And why the blog admires Bernie Villegas, a preeminent Filipino economist, for acknowledging that we blew it.

“WB report: Covid scarring cuts PHL growth,” Cai Ordinario, BusinessMirror, 7th Dec 2021. “THE extent of the economic scarring caused by the pandemic has cut the country’s long-term economic growth potential to only 5.7 percent on average between 2020 and 2029, according to the World Bank.

“The jobs lost to the pandemic will lead to a higher poverty rate. The World Bank estimated this would mean a poverty rate of 22 percent in 2020 and 21.3 percent in 2021, based on the lower-middle-income poverty line of $3.20 a day in 2011 purchasing power parity (PPP).

“The World Bank said the social assistance under Bayanihan to Heal as One Act (Bayanihan 1) was not enough to prevent more people from falling into poverty.

“This foreshadows that the crisis will have long-lasting effects on Filipinos’ well-being.”

That is the context of the enormous challenge we face.

Here’s a quote from an earlier posting: “Question: Where is PH in wealth inequality? Answer: We have the worst GINI coefficient index in the region. 

“In other words, if from 2009-2019 we grew GDP at a compounded 8% (at constant $) and still suffered a poverty rate of 16.7%, the jobs lost to the pandemic will lead to a higher poverty rate. The World Bank estimated this would mean a poverty rate of 22 percent in 2020 and 21.3 percent in 2021.”

Consider: We in the Philippine elite and chattering classes may be preoccupied patting ourselves in the back, yet roughly 23 million Filipinos can’t put body and soul together.

And so, “a DOF undersecretary mocked some analysts for their pessimistic outlook on the economy’s recent growth.” See above; what an 8% growth rate brought us. 

But what is the point of reference? Our “economic managers” must know that 23 million poor Filipinos are equal to 90% of the Australian population? And more than the entire population of Romania?

In other words, even the manna from heaven that we rely upon — the $60 billion between OFW remittances and call centers — has not sufficed. Instead, it gave us the “OFW disease” and a source of hubris: It is classic adding insult to injury.

Let’s pause right there.

For example, Elfren Cruz invokes Pope Francis and argues for redistributing wealth?

See above; freedom and the free market are not about rules but principles, including the commitment to transparency. 

And that while leadership is inherent in a democracy, it is an exercise in self-government to attain the “common good.”

Will “the measures to ease restrictions on foreign participation in the economy, amendments to the Public Service Act, Retail Trade Liberalization Act, and Foreign Investments Act” be the answer?

Let’s test that:

Our top companies will benefit from “CREATE and other tax reforms and the continued infrastructure drive to help the country’s economic competitiveness.” 

But consider the industries of our top companies: retail, real estate, food, among others. Will these top companies – collectively – mirror Samsung Vietnam’s $57 billion revenues and their impact on Vietnam’s economy and the knock-on effect on poverty?

They won’t. Why? 

Their businesses don’t spawn the subindustries as did tech-based Samsung Vietnam. Moreover, beyond investment, we lag in technology too. And we needed both like yesterday to even have a prayer in raising our innovation quotient and global competitiveness demanded by the 21st century.

That is the real-world context we must satisfy. How?

“80% of US companies and 67% of European companies” in China are potential investors, and, unsurprisingly, Vietnam, Thailand, and Malaysia are gearing up. 

Let’s hold it right there.

These neighbors have left us in the dust. Do we know how they are gearing up to win more FDIs?

We cannot underestimate the abilities of our neighbors. They are far advanced in cognitive development compared to us. For example, they have moved beyond binary thinking.

Translation: We must get ahead of the curve. Our best efforts have fallen short because “pwede na ‘yan” gets in the way. 

Here’s where we stand export-wise against Vietnam, Thailand, and Malaysia: They do roughly twice more than we do. [Correction: I picked up the wrong line the last time the blog quoted export numbers. Sorry.]

We must design our competitiveness measures against the dynamism of this world – because these neighbors can only step on the gas. They have benefited from their development experience and can either exploit or overcome driving and hindering forces accordingly.

“McKinsey and Co. Philippines Acting Managing Partner Jonathan Canto said the Philippines should explore a potential niche as a manufacturing hub with 80% of US companies and 67% of European companies from China to elsewhere in Asia. And Vietnam, Thailand, and Malaysia are currently gearing up to take over China.

“Mr. Canto recommended that the Philippines reassess its FDI strategy and priority sectors, build unique deal-focused value propositions, focus on investment promotion, and ensure end-to-end support for investors.” [“Foreign chambers tout FDI as key to economic recovery, poverty relief,” Bianca Angelica D. Añago, BusinessWorld, 1st Dec 2021]

The alternative to our generic initiatives is right there: reassess our FDI strategy and priority sectors, build unique deal-focused value propositions, focus on investment promotion, and ensure end-to-end support for investors.

But can we heed the above? That’s why the blog raised tapping Mr. Canto as a resource. With due respect to our economic managers, the outcome we must seek for Juan de la Cruz is to traverse poverty to prosperity rapidly.

We must get ahead of the curve.

Arangkada and AmBisyon are yet to bear fruits. 

What to do? We may be carrying lots of “psychological baggage” that, to be philosophical, is the mechanism to cope and overcome negative thoughts. It would explain why we crafted a constitution restrictive of foreign investment and then overruled Juan de la Cruz and kicked out the US military. And given our inability to shake off poverty, our economic managers find themselves in the “frontline,” telling us that “we’re doing fine.”  

Consider: Vietnam suffered so much during the Vietnam war – when the US military razed them to the ground, dropping more bombs than all the wars combined.

But what an irony, they are now the benchmark.

A social scientist, Pauline Boss, offers an answer in her book, The Myth of Closure. She argues that “meaning” and “new hope” are essential for coping, intended to help people consider what the loss signifies in their lives and how they can imagine a future that contains their loss.

Did Vietnam have any choice but seek “meaning and new hope” given centuries of conquest by China, including their current dispute over political and territorial issues in the South China Sea? And that – the “conquest” and current disputes – would render their other conflicts a drop in the bucket? And because life must go on?

“Ambiguous loss” is one without “conclusion,” in the traditional sense of the term, i.e., an experience of paradox — a simultaneous absence and presence — that eluded resolution. 

“Ambiguous loss can result in “frozen grief,” when people are stuck in their sorrow – and can be physical or psychological.

“That ambiguous loss is so broad may be frustrating to those who crave absolute parameters. But its haziness is the point. It’s a theory about imprecision. 

“The Myth of Closure contributes to the already robust study of slavery’s traumatic aftermath. That enslavement caused “social death” and produced a generational transmission of trauma.

“And it is omnipresent in the systems that continue to oppress Black people today. That historical context matters for human development and that being traumatized instead of nurtured will affect not only children but also their offspring as well.” [“What if There’s No Such Thing as Closure (?),” Meg Bernhard, The New York Times Magazine, 15th Dec 2021]

For example, does the above theory explain our ambivalence in our relationship with America?

Let’s pause once more: Does that explain why, despite Lee and Mahathir telling Deng to beg for Western money and technology, we ignored the mantra espoused by our neighbors? And why Mahathir’s message to Juan de la Cruz fell on deaf ears: We don’t have to love former colonizers, but we are poor nations. We need their money and technology.

But can we learn from the Vietnamese? How did they find meaning and new hope?

How do we find meaning and new hope for Juan de la Cruz? 

Between Christianity and democracy — the latter, as the blog argues, is the mirror image of the former, i.e., the imperative of personal responsibility in pursuing the common good — could we have found meaning and new hope?

But we won’t until we overcome 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.

That’s why the blog raised defining our “common good”  via a “desired outcome” for Juan de la Cruz, i.e., “to traverse poverty to prosperity rapidly.”

In other words, we don’t have to pigeonhole Juan de la Cruz as a fragile enterprise — and respond with charity giving. That is where we confuse Padre Damaso and Christianity: Juan de la Cruz isn’t stupid but made in the image and likeness of the Creator — and endowed with the capacity for democracy, the imperative of personal responsibility in the pursuit of the common good. 

For example, can Juan de la Cruz not embrace a “desired outcome” as “to traverse poverty to prosperity rapidly”?

That must be the challenge to whoever will be the next president – and the economic managers.

The new administration must edify Juan de la Cruz. In return, we must not submit to tyranny. Instead, we must hold power to account – which is what the blog has been doing for over a dozen years. It’s called personal responsibility inherent in a democracy.

And it’s not a walk in the park: We did not recognize that Maria Ressa and Harry Roque are two sides of the same coin. Why? Recall that we jumped on the bandwagon peddled by the administration that Ressa was a puppet of foreign interests. Don’t we subscribe to foreign media? I watch more Fox News when I am in Manila because people we visit would most likely do. And aren’t we in bed with the foreign interests out of Indonesia? 

But let’s resume and drill down the above “desired outcome” by defining a more tangible “output” as “raising GDP by an incremental $200 billion.” 

How?

Prioritize the foreign investment and technology to tap by distinguishing the “vital few” from the “trivial many.”

And using Samsung Vietnam as the benchmark, we must figure out which of the “80% of US companies and 67% of European companies” in China are potential investors.

And then design our investment policy-making and tax reform initiatives accordingly: reassess our FDI strategy and priority sectors, build unique deal-focused value propositions, focus on investment promotion, and ensure end-to-end support for investors.

And we don’t have to go it alone. See above; tap a resource, Mr. Canto of McKinsey.

Must we find meaning and new hope for Juan de la Cruz? 

He’s not a fragile enterprise.

We must get ahead of the curve.

Gising bayan!