Restructure. Restructure. Restructure.

But can we? Not if we keep our blinders.

Consider: Two administrations would come and go, and Arangkada won’t still give the quantum leap we need.

Why does the blog keep raising our instincts? Look at how we reacted to this news: EU lawmakers warn PH of losing trade “perks” due to rights records.

Have we forgotten that we acquiesced to EJKs? But even more fundamental is that our economy rests on political patronage and oligarchy. Fortunately, we have a solid economic driver thanks to over ten million OFWs and over a million “call center” workers.

Those are the elements of our blinders. And they boil down to our caste system.

Should we have a refresher on “oligarchy”?

“What is an oligarch?

“We’ve used the term a lot recently, so it’s worth providing a definition: Broadly speaking, an oligarch is an elite individual who wields considerable political influence in society. An oligarchy is a government characterized by few (often corrupt) oligarchs with an outsized grip on power.

“So why are they so prominent in Russia?

“To answer that, you have to go back to the collapse of the Soviet Union in 1991. In the years following its demise, the country now known as Russia began privatizing the valuable assets owned by the government during its communist days.

“But the auctions for these assets were as rigged as a game of Monopoly when we’re the banker. And if you had political connections, you could get your hands on precious companies at highly discounted prices. Abramovich’s story is an excellent example of how many oligarchs earned their fortunes.

“In 1995, Roman Abramovich acquired a 50% stake in Siberian Oil Co. (Sibneft, for short) for the rock-bottom price of ~$100 million, and later gained a majority stake. Ten years later, the Russian energy giant Gazprom bought Sibneft for more than $13 billion. Abramovich netted ~$10 billion of the proceeds.

“Abramovich has repeatedly denied that he has a relationship with Russian President Vladimir Putin, and he was not one of the many oligarchs sanctioned by the West in recent days. But he feels like he’ll be the next on the hit list as Western nations attempt to seize the luxury goods of Russian billionaires.

“And those seizures have begun. German authorities have reportedly taken possession of the 512-foot mega yacht belonging to Russian billionaire Alisher Usmanov in the port city of Hamburg.” [“The oligarch garage sale has begun,” The Morning Brew, 3rd Mar 2022]

How do we want to react? That it is all about foreign interference violative of a nation’s sovereignty?

But what do we see if we drill down and peel that reaction? Why does the blog often reference the story of creation and the character of this universe, i.e., dynamism and interdependence? Given our parochialism and insularity, are they two elements that we take for granted?

Can we be more like our neighbors than Russia?

Here’s a quote from an earlier posting:

“Look at Russia. Tiny Singapore has zero natural resources yet is a wealthy nation, while Russia relies on oil with zero industry. Beyond oil, together with Ukraine, they are the world’s largest wheat producers.

“Russia relies on its oil – and political patronage and oligarchy as in the Philippines.

“Recall that Singapore’s debt ratio is over 100%. But it is irrelevant because they have no external debt.

“Singapore issues government securities to assist its national pension fund. And its GDP per capita is $93,400, even greater than that of the US ($60,200).

“Moreover, Singapore allots 173.3% of its GDP to export goods and services while we do 31%.”

On the other hand, “Because we are a consumption economy, household consumption accounts for 73.5% of our GDP end-use. Compare that to 49% for Thailand and 55% in the case of Malaysia.

“We allocate 31% for export initiatives, while Thailand puts 68% and Malaysia 71%.

“Unsurprisingly, the Philippine industry contributes a low-31% to GDP, against Thailand’s 36% and Malaysia’s 38%.

“That explains why the exports of these countries are 3.3 times in the case of Thailand and 2.6 times for Malaysia.

“Finally, where it hits Juan de la Cruz, Thailand’s GDP per capita is 2.2 times that of the Philippines, and Malaysia’s is 3.3 times.

“Instead of trumpeting a 6%-7% GDP growth rate, we must raise our allocation of 31% to export goods and services closer to our neighbors: Thailand = 68%, Malaysia = 71%, Singapore = 173.3%.

Restructure. Restructure. Restructure.

But why can’t we?

Consider: “Hard-working Filipinos remain poor, watching the people of other nations in the region get rich. Revolutions come and go in the Philippines, but the old villains –  corruption and political oppression – remain intact, preventing Filipinos from making the great leap forwards from poverty to riches.

“That happens for a familiar reason: every new regime uses the old mechanisms they had challenged before assuming office to advance its interests rather than the people’s interests at large.

“The Philippines is rich in natural resources (e.g., nickel, copper, gold, silver, and chromium) and human resources (close to 104 million people). But it remains poor. The Gross Domestic Product per capita in the Philippines was at 2639.90 US dollars in 2015, according to Tradingeconomics.com. That’s just 21 percent of the world’s average and well below the per capita GDP of neighboring countries like Indonesia, especially Singapore, which has become wealthy.

“That hasn’t surprised those following emerging markets closely, even though the Philippines’ equity market has outperformed Indonesia’s and Singapore’s in the last ten years. Nor has it been a surprise seeing the Philippines leave behind the old glory days of the 1960s, remaining poor six decades later.

“What’s preventing Filipinos from getting rich? Extractive institutions allow a small group to extract incomes and wealth from the rest of society and block economic growth to safeguard its interests.

“Powerful groups often stand against the engines of prosperity,” write Daron Acemoglu and James A. Robinson in Why Nations Fail: The Origins Of Power, Prosperity And Poverty. Economic growth is not just a process of more and better machines and more and better-educated people but also a transformative and destabilizing process associated with widespread creative destruction.

“Growth thus moves forward only if not blocked by the economic losers to protect their economic privileges and by the political losers who fear the erosion of their political power.

“Worse, extractive institutions breed corruption and political oppression.

“The Philippines is the 101 least corrupt country out of 175 countries, according to the 2016 Corruption Perceptions Index reported by Transparency International. The Philippines’ Corruption rank averaged 92.09 from 1995 until 2016, reaching an all-time high of 141 in 2008 and a record low of 36 in 1995. Meanwhile, the country is on and off “martial law.”

“That’s sad news for the future of the Philippines. “Nations fail when they have extractive institutions, supported by extractive political institutions that impede and even block economic growth,” Acemoglu and Robinson.” [“Why Filipinos Remain Poor,” Panos Mourdoukoutas, Forbes, 1st Jun 2017; Mourdoukoutas is Professor and Chair of the Department of Economics at LIU Post in New York; and teaches at Columbia University.]

Can we pause and ponder? 

Are we more like Russia than our neighbors?

Then consider: “Imelda intervened in the PLDT case. The Marcos family claimed that they owned PLDT. Eh, maging presidente s’ya (BBM), s’yempre, hahabulin n’ya ‘yan. Iipitin n’ya lahat ‘yan. Iipitin n’ya…

“In fact, Imelda also claims San Miguel. They own half of the shares of Danding Cojuangco. Iipitin n’ya lahat ‘yan. Sasabihin n’ya, ‘oy, amin ‘yan, hindi kayo? You got it; you did not pay us for our share.” Magkakagulo lahat ‘yan, magkakaablahan.

“Lucio Tan. The Marcoses have the “affidavit” of Lucio Tan that half of the companies of Lucio Tan belong to the Marcoses. And there’s a pending case now in the Supreme Court that will be decided soon on the claim of Mrs. Marcos that they own half of the companies of Lucio Tan. Madami ‘yan.

“Also, the properties of GMA-7, the Unilab. They will reopen all of that. Sasabihin nila, ‘half of your companies belong to us.’

“Magkakagulo tayo. That’s only one part of it.” [“Goodbye to hidden wealth, if BBM wins,” Federico D. Pascual Jr., POSTSCRIPT, The Philippine Star, 22nd Feb 2022]

Restructure. Restructure. Restructure.

“Instead of trumpeting a 6%-7% GDP growth rate, we must raise our allocation of 31% to export goods and services closer to our neighbors: Thailand = 68%, Malaysia = 71%, Singapore = 173.3%.

But why can’t we?

Because those we lionize — as in oligarchy — are out to protect their interests from the destabilizing process that comes with creative destruction. In other words, rent-seeking thrives not in innovation and global competitiveness — the character of the 21st century — but political patronage. The evidence? Our eight top companies combined can’t match the economic output of Samsung Vietnam.

If our economic managers and the media, and the Philippine elite class can’t show the way to Juan de la Cruz, are we a failed nation?

Gising bayan!