Are we finally on the cusp of becoming an industrialized nation?

News item: “Lawmakers to refile Bulacan airport ecozone bill after Marcos veto.”

It’s heartening that two pillars of our chattering classes are flexing their muscles. But before we go any further, we better not drop the ball as we did with Arangkada.

“Amid the gravest food, energy, education, and geopolitical crises ever to pummel the Philippines, can the country be prosperous on a path of more robust growth?

“Yes, says Ramon S. Ang (RSA), the president and CEO of San Miguel Corp., the country’s largest diversified industrial conglomerate. With P316 billion in sales in the first quarter, SMC is on track to chalk up a record P1.2 trillion in revenues in 2022.

“How can the Philippines grow higher and faster? Thru rapid industrialization and expanded export earnings, says Ang. He thinks the country can easily generate $200 billion in exports annually, from the disappointing $60 billion to $76 billion in recent years.” [“A $200B export plan,” Tony Lopez, Virtual Reality, manilastandard.net, 8th Jul 2022]

“We can be more competitive in the Southeast Asian region and ASEAN in terms of attracting locators specializing in various industries, aviation, technology, science, medicine, manufacturing, and many others.

“This will bring much-needed jobs, livelihood – and valuable experience – to our people. Even local industries throughout Luzon will benefit from increased employment and livelihood opportunities, tourism, economic activity, and the improvements in infrastructure that will come with the development.

“In a briefing, RSA explained that the expected export revenues would come from four areas: (1) the new airport, (2) the ecozone focused on semiconductor manufacturing and industrial goods like batteries for EVs and renewable energy power plants; (3) a university city in tie-up with leading universities in the US, Europe, and China; (4) a world-class medical center with research facilities in a partnership with a university with the caliber of Stanford.

“Taiwan Semiconductor Manufacturing Co. or TSMC is the world’s largest contract manufacturer of the semiconductor chips – otherwise known as integrated circuits – that power our phones, laptops, cars, watches, refrigerators, and more. Its clients include Apple, Intel, Qualcomm, AMD, and Nvidia.

“TSMC is said to be scouting for new locations to spread their manufacturing facilities. That will protect their clients from any supply shortage if China invades Taiwan, similar to Russia's invasion of Ukraine.

“RSA said he intends to create a science and technology export hub with the cheapest “logistics” cost because it is next to the airport and less than half an hour to the Manila seaport via an expressway he is also building.

“I got the impression he was already in conversation with potential locators, including TSMC and others, which will manufacture battery power storage systems, electric vehicle makers, and modular nuclear power assemblies. He thinks the zone can export $200 billion annually.” [“Airport economic zone,” Boo Chanco, DEMAND AND SUPPLY, The Philippine Star, 8th Jul 2022]

Those familiar with the blog may recall that it has raised the challenge for industry leaders Messrs. Ang and Dominguez to lead the effort of replicating the success of Vietnam in attracting Samsung and Apple. And the object is to accelerate the Philippines’ industrialization and set export targets of $200 billion to approximate the GDP levels of our neighbors.

And why the blog quoted Ciel Habito’s article a couple of times: “How we wish our next secretary of the Department of Trade and Industry (DTI) would be known as the champion and booster of Philippine exports,” someone mused in a conversation. He came from knowing how far behind we have been left by our comparable Asean peers in export performance.

“The numbers are indeed glaring: over the last five years, we averaged only $70 billion a year in merchandise exports, while Indonesia earned $182, Thailand $246, Malaysia $248, Vietnam $268, and Singapore $401 billion. We’re not even near half of what Indonesia made the closest neighbor we trail.

“The new government simply must give focused and determined attention to this abysmal export performance, as in it lies the key to solving the major perennial challenges our economy keeps facing, namely: (1) lack of quality jobs, (2) low incomes and high levels of poverty, and (3) higher prices, especially of food, leading to wide food insecurity and malnutrition among our poor—in short, the basics of presyo, trabaho, and kita.” [“Doing a Vietnam,” Cielito F. Habito, NO FREE LUNCH, Philippine Daily Inquirer, 31st May 2022]

But let’s get back to Boo: “Ramon Ang of San Miguel is an enigma to policy wonks and business rivals. He doesn’t make business decisions the way they do. He takes risks others won’t dream of taking. It’s partly jealousy too. They can’t accept that the upstart Tondo boy, who has not taken an economics course and with no MBA from some fancy foreign business school, is doing better than they are.” [“Airport economic zone,” Boo Chanco, DEMAND AND SUPPLY, The Philippine Star, 8th Jul 2022]

At the risk of sounding like a broken record, let’s hear from a preeminent Filipino economist, Bernardo M. Villegas: “I would heed the advice of George Santayana, another famous professor who taught at Harvard. Santayana gave the world the following advice: “Those who cannot remember the past are (condemned) to repeat it.” [BusinessWorld, 28th Jun 2022]

“During these last 30 years, the world experienced three severe global crises: (1) the East Asian Financial Crisis of 1997 to 2000, (2) the Great Recession of 2008 to 2012, and (3) the more recent global economic crisis precipitated by the COVID-19 pandemic and further aggravated by the Russian invasion of Ukraine, the Philippine economy was among the most resilient in the world.

“Given the incoming Administration of President Ferdinand R. Marcos, Jr.’s choices for his economic team of very competent and experienced technocrats, one can expect a continuation of the yearly GDP growth rate of at least 6% to 7%. If the next administration can significantly improve governance and minimize corruption, there is an upside: the growth rate can accelerate from 8% to 10%.

“Those who cannot remember the past are (condemned) to repeat it.

“Who can disagree with that? For example, which of the following can’t we remember?

• The comprehensive agrarian reform program failed to “connect the dots,” i.e., is Philippine agriculture a dismal failure?
• The party-list system did not even the playing field, i.e., local lords continued to rule local governments.
• The OFW phenomenon created over 10 million “high-paying” jobs; it is today a pillar of the Philippine economy. Yet, poverty and joblessness remain.
• The call centers – nor the OFW phenomenon – did not eliminate the challenge of industrializing.
• The Philippine Competition Commission did not undo our oligarchic economy.
• The Duterte war on drugs did not eradicate the drug menace.
• The tax rationalization measures – from GMA to Du30 – did not raise our FDIs to match our neighbors.
• To add insult to injury, we are not acknowledging the toils that Juan de la Cruz expended to bring to the country over $50 billion in remittances; instead, we want to claim credit because of our “outstanding economic managers.”

In other words, the Ang initiative faces other detractors beyond the Marcos veto, given our long history of economic mismanagement.

And why we have been the regional laggard for the longest time.

What to do?

Recall the 3Cs of the hardy mindset. Messrs. Ang and supporters can revisit the discussions from the blog: (1) Commitment, as in the sense of purpose and meaning, (2) Challenge, that “change” rather than “stability” is the norm; and (3) Control, i.e., we can’t problem-solve because our caste system taught us that we could control others when we only have control over ourselves. And that reinforces the reality imposed by this universe, i.e., change and not stability.

It is not easy to get Juan de la Cruz to embrace and commit to a sense of purpose and meaning especially given our instincts of “stability,” as in our caste system. And why we value hierarchy and paternalism. And since Messrs. Ang and supporters don’t have control over Juan de la Cruz, they have to figure out how to get him on board.

And recall the GPS model often discussed by the blog: Where are we; Where do we want to be; How do we get there.

In defining where we want to be, a great model is to identify a benchmark that we want to replicate. And the Pearl River Delta Economic Zone is such a benchmark.

“In 1979, the Central Government of the People’s Republic of China announced that Guangdong Province would be allowed to follow less restrictive economic policies; and would be permitted to set up three Special Economic Zones (SEZs), including two in the Pearl River Delta.

“Preferential policies in the SEZs included features designed to attract foreign investment, such as a 15 percent tax rate, tax holidays of up to five years, and the ability to repatriate corporate profits and capital investments after a contracted period.

“They also included duty-free treatment of imports of raw materials and intermediate goods destined for exported products, as well as exemption from export taxes.

“Guangdong’s early experience with reform allowed a market-oriented culture to develop earlier than in other places in the Chinese Mainland. From 1979, Guangdong Province and the SEZs received more significant political and economic autonomy than other jurisdictions in the Chinese Mainland. Areas of greater “autonomy” included finance and fiscal matters, foreign trade and investment, commerce and distribution, allocation of materials and resources, labor, and prices.

“In 1988, Guangdong was granted expanded powers to set its economic direction and was designated a “comprehensive economic reform area.” That gave rise to (a) the creation of the Shenzhen Stock Exchange and (b) the development of a land lease system and some housing privatization. Shenzhen became a leader in foreign exchange markets, operation of foreign banks, land reforms, and stock market development.

“The economic development of the Pearl River Delta Economic Zone took off explosively. The region’s GDP grew from just over US$8 billion in 1980 to more than US$89 billion in 2000 and US$221.2 billion in 2005. During that period, the average real GDP growth rate in the Pearl River Delta Economic Zone exceeded 16 percent, well above the People’s Republic of China’s national figure of 9.8 percent.

“Since the onset of China’s reform program, the Pearl River Delta Economic Zone has been the fastest-growing portion of the fastest-growing province in the fastest-growing large economy in the world. In the process, a region that was once largely agricultural has emerged as a manufacturing platform of global importance. It is a world leader in producing electronic goods, electrical and electronic components, watches and clocks, toys, garments and textiles, plastic products, and various other goods.” [Wikipedia]

In other words, we don’t have to reinvent the wheel. That is not rocket science yet remains a hard nut to crack because of our parochialism and insularity.

Benchmark. Benchmark. Benchmark.

It is the guardrail to meet the demands of the 21st century – innovation and global competitiveness. We cannot measure our efforts with our instincts or the same thinking that created our problems in the first place – and turned us into the laughingstock stock of the region, if not the world.

See above; those that cannot remember the past are (condemned) to repeat it.

It’s heartening that two pillars of our chattering classes are flexing their muscles. But before we go any further, we better not drop the ball as we did with Arangkada.

Gising bayan!

Juan de la Cruz must go to “school” on “dynamism”

Should the following Editorial give us pause? “Reaching the academic top means fixing school problems from the ground up,” Manila Bulletin, 25th Jun 2022.

“We are critical of education in the country – from textbooks riddled with errors as well as international and regional academic rankings that place the Philippines in positions that leave much for improvement.

“This does not, however, take away from the fact that there are individuals and institutions that perform pretty well academically, recognized for achievements in various fields. These are testament to the inherent intellectual prowess of the Filipino. But, as the saying goes (and loosely translated), talent is bested by effort—and adding to this, “effort” is more effective if the environment and the situation are ideal.

“Hence, the need for improving the academic situation of the country.”

Those familiar with the blog may recall that I practice “andragogy” – going decades in the private sector, given the demands of the 21st century, i.e., innovation and global competitiveness.

“Adults are independent. They strive for autonomy and self-direction in learning. They use their own and others’ experiences. Adults learn when they experience a need to know or perform more effectively. Adult learning is task or problem-centered. Their motivation stems from internal resources – the increased self-esteem, confidence, and recognition from successful performance.” [Pedagogy, Andragogy, & Heutagogy _ University of Illinois Springfield]

My role is one of “an enabler to create a climate of collaboration, respect, and openness.” Yet, the blog’s language does not come across as such to Filipinos.

And the onus is on me to figure out how to get Juan de la Cruz to be receptive. I will keep trying, as the over dozen years of the blog’s existence may attest.

That’s why the postings frequently speak to what I call our instincts: We are parochial and insular. We value hierarchy and paternalism and rely on political patronage and oligarchy; ours is a culture of impunity.

In other words, how can “dynamism” find a “home” in Juan de la Cruz?

Unfortunately, it is not surprising that people take their culture and instincts for granted. As we say aptly, “Pinoy kasi.”

Consider what I said to my Eastern European friends when they asked me to do a “crisis management” session stemming from the world’s challenges from the [covid] pandemic.

“I cannot teach you better than your experience.

“If they took them for granted, I recalled the success stories under their belt. “You have gained an enviable depth of experience over the years.” Over 30 of the senior managers listened to me. Yet, they didn’t expect that I would call on specific individuals to narrate the details of these success stories.

“In turn, I challenged them to be a one-billion-dollar company. “You were less than a ten-million-dollar company and unprofitable for eight years, yet you over-delivered beyond the challenge to be a one-hundred-million-dollar company.”

Recall that these people were born and raised as socialists under Soviet rule. The free market was once foreign to them. They had to unlearn something that was at their core.

Decades after the fall of the Soviet empire, former satellite states still exhibit ambivalence, especially the older folks that accepted what, the younger set saw as “propaganda.” For example, people thought they had the best of what the world had to offer; until they realized they were the poorest country in Europe.

Let’s get back to the above Editorial, “Talent is subordinate to effort—and the latter is more effective if the environment and the situation are ideal.”

It’s heartening that the writer of the Editorial referenced the “growth mindset,” which the blog often discusses.

“The growth mindset is based on the belief that your basic qualities are things you can cultivate through your efforts. Although people may differ — in their initial talents and aptitudes, interests, or temperaments — everyone can change and grow through application and experience.” [“Mindset: The New Psychology of Success,” Carol Dweck]

Sadly, Juan de la Cruz isn’t predisposed to change because of (a) our instincts and (b) culture. They feed on each other.

For example, a caste system imposes barriers and blinders that turn us inward-looking – that’s why we value the hierarchy that comes with paternalism. Unsurprisingly, vote-buying is a perpetual feature of our democratic exercise.

Even worse is our “crab mentality.” It goes beyond “populism.” It explains why we can’t distill the “vital few” from the “trivial many.” And even our economists are not immune.

But that is not surprising given how specialization even in the West succumbs to parochialism. For example, innovation is beyond R&D. Nation-building is beyond economics.

Consider: “Notwithstanding the tight finances, Marcos’ economic team is confident that the economy can grow out of its debts. Per the government’s forecast, the economy will expand by 7-9% this year and by 6-7% in 2023 and 2024.

“These projections, however, are subject to adjustments given external factors such as the Ukraine war, the Chinese lockdown, and tensions in the Taiwan Strait. It is also contingent on successful reforms to improve agriculture and manufacturing outputs.” [“Marcos Jr. faces a balancing act,” Andrew J. Masigan, Numbers Don’t Lie, BusinessWorld, 3rd Jul 2022]

Unfortunately, learning – as in “andragogy” – presupposes autonomy and self-direction yet taps both (a) one’s and (b) other’s experiences. Take the experiences of our neighbors – the Asian Tigers – in moving up from third-world to first-world economies.

What are we missing? For example, why aren’t we “stealing shamelessly” their experiences in relentlessly driving industrialization? Recall that Japan acknowledged that they had to “steal shamelessly” from the West. And Lee and Mahathir told Deng to “beg for Western money and technology.”

In other words, has our caste system – our inward-looking bias and value of hierarchy and paternalism and reliance on political patronage and oligarchy – neutered whatever “dynamism” Juan de la Cruz had?

Consider: Dynamism is an inherent human need – the continuum of physiological to self-actualization. The evidence? From “day one,” humankind demonstrated dynamism, i.e., they left Africa to overcome the climate phenomenon they faced.

And for that matter, our neighbors demonstrated dynamism by rapidly moving up from third-world to first-world nations – and economies.

Let’s try it one more time. The challenge of education – or, more aptly, learning – is beyond the mechanics or the “how-to.”

Learning the mechanics of how to drive or swim does not equate to being skillful in either.

The challenge of democracy is self-government, i.e., it is beyond the mechanics of conducting an election. Ergo: vote-buying, which we accept as a given in the Philippines, undermines self-government.

And why the blog frequently raises its premise: Democracy is a mirror image of Christianity, i.e., the imperative of personal responsibility to pursue the common good.

The bottom line: The real world is beyond the academic world – or ivory tower.

Here’s a hypothesis: “Agri policy needs more bottom-up planning to meet farmers’ needs, the study concludes,” BusinessWorld, 3rd Jul 2022.

“The share of the agri-fisheries sector in the country’s gross domestic product declined to 9% in 2019 from 19% in 1990, then rose slightly to 10% in 2020 when the COVID-19 pandemic happened. The agriculture employment share shed 22 percentage points from 1991 to 2019.

“AGRICULTURE and fisheries planning needs to be more “bottom-up” to meet the needs of farmers and fisherfolk better, steering away from “top-down” programs imposed from above, especially those concerning rice.”

Question: How many studies have we done over the years?

How come Philippine agriculture is a dismal failure? What gives us comfort that this latest study will be any different?

The real world is beyond the academic world – or ivory tower.

“General Electric—a household name since its founding by Thomas Edison in the 19th century—has been headed the wrong way for decades. After legendary CEO Jack Welch grew GE into a banking titan with a peak market value of $594 billion in 2000 (from less than $15 billion when he started in 1981), the following stock slide wiped out more than half a trillion dollars in shareholder value. That was about the same as erasing Warren Buffett’s Berkshire Hathaway Inc. The dramatic decline under former CEO Jeffrey Immelt continued under John Flannery and now Culp, cutting the market value to about $75 billion as of mid-January. Over the same period, the company's net leverage—debt as a multiple of a measure of earnings—has nearly doubled.

“After Immelt stepped down as CEO in August 2017, John Flannery took the reins. He was gone a little more than a year later as the board turned to Culp. In the new boss’s debut on a third-quarter earnings call, the company revealed an expanded federal probe into its accounting, a vastly diminished dividend, and battered power business.

“Both GE’s financial and core businesses are relatively more indebted than their peers.” [“What happened to General Electric? The rise and fall of GE,” bloomberg.com, 30th Jan 2019]

Then consider: “Agri policy needs more bottom-up planning to meet farmers' needs, the study concludes,” BusinessWorld, 3rd Jul 2022.

Question: How many studies have we done over the years?

How come Philippine agriculture is a dismal failure? What gives us comfort that this latest study will be any different?

For example, “The problems besetting agriculture require programs and projects that will take years to bear fruit and boost production to bring down prices eventually. Imports had to be resorted to in the past few years following shortages in rice and meat supply, causing prices to go up.” [“Broad strokes for the future,” Editorial, Philippine Daily Inquirer, 4th Jul 2022]

Learning – as in,  “andragogy” – presupposes autonomy and self-direction yet taps both (a) one’s and (b) other’s experiences. Take the experiences of our neighbors – the Asian Tigers – in moving up from third-world to first-world economies.

What are we missing? For example, why aren’t we “stealing shamelessly” their experiences in relentlessly driving industrialization? Recall that Japan acknowledged that they had to “steal shamelessly” from the West. And Lee and Mahathir told Deng to “beg for Western money and technology.”

In other words, has our caste system – our inward-looking bias and value of hierarchy and paternalism and reliance on political patronage and oligarchy – neutered whatever “dynamism” Juan de la Cruz had?

How can “dynamism” find a “home” in Juan de la Cruz?

Unfortunately, it is not surprising that people take their culture and instincts for granted. As we say aptly, “Pinoy kasi.”

Gising bayan!

Has PHL been headed in the wrong direction?

Consider the story of the one-time icon of American industry: “In 1956, GE bought a parcel of leafy land about an hour north of New York City and established its Crotonville management training center. GE claims it is the oldest corporate university in the country. The first seminar Crotonville offered was 13 weeks long, which sounds absurd today—no modern manager could spend a full quarter of the year solely on professional development. But that initial course paid dividends: Among its students was Reginald Jones, a future GE CEO.” [GE’s Crotonville management campus: Where future company leaders train. (slate.com)]

Then consider: “General Electric—a household name since its founding by Thomas Edison in the 19th century—has been headed the wrong way for decades. After legendary CEO Jack Welch grew GE into a banking titan with a peak market value of $594 billion in 2000 (from less than $15 billion when he started in 1981), the following stock slide has wiped out more than half a trillion dollars in shareholder value. That was about the same as erasing Warren Buffett’s Berkshire Hathaway Inc. The dramatic decline under former CEO Jeffrey Immelt continued under John Flannery and now Culp, cutting the market value to about $75 billion as of mid-January. Over the same period, the company’s net leverage—debt as a multiple of a measure of earnings—has nearly doubled.

“After Immelt stepped down as CEO in August 2017, John Flannery took the reins. He was gone a little more than a year later as the board turned to Culp. In the new boss’s debut on a third-quarter earnings call, the company revealed an expanded federal probe into its accounting, a vastly diminished dividend, and battered power business.

“Both GE’s financial and core businesses are relatively more indebted than their peers.” [“What happened to General Electric? The rise and fall of GE,” bloomberg.com, 30th Jan 2019]

Should we Filipinos – especially the Philippine elite and chattering classes – be interested in the above story?

Indeed we must be interested because of our “materiales fuertes” culture. In other words, even American icons can fall flat on their face.

The problem is that we are so inward-looking that we can’t help but be a disaster waiting to happen.

That also explains why we haven’t matured as a democracy.

I commend CJ Panganiban for his article, “Facts and fantasies on Marcos’ estate tax.” [Philippine Daily Inquirer, 27th Jun 2022]

In other words, are we to uphold the rule of law, given that ours is a democracy?

Consider: “IN MARCOS II V. COURT OF APPEALS (5th Jun 1997), the highest court dismissed the appeal holding thus: “Apart from failing to file the required [ETR] within the time required, petitioner and the other heirs never questioned the assessments served upon them, allowing the same to lapse into finality, and prompting the BIR to collect the said taxes by levying upon the properties left by President Marcos. Assessments [of the BIR] are presumed correct and made in good faith. The taxpayer has the duty of proving otherwise. The course of action taken by petitioner reflects his disregard or even repugnance of the established institutions for governance in the scheme of a well-ordered society.”

“This decision, rendered 25 years ago by the Court’s Second Division, was penned by Justice Justo P. Torres Jr. and concurred in unanimously by Justices Florenz D. Regalado (Division chair), Flerida Ruth P. Romero, Reynato S. Puno, and Vicente V. Mendoza.

“Significantly, the petitioner was named “Ferdinand R. Marcos II”—not Ferdinand R. Marcos Jr.—in the title of the decision and, consistently, in its textual content.

“FROM THESE FACTS, WE MUST ASK: How much has the BIR collected from the levy and auction sale of the Marcos properties? How much remains to be collected? How was the P23 billion computed? How did it balloon to P203 billion? Apart from those already levied and sold at public auction, what other properties does the Marcos estate have to satisfy the original assessment and balloon? What actions, if any, will the BIR undertake to collect these? Is it open to a compromise on the balloon and the original assessment? Let’s await BIR’s answers.”

What about the US, the supposed model of democracy? How are they doing? “Cassidy Hutchinson Stuns With Testimony About Trump on 6th Jan,” The New York Times, 28th Jun 2022.

“She was 22 years old, a rising college senior who went to work as a summer intern in the Trump White House in 2018. She landed in the chief of staff’s office, an omnipresent aide with ambitions of a career in government, not uncommon in Washington.

“But on Tuesday, Cassidy Hutchinson, now 26, distinguished herself as the most potent witness yet in the House select committee’s investigation into the 6th Jan 2021 attack on the Capitol. And as one of the most forceful and compelling aides to testify about former President Donald J. Trump’s bizarre and violent behavior during his four years in the White House.

“For two stunning hours on live television, Ms. Hutchinson described an unhinged former president who, she said, was warned that his supporters were carrying weapons and expressed no concern because they were not a threat to him.”

Those familiar with the blog may recall a recurring theme: “Democracy is the mirror image of Christianity, i.e., the imperative of personal responsibility to pursue the common good.”

If America must nurture freedom, what more of us Filipinos? There is no free lunch among freedom-loving people.

Then consider: “Turkey backs NATO membership for Sweden, Finland.”

Didn’t Putin blame the West to explain his invasion of Ukraine? That Ukraine’s overture about NATO membership made it an existential threat to Russia? Don’t NATO countries now surround Russia?

Let’s get back to the Philippines. Aren’t we going in the wrong direction?

“The Philippines faces various economic, environmental, and social problems due to increasing population, rapid urbanization, vulnerability to disasters, and substantial infrastructure gaps to address immediately.

“Infrastructure spending as a percentage of gross domestic product was at 5.8% last year and considered by the current government to drive the economic recovery, a policy which the next government has signaled may continue.

“NEDA has commissioned 13 sector-wide “master plans” in urban areas nationwide funded through the NEDA project development and other related studies fund. These will guide the preparation and implementation of sustainable infrastructure development.

“The next PDP must pay further attention to transport, water resources, energy, social infrastructure, and information and communications technology infrastructure.” [“NEDA: Unsolicited proposals, development plans need to be aligned,” BusinessWorld, 27th Jun 2022]

It’s heartening that NEDA acknowledges that we face various challenges.

What do we do?

In other words, shouldn’t we Filipinos – especially the Philippine elite and chattering classes – be interested in learning from others beyond strapping our booth straps?

Consider: “Pandemic sets back PHL’s targets to wipe out poverty,” BusinessMirror, 5th Apr 2022.

“The latest official data from the Philippine Statistics Authority (PSA) showed poverty incidence increased to 23.7 percent in the first semester of 2021 from the 21.1 percent in the first semester of 2018.

“That means 26.14 million Filipinos lived below the poverty threshold—estimated at P12,082, on the average, for a family of five per month—in the first semester of 2021.”

And from the 16th Jun 2022 post of SWS, we read: “34% of adult Filipinos got worse off in the past 12 months.”

Let’s hear from a preeminent Filipino economist, Bernardo M. Villegas, BusinessWorld, 28th Jun 2022: “I made sure that before I projected the state of the Philippine economy that I would heed the advice of George Santayana, another famous professor who taught at Harvard. Santayana gave the world the following advice: “Those who cannot remember the past are (condemned) to repeat it.”

And here’s another noted economist: “How we wish our next secretary of the Department of Trade and Industry (DTI) would be known as the champion and booster of Philippine exports,” someone mused in a conversation. He was coming from knowing how far behind our comparable Asean peers have left us in export performance.

“The numbers are indeed glaring: over the last five years, we averaged only $70 billion a year in merchandise exports, while Indonesia earned $182, Thailand $246, Malaysia $248, Vietnam $268, and Singapore $401 billion. We're not even near half of what Indonesia made the closest neighbor we trail.

“The new government simply must give focused and determined attention to this abysmal export performance, as in it lies the key to solving the major perennial challenges our economy keeps facing, namely: (1) lack of quality jobs, (2) low incomes and high levels of poverty, and (3) higher prices, especially of food, leading to wide food insecurity and malnutrition among our poor—in short, the basics of presyo, trabaho, and kita.” [ “Doing a Vietnam,” Cielito F. Habito, NO FREE LUNCH, Philippine Daily Inquirer, 31st May 2022]

What is the bottom line? The Philippines has a structural problem that we keep sweeping under the carpet.

Whether we speak to the Asian Tigers, the latest being Vietnam, and the Nordic countries that we like to talk about, these countries became first-world nations by aggressively pursuing industrialization.

On the other hand, we like to pat ourselves on the back for being the fastest growing economy yet stuck as a first-world economy and, worst, the regional laggard – for the longest time.

Indeed, we delivered 6%-7% GDP growth from 2009 to 2019, yet Vietnam still overtook us. What is so mysterious about our fate?

We are parochial and insular. We value hierarchy and paternalism and rely on political patronage and oligarchy; ours is a culture of impunity.

Unsurprisingly, here’s the latest word from The Economist: “By electing another Marcos, Filipinos show they have forgotten history,” The Economist, 29th Jun 2022.

“But forgetting is not all new, nor all social-media magic. Filipinos forgot as early as 1995, barely a decade after Marcos senior was deposed. In May 1986, three months after the revolution, 41% of those surveyed by Social Weather Stations, a respected pollster, thought he had been “true to the duties of a patriotic president.” By October 1995, the number was 57%. In 1986, 44% agreed that he was a “severe, brutal or oppressive president,” and the same proportion disagreed. A decade later, just 38% agreed, while 60% disagreed. “Not many of us would care to hold a grudge against someone long dead, not even someone like Ferdinand Marcos,” reckoned the pollsters.

“If the forgetting has come to pass, might the repetition of history, too? Bongbong is, in many ways, a fairly standard figure. Like two of his three immediate predecessors, he is the offspring of a former president. Like every president of the Fifth Republic, bar one, he represents a political dynasty.

“A new constitution was to keep another Marcos-like figure out of power. Some in Manila’s political circles argue that the rise of Bongbong marks the end of that era and the rise of a sixth republic.

“Others, such as Manuel Quezon III, a columnist (and grandson of a former president), say the values of the Fifth Republic were lost much earlier, with the election of Mr. Duterte, who openly urged the murder of criminal suspects. Either way, the era defined by the idealistic revolution of 1986 has ended.”

Let’s get back to Bernie Villegas:  “During these last 30 years, the world experienced three severe global crises (the East Asian Financial Crisis of 1997 to 2000, the Great Recession of 2008 to 2012, and the more recent global economic crisis precipitated by the COVID-19 pandemic and further aggravated by the Russian invasion of Ukraine, the Philippine economy was among the most resilient in the world.

“Given the incoming Administration of President Ferdinand R. Marcos, Jr.’s choices for his economic team of very competent and experienced technocrats, one can expect a continuation of the yearly GDP growth rate of at least 6% to 7%. If the next administration can significantly improve governance and minimize corruption, there is an upside: the growth rate can accelerate from 8% to 10%.

“Those who cannot remember the past are (condemned) to repeat it.”

Who can disagree with that? For example, which of the following can’t we remember?

• The comprehensive agrarian reform program failed to “connect the dots,” i.e., is Philippine agriculture a dismal failure?
• The party-list system did not even the playing field, i.e., local lords continued to rule local governments.
• The OFW phenomenon created over 10 million “high-paying” jobs; it is today a pillar of the Philippine economy. Yet, poverty and joblessness remain.
• The call centers – nor the OFW phenomenon – did not eliminate the challenge of industrializing.
• The Philippine Competition Commission did not undo our oligarchic economy.
• The Duterte war on drugs did not eradicate the drug menace.
• The tax rationalization measures – from GMA to Du30 – did not raise our FDIs to match our neighbors.
• To add insult to injury, we are not acknowledging the toils that Juan de la Cruz expended to bring to the country over $50 billion in remittances; instead, we want to claim credit because of our “outstanding economic managers.”

“People now like to say that an “all-of-government” effort is imperative on this-or-that initiative; for the PEDP, an “all-of-nation” push is what the country needs. That is because achieving export expansion entails far more than what the DTI does. The PEDP should not be merely a DTI plan. It requires unison among all the moving parts—including exchange rate policy, infrastructure development, agricultural development strategy, human resource development, fiscal and monetary policies, and many more.

“Vietnam, it seems, has conducted the complex symphony orchestra better than everyone else has. Can our sterling new economic team manage to do a Vietnam in a country where unity, solidarity, and teamwork have traditionally been in deficit?” [Habito, op. cit.]

The problem is, can we Filipinos easily forget?

Why? As the blog argues, our parochialism and insularity are beyond the pale. Unlike our neighbors, we never outgrew our inward-looking bias.

But since I have been out of the country for a third of a century, I am an exception.

Those familiar with the blog may recall that when the family moved to New York, Japan Inc. posed a threat to America. Even the wife did not want to drive an American car. And I found myself in the middle of Corporate America’s efforts to address the shortcomings of higher education – because America’s manufacturing prowess evaporated; and saw the rapid decline of Detroit, for example.

Disclosure: I then learned from prominent American educators about the differences between “adult learning or andragogy” and “children’s learning or pedagogy.” I was with the team tasked with rapidly developing the company’s education and training curriculum, recognizing that we were dealing with “adults” – and experienced professionals.

Fast-forward to the session I did for the senior managers, my friends in Eastern Europe, a couple of weeks ago. “I cannot teach you better than your experience.” That was the message I gave when they asked me to do a session in “crisis management.”

“If they took them for granted, I recalled the success stories under their belt. “You have gained an enviable depth of experience over the years.” Over 30 of the senior managers listened to me. Yet, they didn’t expect that I would call on specific individuals to narrate the details of these success stories.

“In turn, I challenged them to be a one-billion-dollar company. “You were less than a ten-million-dollar company and unprofitable for eight years, yet you over-delivered beyond the challenge to be a one-hundred-million-dollar company.”

The above example is a way to explain andragogy. “Adults are independent. They strive for autonomy and self-direction in learning. They use their own and others’ experiences. Adults learn when they experience a need to know or perform more effectively. Adult learning is task or problem-centered. Their motivation stems from internal resources – the increased self-esteem, confidence, and recognition from successful performance.” [Pedagogy, Andragogy, & Heutagogy _ University of Illinois Springfield]

In other words, my role when my Eastern European friends asked me to do a “crisis management” session was to be “an enabler and create a climate of collaboration, respect, and openness.”

But let’s get back to the Philippines.

We have a couple of barriers: (a) We don’t have the experience in development to match that of our neighbors; (b) Because of our inward-looking bias, we haven’t internalized the “bigger world” that we are a subset of this universe in constant motion and expansion. And “Pinoy kasi” and our “materiales fuertes” culture have no place in a dynamic world.

Whether General Electric or the United States, every entity – beyond individuals – must embrace dynamism as an unpleasant fact. And especially in the 21st century, defined by innovation and global competitiveness.

Shouldn’t Filipinos – especially the Philippine elite and chattering classes – be interested in learning from others beyond strapping our booth straps?

Gising bayan!

This generation is toast!

Consider this Editorial that countless must have read: “Reaching the academic top means fixing school problems from the ground up.”

Is education the problem, or are we – this generation is – the problem?

Education in a country is an expression of its culture. Education did sprout out of a vacuum.

Every challenge we face, our impulse is to talk mechanics or the “how-to.” For example, we offer up strategic planning as an elixir. Think of Arangkada and the scores of industry road maps we proudly created.

Similarly, we like to dissect and do “analysis.” 

Those familiar with the blog may recall I did strategy in a Fortune 500. And it demands strategic thinking beyond jumping into the mechanics. 

And beyond “analysis” is “analytics.” In both cases, the imperative is forward-thinking. And that is where the untrained can fall flat on their face. For example, why can’t we overcome the “crab mentality”? Because we can’t figure out the “vital few” from the “trivial many.” Or what the “drivers” are versus the “enablers.”

What to do? 

We justify our fate and point the finger at the West because of their outsized influence in the global community. Indeed, they failed in that sense.

Yet, we betray our misunderstanding of what “community” is, including the global community.

A community is the product of individuals coming together for the common good. There is no free lunch.

Sadly, our instincts – aka the caste system – are the prism that informs our worldview. We are parochial and insular. We value hierarchy and paternalism and rely on political patronage and oligarchy; ours is a culture of impunity.

Unsurprisingly, do we take our instincts for granted that we don’t even know who Juan de la Cruz is?

In other words, we measure everything by individual achievements that only make us proud.

How can we crow about political patronage and oligarchy? But that’s why we misplaced our values. For example, our value of hierarchy comes with our value of paternalism. And the latter undermines personal responsibility. In other words, they reinforce each other.

Translation: In the community at large, the common good is supreme. And that is our biggest failing.

The good news is that we’re not alone. Even America, the world’s acknowledged measure of freedom and democracy, has dropped the ball.

Let’s assess the assertion again – and it is not a new theme dissected by the blog.

Our parochialism and insularity are beyond the pale. Unlike our neighbors, we never outgrew an inward-looking bias.

How? We can’t fathom the reality demonstrated by these neighbors. They begged for Western money and technology.

While we celebrated oligarchy and the handful of dollar billionaires we created, and worse, to undermine personal responsibility, we nurtured paternalism.

In other words, we respect hierarchy because it comes with the value of paternalism.

And so, we proudly pursued poverty alleviation efforts in conjunction with employment generation.

In the process, we institutionalized our “crab mentality.”

Translation: We, including our economic managers, touted efforts that propagated the “trivial many” while undermining the “vital few.” Pareto is foreign to us!

And that explains why we failed miserably both in agriculture and industrialization.

Sadly, we can’t look at ourselves in the mirror. And the Philippine elite and chattering classes won’t own up to our failings.

Instead, we like to dwell on the failings of the global community.

What to do?

There is no free lunch. Underdeveloped as we are as an economy and nation, we have the onus to put our own house in order. It’s called “personal responsibility” – in the global community context.

That’s why the blog never tires of speaking to the efforts of my Eastern European friends.

They could have pointed to the decades under Soviet rule that turned them into the poorest country in Europe.

Yet, over the last nineteen years, they have achieved something beyond a flash in the pan – because it has endured.

While the wife and I have been in Eastern Europe since April of 2022, we took holidays because I was confident they no longer need my hand-holding – their training wheel.

“I cannot teach you better than your experience.” That was the message I gave when they asked me to do a session in “crisis management.”

In case they took them for granted, I recalled the success stories under their belt. “You have gained an enviable depth of experience over the years.” Over 30 of the senior managers listened to me. Yet, they didn’t expect that I would call on specific individuals to narrate the details of these success stories.

In turn, I challenged them to be a one-billion-dollar company. “You were less than a ten-million-dollar company and unprofitable for eight years, yet you over-delivered beyond the challenge to be a one-hundred-million-dollar company.”

For example, despite the war in Ukraine, the Ukrainian business is up 32% year-to-date. And Poland, supporting the Ukrainians against the Russian invasion, is doing better with sales of 67% over last year. And in the West, Germany’s business is ahead of the prior year by 39%. And all three countries deliver double-digit profitability.

And in the Americas, Latin America’s business is 69% up, and the US is ahead by 44%.

But what about the bigger world? They also asked me to launch the company’s “sustainability” – or green – initiative.

And the message was, “Ours is a simple business. We make things and sell things. We must prioritize sustainability efforts to give us the biggest bang for the buck and a competitive advantage in our products. And to do the same in making these products and in the factories where we make them. And to optimize the efforts, we must partner with third-party providers, e.g., raw and packing materials and trade partners. That will ensure that the initiatives are extensive yet relevant – and benefit all stakeholders.

Let’s get back to the Philippines.

I again call on Philippine industry leaders like Messrs. Ang and Dominguez to lead the effort to replicate the success of Vietnam to lure Samsung and Apple, making Vietnam the latest Asian Tiger.

In other words, we must fight our “crab mentality” and aggressively pursue the “vital few.” We now know that putting up over 300 export processing zones is not the answer to our poverty.

For the last time, we must recognize that our academic bag of tricks is not up to the task demanded by the real world. It is the real world. We learn from experience.

Editorial: “Reaching the academic top means fixing school problems from the ground up.”

Is education the problem, or are we – this generation is – the problem?

Education in a country is an expression of its culture. Education did sprout out of a vacuum.

What to do?

We justify our fate and point the finger at the West because of their outsized influence in the global community. Indeed, they failed in that sense.

Yet, we betray our misunderstanding of what “community” is, including the global community.

A community is the product of individuals coming together for the common good. There is no free lunch.

Gising bayan!