benign0's blog

[ I wrote this article in June of 2009 as the world reeled from the aftershocks of the 2007 to 2008 global financial meltdown. It remains relevant today as we evaluate development paths we need to take as a nation in a world that is undergoing fundamental change in economic order. It is relevant because Filipinos continue to foolishly look to foreign capital and import-driven consumption as a source of its economic salvation. ]

Development in understanding in recent years is making real limits on growth a lot more palpable since it is becoming quite evident that our approach to measuring economic value and the costs of acquiring said "value" (i.e. our monetary system) is woefully incomplete. Yet economic growth remains the be-all-end-all that pervades every aspect of human aspiration. Corporations scramble over one another to get into the next market to expand into. Shoppers are continually trawling vast malls looking for the next must have . Credit is wantonly extended to grease the entire endeavour.

One of the key aspects of the Constitutional Reform agenda revolves around the proposal to open the Philippines to full foreign ownership of business assets and private property. It is a worthwhile option to explore as it has been known for quite some time how inept Filipinos are with creating capital indigenously and at keeping a productive chunk of it within its borders . Nonetheless, there is still a need to remain vigilant as to the nature of the capital we allow Filipinos unfettered access to, specifically: We want capital coming in that expands capacity for sustained gains in productivity and equity creation .

Everytime I walk by the local Flight Centre (an airline ticket booking chain that offers McDonalds-like travel agency services) in the city, I note the posters and fliers displaying sweetened holiday deals to various Southeast Asian cities beckoning Aussies shopping for their next overseas getaway "adventure". You can't help but notice the ridiculously low fares to "exotic" cities like Bangkok, Ho Chi Minh City, Kuala Lumpur, Singapore, and even Phnom Penh - a city just fresh out of the Stone Age. With the Aussie Dollar flying above the rest of the developed world's deppressed currencies, and winter fast approaching in the southern hemisphere, our credit cards are locked and loaded.

Valentine's Day is just around the corner. Who would one expect to see jumping up and down with excitement? Lovers all over the world? Wrong. Most excited of all will be the retailers . Valentine's Day is an occassion that sees us engaging in a most wasteful orgy of gift-giving and consumption. Compared to that other consumerist occassion, Christmas, where the proportion of durable goods that exchange hands is relatively bigger, trinkets that are bought and given out during Valentine's Day are primarily non-durable . Almost all end up destined for a landfill or a sewer within days of their purchase.

What's it going to take for the current administration to stop blaming the previous administration for everything bad that has happened and even the ones that keep happening after former President Gloria Arroyo (GMA) left Malacanang? It has become some sort of a tradition for President Noynoy Aquino (PNoy) and his minions to blame GMA for all the ills in the land.

Looks like the anemic Philippine showbiz industry and the economic aspirations of the broader Filipino public are on a collission course. While President Benigno "Noynoy" Aquino III and his henchmen in the "Communication" business scramble to re-direct blame to former President Gloria Arroyo's administration for the dismal showing of the Philippines in a global ranking of "economic freedom" (coming out 115th in a list of 117!), various local artists are calling for a further regulation of the performing arts industry to stem the entry of foreign acts into the country's concert circuit.

Politicians are quick to grandstand about their achievements and their "contributions" to the development of our wretched land, the Philippines. Whenever statistics about the economy or survey results describing public sentiment is released, politicians will go on a media blitz to ensure that an association between these and themselves are implanted in the vacuous minds of their constituents. Retrospective narrative about statistics is easy. But it takes real courage and conviction to use statistics as prospective measures of future performance.

As the New Year rolls in, every man and his dog is issuing messages of "hope" for the coming Year 2011 and "reviews" of the past Year 2010, presumably entertaining the notion that some sort of wisdom applicable to the future lies in the past. That's fine of course, considering ours is a society with an extensive track record of failure as far as learning from the past is concerned. What is disturbing, however, is how the Government dances around with pompons trumpeting the good fortunes Filipinos can "expect" from 2011 simply on the basis of the character who happens to be sitting in Malacanang and the "reforms" he supposedly "plans" to pursue. Worse, Filipinos, as has been usual in the last 50 years, have been conditioned to look to Government for their salvation -- always ready to credit a single leader for their fortunes or blame him or her for their troubles.

There's been a lot of trumpets being blown over how the Philippines had recently surpassed India as the world's biggest remote supplier of call centre and back-end business process outsourced (BPO) services. The value proposition of such services to the market is quite clear as far as Filipinos are concerned: they are delivered on the cheap by a society awash with under-employed university graduates who speak excellent English.

The venerable Abe Margallo in his FilipinoVoices.com article House Bill 5043, quo vadis (whatever the hell does " quo vadis " mean, anyway?) makes another one of those typically irresponsible rah-rah assertions about the issues of population and reproduction -- the sort that fuels primitivism in already hopelessly backward Philippine society. The cornerstones of his thesis are the following ululations : (1) Filipinos are "assets", so the more such assets we produce, the more value is delivered to the society. (2) The reason Filipinos remain poor despite their being an "asset" is that they lack "opportunit[ies] to work and earn income". (3) The "economic elites" have not done their "duty" to invest more of their resources into creating said "opportunities" for the masses. Guess again, gramps . Here are some reality checks for you...

A factoid we Filipinos often fret about has to do with the whole wasted opportunity we now struggle to come to terms with around our supposedly being a promising emerging regional star back in the 1950s -- our being Number Two to Japan's Number One in economic development back then while all the rest -- Singapore, Taiwan, the Koreas, Thailand, Malaysia and Hong Kong were all mosquito-infested colonial outposts. We were the poster child of American colonial legacy and looked up to as a role model to be emulated. What happened?

In the on-going debate around whether a shift in form of government will yield any significant change in our ability to prosper as a society over the foreseeable future (if there is such a thing), we have established that there is some validity in the assumption that quality of leadership has a strong causal relationship with system of governance. However, the second component that links prosperity to system of governance remains suspect; i.e. that Quality of elected leaders determines ability of a society to prosper .

The venerable Economist makes this terse assessment of Philippine President Benigno "Noynoy" Aquino III's first 100 days in office in a 14th October report : Since taking office in June, he has proposed scant new legislation and promised little. His speeches are filled with platitudes and swipes at his unpopular predecessor, Gloria Arroyo-Macapagal. Nor is Mr Aquino obviously interested in foreign affairs; he is a reluctant flyer and has cancelled several trips abroad. "He's not a statesman," sniffs one Asian diplomat. They make other pointed observations...

The above title expresses the only thought that came to mind as I took in esteemed "economist" Winnie Monsod's "gone-viral" video .

There is good debt and there is bad debt. Like, say, a loan taken out to buy property or start a business, good debt is used to fund appreciating assets. The cost of the borrowed funds (the interest the borrower pays on the principal disbursed to him) is offset by the returns that are yielded by the asset purchased using said borrowed funds. Those yields could come in the form of (1) income generated by the assets -- such as rent or earnings from the funded property or business, and (2) capital gain -- such as when you sell the property or business for more than its value at the time it was acquired -- also taking into account the cost of funding (interest expenses) and cost of ownership.

Some non-debatable facts that Inquirer.net columnist Jose Ma. Montelibano dropped in his recent piece on the economic might of Filipino-Americans (figures that follow presumably are estimates or averages): on an annual basis (1) Filipino-Americans spend $50 billion in personal living activities and purchases, (2) they remit $8 billion to the Philippines. To highlight the scale of these numbers, Montelibano shows that the total expenditure is double the budget of the Philippine Government and the remittance figure accounts for 60 percent of total remittances to the Philippines by Pinoy expatriates.

The United States as a society is not about to collapse any time soon. But there are worries more around its future place the world's primary economic driver. Arianna Huffington goes as far as warning how America may be in danger of becoming a Third World nation . She cites instances of state and county governments curtailing even the most basic services -- closure of libraries and public schools, paved roads being allowed to degenerate or allowed to "return to nature", etc.

While the Catholic Church and its morality police recruits among government policy makers continue to deadlock debate around reproductive health and abortion, an entire generation of Filipinos are coping as best they can with the extreme work environments offered by the call centres and other BPO operations that employ them, not to mention the unconventional lifestyles these workers lead as a result. As the outsourcing operations hosted in the Philippines start to catch up in terms of total value contributed to the economy, social services that support the special needs of its workers need to be boosted.

The Philippines is imprisoned by a deep systemic inability in its people to extricate themselves from poverty. It is a problem that is an outcome of (1) the sheer number of Filipinos that inhabit the planet, (2) the average productive output of each warm Filipino body earning (or seeking to earn) a living, and (3) the general attractiveness of quality of life outside of the Philippines . The following challenges with respect to these three aspects of our dire situation easily reveal themselves...