Groundhog Day Celebrates a Damaged Culture

James Fallows wrote his article “Damaged Culture: A New Philippines? in 1987, a year after EDSA.

It is now 2009, twenty two (22) years after EDSA and still:

The countries that surround the Philippines have become the world’s most famous showcases for the impact of culture on economic development. Japan, Korea, Taiwan, Hong Kong, Singapore–all are short on natural resources, but all (as their officials never stop telling you) have clawed their way up through hard study and hard work. Unfortunately for its people, the Philippines illustrates the contrary: that culture can make a naturally rich country poor. There may be more miserable places to live in East Asia– Vietnam, Cambodia–but there are few others where the culture itself, rather than a communist political system, is the main barrier to development. The culture in question is Filipino, but it has been heavily shaped by nearly a hundred years of the “Fil-Am relationship.’ The result is apparently the only non-communist society in East Asia in which the average living standard is going down.

And speaking of elections, the Philippines of 2009 might as well be stuck in 1987:

Democracy has returned to the Philippines, in a big way. As if to make up for all the years when they could not vote, Filipinos have been analyzing the results of one election and preparing for another almost nonstop since early last year. Election disputes have returned too. For three months after the legislative elections last May, long recounts dragged on to determine whether Juan Ponce Enrile, Marcos’s former Defense Minister, whose switch to Aquino helped topple Marcos, would get one of the twenty-four seats in the Senate. Senators are elected nation-wide, in what often resembles a popularity contest. Among the new senators is a Charles Bronson–style action-movie star; Enrile is about as well known as the actor, and though he has made many enemies, most foreigners I spoke with found it hard to believe that in an honest vote count he would have lost to everyone on Aquino’s list of nominees, which included a number of newcomers and nobodies. Finally, in August, he squeaked in as number twenty-four.

The economy? It is same o same o. The conversation below may very well have happened today, or an hour ago, or a minute ago.

Manufacturing? “There were not many viable sectors to begin with, and most of them were taken over by cronies. The industrial sector is used to guarantee monopoly and high-tariff protection. It’s inward-looking, believes it cannot compete. People are used to paying a lot for goods that are okay-to-shoddy in quality. Labor costs are actually quite high for a country at this stage of development. They should be like Sri Lanka’s but they’re like Korea’s, because union organizing has run far ahead of productivity. It’s a poor country–but an expensive place in which to produce. American and Japanese firms have set up some electronics assembly plants, but they’re only buying labor, not building subsidiary industries or anything that adds real value.’

Agriculture? “It’s been heavily skewed for fifty years to plantation crops. All those traditional exports are down, sugar most of all. Copra is okay for the moment, but it’s never going to expand very much. Prawns are the only alternative anybody can think of now.’ Agriculture is also nearly paralyzed by arguments over land ownership. Since the Spanish days land has been concentrated in a few giant haciendas, including the 17,000-acre Hacienda Luisita of the Cojuangco family, and no government has done much to change the pattern. “You could argue that real land reform would lead to more productivity, but it’s an entirely hypothetical argument,’ an Australian economist told me. “This government simply is not going to cause a revolution in the social structure.’ Just before the new Congress convened, as her near-dictatorial powers were about to elapse, Aquino signed a generalized land-reform-should-happen decree. Most observers took this as an indication that land reform would not happen, since the decree left all the decisions about the when, where, and how of land reform to the landowner-heavy Congress.

Services and other industries? “They’re very much influenced by the political climate. I think this has tremendous potential as a tourist country–it’s so beautiful. But they don’t have many other ways to sell their labor, except the obvious one.’ The obvious one is the sex business, visible in every part of the country–and indeed throughout Asia, where Filipino “entertainers’ are common. In Davao, on the southern island of Mindanao, I watched TV one night and saw an ad repeated over and over. Women wanted for opportunities overseas. Qualifications: taller than five feet two inches, younger than twenty-one. When I took cabs in Manila, the drivers routinely inquired if I wanted a woman. When my wife returned our children’s rented inner tubes to a beach vendor at Argao, the vendor, a toothless old woman, asked if she was lonely in her room and needed a hired companion.

Resources? “Exploiting natural resources has always been the base here,’ one of the economists said. “But they’ve taken every tree they can easily get. It’s not like Brazil or Borneo, with another fifty years to rip out the heart of the earth.’ Every single day Japanese diners take hundreds of millions of pairs of chopsticks out of paper wrappers, use them for fifteen minutes, and throw them away. Most of the chopsticks started out as trees in the Philippines, though more and more of them now come from American forests. The Philippines has more naturally spectacular mountains and vistas than Malaysia or Indonesia, but you can travel for miles in the countryside and mainly see eroding hillsides stripped bare of trees. Like Americans who speak of “conquering’ the frontier, Filipinos sometimes take a more romantic view of what “taking every tree’ can mean. F. Sionil Jose, a prominent novelist in his early sixties, who grew up in Ilocos, has written a famous five-volume saga–the Rozales novels–about the migration from the harsh Ilocos region to the fertile plains of central Luzon. The Ilocano migrants made a new life for themselves, he observes, and they did it by cutting down the jungle and planting rice. “There is some hope with minerals and gold,’ one of the economists said. Indeed, a Forty-ninerstyle gold rush is now under way in Mindanao. I was told that communist rebels, Moslem separatists, and former Philippine Army soldiers now work side by side in the gold mines, proving that economic development can be the answer to political problems.

And the clincher is

Still, for all the damage Marcos did, it’s not clear that he caused the country’s economic problems, as opposed to intensifying them. Most of the things that now seem wrong with the economy–grotesque extremes of wealth and poverty, land-ownership disputes, monopolistic industries in cozy, corrupt cahoots with the government–have been wrong for decades. When reading Philippine novels or history books, I would come across a passage that resembled what I’d seen in the Manila slums or on a farm. Then I would read on and discover that the description was by an American soldier in the 1890s, or a Filipino nationalist in the 1930s, or a foreign economist in the 1950s, or a young politician like Ferdinand Marcos or Benigno Aquino in the 1960s. “Here is a land in which a few are spectacularly rich while the masses remain abjectly poor. . . . Here is a land consecrated to democracy but run by an entrenched plutocracy. Here, too, are a people whose ambitions run high, but whose fulfillment is low and mainly restricted to the self-perpetuating elite.’ The precise phrasing belongs to Benigno Aquino, in his early days in politics, but the thought has been expressed by hundreds of others. Koreans and Japanese love to taunt Americans by hauling out old, pompous predictions that obviously have not come true. “Made in Japan’ would always mean “shoddy.’ Korea would “always’ be poor. Hah hah hah! You smug Yankees were so wrong! Leafing back through Filipinology has the opposite effect: it is surprising, and depressing, to see how little has changed.

And since 1987, the Philippines has remained bleak,- extreme disparity between the rich and the poor,  the impunity of political assassins, the corruption, the instability, and the culture – same o same o.

It may be too pessimistic to think of culture as a kind of large-scale genetics, channeling whole societies toward progress or stagnation. A hundred years ago not even the crusading Emperor Meiji would have dreamed that “Japanese culture’ would come to mean “efficiency.’ America is full of people who have changed their “culture’ by moving away from the old country or the home town or the farm. But a culture-breaking change of scene is not an answer for the people still in the Philippines–there are 55 million of them, where would they go?–and it’s hard to know what else, within our lifetimes, the answer might be.

Recently, The Accidental Migrant wrote:

Our view of Philippine politics is personality-based and mainly centered on the president. We tend to reduce Philippine economic reality to the question of exchange rate between the pound sterling and Philippine peso.

Except for the activism displayed by Filipino domestic workers in claiming their right as workers in this country, we have not gone beyond our translation of Filipino “identity” into those traditional summer barrio fiestas, the beauty contests and dinner parties to raise some money for their pet projects, and our religious gatherings.

The need to translate the respectability we have earned as a migrant workforce into a political power that would demand good governance in the Philippines and to become an important voice in the UK’s foreign policy and overseas development commitments to the Philippines remains a big and ambitious challenge.

The million dollar question – getting from the current/AS-IS state of irresponsibility to the Desired Future/TO-BE State of personal responsibility – of holding and demanding accountability from the government WHILE ensuring one is also accountable for one’s civic obligations remains in oblivion.

The Numbers Do the Talking.. Again

Numbers do talk. But all of us tend to read it differently. Caffeine Sparks was miffed with the numbers

Debt owed to domestic lenders rose from P1.06 trillion in 2000 to P2.4 trillion in 2008. Debt owed to foreign lenders rose from P1.09 trillion to 1.8 trillion in 2008. And the President, dear beloved President in pink, has the gall to say she has “exorcised” debt???

I can understand if FVR will say he “exorcised” debt because it was during his term when the Philippines emerged 35 years of IMF program supervision. Foreign debt is not evil when such debt is used to generate revenues. The question is what is the composition of the 1.09 trillion in debt. If it is debt that does not generate revenue then I agree that Arroyo doesn’t have the gall.

Somehow, I doubt that Speaker Nograles’ proposal to amend the constitution, supposedly to encourage investments, will attract these businesses. They will have to eliminate themselves first.

Well, Item No. 4. Policy Instability – is a euphemism for anti-foreign investments/protectionist policy, specially, when said policy is enshrined in the Constitution under the section on National Patrimony.  Since these rent capture protectionist policies are etched in the charter, changing these policies necessitates amending the charter in order to attract business.

As pointed out by Kobayashi, during an ASEAN sponsored conference  – There are only two reasons for Global Firms to invest in developing areas

Establish Export Plants

– Firms place importance on “operational conditions”

– The less world economic growth, the more selective firms become

– The more possible investment destinations, the more selective firms become

Access to New Markets

– Firms place importance on “market size” and “future growth opportunities”

– The less world economic growth, the more attractive these factors appear to firms

3 Factors Are Considered When Choosing an Export Plant Location

– Geographical/psychological proximity to targeted markets

– Geographical/psychological proximity to global firms themselves

–  Operational costs (including tariffs, restrictions on foreign investments, etc.) and business environment

The BPO industry has benefited from liberalization. The findings of Shujiro Urata, Professor of Economics, School of Social Science, Waseda University, presented his observations at the  US-China-Japan Trilateral Forum in November 11th, 1997 are still relevant:

World foreign direct investment (FDI) has grown rapidly since the early 1980s. Indeed, the rate of increase of world FDI was higher, compared with world trade from the early 1980s through the mid-1990s. As a result of these new developments, FDI has become one of the most important means of integrating the world economy. The role of FDI in the world economy would be significantly greater, if the impact of FDI on various economic activities is considered. FDI enables investing firms to utilize their firm-specific assets such as technologies and managerial know-how efficiently, while FDI recipients can obtain not only the funds for investment but also efficient technologies and know-how. Furthermore, FDI recipients can enjoy the benefits by gaining an access to various networks such as sales and procurement networks being developed by investing firms.

There are some factors that may be important for all types of FDI. A well-functioning legal system is crucial as it provides protection of assets owned by foreign investors. Without security of assets, no foreign investors would undertake FDI. Closely related to the point just noted is protection of intellectual property rights, as intellectual property is a source of competitive edge for most foreign direct investors. These points may be summarized as the capability of providing credible commitment on the part of host government, or governance for short.

Another interesting observation on a number, this time the GDP was made:

Pattern One: GDP went up even as imports contracted.
Pattern Two: GDP went up even as exports also contracted.
There were more goods and services consumed…but we didn’t export any of them?

The authors of the cited study provide the answer in Page 9 –

At any rate, it is quite clear that NIA statistics and even indicators of foreign asset holdings depict not a consumption-driven rise in economic growth after the Asian Financial Crisis but an import-substitution driven one. Can expenditure switching or import substitution explain the rise in Philippine economic growth after the Asian Financial Crisis? If the national income accounts are reliable, this would be a tautological question since the numbers clearly say that such was indeed the case.

They also suggest that:

6 – Consumption growth is probably overestimated
7 – Agriculture may not be as robust
8 – On the contrary, Industry is weakening
9 – There are many problems in the measurement of service sector growth

The authors stated that consumption might be overestimated. They might as well have included:

imports are underestimated and,

exports are understimated.

These underestimations, in case people forget, is the lifeblood of customs.

In general, it would be safe to say that all the goods coming in and out of the Philippines are under–declared.  These “pilferages” will add up. While the customs duties for such goods are not declared, their entry into the economy will have an impact and will be reflected as an increase in consumption as people pay for goods that they consume – but these goods were not captured at the point of entry or exit into the Philippines.

A STRONG ECONOMY BUILT ON WHAT?

It is an economy built on the paradigm of import-substitution, pretty much a protectionist paradigm – which of course is institutionalized in the Constitutional provisions on national patrimony. An economy built on the whims of the local economic elite, without any worries about foreign competition. The local economy is has a captive market that the local economic elite can toy with, with impunity.

Then, a ball was thrown from left field:

Benigno, Bencard,UPn, and BongV

Nibbling at the fringes of a well thought out and sybstabtiated essay bt Dean de la Paz, Why don’t you attack his numbers if you disagree with his analysis? Economics is too complicated for you?

The gist of it is that the GMAs numbers have to be taken with a grain of salt. And I agree For instance, in education – when the Education secretary proclaimed that there was a lack of classrooms – GMA instructed her to pack more children in a classroom – WTF. She solved the classroom issue, BUT in a perverted way. GMA claimed there was economic growth – I agree. NOW, whether this growth was equitably distributed is another matter, given the Gini coefficient. There is nothing new to what the author is saying that I am not aware of. And the conclusion he derives from the data are no different from the conclusions I will make based on the data.

So anong problema mo ngayon MCB?

And it does not help that Philippine society has citizens that behave like feudal subjects, half-brutes even – prompting Jose Rizal to reiterate the adage – like people, like government. James Fallows completes the circle of ground hog day:

Most of the things that now seem wrong with the economy–grotesque extremes of wealth and poverty, land-ownership disputes, monopolistic industries in cozy, corrupt cahoots with the government–have been wrong for decades.

It even gets glaring when one attempts to elevate the discussion to a rational and systematic discussion that the vacuous play possum and play the victim card to the hilt and would rather talk about how victimised they are instead of discussing solutions objectively measurable time-bound measurable solutions.  The victim chatter is pathetic, it sickening, and retarded. What’s worse – are its enablers!

So, the long and short of it. The Philippine state of affairs  (not just the SONA speech,) is all good – Situation Normal All Effed Up – SNAFU.

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