19.1.15

Religion and the progressives double standard

was my Trade Tripper column in the recent weekend issue of BusinessWorld:

Last week was just about Charlie Hebdo, the French magazine known for its satirical cartoons. Though an equal opportunity offender (lampooning viciously everybody, whether it be Christians, Jews, immigrants, etc.), unfortunately one group of people didn’t find some of the cartoons funny (I don’t think anybody does) and so did what any normal, well-adjusted men of faith would do (of course, I’m being sarcastic): massacre a substantial number of the editorial staff (plus two policemen who were at the scene).

The “progressive” Left’s reaction has so far been predictable: (a) lump all religion together negatively as a bunch of intolerant extremists with hair-trigger personalities; (b) obfuscate the matter by putting out to the public gazillions of social media updates, thoughts or articles under the guise of “bridge-building” or the seeking of “compromise” (inevitably leading to inaction); or (c) blame poverty, historical hurts, or politics as the cause of the massacre (rather than pin the responsibility on adults with the free will to choose to just not kill anyone).

The first reaction is so expected it’s almost a satire: “progressives” dislike religions, as they abhor the idea of moral standards. To them, everything has to be relative. Which is why it’s bizarre that their faith (pun intended) in “freedom of expression” runs into the absolute.

As to the relationship between the rights to free expression and religion, I’ve already discussed it in a previous BusinessWorld article (“Offending hate speakers,” October 2013) and won’t repeat the points here.

However, the importance of religion in people’s lives and as a human right should be reiterated: Stanford’s Michael W. McConnel describes it this way: “Religion is a special phenomenon, in part, because it plays such a wide variety of roles in human life.” There is no other human phenomenon that combines all of these aspects (e.g., institution, worldview, locus of community, an aspect of identity, provides answers to questions of ultimate reality, and offers a connection to the transcendent); “if there were such a concept, it would probably be viewed as a religion.”

Because religion indeed plays such a huge role in the human condition and identity, it constitutes a fundamental human right alongside which other rights are arrayed. Hence, though we adhere to the idea of free speech, nevertheless, reasonableness tells us that the exercise of such right (in fact, any right) has to be done in a manner that is respectful of other and of other’s rights.

The right to religion is also subjected to this dimension; hence, why the Islamic extremists who murdered the Charlie Hebdo staff are justly and correctly condemned. The same goes for Christian anti-abortion activists who murder doctors or nurses.

Progressives have it wrong: you don’t actually respect the religion, you respect people. And many people simply like their religion. That is reality. Just as nobody should maliciously, without reason, offend the feelings of a person for liking One Direction (utterly tempting and justifiable it may be), then all the more should you respect that person’s sensitivities when it comes to his identity and his belief about his Maker.

There’s one aspect, however, that must be emphasized: as we noted above, the progressives’ inability to definitively call Islamic terrorists as responsible.

Because to hold them to account requires a standard (which an act is said to violate that gives rise to the accountability). But as mentioned previously, progressives hate standards. And worse (for them), one quite identifiable source for a standard, which will inevitably invite comparison, is Christianity. But the idea that Christianity (particularly the Catholic Church, which opposes contraception, same-sex marriage, abortion, euthanasia, etc.) might actually possess possible solutions or even guidance is such an anathema to those on the Left that they will absolutely refuse to consider it at whatever cost. They’d rather have the world burn from global inaction against the terrorists just because something will not fit their narrative.

And the logic twisting goes to ridiculous lengths: Islamic extremists murder people and liberal media and academe go into hyper-drive in demanding “nuance” and “understanding”: that Muslims suffer more from terrorists or are forced to do acts not required of other faiths or have suffered historic wrongs stretching not only decades but millennia. But such are quite fallacious. Besides, the problem is not the Muslims. Or anyone’s religion. The problem is the Islamic extremists who kill, torture, or otherwise hurt people.

On the other hand, when a Christian simply writes or speaks about the faith’s doctrines on same-sex marriage, the entire liberal progressive establishment goes nuts: all of a sudden, absolutism is fine, particularly when it comes to free speech. And forget about nuance. One local newspaper columnist labeled “intolerant” the Philippine Catholic Bishops for simply pointing out a misquote on Pope Francis.

There is nothing reductionist about this: people really need to start approaching things with reason rather than ideology. Perhaps with that at least something constructive can be done.

10.1.15

Want inequality? Wreck the traditional family.

my Trade Tripper column in this weekend issue of BusinessWorld:

Amid the discussions regarding 2015’s ASEAN integration, certain data had been consistently ignored by the general academe and policy makers: Filipinos 30 years old and below comprise around 70% of the population (with those below 14 years at 35%, with the median age at 22.9 years old). Those at 65 years old comprise only about 4.1%.

Quite simply, beyond economics, the very future of this country depends on how well that 70% is educated, developed, and formed.

But even just narrowing the discussion in economic terms, to state the obvious: a lot is dependent on people. A huge portion of our output or trade has to do with services, yes, but even then, manufacturing and agriculture would need people to run them. Nevertheless, despite the demographic potential that the Philippines has compared to the ageing populations of our trading partners, all of that would be meaningless if that youth would not grow up as responsible adults.

Unfortunately, our education system needs a lot of improvement. The “Times Higher Education World University Rankings 2014-2015” show no Philippine university included.

That is compounded by the fact that of the almost three million Filipinos currently unemployed, 48.2% are within the 15-24 age group, with 29.9% from those in the 25-34 age group. Most of them are high school graduates.

All these are not contributing to the proper formation of the youth. And yet, nothing could be more devastating to them than the weakening of the traditional family institution.

But unfortunately, teenage pregnancy in this country rose by 70% in the past 10-year period (114,205 in 1999 to 195,662 in 2009). Figures for 2010 show 206,574 of such pregnancies. Data from the National Youth Commission show that the Philippines is third highest in Southeast Asia and among the highest in the ASEAN region and the only country where that number is increasing.

Also disconcertingly, 13-14% of all registered marriages are among teenagers. On the other hand, perhaps not coincidentally, there is also a rise in annulment cases (records indicate a 100% increase in the past 10 years). Add to that the increasing incidences of rape.

However, not only is economic development retarded by the diminution of the traditional family institution, economic inequality is fostered as well.

According to Jeff Jacoby in a November 2014 article, “One report, aptly titled ‘For Richer, For Poorer,’ is by sociologist W. Bradford Wilcox of the American Enterprise Institute and economist Robert I. Lerman of the Urban Institute. It documents the profound links that connect family structure and financial well-being and underscores what decades of empirical data have shown: Families headed by married couples tend to be stronger economically than those headed by unwed single parents.”

“‘Anyone concerned about family inequality, men’s declining labor-force participation, and the vitality of the American dream should worry about the nation’s retreat from marriage,’ the authors write. The steady fall in the percentage of married two-parent households -- from 78% in 1980 to 66 % in 2012 -- goes a long way toward explaining why so many ordinary families have trouble climbing beyond the lower rungs on the economic ladder. Correlation isn’t proof of causation, of course. But there is no refuting the strong association between growing up with both parents in an intact family and achieving higher levels of education, work, and income as young adults.”

“To be sure, not all families headed by married parents are stable or successful, and not all children raised by single parents struggle economically or professionally. Barack Obama, who was two years old when he was abandoned by his father, is dramatic evidence of that. But as Obama himself says, the data aren’t in question. ‘Children who grow up without a father are more likely to live in poverty. They’re more likely to drop out of school. They’re more likely to wind up in prison.’”

The message was emphasized further by Aparna Mathur: “Wilcox and Lerman document how the shift away from marriage and traditional family structures has had important consequences for family incomes, and has been correlated with rising family-income inequality and declines in men’s labor force participation rates. Using data from the Current Population Survey, the authors find that between 1980 and 2012, median family income rose 30% for married parent families, for unmarried parents, family incomes rose only 14%.”

With such scientific and researched backing, then the media’s, academe’s, and policy makers’ wholesale effort to look the other way is truly the height of irresponsibility.

Dominated as they are by left-leaning “progressive” thought, the only thing that matters to them is to further ideologically driven policy initiatives such as divorce, same-sex marriage, the Reproductive Health Law, and euthanasia. Any evidence that shows the necessity to strengthen the traditional family institution simply does not fit their narrative.

Offending hate speakers

this is a repost of an October 2013 article for BusinessWorld:

Last week was full of statements calling for the unconstitutionality of Article 133 of the Revised Penal Code (Offending religious feelings). That such calls are reactionary and biased is to point out the obvious. The claims, however, were also based on fallacious reasoning and on assumptions that have no basis in or disregard reality.

We will ignore complaints that Article 133 violates Church/State separation for their utter obliviousness on what the concept really means. Also to be snubbed is that supremely asinine argument that Christians must forgive everything and forget about justice. That has never been the Catholic Church’s teaching. Forgiveness must always be coupled with justice.

Then there’s the dim-witted "Spanish-era" Article 133 is "antiquated" position. But by that "logic," the US Constitution and the Ten Commandments must be discarded as well.

Instead, we look at the argument that the foregoing provision is unconstitutional for conflicting with free speech. Such, however, ignores basic constitutional law: the right to free speech is not absolute. One cannot libel or slander people, commit vandalism to express opinions, display obscenities, falsely shout "fire" in crowded places. The point here is not to stifle dissent or contrasting ideas but to restrain speech that deliberately is meant to sow hate, violence, or intolerance.

The provision, as it’s currently viewed, has nothing theocratic about it. Neither is it meant to favor a specific religion. It simply acknowledges the fact that there are some things people feel strongly about. Hence, why crimes committed in another’s house or murdering one’s own family members, or assaulting teachers or public officials, have higher penalties. Considering today’s fears of terrorism, one can go to jail just by making a joke about bombs while inside an airport. That is why the Civil Code has a provision restraining rich people from flaunting their wealth in times of public want (see Article 25).

One incredibly bizarre argument recently made is that priests who speak against the RH law during Mass also offend the feelings of those who are pro-RH. But this ignores the constitutional right of the priest to religion and free speech, the constitutional right of the pro-RH individual to religion which includes the right to stop being a Catholic and not attend Mass, and the fact that what is being punished by our laws is not the contrary idea being expressed but the hateful, intolerant manner in which it is expressed.

Then there are people who argue that free speech shouldn’t come with restrictions. Such argument, again however, inanely disregards reality. And also quite hypocritical: I bet that any person who argues that, if confronted with someone who joins their family party and starts insulting them, causes a ruckus, makes them look silly in front of the cameras, and then posts pictures and smugly boasts about it in the Internet, would not hesitate to have the law fully enforced.

The other argument employed is why should religion be given distinct protection? If an Imam, it is argued, enters a gathering of atheists, disrupts proceedings, then why would that not be considered a crime? Actually, it is. On the top of my head, it could constitute qualified trespass, tumults, alarms, unjust vexation, or violating the right to peaceful assembly.

On the other hand, it’s also true that religion is given such protection because it is so fundamental, an inherent and self-evident inclination of people, that the right to religion is considered a primary human right that must be respected. Hence, this right to religious freedom is protected, not only by our Constitution, but also by international instruments such as the UN Declaration on Human Rights, the International Covenant on Civil and Political Rights, and the Declaration on the Elimination of All Forms of Intolerance and Discrimination Based on Religion or Belief.

That is why many countries in the world aside from the Philippines penalize hate speech (i.e., speech vilifying persons on the basis of some characteristic like race or religion). Poland, Norway, Singapore, Thailand, South Africa, Canada, Germany, Denmark, amongst others, impose punishments for it. The European Court of Human Rights has consistently ruled against speech offending religious sensibilities and hate speech. Britain punishes hate speech that seeks to "stir up religious hatred."

The point here is: whether or not you believe in religion or agree with the doctrines of a religion, the reality remains that religion is something fundamental to most people’s identities and their conception of rights. This fact, like the attachment to the ideas of family or marriage (both definitely established human rights as well) is something that liberals, progressives, or leftists have puzzlingly been unable to comprehend. The plea for tolerance (correctly understood from the Latin tol -- to endure a burden) should never be understood to mean that people must shut up about their religious rights.

Simply put, there may be room for sloppy thinking in the public square but none at all for bullying and boorishness.

9.12.14

Again: competition law? Maybe.


(Remarks at the 1st National Competition Conference, Philippine International Convention Center, Manila, Philippines; 09 December 2014)

Good morning.

And thank you for inviting me to participate in today’s discussion on “Competition Policy and Regional Economic Integration”. Indeed, prevalent in today’s mind would be the subject of ASEAN integration. As it should.

With countries touted as interconnected and technology perpetually advancing, nevertheless, most international trade remain affected significantly by geography. And thus ASEAN will always play, should always play, an important part in the formulation of Philippine economic policy.

Competition policy is said to constitute a vital cog leading up to ASEAN integration by 2015. And members are “endeavored” to introduce competition policy and legislation by that year to “ensure a level playing field and to foster a culture of fair business competition for enhanced regional economic performance in the long run.”

It is worth exploring, however, the thought that before the Philippines indeed contribute to enhancing regional economic performance that its own economic interests – both in the short and long term – be solidified. And perhaps it is in that light that we best look at competition policy and legislation.

The trouble with assumptions

One fundamental problem with present discussions on competition law is the implicit reliance on this one assumption: monopolies are bad and government is the solution. But note, not even our Constitution see monopolies with that perspective: the “State shall regulate or prohibit monopolies when the public interest so requires. No combinations in restraint of trade or unfair competition shall be allowed.” (italics supplied)

As my own newspaper BusinessWorld reported (Competition Law Urged, 28 August 2013) on the East Asia Forum on competition law, the consensus seemed to be that “a competition policy is considered important for a country to grow and consider itself an advanced economy.” Furthermore, “competition law should also be separated from politically motivated industrial policy as the latter allows the government to choose which industries to champion instead of letting natural competition occur in the market.”

Urging must be made to re-examine the assumptions on which such assertions are made. It is not dogma that monopolies are inefficient and stifles innovation. And because of the way today’s economic system is, with globalization and technology, the probability of a new entrant, whether locally or elsewhere, breaking in will always serve as an impetus to improve products or services.

Even claims related to predatory pricing need not go unexamined. Predatory pricing can work if the “predator” is willing (and able) to suffer deep financial losses and even then such would only be effective if the market itself is inundated with regulations that exempt, protect, subsidize current players.

Even declarations like “all advanced economies have a competition policy” should be rendered suspect. Simply because we’re not an “advanced economy”. Not yet anyway. Which should tell you a lot about the wisdom of importing and imposing a regulatory framework tailored for countries whose circumstances are not similar to the Philippines.

Indeed, the logic of the foregoing assumptions seems to be is that to further regulate the market will set it free. But we’ve known from trade policy history that such never benefits consumers and that protectionism has generally harmed the economy. And we’ve known from trade policy history that monopolies are created precisely because of regulations: that such regulations before had to do with tariff barriers and subsidies and now identified as monitoring and review really is of no difference.

A question of necessity

And then, there is the question of necessity. Or, more accurately, the degrees thereof. At the outset, let us get this straight: to agree to “endeavor” to have a competition law by 2015 does not mean we should have a competition law by 2015. The only deadline the Philippines must consider at this stage is its own interests and the welfare of its people.

Reference has been made (here and elsewhere) of the 2014 Economic Freedom Index. As its name indicates, the Heritage Foundation’s study measures a country’s openness to trade, economic mobility, and prosperity.

The Philippines is currently ranked 89 (out of 186 countries), although the same is said to be an improvement by 1.9 points. Amongst Asia-Pacific countries, the Philippines placed 16th out of 42. Overall, the Philippines is considered “slightly below the world average” or “moderately free”.

Of particular interest is the Index’s category of “Rule of Law”. For the Philippines: “Corruption and cronyism are rife in business and government, with a few dozen leading families holding an outsized share of wealth and political power. Judicial independence has traditionally been strong, but the rule of law is generally weak. A culture of impunity, stemming in part from a case backlog in the judicial system, hampers the fight against corruption. Delays and uncertainty negatively affect property rights.” In this regard, it is to be noted that as of 2010, Vietnam has overtaken the Philippines in terms of lessened corruption and is currently three ranks higher.

The Economic Freedom Index goes on to discuss ease of doing business or “regulatory efficiency”, noting that in the Philippines “launching a business takes 15 procedures and 35 days.”

The foregoing makes informative reading when set alongside the World Economic Forum’s 2014-2015 Global Competitiveness Index.

The Philippines certainly made improvements, ranking 52 out of 144 countries. However, the data seems to give the impression of the huge role that the private sector played in our improved ranking.

One can see this in our high scores in “business sophistication” and market size (which perhaps can be related to the fact that the Index declares our population to be at 97.5 million, with a substantial chunk of that, it must be added, belonging to the youth sector – more on this later). High scores in innovation and financial market complement this.

However, what is telling are the areas where the Philippines rank lowest: infrastructure, corruption, health and primary education, ease of starting a business, inefficient bureaucracy, and wage determination, hiring and firing procedures, and redundancy costs.

The media trumpets Philippine improvement in one pillar: “institutions” (rank: 67, formerly 79). But even then, when broken down, one sees that it is private institutions that gave us that higher score (at 48), with public institutions at 75. Two additional figures worth noting in this regard: judicial independence (77) and transparency in policymaking at 85 (and which probably highlights why a Freedom of Information Law can help attain better competitiveness for the country).

Nevertheless, the undoubted key for whatever prospects that may open to the Philippines is in education. There is one striking Philippine statistic that everyone should be aware of and that is in the area of demographics: Filipinos 30 years old and below comprise around 70% of the population (with those below 14 years at 35%, with the median age at 22.9 years old). Those at 65 years old comprise only about 4.1%. The future of this country quite simply depends on how well that 70% is educated.

In this regard, let us take note of The Times Higher Education World University Rankings 2014-2015, which declares itself to be “the only global university performance tables to judge world class universities across all of their core missions - teaching, research, knowledge transfer and international outlook. The top universities rankings employ 13 carefully calibrated performance indicators.”

The usual suspects are there: Cambridge and Princeton definitely (as well as some school called Oxford). From the Asian region, the list is filled with Japanese, Singaporean, Hong Kong, South Korean, Taiwanese, Indian, Israeli, Turkish, Saudi Arabia, and Thai schools.

And yet (although one is free to ignore the rankings for whatever excuse) not one of our schools joined the list of top universities. Not even in the “looser” Times Higher Education World Reputation Rankings, which is based on “nothing more than subjective judgment”.

Relate the foregoing with recent figures indicating that teenage pregnancy in this country rose by 70% in the past 10-year period (114,205 in 1999 to 195,662 in 2009). 2010 figures show 206,574 of such pregnancies. Data from the National Youth Commission show that the Philippines is third highest in Southeast Asia and among the highest in the ASEAN region and the only country where such number is increasing.

Furthermore, of the almost 3 million Filipinos currently unemployed, 48.2% are within the 15-24 age group, with 29.9% from those 25-34 years old. Most of them are high school graduates.

Also disconcertingly, 13-14% of all registered marriages are among teenagers below 20 years old while. On the other hand, perhaps not coincidentally, there is also a rise in annulment cases (records indicate a 100% increase in the past 10 years). Add to that the increasing incidences of rape.

Why are these numbers important in relation to our economy? Because the basic economic unit and source of productivity are people. And nothing develops people better than a strong family unit.

Potrykus and Fagan tell us that: “It is worth emphasizing that though economic production generally, and growth particularly involve three components, economic enterprise is a human activity. Human beings, by the measure of growth accounting, contribute over half of what is valuable to production. Only one third of growth may be attributed to non-human, physical capital. Domestic production is affected massively by the human component’s contribution.”

It bears worth pointing out that despite ASEAN integration being packaged as turning ASEAN into one big “production base”, the Philippines nevertheless is also hinging its strategy on expanding our services industry. But services require people. And people need to be educated and trained.

To further press the matter, while the Global Manufacturing Competitiveness Index recognized the importance of infrastructure, the economic, trade, financial and tax system, and the rule of law as drivers of competitiveness, the biggest driver of competitiveness and economic growth is, you guessed it, a country’s people: “the availability of high quality human talent will always remain in the top set of competitiveness drivers.”

And this is key for the Philippines: Demographics, more specifically aging populations, will have a significant impact on market attractiveness over the coming decades, with some nations like Japan, and even China, despite its large population, significantly inhibited by their aging populations and others, including the U.S. with favorable population age demographics gaining the upper hand as time passes.”

How the foregoing, which are clearly urgent matters all, are to be addressed by a competition law is something that needs further examination.

Competition Law? Maybe.

At this point, perhaps it’s best to state some caveats: do we need a competition law? Yes. But we need one that will work effectively for the interests of Filipinos. And the measure of its importance tells us that we better not be too eager in passing such legislation.

And indeed, when we say that we want to foster better competition then we better address the question: competition for whom? And competition where?

So, on a substantive level, and inasmuch as he pulled me to the punch in saying it, then I might as well borrow the words of Teddy Boy Locsin (in his 04 September 2014 “Teditorial”): “If the anti-competition law seeks to stop giant local companies from keeping local competition down and foreign competition out, then that law is a yes. But if seeks to break up local giants now dominating the local market and getting a lion’s share of a cash rich country after beating the foreigners who were taking all the money long ago, then it is a big, fat no.”

If we say better competition to benefit our consumers, then we have to remember that our consumers need money to consume. Which they can’t do if they’re unemployed or underemployed. Which means that they need companies, preferably Filipino companies, succeeding and succeeding well not only in the Philippines but also in an ASEAN integration and beyond.

Ultimately, size is relative and what may seem like giants in our neighborhood that is the Philippines may actually be puny when placed in regional and global arenas.

Consequently, the size of our market should lead us to appreciate the idea of “natural monopolies,” whereby maximum efficiency is derived by way of economies of scale through one or two suppliers.

As such, Filipinos should be supportive of even larger Filipino conglomerates. Take any as example and one would see that despite their size and reach, could not really be considered possessing monopoly power due to the nature and threat presented by global (or regional) competition.

Again, Teddy Boy Locsin gets it remarkably right: “Big is better if it is Filipino because capital has a nationality” but “big is bad if it is foreign, which will destroy what we have, milk it by big bonuses, siphon profits abroad, and make sure no Filipino ever gets big again. If foreign competition wants to break up Filipino giants, let the free market do it. Do not make a Filipino law tailor-made for foreigners do the job for them. Foreign competition does not believe in Filipino competition in their home countries. It only believes in foreign competition here and elsewhere abroad.”

That is why questions on the need to regulate mergers through a competition law at this point are with merit. Not all countries with competition laws even have provisions on merger regulation. As Lisa Campbell, Senior Deputy Commissioner, of the Canadian Competition Bureau, remarked: “the size of a business, even one that dominates a particular market, is not in an of itself, a cause for concern. Businesses may need to become large to achieve lower production costs or to compete against foreign and domestic competitors.” (International Antitrust Forum Fifth Annual Chicago Forum on International Antitrust Issues, June 12-13, 2014)

Further on the substantive, we know that a government-managed competition will not result in free competition. We know that doing so results in inefficiency. Instead, at this point, the best competition policy that we could advance would simply be to strictly enforce the rule of law. The many many laws that we already have now.

Instead, if we must have a competition law by next year, then let it include provisions on the possibility of foreign corporations sneaking up in acquiring Filipino companies or influence to the point that monopoly powers are exercised from beyond Philippine jurisdiction, constricting Filipino entrepreneurial efforts, and damaging local consumer interests. And let us explore more vigorously the idea of implementing the “effects” doctrine as a manner of acquiring jurisdiction over those who seek to damage Philippine economic interests from abroad.

One last point on the substantive: if we must have a competition law then why are the competition law drafts essentially similar in text to foreign competition laws? To have influences is understandable but that is not the point. US laws are worded generally, for example, but that is so because the core provisions were made a century ago. But that was followed by more than a hundred years of US jurisprudence (plus that of Europe and Japan) that we should have learned from and could have been inputted into the draft competition law, thus giving the same more depth and precision.

At the institutional level, I invite everyone to peruse BizNewsAsia’s 01 December 2014 issue. There it reiterates a fact that every economist and policymaker knows: the Philippines has “24 million families and 100 million people.” And yet, political and economic power has been held only by a select few. With that, “since 1962, the country has deteriorated, from Asia’s richest to being the region’s economic laggard.”

I mention that because indeed, another area we need to look at is the connection that competition policy has with corruption, and thus, relatedly, the need to constrain the ill-effects of having both political and economic power held by a select number of families in the country, which is something that even the latest drafts of our competition laws seem to ignore.

Because, what is the point of having trade commissions, legal procedures, and the like if in the end the judged and the judge are from the same side of the fence? Competition laws work in the US and Europe as the people who lead in business would not be the same people who comprise government, thus serving as a check upon each other. While undoubtedly relationships exists between the two groups in any country, that is a far cry from having the same families actually in control of both business and government.

In conclusion --

I should wrap up here before I exceed your patience (if I had not done so already!).

Competition policy and law are definitely important. But they are not panaceas. And like everything else, they would need a certain context to have any positive effect.

In this regard, we must consider that competition-wise we are not as ramshackle as others would have us believe. The Global Competitiveness Index gave us good marks for “intensity of local competition” (61), “prevalence of trade barriers” (51), and “prevalence of foreign ownership” (51). And studies (such as Ajit Singh’s) suggest that policymakers should consider “optimal” degrees of competition rather than maximum competition as apt for a developing country economy (such as the Philippines’).

Contrast this with the scantiness of our resources and experience, administratively and judicially, that are necessary to implement a competition law. Couple this with the abundant reliance on outside analysis that may not have thoroughly considered the peculiarities of the Philippines.

On this point I agree there is a huge need to develop competition advocacy: the thorough education of both Bench and Bar, and the eventual creation of experienced and trained competition and consumer champions.

From years of policymaking we know that if there’s a thing that the ruling sector wants immediately accomplished, with zero fuss, then generally it’s best to make a fuss about it. It is precisely at such moments that time for further study becomes a necessity.

In relation to crafting our competition law, the same thought should apply considering the profound effect it will have on the country’s economy and Filipino lives.

Thank you. I think shall stop here.

= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =

References:

ASEAN Competition Law and Policy: Toward Trade Liberalization and Regional Market Integration (Pornchai Wisuttisak & Nguyen Ba Binh; ICIRD 2012)

Drafting Competition Law for Developing Jurisdictions: Learning from Experience (Eleanor M. Fox
 and Michal S. Gal; 2014)

The Divorce Revolution Perpetually Reduces U.S. Economic Growth: Divorce Removes a Fourth of Head-of-Household Productivity Growth (Henry Potrykus and Patrick Fagan; 2012)

Competition and Competition Policy in Emerging Markets: International and Developmental Dimensions (Ajit Singh; G-24 Discussion Paper No.18, 2002)

2014 Economic Freedom Index (Heritage Foundation)

2014-2015 Global Competitiveness Index (World Economic Forum)

2014-2015 Times Higher Education World University Rankings

2013 Global Manufacturing Competitiveness Index (Deloitte Touche Tohmatsu Limited and the U.S. Council on Competitiveness)

2010 ASEAN Regional Guidelines on Competition Policy

27.11.14

Philippine trade: identity as strategy

is my Trade Tripper column in this weekend issue of BusinessWorld:

It will be likely correct to say that when it comes to international trade, the Philippines essentially relies on “road maps.” And indeed we do have one, particularly to “eliminate” poverty by 2016, which coincidentally is the year the term of the present administration ends. Usually, our road maps focus on certain “key sectors,” such as agriculture, business process outsourcing, road infrastructure, power infrastructure, manufacturing, mining, and tourism.

The question, really, is how effective those road maps are. Any good plan goes beyond concrete goals to include possession of necessary information grounded in experience and real world circumstances. And, at present, the issue for the Philippines (and study after study confirms this) has to do with competitiveness. Because no matter how many trading partners we have or trade agreements signed, the same would still not matter when brought alongside demands of competitiveness.

A significant area of our competitiveness issues goes beyond that of red tape (though indeed a huge problem) and corruption (which still needs to be actually addressed). Equally as important are management practices and productivity. When one looks at the world competitiveness surveys, these are the usually overlooked areas where the Philippines lags behind its competitors. This is a real issue, with quite actual, quantitative consequences.

Unfortunately, it has to be said as well, our response to international trade seems to be stuck in the 1990s. We fail to realize, as William H. Overholt (“It’s time to update our thinking on trade”) ably pointed out, that the “GATT and the WTO were devised for a simpler era, when it was possible to think about world trade in the way Ricardo taught -- namely that a good is produced in one country and consumed also in a single country. That two-country model worked relatively well until about 1978, when China started opening its economy by establishing special economic zones across the border from Hong Kong. By the last decade of the 20th century, production had become a complex global process. The logic of increasing efficiency by reducing trade barriers remained completely valid, but policy adaptation of that logic to a new era has faltered.”

This inability to recognize how trade evolved also feeds our continuing incapacity to measure it properly. An idea of this can be taken from Stephen Grenville (“Are we measuring international trade correctly?”): “Perhaps the most fundamental change in international trade in recent decades has been the development of multinational ‘supply chains.’ The production process has been ‘unbundled,’ with different stages of production taking place in different countries. An iPad is assembled in China, but only $10 of the total production costs takes place in China; most of the total cost comes from inputs made in other countries, including the intellectual property and design input from Apple in California. In conventional trade statistics, exports are counted in gross terms, so the cost of the assembled iPad (including those elements imported into China) is counted in China’s export figures.”

Essentially, what he suggests is to examine “value-add” statistics, which provides a perspective on the value of services. Admittedly, “value-add statistics don’t replace the conventional gross statistics, which are available more quickly and don’t rely on so many assumptions. Nor are they the last word in the ongoing process of refining statics to reflect a changing world. But they provide a valuable alternative perspective, sometimes with policy implications. At the very least, they are a reminder of the complexity of international trade.”

And these complexities increase exponentially with free trade agreements (FTAs). And I have long bemoaned our inability to take advantage of the FTAs we joined. Studies have shown (and confirmed) that Philippine use of the FTAs, particularly that of the 1992 Asean Free Trade Area, have consistently lingered in the region of 20-25%.

Of course, trade officials keep underscoring initiatives to increase awareness of the said preferential trade provisions available to our businessmen. But, frankly, I’ve been dealing in international trade for more than a decade now and I know that it would definitely take more than seminars or workshops to address this perpetual utilization issue. And our products’ competitiveness is still paramount: even assuming that markets are indeed opened, that does not necessarily mean that the consumers in those markets will buy our products or services. The Japan-Philippines Economic Partnership Agreement is a good example of this.

Overall, there has to be a greater degree of calculation relative to our trade policy. This is all the more compounded by our lack of governmental resources and the obsessive insistence that our trade policy research and negotiations work be kept within a small pool of bureaucrats.

And while ideally, multilateralism remains the best avenue for the Philippines, nevertheless, I encourage waking up to reality. The options open to us -- multilateral, regional, bilateral -- all require a tight balancing of priorities and a refusal to think in dichotomies.

But ultimately, it requires from our leadership a keen concrete sense of what the Philippines’ place in the world is.