Obama and Asia's crockpot

my Trade Tripper column for this weekend issue of BusinessWorld:

With the country expectant at US President Barack Obama’s visit to the Philippines, political commentators are looking for clues as to how the US truly sees the Philippine. Oft times, the analysis verges on two extreme ends: either indicating full support (to the point of going to war) or a more “pragmatic” view decided substantially by US’ commercial interests.

One book doing the rounds is Asia’s Cauldronby “ultra-realist” Robert Kaplan. To say that Mr. Kaplan is somewhat unimpressed by the Philippines would be a gross understatement. The Philippines, so says Mr. Kaplan, is “less a country than a ramshackle empire ruled from Luzon.” And it kind of goes downhill from there.

“‘This is still a bad Latin American economy, not an Asian one,’ a Manila-based Western economist told me. ‘It’s true that the Philippines was not much affected by the global recession of 2008, but that’s only because it was never integrated into the global economy in the first place. What you have,’ he went on, ‘is admittedly steady economic growth, lately over 6% per year, undermined by population growth of 1.7%, unlike other Pacific Rim economies that have churned ahead by almost a third higher that amount for decades, and without commensurate increases in population.’ Crucially, a ‘staggering’ 76.5% of that GDP growth in recent years went to the 40 richest Filipino families. It’s the old story, the Manila elite is getting rich at the expense of everyone else.”

Of course, the usual reaction among Filipinos is to go into a blind rage at the impertinence of this foreigner. But I myself can hardly argue with Mr. Kaplan’s assessment that in our culture, “prominent are the luxury, gated communities, inside which the wealthy can escape the dysfunctional environment through life-support systems.” In short, where our so-called “elite” can pretend that they’re Caucasians living a Spanish, American, or Mediterranean life.

The Financial Times (through book reviewer David Pilling, April 4) seems to back up Mr. Kaplan’s claims, particularly on the Philippines: “The chapter on Vietnam is strong because it draws out the historic antagonisms that underpin present frictions. Another, on the Philippines, highlights the near impossibility of a poor archipelago with a decrepit defence force -- Kaplan comes close to calling it a failed state -- being able to resist the rising power of China. The author deals in raw power, dismissing the Philippines’ appeal to international law in pursuit of its territorial claims as ‘the ultimate demonstration of weakness’.”

It is particularly here, however, on national security that I doubt the correctness of Mr. Kaplan’s views. Not that I argue against his view that our legal suit against China is indeed a sign of “weakness” but that our ally in this area -- the US -- is moving on pure amoral calculations.

As pointed out by David Feith (in his book review in the Wall Street Journal, March 25): “Less compelling is Mr. Kaplan’s confused argument about whether there is any moral dimension to China’s bid for dominance. ‘The South China Sea shows us a 21st century world void of moral struggles,’ he argues. ‘It is traditional nationalism that mainly drives politics in Asia, and will continue to do so.’ In contrast to World War II and the Cold War, ‘there is no philosophical enemy to confront.’ Yet he acknowledges that ‘Chinese dominance in Asia would be very different from American dominance,’ partly because China’s ‘authoritarian system’ is ‘less benign than the American model of government.’ No kidding.”

The fact is, the ongoing struggle (of which the Philippines is part of) right now with China is indeed moral in character. In simpler terms, it is about respect for humanity vis-à-vis love for money or power (commercial or otherwise). On a grander scale, Mr. Feith points out: “Domestically the Chinese government disdains the rule of law, denies property rights and crushes political dissent. Overseas it operates as if only might makes right, and today it is forcing confrontations across nearly all of its borders -- not just around the South China Sea but with Japan to the northeast and India to the southwest. Though Mr. Kaplan doesn’t say so, such behavior derives not from natural Chinese nationalism but from the worldview -- or moral character -- of this Chinese regime.”

What complicates the issue is Mr. Obama’s somewhat confused foreign policy and misguided cutting of its defense budget by 7.8% (which is to be contrasted to China’s increase in defense spending by 7.4%).

In the end, however, Mr. Kaplan exaggerates by labeling this area as a “cauldron.” It’s actually a crockpot: slow burning and with truly significant developments unnoticeable to Western eyes.

And I agree with The Economist’s call (“Troubled waters”, March 15): Mr. Kaplan is “too optimistic about China and enlightened authoritarianism, and China will not for a long time, if ever, replace America as the safeguarder of the global commons. Pax Sinica is still far beyond the horizon.”


Virtues, families, and the economy

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

Looking at various studies related to the upcoming ASEAN 2015 integration, one would be struck by the amount of data compiled by our policy makers but at the same time disappointed at the seeming non-interest on their part on one particular set of numbers: the rise in teenage pregnancy and the seeming dissolution of the institution of marriage.

Recent figures indicated that teenage pregnancy in this country rose by 70% in the past 10-year period (114,205 in 1999 to 195,662 in 2009). The 2010 figures show 206,574 such pregnancies, with more than half of that number of girls below 14 years of age. Data from the National Youth Commission show that the Philippines has the third highest number of teen pregnancies in Southeast Asia and among the highest in the ASEAN region and the only country where such a number is increasing.

Also disconcertingly, 13-14% of all registered marriages are among those below 20 years old. Meanwhile, there is also a rise in annulment cases. The number of annulled marriages has steadily increased in the past decade or so, with a daily average of 28 couples reportedly filing annulment cases (as per the records of the Office of the Solicitor General). In 2012 alone, it was reported that 10,528 annulment cases were filed, representing a 100% increase in just 10 years.

Why are these numbers important in relation to our economy? Because the basic economic unit and source of productivity are people.

As pointed out by Henry Potrykus and Patrick Fagan (in their study “The Divorce Revolution Perpetually Reduces US Economic Growth: Divorce Removes a Fourth of Head-of-Household Productivity Growth,” March 8, 2012): “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.”

Also, because it must be pointed out that despite the 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.

Connect that with the recent presentation at National Economic and Development Authority and Philippine Institute for Development Studies (NEDA PIDS) (Jobs, Expansion, and Development; by Paqueo, Orbeta, Lanzona, and Dulay; April 3, 2013) which talked about the “positive correlation of open unemployment with income and education.” More tellingly, they spoke of the fact that “income of households headed by high school graduates is more than double that of households with only elementary education.” In short, “the rate of return to investment in education is relatively high.”

Or put another way: the longer you stay in school, the higher your income and the greater the productivity, which then leads to overall national economic gain. But how can kids stay in school longer if they can’t control their hormones (urged on by a sexed up media) and keep getting pregnant?

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

The government’s solution is to pour condoms on them, which isn’t a solution at all. It’s like throwing band-aids at an accident-prone person but not teaching that person how to avoid accidents.

It’s common sense that is no longer common. As Tara Culp-Ressler writes (“Teen Pregnancy Negatively Impacts The National Economy”, June 8, 2012), albeit in the US setting, “Because teenage pregnancy deters increased education, it leads to significant amounts of lost earnings, which negatively effect the economy as a whole.”

In any event, the foregoing has to be understood within this context: at present, 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 65 years old comprise only about 4.1%.

Where our young go, literally so will our country.

And it takes no stretch of the imagination to connect the rise in teenage marriages to the rise in annulments. In which event, Potrykus and Fagan had this to say (albeit about marriage, divorce, and the economy): “Marriage is a causal agent of economic growth. It constitutes one third to one fourth of the human capital contribution of household heads to macroeconomic growth. The total contribution of human capital to growth of domestic product in turn is large, being of equal proportion to the other two contributing factors: size of the labor pool and physical capital. Divorce removes this agent of economic growth.”

The point of all this is: economics is not just about numbers and graphs. In the end, it’s about people. If we don’t care for our people well, molding their character properly and inculcating in them proper virtues, then all that economic planning is useless.


SC decides on the RH Law

The Supreme Court gave its decision on the RH Law yesterday (08 April 2014).

It was a big victory for the pro-RH advocates. Obviously disappointing but the ruling essentially held no surprises: the core provisions were upheld by a unanimous SC vote, allowing for government subsidization and the free distribution of contraceptives in the country, as well as sex education.

The SC definitely did not 'water down' the RH Law. For text of the decision and various separate opinions, click here
Summary of the decision can be found here.

The only portion declared unconstitutional was practically, as expected, the minor provision on health care workers on the matter of referrals, as well as on spousal consent. People still make a big deal about a non-issue: the matter of abortifacients, a non-issue because the text of the RH Law itself prohibited abortifacients.

For a rundown on the various commentaries related to this SC case, from the oral arguments leading up to the decision today, read hereMy commentary on religious freedom arguments, here.

News accounts on the decision herehere, and here

I doff my hat to the government lawyers, particularly SolGen Francis Jardeleza and Asst. SolGen (and constitutional law expert) Florin Hilbay for a well orchestrated, legally coherent, and sophisticatedly reasoned defense.

Pro-lifers definitely have their work cut out for them in the coming days, years. They have a choice: they can repeat their mistakes, go about their disorganized, unfocused, personality driven way of doing things. Or they can pull themselves together, study harder, think better, and learn to allow their best guns to go forward.


Sold to Bangsamoro

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

The Comprehensive Agreement on the Bangsamoro (CAB) signed on March 27 was simply a sell-out. In terms of negotiations, the Bangsamoro got something that international law itself declares them to be not entitled to and no other country would concede. For purposes of acquiring a temporary peace, the Philippines will eventually find that the price it unwittingly agreed to would be too high to pay.

In essence, the Philippines agreed to create a new State for the Bangsamoro. Contrary to what the government legal apologists will say, and despite the nonsensical presence of the word “asymmetric,” all the elements of a State are present in the CAB and its related agreements.

That it has the elements of “people” and “government” are seen from the provisions of Arts. 1.1, I.2 and 1.5 of the 2012 Framework Agreement on the Bangsamoro (which forms an integral part of the CAB). Thus, the “Bangsamoro shall be established to replace the Autonomous Region in Muslim Mindanao (ARMM).” Also, the “government of the Bangsamoro shall have a ministerial form. The Parties agree to entrench an electoral system suitable to a ministerial form of government. The electoral system shall allow democratic participation, ensure accountability of public officers primarily to their constituents and encourage formation of genuinely principled political parties.”

That it has the element of “territory” are seen from the provisions of Article I above, as well as Article V, particularly Article V.1: “The core territory of the Bangsamoro shall be composed of: (a) the present geographical area of the ARMM; (b) the Municipalities of Baloi, Munai, Nunungan, Pantar, Tagoloan and Tangkal in the province of Lanao del Norte and all other barangays in the Municipalities of Kabacan, Carmen, Aleosan, Pigkawayan, Pikit, and Midsayap that voted for inclusion in the ARMM during the 2001 plebiscite; (c) the cities of Cotabato and Isabela; and (d) all other contiguous areas where there is a resolution of the local government unit or a petition of at least 10% of the qualified voters in the area asking for their inclusion at least two months prior to the conduct of the ratification of the Bangsamoro Basic Law.”

Finally, contrary again to what the government’s legal apologists will claim, “sovereignty” is not a requirement in order for an entity to become a State. As provided for under the 1933 Montevideo Convention, the elements of a State are only the following: people, territory, government, and the capacity to enter into relations with other States. That the Bangsamoro has the first three can be seen above. That the fourth and final element is also already acquired by the Bangsamoro can be seen from the provisions of the Framework Agreement (Article III.2.c) and reiterated in the Power Sharing Agreement, whereby the Bangsamoro has “the power to enter into economic agreements.”

Thus, as of March 27, all the Bangsamoro needs to do is declare that they are a new State. No recognition is required from other States (as recognition is not an element for Statehood). And even then, at least for political reasons, it is not farfetched to believe that the countries thanked in the “Acknowledgement” portion of the CAB would readily give that recognition.

And, as I mentioned above, the fact that the Bangsamoro and the Philippine government has an “asymmetric” relationship means nothing. All four elements of a State have been granted to the Bangsamoro with the complicity of our government. It notably has all the powers of a State: police powers, taxation, and eminent domain. It even has its own executive, legislative, and judicial branches of government. At this point, for the Philippines to refuse “recognition” is inutile.

That the Bangsamoro is geared towards Statehood independent of the Philippines is obvious. And just in case our government negotiators still couldn’t get it, the Bangsamoro team felt free to mention in Article I.5 of the Framework Agreement the Bangsamoro’s continued insistence of the quite discredited (under international law) “First Nation” argument: “The Parties recognize Bangsamoro identity. Those who at the time of conquest and colonization were considered natives or original inhabitants of Mindanao and the Sulu archipelago and its adjacent islands including Palawan, and their descendants whether of mixed or of full blood shall have the right to identify themselves as Bangsamoro by ascription or self-ascription.”

And it doesn’t stop there: our government felt nothing in including in the CAB and related agreement words like “armed conflict,” “self-governance,” and the mention of or even direct participation of foreigners. All this elevated a matter purely between Filipinos into an international one.

And the clincher why we know the Bangsamoro is a State is because not once under the subject agreements do we see the Bangsamoro subject to the Constitution.

It’s said that the road to hell is paved with good intentions. In the Philippines, it’s not only paved, our government even volunteered to furnish, light, and gild it.