15.12.15

To next year’s president: Slash government

my Trade Tripper column in the 11-12 December 2015 issue of BusinessWorld:

Last Dec. 2, I spoke at the University of Asia and the Pacific’s Business Economics Club 2015 Year-end Business Economics Briefing. The theme this year was “2016: New Normal or New Mediocre.” It was apt, coming off a horrible 2015, even by merely using policy direction as sole standard.

And if public commentator Ben Kritz is to be believed, 2016 promises to be an annus horribilis. An assessment I happen to agree with.

In any event, the point I wanted to make in the Briefing was essentially threefold:

• Our foreign policy must flow from an effective domestic policy, for which experienced well trained leadership is vital;
• The traditional family institution must be protected for its vital social benefits, as well as economic significance and overall effect on the common good; and
• The need to cut back on government and put more responsibility (and choice) to the people.

Of the first, I need not dwell on, it being previously discussed in other articles for this column. What will be said is that many critical challenges will be faced by the next administration (perhaps so intended by the current one): managing a likely legal victory over China at The Hague in relation to our sea claims, a Moro Islamic Liberation Front disgruntled over perceived noncompliance of a possible implementing legislation with the Comprehensive Agreement on the Bangsamoro, and the ramifications of public courtship (as what happened during the Asia-Pacific Economic Cooperation meeting in Manila) for the Trans-Pacific Partnership over the Regional Comprehensive Economic Partnership.


On the second, I refer the reader to “Strong Families, Prosperous States: Do Healthy Families Affect The Wealth Of States?” (W. Bradford Wilcox, Robert I. Lerman, and Joseph Price; American Enterprise Institute, 2015):


“Higher levels of marriage, and especially higher levels of married-parent families, are strongly associated with more economic growth, more economic mobility, less child poverty, and higher median family income at the state level in the United States.”


Furthermore: “Violent crime is much less common in states with larger shares of families headed by married parents, even after controlling for a range of socio-demographic factors at the state level... This is noteworthy because high crime rates lower the quality of life and real living standards and are associated with lower levels of economic growth and mobility.”


Hence, this column urges people to vote for candidates that will do away with nonsense such as government subsidized contraceptives, gay “marriage,” divorce, and euthanasia; and instead support those that uphold the traditional marriage and the family. It’s really the socially and economically sensible thing to do.


On the last, it is really urged by this column (and will be a theme repeated throughout 2016) to move away from the paternalistic, socialistic form of government that crept over the country through the decades.


It comes with a cost: a proposed 2016 national budget ballooned to P3 trillion, representing a whopping 461% increase from 2000 and a nearly 300% from 2006. Add to that a nearly P6-trillion national debt.


And this will not be solved by better tax collection or increased personal income tax. Regarding the latter, as John Mangun pointed out, any non-insane increase would still only constitute 14% of the national budget.


The point is that whatever way our government goes regarding tax increases, a budget deficit will still result.


No. The best way for the Philippines moving forward is to really start cutting down the size of government, which now is a humongous 25% of our economy.


Right now, our welfare expenses (using the 2015 budget as benchmark) add up to 64%: this includes programs such as socialized housing, climate change, social protection such as the Conditional Cash Transfer, health care, and employment.


These are fine. But we’ll be far better off allowing the bulk of the responsibility to be shouldered by the private sector.


Cut the size of government, lower spending, lower taxes, allow people to keep more of their hard-earned money, and give them the power to choose which health care, school, business, etc., they want.


Cut the bureaucracy and allow our citizens the power to open and close up businesses as is needed, to hire and fire people, and give incentives for them to share their wealth (such as donations to charity) rather than coercively taking money through taxes.


Such policies are more democratic and empowering of Filipinos.


On the other hand (and again using the 2015 budget as benchmark), on the one job that government is really supposed to do, which is national security, we allocated only a mere 4.4%.


In a world where terrorists and secessionists abound, this is patently not enough. Increased military spending and beefing up our civilian police force should be encouraged.


Clearly, these things cannot be achieved overnight.


But those looking to vote in the next elections would do well seeking candidates that put their trust in the Filipino, encouraging personal responsibility, rather than in fat paternalistic bureaucracies.

8.12.15

Three books for Christmas

my Trade Tripper column in this 4-5 December 2015 issue of BusinessWorld:

Christmas is nearing and with it the dreaded season of giving. There are three books that I recommend as help and for a couple of reasons: they make good reading and provide great insights, which is certainly a plus to the one you’re gifting it to. But they would be also be a boost to national discourse, as these books offer an unvarnished, frank look at what it takes for a society to better itself.


The first is Calixto V. Chikiamco’s The Way Forward: The Path To Inclusive Growth. Currently the president of the Foundation For Economic Freedom (FEF; of which I am a Fellow), Toti (as he is called by friends) is the foremost -- and certainly the most active -- exponent in the Philippines of “incrementalism” as a way towards development. It’s something that up to now I still am trying to grasp, particularly in terms of it being a realistic methodology to achieving actual change.

But Toti certainly believes it can and many a smart person agrees with him. My fellow Fellow at the FEF (and colleague at BusinessWorld) Romy Bernardo wrote of Toti as being a “synergy between public intellectual and grounded entrepreneur.”

From my own field, which is international economic law, The Way Forward asks an interesting question: “it’s a wonder why Economics hadn’t invaded the field of Law earlier.” It’s a question I’ve oft asked myself and certainly the discipline can only be enhanced if a more qualitative and quantitative rationale can be made of why civil damages and penal laws are constructed the way they are.

For a slim book of 183 pages, The Way Forward covers a lot of ground. And if one can’t find value inherent already in its content, then the fact that many of our politicians and policy makers are reading it (Romy reports that Speaker Feliciano “Sonny” Belmonte purchased 300 copies to be distributed to members of the House) is an added motivation to get the book.

The Way Forward (2015) is available at Powerbooks.

While The Way Forward purports to look, well, forward, Chris Pforr’s Dangerous Waters: A Whirlwind Tour of the Philippine Economy Since Independence tells us where we are and came from. And despite the ambition, coming in at a mere 98 pages, it does pull it off.

Mind you, the book’s main service is as an introduction but it does it superbly. Other local books purportedly try to analyze Philippine economic history but end up as mere hagiography.

But not Dangerous Waters, which relishes the non-mincing of words. I particularly find interesting that Pforr partially absolves Ferdinand Marcos of the economic malaise at the end of his term and instead declares that a “more substantial reason was the 20 years of neoliberal policies which had been imposed by the US and the World Bank,” which he alleges “pushed the Philippines into deeper debt-based so-called ‘development’ just when the global economy entered the worst crisis since World War II.”

Read that alongside his point that the “first four years” of the presidency of President Benigno S. C. Aquino III had “been a constant parade of scandals involving Cabinet officials, lawmakers, members of the judiciary, military officers, local government officials, and non-government organizations.”

Interestingly, Chikiamco does declare in The Way Forward that Aquino’s “biggest failure is his failure to apply Daang Matuwid to all public officials, whether they are political opponents or friends, party mates, family or allies.”

Pforr notes the controversies surrounding the Priority Development Assistance Fund and the Disbursement Acceleration Program, and the curious fact that, despite President Aquino “gloats about the economic performance of his administration,” the number of people considered poor hovers around “55%” (quoting a Social Weather Stations second-half of 2013 survey) amidst a 2014 Forbes Asia report that the “wealth of the 50 richest people in the Philippines reached $74 billion.”

This makes Pforr ask, quite reasonably indeed, if the “huge wealth disparity” is actually the “biggest national financial scandal of all?”

Dangerous Waters (2015) is available at Popular Bookstore (in Quezon City).

Finally, a book I haven’t read yet but I do hope would be a good Christmas gift to myself: The Thriving Society: On the Social Conditions of Human Flourishing.

For those of us who think that the Philippines is headed in the wrong direction, well, many Americans think the same of their country. And according to Witherspoon Institute’s James Stoner and Harold James, The Thriving Society collects the thoughts of some of the US’ most distinguished scholars, with the “aim to help the public understand what elements make up a society where people can flourish. They also point out the reasons for some of the problems we currently experience and indicate several avenues for reform.”

The core of the book is Robert P. George’s essay, “Five Pillars of a Decent and Dynamic Society.” According to him, these five pillars are the person, the family, the law and government, the university, and the market.

The Thriving Society (2015) is available through the Witherspoon Institute.

APEC in Manila’s missed opportunities

my Trade Tripper column in this 27-28 November 2015 issue of BusinessWorld:

Probably it’s just me.

But try as I might, it’s really difficult to justify the hardship that our Metro Manila people went through by weighing it against the supposed benefits of hosting the Asia-Pacific Economic Cooperation (APEC) Summit in Manila. Granted that hosting it is by country rotation. And there was really no reason to refuse hosting duties. Still, effort (or pain) should match the result. And hence understandable why people are still scratching their heads, muttering “what was that all about?”

Of course, the government touts the fact that the number of “tourists” that visited the country during APEC week (around 11,000) exceeded government expectations. But how many of them actually spent money on our establishments, as opposed to us spending on them via taxpayer money?

Then there were the bilateral deals signed at the sidelines of APEC. But even that does not give comfort.

Most of those supposed agreements are like the promises people make to newly met friends at a party: all exuberance and best wishes but as to whether they actually amount to anything concrete is another thing.

The US gave us a couple of ships: a research vessel and a coast guard cutter to repel any Chinese intrusion against our waters. There was the Russian deal to explore a possible trade agreement. A memorandum of agreement with Vietnam regarding rice. The rest were technical agreements on drugs, crime, double taxation, and expressions of support.

The thing is: all of those bilaterals could have been signed without APEC and certainly not at the cost (direct and economic) of P40 billion.

On the other hand: what was hoped that APEC could have done, which was expression of unity against Islamic radicalism, fell again increasingly weak. Aside that is, from the petulant answers of President Obama at his press conference here.

There was, of course, the small and medium enterprises (SME). Which was a decided emphasis that the Philippines chose (as host) for the APEC meeting. Thus, the drumbeat was that APEC could spur SMEs to innovate and be more participative in global trade.

Which is all well and good. Were it not for this: trade agreements don’t really provide innovation or any form of assistance (unless funds for capacity building or special/differential treatment are placed in the mix, which nowadays would be minimal at best).

Trade agreements give competition and the markets to compete in. That’s it.

And if the SMEs are hobbled by high taxes, unproductive or untrained workers, high transportation and power costs, high legal wages, unreliable infrastructure, and unreliable legal protection then the chances of them benefiting from global trading arrangements is illusory.

What SMEs need, particularly Filipino SMEs, are not trading arrangements but rather internal Philippine measures that would enable them to unleash their potential. Which is something they’re not getting due to the quality of the politics we have here.

In fact, more and more regional trading arrangements could actually be harmful for SMEs. Particularly for developing countries like the Philippines.

Bilateral and regional trade deals tend to benefit richer countries at the expense of poorer ones. The Economist, a staunch advocate of liberalized trade, way back in 2004 (“Trade Policy: Not All Trade Agreements Are Good”), also took note of the darker side of free trade agreements: “Most bilateral agreements are far from ideal. Those between poor countries often exist more on paper than in practice. Bilateral deals between rich and poor tend to be better implemented, but are marred by restrictive rules of origin and by the routine exclusion of important agricultural products... Bilateralism may be a route to freer global trade, but it is, at best, a risky one.”

This seeming disparity between the benefits going to richer countries as opposed to that going to poorer countries is affirmed, for example, by a United Nations University working paper (“North-South vs. South-South Asian FTAs: Trends, Compatibilities, and Ways Forward”; 2010). The paper’s empirical analysis do reveal “that several incompatibilities exist between N -- S (North -- South) and S -- S (South -- South) FTAs (Free Trade Agreements) in core areas including tariff liberalization, rules of origin, liberalization of services trade.”

Which leads to the other thing that the APEC meeting here in Manila could have done but didn’t: really (rather than issue mere motherhood statements) renew commitment to multilateral trade and revive the World Trade Organization.

Jack Ma of Alibaba was correct: “Let’s agree on something that will really help the small guys,” he said (referring to SMEs) and that is a “WTO 2.0” is important. “In the past 20 years, WTO (World Trade Organization) did for big companies. In the next 20 years, we should use WTO to support small guys because if we cannot change it, it will be a disaster for everybody.”

While FTAs and regional agreements tend to be discriminatory, confusing, and even divisive, a strengthening (“rebooting,” to imitate Ma’s analogy) of the WTO would give businesses of poorer countries greater certainty, simplified (due to unified) trade rules, as well as mitigation of risks.

Well, there’s always next time.

26.11.15

Radical Islam and the war of world views

my Trade Tripper column in the 20-21 November 2015 issue of BusinessWorld:

The 13th of November, of course, was the day radical Islamic terrorists attacked Paris. It was also an anniversary of sorts, it being the day, almost a hundred years earlier, when Western troops occupied Constantinople, the capital of the Caliphate that was the Ottoman Empire.

Coincidence? Perhaps. But this is what’s certain: Islamic terrorists specifically targeted in Paris a football game between France and Germany, a heavy metal rock concert (where the US band Eagles of Death Metal was playing), a hip upscale Cambodian restaurant, and three bars.

This was an attack not simply on Paris but against a way of life. Which is the same kind recognized by most in this globalized world. Of which the Philippines is a part.

Anybody who says those barbaric acts are solvable with better understanding and tolerance of other’s viewpoints to achieve peaceful coexistence is in cuckoo land.

There is no compromise or inane “don’t judge” position available in this case.

Accept it or not, the moment you ask for tolerance and plea for coexistence you make a stand. A stand peculiarly Judeo-Christian Enlightenment in view regarding human right, freedom, and reason. And which is precisely diametrically opposed to and clashes with the radical Islamic belief that everyone must think and do as they do.

If you don’t believe that, try asking for gender equality and religious freedom in radical Islam controlled areas.

Indeed. What these radical Islamic terrorists want is for us to change our way of life or lose it.

Realistic coexistence is unobtainable. Sayyid Qutb (a 20th century Egyptian Islamic theorist) influentially equated modernity and nonbelief in Islam to jahiliyya (ignorance of divine guidance), and declared that “Islam cannot accept any compromise with jahiliyya. Either Islam will remain or jahiliyya. The mixing and co-existence of truth and falsehood is impossible.”

Or, if you like, take the late unlamented Osama Bin Laden’s rant against Western culture, demanding we “reject homosexuality, intoxicants, gamblings, and trading with interest... drugs... art, entertainment, tourism, and freedom,” and further demanding that people be ruled by the “Sharia of Allah.”

And it goes on and on. Hating our freedoms: the fact that women are free to be educated or work, for homosexuals to be treated as people, for anyone to be free to join any religion, and to have a constitutional system that espouses the separation of Church and State.

Thus, more than foreign intervention or economics, what radical Islamic terrorists have declared war on is our world view: their unenlightened totalitarian version of existence against our twin pillars of faith and reason that created democracy and religious tolerance.

And they absolutely abhor the fact that we celebrate our freedom and that such influences their youth: from Manchester United to the trashy Kardashians, the sublimity of Bach, to reading Shakespeare and watching animé.

And that is why radical Islam prefers isolation rather than assimilating with other societies. In France alone, there are dozens, perhaps hundreds, of so-called “no-go zones” that Fox News was forced to apologize for even though it actually exists.

These autonomous areas are not officially recognized but are parts of the country dominated by Muslims and largely exclude non-Muslim people or culture. Civil authorities have abdicated control for fear of violence and secular laws are supplanted by Shariah.

Unfortunately, these areas have been taken advantage by radical Muslim clerics to preach their hateful ideology, resulting in the brainwashing of future terrorists and provide safe havens for present ones.

And thus the unfortunate and ironic statistic (taken last year) where 27% of 18- to 24-year-old French citizens support the Islamic State (IS; 16% for the whole population).

Due to the social media environment we live in, this quite blindingly obvious caveat is made: I am not against Muslims or the Islamic faith. I am not against any religion or race. What I am against are people who seek to impose their beliefs on others by violence.

So what do we do?

First is to value our way of life. We defend it rather than apologize for it. And aggressively, completely reject the littlest notion that real or imagined oppression or minority status will ever justify the slaughter of innocent people.

Another is to call these terrorists for what they are: radical Islam. Because that’s what they call themselves. Because you don’t see Catholic nuns blowing up restaurants. Because these terrorists wreak havoc to make the world ruled by an Islamic Caliphate.

We must also strongly call on the US to finally lead: restrictively guarded measures on refugees and putting boots on the ground.

While France (along with others in the North Atlantic Treaty Organization) took the admirable step of committing to obliterating IS, they just cannot do it without US strength and resources. And President Obama’s incredibly incompetent “leading from behind” presidency is utterly making matters worse.

Finally, we must also act with this realization: foreign policy is but an extension of our domestic policy. By which I emphasize: our policy in relation to Philippine territory.

Poverty and the self-entitled presidency

my Trade Tripper column in the 13-14 November 2015 issue of BusinessWorld:

Last week, BusinessWorld came out with the results of a survey pegging 3.5 million Filipino families experiencing hunger in the last three months. That represents, in just a three-month period, an increase of 700,000 hungry families. Government response to this was predictable: “We continue to address the main problems of hunger and poverty. These are related and government has implemented the social intervention -- poverty alleviation programs that we have done, CCT (conditional cash transfer) for one,” said Edwin Lacierda, presidential spokesman.

And so trust is placed in the CCT program. But with a cumulated total of P300 billion allotted for it, whatever good those programs may initially have brought has plateaued. Ultimately, it will prove harmful to Filipinos. Look around: nearly 24% unemployment, 26% poverty incidence, 7% school drop-out rate, and rising incidence of crime.

Interestingly, the Trade Union Congress of the Philippines had some pretty sensible things to say about poverty alleviation. Through its spokesman, it said that poverty “is high because the current administration’s efforts to curb poverty are off tangent (sic) and inter-agency programs are ineffective... [I]ncome taxes are still high, contractual workers are not reduced, electricity rate is among the highest in Asia, joblessness is widespread.”

Paternalistic, self-entitlement encouraging programs simply don’t work.

Five decades ago, the United States decided to launch its own anti-poverty campaign. And yet, as Ed Feulner relates (“A poor way to fight poverty”; 2014), the success never came: “That was $22 trillion ago... Yet the poverty rate is essentially the same as it was 50 years ago.”

The problem is the tendency to romanticize poverty.

This Feulner effectively points out: “When most people hear that a family is living in poverty, they naturally picture people suffering from significant material deprivation... But government surveys show that many of those officially designated as poor are surprisingly well-off. Less than 2% are homeless, and only one in 10 live in mobile homes. The typical house or apartment of the poor is in good repair and uncrowded. Indeed, the typical ‘poor’ family has air conditioning, cable or satellite TV, and a computer in the home. Forty percent have a wide-screen HDTV. Another 40%have Internet access.”

Mutatis mutandis, the scenario is pretty much the same here.

And yet, despite the continuing ineffectiveness, the temptation to throw even more money got stronger.

In the US, as Stephen White relates: “The federal government currently spends about $800 billion on 92 separate anti-poverty programs, yet the poverty rate today is higher than it’s been in decades.”

Needless to say, our CCT program will meet the same fate.

This amidst a proposed 2016 budget of P3 trillion, representing a whopping 461% increase from 2000 and a nearly 300% from 2006.

Blame on poverty, again, is placed on corruption.

Setting aside the fact that the most massive corruption and crimes in this country are actually committed not by the poor but by our rich elite families, how will giving money away solve any of our issues is baffling.

The results of a study I’ve kept pointing out (“Childhood family income, adolescent violent criminality and substance misuse: quasi-experimental total population study” by Amir Sariaslan and his colleagues, British Journal of Psychiatry, Aug. 21 2014) was described by The Economist as suggesting “that merely topping up people’s incomes, though it may well be a good idea for other reasons, will not by itself address questions of bad behaviour. The second raises the possibility that the problem of intergenerational poverty may be self-reinforcing,” what with “the lack of impulse-control they engender also tends to reduce someone’s earning capacity.” “Neither of these conclusions is likely to be welcome to social reformers.”

Coincidentally enough, the amount of the 2014 budget deficit (P73 billion) is roughly equivalent to the 2014 budget for the CCT (at P62.6 billion).

So let’s agree on the reality that our government is burning taxpayers money.

For the Philippines, rather than corruption or foreign intervention, this paternalistic culture, where people willingly abandon thinking in favor of a government that will “take care of them” is what’s holding us back.

That’s why we should also rid ourselves of the notion that poverty should excuse people from any personal responsibility.

Some of the poorest countries in the world actually have the lowest of crime rates: Azerbaijan, Andorra, Angola, Bangladesh, Burkina Faso and Mali, Cambodia, Cameroon, and Vietnam.

Hence, why I reiterate the ideas I’ve expounded in previous articles: to focus on policies that foster, encourage, and strengthen virtues and the traditional family.

Virtue, such as self-reliance, of which the traditional family is the prime teacher, is what makes democratic societies work.

As Michael Novak (Democratic Capitalism, Sept. 24, 2013) declared: “The prospering of free societies depends on certain moral and cultural practices.”

If our government would instead work harder to support the traditional family, including assisting religious organizations, we might finally get somewhere regarding poverty.

Do presidential candidates’ qualifications matter? Have you seen the Philippines lately?

my Trade Tripper column in this 6-7 November issue of BusinessWorld:

By coincidence (or not), the questions asked of me by news outlets last week were my views on the qualifications of the presidential candidates. Or, put another way, how important are qualifications in choosing our president? And do our voters even care about these things?

My response was that qualifications do matter.

But sometimes the “qualifications” sought by our voters are of a different nature, for a different purpose, and occasionally without any relevance whatsoever to the position being voted for.

In 2010, our country had the following to choose from as president:

> Richard “Dick” J. Gordon (1971 Constitutional Convention delegate, lawyer, Procter and Gamble executive, Subic Bay Metropolitan Authority Chairman, Tourism Secretary, and Senator);
Gilbert C. Teodoro, Jr. (Bar topnotcher, Harvard graduate, Congressman, Defense Secretary); and
Manuel “Manny” B. Villar (UP Business Administration, self-made successful businessman, House Speaker, Senate President).

Instead, we chose Noynoy Aquino III (son of Cory and Ninoy Aquino).

Forget surveys and government statistics.

Just look out the window and commonsensically see the consequences of that 2010 vote: Filipinos paying among Asia’s highest income tax with the world’s lowest wage rates for the longest work hours; world’s worst traffic, world’s worst airports (with bullet planting), slowest Internet speed; 23.2% unemployment, nearly 26% poverty incidence; 3.5 million families hungry, deteriorating education; increased crime, increased smuggling, 1.3 million illegal aliens, China’s territorial grab, Quirino Grandstand massacre, Yolanda rehabilitation, Bangsamoro, Mamasapano.

All messes left to the next president to clean up.

And it comes with a further asking price of a proposed P3-trillion 2016 budget, amidst a nearly P6-trillion national debt.

All this because people got weepy in 2010.

Now with a 2016 vote just a few months away, some are toying with the idea of letting those who got us into this humongous wreck to fix it. That’s lunacy.

Others, meanwhile, are under the insane delusion that we’re currently doing fine and that previous governments are to be blamed for whatever problems there are.

The president elected in 2016 faces incredibly complicated international security and economic problems.

Aside from the West Philippine Sea, there’s a possible oncoming global recession, trade deals like the Trans-Pacific Partnership and Regional Comprehensive Economic Partnership, and overseas Filipino workers.

So, quite reasonably, we should be concerned that the person we choose to represent us can at least match up with the following:

> Prayut Chan-o-cha (Thai prime minister; Chulachomklao Royal Military Academy, former Army chief of staff);

Joko Widodo (Indonesian president; successful businessman, former Governor of Jakarta);

Najib bin Tun Haji Abdul Razak (Malaysian prime minister; University of Nottingham, corporate executive, former deputy prime minister, as well as former minister for defense, education, finance, and culture);

Lee Hsien Loong (Singapore prime minister; Trinity College, Cambridge, a Brigadier General, and former minister for trade, finance, and defense, and deputy prime minister);

Hassanal Bolkiah Mu’izzaddin Waddaulah (Sultan of Brunei; Royal Military Academy Sandhurst);

Xi Jinping (Chinese President; Tsinghua University, multiple government posts);

Shinzo Abe (Japanese Prime Minister; Seikei University, University of Southern California, Kobe Steel executive, and a number of government positions, including executive assistant to the Minister for Foreign Affairs);

Narendra Damodardas Modi (Indian prime minister; Delhi University, and Gujarat University MA in political science.

Malcolm Bligh Turnbull (Australian prime minister; Oxford, Rhodes scholar, journalist, lawyer, investment banker, and former environment minister.

Now the point of looking at the academic credentials and work experience is not for some sort of mathematical process, of whoever has most is best qualified.

What a lengthy resume does is to allow our people to get to know the candidate more and somehow gauge from past performance how that person will be as president.

The problem with a slim resumé’d candidate is that such person is practically an unknown, a risky investment for a logical people. Such a person would not make sense in a field of experienced candidates.

Objectively, what our people should be looking for in a candidate’s past are clues as to judgment, humility, and the ability to get things done.

Judgment: because a president needs to be steady (not prone to emotional hysterics under stress or tactless insensitivity); and the ability to make right decisions, quickly if need be and, as if often the case, with imperfect information.

Humility: because a president needs to be able to form a good working relationship with the other co-equal branches of government. A politician who ends up unnecessarily having to bully others is simply not presidential material.

And finally, the ability to deliver.

Of what use is a lengthy resume, great speeches, and charisma if that person only ends up botching every assignment he (or she) took over?

Yes, integrity is an indispensable trait.

But additionally the Philippines also needs (specially after the last five years) a president in whose hands things flourish, people perform better, and with a clear sense of correct direction.

In short, a president who obeys his oath and can get the job done.

The Trans-Pacific Partnership as a presidential campaign issue

was my Trade Tripper column in the 30-31 October 2015 issue of BusinessWorld:

Just to continue the point made in my previous article on the Trans-Pacific Partnership (TPP; “Should The Philippines Join The TPP?” Oct. 16), what is to be emphasized -- ironically, despite the title -- is not whether the Philippines should indeed join (we should, clearly) but the conditions in which the Philippines does so.

On the former, online publication The Establishment Post (“The TPP Impact On ASEAN,” Oct. 12) has this to say: “The TPP’s impact is just as significant for the ASEAN (Association of Southeast Asian Nations) countries not in the agreement. Indonesia, Thailand and the Philippines in particular will feel the competitive disadvantages for their exports (Myanmar, Cambodia and Laos still being able to use Generalized Scheme of Preferences [GSP] privileges). This will definitely put more pressure on the countries to complete the Regional Comprehensive Economic Partnership (RCEP) talks, which in turn will mean convincing India and Indonesia to be more flexible on their bargaining positions. The three large ASEAN countries might also try to reinvigorate their FTA (Free Trade Agreement) talks with the EU (European Union). Strengthening the AEC in the post-2015 era will also become more important.”

The matter, really therefore, is not “should we?” but “how?”

And as I previously noted: yes, the TPP covers almost 40% of the global economy. And indeed it affects not only tariffs but also services, investment rules, patents (including, quite ominously for many, over pharmaceuticals), agriculture, the environment, and government procurement. But of the 12 TPP members, the Philippines already has free trade relationships with seven: aside from the World Trade Organization (WTO), there is ASEAN Common Effective Preferential Tariff, ASEAN-Australia and New Zealand, ASEAN-Japan, Philippines-Japan Economic Partnership Agreement, and the (unfortunately expired but with possibility of renewal) GSP relationship with the US.

And, then, there is the Asia-Pacific Economic Cooperation (APEC).

While not an FTA, it does constitute a coverage that the TPP can only dream of. Unlike the TPP’s 12-country membership covering only 11% of the world’s population, APEC’s 21-country membership constitutes more than half of the total global population. And while everyone is agog at TPP’s being 40% of the world gross domestic product (GDP), APEC has 54%.

And this can be emphasized more when an FTA of the Asia-Pacific does become a reality.

The same thing goes for the RCEP, which has a 16-country membership, constituting (like APEC) also half of the world’s population. While its GDP coverage is scoffed at for being a mere 29%, nevertheless, one has to remember that FTAs are about trade and not GDP. In which case, the TPP’s 13% of world trade is not much of an advantage over RCEP’s 12%.

And speaking geographically, which is still an important factor in international trade, the RCEP does have India and China. And quite significant as well is the fact that TPP’s countries are not growing as fast as RCEP ones.

So there is time for the Philippines to be deliberate and more calculating about our entry into the TPP. The TPP members themselves will give us that. Canada voting a lukewarm Justin Trudeau into its premiership is one, another is the US’ quite divided hostile political environment.

As Foreign Affairs magazine (“Free Trade and the TPP,” Oct. 7) describes it: “When, after five years of talks, an agreement was finally announced on October 5, neither a single Republican leader in Congress, nor any broad business federation could be found to support it. Republican support for the TPP is indispensable since most congressional Democrats oppose it and former Secretary of State Hillary Clinton has just come out against it.

Consequently, ratification is both a question of when and if. Without ardent efforts by GOP leaders to move some of their reticent rank-and-file, the TPP cannot be ratified. Legally, Congress cannot even vote until the February primary season at the earliest and, in an election year, ratification will be an uphill climb even under the best circumstances.”

And the reason for all this wariness is something that the Wall Street Journal incisively explains (“TPP is Surprising Vote of Confidence in Globalization,” Oct. 21), of which our present political and bureaucratic leaders are strangely unconcerned about but definitely should -- the possible danger that the TPP might pose to our national sovereignty:

“‘Behind the border’ barriers are politically more sensitive than tariffs because they affect domestic policies, from human rights to how much public health systems pay for drugs. Classical arguments for free trade are also less relevant: a country that grants foreign drug companies longer patent protection is raising prices for its own consumers, and more restrictive labor laws erode its competitive advantage of cheap labor. Yet these sorts of rules are the conditions the US and other advanced countries insist on if developing countries are to have access to their markets. This is why TPP’s significance lies not in its economic impact -- modest for most signatories -- but how it restricts its members’ domestic sovereignty.”

Hence, why I repeat: the TPP (and WTO, APEC, RCEP) is not as simple as ABC.

27.10.15

I’m special but I’m so sad...

was my Trade Tripper column in the 23-24 October 2015 issue of BusinessWorld:

It was family movie night and with a mind to keeping things educational I decided to pass on The Book Thief and instead watch The Man With The Golden Gun. In the routine briefing scene M informed James Bond that the villain Scaramanga was out to kill him. It was at this point that something piqued my interest: rather than be sympathetic or solicitous towards Bond, he actually told him to either resign or take a sabbatical because, as he put it, he can’t afford to jeopardize any mission.

When Bond suggests going after Scaramanga instead, M does not praise or congratulate Bond. But just dismisses him gruffly that it could “dramatically” change the situation.

Later in the movie, when something goes wrong, rather than tell Bond everything is okay and encourage him to move him on, M cold-bloodedly (and quite famously) tells Bond that “l almost wish that Scaramanga had a contract on you.”

Now all this is rather interesting to me because if M had done that to a present day Bond, who’d likely be a tattooed teen or 20s, Bond would go to Facebook, talk about “the darkness,” how empty his life is, post a selfie of his unappreciated-by-the-boss look, and then -- after getting hundreds of Facebook Likes -- kill himself.

Which reminds me of another marvelous M quote: “Christ, I miss the Cold War!”

What’s wrong with kids nowadays? Michael Jordan says it best: “A lot of kids today need reinforcement. They need a pat on the back. Back in those days, if you didn’t get the pat, you better pat yourself and keep moving.”

I remember a young lawyer years ago whom I assigned to prepare a brief. The next day, I found his work to be completely unsatisfactory and told him so. He replied defensively to “give him a break”, as he “worked all night on it and hasn’t slept yet.” At that point, I went ballistic. What does it matter if one hasn’t slept or worked to the point of exhaustion? It was still sloppy work!

Which takes me to a lawyer friend working in the human resources (HR) department of a multinational company: “Just tell any 20-something nowadays, no matter how gentle, of how he or she needs to improve and you get an HR complaint like clockwork.”

The words of another curmudgeon comes to mind -- Gregory House, MD: “I’m sure this goes against everything you’ve been taught but right and wrong do exist. Just because you don’t know what the right answer is, maybe there’s even no way you could know what the right answer is, doesn’t make your answer right or even okay. It’s much simpler than that. It’s just plain wrong.”

Thus this memory of conversations I’ve had with other law lecturers. A lot think that students nowadays have to be treated with kid gloves. A little push or a little pressure and you either get a defensive, sulking student (or a crying wreck) or somebody who’ll organize a petition for a change in lecturers. This should be resisted.

Things have become so soft that law school recitations can’t even simulate legal practice back and forth. As if trial work will be any different. While I’m not advocating that we go back to the old days when law or medical school recitations become so to the point of harassment, nevertheless, there is merit in exerting as much pressure on students, all students.

Why? Again Gregory House. When he was asked to lecture and a student started complaining that “You know, it’s kind of hard to think when you’re in our face like this -- ” then House angrily cuts him off with “Yeah? You think it’s going to be easier when you’ve got a real patient really dying?”

To be honest: I’d rather have a business, medical, or law student have his feelings badly hurt than have a person in the real world lose his livelihood, his freedom, or his life just because a kid couldn’t grow up not knowing how to handle pressure or failures.

In the superb Why Generation Y Yuppies Are Unhappy (Tim Urban, September 2013), which pinpointed to the logical conclusion of Baby Boomer narcissism transmutating itself to their progeny Gen Y’s (“the generation born between the late 1970s and the mid-1990s”) “they’re special.”

Unfortunately, one should only feel special after actually having done something concrete to deserve it. Or as Urban points: “the real world has the nerve to consider merit a factor.”

Which destroys a lot of Gen Y’s feelings when their expectations are crushed against reality: “the funny thing about the world is that it turns out to not be that easy of a place, and the weird thing about careers is that they’re actually quite hard. Great careers take years of blood, sweat and tears to build.”

Indeed. As Valmont would say, rather than understanding, kids today “don’t need help, they need hindrances.”

Should the Philippines join the TPP?

was my Trade Tripper column in the 16-17 October 2015 issue of BusinessWorld:

Everybody is agog over the passing of the Trans-Pacific Partnership (TPP). Even people I know that only have a passing interest in international trade are all of a sudden asking, in somewhat hushed, noticeably excited tones, about its implications for the Philippines. So the curmudgeon in me might have been more apparent this time around when my reply revolved a mere two words: not much.

To begin with, nobody outside the negotiators has really studied the TPP. The actual, official texts may be released (particularly by the US) by early next month.

Having said that, the TPP, of course, is an expanded version of the 2005 Trans-Pacific Strategic Economic Partnership Agreement and currently includes as parties Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam, and the United States. The TPP covers almost 40% of the global economy and affects not only tariffs but also services, investment rules, patents (including over pharmaceuticals and even, allegedly, control of public information), agriculture, the environment, and government procurement.

Of those 12 TPP members, the Philippines already has existing free trade relationships with seven -- Association of Southeast Asian Nations (ASEAN) Common Effective Preferential Tariff (CEPT), ASEAN-Australia and New Zealand, ASEAN-Japan, Philippines-Japan Economic Partnership Agreement -- plus the Asia-Pacific Economic Cooperation and the (now unfortunately expired and still awaiting renewal) Generalized Scheme of Preferences (GSP) relationships with the US.

So on that specific regard, one question that we need to ask is how the Philippines is faring with regard to utilizing its already available free trade agreement benefits.

Not much if we’re to judge by the CEPT (with some studies pegging it at a mere 20%) and US GSP (which reportedly has a utilization rate of 70% but with the context that the goods covered only constitute 10% of total Philippine exports to the US).

Heritage Foundation’s Economic Freedom Index is quite instructive in this regard: this 2015, the Philippines overall showed improvement.

But there were concerns raised regarding “open markets”, with “trade freedom” getting a lowered score. Noted, is the average tariff rate at 4.8%. “Domestic companies are favored in government procurement bids. Rice producers are subsidized and protected from competition. Foreign investment in several sectors is restricted.”

For regulatory efficiency, business freedom also showed a lowered score due to the fact that “incorporating a business takes 16 procedures and 34 days. Completing licensing requirements remains time-consuming, taking about three months on average. The labor market remains structurally rigid, with varying degrees of flexibility across economic sectors and regions of the country.”

The 2014-2015 Global Competitiveness Report almost reflects the Economic Freedom Index -- lamenting regulatory inefficiency and red tape and lackluster rule of law. But it does give us good marks in “intensity of local competition.”

The insight that I suggest from the two international reports is twofold: First, we really don’t have an issue as to us being plugged into the international trading system, what with our membership already into the World Trade Organization (WTO), in addition to several free trade agreements.

Finally, the problem is our internal structures that only prevent us from benefitting substantially from international trade.

Of what use is Philippine membership in more trade agreements for ordinary Filipinos if they’re bogged down by red tape and high taxes, amidst world-beating-in-being-horrible airports, the world’s worst traffic, slow online speeds, flooding amidst water shortages, and the incredibly bizarre inability to produce simple drivers licenses and passports?

Now, the position of my fellow experts and commentators on the matter is that membership in more trade agreements such as the TPP will provide external pressure for the Philippines to shape up.

But that is wishful thinking.

For two reasons: One, we’ve long been members in other trade agreements and look at us now. So much for external pressure.

Finally, as a sovereign country, I don’t see the point in wanting the Philippines rendered vulnerable to international litigation simply because our country can’t do things unilaterally because our government officials can’t muster the political will to do what is right.

Besides, note our quite jubilant reaction in the immediate aftermath of the Cancun WTO Ministerial debacle of 2003 (amidst the huge disappointment expressed by the US), immediately followed up by our quite unsubtle public rejection of US invitations to enter into a trade partnership with it right there and then.

This has therefore led, to the present day: when the Philippines expressed public interest in joining the TPP, this was simply responded to with a set of conditions for us to comply with -- improved rule of law, opening up foreign ownership of businesses or property, addressing State ownership of certain industries, strict protection of intellectual property, and so on. Clearly, the US has little patience with flaky allies.

In any event, the TPP still has to go through the constitutional processes of its members. The US, in particular, being already in its presidential election season, may see a TPP vote no earlier than next year.

That should give the Philippines a modicum of time to put its priorities right.