is the subject of my Trade Tripper column this Friday-Saturday issue of BusinessWorld:
The idea for this article came about while I was gathering notes for a separate article I was writing in relation to Ateneo Law School’s 75th anniversary. I was reading some lectures and papers of Horacio de la Costa, the Jesuit priest-scholar, and they were incredibly interesting for their elegance, intelligence, and -- considering he wrote them around 40 years ago -- utter prescience.
Examples: "we must also find some workable integration of the twin objectives of productivity and equity"; and "the quality of a society depends, in large measure, on the quality of its leaders." Finally, for somebody long advocating for caution regarding Philippine entry into FTAs, particularly if it’s between us and a rich developed country, Fr. De la Costa had this to say: "free trade between an industrial country and an agricultural country is to the detriment of the agricultural country."
What’s further interesting is that Fr. De la Costa wasn’t even a lawyer or a developmental/trade policy specialist. But what he did had (he died in 1977) was a profound insight into the realities of the human condition, particularly that of the Filipino. And it’s no coincidence that he is part of the Catholic Church.
People accuse the Church of being out of touch, archaic, whose teachings are unconnected to fact or science. But the fact of the matter is: no other institution on Earth can claim to have the same understanding of how human beings function. As Pope John Paul II was wont to say: the Church "is an expert in humanity." Or to put it another way, the Church isn’t behind science or society; actually it’s the other way around.
Interestingly enough, the past recent months saw The Economist provide two instances of the Church’s counter-intuitive thinking again proven right by scientists. The first had to do with the role of mortification and penance in assuaging guilt: researchers from the University of Queensland, in Australia, found that guilt "seems to behave in the laboratory as theologians have long claimed it should. It has a powerful effect on willingness to tolerate pain. And it can be assuaged by such pain. Atonement hurts. But it seems to work." (The Economist, "The masochism tango," Feb. 5, 2011)
And last January, The Economist reported on a finding that’s bound to disappoint some hormonally confused twenty-something: "When is it the right time to do the deed? If priests had their way, it would be shortly after the wedding ceremony -- but recent studies show such advice is rarely heeded. Roughly 85% of the American population, for example, approves of premarital sex. Faced with numbers like that, what hope do the Vatican and its ilk really have?" However, the Church, again, seems to have been proven correct: "Dean Busby and his colleagues at Brigham Young University, in Utah, however, have gathered some data which support delay ... Their report, just published in the Journal of Family Psychology, suggests that people who delay having sex do indeed have better relationships, on four different measures. That result applies to both men and women." ("The waiting game," Jan. 22, 2011)
Then there’s this famous incident in 2009 when Pope Bendict XVI made a declaration that went against the wisdom of the entire world. Asked about condoms and AIDs in South Africa, the Pope replied: "The scourge cannot be resolved by distributing condoms; quite the contrary, we risk worsening the problem." That answer provoked an international maelstrom, with alleged free thinkers, who should have kept an open mind on the matter, resorting to numerous insults on the Pope. Unfortunately for them, the Pope was right. As Martyn Drakard of the Observer wrote: "A Harvard expert on AIDS prevention, Dr. Edward C. Green, said ‘the Pope is actually correct’" and also that "in an article in the leading British medical journal, The Lancet, James Shelton, of the US Agency for International Development, stated openly that one of the 10 damaging myths about the fight against AIDS is that condoms are the answer." And let’s not forget Caritas in Veritate.
Anybody who is rational would really have to consider this one important fact: how can the Church be out of touch when it’s filled with men who do nothing all day but ponder about humanity or listen about the confessed sins of other men? And they’ve been doing that for 2,000 years, starting with Jesus’ highly counter-intuitive advice to "love your enemies." As GK Chesterton wrote: "First it must be remembered that the Church is always in advance of the world. That is why it is said to be behind the times." The Catholic Church, he correctly finds: is the "only institution that is not only right but always right when everything else is wrong."
So if you’re smart, you might want to seriously take this piece of advice from Denver Archbishop Charles Chaput: "If you’re Catholic and you disagree with your Church, what do you do? You change your mind."
24.2.11
17.2.11
Corruption and lawyers
is the subject of my Trade Tripper column this Friday-Saturday issue of BusinessWorld:
Obviously, with a title like that, loads of lawyer jokes inevitably come to mind Here’s one: why is it that sharks won’t eat lawyers? Professional courtesy. But seriously folks ... I brought up the subject of lawyers in relation to corruption because of a quote I once came across: "who will watch the watchmen?" Really, when you think about it, the capability of a country to fight against corruption is only as good as its lawyers’ ability to comprehend it.
That truism came into display at the early part of President Arroyo’s administration, when the latter’s finance officials launched an anti-corruption drive that, despite all the macho talk displayed before the media, resulted in nothing except drive the foreign consultant they hired to leave the country in sheer exasperation.
A primary reason could be taken from the fact that not many people actually understand or even take the effort to understand the actual concept, nature, causes and effects, and the varied array of methodologies of corruption. The campaign slogan (its success and the fact that it resonated so well with some people) "kung walang corrupt, walang mahirap" betrays the simplistic thinking and lack of seriousness with which corruption is addressed in this country. The fact that nobody of significance engaged in corruption has been imprisoned as of now also shows the level of focus of this administration regarding that issue.
Interestingly enough, the International Bar Association came up with a survey last year on corruption and the legal profession. Depressingly, "Forty percent of lawyers surveyed have never heard of international anti-corruption instruments." Furthermore, "the IBA survey also found that in many jurisdictions well over half of the lawyers surveyed identified corruption as an issue in the legal profession in their own country. More than one in five said they had been approached to take part in what they believed could be a corrupt transaction. And, one in three said they had lost business to corrupt law firms or individuals."
Those figures could actually be quite higher as far as this country is concerned. It has to be when you consider that there are still law deans out there who would be complaining about Bar examination questions that contain "too many" public international law questions. The actual problem is not that there are too many international law questions but rather that there are too few. Considering the inter-connectedness of the world’s economies and politics, it is actually possible to make every question in the Bar exam contain a foreign element without necessarily referring to international law concepts. That goes for every subject, whether it be political law or commercial. Taxation, which normally should be completely within the domestic jurisdiction of a state, now finds itself relating to international law precepts when one considers the WTO and free trade agreements, as well as bilateral tax treaties, on areas not necessarily restricted to tariffs but to all types of taxes. Our present cases before the WTO, for example, on distilled liquor, is not essentially a tariff issue but an excise tax one.
So it wouldn’t be a surprise if a majority of the lawyers here would not be familiar with vital anti-corruption instruments such as the United Nations Convention against Corruption (UNCAC) and the OECD Anti-Bribery Convention. These are important tools against corruption for at least two reasons: 1) because to rely solely on our penal laws would be incredibly unintelligent considering that a great degree of true corruption, not the petty "facilitation" stuff but the ones that really funnel a significant amount of money from the public coffers, uses a vast array of (or proof which can be found in) economic and accounting methodologies that our archaic criminal system is simply unequipped to handle; and 2) because these instruments form part of the laws of the Philippines by operation of the incorporation doctrine prescribed in the Constitution.
Finally, there’s also the inability (or refusal) of policymakers (and lawyers) with regard to this fact, that law professors David Trubek and Alvaro Santos wrote upon: "the connection between eliminating corruption and ‘development’ remains obscure. Even if the move from a ‘corrupt’ legal regime to a ‘not corrupt’ regime produces a one-time efficiency gain, there is no good economic theory predicting that this will lead to growth or development, rather than simply another stable low-level equilibrium."
Clearly, corruption is not a victimless crime. Vast amounts of money that could have been used for education or health have instead been diverted to less altruistic enterprises. It may have even diverted potential investments away from the country. Deloitte’s 4th annual "Look Before You Leap" found that "63 percent of respondents reported that the FCPA and anti-corruption issues caused their companies to renegotiate or pull out of planned business relationships, mergers or acquisitions over the last three years."
Indeed, more than mere slogans are needed to fight corruption. Better trained lawyers would be a good start.
Obviously, with a title like that, loads of lawyer jokes inevitably come to mind Here’s one: why is it that sharks won’t eat lawyers? Professional courtesy. But seriously folks ... I brought up the subject of lawyers in relation to corruption because of a quote I once came across: "who will watch the watchmen?" Really, when you think about it, the capability of a country to fight against corruption is only as good as its lawyers’ ability to comprehend it.
That truism came into display at the early part of President Arroyo’s administration, when the latter’s finance officials launched an anti-corruption drive that, despite all the macho talk displayed before the media, resulted in nothing except drive the foreign consultant they hired to leave the country in sheer exasperation.
A primary reason could be taken from the fact that not many people actually understand or even take the effort to understand the actual concept, nature, causes and effects, and the varied array of methodologies of corruption. The campaign slogan (its success and the fact that it resonated so well with some people) "kung walang corrupt, walang mahirap" betrays the simplistic thinking and lack of seriousness with which corruption is addressed in this country. The fact that nobody of significance engaged in corruption has been imprisoned as of now also shows the level of focus of this administration regarding that issue.
Interestingly enough, the International Bar Association came up with a survey last year on corruption and the legal profession. Depressingly, "Forty percent of lawyers surveyed have never heard of international anti-corruption instruments." Furthermore, "the IBA survey also found that in many jurisdictions well over half of the lawyers surveyed identified corruption as an issue in the legal profession in their own country. More than one in five said they had been approached to take part in what they believed could be a corrupt transaction. And, one in three said they had lost business to corrupt law firms or individuals."
Those figures could actually be quite higher as far as this country is concerned. It has to be when you consider that there are still law deans out there who would be complaining about Bar examination questions that contain "too many" public international law questions. The actual problem is not that there are too many international law questions but rather that there are too few. Considering the inter-connectedness of the world’s economies and politics, it is actually possible to make every question in the Bar exam contain a foreign element without necessarily referring to international law concepts. That goes for every subject, whether it be political law or commercial. Taxation, which normally should be completely within the domestic jurisdiction of a state, now finds itself relating to international law precepts when one considers the WTO and free trade agreements, as well as bilateral tax treaties, on areas not necessarily restricted to tariffs but to all types of taxes. Our present cases before the WTO, for example, on distilled liquor, is not essentially a tariff issue but an excise tax one.
So it wouldn’t be a surprise if a majority of the lawyers here would not be familiar with vital anti-corruption instruments such as the United Nations Convention against Corruption (UNCAC) and the OECD Anti-Bribery Convention. These are important tools against corruption for at least two reasons: 1) because to rely solely on our penal laws would be incredibly unintelligent considering that a great degree of true corruption, not the petty "facilitation" stuff but the ones that really funnel a significant amount of money from the public coffers, uses a vast array of (or proof which can be found in) economic and accounting methodologies that our archaic criminal system is simply unequipped to handle; and 2) because these instruments form part of the laws of the Philippines by operation of the incorporation doctrine prescribed in the Constitution.
Finally, there’s also the inability (or refusal) of policymakers (and lawyers) with regard to this fact, that law professors David Trubek and Alvaro Santos wrote upon: "the connection between eliminating corruption and ‘development’ remains obscure. Even if the move from a ‘corrupt’ legal regime to a ‘not corrupt’ regime produces a one-time efficiency gain, there is no good economic theory predicting that this will lead to growth or development, rather than simply another stable low-level equilibrium."
Clearly, corruption is not a victimless crime. Vast amounts of money that could have been used for education or health have instead been diverted to less altruistic enterprises. It may have even diverted potential investments away from the country. Deloitte’s 4th annual "Look Before You Leap" found that "63 percent of respondents reported that the FCPA and anti-corruption issues caused their companies to renegotiate or pull out of planned business relationships, mergers or acquisitions over the last three years."
Indeed, more than mere slogans are needed to fight corruption. Better trained lawyers would be a good start.
10.2.11
Growth toward Gomorrah
is the subject of my Trade Tripper column this Friday-Saturday issue of BusinessWorld:
Ralph Waldo Emerson once wrote: "common sense is genius dressed up in work clothes." If that’s the case, then our capacity for genius is seriously deficient. I, for one, can’t tell if we actually have any policy direction regarding our economy and finance. Or to be more accurate, we probably do have policy direction, it’s just that it doesn’t seem to be grounded in common sense.
The problem is that this inadequacy is disguised by all those celebratory reports found in recent newspaper articles: "fourth-quarter acceleration 7.3% growth in 2010 (the fastest in more than two decades!)," "GDP growth strengthened by 7.1% in the last three months of the year," with "full-year result surpassing the official 5-6% target (the highest since democracy was restored in 1986!)." The truth, however, is less glowing.
My BusinessWorld colleague, Benjamin Diokno, beat me to it when he cogently and thoughtfully wrote in his article last week that "serious policymakers should be concerned with equity as well, and should work for an economic growth that is inclusive, strong, and sustainable." He was writing in response to this administration’s penchant for drumbeating the country’s growth numbers. I agree. Their enthusiasm for growth is misguided. First, because any growth that we have at the moment should in all probability be better attributed to factors that have nothing to do with this administration’s policies. As Mr. Diokno wrote: "public policy works with a long and variable lag. It is more appropriate to attribute the economic growth in the second half of the year to Mrs. Arroyo’s administration. Second, the contribution of government consumption spending and public construction in the second half of 2010 was negative. Third, the strong 2010 growth is largely attributable to base effects owing to the recent global crisis."
Furthermore, to claim credit for growth would also entail shouldering responsibility for any downturn on the economy. Which this administration seems to be incapable of doing considering its silence regarding the recent dip in performance of the country’s stock exchange.
Finally, as I wrote last week, to focus on growth, whether it be GDP or GNP, bespeaks of intellectual sloppiness: "Nobel laureate for economics Amartya Sen recently chided India for focusing too much on growth (calling such ‘very stupid’) when more serious indicators need to be addressed, such as nutrition. The same goes for the Philippines and to which I add education, health, and social mobility." As Professor Sen puts it, growth would only be a "positive thing" in the "context of social justice, poverty reduction and directing greater public revenues towards health and education."
Professor Sen’s remarks quite apply to the Philippines. And as Mr. Diokno pointed out, equity (i.e., the equal distribution of wealth or opportunities) is an area that we should seriously direct our attention to. The truth is, what does growth mean to the country if in the end its only effect is that some stupid spoiled brat from a wealthy family can have a new sports car? In other words, what is the use of growth if it only benefits the rich and not the 40% or so in the country (including 33% of our schoolchildren) who go to bed without having had anything to eat during the day?
I personally would focus on education. Want a good economic policy? Improve education. And considering that the Philippines’ comparative advantage is in services, education is obviously a paramount factor that must be addressed. Education, after all, does not mean only literacy and the ability to speak English (although the latter, it has been noted, has been steadily deteriorating as well). Our education should be geared to strengthening values and patriotism, encouraging innovation, creativity, and greater productivity, as well as critical thinking. Our students should be more rigorously tested and teachers held to greater accountability. None of this is being done.
Finally, of what use is growth if it doesn’t lead to jobs? Unemployment is high. And with toll rates, MRT/LRT rates, jeepney fares, water and electricity rates, gasoline prices, and inflation rising, where would the people get the money to pay for their subsistence? Worryingly enough, WTO Director-General Pascal Lamy noted that "2011 will see the prices of most commodities rise, as the rise in global GDP bolsters demand, led by emerging economies ... Over 70% of the growth will come from commodity-intensive emerging markets." Now while the same could be a boon for countries supplying those raw materials, nevertheless, as pointed out by David Nabarro, the UN’s special representative on food security and nutrition, "higher food prices can also pinch the world’s poorest people, who spend almost all of their income on basic staples."
The problems that need to be confronted are clearly complex, difficult, and dangerously subtle. It’s perhaps no coincidence that both Diokno and Sen, in writing respectively of such, impliedly indicated the need for serious policymakers. Sadly, that’s what we lack the most right now.
Ralph Waldo Emerson once wrote: "common sense is genius dressed up in work clothes." If that’s the case, then our capacity for genius is seriously deficient. I, for one, can’t tell if we actually have any policy direction regarding our economy and finance. Or to be more accurate, we probably do have policy direction, it’s just that it doesn’t seem to be grounded in common sense.
The problem is that this inadequacy is disguised by all those celebratory reports found in recent newspaper articles: "fourth-quarter acceleration 7.3% growth in 2010 (the fastest in more than two decades!)," "GDP growth strengthened by 7.1% in the last three months of the year," with "full-year result surpassing the official 5-6% target (the highest since democracy was restored in 1986!)." The truth, however, is less glowing.
My BusinessWorld colleague, Benjamin Diokno, beat me to it when he cogently and thoughtfully wrote in his article last week that "serious policymakers should be concerned with equity as well, and should work for an economic growth that is inclusive, strong, and sustainable." He was writing in response to this administration’s penchant for drumbeating the country’s growth numbers. I agree. Their enthusiasm for growth is misguided. First, because any growth that we have at the moment should in all probability be better attributed to factors that have nothing to do with this administration’s policies. As Mr. Diokno wrote: "public policy works with a long and variable lag. It is more appropriate to attribute the economic growth in the second half of the year to Mrs. Arroyo’s administration. Second, the contribution of government consumption spending and public construction in the second half of 2010 was negative. Third, the strong 2010 growth is largely attributable to base effects owing to the recent global crisis."
Furthermore, to claim credit for growth would also entail shouldering responsibility for any downturn on the economy. Which this administration seems to be incapable of doing considering its silence regarding the recent dip in performance of the country’s stock exchange.
Finally, as I wrote last week, to focus on growth, whether it be GDP or GNP, bespeaks of intellectual sloppiness: "Nobel laureate for economics Amartya Sen recently chided India for focusing too much on growth (calling such ‘very stupid’) when more serious indicators need to be addressed, such as nutrition. The same goes for the Philippines and to which I add education, health, and social mobility." As Professor Sen puts it, growth would only be a "positive thing" in the "context of social justice, poverty reduction and directing greater public revenues towards health and education."
Professor Sen’s remarks quite apply to the Philippines. And as Mr. Diokno pointed out, equity (i.e., the equal distribution of wealth or opportunities) is an area that we should seriously direct our attention to. The truth is, what does growth mean to the country if in the end its only effect is that some stupid spoiled brat from a wealthy family can have a new sports car? In other words, what is the use of growth if it only benefits the rich and not the 40% or so in the country (including 33% of our schoolchildren) who go to bed without having had anything to eat during the day?
I personally would focus on education. Want a good economic policy? Improve education. And considering that the Philippines’ comparative advantage is in services, education is obviously a paramount factor that must be addressed. Education, after all, does not mean only literacy and the ability to speak English (although the latter, it has been noted, has been steadily deteriorating as well). Our education should be geared to strengthening values and patriotism, encouraging innovation, creativity, and greater productivity, as well as critical thinking. Our students should be more rigorously tested and teachers held to greater accountability. None of this is being done.
Finally, of what use is growth if it doesn’t lead to jobs? Unemployment is high. And with toll rates, MRT/LRT rates, jeepney fares, water and electricity rates, gasoline prices, and inflation rising, where would the people get the money to pay for their subsistence? Worryingly enough, WTO Director-General Pascal Lamy noted that "2011 will see the prices of most commodities rise, as the rise in global GDP bolsters demand, led by emerging economies ... Over 70% of the growth will come from commodity-intensive emerging markets." Now while the same could be a boon for countries supplying those raw materials, nevertheless, as pointed out by David Nabarro, the UN’s special representative on food security and nutrition, "higher food prices can also pinch the world’s poorest people, who spend almost all of their income on basic staples."
The problems that need to be confronted are clearly complex, difficult, and dangerously subtle. It’s perhaps no coincidence that both Diokno and Sen, in writing respectively of such, impliedly indicated the need for serious policymakers. Sadly, that’s what we lack the most right now.
3.2.11
Of roadmaps and strategies
is the subject of my Trade Tripper column in this Friday-Saturday issue of BusinessWorld:
I’ve never been a fan of jargons. A little test that I have (a bit discriminatory sometimes I know) is whether a person feels the need to resort to technical terms or the latest business buzzwords during meetings. Thus, anybody who regularly spews out words like metrics, synergize, take that offline, breaking silos, strategic vision is without fail a person who does not know what he’s talking about. The same way anybody who aggressively pumps up his staff to have "fire in the belly" is more often than not merely suffering from diarrhea.
But I was indeed appreciative of the fact that the Department of Trade and Industry came out with a road map to attain investments and exports en route to achieving a 10% GNP expansion. This is with the view to "eliminate" poverty by 2016, which coincidentally is the year the term of the present administration ends. As reported in the newspapers, the road map would make a focus on "key sectors," such as agriculture, business process outsourcing, road infrastructure, power infrastructure, manufacturing, mining, and tourism.
The problem, however, is how to achieve the said goals. Any good plan goes beyond concrete goals but includes possession of necessary information grounded in experience and real-world circumstances. The issue really for the Philippines (and this was acknowledged by our trade officials) has to do with competitiveness. Because no matter how many trading partners we have or markets opened, the same would still not matter if our competitiveness were lacking.
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 and it has actual, quantitative consequences.
One consequence is the inability to take advantage of our present trade agreements. Studies have shown (and confirmed) that Philippine utilization of the FTAs, particularly that of the 1992 AFTA, have lingered in the region of 20-25%. Of course, trade officials recently underscored their plan 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.
Another consequence is, even assuming that the markets are indeed opened, how sure are we that our businesses would be able to satisfy the market, both in terms of quality and quantity? Because an opened market does not necessarily mean that the consumers in those markets will buy our products or services. Several years after JPEPA had been made effective, for example, we still have to get a double-digit figure in the number of nurses working in Japan.
This boils down again to the value of education as a component of economic policy. When US President Barack Obama gave his State of the Union address last week, despite being criticized for lack of details, nevertheless he was spot-on in saying that in order to improve its economy, the US needs to "out-innovate, out-educate, and out-build the rest of the world." One US study confirmed education to be "the single-biggest determinant of career success." Thus, "the unemployment rate for people who never graduated high school is 15 percent -- depression-level joblessness. For high-school grads with no college, unemployment is 10.4 percent, and for college grads it’s just 4.9 percent."
For the Philippines, education is clearly a primary key to fostering innovation and productivity. But education has always been strangely absent in our priorities. The roadmap doesn’t emphasize it and neither does the International Trade Strategy that was drafted by members of the PIDS with the funding assistance of the European Union.
There was also this disturbing comment from one trade official: "Most pronouncements made by the (National Economic and Development Authority) are qualitative. We [the DTI] will try to be as quantitative as possible in our analysis of how we can attain our growth targets. We need to be sure that our assumptions are well-founded. There should be empirical data to support what we want to achieve." That’s laudable, indeed. But aren’t these guys supposed to be working as one team? Any strategy or road map is not supposed to work in a vacuum. And the problems are so complex that the efforts of one are necessarily connected to the efforts of others.
Finally, why the undue focus on GNP? Nobel laureate for economics Amartya Sen recently chided India for focusing too much on growth (calling such "very stupid") when more serious indicators need to be addressed, such as nutrition. The same goes for the Philippines and to which I add education, health, and social mobility. But, that, I guess, is for another article.
I’ve never been a fan of jargons. A little test that I have (a bit discriminatory sometimes I know) is whether a person feels the need to resort to technical terms or the latest business buzzwords during meetings. Thus, anybody who regularly spews out words like metrics, synergize, take that offline, breaking silos, strategic vision is without fail a person who does not know what he’s talking about. The same way anybody who aggressively pumps up his staff to have "fire in the belly" is more often than not merely suffering from diarrhea.
But I was indeed appreciative of the fact that the Department of Trade and Industry came out with a road map to attain investments and exports en route to achieving a 10% GNP expansion. This is with the view to "eliminate" poverty by 2016, which coincidentally is the year the term of the present administration ends. As reported in the newspapers, the road map would make a focus on "key sectors," such as agriculture, business process outsourcing, road infrastructure, power infrastructure, manufacturing, mining, and tourism.
The problem, however, is how to achieve the said goals. Any good plan goes beyond concrete goals but includes possession of necessary information grounded in experience and real-world circumstances. The issue really for the Philippines (and this was acknowledged by our trade officials) has to do with competitiveness. Because no matter how many trading partners we have or markets opened, the same would still not matter if our competitiveness were lacking.
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 and it has actual, quantitative consequences.
One consequence is the inability to take advantage of our present trade agreements. Studies have shown (and confirmed) that Philippine utilization of the FTAs, particularly that of the 1992 AFTA, have lingered in the region of 20-25%. Of course, trade officials recently underscored their plan 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.
Another consequence is, even assuming that the markets are indeed opened, how sure are we that our businesses would be able to satisfy the market, both in terms of quality and quantity? Because an opened market does not necessarily mean that the consumers in those markets will buy our products or services. Several years after JPEPA had been made effective, for example, we still have to get a double-digit figure in the number of nurses working in Japan.
This boils down again to the value of education as a component of economic policy. When US President Barack Obama gave his State of the Union address last week, despite being criticized for lack of details, nevertheless he was spot-on in saying that in order to improve its economy, the US needs to "out-innovate, out-educate, and out-build the rest of the world." One US study confirmed education to be "the single-biggest determinant of career success." Thus, "the unemployment rate for people who never graduated high school is 15 percent -- depression-level joblessness. For high-school grads with no college, unemployment is 10.4 percent, and for college grads it’s just 4.9 percent."
For the Philippines, education is clearly a primary key to fostering innovation and productivity. But education has always been strangely absent in our priorities. The roadmap doesn’t emphasize it and neither does the International Trade Strategy that was drafted by members of the PIDS with the funding assistance of the European Union.
There was also this disturbing comment from one trade official: "Most pronouncements made by the (National Economic and Development Authority) are qualitative. We [the DTI] will try to be as quantitative as possible in our analysis of how we can attain our growth targets. We need to be sure that our assumptions are well-founded. There should be empirical data to support what we want to achieve." That’s laudable, indeed. But aren’t these guys supposed to be working as one team? Any strategy or road map is not supposed to work in a vacuum. And the problems are so complex that the efforts of one are necessarily connected to the efforts of others.
Finally, why the undue focus on GNP? Nobel laureate for economics Amartya Sen recently chided India for focusing too much on growth (calling such "very stupid") when more serious indicators need to be addressed, such as nutrition. The same goes for the Philippines and to which I add education, health, and social mobility. But, that, I guess, is for another article.
27.1.11
DTI roadmap
Much was made about the DTI roadmap released last week. This, however, (from an article in the Inquirer) caught my eye:
"Trade Undersecretary and Board of Investments managing head Cristino Panlilio said it was not enough to set targets. All targets should be backed by hard facts and empirical data to make them attainable.Most pronouncements made by the (National Economic and Development Authority) are qualitative. We will try to be as quantitative as possible in our analysis of how we can attain our growth targets,he told reporters.We need to be sure that our assumptions are well-founded. There should be empirical data to support what we want to achieve."
Why do these guys sound as if they’re competing against each other? Aren’t NEDA and DTI supposed to be working on the same goals?
Ironically enough, when one looks at the DTI roadmap, the same still leaves a lot to be desired. I’ll save my comments on the roadmap for later. But for now, the roadmap still looks like any previous roadmap: full of untested, unexamined assumptions.
"Trade Undersecretary and Board of Investments managing head Cristino Panlilio said it was not enough to set targets. All targets should be backed by hard facts and empirical data to make them attainable.Most pronouncements made by the (National Economic and Development Authority) are qualitative. We will try to be as quantitative as possible in our analysis of how we can attain our growth targets,he told reporters.We need to be sure that our assumptions are well-founded. There should be empirical data to support what we want to achieve."
Why do these guys sound as if they’re competing against each other? Aren’t NEDA and DTI supposed to be working on the same goals?
Ironically enough, when one looks at the DTI roadmap, the same still leaves a lot to be desired. I’ll save my comments on the roadmap for later. But for now, the roadmap still looks like any previous roadmap: full of untested, unexamined assumptions.
Some rules on leadership
is the subject of my Trade Tripper column this Friday-Saturday issue of BusinessWorld:
I once watched a CNN show hosted by Fareed Zakaria on leadership. He interviewed a wide range of leaders from different backgrounds and it was obvious that his intention was to portray leadership as un-singular by nature, highly changeable depending on the different contexts in which leadership is being exercised. In short, Mr. Zakaria wanted to show that leadership differs depending on the situation or organization. What was funny was that, despite trying so hard to elicit confirmation of his theory, the answers were quite the opposite of what he wanted.
Rather, contrary to the belief that leadership varies according to differing conditions, a commonality actually was undeniably present in all great leaders, whether it be the head of state or the manager of a small company. Also, unlike the fantasies of those obsessed with political correctness and the democratization of governance (infatuated as they are with leading by committees), individuals do matter. And leadership by an individual is a significant thing indeed.
Here is my own personal list of rules that, in my own observations, true leaders follow. None of these are original and most can actually be attributed to common sense. Even more, a high degree of that contained in the list would be quite familiar to anybody who has had experience running an organization or, at the very least, worked for a living.
First on my list is that leaders should "Know clearly what they want to achieve." I’ve always found memorable Charles De Gaulle’s opening line in his memoirs: "I have always had a certain idea of France." That alone says a lot about the kind of man De Gaulle was and the kind of leader that France had in him. These leaders exactly knew where their country was and where they want to bring the country to. However, indispensable to this is that the leader knows himself as well and comfortable with who he is. Positions of leadership are not the time to start learning about oneself. One should have done that a long time ago. While it is true that one can grow into leadership through time, it merely works on material that is already present. A man who does not know who he is will not know what he wants and definitely will not know what they want to achieve as leader.
Another is that leaders should "Communicate clearly but keep communications to a minimum." Admittedly, one of the reasons for this is that leaders should keep a certain distance, maintaining detachment, preserving a mystique for his office. However, an even more practical reason is to avoid confusion. A person who needs too many words to convey something is a person who has not mastered his subject. And, related to the first rule, if a person is himself confused then his own pronouncements will be confused.
A third rule is "Leaders surround themselves with smart people and are very careful who they choose." Leaders are never so insecure as to hire those who are better than they are in some aspects. They have egos healthy enough to deal with the super smart. Among the functions of a leader, this has got to be one the most important. To those who argue that leading is essentially a team function, Jack Welch has this to say: " ‘A’ players hire fellow ‘A’ players; ‘B’ players hire ‘B’ players."
This is complemented by Rule 4: "Leaders respect, encourage contrary opinions." Particularly in today’s complex world, no single person can have all the necessary information and skills to arrive at a reasonably intelligent decision. I mean, Harvard graduates or those with Phds will still need to have the humility to know that there are other co-workers out there with the insight and expertise to get the job done. All the more so those who don’t have the same credentials.
The following rule is really a no-brainer: "Leaders never ask others to do what they themselves aren’t willing to do." People, if they’re well adjusted and normal, know instinctively hypocrisy when they see it. Nobody wants to follow a hypocrite. People would be happy to make sacrifices for a cause but only if they saw that their leaders are sharing in that sacrifice. Look at Britain’s leaders during World War II. Leaders could have flaws but being perceived a hypocrite could never be one of them.
Then this very important rule: "Promote merit, have no tolerance for incompetence, demand accountability." Bottom line, a leader is there to get results. There are just simply two kinds of people: those who get things done and those who don’t. Friendships, personal loyalties are important, but if these are hindering the achieving of results then sacrifices must be made. Because that’s what leaders do.
Finally, leaders should have character, competence, and integrity. Without these three, anybody can have all the popularity and good intentions in the world, but, frankly, it wouldn’t matter.
I once watched a CNN show hosted by Fareed Zakaria on leadership. He interviewed a wide range of leaders from different backgrounds and it was obvious that his intention was to portray leadership as un-singular by nature, highly changeable depending on the different contexts in which leadership is being exercised. In short, Mr. Zakaria wanted to show that leadership differs depending on the situation or organization. What was funny was that, despite trying so hard to elicit confirmation of his theory, the answers were quite the opposite of what he wanted.
Rather, contrary to the belief that leadership varies according to differing conditions, a commonality actually was undeniably present in all great leaders, whether it be the head of state or the manager of a small company. Also, unlike the fantasies of those obsessed with political correctness and the democratization of governance (infatuated as they are with leading by committees), individuals do matter. And leadership by an individual is a significant thing indeed.
Here is my own personal list of rules that, in my own observations, true leaders follow. None of these are original and most can actually be attributed to common sense. Even more, a high degree of that contained in the list would be quite familiar to anybody who has had experience running an organization or, at the very least, worked for a living.
First on my list is that leaders should "Know clearly what they want to achieve." I’ve always found memorable Charles De Gaulle’s opening line in his memoirs: "I have always had a certain idea of France." That alone says a lot about the kind of man De Gaulle was and the kind of leader that France had in him. These leaders exactly knew where their country was and where they want to bring the country to. However, indispensable to this is that the leader knows himself as well and comfortable with who he is. Positions of leadership are not the time to start learning about oneself. One should have done that a long time ago. While it is true that one can grow into leadership through time, it merely works on material that is already present. A man who does not know who he is will not know what he wants and definitely will not know what they want to achieve as leader.
Another is that leaders should "Communicate clearly but keep communications to a minimum." Admittedly, one of the reasons for this is that leaders should keep a certain distance, maintaining detachment, preserving a mystique for his office. However, an even more practical reason is to avoid confusion. A person who needs too many words to convey something is a person who has not mastered his subject. And, related to the first rule, if a person is himself confused then his own pronouncements will be confused.
A third rule is "Leaders surround themselves with smart people and are very careful who they choose." Leaders are never so insecure as to hire those who are better than they are in some aspects. They have egos healthy enough to deal with the super smart. Among the functions of a leader, this has got to be one the most important. To those who argue that leading is essentially a team function, Jack Welch has this to say: " ‘A’ players hire fellow ‘A’ players; ‘B’ players hire ‘B’ players."
This is complemented by Rule 4: "Leaders respect, encourage contrary opinions." Particularly in today’s complex world, no single person can have all the necessary information and skills to arrive at a reasonably intelligent decision. I mean, Harvard graduates or those with Phds will still need to have the humility to know that there are other co-workers out there with the insight and expertise to get the job done. All the more so those who don’t have the same credentials.
The following rule is really a no-brainer: "Leaders never ask others to do what they themselves aren’t willing to do." People, if they’re well adjusted and normal, know instinctively hypocrisy when they see it. Nobody wants to follow a hypocrite. People would be happy to make sacrifices for a cause but only if they saw that their leaders are sharing in that sacrifice. Look at Britain’s leaders during World War II. Leaders could have flaws but being perceived a hypocrite could never be one of them.
Then this very important rule: "Promote merit, have no tolerance for incompetence, demand accountability." Bottom line, a leader is there to get results. There are just simply two kinds of people: those who get things done and those who don’t. Friendships, personal loyalties are important, but if these are hindering the achieving of results then sacrifices must be made. Because that’s what leaders do.
Finally, leaders should have character, competence, and integrity. Without these three, anybody can have all the popularity and good intentions in the world, but, frankly, it wouldn’t matter.
20.1.11
A cloudy open skies
is the subject of my Trade Tripper column this Friday-Saturday issue of BusinessWorld:
There’s a line from CNN that goes somewhat like this: "do you go with those who got it right or with those who got it wrong?" Because, frankly, in relation to the ongoing debate on the open-skies policy, do we give credence to those men able to build business empires from scratch, as well as the men and women able to effectively run local airlines for the country, or do we believe the promises of some guy who spent a considerable amount of money just to come up with "Pilipinas kay ganda"? I know what I’d choose.
Look, I don’t know Lucio Tan. I don’t know what he’s like. But I do know what he did and what he did is all around us. From beer to banks to airlines to cigarettes, this is a man who knows business. And when you have guys like that who can actually get things done, I would think we should instinctively help them or their endeavors. Apparently, we’d rather do the reverse.
Because at a time when a lot of people are predicting uncertainties for the global economy this year, with the concomitant unpredictability of our own economy, why we should be making it harder for the Philippines’ very own PAL (as well as Cebu Pacific and Zest Air), at this particular time, is beyond me. We shouldn’t be making it harder for them, we should be helping them.
Considerably, our tourism industry needs more than additional plane seats to get going: they need better airports and an efficient infrastructure. Both of which, we don’t really have. Such also needs careful and coordinated planning. None of which is being done effectively. We have a Category 2 rating from the International Civil Aviation Organization due to deficient aviation infrastructure and safety standards. All these are beyond the purview of local airlines. But they do fall squarely within the responsibility of the government. Traffic, peace and order, pollution, sanitation? These are not the responsibility of the local airlines. These are government’s. So why put the burden squarely on the shoulders of our airlines?
Besides, what does "pocket open skies" even mean? How different is that from a mere open skies? I suspect it’s one of those terms some policymaker cooked up to obfuscate matters, like "calibrated trade liberalization." They have no practical meaning. It’s either you open or you don’t. If one is going to be selective about it, then there better be good reasons for the selection. And if the selection turns out to be opening almost all air travel anyway, then that is not "pocket." That is open skies. Period.
Some people argue from the perspective of the expected benefits of "liberalization." Let’s not be simpletons about this. This column obviously is partial to liberalization. But there’s a difference between being partial and blind. As in all matters, we need to be smart about this. Look, US skies won’t open unilaterally. And it’s done very deliberately. Liberalization entails competition, which entails we step our game up, which means all of us, which means the government and private sector. If one of those factors or players is missing from the equation, then we just made people lose their jobs for no purpose. We can’t just open our skies up and hope that a "trickle down" effect ensues. We simply cannot gamble with people’s livelihoods.
Government assistance is particularly crucial for the airline industry. I don’t know of any successful foreign airline that made it without government support. Aside from airports, infrastructure, security, and safety, government help, particularly in economic crunches, is significant. The ability of the government to open up markets for our airlines is vastly important as well. To open up our skies without getting reciprocity from the other countries is to place an undue handicap for our companies. It’s not only unintelligent, it’s unconstitutional.
Besides, the nature of the market doesn’t seem to support the idea of open skies. People sometimes rail against our airlines for being monopolies, but we may have to accept that a "natural monopoly" may be necessary as far as airlines in the Philippines is concerned. That’s because the market could perhaps support only two or three players. That being the case, I’d rather have those two or three to be Filipinos. It then follows that we support such Filipino airlines as to be able to compete against those better-funded and larger foreign airlines.
The importance of Filipino carriers goes beyond economics. There’s also "transport security" (similar to "food security" arguments), particularly to ensure the safe return of our numerous OFWs during international emergencies. Finally, there’s also national pride. I rather like the idea of having Filipino-owned planes flying around. I like the thought that we have a flag carrier. And, despite (or because of) our difficulties, I’d really like to still be able to lift my head up and see the Philippines soar.
There’s a line from CNN that goes somewhat like this: "do you go with those who got it right or with those who got it wrong?" Because, frankly, in relation to the ongoing debate on the open-skies policy, do we give credence to those men able to build business empires from scratch, as well as the men and women able to effectively run local airlines for the country, or do we believe the promises of some guy who spent a considerable amount of money just to come up with "Pilipinas kay ganda"? I know what I’d choose.
Look, I don’t know Lucio Tan. I don’t know what he’s like. But I do know what he did and what he did is all around us. From beer to banks to airlines to cigarettes, this is a man who knows business. And when you have guys like that who can actually get things done, I would think we should instinctively help them or their endeavors. Apparently, we’d rather do the reverse.
Because at a time when a lot of people are predicting uncertainties for the global economy this year, with the concomitant unpredictability of our own economy, why we should be making it harder for the Philippines’ very own PAL (as well as Cebu Pacific and Zest Air), at this particular time, is beyond me. We shouldn’t be making it harder for them, we should be helping them.
Considerably, our tourism industry needs more than additional plane seats to get going: they need better airports and an efficient infrastructure. Both of which, we don’t really have. Such also needs careful and coordinated planning. None of which is being done effectively. We have a Category 2 rating from the International Civil Aviation Organization due to deficient aviation infrastructure and safety standards. All these are beyond the purview of local airlines. But they do fall squarely within the responsibility of the government. Traffic, peace and order, pollution, sanitation? These are not the responsibility of the local airlines. These are government’s. So why put the burden squarely on the shoulders of our airlines?
Besides, what does "pocket open skies" even mean? How different is that from a mere open skies? I suspect it’s one of those terms some policymaker cooked up to obfuscate matters, like "calibrated trade liberalization." They have no practical meaning. It’s either you open or you don’t. If one is going to be selective about it, then there better be good reasons for the selection. And if the selection turns out to be opening almost all air travel anyway, then that is not "pocket." That is open skies. Period.
Some people argue from the perspective of the expected benefits of "liberalization." Let’s not be simpletons about this. This column obviously is partial to liberalization. But there’s a difference between being partial and blind. As in all matters, we need to be smart about this. Look, US skies won’t open unilaterally. And it’s done very deliberately. Liberalization entails competition, which entails we step our game up, which means all of us, which means the government and private sector. If one of those factors or players is missing from the equation, then we just made people lose their jobs for no purpose. We can’t just open our skies up and hope that a "trickle down" effect ensues. We simply cannot gamble with people’s livelihoods.
Government assistance is particularly crucial for the airline industry. I don’t know of any successful foreign airline that made it without government support. Aside from airports, infrastructure, security, and safety, government help, particularly in economic crunches, is significant. The ability of the government to open up markets for our airlines is vastly important as well. To open up our skies without getting reciprocity from the other countries is to place an undue handicap for our companies. It’s not only unintelligent, it’s unconstitutional.
Besides, the nature of the market doesn’t seem to support the idea of open skies. People sometimes rail against our airlines for being monopolies, but we may have to accept that a "natural monopoly" may be necessary as far as airlines in the Philippines is concerned. That’s because the market could perhaps support only two or three players. That being the case, I’d rather have those two or three to be Filipinos. It then follows that we support such Filipino airlines as to be able to compete against those better-funded and larger foreign airlines.
The importance of Filipino carriers goes beyond economics. There’s also "transport security" (similar to "food security" arguments), particularly to ensure the safe return of our numerous OFWs during international emergencies. Finally, there’s also national pride. I rather like the idea of having Filipino-owned planes flying around. I like the thought that we have a flag carrier. And, despite (or because of) our difficulties, I’d really like to still be able to lift my head up and see the Philippines soar.
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