Rice is what we make of it

my Trade Tripper column in this 1-2 October 2016 issue of BusinessWorld:

If there is ever a product that most profoundly shaped Philippine politics, economic policy, and international trade, rice (along with sugar) would have to be it. Yet most policy initiatives dealing with rice are sadly defensive. Such, despite the fact, that most Filipinos implicitly profess heavy emotional investment in that little grain.

The Philippine Rice Research Institute, for one, considers “zero rice importation or self-sufficiency has always been the elusive goal of Philippine agriculture policies regardless of political dispensation. Any inferior goal is unpatriotic and criticized as a failure of the government and the nation as a whole.”

Strong stuff.

Pons Intal and Marissa Garcia (in a 2005 PIDS study) discussed the magnitude of rice’s political clout in this way: “the price of rice has been a significant determinant in election results since the 1950s.” That includes the Martial Law years. A possible exception is Estrada’s 1998 popular runaway election.

The problem is basic: we only have around 4.7 million hectares of land suitable for rice. Compare that with 7.8, 10.8, and 13.8 million hectares of Vietnam, Thailand, and Indonesia respectively. Those millions of hectares are irrigated well and fully by natural large river systems.

The Philippines does not have an equivalent inherent irrigation source and the man-made ones are poorly maintained. Ironically, the modern rice breeds we use (same with Vietnam, Thailand, and Indonesia) for greater yields and to survive require heavy amounts of water. Unfortunately, our incoming water flow is almost appallingly nil compared to the aforementioned three countries.

Thus, rice yields are at 5.75 tons per hectare (t/ha)., 3.1 t/ha., and 5.13 t/ha. for Vietnam, Thailand, and Indonesia, respectively. The Philippines does have a respectable 4 t/ha. but for an area less than half of its competitors.

Add the fact that Vietnam (land area of 332,698 sq. km.) has a population of roughly 92 million. Thailand 513,120 sq. km., for a 67 million population. Indonesia 1,904,569 sq. km., for a 255 million population.

The Philippines (area 300,000 sq. km.) needs to feed a population of 100 plus million. Rice consumption, incidentally, means not only as food but also as seed, animal feed, or other non-food uses.

The population increase also relates to the need to convert arable land for residential, commercial, or industrial purposes.

And yet, to add to the fundamental disadvantages that the Philippines has regarding rice production, is the inability of the rice industry to accept and adjust to the same: “farmer interest in rice farming has diminished through the years due to the increasing cost of rice cultivation brought about by the rising opportunity cost of labor and land and the availability of lower priced imported rice, which further dampened incentives for rice production.” Then, also “the lack of proper maintenance of irrigation facilities has meant the deterioration of these systems and the reduction in the effective life of these investments and area coverage.” (Intal and Garcia)

The issue of rice protection has cropped up (pun intended) as a decision is being made to lift WTO quantitative restrictions. When that happens, cursing and gnashing of teeth will be predictably heaped on the WTO, the multilateral trade system, globalization, and the free market.

But then: while protected industries welcome quantitative restrictions or high tariffs, the un-talked about logical unwelcome offshoot is smuggling.

So, despite the Philippines being among the world’s top importers of rice, we still had a rice smuggling problem amounting to almost 50,000 metric tons weekly (as reported by The Diplomat in 2014).

The problem is not the WTO nor smuggling; it’s the inability to feed the huge demand. An inability existing even before the Republic was born.

We’ve practically been a net importer of rice since the 1870s. Except for a small window in the early 1970s, we’ve never achieved rice self-sufficiency. And our insistence in becoming so only resulted in rice prices amongst the most expensive in Asia. Place that within the context of a poverty rate of around 25%.

The Foundation for Economic Freedom’s position calling for the removal of the quantitative restrictions is, I think, the right one: it will “lower rice prices, reduction in hunger, and lower inflation”. In the end, the poor benefits.

And food security should be better defined as managing our food stocks rather than insisting on production self-sufficiency.

Finally, we need to explore other options aside from mere restrictions, importation, and greater budgetary outlay.

One way of thinking about it: do we view local rice production as a means of feeding our citizenry or can it be shifted for cultural, social, tourism, and heritage purposes?

In short, retain the lands most suited for rice, employ willing and able farmers, yet without the pressure of rice production as the source of staple for the whole country.

By reframing rice’s importance, not necessarily now but thinking long term, we can then limit and put focus regarding people, land, money, and effort (including training and regulation) to a rice production that is doable and reasonable.

Reboot: The Philippines as strategic global player

my Trade Tripper column in the 24-25 September 2016 issue of BusinessWorld:

From the looks of it, indeed the Philippines seems like a gateway or staging point depending on how one views the map. Yet, the thinking seems based on the idea of transport vis-à-vis military mobility, of the need for air and naval bases. Unfortunately, technology seemingly diminished that aspect of the Philippines, what with missiles moving warfare away from the traditional kind and hence not necessarily tied to a location.

And yet the Philippines retains options that could keep it relevant. And interestingly, location has nothing much to do with them.

We presently have around 2 to 2.4 million Filipinos working abroad as OFW’s in various locations around the world. And while indeed, the same represents around P1.2 trillion annually in remittances, nevertheless the huge potential of OFWs remain untapped.

As a marketing avenue, political lobby force, and information network, the OFW population represents an opportunity to push the Philippines forward strategically. Not only do they represent a huge diaspora, the same is virtually a cost-cutting resource in terms of people and equipment that can be relied upon whenever the Philippine government or businesses has a need to move around in or know about other countries.

Another unexploited avenue that could elevate the Philippines’ importance is its peculiar history and culture. This was something that Singapore unfortunately took away from us. But the Philippines -- with its English speaking population and quite remarkably cosmopolitan outlook -- should have been the natural gateway of the West to Asia and vice versa.

And I’m not talking here merely of tourism but rather in terms of political and foreign relations clout. Had we played it right, we could have served as the deciding vote in any international gathering, and the natural guide and partner whenever a Western country is seeking trade, security, or international agreement with a (at the least) Southeast Asian country.

Then, there is trade.

Looking at 2015 figures, one sees the following: Japan, China, the US, Singapore, and Hong Kong (in that order) remain our top trading partners. They account for more than half (53.8%) of our trade. If one also considers the rest of the top ten partners, including the EU, South Korea, ASEAN, the level of trade would reach 78.5%.

If that doesn’t give a clear enough picture, the top ten exports account for 83.5%, while the top ten imports 74%. They revolve around electronics and other manufactured goods, transport, furniture, wiring sets, chemicals, apparel, and mineral and metal components.

A narrow bench on trade if there ever was one.

And while increase in FDI for the past few years has been lauded, the same is still lower than the major ASEAN countries and, ironically, lower than that of the 1980’s and 1990’s (OECD Investment Policy Review: Philippines, 2016)

The huge missed opportunity was the inability to transform the Philippines into an air transport and maritime hub, particularly after 9/11 and definitely during the first decade of 2000.

The Philippines could have made itself a vital and necessary player in the Asian supply chain, particularly as our islands constitute natural (and suitably secure) processing zones.

Another should have been the bulking up of the workforce of the Department of Trade and Industry, as well as Customs, as preparation for the various necessary free trade agreements that the Philippines could have contemplated joining in.

Longtime readers of this column are quite familiar already with the wary stance we take regarding FTAs (free-trade agreement).

But that wariness rests on three things: the resources with which brings the ability to negotiate a trade deal beneficial to the Philippines (and not merely wishing that merely opening up of industries will magically transform the Philippine economy), the resources with which to execute the agreement (including the bureaucracy to catch violations of the rules of origin), and third was the hope that the World Trade Organization could still finagle a deal revitalizing the multilateral trading system (an eventuality that now appears to need considerable time to happen).

Fast-forward a decade later and we still haven’t moved beyond those three factors. And yet, we now are faced with around 11 FTAs that are already effective, signed but awaiting implementation, or to be negotiated (i.e., ASEAN-Hong Kong, China FTA, Philippines-EU FTA, Regional Comprehensive Economic Partnership, Philippines-European FTA, ASEAN FTA, ASEAN-Australia and New Zealand FTA, ASEAN-India Comprehensive Economic Cooperation Agreement, ASEAN-Japan Comprehensive Economic Partnership, ASEAN-People’s Republic of China Comprehensive Economic Cooperation Agreement, ASEAN-[Republic of] Korea Comprehensive Economic Cooperation Agreement, Japan-Philippines Economic Partnership Agreement).

And the forgoing doesn’t even yet include the massive Trans-Pacific Partnership.

Compare our attitude, flexibility, and sophistication on this matter with China, which currently is the top trade partner of around 120 countries. And we wonder why we have difficulty in getting traction on our West Philippine claim!

To paraphrase one foreign affairs thinker: the Philippines should mentally rearrange the world and determine its own place in it, rather than obediently see the world as international law tells it to.

Too many lawyers

my Trade Tripper column in this 17-18 September 2016 issue of BusinessWorld:

“The first thing we do, is to kill all the lawyers.”

Popular in cocktail parties and reliably worth a chuckle or two, and almost always intended at the lawyers’ expense, the phrase seemingly connotes weariness of the legal profession’s annoyingly unwelcome omnipresence in people’s lives.

In truth, the line is actually an unintended compliment to lawyers.

Uttered by the murderous villain Dick the Butcher in Shakespeare’s Henry VI, Part 2, the setting involved a group of no-gooders out to foment chaos in England and seize power. And the best way to achieve that, they conclude, to ensure that anarchy happens, is, you guessed it: “to kill all the lawyers.”

Which leads me to another so-called “fact”: the Philippines has too many lawyers. A complaint of businessmen constrained by regulations, policy makers bothered by constitutional parameters, and academics outraged that their discipline is perceived as a steppingstone to law.

The lament is usually accompanied by the wish for more scientists, doctors, engineers -- anything involving the “hard sciences.”

Just not more lawyers.

Of course, humanities and arts feel the same: we need more philosophers and artists. Business schools meanwhile trumpet the need for more managers or (even better) entrepreneurial-minded youth.

But do we really have too many lawyers?

One way of addressing that query is too see how people generally feel about legal costs or the variety of legal counsels they can choose from.

Because if there are indeed too many lawyers, then the law of supply and demand should take care of that, by dragging the fees down. An eventuality, I believe, most are not inclined to admit is happening.

The fact is, we currently have on roster around 40,000 living lawyers. And people have to understand that most of those will not be engaged in traditional law practice.

Many will work in corporations, either as counsel or as part of management. Still many more will be engaged in private business, politics, or the academe.

The actual number of lawyers that people can choose from to handle their litigation or legal requirements is therefore understandably far lesser than what most people think.

Furthermore, the recent development of top corporate positions being increasingly offered to those with law degrees further speaks of the demand for lawyers and against the notion of the latter’s oversupply.

Ah... but surely lawyers are disproportionately too many compared to the other disciplines, particularly within the context of the overall Filipino population?

Again, not true.

Assuming a 100-million Filipino population, that would make a lawyer density of .4 lawyers for every 1,000 Filipinos (or 1 lawyer serving 2,500 Filipinos). And again remember, not all registered lawyers are engaged in traditional law firm work, so the proportion would be far smaller in reality.

Compare that with the United States, which has 1.3 million lawyers for a population of around 300 million. That makes it 4 lawyers for every 1,000 Americans or 1 lawyer for every 250 US citizens.

But don’t we need more scientists or doctors? Sure we do.

But consider: the number of practicing doctors is already nearly twice that of registered lawyers. Reportedly, in 2014, there are around 130,000 registered doctors, with perhaps 75,000 practicing. That makes it 1 doctor for every 1,333 citizens. Although, apparently, the medical profession thinks the optimum doctor-population ratio should be 1:100, which seems to mean that they’re aiming for almost 1 million more doctors!

Perhaps such is possible.

In 2015, there were 2,491 new doctors (a board passing rate of 85%). The year before, 2,218 (81% passing rate).

In 2016, we also had 2,245 new civil engineers (a board exam passing rate of 38%), 2,967 new accountants (43%), and 6,183 new nurses (44%).

Every year, the legal profession just has a little over a thousand new lawyers, with Bar exam passing rates meandering at 18-22% (the most recently released result, 2015, had a higher than normal rate of 26%).

Even looking at student numbers belie the myth of too many lawyers: for example, the 2013 University of the Philippines Statistics show that only 1.1% of its student population are law students, with science and engineering and social sciences accounting for 64%, arts and letters, 15.1%, and management 11.5%.

Now perhaps lawyers are disproportionately represented in high profile or influential positions vis-a-vis other professions or academic disciplines. But one can’t blame lawyers for that.

But it does lead to questions of why.

The Philippines gives too much prestige to lawyers? If true, why? The Philippines is too litigious? If so, why? Why do scientists, engineers, philosophers, etc. not exert a bigger influence in the country?

This article is emphatically not saying that the legal profession is better than others. The only point here is that to say we have too many lawyers is untrue.

In any event, if Filipinos really want to get rid of lawyers or make them irrelevant, then they should just stop lying, stealing, cheating, or hurting one another.

A multifaceted long view of China

my Trade Tripper column in the 10-11 September 2016 issue of BusinessWorld:

Disappointing, of course, was the previous administration’s act of arbitral initiation against China but not bothering to develop a coordinated diplomatic, media, political, and legal strategy in case of victory. Then and now, even without the benefit of hindsight, the case was a forgone conclusion considering the inherent strength of the Philippines’ legal position, an outcome all the more certain once the jurisdictional hurdles were overcome.

Even assuming a follow-through strategy was indeed formulated, since it was not presented to the Filipino people’s evaluation (or at least their elected representatives) then it just doesn’t exist.

There was effectively no preparation done beyond the short-term gratification of seeing China beaten. Realizing this, commentary following the victory was diverted to pointing out that the rule of law was upheld and of the ruling’s long-term significance to international law, whatever that means.

In the meantime, while the legality of the Philippine claim was indeed solidified (as if it needed more solidifying), China’s belligerent construction in the disputed islands remained unabated, reinforcing their possession of those areas.

At most, wishful thinking focused on the strategy (if one can call it that) of “name and shame”; or the hope that other countries would file similar arbitral cases; or (as a variation of the first two) that the ruling would soften China’s will, with ensuing popular support for the Philippines rendering China pliant.

Unfortunately, those desired scenarios are still searching for clear footing: both the Philippines and China (depending on which source one reads) substantially having equal quality of support.

But for the most significant area for the Philippines, South-east Asia, the level of support unfortunately remains ambiguous.

One reason is China’s continuing economic importance. In China’s Economic Ties with ASEAN (Association of Southeast Asian Nations) : A Country-by-Country Analysis (prepared by the staff of the US-China Economic and Security Review Commission, March 2015), the Philippines’ erstwhile adversary “consistently appears among the top five trade partners for ASEAN members.”

And China as a source of economic opportunity apparently seems far from being tapped out: “although its outbound direct investment has been rising rapidly, China is still marginal to ASEAN’s overall FDI (Foreign Direct Investment) receipts.” Still, “even allowing for the possibility that MOFCOM [Ministry of Commerce] may be undercounting actual flows (for example, by not factoring in investment originating in Hong Kong), the fact remains China is not yet a major investor in ASEAN.”

What is even more interesting is this: “the degree of dependence on China as a source of exports, imports, or both varies. Where wealthier ASEAN countries have a diverse set of trading partners, poorer ASEAN countries depend heavily on China, especially as a source of imports. Vietnam’s share of Chinese export and import flows with ASEAN has increased substantially, while Singapore’s share has dropped.”

Now that is worth pondering upon as it jives with other research seemingly revealing of Chinese thinking regarding foreign relationships and the response of other countries: “previous studies confirmed that only the rich natural resources and the weak institutions countries attracted China’s OFDI (Outward Foreign Direct Investment). However, we found out that, in recent years, not only weak institutions but also good institutions with rich natural resources countries attracted China’s OFDI.” (Chinese Outward Foreign Direct Investment: Is ASEAN a New Destination?, Nguyen Thi Tuong Anh and Doan Quang Hung, May 2016, SECO/WTI Academic Cooperation Project Working Paper Series, June 2016)

The Philippines generally hasn’t felt this down to the psychological because of the continuing level of comfort we have regarding our concentrated trade with Japan and the US, and considering that China’s FDI to the Philippines remains relatively conservative.

It’s also gratifying for those taking the more hawkish position that though “Philippine balance of trade with China deteriorated in 2013, going from a decade of surplus to a $1.6-billion deficit,” standing in stark contrast to “the country’s surplus with the Asia region as a whole,” such has not been apparently disastrous for the Philippines.

Nevertheless, even though the aforementioned 2015 paper acknowledges that the Philippines “is more important to China in the political than the economic realm” and that while “Chinese FDI in the Philippines totaled only $692 million in 2012... individual deals suggest far more investment is actually flowing into the country.” And furthermore, “the Philippines has actually made investments in mainland China. The investors include the snack food company Oishi, the San Miguel brewery, and real estate businesses like Ding Feng Real Estate Co., which specializes in mixed-use developments such as condominiums, shopping malls, and hotels.”

The key, commonsensically and strategically, now, today, at this present time, is to find common ground.

First step is to re-acknowledge that there are two decades worth of agreements that the Philippines entered into with China, covering the economic to military cooperation, which the last administration seems to have short-sightedly scrapped.

It’s also important for the two countries to tune out all nondiplomatic noise and allow each side to have the space to find a mutually beneficial solution in the future.

Making the Philippines right: some books on conservatism

was my Trade Tripper column in the 20-21 August 2016 issue of BusinessWorld:

An aspect of Philippine politics that needs maturing (there are many but let’s focus on one) is the need for competing political philosophies. The Left at least has been admirable (let’s grudgingly admit) for their consistency, effort, and determination in pushing for their beliefs. Confused and unworkable those beliefs may be. But it’s far better than the alternative, which practically does not exist. Or if it does, is an incoherent mishmash of religiosity and emotion.

It would be good then to have a streamlined Conservative thought serving as counterweight to the insanity prevailing in our politics.

Probably because of its name, “conservatism” (the different strands of which we’ll try discussing in future articles) seems static or merely interested in the status quo. Which is false. If there’s one thing conservatism truly stands for it is freedom -- personal freedom correctly understood.

Hopefully, the following books discussed here, mentioned in no particular order, help in spreading conservatism in the Philippines.

Admittedly, conservatives and liberals both want the same things; the difference is the means of achieving them. Conservatives work with reality.

As John Finnis (of the brilliant Natural Law and Natural Rights) points out in one occasion: “Reality is known in judgment, not in emotion. In reality, whatever the generous hopes and dreams and thoughts [will always have to give way to what is actually there].” For conservatives, as for Thoreau: “any truth is better than make-believe.”

For progressives, borrowing the words of Roger Scruton (from his book How to be a Conservative), unfortunately, the “fictions were far more persuasive than the facts, and more persuasive than both was the longing to be caught up in a mass movement of solidarity,” with the end that their “solutions” are actually but “dreams.”

You can tell if a writing is done by a conservative or liberal: the latter’s are mostly incomprehensible academic gibberish (Scruton describing it as when the “nonsense machine began to crank out its impenetrable sentences, of which nothing could be understood except that they all had ‘capitalism’ as their target”). And there’s a reason. Again, Scruton: “Intellectuals are naturally attracted by the idea of a planned society, in the belief that they will be in charge of it.”

The foregoing was from his magisterial Fools, Frauds and Firebrands: Thinkers of the New Left. His delicious eviscerations of left-wing thinkers like Lacan, Derrida, or Habermas alone make the book worth reading and rereading. Had he included targeting Rawls, this book would have been perfect.

Which is therefore one of the reasons why Robert George’s Conscience and its Enemies is necessary reading. Aside from critiquing Rawls (on the way to describing Finnis’s work), George makes a strong push for the traditional family institution:

“When my liberal colleagues in higher education say: ‘You guys shouldn’t be worried so much about these social issues, about abortion and marriage; you should be worrying about poverty,’ I say: ‘If you were genuinely worried about poverty, you would be joining us in rebuilding the marriage culture.’ Do you want to know why people are trapped in poverty in so many inner cities? The picture is complex, but undeniably a key element of it is the destruction of the family and the prevalence of out-of-wedlock pregnancies and fatherlessness.”

Another fundamental area differentiating conservatives from liberals is regarding truth. For conservatives, the seeking of truth is the raison d’être of education and knowledge. Liberals, generally, believe there are no absolutes, that truths are unprovable, relative, or inexistent. Hence, Scruton’s perfect response for students vis-à-vis their relativist professors: anyone “who says that there are no truths, or that all truth is ‘merely relative,’ is asking you not to believe him. So don’t.”

Speaking of truth, of course, no one beats Joseph Ratzinger: “The truth is not decided by popular opinion.”

For that matter, his Truth and Tolerance (though he himself would refuse the political label of “conservative”) is obligatory. To those proclaiming belief in God but not in religion, this is his response: “the concept of Christianity without religion is contradictory and illusory. Faith has to express itself as a religion and through religion.”

Which leads us to the great William F. Buckley, Jr. (God and Man at Yale): “I believe that the duel between Christianity and atheism is the most important in the world. I further believe that the struggle between individualism and collectivism is the same struggle reproduced on another level.”

And he was prophetic in 1959’s Up From Liberalism: “Liberals claim to want to give a hearing to other views, but then are shocked and offended to discover that there are other views.”

Ultimately, what makes a conservative (per Russel Kirk, A Conservative Mind) is intellectual humility -- that man cannot know, should never presume to know, all the answers; thus, the “belief in a transcendent order, or body of natural law, which rules society as well as conscience. Political problems, at bottom, are religious and moral problems.”

SUSI as key: random reflections on US political thought

my Trade Tripper column in the 13-14 August 2016 issue of BusinessWorld:

Just finished a US State Department sponsored “Study of US Institutions” (SUSI) program, with mine focusing on the Constitution and US Political Thought. The former was quite interesting for me, inasmuch as our constitutional system has inherent similarities with the US. But the latter was even more intriguing, considering the US (except perhaps for “pragmatism”) doesn’t really have an originally developed political thought.

Instead, what the US did was to adopt existing and emerging political philosophies and molded them as its own. And as an “experiment,” for even Americans today hold on to the belief that its country is an ongoing one, could only be honestly admitted as more successful than not. It’s a success we all should hope continues.

For the US was built not on racial or tribal lines but on an idea. Trite as it may seem (with Hollywood movies harping on it without necessarily understanding the implications), the notion that “all men are created equal” entitled to “life, liberty, and the pursuit of happiness” is fundamental. More on this later.

As with all good programs, SUSI encourages one learn more outside the classroom than in it. And it gave a human face to the international events one reads in the news. So I smile at the memory of this delightfully mischievous devout Muslim Algerian, a most optimistically elegant Thai, an enviously urbane Rwandan, and a passionately conservative Bulgarian.

But it was a Chilean lawyer who, like me, also works on natural law that I had one of my more personally cherished insights. One Sunday mass with him, I was struck that a person I’ve never met before, from a country thousands of miles from mine, with barely a word exchanged between us, would utter the same exact prayers, kneel when I kneel, stand when I stand. Some ridicule doctrines and rituals. But I found myself deeply moved knowing that when I intone “I believe ...” of the Creed or say the Lord’s prayer, I am joined by, actually uniting myself, with so many others, including those I have yet to meet, those long dead, and those yet to be born. From there, I dare say, we get a glimpse of the universality and timelessness of the Church.

If there’s at least one reason why Filipino Catholic bishops should unanimously insist in strict uniformity with Rome on the rubrics, it is that.

Sticking with religion: being consistently bludgeoned at home -- from media and the academe -- of the misleadingly Jeffersonian notion of “separation of Church and State,” one gets surprised at the underlying religiosity in the language of US politics.

Liberal Americans would deny this, of course. But from John Winthrop’s “city on the hill, which later Reagan would make “shining,” the Declaration of Independence’s “Laws of Nature and of Nature’s God,” to Lincoln’s “nation under God,” to today’s political speeches comes the point, as John Adams once remarked, that the US “Constitution was made only for a moral and religious people. It is wholly inadequate to the government of any other.”

By the way, to those who still insist that the US Constitution never mentioned God, the fact is that the same closes with the words: done “in the Year of our Lord one thousand seven hundred and Eighty seven.”

The unfortunate thing is that many US academics attempt to deny or ignore this, all in the name of political correctness or inclusivity. Or simple antipathy towards religion. But doing so creates particular problems, leaving the US political system looking strangely unmoored, without a coherent context, or like a product of unnecessary randomness.

In any event, speaking of the US Constitution, quite telling is that the oaths of public officers (specifically the US president), as well as for US naturalized citizens, contain the duty to “preserve, defend, and protect” -- not the United States but -- the US Constitution. It is an incredibly profound difference and something (considering the similarity of our oaths) many here miss.

For the US definitely has its faults. A fact the academics I met made a point of highlighting. Which was completely unnecessary. Only a socialist fool would expect utopia here on earth. For the US system (founded, amongst others, by Thomas Jefferson and current Broadway star Alexander Hamilton) never promised happiness for all but simply the right to pursue it.

That it carries out its promise admittedly imperfectly but still better than anyone is what anchors US exceptionalism. And the hypocrisy lies not with the US but those expressing hatred for it while desirous of its possibilities.

Space constraints compel me to leave other observations for future articles. For now, I exaltingly commend the Donahue Institute, led by Mike Hannahan and Lonce Bailey, for a superbly organized program. And quite specially the exhilaratingly wonderful Becky Howland, who I egregiously left out in my farewell speech but the one I gratefully will always remember as having led me, fittingly enough, to Walden Pond.

The damage of liberal elitism to the Philippines

my Trade Tripper column in this 6-7 August 2016 issue of BusinessWorld:

And I’m not talking about the wealthy oligarchy, a completely different topic altogether. No. Am focusing on this country’s so-called “intelligentsia,” of the academe and the professions, particularly of law (which I’m most familiar with), from those exclusive few universities convinced only they are entitled to influence others and make the decisions simply because (so they believe) they’re smarter than all of us.

Which is really annoying considering how utterly without basis their thinking is.

I remember one former Supreme Court justice pointedly (but quite correctly) telling a graduating central Manila law school class (and I’m paraphrasing here): “Be proud of yourselves, don’t be intimidated by the elite universities. Remember, at least your school hasn’t produced corrupt leaders, plunderers, and traitors that plague this country.”

So when I hear the self-congratulatory prattle of academics, lawyers, policy makers from those hallowed halls of learning, the humble bragging about their progressiveness (and they usually do describe themselves as “progressives” or “liberals”) supposedly making a difference to the country, I get baffled: have you seen the Philippines lately?

However, in fairness to the present administration, let’s agree it’s really too early days to tell how Bedans fair in governance. Full disclosure, I’m a Bedan.

In any event, beyond the corruption and mismanagement our intellectual class brought down upon us, the greater danger is the thought homogeny permeating our top schools.

This leads to two distressing consequences, both observable priorly from the United States, which we’re seemingly determined to copy.

The first is hostility to dissenting opinions: anyone with a conservative viewpoint will surely be labeled as “medieval,” “racist,” “bigoted,” or “uninformed.” And these occur in a range of topics: from sexual ethics to immigration to national security.

Thus, if you dare question the concept of “the other” (the latest buzzword favored by progressives), you are “xenophobic.”

If you ask about the merit of allowing transgenders their choice of restrooms, you are “bigoted.”

And God help you if you ever utter the word “God” in an “intellectual” conversation.

All this renders learning inutile.

As Nicholas Kristof (New York Times, “A Confession of Liberal Intolerance”, Nicholas Kristof, May 7, 2016) puts it, “the stakes involve not just fairness to conservatives or evangelical Christians, not just whether progressives will be true to their own values, not just the benefits that come from diversity (and diversity of thought is arguably among the most important kinds), but also the quality of education itself. When perspectives are unrepresented in discussions, when some kinds of thinkers aren’t at the table, classrooms become echo chambers rather than sounding boards -- and we all lose.”

Finally, we seem to be aping the US’ obsession (at least from the academic standpoint) with national guilt. In their case, it’s about race and slavery. In ours, the alleged historical baggage the Philippines has vis-à-vis the Bangsamoro concept.

There’s also the academic and social media “thought leaders” fashionable passion to seek out and help (again to use those words) “the other” (usually minority refugees), with nary a nod to national security or economic viability.

But intellectual elite actions also led to the (likely intended) consequence Janet Daley (The Telegraph; “The US elite abandoned the American dream -- Trump is the terrifying result”, March 12, 2016) decried as where “love of country is no longer instilled in the children of every generation as it once was.”

So with the Philippines.

Most of our so-called intelligentsia took post-graduate studies from foreign universities, many from the Ivy League, again usually “progressive,” and it’s interesting how naively oblivious they are about the damage the ideas coming from those schools wrought upon the rest of the world.

For example, the liberal freak-out over “Brexit”: “Over the past decade, elites broke the world, and were unrepentant about their failure. They created the conditions for the worst economic crisis in nearly a century, and made sure that their elite friends at the top would scoop up the post-crisis gains, stranding the vast majority of people. They decided their project of globalization and liberalization mattered more than democracy.” (The American Prospect, David Dayen, “Who’s to Blame for ‘Brexit?’ The Elites,” June 24, 2016)

Another: elites at the IMF fostering “groupthink and intellectual capture” resulted in unmindful cheerleading “for the euro project, ignored warning signs of impending crisis, and collectively failed to grasp an elemental concept of currency theory.” (The Telegraph, “IMF admits disastrous love affair with the euro and apologizes for the immolation of Greece,” July 29, 2016)

This article, make no mistake, is not a call against experts. Rather, it’s a plea for people to be accepting of dissenting ideas and to be more democratic in the sourcing of varying thoughts.

For the Philippines, certainly expanding the bench from where we get our analytical input could only be helpful.

We know that because our continued insistence in narrow intellectual sourcing from an exclusive set of families and schools has definitely not worked for the country.

Go south, grow Mindanao

my Trade Tripper column in this 26-27 June 2016 issue of BusinessWorld:

If ever there’s a set of numbers Filipinos should know it’s this: Mindanao -- blessed with so many resources that it provides 60% of our agricultural exports, not to mention minerals and fisheries -- has a land area of 135,627 km2 Singapore has only 719.1 km2, with practically no natural resource whatsoever. And yet, the latter beats the former on a GDP per capita basis of around 60:1.

Ironic, really.

Set aside agriculture, Mindanao also represents the Philippines’ biggest reserves in gold, copper, iron, and aluminum. Yet to be verified is Wikileaks claim of Mindanao’s untapped $1 trillion oil and mineral reserve.

There is also Mindanao’s strategic position, businesswise: unlike Luzon (separated from the Asian mainland by huge amounts of sea), Mindanao is practically next door neighbors with Indonesia and Timor-Leste, with Cambodia, Vietnam, Laos, Malaysia, and Thailand just further down, then New Guinea.

Which should therefore make every Filipino scandalized that 11 of the Philippines’ 20 poorest provinces are in Mindanao.

One reason is the woeful neglect in infrastructure, with Mindanao’s near daily power interruptions symptomatic of that.

But Mindanao should be the obvious choice for a marine transport system, what with trade and tourism opportunities that a fully functioning Brunei, Indonesia, Malaysia, and the Philippines East ASEAN Growth Area (BIMP-EAGA) and Indonesia, Malaysia, and Thailand Growth Triangle (IMT-GT) could bring.

That, on top of the vaunted 600 million market population of ASEAN integration.

The island also proved, so long as it can keep its peace and order situation to a reasonable minimum, its export growth rate capabilities could be double of the country’s.

As it stands, the World Bank declared Mindanao presently needing a continuous P350-billion inflow annually in investments, particularly for agriculture, infrastructure, health, and education.

Of infrastructure (aside from roads, irrigation, potable water, power generation, ports, and airports), focus should be on constructing more police stations and judicial offices.

Again, this should not be treated as a hurdle.

According to a McKinsey report, most infrastructure spending has been down particularly for developing countries. Yet, as the Wall Street Journal commentary on the report says: “Governments don’t have to be the only source of new money for projects, the report found. Worldwide, banks and institutional investors such as pension funds and university endowments have about $120 trillion in assets that could be invested in infrastructure. Making it easier to connect that money with projects could close the gap, Mr. Jan Mischke [a senior fellow at the McKinsey Global Institute and one of the report’s authors] said. ‘It’s really a fundamentally quite solvable problem.’”

Another opportunity area would be on international trade.

Interestingly, most of Mindanao’s current top trading partners are not its geographical neighbors: the US, Japan, China, Netherlands, South Korea, Singapore, Switzerland, United Kingdom, and Germany.

Here, the development of small and medium enterprises -- bolstered by easy credit and effective contract/property protection, as well as marginalizing the Armalite happy -- would be a big help.

According to the WTO: “Globally, SMEs make up over 95% of all firms, account for approximately 50% of value added and 60% of total employment. Micro enterprises, the smallest component of the SME sector, are increasingly the largest sources of employment in many developing countries, especially for women and youth.”

Unfortunately, SME’s are very much affected by trade barriers; hence the importance of arrangements like BIMP-EAGA, IMT-GT, and ASEAN.

Agriculture, while an obvious source of Mindanao’s pride, is actually illustrative of its present shortcoming.

Or its great potential.

The reason is that despite its stature, relatively speaking in terms of overall Philippine export trade, Mindanao agriculture is -- to exaggerate for effect -- actually quite pathetic.

This can be seen from Mindanao’s contribution to the country’s GDP: just meagerly above 14%, while desperately needing 12.7% of the nation’s budget (P380.9 billion) for its maintenance.

According to the World Bank, only 11% of its farmers can be considered producing for a marketable surplus, with 89% classifiable as “subsistence” (or “near subsistence”) farming.

Another is that most of Mindanao’s agriculture exports are in “raw” form. Which leaves the potential for value adding or processing, thus opening the possibility of greater income for its farmers.

“The value of farm products can be increased in endless ways: by cleaning and cooling, packaging, processing, distributing, cooking, combining, churning, culturing, grinding, hulling, extracting, drying, smoking, handcrafting, spinning, weaving, labeling, or packaging.” Accordingly, “value-added products can open new markets, create recognition for a farm, expand the market season.” (ATTRA, Adding Value To Farm Products, 2006).

Finally, there is taxation: there is no constitutional reason why Congress can’t make an income and corporate tax system allowing for special and differential treatment for Mindanao.

This should encourage more investments in the area and de-clog Luzon’s population of 50 million plus (in an area of just around 12,000 square kilometers more than Mindanao) vis-à-vis the latter’s 25 million.

Ultimately, whatever change comes to Mindanao could, should, and must be for the country’s unified good.

A conservative approach to anti-poverty

my Trade Tripper column in this 18-19 June 20 2016 issue of BusinessWorld:

The cause célèbre obviously is poverty. Or to be more specific: income inequality. Unfortunately, the solution célèbre is always to redistribute income. Done by way of ever increasing taxes, then spread through welfare entitlement programs, it has nevertheless proven to be consistently ineffective one wonders at the sanity of it.

Consider: last year “marked the 50th anniversary of Lyndon Johnson’s ‘War on Poverty’, which has been the centerpiece of liberal anti-poverty policies for the past half-century. In boasting of these policies, liberals often talk about the public funds that have been spent. And there’s no question that money has been spent.”

Since it began, the US government spent “$22 trillion (measured in 2012 dollars) to Johnson’s War on Poverty. After adjustments for inflation, this represents about three times more than what was spent on all military wars since the American Revolution. Inflation-adjusted government transfers for social welfare programs soared more than tenfold between 1964 and 2013. And yet, despite all this spending, the present poverty rate is about the same as it was in 1967. The poverty rate is the highest in a generation, and deep poverty is near record highs.” All clearly illustrating “the ineffectiveness of the current federal programs.” (Patrick Garry, “The ‘Right Deal’: the Conservative Anti-Poverty Approach,” January 2015)

In the Philippines, the same scenario: the Conditional Cash Transfer program already spent around P300 billion before the further P64 billion allotted in the current national budget, and the World Bank recently approving a $450-million loan to be applied from 2016-2019. The foregoing continuing to bloat our budget from its present P3 trillion, which naturally has to be supported from taxes collected from employed Filipinos.

And yet: poverty remains above 25% (with 51% of Filipinos rating themselves “poor”). Meanwhile, the Ibon Foundation declares the Philippines as having “the worst unemployment in Asia,” those out of work up 6.1% (April 2016), underemployment at 18.4%, with around 1 million young Filipinos jobless (a rate double that of national unemployment).

The outgoing administration unfortunately has got it in the reverse: underspending on things that should be spent on (i.e., infrastructure, education, the military), while throwing money around welfare-wise.

It’s a disincentive for people to job hunt or better themselves. It induces taking the easy way out whenever a problem occurs.

Many welfare programs are also unjust: rewarding those exerting minimal intelligent effort, while ignoring those that decently strove to have a high school or college education or started their own business.

Even at the international level, to give aid without demanding commensurate effort is now recognized as dodgy.

As The Economist (“Misplaced charity,” 11 June 2016) reported: “By almost all of these measures, foreign aid is failing. It is as co-ordinated as a demolition derby. Much goes neither to poor people nor to well-run countries, and on some measures the targeting is getting worse. Donors try to reward decent regimes and punish bad ones, but their efforts are undermined by other countries and by their own impatience. It is extraordinary that so many clever, well-intentioned people have made such a mess.”

No. As The Economist rightly concluded: “aid is best spent in poor, well-governed countries.” The same goes for people.

This column recommends a shift in the way we approach poverty, emphasizing democracy, freedom, and -- most importantly -- personal accountability.

Accordingly, any poverty program implemented must have correct, objective, practical measures, and objectives.

It simply won’t do to provide assistance to those pleading poverty, claiming scarcity of work and savings, and yet possessing a flat-screen TV and indulging in videoke and selfied weekly drinking sessions.

Our anti-poverty program must demand eventual work (particularly those of employable age), cash dole-outs must have clearly defined and short cut-off periods, tax structures must not penalize married couples for having children (but at the same time not rewarding irresponsible child-bearing), parental liability for truants, greater credit facilities and tax benefits for those with a reliable work history (or business, particularly SME’s), and more tax incentives for private charitable organizations.

No across the board tax exemption should be given to any social class. Simply because no one respects anything they have no actual stake in. Reasonable tax rates, with highly simplified collection procedures (and periods) must be applied for those in the bottom rung of society.

The foregoing must be coupled with the stoppage of the inflow of illegal aliens, more effective property protection, and harsher sanctions for repeat criminal offenders.

Finally, federalism or not, the welfare program must be made the responsibility of local government units.

A corresponding proportional contribution may be made by the national government but only with the up-front budgetary layout primarily taken from the local government unit’s earnings. This would place greater emphasis for local government units to generate revenue, while encouraging fiscal restraint. Clearly, this will also mean that the bulk of the income they earn should remain in their hands.

Bottom line: our anti-poverty programs should focus on equalizing opportunities, not entitlement.

Our China policy: separating movies from reality

my Trade Tripper column in the 11-12 June 2016 issue of BusinessWorld:

An interesting phenomena common enough in politics is the difficulty people have with differentiating reality from wishful thinking. True and without fault, everyone would like the world to be something better. But it is one thing to work towards an objective, and another mistaking a hoped for ideal as the present state and then proceeding as if the illusion were true.

The same goes for foreign policy.

Because no matter how developed our talent for imagination may be, we simply do not have the capability and resources, including military strength necessary, to back up our declared policy objectives.

Our aerial territory is open to any foreign plane whizzing by (detected or not), the waters we claim are plugged with enough holes that to declare archipelagic sea-lanes is almost comical, and our official borders are so dysfunctional that drugs, other contraband, and even illegal aliens can go in and out at will.

These are some of the parameters hedging the Philippines in when dealing with China, which the US military recently described (US Department of Defense, Military and Security Developments Involving the People’s Republic of China 2016) as having improved: “its ability to fight short-duration, high-intensity regional conflicts at greater distances from the Chinese mainland.”

Furthermore, “China demonstrated a willingness to tolerate higher levels of tension in the pursuit of its interests, especially in pursuit of its territorial claims in the East and South China Sea.”

Unfortunately, the excessively belligerent attitude (frankly, by all sides) raised the possibility of armed conflict all too sadly real.

The US Council for Foreign Relations (Contingency Planning Memorandum No. 14, April 2015) thus warns of a possible “conflict between China and the Philippines over natural gas deposits, especially in the disputed area of Reed Bank, located eighty nautical miles from Palawan. Oil survey ships operating in Reed Bank under contract have increasingly been harassed by Chinese vessels. Reportedly, the United Kingdom-based Forum Energy plans to start drilling for gas in Reed Bank this year, which could provoke an aggressive Chinese response. Forum Energy is only one of fifteen exploration contracts that Manila intends to offer over the next few years for offshore exploration near Palawan Island. Reed Bank is a red line for the Philippines, so this contingency could quickly escalate to violence if China intervened to halt the drilling.”

Simply put, “the United States could be drawn into a China-Philippines conflict because of its 1951 Mutual Defense Treaty with the Philippines.”

Publicly, the US has been declaring repeatedly its refusal to take any side in the ongoing territorial dispute in the region.

Couple that with the US Defense Department’s recognition that “China still seeks to avoid direct and explicit conflict with the United States.”

Unfortunately, not many in the Philippines are taking the hint regarding this, a foolishness ironically forcing everybody’s hand in the matter.

So, despite the US’ utter good sense, perception-wise its “failure to respond would not only set back US relations with the Philippines but would also potentially undermine US credibility in the region with its allies and partners more broadly. A US decision to dispatch naval ships to the area, however, would risk a US-China naval confrontation.”

A quite key consideration is that China’s ambition to be the respected primary world leader hinges on possessing secure economic dominance. Which, had there been no problems, needed a half century more of peaceful co-existence with other countries.

Note that trade in the West Philippine Sea/South China Sea region is almost $6 trillion, nearly a fifth of that generated by the US.

Certainly, the Philippines may have its allies, particularly in trumpeting the virtues of the “rule of law.” But also do remember that our ASEAN partners, as well as Japan and South Korea, are getting closer to economic dependence on China than they have ever been before.

Unfortunately, China’s economy is suspected of being on the back heel.

The Economist (The Coming Debt Bust, 7 May 2016) pointing out that “the country’s debt has increased just as quickly over the past two years as in the two years after the 2008 crunch. Its debt-to-GDP ratio has soared from 150% to nearly 260% over a decade, the kind of surge that is usually followed by a financial bust or an abrupt slowdown. China will not be an exception to that rule.”

So to put it mildly: the possibility of China’s dreams being dashed because of an economic cock-up could motivate the latter to induce everybody into a scenario that no sane country could want.

All the more if a country (i.e., the Philippines) is nowhere near physical and mental readiness for it.

What’s interesting about the foregoing is that you can be sure both China and the US know this. And you can also be sure that both countries know there is a one in four chance things could go deadly wrong.

Gratifyingly, the incoming administration seems to know it as well.

For a Philippine policy of greater international trade

my Trade Tripper column in this 4-5 June 2016 issue of BusinessWorld:

In news that quite likely caused the Left to undergo gleeful paroxysms (rather than their usual outraged convulsions), the IMF was said to report (via a paper, “Neoliberalism: Oversold” by Jonathan Ostry, Prakash Loungani, and Davide Furceri; June 2016) that “instead of delivering growth, some neoliberal policies have increased inequality, in turn jeopardizing durable expansion.”

At a time when socialist and “progressive” ideas are poised to dominate the world, for the IMF -- which the British newspaper The Independent labeled as “one of the key international proponents” of neoliberalism -- to admit the foregoing seems to have put the proverbial final nail upon the hated free market.

However, closer study reveals the IMF’s verdict as narrower than publicized. The “assessment of the [neoliberal] agenda is confined to the effects of two policies: removing restrictions on the movement of capital across a country’s borders (so-called capital account liberalization); and fiscal consolidation, sometimes called ‘austerity,’ which is shorthand for policies to reduce fiscal deficits and debt levels.”

To emphasize: the point being made very clearly here is that at a time when protectionism is being lauded, international trade was not the actual target of the IMF’s confessional.

This is important because with a new Philippine government set to come in, the temptation to reverse policies on trade liberalization will predictably be there.

This amidst the bizarre politics within the very country everyone is looking for leadership in relation to trade and that is the United States. As described by Daniel Ikenson (“Trade on Trial, Again”; June 2016), its thinking on trade seems to have taken a turn to the surrealistically unfortunate:

“To cheering crowds, Donald Trump promises to slap duties on imports from China and Mexico and to use the tax code to punish US companies that outsource parts of their operations abroad. Bernie Sanders vows to tear up NAFTA and other free trade agreements, calling them ‘a disaster for American workers.’ Hillary Clinton, a co-architect of the Trans-Pacific Partnership trade agreement (TPP), now opposes that deal, while promising to disregard certain US treaty obligations with China.”

Nevertheless, if Filipino demagogues against trade are correct, then they should be very happy right now.

Philippine trade performance so far has been dismal: preliminary figures as of March, our exports went down by 4.5% (to $4.61 billion), while our imports went up by a whopping 11.71 or $6.36 billion. This represents a trade deficit of $7.1 billion.

The foregoing within the context of final trade figures for 2015 of $58.83 billion, with imports at $71.07 billion, resulting in a trade imbalance of $12.24 billion. That amidst a foreign direct investment performance averaging for the past five years (ending 2015) at P41129.66 million.

Most of our imports come from Japan: $12.4 billion (21.1% of total Filipino exports), United States: $8.8 billion (15%), China: $6.4 billion (10.9%), Hong Kong: $6.2 billion (10.6%), and Singapore: $3.6 billion (6.2%).

Top export partners (using the 1st semester of 2015 as basis) are Japan (at top spot), followed by China, US, Singapore, and Hong Kong.

The problem here is that our trade -- both in terms of goods and identity of our partners -- is narrow in breadth, with 82.7% of our exports revolving merely around ten product groups, while our trading partners list is dominated by Asian countries (the latter accounting for 60% of our total trade). APEC itself constitutes 80%. On the other hand, trade with the EU hovers merely around 11%. And business with Australia and New Zealand leaves a lot of room for improvement.

But we know the protectionist lobby (i.e., the Left backed up ironically by the oligarchs) by railing against trade merely ensures the continued poverty of 51% of Filipinos (who think themselves poor), 26 million Filipinos (that are actually below the poverty line), and at least 12 million of our citizens (sadly living in “extreme poverty”).

The problem, as Ikenson himself admits, is that “the case for free trade is not obvious. The benefits of trade are dispersed and accrue over time, while the adjustment costs tend to be concentrated and immediate. To synthesize Schumpeter and Bastiat, the ‘destruction’ caused by trade is ‘seen,’ while the ‘creation’ of its benefits goes ‘unseen.’”

Indeed, trade, whether in the form of exports (whose benefits should be obvious) or imports (which “deliver more competition, greater variety, lower prices, better quality, and new incentives for innovation”) can only be good for a still economically developing country like the Philippines.

Global inequality there may be, along with domestic inequalities. But such could certainly be mitigated by rising incomes: poorer countries that traded saw per individual incomes rise 3.6% higher than closed economies; and Jeffrey Sachs and Andrew Warner (1995) found that poor countries with more open trade grew six times faster than those resorting to protectionism.

In sum, the incoming Duterte administration would certainly do well to continue the trade liberalization policies that have helped sustain our drive for economic progress.