 |
 |
| ON THE OTHER HAND |
| The Anatomy of Failure By Antonio C. Abaya Written on Nov. 13, 2005 For the Standard Today, November 15 issue In my previous article, �The Failure of Revolution,� I had argued that our economic malaise started with the enactment of the Minimum Wage Law in the late 1950s, which made us less attractive to American companies in the 1960s when they started to move their manufacturing facilities to the Far East. This was followed by our failure to jump aboard the Export Express in the 1970s with South Korea, Taiwan, Hong Kong and Singapore, and in the 1980s with Malaysia, Thailand and Indonesia. It was not until the 1990s that this country, under President Ramos, began to look seriously into the export of manufactured goods. But by then, it was too late: the global marketplace was becoming over-crowded, especially with the entry of the People�s Republic of China. It was the communist movement that actively and consistently opposed an export-oriented economy. Communist ideologues Renato �Tato� Constantino Sr. (a business partner of mine for seven years) and Edberto Villegas (then head of IBON Data Bank, a communist propaganda outfit) argued that production should be geared only for the domestic market, and only the surplus, if any, exported; and that we should not make our economy hostage to the whims and caprices of foreign markets. Sentiments that were dutifully parroted by their media ally, the all-knowing Inquirer columnist Conrado de Quiros, with his vast knowledge of economics. Tato was a staunch admirer of the juiche or �self-reliance� policy of the Hermit Kingdom of North Korea, which believed in producing everything it needs at home � including imitation Mercedes Benz limousines for its ruling elite � and exporting virtually nothing. Villegas� IBON Data Files in the late 1980s proposed that the Philippines �look at North Korea� as a model economy. North Korea was at that time training NPA assassins. (In 2003, while South Korea earned a staggering $201.3 billion in exports, North Korea, true to its juiche ideal, exported only an estimated $1 billion worth, while its starving people were reduced to eating grass and tree bark, supplemented with food aid from South Korea, Japan and the evil USA, which it extorted through nuclear blackmail.) Communist ideologues Walden Bello and Horacio Morales � who have since re-invented themselves as social democrats kuno � co-authored a book in the late 1980s arguing that an export-oriented economy was not a good model for the Philippines because export winners Taiwan and South Korea were experiencing environmental and labor problems, respectively. As if, naman, export loser Philippines was not experiencing the same. But the opinions of intellectuals mattered little on the ground. It was the militancy of the communist KMU labor unions that crippled the Philippines� initial feeble attempts at an export economy. Strike after strike by the KMU ravaged the Bataan Export Processing Zone until the locators just gave up and moved their factories to elsewhere in Asia.. And not just factories in the EPZ. Labor-intensive garment factories elsewhere, the mainstay of this country�s export trade then, were also hit by KMU strikes, resulting in factory closures and the loss of tens of thousands of jobs. And not just garment factories. Foreign-owned companies were also targeted by the KMU in line with the xenophobia of communist ideologues. The Swiss food-and-dairy giant Nestle, which was already paying its janitors P6,000 a month when the statutory minimum wage amounted to only P2,000, was hit by a prolonged and vicious KMU strike, an apparent bid to discourage foreign investors from investing here, which certainly succeeded. Failure to build an export-oriented economy during the export boom in the 1970s and 1980s was the biggest single economic reason for our economic failure. But there were others. We also failed to take advantage of the tourism boom in the 1990s, as I wrote in my article �Why Are We Poor?� I was in Bangkok the other week. The place is swarming with foreign tourists, even after the tsunami of December 2004. This year, the Thais expect 13 million tourists to visit their country. Malaysia and Singapore are drawing in the same number. The Philippines is drawing in only 2.5 million.. In 1991, the Philippines and Indonesia drew almost exactly the same number of tourists: one million. Since then, Indonesia has gone on to attract six million a year, despite two bombings in Bali. We�re still struggling with 2.5 million. We seem to be afflicted with collective BO, as millions of tourists avoid visiting our country. The reasons are obvious enough: political instability, rampant criminality, negative media headlines, military coup attempts, communist insurgency, kidnappings and bombings by Muslim separatists. But, as I wrote in �Why Are We Poor?,� the major reason for our failure in tourism is our abysmally poor marketing efforts, if they exist at all, as anyone who watches CNN or BBC can tell. One views marketing campaigns to promote Malaysia Truly Asia, Amazing Thailand, Incredible India, Indonesia Land of Smiles, Singapore as endorsed and praised by prominent people, Macao: the Difference is Macao, Taiwan Ilha Formosa, Hong Kong and Disneyland, even Maldives the Sunny Side of Life, even Go Go Goa (Goa being a small, former Portuguese enclave in India)�.but absolutely nothing on the Philippines. Our �Wow, Philippines!� campaign was withdrawn after I panned it in my article �Wow, Philippines!� (July 08 2004) as lifeless, uninteresting, amateurish and unlikely to attract many visitors. Nothing has been prepared to replace it. Our tourism people should examine Malaysia Truly Asia and Incredible India as the epitomes of successful TV tourism campaigns: colorful photography, infectious background music, creative editing, and living people either enjoying themselves or showing off their distinct cultures. Not a bird�s eye view of a DESERTED beach, which was the anchor image of Wow, Philippines! Having been crippled, investment-wise, by a minimum wage law in the 1960s; having failed to get on board the export bus in the 1970s and 1980s due, in large part, to the agitprop activities of the communist movement; having failed to attract the millions of tourists who were/are already in the region during the tourism boom of the 1990s and the present decade; the Philippines could not generate the millions of industrial and tourism-related jobs that would have lifted our people from poverty, as in fact they did in South Korea, Taiwan, Hong Kong, Singapore, Malaysia, Thailand and Indonesia. And to make matters worse, if they could be made any worse, from the 1990s on, the Philippines foolishly embraced not just free trade and globalization, but an ACCELERATED free trade and globalization, under the na�ve leadership of then President Fidel Ramos and then Senator Gloria Arroyo, influenced by economists Jesus Estanislao and Bernardo Villegas of the Opus Dei. Under free trade and globalization, many of the multinational corporations with manufacturing facilities here moved their factories to other countries (with cheaper electricity, with no communist unions to hassle them), content with just importing and marketing their products here, thus shedding tens of thousands of Filipino jobs More importantly, our nascent import-substitution industries, which would have been fortified for global competition by an export-oriented policy, were forced to compete bare-ass with a flood of imported products, in many cases cheaper and better than ours, and many of them have had to close down or retrench, resulting in the loss of hundreds of thousands of Filipino jobs. The same is happening to our agriculture as competing products from China and elsewhere � rice, sugar, vegetables, fruits, fish, chicken, pork, etc � enter our domestic market with impunity and illegally compete with domestic producers, resulting in job losses among our agricultural workers.. So, to get back to Mr. Anno�s challenge to me to explain why a communist insurgency persists in this country, an analysis of our economic failure reveals that our failures were largely self-inflicted, with the biggest failure � the failure to build an export-oriented economy � directly traceable and attributable to the agitprop activities of Mr. Anno�s own comrades in the communist movement. If we only had even only half the $201.3 billion export earnings of South Korea in 2003, instead of the paltry $34.6 billion that we actually earned, our pool of unemployed and underemployed would be much smaller than it is now, and the communist insurgency would long have sputtered out into the sunset. Again, if we only drew in even only half the 13 million tourists that Thailand attracts, instead of the 2.5 million that we actually do, our economic situation would be much better than it is now, and the communist insurgency would likewise have died a natural death. These are the economic reasons for our economic failure. As I wrote in the previous article, there are also political and social reasons for it. And these I will tackle in the next article. ***** (To be continued) Reactions to [email protected] or fax 824-7642. Other articles in www.tapatt.org NOTE. We are in the process of improving our electronic distribution system. If you wish to continue receiving the articles of Columnist Tony C. Abaya, as well as readers� reactions to them, you are invited to join the tapatt yahoogroup at http://groups.yahoo.com/group/tapatt/ OOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO Reactions to �The Anatomy of Failure� Mr. Abaya, Someone forwarded Peter Wallace's letter to Gloria. In it he recognized that Gloria was right when she pointed out that employment was up. Well and good! Here�s my take on that: There�s virtually no increase in employment but there sure is a lot of deployment! Also, according to Wallace, Gloria boasted of �airports jumping� (whatever that is). But of course! With an average of 80,000 workers deployed by DOLE every month - airports are bound to jump with would-be foreign laborers flying around! And this figure was confirmed by DOLE in a news release with the Manila Bulletin (main news in today�s issue) saying that the DOLE reports 800,000 Filipino workers were deployed overseas in 10 months. I don�t know whether I should be angry, happy, sad, disappointed (or whatever) about this DOLE report. To me, this DOLE news release has officially (dare I say legally?) confirmed that Gloria and her government has institutionalized human trafficking of Filipinos! What a shock! The crime of human trafficking is punishable anywhere in the world with imprisonment! The news does not include people who have 'escaped' the DOLE registry so the figure quoted by DOLE should be increased! A good guess is that close to 1,000,000 Pinoys (and Pinays) left the country from January to October 2005 in search of green (not greener) pastures. Imagine close to 100,000 Filipinos/Filipinas leaving monthly to escape the prospect of living a morbid existence of dire poverty? And think of the dues, travel taxes, bribe money and other fees that these departing Pinoys/Pinays generate for Gloria Macapagal-Arroyo's government coffers even before they are allowed to join the queue of people at Philippine airports out to do virtual forced labor for Gloria's Philippines! Think of the millions of pesos that those DOLE�s deployed workers overseas alone must be making for the government "syndicates.� There�s no other way to look at it but that this human trafficking syndicate/racket is sure making a mountain of mint for the government "syndicate". Like it or not, DOLE has just finally, most officially CONFIRMED Gloria Macapagal-Arroyo�s government has institutionalized or legalized human trafficking! So why doesn�t anybody in the Philippines tackle human trafficking seriously and take Gloria Macapagal Arroyo to task? Doesn�t anyone in the country know that human trafficking is an international crime? Anna de Brux, [email protected] Belgium, November 16, 2005 wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww Dear Mr. Abaya, There's another thing we should be doing- but are not, because the government/politicians are afraid of these people who cling to an ideology that has been abandoned by the rest of the world. Our Labor Code is antiquated , was formulated for the 1970's workplace and no longer reflects current realities. If you talk to Filipino regional HR executives, they will tell you how difficult it is to explain some of our provisions to managements overseas and how these are oftentimes deterrents to employment. I hope we can build an atmosphere where rational discussion can take the place of knee jerk reactions and sloganeering. If people (like you and Winnie Monsod, who I think shares your views) conducted an honest-to- goodness debate with the commies, I do not see how they can win. But they are good in agitprop and are given far too much time and space in media than they deserve. It is a good thing though that there are reasonable segments of the labor force. I hopeful however that through intelligent and careful presentation of facts and arguments, we can convince the other groups that we all need to work together for a better Philippines. Do you think I am being too optimistic? Grace Abella-Zeta, [email protected] November 16, 2005 wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww Dear Tony, I have been following the "festering" problems of my Philippines through your fascinating articles on political ineptitude and, this day, through your excellent article on the incompetent handling of the Filipino economy. While it doesn't make me feel good after all these years, I at least feel closer. Thanks for opening my eyes! What gives with that accumulation of brain power out there? You'd think that with the somewhat homogenous population, some real solutions can be found and take root, that corruption can be reduced (although I doubt ever eliminated), and the nation can finally assume a deserved and what should be a useful, productive place in the ongoing development world. You have stirred my imagination. At least on the economic side, why hasn't an Economic Brain Conference been convened to take a harsh look at the failures over the years and to create a ten year program without political partisanship to address the country's ills in the context of the changing world we live in? Or is that asking too much? But then, who am I to talk from the growing mess of Bushland? Love to you all, Alan Klaum, [email protected] San Francisco, CA, November 16, 2005 MY REPLY. You ARE asking too much. Ten economists from any ten countries would likely disagree on what GNP means. What more, ten FILIPINO economists. That�s why Economics is known as an inexact science, as well as a dismal science. wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww Dear Mr. Abaya (God for short) (So why are you not groveling/? ACA) A writer put it so succinctly - Give up your soverignty or vigourously reasser it. Oh my goodness if you were not careful you would be accused of being a clone of Joe Macarthy. The Red's did it . Whew! (I gave four economic reasons for our economic failure but attributed only one of the four to the agitprop activities of the communist movement. You obviously missed that. (If that is McCarthyism to you, that�s your problem. To me it is nothing but insisting on Truth in Advertising. The communist movement is very vociferous about what is wrong with this economy, but they are deliberately evasive about what they want in its place. (I at least have pinned them down on what their model economy is: North Korea, one of the most extreme mercantilist economy in history and one of the biggest losers today. Or is North Korea also your model economy? ACA) I will not get into the argument you raised about high minimum wages which is really a non-starter if you understand nominal and real wages and why there is such a gap in real and nominal wages in the Philippine scene. None of the people you mentioned unfortunately have had their hands on the reins of power most especially the fiscal and monetary policies of this country. Inflation is always a monetary phenomenon and guess who has a handle on that lever? Ever since Keynes gave governments the idea of printing money the world has never been the same since. That would explain the concept of real wage. By the way the guy who first postulated that labor value of determining prices was not Marx but our favorite father of free trade and free markets Adam Smith. It was he who clearly defined the concept of nominal and real wage. I strongly suggest you bone up on it. Now onto your other doctrines. You write with absolute certainty as to why the country is in deep manure. You must be a God as only God knows for certain why things are such. (Does this mean no one should have a strong opinion on anything, except when it agrees with yours? You seem so certain as to why things are such, so you must be God yourself, by your standards. ACA) However a clear reading of texts on the hisory of the different models of economic development reveal a very startling fact. Trade and capital market liberalization and are caused by economic development and not the strategic causes of economic development. All countries that have developed all used the strategy of managed trade and manged capital flows as part of their strategy to develop. Porter who wrote the book on the competitiveness of nations said that before you can even think of going global you must have achieved a mature and developed agro-industrial domestic market base. (I am also in favor of managed trade, as opposed to free trade. But I disagree that a mature and developed agro-industrial domestic market base is necessary before going global. Malaysia, Thailand and Indonesia were not more mature than the Philippines in the 1970s, but they managed to carve niches for themselves in the global marketplace. ACA) The two countries that are now joining the ranks of the world economy India and China all used the protectionist model and are still the most protected economies in the world. Yet they are charging ahead and challenging the mature economies of the world in the world trading arena. (Bully for China and India. Bully also for Japan, South Korea, Taiwan, Malaysia etc, which built up their industrial (and agricultural) base under protectionist regimes. Only the other day, South Korean farmers were rioting in protest against moves to increase imports of (cheaper) rice. Free Trade, like Communism, is a theoretical ideal that does not exist in reality. ACA) The Philippines which even the World Bank considers a part of Latin America have been following the sap programs of the Breton Woods twins and the results are clearly apparent that even ideologues of the neo-classical frame of economics have admitted that the Asain miracle had all the earmarks of the models used by the mature industrializing economies when they started on the road to industrial capitalism. Please note the following from mainstream neo-classical economists : (Exactly. The Asian miracles did follow the path of development of the mature economies when they were just starting: protectionism, to protect their nascent industries from foreign competition. (I also agree that the Philippines has more in common with Latin America than with Asia. In the 1960s, my good friend from the Mexican Embassy, the late historian Rafael Bernal, was of the opinion that the Philippine Revolution of 1896 was not so much the first Asian revolution as it was the last Latin American revolution. ACA) "As governments ponder these alternatives, they would do well to consider the following astonishing fact: Despite the tremendous wave of neoliberal reform that swept over the continent during the last two decades, only three economies in Latin America managed in the 1990s to outdo the performance they had experienced under the inward-looking, populist policies of the past. Chile remains a success, in part because it has taken a cooler attitude towards capital inflows than the others. Uruguay looks shaky and is hardly an inspiring example in any case because its growth rate has been anemic. And Argentina now lies in ruins. Its collapse reminds developing nations in Latin America and elsewhere that they cannot postpone much longer the stark choice they face. Either they will sacrifice sovereignty in a big way, or they will reassert it vigorously." Dani Rodrik is professor of international political economy at the John F. Kennedy School of Government at Harvard University. "In our assessment, the usual identification of protectionism and various forms of economic inefficiency as the primary causes for the absence of sustained growth in the Philippines is wrong. We believe that the correct way to view the Philippine economic history is through the prism of the three-gap model (savings gap, foreign-exchange gap, and fiscal gap). The fundamental problem in Philippine development is its anemic domestic private investment and low savings rate, which makes the economy overly dependent on the inherently unstable flow of foreign capital. The tragedy is that whenever foreign capital inflow drops, the government of the day invariably implements orthodox IMF-style structural adjustment policies to handle the resulting balance of payments difficulties. The brunt of the tight credit policy is borne chiefly by the domestically anchored industriable tradable sector, hence preventing any sustained expansion of export-oriented enterporises and import competing enterprises. The accompanying trade liberalization has an immediate negative impact on the sheltered import-competing industires and hence stops them from maturing into competitive industries. If the decline in output from the credit contraction and trade liberalization were to deepen the pessimism of the foreign fund managers, then capital inflow would decrease further. If this prompts a bigger dosage of the IMF medicine, output would decline further." U.P. economist Joseph Lim and Manuel F. Montes ."The very individuals, who precisely because of their fiduciary obligations and standing as custodians of public savings should serve as models of propriety and transparent governance, turn out to be the same people, who have for as long as this country's financial history is concerned, become accomplices in the large-scale predatory looting of the treasury and the monetary institutions" Business World July 1998 It would seem that the guys who you dismissed as communists have had it more right than wrong all along. Please do not take it to the extremes of bringing in examples of North Korea.. (Why not? They, not I, specifically chose it. And I did not �dismiss� them as communists. Constantino was a member of the Politburo of the Partido Komunista ng Pilipinas. Morales was co-founder of the National Democratic Front, the political arm of the Communist Party of the Philippines. What can be more communist than that? ACA) Please look at the examples of all of Latin America and all of Africa when you speak of the free market model. The import susbtitution models have been proven to be more beneficial to all these countries. Unfortunately it was not sustained. (But that�s the same thing. How can import substitution now be sustained under the relentless pressure for free trade and globalization? Besides, import substitution should lead to manufacturing for exports to achieve economies of scale, increase job opportunities, raise additional tax revenues, etc. If South Korea had stopped at import substitution, it would probably be earning only $1 billion a year in export earnings, like North Korea., instead of the $201.3 billion it actually does. They would both be dirt poor. ACA) The history of the Breton Woods twins themselves has been a one of notoriety that even the U. S. Congress organized a commission that recommended it's closure or disappearance from the scene. The U.S. treasury practically said that it was the cheapest and most effcient way of taking over countries without invading. (Could not have been said better. ACA.) My final question to Mr. Abaya is , you seem to be like the Gods of the Old Testament, you should get out into the real world sometimes and smell the roses. Other that or you would waste away. It is a shame. (And you, Mr. Vaswani, are insufferably arrogant to presume that, just because I disagree strongly with your communists, I agree with their polar opposites, the globalists. I am looking for the middle ground trail-blazed by Mahathir of Malaysia, under no illusions, as you apparently still are, that the communists represent the wave of the future. (In case you haven�t heard, Marxism-Leninism, a.k.a. Communism, has been abandoned in Europe and Russia, and China and Vietnam are now fascist-capitalist countries. Cuba and North Korea will soon likely follow when Fidel and Kim go to the socialist heaven. (When that happens, what will you and your comrades have left? A theoretical ideal totally detached from reality. (You have stated your position, I have stated mine. I consider this matter now closed. ACA) R. Hiro Vaswani, [email protected] November 16, 2005 wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww Dear Mr. Abaya, I believe you. You have the same analysis as my late husband, who had a Masters in Economics at Lehigh University. He was also a "Kabataang Makabayan" during those days.... I have heard these stories before. I hope you keep going....we need the education. Thank you and best regards, Mary Ann Rodriguez , [email protected] November 16, 2005 wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww Hi Tony, Just a reaction to your column. The tourism attraction of Thailand and the Philippines are different for many reasons, but chief among them is an unguided community consensus that we do not want to actively develop a sex industry as the Thais have. In the Metro Manila area, mayors like Fred Lim, Mel Mathay, and Jojo Binay to name a few, actively discouraged too many girlie bars and prostitution joints. Yes, those exist now, but not like they have in our erstwhile twin country. I would hazard a guess that there is as much sex activity attraction there is in Thailand as regular tourism activity. If so, let�s cut our comparison and ambition to say 6 to 7 million tourists instead of 13 million. And, as you know, Thailand may have as many as 1 million HIV disease (and other) infected individuals. What a price to pay! It�s as if we duplicated Angeles City (in its heyday) all over the Philippines. Yes, there are some things we don�t want at all cost. Joey Yujuico, [email protected] November 16, 2005 MY REPLY. Point well taken. I should have wished for �half the 13 million tourists that Singapore and Malaysia attract.� Thank you for pointing that out. wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww Oh, oh, Bushy Boy has just expressed the Chinese of choice. The non-communist kind. Which methinks Mr. Anno should consider choosing. I mean, what is this guy thinking? Communism is obsolete. Cuba's Fidel wants to retire in Miami. The North Koreans have turned into goats. And China? Wowow wang! It�s going to wake up one day to have to resolve the great conflict in ideology. Ano ba talaga, kuya? Communism or Capitalism? How come some comrades are richer than others? And they all seem to belong to that frat they call the "Politburo" Whoa! Why are they the only ones that can drive the Ferrarris that were meant to be copied and made the People's Car. "Where do I sign up to join the frat?" asks the innocent, Tiananmen-Square-strolling, family-in-tow ordinary comrade. "Can I expect delivery of my Ferrarri anytime soon?", he added naively. "You sure can" said the serious looking Red Guard in charge of the Peoples' Vehicles Assignment Division. "Just fall on line, you're number 1,355,896,981." Rafael Santos II, [email protected] Roxas City, November 16, 2005 wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww Dear Mr. Abaya, I have been, for several months now, receiving copies of your email messages. I am glad you have included me in your mailing list. I agree with you that the main reasons why tourists avoid visiting our country include political instability, rampant criminality, negative media headlines, military coup attempts, communist insurgency, kidnappings and bombings by Muslim separatists. For one who has lived in Thailand for more than seven years and who has traveled to many other Asian countries, I believe we could add the lack of a system to protect tourists from hold-uppers, abusive taxi drivers, airport personnel, vendors, tourist guides, etc. In Thailand they have set up a special police force that assists tourists who have been victimized by these unscrupulous groups. Also in Thailand, you see groups of people drinking liquor at night along the streets but they're generally not noisy and they don't bother tourists and other people who walk by. On the matter of why we are poor, I completely agree with your analysis. I would like to add one thing, however, and this is about the dissemination of research outputs, particularly in the areas of agriculture, forestry and natural resources. Here, research outputs seldom trickle down to the poor. Many products of research, instead of getting disseminated widely to the supposed beneficiaries (e.g. farmers), are kept by government researchers for their own advantage. For example, a research agency based in Los Banos, has successfully developed a procedure for the mass propagation of an agricultural crop through tissue culture. But then, the right to market the tissue cultured materials has been given to a private company, which naturally, sells the propagules at high cost. Another example is research on plant growth and productivity enhancing mycorrhiza and rhizobium. These technologies have not become widespread and beneficial to farmers because concerned government institutions have not done anything to disseminate them to intended beneficiaries. In Thailand, the Department of Agriculture produces large quantities of mycorrhiza and rhizobium and distributes them to farmers and other users either for free or at a minimal cost. At the same time, they have a nationwide campaign promoting the use of the technologies. Here, the beneficiaries of such technologies are again, the private sector. There are many other examples that I could cite but I guess these are adequate as illustrative examples. If you wish to know more details, I'd be glad to supply them. CELSO B. LANTICAN (D.Phil., Oxon) Retired Professor of Forestry (UPLB) and Natural Resources (AIT, Bangkok) November 17, 2005 wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww |
Tony, You are correct. Labor unions destroyed the momentum towards industrialization and export oriented business in the Philippines. Similar to Detroit where the United Auto Workers Labor Union had been strong and influential in the past. However when the big three auto firms began moving their factories to Latin America, then eventually Asia, many labor union members became disappointed with their membership paying monthly dues then coming to realize that their destiny is not within their union membership but under the entrepreneurs. Little by little union memberships were dwindling. UAW labor workers were frustrated, then moved to other jobs and places. Since the US moves to a service oriented industry, the Labor Union officials finds another haven under the truck driver labor union whom the Democrats are sucking like leech. Government social programs must be improve in order to counter the spread of communism. Poverty attracts communist ideology. Corruption by government officials impedes economic and social development resulting to inefficient and ineffective administration and low morale. Low morale triggers brain drain as it is in human nature that young and brilliant engineers and doctors quest for the enhancement of their skills and prefer better facilities and implements. People will not find seriousness in the government to deter corruption as long as former President Estrada is still sitting in his cozy jail cell waiting for his redeployment to Malacanang. People prefer to see a verdict and punishment for his wrong doings. The VAT seems to be helping the peso exchange rate but for how long? Nonoy Ramos, [email protected] Pennsylvania, November 21, 2005 wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww The Philippines should have been a Commonwealth Dear Antonio, My name is Louie Eguaras. I was born and raised in Manila but moved here to the USA at the age of thirteen. I still keep myself informed with what is happening in our once beautiful country by watching the news or reading local Filipino newspapers. I firmly believe that the future presidential and political leadership will not come from within Philippines but more so from outside Philippines. It will take an "outside looking in" approach to really solve the problems in Philippines. There are so many rooted corruption-based organizations that have existed over centuries. In a way, I don't think Philippines is ready to be a nation to lead on it's own. It would have been better that the nation became a commonwealth rather than a nation of people who do not know how to rule. For example, look at Guam and Puerto Rico, under the guidance of the USA and still have a healthy economic outlook. Another aspect worth considering is getting rid of the religious influence the Catholic Church has on the Presidency, Senate and Congress in Philippine government. I believe that if the government really genuinely sat down with the Muslim extremists, there would be some ground made. Anyway, I enjoyed reading your "No Dancing for Ping" article. I will also bookmark your website. Maraming salamat! Gumagalang, Louie Eguaras, [email protected] Valencia, California, November18, 2005 MY REPLY. The Philippines WAS a Commonwealth in the American Union, from 1935 to 1946, with time off from 1942 to 1945 as a Republic under Japanese Occupation. What you probably mean is that we should have remained a Commonwealth even after 1946. While many probably secretly wish that were so, in view of our many intractable problems, it would be a hard sell in public. It is also doubtful if the Americans would welcome back into their Union 86 million quarrelsome non-whites. wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww On another topic: TRAFFIC My bone of contention is that the traffic problem is also largely caused by the people who are supposed to manage it. For example: Traffic managers have supposedly studied the problem and they say that a sub-problem is enforcement. So why is it that one solution is number coding system which would rely on enforcement - the problem? How did these guys ever pass their thesis?. When Binay was the MMDA there was number coding on Saturdays. If you have read the resolution, it goes something like this: Whereas it has shown that the traffic on Saturdays is caused by the absence of number coding on that day, Now therefore, an experiment on Saturday number coding scheme shall be effected. My goodness! Didn't he get his Masters from U.P.? Anyway, going back to the issue of traffic managers being the problem My understanding is that we adapted the international signs, hence the circles, triangles, etc., So here are examples: Even the traffic manuals available at National Book Store says a yellow line designates lanes of opposing traffic while a white line designates lanes of traffic flowing in the same direction. So why is it that with several colors available in this earth, we chose yellow to mark PUV lanes along EDSA? More than that is the design. If you were to strictly follow the line, coming from a side street, you would have to cut two lanes. Turning right later would be even more dangerous as you would have to cut two lanes again with busses on your right. Somehow, this is not how I have read it's supposed to be. More on EDSA. There are now emergency bays along the center islands at EDSA. Having emergency bays is a good idea except that should one who is supposed to be encountering problems, be driving on the left most lane? And how does one go to look for assistance? Does he cross EDSA? Then there are other signs that you see on a right traffic light: Left turners must give way. How does one pass a driving test without knowing this? And if one is turning left, does he look at the right traffic light? There are also signs which say: Right turn anytime with care. Again, isn't a driver supposed to know this, that we have to spend taxpayers money for this? Or does it mean that unless there is a sign, we could turn right without any care? Along Quezon Circle going to Commonwealth, the third and fourth outer lanes are shown to be for those either going straight or turning right. But if you go straight, you will be apprehended. Yet you could be coming from the innermost lane turning right and you will not be apprehended. What kind of traffic management is this? Also take a look at the design of the flow along Quezon Avenue as you approach BIR Road. Private vehicles turning left have to cut across jeepneys that are going to move right. As if we don't have enough problems with traffic managers who do not seem to know traffic rules, it's even worse that they make their own rules Dobbit Palacios, [email protected] November 20, 2005 |
| wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww (Through the tapatt yahoogroup) To Mr. Abaya, Few points at random: I enjoy and am learning immensely from your healthy (mutually offensive too - certainly not worth emulating but concededly part of a pluralist democracy) debate with a certain Mr. Viswana. But do us babes in the woods a favor. Please do not bring the curtain down on him. He represents the antithesis side and I (or we?) would be deprived of a view equally valuable to yours towards forming a more enlightened opinion. (Excursus: A most dangerous position is one which borders on "ako lang ang tama." Don't the non-schooled and the masses have their own hermeneutics too which deserves a hearing? Even the language that we use reinforces the gap. Such impertinence). You have non-expert readers, including myself, who don't have sufficient academic background to understand highly technical terms and concepts in economics. Your interaction with another, equally capable economist-academician (is he? I'd presume)at least is not beyond us. By the way I agree with another reader who wrote that the issue of communism in the country is moot and academic. But the struggle for a decent standard of living among the scavengers in the Payatas dumpsite continues. Capitalism? Socialism? Certainly a non-issue for them. Whose then? Thanks for the space and more power! Levy Lara Lanaria, [email protected] November 22, 2005 MY REPLY. Mr Vaswani was under the impression that, since I was attacking the communists and communism, I would also be defending free trade and globalization, the IMF, World Bank and his other pet peeves. He may have been a little surprised to discover that he and I share certain advocacies. wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww George Burns and Oprah Whitney When George Burns was 97 years old he was interviewed by Oprah Winfrey. She said, "Mr. Burns how do you carry so much energy with you? You are always working and at your age I think that is remarkable." Mr. Burns said," I just take good care of myself and enjoy what I do when I do it." Oprah said," I understand you still do the sex thing, even at your age." George said, "Of course I still do the sex thing, and I am quite good at it." Oprah said, "I have never been with an older man, would you do it with me?" So they had sex and when they finished Oprah said, "I just don't believe I have never been so satisfied ... you are a remarkable man." George said, "The second time is even better than the first time." Oprah said, "You can really do it again at your age?" George said, "Just let me sleep for 1/2 hour. You penis in your right hand and wake me up in thirty minutes." When she woke him up, they again had great sex, and Oprah was beside herself with joy. She said, "Oh Mr. Burns, I am astounded that you could do a repeatperformance and have it be better than the first time. At your age, Oh My, Oh My!!!" George said that the third time would be even better. "You just hold my testicles in your left hand and my penis in your right hand and wake me upin thirty minutes." Oprah said, "Does my holding you like that kind of... um, recharge your batteries?" George said, "No, but the last time I had sex with a black woman, she stole my wallet" wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww |
| Dear Mr. Abaya: One of the reasons why our country failed in its export drive is the policy of our government in maintaining a stable exchange rate. During the 1950's when our country was facing a severe balance of payments problem, the government opted for exchange controls simply because the Laurel-Langley Treaty prohibited our government from devaluating the peso. (Japan, South Korea, Taiwan and the People�s Republic of China used exchange controls during their formative postwar years to control the inflow and outflow of dollars. But that did not prevent them from building an industrial base and gearing their economies towards the export of manufactured goods. ACA) The Quirino Administration instituted a policy of exchange controls which rationed dollars for import. The reason why the Liberal Party was wiped out during the elections in 1951 and 1953 was because this policy of import controls forced the closure of many firms because they could not obtain dollars to finance their imports. This caused a recession in our economy and recessions are never good for elections. The Quirino Administration did not realize that by instituting a policy of import controls, they would cause the contraction of our economy. (The reason why the Liberal Party was wiped out in 1953 was because the very popular Ramon Magsaysay was the presidential candidate of the Nacionalista Party against the very unpopular Elpidio Quirino of the Liberal Party. Most Filipino voters do not understand import controls and other arcane of economic theories to make it the basis for choosing their candidates. ACA) Because of the phobia of every administration to institute measures that would result in inflation, the government has resisted any efforts to devaluate the currency. What Pres. Quirino should have done to solve our balance of payments problem that rocked the Liberal Party Administration was to raise the tariff in lieu of the fact that the Laurel Langley Treaty prohibited our government from devaluating the currency. However, due to the phobia of the government -- which exist to the present -- to undertake measures that would increase the inflation rate, the government refused to consider raising the tariffs to solve our balance of payments problem. The economic technocrats of the Quirino Administration thought that imposing import controls would accelerate our economic development since the government was in direct control over all import activities in our country through their control of the exchange rate. They be lieved that they had a powerful weapon to influence the economic activities of our country. What the economic technocrats of the Quirino Administration failed to realize is that imposition of import controls would cause a recession in our economy. (Again, Japan, South Korea, Taiwan and the other tigers used import controls to protect their industries against foreign competition. Without import controls, they would not have matured into the industrial exporting economies that they have become. In the case of the Philippines, import controls were used only to protect import-substituting industries, not to build an export-oriented economy. ACA) The government could not be totally faulted because of its phobia to take measures that would increase the inflation rate in our country. In every election the issue of high prices is a very hot item. In a republican government such as this our politicians would be naturally sensitive to any measure that would increase the inflation rate. With the devaluation of the peso during the Macapagal Administration, Pres. Macapagal followed the policy of his predecessors to resist any economic measure that would increase the inflation rate. Hence Macapagal resisted every suggestion that the peso be devaluated to correct our balance of payments problem. The Marcos Administration followed the policy of all his predecessors in resisting devaluation because of its effect on the inflation rate. (Not true. In 1960, the exchange rate was two pesos to one US dollar. Through 25 years of Macapagal and Marcos, the peso was devalued several times. By the time Marcos was overthrown in 1986, the exchange rate was down to about 20 pesos to the dollar. ACA) The sudden devaluation of the currency in 1970 caused a recession in our economy. The Marcos Administration was placed in the same boat that the Quirino Administration faced. There was unrest in the country and the political opposition as well as the NPA and Muslim rebels tried to extract maximum advantage from Marcos' predicament. All of these disorders ended up with the declaration of martial law. Prior to the devaluation of the currency in 1970, Jesus Cabarrus, one of the leading export tycoons in our country, suggested that the government devaluate the currency in order to solve our balance of payments problems, but because the Marcos Administration like every administration before and after him had a phobia for inflation, Cabarrus was simply ignored by the government. (You should qualify the statement that Jesus Cabarrus was �one of the leading export tycoons in our country.� He was an exporter of mining products, i.e. ores and concentrates, not an exporter of manufactured goods. Devaluating the peso meant more pesos for every dollar that he earned, without creating the jobs that manufacturing finished products from those ore and concentrates would have created. ACA) The Marcos Administration during the martial law period insisted on a stable exchange rate in spite of worsening balance of payments problems. But this policy of resisting devaluation to solve our balance of payments problem could not held for long because of our persistent balance of payments problem. The result was the 300 % devaluation in 1983 which was one of the factors that led to the downfall of the government. Informed sources say that the 300 % devaluation in 1983 caused a contraction of our economy by 10 %. The Aquino Administration continued the policy of all her predecessors in maintaining a stable exchange rate. However, knowing that the Quirino and Marcos Administration faced a severe crisis because of persistent balance of payments problem, the Aquino Administration and all her People's Power successors modified the policy of all administrations in maintaining a stable exchange rate by instituting a policy of gradual devaluation of the currency. Because of this policy of gradual devaluation of the currency, the value of the peso to the dollar fell from P 20 in 1986 to P 55 that it is now. By instituting a policy of gradual devaluation of the peso by increments of about 30 %, the People's Power government avoided recessions caused by the sudden large devaluation of the currency. These recessions caused the downfall of the Quirino and Marcos Administrations something which they were hoping to avoid. It appears that devaluation is the only solution to prod the export sector to export more. In your article, you said that only Pres. Ramos realized the importance of increasing exports and instituted measures to help the export sector. All administrations took care of the export sector and the reason why the export sector was not performing as good as it should is because the government consistently refused to devaluate the currency. Without devaluation, the exporters will be lukewarm to the efforts of the government to increase our exports. (You sound as if you believe that devaluation was something we were at liberty to choose or not. In fact, devaluation was forced on us, time and time again, because of the perennial trade deficits we have suffered, almost every year, since 1960. That means that almost every year we were spending more dollars than we were earning through exports, tourism, etc. Under that circumstance, devaluation was inevitable as night follows day. (By contrast, for example, the Japanese yen in 1960 was valued at 320 yen to one US dollar. But because of their extraordinary success in exporting manufactured goods, the Japanese were forced by their trading partners (like the US) to revalue their currency upwards, again and again, to make their products more expensive in the US market and to make US products cheaper in the Japanese market, and thus reduce Japan�s perennial trade surplus. So it is no wonder the yen in 2005 is valued at only about 119 to the dollar. Because of its huge trade surplus, China is now being forced by its trading partners to revalue its yuan upwards for the same reason.) (In the case of the Philippine peso, it has been increasing in value the past few weeks because of the inflow of OFW remittances, not because we are now exporting more than we are importing. We are still running trade deficits every year and we are still attracting only a few tourists. That means that if there were no OFW remittances, the exchange rate would probably be about 80 to 90 pesos to the dollar by now. ACA) You also mentioned the failure of our tourism industry to attract as much visitors as our ASEAN neighbors. One of the reasons for the failure of our government to attract as much visitors as our ASEAN neighbors is also connected with the phobia of the government in considering measures that would increase the inflation rate in our country. (Not true. The government wants to attract more tourists but fails to do so because of poor marketing efforts, not because it is afraid of inflation. How many ads promoting the Philippines have you seen in CNN or BBC lately? Zero, while all our neighbors spend millions of dollars promoting their countries. Inflation has nothing to do with it. ACA) All our ASEAN neighbors have instituted a policy of managed float of their currency. This means that if they face a balance of payments crisis, the government would not hesitate to immediately devaluate the currency by 10 %. It is only the Philippines that has refused to follow the economic policies of our more successful neighbors. The policy of our government is to resist devaluation up to the end in spite of any balance of payments crisis, until the IMF-World Bank forces the government to devaluate the currency. (Also not true. If you go to Tokyo or Seoul or Taipeh or Singapore or Hong Kong or KL or Bangkok or Jakarta, you will note that the exchange rates very every day, usually several times in one day. This is dictated by the supply and demand of dollars or mark or yen in their economy, not by fears of inflation. An economy that runs a shortage of these hard currencies in relation to the demand for them, will suffer pressure for devaluation. ACA) Thanks very much for telling me about the KMU. This is the first time I got that information. (Where have you been all these years that you know nothing about the KMU? ACA) Ramon A. del Gallego, [email protected] November 26, 2005 OOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO |