by ROBERT PONCE LEPON
 
 
 

In the onslaught of globa-lization, there is only one safety net. It is the stock exchange.

The stock exchange is the bastion of any capitalist and democratic economy.  You can tell easily the country’s state of democratic condition by the strength of its stock exchange.  Every second, votes are cast and confidence expressed.  There is no other place in the universe where elections take place as frequently.

An economy without a stock exchange is dead in the water economy.  You do not have to look far to notice that.  All the countries in the communist block are like these.  These are the countries which tend to close their market from outside peep.

The leaders of these countries will do their best to shut out foreign intrusion, be it in the form of business investments or otherwise because with it comes erosion of their political power as people will vote them out as quickly as ice in the falling rain.

A country run by plutocrats and oligarchs can never disguise itself as a full-fledged demo-cracy in their stock exchanges.  All you have to do is look at their stock exchanges and you will know who run the government and how.

In situations like these, governments of these nations do not enjoy the support of their people because, rightly so, their elected leaders are under the influence of the oligarchs and the plutocrats running their stock exchanges.  Countries at these stages have plenty of small businesses and family-run businesses all vying to reach size to compete with the established ones in the exchanges.  But capital is scarce because people will keep the money to themselves or bring these elsewhere.

There is no efficient and effective conduit of peo-
ple’s earnings and these are squandered in many start-ups and sprouting me-too businesses.  In this instance, the banking sector takes over and interest rates are higher than normal as these bankers who also run the stock exchanges charge premiums to take advantage of the situation.

But, in both cases, the economies are weak and easily prone to collapse in the face of extreme scrutiny from both within and outside the country.

In globalization, when people everywhere can vote for any country in the world, tainted politics will not work.  We have witnessed this happen in 1997 when people foreign to Asia voted to pull out their investments from Asia.  Countries largely affected were those with economies which were not democratically run.  Sweeping political changes took place and those in power were shaken to the core and got upended in the process.

We must not blame globalization for our economic woes.

Instead, we should welcome it as a catalyst for political change.  We cannot turn back the tide and those that will try will be swept under the irresistible force of its current.  All we can do is prepare ourselves.

The best way to prepare is to strengthen our stock exchanges.  How?

The government must encourage the citizenry to trust their stock exchanges.  The ultra difficult process of listing should be relaxed without compromising transparency. The small entre-preneurs and family businesses should be made to understand that their country’s future is tied up with its stock exchange.  They should be induced to list in the stock exchanges and seek capital through this process.

If people see that their smart entrepreneurial neighbors are flocking to the stock exchange for capital, they will then be induced to invest their hard-earned earnings in those potentially successful companies and discard the all too dangerous me-too business idea.  A government’s success or failure depends on its ability to persuade the public to patronize the stock exchange.  And the patronization of the people in its stock exchange will ensure it of a place in the future.

(Mr. Lepon is audit senior manager of Punongbayan & Araullo Cebu Office.  He is a close friend of the Medical Mission Group.)
 

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