Monday, July 04, 2005

Change the Plot

Marx said that philosophers should not only interpret the world, but change it. His mother though was said to lament, “If only Karl made Capital instead of just writing about it…” We Filipinos need to carefully think our state of affairs through. As one economist wrote, the crux of the matter is not only in changing the world but in first interpreting it CORRECTLY.

The past few weeks have been politically and economically brutal for the nation. After a good economic first quarter, dirty politics, graft and corruption, and roadblocks to economic reform are threatening the modest economic gains of the economy. Indeed, in the Philippines, the economy is intertwined with politics. Or is it?

Everyone in the country loves discussing politics. A look at the newspapers, writings of columnists, TV talk shows, and even discussions at family gatherings ultimately focus on politics. The alleged shenanigans of the Macapagal administration and the Arroyo men make for good fodder. Why so? In discussing what ails the country and the search for solutions, do the people agree on the root causes and the course of action needed?

From listening to these discussions and reading what columnists and “experts” write, the problems identified are generally; a corrupt government and legislature, peace and order issues, poor infrastructure, rampant poverty, and overpopulation, among others. Recommended solutions range from a hardline, authoritarian leader, to a parliamentary form of government, to a communist revolution. We ask, why is it that the identified problems are mainly economic in nature, but the solutions prescribed political? One could easily answer that this is the reality of political economy; but what if we try something else, something based on reality? Why should the national savior be a politician?

Two EDSA People Power, numerous coup de’tats, national worker strikes, a communist insurgency, Muslim secessionist movement, church activism, etc. have not done much to improve governance by our politicians and bureaucrats. Politicians and bureaucrats are clearly a problem and a significant part of the solution, but reforming them is not the only solution unless we are willing to literally KILL them all off.

Many of our countrymen have done the next best thing. They have voted with their feet. They have not given up on their country, only their politicians and bureaucrats. The Leftists’ calls for various boycotts have been taken up by our overseas foreign workers (OFWs), who want nothing to do with government. They have gone abroad to become the best that they could be in their fields, specialization, and careers. For many the costs are high, but their individual actions collectively state their priorities. These seven million plus OFWs prioritize personal and professional achievement, family economic security, and a better future for them and their families. For the country, the OFWs have been an economic lifesaver. They deserve more than just as a new national commodity.

For those who have remained behind, the successful are those who have done it through legal and honorable means or through criminal and rent-seeking activities. Looking only at the former, these small and medium-sized entrepreneurs, big businessmen, and professionals diligently conduct their affairs and seek to minimize their interaction with government. I know of successful businessmen who refuse to bid on government contracts and avoid contact with government. The successful Chinoy business community deals with government on an arms-length basis and through third party mediators. Their focus is on growing their businesses, not socializing with the political powers. The Ayala family, who have adopted the motto “Profit with Honor” have tapped the best and brightest their money can hire to help them professionalize and expand their businesses.

Business leaders like PLDT’s Manny Pangilinan, the Aboitizes, Lorenzos, and so on, have not only studied the Philippine business cycle well, but have developed a deep understanding of what products and services the country needs. These they provide to the immense profit of their respective companies.

What do these individuals and organizations have in common? The focus is excellence, be it personal or business. Diligence. Skill. Individual and corporate achievement. Providing for the family and the future. Personal integrity and responsibility. Continuing education. Highly competitive spirit. Work ethic. Team effort. Profit with honor. Corporate responsibility. Innovation. Studied risk taking. Growth and diversification.

What about government? Government is seen by them as a hindrance, a burden, something to be overcome. For the OFWs, government is irrelevant. For the companies, they must ensure that they comply with all laws and regulations. Do they seek to influence government or resist some corrupt politician or bureaucrats’ attempts to extract money from them? Sure they do, but they do it at arms length. No way will they invite these corrupt politicians and bureaucrats to dinner in their homes. Have you noticed how geographically far away our resilient farmers and fishermen are from bureaucrats?

Democracy is not only exercised at the polling booth. Politicians, their lackeys, arm-chair intellectuals, and the media have drummed it into us that votes, which are easily bought, are the best and only manifestation of a vibrant democracy. Another way though of exercising democracy and good governance is through each individual’s wallet.

We each need to take back control of our individual destinies. Do not wait for the government to reform itself and get the economy to grow. Politicians and bureaucrats are enriching themselves through rent-seeking activities because we allow them to. Where do we start in preventing this?

To the youth, do not abandon your education. Make sure you get a degree regardless if you are a Leftist or party animal. Sooner or later you will need that degree for credibility when you are in power or applying for work. Unless you want to be an inept individual and a liability to the organization you will join, you will need basic skills of reading comprehension, writing, public speaking, math, abstract thinking, and adaptability, among others. Get these skills in school asap. Plus, it will be harder for the politician/bureaucrat to fool or intimidate you.

To the entrepreneur, seek business opportunities that minimize interaction with government officials at all levels. Seek a low profile so you are not targeted by them. Study the lifestyle of the Chinoy entrepreneur, who saves and re-invests profits, diversifies both in business and geographical terms, and seeks to constantly improve his/her situation. If you do have to interact with a government official, do so professionally and do not seek to befriend them. It will be cheaper for you and less stressful in the long run.

To the professional, it is okay to seek employment abroad if that will ensure the economic future of your family. Take your expertise to the one who will either pay you or who appreciates your skill and professionalism the most. You deserve it. Love of country is not based on where you live, but what is in your heart and the help you will eventually extend to your friends, relatives, and community. When abroad, insist that OFW associations do not host or invite politicians who visit to speak or seek financial support. The point is to ignore the corrupt officials.

To civil society, focus your energies on specific, attainable goals. Do prioritize local sites and situations. In fighting for good governance, focus on the erring official and his/her family, while demanding command responsibility. Corruption is personally enriching, hence the consequence must be intimately personal. Information is a powerful tool. Get and clearly document instances of graft and corruption and immediately share it with the public through the internet, text, TV, radio, etc. Set up blogsites/websites that accept tips on graft, corruption, and criminal activities of government officials. The corrupt must be publicly ostracized. Let the management of these sites be flat and free-wheeling so that it will be hard to shut down. Increase the penetration of the Internet and other mass information technology to the countryside and to poorer communities, so that they can participate in a grassroots movement of governance. Your success will inspire compassionate individuals, and there are many, to support your cause.

Politics has been used to corner scarce resources for interest groups. Individual wealth and community self-help can insulate us from the pervasive influence of corrupt officials. Focus on generating your own wealth, while at the same time insisting on good governance. With a bigger middle class, more pressure can be laid to bear on government officials to do what is right.

Approximately 7.5 million Americans and 67,000 Hong Kong residents have assets of at least $1 million exclusive of primary residence. The Asia-Pacific region has at least 2.3 million millionaires mainly concentrated in India, Hong Kong, Australia, and Singapore. Economic growth and market capitalization are the main drivers. In these countries, even with a monkey as the leader, the economy and market continue to operate.

The bottom line is it will be wealth, individual wealth in many hands that will determine whether our country will grow or become a failed state. It is individual wealth that will enable us to demand good governance, hale the corrupt to court, sue the incompetent government official, jail the criminal, pay for better infrastructure and social services, and financially support civil society. It is not government who will do it but ultimately each one of us.

Do not believe what is being written that we need a political savior, a benevolent hardliner, or a communist takeover for the economy to grow. The first two are contradictions in terms, while the communists, though idealists, are inept in management and governance. Further, as seen in the Erap leftist officials, they are easily co-opted by sudden riches.

The most sustainable reform movements are those that are broad based, cognizant of merit, wealth-generating, focused on self-help and enlightened self-interest but with a sense of community, compassionate, and integrity-driven. These movements try their best NOT to depend on politicians. Once successful they leverage this success to help others and seek reforms. That is why projects such as Gawad Kalinga, the OFW initiatives, the community-based environmental programs, voluntary professional associations like Rotary, European Chamber of Commerce in the Philippines, MABINI, etc.; organizations such as the Philippine Center for Investigative Journalism, Businessworld, WWF, etc.; businesses like Jollibee, Globe, San Miguel, PLDT, Ayala, Red Ribbon, and the Chinoy business community are so efficient, effective, and successful. These are real people doing real things.

Political reform to effect economic growth is only one way. Political reform can be done either violently or with fundamental societal change that may have either positive or unintended consequences. Another way is through individual wealth generation that enables citizens and civil society to pressure government officials to do what is right.

How do we go about generating wealth? That is your task. Read the StreetStrategist's Hyperwage Theory at the Businessworld.