Tuesday, January 23, 2007

Discussion with Norman Madrid on Servant-Leadership and Gawad Kalinga

From: Norman Madrid
To: Fil-AmForum@yahoogroups.com
Monday, January 22, 2007 7:29 AM
Subject: Re: [Fil-AmForum] Re: Servant-Leadership and Gawad Kalinga

Hi Hecky and Perry,

Thanks to the seven of you who have responded to my critique of Gawad Kalinga. May I follow up with two stories to possibly clarify our thinking on good versus bad humanitarianism? If you agree with me, then we could perhaps invest together to build a strong nation, with GK investing with us as we transform its thinking to our thinking?

Just us eight, plus 300 more bright Filipinos and foreigners that I have been assembling for the task of fortune-making and nation-building, will be enough to build a strong Philippines.

I mean, the 300 plus us eight and GK plus certain global corporations will be our ideal partners at world export-conquests will get the
Philippines built-- government officials not needed in the alliance.

and that I have been the building of private fortunes-- for the 300, the eight here, and the multinationals and 150 million Filipinos by 2040.

1. KG as a Malthusian Story:

a.. A society produces food abundantly. Hence, the population grows. The society must therefore produce more food for the bigger population. The food adequacy enables the population to further grow. So, the society is forced to produce even more food.... But, it can't! Resource limits have been reached! There is no more land to produce more food. The society dies.

b.. That is the current Gawad Kalinga story. Amidst a housing shortage, it produces housing by begging for funds. The poor are happy with their new GK houses, and they grow in number. They also grow in poverty, since GK is erecting no productive factories to employ and enrich the poor. Amidst the wider poverty, GK must produce more housing by begging for more funds. The poor are again more happy as they see the more numerous houses. Therefore, they further grow in number. That further worsens poverty due to a lack of factories. GK must produce more housing through more begging. But, it cannot! Donors refuse to support the begging anymore. GK has hit a Malthusian wall and can no longer build more housing. The poor can no longer maintain their GK houses, which fall apart. The poor die. So too, GK dies, a beggar killed by the Malthusian apocalypse.

c.. There is a happy alternative to the above story, GK as a Tiger.

2. The GK Tiger Story

a.. A poor
Philippines lacks food and housing. Still, population grows. The jobless poor have no choice but sex and babies. Poverty intensifies.
b.. GK warns the government not to overtax intellectuals and investors just so as to feed and house the people.
c.. GK says two things to President Arroyo:
a.. "Leave investors alone. Let them keep their money to find foreign multinationals as allies at world export conquests.
b.. "Open up the economy to free trade. Let the world discover our low wages and come in freely to exploit us fairly or unfairly, it don't matter.... it DON't matter.
d.. Gloria is heartless and complies.
e.. Foreign partners flow in to the
Philippines, attracted by low Filipino wages and the crazed global ambition of the hungry local GK Tiger investors.
a.. The GK Tigers are like avenging angels knocking at every Fortune 5000's door to find partners for global victory
b.. Many foreigners don't want Filipino partners. They want to be by themselves, exploiting Filipinos independently as cheap soldiers to kill their global multinational rivals with.
f.. The mix of three weapons--low Filipino wages, GK Tiger ambition, and multinational resources-- is globally winning! The
Philippines steals American, Japanese, and European markets at export wars.
g.. The three weapons become known as the global predator, GK Tiger Inc. It is a purely private initiative headed by Hecky, Perry and three or four more people.
h.. GK Tiger, Inc. earns big dollars that imports machines and technologies.
i.. The Philippines gets modernized and enriched by booming factory building and infrastructure construction.
j.. Everyone finds a job.
k.. Many scientific labs and R&D institutes rise. Mapua develops world-class products.
l.. GK Tiger needs more workers, but cannot find many. The working poor are too busy to have babies!
m.. So GK Tiger is forced to invest in technology from Mapua to make existing workers more productive.
n.. As their productivity rises, workers get better pay
o.. GK Tiger offers to build low cost housing.
p.. The workers say, "No! We don't need low-cost housing. You build bigger homes for us and we will pay whatever must be paid."
q.. Wow! This is known as GK Tiger Humanitarianism: Investing in world conquest, GK Tiger makes every poor person rich!
r.. Population is declining, as in
Western Europe for many years now.
s.. Farms are abandoned. Far more income is made at factories conquering world markets than at farms.
t.. All food is imported, at lower prices than in the
Philippines. No problem: export dollar earnings pays for all that food, as in Hong Kong and Japan.
u.. Firewood no longer gets used. LPG is imported easily with the country's big export earnings.
v.. The Philippines is virgin green! Abandoned farms have become forests on their own! The forests are untouched, as houses are no longer made with wood but with earth and steel.
w.. Malthus cannot escape from Pandora's box to plague the
x.. Resource limits are not reached at all as population declines and Mapua is ever inventive.
In short, Perry Diaz: there are two kins of humanitarianism.
a.. GK Malthusian humanitarianism which leads to death.
b.. GK Tiger humanitarianism leads to everlasting life and riches
May I count upon you, Perry, to be a GK Tiger?

Re Hecky's point on behavior, yes GK is behavioral and action oriented, and that is good. And, bad, because the behavior and actions are sub-optimal, they are GK Malthusian.

Hecky says in his second email that GK is needed since the World Bank's structural adjustment programs and free trade policies have killed Philippine industries. There are two errors in this statement.

a.. First, that GK in its current form is needed. No, no, no, Hecky: the current form is GK Malthus and must be ended. GK Tiger must be initiated. (By whom and when? By us, now, here. Just us eight people, talking now can turn the
Philippines into a Tiger by applying a formula discussed in another email-- "The GK Tiger 300 Billionaire Solution..." )

b.. Second, that the World Bank has killed the Philippine economy. No, no, no, Hecky. The World Bank's programs were sane. Filipinos did not know how to implement it. Hence, GK Tiger is needed as a group of a few Filipinos who 1) know what to do to make the country prosper, and 2) will do it.
I must use an analogy. The
Philippines has been suffering from a heart attack, and the World Bank came in to put the patient in a clean room for rehabilitation. But the Filipinos did not know what to do at rehabilitation. Therefore, the patient got worse.

By contrast,
Hong Kong and Singapore were already in the same clean room and boomed by knowing what to do in that room.

To explain these obscure points, do understand the elements of the World Bank's so-called Structural Adjustment Program. It has about 10 requirements or goals:
1.. Inflation control so that there is a stable business environment;
a.. Yep, HK and
Singapore went for this and prospered!
2.. Promoting exports so that there are dollars earnings to import machines;
a.. Observing this rule,
Hong Kong has exports of $260 billion and Singapore $200 billion. These far exceed those in the Philippines of $42 billion. Yet the Philippines is 3,000 times as big in land area as HK and has 12.8 times as many people;
3.. Meeting debt-payment schedules so that the borrower is seen to be responsible
5.. decreasing budget deficits, so that governments live within their means
6.. cutting government spending and employment (same as #4). Government employment must be cut since government jobs are often only unproductive, patronage jobs,
7.. higher interest rates, so that only the most profitable projects are pursued, and citizens will deposit their money locally instead of abroad, and foreingners will deposit their money in the country
8.. currency devaluation to help exporters, and keep out imports, thus developing the country's ability to industrialize,
9.. lower real wages, so that the country can conquer world markets and earn big dollars for development, and employ more of its people
10.. sale of government enterprises, since they are often unproductive, are milking cows for the corrupt
11.. reduced tariffs, so that foreign raw materials can be imported cheaply and used as inputs to conquer world markets with, and so that local companies enjoy no protection and are forced to be efficient and be competitive in the world; and so that, if they do not know how to be globally efficient, then they will find foreign companies as their partners for export success;
12.. liberalized foreign investment regulations, so that a country's power plants and railways, water, port and telecom systems, which require much capital to develop, get developed by rich foreign investors, and will attract foreign investors to set up industrial plants in the country and make the country prosper.

.. Completely World- Banked: free trade and structurally adjusted: meaning, , Also suffused with free trade policies. ir textile, steelthe cure.

T. It was not the World Bank's responsibility to cure the patient. It was Filipino responsibility-- yours and mine. But, we did not do it. Hence, the patient remains comatose. But, the cure is obvious. I will explain. (Hint: think of free-trade and structurally-adjusted
Hong Kong and Singapore conquering the world, instead of doing local industries as in the Philippines, which were the industries in the Philippines that died amidst the . and the immense inflows of foreign investors to the two locations.)

, and ill become apparentLet me

that has collapsed from a heart attack.

unite make additional comments to establish so that we. that I hope you will find valid. My goal with these comments is to produce 300 young, bright Filipinos (and one old one) who will be billionaires in 15 to 25 years. That is, they will be thinker/investors like the 22 billionaires that have built the richest Asian economy,
Hong Kong. Hong Kong was poorer than Japan and the Philippines but rose to surpass both and many European economies. The 22 billionaires there among only 7 millon people signify an abundance of nation-building leadership. It has been leadership in global thinking, global investing, global politicking.

, bright thinking and acting at investments, .

ies in the world--
Bermuda, Luxembourg; and the richest Asian nations, Japan and the four Tigers. Then we could feed, educate, and house Filipinos instead of kill them as Gawad Kalinga "humanitarianism" is doing (as I will explain later).

Hint1: GK is a Malthusian effort. Hint 2: GK applies Band Aid to cure AIDS.)

The other phrase: band aid. is used to for )

no suspicion out meaning to do it.

far faster than enrich the
Philippines far beyond the Gawad Kalinga the

Let me re-state my goal: produce many young, bright Filipino philosopher kings brighter than all Filipino intellectuals, business, banking, industrial, and revolutionary leaders from the 1800s to date.

Wait, re philosopher kings, do kings still exist? No more? Or, hardly? Okay, let me change to philosopher-billionaires in the mold of Bill Gates and Warren Buffet. Are these billionaires, the biggest in the world, philosophers? Yep! Like Frank Sinatra, with deep, deep words for his songs:

Do be do be do,
Do be do be do.

I think he means To do is to be, and to be is to do. When you think about it, that has been the lives of modern philosopher-billionaires including Edison, Rockefeller, and Li Ka Shing--the richest Asian ($19 billion fortune)

so that you may become an Asian Tiger thinker and investor and will transcend Robin Broad, Walden Bello, Renato Constantino, GK, and our three billionaires plus all the bankers (BPI, Metrobank) and industrialists (Hilarion Henares, Concepcions, Gokongwei) and politicians-- Pimentel, Salonga, Manglapus, Recto.

add addtional points for your is constructive . I hope you will regard Now don't be insulted if I say

----- Original Message -----
From: Hecky Villanueva
To: Fil-AmForum@yahoogroups.com
Friday, January 19, 2007 12:43 AM
Subject: [Fil-AmForum] Re: Servant-Leadership and Gawad Kalinga

Norman, hello and thanks for your comments. Good points. They will help me with my research. I will also distribute widely as you suggested. My response follows.

On servant leadership, not only the western world needs it, but the elite in the developing world as well. The elite in the
New York are similar to the elite in Manila. The issue is power. They have it and they will use it to maintain their economic advantage. Servant leadership is geared to the elite of the world, especially those that preach free markets but actually co-opt government to gain an advantage. Think oil subsidies, no-bid contracts in Iraq, $500/night cruise cabins for Katrina refugees in America. Why can't a proposed legislative bill on requiring performance bonds for highway construction pass in the Philippines?

I agree with your strategies for economic development, but getting from here to there is the issue. Along with the non-working rich living off the fat of their ancestors, Filipinos need to contend with the big-time tax evader, smuggler, carpetbagger, influence peddler, and the three groups that have constituted themselves into their own class: the bureaucrat, the politician, and the local official. All these individuals and groups are both in cahoots and in competition with one another to gain wealth and power at the expense of the country.

Why should we blame the poor, when they're the only ones who honor their word? As Tony Meloto says when a politician buys their votes, they keep their end of the bargain and vote for the tradpol.

We have seen and read all types of proposed national development policies all these years, but where are the leaders to implement them? The Left? They are so easily co-optable as seen during the Erap administration. Civil society? They are constantly worried about the next funding cycle. The military? Most are poor and are easily corruptible. The Ivy League technocrats? Marcos hired most of them. They allowed the country to be the guinea pig for WB-IMF's structural adjustment program (SAP). Robin Broad's Unequal

The World Bank, the International Monetary Fund and the
Philippines shows how SAP was implemented without any mathematical or economic basis. The country actually deindustrialized under SAP. Free trade? The country was one of the first signatories. Our corn, poultry, chemicals, textiles, steel, etc. industries collapsed.

The question is not how because the alternative studies, plans, strategies are there. It is leadership, political will, and courage to protect national interests that are needed.
To GK, poverty is not economic, but behavioral. It is the breakdown of relationships between rich and poor, powerful and powerless. It is first about healing social divisions, restoring dignity, generating social conscience, and accepting responsibility to care and share. When rich and poor get together, maybe they can discuss what the national interest is. Greenleaf wrote that, "Criticism has its place, but as a total preoccupation, it is sterile..One is asked, then, to accept the human condition, its sufferings and its joys, and to work its imperfections as the foundation upon with the individual will build wholeness through adventurous creative achievement."

Maybe a new generation of bureaucrats, politicians, and local officials will arise from work with GK?

As an economist, you will not disagree with GK that housing is the single biggest household expense for an urban family. In the
US, if housing and utilities are more than 30% of the household budget, the family qualifies for government assistance. In poorer countries, why is that they pay higher ratios for rent (on squatted land), water, electricity, transportation, etc. Isn't the strategy of providing an fundamental need - housing- to the poor help them get back on their feet and release their economic potential? Wasn't Hernando de Soto agog over providing squatters with land security? If you can build equity with a home in the US, why can't the squatter do the same?

Although GK started housing, they have a 7-point program that includes economic productivity. Alas, that is for another article.
Norman, I have no disagreement with you on the economic policies. It is just getting our leaders to do it. How? Getting it done though means having the right type of leaders. The elite in the Philippines, be it the non-working landed class, politician, influence peddling hustler, or corrupt businessman are formidable adversaries. GK advocates a culture-based approach of moral persuasion. I am very interested in your thoughts on this.

Maraming salamat po at Mabuhay.


Hi Hecky,

I enjoyed reading your essay and was also pained by it, as I will explain.

Please circulate the following critique of the Gawad Kalinga approach to all the people in your mailing list. Let a hundred flowers bloom at debate on servant leadership. I certainly will be happy to have my ideas below critiqued by you and others. What follows is my response to your essay.

== = = =

The concept of servant leadership is relevant only in the Western world. Let them, as the dominant leaders of the world, work as servants of the world.

Leaders in poor nations should not spend any time on the concept. Instead of community projects such as housing to serve the people, the leaders of poor nations should focus on factory building wherein to employ workers at export projects to conquer world markets.

The big dollars that we could earn from the world would finance even more factory building. It will also help to finance more joint venturing with foreigners to conquer world markets.

Thus, jobs will proliferate! Unemployment would fall to 1.5% as in
Thailand today. Workers will get rich, allowing them to buy houses on their own; they will have the income to afford it; and the houses will be twice as big and much better than Gawad Kalinga houses.

At Gawad Kalinga servant leadeship, that duty to win in world mrkets is neglected. Instead GK focuses on building homes, and not the the competitive factories to conquer world markets with.

Japan was poor, it went for the formula "Export or Die" to prosper. The Japanese lived with sub-standard housing, called rabbits hutches by contemptuous Europeans, for nearly 40 years, from the end of World War II up to the early 1980s, so as to focus on investments in factories for global competitive success.

The smart economies of
Asia--the four Tigers (HK, SK, Taiwn, Singpr) followed by Malaysia, Thailand and China--copied Japan, and did not allow themselves to get trapped by the economically inferior concept of servant leadership followed by Gawad Kalinga.

The result is that the export revenues of the four Tigers in 2005 from goods and services exports totalled $1,100 billion ($1.1 trillion). That was far more than the corresponding figure of $55 billion for the
Philippines (including $11 billion of remittances added to the service export revenues).

The inferior Philippine performance reflected decades of globally-inferior Philippine projects. The three main projects: 1) land reform that earned no dollars, and 2) the anti-Chinese Filipino First policy that also earned no dollars, and 3) the industrialization program that served only the local markets and thus also did not earn dollars.

Time for the =non-global Gawad Kalinga initiative to die! Let us focus on winning in world markets, pooling all our capital into investments in machines and into attracting foreign investor allies with whom to conquer together in world markets.

The big dollars we earn will finance even more factory building. It will also help to finance more joint venturing with foreigners to conquer world markets. Whoa... didn't I say this already?

Thus, jobs will proliferate! Unemployment would fall to 1.5% as in
Thailand today. Workers will get rich, allowing them to buy houses on their own; they will have the income to afford it; and the houses will be twice as big and much better than Gawad Kalinga houses. Whoops... that too is repeated... and worth repeating!

The Asian Tiger model definitely beats the GK approach at helping the poor.

Have a better year, GK guys, by abandoning the GK initiative and embracing the Asian Tiger approach at nation-building and at eradicating poverty.

Norman Madrid
New York City

No comments: