Thursday, January 25, 2007

Debate on Gawad Kalinga

Dear Norman and others,
I beg the indulgence of all, but this seems to be an educational conversation, especially in light of what Boy Montelibano noted is an election year. Maybe those running for office can pick up something here. In response to Norman's rejoinder, I will answer in three ways:

Norman's assumptions of what GK is doing are inaccurate. When Perry labeled it a humanitarian effort, it conflated it with Western- forms of assistance. It is not. It is a culture-based (Filipino) social movement that has global implications.

- I strongly disagree with Norman's view of the World Bank's historical SAP (structural adjustment program) performance in the Philippines, as well as free-trade as it is currently being implemented by the developed nations. The documentation shows that WB-IMF practically handpicked (by browbeating Marcos), trained, cajoled the Filipino technocrats who co-implemented SAP. WB internal documents, as emphasized by R. Broad, also show that there was no mathematical or economic basis for a Philippine SAP. Implement SAP within a dictatorial and corrupt Marcos regime and what do you expect? Let us not blame Filipinos when the WB-IMF were wedded to the Marcos regime.
On free-trade, when the World Bank decides to do an honest assessment on the topic it find concludes that free-trade isn't free at all and adversely impacts the Philippines. See World Bank's Cororaton’s study.
The new tigers of Asia did not use WB's formula. They had proactive government officials who protected the national interest (industrialization, build up domestic economy then export, etc.). They were able to get trade concessions from the developed countries. Our leaders did not. So, it’s back to a question of leadership...

- I disagree that low wages is a way to development. This is unrealistic and not feasible. Instead of low wages, we should be more creative, more daring, more courageous and we should value the human capital of Filipinos. In this regard, I recommend reading the Hypwerwage Theory of Thads Bentulan aka the Streetstrategist and Universal Basic Income.

Other than those above points, I have no quarrel with Norman's plan for a Filipino conspiracy to conquer the world. In discussions such as this, I like to keep in mind the words of American, Filipinist historian, Alfred McCoy, that social science often times diverges from social reality.

GK's Tony Meloto always stressed that GK is neither a project nor a program. They are neither funding depended nor are they concerned with exit strategies. They do not ask, much less beg, for money from anyone. They have not and will not. Yet, supporters have pledged to build a million homes.

GK is an initiative of 10-15% of the one million member Couples for Christ (CFC). They started it with their own experimental efforts (in the late 1980s) and money through 'padugo'. This enabled them to come up with a model for a new kind of social movement for nation building, which is built on servant-leadership, modeling change, healing social divisions, and a holistic, seven-point, community based development process. GK claims their sites are 'non-sectarian, multi-sectoral, non-partisan and non-discriminatory' and are developed through 'caring and sharing of time and resources, massive mobilization of volunteers and partners, and patriotism in action'. GK's model of a transformed community is a peace zone and faith community, environmentally healthy, and productive through programs on shelter, child and youth development, health, environmental, food, and economic productivity initiatives, community empowerment and values transformation.

The reason why GK initially focused on housing is because of the acute need for it. Housing and related expenses, as I have said, constituted the bulk of the poor's household expenses. With their new home, it enabled them to save, use the home as either an economic asset or entrepreneurial tool, gave them dignity and confidence, freed resources for better nutrition and health, etc. Again, housing is only one of six initiatives in each GK site.


GK's Dylan Wilk says that corruption stifles business in the Philippines and that working with GK fosters a culture of integrity. If the rich, the powerful, and the government are transformed then the poor have a chance to progress. Tony Meloto said that the poor already know how to fish so there's no need to teach them how to fish. But, 'they ain't fishing'. Thus, with the 900 communities GK has set up, it is launchiong its economic productivity strategy encapsulated in the following:
- Develop middle class and entrepreneurial values in GK communities,
- Make education, technical skills training, etc. available in all GK communities,
- Adopt a one town-one product (OTOP) strategy for each GK community based on comparative advantage,
- Develop food sufficiency (i.e., square yard vegetable production) in each GK community with the goal of surplus production,
- Foster trade among the projected 7,000 GK communities in the Philippines and eventually GK communities worldwide,
- Encourage expatriate Filipinos to retire in the Philippines bringing with them their savings, skills, and time. A developed 'Reunion Village' (complete with in-house farm, convention center, R & R facilities) in Batangas has a current market value of at least 150 million pesos (one home costs US$40,000). This is run and managed by GK beneficiaries. Several more are being planned and target the 300,000 eligible Fil-Am retirees,
- Develop each GK site as commercial and tourist centers. In GK Baseco, Starbucks-donated equipment enabled the set up of Bayani Café where a cup of coffee retails for P65.
- Use information and communication technologies (ICT) to promote entrepreneurial activities. A MOA was signed with the Rotary and a b2b Filipino group to pilot test b2b centers in five GK sites, and, most importantly,

GK is open to any suggestion that fosters productivity in GK sites that is sustainable and socially just.


I have been trying to convince the StreetStrategist that Hyperwage Theory and GK are not mutually exclusive. GK complements Hyperwage in that the former shares the value system of the latter. It puts a premium on Filipino human capital and seeks to develop it. Hence, prices for GK goods are of the middle class range (inflation is a not an issue), i.e. P65 coffee, US$40K retirement homes, PhP5,000++ art pieces. GK is a social movement, which can espouse Hyperwage because of the same value system.

You will have to read the Hyperwage Theory. The StreetStrategist recently wrote Why Filipinos Aren’t Rich and reiterated his call for a hypwerwage policy. According to him, labor is undervalued, hence there is little purchasing power. This stifles entrepreneurial activities and innovation. Hyperwage will enlarge the middle class. Radically raising the salaries of the working class (the household helper is proposed to earn P20,000/month) will have significant multiplier effects.

GK, Hyperwage, and other social justice movements all look at the unequal distribution of wealth and power as the single most pernicious barrier to Philippine development. Each propose their own solutions to underdevelopment, but nothing will move without a transformational leadership at all levels of society.

NOTE TO HYPERWAGE E-GROUP MEMBERS: For background information on the debate on Servant- Leadership and Gawad Kalinga, click on this link.

Thanks again and regards.

Reprint of StreetStrategist's (Thads Bentulan's article) WHY FILIPINOS ARE NOT RICH

Why Filipinos Are Not Rich by the StreetStrategist aka Thads Bentulan

The Street Strategist has arrived at the conclusion that the poor Filipinos are not rich because they do not have money.

This is a very simple concept but it takes a genius to appreciate its simplicity.

You may notice that I am trying to explain "why Filipinos are not rich" in contrast to "why Filipinos are poor." Is there a difference? Yes, there is.

In asking "Why Filipinos are not rich," the implication is that the normal state of events should be that Filipinos are rich and we have to explain if ever they are not in the normal state, that is, we have to explain why Filipinos are not rich when supposedly they should be rich.

Diminishing circle Anyway, let us proceed. The Street Strategist has arrived at the conclusion that the poor Filipinos are not rich because they do not have money.

The Filipinos have no money because the country's wealth is inequitably distributed in favor of a few rich.

Wealth is inequitably distributed because the labor sector does not have a bigger share of the wealth.

Labor does not have a bigger share because they are mispriced and undervalued.

Labor is undervalued because they do not have an equal footing to enter into a fair contract with the rich employers.

To gain a stronger footing, the government should step in and prescribe a higher minimum wage.

But the government does not want a higher wage because they are afraid the businesses would have lower revenues as a result of higher labor wages.

The businesses cannot maintain their revenues in the faces of higher costs because the demand for their goods and services do not increase.

The demand for goods and services do not increase because the labor class are not rich, therefore they have lesser disposable money.

The people have no money because the wealth is inequitably in the hands of a few rich.

Thus, we are locked in an ever diminishing circle.

Community of inequality Let's view this from another perspective.

According to a World Bank study, 1/3 of the wealth of the Philippines is owned by only 5% of the Filipinos. This is a huge disparity. This is an egregious distribution of wealth. In economics, the Gini coefficient is the measure the gap between the rich and the poor.

What does this statistic mean?

Try to visualize a community of 100 of your friends.

For every PhP100 spent within this community, after all is said and done, these expenditures and incomes will eventually settle as asset or wealth distributions.

Of every PhP100 in asset, PhP33.3 goes to only 5 of your friends (PhP6.7 per pax). The balance of P66.6 is distributed among the reminding 95 friends (PhP0.70 per pax). Can you imagine how inequitable that is? That's a ratio of 9.5 to 1, or 950%.

And did you forget something? Those 5 friends of yours were actually not doing any work at all. They were playing golf all day, while your other 95 friends were the ones toiling under the hot sun, fighting against each other, backstabbing each other, and knocking on doors at night to sell products. Is that fair?

What is really callous is that your rich 5 friends have billions of money that they could not possibly consumed in ten lifetimes. Single solution And yet you ridicule me for proposing a single solitary action, that is, a legislated minimum wage of P20,000 ($400 at $1=PhP50)?

Please remember, I am advocating communism, socialism, or confiscation of property. I am only advocating the correct valuation of labor, the world market price for labor. Why can't our teachers be paid like the teachers in Singapore? And Singapore has zero natural resources to rely on unlike the Philippines?

Squander Myth: The Filipinos are poor because they squander money.

I heard so many upper class people say this. I even heard on radio somebody who cited their rich neighbor whose children squandered their inheritance.

But many Filipinos are fortunate enough to inherit wealth? A few thousands? We have about 35 million workers, and that's the majority. They have nothing to squander. Job search Myth: The Filipinos don't look for jobs.

I find this too simplistic. Filipinos are looking for jobs so much so that millions of Filipinos in search of work worldwide.

Maybe there are too few jobs here in the country. I have repeated many times why are there a few jobs around. That is why I wrote several chapters on the topic of job creation as a result of the Hyperwage Theory.

Maybe the jobs are not paying well enough. If the actually wages are lower than the threshold reservation wage (the point at which the worker is indifferent if he has a job or not), then maybe that's the reason they do not apply for jobs.

Remember if you work in the US for one year that is equivalent to 10 years in the Philippines.

Lazy Myth: The Filipinos are lazy.

You must be kidding me. Give each one a minimum wage of PhP20,000 and you'll see. Currently, among the best workers abroad are Filipinos. And you and I both know that.

Unsaving Myth: The Filipinos don't save.

Of course, the savings rate in this country is low. Of course, the Filipinos don't save. We have half of the country living below the poverty line and you expect savings? But the top 5%, yes, they do save. Save for what? Should that money be shaved off a little bit and shared back to the workers in form of higher wages that will be used to buy the goods and services owned the same top 5%? It will all go back to the businessmen anyway.

Why Filipinos Are Not Rich (Part 2 of 2)

Naturally rich The Filipinos are naturally rich. If we monetize the value of our entire natural resources nationwide we would have a higher per capita wealth than Hong Kong, Taiwan, or Singapore.

But why is it that these city-states have a higher per capita income than the Philippines given that fact that they have no natural resources? Simple. They put a value to their intellectual capital and human capital.

In Hong Kong, if you can't afford to pay about PhP25,000 for a domestic helper, then don't have one. If you can't afford to pay PhP30,000 for a sales clerk, then don't be in business. But do you know that happened? Businesses flourished. And they have domestic helpers who are nurses or principal teachers from the Philippines. Hong Kong is the 4th or 5th largest financial center in the world and it is only about 1/5 the size of Cebu province and it have zero natural resources. It imports water from China, can you imagine that? Singapore imports vegetables from Indonesia or Malaysia.

Why aren't the Filipinos rich when in fact they should be? It is because the minimum wage workers are paid slavery wages, very far from the world market price for labor with is the US price. Since they have slavery wages, they have little purchasing power. With little purchasing power, there is little domestic market. When there is little domestic market there are few businesses. When there are few businesses, then there are fewer employees, and since there are fewer employees, there is little purchasing power. And if there is little purchasing power there is little domestic market and so on and so forth.

Few rich, thin middle class The Philippines has a very thin middle class, as with any other Third World country. It is the middle class who provide entrepreneurship, the small businesses that is 95% of the number of establishments. Again, this thin middle class is due to the egregious concentration of wealth in the top 5% of the population. How do we then solve the inequitable distribution of wealth? With only one stroke. A legislated minimum wage of about P20,000 ($400) probably staggered over five years.

I am tempted but would not discuss here all the economic benefits and non-economic benefits of Hyperwage Theory because I had done that in my 33-chapter book.

Before anyone criticizes Hyperwage Theory, it would do justice if you read it first. In the same manner that I read as much economic textbooks and journals before I finally set into writing my idea of Hyperwage. What I am saying is this: The Filipinos are not rich but that is not what is supposed to be. We have the natural resources that should have given us the power of the purse, the power of wealth. The Filipinos are supposed to be rich. And there is one solution to correct this anomaly. Give labor its true value.

Suppose the businesses give back PhP100 billion in wages back to the people. Assuming a propensity to consume of 80%, the economic multiplier is theoretically 5 times, and the entire nationwide economy will be richer by PhP500 billion. This is the beauty of Hyperwage Theory. Instead of business annihilation, there would be economic redemption. Again, I have discussed this fully in my book on Hyperwage.

I hope I can meet my Henry Dennison, the multi-millionaire that Harvard economist John Kenneth Galbraith called crazy but who eventually caused the latter to reverse his economic thought. If you recall in my Hyperwage book, Dennison argued that the rich few like himself have a bigger share of the income stream which sucks the economic wealth away from the economic system. Dennison argued that the income stream to the poor should be increased. Who will be my Dennison who would believe the Street Strategist's Hyperwage Theory and become its advocate?

And who will be my Galbraith? As I narrated previously, the famous Galbraith was once a Harvard professor who flipped his economic thought and reversed his ideas and finally adopted the very radical, ridiculed, and controversial ideas of John Maynard Keynes.

Asymptotic hyperinflation

Will there be hyperinflation under Hyperwage Theory? I have discussed this fully and the answer is that there will asymptotic hyperinflation, that is a hyperinflation with a ceiling, and that ceiling is the world market price.

Let's take a look at this illustration. This is a simple one but if we analyze common products (vegetables, cooking oil, paper, newspapers, etc.) in this manner, we will have a clear idea of what asymptotic hyperinflation is.

Assume a person eats half a kilo of rice a day. With a domestic helper's wages of P2,000 per month, then a person earns PhP76.90 daily. Assuming the current price of rice is PhP30/kg then he will consume PhP15 of rice daily. He will have a net on only PhP61.90 per day.

On the other hand, under Hyperwage, is monthly rate is PhP20,000 and his daily rate is PhP769. What will be the price of rice under Hyperwage? About PhP50/kg? Where did we get this price? We assume a comparable quality of rice in the expensive city of Hong Kong which is priced about PhP50/kg. Surely, we could not be above Hong Kong' price under our Hyperwage Theory. Thus, after spending for a half kilo of rice, the helper obtains a net of PhP744.

So which is better, a net of PhP46.90 under our current low wage regime or a net of PhP744 under Hyperwage Theory? What if rice surges up to PhP100/kg? This means our rice will be higher than that in the US or Singapore or Hong Kong? That's seems impossible. We could not be above these expensive cities, could we? Even assuming it is PhP100/kg, but how much rice can one eat? Still half a kilo so that will cost him PhP50 daily, and his net is PhP719 daily.

Monthly Wages

(PhP) Daily

(PhP) Rice/kg

(PhP) Daily rice consumption/pax (PhP Net)


2,000 76.90 30 15* 61.90

20,000 769.00 50** 25 744.00

20,000 769.00 100*** 50 719.50

* Assumes a person consumes ½ kg rice daily

** Comparable rice per kg in Hong Kong (we cannot possibly be more expensive than HKG) ***

Can rice really surge to PhP100 or any amount higher than US or HKG? Now, apply the same to a can of Coke, a kilo of cabbage, an IBM Laptop, an Ericsson cellphone or a Sony TV. How do we know what will be the prices when we adopt Hyperwage? Simple, call the US or Singapore prices, and you can use these prices as your reference prices. Do you really think the price of an IBM laptop will rise 100% once minimum wages are raised 1,000%? No way. It may rise by 5% to 15% but never by 100% because the world market price for an IBM laptop is our reference point. If laptops are being sold in this country at P100,000 each, do you really think it would be sold at P200,000 because the minimum wage is now P20,000? Why should we pay double than US prices?

See my point?

At any rate, I have discussed all these issues in my 33-week discourse on Hyperwage Theory in 2005. Human capital

There are several factors of production in an economic system. Our economic theories emphasize the benefits of using the market price of each of these factors. Our theories frown upon subsidies because they distort the allocation and efficiency of capital. Yet, there is one factor that is not merely an inanimate factor of production, a factor that cannot be made to wait for market forces to determine its price. This is human capital. In the Third World countries, if we wait for market forces to determine the market price for labor, such time may never come in our lifetimes. Why? Because a hungry stomach cannot wait for market forces. If First World countries value labor at $7.50 per hour, without government intervention, do you think human capital in Third World countries will stop working unless paid the market price of labor? They cannot survive half a day without food. They will accept anything to survive. Why aren't Filipinos rich?

What makes a country or its people rich?

Education? We have a literacy rate that is one of the highest in the world at 95% or more, yet we are belong to the poorest of nations. Can we econometrically say that education is what makes a country rich? Statistics says no.

Natural resources? We have one of the richest natural resources in the world, yet we belong to the Third World. Surely, natural resources is not what makes a nation rich, is it? Statistics says no.

English? We are the third largest English speaking country in the world, but we wallow in poverty not wealth. Is English what makes a country rich? Japan, Korea, Taiwan, and Hong Kong don't have half of our English skills, yet why are we mere domestic helpers to them, rather than being their rich employers? Or is there a possibility that English is not such a relevant factor we think it is?

I admit the BPO industry has employed hundreds of thousands but do you really expect us to become a First World country with this? This is Third World mentality. To attract call centers to the Philippines, we need to slave our college graduates as phone operators? Isn't it possible that we will perpetuate our status as Third World workers for First World businesses?

Low wages? For the last hundred years our strategy has always been low wages but why are we poor? Maintaining low wages means that you want the people to earn less than their US counterparts and therefore keep the people in check under the strategy of poverty. Yet, how come low cost of labor did not help our businesses become world-class players like Nokia or Intel or Samsung? Isn't it obvious that maintaining low wages has kept us in Third World status? Can you economically argue that low wages are what makes a country rich?

Statistics says no.

Low purchasing power? Low wages means low purchasing power. Answer me this: Does SM or Ayala go to Maasin Leyte because of low wages? No. The big businesses go to places where the people have purchasing power. Purchasing power is due to high wages of the people. Isn't it obvious that Jollibee goes to the US because of the high purchasing power despite the high labor cost? Why is SMC in Australia? Why is ABS-CBN in Saudi Arabia? Economically, what makes a country richer, low purchasing power or high purchasing power?

Yes, indeed, why aren't Filipinos rich? Why is there a huge gap between the rich and the poor? Why is management paid 100 times higher than the lowest employee in this country while in some countries it is only 10 times? What is your solution to correct this situation?

As I have pointed out, it is not high education, it is not natural resources, it is not command of English, and it is not low salary that makes a country rich. It is how you value the poorest of the poor. It is how you value least of the least. It is how you value human capital. It is giving labor its true world-market value. It is Hyperwage.


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Tuesday, January 23, 2007

Discussion with Norman Madrid on Servant-Leadership and Gawad Kalinga

From: Norman Madrid
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
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