Is there hope in the Philippines?

Is there hope in the Philippines? If there is where does it lie?

The article written by Antonio C. Abaya is very timely for we as Filipinos should think critically on this island nation's direction.

Read along.

Anachronistic

By Antonio C. Abaya

Written on Nov. 24, 2008

For the Standard Today,

November 25 issue

The topic assigned to me was "Defeating the Communist insurgency."

But I told my audience last Friday, Nov. 21, that talking about "defeating the Communist insurgency" was anachronistic because Communism itself has become anachronistic.

My audience was composed of military officers, local government officials, and representatives of various government agencies, taking a five-day seminar on national security at Camp Aguinaldo under the direction of the National Defense College of the Philippines.

Our neighbors in East and Southeast Asia had defeated their Communist insurgencies decades ago, by taking draconian measures against their insurgents: Malaysia and Singapore, by using their Internal Security Act (ISA), inherited from the British colonial government, which gave both governments the right to throw in jail, indefinitely and without trial, anyone suspected of being a Communist or a Communist sympathizer; South Korea, Taiwan and Thailand – confrontational states vis-à-vis North Korea and Maoist China - by crushing the Communist movements in their territories during their periods of military rule in the 70s and 80s; Indonesia by a bloodbath against the Parti Komunis Indonesia which had tried to grab power by machine-gunning to death almost the entire military high command in Halim Air Base outside Jakarta in September 1965. Estimates vary from 300,000 to two million on the number of suspected Communists and Communist sympathizers summarily executed by the military in their counter-coup.

But to use such draconian measures now against our Communist insurgents would no longer be fashionable and would just make this country an international pariah, and would dry up investments and official development aid..

Even before the first decade of the 21^st century, Communism has faded as a global threat, having imploded from the accumulated weight of its own failures.

In 1989, millions of East Europeans – Poles, Hungarians, Czechs, etc – literally walked out on their Communist regimes in a spontaneous, leaderless and largely bloodless (except in Romania) civil revolt, People Power in its purest form, that forced their Communist governments to resign.

In 1991, a similar civil revolt broke out in Moscow, primed by the glasnost and perestroika reforms of Mikhail Gorbachev and inspired by the defiance of the Eastern Europeans. The 15-state Union of Soviet Socialist Republics collapsed and the Communist Party of the Soviet Union was even outlawed, ironically in the very country where the first Communist revolution had triumphed, only to be restored months later.

Since 1979, Maoism as the definitive national ideology was slowly and systematically dismantled in China by the pragmatic Deng Xiaoping, who restored capitalism and the profit motive, a counter-revolutionary transformation which propelled China to the status of an economic super-power in less than 30 years.

Communism is dead. The only Communists left in Europe are two Filipinos: Jose Ma. Sison and Luis Jalandoni. And even Joma has admitted that the victory of Communism, once considered by its gibbering true believers as inevitable and imminent, would now take "hundreds of years." (See my article 'Hundreds of Years' of Nov. 14, 2006, archived in www.tapatt.org.)

But why is there still a Communist insurgency in the Philippines?

Largely because of the failure of successive Philippine presidents, from Marcos to Arroyo, to build an export-oriented economy. And also due to the failure of these same presidents to conceptualize and articulate a Better Idea. Communism is an Idea. To defeat it, one must have a Better Idea.

In my article Why Are We Poor? of Dec. 14, 2004 and subsequent articles, all archived in www.tapatt.org, I listed down the economic missteps that successive Philippine governments committed in the past fifty years.

One. The passage of the Minimum Wage Law in the late 1950s, which discouraged American companies from locating their factories in the Philippines. They located them instead in Taiwan and Hong Kong because wages there were lower (believe it or not) than here and there was no statutory minimum wage.

Two. In the 1970s, South Korea, Taiwan, Singapore and Hong Kong (then a British colony) geared their economies towards the export of manufactured goods. The Philippines did not, content as we were with import substitution.

Three. In the 1980s, Malaysia, Thailand and Suharto's Indonesia followed the original Four Asian Tigers above in gearing their economies towards the export of manufactured goods. The Philippines did not. What few export industries Marcos managed to set up were deliberately wrecked by the Communist KMU unions which staged strike after strike against them, until their owners got fed up and moved their factories to other countries.

When I started writing a column in 1987, I kept on hammering on the theme of export—oriented industries, but President Aquino and her group of allegedly 50 advisers ignored my counsel. It was President Ramos in 1992 onwards who seriously went into export industries., but by then it was too late: China was emerging as the dominant producer and exporter of manufactured goods. (FVR himself told me that he kept a file of my articles, which was confirmed by an American academic who was researching on the Philippine military.)

Four. President Ramos worked at cross purposes with his own export initiative by accepting the advice of Opus Dei economists Jess Estanislao and Bernie Villegas, who pushed for an accelerated embrace of free trade and globalization, even ahead of fully developed South Korea and Taiwan. The resultant flood of imports drowned local producers, causing them to stop or reduce operations, forcing millions of Filipino workers to look for work overseas.

Five. In the 1990s, the Philippines failed to ride the tourism boom, just as we had failed to ride the export boom earlier. In 1991, Indonesia and the Philippines had exactly the same number of tourist arrivals :one million. In 2007, Indonesia had six million; we managed only three million. (Malaysia had 16 million, Thailand 13 million).

Six. The Philippines failed to manage its population growth. In the 1970s, Thailand and the Philippines had the same population size, 45 million. Because it had an active and successful population management program, Thailand's population grew to only 65 million in 2007, while the Philippines', which did not have one, grew to 89 million.

By any yardstick, it is easier to feed, clothe, house, educate and provide jobs for 65 million people than for 89 million.

Prosperity is about jobs. Let us not even talk about South Korea, Taiwan and Singapore because they are so far ahead of us, having embarked on the export of manufactured goods as far back as the 1970s. In 2006, South Korea's exports totaled $326 billion, Taiwan's $216 billion, Singapore's $283.7 billion.

Let's talk of Malaysia, whose exports in 2006 totaled $158.7 billion, compared to the Philippines' $47.2 billion, or a difference of $111.5 billion. If we follow the rule of thumb that one billion dollars worth of exports create 100,000 manufacturing jobs, we can conclude that our failure in exports cost us about 11 million foregone jobs.

And consider also that in 2007, Malaysia attracted 16 million tourists, compared to our three million, or a difference of 13 million. If we follow the rule of thumb that one million tourists create 100,000 tourism-related jobs, we can conclude that our failure in tourism cost us another 1.3 million foregone jobs.

So our combined failures in exports and tourism cost us 12.3 million foregone jobs, one and a half times the number of Filipinos forced to work overseas because they could not find jobs here. It is the difference between prosperity and poverty and explains why a Communist insurgency continues to fester here, long after Communism became anachronistic. (To be concluded) *****

Conclusion:

In the first part of this essay, I had written that the ultimate reason why a Communist insurgency still lingers in the Philippines, decades after our neighbors had solved their Communist insurgencies, is the failure of one Philippine president after another, from Ferdinand Marcos to Gloria Arroyo, to create broad-based prosperity.

In the East and Southeast Asian context, this failure was caused by wrong choices in economic strategies and policies, most especially in exports and in tourism. Two other East and Southeast Asian countries share our failure: North Korea and Myanmar, both of which have followed autarkic economic policies – meaning they were not interested in importing or exporting anything. Both countries have also deliberately shunned the presence of foreigners, tourists and otherwise, out of a deep-seated xenophobia.

But in the case of the Philippines, our failures in exports and tourism were not the result of deliberate autarkic and xenophobic policies, but rather the result of poor, mediocre, myopic, unimaginative, even stupid, leadership at the very top, from Marcos to Arroyo.

Marcos is pilloried for having been corrupt and authoritarian. But all the other leaders in East and Southeast Asia in the 1970s were corrupt and authoritarian, with the possible exception of Singapore's Lee Kwan Yew, who was also authoritarian but was apparently incorruptible.

The greatest sin of Marcos, I told my audience at Camp Aguinaldo, was his failure to build an export-oriented economy for the Philippines, as the other Asian leaders had succeeded for their countries at that time.

The Communists and nationalists blame our poverty on the Americans, the Japanese, the IMF and the World Bank. But neither the Americans nor the Japanese, nor the IMF nor the World Bank exerted any pressure on us NOT to develop export industries or tourism. These were the sovereign choices of our leaders, and they have been proven spectacularly wrong.

I wrote in the first part of this essay that our failure in exports and tourism, compared to Malaysia's success, cost us 12.3 million foregone jobs, one and a half times the number of Filipinos forced to work abroad because they could not find gainful employment in the Philippines, jobs that our domestic economy failed to create because of wrong and poor choices in economic policies and strategies.

The export of manufactured goods was the basis for the industrialization of our neighbors which enabled tens of millions of their citizens to rise from poverty to middle-class status. Broad-based prosperity, generated by exports of manufactured goods, dulled any interest in and appetite for Marxist-Leninist-Maoist revolution.

Aided in no small measure by successful efforts to slow down population growth. As I wrote in comparing Thailand and the Philippines, it is far easier to feed, clothe, house, educate and provide jobs for (Thailand's) 65 million people than for (our) 89 million.

The growth of enterprises in their export-oriented economies mopped up their pools of unemployed and underemployed, thus raising wages and salaries without the crutch of a minimum wage law, as entrepreneurs bid higher and higher for the workers and employees that they needed

In the light of the current economic crisis ravaging the entire world, there is an upside to our failures. As millions of people in the developed and developing countries lose their jobs and/or reduce their family expenses, markets for everything – including foreign tourism and imported manufactures – will shrink in the next two to four years.

As the East and Southeast Asian country with the least developed export and tourism sectors, the Philippines will suffer the least from the global meltdown, not because of any astute defensive measures taken by our stupid leaders, but because we just happen to have accumulated the least crockery that can be broken as the financial tsunami sweeps through our neighborhood.. This is our consuelo de bobo.

The tsunami also means that, for the time being, exports and tourism will not generate the GDP needed to raise tens of millions of Filipinos from poverty to middle-class status, as they did in the 1970s, 80s and 90s in other Asian countries. It is the enduring tragedy of us Filipinos that, having missed the exports and tourism buses in the past, because of the myopia and stupidity of our leaders, we now see that there is no bus going anywhere anytime soon.

While the tsunami is raging worldwide, GDP has to generated largely in the domestic economy. This means domestic producers have to be encouraged to start and expand their enterprises, with the domestic market, by necessity, their target market. This also means that global trade has to be conducted on a fair or managed trade basis, not on a free trade basis, despite the hue and clamor against protectionism in the recently concluded APEC Summit in Lima, Peru..

Under free trade – embraced foolishly by Gloria Arroyo, even while she was still a senator – rich and developed economies will always have advantages over poor and developing ones. Rich and developed countries have the capital, the technology, the marketing connections to overwhelm poor and underdeveloped ones with their products.

Poor and developing countries will never manage to develop their economies – and generate the jobs they need to survive - if they are overwhelmed right from the start by the superior products of rich and developed ones.

Under fair and managed trade, poor countries should have the option of choosing which products they can import and from which countries, so as to protect their producers and their workers from being overwhelmed by floods of imports, under the rubric of reciprocity. Nations will have to come to mutual agreements that "we will buy your products a, b and c, but only if you will buy our products x, y and z, in more or less equal measures."

This may be the direction that President-elect Obama is heading, after he promised the American electorate that he would create "five million jobs that cannot be outsourced." My sense is that American producers and American jobs will be protected under an Obama administration, and rightly so. Copycat Filipinos should do no less.

President Arroyo is correct in proposing a P100 billion package to stimulate the Philippine economy through a crash public works program. The US has set aside a similar bailout package now totaling $1.5 trillion, China more than $530 billion, parts of both of which will go into public works spending.

This would be similar to the New Deal emergency employment program launched by President Franklin D. Roosevelt in the 1930s to pull the US economy out of Depression. Which, for the information of McCain-Palin supporters who labeled Obama a "socialist", was socialistic and against the tenets of laissez faire capitalism.

In the Philippine context, however, caveats have to be raised: how much of those P100 billion will really go into building infrastructure and generating jobs, how much will get attached to the sticky fingers of President Arroyo's relatives and favored bureaucrats, and how much will go into bribing congressmen and women into passing ChaCha that will allow her to stay in power beyond 2010 as prime minister? *****

Reactions to tonyabaya@gmail.com. Other articles in www.tapatt.org and in acabaya.blogspot.com.