Benign0 is just as clueless as “Benigno”

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Yes, you read it right.

We’re talking about Benign0 (the “Get Real Philippines” guy who uses the “Jimi Hendrix” avatar on the left) being just as clueless as his “namesake” Benigno S. Aquino III. Why so?

Because just like his “namesake” Benigno S. Aquino III, benign0 is rabidly against Constitutional Reform, and just recently came out with a new article that highlights his total lack of insight and analytical ability when he attacks the notion of removing the blanket anti-Foreign Direct Investment restrictions found in the 1987 Constitution which actively discourage Multinational Corporations (aka “MNC’s”) and Foreign Direct Investments (aka “FDI”) from coming into the Philippines.

Check this screenshot out:

bobonign0

Oh wow. Really, benign0? Do you really think that your namesake’s point was “before you sell your building you need to fix its rotten floors first lest the new owner’s furniture fall through it?” Or did you not realize that your namesake is just simply clueless, doesn’t know anything about economics, and is simply out to protect the monopolistic vested interests of fellow members of the oligarch class that he was born into?

Wait a minute, benign0, did you not see the blatant error that your namesake Benigno S. Aquino III made? It’s this one here:

tanganign0

Did you not notice the error,  benign0?

Did your “critical thinking faculties” fail you when you could not see that your namesake Benigno S. Aquino III committed a major logical blunder when he introduced a fallacy in the form of a “red-herring?”

Perhaps you do not get it despite me pointing out to you in red what the fallacious snippet was…

You see,  benign0, it seems like you – just like your clueless namesake Benigno S. Aquino III aka “Noynoy” – are incapable of understanding the difference between:

(1) Business/Corporate Ownership by foreigners
(2) Land/Real Estate Property Ownership by foreigners

As it turns out, your namesake Benigno S. Aquino III was trying to mislead the Filipino Public that the whole “60/40” and “anti-Foreign Investor restrictions” issues are related to the whole Land Ownership issue. They are not.

One is about whether or not Foreigners are to be allowed to own businesses or perhaps limiting them to a small minority share of entire businesses, while the other one is about allowing Foreigners to own land. They’re totally different issues altogether.

What matters primarily to MNC’s and Foreign Direct Investors is whether the country in question freely allows or restricts foreign entities to own businesses in the country. As we all know, countries that are more open to allowing majority ownership of corporations and businesses or even allow up to 100% ownership by foreigners are more likely to be able to attract foreign direct investors than those countries that are more closed. That is obvious.

Allowing land ownership to foreigners on the other hand, is merely a secondary or “extra” feature that can help bring in more investors. It is possible for countries to allow 100% corporate ownership by foreigners, but ban the ownership of land by foreigners. China and Vietnam are countries that allow foreigners to own up to 100% of companies, but prohibit everybody – both foreigners and local citizens – from owning any free-hold real estate property.

President Benigno S. Aquino III  aka “Noynoy” simply couldn’t make the distinction between the two. He either didn’t know anything about the topic and made an erroneous statement showing his sheer ignorance and inability to distinguish between the two issues of “corporate ownership” versus “land ownership” or he was actively trying to distract the public by using the “land ownership issue” as a kind of smokescreen distraction to throw everyone off the real issue.

How could you miss that, benign0?

Weren’t you supposed to be intelligent? Aren’t you supposed to engage in critical thinking?

Looks to me like you were following “the other Benigno.” Don’t you remember Obi-wan’s famous words, eh benign0?

* * *

Here’s how it works, Ladies and Gentlemen:

For benign0, the Philippines should not even attempt to try to emulate the tried and tested best practices of Singapore’s “Third World to First” strategy in trying to create massive employment opportunities for their people by removing all sorts of anti-FDI restrictions and actively inviting as many Multinational Corporations and Foreign Direct Investors to set up local operations in order to hire as many local employees as possible, thus easing (and eventually eliminating) the persistent unemployment problem. GRP’s webmaster benign0 seems to have actively ignored (or perhaps forgotten) that Singapore was not the only country that actively employed the “actively invite MNC’s and FDI’s in by removing anti-FDI restrictions” strategy.

Let’s see… Aside from Singapore, here are examples of countries who actively dismantled anti-FDI restrictions in order to bring in massive MNC-and-FDI inflows that caused rapid job creation for their people, resulting in the step-by-step reduction of poverty and many of the other issues that result from poverty:

1) Malaysia under Mahathir bin Mohamad

2) China under Deng Xiaoping (邓小平)

3) India under Narasimha Rao

4) Vietnam under the current “Communist” Party of Vietnam

5) Indonesia under  Susilo Bambang Yudhyono

6) Cambodia under the late Norodom Sihanouk

Singapore started the ball-rolling.

It was Singapore that went against the grain of most people in the “Developmental Economics” field which had long since been dominated by Marxists and other ideologically-fixated proponents of the “closed economy”-centric and autarky-based “national industries” model of development which erroneously held the zero-sum theory that “economics means that if one makes money, someone else loses money” as opposed to the win-win theory that economics involves a free exchange of value wherein both parties have a net gain as a result of the exchange than prior to when the exchange occurred.

Thanks to the aggressive policy of bringing in MNC’s into Singapore and getting them to create so many jobs, the Singaporean public now gained a huge purchasing power and people who previously had little or no income now had incomes that would allow them to feed themselves and pay for their most basic needs.

It is no wonder that the rest of the ASEAN region and many in the wider Asian Region are emulating Singapore’s “bring-MNC’s-in” approach by removing anti-FDI restrictions in their laws and economic policies.

Let us review how things turned out on the FDI-inflows front in ASEAN back in the period of 2010-2011:

ASEAN with Singapore

Alright. Let’s look at those values so that we all have a good sense of comparison:

Singapore   113,000,000
Indonesia    32,000,000
Malaysia     21,000,000
Thailand     17,000,000
Vietnam      15,400,000
Philippines   3,500,000

As you can all see from the graph, Singapore is pretty much “off-the-charts.”

I colored it GREEN just to show that it is the leading country in the pack. The laggard is colored RED. Poor laggard. Poor us. We’re the unfortunate laggard: the “runt of the litter.”

And we’re the laggard because we are the weakest as far as FDI inflows are concerned. Oh wait a minute! Yes, that also corresponds with the fact that among all these countries listed in the graph, we also happen to be the country with the worst incidence of unemployment and underemployment. Oops!

And First World Singapore is the country that happens to have the highest FDI inflows. Hmmm… Is this a coincidence? Or is this clearly connected?

Well obviously it is connected! Attracting FDI’s and MNC’s to come to Singapore was precisely the reason why Singapore became a First World country in just around 30 years in the first place. Malaysia, for the longest time, also had the second best FDI-inflows, and that’s why Malaysia had also been one of the more dynamic and better countries in the region, seen as being second to Singapore, often “stealing opportunities” from Singapore by touting itself as a half-priced Singapore. It just so happens that Indonesia decided to really work hard at getting more FDI’s flowing in because their leadership is dead serious on job creation and real economic development.

Ok. Since Singapore is already a First World country and it pretty much is in the league of the Big Boys (the Western Countries plus Japan — oh wait… It bested Japan to become the richest country in Asia based on GDP per capita!), so to be fair, let’s compare ourselves among other third worlders. Let’s take Singapore out of the picture:

Asean minus Singapore

Geez, we’re looking really really bad here!

In the first graph where Singapore was around, the inclusion of the First World country, its FDI-attraction figures totally dwarfed everyone else’s, so in a way, the Philippines kind of didn’t look that bad since “everyone else was dwarfed by Singapore.”

But looking at this second graph, with Indonesia taking top spot (in GREEN) our status as the worst country in the region as far as unemployment and FDI-inflows is concerned should wake everyone up.

It should wake benign0 up, since it was he who said:

loser-benign0Thus spake the clueless one.

“Reliance on foreign capital and foreign commercial activity is an obsolete concept embraced by losers.”

Now that was one of the most ridiculous things I’ve ever read coming from benign0

Clearly, benign0 just doesn’t get it.

He simply hasn’t read up on economics and economic history enough to realize that it is actually the AUTARKY-based “Import Substitution”, “Closed Economy” and “National Industries” economic model that is obsolete. It has already been proven time and time again to be the slower and more-prone-to-failure approach to economic development.

He simply hasn’t realized that it is the Open Market concept of freely allowing FDI’s and MNC’s to freely flow in that has worked the best and the fastest in transforming poorer countries to become richer countries.

benign0 also forgets that the country he emigrated to – Australia – is the result of a huge Foreign Direct Investment venture by the British Empire. Worse, he ignorantly forgets that many industries in Australia were started by British foreign direct investors and Australia’s mining industry was actually jumpstarted by foreign companies. Ho boy.

The guy needs to do some research (which, by the way he never does which is why he always loses to me in debates during the few chances that I have the time to engage that slacker), but of course, he is lazy to read. He hasn’t even read Lee Kuan Yew’s “From Third World to First” which he bought, and if he read it, he would have realized that the cornerstone of Singapore’s rapid rise to First World status was its openness to foreign direct investments.

Would you believe this was in Singapore?

Would you believe this was in Singapore back when it was still “Third World” — …Akala mo siguro nasa Pinas, ano?

(Take time to notice how the photo of Singapore back when it was still “Third World” looks very much like a scene from the rural Philippines. Well, obviously, just looking below, one can see just how Singapore got built up into a First World international hub of business all thanks to Foreign Direct Investments.)

Marina Bay Sands, the Singapore icon, is a Foreign Direct Investment by Sands of Las Vegas

Benign0 doesn’t realize that Marina Bay Sands, Singapore’s new representative landmark, is a Foreign Direct Investment by Sands of Las Vegas

Singapore is just one case in point, but in Western Europe, the old perennial laggard Ireland too became one among the fastest growing economies in the world at the time that the Asian Tigers (yes, including Singapore) were getting a whole lot of attention, giving it the monicker the “Celtic Tiger.”

How did Ireland do it? Simple: It did what Singapore did…

It allowed FDI and MNC’s to come in and create lots of jobs for their people!

In the end, FDI and MNC-attraction was the key in all these examples of fast-growing “former laggards” who got their acts together.

Even  benign0‘s ignorance of Philippine Economic history gets highlighted as he clearly doesn’t even realize that the very reason for why the Philippines was “second only to Japan” back in the 1950’s and 1960’s was because of the post-war reconstruction programmes that the Americans helped us out with. True, they sent us aid. They paid “rent” for the US military bases on Philippine soil back then. But most importantly, they sent in hundreds, even thousands of American investors and corporations to invest in the Philippines to create jobs.

Luckily, despite all the existing anti-FDI legislation that had been existing as well as the anti-FDI public utilities and natural resource provisions in the 1935 Constitution, the Philippines inserted a new amendment into the 1935 Constitution that allowed all American citizens and American entities to enjoy the same economic rights guaranteed to Filipino citizens and Filipino entities. This was known as the Parity Rights Amendment. As such, many American companies did not have to deal with whatever 60/40 rules existed in legislation in certain sectors. Whatever Filipinos could own, Americans could own too. There were just so many Americans and American companies in the Philippines at the time so that a lot of employment was generated by the massive hiring that American companies did.

Alright. So now it’s clear.

benign0 simply doens’t know what he’s talking about. (As usual. He comments about a lot of stuff he hasn’t done any research on)

Rather than actively looking for solutions that could make the Philippines a better place, he’d simply prefer to just yak and yak about how “Filipinos are destined to be losers” or how “Filipinos will never succeed” or how “Foreign Investments are a shortcut to success.”

That last idea is the whole point of why we are fighting for the removal of all those anti-FDI Constitutional restrictions! Yes indeed, Foreign DIRECT Investments are a shortcut to success! There’s nothing wrong with taking shortcuts that work and have no side-effects.

Why take the long and painful route of forcing autarky upon ourselves through the use of a closed economy when we can take the tried and tested faster way of rapidly creating massive employment for millions of Filipinos simply by removing all of those anti-FDI restrictions that shoo MNC’s and foreign investors away?

(I mean, come on, everyone else is using the short-cut route already! Everyone else in the ASEAN region is going with the MNC-attraction strategy. Why should we make things harder for ourselves than it should be?)

Is benign0 a masochist? Or does he just want Filipinos to continue to suffer when in fact bringing FDI’s in is one way of creating jobs and training opportunities that can jumpstart economic development?

As it turns out, it looks like benign0 just really prefers to see Filipinos continue to fail, because that justifies to him that his decision to leave the Philippines back in 2000 to emigrate over to Sydney was “the right one.” After all, should the Philippines improve itself after he left, it could make him and his wife Ilda think that they jumped the gun and quit.

How can benign0 actively go against Constitutional Reform (particularly economic liberalization as discussed in this article) when it is obviously the key missing ingredient in the Philippines’ quest to move up the value chain and get rid of its massive unemployment, poverty, overdependence on OFW Remittances, and its host of so many other social issues derived from all those I’ve just mentioned?

Oh well. The obvious conclusion anyone can get from reading this article is simply that the benign0 from GRP is just as clueless as the other Benigno (Aquino III) from Hacienda Luisita.

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Polls aren’t just for Metro Manila: Why Federalism?

Manila Philippines from the air Aerial Pictures Metro Manila

by: Jan Emil Langomez

Risa Hontiveros, Bam Aquino, Nancy Binay, Chiz Escudero: What do these political candidates have in common?

It’s simple really, all were born and raised within Metro Manila. These “senatoriables” are currently gunning for seats in the Senate. We constantly watch them in televised debates and interviews. Yet, there is a much deeper issue with regards to where our politicians come from and who they represent.

Our country is an archipelago containing 7,100 islands, each having their own unique culture and heritage. Indeed, we’re a diverse country; but is our political system as diverse? Look at our members of the 15th Congress Senators. Look at the current candidates running for a seat in the Senate. I bet you that most of them at least come from either Luzon or Metro Manila.

That’s the problem with our political system. We are too over-centralized. This greatly impacts the policies of our government. Take for example NEDA’s Philippine Midterm Report on the Millennium Development Goals. One of the challenges mentioned is the presence of ‘a wide disparity of development among the local regions’, especially provinces in Mindanao. That report was made during 2007. It’s 2013, yet the same problem persists.

Diving deeper into the issue, the NEDA report shows one stark reality: the presence of disparity. Of course, we can argue that this disparity is caused by many factors. But if we look at our current society today, we can see that a main factor here is how our provinces or regions are represented. Sure, we can say that the lower house is enough to proportionally represent our country. Sure, we can say that our barangays are already autonomous due to our law on Local Government Units.

But that’s not enough. We tend to forget that getting the views of individuals affected (known as “stakeholders”) is important if we want government policies to work. Hence, we also tend to forget the importance of local knowledge in order to fully understand local issues. In order to encourage the discussion of these issues, a proper form of political representation is necessary.

Indeed, if you want to solve a problem, it takes more than the “know-how.” It also needs the views of stakeholder, collectively represented by proper political figures within our legislative branch. This is important because these representatives of their respective regions have the local experience and knowledge important for the government to overcome different challenges faced by many of our provinces.

Let’s put this into a simple context: do you expect an average Manileño to understand the problems of an average Tausug? In some sense, yes, if he or she has the knowledge (something that’s very unlikely); when it comes to experience though, the Tausug clearly defeats the Manileño. Of course, intelligence and competence remain to be necessary traits; but having the local knowledge is a big plus! Experience is something that politicians can’t ignore.

So here we see how our country is represented. It reminds us of a famous terminology down south: “Imperial Manila”. Indeed, if we were just able to properly represent all of Filipino society, maybe the conflict in Mindanao would have been less problematic in the past. Maybe we wouldn’t have so many people coming to Metro Manila just to look for a job. Maybe many of our provinces would be better off if we give them a form of autonomy.

As expected though, a common critic would disagree. He or she would say that the problem in Mindanao is caused by the issue of land ownership, that many people in the provinces come to Metro Manila due to the lack of job opportunities, and that giving provinces autonomy would just empower the political families already present.

All of these points do make sense. It’s just that we can say as a rebuttal that progress in the Mindanao peace process would have been realized much faster if there were more “Mindanaoans” present in the government; politicians who most likely care a lot more about the issue.

We can say as a rebuttal that an important factor on why there are no job opportunities in the provinces is because we over-centralize development in the NCR, instead of spreading the fruits of development towards the other regions.

We can say as a rebuttal that providing autonomy towards the provinces can help fight corruption by lessening the budget coming from the federal government; greatly encouraging these politicians to collect taxes from only their respective provinces, making these political families more accountable of their actions.

It will take time for us to shift from a centralized form of government to a federal republic. So let’s use our time wisely. It’s currently the election period, and as responsible citizens, we can do so much in order to push for federalism in the Philippine government:

  1. Vote for those who are willing to initiate Constitutional Reform. Of course, intelligence, track record, and competency still remain to be important traits. If you’re not yet an eligible voter, tell those who are capable to initiate the mentioned action.
  2. While taking note of the above mentioned traits, let’s also vote for more candidates coming from the Visayas and Mindanao. Metro Manila is not the entire Philippines, and the Philippines is not just Metro Manila.
  3. Join political forums where you get to speak to your candidates. Mention to them of the need for Constitutional Reform.
  4. Make a post on Facebook, twitter, and other social websites about this issue. Inform your friends and family on how Federalism can help our government and country.

Federalism is so much more than petty “regionalism”. It is about properly representing all of the Filipinos. It is about a more efficient government. It is about respecting our multicultural identities.

Federalism is about unity in diversity.

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Further Reading:

Chicken or the Egg: Culture Change or System Change?

Chicken-or-the-Egg-smallerPeople often wonder about what determines the success of a society. Is it the culture or is it the system? Quite recently, as the debate on Constitutional Reform progresses and as more and more people realize that the current Philippine System – both economic and political – is dysfunctional and flawed, one opposing view that keeps coming up insists that it is not the system that needs changing, but the culture. While I am an advocate of Constitutional Reform and System Shifting, I have also long since proclaimed the fact that Filipino Culture is deeply dysfunctional, flawed, and needs a major overhaul. The question is: How do we overhaul Filipino Culture?

* * *

Differences in culture

Ever since I was in High School, I have been reading extensively about other countries, observing and finding out about other cultures, and in those observations as well as the research I’ve continued to do just to satisfy my own curiosity, I realized one main thing: That some cultures are more predisposed towards success than others.

My lola is half-Leb, but I was sent to Chinese schools anyway

I was born and grew up in Metro Manila and despite not being of pure Chinese ethnicity, studied in the Jesuit-run Xavier School (光啓學校) in San Juan which is known to have a predominantly ethnic Chinese or mixed-Chinese descent student population where Mandarin was taught as part of its curriculum. Incidentally, the most recent “immigrant” ancestor I had was my Lebanese great-grandfather, Elias Jureidini – my father’s mother’s father who had married into a Mestizo-Criollo Ilonggo family. On the other hand, all of my other ancestors were either native “Indios” or culturally Hispanicized and assimilated “Mestizos de Sangley” (Chinese-Mestizos – mother’s side) who, despite their unmistakably Chinese facial features, had no identification whatsoever with Chinese culture. During the summer before I got into the 6th grade, my family moved to Cebu (as my father is Cebuano) and I transferred to Xavier’s “Cebu branch” (which also had a predominantly ethnic Chinese or partly-Chinese student population), a school that used to be known as “Sacred Heart School for Boys” (聖心男校) , which later changed its name to “Sacred Heart School – Jesuit” when it accepted girls long after I graduated, and just recently, it has now become known as the “Ateneo de Cebu.” Due to this close contact with Filipino-Chinese friends and classmates, I observed a lot of key behavioral differences that showed just how the ethnic Chinese differ culturally from most fellow Filipinos. These ranged from such things as frugality and handling money, attitude towards studies, attitude towards achievement, self-discipline, and many more. One weekend, I visited a Tsinoy friend and classmate who lived in the Cebu Downtown area with whom I was working together on a joint class project. His home was the typical shop-house where they lived upstairs and their store was downstairs. I was slightly shocked to see him handling the cash-register while his father dealt with customers. I never imagined that his parents would make him work during the weekends. But there it was. He was being given direct training at such a young age on how business worked. If anything, I now saw the secret of his quick math skills. This experience of observing Chinese culture first hand was taken many steps further when I, together with some schoolmates were sent on a Mandarin-language study tour in Taiwan one summer in order to spend a little over a month at the St. Ignatius High School (徐匯高級中學) in the Luzhou district (蘆洲區) of Taipei. We Filipino students (many of whom were Fil-Chi) were a bit shocked at the rather “repressive” environment and hard-driving system that was in place for the Taiwanese Junior-Grade High School students who all had to live on campus. While we visitors had it relatively easy, the Taiwanese students from the first 3 years of High School were essentially living in a Catholic version of the highly disciplinarian Shaolin Monastery with elements taken from Military Academies! Instead of Buddhist Shaolin Masters, the “slave-driving” Shifus (師傅) were mostly Taiwanese Jesuit Priests, Jesuit Brothers and the teachers under them. (It is said by my close Ilonggo Tsinoy friends that a similar Shaolin-Military style system is in place at the Iloilo Central Commercial High School, fondly known as “Hua-Shong” – 華商 , the alma mater of such famous people as singer-businessman José Mari Chan & basketball star & former presidential brother-in-law James Yap.)

Discipline at the Shaolin Monastery

At St. Ignatius High School, a sort of reveille would wake all of them up early in the morning, around 6am, got them doing early calisthenics, then breakfast, and then they all had a supervised common study period before they did their everyday flag ceremony where they’d have two anthems play. They would first sing the Kuomintang’s (國民黨) solemn anthem entitled the “Three Principles of the People– (三民主 – San Min Zhu Yi) and after that, they’d all salute the Kuomintang banner of the Republic of China while a faster, unsung military march called the “National Flag Anthem” (國旗 – Guo Qi Ge) was played for the actual flag raising. Only after all those morning rituals would they start their classes for the day at around 8am. Every afternoon, we all couldn’t help but notice that the Taiwanese students all seemed to have P.E. or military training (depending on their year level). Then afterwards, they’d have some free time, dinner, and then right after dinner, they’d have supervised study & do-your-homework periods.

Supervised evening study at St. Ignatius High School

We visitors from the Philippines were shocked once again to see how the Taiwanese students were all literally forced to study their day’s lessons at their classrooms (several such classrooms were close to our dorm rooms) until around 9:45pm, and during those study periods, there were teachers or proctors who made sure no one dozed off. Occasionally, we’d gasp in horror when we’d see some students brought out to the corridors and spanked in the derrière with a ruler by the supervising teacher or proctor for the slightest infraction – usually dozing off. We had it easy. We never had to go through any of that! We also took note of the fact that the Taiwanese school system had classes 6 days a week (they had Saturday afternoons off when they’d return to their families to spend the weekends) and they had six full years of high school. Three years of Junior-Grade High School, and another three years of Senior-Grade High School. After that, they’d have to do two years of full-time military service before ever stepping into University. Whew! My Fil-Chi friends and classmates who were with me at the study tour were so thankful they were all born Filipinos and they’d exclaim in Cebuano almost every single day that they were so lucky their grandparents decided on choosing the Philippines as an immigrant destination to escape the poverty of Fujian Province in the early 1900’s instead of staying in China and then getting forced to flee to Taiwan with the KMT when the Communists won. Indeed, while it was true that the Filipino-Chinese themselves have done extremely well in the Philippines when compared to the relatively complacent and extremely fun-loving native Pinoys, the Taiwanese, who themselves are mostly of the same predominantly Hokkien-Fujianese stock as most Filipino-Chinese, were clearly more driven and hard-driving than the Tsinoys. In fact, in recent years, many Filipino-Chinese have not only gotten so assimilated and Filipinized (not necessarily a bad thing), so that they’ve been losing their heritage, language ability, and even the recognition of the traditional cultural values, some of them have even adopted some of the slothful traits of many “huaná” (番仔), the Hokkien term used to refer to native Filipinos. Having observed the Taiwanese example first hand, I do not at all wonder why Taiwan’s economy is one of the most competitive in the world, and why Taiwan has been responsible for coming up with some of the world’s most successful technology companies such as Acer, Asus, MSI, Trend Micro and many more. That highly disciplined military boot-camp cum Shaolin-style traditional Chinese educational system they all had to go through in Taiwan explains why they ended up with a culture that seems hard-wired for success.

Harbin’s No. 3 Middle School (哈尔滨市第三中学)

Fast forward to 2004 when I went to Harbin, China to spend a year there, I saw a very similar situation where the academic competition was extreme especially at the Number 3 Middle School of Harbin (哈爾濱市第三中學) where I taught a few classes of English while doing a sabbatical from working in the IT industry to beef up on my Mandarin Chinese skills. Every single one of the students was conscious about how good jobs were scarce and how they all needed to compete against hundreds of millions of other people by the time they got out into the work-force. For them, their only ticket to a good life was to get a good job, and the only way to get a good job was to qualify for a good university (and if possible, get a scholarship abroad), and one of the best ways to qualify for a good university was to finish at number 3 Middle School, which was one of Harbin’s top schools which also figured among one of the top schools in Northern China. For the longest time, among themselves, the Chinese (whichever side of the Taiwan strait they come from) have had an extremely strong sense of Meritocracy, causing José Rizal himself to mention what might seem to be a minor detail about Chinese culture in an excerpt taken from Chapter XIV of Noli Me Tángere, entitled “Tasio, el loco o el filósofo” (or “Tasio, the madman or the philosopher”) which happens to be extremely relevant to these times. In the excerpt, Tasio the Philosopher addresses the visiting Doña Teodora Viña (emphasis is mine):

Noli’s Chapter XIV complained that most Filipinos were anti-progress & anti-intellectual

Original:

“Ya sabe usted, Señora, que no soy partidario de la monarquía hereditaria. Por las gotas de sangre china que mi madre me ha dado, pienso un poco como los chinos: honro al padre por el hijo, pero no al hijo por el padre. Que cada uno reciba el premio o el castigo por sus obras, pero no por las de los otros.”

English translation:

“You already know, Madame, that I am not an advocate of hereditary monarchy. Due to the drops of Chinese blood that my mother has given me, I think a bit like the Chinese: I honor the father because of his son, but not the son because of his father. That each one receive the reward or punishment for his own deeds, but not for those of others.”

As everyone can see, even Rizal himself had made it a point to make explicit mention of the meritocratic culture of the Chinese “Sangley” community who had been distinguishing themselves through hard work as traders and businessmen, many of whom had intermarried with native Filipina women and produced the hybrid, mixed-heritage, assimilated “Mestizo de Sangley” caste of Spanish-speaking Filipinos from whence most business-minded, educated, wealthy, hard-working, knowledgeable, and enlightened Filipinos like Rizal, Mabini, Aguinaldo, and many more came from. (The word “Sangley” is derived from the Cantonese dialectal pronunciation of 生理 “Sang-lei”, pronounced “Seng-li” or “Seng-di” in Hokkien or “Sheng-li” in Mandarin which means “business”) Filipinos may ask what makes a culture strong or success-oriented, and I will say with conviction that it is not a random coincidence that the Chinese are more predisposed towards economic and all other forms of success than most ordinary Filipinos are.

The scroll reads “天道酬勤” – “Tiandào Chóu Tsín” -“Heaven favors the Diligent”

The Filipino-Chinese are much more predisposed towards economic success than most Filipinos because from a young age, many of them are brought up to regard hard work and self-discipline, not luck, talent, hereditary brilliance, or innate ability, as the determinant of success. At an early age, many of them are introduced into their family businesses to help out and learn the ropes during the weekends and summer breaks so that they learn and internalize simple business concepts, improve their mathematical and accounting skills while handling the cashbox, learn the intrinsic values of self-discipline, and recognize that money does not grow on trees. In their homes, their parents or grandparents hang decorative Chinese calligraphy scrolls with proverbs or sayings that extol the virtues of hard work, diligence, perseverance, continuous learning, and many more. Even the families of Filipino-Chinese Taipans Henry Sy and John Gokongwei, to name just two examples, did not spare their children the obligation to earn their allowance by doing work at their stores, rotating them into different parts of their businesses, familiarizing each one with inventory maintenance, merchandizing, delivery management, accounting, etc, with the intention of instilling both a strong work ethic and to train them to turn business management into their second nature while still at a young age. Chinese Culture is much more predisposed towards success because the Chinese have set up formidable child-rearing and positive reinforcement systems that cultivate their young to exhibit the very traits and behavioral patterns necessary in order to be successful in business or whatever field of endeavor they so choose. Many of them set up the right role models of whom to emulate, and they continuously, consistently, and constantly repeat proverbs or sayings that remind themselves of what to strive to become and what to avoid becoming. They set up the appropriate behavioral rewards and reinforcements as well as punishments and disincentives so that as much as possible, their children learn the right values and behaviors and avoid the wrong ones. In short, the “secret” of the Chinese is that they have set up a System of how to bring their children up in order to instill the highly success-oriented aspects of Chinese Culture in them.

* * *

What exactly is Culture?

Culture, just like talent, must be cultivated

After years and years of observing different cultures, collective behaviors, collective achievements (or lack thereof), and looking at the systems of up-bringing or cultivation that either gave rise to, further augmented, or dampened the competitiveness of the different people who possess these traits, I’ve realized that cultures do not randomly emerge. More importantly, successful cultures do not arise as a result of historical accident. Successful cultures are cultivated. In fact, if we were to look at the etymology of the word Culture, we find that its original Latin “Cultura” stems from the word “Colere” which means “to cultivate.” Cultures, therefore, emerge partly because they are either unconsciously cultivated by some external force such as the physical environments or climates in which they were spawned, or they can also be consciously cultivated by the very people who comprise or lead the groups in which people belong so that a culture’s development may be cultivated towards a particular direction, either counterbalancing the debilitating tendencies that a particular environment may cause, or by appropriately responding to the challenges that certain environments may exert. When we check the American Heritage Dictionary, we find that Culture is defined as thus:

Culture (kŭl’chər) noun

1.
a. The totality of socially transmitted behavior patterns, arts, beliefs, institutions, and all other products of human work and thought. b. These patterns, traits, and products considered as the expression of a particular period, class, community, or population: Edwardian culture; Japanese culture; the culture of poverty.
c. These patterns, traits, and products considered with respect to a particular category, such as a field, subject, or mode of expression: religious culture in the Middle Ages; musical culture; oral culture. d. The predominating attitudes and behavior that characterize the functioning of a group or organization.
2. Intellectual and artistic activity and the works produced by it.
3.
a. Development of the intellect through training or education. b. Enlightenment resulting from such training or education.
4. A high degree of taste and refinement formed by aesthetic and intellectual training. 5. Special training and development: voice culture for singers and actors. 6. The cultivation of soil; tillage. 7. The breeding of animals or growing of plants, especially to produce improved stock. 8. Biology.
a. The growing of microorganisms, tissue cells, or other living matter in a specially prepared nutrient medium. b. Such a growth or colony, as of bacteria.
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The very first definition clearly defines “Culture” to be a set or System of behavioral patterns, beliefs, values, priorities, traits, etc.

Dr. B.F. Skinner

One of the most instrumental researchers in the development of culture, its ability to be shaped and modified as seen fit, and its relation to behavior, values, and many of the other trappings of what we all call culture, was the founder of Operant Conditioning, the late Dr. Burrhus Frederic Skinner. In Chapter 7 “The Evolution of a Culture” of Beyond Freedom and Dignity, B.F. Skinner states:

“…those who observe cultures do not see ideas or values. They see how people live, how they raise their children, how they gather or cultivate food, what kinds of dwellings they live in, what they wear, what games they play, how they treat each other, how they govern themselves, and so on. These are the customs, the customary behaviors, of a people. To explain them we must turn to the contingencies which generate them.

Some contingencies are part of the physical environment, but they usually work in combination with social contingencies, and the latter are naturally emphasized by those who study cultures. The social contingencies, or the behaviors they generate, are the “ideas” of a culture; the reinforcers that appear in the contingencies are its “values.”

A person is not only exposed to the contingencies that constitute a culture, he helps to maintain them, and to the extent that the contingencies induce him to do so the culture is self-perpetuating…”

Furthermore, he states at the end of Chapter 7:

“The social environment is what is called a culture. It shapes and maintains the behavior of those who live in it. A given culture evolves as new practices arise, possibly for irrelevant reasons, and are selected by their contribution to the strength of the culture as it “competes” with the physical environment and with other cultures. A major step is the emergence of practices which induce members to work for the survival of their culture. Such practices cannot be traced to personal goods, even when used for the good of others, since the survival of a culture beyond the lifetime of the individual cannot serve as a source of conditioned reinforcers. Other people may survive the person they induce to act for their good, and the culture whose survival is at issue is often identified with them or their organizations, but evolution of a culture introduces an additional kind of good or value. A culture which for any reason induces its members to work for its survival is more likely to survive. It is a matter of the good of the culture, not of the individual. Explicit design promotes that good by accelerating the evolutionary process, and since a science and a technology of behavior make for better design, they are important “mutations” in the evolution of a culture. If there is any purpose or direction in the evolution of a culture, it has to do with bringing people under the control of more and more of the consequences of their behavior.”

Moving on to the idea of designing or modifying a particular “culture”, in Chapter 8 “The Design of a Culture” of Beyond Freedom & Dignity, B.F. Skinner goes on to state:

“Many people are engaged in the design and redesign of cultural practices. They make changes in the things they use and the way they use them. They invent better mousetraps and computers and discover better ways of raising children, paying wages, collecting taxes, and helping people with problems…”

He goes on to say:

“A programmed sequence of contingencies may be needed. The technology has been most successful where behavior can be fairly easily specified and where appropriate contingencies can be constructed – for example, in child care, schools, and the management of retardates and institutionalized psychotics. The same principles are being applied, however, in the preparation of instructional materials at all educational levels, in psychotherapy beyond simple management, in rehabilitation, in industrial management, in urban design, and in many other fields of human behavior. There are many varieties of “behavior modification” and many different formulations, but they all agree on the essential point: behavior can be changed by changing the conditions of which it is a function.”

It is extremely important that Filipinos who wish to understand the “culture change versus system change” debate realize that Culture is by itself a System. Culture is a system of mores, values, behavior, and social consequences dependent on behavior. It is a system of thought patterns. It is a system of priorities. It is a system of how things are done. To change the culture of a particular people, it is necessary to change the underlying system or systems that cause the culture in question to be the way it is. Doing so when a system deals with human beings requires that the appropriate rewards (positive reinforcements) versus punishments (aversive consequences) be put in place in order to induce the desired behavior and avoid the unwanted behavior.

* * *

Systems that determine or influence Behavior & Culture

Human behavior and the underlying values, preferences, priorities, and manner of thought – collectively lumped into that system of social norms shared by a group of people known as “culture” – is often the result of several levels of system influences. Rather than stating that an individual person’s behavior is necessarily the result of only one particular system, it is best to recognize how several different systems work together to probabilistically determine or at least highly influence a person’s behavior and subsequently, the culture to which he belongs. Here is a listing of all 5 systems and their attributes:

1. Natural Environment & Eco-System
– Affects people collectivelyCannot be changed – Is represented by the influences of Climate, Terrain, Geography, Land Altitude, Land Fertility, Weather, other natural factors peculiar to the location where people live. – (you may superficially and temporarily “alter” climate by using air-conditioning, or do other “superficial changes” but it requires effort, energy, and technology)
– (you may migrate to a different territory to get away from the original environment)
 
 
2. Societal System
– Affects people collectivelyCan be changed
– System of Government, System of Laws, System of Law & Policy Enforcement, System of Education
3. Sub-Community Group and Family System
– Affects people collectivelyCan be changed
– Upbringing, Nurture, Family Values, Values of the Small Community
4. Personal System
– Affects people individuallyCan be changed
– Personal Beliefs, Personal Values, Personal Principles, Personal Decisions
5. Hereditary & Genetic System
– Affects people individually at the cellular/DNA levelCannot be changed within one’s lifetime
– Genetic Inheritance, genetic predisposition, behavioral tendencies / Temperament caused by genetic influence, innate abilities / talents

*

By understanding how these 5 different systems all influence human behavior, we also can better understand at which levels the challenges, advantages, disadvantages, and even dysfunctions are to be found as far as behavior and culture are concerned. It is in this way that it also becomes much easier to determine how to improve the competitiveness and survivability of a particular individual or group of people with respect to inducing the emergence of desired winning behaviors and thus to ultimately establish winning cultures on the collective levels of the wider society, the sub-community group, and the family. It is also necessary to understand that these different systems are all arranged from macro to micro, in order to more easily understand why it is possible for there to be “exceptions to the rule.”

For instance, certain societies within a particular environment may develop a particular predisposition to act in a certain way due to said environment. However, some societies may develop their own societal system that causes the people within that society (or country) to defy the natural tendencies as induced by the environment and thus behave differently. This is best seen within the context of how Singapore, despite being in the tropics where numerous societies within tropical regions are often expected to have national cultures that are usually uncompetitive & slothful, Singapore shines as an exception to the rule due to the manner in which its societal system was set up in order to defy the environmental influences of being in the tropics. Likewise, within a particular society having a collective culture, some sub-groups or families may defy the stereotypes because within their own small groups or family-units, collective systems are set up in such a way as to cause the members of said groups or families to behave differently from the mainstream. This is how the Filipino-Chinese, Mestizo-Sangleys (often known in modern times as “the Filipino Upper Classes”), and Mestizos-Criollos (often called “Tisoys”) do not always conform to national stereotypes due to differences in how these groups raise their children within their family-settings so that they end up exhibiting certain traits and behaviors that are oftentimes advantageous over the mainstream (such as fiscal consciousness, frugality, etc). This also explains how Ilocanos are stereotyped to be extremely frugal, despite the general tendency of most mainstream Filipinos to be spendthrift, even though many Ilocanos have already migrated to other areas and no longer live in the relatively barren and infertile homeland of Ilocandia which was responsible for shaping their frugal nature. Likewise, if and when a person is born into a dysfunctional family where there is chaos and disorder and no proper parental guidance nor family role model to aspire to, this model also explains how it is possible for an individual person to decide to defy his family’s dysfunctional system and still turn out successful due to extreme willpower and a strong, well-developed personal system. More importantly, it should also be recognized that well-developed collective systems (systems at the societal and small group & family level) can even drive people to succeed despite their lack of genetic endowments. As it is, in the Confucian-influenced East Asian cultures of the Chinese, Koreans, Japanese, Vietnamese, as well as others bearing similar influences, one’s genetic predispositions are – within their cultural paradigms – said to count for little or are often seen as irrelevant, as their paradigm for achieving success rests more with hard work and effort. As such, genetic endowments are seen merely as a bonus in such cultures. Each and every person is expected to work his or her hardest to succeed, despite whatever hereditary background they may have, be they the children of street-cleaners or PhD’s in Physics. For such Confucian cultures, “genius”, which in Mandarin is “Tian Tsai” (天才) – literally Heavenly (天) Gift (才), is not an excuse to slack off and take it easy, and instead, so much more is expected of a genius or extraordinarily-gifted person. (This also has echoes in the Protestant Ethic)

Vertical:”持之以恆” (Chi Zhi Yi Heng) “Perseverance”; Horizontal:”學無正境” (Xue Wu Zhengjing) “Learning has no limits”

From the perspective of many East Asian cultures’ paradigms, failure is not the result of one’s innate deficiencies but is rather a result of not having worked hard enough. This paradigm is most observed with the kinds of ancient classical proverbs that the Chinese have (which are often hung as decorative calligraphic scrolls) and are often shared with other cultures of the Sinosphere, including Korea, Vietnam, and Japan. Rather than exalting innate abilities or in-born intelligence, ancient Chinese proverbs or key words exalt perseverance (持之以恆), hard work (功夫 – “Kung Fu”, which in the West is thought to mean “Martial Arts”), continuous improvement (改善 – “Gaishan” in Mandarin, “Kaizen” in Japanese), continuous learning (學無正竟), and of course, the all-important virtue of discipline (訓練). It must be realized that culture change by itself can never happen unless a corresponding system change is made. This is simply because of the numerous systems that influence and probabilistically determine human behavior and ultimately, human culture. Before we can change culture, we need to know what the different systems are and how they influence behavior: 1. Natural Environment & Eco-System

The Natural Environment and Eco-System in which a group of people first form their cultural identity has a profound effect on how such people may behave, think, and see the world.

the late Arnold J. Toynbee

British Historian Arnold J. Toynbee, in his book “A Study of History” explained in his Challenge and Response Theory that human societies are often subjected to various challenges which if responded to properly, can allow the societies to rise above the challenge and succeed. Such challenges, at the environmental level includes such aspects as climate, terrain, quality of land, and others which may pertain to the abundance or scarcity of sources of food or food production ability. Difficult environments such as cold climate or difficult terrain, for instance, pose as challenges to the groups of people living in such environments. Not responding appropriately to such challenges results in extinction or suffering, while responding to the challenges properly results in improved chances of survival. A culture that is competitive and easily able to respond to challenges is termed a “hard culture.” Wherever the environment is easy, chances are very high that the people living in such an environment tend to become lax and complacent. Such a culture is termed a “soft culture.”

In “A Study of History”, Toynbee writes:

“Civilizations come to birth in environments that are unusually difficult and not unusually easy.”

In describing the development of Chinese Civilization, Toynbee adds:

“The Sinic Civilization was nurtured in the north of China, where the climate was severe, and swamps and regular floods made agriculture difficult, and so it became a “hard” society.”

From the Age of Enlightenment came an older, similar idea which emphasized the role of environment & ecosystem, most particularly of the aspect of Climate, on how different cultures tend to behave differently.

Charles de Secondat, best known as “le Baron de Montesquieu”

Charles de Secondat, le Baron de la Brède et de Montesquieu, known to the world simply as “Montesquieu” wrote extensively about the role of the Environment & Eco-System, with an apparent emphasis on Climate, in determining the behavior and culture of people. He described colder climates as being more likely to force people to become more frugal, forward-looking, self-disciplined, and less emotional.

On the other hand, he described warmer climates as being more lax and tolerant of mistakes, based on the short term, frivolous/flippant, and emotional.

In one excerpt, Montesquieu writes:

Original:

“On a donc plus de vigueur dans les climats froids… Cette force plus grande doit produire bien des effets: par exemple, plus de confiance en soi-même, c’est-à-dire plus de courage; plus de connaissance de sa supériorité, c’est-à-dire moins de désir de la vengeance; plus d’opinion de sa sûreté, c’est-à-dire plus de franchise, moins de soupçons, de politique et de ruses.

J’ai vu les opéras d’Angleterre et d’Italie ; ce sont les mêmes pièces et les mêmes acteurs: mais la même musique produit des effets si différents sur les deux nations, l’une est si calme, et l’autre si transportée, que cela paroît inconcevable.

Vous trouverez dans les climats du nord des peuples qui ont peu de vices, assez de vertus… Approchez des pays du midi vous croirez vous éloigner de la morale même: des passions plus vives multiplieront les crimes ; chacun cherchera à prendre sur les autres tous les avantages qui peuvent favoriser ces mêmes passions.”

English Translation:

“The people have more vigor in cold climates… This superiority of strength must produce various effects: for example, a greater self-confidence, that is to say – more courage; a greater sense of superiority, in other words, less desire for vengeance; a greater sense of security, i.e., more frankness, less suspicion, politicking, and scheming…

I have seen the operas of England and Italy, they are the same pieces and the same performers: and yet the same music produces effects so different upon the two nations; one is so calm, and the other so transported that it seemed inconceivable.

You will find in the climates of the North – people who have few vices, many virtues… If you approach the South you will believe yourselves entirely removed from the verge of morality: the deepest passions cause a multitude of crimes; each one will seek to take advantage of all the others who can promote these same passions.”

The good Baron’s observations regarding the differences that often characterize the Cold versus Warm dichotomy when looking at the fates of different societies continue to be a recurring theme when correlations are made between the richer temperate countries versus the often poorer tropical countries of the world. It is also not surprising that Montesquieu thus observed that societies from colder climates can prosper even with democratic or libertarian systems, while societies from warmer climates need to have strict, disciplinarian, and somewhat coercive systems in place for such societies to prosper.

Lee Kuan Yew

In “Lee Kuan Yew, the Man and his Ideas”, the Elder Statesman – who also subscribes to Montesquieu’s Climate Theory – mentions his own observations on the differences between some cultures based on their climatic environments:

“On my first visit to Germany in 1956, we had to stop in Frankfurt on our way to London. We had [earlier] stopped in Rome. This languid Italian voice over the loudspeaker said something … And there were Italian workers trundling trolleys at the airport. It was so relaxed, the atmosphere and the pace of work. Then the next stop was Frankfurt. And immediately, the climate was a bit cooler and chillier. And a voice came across the loudspeaker: “Achtung! Achtung!” The chaps were the same, porters, but bigger-sized and trundling away. These were people who were defeated and completely destroyed and they were rebuilding. I could sense the goal, the dynamism.

…I also visited Switzerland when I was a student in ’47, ’48, on holiday. I came down by train from Paris to Geneva. Paris was black bread, dirty, after the war. I arrived at Geneva that morning, sleeping overnight. It was marvelous. Clean, beautiful, swept streets, nice buildings, marvelous white pillowcases and sheets, white bread after dark dirty bread and abundant food and so on. But hardworking, punctilious, the way they did your bed and cleaned up your rooms. It told me something about why some people succeed and some people don’t. Switzerland has a small population. If they didn’t have those qualities, they would have been overrun …”

(Personally, I think that the key difference between Paris and Geneva – both being linguistically and culturally French-speaking is that Paris is predominantly Catholic (as well as agnostic), while Geneva is predominantly Calvinist-Protestant, and is therefore heavily-influenced by the Protestant Ethic.)

The tropics can make you just want to relax and laze around

Even Lee Kuan Yew wrote that if the system of Singapore were not based on an extremely competitive meritocracy, then the tropical climate would make Singaporeans grow soft and complacent, and in the end, the effects would mean slipping back into “Third Worldism” and mass poverty.

In a speech to a group of Trade Unionists in Adelaide during a visit to Australia, Lee Kuan Yew explained:

“The Chinaman who came out to Southeast Asia was a very hard working, thrifty person. I mean he faced tremendous strides because he faced floods, pestilence, famine…, [but] we are getting soft. You know, all sunshine and bananas growing on trees and coconuts falling down by themselves – this affects people. To a certain extent, you can try and counter it… Up to a point we can strive to lessen the burden… This is a problem all migrants face. You are part of one culture, one civilization and culture. But it is a different climate.”

We can also see how other challenges posed by the Eco-System can cause people to respond in ways that make them more predisposed towards certain types of behavior, hopefully those more conducive to success.

The Ilocanos, for instance, are known to be very frugal and hardworking people and quite often, the somewhat barren or infertile nature of the land in Ilocandia is cited as the reason for this. Incidentally, they are also some of the most orderly of Filipinos. A visit to the Ilocano countryside or to Ilocano cities such as Vigan or Laoag reveals an extremely clean and orderly (almost obsessive-compulsive) environment, eliciting analogies with the Japanese: orderly and always ensuring that their surroundings are very neat.

St. Ignatius of Loyola, founder of the Jesuits, was Basque

The Fujianese or “Hokkien” (福建) Chinese are seen to be like the Ilocanos of Southern China (Fujian is barren and hilly) – extremely frugal and hardworking, especially when compared to the Cantonese whose culture is said to have flourished in the lush farmlands and plains of Guangdong (廣東) Province.

The Basques of Spain also have the same rugged and relatively infertile terrain as the Ilocanos and the Fujianese, and it is for this reason that they are considered to be the most hardworking of Spaniards, and among all the immigrants from Spain who went to Latin America, they quickly became the earlier landowners and industrialists and dominated agriculture and early industry. It also comes to no surprise that many of the surnames of some of the richest families in the Philippines such as Abóitiz, Araneta, Ayala, Elizalde, Larrazabal, or Ortigas just to name a few are Basque.

Ultimately, there’s not much we can do about our natural environment other than migrate to another location with a different environment. Or we can temporarily change the temperature and humidity of our enclosed surroundings through air-conditioning, but that’s just about it. We thus just have to work on what we can change: our collective social systems and personal systems.

2. Societal System

The same thinker from the Age of Enlightenment who talked about Climate and the Eco-System’s effects on human behavior, Montesquieu, also mentioned that the manner in which a society is run (its “System of Governance”) also helps to shape culture. More importantly, Montesquieu did not dismiss the possibility of people from warmer countries becoming disciplined, frugal, forward-looking, and more logical, because as long as the societal system (including the system of government) is carefully-designed to constantly provide the right incentives to promote the desired behaviors to emerge among the people as well as appropriate disincentives that would prevent the emergence of undesirable ones, then the people from such warmer countries can learn to exhibit the same or similar “winning culture” that has often been observed among civilizations from colder climates.

As it turns out, while the Baron de Montesquieu did in fact observe that the Eco-System – climate, geography, and other aspects of the environment – affect the temperaments and customs of a group of people, he did not believe in rigid determinism. As such, he did not believe that the effects of the environment and the resulting cultural inclinations (especially the dysfunctional ones) could not be resisted and mitigated.

Modern French now spells it as “lois” (“laws”) instead of “loix” for the plural of “loi” (“law”)

For him, it was necessary that the laws put in place, the policies pursued, the manner in which they were implemented and enforced, and even the form of government adopted and set up by the people would have to take careful account of all these different factors. Thus, as an example, instead of copying the form of government that was specifically set up for another society having an extremely different set of cultural and historical circumstances, Montesquieu advocated taking careful stock of the cultural and behavioral inclinations as well as the environmental influences on society in order to accommodate whatever positive traits proved useful, and actively and ruthlessly counteracting all the cultural and behavioral dysfunctions of the people as well as the negative effects the environment influenced upon the people.

In talking about the need to ruthlessly counteract the effects of the environment on people’s behavior, in his magnus opus “De l’esprit des lois” (The Spirit of Laws), the Baron of Montesquieu writes that sometimes, if the country’s environment causes people to be too lazy or unwilling to work, there is no choice but to use coercion just to get things done:

Original:

“Il y a des pays où la chaleur énerve le corps, et affoiblit si fort le courage, que les hommes ne sont portés à un devoir pénible que par la crainte du châtiment: l’esclavage y choque donc moins la raison…

English translation:

“There are some countries where the heat irritates the body, and weakens one’s drive so strongly, such that men can only be made to perform hard work only by the fear of punishment: slavery thus becomes less shocking to one’s reason…”

Lee Kuan Yew himself also saw this and realized that tropical Singapore needed “behavioral modification” and “social-engineering” systems that were a clever mix of proper incentives and disincentives which practically bordered on “coercion” in order to motivate people to work hard. As such, despite huge monetary reserves, Singapore never went on the same type of dole-out distribution spree that characterized many prosperous Western countries who believed in socialistic welfarism.

CPF contributions pay for Singapore’s public housing projects

Moreover, instead of a Ponzi-scheme social security system, he set up the Central Provident Fund which operated like a high-interest bank account, where employees would be deducted a particular percentage of their income each month, to be matched by their employer. Upon reaching retirement age, retirees are not exactly going to be drawing from an inexhaustible pool of retirement pension payments. They would be dispensed cash against their own CPF accounts which they had built up over their years of working. The Central Provident Fund was also the instrument used to fund the home-ownership drive of Singapore’s Housing and Development Board, where instead of coming up with a “free housing” scheme, Lee Kuan Yew and the People’s Action Party preferred that people pay for their houses in order to give them a real sense of achievement and value. (Consistent with Singapore’s “no dole-out” policy)

On the other hand, the low income-tax rates which were computed only after CPF contributions were deducted ensured that Singaporeans would see most of the fruits of their own labor going to themselves and not to some “black hole.” This way, earning was not unduly penalized. This system effectively fostered frugality and gave more motivation for people to earn more. In a tropical environment of abundance lacking the urgencies of deadlines and seasonal changes in temperate climates, it made sense to set up a system of rewards and penalties that would encourage people to earn and save more in order to counteract the tropical tendency to be spendthrift and hedonistic. Moreover, he needed to use such techniques of reward & punishment and caning & fines (“$ingapore is a fine city”) in order to reform Singaporeans to become more orderly and hygienic and abandon such previously common but abominable traits such as spitting just anywhere including indoors as well as urinating inside elevators!

3. Sub-community Group and Family System

It is important for people to realize that the reason why the Jewish Diaspora, Overseas Chinese, the Lebanese diaspora, the Armenian diaspora, the Sindhi diaspora, and many others are hugely successful ethnicities is not because their cultures emerged as having the right traits of success by chance. Instead, the real fact is that many of these successful groups ended up with their “Winning Cultures” often as the result of their sub-community systems and strong and effective systems of family upbringing which molded their behaviors while they were still young.

Dr. Eric Kandel – Jewish polyhistor, intellectual & Nobel Laureate for research on the human brain – studied at a Yeshivah (Jewish seminary), majored in History, Medicine, then Neuroscience

Lee Kuan Yew, for instance, wrote that he learned that part of the reason for the dominance of Jews in many fields of endeavor, such as the sciences, arts, business, etc is that their culture was shaped by how they were brought up strictly to strive for excellence (especially in numerous intellectual fields) by disciplinarian parents within their family setting. In the book “Lee Kuan Yew, the Man and his Ideas”, Minister Mentor Lee writes:

“From the 10th to 11th century in Europe, among the Ashkenazim, the practice developed of the rabbi becoming the most desirable son-in-law because he is usually the brightest of the flock. …So he becomes the richest and wealthiest. He marries young, is successful, probably bright. He has large numbers of children and the brightest of the children will become the rabbi and so it goes on.”

To become a rabbi, one had to go through intense study. There was the study of Hebrew, Aramaic (some texts such as the Targums are in Aramaic, not in Hebrew), and yes, the texts of the Tanakh (Hebrew Bible), the Talmud, and many more. They had to study Jewish jurisprudence and learn to be superior at logic and many more. Every single family wanted their sons to become rabbis. Since all their boys needed to study certain religious texts for their Bar Mitzvah anyway, everyone was encouraged to at least aim to study to become a rabbi. And the best among them would indeed become rabbis. Those who did not become rabbis still benefitted from the intense focus and discipline they underwent in their religious instruction so that as merchants, bankers, physicians, and other experts, they had the necessary traits to prosper. Even those who did not study to become rabbis all looked up to rabbis and got their children to aspire accordingly. The pattern got repeated over and over again.

With the Chinese, just replace the word “Rabbi” with “Mandarin Magistrate.” And replace “study the Torah, Bible, and other texts” with “study the Analects of Confucius, Sun Tzu’s Art of War, The Three Kingdoms, and all the other Chinese classics.”

Mandarin “Scholar-Official”

Practically every Chinese family (except those barred such as sons of actors and prostitutes) hoped to have a son become a Mandarin Magistrate. It was their ticket to the big-time. As much as they could, they pushed their sons to study hard so that when they were ready, they could take the Imperial Civil Service exams that would turn them into mandarins. Rich merchants (most often failed Mandarin-wannabes who became traders) presented their daughters to newly-minted mandarins (and back then, they also had polygamy) for marriage. In short, almost everyone wanted to become a mandarin, and even those who didn’t make it actually benefited in their new trades from the training, discipline, and intense study they had gone through.

Lee Kuan Yew figures once again as he also showed how a certain culture of “eugenics” emerged due to the competitive nature of old Chinese society:

“…You read Hóng Lóu Mèng (紅樓夢), A Dream of the Red Chamber, or you read Jīn Píng Méi (金瓶梅The Plum in the Golden Vase), and you’ll find Chinese society in the 16th, 17th century described. So the successful merchant or the mandarin, he gets the pick of all the rich men’s daughters and the prettiest village girls and has probably five, six, seven, eight, nine, ten different wives and concubines and many children. And the poor labourer who’s dumb and slow, he’s neutered. It’s like the lion or the stag that’s outside the flock. He has no harems, so he does not pass his genes down. So, in that way, a smarter population emerges.

In an interview with Fareed Zakaria, Minister Mentor Lee said:

“If you have a culture that doesn’t place much value in learning and scholarship and thrift and hard work and deferment of present enjoyment for future gain, the going will be much slower.”

For the case of the Lebanese, and the Lebanese Diaspora (the Lebanese are ultimately the surviving heirs of the ancient Phoenician-Punic maritime civilization who invented the original alphabet which influenced the Greek, Latin, Hebrew, Arabic, and Aramaic scripts), many of them are Christians (Latin America is dominated by Lebanese Christian émigrés – like Carlos Slim Helu of Mexico, listed as Forbes’ richest man in the world – surpassing Bill Gates and Warren Buffet, and internationally, there are other famous names like Carlos Ghosn of Nissan and Renault, former CEO of Ford Jacques Nasser, author Nassim Nicholas Taleb) and for a very long time, the culture was similar to the Jewish one. (In fact, the Syriac-based names of the months in the Lebanese Christian calendar are not too different from the Hebrew names of the months in the Jewish calendar.)

Carlos Slim y Helú, the world’s richest man, is of pure Lebanese descent

Most Lebanese were traditionally brought up in very strict family environments by disciplinarian fathers, and instead of rabbis, the Lebanese Christians had priests (Maronite Catholic, Orthodox, etc). Because of the unique ancient eastern traditions of the Lebanese Christians, even those Christian groups under Roman Catholic jurisdiction such as the Maronites, Melkite Greek Catholics, and several other groups, married men are permitted to become priests. (The only real restriction is that marriage must happen before Holy Orders. Moreover to become a bishop, one must be celibate, so those who have plans to move up the ranks must stay celibate, or in the case of the Orthodox, an ecclesiastically-sanctioned divorce is obtained permit a married priest’s promotion to the episcopacy.)

In short, in the pre-modern days, many Lebanese Christians were brought up in a competitive religious educational environment not too different from the Jewish rabbinical tradition of scholarship and many of them were expected to give prestige to their families by joining the priesthood. If they planned to raise their own families, they had the option to delay taking up Holy Orders in order to get married before going through the Sacrament that would turn them into priests. Being a priest was not only well respected, it was something that almost every male aspired to become or at least emulate because there was no strict “celibacy trade-off.” Such a tradition of high aspirations and high collective expectations permeated throughout Lebanese society, resulting in the relatively high success rates of many Lebanese émigrés and their descendants.

We also see how some groups of people, undergo collective “spiritual conversions” or changes in their belief systems. Max Weber, in his extremely famous work “Die protestantische Ethik und der Geist des Kapitalismus” (The Protestant Ethic and the Spirit of Capitalism), explained that the belief-systems and value-systems of many Protestants, particularly Calvinists, were ultimately responsible for their relative economic success. By simply going through a major paradigm shift that made them think of work not as a chore or “necessary evil”, but rather as a “means to praise, honor, and glorify God“, and that “wealth is not evil, but a sign of God’s grace“, Calvinists and most other Protestants on the average ended up more prosperous than Catholics because they did not disdain work nor wealth.

Max Weber, the sociologist who described the Protestant Ethic

Such conversion required a constant “reminding” of the value system that was adopted. Thus, a system of reminders or “rituals” or “practices” (such as regular worship services) needed to be put in place so that the individual members of the group do not forget nor lose sight of the newer paradigm they have adopted. In that manner, new converts do not regress back to their pre-conversion state.

This level is referred to as the “Sub-Community Group” and “Family” level because in addition to raising children within the family setting, there is also the fact that minority groups, often as immigrants, tend to congregate within a small common group of fellow immigrants from the same ethnic community. In such a setting, they may reinforce each other and their children to retain whatever good traits their ethnic background may have. When groups of families regularly congregate around certain cultural or religious centers that help maintain a specific identity, such as churches, synagogues, mosques, temples, or other centers, common collective behaviors and customs and traits emerge which may be reinforced or enhanced by the religious systems and discipline espoused by their groups.

One peculiar example that stands out in the Philippine setting is that the Philippine classical music scene’s choral and operatic sector is currently dominated by highly-talented and extremely sought-after Filipino opera singers and choral conductors who happen to come from mainline Protestant backgrounds. (“Mainline” includes UCCP, Baptists, Methodists/IEMELIF, Episcopalians/Anglicans, Presbyterians, etc.) At the very least, the relatively large number of mainline Protestants who enjoy some of the most respected reputations within Philippine classical music’s voice category is clearly disproportionate to their small overall share of the total Philippine population which continues to have an overwhelmingly Catholic majority.

Maestros Joel Navarro & Eudy Palaruan – both conducted the Ateneo Glee Club

Case in point: World class and internationally-acclaimed Filipino opera stars like soprano María Rachelle Gerodías, baritone Andrew Fernando, tenor Lemuel de la Cruz (all three of them also happen to be products of UST’s Conservatory of Music), internationally-acclaimed Filipino choral maestro, math genius and music professor Dr. Joel Navarro, and famous counter-tenor, choral conductor, and keyboard virtuoso Eudenice Palaruan (who used to direct the now-defunct San Miguel Chorale and whose choral arrangement of the Capiznon folksong “Pasigin” and a few other Filipino songs are extremely popular among most serious choral groups including choirs in Singapore, Thailand, and Indonesia) all come from mainline Protestant backgrounds. Continuing the list are the celebrated late baritone Gamaliel Viray, the famous “Dequadin Tenor” Nolyn Cabahug and his sister soprano Lisa Cabahug, soprano Ailene Cura, mezzo-soprano and choral conductor Jai Sabas-Aracama, pianist & choir conductor Fidel Calalang, Jr., pianist & choir director Carminda Regala, and the late baritone and choral conductor Elmo Makil.

(The late Prof. Makil is also famous for his arrangement of the Itneg War Chant “Iddem dem Mallida” which like Eudy Palaruan’s arrangement of “Pasigin” is another favorite choral piece within the Singapore choral community, even being used by Singapore’s Anderson Junior College Choir as a choral competition piece in Italy).

Incidentally, Rachelle Gerodías – who has also made her name as the soprano “gold standard” in both the Singapore and Malaysia opera scene – confirmed that the same situation applies to South Korea as most if not all the Korean opera singers she has met also come from Protestant backgrounds. Rachelle also added that aside from the emphasis on polyphonic choral music as used for Sunday worship services dating back to the time of the devout Protestant Baroque composers Johann Sebastian Bach (famous among both Catholics and Protestants for the hymn “Jesus bleibet meine Freude”) and George Frederic Händel (famous for “Joy to the World” and the Messiah Oratorio), she also clearly hints at what Max Weber calls the Protestant Ethic when she says:

Ma. Rachelle Gerodías, Soprano Diva

“…I think what really made a big difference between Catholic and Protestant musicians and singers is the discipline and the religious or spiritual practice. Most singers in Protestant churches are encouraged to join the choir and sing every Sunday. If you are gifted with a beautiful voice, it is recognized as a talent from God that you must use and develop because that is the will of God.”

Based on the famous diva’s words, it appears that the overall “system” or paradigm of mainline Protestant spiritual belief and religious practice actively supports the development of highly talented classical singers. The spiritual belief motivates those with talents in music to further develop such talents, while the religious practice of Sunday worship molds many of them towards the direction of classical singing.

In contrast to the emphasis on classical-style choral singing that is integral to the Sunday worship services of mainline Protestant churches in the Philippines, post-Vatican II Roman Catholicism as practiced in the Philippines had unfortunately drastically reduced or even practically eliminated the traditional emphasis on polyphonic classical-style choral singing or even unison Gregorian chants and switched to a significantly less elaborate form of musical expression for the newer “Novus Ordo Missae.” (“New Order of the Mass”)

Hopefully, with a lot of the positive examples provided on how certain minorities – ethnic or religious – are able to outperform other groups, mainstream Filipino families and groups can pick up a tip or two on how to make the next generation of Filipinos become much more competitive, achievement-oriented, and successful.

Despite being abroad, many Filipino emigrés were crazy about the garbage shown on Wowowee

Moving on to how Filipino migrant communities in other countries fare, we unfortunately find that among many small Filipino communities abroad, Pinoy migrants who hold get-togethers with fellow Pinoys often congregate around a television set that has The Filipino Channel (TFC) in order to watch Wowowee (back when it was around) and get their kids learning to dance to the Ocho-ocho, Spaghetti Song, and other sexually-explicit and unfit-for-public-broadcast crass embarrassments to Filipino identity that very often get criticized by non-Filipinos. Those immigrant Filipino communities are just small microcosms of what goes on in the teeming squatter colonies and shanty-towns all throughout the country, where birthday parties of little girls aged 5, 6, 7, or older are celebrated with the same sexually-explicit songs and dances popularized on the noontime shows. Worse, from noontime, the go-go dancers have even been migrated to prime time.

With a “system of entertainment” that encourages sexually-explicit dance moves at such a young age and rewards those who fit the go-go dancer mold with fame & fortune (the rumor circulating is that the go-go dancers on the various noontime and primetime variety shows earn good money and are given their own cars), it is not surprising at all that from being known as a nation of domestic helpers, the Philippines has now overtaken Thailand to be a major source of prostitutes and “hospitality-providers” to Singapore & Malaysia. Those at the top of the pyramid of the go-go dancing “industry” get accepted into the TV variety shows and earn big bucks and get free cars. Those who don’t make it capitalize on the “go-go dancing skills” they picked up while aspiring to get into the TV variety shows by becoming go-go dancers in girlie-bars or progress into “modeling” (notice the quotes) and “escort services” or outright prostitution.

It would have been preferable if what got retained were the good Filipino values and the ugly & embarrassing garbage, discarded.

Compared to the Responsible Parenthood Bill (fmrly known as the RH Bill), promoting the go-go dancer culture on prime-time TV is truly evil. CBCP, do your job, denounce this!

Personally, while I accept that the CBCP has the right to teach Catholics the official Vatican line, it does not have the right to impose Catholic-only dogma on the secular government. The issue is that instead of denouncing the go-go dancing phenomenon promoted on Filipino TV variety shows, the Catholic Bishops’ Conference of the Philippines continues to waste its time on a losing battle by imposing specifically Catholic-only anti-contraception dogma on the secular government which happens to represent the rights of non-Catholics (Protestants, Muslims, and others) who have no opposition to modern contraceptive methods. The CBCP clearly needs to refocus away from attacking the Responsible Parenthood Bill, and instead put more effort on actively denouncing the extremely sexually-suggestive (and even explicit!) noontime and primetime variety show go-go dancer phenomenon, otherwise, the Philippines will continue on its downward spiral towards a totally failed state.

(An American friend and his family in Singapore have a Filipina maid who requested for a subscription to The Filipino Channel. He told me not long ago that when he came home for lunch one day, he was horrified to find his little kids watching a bunch of go-go dancers gyrating on a noontime TV show as the maid was having her daily dose of Wowowee using the common living room TV set! Immediately afterwards, he had a small TV installed in the tiny maid’s room and got the cable company to deactivate The Filipino Channel from the living room’s set top box and activated TFC only for the maid’s room. What a major embarrassment for the Philippines!)

4. Personal System

Some people are more hard-working than others even if they are in a group or family of sloths. Some people do 180 degree turns in how they manage their lives, despite the people around them. These behavioral and mindset shifts are often the results of the personal system that a single individual may set up for him/herself. No doubt, such changes at the personal system involve whole lot of self-discipline and self-control.

Does a person reward himself after he does well on an exam by treating himself to ice-cream? Or does he treat himself to ice-cream regardless of whether he does well, passes, or fails? Does he deny himself certain indulgences like playing video games if he hasn’t accomplished his work yet? Or does he play video games regardless of whether he has accomplished his work or not? Does he reward himself with a brand new luxury car (or two) if, as CEO of the company he just recently took charge of, was able to turn it around for the better? Or does he buy it/them anyway, never mind that he hasn’t done anything at all to deserve such a reward?

One’s personal system is ultimately what determines a person’s behavior as it is the final arbiter of whether a person is likely to be open or closed to outside influences that may be advantageous or disadvantageous. It is the Personal System that is targeted by authors of self-help and motivational books that often aim to change the world “one person at a time.”

The key challenge is usually that while a person may decide that he wants to improve himself, he may encounter difficulties if the other collective systems that influence him are not too cooperative. A drug-addict who wishes to go clean will find it almost impossible to do if his own family is dysfunctional and are themselves drug addicts, unless he leaves his home to escape the dysfunctional family system.

While extremely self-motivated individuals can improve themselves on their own without requiring a support group to help them out, such people are extremely rare. Most human beings need other human beings to remind them and point out their faults or achievements. That is also why human beings often need other people to serve as their teachers and mentors, rather than going purely along the “self-taught” route. This too, is why support-groups such as Alcoholics Anonymous often work better than having single individuals try to solve their own alcoholism or addiction problems because people need other people to tell each other what they refuse to see or remind each other or things they may forget or ignore.

It is for this reason that most of the time, for real profound change to happen in an individual’s personal system, a change needs to happen in the collective systems that influence people as well. That means that change is most effective when it is done collectively, hitting not just a single individual’s personal system, but also the sub-community systems, family systems as well as the entire societal system at the very top. That’s because it is easier for people to remind each other of what values they must hold themselves to, what behaviors they must exhibit, as well as praise and reward good behavior or castigate and punish bad behavior, as it is not always practical for a single person to reward or punish himself.

5. Hereditary & Genetic System

People’s behavior tends to be influenced by genetics. Studies on identical twins separated at birth and raised by different families has revealed the extreme similarities in temperament and personality of such twins so that psychologists have confirmed that nature does have a profound influence on a person’s behavioral or personality tendencies.

Unfortunately, there’s not much we can do about our genes. We are what we are born with. All we can do, however, is to try our best to take advantage of whatever good traits our genes have given us, and work as hard as we can to fight against our unfortunately genetically-embedded negative tendencies.

Since I would prefer to delve more on the importance of culture and culture-change, making mention of the genetic level and how the hereditary system influences behavior helps for us to know what our inherent strengths and weaknesses are in order that we may modify our behaviors to take advantage of such strengths and avoid or suppress the weaknesses.

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How the different Systems determine Culture & ultimately Destiny

Now that the different systems have been discussed, it is important to note that only three out of the five systems can easily be altered and modified through human means by way of policy-changes and proper enforcement of said policies. These are the Societal System, the Sub-Community & Family System, and the Personal System. Due to the collective nature of both the Societal System and the Sub-community & Family System, they are best lumped together under the description “Collective System.” Through this, we can see how the systems work in order to change not just human behavior on the individual or collective scale, but also how these can become more embedded to become individual Characters or collective Cultures. Personal Systems clearly induce specific individuals to behave in a particular way through the priorities and value-systems that individuals set for themselves. If they adhere to a particular belief-system or paradigm, they are likely to encourage themselves to behave in a certain way and avoid other types of behavior. A person who personally believes that mediocrity is acceptable and that there is no need to stress himself out by working hard will clearly act it out: he will be mediocre and he will not work hard. Either he coasts along barely passing, or ends up failing in many of his endeavors.

Dr. Fareed Zakaria, PhD

Others who, for instance, may personally adhere to Max Weber’s Protestant Ethic that working hard is a means to “glorify God” and believe strongly that their purpose in life is to “glorify God” have a higher likelihood of working hard and succeeding. In similar fashion, people who adhere to the Confucian Ethic of hard work and self-discipline have been observed by eminent socio-political analyst, author, and CNN host Dr. Fareed Zakaria to exhibit the same success-oriented traits that Max Weber described to be present in the Protestant Ethic. In addition to setting up a personal philosophy or personal belief-system, more disciplined and self-directed people are likely to even set up strict consequences of reward and punishment for themselves, denying certain pleasures unless tasks that they set for themselves are accomplished, and rewarding themselves only when they achieve success. As they continue to follow their own personal system of pursuing certain behaviors and avoiding others and continue to reinforce these through a combination of self-reward versus self-denial, they may cause those behaviors that they continue to do to become habits. With much more repetition, the habits become more ingrained and embedded, becoming part of one’s character. If the character that one develops for himself is one that is more predisposed towards success, then chances are higher that he would become successful. Sadly, it is easier to mold human behavior at the personal level when young and when under the appropriate tutelage of parents. Once grown-up, people oftentimes have habits and personal paradigms that die hard and sometimes, even if they change their paradigms, their habits are so ingrained and their characters so fixed that changing their own characters by themselves is next to impossible. Since it is far easier for human beings to check on others, shaping behavior collectively is actually much easier. Collective systems, like societal systems such as a political system or a system of governance, or a specific educational system developed at the state level, or religious systems propagated within particular religious communities through their church, mosque, synagogue, or temple, as well as systems of family upbringing can mold behavior at a much more sustainable and much higher level of effectiveness. Collective Systems, through the effective balance of consequences, tend to induce behavior more easily because people follow others whom they observe to be “winning” and avoid emulating those whom they observe to be “losing.” In other words, it is not always necessary for a person to be punished in order to discourage undesired behavior or rewarded to encourage good behavior, because in collective contexts, this can be done vicariously. One merely needs to observe that another person whose behavior has been undesirable is promptly punished in order for one to conclude that such behavior must be avoided. Setting up examples of model behavior and praising them as well as presenting examples of unwanted behavior and shaming or punishing them thus tends to work more effectively because of the influence of peer pressure in addition to the actual use of enforcement. As groups of people continue to behave desirably through constant reinforcement, that collective behavior becomes a custom. As that custom and the underlying value behind the custom get more embedded in the group’s collective consciousness, they become a part of the group’s collective Culture. And when a group’s collective Culture causes them to succeed in one or more areas of endeavor, then the collective destiny as determined by that culture is one of Success.

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What behaviors should be emulated vs. avoided?

It is necessary to note that what is considered “desirable” versus “undesirable” behavior often varies across groups. Filipino Society has been described by many foreigners and Filipino academics alike to be extremely anti-Intellectual, so that people who tend to be more intellectual than others either get ostracized or invite jealousy, rather than praise and adulation. There may also be some groups where cheating is tolerated and worse, tolerating or even assisting in cheating is seen as a sign of camaraderie. In such cases, the peer pressure system works so that the one who does not cheat nor allows others to cheat is deemed an outcast. (And this is clearly an example where the peer pressure undermines the competitiveness of the group) How then do we determine what types of behavior should be considered desirable or undesirable? Montesquieu did mention that colder countries do tend to produce more frank and honest people. Why is frankness and honesty more likely to develop in colder areas?

If by winter, you don’t have shelter or clothing, you die. No food stored, you die. No firewood collected, you die.

Here’s the answer: The Natural Environment as well as the Climate are tyrannical, unforgiving, and inflexible task masters. They set definite deadlines which cannot be stretched. A community of people living in the cold temperate zone have no choice but to be honest with each other regarding task assignments or simple things like food supply levels. If the leader asks one of the members of the community to handle the supplies of food, any dishonesty on the part of the member will translate into suffering or death for one or more members of the community. Worst case, dishonesty results in the death of the entire community, including the dishonest member. If a community leader assigns a member to start planting crops on a particular day, if that member procrastinates and doesn’t start planting on the day he’s told to, he can’t fudge and cover it up by saying “yes” when asked “have you started planting the crops I told you to plant?” He has no choice but to be honest because dishonesty will result in the entire community’s suffering. Transparency, honesty, integrity, punctuality, frankness, and self-discipline are oftentimes naturally-developed in temperate zones because of Winter. If you are late in planting by a day or two and are at least honest about the lapse, crisis may still be easily averted by immediate corrective action. But doing cover-ups and making excuses, on the other hand, results in pain, suffering, and perhaps death by the coming Winter. The cold climate can’t be bargained with. It can’t be reasoned with. It is a ruthless taskmaster. This largely explains the difference in timeliness and punctuality as well as openness, frankness, and honesty, and self-discipline that contrasts cultures from colder versus warmer climates. We should definitely rank countries based on all the competitive indices available, including GDP per capita, Human Development, lower incidences of corruption, etc and take a good look at the kinds of traits and behaviors that are exhibited by their people. The problem with the Philippines is that as a tropical country, our climate and general environment are rather tolerant of mediocrity. Failure does not necessarily result in annihilation, unlike in countries with much harsher, colder climates. Our climate and environment unfortunately do not give us direct feedback on whether what we do or do not do is wrong.

The Philippines is at 113th place under the World Bank ranking with $1,745 per person per year (2009)

However, we can see just how mediocre the Philippines is whenever we compare ourselves against other countries in terms of per-capita economic output, our level of human development, and even simply at how we are regarded by other people around the world. The way forward, therefore, is to emulate the winning traits, winning behaviors, and winning cultural inclinations of the people from the most successful countries in the world. We also need to sift out whatever behaviors some of them may already be exhibiting due to success, as some First World countries whose people used to be extremely hard-working and self-disciplined have, due to their societies’ wealth, comfort, and First World status, have started to become less hard-working and have grown “soft.” We especially need to learn from Singapore, which – though tropical just like us – has adopted a Societal System that seeks to induce Singaporeans and all the people living in Singapore to behave, act, and think competitively and competently like the people from the most advanced countries in the World which are mostly found in temperate climates. Since tropical environments do not by default induce people living in such climates to save, Singapore set up a collective system that would cause people to save: a forced savings scheme (the Central Provident Fund) as well as many other schemes that would actively reward and encourage it. Ultimately, the Philippines needs to set up effective Societal Systems, ranging from an appropriate System of Government, appropriate laws and policies, appropriate rewards and punishments, an appropriate state-prescribed Educational System that increases our overall economic competitiveness, as well setting up other appropriate systems at the societal level that all seek to induce Filipinos to collectively stop behaving like children and force us to mature and learn to be more responsible. Moreover, these societal systems must be set up to further encourage sub-communities (like churches, religious groups, etc) and families to further improve their sub-community systems and family systems to cause Filipinos to get our collective acts together. Simply telling people to “shape up” will not work. Systems must explicitly be set up in order to actively enforce behavioral and cultural reform (or overhaul) at the collective level. Obviously, this effort of reforming the Filipino should start at the highest level if this is going to be a wide-scale collective effort. That highest level is at the System of Government as it is at this highest societal level from which everything else emanates: far-reaching policies on education, economic management, finance, commerce, environmental management, infrastructure, law enforcement, etc are all dependent on the Government.

Does the current system of government allow the best, brightest, most competent, most dynamic, and most hard-working to end up in Malacañang Palace?

If the System of Government continues to allow unqualified and incompetent people to reach the top and call the shots simply because the system is set up to favor popularity, name-recall, winnability, and celebrity status, then we can all expect that the quality of everything else will suffer. But if a better system of government were set up so that only the best, most analytical, most brilliant, most capable minds, most competent, most hard-working, and most action-oriented are able to emerge on top, then such a system of government would also induce the entire populace to behave accordingly: a competent, intelligent, and hardworking leader assigns only other competent, intelligent, and hardworking people to work in his team. Because of such a system of meritocracy, people will aspire to be the best, most brilliant, and most capable in order to achieve success. It is therefore important for everyone to note that the quest to reform and improve Filipino Behavior and Culture requires reforming the System of Government. To reject efforts and calls to reform the system of government by stating that culture must first be reformed is to miss the point: Massive cultural reform requires system reform, and the highest level for implementing this lies in reforming the System of Government.

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System of Government must be appropriate to the Culture & Environment

Lee Kuan Yew commented on how the Philippines was erroneously approaching its developmental problems by blindly and mindlessly adopting wholesale a concept of governance which Montesquieu himself wrote to be more suited to cold countries (where the people are more likely to be more self-disciplined and more calm and less rambunctious) than to warm countries, in his book “From Third World to First”, he wrote:

Cecilia Muñoz-Palma

“At dinner, Mrs. Aquino seated the chairman of the constitutional commission, Chief Justice Cecilia Muñoz-Palma, next to me. I asked the learned lady what lessons her commission had learned from the experience of the last 40 years since independence in 1946 would guide her in drafting the constitution. She answered without hesitation, “We will not have any reservations or limitations on our democracy. We must make sure that no dictator can ever emerge to subvert the constitution.”

Immediately after, he thought to himself:

Was there no incompatibility of the American-type separation of powers with the culture and habits of the Filipino people that had caused problems for the presidents before Marcos?

That last part was the real clincher: “Was there no incompatibility of the American-type separation of powers with the culture and habits of the Filipino people that had caused problems for the presidents before Marcos? Quite obvious to Lee Kuan Yew which was totally ignored by the late Pres. Cory Aquino and by Chief Justice Cecilia Muñoz-Palma was the Montesquieuan Principle that a country needed to adopt a form of government that took into consideration the strengths and weaknesses of the people’s culture, behavior, inclinations, and tendencies, so that said system of government could more appropriately operate & hopefully succeed without encountering funny little surprises.

Frontiersman Daniel Boone: The US System was designed with people like him in mind

One of the main points that most Filipino leaders and ordinary citizens missed (and still continue to miss!) is the fact that the US Presidential System and its Paradigm of revolving around “Freedom and Liberty” was originally designed with the rugged, self-disciplined, self-directed, self-motivated, independent-minded immigrant (or son of immigrants), and predominantly Protestant Anglo-Saxon (therefore “Northern European”) Frontiersman who had rebelled against his former mother country of Britain clearly in mind. It was a system that had been designed not for the predominantly Catholic, supposed to be docile & obedient, Hispanic-influenced indigenous and non-immigrant Austronesian that is the Filipino. This problem is analogous to having a short Filipino boy riding a mountain bike that was custom-built for a huge 6 ft 7 inch tall white American adult. (This is a point that journalist and historian Stanley Karnow often repeats in his book “In Our Image: America’s Empire in the Philippines.”) Alas, as Filipinos were far too enamored by the form of the American System, little real thinking was put into analyzing the substance of how to best adopt a system suited to the Philippines. Instead of studying the systems of other predominantly Catholic countries as the drafters of the Malolos Constitution had done (where they patterned it after the Constitution of Spain and several other predominantly Catholic countries, thus adopting a Spanish-style Parliamentary form of Government), the guiding principle for designing the 1987 system of government was for the Philippine System to “out-do”, “out-democratize”, or “out-Americanize” the United States of America.

(Digression: Incidentally, the structure of the modern-day Italian system closely resembles the proposed form of government prescribed by the Malolos Constitution. The Head of State of the First Philippine Republic was the largely ceremonial “Presidente de la República.” In Italy, their ceremonial Head of State is the “Presidente della Repubblica.” The more actively-governing prime minister of the Malolos Republic’s title in Spanish was “Presidente del Consejo de Ministros.” In present-day Italy, the Italian prime minister’s title is “Presidente del Consiglio dei Ministri.”)

Instead of making use of an Electoral College through which the USA enforces the “republican ideals” of representative government which the majority of the US Founding Fathers preferred as opposed to Thomas Jefferson’s deviant ideals of “direct democracy”, the Philippine Presidential System of 1987 became one which prescribed nationwide voting-at-large for the President, separate from the Vice-President, as well as Senators. Had Montesquieu been alive today, he would be cursing at Filipinos for the blasphemy which we had decided upon in 1987, which many Filipinos – including some people who should know better – have continually refused to correct. As the good Baron would have predicted, funny little surprises did occur. Thanks to the stubborn “Democratism” that Fr. Joaquín Bernas, SJ and majority of his fellow members of the 1986 Constitutional Commission had insisted upon, the presidential elections of 1992 turned out to be a near-disaster at the Presidential level, as they forgot to insert a provision requiring a run-off election which would ideally pit the top two candidates from the first round in case the electoral contest with more than 2 candidates did not yield a majority winner. The president who emerged, Pres. Fidel V. Ramos, won only 23.58% of the entire vote, while his closest opponent, Miriam Defensor-Santiago got 19.72%. There were a total of 7 major candidates, and the emerging winner had less than 25% of the entire vote. In another country like France, Mrs. Santiago and Mr. Ramos would have been forced to slug it out in a second round, thereby forcing the emergence of a president with Majority Mandate, as all the other supporters of the remaining candidates would have had to choose between the top two. Why had they not even seen something as simple as this when so many other countries in Latin America or France that have multi-party Presidential systems featured run-off second rounds? Moreover, why had they not learned from the USA which had at least fused the selection of President and Vice-President, so that ballots do not feature separate individual candidacies, and instead force voters to choose a tandem? In other words, in the USA, you cannot mix and match. You either vote for Obama-Biden or McCain-Palin. You cannot choose Obama-Palin because US ballots feature tandem-pairs. On the Vice-Presidential level, it was a real disaster. Competent candidates like the late former Chief Justice Marcelo Fernan or former Cebu Governor Lito Osmeña were electorally no match for veteran action star and “heart-throb” Joseph Estrada. Moreover, at the Senatorial level which was a nationwide contest just like the Presidential and Vice-Presidential races, the top scorer was none other than Eat Bulaga host and slapstick comedy actor Vicente “Tito” Sotto III. The “funny little surprises” were all too easy to spot.

Fr. Bernas, SJ & his colleagues did not follow Montesquieu’s advice when designing the current faulty system

Fr. Bernas, SJ and the people who designed the 1987 Constitution unfortunately did not take into consideration the happy-go-lucky, flippant, frivolous, childish, undisciplined, rambunctious, personality-oriented, popularity-centric and what Montesquieu would have called “warm-climate” tendencies of Filipinos. They blindly and mindlessly assumed that if the Philippines adopted the Freedom-and-Liberty paradigm that was originally designed for the predominantly Protestant Anglo-Saxon and Northern European immigrants (from cold countries!) who had rebelled against Britain, then the Philippines would automatically enjoy the same prosperity and success that was present in the USA. By further tweaking it in order to “out-democratize” the USA and thus “be more American than the Americans”, Bernas and his companions sealed the fate of the Philippines as a chaotic, unstable, coup-prone, rambunctious and anarchic failed state. These people had failed to analyze the fact that the higher level of education and political consciousness of Americans in looking more at issues and not mere personalities, the superior economic performance of the American economy – thus enabling Americans to more easily live fulfilling lives, as well as its specific cultural context allowed the American Presidential System – though obviously containing many flaws – to work adequately for Americans. In fact, these people simply failed to realize that certain key features of the American system such as the use of the Electoral College as well as the practice of both main parties (Republicans and Democrats) to practice strict party discipline through intra-party caucuses and primaries prevented the same problems that are present in the Philippines from emerging in the USA. Moreover, the leaders who do emerge from the US presidential elections have a minimum level of qualifications and competence and American voters often choose on the basis of relevant issues such as platform and programs of government. In the Philippines, on the other hand, presidential elections are purely popularity and name-recall contests so that the emerging winners are not necessarily the most suitable candidates for the job of leading the country. As early as the 1990’s, fearless crusaders like Mrs. Carmen Pedrosa, Dr. Pepe Abueva, and even Butch Abad were already mentioning that the 1987 Constitution was inherently flawed and its corresponding presidential system of government prone to gridlock, prone to higher levels of corruption, and much slower to get things done. Still, blindness, stubbornness, mindlessness, emotionalism, small-mindedness, irrationality, and the refusal to do the appropriate research and analysis continued to prevent the much needed changes from happening as uninformed members of media, politicians who did not care to study and analyze issues carefully, as well as many uninformed members of the public chose to reject what was an honest call for reforms. They misguidedly (and some, maliciously) kept branding the call for reforms as an underhanded means to cause the incumbent to stay in power.

Would it make sense to wear these in the hot & humid Philippine climate?

For the longest time, it was almost as if Fr. Bernas and his colleagues – through their insistence on using an “extra-democratized” form of the American Presidential System (originally designed for a predominantly Protestant country with a predominantly Northern European-descended population in a temperate climate) – had been forcing Filipinos to wear fur coats originally designed for use during cold Minnesota winters in the sweltering heat and humidity of the Philippines. Bernas and company unfortunately took the text of the American System, but not the full American context. Talk about inappropriate. The only real hope for the Philippines is for Filipinos to realize that we unfortunately do not belong to the same context as the Americans, and to use the “text” and system of government that was designed for a people with a different historical context, different cultural inclinations, a very different personality and work ethic, and a different level of economic and intellectual development is totally disastrous. By adopting a form of government and system of governance that is much more flexible and appropriate to the Philippine context, Filipinos will find that self-government need not be too much of a burden. Should we really continue to use a system that does not work for us? It’s high time we made the change.

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Conclusion & Recommendations:

This rather lengthy “quasi-dissertation” has clearly covered many points and has sought to carefully explain, beyond reasonable doubt, the causal relationship between system and culture. It is thus important to present a few solid feasible recommendations to the readers at the various levels of fixable systems involved: Societal System:

There is no doubt that Constitutional Reform must be pursued in order to set up a more flexible, stable, accountable, platform-centric, and supremely more appropriate system that would support a more meritocratic framework of allowing the more competent and deserving members of society to rise to the top of the leadership hierarchy. Instead of promoting pure popularity and winnability, shifting to a parliamentary system which better promotes platforms, programs, competence, intelligence, and achievement as opposed to the winnability-focus found in the flawed Philippine presidential system will send an extremely strong signal to the entire Filipino populace that the country’s priorities have changed and improved and people will respond accordingly through the appropriate behavior.

It is also necessary that in choosing the model of such system, care is taken to ensure that the model of governance adopted is one which is more likely to be consistent and cognizant of the cultural context of the Filipino People. An extremely flawed and distorted version of the American-style Presidential System has continually been tried and it has clearly failed Filipinos. It is high time to reject it and replace it with something better and more appropriate to our context.

Moreover, at the societal system, the leadership structure – once such system reform takes place -should definitely seek to set up a system of education that molds Filipinos to become highly-disciplined, focused, hardworking, analytical, studious, logical, rational, highly-informed, inquisitive, and intellectually-precocious. Perhaps a lax and liberal atmosphere patterned after the mainstream liberal American educational system may not be the best one given that the Philippine tropical environment is not conducive to molding a highly-competitive citizenry. Numerous European countries (despite being temperate and cold) and Asian countries (take a good look at the Chinese, Taiwanese, Japanese, Korean, and Singaporean educational systems!) have systems that are highly competitive and disciplinarian, which is then reflected in their superior international academic rankings.

A highly competitive educational system is the basis of a competitive society

At every level and every area in society, the government should strongly promote merit-based competition. Even “Conditional Cash Transfers” should not end up like simple dole-outs to beggars and instead should best be implemented with competitive requirements such as, perhaps, turning the CCT into an incentive scheme for poor families to promote scholastic excellence among their children: only families who produce honor students among their children are eligible to receive CCT’s. In fact, an even better scheme might involve giving much higher CCT allotments to families whose children graduate as class valedictorian, salutatorian, honorable places, and other special graduation distinctions.

In short, government should use every single opportunity to promote excellence in any given field as a prerequisite to receiving any “favors” or financial assistance. A society that creates such a system where “there is no such thing as a free lunch” can easily find itself almost instantly changing the priorities and cultural preferences of the people. Through such a major shift in philosophy and practice, mendicancy will automatically get drastically reduced and everyone will learn to recognize the value of everything.

Sub-Community & Family System:

Small communities like church groups, parishes, Islamic Majlis councils, civic groups, community clubs, village associations, barangay groups, and the like need to organize themselves around actively motivating their members and the families that comprise them to become successful and competent members of the wider society.

(I also emphasize greatly that the Catholic Bishops’ Conference should definitely shift its attention away from their losing stance on the Responsible Parenthood Bill, formerly known as the RH Bill – which unfortunately erodes the CBCP’s support base and credibility – and instead focus more on denouncing the go-go dancer phenomenon found in noontime and primetime TV variety shows which invariably promote prostitution as a “viable occupation.” That is the greater social cancer that afflicts the Philippines.)

Singapore’s government reaches out to the Malays through the Community self-help group Mendaki

Singapore has successfully made use of this paradigm of organizing the various ethnic groups’ associations, clan associations, old-country home-town groups, religious groups (church, mosque, temple, gurdwara, etc), small political constituencies, town halls, and more that comprise Singapore in order to promote policies that lead towards the direction of excellence and real economic and societal progress. These initiatives range from simple educational-support, actively giving due public praise and recognition to scholastic, intellectual, musical, athletic, and other achievements to students who excel, organizing review-groups, as well as providing tutorial and assistance to those encountering difficulty. Awards are even given at these small-community levels to parents whose children excel in school, thus giving incentives for parents to ensure that their children study hard. Moreover, adult members of communities themselves receive recognition for their own career excellence.

Because of the strong culture of meritocracy and achievement fostered at the wider societal system through the Government’s active promotion of excellence which permeates down to the Sub-community system via the small community groups, Singapore’s family systems are likewise geared towards excellence. Parents from all ethnic and religious communities actively discipline and encourage their own children to study hard, excel in whatever they do, and cultivate their talents in different fields of endeavor.

Lee Kuan Yew, in an interview with Fareed Zakaria, explained how Singapore co-opted the family unit as part of its “implementing arm” in bringing Singapore forward:

“We have focused on basics in Singapore. We used the family to push economic growth, factoring the ambitions of a person and his family into our planning. We have tried, for example, to improve the lot of children through education.

The government can create a setting in which people can live happily and succeed and express themselves, but finally it is what people do with their lives that determines economic success or failure. Again, we were fortunate we had this cultural backdrop, the belief in thrift, hard work, filial piety and loyalty in the extended family, and, most of all, the respect for scholarship and learning.”

Truth be told, the collective solidarity that exists within the traditional setting of the Filipino family is a good starting point which connects us with our Asian neighbors as well as our related Mediterranean (Latin/Hispanic) adoptive siblings and cousins.

Granted, thrift might not be a strong point of some Filipino families – not yet at least, but filial piety, loyalty in the extended family? These are intrinsic values in Filipino Culture just as much as they are among the Chinese, Malays, and Indians of Singapore. If enlightened Filipino leaders are able to properly harness the natural family-orientation of Filipinos in order to bring about much needed reforms in society the same way Singapore did, there is no reason that the Philippines cannot achieve similar results. (Now that also requires that the political system allows competent and enlightened Filipino leaders to emerge at the top in the first place, which is why “system of government” is important!)

How can we improve the Filipino Family System in order to develop our children if the parents are forced to work abroad as OFW’s because there are too few local jobs?

Unfortunately, the Filipino Family System cannot be improved unless parents are in the Philippines together with their children. If one or two parents are forced to work abroad because they are unable to find decent-paying local job opportunities, the Family System weakens and the children suffer. Instead of sending Filipinos to work in foreign companies in foreign countries as OFW’s, causing them to be unable to provide effective parental guidance to their children, and often indulging them by sending undeserved gifts in order to make up for their absence, we need to bring the foreign companies to the Philippines to give local jobs to locally-based Filipinos.

Therefore, part and parcel of the need to improve the Family System is to bring about Constitutional Reform with the ultimate aim of creating massive local employment opportunities by removing the misguided protectionist provisions which have discouraged foreign investors from creating jobs for Filipinos.

Personal System:

Thanks to the emphasis on excellence and meritocracy at all wider collective spheres, people will have no choice but to adopt the emphasis on excellence and meritocracy as part of their own personal systems and philosophies. Under such a paradigm, sloppiness and laziness will cause them to become the outcasts.

Currently, Filipino society is unfortunately wired in such a way so that people who wish to excel need to have extremely strong personal systems with “deviant” tendencies or strong personalities who do not care about what others think of them in order to defy the general tendency of Philippine society towards laxity, mediocrity, moral turpitude, and anti-intellectualism. The strong crab-mentality and “pakikisama” tendency causes many Filipinos, especially many Filipino males, to merely seek to fit in with the mediocre crowd rather than excel and stand-out due to the risk of ostracism. This peer pressure culture of pakikisama in the Philippine context of the urban & rural poor may even be such that young little girls who are exposed to the sexually-suggestive music of Lito Camo and the sexually-explicit gyrating dance-moves of the Sexbomb Dancers are forced to fit in with the rest of their young peers and join in the dancing or risk ostracism. Those young little girls who know better not to join in such dancing end up becoming social outcasts among the peers they grow up with within their communities.

Pakikisama-Peer Pressure: If these are the friends you grew up with, you risk alienation if you are studying to become a PhD because you won’t have time to join them in drinking & card games

This problem of pakikisama and peer pressure towards all the wrong things is unfortunately why many of Philippine Society’s most competent and most excellent members are often forced to put up façades of ordinariness just to blend in with the wider crowd. It’s either that, or those who really do excel in certain fields that are not considered “mainstream” start out as deviants in one way or another, not caring about how others see them.

As it is, focusing on the personal system as a means to achieve societal change is important. But personal systems of different individuals often respond to stimuli formed within the collective context of their own families, communities, and the wider society as determined by those at the top of it. If the collective systems in the wider context of Philippine society continue to promote mediocrity and incompetence, then people whose personal systems incline towards achievement and excellence risk social alienation.

How can we create a successful society if being excellent and successful means risking social alienation?

How can we create an intellectually-precocious society if being intellectually-precocious is seen as weird?

How can we create a meritocratic and hard-working society if our systems reward popularity, not merit?

Do you want to be modern like KL (top)? Or do you want to stay as-is (below)?

It is for this reason that reforming all the Collective Systems at the Societal, Sub-Community, and Family level are extremely important. The rewards or punishments provided at the collective levels, no doubt influence or even determine the kind of Personal Systems that most individuals maintain. Ultimately, we must realize that if our aim is to come up with a society that is competent and excellence-based – one that can get out of our unfortunate failed state of Third Worldism and transform ourselves into a prosperous and well-run society, then we cannot simply hope to change the Philippines one Filipino at a time. It has been proven that other societies can leapfrog their mediocrities and states of economic stagnation to change their societies collectively through effective top-down reform caused through the pursuit of correct and appropriate government policies that permeate downwards to other societal levels, smaller communities, down to families, and down to the individual personal level. Do we really want to improve our culture collectively so that instead of mediocrity, we all fight for excellence and a better life? If yes, then that entails changing our collective culture, not just our individual characters, changing our collective customs, not just our individual habits, and ultimately changing our behavior, both collective & individual. Luckily, we now know how all that can be done:

To change our collective culture, we must change all our systems.

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Click here to visit a related article

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If you liked this, you might also like these articles by Orion Pérez Dumdum:

1. Why Charter Change is CoRRECT™

2. Philippine Progress: Shift in Sports, Shift in System

3. Senator Pangilinan and the Parliamentary System

4. The Parliamentary System Fits the Philippines

5. Two Filipinos: A Football Legend & A Spanish Prime Minister

6. Eight Points in Enlightening the Élite

7. The Parable of the Mountain Bike

8. F to A: What P-Noy Needs to do in order to Succeed

9. Lee Kuan Yew on Filipinos and the Philippines

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Why is this site called antipinoy.com? Click here!

A Tale of Two Countries

(Borrowed from the Far Eastern Economic Review)

by William McGurn (June 1994)

Editor’s note: While it is true that this is an old article from June 1994, the author William McGurn’s analysis is so spot-on and remains extremely relevant today such that this article seems as if it was written just yesterday. If anything, it is worth noting that the Philippine situation is even far worse now (some 20 years after this article was written) so that whatever the author wrote in 1994 has become even worse in terms of degree. That this article was written in 1994 does not diminish the Truth that this article speaks.

The human costs of protectionism 

Teresa Concepcion had high hopes for her future.

Although her father was only a farmer with a grade-school education, things were looking bright for the new generation of Filipinos. By the time Teresa (not her real name) was born, the country had risen from the ashes of World War II to achieve not only independence and a working democracy but the second-highest standard of living in the Far East after Japan’s. In 1970 she entered a local university. Four years later, degree in hand, she took a job as a social worker supervising day-care centers. That’s when her dreams began to dissolve.

Teresa had expected only a modest salary. Upon entering the working world, however, she was stunned to find out exactly how low wages were, not only in her profession but throughout the Philippines. Her paycheck brought in barely $40 a month. By now she was married and had given birth to the first of three sons. Her husband, a surveyor’s assistant with the Bureau of Land and Natural Resources, made no more than she did. Even such basics as clothing and baby food became more than they could afford. And so, after eight years of incessant financial struggling, Teresa and her husband made a critical decision.

In the summer of 1983, she hugged her husband and three boys–ages 7, 5, and 3–and, with money borrowed from her in-laws, boarded a plane bound for Hong Kong at Manila Airport. At age 33, she was leaving her family behind to begin a completely new career: as a maid

Teresa was not alone. Some 105,000 Filipinas labor in Hong Kong as amahs, or maids. Almost a decade after the People’s Power revolution that toppled Ferdinand Marcos, the plight of these women remains a standing indictment of the Philippine government’s staunchly protectionist economic policies. Like Teresa, the amahs are for the most part smart, relatively well-educated women who found the door of opportunity slammed shut at home. They have college degrees in disciplines ranging from accounting to education, yet they find themselves cooking meals and scrubbing floors for Hong Kong shop clerks and secretaries. Like Teresa, many of them are mothers who are now raising other people’s children while their own grow up without them. Underscoring their predicament is a cruel irony: A generation ago, Filipino families imported Chinese maids.

Today the situation has reached crisis proportions. Within East Asia, disparities in prosperity have led to huge labor outflows, mostly from poorer countries such as the Philippines to richer ones such as Hong Kong, Singapore, and Korea. The maids are only the legal tip of a Filipino iceberg that includes such diverse occupations as nightclub dancers, construction workers, shop clerks, and mechanics. Their growing numbers and negative image have become sensitive issues both at home and abroad. When Teresa first arrived in Hong Kong 10 years ago, there were only 24,800 Filipina amahs at work; now there are more than four times that many, and locals complain that the women occupy the city center on Sundays, their one day off.

In the Philippines, the debased condition of these women has led to legislation calling for an end to the Overseas Worker Program. In 1993, Philippine public opinion was outraged by the death of a Filipina nightclub hostess in Japan whom Japanese authorities said died from hepatitis but whose family claimed she had been beaten. Filipinos are also upset by the virtual identification of domestic with Filipina throughout the region.

The current president, Fidel Ramos, has vowed to reverse some of the longstanding policies that have sent so many Filipinos abroad–a promise that the Philippine people have heard many times before. Ramos’s biggest obstacle is a reluctance among the Philippine establishment to admit that its self-perpetuating economic policies are largely responsible for the country’s descent into poverty.

Over the years, Philippine leaders have ascribed their abysmal economic failure to any number of root causes, including their colonial heritage, Marcos-era greed, and a series of natural disasters. The truth, however, is that the country’s poverty is no accident and the quandary in which Filipina maids find themselves owes itself almost directly to the most pernicious of economic sins: protectionism. For the past 40 years, under the guise of ensuring the country’s economic sovereignty, successive Philippine governments have enacted laws that have discouraged foreign investment, concentrated wealth in fewer and fewer hands, and diminished the standard of living for the average Filipino to the point where less than 50 percent of the country earns a subsistence wage. 

Nowhere is this clearer than in a comparison between the Philippines and Hong Kong, just a two-hour flight from Manila and the destination of so many Filipino laborers desperate for work. Just as the Philippines owes its current status as “the sick man of Asia” to longstanding protectionist policies, Hong Kong owes its stupendous wealth today to an ongoing commitment to open markets and a hands-off approach to business. For the past decade, Hong Kong has boasted an unemployment rate of under 2 percent, and its residents purchase more each year than the Japanese, other Asians, or Europeans. In 1993, Hong Kong’s per-capita income even surpassed that of its colonial protector, Great Britain.

But Hong Kong was no more destined to be wealthy than the Philippines was destined to be poor. If anything, it was a prime candidate for the sort of economic anemia that afflicts the Philippines. Lord Palmerston’s remark about Hong Kong upon its 1842 acquisition by the British–he called it “a barren island with hardly a house upon it”–was a fair description of its seeming promise, and even today its crowded population is spread over an inhospitable terrain that makes it utterly dependent on its neighbors even for basic resources such as water.

If Hong Kong’s natural obstacles to wealth were considerable, the man-made ones were downright staggering. No sooner had the colony begun to recover from the Japanese occupation of World War II than the Communist takeover of the mainland sent hundreds of thousands of desperate refugees to its shores. A few years later, a United Nations-imposed boycott of China saw Hong Kong lose its largest market overnight. Back in the 1950s and ’60s, the experts were not talking about the “Hong Kong miracle.” Back then, they were wondering if Hong Kong would survive.

Hong Kong withstood these pressures primarily by remaining open to foreign investment. While the Philippines and other East Asian nations chose to coddle their industries and put their faith in central planning, Hong Kong forced all its industries to compete with the rest of the world on their own merits and on a completely equal basis. And now, when countries such as South Korea are busy trying to pare down huge bureaucracies spawned by protectionism, Hong Kong is free to do productive business. There are no foreign exchange controls, and foreign companies are free to take their profits out if they choose. Taxes are stable and minimal, with none on capital gains and a flat tax on corporate profits. As Milton Friedman once quipped, “To see how the free market really works, Hong Kong is the place to go.”

This prosperity and freedom are largely the legacy of Hong Kong’s legendary financial secretary, John James Cowperthwaite. During the 1960s, Hong Kong was said to be governed “by the gospel of Adam Smith as expounded by his disciple John James Cowperthwaite.” Arriving in the colony as acadet officer in the civil service just three months after the Japanese surrender and charged with getting the economy back on its feet, Cowperthwaite immediately noted the degree to which Hong Kong’s resilient economy had already recovered without any government help. Cowperthwaite’s strength was that, more than most, he understood that even the most brilliant planner was no match for the collective genius of the market.

Whether it was water–which in those days was always in short supply–or food or energy, Cowperthwaite insisted that the best way around the problem was to allow free pricing among suppliers and to keep the doors open to anyone who wanted to enter. He did his part by keeping taxes low and refusing to spend more than he took in. “I see no reason,” he once said to a request for government to finance lower water rates, “why someone who is content with a cold shower should subsidize someone who is able to luxuriate in a deep hot bath.” Cowperthwaite, in fact, was so distrustful of intervention in the economy that he refused to allow the government to keep statistics on gross national product–on the grounds that if the government kept the statistics they would only misuse them.

This strategy was not simply do-nothingism. At the same time the government was keeping taxes low and spending under control, it embarked on a public housing scheme that would eventually shelter more than half the population. The difference was that Cowperthwaite could afford to do this since he maintained fiscal restraint and resisted calls to subsidize Hong Kong industry or give them any protection.

“Had Cowperthwaite taken the advice or yielded to all those who wanted more government intervention,” says Richard Wong of the Hong Kong Center for Economic Research, “Hong Kong would not have prospered. By keeping Hong Kong open he ensured that it would remain competitive.”

Certainly history has vindicated Cowperthwaite’s judgment. During the 10 years between 1961 and 1971 that Cowperthwaite was Hong Kong’s financial secretary, income grew faster there than anywhere else in Asia. The policy of keeping the door open to imports also fueled an export boom–at a phenomenal average annual rate of 13.8 percent over these years. Real wages increased by more than 50 percent over this period and remain roughly twice those of both Korea and Taiwan.

Hong Kong’s disavowal of protectionism extends to the lack of anti-dumping laws that are used even in the United States to keep competitors out. “Any economist will tell you that when you keep foreign business out you simply hurt your own people,” says Hong Kong treasury secretary and former trade negotiator, Donald Tsang. “All you are doing is cutting your nose off to spite your face. We keep our economy open because it is in our self-interest.”

(Note: Sir Donald “Bow-tie” Tsang went on to be Hong Kong Chief Executive at the time when Noynoy Aquino committed terrible embarrassing diplomatic blunders during the HK Tourist Bus Hostage Crisis.)

If Hong Kong owes its impressive wealth to a conscious political decision not to micro-manage the economy, the Philippines’ pervasive poverty represents the negative version of the same argument. There, a series of conscious economic choices made over the past four decades–especially a hostile attitude toward foreign investors–has allowed local monopolies to flourish at the expense of both workers and consumers.

Some have called it “crony capitalism.” But the preferences enjoyed under this arrangement have little in common with capitalism, and the cronies would lose their protected empires tomorrow if the state weren’t propping them up. The ruling elite in the Philippines has taken a country with a well-educated English-speaking work force and an enviable location smack dab in the midst of the world’s fastest growing market and turned it into an economic basket case.

This took some doing. Providence had bequeathed the Philippines many advantages, including an almost inexhaustible supply of natural resources: gold, iron ore, copper, cement, salt, granite, marble. Its soil was rich and its produce bountiful, including rice, sugar, coconuts, tobacco, bananas, and avocados. In the late 1950s and early ’60s, it was second in Asia only to Japan, and everyone assumed that its future would be as bountiful as its present.

As the World Bank put it in an upbeat report, “By comparison with most underdeveloped countries, the basic economic position of the Philippines is favorable…. |Apart from its~ generous endowment of material resources and high level of literacy, other favorable factors are the growth of the labor force, the availability of managerial and technical skills, the high level of savings and investment, rather good prospects for most of the Philippines exports, and considerable possibilities for import substitution.” The Philippines was considered so successful, in fact, that in the ’60s Manila was sending specialists to Korea to advise them on their development.

But the Philippines never realized its potential. Instead opening the door to foreign investors with the money and the wherewithal to make something of its resources, the Philippines wrapped itself in the cloak of protectionism. Under the guise of nationalism–the country had achieved independence in 1946–the Philippines passed a series of laws limiting what they called “alien” (foreign) involvement in the economy. It started with a limit imposed on alien-owned market stalls in Manila and soon covered everything from access to credit to quotas on imports. By the end of the ’50s, this had evolved into a full-fledged ideology called “Filipino First” that would figure prominently in the presidential elections for years to come.

In 1960, Philippine President Garcia summed up the Filipino First policy as merely “an honest-to-goodness effort of the Filipino people to be master of their own economic household.” His secretary for commerce and industry, Manuel Lim, likewise described the policy as simply an effort to ensure that Filipinos get some share of the benefits flowing to foreign investors. Of course, it was slightly more than this. Although both Garcia and Lim went out of their way to say the Filipino First policy would be fair to outsiders, they both saw foreign involvement in the economy as a “threat” and a cause for alarm. Although the policy was later relaxed somewhat, the emphasis remained on ensuring Philippine “supremacy.”

“It’s the classic mistake for developing countries,” says Richard Wong. “Despite all the populist rhetoric, whenever you make it more difficult for foreigners, all you are doing is taking money from the public and putting it into the hands of the vested interests.”

In the Philippines, protectionism was intertwined with racism. Many of the local entrepreneurs belonged to the country’s sizable Chinese minority, and many of the government regulations attempted to force them from their economic niches. Two of the most infamous regulated participation in retail selling and the corn and rice industries. In June 1954, President Ramon Magsaysay signed “An Act to Regulate the Retal Business,” which was followed by a 1964 measure that tightened the screws even more. The gist of the regulations was that no industry or store could sell directly to the public unless it was Filipino owned; otherwise the business had to sell to a Filipino first. The object was to make sure that Filipinos got a piece of the action on every sale. But in practice, the regulations simply created a middleman who raised the final cost to the consumer. The almost-immediate effects included a precipitous drop in the number of newly registered retail businesses and a sharp rise in general prices.

Much the same thing happened in 1961, when the Philippines passed another protectionist act, this one “Limiting the Right to Engage in the Rice and Corn Industry to Citizens of the Philippines.” Like the retail business law, this one took aim at the Chinese merchant population by decreeing that only Filipinos would be allowed to participate in rice and corn production. This was a big decision, because at the time rice was both the chief staple of Filipinos’ diet and a significant commercial export. In 1960 there had been 6,100 foreigners registered in the rice and corn business, but by the summer of 1962 the executive director of the Rice and Corn Board, E. V. Mendoza, reported that the program had “worked” in running foreigners out.

“Success,” however, was curiously defined. Apart from encouraging fraud–some foreigners simply put their companies in the names of their Philippine wives or friends–it had a disastrous effect on production and prices. Mendoza was correct in noting that by year’s end most of the rice and corn business was forced out of foreign hands. But the price paid by the population for that change was a severe rice shortage. The Philippines went from a country that exported rice to one that imported it, a situation that did not change until much later in the decade when scientific advances introduced a new, “miracle” rice capable of tremendous new yields.

The government’s continuing support of protectionist policies in the face of such abject failures is the reason why Max Soliven, editor of The Philippine Star and the country’s most popular columnist, blasts the Filipino First philosophy as “the pirate flag of convenience for vested interests.”

“Every big foreign investment project,” says Soliven, “is slandered as ‘a scam’ or labeled ‘imperialist exploitation,’ and thus those two cabals of conspiracy, the Old Rich and the nouveau riche, manage to fight off and repel ‘the enemy.'” Filipino First, says Soliven, should really be called “Filipino Last and Always.”

As far back as the early 1960s there were voices raised in warning. In 1962 the president of the Philippine Chamber of Commerce, Alfonso Catalang, went on television to say that Filipino First was shooting the country in the foot. My magazine, the Far Eastern Economic Review, warned that “Filipino politicians seem to favor securing foreign loans instead of inviting foreign capital to come in.” The direct result of such choices were the bloated Philippine monopolies that still stand before us today, protected from foreign competition and unresponsive to the needs of the country.

Although myriad regulations restrict foreigners doing business in the Philippines–foreign banks, for example, have not been permitted to open new branches since 1948–the most effective way of keeping them out has been a law limiting the amount any foreigner can own in a business to 40 percent. At the start of his reign, President Marcos made some moves to open up the economy, but instead of busting the monopolies he merely put his own buddies in charge of them. Nor did things improve with the People Power revolution of Cory Aquino. By 1991 foreign investment in the Philippines totaled only $783 million–compared to about $5 billion for Thailand and almost $9 billion for Indonesia, which is just about as poor as the Philippines.

In many ways, in fact, Aquino only made the situation worse. The constitution drafted by her associates specifically blocks or severely limits access to vast segments of the economy by outside developers, especially in the area of natural resources. Section 12, for example, requires that the “State shall promote the preferential use of Filipino labor, domestic materials and locally produced goods.” In effect, the revised constitution applies the 40-percent limit to all but a few areas. Filipino First is back with a vengeance.

The reason the 40-percent limit is so debilitating is that as long as votes in a company are pegged to the owner’s share, no foreign investor will have control over his money. This is particularly distressing in a developing country such as the Philippines, where the economic climate is uncertain and the risks are already high. Foreigners are unlikely to invest millions of dollars if they don’t have a say over how the money will be spent.

“If I had to name one thing that has hurt the Philippines more than anything else, it’s this 40-percent limit,” says Peter Wallace, an international business consultant and economist who has lived in Manila for many years. “We had a similar problem in Australia years ago–we were resource rich but cash poor. Much of Australia’s development came about because it opened the door to those who had the money to develop, especially in the mining industry.” In testimony before the Philippine Congress, Wallace pointed out that if the Philippines followed Australia’s lead, the country’s abundant resources would finally start paying some dividends.

The development of natural resources is hardly the only area of the Philippines’ economy affected by the lack of foreign capital. The nation’s infrastructure, for example, remains one of the worst in Asia. President Ramos has recently eased the ongoing power shortage that just last summer was responsible for blackouts of 10 to 12 hours a day. But the shortage never would have occurred had the country opened energy development to foreigners. “Making yourself open to foreign investment does much more than bring in money,” says Wallace. “It brings in badly needed technology. It grows your exports. It creates jobs, and it generally also develops a host of industries that pop up to serve the new investors.”

The Philippines’ nationalism has, in fact, managed to strangle every aspect of economic development. Foreign goods remain a luxury that only the protected rich can hope to afford. Recently Philippine Sen. Blas Ople pointed to a study by the government’s own assistant secretary for trade documenting that no less than 167 signatures were necessary to release an imported car from the Bureau of Customs. Ople had a field day when the customs commissioner proudly announced he had greatly reduced the number of necessary signatures: to 50.

The regulatory choke hold is also responsible for a phone system so abysmal that it is an international embarrassment. In a November 1992 visit to Manila, Singapore’s senior minister, Lee Kuan Yew, publicly spoke out against the Philippine telephone company as “an example of a powerful vested interest … which has had a monopoly for 64 years.” He also cited a standing joke that “98 percent of Filipinos are waiting for a phone and the other 2 percent are waiting for a dial tone.” In fact, fewer than 2 out of 100 Filipinos have phones in this nation of 61 million people, and the Philippine Long Distance Telephone Company controls more than 90 percent of the existing 600,000 lines. Their monopoly has been helped along by Supreme Court decisions that shut Eastern Telecommunications out of the market and awarded a contract to PLDT even though its foreign-backed competitor had outbid it by a factor of six.

Comparing the Philippines’ phone system to Hong Kong’s actually provides a thumbnail sketch of how two economic systems produce hugely different results. While the Philippines stagnates with one of the worst phone systems in the world, Hong Kong boasts one of the best: fully digitalized with about 63 phones per 100 population, about double the number of another East Asian powerhouse, South Korea. It is so easy to get a phone in Hong Kong that almost all the colony’s shops have a phone sitting out front that customers can use free. And with new developments in related technology (such as cellular phones) now becoming popular, the government reviewed its telecommunications policy and decided to open up additional networks to increase competition.

Beyond all the theoretical and statistical explanations, however, the painful human costs of the different economic strategies pursued by Hong Kong and the Philippines are dramatically illustrated by the booming growth of domestic helpers in Hong Kong. A generation ago, middle and upper-class Filipinos were likely to have poor Chinese as amahs. Today the situation has flip-flopped. Thousands of desperate Philippine women just like Teresa Concepcion–college educated and with children of their own–are forced by circumstances beyond their control to go abroad and work as domestics. The ones who are lucky go to Hong Kong. Many go to the Middle East or other parts of Asia, where the work is even more demanding and the environment even more difficult.

Despite their relative good fortune, their life in Hong Kong is not an easy one. According to a survey by Asian Labor Update Research, some 40 percent of these maids work 14 to 15 hours a day and 30 percent work 16 to 17 hours a day for a standard monthly wage of $415, much of which is sent back home. If they are “lucky,” as is Teresa, they have an “amah’s room” off the kitchen–a non-air-conditioned eight-foot-by-six-foot cell barely big enough for a twin bed. Less fortunate amahs sleep on a couch or share a room with the younger children of their employers.

Life on the bottom rung of society has its other problems as well. Filipinas often report that the Chinese look down on them and treat them harshly. Indeed, one of the colony’s biggest companies, Hong Kong Land, recently tried to bar them from sitting on its grounds on weekends when they congregate with their friends in the center of town.

Occasionally, their work may even prove fatal. One Filipina, Pascuela Destas, gave her life for her 5-year-old charge by pushing him out of the way of an out-of-control bus. But saving the life of her employers’ son meant that Destas left her own three boys back in the Philippines without abreadwinner.

Although life in Hong Kong may be difficult, the maids agree on one thing: It is better than being in the Philippines. Thirty-eight-year-old Eppie Cruz is typical. Ten years ago she received her B.S. in accounting from the Philippines’ University of the East. After her graduation, she came to Hong Kong to work as a domestic to support her sisters back home. “Of course we would like to stay in the Philippines if the opportunity was there,” says Eppie. “But the jobs are here.”

Eppie is wearing a Giordano blouse, a popular brand in Hong Kong roughly equivalent to the Gap in America. In the Philippines, she says, it would cost three times as much as it does in Hong Kong. The same goes for her Sony Walkman. Back in her tiny room, she has a telephone, an air conditioner, a JVC television, and a host of minor appliances that are standard in Hong Kong but would be regarded as luxuries in the Philippines.

Or consider 49-year-old Cora Alanunay. Cora is the mother of six children–two of whom are with her in Hong Kong, also working as domestics. One son, Ramon, is working in a hospital in Saudi Arabia. She came to Hong Kong shortly after she was widowed and needed work, and like her friends she is impressed by Hong Kong’s commercial openness and the opportunity it breeds. Although Cora makes only a minimal wage in Hong Kong, it’s far more than what another son makes back in the Philippines as a bank executive.

The incentives are as clear as they are heartbreaking. Today Teresa Concepcion’s children are 16, 14, and 12. Since leaving the Philippines nine years ago, she has seen her boys and her husband just once each year for a few weeks’ holiday. Yet she has little choice. Her salary of $520 per month is 13 times what she could hope to make in the Philippines, and each month she mails half of it back home. Like other Filipina exiles in Hong Kong, Teresa stoically accepts the trade-offs: “I constantly remind myself how important it is to send back the money to them. Otherwise I would get depressed thinking about the kind of work I’m forced to do.”

These amahs are not alone. Ever since the Philippines started its Overseas Employment Program in the mid-1970s, hundreds of thousands of Filipinos who would otherwise have stayed at home have gone into exile to provide for their families. They have also provided for their country. Last year, the 4.5 million Filipinos working abroad helped bail out their country’s cash shortages by sending home an estimated $2.5 billion in foreign exchange-more than the revenue from a number of important Philippine industries, including tourism.

Having inherited an economy that so demeans productive workers, President Ramos has moved to open up the banking system and, most recently, has vowed to fulfill promises to sell off state enterprises. But the problems remain formidable–particularly the protectionist constitution that walls off investment in any number of areas and a Filipino First legacy that endures. Perversely enough, at a time when the Philippines ought to be out begging for multinational investment, a major argument in the national legislature against the privatization of firms such as Petron Oil is that they may be bought by foreigners.

Ramos, too, for all his stated intentions to the contrary, is not above playing the old games. Back in 1975, Imelda Marcos erected pretty white fences so that the delegates to the annual IMF/World Bank meeting would not have to be offended by the sight of the very poor they were supposed to serve. Last year on May Day, President Ramos announced plans to close the Smoky Mountain garbage dump–long a favorite of foreign reporters looking for a symbol of the Philippines’ crushing poverty. The thousands of scavengers who eke out an average $3.00 per day picking through Smoky Mountain’s waste for anything they can sell, use, or eat are upset that the government is once again taking away what little livelihood they have. The Philippine poor will be forced to move out of sight, if not out of poverty.

And in Hong Kong, Filipina mothers and daughters continue to pay a devastating social and economic price for the protectionist schemes of their government. Most of these women started out with big dreams; Teresa Concepcion thought that with her college degree she’d have a fulfilling career in the Philippines, not a job scrubbing floors in Hong Kong. Today she just wants to go home. “I’d like to return to the Philippines in two or three years,” she says, “maybe to farm with my husband.” Even if she is lucky enough to do so, it will mean her children will have grown up without her. What kind of protection is that?

William McGurn is a senior editor at the Far Eastern Economic Review.

Here's how bad the level of FDI has been in the Philippines when compared to the rest of ASEAN.

Here’s how bad the level of FDI has been in the Philippines when compared to the rest of ASEAN.

Tale of Two Countries

Making the economic comeback w/ higher private FDI

Dr. Gerardo Sicat

(taken from the Philippine Star – originally published: 13 June 2012)

by Dr. Gerardo Sicat

As economic opportunity knocks on the country, the question is how to maximize the gains for the social and economic good.

“Two needed market reforms.”

There are two market reforms that can bring us to the front ranks of high growth countries. These reforms concern, first, the attraction of private foreign capital in critical sectors of the economy and, second, the improvement of flexibility of the labor market to create greater employment.

I have written extensively on these topics on previous occasions. I will try to introduce new arguments in support of these reforms as much as practicable. (Today, I discuss FDI policy.)

“Broadening the capital base of the economy.”

The improvement of the flow of private foreign capital has to do with the liberalization of the constitutional restrictions on foreign capital.

These restrictions deal with provisions of the constitution with respect to special sectors of the economy: land, natural resources and public utilities. In terms of the corporate framework, the restrictions are summed up in the “60-40” equity rule favoring Filipino over foreign capital participation.

The policy as it stands permits all foreign investments to come to the country except those that are specified in Foreign Investments Negative list. This list enumerates specific economic activities where foreign equity is either limited or banned. But direct incentives to promote specific investments rest mainly with the BOI, further constrained by the restrictive economic policies pertaining to foreign capital.

“President Aquino’s position on the ‘60-40’ rule?”

It is unfortunate that when asked pointedly during the talk that he gave before the alumni group of US business schools recently, President Aquino replied that he felt more “nationalistic” on this issue, implying that he does not intend to work to amend this provision.

The President can speed up economic growth by directing more foreign direct investments to the country through the liberalization of these provisions. The question cannot be put aside. New investors will always ask the same fundamental questions, and they compare our answers with what other countries do. Why not simply do away with the issue?

Nationalism has been used as main cover of the standard argument in support of these restrictions. While indeed the economy has grown, because of the limitations imposed by this policy, the nation’seconomic growth has been limited and less inclusive.

The benefits of development have been confined to a smaller segment of the population. In this respect, the policies have hampered growth, thereby reducing employment and productivity at home.

“Wide gaps in investment needs.”

Today, the big gaps in services exist in public utilities, transportation, and infrastructure. Despite our good natural endowments, there is also under-investment in the natural resources industries and in agriculture.

These are sectors in which the involvement of private foreign capital leaves much to be desired. Energizing private foreign capital to invest in these sectors would imply providing greater leeway to allow foreign capital to move into these sectors.

“PPP participation is narrow.” 

A most noticeable aspect of the PPP (public-private partnership) projects is that there is limited participation of private foreign capital in them.

Many of the infrastructure projects require huge financing and also a high level of technical capacity of the main contractors. And private foreign capital is in search of good investment projects because of low world demand.

A liberalization of the rules regarding the constitutional restrictions – which could only be amended by a concerted effort to deal with the issue through constitutional amendment – would line up more players to the PPP infrastructure projects pipeline of the government.

A consequence of this provision is that foreign capital will seek Filipino partners to do their job well. In their homeland, Filipino enterprise can leverage their contributions to the projects even if in the process they allow a larger proportional inflow of foreign capital and foreign expertise to get the job done.

Solving the infrastructure problems of the country has a sizable impact on raising the country’s economic productivity, thus accelerating the growth of the whole economy. The sooner the better.

“Raising Philippine international competitiveness.”

A perverse outcome of the “60-40” investment rules in the availment of BOIinvestment incentives is that we have promoted relatively weak national firms in the domestic economic sector. This is a setback since we are entering a new stage of competition within the larger free trade ASEAN market.

The best evidence of this can be found in our department stores, grocery shops, and in the hardware and construction supermarkets of the country. Goods that are made in other ASEAN countries can be found that give us tough competition. Our locally made products tend to be more expensive in these stores and sometimes suffer from comparison.

These are products produced for home consumption and for the domestic market. Sometimes we find products that they produce which we do not make at home. The countries that have welcomed foreign direct investments with less restrictive conditions compared to us.

The joint venture enterprises and FDI owned companies in these other countries have managed to encourage firms that produce goods that are of high quality under competitive international pricing. These products could have been produced in the Philippines but the foreign investors had moved to the other countries where they located their factories.

“Integrating the industrial export sector with the domestic economy.”

Another perverse consequence of the “60-40” is the disconnect that exists between the domestic industrial sector and the export sector. The export sector imports raw materials to process them for export.

Our record in industrial export has been reasonably successful. However, we have not developed greater depth in domestic industrial sector because of restrictive policies on joint ventures. The result is that there is very low domestic procurement ratio for industrial export firms.

There are not enough world class FDIs and domestic firms that produce for the local market. The foreign investment promotion laws have segregated domestic enterprises with the enterprises that produce for exports.

This is unlike in Thailand, Malaysia, and now, also in Indonesia and in Vietnam! PEZA-located firms prefer to buy their inputs from world supplies rather than from domestic firms because the latter do not have competitive sources of supply if they exist at all in the domestic economy.

Of course, the evidence for this is simply that PEZA has succeeded more in inviting foreign direct investments compared to the BOI. And PEZA has only a more recent history compared to that of the BOI which dates back to 1967.

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The author’s email is: gpsicat@gmail.com. Visit this site for more information, feedback and commentary: http://econ.upd.edu.ph/gpsicat/

Dr. Gerardo Sicat is an economist who advocates bringing in more FDI and MNC’s as a means of increasing the number of jobs in the Philippines by removing the anti-FDI provisions in the economy that have caused the Philippines to remain poor and unable to provide jobs to its people.

 

Crucifying Cruz

Neal H. Cruz at center: He is anti-Foreign Investment, anti-Constitutional Reform, but he is sipping Foreign Wine with pro-Foreign Investment, pro-Constitutional Reform Speaker Belmonte

After reading the article written by Neal Cruz last October 17, 2011  titled Cha-cha will let foreigners grab our lands, I couldn’t help but have the urge to reply to some of the claims made by Mr. Cruz on the aforementioned article.  Had not he been so serious about the claims he had made, I could have easily dismissed it but with the amount of vitriol he likes to throw against the “evils of foreigners” and other assorted nationalist rah rah, I felt I really needed to write this as a response.

In his article, he writes that the proposed ChaCha or Charter Change, which aims to amend provisions of the current 60/40 ownership restrictions placed on foreign investors, will allow foreigners to “grab land from the Filipinos.” Despite not having anything to back this statement up, for him it is a fact simply because it stirs nationalism in the hearts and minds of Filipinos against the much-dreaded “evil white man” and when most of the populace has to deal with the harsh realities of life, nothing is more comforting than the nationalistic wails of “Pinoy Pride” or “the Philippines belongs to Filipinos only.”

Let me explain why his statement of foreigners “grabbing” all the lands here is both dubious and ridiculous. Vietnam and China, both countries who have really large foreign investments, allow foreigners to fully own 100% of any company set up in these countries. Section 8 of Article 2 on the 1996 Law of Foreign Investment in Vietnam states that a foreign investor is defined as “An enterprise with one hundred (100) per cent foreign owned capital means an enterprise in Vietnam the capital of which is one hundred (100) per cent invested by foreign investor(s).” Clearly this states that any foreign company who wants to invest in Vietnam can invest with 100% foreign ownership. As per land ownership, Section 1 of Article 5 of the Vietnamese Law on Land states that “Land belongs to the entire people with the State as the representative owner” meaning that land ownership lies in the hands of the State, which then leases the land (or sells time-bound “land-use rights”) to foreign investors. That’s because the two countries aforementioned follow the principles of Georgism, which states that anything that is not created by man, in this case the earth, cannot be owned.  No evil white man grabbing land there.

Skyline of Hanoi, capital of Vietnam

Although his claim that marginalized local folks will “run out of land” if we allow the “evil white man” to own lands in the Philippines due to the country’s small size and ever-increasing population sounds academic to some, it is false since there are other countries that are smaller with lesser land area that allow foreign ownership of lands yet their citizens are neither “marginalized” nor “evicted” from their lands to pave way to foreign ownership. Singapore, which is a lot smaller compared to the entire island of Luzon (Singapore, with a total land area of 778 km2, is even smaller than Marinduque, which has a land area of around 963 km2), allows foreigners to own land under the 1973 Residential Property Act which states that “The Act seeks to strike a balance between giving Singaporeans a stake in the country by being able to buy and own residential properties at affordable prices, while attracting foreign talent by allowing permanent residents, foreign companies and limited liability partnerships that make an economic contribution to Singapore to purchase such properties for their occupation.” Yet you never hear of any “oppressed” or “marginalized” Singaporeans who cannot own land. Seems like there is something so special about the Philippines that makes “evil white men” want to grab all the land.

Adding more fuel to his “Pinoy Pride” ultra-nationalism is his statement about “European settlers grabbing the lands of Amerindians and confining them to reservations”, as nothing is more dreadful than instilling the thought that evil foreigners are out to get your land and have their way with the local women, despite being historically inaccurate. When the first batch of Europeans arrived in 1492, this vast land now known as America was not owned by the Amerindians as a nation as there was no “Amerindian or Cherokee” nation that existed during the time, despite claims made by these sponsors of White guilt. The land was inhabited by several Indian nations such as the Cherokee, Iroquois, Apache, Mohawk and others who among themselves fought for land ownership. Historical facts be damned in the name of “Pinoy Pride.”

This is the result of very little investment (foreign or local), resulting in very few jobs…

And his claim that the 40% limit of foreign ownership of companies and utilities here in the Philippines is for the “benefit” of the Filipino people is ludicrous as the results has proven to be detrimental to the Filipino people. Looking at utilities alone, the Philippines ranks as having the highest power rates in Asia, and among the highest power rates in the world. Why? Because power generation is monopolized by the state-owned NAPOCOR , which then provides little or no competition to other foreign/local energy generation firms which then gives little incentive for NAPOCOR to generate electricity at lower prices through the use of less fossil fuel/coal dependent means such as geothermal and hydroelectric power as they do not have to compete in the consumer market with lower power rates and value-added services, which is the very essence of competing companies in free markets. This in turn allows them to sell electricity at fixed rates to various electric providers, who in turn have the liberty of overcharging for their services as there is no one else competing with them. As a result, many Filipinos have to suffer as foreign investors are hesitant to set shop in the Philippines due to the high energy costs which in turn keeps most of the population jobless and local businesses too have to struggle with the high power costs to keep themselves operational and the regular Juan Dela Cruz has to endure paying high electric bills.

Another example is the Internet. According to SpeedTests.net, the Philippines ranks 121st in terms of internet speed (Average download speed/download rate) at 787 kbps (0.8 mbps) or 98 KB/sec, lower than its Southeast Asian neighbors(Malaysia at 1269kbps or 159kb/sec, Singapore at 4078kbps or 510kb/sec, Thailand at 3529 kbps or 441kb/sec) Want to know why? Since foreign investors have limited ownership and because foreign ISP’s cannot invest in the Philippine market, which also allows them to invest in the technology for high-speed internet, the populace is left with a few major internet providers who are free to jack up internet prices or provide cheap internet but with terrible service as these companies have no competition in the local market. I don’t think the average Filipino wants to pay higher electricity or live with mediocre internet connection all in the name of “Pinoy Pride.”

His third to the last statement made about Petron’s sale to ARAMCO smacks of his ignorance on the free market system. Free markets work through the basic law of supply and demand, which states that when the demand is low and the supply is high, prices are low and vice versa. By allowing the government to intervene, which is what he wants through price controls, this creates an artificial demand as lowering prices for the sake of the “poor” masa only allows for more demand, and when supply can’t keep up, you eventually run out of supply, the end result being long bread lines, just like in communist countries such as the USSR in the late 1980’s.

It is true and sad that most Filipinos cannot afford the means to buy housing and their own land, coupled with the skyrocketing costs of commodities and other necessities. But the solution does not lie in big government, corporate monopolies and autarky. By keeping out foreign investors and kicking them out, which at the end of the day is what Mr. Cruz wants, it will only worsen the plague as there will be no new jobs generated and we’ll end up with high costs of products & services and more poverty. Without a lot of lucrative job opportunities for local employees, it destroys both the ability of the local economy to grow through the multiplier effect and social mobility, meaning the ability of those who want to move up the financial food chain to do so, thus leaving us no choice but having to rely on our overseas workers for their dollars.

Looking at our more successful neighbors like Singapore, one of their formulas for success is by allowing foreign investors to invest in the country with 100% ownership and removing the protectionist and ultranationalist policies that were in place. As a result, Singapore is among the wealthiest nations in Asia and has truly gone “From Third World to First” alluding to the title of Lee Kuan Yew’s book on Singapore’s success. As the late Paramount Leader of China, Deng Xiaoping once said: “It doesn’t matter if it’s a black cat or a white cat, if it catches mice, that’s a good cat.”

In the age of globalization and advancing technologies, where whole economies are intertwined by free trade and the world is made even smaller by the internet through e-commerce, there is simply no room for such ultranationalistic backwardness. But unfortunately, many of the likes of Mr. Cruz will still push for over protectionist policies and kick out people who will bring further wealth to the country all in the name of “Pinoy Pride” or “Brown Power.

Too bad it neither puts food on the table nor buys the clothes on your back.

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About the Author: James Aron Mangun, known simply as James or “Jim” to colleagues, is a former BPO English Trainer in several companies and now a freelance BPO consultant/businessman who regularly visits political Philippine blogs and websites to offer his two cents on current events/affairs.

He is an ardent believer of the free market system and is an avid fan of Ludwig von Mises, Ayn Rand, and Milton Friedman. He currently runs the Mangun On Markets website with his father John where they offer advice/tips to people interested in investing in the PSE. You can visit his site at http://www.mangunonmarkets.com

 

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