One of them is so obsessed with statistical growth, perhaps this is what his economics professors taught him back in college, while the other would like to focus more on understanding and adopting the right politics, which is the key to a sustainable economic model.
Philippine President Noynoy Aquino is the leader who’s more interested in statistics rather than real, long-term economic growth that could improve the people’s quality of life and well-being. No, I don’t doubt the President’s intention; however, I believe good intention is never a virtue.
In my humble opinion, good political leadership is about getting the ideas right and understanding the right principles. In the real world, there are wrong and right ideas as well as good and evil ideas. There are universal principles. But this is not to say that modern-day government leaders must be what Plato called “Philosopher Kings”, for the Platonian ideal calls for a communal system of government. Plato’s enlightened ruling elites are what B.F. Skinner called “technologists of behavior” or “scientists” who must be rulers of the latter’s global community or dictatorship.
I want political leaders who are able to grasp the value of right and proper ideas. That is, I want modern-day Thomas Jeffersons, George Washingtons, Benjamin Franklins, John Adams, John Jays and James Madisons. These early political leaders who established the first freest nation on earth clearly understood that politics is not about rulers and powers, but more about universal principles and reality-based ideas anchored on the nature of man. These men, who all fought a power-hungry British monarch, knew that laws are made and intended to protect man’s rights and freedom– that any political edict or decree that violates man’s inalienable right is not a law or an anti-law.
Today most leaders who are obsessed with numbers and statistics are political frauds who should have no business at all running people’s lives.
The problem with President Aquino is that he did not just immerse himself in trying to quantify his alleged achievements and to meet his GDP target, which is perhaps an attempt to prove he’s doing the right thing, but he also surrounded himself with economic frauds or bad economists.
A great economist in the past (Austrian economist Ludwig von Mises), who clearly understood that economics is not about statistics but about human action, explained that statistics is simply a “method for presentation of historical facts concerning prices and other relevant data of human action.” Thus, statistics is “not economics and cannot produce economic theorems and theories.”
If it’s indeed true that the Philippine President’s most touted 7.5 gross domestic product (GDP) indicates a fast-growing economy, then we should have better quality of life, more employment and opportunities, higher wages, among others. Instead, the entire country was hit with higher unemployment rates, less exports, and negative foreign direct investment.
What we all know and feel is that the Malacanang’s statistics and numbers contradict the country’s historical facts and economic reality. Well, this is because statistics, like any numerical graphs and figures, can be simply manipulated, exaggerated, or embellished. Or, perhaps it’s because GDP growth does not necessarily reflect a healthy or robust economy. GDP figures can be an effective propaganda tool designed to fool the masses and the gullible.
According to this IMF (International Monetary Fund) analysis, there are things that GDP metrics cannot tell us.
GDP is not a measure of the overall standard of living or well-being of a country. Although changes in the output of goods and services per person (GDP per capita) are often used as a measure of whether the average citizen in a country is better or worse off, it does not capture things that may be deemed important to general well-being.
The Philippines’ 7.5 or more GDP growth might have been caused by a number of factors that do not necessarily reflect general well-being, such as high government expenditure and increased OFW remittances.
Like I said I don’t doubt President Aquino’s intention. He still deserves the benefit of the doubt.
Based on his public speeches, the commander-in-chief really wanted to see an improved economy and to help the poor. The problem is, his pro-poor approaches and programs cannot guarantee long-term results and success. His welfare policies, namely, the Conditional Cash Transfer (CCT), RH programs and universal healthcare system, are just patch-up solutions to our worsening poverty level caused by less domestic and foreign direct investment, high jobless rates, massive regulations, red tape and graft and corruption. In fact, the President’s temporary welfare solutions could even lead us to more debts, higher budget deficit, bankruptcy and social and economic crisis.
What this third-world, cash-strapped country needs is real economic growth and realistic, practical (not pragmatic) economic model. It needs foreign participation and cooperation. That is, we need foreign investors and professionals to join our Team.
Yet President Aquino rejected calls for charter change to allow foreign involvement, saying “[t]here is no absolute certainty that if we lift the restrictions in our Constitution, there will be corresponding economic gain.”
“Before we do Charter change, I think there should be concrete evidence that it would help our country,” the President added.
I find it preposterous that this economics graduate from Ateneo De Manila University failed to see that the best evidence is our more than 20-year experiment with his mother’s (former president Corazon Aquino) higher level of protectionism and Bigger Government model.
When the President’s mother took over the presidency in 1986, many Asian countries (e.g., China, Singapore, South Korea, Japan and Taiwan) turned away from protectionism and gradually opened their economies to the outside world. China started to break away from Maoist communism in 1979 by adopting what Deng Shaoping called “second revolution” that betrayed or compromised Mao Tse Tung’s communist revolution. (Here’s a study on China’s economic growth since 1979, or since Beijing’s rejection of protectionism).
Today China, despite stubbornly preserving its socialist political structure, is economically freer than the Philippines, which bans foreign ownership of lands and imposes its protectionist 60-40 rule. For instance, China’s Wholly Foreign Owned Enterprise (WFOE or WOFE) allows foreign investors to fully participate in its booming economy.
The Wholly Foreign Owned Enterprise (WFOE or WOFE) is a Limited liability company wholly owned by the foreign investor(s). In China, WFOEs were originally conceived for encouraged manufacturing activities that were either export orientated or introduced advanced technology. However, after China’s entried into the WTO, these conditions were gradually abolished and the WFOE is increasingly being used for service providers such as a variety of consulting and management services, software development and trading as well. With that, any enterprise in China which is 100% owned by a foreign company or companies can be called as WFOE.
Despite being one of the biggest economies in the world, China has the humility to say: “We need foreign investors and participants to
boost our economy”. In contrast, the Philippine leadership’s attitude toward foreign investment is: “We need to see more proof that foreign involvement would help our economy”. I say the president’s response does not just exhibit personal arrogance, but political insanity as well.
According to this 2013 study on China’s quick economic rise (a Congressional Research Service report for the U.S. Congress), China’s free market reforms reversed the country’s poverty-perpetuating policies during the Red Era.
Since opening up to foreign trade and investment and implementing free market reforms in 1979, China has been among the world’s fastest-growing economies, with real annual gross domestic product (GDP) averaging nearly 10% through 2012. In recent years, China has emerged as a major global economic and trade power. It is currently the world’s second-largest economy, largest merchandise exporter, second-largest merchandise importer, second-largest destination of foreign direct investment (FDI), largest manufacturer, largest holder of foreign exchange reserves, and largest creditor nation.
Seriously the President needs to fire all his incompetent economic advisers and economic planners, especially NEDA chief Arsenio Balisacan.
Now I believe I need to stress that all of today’s Asian tigers were formerly protectionist economies.
Singapore, on the other hand, is one of the freest, if not the freest, economies in the world. Unlike the Philippines that massively limits foreign investment, Singapore fully allows and encourages foreign investors. According to the latest Doing Business Index, Singapore is number one in the global ranking in terms of ease of doing business.
Like most tiger economies in Asia, Singapore’s quick economic development was fueled by FDI. The city-state owes its industrialization and rapid economic growth to foreign involvement and its openness to global trade.
Lee Kuan Yew, Singapore’s most revered founding father, once said that his country’s liberal free market policies and immigration were inspired by the United States.
Consider what Lee Kuan Yew (in his interview with Charlie Rose) said about their and America’s openness to foreign professionals and investors:
Lee Kuan Yew: “It’s not just American talent that gets you here. You’re just 300 million people and they [China] have 1,300 million and very many more able people.
“But you are attracting all the adventurous minds from all over the world and embracing them, and they become part of your team.
“Now I don’t see two million Indians and half a million other peoples, Japanese, Koreans, and others, becoming part of China. I mean, first the language is so difficult. Secondly, the culture is not embracing. How do you fit in?”
Charlie Rose: “Take Singapore… It has to be a place people want to invest in. It has to be a place… go ahead.
Lee Kuan Yew: “It has to be a place that’s useful to the world. Otherwise it wouldn’t exist.
Charlie Rose: “And that’s what you’ve created since the founding of the modern city state?”
Lee Kuan Yew: “Absolutely. We have made ourselves relevant to the world…”
Charlie Rose: “And how will you maintain your relevancy?”
Lee Kuan Yew: “By keeping on changing. You cannot keep your relevance by just staying put. The world changes. There are shifts in the geopolitics and economics of the world. We’re gonna watch it and we’re gonna ride it.
“We are keeping our links with America, with Japan, with Europe. THEY BROUGHT US TO WHERE WE ARE.”
Mr. Aquino needs to listen to this great man. Even Deng Xiaoping called him a “mentor”.
But still, Mr. Aquino said he needs more concrete evidence that foreign participation would improve the country’s struggling economy.
I seriously believe Mr. Aquino must be living on a different planet.
Now fortunately for the Singaporeans, LKY’s son, Prime Minister Lee Hsien Loong, is more interested in getting or starting with the right politics, which according to him, is “the key to a sustainable economic model”.
It appears that Mr. Lee is simply continuing the legacy and vision of his father– to keep Singapore relevant to the world.
If Mr. Aquino and his team, composed of Keynesian economists (like Balisacan, National Statistical Coordination Board Secretary General Jose Ramon, among others), are more obsessed with meeting their GDP targets, Singapore’s government leaders believe in getting their politics right to remain economically progressive and competitive over the next two decades.
Lee Hsien Long explained his thought process in the following fashion:
“Because if your politics is wrong, your economics is bound to go wrong. And the reason why so many countries cannot get their economies right, it is because their politics don’t work.”
“I think that we have got to be able to get the fundamentals right and, so far, we have been able to do so,” said Mr Lee. “And we can continue to get the politics right and then I think the economics can work out,” he added.
Mr. Lee also believes in getting the “fundamentals right” and to “continue to get the politics right” so economics can work out.
Here’s a report from TodayOnline:
Said the Prime Minister: “I cannot make everybody a billionaire, but I can make sure everybody can earn a good living for himself. I think that’s possible. But it takes effort and you have to be competitive.”
Mr Lee cited the Government’s investments in a slew of measures, ranging from infrastructure to providing less well-off Singaporeans with subsidies in healthcare and education, among other things. “I don’t think it will make us a society where everybody is absolutely equal,” he said.
“In fact, if I can get another 10 billionaires to move to Singapore and set up their base here, my Gini coefficient will get worse but I think Singaporeans will be better off, because they will bring in business, bring in opportunities, open new doors and create new jobs, and I think that is the attitude with which we must approach this problem.”
That’s exactly the kind of leader the Philippines needs. A leader who understands fundamental principles and proper ideas. Mr. Lee knows that political ideas and principles must be grounded in reality– both political and economic reality– for them to work in the real world.
What more excuses and proof do we need, Mr. Aquino? Free the economy and stop protecting Filipino cronies and oligarchs.
- The Philippines is lagging behind in terms of global competitiveness, ease of doing business and corruption perception index.
- The Philippines is lagging behind in terms of FDI inflows over the past ten years.