Counter-intuitive solutions to fixing the Philippine economy

I remain convinced that America’s immense creative and commercial energy will shine through whatever social order is imposed on it; much the same way as the might of Chinese entrepeneurial and industrial ethic managed to thrive in the repressive communist regime of the mainland as well as in even most the dysfunctional and corrupt governments of societies that host its expatriate communities.

The economic downturn that is gripping the United States and many parts of Europe can be (and at the moment is) partly blamed on legacies of 1990’s thinking, but I think this is more a problem created by private enterprise. In America and in most progressive societies at least some learning will be derived from this experience and private enterprise will soldier on, self-correct (primarily over the next several years write off all the bogus “value” it created — thus a need for a bit of economic recession) and then re-build.

Now will be a good time for the industrialised world to re-evaluate its dependence on (a) blood-stained foreign oil and (b) cheap coal-burning Chinese manufacturing.

The question remains though: Where does that leave societies that are mere corks bobbing on the waves of globalisation? Because over 50 years of bumpy progress in both the West and in the East Asian region, the Philippines stands out in its pathetic slow-but-inescapably-consistent downward decline. First factor out the effect of how the Philippine economy piggybacks on global economic trends, trading in funny money (i.e. consumption) and the OFW remittances it has grown addicted to. Then evaluate our worth as a society using plain-and-simple Accounting 101 using as primary metrics our production capacity and tangible capital. Do those, and you are left to regard the stark reality of the utter void that underpins everything we imagine ourselves to be as a people (maybe prayer does indeed keep things chugging along in the Philippines!).

Consider then that what the chronic weakness of the Philippine economy really highlights that is relevant to all is the need to get back to basics:

(1) Self-sufficiency — being able to produce domestically what is consumed locally in order to;

(2) Reduce unhealthy and un-secure dependency on global trade and reliance on unnecessary shipping of goods.

(3) Simplification of the concept of economic value tying it squarely back to production and tangible assets all sustainably created through;

(4) Domestic capital creation — an ability to rely on one’s own inherent cleverness to create physical, intellectual, cultural, and (ultimately) financial capital indigenously.

Tough luck for us though. If we evaluate the Pinoy condition along the above four points, we get bad news spelled out for our lot. Our economic value as a people is tied squarely to the amount of capital and commercial activity that the industrialised world is able to generate (like rats and roaches who live off by-products of human activity). Now that we are seeing a withdrawal of this activity by the rich world, we will be left to increasingly rely on our own cleverness to replace this with something to keep our economy buoyant. A reliance on a cleverness that historically was never evident in us is a scary prospect. Personally I’d put my money on roaches and rats.

Protectionism will be a reality check and possibly the bitter pill we need.

If we shut our ports to cheap Chinese celphone trinkets (among other useless things we import) — our consumption-driven economy will slow down.

This will have a triple effect:

(a) Pinoys start feeling the pinch and spend less.

(b) Whatever remaining Pinoys who have cash to spend will have lesser stuff to spend on.

(c) A bigger chunk of household incomes (specially incomes sustained by OFW dollars — remitted by whatever is left of the overseas labour force) will remain parked in bank accounts.

As oligarchs who once earned their fortunes by convincing hollowheads to part with their hard-earned OFW dollars in exchange for useless trinkets and over-priced restaurant meals shift their businesses (hopefully) back to manufacturing and farming (activities that actually produce stuff), our society then gets back to building a nation the old-fashioned and sustainable way. And, guess what, all that money parked in the financial system that would have been spent on cheap Chinese trinkets becomes available to fund our next-generation sustainable capital expansion!

Best of all, in this much more real order of things (though maybe not good for most as Pinoys are famously averse to dealing with reality), the whole debate about whether or not there is simply just too many of us will be settled once and for all — and the right thing done about it.

Even the Church stands to gain from all this. The short-term despair the ordinary Pinoy schmoe will feel will put them in a bee-line back to their local churches.

Everybody wins!

Sometimes an arm needs to be amputated so that the whole body does not die an agonising gangrenous death.