'Competitiveness,' GDP and other BS

DIE HARD III
Herman Tiu Laurel
1/24/2011



Charter change (Cha-cha) proponents are foisting their battle cry of economic “competitiveness” to hoodwink our people into letting down their guard like a boxer lowering his arms. This BS has prevailed in the country for the last 25 years ever since the Yellow fever took hold, with the Makati Business Club behind it. Just look at how much clobbering the Philippine economy and population has taken--beaten to a pulp, in the ICU--while countries which kept up their guard such as Malaysia, Vietnam, Indonesia, China, India et al. have not only kept up their sparring form but have taken crown after crown in the ascending economic weight divisions.

Like the Philippines , the US is now being beaten to the canvass by the likes of China because, in its bigness, it led down its guard as China did the famous Ali “rope-a-dope.” So who’s the dope now?

This is what economist Paul Krugman had to say when Obama, in a crucial address, dwelt on the matter: “Sigh. So it appears that President Obama is going to make ‘competitiveness’ his main economic theme… But this is hackneyed stuff, and involves a fundamental misconception about the nature of our economic problems. It’s OK to talk about competitiveness when you’re specifically asking whether a country’s exports and import-competing industries have low enough costs to sell stuff in competition with rivals in other countries… But the idea that broader economic performance is about being better than other countries at something or other--that a country is like a corporation--is just wrong… As Robert Reich says, this could all too easily turn into a validation of the claim that what’s good for corporations is good for America , which is even less true now than it used to be.”

Last week we focused on the incontrovertible fact that the Philippines is fully equipped to achieve success in its national economic recovery aspirations, particularly in the availability of domestic capital, as the idle P1.22-trillion Special Deposit Account managed by the Bangko Sentral ng Pilipinas shows. Hiro Vaswani, forensic finance process consultant and research chief of KME (Kilusan para sa Makabansang Ekonomiya), pointed this out--something that we shared in our last column. Well, Hiro just sent us another e-mail on the subject of competitiveness and the Cha-cha:

“Maintaining nationalist (partial bars to foreign ownership) provisions in the Constitution in some sectors of the economy and qualified restrictions of land ownership for foreigners is not a bar to economic development. The present 1987 Constitution in many ways calls for a developmental state model that has not been clearly established by the government itself. The calls for changes to the Constitution, in the alleged face of the emergence of a borderless economy, are stupid and insane at best. Firstly, countries do not and cannot compete like corporations. Countries do not have a bottom line that, if not achieved, they die like corporations. Furthermore, the recent financial crisis has already put the lie to the ideas of this so-called borderless world economy led by the more developed economies of the world.

“Countries all over the world today are putting in place domestic policy measures to grow their domestic economies. Amongst the emerging market economies, strong state developmental policy paradigms are driving their economic development. The problem in the Philippines remains with the policy of importing demand (i.e. export market dependence) deeply imbedded in the Filipino psyche. The economist Simon Kuznets who is credited with the creation of national income accounts (such as GDP or Gross Domestic Product) warned the government then that this measurement does not measure the general welfare of the people in the country. He further warned that there will be a huge disparity in income with developing economies as they transition from agrarian economies… (which) can only be avoided if an industrialization process happens…

“Figures from the government today reveal that income from deployed foreign employment is greater than domestic employment. The so-called ‘employed,’ consisting of self-employed and unpaid family workers, comprise the bulk of the true unemployed in the country (30 percent to 40 percent).”

Simply put, competition as an exemplar only emerged from “corporate economics,” along with its myth of the “private sector”-led growth. Of this Vaswani says: “An economic system that depends on individual selfishness and greed without qualifications will always lead to perverse incentives. Lying, cheating and corruption in both public and private sectors become institutionalized. Individual and familial interests prevail over a non-existing national psyche. Economic systems are morally neutral. This is where politics come in. Any student of political economy knows that the material base will greatly influence the political structure. It is in the rational self interest of a poor man to sell his vote for lugaw to survive the day…

“Economic history has proven that the selfish motive of man to create a better life for himself with ever decreasing levels of effort was directed by men who established state institutions to direct this effort over the last three centuries with resounding success.

“These state institutions are still mainly national in character. The idea of competitiveness in a borderless economy is a utopian dream of nuts and carpetbaggers. Taking it in hook, line and sinker has created a dystopian situation in the country.”

So let’s cut the BS and get back to the National Development Economics paradigm. Let’s all junk the GDP mantra and replace it with a National Development Index of human, ecological, industrial and sovereign growth!

(Tune in to Sulo ng Pilipino, Monday, Wednesday, and Friday, 6 to 7 p.m. on 1098AM; TNT with HTL, Tuesday, 8 to 9 p.m., with replay at 11 p.m., on GNN, Destiny Cable Channel 8, about “The RP Constitution, Economics and Cha-cha” with Atty. Alan Paguia and Dr. Hiro Vaswani; visit our blogs, http://newkatipunero.blogspot.com and http://hermantiulaurel.blogspot.com)