The business of America is business, someone once said. Germany used to be called Deutschland AG or Germany Incorporated. Business is not a bad thing. We all want to make a living. When I was young and angry at the Marcos regime I was a leftist. At the very latest the failure of communism in Eastern Europe showed me that this was not the right way of thinking.
Filipinos and business
In the Philippines business has a bad connotation. Well it has often meant monkey business in reality. Or rent-seeking business of the oligarchic or crony type. Miguel Syjuco highlights the distribution of wealth in the Philippines in his article Beating Dickheads (link). Obviously the country is not yet a truly modern economy:
A recent study by economist Cielito Habito said that the forty richest Filipinos account for three-quarters of the country’s GDP growth – the highest in Asia. As the Philippine Daily Inquirer reported, this contrasts with Thailand, whose swankiest forty are behind a third of GDP growth. Malaysia’s fattest forty account for just 5.6 per cent, while Japan’s drive a mere 2.8 per cent. Meanwhile, the top two Filipinos on Forbes magazine’s rich list account for around $18.8 billion – 6 per cent of my country’s wealth. This was contrasted with the bottom quarter of Filipinos, who live on hardly a dollar a day. That’s twenty-five million people, more than the population of Australia, living on less than a buck. This ratio, the Inquirer reported, ‘was little changed from a decade earlier’.
He does mention that progress has happened:
The Philippines is no longer the sick man of Asia. Our middle class is expanding. Our workers are prized all over the world. The country is politically stable compared to our neighbours. The administration of our current president, Benigno ‘Noynoy’ Aquino III, has cracked down on corruption, most notably on a scandalous pork-barrel scam implicating a dozen powerful senators and more than a score of congressmen. And, best of all, the Philippine economy is booming.
But that also there are a lot of things to be improved:
But the same families maintain a stranglehold on power while the gap between rich and poor widens. Monopolies, nepotism, tax evasion, protectionism, erratic regulation (too little where it’s needed, too much where it’s not) and personal relationships between business and policy makers continue to bloat the wealth of the political and non-political elite alike.
This is of course not surprising in a country where traditionally wealth was gained by extractive monopolies. From the time of the galleon trade onwards.
How others developed
America also had its robber baron period in the late 19th century (link). Much development was made possible by these ruthless men. Germany also had big industrialists like Krupp.
- anti-trust regulations developed to prevent monopolies from getting too powerful. One of the biggest anti-trust actions was the break-up of AT&T (link).
- sophisticated stock markets developed with insider trading rules (link) in order to give small shareholders a chance and not just be potential suckers.
- highly regulated banks and pension funds became major investors in developed economies – the former in Japan and Germany, the latter in the USA.
- small and medium-sized enterprises were protected, municipalities given a tax share. Germany’s SMEs employ over 60% of the workforce (link).
- strong social democratic or labor parties especially in Europe made sure that workers were given a fair share of their contribution to productivity.
Works councils in Germany (link) make sure that workers and corporations work as a team and not against each other. Much of postwar Germany’s success is also due to them. But also:
- Most modern countries have real political parties that recruit members from all walks of life, similar to trade unions. Party finances are highly regulated (link).
- Different interest groups exist in any country. Nothing wrong about taking care of common interests. Nearly every industry, profession, group has that in Germany.
- Corporations, political parties, lobby groups all breed their leaders internally with some degree of meritocracy and some game-playing. Nearly no dynasties as a result.
Countries with that degree of professionalization and institutionalization are of course in a totally different league than Saudi Arabia, Dubai or the Philippines.
Gettings things there
There are indeed a few initiatives that may move the Philippines in the right direction if implemented properly. They all bear the signature of Senator Bam Aquino:
- The Philippine Competition Act is now not only promulgated but implemented, with former NEDA Director-General Balicasan heading the Philippine Competition Commission
- The Go Negosyo Act (link) and the Negosyo Centers implemented as a result (link) give opportunities for SMEs. What I have heard so far is that they are the real deal even for OFWs.
- Latest initiatives on innovation, pushing for the internet infrastructure to be improved, consumer protection are all further initiatives that are quietly being pushed by the Senator.
An article from the Philippines Free Press of August 29, 1970 “The Ruling Money – Anatomy of the Republic as a plutocracy.” (link). It identifies the sources of the wealth in those days, and the man who clearly names the sources of that wealth is Senator Aquino – not Bam but Ninoy Aquino. He also makes a clear statement about the dangers of such a concentration of wealth:
Senator Aquino sees one great danger: the Filipino who becomes master in Juan’s house may not be Juan de la Cruz himself. Juan may find that the foreign exploiter he kicked out has been replaced by a native one. “The Spanish exile, Salvador de Madariaga, warned that a country can become the colony of its own people.” And the hurt is that it’s Juan’s money that will be used to make him poorer and his master richer.
So it does seem that Bam Aquino is living the same spirit as Ninoy Aquino then, and even implementing measures that will change things. To paraphrase Michael Syjuco’s article – Bam Aquino is for sure NOT a dickhead. I am not so sure about President Benigno Aquino III sometimes, or about Manuel Roxas II. Could it be a generational thing? More stuff like that of Bam Aquino please.
Irineo B. R. Salazar, München, 16. March 2016