The battle for or against economic liberalization has been going on for years. Back then, I remembered the Filipino First Policy and how it was taught in values education (read here). With March, it's very easy to remember the late Flor Contemplacion, whom Migrante (Migrant) International (or some people on Facebook gave them the nickname Migraine International) still has declared as some kind of heroine (read here). Migrante International (which has branches around the world, ironically) has also shared several ideals that are really declared failures yet they still insist on them. They have been demanding for "Trabaho sa Pinas, hindi sa labas." (Jobs in the Philippines, not abroad). Yet, one big question that I'd like to ask as an MBA graduate (though I'm no longer planning to pursue a doctorate) is this, "Do these groups demanding jobs for Filipinos, instead of abroad, provide local employment."
A look at the economic nonsense arguments of Filipino labor groups
The frequent demands of "thought leader" labor groups like Migrante International, IBON Foundation, Kilusang Mayo Uno (May 1 Movement), Kabataan (Youth) Partylist, Anak ng Bayan (Child of the Nation), Bayan Muna (Nation First), Alliance of Concerned Teachers, the League of Filipino Students, the Philippine Anti-Fascist League (though it seems its founders are currently inactive for a reason),, etc. might be summarized as follows:
- No to the opening up of the Philippine economy to FDIs because they will exploit resources, only they will get rich, they will destroy national sovereignty, and whatever. Instead, these groups demand the protection of local Filipino businesses and try to industrialize the nation by itself, to which doing so will create a national industry that will boost the Philippines. That is according to these "thought leaders".
- The demand for the three-fold demand of (1) increasing the salaries of workers, (2) lowering the price of goods, and (3) giving handouts worth PHP 10,000.00 (read here).
Speaking of the third claim, do I need to stress that basic accounting principles will show salaries are part of production costs. If you raise salaries by PHP 150.00 now or up to PHP 750.00 (which will get higher and higher as these groups would want it) then you can expect the prices of goods to go up. Even worse, the Economics Help website also presents wage-push inflation as a cost for stagnant inflation, which the Philippines must deal with:
Wage Push Inflation. If labour is able to push for higher wages, despite lower growth, then we could get a combination of rising inflation, but slow growth. This is especially a problem if a country is part of the single currency. If wages rise, they become uncompetitive leading to lower demand. Therefore there is an unwelcome combination of rising prices, but lower growth. If countries were not in a single currency, the uncompetitiveness would lead to a depreciation in the exchange rate to restore competitiveness and increase demand.
These thought leaders have made ridiculous claims such as:
- Singapore only opened up to FDI because of its lack of natural resources.
- First-world countries only opened up their economy after they strengthened through protectionism.
- Competition from foreigners will destroy local businesses and drive Filipinos poor. They even suggest competition will ruin quality.
- Some even say that giving people ayuda (cash handouts) would help generate jobs.
The arguments are totally dumbfounded. That's why I decided to buy the late Lee Kuan Yew's book From Third World to First. It was a good thing that decided to buy the book because they've even made ridiculous claims. I even read on Facebook the ridiculous claim that Lee supposedly got advice from another hero of protectionist policies, the late Ferdinand E. Marcos Sr. Lee didn't speak well of Marcos Sr. and later said that the Philippines has a rambunctious press. I read the portions about the Philippines even more. However, I was more fascinated with how Communist countries like China and Vietnam both accept FDIs. I can't be sure about red-tagging nor do I want to engage in it. What's more important to me is to debunk the idiotic arguments of such people. Just because I'm a nobody doesn't mean I can't vocalize or learn from people who know better.
Their argument for job creation has really no substance in the light of several references. For example, a reading of Lee's book From Third World to First reveals the startling fact about FDIs and how Singapore fares now, defeating their nonsense arguments:
Pages 57-58
After several years of disheartening trial and error, we concluded that Singapore's best hope lay with the American multinational corporations (MNCs). When the Taiwanese and Hong Kong entrepreneurs came in the 1960s, they brought low technology such as textile and toy manufacturing, labor-intensive but not large-scale. American MNCs brought higher technology in large-scale operations, creating many jobs. They had weight and confidence. They believed that their government was going to stay in Southeast Asia and their businesses were safe from confiscation or war loss.I gradually crystallized my thoughts and settled on a two-pronged strategy to overcome our disadvantages. The first was to leapfrog the region, as the Israelis had done. This idea sprang from a discussion I had with a UNDP expert who visited Singapore in 1962. In 1964, while on a tour of Africa, I met him again in Malawi. He described to me how the Israelis, faced with a more hostile environment than ours, had found a way around their difficulties by leaping over their Arab neighbors who boycotted them, to trade with Europe and America. Since our neighbors were out to reduce their ties with us, we had to link up with the developed world-America, Europe, and Japan-and attract their manufacturers to produce in Singapore and export their products to the developed countries.The accepted wisdom of development economists at the time was that MNCs were exploiters of cheap land, labor, and raw materials. This "dependency school" of economists argued that MNCs continued the colonial pattern of exploitation that left the developing countries selling raw materials to and buying consumer goods from the advanced countries. MNCs controlled technology and consumer preferences and formed alliances with their host governments to exploit the people and keep them down. Third World leaders believed this theory of neocolonialist exploitation, but Keng Swee and I were not impressed. We had a real-life problem to solve and could not afford to be conscribed by any theory or dogma. Anyway, Singapore had no natural resources for MNCs to exploit. All it had were hard-working people, good basic infrastructure, and a government that was determined to be honest and competent. Our duty was to create a livelihood for 2 million Singaporeans. If MNCs could give our workers employment and teach them technical and engineering skills and management know-how, we should bring in the MNCs.Page 66Our job was to plan the broad economic objectives and the target periods within which to achieve them. We reviewed these plans regularly and adjusted them as new realities changed the outlook. Infrastructure and the training and education of workers to meet the needs of employers had to be planned years in advance. We did not have a group of readymade entrepreneurs such as Hong Kong gained in the Chinese industrialists and bankers who came fleeing from Shanghai, Canton, and other cities when the communists took over. Had we waited for our traders to learn to be industrialists we would have starved. It is absurd for critics to suggest in the 1990s that had we grown our own entrepreneurs, we would have been less at the mercy of the rootless MNCs. Even with the experienced talent Hong Kong received in Chinese refugees, its manufacturing technology level is not in the same class as that of the MNCs in Singapore.Pages 68-69If I have to choose one word to explain why Singapore succeeded, it is confidence. This was what made foreign investors site their factories and refineries here. Within days of the oil crisis in October 1973, I decided to give a clear signal to the oil companies that we did not claim any special privilege over the stocks of oil they held in their Singapore refineries. If we blocked export from those stocks, we would have enough oil for our own consumption for two years, but we would have shown ourselves to be completely undependable. I met the CEOs or managing directors of all the oil refineries-Shell, Mobil, Esso, Singapore Petroleum, and British Petroleum on 10 November 1973. I assured them publicly that Singapore would share in any cuts they imposed on the rest of their customers, on the principle of equal misery. Their customers were in countries as far apart as Alaska, Australia, Japan, and New Zealand, besides those in the region.This decision increased international confidence in the Singapore government, that it knew its long-term interest depended on being a reliable place for oil and other business. As a result, the oil industry confidently expanded into petrochemicals in the late 1970s. By the 1990s, with a total refining capacity of 1.2 million barrels per day, Singapore had become the world's third largest oil-refining center after Houston and Rotterdam, the third largest oil trading center after New York and London, and the largest fuel oil bunker market in volume terms. Singapore is also a major petrochemical producer.To overcome the natural doubts of investors from advanced countries over the quality of our workers, I had asked the Japanese, Germans, French, and Dutch to set up centers in Singapore with their own instructors to train technicians. Some centers were government-financed, others were jointly formed with such corporations as Philips, Rollei, and Tata. After 4 to 6 months of training, these workers, who were trained in a factory-like environment, became familiar with the work systems and cultures of the different nations and were desirable employees. These training institutes became useful points of reference for investors from these countries to check how our workers compared with theirs. They validated the standards of Singapore workers.
It's not just because Lee said it. It's because Lee's Singapore is a testament to a country that went from third-world status to first-world status. I guess such people will not want to read the book because their hearts are still aching over the execution of Contemplacion last 1995. I guess they will choose to stick to the events of The Flor Contemplacion Story where her two sons starred as themselves. Lee could've written a very thick book and made no sense. However, the book itself is both quantity and quality as Lee's Singapore is a very big testament to what it means to be an economic power. Yet, some people will keep saying, "But the Philippines isn't Singapore." (read here) to further remain in the status quo of protectionism.
The results have been rather different. What has the Philippines achieved ever since the late Carlos P. Garcia implemented It? 1935 constitution, 1973 constitution (which I believe was very illegal), and the 1987 Constitution (which was written sometime in 1986 before its first version was finalized on February 2, 1987) have to brag about? True, the Philippines is a democratic country. However, it's a shame, by all means, that Communist Vietnam has defeated the Philippines economically. They can continue to keep crying because it's Marcos Sr. (who, by the way, was a protectionist, read here) that the Philippines isn't rising. Come on, it's already beyond 1987 and are we still going to cry over the spilled milk of what Marcos Sr. did? I guess if they read From Third World to First, they only clung to what Lee had to say about the Marcoses instead of learning his policies that made Singapore rise up from a third-world country to a first-world country.
The bigger challenge is how can these labor unions provide what they demand?
I'm getting tired of the Facebook rants of people like Hon. Sarah Jane I. Elago of Kabataan Partylist and Carwyn Candila of League of Filipino Students. These groups renounced the Public Services Act of 2022 (signed by former president Rodrigo R. Duterte, who celebrated his birthday a few days ago) as an act of foreign imperialism. How can they renounce American imperialism when they're using Facebook and Twitter? According to some people, they aren't hypocrites for using iPhones because they're simply "forced to participate" in capitalism like people who buy clothes from a Communist-owned shop (read here). Are they really forced to use Facebook and Twitter as well as blogging platforms like Blogger, Weebly, Wix, and WordPress? Hmmm... that I'd like to ask them!
They've been demanding jobs in the Philippines and better services for Filipinos. They keep complaining about the high cost of utilities and the like. However, the same people are still against FDIs, asking for wages to increase (which in turn, will force companies to raise fees), and are still acting like everything can be done by magic. What's the use of criticizing President Ferdinand R. Marcos Jr.'s ridiculous plan for PHP 20.00 per kilo of rice if they demand the prices of goods to be reduced while increasing the wage rate? Do they even realize that to do so would collapse the local businesses they claim to protect? It's because increasing salaries while selling your goods at a lower rate is selling at a loss. It's plain simple common sense that's often ignored!
They say that the Philippines should just engage in national industrialization. However, the big question is are these people even setting up businesses that can provide what they demand? Here are some challenges that I'd like to give to these labor groups:
- Their demand for "trabaho sa Pinas, hindi sa labas" is already one. Are they currently setting up businesses that would fulfill it? I wonder if Migrante International is now setting up a travel agency, Kabataan Partylist is setting up a kiddie party center, Alliance of Concerned Teachers now setting up schools, and the like?
- They have been demanding better services such as affordable quality utilities. They have been calling the Public Services Act of 2022 an act of foreign imperialism. If these groups have engineers who can start establishing utility companies for utilities then can they provide better quality than the oligopoly in the Philippines or FDI providers of utilities?
- Since they have been demanding higher salaries and lower prices of goods, maybe they can set up the model to prove that it's feasible. They should pay their employees PHP 750.00 per day while providing services that will cost lower than what local investors and FDIs can provide.
This would be a very good challenge. These people keep barking this and that. However, I don't see them being able to deliver what they demand. They're given solutions yet they don't want it. They still demand nonsense solutions. If they can fulfill their demands then they are worth listening to. If not, then they're only contributing to noise pollution.