• Asian Tigers grew because of nationalism–which is vanishing in our country

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    RIGOBERTO D. TIGLAO

    RIGOBERTO D. TIGLAO

    FORMER US Ambassador Philip Goldberg—based on his alleged oust-Duterte plan reported by this paper—unsurprisingly described the President’s alleged frame of mind as “old-fashioned nationalism”. It’s a term economists like Bernardo Villegas blindly espousing that we open our doors totally even to foreign monopoly capitalists, and just trust that the market, would embrace.

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    Yet it is historical fact that the so-called Asian Tigers—the now highly developed economies of Hong Kong, Singapore, South Korea and Taiwan—grew starting in the 1960s because their leaders were economic nationalists, pragmatists without dogmas, or illusions, that free markets alone would magically lead to the most efficient allocation of resources, and thus, result in the prosperity of their peoples.

    In contrast, economic nationalism in our country has been inanely caricatured as involving solely what were alleged to be disastrous “import-substitution” policies that were in place in the 1960s, protecting local industrialists—the elite—from foreign competition.

    However, all the Asian Tigers did employ such protectionist policies, and in fact, so did almost all industrialized countries before their economic takeoffs in the 19thcentury. What they did, which we failed to do, was to shift to export-oriented industrialization when the local market could no longer absorb the products of the import-substitution industries.

    The governments of the Asian tigers nurtured their export-oriented industries—and key industries such as telecoms—through such means as preferential credit, subsidies hidden or overt, and lower tariffs for their inputs, to enhance their competitiveness in the world markets. (A very detailed account of this, using the case studies of Taiwan and the Philippines’ textile, semiconductor, and plywood export industries, is in Kuo, Cheng-Tian and Kuo Cheng-Tian’s Global Competitiveness and Industrial Growth in Taiwan and the Philippines, University of Pittsburgh, 1995.)
    gdp20161230In Japan, there was such close cooperation between the designated “champion firms” and government, particularly the Ministry of Trade and Industry, that the system was dubbed Japan, Inc. This was how the country miraculously achieved economic growth after its devastation in World War II. The engine of Japan’s growth was its keiretsus, and for South Korea, its chaebols—both of which were conglomerates assisted by their governments on the condition that they focused on certain industries regarded by state planners as vital to stimulating economic growth.

    We have had no such keiretsus and chaebols, although the strongman Marcos in the late 1970s thought he could develop firms controlled by his cronies as such.

    Our conglomerates operate as though there was no state at all, except perhaps in terms of bribing bureaucrats when needed, or betting on certain candidates during national elections. State officials operate as though there were no conglomerates at all, except to get bribes or campaign funds from them.

    Framework for growth
    Without such a framework for growth that the national economy should be directed through state intervention—as Japan, South Korea, Taiwan and China did—the ownership, whether foreign or local, of public utilities, especially telecoms, becomes unimportant. That has been one of our biggest weaknesses, one that has hobbled us since the era when the American GTE was the telecom monopoly. Today what we have is a monopoly of the industry owned overwhelmingly by foreigners.

    “The developmental history of a nation is in its government’s hands,” * pointed out a very lucid and readable book on how the Asian tigers developed and why other Southeast Asian countries, including the Philippines, failed to follow the same path. That idea, really, is the essence of economic nationalism, in contrast to neoliberalism.

    Neoclassical economics ideologue Bernardo Villegas and lobby groups such as the Foundation for Economic Freedom lobbying for the lifting of restrictions on foreign capital in public utilities have been claiming that we should emulate industrialized countries in adopting current liberal policy on foreign capital.

    What they do not mention, though, is that in the period when these countries were still developing, they put restrictions on foreign capital in their strategic industries. They lifted these only when their state firms or those owned by their nationals were strong enough to withstand the impact of new competition amid the entry of foreign corporations. **

    Nearly all industrialized countries, when they were still struggling during the development stage, had state-owned firms operating their power systems to have better control at ensuring the most efficient supply, not only to their citizens but also to their nascent industries. The power industry was too important to turn over to private companies, which, no matter how efficient they were, had profit generation—and distribution to their stockholders—as their prime directive.

    It was only when they had achieved industrial status and their companies had become among the world’s strongest and biggest, that they privatized their power sectors and opened them up to foreign competition.

    Why the restrictions? Such sectors involve limited national, and natural resources; in the case of telecoms, the radio spectrum for cellular telephony and a captive market that is the nation’s population. These sectors possess natural-monopoly features that must be reserved for citizens since these involve rent profits, part of which the state must appropriate for the welfare of its own people. These are public utility firms, which by definition must serve public welfare as their paramount objective, rather than the generation of dividends.

    The country certainly needs foreign investment, why not? But not in public utility firms, and the framers of our Constitution must have realized this that they decided to put the 40 percent cap on foreign investment in public utilities, as well as land ownership—laws which have not been followed because of our weak legal and regulatory systems.

    Nationalism fading
    Nationalism is fading in our country, despite its resurgence in both the academe and policymakers in the rest of the world. The growth of the Asian Tigers and the emergence of China as an economic superpower constitute incontrovertible evidence that economic nationalism, rather than laissez-faire economics, will result in nations’ economic growth.

    The nation’s youth have also been brainwashed into seeing themselves as “citizens of the world,” a cockamamie belief that in today’s world there are no more nations, that economic nationalism is the evil that generates poverty in the country. This erroneous thinking has even gained ground in the country in recent decades, what with economists such as Dr. Villegas propounding it, exemplified in his July 25, 2015 column with the preposterous title “Nationalist industrialization hurts the poor.”

    Hasn’t he heard at all of industrialized countries like Japan, South Korea and Taiwan, which became rich through nationalist industrialization policies? (A recent, popular account of the economic growth of these countries on the basis of nationalist industrialization was done by Joe Studwell, How Asia Works: Success and Failure in the World’s Most Dynamic Region, Grove Press: 2013.)

    Cronyism, corruption, and regulatory capture—in various forms, levels of government, and degrees—have been pervasive in our country, weakening the state so much that its efficiency and efficacy in serving not just a class but the entire nation and in redistributing assets have been drastically diminished.

    The saddest phenomenon in our country is that the elite have lost the sense that they belong to a nation, which is not just a market. This has trickled down to the rest of this society so that many Filipinos have also lost their sense of nationalism, so that few care that our telecom industry is under foreigners’ control and that our government regulatory bodies have allowed them to trample upon our Constitution.

    Economic nationalism is the worldview that we are not just consumers or producers in an each-to-his-own market but members of a nation—in this age the most important community a human can be a member of—organized for the welfare of all its members, and that the state has the duty, and all the resources and tools to do so.

    The decline of nationalism since the 1990s, so obvious in our country today, is actually rooted in the fact that we have jettisoned economic nationalism as a plan of action, as the spell of neoliberalism and globalization descended on the country.

    We have remained poor despite EDSA I and II, and through four Presidents, because we have not embraced the kind of economic nationalism that made the Asian Tigers the highly developed countries they are now.

    Should we wonder why the GDP per capita growth rate of Vietnam—one of the most nationalistic countries in the world—averaged 5 percent from 2000 to 2015, significantly higher than our 3 percent?

    Real change will not come under President Duterte,unless he breaks from his predecessors’ economic mindset.

    * Studwell, Joe. How Asia Works: Success and Failure in the World’s Most Dynamic Region. New York: Grove Press, 2013.

    ** Chang, Ha-Joon. Kicking Away the Ladder: Development Strategy in Historical Perspective. 1st ed. Anthem Press, 2002.

    This column is largely based on Chapter 13 of my book Colossal Deception: How Foreigners Control Our Telecom Sector — A Case Study of Corruption, Cronyism and Regulatory Capture in the Philippines,available at National, Popular and La Solidaridad bookstores.

    E-mail: tiglao.manilatimes@gmail.com
    FB: Rigoberto Tiglao and Bobi Tiglao
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    12 Comments

    1. The cause of our sluggish growth is the extreme division of our people. This is endemic to every Catholic nation. One of the programs of the late President Marcos to spur our economy was counter-trade. Counter trade was used successfully in Indonesia, Thailand and Malaysia but it did not work here. For example, the former USSR offered the Philippines goods from Russia using only our logs as payment, but nothing came out of this proposal because nobody was willing to chip in. President Suharto of Indonesia murdered 500,000 of her own countrymen to keep her government going. Marcos did not kill anybody but he was accused of being a dictator and a tyrant. Nobody complained about half a million that Suharto killed, but everybody complained about Marcos who did not kill anybody.

      It will take a lot of courage to make this statement just as it takes a lot of courage to say the things that you are saying right now.

    2. The folly of letting the “market” decide:

      “The later transformation of the market, from one of small-scale producers into one dominated by large corporations and monopolies and near monopolies, lent a new meaning to market ‘forces.’ The market was now the site of great powers: powers that determined prices, wages, patterns of consumption, the well-being or poverty of individuals, the fate of entire neighborhoods, cities, states, and nations. Several of the larger corporations possess wealth rivaling or exceeding that of many of the smaller nations of the world. The power of great corporations underwent further change toward the end of the twentieth century when corporate power conjoined with state power. The ‘market’ ceased to be an entity distinct from, and contrasting with, state power, becoming its extension–and vice versa, becoming the ‘hidden hand’ in ‘public’ policies.”

      (Sheldon S. Wolin, Democracy Inc.: Managed Democracy and the Specter of Inverted Totalitarianism, 2008, p. 92)

    3. armando ricarte on

      We are now economically progressive because post Edsa governments embraced liberal economic policies. Bonifacio Global City exists today because the Ramos administration deemed it wise to raise funds by selling off military camps to private investors. Economic nationalism is equated with oligarchic control of public utility companies. Mr Tiglao is critical about foreign control of a sector of our telecommunication industry. Thats a narrow-minded point of view. I bet his definition of a Filipino is confined to the indigenous brown-skinned people of the Republic. Someone should remind him that Pia Wurtzbach is a Filipino. So are dual citizens all over the world. Mr. Tiglao should be reminded that the current thrust of the Bangko Sentral is to make corporate citizens out of foreign banks to make the Philippines the center of banking in the region. The problem with Mr Tiglao’s definition of economic nationalism is its espousal of class warfare and dependence on government intervention in the natural flow of the market. All done in the name of the impoverished masses. I say that he is a socialist dinosaur still reliving the romantic side of socialist delusion The rest of the world has moved on.

    4. Blame Philippine television, too, for the lack of nationalism. They use Taglish, show stupid foreign telenovelas dubbed in Filipino, shun wearing the barong tagalog and instead don western suits even in the heat of summer. Yes, what a country!

    5. Power, telecommunications, harbours, manufacturing etc in Hong Kong have always been in private hands. Low or no taxation, no VAT or sales tax, no import duties excepting alcohol and tobacco. Definitely a laissez- faire economic policy was followed there. Yet they have an efficient Public Health Service, education, public transport. Corruption was endemic until the founding of the ICAC which was very effective in cutting it out. Compare with the Philippines! High, taxes, taxes of every conceivable kind, high import / export duties limited inefficient public transport, health and education!

    6. A simple type of classifying and self-evaluation, makabayan ba tayo or mukhang-pera, sa mga ginagawa sa totoo.

    7. Thank you for your intrepid editorial. Maybe, Duterte will not be the one who will bring us to the level of our neighboring countries but he is definitely the one who is waking us up to believe in ourselves again. Our nationalism shall be born again.

      There are elements hindering our sense of nationalism. I know our religious institutions keep on interfering the affairs of the state. But in the US, there is a defining line, a real separation. No intervention, no confusion, and onward to progress.

      • Agree, Duterte will help us wake up the nationalism in us and he already started it. There will be obstacles (the yellow oligarchs and US puppets) but I believe majority supports Duterte.

    8. Thank you for your intrepid editorial. Maybe, Duterte will not be the one who will bring us to the level of our neighboring countries but he is definitely the one who is waking us up to believe in ourselves again. Our nationalism shall be born again.