One of the books that I’m reading at the moment contains some interesting information on the start-up of the civil airline industry. The 1930s was the time when things were starting up in India, for example, Air India commenced activities with Mr. Tata (an industrialist) flying himself in a biplane of the time delivering mail between various Indian cities.
In fairly quick succession, more and bigger planes were being bought and passengers carried as enterprises grew bigger.
Oil companies started their activities earlier than this in a similarly casual sort of way, old guys would poke a stick in the ground and out would come oil—a chat would be held with the local Sultan or ruler, concessions would be agreed and big business would commence.
Back in the late 19th century, Standard Oil Company, mostly owned by Mr. Rockefeller and the predecessor of Exxon and other US oil majors, had an exclusive concession for oil exploration and development covering the whole of China, which allowed them to capture 88 percent of the Chinese market by 1922. This was later much publicized in the Chinese education system as one of the many “unfair contracts” forced upon the nation, which was victimized by rapacious foreigners!
These examples are of early monopolists and the ease with which they were able to establish businesses that grew to national or world scale. They and many others were able to start and build big businesses because 1) the rules then were not like the rules now, and 2) they managed to achieve exclusive concession agreements for products and services which grew to generate very high demand. It wasn’t too long, though, before anti-trust legislation came along with the intention of ensuring that businesses with monopolistic concessions would not be allowed to act against the public interest or achieve market dominance—being too large to allow market competition.
To have a less rule-based business environment which allows new businesses to start is a good thing. The rules now and the systems they support develop so as to become more anti-business by the day, and although the Philippines is a shining example of total suffocation of entrepreneurial initiative by rules and bureaucracy it is far from being alone in having a negative business start up environment. The Philippines has managed well in sustaining monopolistic or duopolistic practice against the public interest. You have only to look at the service and charges of Smart, PLDT, Globe, the landowner developers, Meralco, Maynilad and Manila Water and many others to see the negative effects on consumers brought about by market dominance. Yes, there are regulatory bodies, but they are ineffectual.
The Philippines suffers from political and regulatory capture that allows the maintenance of monopolistic practices and market dominance, which is why foreign direct investment is so minimal. It is why society remains stuck in paternalism and it is directly responsible for the dearth of decent job opportunities, and the massively unequal distribution of wealth. It would be nice to think that the upcoming elections would bring an opportunity to change this skewed concentration of business power, but I doubt it.
The question is, what can be done to bring about a more open economy and consequent greater opportunity for all? Whatever may be proposed as being in the best interests of the people will be opposed and quickly defeated if it should have a chance to threaten the position of the vested interests. Could it be that the vested interests don’t really care about anybody else and that they will use their political lobbies and influence to ensure that their interests alone are satisfied? Could it be they who are behind the push for privatization in order to capture yet more control and income-generating ventures for themselves?
Whilst I can be quite sure that Mr. Rockefeller and Mr. Tata had their own political lobbies, Air India became owned by the government and Standard Oil was broken up into several independent oil companies as a result of anti-trust cases. These types of business restructuring patterns, both of which indicate a realization of the need to recognize the interest of the public or the consumer, have not taken place in the Philippines, or if they have in a limited sort of way, the motivation has been to suit somebody’s business interest rather than that of the consumers.
Rather than opening up markets in the Philippines the opposite tends to happen, government provided utility services are privatized under exclusive concessions into the control of the same old vested interests that just continue to fatten up and increase their power bases. They own the banks, they have the concessions, they have the money and they have the businesses, they have relations and connections throughout politics, the military and the Church. They appear to be invincible.
It is very difficult to see how this oligarch controlled nation could ever become one which has the interests of its citizens as a core social tenet, at least until such time as the oligarchs wake up to the realization that they, like everybody else, have a responsibility to their fellow Filipinos, and that by honoring that responsibility they can contribute building a nation rather than sustaining corruption, impunity, outrageous poverty and the associated negative social publicity, which so frequently attaches to the Philippines in international media reports.
Mike can be contacted at email@example.com.