Thursday, 21 May 2009

What do we do if?

Outside the Box
John Mangun
Business Mirror
http://www.businessmirror.com.ph/home/opinion/10610-what-do-we-do-if.html

You probably ignored a story in yesterday’s BusinessMirror, “New US law may hamper Philippine food exports to American market.” The conclusion of the article quoting Robert Levy, a US Food and Drug Administration (FDA) and Asia Trade Matters consultant, was that the Philippines needed to move quickly to meet new food-testing standards and procedures.

His last comment was the most interesting; “The Philippines will gain a bigger share in the American food market, especially once the American media have started reporting that Philippine food exports comply with the US FDA standards.”

The new attitude toward imports into the USA has changed for nations like the Philippines, who gain from access to the US market. “In the last six months, 65 shipments from the Philippines were detained, and Levy said the number is expected to reach 165 for this year, or an increase of 47 percent from 2008.”

The reason I point out this article is that it illustrates what I have been ranting and raving about for some time. The global economic game has gone through a complete upheaval in the last year; what worked before is not going to work anymore, and the Philippines must adapt and take advantage of those changes.

The traditional behavior of countries like the Philippines about trade with the American giant has been to go begging to Washington, D.C., asking for more favorable trade policies to boost exports to the world’s largest economy. And, no doubt, when the government finally realizes the significance of this new US food-importation law and the negative results to our exports, that is probably what will happen again. Hey, begging worked in the past, why wouldn’t it work now?

But as I have said before, the rules of the game have changed. What Mr. Levy is proposing is something that politicians and policymakers are not very good at: being proactive. He is strongly suggesting that the Philippines get ahead of the curve and do everything necessary to comply before our trading competitors to meet the new standards and, therefore, keep our food-exporting business running smoothly.

Creative thinking and being proactive, looking ahead to and planning for possible scenarios are not something that politicians do well.

World War II was a game-changer. The most significant after-effect of the war was that 500 years of colonial rule came to an end almost overnight. The Philippines, Malaysia, India, Indonesia, a large portion of Africa, all had sought and fought for self-rule for decades, if not longer. Yet none of the political leaders of these nations had accurately anticipated that the war would lead to their final independence, and few, if any, were remotely prepared. India disintegrated with terrible violence into two nations. Britain’s abrupt pullout left Malaysia completely unstable. After Japan no longer ruled China, civil war erupted. Many African nations have never recovered the economic standard they had under colonial rule.

Events blew over these nations’ leaders as they desperately tried to react to changing times. None seemed to have a plan in place for what to do when they finally achieved the independence they had so long sought. And the results were, in many places, catastrophic.

Government policymakers are good at saying “What do we do now?” when conditions change instead of thinking “What do we do if?” before the game changes.

Assume for a moment that I am correct and Obama’s financial policies do not work and, instead, the USA prolongs its recession and all the dollar-printing creates very high inflation. The most visible result will be the impact on millions of older and retired Americans living on pensions and other fixed income that will see their purchasing power greatly reduced. This, of course, includes thousands and thousands of older Fil-Ams.

We have given lip service for a decade to making the Philippines the retirement capital of the world, and it could be a reality. There may soon be an incredible need for a country to position itself to serve the needs of retirees from First-World countries. Yet little, if anything, has been done to prepare for that scenario.

Of course, it is not the government’s job to do the heavy lifting. All it can really do is assist private enterprise and capital. And our private sector is behind the curve also. There, too, is the mentality of often waiting to see what will happen instead of being proactive.

There is a reason disaster-planning is usually left in the hands of the military or headed by former military people. A successful general leading a successful army spends most of the time thinking in the “What if” frame of mind.

What if economic recovery is years away in the West? What if inflation becomes a serious problem for the First World? What if global trade continues to deteriorate? The “what if” list is lengthy.

The last year should have taught us one lesson: Things happen and situations can change very dramatically very quickly. And I do not think we are planning to take of advantage of the inevitable changes that will come next. The changes will come and our leaders will again be saying, “What do we do now?”

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PSE stock-market information and technical analysis tools provided by CitisecOnline.com Inc. E-mail comments to mangun@email.com.

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