Thursday, 8 July 2010

If only we believe

Written by John Mangun
Outside the Box
Business Mirror

Several years ago, my ramblings in this space centered on how a people’s culture creates their economy.

For most of its history, the economic principles of the US were based on hard work, thrifty money management and solid, sensible business practices.

The entrepreneurial capitalism of 19th-century America was ruthless but efficient and beneficial to the consumer. At one time, John D. Rockefeller, founder of Standard Oil of Ohio, owned 90 percent of all the oil-refining capacity of the US. He accomplished this through buying, bullying and throat cutting of the competition. Yet the efficiency of his monopoly was so great, that over the life of the company, the price of kerosene, the basic heating and cooking fuel, decreased by 80 percent.

Rockefeller’s life motto, in addition to “God gave me the money,” was from religious leader John Wesley: “Gain all you can, save all you can, and give all you can.”

Those American principles changed after World War I gave way to the “Roaring Twenties,” which saw banks give up sound banking values in favor of speculation, primarily in the stock market. The 1920s saw a period of rapid expansion of both consumerism and the financial industry, during when the finance and insurance sectors doubled and tripled in size.

After World War II, the next 30 years saw a return to both cultural and economic principles that were more prudent and conservative. Then the 1980s brought another period of the “anything goes” mentality, where instant gratification became more important than looking at consequences. The sexual revolution of the 1960s and ’70s was followed by the “financial revolution” of the 1980s and ’90s. Sexual relations without commitment; making purchases without money. Currently, at least one in four US teenage girls has a sexually transmitted disease, a US government study found. Among girls who admitted to ever having sex, the rate was 40 percent. That is about the same percentage of US homeowners already in foreclosure or soon facing losing their houses.

The US and the West have shifted wildly in the last 50 years in their perception of right and wrong, good and bad, sensible and irresponsible practices, perhaps especially when it comes to money.

The e-mail inbox contained a very nice letter from a woman who works for a major Philippine bank. She forwarded to me comments from someone at another bank that included the following thoughts worth repeating. “Our positive traits, i.e., hard work, high literacy and an amiable disposition, are driving the numbers and steering this economy forward. We are on to something, I truly believe. If we can only all become more aware of the progress we are making, it will empower us to do more, be more.” And this is simply beautiful: “Enough of the thinking that the Filipino is small and is, therefore, incapable of thinking and doing smart.”

Perhaps, like many, I have been thinking back to the days nearly 25 years ago of the Cory Aquino presidency. The inaugural speech of our new President Aquino was of the same style as his mother. He faces many of the same problems; among them, a looming power/electricity deficiency, a transportation infrastructure that needs expansion, and, of course, corruption.

The reason I quote the lady’s e-mail is that it could have also been written in 1988. But so quickly then, the Filipino lost or had stolen the belief in the possibility of greater success and achievement.

I realized something else. The basic and fundamental aspects of the Philippine economy have not changed much since Cory led the government. And I think that is what has kept this country resilient.

Today, as then, people still buy real estate to live in, not purchasing expecting prices to double and double again as in the West. The only two investment bubbles I can recall where prices skyrocketed and then collapsed were in 5-star golf club memberships and seats on the Philippine Stock Exchange. While Japan and the West had their stock-market and real-estate market bubbles explode, we have not have that happen here.

This economy also has an ability to price the exact same goods at huge price differentials, allowing market participation throughout the economic classes. A toy or article of clothing bought at a department store can be found for half the price in Divisoria or Baclaran. This economy provides a great range of choices in goods and pricing.

We can buy the latest iPod for P30,000 at the same mall store selling a perfectly good Nokia “buy one-take one” for P2,500. Three local stores deliver purified water in my area. The cheapest is P28; the most expensive is P40. That is a 30-percent price disparity for the same product. And, apparently, all three owners are making money since they have been in business, in competition, for years.

Basic commodities are available the same way. You can pay 20-percent higher or 20-percent less for a kilo of pork at the supermarket or at the wet market, sometimes located within walking distance of each other. And often, the supermarket is cheaper.

The government is building a P9-million farm-to-market road in Bukidnon. This road is expected to increase the area farmers’ incomes by 20 percent. That is only the cost of a Jollibee franchise or two. It’s nothing. But this is what can be done when there is a will and a belief that economic progress can be achieved.

Yet the exact same problems and the exact same opportunities for excellence exist today as 20 years ago. It is almost as if the economy hides a buried treasure waiting to be dug up if and when the Philippines and its people decide to pick up the shovel.

Maybe it is exactly like the lady said: “I truly believe. If we can only all become more aware of the progress we are making, it will empower us to do more, be more.”

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