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Musings on Wealth January 12, 2007

Posted by liberaleconomy in economic.

Hello Everyone. Happy New Year to all.  Thank you Siggi for the link. Interesting.

The one important point I got from reading Stewart Brand’s article is that wherever people are – there goes wealth creation. Be it urban or rural, people create their own wealth. This is just consistent with human nature to find out ways on how to survive and better one’s life.

One point is missing though, wealth creation is not an end in itself. Wealth distribution and wealth consumption completes the whole picture of wealth creation. True that the poor create their own “squatter cities”  which “generate a seething informal economy.” I take it that this informal economy also propels the formal economy and that this cycle benefits the nation as a whole. But does the wealth created  by this informal economy redound to the wealth creators – the poor in the cities who create it? The fact that it is an informal economy already says something about the distribution and consumption of resources.  More often than not, the wealth created was obtained by subverting some laws. Otherwise, why not take part in the “formal economy” processes, instead? We have squatter cities that thrive on drug-smuggling, theft and robbery. Squatter cities more often than not become haven for criminal acts.   We have squatter cities that force women and children to prostitution and mendicancy. Do all these form part of the informal economy that creates wealth for the poor in the cities? 

This makes us revisit the concept of “wealth.”  For me, there can only be true wealth creation when this wealth redounds to one’s general well-being as a person of dignity. Squatter cities create wealth –but for whom? Maybe a minuscule portion enough to sustain one’s bare existence redounds to the creator but the bulk of this wealth created – I take it – goes to somebody else who has not exerted much effort to create the said wealth, in the first place.

I cannot agree with Mr. Brand that rapid urbanization is something to be optimistic about. Aside form the rise of criminality in the urban areas, it also contributes to pollution and other environmental problems.  I can only look forward to the day when people will remain in the rural areas because they “don’t have to” go to the cities to try their luck. I can only look forward to the day when people start thinking that wherever they are – wealth follows them – legitimate wealth at that.

Happy New Year to all!

PS: If you have the means to, please watch The Inconvenient Truth. It’s an interesting documentary on climate change. If I may suggest to some of our local officials, please make the documentary a required viewing especially for the students in your respective localities. It will change the way you live your present so that a future can await you still.  




The importance of cities January 3, 2007

Posted by liberaleconomy in Liberal Leadership Seminar Report.
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Happy New Year, friends! To start the year on an informed foot, I looked at this fascinating website, http://www.edge.org, that asks people why we can be optimistic about 2007. Among many fascinating takes, here is an interesting article on the role that urbanisation plays in poverty alleviation. Since many people are worried about overpopulation and the rural-urban migration, I thought this is a good antidote to these fears.
A quote to whet your appetite: “Cities have always been wealth creators. Cities have always been population sinks. This year, 2007, is the crossover point from a world predominantly rural to a world predominantly urban…”

The full text can be found here: http://www.edge.org/q2007/q07_12.html#brand
The title is: “Cities – Global Population Shrinkage and Economic Growth” by Stewart Brand

But do check out the rest, too. It’s worth it.

Gretings, Siggi

Prepare for globalization November 30, 2006

Posted by liberaleconomy in Globalization.
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We just had this week the Abel Iloko Congress.  Abel Iloko is the product that Ilocos Sur chose as their OTOP (One Town One Product).  The Congress was organized by the DTI-Ilocos Sur.  Concerns and issues were tackled – capital to lower down the cost and make raw material more accessible, manpower (less younger people are interested in getting the skills), quality of product to compete (standardization), marketing.  In short almost all aspect.

On capital – the solution was to put up a raw material bulk buying center.  The capital is small – only 600,000.  Unfortunately, when I talked to a participant a day later, she says this is not the main issue.  It is the season, when sales are low – about 5-6 months in a year.  Their capital “sleeps” and they have no income to sustain the salary of their weavers.  Raw materials are bought in Manila. 

On manpower issue – solution was to incorporate in the elementary and high school curriculum the necessary skills.  However, there was concern on child labor which is punishable by law.  Another solution is to conduct short courses on handloom weaving – skills training.

Marketing.  I don’t think this is an issue because there are many orders but most of them refuse bulk orders because of fear that they might not be able to accomplish the orders.  Probably, the concern here is the marketing during low season.

Quality.  Speakers who came were from the Bureau of Product Standards and Philippine Textile Research Institute.  They created a committee that will look into this – that will involve the local stakeholders.  The advantage of this is, loomweavers may pool their resources and be able to sustain the needs of consumers and quality improved to compete in the world market.

I gave the closing remarks – centered on the importance of raw material bulk buying center – this will solve the issue on capital and quality of raw materials because this will be tested on different factors; come up with standards to compete with global market by 2010 and ability to pool finished products; but most of all, for all the loomweavers to unite because it is easier to negotiate with source of raw materials as well as buyers.  It is easier to get help from the different government agencies if they have only one voice.

So my next move, is probably look for a grant to put up the raw bulk buying center and innovate products which can be sold even during non-peak season.  Probably export! 

So if there is anyone there who could help us with this endeavor like any agency which grants this kind of help.

 CNN or Fox had this feature this evening – about liberals on charities.  Can you enlighten me on this?


F.Sionil Jose’s “Why are Filipinos So Poor?” November 23, 2006

Posted by liberaleconomy in Liberal Leadership Seminar Report.

Hi Libs!

I was just browsing through the internet when I stumbled on this one. It was “serendipitous” – as Atty Jen might want to call it. Have you ever experienced something like this – when one thing leads to another and the whole chain of events feels like it has been woven by some Divine hand? Anyway, this is an article posted at philpost.com tackling the issue of why Filipinos are “so poor.”

Its amazing how F. Sionil Jose interlocked the ideas and issues we have so touched during the seminar into one meaningful essay. One thing that struck me was his line on – we are poor because we are poor. Indeed, we need to get out of a “poverty” mindset lest we rot in the rut. It has a lot to do with attitude. Because even if we have means or access to capital or wealth if our attitude treats poverty as an excuse not to better our lives, we will remain where we are until kingdom come.

I just thought the essay might interest you, so I am sharing it with you. A word of caution though, its quite long, so read it if you truly have the time. There are lots of provocative insights that can be derived from it. One good thing about the essay is that it is still infected with one distinctly Filipino trait: the Big O. As in Optimism. Hope springs eternal – if we only have the “courage to change ourselves.”

Happy Reading!


Why are Filipinos so Poor?

In the ’50s and ’60s, the Philippines was the most envied country in Southeast Asia. What happened?

By F. Sionil Jose

What did South Korea look like after the Korean War in 1953? Battered, poor – but look at Korea now. In the Fifties, the traffic in Taipei was composed of bicycles and army trucks, the streets flanked by tile-roofed low buildings. Jakarta was a giant village and Kuala Lumpur a small village surrounded by jungle and rubber plantations. Bangkok was criss-crossed with canals, the tallest structure was the Wat Arun, the Temple of the Sun, and it dominated the city’s skyline. Ricefields all the way from Don Muang airport — then a huddle of galvanized iron-roofed bodegas, to the Victory monument.Visit these cities today and weep — for they are more beautiful, cleaner and prosperous than Manila. In the Fifties and Sixties we were the most envied country in Southeast Asia. Remember further that when Indonesia got its independence in 1949, it had only 114 university graduates compared with the hundreds of Ph.D.’s that were already in our universities. Why then were we left behind? The economic explanation is simple. We did not produce cheaper and better products.

The basic question really is why we did not modernize fast enough and thereby doomed our people to poverty. This is the harsh truth about us today. Just consider these: some 15 years ago a survey showed that half of all grade school pupils dropped out after grade 5 because they had no money to continue schooling.Thousands of young adults today are therefore unable to find jobs. Our natural resources have been ravaged and they are not renewable. Our tremendous population increase eats up all of our economic gains. There is hunger in this country now; our poorest eat only once a day.But this physical poverty is really not as serious as the greater poverty that afflicts us and this is the poverty of the spirit.

Why then are we poor? More than ten years ago, James Fallows, editor of the Atlantic Monthly, came to the Philippines and wrote about our damaged culture which, he asserted, impeded our development. Many disagreed with him but I do find a great deal of truth in his analysis.This is not to say that I blame our social and moral malaise on colonialism alone. But we did inherit from Spain a social system and an elite that, on purpose, exploited the masses. Then, too, in the Iberian peninsula, to work with one’s hands is frowned upon and we inherited that vice as well. Colonialism by foreigners may no longer be what it was, but we are now a colony of our own elite.

We are poor because we are poor — this is not a tautology. The culture of poverty is self-perpetuating. We are poor because our people are lazy. I pass by a slum area every morning – dozens of adults do nothing but idle, gossip and drink. We do not save. Look at the Japanese and how they save in spite of the fact that the interest given them by their banks is so little. They work very hard too.

We are great show-offs. Look at our women, how overdressed, over-coiffed they are, and Imelda epitomizes that extravagance. Look at our men, their manicured nails, their personal jewelry, their diamond rings. Yabang – that is what we are, and all that money expended on status symbols, on yabang. How much better if it were channeled into production.

We are poor because our nationalism is inward looking. Under its guise we protect inefficient industries and monopolies. We did not pursue agrarian reform like Japan and Taiwan. It is not so much the development of the rural sector, making it productive and a good market as well. Agrarian reform releases the energies of the landlords who, before the reform, merely waited for the harvest. They become entrepreneurs, the harbingers of change.

Our nationalist icons like Claro M. Recto and Lorenzo Tanada opposed agrarian reform, the single most important factor that would have altered the rural areas and lifted the peasant from poverty. Both of them were merely anti-American.

And finally, we are poor because we have lost our ethical moorings. We condone cronyism and corruption and we don’t ostracize or punish the crooks in our midst. Both cronyism and corruption are wasteful but we allow their practice because our loyalty is to family or friend, not to the larger good.

We can tackle our poverty in two very distinct ways. The first choice: a nationalist revolution, a continuation of the revolution in 1896. But even before we can use violence to change inequities in our society, we must first have a profound change in our way of thinking, in our culture. My regret about EDSA is that change would have been possible then with a minimum of bloodshed. In fact, a revolution may not be bloody at all if something like EDSA would present itself again. Or a dictator unlike Marcos.

The second is through education, perhaps a longer and more complex process. The only problem is that it may take so long and by the time conditions have changed, we may be back where we were, caught up with this tremendous population explosion which the Catholic Church exacerbates in its conformity with doctrinal purity.We are faced with a growing compulsion to violence, but even if the communists won, they will rule as badly because they will be hostage to the same obstructions in our culture, the barkada, the vaulting egos that sundered the revolution in 1896, the Huk revolt in 1949-53.

To repeat, neither education nor revolution can succeed if we do not internalize new attitudes, new ways of thinking. Let us go back to basics and remember those American slogans: A Ford in every garage. A chicken in every pot. Money is like fertilizer: to do any good it must be spread around.Some Filipinos, taunted wherever they are, are shamed to admit they are Filipinos. I have, myself, been embarrassed to explain, for instance, why Imelda, her children and the Marcos cronies are back, and in positions of power. Are there redeeming features in our country that we can be proud of? Of course, lots of them. When people say, for instance, that our corruption will never be banished, just remember that Arsenio Lacson as mayor of Manila and Ramon Magsaysay as president brought a clean government.We do not have the classical arts that brought Hinduism and Buddhism to continental and archipelagic Southeast Asia, but our artists have now ranged the world, showing what we have done with Western art forms, enriched with our own ethnic traditions. Our professionals, not just our domestics, are all over, showing how accomplished a people we are!

Look at our history. We are the first in Asia to rise against Western colonialism, the first to establish a republic. Recall the Battle of Tirad Pass and glory in the heroism of Gregorio del Pilar and the 48 Filipinos who died but stopped the Texas Rangers from capturing the president of that First Republic. Its equivalent in ancient history is the Battle of Thermopylae where the Spartans and their king Leonidas, died to a man, defending the pass against the invading Persians. Rizal — what nation on earth has produced a man like him? At 35, he was a novelist, a poet, an anthropologist, a sculptor, a medical doctor, a teacher and martyr.We are now 80 million and in another two decades we will pass the 100 million mark.

Eighty million — that is a mass market in any language, a mass market that should absorb our increased production in goods and services – a mass market which any entrepreneur can hope to exploit, like the proverbial oil for the lamps of China.
Japan was only 70 million when it had confidence enough and the wherewithal to challenge the United States and almost won. It is the same confidence that enabled Japan to flourish from the rubble of defeat in World War II.
I am not looking for a foreign power for us to challenge. But we have a real and insidious enemy that we must vanquish, and this enemy is worse than the intransigence of any foreign power. We are our own enemy. And we must have the courage, the will, to change ourselves.

F. Sionil Jose, whose works have been published in 24 languages, is also a bookseller, editor, publisher and founding president of the the PhilippinesÕ PEN Center. The foregoing is an excerpt from a speech delivered by Mr. Jose in Manila, Philippines.

2nd Liberal Leadership Training Gallery November 20, 2006

Posted by liberaleconomy in Uncategorized.
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2nd Liberal Leadership Training Workshop

Click here
to view and download pictures courtesy of Flickr.com

Another Economic Insight November 20, 2006

Posted by liberaleconomy in Uncategorized.

Talk is cheap – because supply exceeds demand.

Economic Joke of the Day November 17, 2006

Posted by liberaleconomy in Uncategorized.
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Man walking along a road in the countryside comes across a shepherd and a huge flock of sheep. Tells the shepherd, “I will bet you $100 against one of your sheep that I can tell you the exact number in this flock.” The shepherd thinks it over; it’s a big flock so he takes the bet. “973,” says the man. The shepherd is astonished, because that is exactly right. Says “OK, I’m a man of my word, take a sheep.” Man picks one up and begins to walk away.

“Wait,” cries the shepherd, “Let me have a chance to get even. Double or nothing that I can guess your exact occupation.” Man says sure. “You are an economist for a government think tank,” says the shepherd. “Amazing!” responds the man, “You are exactly right! But tell me, how did you deduce that?”

“Well,” says the shepherd, “put down my dog and I will tell you.”

Economic Poetry November 17, 2006

Posted by liberaleconomy in economic, poetry, Uncategorized.

During my last presentation, I quoted from a poem by Kurt Tucholsky. Here is the full text, as translated by me:


The wines from the Rhine are good, they say-
but you can’t sell them in UK-
Buy British!
The people from Vienna make great cakes and pies
which can’t be sold under Swedish skies-
Köp svenska varor!
Oranges rot in Italy-
but we have to protect German farmers, see?
Germans, buy German lemons!
And on each square inch of territorial space,
Dreams are dreamt of the glory of each race.
And quietly the wind whispers in the tree…
Territories are imaginary.
There lies Europe. What state is it in?
That of a garishly painted loony bin.
The nations indulge in a common sport:
Export! Export!
The Others! Let the others buy!
Let the others import our rye
Let the others rent our ships!
Let the others eat our chips!
import licence and customs raid:
we won’t let anything into our state.
Not us. We follow an ideal:
We hunger. But with national zeal.
Into everything flags and anthems are crammed.
Europe? Europe? Europe be damned!
And if everything drifts towards ruin and decay:
Let the nation only stay!
Humans are a redundant quantity.
Long live England, Poland and Italy!
The state devours us. A ghost. A definition.
The state is a thing without much of inhibition.
The thing has grown huge, towards the stars it is reaching-
Even the church could learn from its teaching.
Each one should buy. No one can buy.
The national funeral pyre burns high.
On the altar of national sacrifice
the meaning of life is to let taxes rise!
May heaven be our bankcruptcy court!
Modernity plays a medieval sport.
The nation is the eigth sacrament-!
May God bless this continent.

Kurt Tucholsky, 1932

When Tucholsky wrote this poem, the world economywas experiencing the Great Depression. One of the reasons why a recession was turned into a depression was a new round of protective trade tariffs that was started by the USA in 1930, in the shape of the Smoot-Hawley tariff that triggered countervailing duties in the rest of the world, and world trade contracted, or rather collapsed, by 30%.This came on top of an already fragile world economy – Europe was deeply indebted to the US after World War I due to the costs of the war, but the US had gone protectionist and isolationist after the Republicans took over in 1920, so Europe – and especially Germany – could not rebuild its economies through exports, instead relying on new credits to pay off the old ones.

The Great Depression caused widespread despair, and in Germany it helped propel Hitler and the Nazis to power in 1933, less than a year after Tucholsky wrote this poem. The imagery of fires and dark sacrificial rites that he employs in this poem send a deep chill down my spine each time I read the poem due to its prophetic quality; it presages the fires that devoured Europe after 1939, and the return to barbarity became more real than even Tucholsky could have imagined. He comitted suicide in 1935, deeplys depressed about the descent into barbarity that Nazism represented.

It is this experience, and the realisation that the Smoot-Hawley tariff was an unmitigated disaster, that propelled the USA to construct a different global economic order after World War II, bringing back an era of relatively free trade, allowing Germany and Japan to grow rich through exports, a path later followed by other countries such as Taiwan, Korea, etc.

One last aside: Tucholsky was a leading leftist intellectual of his time, fairly close to the communist party for some time (though never a member, and becoming increasingly critical of it in the last years of his life). German leftists with a sense of history are therefore very startled when they come across this poem that praises free trade and lambasts protectionism. Just goes to show that the understanding of the real effects of trade has been lost among much of the Left… 🙂

Resources: Presentations and Readings November 17, 2006

Posted by liberaleconomy in Market Economy, Poverty Alleviation, Presentations, Readings, Resources.
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1. Introduction to the Friedrich Naumann Foundation
by Mr. Siegfried Herzog | Powerpoint presentation | Day 1

2. Economic Systems and Principles of Market Economy
by Mr. Siegfried Herzog | Powerpoint presentation | Day 1

3. Globalization is Good
by Mr. Johan Norberg | Video | Day 1

4. How Economic Alleviation Helps the Poor?
by Mr. Siegfried Herzog | Powerpoint presentation | Day 2

5. No Real Empowerment without Property Rights: Case Study of Malaysian Indian Women
by Ms. Sarinthorn Sachavirawong | Powerpoint presentation | Day 2

6. Property Rights: A Tool for Poverty Allevation
by Attorney Sedfrey Candelaria | Powerpoint presentation | Day 2

7. Taking Action: Micro-finance and Entrepreneurship
by Mr. Bienvenido Nito | Powerpoint presentation | Day 3

8. Why Globalization Helps the Poor: Case Study of South Asia
by Mr Siegfried Herzog | Powerpoint presentation | Day 3


Market Economy and Poverty Alleviation: Making the Market Work for the Poor
Handouts for the 2nd Liberal Leadership Training Workshop

The Definition of Globalization November 16, 2006

Posted by liberaleconomy in Blogroll, definition, Globalization, Leadership, Liberal, Training.

Siegfried HerzogHi! It was great to have met you all during our Liberal Leadership Training. Thank you again for making it a success.

For the purpose of documentation, I thought I give you the full definition of globalization for further reference:

Question: What is the truest definition of Globalization?

Answer: Princess Diana’s death.

Question: How come?

Answer: An English princess with an Egyptian boyfriend crashes in a French tunnel, driving a German car with a Dutch engine, driven by a Belgian who was drunk on Scottish whiskey, followed closely by Italian Paparazzi, on Japanese motorcycles, treated by an American doctor, using Brazilian medicines! And this is sent to you by an German, using Bill Gates’ technology – which he enjoyed stealing from the Japanese. And you are probably reading this on one of the IBM clones that use Taiwanese-made chips, and Korean-made monitors, assembled by Bangladeshi workers in a Singapore plant, transported by lorries driven by Indians, hijacked by Indonesians, unloaded by Sicilian longshoremen, trucked by Mexican illegal aliens, and finally sold to you.

Siegfried Herzog