A friend, Priscilla Tacujan, wrote a good article published today in the Philippine Star, about economic nationalism in the Philippine Constitution. I shared it in my facebook wall and it attracted a good exchange between me and Stephen P. Cutler, an American security analyst based here in Manila. Posting our exchange with his permission, thanks a lot Steve.
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Stephen
P. Cutler Nonoy Oplas, thanks for posting. I've heard another,
possibly even more damaging effect of the protectionist clauses. The
prohibition against foreigners obtaining licenses for professions reduces the
growth and skills development brought about by healthy competition. Architects,
engineers, lawyers, and the medical profession know that they can be
comfortable and complacent in competing only against local talent. They don't
have an economic incentive to be among the best in the world. Some strive for
that, but the market doesn't reward their efforts since they are too few. Many
of the great powers in the world actively seek the honing and sharpening that
comes from competitions. That virtually forces improvement among practitioners.
Nonoy
Oplas Correct Steve. Lots of hypocrisy in this country, even among
the professionals. Filipino doctors and nurses can practice in the US, UK,
Canada, Australia, etc. so long as they pass qualifying exams or they get
direct hiring, but doctors and nurses there cannot practice here. The same goes
for almost all other professions (engineers, dentists, lawyers,...).
On another note, our session in the recently concluded international conference, "Jeju Forum for Peace and Prosperity" in S. Korea, dealt with economic nationalism and why it is wrong,
On another note, our session in the recently concluded international conference, "Jeju Forum for Peace and Prosperity" in S. Korea, dealt with economic nationalism and why it is wrong,
Stephen
P. Cutler I recall the loud clamor when a member of the District
of Columbia City Council, equivalent to a Kagawad, tried to get more funding
for training of people in his district for nursing jobs. He noted that the
local hospital wasn't hiring locals, but had to hire a lot of Filipino
nurses for the job openings. He was condemned by the Philippine Ambassador and
many many others as racist against the Filipinos. If the Councilman had been
smart, he'd have asked for an nurse exchange program with the Philippines. That's
impossible of course since U.S. people can't be licensed nurses here. That
said, the professionals CAN work here, under the guidance and oversight of a
locally licensed professional. Thus, the local gets a slice of the fees, and do
no real work at all.
Nonoy
Oplas Economic protectionism -- against foreign goods and services
(professionals) -- is exposed more in our daily lives. Many Filipinos oppose
free trade, they want "fair trade" aka protectionism. But many
Filipinos benefit from unilateral free trade policy of HK -- no trade
negotiations, no hiring of hundreds of trade bureaucrats and trade consultants
with hundreds of junkets all over the world (and cost lots of taxpayers money).
In HK, all goods are welcome, zero tariff, only local taxes apply. The only
goods that are regulated if not prohibited, are those that can harm lives like
bombs, guns, poisonous substances, fake medicines, contaminated food and
drinks. PH-HK-PH flights could be as high as 30 a day to include flights from
NAIA (terminals 1-3), Clark, Cebu, Davao, Iloilo, Kalibo, etc.. The beauty of
unilateral free trade yet people lambast free trade.
Stephen
P. Cutler Many folks here have such a low opinion of themselves
and other Filipinos that they believe we can't compete on the world stage,
except for domestic helpers. That's a sad statement, because the underlying
foundation is false. Many OFW's in Taiwan and the U.S. and elsewhere are
professionals in computers and data management, engineering and so on, and are
highly sought after. Free trade will lead to an even more vibrant labor sector.
Our people are competent for the world stage. Open it up and let them compete,
without having to leave home.
Nonoy
Oplas Yes, the enemy within. People who love competition in sports
and politics and politicians, yet hate competition in the economy. People who
lambast free trade and free market yet hug the free market (if you don't like
the price, leave and look for another seller) and bargain prices of Divisoria,
Baclaran and tiangge0tiangge. People who lambast capitalism and yet use
facebook, twitter and youtube -- ALL are products of capitalism -- for their
anti-capitalism paranoia. People who lambast mining and yet do not want to live
in caves, who want to enjoy electricity, cell phones, laptops, cars, buses,
buildings, etc., ALL of which, zero exception, are products of mining.
That is why I never believe central planning and the central planners. Them in high authority and with PhDs who over-estimate themselves and think they can know and plan things for everybody else. Societies progress because of diversity and spontaneity, innovation and products revolution, never of monotony and central planning.
That is why I never believe central planning and the central planners. Them in high authority and with PhDs who over-estimate themselves and think they can know and plan things for everybody else. Societies progress because of diversity and spontaneity, innovation and products revolution, never of monotony and central planning.
Meanwhile, here's from our Indian free market friend, Barun Mitra, who was
among the discussants in our panel on "Dealing with Economic
Nationalism" at the Jeju Forum:
"People trade, companies trade, governments don’t, but governments negotiate trade, and negotiations take many years.
India is not known for manufacturing, more for IT. Perhaps the only country manufacturing automobiles in the 40s after Japan, yet how many Indian car brands do we hear now. Today local car manufacturers survive only because of government support. The infant industry argument only resulted in cronyism.
IT not protected or subsidized, even completely neglected, and they prospered. About 80 percent of our IT products are for exports. Free trade is fair trade. Two sides agree, a win win situation, benefits both buyers and sellers. Economic nationalism is used by politicians to secure themselves. Losers are the people."
"People trade, companies trade, governments don’t, but governments negotiate trade, and negotiations take many years.
India is not known for manufacturing, more for IT. Perhaps the only country manufacturing automobiles in the 40s after Japan, yet how many Indian car brands do we hear now. Today local car manufacturers survive only because of government support. The infant industry argument only resulted in cronyism.
IT not protected or subsidized, even completely neglected, and they prospered. About 80 percent of our IT products are for exports. Free trade is fair trade. Two sides agree, a win win situation, benefits both buyers and sellers. Economic nationalism is used by politicians to secure themselves. Losers are the people."
Stephen
P. Cutler Mitra has some good insights. Tata is a huge company,
but doesn't have to go outside India. Tata likely cannot compete with its
current product line,which is built for standards that are for the Indian
masses, and thus low standard. It doesn't have to be that way.
Go ahead and quote. No problem. Thanks
Nonoy
Oplas Thanks Steve. Despite economic protectionism of the PH Constitution, there are some good
policies that were innovated, like the FTAA scheme in mining that allows up to
100 percent foreign ownership of mining companies. But the case of Tampakan-SMI
shows that while the Consti can be "tweaked", local politicians and
bureaucracy, politics of envy, can be a bigger enemy. A company that has passed
all the requirements by MGB-DENR, SEC, DTI, BIR, etc., can be stopped from
operation by a provincial government.
Also, despite continued consti protectionism, some sectors in the economy simply are not giving up, they grow despite bureaucratism and the politics of envy, PH 1st quarter 2013 growth now the highest among emerging economies and the industrialized world, http://www.interaksyon.com/business/63079/fat-free-economics--economic-growth-and-population-growth
Also, despite continued consti protectionism, some sectors in the economy simply are not giving up, they grow despite bureaucratism and the politics of envy, PH 1st quarter 2013 growth now the highest among emerging economies and the industrialized world, http://www.interaksyon.com/business/63079/fat-free-economics--economic-growth-and-population-growth
We are always fed with inflows of FDI but we are not fed with outflows. From Priscilla's article, Singapore has inflow of around $60 B a year for 2011-12, India has $30 B a year for 2011-2012. At such FDI inflow, which I think includes portfolio or short, stock market investments, not just long term foreign investments, Singapore should be growing at 6% or more per year. But its growth in 1st Qtr 2013 for instance is only 0.2%. What happened?
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See also:
Free Trade 27: Proposed EU-PH FTA and TRIPS Plus, September 24, 2012
EMHN 7: Free Trade Improves Public Health, February 26, 2013
Free Trade 28: Exports and Prosperity, March 11, 2013
Free Trade 29: The Asian Century, May 28, 2013
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