Opinion Bloomberg editorial
No... From A4
AFP Chief of Staff Eduardo Año and PP Director General Ronald dela Rosa both think the country has so much democratic space that people are lacking in discipline. So would they rather have a despot? It would appear so. I say this is a cause for concern. Both the military and the police chief believe that we need a tyrant to instill discipline among the people. And both have the power to install somebody in the position, even without the consent of the people. Are we headed that way? *** The death of Washington Sycip is mourned by many. I join them, especially since I had the privilege of knowing him. I first met Wash when he started SGV with his friend, Alfred Velayo. At that time, Wash’s father was chairman and president of China Bank and I would go to
Leila’s... From A4
Duterte has signed an order fulfilling that promise, with the creation of a new financial institution dedicated to the needs of the 10 million or so Filipinos toiling in foreign lands. The proposed OFW Bank, a wholly-owned subsidiary of the Land Bank of the Philippines, has the potential to significantly lower the remittance costs of Filipinos overseas. Commercial banks and money-transfer companies, after all, have long feasted on the $30 billion or so sent
his office when I was business editor of the Philippines Herald. Don Albino would talk about his children—David, Washington and Alexander. I became a close friend of David. The last time I saw Wash was when he was given a birthday party by Bobby Ongpin—his youngest-ever managing partner at age 26. Boby was my student in Ateneo High School. Wash became known for his charitable works and love of country. He was a nationbuilder. *** Speaking of Bobby Ongpin, his Alphaland Baguio Mountain Lodge, referred to as the Forbes Park of Baguio City, is almost finished. The place has all the amenities one can dream of. It also has a concrete perimeter fence. The site enjoys lush Benguet pine air. I love seeing the place even if I cannot afford to buy a home. home annually by OFWs, who have to shoulder exorbitant rates charged by these firms that send their money to their loved ones here. I also see the OFW Bank helping OFWs permanently returning home become entrepreneurs, especially by providing them with financial advice and loan facilities if they decide to put up small businesses where their particular skills and expertise can be maximized. Commercial banks, which are geared to service the needs of established businessmen, have not been very helpful to OFWs in this regard—and a dedicated bank can help a lot.
A5
mst.daydesk@gmail.com
Taking a taxi can be taxing
What economists can learn THE Swedish committee that awards the Nobel Prize in economics is famously slow and conservative: It has honored behavioral economist Richard Thaler because decades of experience have proven the value of his contribution. If only the laureate’s own profession were so responsive. Thaler has devoted his career to developing an idea that challenges orthodox economics—the fact that humans aren’t always rational, and don’t always act in their own best interests. Among other things, they lack self-control, they’re inconsistent in how they value things, they have an outsized fear of losses, and they overreact to bad news. Various businesses—payday lenders, car rental companies, video streaming services—have long exploited such psychological insights to take advantage of consumers. More recently, thanks to the efforts of Thaler and his collaborators, companies and governments around the world have tried to use them for people’s benefit. They’ve looked for ways to “nudge” people to save more for retirement, drive safely, go to better colleges and participate in free school-lunch programs. Yet decades on, and after a crash that brutally demonstrated the limits of the “rational actor” approach, macroeconomic theory has hardly moved. The mathematical models that guide policy in finance ministries and central banks are still based on assumptions that don’t fit the facts—on the idea, for instance, that people smooth out consumption over their entire lifetimes. Thaler notes in his latest book, “Misbehaving: The Making of Behavioral Economics,” that much more academic work is needed to illuminate vital questions facing policy makers: how to change tax systems to encourage investment; how to encourage people to spend more when higher spending is needed to support the economy; how to discourage borrowing when excessive debt threatens financial stability. These and countless other issues require subtler research, in the spirit of behavioral economics, into how people actually respond to changes in policy. Improving economics as a science will require economists to act more like scientists—rejecting models that don’t fit, relying more on experiments, and replicating findings to test their validity. Top journals should see it as part of their job to challenge the prevailing theories. And improving economics as a guide to policy requires, in addition, more skepticism. Economists and policy makers need to worry more about the assumptions that underlie their proposals, and not just about the math that yields answers once those assumptions are made. Thaler richly deserves his Nobel. If his prize nudges economics in the right direction, even better.
WEDNESDAY, OCTOBER 11, 2017
BACK CHANNEL ALEJANDRO DEL ROSARIO TAKING a taxi can be a stressful and taxing experience. At one time or another, a taxi passenger probably had an encounter with an abusive driver. Reports and horror stories of such incidents when riding a taxi have been reported to the Land Transportation Franchise and Review Board but to no avail. These incidents are a one-on-one encounter between passenger and driver. There are no witnesses and when reported to the police it becomes a case of he says she says. I have experienced such a taxing time with abusive drivers. Did I bring this on myself? I don’t think so. Once I get into a taxi I usually greet them a good morning or afternoon to set
the tone for a pleasant journey. Sometimes the driver responds to your greeting with a “good morning too, sir.” But often there is no response which signals this is going to be one stressful journey. True enough, this I know as an experienced commuter who only stopped driving because of those loose madmen on motorcycles on the road. When you hail a cab and the driver asks where you’re going and then demands an extra P100 for what he says is a traffic congested route, do not get on. This is a telltale sign he’s going to take you for a ride you are not going to enjoy. I would rate myself considerate and in fact generous, usually giving a P20 tip even for short distances and P50 for longer trips. But I won’t allow myself to be a victim of downright extortion. Let me say that there some drivers who are
courteous and in fact nice to talk when traffic is at standstill which is usual in this gridlocked metropolis. Many motorists complain about the lack of parking spaces in the city. But most streets, like the oftused Edsa, including Roxas Boulevard and Osmena Highway have become virtual parking lots during rush and peak hours. It is then comforting news that the Land Transportation Franchise and Review Board is going to impose stiffer penalties for abusive drivers. Under the new LTFRB rule, abusive public utility drivers will be subject to heftier fines. Some taxi drivers do not just subject their passengers to verbal abuse. We have read police reports of female passengers being robbed and raped by taxi drivers. A corresponding case of criminal negligence should be imposed for taxi operators and owners to make them
also accountable for not vetting the drivers they hire. A taxi driver himself told me that because of the big demand for drivers, some of them are hired without the required National Bureau of Investigation clearance. Oh, my God ! It isn’t just criminals loose in the streets. Some of them are behind the steering wheel! This piece isn’t to malign and portray taxi drivers as all abusive and criminals. But it simply warns passengers to be wary and careful when getting a cab. If a you’re a female, never ride in the front passenger seat. A woman is more vulnerable when she takes the seat beside the driver. This is particularly true when she’s wearing shorts or mini skirt. That’s a tempting invitation to acts of lasciviousness. The back seat is a better defensive position in case you see the driver keeps looking at you from his rear-view mirror and you sense he
could be up to something. To be fair, there are instances that show some good taxi drivers like the one who returned a bag containing cash and an expensive cell phone a passenger left in the back seat. May their tribe increase. One also has to understand the difficulties taxi drivers undergo in their daily job behind the wheel. Aside from the horrendous metro traffic that reduces their income, they have to deal with the high boundary system of owners and taxi operators not to mention the increase in the price of gasoline and diesel fuel. Even if taxi drivers would like to opt for another job or profession, they can’t because of the scarcity of jobs in the market. But that’s no reason to take it out on your passengers who could be also dealing with life’s adversities but coping with it.
Washington SyCip, 96 VIRTUAL REALITY TONY LOPEZ MY FRIEND Washington SyCip, an American by force of circumstances (he was with the US Army in Manila to decipher secret Japanese codes during the war, using his talent with numbers and by name (he was named after Washington DC where his father was defending a case) but a Manila-born Filipino in heart and soul, died in his sleep as he was about to land on a Philippine Airlines flight in Vancouver, Canada, Oct. 8, 2017. He was 96. As the youngest business editor of a daily in the 1970s, I had the opportunity to interact with Mr. Wash. He encouraged me and was generous with praise. He also liked my weekly BizNewsAsia and ordered copies when something was written about him. When he turned 90 in 2011, I wrote that Mr. Wash was the Philippines’ foremost management guru— founder of SGV & Co., the largest accounting and professional services firm west of the Mississippi. He also helped establish the Asian Institute of Management, the Philippine Business for Social Progress and the Management Association of the Philippines. He was the symbol of wisdom, strength and durability—qualities of successful enterprises. He was on the boards of many international and local corporations, but devoted more time in reducing poverty in his later years. He believed that democracy cannot work in an im-
poverished nation. Thus, he urged government to reduce food prices. His strategy toward reducing poverty was by increasing access to education, promoting entrepreneurship through microfinance, and improving health care. Addressing a dinner party on his 90th birthday, Wash expressed hope that “in the remaining years of this bookkeeper, we can still work together in the quest for a time when the water in every Philippine community can be drunk. Only then can our people really know the meaning of democracy.” Wash was the most respected bookkeeper and business guru. He founded the Philippines’ first truly multinational, SGV, once the largest professional services firm. He believed in Narayana Murthy of Infosys Technologies, that the future of the corporation lies in its value culture which includes fairness honesty, decency, transparency, accountability, happiness, humility, charity,and Wash’s personal favorite—integrity. Last July 27, 2017, SGV’s youngest and longtime chairman, Roberto V. Ongpin tendered a dinner in Wash’s honor. RVO related “a few vignettes, a few glimpses of the 15 years [he] spent with Wash. It was attended by five former finance secretaries and a who had been with SGV. Here is Bobby: Wash hired me when I was 26 years old, and he tells this story which I think is not true and we have a disagreement about it. He says that when he first interviewed me, I asked him, “How old are you?”
And he said, “Why?” “Because I want to know how long before it is I can take over from you.” You know, that’s just not true, but he just thinks it’s true. And you know, I was a young guy, I was in great awe of him. As a 26-year-old, he was a great guy and like a God to me, and I would ask him “How old are you?,” “How long before I could take the firm, take over the firm?” I just don’t do that, but as he claims I said that. I joined the firm late 1964, and I left when I was conscripted into the government in 1979, so I was with Wash for 15 years. What I am today is because of what Wash and SGV taught me. Wash had a very strong belief in meritocracy. Anybody, no matter what his background is, If you deserve it, merit the job, you’ll get it. I was appointed managing partner, in 1970s in my early 30s, and it’s great that it changed my life. I just want to say that SGV developed, has always had a culture of meritocracy. You have to work hard, you got to serve, and you will get what you deserve. And so, up to today, it’s a badge of honor to have worked for SGV. I think many of the CEOs and many CFOs now of most of our largest companies have worked for SGV and are proud of the fact that they worked for SGV. Our former Central Bank governor, Say Tetangco worked for SGV, and so many people here worked for SGV. I always thought that Wash SyCip was named after George Washington. Then shortly after I was with the firm, somebody
asked him, “Why is your name Washington?” He said, “My name is Washington, because my father was in Washington DC when I was born.” So, if his father had been in Buffalo or Peoria, Illinois, or Des Moines, you’d be called Buffalo SyCip! The years I spent at SGV were very difficult. I was at my young 30s as a Managing Partner, and most of my partners were in their 50s, 60s. And it was not easy, but you know, Fred Velayo was the original partner of Wash and they would always say “We’re the largest firm, accounting firm, west of the Mississippi” because most of the big accounting firms have headquarters in Chicago and New York but Westbrook we read them. At that time, as I remember the numbers, because we were the SGV group, we were the first true multinational company, because Wash started the T. N. Soong in Taiwan. We were in Korea, Taiwan, Hong Kong, Bangkok, Kuala Lumpur, Singapore, and Jakarta. And I remember because I would spend half the month travelling, and it was hard. I would spend two days in every country, and spend half of the month in Manila. But we became a really powerful multinational. Just before I was conscripted in the government, I convinced Wash that we should go into the Middle East. And actually I spent one of the much time in the Middle East. I opened an office in Kuwait, in Bahrain, in Dhahran, Saudi Arabia, in Dubai, and Abu Dhabi in the Emirates. And then I
was conscripted in the government and you know, that was the end of that. SGV represented eight of the big at that time eight accounting firms, worldwide. The only one that we did not have was Price Waterhouse. Price Waterhouse was with Cunanan. Wash was very keen, and actually so was I, with Arthur Andersen. Arthur Andersen had the culture which was most resembled SGV and in fact, I went to St. Charles, their training center, very impressive, and the managing partner was a fellow, Harvey Kapnick who was very very aggressive, and I spent a lot of time with them and he was always trying to convince me to join up but I told Wash, why should we join up with anyone with these Big Eight. Why should we marry one of them when we can sleep with all seven of them? Anyway, after I left the firm I was in London and Wash said, “Are you going to return to SGV” “I don’t think so” and he said, “Do you mind if I team up with Arthur Andersen” and I said, “No, I don’t mind, I’m not going back to the firm.” But I really always admired Arthur Andersen. Unfortunately it became a victim of the Enron disaster. And Arthur Anderson disappeared. One of the few things that Wash always encouraged me (to do) was to find the good guys. He would push me to go to the US twice a year to interview the best guys from the best business schools. He is not only a great man, he is a good man, and indeed a man for all seasons.
the trainors, with the hope that the technology transfer is propagated back home. The other MOU was with AGRIGAIA, which already has an upcoming project with Benguet State University on organic vegetable farming methods. They intend to expand into more demonstration farms, with Meco assisting in tying them up with state-owned agricultural colleges and universities. The NGO would also develop training modules in agriculture courses for Taiwan-based OFW’s. Think of better atis farms, or malunggay propagation, or okra and ampalaya, which can be exported. And vegetable propagation which would increase food supply for domestic consumption and eventually cut the cost of food. In a recent article I read, former agriculture secretary Willy Dar advocated developing an “entrepreneurial ecosystem
involving most if not all smallholder farmers (towards) accelerating modernization and industrialization.” The formula for the oftrepeated goal of inclusive growth through agri-preneurship is simple, according to Dar. It “consists of increasing productivity at the farm level; manufacturing or processing by agro-industrial firms and cooperatives; and tapping both the local and export markets.” I have always maintained, in this column and elsewhere, that there are two areas where the country can focus its efforts on the economy: Agriculture and tourism. The first because so many of our poor are fishermen and farmers; the second because of our natural beauty and our natural friendliness. At our representative office in Taiwan, we are taking some small steps towards contributing to what ought to be a concentrated national effort.
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Advancing food security SO I SEE LITO BANAYO LAST week, we used the Philippine atis and the Taiwan shir-jia, also called sikya, as an example of how technology and its proper use and propagation could assist Philippine agricultural production. The matter of agricultural productivity is very important in advancing food security for a population which continues to grow. For years and years we seem to have defined food security in terms of being able to produce our own rice requirements. Self-sufficiency in rice has always been the be-all and end-all of government’s agricultural policy. And yet it is in diversifying our product profile and increasing the incomes of our marginalized farmers
that the future of our agriculture must be shaped. Unless farm incomes increase, there will be less and less young people interested in farming. Not only is agriculture not “sexy” enough to the youth. As small farms presently are, they simply do not generate enough income to sustain basic needs let alone give them enough disposable income. The farmer slaves and scrimps, borrows and pawns practically everything to be able to send the son or daughter to become an OFW. The overseas worker phenomenon has become some kind of miracle cure for poverty so endemic. Sadly, the foreign contract worker again slaves, and whatever is left after sending sustenance to their families back in the Philippines, the paltry savings he or she is able to keep, is later invested in low-income generating economic activities, such as a tricycle, or a jeepney, or a small store.
Thus the cycle of disinterest in farming continues. This imperils the nation’s food production. On a macro level, the Philippines exports only 5 billion dollars of agricultural products, mostly bananas and pineapples, a little sugar, and coconut. On the other hand, we import some 10 to 11 billion dollars of farm produce each year. And where, pray tell do we get the wherewithal to finance the 6 billion dollar difference between exports and imports? Why, the “katas ng OFW” of course. Decades back, we broke up our big landed estates by legislation and distributed the land to tenants and farm workers, and we called this agrarian reform. Nothing wrong with that, except government it seems defined reform as purely a matter of land distribution. Binigyan ng lupa ang magsasaka, pagkatapos, bahala na sila sa buhay nila.
Where the big estates (also referred to as “haciendas”) had economies of scale that generated enough capital to mechanize, the small landholdings had become diseconomies. Cooperative models, as in Israel’s “kibbutz”, or even neighboring Taiwan, were not replicated in our country. Farms became subsistence operations. Balik sa isang kahig, isang tuka. Were it not for the escape valve called overseas work, this country’s social volcano would have exploded long ago. Agrarian unrest and landlord exploitation in fact fuelled the unrest, mostly in Luzon, that was the Hukbalahap revolt right after the Japanese occupation. Many of our landlords just got their huge share of the farm output on the back of the labor of their “kasama” without attempting either farm modernization or social amelioration. Last Friday, the Manila
Economic and Cultural Office signed two memoranda of understanding in the southern city of Kaohsiung. One was with the National Kaohsiung Marine University, which would develop aquaculture training course modules for OFWs working in Taiwan. Meco would allocate funds for the training, some form of scholarship so that interested OFW’s would learn technical skills in aquaculture that they could put to good use when they retire from their jobs here. Instead of the usual jeepney or sarisari store, both of which are fast becoming rendered obsolete by time, why not start with a small aquaculture farm? With the technology imparted and the management skills imbibed from the course, there is alternative livelihood. Likewise, NKMU is offering five scholarship grant slots for employees of the Bureau of Fisheries and Aquatic Resources. Training