ReInventing Philippines Inc.,

Whatever you say about opening up for globalization ( it has its bad sides), no country anywhere has achieved sustained high economic growth without opening up. Japan started to grow after they opened up in 1860, so did China in 1980, and so did India and Eastern Europe in the 1990s.

The last 50 years owes its greatest growth due to technology and globalization.  World GDP rose 240 percent from 1900 to 1950 and grow even further by 700 percent from 1950 to 2000, as technology and trade accelerated. Before that, it was almost negligible.

Technology enables better products for lower prices, and improves productivity.  The increases means more money for consumers to spend, and more profits for the business.

In 1962, President Kennedy declared that the major challenge of the sixties is how to maintain full employment at a time when automation will be replacing men.  Well, not only were no jobs  lost, but tens of millions more were created due to tech advances.

When NAFTA ( North American Free Trade Agreement which allows free trade between Canada, United States and Mexico without tariff) was to be signed, Ross Perot, a presidential candidate, declared that this will result in the giant sucking sound of jobs going to Mexico since the salary there was  much cheaper.

It did not happen. In fact, the next few years after that agreement, the United States generated 22 mllion new jobs, and unemployment rate feel from 7 percent to 4 percent as new technology and trade created new jobs.

Trade has been the weapon that have made numerous countries rich.  You cannot find a country that is rich that does not trade.  And you become competitive in trade by investing in people and technology.

The Soviet Union, former Eastern Europe, China, Latin America, and  India experimented with various forms of communism and socialism in order to redistribute wealth more equitably.  They failed.

This philosophy of redistribution is anchored on the thinking that people are entitled to their share of the pie, and therefore have created the fundamental policy of taking from Peter to give to Paul.  However, the growth of the Philippines the last 50 years have been limited to 3 to 4 percent.  At this rate of growth, and especially if the population is growing 2-3 percent as well,  no amount of redistribution will lift people out of poverty, and we have failed as well.

According to Arthur Okun, whose saying has become known as Okun’s law, GDP growth of 3 percent will not be able to lower the unemployment rate.

The experience of the 4 tigers ( Hong Kong, Singapore, South Korea, Taiwan) , SouthEast Asia and lately of China and India have shown us that when the GDP is growing faster than 7%, then it is like a tide that lifts all boats.   The wonder of China’s economic growth is not only that it created millions of millionaires, but that it lifted a few hundred million people out of poverty.

Philippines should adopt a policy of fast growth, and should do what it can to insure the competitiveness of its industries, by insuring that the cost and ease of doing business is competitive, and remove all hindrances to growth.

It is great to talk about justice or land reform, but above all else, we need to grow…. Fast!  The number 1 priority should be to lift people out of poverty and the only proven way is to grow the pie by focusing on positive sum strategies, not zero sum policies.

What you believe in influences your judgment and conclusions.

Just like many executives, I spent years trying to do something for my company – make it bigger, increase sales, avoid losses, not lose out to competition, etc.

I slaved over every quarter to make sure that it would be better than the previous one – much like every country today where they want to report lower unemployment, higher GDP, better tax collection and the like.

Then I saw a quotation that changed these perspectives.

The job of the CEO is not to grow the company.  The job of the CEO is to make the company healthy.  When it is healthy , it will grow.

This changed my outlook and have become the founding principle on which I manage my companies. In short, just like your body, the way to health is not to eat a lot of vitamins or exotic herbs. It is just you don’t do whatever will make you unhealthy.

On this note, I present to you first what my basic beliefs,  and conclusions before I lay out my facts.