The Incidental Tourist

That’s me. I’ve lost my bus ticket, so I guess I’ll just stick around and see what is happening hereabouts.

I see that Moody’s has upped the investment rating of the Philippines. This is a good thing, but it is important to read the Moody’s report deeper than the headline.

Moody’s attributes the improvement to restraint on government expenses. They note that revenue keeps coming in, so the inflow/outflow is better than it used to be. But Moody’s points out that the sources of revenue are a bit soft. Well, they use better words, but that is the essence.

So two points can be drawn from this.

One, the improved rating was largely accidental. The Aquino Administration has not spent money because it does not have a rigorous infrastructure (capital) or value building (expense) plan. It just keeps doing what has been done before, but holds back on expenses that are deemed political. That is Joe Am’s technical description, not Moody’s.

Two, Moody’s intimates that ratings could be improved further if revenue sources were firmed up. “Intimates” is one of those words you use when you don’t really understand what they are saying, and want to wrap it up in something other than a wild guess, or SWAG. I think Moody’s is intimating that there is a road that the Philippines could follow to continue to work toward investment status.

I’ve argued before that the Philippine tax structure is unsound, but now with the weight of Moody’s behind my credibility on this point, I will restate it.

The Philippines depends too much on fee-based taxes rather than taxes keyed to value creation. Fee-based taxes too often destroy value. For example, court fees constrain who gets justice. Justice in the Philippines favors the favorites. The poor are not among them. Fees don’t promote the value of “justice for all”.

Customs assessments represent 22% of the entire revenue stream. Operating under a taxation charter, Customs does little to build Philippine trade competitiveness. Indeed, outrageous Customs’ fees and burdensome paperwork undermine Philippine global competitiveness. Can you imagine the benefit of uncorking the export and trading markets? The Philippines would return to its 1800’s stature as a hub of Asian trade. But Filipino officials can’t imagine this state of affairs so they can’t figure out how to get there. They just tax away.

VAT is a good tax as long as it does not become so onerous that people stop making purchases. It is keyed to value creation. A retailer creates value when he buys goods for X and sells them for X+M, where M is the markup. The amount the customer pays is X+M+T, adding in the VAT. Well, if the mark-up M is 12% and T is 12%, then government has piled on pretty heavily. The State is essentially saying that it deserves as much money as the retailer who has worked hard to build a store, build a customer base, buy goods, and build and sell products.

Seems greedy to me.

A 12% VAT is not conducive to fostering a vibrant retail industry. It is just easy money to grab for the State.

Two other taxation sources that are roundly ignored are income taxes and property taxes. Why? Because they hit the moneyed friends of the political families. So much value created, so few taxes levied. Property taxes, which could fund school improvement, are a joke. I’ve funded the purchase of two properties and both times the attorneys advised to understate the actual purchase price to avoid taxes. Then the annual tax bill arrives and I pay like P100 for a lovely beach paradise. The annual tax could and should be P10,000.

A friend who worked in the assessor’s office said they could not tax at fully authorized rates because the people who backed the mayor would complain.

Therefore, all the kids of the Philippines suffer through insufferable, overcrowded schools with weak teachers.

So the mayor can stay in office.

That, my friends, is Filipino sacrifice and patriotism. It is the jolly, good-hearted, considerate way this island paradise stays stuck in the mud. We incidental tourists just shake our heads in wonder.

In concert with my new advisory slogan, “Man up, Philippines”, I say: find where value is created and tax it reasonably. Make the whole community wealthy, if not in money, then in service and respect, instead of coddling the rich and well-connected.

Rise up, even. Like Edsa the hell out of this baby. Throw tea into Manila Bay, or a case of San Mig. Demand taxes that will benefit your kids. Demand taxes that build wealth instead of constrain productivity.

The Transactional Worm

The worm has turned.

 

The cultural pattern followed in the Philippines is generally transactional and reactive. It is not principled. It is not strategic. It is not broad minded or far-reaching. It is not sacrificing.

Let’s take a few recent transactional incidents and observe how the Philippines has behaved:

 

The Philippines joins the coalition of the willing in Iraq. Bullets start flying and the Philippines is the first nation to drop out. President Arroyo bends to the will of her emotional subjects. She is not willing to sacrifice her job for the long-term well-being of the Philippines.

Nicole has a drunken night with Private Smith; it is assumed he is guilty of rape and it is extrapolated that most Americans are sex mad perverts, coddled by an arrogant, imperialistic America. The Philippine media milk this story for three years, until Nicole recants and is spirited out of the Philippines to the US. Then everyone shuts up.

Because of the Nicole incident, the VFA is loudly decried (VFA is the Visiting Forces Agreement, which basically says things like US soldiers don’t have to get visas and, if they are charged with a crime, can be held by the US). “The humiliation, the humiliation!” exclaims Senator Santiago, in commenting about the how the agreement differs in imprisonment clauses. Mobs of Filipinos block Roxas Boulevard protesting in front of the American Embassy.

China rattles its naval swords over the Spratleys, a cluster of resource laden islands which several other nations also claim. Viet Nam, Japan and the Philippines cry out in protest of specific Chinese acts. The Philippines waves its joint defense agreement with the US loud and clear. Senator Santiago and the press and everyone else suddenly shuts up about the VFA.

So here is the grits of it. If China moves into the Spratleys in force, Filipinos believe I should send my sons and daughters to fight for them, to die for them, and I should spend my tax money defending a people who collectively stand as a fair-weather friend. You know, the kind of friend who is there only if something is in it for them.

Screw it.

I will write long and hard for the US to keep the hell out of the Philippine mess. I suggest the Philippines man up and start training a real army and navy. And buy a jet or two.

It is okay for the Philippines to rattle its own sabers, but not mine.

I’m sure there are those who will argue there is some strategic advantage to the US to keep an alliance with the Philippines. Please enlighten me as to what it is. It seems to me it is a sink hole of self engagement by Filipinos with no over-riding loyalty to a set of principles that establishes mutual interest as a two-way street, no willingness to put transactional incidents under an umbrella of mutual commitment and mutual sacrifice.

Getting tossed out of Clark and Subic said it clearly enough. Filipino flight from Iraq said it Lima Charlie, loud and clear. The hair pulling by senators and citizens over the VFA, that “humiliating” document that makes it simple for US troops to come into the Philippines to do their bloody work defending thankless Filipinos says it so loud and so clear that even Joe Am has listened.

Let Filipinos defend Philippine interests.

 

Corruption of Public Trust, Part II

Money is a value. Trust is a value. One is hard, defined in a coin or slip of paper. The other is soft, defined in the integrity of behavior.

Media and governmental attention to corruption in the Philippines is focused mainly on money. The more prevalent form of corruption, betrayal of public trust, is largely overlooked. Indeed, participation in this form of corruption is so vast, so pronounced, so prevalent, that it defines the moral way to act in the Philippines. The lack of personal integrity in the Philippines is so robust that Filipinos cannot see it in themselves.

It is a fun-house mirror, where thin looks fat and fat looks tall.

It is moral to slander those who take an opposite view, or who have the gall to get something that you don’t have. It is a tear-down morality, where diminishing others is a way of life. If someone should have the audacity to win, making you lose, you have are enemies for life.

It is moral, if you are a governmental manager, to hire a friend or favorite or family member over someone who is more capable of doing the job. It is moral to “take care of your own” that way, rather than take care of the public by assuring competence in every position.

It is moral to pass favors to those who have helped you, or might yet help you. Even if the passing of those favors denies others a fair deal.

It is relatively easy to track the paper trail and find out what happened to money. It is very difficult to track what is in the heart and mind. Especially when it is moral to diminish the person who is investigating.

And when what is in the heart is “personal advantage”, when what is in the mind is greed, then the community is poorly cared for.

And you get the Philippines.

A place that does not recognize public trust as a valued currency. Or, perhaps, is just awakening to the damage Filipinos are doing to Filipinos, and that trust is more valuable than money.

Corruption of Public Trust, Part I

I have been cursed with having visions that most Filipinos don’t see. It is rather like some see the White Lady, others do not. It is astounding.

I see an essential unfairness in the appointment of family, friends and favorites to jobs that more capable workers are denied, but Filipinos see nothing wrong. “It’s just the way things here work.”

They aren’t working very damn well.

Equal opportunity means employers consider the job and the job candidate objectively, and hire the most capable person. This leads to fairness that is blind to race, religion, gender and other irrelevancies. It assures the most productive outcome. But Filipinos don’t get this concept – of promoting capability - or if they do get it, they have no idea how to make it a national value, or if they do know how to make it a national value, they can’t summon up the frickin’ energy to frickin’ act.

I see an incredible unkindness from Filipino to Filipino, even racism, favoring white and whites, but I am greeted with how proud Filipinos are, how tight-knit, how happy and “you foreigners shut your yaps”.

I see the Catholic Church nailing the Philippines solidly to the 15the century, like Jesus tight upon the cross; Filipinos march off to mass like lemmings over the cliff, hailing Mary all the way. Poor, poor Mary. You know Mary? The woman? Yet here wife beaters are protected, deadbeat dads are protected, the other cheek is turned toward adulterous men and women, teenage girls sneak out for coat-hanger abortions, and the church is busy screaming how a piece of rubber is threatening the very moral underpinning of a nation, stealing its very right to life.

This is life, these malnourished, sick children who never makes it to the doctor before they find the grave? These dog ridden, lice infested sewerage pits that people call home? These shacks on the river banks awaiting the next big rain to see if their occupants can mud-surf all the way to the South China Sea?

This is life?

My wife knows how frustrated I get with the blindness, the relentless envy and cattiness, the Ego and unkindness that underpin so many daily Filipino acts. The windshield of my Honda Civic hears my loud rants and throws them back into my face, useless, as if it, too, had the impervious turtle shell that defines Filipino self-awareness.

My Barangay Captain plays his power, rewards his friends, punishes his enemies. He is careful not to play with money; he knows that in an awakening Philippines, that could get him in trouble. So he plays a different game.

He is not in office to protect the public welfare and provide service to all, equally, blind to gender or nationality or faith or wealth. He is in it to execute his little agendas, to stoke his pride, his power. It is akin to the smugness you read on Ampatuan Sr’s face as he plays the courts like a yoyo. You are either with him, or against him. You are on list A or list B.

My family is on the Captain’s list B.

So I will tell all you blind Filipinos that there is more to corruption than money. There is corruption of ethics, of public trust, of fairness, of kindness. And it is more prevalent than moneyed corruption in the Philippines. Power plays. Favorites. Punishments. Game-playing that harms others. Tearing down rather than building.

I wrap it all up under the banner of corruption of public trust.

It is a violation of the Constitution, although I doubt I can find a Filipino attorney who can even grasp that concept. They are not exactly a deep-seeing bunch, being fully engaged in bowing to the big shots rather than caring for their nation. Caring is not a quality that runs rich in the Philippines, and in hard-hearted, money-grubbing attorneys, it runs absent. These useless attorneys are, after all, clothed in Filipino values from the dog-shit soiled soles of their polished black shoes to the unshowered, sweaty starched collars on their lacy beige shirts. Looks good, stinks underneath.

I’ll write more about corruption of public trust when I cool down.

Freight Train on Ice

The US economy is a large freight train on ice. When President Clinton turned the train over to President Bush, it was on sound tracks, on land, but after eight years of fiscal mismanagement, including the funding of two wars off budget and tax cuts for the wealthy, the train had careened recklessly onto the ice. The country’s debt reached nine trillion. The train hit a curve in late 2008 and the ice cracked. Engineer Bush bailed, his credibility so poor, his administration so ineffective, that he could do nothing. President Obama, who grabbed the controls with nothing but credibility in his presidential portfolio, applied it and some thoughtful work to slow the train, and to straighten the tracks. Government bailouts, support for Fed emergency measures, forced mergers to stabilize the financial sector, incentive spending to generate jobs. All within a few weeks.

The effort cost more money, and the debt quickly built to 13 trillion, and it has been edging up ever since. The train is still on ice, after all.

There are those who expect the President’s administration to stop the train sharply, to put the jobs back right now. They have political words, no risk, whereas the President has all the risk – patchy thin ice, controls that are wobbly, and the speed represented in trillions of wealth yanked from consumer and business wallets from a collapsed real estate market. He knows he cannot slam on the brakes, or yank the train left or right, or somehow fly off the ice onto solid land. He must steer the beast skillfully.

It is very important to sort out politics from government. Politics is biased, it is for elections, for the candidates. It is not for the people. Indeed, it engages deceit and spin and incendiary words aimed to provoke, to tear down. In many instances, it is against the people.

Government is for the people. It is serious business. Trillions ripped from the nation’s wealth does not come back overnight. The damage done by the Bush presidency is more serious than that.

The politicians are but clowns. Pelosi is a clown, Reid is a clown, Boehner is a clown. Palin is a clown’s clown. Trump is the clown to top all clowns.

President Obama is one of the people. He irritates the clowns because he knows he cannot bend to their baloney. He must steer steady and true, slow the train, get it on land, get it under control.

He’s doing fine. I don’t want him to yank popular levers without regard for the train’s well-being.

He still shoots hoops, plays ping pong, kisses babies, travels the globe garnering respect for the US.

He got health care reform passed, something other presidents failed to do.

He delicately handled the Libyan crisis, keeping the US out of major engagement and letting other nations step to the front.

He has generally stuck to his campaign promises, Guantanamo the main exception. Iraq and Afghanistan are moving into the hands of Iraqis and Afghans, where they belong. Both are trains in their own right, but the US ought not be doing any more steering.

And he nailed bin Laden in his spare time.

He’s doing better than fine. So much better than fine.

Technical Difficulties

The blogspot comment form is not working properly for some reason that I cannot comprehend. I hope it clears up soon of its own accord, for I have the technical moxie of a drunk chicken. I appreciate that you visited the blog, and regret if your comment posting cannot get through. As mine cannot get through . . .

Hail to the Chief

I often agree with critics of the Philippines on the failure of the nation to be modern and productive and treat its citizens better, and occasionally with critics of President Aquino, on specific acts. I have never agreed with those who panned the President because he had an undistinguished senatorial career, or is a part of the family and big-money cliques that run the Philippines, or has a flighty sister named Kris. And I have argued for a little consideration and latitude for the President to be who he is, in a very difficult job. I call it the patriotic thing to do, but I understand that patriots are free to criticize, so that’s all right, too. It is just my attitude, shaped by my childhood citing the Pledge of Allegiance, and three years in the Army, one of them in Viet Nam. In the Army, you subjugate yourself to the greater need, and I carry that forward in wanting my President to be strong. If I support him, he is just a wee bit stronger than if I do not.

So I don’t run around looking for flaws, looking for things to criticize. I don’t want to undermine my President unless by undermining him, I strengthen the US. (Nixon was well worth undermining; Clinton was not.)

Indeed, if I step back, away from the howling critics, I see some good things happening in Philippine governance. Here is what I see:

1. I see a government trying to modernize its treatment of women by passing a Reproductive Health Bill and a Divorce Bill. I don’t say these efforts are perfect, but I see a nation that is coming to the realization that it is behind the times, and a government that wants to catch up. When you see the screaming and foot-dragging of the Catholic Church, you have a crystal clear understanding of why the nation is behind the times. But President Aquino is doing what President Arroyo (a woman, fer chrissake) did not do, what President Estrada did not do, what the prior President Aquino did do, and what no Philippine president has done until now.

2. President Aquino has not gotten tagged by any fertilizer, ZTE, or other multi-million dollar scandals or scams while in office. This is a marked improvement over Arroyo and Estrada. President Aquino is fundamentally an honest president, for all the naïve mistakes he makes and the attachments to power-people, something that no president can avoid. He is delivering on an expectation of those who elected him. Be fundamentally a good person.

3. The President’s administration is grinding away at corrupt behavior and values, pressuring the Ombudsman out of office, investigating Congressman Mike Arroyo for tax evasion, putting the head of Customs on a short string for not stopping unrelenting smuggling, undertaking multiple inquiries as to how certain people got rich so fast when their salaries would not generate such wealth, and advancing inquiries into prior President Arroyo’s assorted scandals. It is changing the tenor of things. Now you sense that whistle blowers are being listened to. When a prison official gives favored treatment to a convict, you hear about it. When a governor is caught with his fist in the public cookie jar, he gets discovered. The cumulative pressure in favor of good behavior has escalated noticeably. It is exactly the kind of pressure that can change values if it is sustained.

4. Efforts to anticipate and protect against typhoons and other natural disasters are real. Forecast information is now readily available on the web and recovery people are standing by in advance of typhoons. Intense pressure is being put on the DENR to perform, to stop the clear-cutting and illegal harvesting of trees that lead to flash floods and mudslides. The standard for all typhoons is “zero fatalities”. Those of us with careers in planning recognize how critically important such benchmarks are at motivating actions to achieve them.

5. The Philippines finally has a foreign engagement effort that represents something other than begging or chasing President Obama for photo ops and fine dining in New York. President Aquino has been both pragmatic and proactive in establishing direct lines of communication with leaders of countries that matter.

I think it is fair to ride the president for things like a light work schedule, or a botched bus massacre, or poor coordination and responses among his communication team, or other nits worth picking.

But for myself, I see real change happening, from a perspective above the trees. The forest is developing, and it is developing in the right direction.

Yes, yes, a lot more has to happen, mainly in economic and industrial arenas. How can farming become agribusiness? How can mining capture value in the Philippines instead of shipping it to Korea? How can tourism thrive when the coral is bombed, the waters are polluted, and the mountains are full of killer gangs (I refuse to apply the tag “rebels” to this destructive bunch of protection-racket thugs)? How can trade become the heart of the Philippines again (like, uh, make Customs a service unit instead of taxing arm)?

Those of you with yellow burrs under your saddles, keep on riding and writing. It can only speed the process, for I think something else is different about President Aquino. He listens. Perhaps he tries to hard to justify his botchings, but at least he is not tone deaf or stone deaf, as his predecessors were.

It would be helpful to give him an assist now and then. Like when the leaders of the Catholic Church insist that women be stoned with guilt, and bound and tied to deadbeat dads and abusive men. Climb all over that one. Or when teens are shamed into getting coat hanger abortions rather than benefitting from an education about sex and parental responsibilities. Strive mightily for more dignified laws.

It would be good to pile onto the miscreants in public office who still use the public coffers for personal glory and wealth, rather than taking care of the nation and the citizens they say under oath they will represent well.

And it would be good to agitate for more productive economic activities.

We can help build the societal pressures that push toward a changing, more productive, kinder, wealthier Philippines.