Wednesday, April 10, 2013

Rich men, poor nation

By Winston A. Marbella

To paraphrase Albay Gov. Joey Salceda, an economist, President Aquino is one lucky canine.  

The good governor used the female term for the species to describe his former boss, President Gloria Macapagal Arroyo.  Salceda subsequently apologized for his bad vocabulary, but columnist Tony Lopez is far from apologetic when he says that P-Noy is lucky because the economy is going great guns even before the President has done much about it.

In recent months the country has seen one of the highest growth rates in the region next only to  China, and credit ratings have improved.

"The Philippines is no longer the sick man of East Asia, but the rising tiger," World Bank country director Motoo Konishi gushed at an economic forum in Manila recently.

But some prominent economists lament the government's failure to create inclusive growth that reaches  the poorest sectors, and to make structural changes needed to bridge the region's widest gap between rich and poor.

Exclusive growth

Cielito Habito, a former economic planning  secretary, at the same forum  presented his observations that the 40 richest families on the 2010 Forbes magazine annual tally accounted for 76 percent of the country's gross domestic product (GDP) growth.

This was the highest concentration of wealth in the region. Comparatively,the top 40 in Thailand accounted for 33.7 percent of wealth growth, in Malaysia 5.6 percent, and in Japan just 2.8 percent, Habito said.

In the Forbes 2012 richest list, the top two wealthiest, Henry Sy and Lucio Tan, were worth a total $13.6 billion, six percent of the entire economy, the French news agency Agence France Presse reported.

In contrast, one fourth of the population (around 25 million people)  lived on $1 a day or less in 2009, little changed from 1999, according to  government figures.

For 2013, the top Filipinos in Forbes' billionaires list are:

1.Henry Sy and family - $13.2 billion (68th overall)
2.Lucio Tan and family - $5 billion  
3.Enrique Razon, Jr. - $4.9 billion  
4.Andrew Tan - $3.95 billion  
5.David Consunji and family - $2.8 billion  
6.George Ty and family - $2.6 billion  
7.Lucio and Susan Co - $2 billion  
8.Robert Coyiuto, Jr. - $1.6 billion  
9.Tony Tan Caktiong and family - $1.4 billion  
10.Andrew Gotianun and family - $1.2 billion 
11.Roberto Ongpin - $1.2 billion  

Economic elitism

The business interests of the country's economic elite dominated utilities, property development, banking, construction and telecommunications.  

The elite continue to rule the economy because the power structure  allows near monopolies in key industries.  

Patronage politics

Habito says the country's culture of patronage politics is partly to blame for the economic elitism. 

This year the government is spending more than $1 billion on the conditional cash transfer program for some 15 million of the poorest, who will receive money directly for sending their children to school and visiting health centers.

Economists suggest other reforms like higher tax revenues to boost infrastructure spending, incentives to rebuild the country's agriculture and manufacturing sectors, and raising productivity and competitiveness by improving the education system.

Creating wealth 
Analyzing how nations grow rich, the Harvard economist Michael Porter  thinks that it is not by accident that Japan leads in consumer electronics, or Italy in fabrics and  furniture design, or the U.S. in software, music and movies.  

In his best-selling Competitive Advantage of Nations, Porter asserts: “National prosperity is created, not inherited. It does not grow out of a country’s natural endowments, its labor pool, its interest rates, or its currency’s value, as classical economics insists."

Continuous improvement 

“A nation’s competitiveness depends on the capacity of its industry to innovate and upgrade,” Porter says.  “They benefit from having strong domestic rivals, aggressive home-based suppliers, and demanding local customers.”

“In a world of increasingly global competition, nations have become more, not less, important. As the basis of competition has shifted more and more to the creation and assimilation of knowledge, the role of the nation has grown,” Porter insists.

Roots of success 
“Differences in national values, culture, economic structures, institutions, and histories all contribute to competitive success,” he says. 
“Ultimately, nations succeed in particular industries because their home environment is the most forward-looking, dynamic, and challenging.” 

Porter warns: “According to prevailing thinking, labor costs, interest rates, exchange rates, and economies of scale are the most potent determinants of competitiveness.”  

Flawed approaches  

“Among governments, there is a growing tendency to experiment with various policies intended to promote national competitiveness—from efforts to manage exchange rates to new measures to manage trade to policies to relax antitrust—which usually end up only under mining it,” says Porter. 

“These approaches, now much in favor in both companies and governments, are flawed. They fundamentally misperceive the true sources of competitive advantage.”


Tuesday, April 9, 2013

Should fat passengers pay more?

By Winston A. Marbella

Risking accusations of discriminating against oversized persons, a Norwegian economist has put together a fat-busting study recommending that airlines should charge obese passengers more.

Bharat Bhatta, an associate professor at Sogn og Fjordane University College, said his pricing scheme would bring health, financial and environmental benefits, the British news agency Reuters reported.

Bhatta said that other transport sectors already charge by space and weight. 

Thin is in

The Norwegian professor is not the only one thinking that thin is in.

In neighboring Denmark, a law was passed last year imposing a tax on fatty foods in an attempt to improve the nation's unhealthy eating habits.

Denmark's Ministry of Health says Danes currently have a life expectancy lower by three years than the European average of 79 years.

A health-conscious  nation, Denmark thus became the first country to put saturated fats in the same category as health hazards like cigarettes and alcohol.

Saturated fats have been tagged as one of the main causes of heart disease, along with sedentary lifestyles and lack of exercise.

Alarmed over growing global obesity, two international agencies, the World Bank and the World Health Organization, have urged governments to pass laws regulating fats.

Double whammy
"To the degree that passengers lose weight and therefore reduce fares, the savings that result are net benefits to the passengers," Professor Bhatta wrote in Norway's Journal of Revenue and Pricing Management.

"As a plane of a given make and model can accommodate more lightweight passengers, it may also reward airlines" and reduce the use of environmentally costly fuel, he said.

About two-thirds of U.S. adults are obese or overweight, Reuters reported.

In a 2010 online survey for the travel website Skyscanner (, 76 percent of travelers said airlines should charge overweight passengers more if they needed an extra seat, Reuters said.

Pay as you weigh

Typical of academic studies, Professor Bhatta's put together three models for what he called "pay as you weigh airline pricing."

The first would charge passengers according to how much they and their baggage weighed. It would set a rate for pounds (kg) per passenger so that someone weighing 130 pounds (59 kg) would pay half the fare of 260-pound (118-kg) person.

A second model would use a fixed base rate, with an extra charge for heavier passengers to cover the extra costs. Under this option, every passenger would have a different fare.

Bhatta's preferred option was the third, where the same fare would be charged if a passenger was of average weight. A discount or extra charge would be used if the passenger was above or below a certain limit, Reuters reported.

Grappling with fat

That would lead to three kinds of fares - high, average and low, Bhatta said.

Airlines have grappled for years with how to deal with larger passengers as waistlines have steadily expanded, Reuters said.

Such carriers as Air France and Southwest Airlines allow overweight passengers to buy extra seats and get a refund on them. 

High blood pressure

In Sri Lanka, the World Bank has urged third-world countries  to enact laws to encourage good food processing practices and control trans-fats content in food. 

“These efforts, such as more effective legislation on the use of trans-fats and tobacco as well as public education to reduce salt intake, would help delay the onset of these diseases,” the bank said. 

The report differentiated between unhealthy trans-fats and good fats in the global fight against rising non-communicable diseases (NCD) like high blood pressure.

Children at risk

Two epidemics are currently raging in poor countries---the all-too-familiar hunger and malnutrition and a more pernicious one, obesity.  It afflicts 42 million children under the age of five, 35 million of whom live in third-world countries like the Philippines.

Alarmed, the World Health Organization has called for action to end the epidemic of child obesity by reducing marketing of unhealthy foods and non-alcoholic beverages to children.

WHO says children worldwide are exposed to marketing of foods high in fat, sugar or salt. This increases the potential of younger generations developing non-communicable diseases during their lives.

The WHO report says non-communicable diseases already account for 60 percent of deaths worldwide, or more than 35 million people.
 TV ads to blame

WHO officials cite poor diet as one of the four common causes of cancer, diabetes, cardiovascular diseases and chronic lung diseases, leading to more than nine million premature deaths. 

Palantina Toelupe, director-general of health of Samoa, a small island state of 180,000 in the Pacific, says:

“We have no way of competing with multi-nationals on the media with regard to advertisements and the influence that they impose on our children.”

The idea to make oversized passengers pay higher fares may work because it impacts particularly fat wallets.(E-mail 

Saturday, April 6, 2013

How the paths of Doy and Ninoy converged at Edsa

By Winston A. Marbella

(Editor's Note: This piece was sourced from historical documents at the Salvador H. Laurel Museum & Library, which was opened to the public recently with the launching  of Nick Joaquin's book,“Doy Laurel in Profile.”)

At the peak of its power, the Roman Empire liked to boast, “All roads lead to Rome.”   The same feeling of euphoria  engulfed everyone at the climax of the Edsa People Power Revolution in February 1986.

But while the road to Edsa seemed historically inevitable, many separate paths had to converge into a confluence of events that made the restoration of freedom and democracy possible.

The watershed event was the proclamation of martial rule in September 1972 and the incarceration of opposition leader Ninoy Aquino together with many others.

Ninoy's boyhood friend, Salvador H. Laurel, would pick up the opposition torch and lead a lonely struggle to fight martial rule.

Many opposition leaders thought it was an impossible dream and opted to sit out the  local elections called in 1978.  From jail, Ninoy put together an opposition team to run in Manila.

Former Rep. Teddy Locsin Jr. would recall at the opening of the Laurel Museum last Jan. 27 that Doy had organized the “noise barrage” on the eve of the elections – to tell the world how the Filipino people felt, even though they knew their votes would not be counted.

Locsin spent that night in jail together with several Laurel children, he told a rapt audience at the Laurel museum in Holiday Hills in San Pedro, Laguna.

Boyhood friends 

Ninoy's and Doy's paths would cross many more times in the struggle to end martial rule.  Sons of prominent political families, they had forged a friendship that would last a lifetime and later extend to Ninoy's widow, Cory Aquino.

After the second world war had ended, Ninoy was to tell Nick Joaquin in his book on the Aquinos of Tarlac, that the only friend Ninoy had was Doy Laurel.

The boyhood friends would pursue different paths – Ninoy in politics and Doy in private law practice.  Their paths would not cross again until they both got elected to the Senate in 1967 – to six-year terms they would not finish because martial rule would intervene.  

For Doy Laurel, the road to the Senate – and Philippine history – would begin in a small path that seemed inconsequential at the time.

In 1966, Justice Roman Ozaeta, president of the Philippine Bar Association, requested a young private lawyer,  Doy Laurel, to handle a case for free.  

Shaping history

Thus began a series of seemingly unrelated events that would reshape the nation's history.

It became a celebrated case. Soon many people were going to Doy directly for legal assistance. Justice Ozaeta asked Doy to organize the Citizens' Legal Aid Committee (CLAC) of the  Philippine Bar Association to cope with the growing workload. 

Doy handpicked “the best and the brightest” lawyers to help him. Then came the case of Parisio Tayag, which put CLAC on the map.

Murder in the plaza

Tayag was a poor jeepney driver in Dinalupihan, Bataan.  One day he got involved in a minor traffic accident.  The traffic policeman tried to shake him down for three hundred pesos.

Tayag had only thirty pesos. He offered it to the policeman. The cop refused. One word led to another. The policeman drew his gun.  Tayag drew a knife but fled when the policeman aimed at him. 

A chase ensued.  The policeman was joined by five other policemen.  They cornered Tayag in the town plaza and shot him dead.  It was high noon.

Tayag's widow, pregnant with their sixth child, lost her baby and her mind.

Excessive force

In court, Doy argued that the policemen used excessive force --- they could have easily overpowered Tayag.  The court convicted the six policemen.  

Within a month, Doy's “band of brothers” had more than 200 free legal aid cases to handle.  Soon CLASP was born --- the Citizens' Legal Aid Society of the Philippines.  

Before long, CLASP had 52 chapters all over the country. On its first year, it grew to 750 volunteer lawyers.

But the volunteer lawyers soon realized that new laws were needed to provide long-term legal aid to the poor and defenseless.

They urged Doy to bring the cause of justice to the halls of Congress.  Soon there was a national clamor to make him run for the Senate in the elections of 1967.

Historic group

Doy was elected.  In that group of young senators were Benigno (Ninoy) Aquino, Helena Z. Benitez, Magnolia Antonino and  Lorenzo Teves. 

The new Congress opened on Jan.  22, 1968.  It was one of Doy's happiest days.  This was where he wanted to be --- in the hallowed halls where his father once stood to debate the burning issues of the day. 

On Jan. 27, five days after entering the Senate, he fulfilled his campaign promise: he filed seven bills to ensure the poor of speedy and inexpensive justice. Five of the bills were passed into law and are now known as the Laurel Justice for the Poor Laws. 

But this group of idealistic senators would not finish their terms, for Congress would be abolished with the proclamation of martial rule in 1972.

Ninoy would be thrown in prison with other dissidents.  Later he would  go on medical exile to the United States for a heart ailment.  Murder awaited him at the Manila international airport on his return in 1983.

The once legal aid lawyer, Doy Laurel, picked up  Ninoy's fallen torch.  He would lead a lonely struggle to unify the Opposition forces.  

Many believed it was a hopeless cause.  But the Unido (United Opposition) won scores of seats  in the elections to the Batasang Pambansa in 1984. There was hope in Doy's impossible dream.

When snap elections were called in 1986, Doy Laurel gallantly stepped aside to endorse Cory Aquino as presidential candidate of the Unido.  Thus was set the stage for the People Power Revolution of 1986.

Cory Aquino would acknowledge Doy's s statesmanship as a “supreme sacrifice” that showed his selfless love of country.

(The Laurel Museum is open to student field trips. For schedules, see Facebook.)