Economic Protectionism Will Never Be As Gorgeous As Economic Liberalization

This picture is an example of how economic liberalization is that gorgeous. This is Suzy Bae from South Korea and not from North Korea. She has served as a model for Samsung and not for Koryolink. She's also a model for Lenovo which is a Chinese-founded company where its current headquarters is located in Morrisville, North Carolina, United States. Do you think this gorgeous promotion would be possible through economic protectionism? The answer is no. Lenovo was founded in China last 1984. The 1980s was when Deng Xiaoping moved away from obsolete Maoist and Marxist views in favor of his policy of economic liberalization. Let's take a look at various reasons why economic liberalization is more gorgeous than economic protectionism.

Healthy-minded competition will make local businesses provide better products and services

Why do we get to enjoy foreign products from other countries? It's all about competition in the places where they are considered local products. I remembered writing about whether or not Koryolink will have a competitive advantage over Samsung. I talked about how Samsung which serves as South Korea's local smartphone has to compete with various companies like Nokia, Sony, Apple, LG and Lenovo. As I have used some Apple and Samsung products I thought about how each side kept innovating to keep selling. Samsung products can be viewed by some as more affordable substitutes to Apple's more pricy products. Even if I could afford Apple products but I usually avoid their really pricy items.

Okay, the Philippines may be stuck with 60/40 as a default rule but just think of what if Jollibee had no competition back in its home country. What if Jollibee didn't have to face off against McDonald's, Wendy's and Kentucky Fried Chicken to name a few of its competitors? Jollibee hit abroad in China, Hong Kong, Singapore, Vietnam, Kuwait, Qatar, Saudi Arabia and United Arab Emirates. If there was no competition against Jollibee then do you think that it would be forced to innovate? I thought of the number of items where Jollibee succeeds and fails. I want good fried chicken I go to KFC. I want some really good burgers? Jollibee is definitely one of the best burgers there is.

Why are most Filipino businesses stuck in limbo? As said no competition means no competitiveness. No one would strive to be competitive if there's no competition. The services of most Filipino businesses are stuck way back because of a lack of competition. Why do you think electricity, water and other necessities are so expensive in the Philippines? It's because of a lack of competition which in turn affects the supply and demand cycle. You have 7,107 islands and millions of Filipinos but you only have very few companies to cater to all their demands. The result is that when supply is down and demand is up is that prices will naturally go up. Also, the scarcity of supply means efficiency is being compromised in the process.

Foreign investors will force more Filipinos to become competitive. To say that no Filipino business is ready to go into the international market is a lie. Jollibee is an example of Filipino business that has the edge to go against foreign competition in other places. The reason why the oligarchy provides such lousy services is because they have no reason to improve. Do you think Globe and PLDC will want to offer better Internet service if there's really hardly any competition but each other? They wouldn't and it's stupid to want better services but hate economic liberalization. If more Filipino businesses will become more competent then the more the Philippines can benefit from exporting quality products and doing businesses (either by fair joint venture or full ownership) abroad which will translate to more revenues for the Philippines.

Instead of being a crybaby about foreign investment, any good Filipino businessmen take them as threats that can be turned into opportunities

In business there is the SWOT analysis which means Strength, Weakness, Opportunities and Threats. Every company must examine their strengths, weaknesses, opportunities and threats before doing anything.  Let's focus on the SWOT first since competing with foreign investors requires a good strategy. Companies seek to examine their strengths to enhance them and weaknesses to continuously resolve them. This also focuses on the examining two more areas of SWOT namely opportunities and threats.

It's safe to assume that people like Representative Neri Colmenares are pessimists. He has stated many times on media that if we allow foreigners to do businesses in the Philippines then it will destroy local businesses. Yes it will destroy local businesses if they refuse to be competitive. Colmenares only sees W and T in SWOT. Any good Filipino businessman sees all letters of SWOT where they view that foreign investors are both threats but they can also be opportunities. This is an opportunity to learn from the competitor, form a secret partnership with the competitor (ex. cartels) and to gain more services and customers from foreign investors.

Foreign investors may actually provide opportunities to get better services for Filipino businesses. This is the opportunity to improve one's business network. You might be stuck with stupid electricity from Meralco and bad Internet services from Globe and PLDC. You might be stuck with really lousy transportation services or a lack of it. If you had only one transportation service then think of how limited your network will be. But if you can get two or more then think of how your business can grow. More transportation services competing with each other means companies will have more choices. They could get the first company to do this task and the other company to do that task. Having better Internet, electricity, water and other services also means doing better business. Better Internet means developing faster networks to help keep in touch with one's customers in the long run.

Foreign investors can also provide opportunities to have more customers. When there's competition there's opportunity. You may be having a competitor left and right but so does your customer. If you have more than one service provider available (and they're all competitors) then your customer has competition to face. You could think if you sold rice, spices and vegetables by the wholesale then think about selling them to the foreign investors who need them. If your customer has a lot of competition then why not entice the competition to be part of your network? This in turn will help generate more revenues for businesses when there's healthy competition.

Weakening the ever-burdensome labor export policy with more employment opportunities for Filipinos in their homeland

I can't forget how I stated the irony of ultranationalistic OFWs. They think foreigners are evil but they work in foreign countries. They hate the idea of economic liberalization but they work in countries that benefit from it. So why are these people working in countries that benefited from free trade instead of countries like North Korea and Venezuela? Why are they working in South Korea instead of North Korea or in Chile instead of Venezuela? If their reason is for better pay then they should realize that economic liberalization is necessary to raise the minimum wage for any country.

The people of groups like Migraine International sure are economic neanderthals in some way. They want to end labor export policy (or maybe they're just pretending to) all the while they hate the idea of free trade. If you want to provide more jobs then take a look at how China and Singapore solved the unemployment crisis. They didn't do it by the "pambansang industriya" because that is just a sick man's fantasy. Instead, both China and Singapore both encouraged foreign investors to start investing and provide job opportunities for their citizens. It was through foreign investment and not pambansang industriya that first world countries became first world countries.

Since when has the OFW phenomenon ever allowed the Philippines to control countries where there are OFWs? It never worked that way because that's not how it works. Do I need to emphasize that W in OFW means worker and not warrior? If and if OFWs were helping the Philippines take over the world then why are OFWs not immune to the laws of certain countries. You could think of how the three drug mules got executed in China in accordance to Chinese laws. Guilty foreigners get punished in the Philippines according to Filipino laws. Edz Ello got kicked out according to Singaporean laws.

These foreign investors provide job opportunities for Filipinos. Even if they are foreigners but they will still be registered in the list of businesses who earn income in the Philippines. In short, they are bound by Filipino laws. This would weaken labor export policy which may be the reason why groups like Migraine and Makabobo don't want to liberate the economy. They may just be pretending to be against labor export but they secretly love it. If more Filipinos get more jobs then what purpose will these stupid activist groups have? They will lose their purpose as a result and the same can go for drug dealers.

The Philippines will become less reliant on other countries' governments since foreign investors in the country are obliged to follow Filipino laws

The fear of "colonization" in the form of foreign investment is leaving the Philippines in the economic dork ages. If they study the history of free trade they will realize these facts. Foreign investors are under the control of whatever country they do business in. They must bow down to the governments of the countries where they do work. Free trade isn't exactly free of rules either since every free country still has rules to follow. A government can refuse certain foreign companies that don't do well vs. those that do well. A government can still kick out foreign investors should they be found guilty of any offense that would require immediate lawful action such as deportation.

Have countries that benefited from free trade lost their sovereignty to foreigners? They haven't lost their sovereignty one bit to these foreign investors and they have maintained their independence as a nation. Go and check out first world countries if they have lost their sovereignty to foreigners. China is still an independent state. Singapore is still an independent state. Japan is still an independent state. South Korea is still an independent state. They have a lot of foreign investment from various places but all those countries bow down to them whenever they do business in those countries. It's all because free trade involves a healthy respect of sovereignty. You can do business in other countries with or without a local partner but you must still obey the rules of that country.

Here's an illustration of how sovereignty is still kept in free trade. Foreign investors who come to the country must bow down before the government. They must comply with registering to the Department of Trade of Industry, the Bureau of Internal Revenue, City Health the City Hall of a certain city and every other government office to secure their permit. If they break any of the rules they can't register even if they would be allowed 100% ownership. If they comply with the rules the congratulations their permit will be processed. If they fail to process any of the necessary procedures then they won't even get to start their own business. That doesn't even look like colonization by foreigners because this is foreigners under the rule of the Filipino government.

Since this would mean weakening the labor export policy then the Philippines would become less reliant on other countries' governments. There will be less need for Filipinos to beg other countries to allow them to work in their countries. These foreign investors should obey labor laws and treat their Filipino employees with respect or risk government action against them. Any abusive employee whether Filipino or foreign will not be tolerated. Both foreign and Filipino businesses are placed on the same field of accountability.

Keeping economic liberalization gorgeous should be done through strict but reasonable disciplinary laws like Singapore, Taiwan and Japan

Why some free trade governments like the United States of America fail is not because of free trade but a lack of strict discipline. It's just like why OFW families usually remain poor. Sure the OFW families themselves usually get higher income but what's the use of higher income if you waste it on nonsense? George W. Bush squandered all that money on warmongerning during his term hence the U.S. lost a lot of money in the process. The same can be said about some free trade failures. They have large sources of income but they squander it. Protectionism is not the solution but worsening the situation. Instead, there's the need to put strict disciplinary measures as part of good economics. That's why countries like South Korea, Singapore, Taiwan and Japan are doing better than the U.S. It's not free trade but it's misuse of funds that brought certain free trades down. The U.S. spent more than it could handle which made revenues it got from the benefits of free trade useless.

The Philippines can't progress even with free trade if problems irresponsible handling of funds will continue. Even if Noynoy Aquino uplifted economic restrictions last 2010 but it would still mean nothing if Butcher Abad would continue to operate using legalized theft. It wouldn't improve the MRT if people like Joseph Emilio Pabaya continue to mishandle funds. This would require more accountability with the money inflow from free trade. If there were strict guidelines in how to handle revenues and a wise budget then free trades themselves can stand. But it's also important to realize that with great power comes great responsibility. More money means there's the need for more accountability to how the money is used for national development.

That's why there's always the need to put a system of accountability for check and balance. It's time to stop using popularity-based systems and unitary systems. It's time to consider setting up competency based systems if you expect the Philippines to be competent. Free trade is better than protectionism but it should still be accompanied by check and balance. This also means people should always be made to follow simple guidelines as part of creating a productive workforce for the Philippines.


Popular Posts