Why we’re poor – Gerry Sicat’s take and Boo Chanco’s observation

In a sense it’s the fault of the pakialameros who find a way to make kurakot.

Gerry Sicat also thinks ‘inclusive growth’ is just another fad.  The hard work of economic growth is a battle between the powerless and the powerful where the latter have found a way to rig the rules against the former. Here’s what he thinks led us astray:

“Controls, tariffs, administrative processes all combined to encourage “rent-seeking” activities. These occurred because most productive efforts required government permits to be undertaken.

Monopolies, oligopolies, and political controls often resulted in incentives for bureaucrats to add their own “demands” as approving authorities to the costs of the processes. Moreover, these also led to enormous artificial scarcities.”

Sicat’s lesson is clear and I agree.  If we want the local economy to grow, we need Schumpeterian market discipline and level playing fields.  The ‘market’ will bring in innovation and choose what’s best in terms of cost effectiveness and what folks want produced.  This eminently makes sense now that we’re really not that poor, as pointed out by Boo Chanco.

It’s also as simple as that, where ‘level playing fields’ means that the judiciary is incorruptible, and legislators stop making all sorts of useless papogi laws.  The Executive can and should follow through with enforcing apparently unenforced laws against unfair trade and monopolies, or simply not tolerate rent-seeking as in the way the Renewable Energy law is being implemented. If the three branches of government worked thus, we may well see a Philippine tiger worthy of the name.

At the individual level where we ask ourselves what we have done lately for the country (a new fad among the CSR and advertising sector), we can do something quiet and powerful, an almost Shakespearean thing — banish and shun all those folks who ‘rent-sought’ their way to wealth. And of course we know who they are, except we can’t name them: They’re the quick-trigger libel plaintiffs in these parts.  Here, there’s nonetheless a simple moral lesson: The key to growth and development is simple.  We call it Deadma.  That’s not a fad.  We’re experts at that.

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4 thoughts on “Why we’re poor – Gerry Sicat’s take and Boo Chanco’s observation

  1. rent-seeking happens only because govt allows it….in the West, administrative bodies task to regulate business work the way they should, more often than not (in the US, the Bush years would be an exception)….

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    1. that raises other questions: why do public officials permit/condone/promote rent-seeking? why don’t the media raise an infernal ruckus about it? why don’t the voters ‘kick them rascals out’ at election time?

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  2. The biggest stumbling block to growth of labor intensive industries or all industries for that matter is energy cost. While most manufacturers are able to keep labor costs stable at around 5%, energy costs hover from 3 to 10 percent of total production cost. Raw materials is a mere cost-plus pass on.

    It is difficult for an industrialist/investor to bet his bottom dollar on a risky venture that would competitively price his product and make just enough to cover the cost of money.

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