Da Coconut Repablik

A Chronicle of the Da Pinoys and Da Coconut Repablik of Da Pilipins

Why the Philippines Must Dismantle Its Protectionism

Today is Labour Day and all of us are getting used to that special day.  It is true that the workers and the farmers are the backbone of our industries, we cannot function without them. They are the oil that keeps the machine running endlessly. Every year, these folks are demanding reforms in order to feed their families like higher wages. abolition of job contractualization and many others. We cannot deny that prices are soaring everyday and inflation causes depreciation which leads to the worthlessness of some values in our currency. Because of the poverty of the common workers, we cannot blame them why they are still believing that nationalisation and pure socialism will solve their hardships.

The reality is quite the opposite. The fall of the Communist states had already discredited these ideas. The remaining ones are forced to adopt policies to keep their pace with the rest of the world. The common worker, you may hate me because of this, is better off than his Industrial Age counterpart.  Still necessary steps must be adopted in this country. The standard of living of an average worker here is still lower his neighbouring counterparts abroad.

The apparent lack of large scale competition and few foreign investors are contributing factors to the lack or little action of the local companies regarding their employees’ benefit. The monopoly of the politicians and several big companies who refused to open the country are not only contributors to the poverty of the lower classes, but they are also making the life of the middle class mediocre. I suggest that we must open this country to foreigners as soon as possible. Why? Because I have three reasons:

1. History-  During the Pre Hispanic times, several city states became affluent due to to their outside trade with the foreigners such as the Chinese, the Arabs, the Persians, The Japanese and several other cultures in Asia. This trade exchange had brought new technologies to the natives such as the gunpowder, new methods of farming, duck incubation, cannons and other innovations. It had also contributed to the surge of immigrants who were primarily from China, India and Japan which their customs, cuisines and traditions had been quickly assimilated to the local culture . It had also introduced new religious beliefs such as Hinduism, Buddhism, Islam and others.

During the Spanish era, our trade was heavily restricted to few foreign ships, with the majority of our trade came from the Manila Acapulco galleon trade. The bureaucrats of the Spanish Empire were the main benefactors and almost all of the profits were in their hands. They were also in control of China’s hunger for silver until the 19th century during the time of the Opium Wars when the British had forced China to end the Canton system of trade. This kind of economic system is called mercantilism.

During the late 18th and the 19th centuries, free trade became a phenomenon. First championed by the British intellectual Adam Smith in his book “The Wealth of Nations”, the barriers of monopoly were almost destroyed for a time. The French Revolution and Napoleonic Wars had drained Spain’s treasury. To add insult to injury, the South American colonies fought and declared their secession from the Empire, leaving Cuba and the Philippines as the only major colonies of Spain.  This had forced the Spanish colonial authorities in the Philippines to open the country and the main architect for that was Jose Basco.

He established the Sociedad Económica de los Amigos del País, or the Economic Society of Friends of the Country, which revived the tobacco industry in the Philippines. He established the bases for the takeoff of the agriculture of Philippine exports with a tolerance policy towards the theoretically illegal, activity of the foreign retailers, mainly English and North Americans who went to Manila to complete their product shipments. He also made the colony independent, by freeing it from the control of New Spain, which is today Mexico. His reforms had paved way to the opening of the country in 1834.

The opening of the country in 1834 had transformed the Filipino society overnight. According to Nick Joaquin, the Philippines became one of the richest settlements in the Orient. As with trade liberalised, so did the spread of revolutionary ideals towards the educated classes. The books of Jefferson, Voltaire, Rousseau and other figures of the Enlightenment became common and they were widely read by the new class of people, the Ilustrados. The Ilustrados had threatened the power of the Spanish colonial authorities, as well as the Principalia, the descendants of the rajahs and datus.

They began as the Los Hijos Del Pais lead by Luis Rodriguez Varela, which later evolved to the First Propaganda Movement led by Jose Burgos, one of the Gomburzas. They had powerful supporters such as Governors Claveria and de La Torre,  Pedro Palaez and other prominent Filipino aristocrats and Ilustrados. They led a failed mutiny in Cavite which led to the execution and exile of the reformists.

You know what happened next. The Second Propaganda Movement, the exile of Rizal, The revival of the Los Hijos Del Pais as the Katipunan led by the Ilustrados such as Bonifacio, Aguinaldo, Luna, Mabini  and Jacinto, The Philippine Revolution, The Independencia and the fall of the First Republic. History itself had already dictated that the Philippines was indeed suitable for free trade.

2. Location-  The Philippines is in a very strategic location, we are indeed in the heart of Asia. We need to exploit these advantages to attract investment. As I pointed out on my reason #1, the rise of the city states and the Ilustrados were made possible by free trade. Several investors are ready to invest here, but they are getting disappointed every year because of the restrictive provisions of our outdated Constitution. It is the time to remove its clauses to attract more jobs in order to reduce the number of OFW’s, more opportunities and more companies that can offer better pay for workers. They can also help for our overall modernisation and development in the country.

3. Our workforce- The Philippines has a large English speaking workforce. Lee Kuan Yew even mentioned it in his book “From Third World To First”. Unfortunately, we chose to depend on remittances in  order to keep our economy afloat. but what if there are no remittances in the first place? Our economy will be probably in shambles. Lee Kuan Yew said that the professionals and the labourers from Philippines are equal or even superior to their  Singaporean counterparts. Other countries have also praised the same sectors.

It is the time to move forward. The brain drain of our society must stop. We need Economic Liberalisation badly in order to improve our standard of living, our infrastructure and almost everything else. It will be also a contributing factor to encourage the most competent labourers and professionals to work here again due to higher wages and more opportunities that these reforms will bring to us.

Actually if you will ask my opinion about job security, I agree with it. Every citizen has a right to keep their job as a source of income. I am also encouraging people to become part time entrepreneurs. They can become one easily because of the Internet. It will not only bring an alternative source of profit, but it will also teach people to become an independent and productive member of a community. I agree to abolish job contractualisation, it is just an another form of unjust labour practices.

If some of you are not convinced enough of my reasons, I can give you examples from history and our neighbours. Japan became a modernised country not only because of its culture of adaptability and openness to change, but also due to foreign investment. Singapore was poorer than us in the 60’s, but due to combination of the common Chinese trait for being hard working and its relatively free economic policies, they became developed in just a couple of decades. Malaysia has a similar culture to us but thanks to economic reforms which favoured liberalisation, they had elevated themselves 6 times higher than us. Vietnam also did the same in order to survive. Indonesia also did the same. I can even mention China here, but you are too common with that success story.

Some radicals are still clamouring to improve our industry than opening up, in a fear that we will become a client state or a puppet. I usually shrug off their hysteria. I always said that the Industrial Age was already over and the Information Age has revolutionised everything. The emphasis had already shifted from factory production to foreign capital. Contrary to their views, we had a manufacturing base but it had slowly died a natural death after the elimination of the trade barriers.

These current radicals from the Left and Right are crying over spilled milk to  return the barriers that the world will only reply to us with the middle finger. We need to be ready for these kinds of reforms.  We need to accept it. I want the Philippines to progress. It is 2 years away before the ASEAN Charter that will integrate the member countries to open up their doors to each other.

We had tried and failed the slogan “Kung kaya ng iba, kaya din ng Pinoy”. Nationalisation of industries will not help us either, rather it will drag us further to stagnation. We need to become realistic undeterred by ideologies. We do not need polarised policies regarding our economy, we need pragmatic solutions. This is the result of our apparent refusal to change and our blind nationalism.

If you still want the country to remain as a pathetic state and a Sick Man of Asia, do not support this. If you want to destroy the monopoly of the decadent oligarchy and for the better future of the Filipinos, support Constitutional Reform. There are several things that needed to be fixed here. It will not magically erase our problems, but it will considerably improve our lives and the development of the nation. It is not only for the benefit of the middle class, but for the benefit of each and every citizen of this Republic.

Until then, I see you guys. I am not a socialist but I somewhat love this song

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