The Society of Honor by Joe America

In this blog, I seek to develop a set of understandings about how the Philippines works as a nation. Is there a way to improve the productivity of the Philippines? The blog is another case of JoeAm thinking out loud, and writing about it.

A puzzlement: what kind of government is best?

One puzzlement for me has been trying to figure out which is best: a strong central government or a vibrant federated state. In a federated state, decentralized power is given to local governments and they get most of the nation’s progress done through their independent authority and initiatives. Revenues are assigned locally to support these initiatives.

If you try to describe the Philippines, it gets a little bizarre, for it is run mostly from the center, but some authorities are decentralized. It also is not exactly democratic in the American prototype. Although it is called a republic (meaning the people elect the leaders), it is considered by many to be “feudal” because it is controlled by a small group of moneyed power barons who alternately use the poor to get elected and then abuse them to build haciendas all over the world. Voters are generally along for the ride. Well, for sure these voters are culpable, for it would seem that they can’t discern that legislators require different skills than boxers.

Many of the heads of local government units (LGUs: provinces, cities, municipalities) run their own fiefdoms, selling favors like priests used to sell salvations. “Give me P5 million or a condo unit and you can have your permit.”

Like, they are super-fixers.

We ought to issue capes.

The epiphany over the dirty dishes

Well, as often happens, enlightenment came to me at a most bizarre moment. I was washing dishes. The sunlight slid gloriously through the drapes at the same instant that it struck me that Filipino fiestas are essentially decentralized American-style Thanksgiving holidays. Warm, food-oriented affairs where Filipino families come together and embrace everyone within reach. It is futile to try take that bonding out of the government archetype, or even try to work around it.

That settled it. The Philippines is naturally a decentralized place. I mean, I could have looked at a map and 7,000 islands and seen that. Or counted up the 114 different languages or made note of all the local dynasties locked into place like dukes and an occasional duchess. But it took washing dishes to reach that majestic epiphany.

So then I had to deal with the problem, okay, decentralized hereabouts seems to mean divided and argumentative rather than unified and working for the good of the WHOLE nation. A strong whole nation is needed for defense and international relations, and to orchestrate finance, laws, and essential services that are above the funding capacity of local areas.

Diversity can go either way. It can build enrichment if it is recognized and accepted. It can build dividing lines if competition or envy become unduly heated. The Bangsamoro agreement strives for the former to get away from the latter. The hodgepodge of cities doing their own thing in the greater Manila area is an example of diversity gone bad. Manila declares a truck ban, the port jams up, the economy takes a heavy hit, and neighboring communities suffer.

Coordination is sloppy and there seem to be a lot of big egos in the mix.

How do we actually manage a federation, anyhow?

So the question becomes, okay, if we accept that a federation is the natural composition of the Philippines, how do we best govern a diverse, more decentralized federalist republic? If every LGU head does his own thing, and it is not sophisticated in management style, we get a very disjointed, inconsistent, weak output.

Hints of how to improve decentralized performance can be seen in President Aquino’s pioneering work at injecting corporate disciplines into the government management methodology. He believes in planning over a long term,  in “metrics”, the numbers that tell whether progress is being made or not, and hiring people who have good technical skills in crucial roles: Abad in budgeting, Purisima in finance, and I’d argue Jimenez in tourism . . . a marketing pro who understands infrastructure is key to selling his product.

• technocrat: ˈtɛknə(ʊ)kɹat/ (noun) (1) An advocate of technocracy. (2) An expert in some technology, especially one in a managerial or administrative role. (3) An individual who makes decisions based solely on technical information and not personal or public opinion.

Technocracy is a government that is run by technocrats, people skilled in their fields who manage by the numbers rather than politically.

Emphasize that: rather than politically

How refreshing that is, to think of the Philippines in business for productivity instead of politics.

Open information is an aspect of that, and we can see in the budgeting arena that such transparency is a part of Secretary Abad’s work process. He was able to supply specific information about DAP budget items: who requested money, what it was for, how much has been spent to date . . . information that absolutely shut his critics up. Strong automated data gathering and crunching is essential for technocrats.

How to blend technocracy at the center with a decentralized nation

Well, in a decentralized republic, the tools that support a technocracy have to be pushed to LGUs  for their own improved management disciplines, and also so that the central government can do its job of advocating for a stronger union. We can’t have hundreds of separate data centers as LGUs do their own thing. We want integrated data centers and systems, and we want to be able to articulate “best practices” so that LGUs are constantly driving for improved performance.

Again, thanks to the Aquino method of metrics, we have the very beginning of what is needed in the form of a report that had a brief play in the news and disappeared . . . because it did not stir up enough controversy to have any languishing time in the headlines. That report was issued by the National Competitiveness Council (NCC) earlier this year.

The National Competitiveness Council

I really like this NCC, which has both public and private representation (like, businesspeople). The web site address does not beat around the bush: http://www.competitive.org.ph/

The thing is, the NCC states its top line metrics right there up front in the “about us page”:

METRICS

• BY 2016, Higher FDI (new investments of 3-4% of GDP), from US$1.7 billion in 2010.
• Double export growth to US$120 billion by 2016 with new products and services to account for 30% of exports.
• GDP Growth of 7-8% per year.
• Job Growth/Lower Unemployment Lower Poverty Incidence: 26.5% in 2009 to 16.6% by 2015.
• Growing C socioeconomic class (currently 8.6%); shrinking DE class (currently 91%). 

Visit the web site. I encourage you to do that if you want a picture of the Philippines moving in the right direction. Visit the site and prowl around. It’s candid and focused on critical needs like ease of doing business, concepts such as “national single window” for business applications, and raising the nation’s competitive standing around the world. It is not a self-worship web site.

Then click on “The cities and municipalities competitive index” .

The most competitive city is Makati and number 136 is Binan City (Laguna Province). Keep in mind this primarily measures BUSINESS COMPETITIVENESS, although it does also consider health and education. The three main categories that determine rankings, along with subordinate measures, are:

1. Economic dynamism (with subordinate measures for size of the local economy, growth of the local economy, capacity to generate employment), cost of living, cost of doing business, financial deepening, productivity, and presence of business and professional organizations).
2. Government efficiency (transparency score, economic governance score, ratio of LGU-collected tax to LGU revenues, LGU competition-related awards), business registration efficiency, investment promotion, compliance to national directives for LGUs, security, health and education.)
3. Infrastructure (existing road network, distance to major ports, DOT-accredited accommodations, health infrastructure, education infrastructure, availability of basic utilities, annual investments in infrastructure, connection of ICT, number of ATM’s, and number of public transportation vehicles).

Well, this seems to me to be so comprehensive as to be fairly meaningless and open to lots of legitimate reasons to argue that “it does not apply to my community because . . .”. For example, using the size of the local economy as a basis for rankings means small cities will always be ranked poorly. I think there are a lot of apples and oranges and pears and irrelevancies among the measures.

Number of ATM’s?

Why are we measuring that? Do we want our LGUs to be striving to get more ATMs? Or do we want them to strive to reduce the incidence of poverty?

Also, how is “financial deepening” measured? Is it measured statistically or is it a subjective assessment? If LGUs don’t “get it”, or have confidence in it, they won’t buy into the results.

A corporate planning guy’s perspective

I learned from the Japanese managers of our bank in California that a plan can be elegant for its simplicity and “pithiness”. It is crucial that people actually understand and work with the plan. There should be a clarity of focus that does not get lost. The biggest fault of most plans is ineffectiveness due to an attempt to be comprehensive.

A local government unit is different than a bank, but I suspect that with a little debate, we might be able to identify a handful of top-line measures that, if every LGU drove to  improve the numbers, the Philippines would change dramatically. Mine are different than the NCC’s top-line targets because I’m not interested in the “how” (like foreign investment), but the OUTCOMES we desire.

1. Number of wage-jobs per household base (excluding day labor or seasonal labor)
2. Average household income (annual)
3. Local tax revenues per household
4. Average net income per business unit (after expenses and taxes)
5. Percentage of households below the poverty line

These five targets would measure, respectively:

1. Creation of a growing base of stable “career” jobs
2. Wealth and well-being of families
3. Revenue collection efficiency
4. Wealth and well-being of businesses
5. Care-taking of the most vulnerable citizens

Perhaps these can be tweaked, but you can likely imagine how different this would be than today’s “play it by ear” methodology. The simplicity is something the press could grasp and report. That’s very important to leverage recognition for good performance . . . and to highlight failures.

You’d have the best of both worlds, an empowered group of local governments driving toward goals that would elevate and empower the nation. If an LGU were failing, it would become clear to that LGU’s citizens. The leaders would not remain in power long. Dynasties would thrive or end based on how they performed.

The technocratic federated Republic of the Philippines

An energized nation with local units all headed the same direction, and fully accountable for their performance.

The thing is, we are almost there thanks to the Aquino government’s push down this track. It does not take a new constitution. It takes a mind-set, defining how to gather and link data, and eventually pushing more revenue from national to local units to build the “federated” aspect of the republic. Skilled technocrats could get this done.

Next up

My next topic along this line comes from another epiphany that emerged during the edit of this article. Why in the world do we even need provinces? What VALUE ADDED do they provide? As near as I can tell, they suck value from the system by adding a layer of corruption and red tape and inefficiency. Not add to it by producing anything. So I need to dig into that to understand why provinces exist.

Back to the dishes now . . . in search of greater enlightenment . . .