Lessons to learn

America is at the beginning of a crisis that could affect the world. The choices foisted upon the public as to who will next head that great nation is, in a word, scary. Neither candidate is wanted, nor should be. Yet there’s no other choice.

If we thought Brexit was bad, this can only be worse. Both candidates have espoused an isolationism, a protectionism that goes against all the world has learned in the past century. Opening borders simply works. America is great because of its immigrants, all the way from the founding fathers.

President Barack Obama wrote a piece for the Economist (“The Way Ahead,” 10/8/16), and there’s much this country’s leaders can learn from it. He started by saying: “How has a country that has benefited—perhaps more than any other—from immigration, trade and technological innovation suddenly developed a strain of anti-immigrant, anti-innovation protectionism? Why have some on the far left and even more on the far right embraced a crude populism that promises a return to a past that is not possible to restore—and that, for most Americans, never existed at all?”

Obama went on: “It’s true that a certain anxiety over the forces of globalization, immigration, technology, even change itself, has taken hold in America. It’s not new, nor is it dissimilar to a discontent spreading throughout the world, often manifested in skepticism towards international institutions, trade agreements and immigration. It can be seen in Britain’s recent vote to leave the European Union and the rise of populist parties around the world.

“But some of the discontent is rooted in legitimate concerns about long-term economic forces. Globalization and automation have weakened the position of workers and their ability to secure a decent wage. Too many potential physicists and engineers spend their careers shifting money around in the financial sector, instead of applying their talents to innovating in the real economy. And the financial crisis of 2008 only seemed to increase the isolation of corporations and elites, who often seem to live by a different set of rules to ordinary citizens.

“So it’s no wonder that so many are receptive to the argument that the game is rigged. But amid this understandable frustration, much of it fanned by politicians who would actually make the problem worse rather than better, it is important to remember that capitalism has been the greatest driver of prosperity and opportunity the world has ever known.”

The Philippine Left might want to take note of that. No socialist regime has come even close to what capitalism can achieve, not just for the elite but also for the people in general.

Obama wrote further: “The world is more prosperous than ever before and yet our societies are marked by uncertainty and unease. So we have a choice—retreat into old, closed-off economies or press forward, acknowledging the inequality that can come with globalization while committing ourselves to making the global economy work better for all people, not just those at the top.

“Economists have long recognized that markets, left to their own devices, can fail. This can happen through the tendency towards monopoly and rent-seeking.”

This is certainly a problem in the Philippines, and understandably so because in an emerging economy there are just too few who have enough money early on to invest in major activities. President Benigno Aquino III’s foolish refusal to allow amendments to the Constitution accelerated this oligopolist shift.

President Duterte’s 6-year goal must be to pull up the poor—into greater wealth by giving them jobs. This is something the wealthy can best do, but they need to shift toward businesses that create large numbers of jobs—manufacturing, not shopping malls. College graduates must be equipped with the necessary skills, and the K-to-12 expanded basic education program enacted during the Aquino administration is a good start. Put more money into production, not consumption. It has long bothered me that the Philippine economy is consumption-led, not production-driven. Concluded next week

E-mail: wallace_likeitis@wbf.ph  Read my previous columns: www.wallacebusinessforum.com