Toward national ‘abundance’ (1)
OXFORD—The great philosopher Isaiah Berlin once famously distinguished between two types of people: the “fox,” who is a jack-of-all-trades and can rapidly adapt to new circumstances, and a “hedgehog,” who is supremely proficient in a single realm of excellence. Berlin also recognized a third possibility, which he saw in the Russian novelist Tolstoy: a singular genius who could also be tactically and intellectually adaptable.
We need leaders who can be both a fox in generating prosperity through policy adaptation and a hedgehog in fighting corruption and misgovernance. We need a new type of leadership precisely because we are entering a perilous “Age of Uncertainty.” Referring to how China and other rising powers are redefining the very physics of state power, and, crucially, the assumptions undergirding mainstream economics, historian Adam Tooze has argued, “[W]e are watching how the pyramids are [being] built right now.”
Throughout my adult life, I have repeatedly heard Western pundits assert how China is too authoritarian to spur innovation or that its ruling party is incapable of anticipating the infinite range of policy interventions and coordinates necessary to ”plan” a modern capitalist economy. Or that India is too unruly to become a serious power. Or that Iranians under a clerical regime are incapable of making advanced weapons systems and enriching their own uranium. Having looked at the actual achievements of all these nations, it is clear that shortsighted orientalist-libertarian analysis masked Western prejudice.
Across authoritative surveys, Chinese cities of Beijing and Shanghai and their top universities rival and even surpass American counterparts in scientific output and tech innovation. Studies by the Australian Strategic Policy Institute, Bloomberg, and Nikkei Asia, inter alia, show that China is already the dominant player in a vast majority of cutting-edge technologies—underscoring the remarkable capacity of authorities to coordinate, regulate, and incentivize mass-scale production of the most sophisticated products. China’s BYD and Huawei are already global leaders, with Xiaomi and others rapidly catching up.
China’s success, keen observers, such as Tooze argue, shows there is “profound uncertainty” over old assumptions about economics, “[a] profession [that] has just been devastatingly wrong [on the biggest questions of our era].” Closer to home, look at how Vietnam has rapidly transformed from an isolated, war-torn communist regime into a new global economic dynamo. It now boasts its own electric vehicle brand, 5G telecommunications, and, gradually, is even competing with the Philippines in the business process outsourcing (BPO) sector.
Traumatized by the disastrous legacy of the Marcos dictatorship, especially its failed support for “bonjing” industries led by cronies, our ”free market” economists have been largely allergic to even any discussion of proactive economic intervention. The reality, however, is this: even in our ”boom decade”—think of 2006 to 2016—the 40 richest families gobbled up three-fourths of all newly created wealth, which was mostly generated from retail, real estate, and other low-value-added sectors. The much-vaunted BPO industry, meanwhile, managed to employ only a few million out of tens of millions of underemployed Filipinos.
Looking at our low per capita income, the hard truth is that our services-driven economic model is broken. It can’t bring about prosperity for the majority of our folks—even if we magically eliminate corruption and other inefficiencies. What explains the success of nations as varied as China, Türkiye, and Vietnam in recent decades is their embrace of manufacturing under varying forms of ”industrial policy,” namely, targeted and performance-based state support for critical and high-value-added sectors, some of which have turned into global companies and national champions employing millions and generating billions in annual revenues.
Of course, industrial policy is not easy, and it’s prone to abuse, but not having it is far worse—as evidenced by the persistent ”triple evil” of poverty, inequality, and corruption in our country even during our best days of growth and anticorruption crusade under former President Benigno Aquino III. The good news is that, as Harvard economist Dani Rodrik has argued, we can learn from past mistakes, including Marcos-era ”crony industrialization” disaster—by adopting a more measured approach, which (i) focuses on specific sectors of interest (e.g., semiconductors); (ii) adopts stringent monitoring mechanisms to ensure targets are met and subsidies are not wasted; (iii) develops a more collaborative public-private synergy approach, which ensures the buy-in of top local businesses; and (iv) funds modern infrastructure and subsidizes energy to attract foreign long-term investments and make manufacturing profitable.
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richard.heydarian@inquirer.net
