Apec’s predatory underside

Let’s be defensive before we’re accused of being offensive. We are committed advocates of capitalism. Even of the kind that foists profits as ideal, relegating social responsibility, corporate citizenship and charity as offshoots following Adam Smith’s crusted cliché on the “Invisible Hand.” 

We likewise believe in globalized market-driven economies and a world economic order linked in a grand value chain.

Note how a small Filipino trader in Manila is able to import from China prepared dimsum, which he then repackages and distributes to a network of wooden carts along the University Belt. Who can tell that those dough-covered fishballs were not prepared in a local kitchen using Filipino labor? Given the relatively cheaper options, why, indeed, would the trader manufacture locally?

See how an Ethiopian cacao farmer where famine prevails is able to plant the beans that make up an upsized Frapuccino Venti that costs a mere few pesos but is the equivalent of a whole month’s pay for the Ethiopian farmer.

Both show upsides and downsides. Subscribing to globalization, however, does not mean we are blind to its evils.

The evils of globalization center on the specific point within the global value chain that a particular economy finds itself condemned to forever remain from a combination of myopic domestic economic policies and from the impositions of external forces, from international markets or offshore creditors inadvertently conspiring to perpetuate an economy to a specific value-chain level.

Let us flesh out where the Philippines economy might find itself in through inadvertent membership in a cross-economy club that foments the downsides of predatory globalization – one perpetrated by such aggregations such as the Asia Pacific Economic Cooperation (Apec).

Against the global value chain, let us see how we stepped into, with both eyes open, the victimization pit.

More than manufacturing, of late, we shifted our focus, and, indeed, a substantial amount of our capital, to the services sector where revenues are quick, start-ups even quicker and necessary capitalization money, relatively lower. While it alleviated some of our unemployment problems, we condemned Filipino labor to lower-end and lower-quality employment where skills are simple and critical thinking unimportant.

Where we need hard goods, we’ve turned into traders, content to import finished goods including plastic toothpicks. By so doing, we nailed another peg unto the industrialization coffin we’ve inadvertently been fashioning.

In the global value chain, we, thus, wallow at the earlier ends where margins are thinnest and revenues lowest, as most of our contributions are limited to sweat and unskilled labor. Government efforts are focused on such myopic endeavors and our educational systems are similarly tailor-fit. Essentially, within the value chain, we have very little in the middle where most of Asia operates and earns for themselves the fruits of inclusive growth.

To make matters worse, when we look at the globalization initiatives of such aggregations as Apec, these center on liberalization, deregulation and the privatization of institutions that should have domestic and growth-inclusive priorities, but do not. Their focus is on offshore economies where ours is limited to raw inputs and much of the values added enter elsewhere.

The combined effects turn predatory where foreign manufacturing simply treats the domestic Philippines economy as a consumer market paying the highest end-chain margins and yet earning from the lowest.

The call of Apec is cooperation. That is what Benigno Aquino III mimics without as much as understanding what cooperation entails. Apparently it entails condemning our economy where margins are low, and after that, at the end of the value links where margins are high.

As we have seen, not all of globalization’s brand of cooperation is beneficial for all. Some are forced to remain at the bottom of the food chain. Perhaps more are relegated to the blunt end because our leaders are pathetically ill-equipped to intellectually discern globalization’s profound predatory downsides.