Carlo's Think Pieces

Reflections of a Filipino in the Netherlands

Archive for December, 2011

Enough Jobs for People

Posted by butalidnl on 16 December 2011

There is apparently a job shortage in the world. It seems as if machines are replacing a lot of people in agriculture, industry and even services (See Why Workers Are Losing the War Against Machines) So, does progress mean that people are being out-competed by machines? In other words: are we headed (or are in) a situation where there are too few jobs to go around?

One approach to ‘solving’ the job question, especially in developed countries, is to make workers upgrade their skills. Farmers become agricultural managers and agri-machine operators, factor workers become processing engineers, etc. But let’s face it: up-skilling is not for everyone. So, unless we are prepared to have a large army of unemployed unskilled workers, this solution is not adequate at all.

Enough Work
The question of enough jobs actually boils down to there not being enough tasks that businessmen are willing to pay people to do. There are a lot of things that need to be done, but which are either done by volunteers, or don’t get done at all. It all is a question of economic arrangements. Or, put another way, it is a question of rearranging the market so that the market makes sure that there is a need for those other things.
Let us now look at some areas where there are plenty of jobs.

Urban Farming could put so many people to work, while at the same time be good for people’s health and the environment. People could grow vegetables, potatoes, even grain on rooftops, backyards and empty lots. But they don’t. And this is because there is no ready market for the products. People don’t buy that much vegetables and fruits, and when they do they buy these in grocery stores, not from a neighbor’s garden.

The government could stimulate urban farming by helping develop a market for the products. Ad campaigns could promote the consumption of locally-grown fruit and vegetables. The government could also help set up neighborhood vegetable markets. Also, it could provide technical advice and help for growers, e.g. cheap fertilizers and seeds. It would help a lot if governments declare that income from growing vegetables would not be included in the computation of income for food stamps or welfare benefits (up to a certain limit, of course). This should entice the very poor to take up farming.

At the same time, other kinds of food (especially grains and meat) could continue to be produced in the rural areas. These foods should be produced in an efficient and environmentally sound manner.

Recycling. Collecting and sorting recyclable materials is quite labor-intensive. On the basis of market forces alone, most recycling activities would not be profitable. This results in a lot of recyclable materials simply ending up in dump sites or incinerators.

People could collect recyclable materials door-to-door. This is especially good for things like furniture and appliances. And garbage processing centers need people to physically sort materials. A lot of people could work at recycling electronics – dismantling these to get reusable materials.

The problem with recycling is that it does not yet give a market profit. ‘Externalities’ (e.g. pollution, displacement of people, waste of water etc) in obtaining raw materials are not fully included in the market price for these raw materials. And the result of this is that it is much cheaper to simply dispose of things rather than recycling them.

But recycling does not only mean that vital resources are reused, it also means that much less gets dumped in landfills or incinerated. And this translates into a savings of government expenses for garbage handling.

Governments should step in and make recycling profitable, by imposing a tax on the importation of all raw materials. Or by granting tax exemptions on the operations of recycling companies. Or by charging a recycling fee upon sale of consumer durables, which would be collected by those who would actually recycle them (system is used by Netherlands). Or by stepping in and providing a market for certain minerals – esp. rare earth minerals. Or, a combination of the above measures. These measure would not be a distortion of the market, but merely a matter of internalizing the externalities of the production of raw materials.

Tailored’ Products. It is now increasingly possible to produce many things tailored to a person’s tastes, measurements, DNA and whims. And this is a great opportunity to get people to work. Even though mass-manufactured items may still be cheaper, people seeking quality will opt for made-to-order items. Medicines, for one, will be increasingly based on a person’s DNA – for maximal effectiveness and minimal side effects. When this happens, there will be a need for advisers in pharmacies who will help people get the right medicine variety for their illnesses.

Clothes will be more made-to-order, and they can be made quickly. People would just input their measurements from a file or chip, and specify designs and materials (also selected from various fashion databases), and then a CAD-CAM dress shop would instantly cut the cloth and human seamstresses will put the clothes together in a matter of hours. These shops could be located near airports or train stations, and a traveler could order their clothes before leaving home, and have them ready when they arrive. They would need a lot less luggage.

Fab centers with 3D printers could also make things like personal jewelry and household items. Already, it is possible to ‘print’ 3D objects made out of a single material. Soon, it should become possible to print using 2 or more materials in one product.
Fab centers could also be combined with Clothes centers. They could provide employment for many. In these new kinds of shops, you could also have a physical book produced (from an e-book database) or a CD burned.

The shops which personalize services and products would employ a lot of people. They would also increase the quality of products, and people’s satisfaction with them.

Governments could stimulate the growth of the ‘tailored products’ industry by establishing standards, extending technical support and maybe even initial wage subsidies.

Infrastructure Maintenance. The government should require that all buildings be maintained properly. There would be building inspectors who mete out fines, or order repairs themselves, on buildings. Badly maintained buildings should either be taken over by the government, or torn down, giving way to new construction.

As a result of the ‘maintenance directive’ a lot of companies catering to building and infrastructure maintenance will be formed, giving employment to many. The building supplies industry will also thrive. Good maintenance make sure that buildings and infrastructure get used optimally. In effect, it conserves the materials that went into those buildings and infrastructure.

Community Services. There are a lot of things that need to be done under the overall heading of community services.  Services could include helping people with the upbringing of children, from parenting seminars, ‘homework supervision, pre-school to teen programs.

Families in distress also need help. Those with ‘especially challenged’ members need help, as well as those with sick or invalid members. Dysfunctional families would need family coaches, and some families need help in managing their budgets.

Activities to help forge communities, and to get people to participate are also important. This would include inter-cultural interaction, settling disputes among neighbors, etc.

Governments often don’t fully appreciate the need for community services. This is especially felt in the tendency to cut down on ‘social services’. The government does not need to completely bear the burden for doing these things. What it could do would be to strengthen the community level networks and institutions that do these things. The government and businesses could put in money, but community members themselves should also contribute in the form of labor or cash.

Community services are necessary to maintain a stable social environment, which in turn helps make workers more productive.  A good quality of life will also help make the whole population able to respond better to any changes caused by environmental or market conditions.

Quality not Quantity
Machines will only make workers obsolete if the economic system continues to concentrate on producing ever increasing amounts of goods. This will lead, not only to making workers obsolete, but also the exhaustion of natural resources, and the lowering of the quality of life. But if governments aim is to maximize people’s culture and the Earth’s resources, the economy will continue to grow and employ people while improving the quality of life.

Recycling, maintenance and tailored products are things that seek to maximize the use of resources. On the one hand, there would be a closed loop for raw materials (minimizing extraction as well as garbage); on the other hand, what gets made is used optimally (in the case of tailored goods and well-maintained buildings). Urban farming maximizes both space and labor for producing food; and minimizes the use of fuel or storage facilities because the food is produced near the consumer.

These measures could be taken even without any radical change of economic system. It is only a matter of including some additional dimensions to the present system.

Posted in World Affairs | Tagged: , , , , , , , , , , | Leave a Comment »

Bill Against Call Centers?

Posted by butalidnl on 13 December 2011

In the US House of Representatives, there is a pending bill (the U.S. Call Center and Consumer Protection Act) that seeks to discourage companies from transferring their Call Centers abroad. [Bishop Introduces Bipartisan Bill to cut off Taxpayer Dollars for Call Center Outsourcers ] This law, if passed, threatens to lessen the demand for Philippine-based call centers. The proposed bill will penalize US companies outsourcing their call centers by cutting their Federal grants and loans.

No Effect
The proposed bill with probably not pass the US House of Representatives. There is a Republican majority there, which is pro-free trade and  pro-corporation. Outsourcing of call centers is a significant way of reducing operating costs of companies, and thus will be supported by Republicans.

Even if it passes, though, the law’s effect is likely to be minimal. It would be easy for companies to go around it. For one, a lot of US companies already have call centers abroad, or they hire the services of a BPO (Business Process Outsourcing) company. They will not be affected by a ban on ‘transferring’ call centers abroad.

Then, there are some companies which combine an in-house US-based call center with a call center based abroad. The more difficult problems are addressed by the in-house staff, while the routine questions are handled in the Philippines or India.  With this arrangement, a company could conceivably expand its overseas customer service staff without reducing its in-house staff.

Another way of ‘going around’ the law would be to have specialized US-based BPO companies get contracts from US-based companies to handle their customer service work. The BPO company then assigns Third World based personnel to do the Customer Service work.  This means that the BPO company is the one which outsources work abroad, and thus be deprived of Federal grants and loans, but that won’t be a problem for them.

Up the BPO Ladder
Call centers (also called ‘voice BPO services’) are the part of the BPO services which are the target of the protectionists. Right now, this comprises the largest part of the Philippine-based BPO services. There is the impression among many in the US that call centers in India or the Philippines are ‘cheap’ – in the sense of being both low cost and low quality. They do not realize that Philippine-based call centers are perhaps better than US-based ones in terms of quality; due to highly motivated Filipino agents.

But there are other kinds of BPO work, which are growing even faster than call-centers. There is the medical transcription work, which is the transcribing of medical records for US-based doctors. There are back-office operations (accounting etc) for US banks and other financial firms. Back office work is especially lucrative because of the time difference – Phil or Indian workers work on the transactions when it is nighttime in the US. Back-office operations are less language-dependent than call center work, and thus could be done for companies from countries other than the US.

There are also virtual tutors, remote publishing, virtual personal assistants, and a host of other virtual services which could also be provided by Philippine-based BPO companies. Eventually, all kinds of non-voice BPO will become the bigger part of Philippine BPO services.

Cut the Beef
Even though we know that Cong. Bishop’s proposed law will not have much of an effect on Philippine call center services, the Philippines should still express its concern at what is a protectionist act aimed directly at a key Philippine export.  If we do nothing, there could later be other laws that will be more effective.

The Philippines should tell the US that it will consider possible responses to this hostile act, in terms of restricting the entry of some US products to the Philippines in the name of protecting Philippine jobs. Preferably, these would be US service exports of an equivalent value – perhaps something like insurance, advertising or consulting services. We should also consider imposing extra levies on imports such as beef or chicken, or orange juice.

Philippine political leaders are known to be timid in relations with the US, and may not see such moves as ‘proper’. The public should make it clear to the politicians and technocrats in government that such ‘proper’ behavior does not serve the Philippines’ interest. The Philippines should flex its muscles whenever Philippine interests are in possible jeopardy. Otherwise, the US would simply trample on our interests at will.

Posted in Philippine economics, Philippine politics, Philippines, World Affairs | Tagged: , , , , , , , | 1 Comment »

Mobilizing OF Savings for Development

Posted by butalidnl on 8 December 2011

Overseas Filipinos (OFs) remitted a total of $18.8 B in 2010. Most of this money went to family expenses e.g. food, education, health care and housing. The question that gets often asked is: how can we utilize OF remittances for Philippine economic development?
Remittances are already being utilized, in two different ways:

OF Bonds
The Philippine government issues OFW Bonds that are supposed to siphon some part of OF remittances to help the overall national budget. These have relatively higher yields than ordinary government bonds. But the vast majority of those who buy these bonds are not OFs, but Philippine-based Filipinos.

Most OFs would not find OFW Bonds attractive. While the interest rate may be high in pesos; keeping their money in bank accounts abroad, or invested in foreign stocks could be more lucrative, especially when you consider that foreign currencies appreciate relative to the peso. Besides, there are also fears about their liquidity (or, how easily will it be to sell those OFW Bonds?).

OFs also set up micro-businesses e.g. tricycle, jeepney, taxi or sari-sari store. These are invariably run by their relatives.

There are often problems with relatives who manage these micro-businesses. They are not run in a business-like manner – vehicles are not properly maintained, they are used for personal purposes, funds are not set aside for buying replacement vehicles. So, the OF has to ‘invest’ again in a few years, or even regularly spend for maintenance.

These micro businesses are effectively given to relatives. They are not owned by the OFs. This OF ‘investment’ is thus limited to what they can afford to lose, to give away. The OF will keep their own savings (for their retirement, etc) safely in their host countries.

Ownership and Scale
The problem with either approach is that the OF does not have ‘ownership’ of their investment. In the first kind (OFW Bonds), the government can spend the money on anything it likes to; in the second kind (microbusiness), the OF cedes control to relatives. Thus, these investments do not really ‘feel’ as if the OF is saving for their future or for retirement. There is also the matter of mismanagement of funds by the government or by the relatives.

Ownership would mean that the OF has continuous control over the investment, and can even withdraw it when he/she decides to. He/she should have the freedom to get the best people to manage his investment, and to determine what happens with the money or any other benefit generated by it.  With continuous control, the OF would then be said to ‘own’ it.  The investment should also literally be in their name. When this is possible, more OFs could be convinced to invest their hard-earned savings in the Philippines.

Then there is the question of scale. An OF’s personal savings is usually limited, and it can only fund micro enterprises. In order to fund bigger businesses (small to medium sized) e.g. poultry, rice mill, grocery store, small factory, there need to be mechanisms by which OFs could bundle their savings.

Channels for OF Investments
There are a number of possible arrangements where the requirements of ownership and scale are fulfilled (in various ways and extents) and the OF can use them in investing in Philippine development. So far, though, none of these have really been developed.

Savings in Rural Banks. The rural bank can serve as an intermediary for OF savings for investment. The OF saves money there, and by agreement, the rural bank extends loans to the micro or small business of his relative. This way, the relative is forced to run his business properly, since he will be under the supervision of the rural bank.

‘Diaspora’ Funds. In this case, the OF saves his money in a Diaspora Fund (DF) based outside the Philippines. The DF extends loans to enterprises in the migrants’ home countries.

Mutual Funds. The OF could also invest in Philippine-based mutual funds that invest in Small and Medium sized Enterprises (SMEs). These mutual funds select SMEs that they invest in, choosing those that are well run and which just need a bit more money in order to expand.

The mutual fund could also specialize in investing money in ‘large’ corporations. It will then be a kind of portfolio investment fund in Philippine large cap stocks.

The OF only has a decision of being ‘in’ or ‘out’. Management decisions are made by the mutual fund’s managers.

Investment Fund Run by a Corporation or Cooperative. Some Philippine corporations (small or medium) could set up Special Funds, in which OFs can participate. The Special Fund will be put to a specific use, and profits distributed to participants regularly.

Shares of Corporation. OFs could also directly buy shares in a Philippine-based corporation, and exercise all the ‘powers’ of doing so. There could possibly be problems though regarding the nationality or residency requirements of those corporations.

It is the challenge that faces governments, NGOs and enterprises in the Philippines in the next few years to develop these, and perhaps more, forms to utilize the savings of OFs for economic development projects that go beyond the scale of a single family.

Posted in Overseas Filipinos, Philippine economics, Philippines | Tagged: , , , , , , , , | 1 Comment »

Green Plants and Philippine Education

Posted by butalidnl on 2 December 2011

A teacher I once had said that you can conclude a lot about the education system of a country by asking an 8-year-old child: “Why are plants green?”. Ask a Filipino 8-year-old (according to my teacher), and the answer will be something like: “God made it so.”, or “the angels work to make it green”. Ask a Japanese 8-year-old, and you will get a story that involves photosynthesis and chlorophyll.

It has been some time since I have been in school, but I think the Philippine education system is very much in the same place as it was in my time. Filipinos are generally taught creationism (in effect) first, and then science later.

A niece of mine was enrolled in an ‘exclusive’ Catholic school. When she was about Grade 5, she recited to me how photosynthesis works. It was straight out of the book, word for word. I wonder how much she really understood of the concept then.

How Photosynthesis Works
I don’t think many students in the Philippines go further than: “plants are green because they contain chlorophyll, and chlorophyll is green. ” If you really think about it, this is only a marginally better answer than “God made them green”. The “plants have chlorophyll” story sounds scientific, but it isn’t, really. A real scientific explanation should go into WHY chlorophyll is green.

The explanation of why chlorophyll is green could be done in various scientific levels. Let’s start with the first one: chlorophyll is actually a family of compounds which absorb light to produce energy. Chlorophyll A & B, the most common forms, absorb red and blue light, and not green. Thus, light reflected from leaves look green. In the Philippines, I think only BS Biology students could tell you that.

Of course, the story goes deeper. [second level] When sunlight hits chlorophyll, it emits an electron, which goes to make Adenosine Diphosphate (ADP) into Adenosine Triphosphate (ATP). ATP is the body’s ‘small change’ for energy. Elsewhere in the plant, ATP is used to make carbohydrates from water and carbon dioxide.  I suspect that BS Biology students don’t even get this far.

[There would even be another level of explanations which explain why the specific structure of the various chlorophyll variants absorb light at certain frequencies and not others, and the mechanism of how ADP becomes ATP, and how ATP is used to make carbohydrates. But this is too deep for our current purpose.]

Back to the first scientific level. Chlorophyll is actually a very inefficient way of turning light into energy. [and that is why plants only transform 1% of sunlight into plant material, thus ‘wasting’ 99%] Chlorophyll reflects green which is potentially a very good wavelength to get sunlight, which has a lot of waves (or photons) around the green part of the spectrum. Chlorophyll is actually one proof that life did not come about as the result of a ‘creator’ or ‘intelligent design’. An intelligent designer would have made plants absorb more light (instead of wasting 99% of it), making them black so that it would absorb all light. If green chlorophyll just so happened to have arisen by mutation, further mutations would just improve on it, instead of making a whole new and more efficient molecule. So, the imperfect (you may say defective) nature of chlorophyll shows that it is not the product of an ‘intelligent designer’.

Leaves become brown when the plant withdraws Magnesium from chlorophyll, turning it into a transparent substance. As a result, the leaf then would reflect red and blue, resulting in brown.

How Students Are Taught
The fact that Filipino students learn that” plants are green, because they have chlorophyll” (which is good for 8 year-olds, but not for university students) shows us how science is taught in the Philippines. Science is taught by getting students to memorize things, instead of getting them to understand processes.

Biology is a tedious subject, where students have to memorize a lot of things. They have to remember how plants and animals are classified, that sort of thing. This makes the whole subject quite boring and daunting. Instead, biology could go into the WHY and HOW species actually develop. And look at things like: polar bears adapting to climate change by mating with brown bears; primitive whales  surviving by swimming in the cold water near the north and south poles and out of reach of huge sharks (in the past, sharks were much bigger than they are today). Biology could be such an interesting subject. And this is the case for more subjects.

History could become interesting, if only it is taught like a series of adventure stories. Imagine the story of Magellan: the various intrigues in the Spanish Court and during their journey; the politics of Humabon and how Lapulapu outsmarted Magellan, and why Humabon was forced to massacre the Spanish; how Magellan’s slave Trapobana (Enrique) was the first man to circumnavigate the world, etc. It could be interesting; but instead, teachers have reduced it to a series of dates and names, in other words – to a boring lesson. Even Yoyoy Villame did it better than the schools, with his song ‘Magellan’ that we can easily remember.

Everybody who says that history is a boring subject, is just saying that they had unimaginative history teachers. When I was in the 3rd year high school, I had a teacher who made history into a set of stories; and I have been interested in history ever since.

Philippine education could be improved a lot by changing the way subjects are taught. While memorization cannot be totally avoided; they will then be in addition to the interesting stories behind them. And researches show that if a concept is made interesting, it is more easily remembered.

But instead of improving the quality of education, the government is now busy with the K12 program, which aims to increase the quantity of education. The plan is to add two more years of monotonous, boring lessons for the poor students, without offering a way to raise their intellectual level. I think that unless education is made more interesting, analytic, up-to-date, adding two years to it may do more harm than good.

Posted in Philippine education, Philippines | Tagged: , , , , , , , | 2 Comments »