Alan Greenspan speaks on protectionism

Local knee-jerk nationalists here have something in common with the conservatives in the United States and now, even with some Liberal Democrats. They are all advocating protectionism. If they could have their way, they would erect high walls that would isolate their countries from world competition. Never mind that such action would slow down the growth of their economies and cost their consumers a bundle.

Serious job losses in the United States have inflamed the current election campaign season. Politicians, like Sen. John Kerry, who should know better, have taken cheap shots at free trade to win precious votes. Such protectionist talk has alarmed Alan Greenspan.

In a recent public statement, the Federal Reserve Chairman suggested that Americans work to improve their competitiveness rather than isolate their economy. Americans should move up the value chain. This, they could do by acquiring skills that are essential in today’s competitive world of technology.

It would be more fruitful, Greenspan said, to consider reforms in the education system to ensure that workers with needed skills in technology are available. That would also ease some of the pressure that has driven wages of highly skilled employees up amid virtually stagnant pay for less-skilled workers.

Greenspan’s advice could have been directed to us. We will be unable to bring down our high unemployment rate for so long as our educational system is more concerned with mass producing diplomas than properly training graduates. We have allowed our educational system to deteriorate through the years. How can we continue to send more of our workers abroad if they are no longer as well educated as their parents?

While it is true that education takes the largest share in the national budget, salaries account for the largest share of the education budget. That would have been alright if the salaries covered compensation for teachers in the field. But our large education budget mostly covers salaries of a bloated bureaucracy, principally in the head and regional offices. We should spend money on actual classroom work instead.

"Anything that we do to enhance the skill level of the American work force is crucial to our long-term development and the stability of our society," Greenspan said. Again, he just might as well have been speaking about our situation. The only way to remain competitive is to make sure our people are well educated, well trained for the skills needed in today’s world.

It simply does us no good to denounce globalization and believe that it would go away if we demonstrate, rant and rave often and loudly enough. The world has become a global village, and there is no turning back. We are all interdependent on each other. What the Indians and the Chinese are doing will forever be part of every nation’s economic equation. In this context, it is the most efficient producer that flourishes and survives.

Economist Paul Krugman said as much in reaction to the scary protectionist talk that is sweeping the United States. It is as true as ever, Krugman said, that the US economy would be poorer and less productive if we turned our back on world markets. "Furthermore, if the United States were to turn protectionist, other countries would follow. The result would be a less hopeful, more dangerous world."

But Krugman admits that free trade has its problems and this is why governments must be ready to provide safety nets to allow for a smooth transition. When I was covering our own Senate in the mid-90s, I heard then Sen. Gloria Macapagal Arroyo sponsor the ratification of the GATT treaty and she emphasized the importance of these safety nets. She couldn’t have forgotten so soon.

Economists like Krugman support free trade but they also urge governments to have those safety nets in place to help those who may be left behind in the transition. It’s bad economics to pretend that free trade is good for everyone, all the time, Krugman says.

"Trade often produces losers as well as winners. The accelerated pace of globalization means more losers as well as more winners; workers’ fears that they will lose their jobs to Chinese factories and Indian call centers aren’t irrational. Addressing those fears isn’t protectionist. On the contrary, it’s an essential part of any realistic political strategy in support of world trade."

Krugman observes that first and foremost, we need more jobs...Imports and outsourcing didn’t cause that shortfall, but if the job gap doesn’t start closing soon, protectionist pressures will become irresistible. Beyond that, we need to do much more to help workers who lose their jobs. "The point is that free trade is politically viable only if it’s backed by effective job creation measures and a strong domestic social safety net."

This is the kind of food for thought our national leaders should have and act on. For us, we have the opportunity to take the first step this May by really voting for change...an honest to goodness fresh start.

Rats In Boracay Resort

I got this e-mail from a disappointed California-based Fil-Am family who vacationed in Boracay. They found rats in their resort room. Now I feel better about my problems in that resort in Bohol where I only had to contend with mosquitoes, ants and karaoke singing Korean tourists.

I forwarded this e-mail to the Department of Tourism but got no response. As I said, it is time that the DOT strictly implements standards. This particular Boracay resort is supposed to be high end. How can we get going with our tourism program if we take no effort to adopt international standards? I don’t have enough space so I will just pick the salient features of the complaint.

Margaret Magat wrote that on the evening of Feb. 29. 2004, after a long day of travel, her family checked into this resort owned and managed by a foreigner. She and her American husband (and her aging parents) were looking forward to a peaceful respite for three nights and four days. They were placed in a room called The Butterfly. The horror story starts.

"Rather than having gentle creatures like the name implies, we were horrified to be under attack from not one but at least five rodents. As we unpacked, we were shocked to see several vermin emerge from a hole in the wall. They headed to our suitcase, and swarmed over it. They chewed through a sealed plastic bag of crackers."

Margaret continues her story: "My husband shooed them away, and the vermin squeaked and made lots of squealing noises. They returned after a few minutes, and were extremely frightening with their aggressive behavior. Fearing for my health and safety, I screamed for help. My husband went to the front desk and returned with the guard, who witnessed the vermin exiting from a hole in the wall. Then the reception employee, Rose Anne, came and also witnessed it."

They asked to talk to the foreign owner "who arrived surrounded with a strong smell of alcohol and with bloodshot eyes. First, he denied there was a problem with the room, claiming that we are the first to complain after 12 years. Later, we found out from employees that there have been many such incidents. Because he remained disbelieving, we brought him to the room where he continued to deny the problem, that is, until he saw at least one rodent. Only then did he say we have a point. But he answered rudely that it was basically our fault, as we brought food with us (we had crackers in a sealed plastic bag that was gnawed open in less than one minute)."

The worse part is, the foreign resort owner "also insulted the Filipino people, claiming the rodent is an ‘indigenous mole’ and that typical Filipino houses like our room have such creatures in them. He denied that they bring disease and claimed that they were clean, harmless creatures and we were making a big deal of their presence."

Paging Obet Pagdanganan. The association of Boracay tourism establishments should also police their own ranks. That foreign resort owner has no stake in seeing our tourism program succeed in the long term. We are killing local tourism through sheer neglect.

Men And Computers

From fifty-something Dr. Ernie E, here’s today’s contribution to your laugh quota for the day.

Q: Why do men love computers?

A: No matter what mood they’re in, they can still get a floppy in.

Boo Chanco’s e-mail address is [email protected]