Proceed with eyes wide open

By

IT

may be easy to be swayed by the accomplishments of the free market. It is also easy to swing to the opposite side, to be focused on the free market´s negative consequences, to a point of completely disavowing it or even actively opposing it.

As we build Dream Philippines, we probably should be smarter than to lean too much to any given side. We should put into play the best elements of the free market, such that it delivers for us the accomplishments it has wrought in many other parts of the globe. But we should be equally discerning in guarding and even actively fighting against some of the negative consequences that untrammeled free markets can bring about.

Francis Estrada is all for this smart balance. He continues:

“What did happen with globalization was a massive transfer of capital and purchasing power (via reserves) from the profligate developed economies to the “parsimonious” savers which the developing economies were, after burning their fingers in previous periods of excess. Global consumer demand has indubitably grown dramatically.”

The build-up of massive dollar reserves in many developing economies, the flow of savings or financial resources from these economies to the more developed ones, such as the United States, have brought various stresses and strains in many economies. The growth of consumer demand, particularly in developed economies, has created enormous profit opportunities in various markets. However, the stresses and the strains have also become very obvious, even in developed economies. Mr. Estrada continues:

“The combination of political turmoil in a number of countries (Africa, the Middle East and even parts of former USSR), the vastly lower standards of living in those areas and an abrupt globalization has created the volatile situation we see in Europe and parts of the United States today. One observes:

• “Social alienation in the “developed” economies arising out of sharpening social inequity (due to) a ´market system´ that is insensitive to declining standards of living of the former ´middle class´ and tolerant of an increasingly inequitable distribution of the benefits of enterprise; does not protect the middle class from the loss/diminution of jobs and opportunities as a result of globalization and illegal immigration; and is seen to favor those with inherited wealth and/or privilege.”

• “A public or state sector that is generally discredited as corrupt and ´captive´ to vested interests or simply incapable of being responsive.”

• “The formation of a “coalition of the neglected,” led by the following increasingly influential, right wing, populist, and isolationist political forces: Steve Bannon, et al. in the US; AfD, Methuen/Gauland in Germany; NF, LePen in France; LN, Salvini in Italy; PVV,Wilders in the Netherland; VB, Blok in Belgium; Orban in Hungary; UKIP, Farage in the UK.”

• “The ‘coalition of the neglected´ appears unified by the following common fears: globalization and the inability to compete with developing or lower-cost producing countries, ‘foreigners’ and ‘economic and political migrants.’ Moreover, these fears are exacerbated by inadequate training and education to address rapidly changing skill requirements and (particularly in the case of the US) inevitable changes in demographic composition.”

In many countries, the mood has darkened, and there is a greater tendency to bring up the draw-bridges. The sense has spread that the market has not worked as advertised and claimed.