Business World, 1 August 2016


The week of the 15th of July 2016 was made particularly joyous by the appearance of two blissful black swans. First, on that day was announced that two Pinoy high schoolers — Farrell Wu of Makati Gospel Church Academy and Kyle Dulay of the Philippine Science High School, bagged one gold medal each; and two others, Clyde Ang and Albert Patupat, bagged a silver medal each in the recently concluded International Math Olympiad (IMO) 2016 in Hong Kong. A gold medal in the Math Olympiad is only a stuff of dreams. Two golds and two silvers — would that we never wake up from the dream. For those of us operating in think space, this is bigger than a Pacquiao beating a Merryweather. Second, during the week, DU30 was reported to have told off an EU envoy who insisted on the Philippines’ strict abidance by its COP 21 commitment of a 70% reduction in its carbon footprint. His answer was “No.” This position he reiterated during his first SONA which I paraphrase: After you have achieved the pinnacle of development by burning of coal and polluting the earth’s atmosphere, you now want us to go “clean” and retard our own development? Both events, the two IMO golds and DU30’s “No” had one element in common: they are both cerebral cortex events. As the first is obvious, I would like to dwell on DU30’s “No.”

Ha-Joon Chang (2002) of Cambridge University in a controversial but celebrated volume Kicking Away the Ladder ridiculed the West’s imagined history of economic progress as anchored on free trade and laissez faire. His position is that when the USA and Great Britain were climbing the ladder of development, they were jealous practitioners of mercantilist policies using tariffs and other protective instruments to improve the prospect of their domestic industries. While there is some academic quibble about Chang’s reading of history or its placement of trade policy as central to the development project (e.g., Acemoglu and Robinson in a later more celebrated volume (2012) stopped at the Northian imperatives, viz., protection of property rights and enforcement of contracts as sine qua nons), it can be argued that laissez faire trade was the flagship advocacy of the World Bank and the International Monetary Fund in dying decades of the 20th century. What cannot be denied was that Great Britain and the USA embraced policies that they thought put the interest of the country first and that included mercantilistic protection for industries at home and an occasional use of gunboats to force potential markets into opening up to British woolens and Indian opium. Now that they have reached the heights, they would have late-comers eschew the policies (now denigrated in western Econ 141 textbooks as “beggar thy neighbor”) they once employed. They are “kicking away the ladder!”

DU30’s association with the left may have familiarized him with this narrative. But trade is only one arena where the “beggar thy neighbor” smokescreen rears its head.

Last week Indonesia was once again treated to withering attack from the west for executing four convicted drug criminals — a repeat of last year’s bashing when, over the deafening jeremiads from the West, President Widodo allowed the execution of eight convicted drug-traffickers. The spin favored in the West, as I observed then (see Fabella, May 2015) is Pisani’s (May 1, 2015, “Widodo’s Desperate Executions,” The New Yorker): “Widodo, however, is far too weak politically to have hesitated over these issues. He desperately needed to signal his strength at home, and he could most easily do that through the crack of the firing squad.” If you don’t act by the West’s values, you are weak if not in the head then in the polls. Conveniently forgotten is that at the same level of development, death by the noose or the ax was deemed natural and even biblical in the West. Expect a similar tsunami of denunciations when the Philippines reinstates the death penalty.

But how does Du30’s moral outburst make for a cerebral cortex event? The Philippines’ carbon footprint per capita (in metric tons) is the lowest and its renewables share the highest in East and East Asia (see Ravago et al., 2016). But even correcting for differential in current per income incomes, the Philippines’ is still the lowest. This is shown by Figure 1 (provided by Dr. Jeff Ducanes for a forthcoming paper):

This shows that our minuscule carbon footprint is not due to our neighbors being richer. It is due to poor development policy choices. Among countries with per capita incomes of PPP$5th-PPP$7th, the Philippines CO2 emission per capita is 5th of 11 countries. Predicted on GDP per capita, the Philippines per capita CO2 emission (0.86 tons) is only 61% of where it should be for an average country (1.4 tons), as is shown in Figure 2 (again thanks to Dr. Jeff Ducanes)!

We not only have income-poverty; we have power-poverty; and arguably the first poverty is due to the second. We can raise our carbon footprint 40% and still be a responsible global citizen!

Add the well-known fact that our renewables share (33%) in the fuel mix — already one of the highest in the world — it is not farfetched to conclude that reducing our carbon footprint would make no dent in global warning and would only raise the cost of power (already raised by 8 centavos per kWh since June 2016, thanks to fit-in tariff), thus exacerbating the power- and income-poverty. DU30’s “No” was not only forceful, it was eminently cerebral.

Indeed, it was a joyous week. Would that these blissful black swans turn white (and commonplace) in our future!