Having explored the first layer of The Ultimate Poverty Framework™, we now move on to the three key classes of management imperatives relevant to building wealth (and extricating one’s self from poverty):
:) Securing and growing our revenue base.
:) Creating and increasing the value of our asset base.
:) Controlling and managing our cost base.
Whether as an individual, a business enterprise, or an entire nation or society, the march towards progress can be seen as an exercise in gaining mastery over each of the above three management imperatives. As such, these three imperatives form the next layer of our framework.
As individuals, we want a stable livelihood with a favourable outlook in terms of how we earn progressively more income as we engage in it. We also aspire to be well-regarded through, say, good grooming, wearing fashionable clothes, and being generally well-mannered. We do all this while at the same time ensuring that we live within our means.
Business enterprises for their part engage in their trade by carving out a niche for itself in the market, building a brand and enriching its shareholders, while increasing profitability.
And though made out to be some sort of noble metaphysical construct, nations — and their success or failure — are no less than the previous two driven by nothing more than the effectiveness of management across the three abovementioned imperatives.
When we regard the question of Pinoy-style Chronic National Poverty, this power-of-three structure becomes useful as a simple mutually exclusive, collectively exhaustive (MECE) scorecard (for that matter, The Ultimate Poverty Framework™ itself in its entirety possesses the property of being internally MECE ;) ).
So consider at a national level.
(1) A revenue base derived from its international and domestic commercial operations;
(2) An asset base consisting of its aggregate production capacity, economic, intellectual, and cultural equity, and natural resources; and,
(3) A cost base accounted for by population and the rate at which it depletes resources as it consumes.
[A testament to the brilliant scalability of this framework! :D ]
Along the lines of the above three, we can cite a few things indicative of the overall risk profile of our society as an on-going economically-viable entity.
Revenue base:
- More than 10% of the national economy is derived from remittances of overseas workers.
- Philippine manufactured products and services are undifferentiated, lack a robust value proposition, and therefore merely compete on price.
Asset base:
- Food production and distribution capability is shot. We depend on importation for a large chunk of our supply of the national staple and corn imported from halfway around the world is tonne-for-tonne cheaper than the same commodity sourced from Mindanao.
- The value of our human capital is being eroded by progressively degenerating standards and affordability of education as well as absentee-parenting brought about by increasing OFW-ism.
- Lack of imagination and originality remains a world-renowned trait of the Filipino.
- We are known for the natural beauty of our islands (our man-made stuff however, tends to be known for the opposite). Trouble is, the continued destruction of this natural beauty is accounted for by the mere existence of Pinoy society on said islands.
- Manny Pacquiao at the moment accounts for 99% of Philippine brand equity. Talk about all our eggs in one basket! Beyond Manny Pacquiao, the concept of The Filipino remains associated with utter uncoolness.
Cost base:
- Filipinos are proliferating in unproductive numbers.
- Wastage due to poor infrastructure, bureaucratic inefficiency (including corruption), and lost opportunity (due to behaviours accounted for by our Heritage of Smallness)
Let’s say the above comprises the Executive Summary of a Prospectus of the island nation known as “the Philippines”. As an astute capitalist looking to invest one’s time, resources, and physical health, ask yourslef this question:
Would I invest in the Philippines?
At the end of the day we are all capitalists. We evaluate risk to and returns on our investment — whether they be chunks of our short time as energy-dissipating structures on Earth, intellectual capital stored after slogging through 5-6 years of an engineering course in the State University, or emotional stamina expended on believing in ocho-ocho “revolutions”. Every day is an exercise in constantly re-evaluating courses of action. Fight or flight? Do the same thing or try something different? Focus on no-results crap or on stuff that directly correlates with safety and quality of life?
We are all investors.
That is why when we step back and regard the society we have built for what it is…
A society that relies on soliciting the sympathy of the altruistic and heroic rather than on EARNING the confidence of the shrewdly enterprising.
… we are left with a sour taste in our mouths.
Do we want to be such a society?
Do we want to continue…
[...] expect[ing] heroic efforts from the few and continued mediocrity from the majority [.. and ...] expect[ing] the low product of the majority to be subsidised by the execptional output of the minority[?]
[See full article from which the above excerpt was sourced here.]
Because if we do, then that pretty much explains 95% of why we continue to be a society chronically impoverished in just about all aspects of the word — in mind, in body, in spirit, and most definitely in moolah.
We can induce sympathy and empathy all we like — that favourite hobby of the impoverished mind that Pinoy society relies on for survival. But unless we truly understand the nature of the beast we will never build a society that by design succeeds in its efforts to prosper. For as the wisdom that Cocoy cites here expresses:
Design is a signal of intention.
This however comes with a very exacting condition that challenges us given the low-thinking-applied nature of our society:
[...] it also has to occur within a world and we have to understand that world in order to imbue our designs with inherent intelligence [...]
Kung baga:
No predisposition to design equals no real intention to prosper.
A framework is a starting point for design. And a good framework underpins good design. We can choose to keep our “debate” at the level of the tabloidesque, OR; we can step up and differentiate ourselves as a “collaborative effort” by focusing on elevating the quality of the national debate through the exchange of truly insightful ideas rather than senstaionalised but trivial factoids that are easily monopolised by “experts” who dwell in their comfy worlds of the verbosely pompous that has for so long dominated in that typically no-results way that traditional Pinoy approaches do.
It’s simple, really™
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From dictionary.com
in·fra·struc·ture (ĭn’frə-strŭk’chər) Pronunciation Key
n.
1. An underlying base or foundation especially for an organization or system.
2. The basic facilities, services, and installations needed for the functioning of a community or society, such as transportation and communications systems, water and power lines, and public institutions including schools, post offices, and prisons.
in’fra·struc’tur·al adj.
Usage Note: The term infrastructure has been used since 1927 to refer collectively to the roads, bridges, rail lines, and similar public works that are required for an industrial economy, or a portion of it, to function. The term also has had specific application to the permanent military installations necessary for the defense of a country. Perhaps because of the word’s technical sound, people now use infrastructure to refer to any substructure or underlying system. Big corporations are said to have their own financial infrastructure of smaller businesses, for example, and political organizations to have their infrastructure of groups, committees, and admirers. The latter sense may have originated during the Vietnam War in the use of the word by military intelligence officers, whose task it was to delineate the structure of the enemy’s shadowy organizations. Today we may hear that conservatism has an infrastructure of think tanks and research foundations or that terrorist organizations have an infrastructure of people sympathetic to their cause. The Usage Panel finds this extended use referring to people to be problematic, however. Seventy percent of the Panelists find it unacceptable in the sentence FBI agents fanned out to monitor a small infrastructure of persons involved with established terrorist organizations.
First the framework drawn out above is noteworthy entirely for the effort…
However the substance reveals an almost total ignorance about the differentiation between economy and business.
Productive capacity is not the machinery itself.
It is the stage of a society wherein the productive forces (human capital) have achieved a certain degree of skills using natural skills and science to create capacities.
It does not happen by itself.
In the study of economic theory the reality is political economy. The ideal is efficient market economy.
I strongly suggest you go back to the drawing board.
You do remember the bronze, iron, steel and now digital age don’t you?
Generally speaking the Indio is still at the clay age.
i have a question about your bigger objective:
you have mentioned before that the key constraint in the philippines is cultural. yes?
so your prescription is basically: “stop doing the thing that i’m criticizing you about”
Telling people to “not be something”, while interesting, is ultimately useless. You can’t just tell people to be different and expect it to happen.
i’m sure u know this, so i’m waiting for some actual policy recommendations…
Heeere we go…
J_AG your notes on the usage of the term “infrastructure” was itself “noteworthy entirely for the effort” you took to paste it in the comment box. :D
If my interpretation of your assertion that…
… is you telling me that I am mistaken in classifying capacity as being part of a nation’s asset base, well let me first highlight (in bold) a few key words that you use in the way you qualify the above assertion:
First a bit of ad hominem, if I may: I notice that you use the word “capacities” to define productive capacity. You shouldn’t really be using a word present in the term being defined in aticulating its own definition, dude.
But consider now the key words I highlight:
:D human capital
:D skills
:D science
These are all forms of capital that are developed and accumulated in a society AND THEN put to productive use — the kind that brings home the bacon sustainably and in a scalable manner. A skill, for example, determines ones capacity to perform to a given degree required to produce a quantity of value. The value of an asset is usually determined by the value of its return. That is why most engineering and business courses are quota courses in, say, the University of the Philippines. They command a premium because of the return that these courses provide on the time and money students invest in taking them.
And yes, dude, “it does not happen by itself”. Developing an asset takes effort and thinking.
Here it gets a bit more baffling as you introduce (or rather type in) a few “concepts” that you seem rather disinclined to elaborate on:
So, dude, let’s say that I will take you up on your “suggestion” and “go back to the drawing board”.
What is it then about these concepts “economic theory”, “political economy” and “efficient market economy” that you mention are relevant to re-framing my otherwise brilliant framework?
In fact, you mention that there is a “differentiation” between “economy” and “business” that I am apparently “ignorant” about. Which makes me a bit curious now considering that I am a bit confident in my own personal understanding of such concepts (so confident as not to require me to look these up in a dictionary and paste their definitions on a comment box).
So enlighten me. Please. :D
I thought you’d never ask, GabbyD! :)
Refer to this site where I articulate my Solution Framework and tell me what you think.
The Conclusion section of my book also provides some ideas on which direction we should be focusing on.
great blog my favorite benigno,
Since I am an entrepreneur that do not believe on working 8 am to 5 pm, my expertise to make profits rely on fundamental and technical analysis of the world’s market, the big BASKET.
Since my world has gone bigger compared to the world of my own people and my own family, I have determined that Philippines are supported with good indicators for a coming bullish market- we are an emerging market that requires a CONFIRMATION.
The confirmation that I’m looking for relies on management, experience and the skills of the policymaker. It’s been bearish for a while. I would like to see BULLs coming in. The bulls i’m talking about are the other investors who can provide employment to the many unemployed.
Other BULLS such as the activist and the GREAT pretenders must join. That’s what FV is all about.
I will consider Foreign direct investment as an indication for market reversal. In simple term, Chacha for the corrupts and No Chacha to those who are ignorant.I have no choice but to play the market according to my own will. Money will not matter.
If I will invest in the Philippines?, Sure but not to make profit but for HUMANITY. It will probably be the biggest investment of my life without considering my own life getting broke :)
Tomorrow , I will be sober. My mind may differ from what I wrote today :)
obvious ba na lasing ako? :) will see
more feedback from other BEARs and the BULLs.
benigno,
have you seen this Video on Chacha ?
it’s funny :)
so benigno, having mastered this framework and applied it to your successful company (presumably you are a ceo by now) what advice can you give to Manny Pacquiao? How should he invest his millions? Should he invest in the Philippines? or go elsewhere?
Differentiation:
There is a new toothpaste around its brand is “UNIQUE”,it is unique because it has Fluoride and Fluoride stops tooth decay.(not a joke)
There YOU GO!
You said you focus only on the Philippines,you highlight that flaw(/s) and you don’t care if it also happening all over the world,as long as you are talking only to the Filipinos,and you are asking them to recognize where they suck.
You are on the web my man, you have non pinoy readers. Or do you? You are also telling them,don’t go to the Philippines,they suck!
Your differentiation proposal is your website.
You show it by that big “BEG TO DIFFER” on many of your posts.Going to your website,you will find it somewhere there too.
To end this :let me quote a heckler in FV,which already took over as the resident heckler of FV from you:
JUWAN_D;
PARE PAREHO LANG KAYO……..
So much for differentation.
Lack of originality and imagination:
I heard it here from JCC,but obviously I heard it somewhere else:
TABULA RASA:there is none such.
everything we learned or heard somewhere,so nothing is really that original, paunahan lang yan sa pagtake ng credit at pagpatrade mark.
You must have beard that “it’s simple really from your dad or pre school teacher, when you asked them how to tie your shoes and they said: watch and learn,It’s simple really.
Then it stuck to your mind and decided to put a trade mark on it.
Ang galing talaga gumawa ng storya ng pinoy ano?
benigno is quiet today…he is probably busy with his multimillion dollar company..that or we are in for another set of powerpoint slides…
Hmmm, leytenian. If this is your approach then you probably wouldn’t be one of the first people I’d trust to manage my business.
What makes you think I “mastered this framework”, nash? I doubt if the person who invented the game of chess would have been able to beat Gary Kasparov in a match.
If I had a clue as to how best to invest money then I’d be lying on a beach in New Caledonia today while I pay Sharon Cuneta to endorse GetRealPhilippines.com in glossy TV ads placed by Saatchi and Saatchi all over the world.
Well, KG, you seem to have a rather fundamentalist concept of “originality”. But take Apple Computer — one of the most iconic of American brands. It commercialised point and click operating systems (which was originally developed in Xerox’s Palo Alto Research Center) and incorporated its version of this technology into its own brand equity. Microsoft was even more Hun-like in its approach when it successfully marketed an inferior version of the technology and still went on to dominate the industry.
Where these products “original” by your rather small-minded definition?
Maybe not. But each company had an original approach to turning these technologies into VAST fortunes.
Compare those achievements to these urban legends about a bunch of poor Pinoy sods who are considered to be the “original” inventors of things like fluorescent lighting and the first karaoke machines that we keep whining about. At the end of the day, it was the enterprising individuals and companies that built money-making and wealth-building systems (some people call them business enterprises) around these “inventions” that gets to buy the Ferraris.
And guess who, as usual, is the loser in the above stories. To them, only two words come to mind:
Tough luck.
As Sean Connery’s character in the brilliant movie The Rock pontificated:
Losers whine about doing their best.
Winners go home and fnck the Prom Queen.
- :D
I had that coming and I deserve that.
But of course I have a “motive”,and that is to get a response from you.
na inaamin ko medyo matagal na dahil kungdi nonesense ang mga sinasabi ko,my comments were spent defending you,explaining the obvious or whatnot.
Forget the times I disagree(without using Ben Kritz’s hierarchy of disagreement), let me go back to points where I agree.
Let me try to speak using your language.
Yah ,pinoy daw ang gumawa ng flourescent at Flores daw ang apelyido nito.
Sing-along,naunahan lang daw ang pinoy ng hapon.
Before I forget the water powered engine,pinoy din daw ang nagimbento.
Boo Hoo!
yah point and click was not invented by apple,but they are the ones who made the first move to make something of it,as they say; “Life Is What You Make Of it”.
Now that microsoft’s mediocre version of THE Mac OS: Windows.
Take the US out of the equation,during the advent of IBM compatibles said to be started by COMPAQ(again some will say it is debatable)greatly outnumber the machines using MACS. But Apple does not care, they have their captured market or niche.
to go a little bit extereme I will go to another defunct IT company ;the Digital Equipment Corp.They have an OS called OPENVMS,they claim it has no bugs for so long that it does not need upgrading UNLIKE MICROSOT, again thanks to their loyal users of their alphaservers,tumagal sila ng konti hanggang maabsorb ng compaq at eventually ng HP.
So tubong lugaw ang Microsoft dahil na corner nila ang halos lahat ng makina,even with the advent of OPEN SOURCE,Rival Os,rival rdbms softwares,Microsoft is here to stay, and Bill Gates is back to being the richest man in the world even with his exit from Microsoft.
in other words,correct ka dyan, benign0.
Ok correct ka sa originality pati na rin sa differentatiation.
Can the Philippines be run like a business?
Taking from what J_AG said na nadinig ko din ke HVRDS.
the difference between business and economics or the economics of doing business.
I thought J_AG out getrealed or out benignoed you for a while there,but nah,wala din naman syang nasabi kundi go back to the drawing board at ang pilipinas ay primitive dahil nasa clay age pa din.
I am interested about this so called difference between business and economics is, that not even HVRDS bothered to explain, all he did was remind me of my ignorance, mas matetake ko pa ang small mindedness kesa ignorant and stupid.
the economics of doing business.
Ang sagot ng mga farmers ay cooperatives,dahil wala daw silang access to credit from the banks.
Ang sagot naman ng iba ay microlending for microbusinesses. Pero ang nagyayari sa producto ng small minded ness na ito ay ang pautang mo sa unanag dalawang bwan lang babayaran at ang mga sumusunod na bwan ang pinautang mo pinambabayad na sa “bumbay” o sa 5-6.
I would love to hear this seemingly complicated vicious cycle turned into something really simple by you, benigs.
I hope it won’t be a headscratcher.
did, i misread you benigs? you are not self employed???so you mean to tell me benigs you are not in full time getreal pelefins evangelism?
how are we to follow the leader who does not do as they say?
..and oh about chess..the persians and the indians were (and are)great mathematicians…they new the iterations, how many possible ways a game can be played and knowing this it’s unlikely they were not in the habit of saying “mohammed, it’simple, really…”
Really, nash? You say the Persians and Indians “[k]new the iterations, how many possible ways a game can be played”?
Come now. There are more possible unique chess games than the total number of atoms in the known universe. So how exactly were you able to conclude what you just said?
And as to my personal circumstances, well, show me then how that determines the validity or invalidity of what I assert here. Does expressing am opinion about the Law, for example, require one to be a lawyer?
Real classy, dude. :D
ahh benigs,
i don’t think i will work for you. you will just exploit my talent and be underpaid. :) LOL
BTW benign0, I never thanked you for baptizing me as KG way back at mlq3′s; hanggang ngayon yun pa din ang ginagamit ko na pangalan dun.
ok, i used the wrong word; it should be the persians/indians were AWARE of the many iterations. i did not mean to imply that they KNEW the iterations..
well, you can go to business on your own since you are so convinced of your framework. the same way that a non-lawyer can defend himself in the court if he so believes he can pull it off
mea culpa.
“We are all investors” benigno
You have a capitalistic mind in a country that needs the socialistic mind. I’m sure many of us have studied academically between the difference. What i’m interested is to counter benigno’s capitalist framework :)
Benigno’s framework starts from analyzing the bottom without taking consideration the middle ( industry) and the very top ( health of the economy)- Bottom UP analysis.
For an investor, one must be able to analyze the market from both , TOP down analysis and Bottom Up analysis. Top down analysis is assesing the Health of the economy, the industry within that economy and the earnings to be made within that industry.
Let me complicate it even more. Earnings, average income of the population ( foot traffic- demand and supply) , competition, barrier to entry, exit strategy, and access to credit. Where should we start Benigno? What business are we in? What is the growth rate on that particular industry? How do inflation and deflation affects earnings?
maybe we should go back to Jon’s Limcap, He was more simple and specific. :)
i looked at the link, but i’ll let you summarize it in the future.
but to be clear, when you say:
Do we want to continue…
[…] expect[ing] heroic efforts from the few and continued mediocrity from the majority [.. and …] expect[ing] the low product of the majority to be subsidised by the execptional output of the minority[?]
for discussions sake, lets accept this: what is your alternative? We expect heroic efforts from everybody?
then, you talk about design… how do you design a society[!]? do your principles skew more to central planning, or to individual incentives?
finally… people are a cost [liability?, as in cash flow out?] but they are an asset too, when they are human capital… all factors of production have this dual nature [i.e. they earn money and consume resources], not just people.
Firstly I must apologize for using the fly paper approach top catch flies.
It appears I caught a huge one. The word infrastructure entered the English vocabulary as it was being commonly used in 1920′s.
“An asset base consisting of its aggregate production capacity, economic, intellectual, and cultural equity, and natural resources; and,”
This sentence betrays an absolute ignorance bordering on stupidity on the use of word economic in the sentence.
The author is obviously a major intellect in his own mind.
Any student aware about economics which is a high school subject in more evolved countries would spot the lunacy of that sentence.
Even the root word economy which became commonly used in the 15-16th century would be a tip off if one bothered to check.
Literally it came from the Greek word household /estate management. As societies evolved into larger communities (polity) It became known as political economy. The term micro and macro is a term for another day.
The Present is the Past. In economic management or accounting unlike business measurements can be done using the income (supply or labor value added) side or expenditure (consumption) side. As societies evolved, Three major players came to be, Owners of capital/production, government, management/labor.
In economics the use of the word production is not to be confused with the business use of the same. In an economy using the supply side for example the macro division of labor of the sectors have the productive sectors (physical production – agriculture sector and the industrial sector) The services sector is considered to be the non-productive sector since nothing physical is produced. In a domestic economy the major sectors agriculture-industry-services have to be linked and integrated which would be the ideal situation depending on geographical endowments. However even the formation of communities or states however is a product of history.
Asset management is a business process which is a part of the economy.
One should be able to diagnose also at what stage of economic development a country is to determine as much as is possible the cultural development of that country.
At the start of the 20th century the larger part of the world’s population lived on farms and along the seashore. Towns and cities held a small part of the population. During the American revolution New York City’s population was only 5,000.
A note of advice for the one who calls himself benignO.
You have spent time formulating your own take on the solutions for the Philippines. You forget, “Numb-Nuts,” that those who you criticize as culturally inferior feed, cloth and shelter 90 million people.
Those are the unnamed and faceless masses who make up the productive portion of Philippine society.
You want to initiate a cultural revolution in the Philippines however it was Lenin who said that for every revolution to succeed you have to defend it. So far you have been beating an empty can.
Based on your take on tackling the effects of economic mal-development which results in the widespread poverty in the country you still have a lot of milk on your lips. Metaphorically you are an intellectual pygmy.
It would be an unfair fight as you are totally unarmed.
Obviously you are a product of the mal-education of the population that based its schooling techniques in the rote learning process producing
people who simply regurgitate what they learned as knowledge without understanding what it is they learned or know.
Once again remember the present is the past for those that count.
Another small piece of flypaper for Numb-Nuts. Greenspan recently said this,
What the hell was he referring to? “Critical function structure…
: I found a flaw in the model that I perceived as the critical functioning structure that defines how the world works”
The maestro who conducted U.S. monetary policy found a flaw in his perception… Hey genius can you explain what he meant?
“Creating and increasing the value of our asset base.” benigno
Let me just break down this topic to its component to help you out benigno.
Labor force are individuals who are supposed to be working within our economy to produce goods and services from our country’s natural resources. Labor force components:
1. Size- 90 million POOR , almost naked :)
2. Growth rate: RH BILL may not work due to poor government implementation of skills. The needed short term result could become long term due to the ripple effect of corruption.
3. Productivity of the labor force drives consumer expenditures. eh, walang pera si mang juan to buy a barbie doll for her daughter. The barbie doll store will not make profit. supply and demand.
4. Skill Level- how educated they are or how good they are on crafts or making banana cue. Very good in boxing, singing and ocho ocho dancing. :)
5. Mobility- the ability to adopt to changing labor force condition or technologically savvy. Yes, the OFW are very successful in adopting new languages and making money not in peso.
As an investor, how do you make these people moving and working? What is the role of government? What is the role of the private sectors?
FACT: at least 60% of US GDP ( non farm revenue) comes from employment in the small business sector, employees who spend their income on consumption expenditures. almost 98% of small business in the US has an average employee of 3-25 people.
If only mang juan has access to credit and training, he will not wait for the fruit to fall unto his face :)
Mr J_AG, thanks for the rather fragmented and incoherent history lesson with a few ad hominems thrown in.
I’m still waiting and seeing if you are going to make a point at, well, some point. :D