How to stop or solve the poverty in the Philippines?

[foolonthehill]

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Paradigm
So, I ask you: Did your brain stop working immediately? Did the minimum wage of P20,000 (US$400) (P770 daily) for domestic helpers - not sales clerks, mind you – trigger your automatic transmission-line fault relay into a trip-off?
Did you instantly exclaim, “That’s baloney, that’s wishful thinking, that’s impossible?”
This is what I mean. The moment you tell yourself that it’s impossible, that means you tell your brain to stop working. You do not even attempt to think of the possible consequences. How do you know it’s impossible? Knee-jerk reaction? Academic brainwashing? Small-business-will-collapse bogey?
The most common reaction by economists is: “There will be hyperinflation!”
The rejoinder of the Street Strategist: “So what? Does that scenario paralyze your thinking process? Why, what happens under hyperinflation? Have you really thought about it, or you’re just mouthing the inert textbooks and professors?”

[foolonthehill]

Education vs. innocence
Contrast this: The Nobel Prize economists have a preset reply, therefore, they don’t have to think anymore. Due to their high education, for them, hyperinflation is terra incognita.
Remember that the Street Strategist is an aborted economist, therefore, he does not know what happens under hyperinflation.
For the Street Strategist, it is an economic twilight zone where his intellectual innocence does little to remind him he is committing intellectual hara-kiri.
Don’t worry, we will dwell on this later. Suffice it to say, the Street Strategist found heaven for the Hyperwage Theory in the twilight zone of economics.


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[foolonthehill]

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Butterfly metamorphosis
In my book Strategy Myopia, I wrote an article “The Metamorpher,” which exemplifies my propensity for thinking along the lines of metamorphosis. Pursuing along the same wavelength I would like to invite you to keep an open mind to the Hyperwage Theory.
In effect, what I’m saying is that we are like caterpillars in the caterpillar world in the book Hope for the Flowers. Whatever we do, as long as we think of ourselves as caterpillars we will never achieve our destiny which is to become butterflies. In turn, butterflies are the hope for the flowers to bloom.
Pursuing the analogy economically, as long as we don’t make that quantum leap to hyperwage levels, whatever we do will be useless, a mere maintenance of the status quo.
This is the reason why for the last hundred years or so, the poor countries became poorer in a negative downward spiral while the rich countries became richer in a positive upward spiral. But that’s jumping the gun. I’ll discuss all these issues later.
You might think of the Hyperwage Theory as crank economics, but keep an open mind until after I have completed my exposition.
Some of you will be asking for empirical data, I’ll attempt to provide some along the way.


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[foolonthehill]

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Marxist vs. capitalist
During one radio show, some leaders of the militant labor and cause-oriented groups reacted that they liked the Hyperwage Theory but that their asking price for labor is only for an increase of P125 daily.
Many reacted to say that I’m a communist or a Marxist. That’s completely wrong. In fact, I am a capitalist, and I base my pricing of labor from a capitalistic point of view.
The Marxists merely pluck out a figure from some NEDA statistical table without thinking of its effect to the entire economy or to the world economy.
On the other hand, I use market-based figures. That’s why our figures are completely different and disparate. In fact, I started from looking at the world economy then all the way to the household economy.

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[foolonthehill]

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Survival vs. profitability
Yes, I’m not kidding. I started my thinking process from a macroeconomics viewpoint, on a world-wide basis until I ended up with the domestic helper’s wages.
The Hyperwage Theory was conceived from a completely capitalistic approach. The thinking process was completely different.
The militants are demanding for their wages for their survival, and despite their pro-poor sentiments, they have excluded the domestic helpers.
That’s not really pro-poor is it? The businessmen, the wage boards, the economics professors, the government policy makers, and even including the president are working from the bottom up. They only want to solve the economic issues.
On the other hand, I was analyzing the world economy and arrived at a conclusion that for the profitability of the entire country, not merely survival of the laborers, we must give them the minimum wage that they deserve, and I am forced by my theory to include domestic helpers.
I am analyzing this top down. I wanted to solve not only the economic issues but also the non-economic issues.



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[foolonthehill]

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Expense-side vs. revenue-side
The difference in perspective is tremendous. They are thinking about the survival of labor, hence, they are demanding wages for labor’s survival. I am thinking about the profitability for the country’s economy, hence, I am giving labor wages that it deserves for the country’s profitability.
The businessmen, the economists, and the government are treating labor as an expense. I am treating an enriched labor as revenue.
And yet, that’s not all. The Hyperwage Theory brings on hundreds of flow-on effects.
Again, that’s jumping the gun. Allow me to lay the predicate first.


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[foolonthehill]

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Expense-side vs. revenue-side
The difference in perspective is tremendous. They are thinking about the survival of labor, hence, they are demanding wages for labor’s survival. I am thinking about the profitability for the country’s economy, hence, I am giving labor wages that it deserves for the country’s profitability.
The businessmen, the economists, and the government are treating labor as an expense. I am treating an enriched labor as revenue.
And yet, that’s not all. The Hyperwage Theory brings on hundreds of flow-on effects.
Again, that’s jumping the gun. Allow me to lay the predicate first.


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[foolonthehill]

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First train vs. third train
In addition to the butterfly mind-set, I invite you to think of the train mindset. The Third World countries are riding on the Third Train on Track 3. The First World countries are on the First Train on Track 1.
Whatever the people on the Third Train will do, they will always be in Track 3. They will never go to Track 1. What is needed to move to Track 1?
The Hyperwage Theory is the quantum jump needed by the Third Train to jump to Track 1.
And there’s one more big problem. The people on the Third Train are using the Rules of Track 1 in the hope that they will jump from Track 3 to Track 1. This is a completely wasteful experiment.
What I’m saying is, Third World countries have been using only one set of economic theory but that theory is good only for First World countries.
Under the Hyperwage Theory, it is wrong to use First World economic theories to Third World countries. For one, First World economics is inflation-centric. The First World are afraid of inflation so much so that they want to control it.


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[foolonthehill]

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Upward vs. downward spiral
One more thing about the train analogy. Track 3 is a downward negative spiral track.
On the other hand, Track 1 is a positive upward spiral track. Therefore, Train 3 will always be going down while Train 1 will always be going up.
Come on, guys, you know that. Just a brief teaser: All the doctors on Train 3 are migrating to Train 1 as nurses. The quality of medical care in Train 1 can only go upward given this trend, while the on Train 3 it can only go down. Isn’t that proof enough that we are on the wrong set of tracks?
So now we approach Hyperwage with a different mindset. We are caterpillars who think we should be caterpillars forever when in fact we are butterflies.
We are Train 3 people on Track 3 but we refuse to entertain the possibility that we can be on Train 1 on Track 1. Why? Because our brains stop working. Our brains are the first casualty of the Hyperwage Theory.


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[foolonthehill]

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Summa cum laude
“But they are a rich country while we are poor,” is a typical reaction to the Hyperwage Theory. “We cannot be like them.”
Think of yourself as a teacher, are you going to tell a student that he is a “natural born flunker” or a “natural born summa cum laude?” Can you imagine how absurd that is?
Take my case. It took ten years before I understood debit and credit. But when I finally did, I eventually invented the world’s fastest, most effective, most efficient way to learn debit and credit with perfect accuracy.
Anyway, in my mind, like any student, any poor country can become rich.
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[ieuseerm]

nganong HYPERwage pa man ang term ana nga FAIR wage man jud unta na ba. wage nga macomfortable ang kinabuhi sa isig ka taw.

[foolonthehill]

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Apples vs. oranges
During one of my talks about Hyperwage, one of the panelists who happens to be a member of a Regional Tripartite Wage Board said: “Your theory is flawed. You keep on comparing our country to Japan, Hong Kong, USA or Singapore. But you cannot compare these countries. They are rich, they can afford to pay.”
Can we compare apples with oranges? Why can’t we?
If we can transform matter into energy under Einstein’s E=mc2, there is no reason we cannot transform an orange into an apple, if needed.
Don’t make the mistake of turning off your brains. Better a wrong idea than no idea at all.



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[foolonthehill]

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Economic vs. non-economic issues
What is an economic issue and how does it differ from a non-economic issue?
An economic issue is one solved or addressed by economic theory or economic equations. Other issues are non-economic.
Examples of economic issues or economic problems are inflation, monetary levels, unemployment, wages, purchasing power, and similar data.
Examples of non-economic problems are slow wheels of justice, underdeclaration of income, inefficiency, bureaucracy, migration, brain drain, corruption, population control, lack of computerization.
Why is it important to distinguish economic from non-economic issues? Because ordinary economic theories attempt to solve only economic issues. For example, how does economic theory solve the population explosion? There is no solution from them.
On the other hand, Hyperwage Theory addresses a large number of non-economic issues in addition to solving the economic ones.
For example, Hyperwage addresses computerization, automation, population control, corruption, and brain drain in one single sweeping stroke.
It is this dual nature of Hyperwage that holds promise for Third World countries


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[foolonthehill]

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Many-to-many
If you are a computer programmer, you know the “one-to-many”, “many-to-one”, “one-to-one”, and “many-to-many” database relationships.
I have identified about 50 major problems of Third World countries. Under ordinary modern economics, each of these 50 problems will have 10 solutions each for a total of 500 solutions. How can the government pursue these without spreading itself thin?
That alone will give you an idea of why the government cannot solve our economic problems.
This is an example of a many-to-many relationship. Many solutions for many problems.
On the other hand, Hyperwage is a panacea of sorts. It can address all the 50 issues using only one solution: Domestic helpers should be included in the minimum wage coverage and at a level of P20,000 (US$400) monthly.
This is an example of a one-to-many relationship. One solution for many problems. Can you imagine the elegance of the Hyperwage Theory? It is a one-to-many solution.


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[foolonthehill]

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Summary
In this installment, I have shared with you the combination of paradigms that I used to structure my analysis and gedanken experiments in formulating the Hyperwage Theory.
Why did I do this? Because I want you to vicariously feel the sense of direct, logical, natural and elegant genesis of the Hyperwage Theory when one uses the insight and paradigms above.
If I did not think along the lines of butterfly metamorphosis, twilight zone violations, Einsteinian relativity, Marxist and capitalistic pricing, survival and profitability, expense and revenue, trains on different tracks, positive and negative spirals, summa cum laude and flunkers, apples and oranges, economic and non-economic, one-to-many, I would not have arrived at the Hyperwage Theory.
Whether or not, you will eventually agree with the Hyperwage Theory is secondary.
However, I hope that you will engage yourself in this debate, vicariously, because I am sure you will never look at economics the same way again. I will have the pleasure of making your imaginations run wild.
And you know that’s a scarce commodity among policy-makers, businessmen and economists: imagination.


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