Negative progress

The title is a contradiction in terms. When we speak of progress, we mean moving forward or into something better, therefore positive. Most often we can see only growth without realizing the negative results of this apparent progress. We can be mesmerized at the glare of what we think is economic boom.

In a book (a gift from Enrique Dy), “Why Nations Fail” authors Daron Acemoglu and James A. Robinson (2012) traced the causes for the rise and fall of nations and societies from ancient times to the end of the last century. They even touched on the present, predicting that the new booming economies will eventually collapse just like the ancient kingdoms.

Though their study is global in scope, their theory of the collapse of great nations is solid and applicable to smaller societies and communities. In fact their theory is further validated by the collapse of the economy of present Greece (as it did in pre-Roman times) and possibly by Puerto Rico.

The cause of the decline, fall and finally disappearance of the once flourishing nations was what the authors called “extractive institutions”. These kinds of institutions “extract” or take out from where they prospered to the extent that eventually their hosts are drained of its resources.

During the last 50 years of the 20 th century, our life time, we call these institutions, economic and political as exploitative. They are like leeches sucking the richness of their hosts until eventually they have so suckered the best of their hosts that they kill the source of their riches.

The nationalists of our time have battled against these exploitative foreigners that leave the unwary drained of their own means to develop.

This 529 pages book should be good reading for our leaders for two reasons: (1) the move to open the Philippines to foreign ownership of our natural resources; (2) the emergence free trade.

Let me not suffer you with the global and even national impact of extractive economic institutions or enterprises. Let me apply the theory of Acemoglu and Robinson to our local setting because we are actually seeing and undergoing this same situation, a negative progress in our province. In fact I wrote about this sometime back.

We are all singing praises to the coming into Bacolod all these megamalls and big housing and business enterprises. The SM Bacolod has expanded with its SMX while its chain of Savemore supermarkets is sprouting in Bacolod and Talisay. Soon Ayala will occupy the central portion of Bacolod aside from its The District and Super Metro. Another mall, 888 is expanding across its present site in Gatuslao Street to an extension that is much bigger. Pure Gold has opened two big stores in Bacolod (Santo Niño and Liberatad Extension towards Mansilingan) and soon another will open at San Juan Street just behind 888 and in Araneta Singcang. It just opened in Escalante.

Another Cebu-based supermarket is going out into other cities of Occidental Negros and information says it will open some more.

The sprawling Bacolod-Murcia Milling Company will soon become a business and commercial hub with another one straddling at the boundary of Bacolod. Two large stores to be called City Mall are under construction, one in Mandalagan and another in Goldenfield, Singcang.

What is a common denominator in all these enterprises? Firstly, they are not from Negros and secondly, they are consumer-driven. Their intent is to take out the riches of this province and remit to their coffers.

Someone asked how Negros can sustain these businesses. I said they are not here to help develop the province but to extract the huge amount of money that Negros earns mostly from sugar, call centers and OFW remittances.

These extractive economic institutions do not contribute to progress in the long term. They extract as much as they can and then expand into more extractive enterprises.

While they bring in employment these jobs are extractive - less pay and short-term contracts and thus deprive workers of mandated benefits because most are not reported to the SSS in the guise or wrong and illegal belief their contracts are only for a brief period.

Their extractive characters made European countries reject them because they kill native, small businesses. Have you been to super malls in London, Paris, Madrid, Brussels, etc.?

If progress is our intent, we should push for investments in production, manufacturing, improved education, farm mechanization and adoption of new technologies. The extractive enterprises hardly sell local products.

We'll have more on this issue.*

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