Intangible wealth of nations

MANILA, Philippines — A distant cousin of mine, “Kadyo” (nickname for Arcadio), was a taxi driver in Metro Manila. He zigzagged in and out of lanes, passed red lights, choked already clogged intersections ignoring the crossing vehicles, and drove in the opposite lane blocking the in-coming traffic. But wonder of wonders, he has not been fined or haled to court for any traffic violation.

Miracle of the three “L’s.” When I asked him how he has escaped sanctions for his traffic violations, he bragged: “It’s simple. Usually, there are no policemen. During the few times that there were, I would argue I passed only a yellow, not red, light. If the policeman ignores my ‘lusot’ (bluster), I threaten him with a suit and boast that I had a good lawyer. No, not you Coya. My lawyer is Manuel A. Roxas (sheepishly pulling out a hundred-peso bill in which the photo of President Roxas is imprinted). If ‘lagay’ (bribery) does not work, I use ‘lakas’ (influence) by crowing that the mayor is my cousin. Yes, ‘lusot, lagay, lakas,’ these three ‘L’s’ have enabled me to feed my nine children, the eldest of whom has just passed the nursing board exam.”

Kadyo in America. That was 15 years ago. Last August, my wife and I visited my sick brother in Vancouver. Thereafter, we flew to Las Vegas en route to see our children in the United States. There, we watched some shows (Celine Dion, The Producers, Mystere and Lani Misalucha). Driving the cab we hailed on “the Strip” one evening was Kadyo!

I was, of course, surprised to meet him there, and even more startled to see him driving so carefully and observing all traffic rules. He explained that his eldest child, who was employed 14 years ago in a nearby hospital, was allowed to bring in her parents. “I do not use the three ‘L’s’ here because I would get into trouble with the police and lose my license. I just follow all rules. I earn enough without having to use bluster, bribe or influence. In America, one only needs to be industrious to live comfortably,” he mused.

Kadyo is typical of many Filipinos who violate traffic rules here, cheat in paying their taxes, employ legal short cuts, and patronize politicians to be able to land a job or to secure a government contract. But once they are in America, or in other developed countries, they obey all laws, dutifully fall in line and enjoy the blessings of life by just doing their work diligently. To forge ahead, they do not need to peddle influence or polish their bosses.

World Bank Report. For the longest time, I had been wondering, why does the Filipino worker mightily succeed when he is in the United States, but not when he is back home? Another heart warming fact: according to our consul general in New York, Cecilia Rebong, the Filipino professionals in the United States earn comparatively more than their counterpart native Americans. Why? The answer may lie in a World Bank (WB) report on the “Wealth of Nations.”

The study shows that if the total wealth or “capital” of the United States were distributed evenly, each person there (including Kadyo) would have access to $512,612 in capital, compared to only $19,351 in the Philippines. That is why industrious and law-abiding Kadyo earns more there than here; and more than other drivers there.

To be sure, the WB explains that there are really three kinds of wealth: (1) natural capital–“the sum of nonrenewable resources (including oil, natural gas, coal and mineral resources), cropland, pastureland, forested areas and protected areas”; (2) produced capital–“the sum of machinery, equipment, and structures (including infrastructure)”; and, (3) intangible capital that encompasses raw labor, human capital (the sum of knowledge, skills and know-how of the population), social capital (the level of trust among people in a society and their ability to work together toward common goals) and the quality of institutions essential to good governance, like an independent judiciary, clear property rights, effective revenue collection, nonpolitical military, credible elections and stable rule of law.

Worldwide, natural capital accounts for only 5 percent of total wealth, produced capital for 18 percent, and intangible capital for 77 percent. On the average, every one in the world has a total wealth of $90,000, an amount available to those in Brazil ($87,000), Libya ($89,000) and Croatia ($91,000). This world average is much more than the Philippines’ $19,351, broken down into $1,549 natural, $2,673 produced and $15,129 intangible.

While natural resources help, they are not the most important wealth. Singapore has zero natural capital but is credited with $79,011 produced capital plus $173,595 intangible capital for a total of $252,607. Japan has only $1,513 natural (same as ours) but has $150,258 produced plus $341,470 intangible for a total of $493,241.

Conclusion: The WB study shows that more than three-fourths of the total wealth of the world is intangible. Further, the most significant elements of intangible wealth are education and the rule of law. These two facts imply that while the natural resources and infrastructure priorities of President Macapagal-Arroyo deserve some attention, the much more important focus should be on our intangible capital, like the primacy of education, the promotion of the rule of law, and the strengthening of our democratic institutions. These are the truly lasting legacies.

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To those who asked for more NUSP info, log in to cjpanganiban.ph and click “Recent Speeches” for a complete text of my NUSP address.

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