The long-awaited match between Manny Pacquiao and Floyd Mayweather was finally held last Sunday, 2 May 2015. The general immediate verdict? Mayweather won the fight but Pacquiao won the audience.
In other news this week is research from the Asian Institute of Management Rizalino S. Navarro Policy Center for Competitiveness which points to the persistence of poverty in the country. This follows release of the 2015 World Happiness Report which indicates that the general level of life satisfaction (the WHR measure of happiness) in the country continues to trail significantly below neighboring countries. In the most recent human development report, the Philippines ranked below the average of East Asia and the Pacific, and near neighbors, Thailand and Indonesia, using the human development index. In particular, Philippine life expectancy at birth is 68.7 versus 74.0 for East Asia and the Pacific (74.4 for Thailand and 70.8 for Indonesia). Going by these indicators, the country trails its neighbors in the pursuit of health, wealth, and happiness.
What’s happening here? What’s the real bottom line? And what needs to be done?
In the hours after the Pacquiao-Mayweather match, pundits commented on the abundance of running and hugging and the relative dearth of boxing. Following a five-year build-up, the actual fight was less than engaging.
As a professional boxer, the goals seem to be simple: win matches, make money. By these measures, Mayweather has been extremely successful. Clearly, however, there are other expectations.
Business is the same. It would be tough to find anyone who will disagree that businesses must make money. However, simply making money is not enough. In fact, many businesses are criticized for focusing too much on profits. The reason for this is that businesses are also expected to behave responsibly. The term often used is corporate citizenship, that expectation that business has a responsibility to society over and beyond paying the correct taxes and abiding by the law of the land.
The popular term triple bottom line refers to the three categories of outcomes businesses are expected to measure themselves by: profit (financial results), people (impact on stakeholders and society in general), and planet (impact on the environment). The expectation is that businesses should not create a negative impact, and, to the extent possible, create a positive impact.
For nations, a growing consensus among policy makers and thought leaders is that nations need to be measured not only against economic progress but also on such matters as social outcomes and the general happiness of citizens. More importantly, policy makers are increasingly being challenged to look beyond the national averages and look to the levels of equity or inequity. Nations now look not only to increasing average well-being but also to preventing misery, chasing not only economic growth but growth that is inclusive.
In a piece for Rappler, Ronald Mendoza, executive director of APC, and Katherine Peralta pointed out that, in the 45 years since then Senator Benigno Aquino pointed out the disparity between the top 1 percent of the population and those who lived in poverty, not much has changed.
In 1969, Aquino, then 36, pointed out that 80 percent of households lived in poverty. At that time, 1 percent of families were considered affluent (P25,000 per year) and an even smaller fraction were super affluent, earning more than P100,000 a year (over 6 million in current pesos, with inflation).
Mendoza and Peralta point out that government statisticians calculate that over 14 million families, accounting for 74 percent of families live below threshold income level (P57,000 per annum). About 8 percent of families are classified as food poor.
Mendoza and Peralta point out that inequality, in and of itself, is not necessarily bad. Inequality can be the result of the application of increased effort or creativity. Inequality can inspire individuals to build businesses that benefit many others. The problem arises when there is inequality in the most basic of resources, when there is inequality in opportunity.
To support the claim of inequality in opportunity, Mendoza and Peralta point to health and education disparities between the different regions of the Philippines. They also point to potential for economic inequality stemming from political inequality. They point out that their ongoing monitoring indicates that 8 out of 10 governors in the country belong to dynastic clans. This, of course, is not in and of itself proof of political inequality but is indicative of the ability of certain families to wield long-term influence.
Opportunity and capital
One way to address the concern of addressing those at the bottom of the socio-economic pyramid is to examine the factors that prevent them from fully engaging in economic activity. In a working paper prepared for the AIM RVR Center for Corporate Social Responsibility, we identified the building blocks for inclusive growth: (a) a legal and regulatory environment that provides a legal basis for rights, responsibilities and entitlements; (b) guaranteed basic services; (c) institutionalized safety nets; and (d) access to capacity-building.
The thinking behind these building blocks is that economic participation can occur either from individuals becoming employees or engaging in a profession or from individuals founding businesses. The legal foundation covers both individuals and businesses and includes an affirmation of basic rights, laws against discrimination and appropriate incentives. This, for example, includes a judicious taxation regime.
The next block focuses on individuals. Guaranteed basic services include such things as access to health care, education, safe water and sanitation, housing, and energy. Institutionalized safety nets include social security mechanisms but could also, for example, cover institutionalized safety nets for business bankruptcy.
The last and final building block includes education and training but also covers the wellsprings of enterprise. This includes such things as availability of financing, access to basic resources such as roads and transportation, access to the information highway.
Interestingly, the 2015 WHR points to another critical ingredient: social capital. Social capital, the report points out, is correlated both with happiness as well as with economic development. Stronger social support leads to both wealth and happiness.
A consensus is slowly growing. Not only are the social dimensions important as an outcome, they are also important as a condition. It’s time to pay attention to social capital.
Readers can email Maya at [email protected] Or visit her site at http://integrations.tumblr.com.