Archive for November 2014

SOCIAL CAPITAL FOR MINING

November 26, 2014

SOCIAL CAPITAL FOR MINING
Erle Frayne D. Argonza

This paper advocates for an alternative framework regarding mineral resource extraction. It begins with the contention that mining must be considered as primarily a community undertaking, whether the community be national or local. As such, mining must necessarily depart from market-driven models of extraction, or from state-centered models of development, and proceed to a community-oriented or constituency-based engagement.

To be able to comprehend the theme of this paper, let me begin with a story. About four (4) years ago, a former university student of mine at the University of the Philippines Manila informed me that a mining engineer wished to establish a (mining) foothold in the Cordillera. Accordingly, the engineer heard about my mystical background, and was interested to know if there are indeed precious metals in the proposed project site. That is, the engineer expected me to communicate directly to the invisible elemental entities in the area and ask their permission to establish a mining project.

Not only that. Having heard about my background as a political economist, with diversified interest and studies in indigenous culture, the mining firm he represented wanted to know what acceptable methods to employ in flushing out the indigenous people residing in the area.

To cut the story short, I declined the offer, even as I registered my vehement opposition to the sordidly profit-oriented venture of this engineer. If mining has to prosper at all, it must begin with the reality that there are people who have been settled for many epochs in the area of extraction. A win-win solution to the mining problem must be executed, not by expelling the local residents but precisely by involving them in the venture.

Let me now share to you another story. In 1998, at the height of the Asian financial crisis, my consulting firm then, the Phoenixkonsult, contracted a project with a client. The project was about yellow clay extraction, with Bicol as the project site. In a small town in Bicol is found yellow clay, a rare material that has various industrial applications as well as aesthetic uses. Incidentally, the area also has some Aeta-related residents as well as marginal peasants.

Being then the board chair of the corporation, or being in a central position to direct the developmental strategies of the firm, I strongly proposed that the project involve the residents in a number of ways.

First of all, in the feasibility study preparation, the residents can be tapped as eco-scanners to identify possible sites where the material was highly concentrated. Also, the same residents will be constituted into a cooperative, properly trained in social entrepreneurship, and invited to be co-investors in the mining project through their cooperative. A third involvement would be to tap those residents who are physically capable enough as human resource for the extraction and production activities.

Such a scheme is what social scientists and development practitioners like myself refer to as tapping ‘social capital’. Mining should not just be regarded as investment capital, but should also consider the vast wealth of social networks—‘social capital’—that can wield tremendous powers of production. Studies in comparative political economy have shown that developmental pursuits that tapped ‘social capital’ ended up more appreciably better than those that failed to do so.

The development experiences of Brazil are particularly instructive. As documented by such social science luminaries as Peter Evans (see Evans’ works on ‘state-society synergy’), those projects in agriculture, irrigation and urban-based infrastructure and housing in Brazil where a state-civil society partnership was consistently used, turned out really good in results. On the other hand, those projects that were largely state-centered or market-driven and insulated from the community networks eventually faltered, as indicated by typical experiences in most Third World economies.

In today’s evolving global context, state-centered development has become ridiculously passé. In this old framework, the state performs the role of a ‘provider state’—giving out everything such as candies and shelter units to helpless people waiting for the ‘Santa Claus’ dole outs. Such a framework had proved to be disastrous in results. Not only did it reinforce a strong dependency syndrome among the people, it also led to vicious poverty instead of eradicating this malaise. It need not be stressed that much money went to the pocket of state officials and contracting firms’ managers through this old framework.

The new framework delimits the state’s role to that of an ‘enabler state’. In this framework, development efforts are properly the tasks of market players, who possess the investment capital, and civil society players, who possess the vast social networks of ‘social capital’. The state then builds the policy environment and strong institutions that can support and sustain various developmental efforts.

I strongly contend for a ‘social capital’ approach to mining. In this approach, the first thing to do is to recognize the institutional capacity building efforts of people who live in the areas of resource extraction. Stewardship agreements must be concurred between market players and community or social enterprises of the folks, with the state serving as a mediator or facilitator. I am very optimistic about the positive results of this scheme, compared to market-driven and state-centered approaches.

You see, when people, through their social enterprise groups, are motivated to co-direct development projects, the people themselves will do so much to zealously guard and monitor the entire project or enterprise venture. The bonus for indigenous peoples is that they have easy access to the spirit world, to the nature beings in the area (called ‘elementals’ by mystics), beings that can also be tapped to guard the project.

Now, go back to the cranky old models (market-driven and state-centered), and remove the indigenous peoples from the scene of a gargantuan development effort. What will you have?

It would be instructive to recall the Celophil and Chico dam projects, both Cordillera-based, that proceeded from the old frameworks. The disastrous offshoots of the projects became the fuel for insurgent groups, largely peopled by the I.P.s, to wage zealously bloody campaigns against the colossal projects.

There is no further reason today for the likes of the Celophil and Chico projects to be repeated. We must have learned lessons from their failures at this juncture. But it seems that those who now wish to revive a mining sector that has been in the doldrums for two (2) decades to go the route of Celophil and Chico.

I wish not to further highlight the folly of any idea today that wishes to pursue development by expelling people like they were deadly toxins. Many advocates of win/lose pursuits are well placed in government even as they dominate the corporate sector. They simply couldn’t see the folly behind their antiquated approaches, blinded as they are by greed.

As a final statement, let me declare that the framework elaborated in this brief paper is not an official policy framework of state. Rather, it is a policy framework that should be discussed among various quarters and social sectors, the state included. The state after all comprises of a plurality of framework trends operating in a vast array of bureaucratic mechanisms. There is no such thing today as a monolithic state with a singular framework dominating the policy environment. Rather, the state is a fluid field for contestation by various interest groups that are all aiming to influence the shaping of the policy environment.

But this I am optimistic about: if given a chance to prosper, a ‘social capital’ framework for mining will sell like very hot cake. I am very sure about this forecast. And may the communications enclaves allow this idea of ‘social capital’ for mining to germinate and percolate, because whether we like it or not this will be the direction of resource extraction in the foreseeable future. Bar it from crystallizing, and the result will be more resentments leading to more vicious insurgencies. Permit it to galvanize, and the whole nation becomes heroic in the eyes of the international community for setting new precedents. So, which option is the better choice?
[Note: The author is a political economist and social development consultant. The paper was delivered in a panel lecture at the Kamayan Forum, Kamayan Restaurant, Manila, 12 noon-2 pm, 19 November, 2004.]

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WILL ZAIBATSU OFFENSIVE BE ACCOMPANIED BY NEW JAPANESE MILITARISM?

November 11, 2014

WILL ZAIBATSU OFFENSIVE BE ACCOMPANIED BY NEW JAPANESE MILITARISM?
Erle Frayne D. Argonza

In a previous article, this writer articulated the success of the Japanese Zaibatsu offensive. As one ought to realize, the success of the Zaibatsu offensive came at the expense of other markets, notably the North’s. Intellectually bankrupt as they are, the policy makers and technocrats of the North never foresaw the catastrophic consequences of predatory policies more so those concerning finance that came from their Japanese partners.

Today, Zaibatsus are well prepositioned across the globe, and it doesn’t matter anymore whether their headquarters will still be based in Japan. They have already fanned out beyond their boundaries, thanks to gullible states and market players in host countries that aren’t equipped to read the psyche of their Japanese partners. Japanese market presenters carry the mien of humble partners who bow in deep respect before you during business meetings, so who could ever suspect the rather cold-blooded nature of such gestures.

What the world must observe with greater focus these days, when global fascism is rising, is the resurgence of Japanese militarism. It may come in the form of ultra-nationalism, or ultra-conservatism, and may have nothing of the ‘Hail Emperor’ mantra of the previous Empire. But seeing the rise of predatory Zaibatsus, focused observers can never miss out on the possibility that the economic offensive may be accompanied, at some juncture of global economic crisis, by a very resurgent militarism.

Japan was very badly isolated during and after the 2nd World War, and till the early 1970s its moves at extending cooperation came with enormous suspicion, more so from the Asians whose countries were “burned down to the ground” by invading Japanese military forces. There surely was a colossal repackaging of Japan’s image, from wartime arrogance to new era peace-loving and humble advocate. To prove their sincerity, they even crafted their new constitution such that offensive forces were banned and only defensive military forces allowed.

No one ever heard of Japan getting involved in the arms race for many decades, and till these days the mindsets of somnambulistic folks tend to regard the Japan of the present as the peacenik country of post-war yesteryears. Even my old folks, who suffered miserably from the cruelties of Japanese forces during the war, have come to forgive Japan, though they still harbor the pains during moments of reminiscing.

The peacenik image is a product of its own context, this one must be reminded about. Japan was in high growth for many decades, than it matured onwards till it reached consumer society proportions around the 1980s. Then came the ‘globalization’ voodoo economics, and the rest was history.

That was then. The situation now is different. The global economy is crashing down, the plunge still hasn’t ceased, and the EU-USA experts just couldn’t learn from Japan’s ‘bailout’ mistakes. As the economy falters, anxieties arise within a country, and tensions across borders will increase. Superstition and groupthought (fascism) are rising, and before long we will see the fireworks of another world war ensued in the hottest spots of the globe.

EU-USA (West) and Japan (East), which comprise the pillars of the global economy, are now on the decline. If we study the behavior of their peoples well, whenever they experience severe crises, they undertake wars as strategy to release or canalize collective anxieties. They identify a Bogey Man (e.g. Nazi’s identified the Jews, North Americans identified the Southern slave owners during the US civil war,…), and then transfer their internal anxieties and defects on the Bogey Man, and war ensues.

Such economic pillars just seem unable to manage their decline without taking down others. This is classic binary mindset, destructive and demonic. Such mindset is responsible for using nuclear arms, regarding the casualties on their perceived enemies thereafter as mere statistics. And East Asia better prepare for the eventuality that this mindset will become dominant again in Japan in the short run.

Demented minds in Japan have two (2) bogey men today: (a) North Koreans and (b) Chinese. As this is happening, events have already shown the preparedness of Japan to mobilize its troops for missions outside the borders (e.g. Iraq war). Japan also possesses the technical capabilities to produce weapons of mass destruction such as nukes and probably the Tesla Earthquake Machine or TEM.

Intelligence reports have it that Japan is capable of constructing WMDs and manufacturing new series military vehicles (e.g. aircraft carriers) in just less than a year upon call to action. We wouldn’t be surprised if we receive further intelligence information that such WMDs and vehicles are in fact already in place, needing supplementation in quantities and troop mobilizations.

It need not be overstressed that Zaibatsus are awash with money to fund militaristic or Banzai offensives for sustained periods. They already demonstrated this, during the Gulf War and Iraq War, when their coffers coughed up large sums by the tens of billions of dollars to pay the bills for the offensives while the USA provided the main attack hardware and human ‘warm bodies’ (like they were the Hessian Troops of the global
oligarchs).

If ever that the USA-EU would fall into a state of totalitarian governance (police state, fascism), and Japan would follow along that direction, then chances are high that the North Atlantic Alliance (USA-EU) and Japan would form a new Axis Powers alliance. The North Atlantic powers would constitute the Western flank, while Japan would comprise the Eastern flank of the alliance.

It will be déjà vu for sure. If indeed such is the direction. Peace advocates still have time to scuttle new treaties up north that could redound to concentrating enormous powers in central governments that are undisguised fascist police states. There is still time, but time is now short.

Before long, Japanese slogans of Banzai! will be heard again across the Pacific. Just by hearing it, or reading it on the papers and TV, many middle class Asians will die of heart attacks. Let us just hope that it will only be a slogan of marginalized mad people in Japan and nothing more.

[Philippines, 15 November 2008]
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ZAIBATSU GLOBALIZATION ‘VOODOO ECONOMICS’ BOWING OUT

November 3, 2014

ZAIBATSU GLOBALIZATION ‘VOODOO ECONOMICS’ BOWING OUT
Erle Frayne D. Argonza

Magandang hapon! Good afternoon!

Let me share to you at this moment some notes regarding the ‘globalization’ experiment and the flawed policies that sustained it. There has been much ballyhoo about the global economy’s integration, over the last three (3) decades, as having been carved out supposedly by the Anglo-Saxon policy architects, using Thatcher & Reagan as the face for the ‘neo-liberal’ policy regime they installed.

Little do peoples across the globe, including experts who are so mired in their own parochial perspectives, know that the liberalization of country economies has a great deal to do with the Zaibatsu offensive. The West should better accept the facts: that their technocrats and policy shapers have run out of fresh ideas since the 1970s onwards (i.e. mentally bankrupt), a gap that they filled up by looking up to Japan and the NICs (newly industrializing countries) for copycat purposes.

Reaganomics, as neo-liberal policies of ‘privatization’ was dubbed (Thatcher of the UK preceded Reagan by a year), is as voodoo as one can get, seductive as any enchanting mantra-resonating principle can be, and was indeed potent in erasing the vestiges of the Regulated Economics doctrines that preceded the era. In the emerging markets, they were dubbed as ‘structural adjustment policies’ or SAPs, were imposed by the IMF-World Bank Group on debtor nations, and can be summed up as follows:

• Core principles: Privatization, Liberalization, Deregulation
• Subsidiary Principles: Tax reforms, trade liberalization, free floating exchange rates, diminished state subsidies for welfare, increased utility prices (revenue generation)
• Governance Principle: Decentralization (local government autonomy)

Such policy reform measures, as far as developing countries or DCs were concerned, came in as very harsh, cruel ‘austerity measures’ imposed by the IMF. We citizens from the ‘margins’ can never forget these measures, the pauperization that they effected, the dislocation of marginal producers, the decline of health services and rise of morbidity rates, and so on. In the Philippines, our very own capital goods industries were either delayed or un-implementable (such as integrated steel), as the money allocated for their purposes simply dried as dictated by the World Bank.

But there’s another set of policy architecture that wasn’t Anglo-Saxon, and didn’t receive their inspiration from the classicists (Smith, Ricardo) and the monetarists (Friedman, Hayek). This set of liberalization policies came from Zaibatsu country, and were crafted by Japanese technocrats. Not only policies, but also institutions were addressed by them, giving rise to the globalized economy that we have today.

Chief among those technocrats was Kenichi Ohmae, who in the 1980s was a think-tank executive. Further down the line were many other technocrats, who were organically linked to the Zaibatsus (landlord-industrialist-financier oligarchs), taking up cudgels for Ohmae.

Globalization, as one better realize, was never meant as any ‘win/win’ formula for nation-states in the arena of international trade as the liberal thinkers came to defend it later. It was outright a strategy to pre-position Zaibatsu corporate interests outside of Japan, notably the U.S. and European markets.

At that time of conceptualization, Zaibatsus have already efficaciously penetrated the Asian markets, and had leveraged their investments’ entry via aid and technical knowledge diffusion (including sponsoring Developing Country scholars in Japanese universities & special institutes). The old doctrine of ‘Asia Co-prosperity sphere’ was finally won, without firing a shot this time (unlike Imperial Japan era expansionism).

In the 1980s, the clamor for mooring investments and trade in the Western markets became ever stronger. The offensive tactic adapted was rather two-pronged, which made the new voodoo mantra even more potent:

• On the micro-level, permeate other markets with new concepts such as ‘Theory Z’ (decentralized authority, see W. Ouichi), total quality management or TQM, new tools for strategic planning, mergers and de-mergers. Till these days, the tools are considered sacrosanct in all sectors of society, including the Catholic Church that now uses ‘bottom-up’ planning added to strategic planning (my observations done in 2001-02 in a California diocese).

• On the macro-level, blend the Reagan-Thatcher ‘structural adjustments’ with the ‘globalization’ doctrine. The Zaibatsu technocrats fanned out across the globe, some of whom were positioned inside international bodies, and sweetened liberalization via a supposedly ‘win/win’ growth strategy for participating countries. This brilliant blending, which Western thinkers didn’t perceive at all as any subtle tactic by a predatory class (Zaibatsu), soon caught up fire and became buzz word for nigh three decades.

Before long, the Japan Inc. was being bandied across the globe as worth any country’s emulation. Southeast Asia and Korea went for it. Even the former presidents of the USA admired the Japanese Inc. doctrine of renewed private initiatives and shift from macro- to micro-economics as stabilization and growth measure. Bill Clinton of the USA spoke so fondly of ‘globalization’ like some captive fan of an economic icon, and moved to negotiate the NAFTA.

Little do unsuspecting, gullible peoples across the planet, more so the policy experts of the West, realize that the Japanese voodoo economics was largely intended to permit Zaibatsu investments to breed and morph inside their economies. Using merger and buy-in tactics, the Zaibatsu agents made it appear that their sponsors came in for benign purposes or so. If there is any group in the world today that is enjoying its last laugh, it is the Japanese militarists of the past, who finally saw the success of their nation’s offensives and the decline of the West via ‘organized chaos’.

Around 1994, the magic of the Japan Inc. began to cramble. Recession came, and before long many banks and investment houses were catching fire. That was the origin of the bankrupt and immoral Bush-Paulson ‘bailout’, which began with the ‘crisis management’ tactic in Japan to save ailing banks and financial institutions. Eventually, Zaibatsu technocrats were forced to revive the Western tool of ‘interest rates’ intervention, to the extent of bringing down interest rates to zero percent and sustaining it there for many years.

There also came that moment, in the late 1990s through 2006, when Zaibatsu financiers suddenly were so awash with funds (liquidities), at a time when Western economies reached low growths. The ‘yen initiative’ package was therefore conceptualized as another last-ditch voodoo tactic, which was implemented by loaning out large funds at zero or low interest, which Western financiers than re-loaned at profitable interest rates. Many such funds reached the USA& EU realty subprime mortgage markets, to recall. Again, note the seemingly benign nature of the financial gesture.

Just as when the realty markets were beginning to sneeze in America, the last voodoo measure was pulled out. The ‘crisis management’ was already folded up earlier, as Japan’s economic growth was propelled up anew by the Asian markets notably China’s. Just as when USA & EU needed the Zaibatsu loans very badly, and ditto for portfolio investments, they were pulled out, thus ensuring the crash of both economies.

Japananese voodoo economics is now bowing out, as the compass of policy initiatives at present is pointing to the reconstruction of macro-economic, New Deal type measures intended to attack problems both on short-term (bail out on productive sectors) and long-term basis (induce physical economy rather than predatory finance). But the withdrawal of the voodoo regime is not being done without witnessing its catastrophic results.

That’s surely tragic for the West or North. I wonder how Zaibatsus & technocrats perceive peoples outside their borders: whether they regard the latter as human beings worth co-partnering with, or as hungry lizards that must subsist on crumbs of investments & finance from Japan that have been buttressed by enormous tons of gold acquired through production and plunder of occupied lands, across the 2,000 years of Japan’s existence from kingdom to nation.

Honestly, I don’t know the answer. But if the Zaibatsus are receiving flaks from outside their borders, it wouldn’t be a surprise. There are no more borders for Zaibatsus by the way, just an entire planet with seamless web, cocooned in all corners by their corporate money.

[Philippines, 14 November 2008]