IN DEFENSE OF HUMAN CAPITAL Speech of Congressman Roilo Golez Second District of Paranaque City Annual Meeting of Human Life

International Pilipinas Cebu City, 25 August 2007

Gary S. Becker, University Professor of Economics and Sociology at the University of Chicago and the Rose-Marie and Jack R. Anderson Senior Fellow at Stanford's Hoover Institution, a pioneer in the study of human capital, and 1992 Nobel Prize winner in economics, wrote that human beings should be called human capital because people cannot be separated from their knowledge, skills, health, or values in the way they can be separated from their financial and physical assets. Becker stated further that economists regard expenditures on education, training, medical care, and so on as investments in human capital Schooling, a computer training course, expenditures of medical care, and lectures on the virtues of punctuality and honesty also are capital. That is because they raise earnings, improve health, or add to a person's good habits over much of his lifetime. And finally, Nobel Prize winner Becker stressed that Many studies have shown that high school and college education in the United States greatly raise a person's income Similar evidence is now available for many years from over a hundred countries with different cultures and economic systems. The earnings of more educated people are almost always well above average, although the gains are generally larger in less developed countries. I agree with the proposition of Professor Becker. If we want to improve the per capita income of the Philippines, we need to invest more in human capital through more investments in education, training on high technology, medical care and lectures on the virtues of punctuality and honesty and, if I may add, personal discipline, instead of attacking and lamenting the nations growth in human assets and human capital. Last August 8, 2007, one of the exponents of population control in the House of Representatives delivered a privilege speech on the subject. In my interpellation, my first question was: How do you view children? Assets or liabilities? I knew that was a tough question. There was no way my question could be answered directly for that question reduces to absurdity the proposition that population is a liability to a nation. Our population has been our foremost asset and will become greater assets if we align our national budget in the right places instead of spending billions on population control, responsible parenthood and other euphemisms for population control.

Today, one of the biggest components of our GNP is the one billion dollars a month being remitted by our eight million Overseas Filipino Workers or OFWs. Economists have stated that this huge economic input has saved the country from deep economic troubles in the past like during the 1997 Asian currency crisis and last years economic crisis. It is no doubt the great economic stabilizer. Today, OFWs account for at least 50% of the sale of housing units, making the property market one of the pillars of the current economic upturn. Most of those OFWs come from poor Filipino families. Most of those OFWs come from big families with five or even more children. Many of those OFWs are in their thirties or even younger. If the population control advocates had their say three, four decades ago and succeeded in depopulating the Philippines, most of those OFWs who are the undisputed saviors of the Philippine economy would have been unborn. Those eight million OFWs, most of them skilled and professionals, are competitive in the global market because their parents and they themselves invested in their education and training, i.e., recognizing human beings as human capital, treating human beings as assets and not as liabilities. To those who say more children can make the family poor, I would like to cite the example of a good friend of mine, Danton Cantuba, resident of Sitio de Asis, one of the depressed areas in my district in Paranaque City. You see, Danton, now in his 70s, still lives in a small house in Sitio de Asis, has more than eight children who all went to college and are now professionals and successful. Some are gainfully employed abroad. One is a nurse, another is an engineer and he also has a doctor. I found this out when Danton asked me to be a wedding sponsor of his daughter who worked as a nurse in Ireland and is now a nurse in a hospital in the Caribbean. I asked Danton how he was able to send all his children to college with his meager income. He said, Congressman, my wife and I decided early to spend most of our income on the education of our children, and not much for our comfort. In fact, the house that we started with is practically still the same house we have now after forty years of marriage. No drinking, no smoking, no gambling, no fine food or clothes for us. Almost every peso we earned went to the education of our children. Without reading the treatise on human capital of Nobel Prize winner Becker, Danton found the right formula for success: that expenditures on education, training are investments in human capital Schooling, a computer training course and lectures on the virtues of punctuality and honesty also are capital. That is because they raise earnings

The solution therefore is not population control but to teach and enlighten parents on the virtue of spending less or none at all on vices like alcohol, cigarettes and gambling and spending more on the education of their children, the way my friend Danton did it. And of course for the government and some NGOs to redirect the billions they have been spending on promoting population control to education and teaching parents and the youth on the virtue of personal discipline and good education. The solution is not population control but more investments in human capital. Let me cite these world class achievements, all of which have been achieved with the help of Filipinos coming from relatively big families, or could not have been achieved without the population base that we have. We are a world class call center hub, now no. 3 in the world, next only to India and China. The Philippines ranks No. 4 worldwide in competence and skills for the information and communications technology (ICT), per survey of a US-based company, the Meta Group, beating developed countries like the US, Canada, France and Australia in producing ICT professionals and workers. Intel has been in the Philippines for 28 years and its Philippine plant is where its most advanced products are launched, particularly Pentium IV. We can claim that a Filipino product is the spark plug of most of the millions of modern PCs now being used worldwide. Texas Instruments in Baguio produces the DSP chips that are the brains behind a cell phone, and this Filipino product powers 100% of all Nokia cell phones and 80% of Erickson cell phones! High end Toshiba laptops are produced in Laguna. Panasonic in Sta. Rosa, Laguna manufactures millions of cell phones exported worldwide. If you are driving a Benz or a BMW or a Volvo, it is very likely that the ABS system in your car was made in the Philippines. Mitsubishi Motors will reportedly transform the Philippines as their production hub for spare parts and components for Mitsubishi and Daimler-Chrysler vehicles. Trend Micro, makers of the top anti-virus software PC-Cillin develops its cures for viruses in Eastwood Libis. When a new virus is detected, the Eastwood Libis team can find a solution within 45 minutes.

The giant high tech company America Online or AOL has 1,000 people in Clark answering 90% of AOL's global email inquiries. Proctor and Gamble has over 400 people in Makati (average age is 23 years old) doing backup officer work for their Asian operations including finance, accounting, HR, and payments processing. Citibank's global ATM programming is done here in the Philippines. Most of our exports are high tech. The semiconductor and electronics industry in the Philippines contributes at least 60% annually to the country's total export sales. These are diverse products like ICs, discrete semiconductors, semiconductor modules, electronic components, floppy disk drives, CD-ROM technology and computer processors. We are now exporting cars in quantity. Ford Philippines will export more than 100,000 units of the Lynx and Escape cars in the next five years. The Tsuneishi Group shipyard in Balamban, Cebu can construct a huge bulk carrier in 22 days. There is also the 1$ billion Hanjin shipyard coming up in Subic. When the two shipyards finally combine operations, they will easily make the Philippines the worlds fourth biggest shipbuilder after Korea, Japan and China! 214,000 Filipino seamen and merchant marine officers have strengthened the world's maritime industry. Practically every major oceangoing ship has a Filipino seaman. Many companies in Indonesia are managed by Filipinos. Banks and sophisticated financial institutions in Hong Kong, Australia, Singapore, London and New York have Filipinos occupying key positions. Filipino nurses and doctors provide world class health care to citizens of the first world countries. Many factories in Taiwan, South Korea and Japan depend on highly skilled Filipino workers. Many shops in Saudi Arabia prominently display the sign "We have Filipino workers" to attract more customers because Filipinos there have established a reputation for reliability and high standard of work. And a most remarkable phenomenon is now happening in the field of education in the U.S. A hundred years ago, the U.S. sent hundreds of teachers now called Thomasites to teach Filipinos the three Rs. Now, we have reversed the situation. We are sending not just hundreds but thousands of Filipino teachers to the U.S. to teach Americans Math, Science

and English. Many of these Filipino teachers are now in California and Texas. U.S. demand for teachers is expected to balloon to two million in the next ten years. Filipinos in New York, according to a US census, have the highest median income among all ethnic groups, higher than European-Americans, Japanese-Americans and HispanicAmericans. All of these world-class achievements that should make us all proud as Filipinos are being achieved by Filipino human capital, most of them from poor families, most of them a third or fourth or even fifth child in so-called big Filipino families. If they were unborn, would all these achievements be possible? Would China and India be the giant industrial nations they are now without their population base? A decade ago, South Korea actively encouraged population control. Now, population adviser Kim Seung-kwon of the Korea Institute for Health and Social Affairs said new policies are needed to promote childbirth. Why? Because they fear that many communities could die out altogether because of the low birthrate of 1.2 children per average Korean woman. Japan, Germany and the United States are facing a social security crisis because of huge portion of their population is over 65, and this is because of their low birth rate spawned by their aggressive population control policy of the past. We are a country with a huge potential to become a great economic power like China and India because of our vast human capital. The Philippines is number 14 in population out of more than 250 countries. Our GDP is number 27 out of more than 250 countries. Our GDP is higher than that of Malaysia, Sweden, Greece, Saudi Arabia, Venezuela and Nigeria. But our life expectancy is a very low number 131, lower than that of Vietnam, North Korea, Sri Lanka and Cuba. Why? Perhaps, our nation spends more on population control than on promoting health and quality of life. The size of our labor force is number 17 in the world. We have an unemployment rate of 7.9%. It is on the high side, but a lot of that is due to incompatibility between education and training and available work, because of poor education policy decisions on the part of both the government and the individuals. For example, the acceptance rate for call center workers is only 5%. Much more Filipinos, perhaps hundreds of thousands more, would have been employed if we had a better English training program.

We should have given more emphasis to science and technology to better address the changing times, so we would not have a shortage of human capital in this field. We should have allocated more funds to state universities and colleges, to make college education more accessible and cheaper. But instead, the trend is to reduce the budget for state universities and colleges. But even with that 7.9% unemployment rate, that rate is still lower than the unemployment rate of Belgium, Spain, France, Greece, Brazil and Indonesia. Yes, we need to invest more in human capital. The entire nation must learn from the success story of Danton Cantuba. He proved, by leading a frugal life and investing almost all of his earnings in the education and training of his many children, that poverty and a big family are not obstacles to raising successful children and creating family wealth. He reared a big family and now enjoys the fruits of his labor with all his children well educated, productive, gainfully employed and helping make the world a better place to live in. Thank you.