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Feb 09

The winter of her discontent

Snapshot 2009-02-09 13-12-59

Since some readers follow the market and are knowledgeable about it, here’s a bit of scuttlebutt to make sense of which whichever way you will:

Meralco share prices are in play. Started last week. They will try to push it to mid 80s range before unloading.

Who, exactly, wants to unload, is a mystery, but whoever they are seem to be in “loading mode.”

Anyway, let’s see how this turns out.

***

The President rushed off to Washington, trumpeting her invitation to the National Prayer Breakfast, where she failed to get as much as a photo opportunity with the new American president. The problem was that the Palace itsel was trying to hype-up the President’s Washington visit.

Eventually, the President tried to make the most of a perfunctory, courtesy conference at the State Department, which was remarkable for Hillary Clinton’s focus on domestic politics.

There was an effort to hype-up the visit as resulting in a commitment for Clinton’s visiting Manila but that doesn’t seem to be in the cards.

The best picture of where the administration’s at, however, might actually be this one:

310109_01rn_640

In power, but going around in circles.

An administration in perpetual survival mode actually surviving, but reduced to going through the motions of governance without actually resolving anything. Meanwhile, everyone is a little more tired, a little more cynical, a little more out of ideas, and running out of options. The President has taken to trying to sound oracular:

“When we were abroad we were hearing strange, huge numbers that just depress the people, but really are very far from what the situation really is,” said Arroyo, who returned Sunday from a weeklong swing through Switzerland, Saudi Arabia, Bahrain and the United States.

Things ain’t so bad? For whom?

Her foes have been kept at bay, but there is little triumph in survival, and endurance only serves to prop up more speculation that her luck is finally running out. Which is more likely than not, wishful thinking. But still…

The administration has managed to consolidate its power to the extent that when things go wrong, it has no one to blame for its problems but itself. It has to keep several balls up in the air; this takes energy, and attention; it also makes for frayed nerves. It’s quite a juggling act, but the longer it’s kept up, the more that everyone expects one of the balls to fall.

That is highly ironic reward for political longevity.

Take two examples.

The first is a gut issue: fuel and food.

Recently, Uniffors blogged about hearings on the LPG supply problem:

So who or what is behind the shortage?

Arnel TY, president of LPG Marketers Association, said the problem started last December when the Big Three- Shell, Chevron, and Petron- started buying LPG from Liquigaz instead of relying on their own supplies.

The Big Three said they were caught flatfooted by the sudden increase in demand.

Didn’t they have any projections?

Well, they said it was difficult to make an accurate prediction because the independent refillers and dealers buy on the spot market.

Petron said, “We are continually selling to allied refillers; They are assured of their regular volume because they follow the rules of the industry. But the demand of independent refillers is hard to project.”

In other words, there would be no shortage if everyone signed up with the Big Three. That’s the golden rule. They wish.

And so what Ty said with regards to hoarding – that it was easier for the Big Three to connive to withhold LPG from the market, to control the supply as it were, than it is for thousands of independent refillers and dealers to do so – makes sense.

And Reyes is blaming the independents, accusing them of hoarding.

In her blog, Marichu Lambino points out that the best that Angelo Reyes can do is to keep reiterating his desire for a departmental army, for emergency powers:

What the Energy Secretary probably meant when he asked for police power is what most people think of when they refer to what police officers do when they make arrests, searches, seizures. That’s not police power. It’s called law enforcement. You don’t need more legislative enactment for that, all the references you need are the Rules of Court and criminal statutes.

The Energy Secretary can on conditions of a valid search, conduct raids of all LPG dealers or the oil cartel in order to arrest the artificial shortage, he can strike fear in the hearts of the greedy and the hoarders in order to avert a full-blown crisis. All he has to do is ask his lawyers how to go about it (i will not give the procedure here); he has to do it as a campaign, not piecemeal; he has to have all the legal bases covered; he has to be swift and discreet.

It’s called: Doing your job. But in this government, no one is doing their job, no one is enforcing the laws, it’s a field day for crooks, fixers, the greedy and the incompetent.

Besides the ongoing problem of the LPG shortage, people are reporting that the price of NFA rice has started to go up again (with stocks apparently fairly healthy; so officialdom now has to look busy: see Agri chief inspects prices of rice at Pasig public market).

The second is the problem of everyone having to tighten their belts while more and more of officialdom gets caught with their snouts in the trough. Yesterday, the Inquirer editorial, Exposed, examined the ambiguous feelings of the public, when it comes to whistleblowers and their revelations -and what ends might truly be served by their exposes. This ambiguity -or unwillingness to take risks- served the purposes of the administration and helped foil the ambitions of its enemies. But having been so thoroughly and consistently whipped, the administration still keeps getting into hot water, and it’s running out of conspiracy theories with which to deflect serious scrutiny.

And what seems to be the growing ability of the public to separate posturing from real action. Senator Miriam Defensor-Santiago, who is of course casting a moist eye on re-election in 2010, has taken to appearing so hot-headed as to be an “unreliable” ally for the President.

But is she? Every time she throws a fit, the story centers on her, and whatever peppery thing she has to say; but it detracts from connecting the dots (to the foot-dragging of the Ombudsman, for example) and relentlessly focusing on what the Senate has shown and which the House tried to whitewash -that allegations of conspiring contractors won’t go away and leads pretty high up, indeed.

Add to this the ongoing mess involving the failure of rural banks, a connected pre-need company, and the sort of cozy collusion that had congressmen trying to exonerate contractors put on the hot seat by the World Bank.

You can see where this is all going: officialdom going around in circles, tripping itself up as everyone gets exposed as being hand-in-glove with other racketeers.

***

As more discouraging news appears (see Motorola lays off workers in the Philippines), news like this –Outsourcing Gets Crimped by Recession: Discretionary IT projects are getting the ax as companies review costs, hurting sales and growth for outsourcing providers– compounds the sense of doom and gloom -and of being adrift.

Here at home, I have to agree with Bong Austero’s view that there seems to be too much self-defeating doom and gloom while not enough focus is being made on what opportunities have arisen or what, really, the big picture is, concerning jobs:

The People Management Association of the Philippines conducted a study in the second and third week of January to get a quick pulse of the employment situation in the country. PMAP is the national association of human resource managers – the people in charge of hiring and firing. The sample of the study was limited, with only 177 companies participating, but it was statistically valid. The study pointed out that – although information from member companies in the electronic and export sectors confirm news reports of heavy layoffs, the survey showed that for the companies represented in the survey, layoffs are limited to 10 percent of respondents. In short, the layoffs and downsizing do not comprise a general trend.

In fact, 60 percent of the respondents of the study revealed that their companies may increase headcount this year. Of this, 43 percent said the increase in manpower would be due to growth in business while 39 percent said it would be due to more aggressive business strategies. Unfortunately, the dark cloud cast by our prophets of doom seemed to have spooked most business organizations. Actual hiring is being done cautiously, with 48 percent of total respondents saying they are only doing replacement hiring for critical positions and a further 10 percent freezing hiring for regular positions.

According to the study, the most optimistic sector seems to be business process outsourcing, with 10 of the 13 company respondents saying they may increase headcount in 2009 due to business expansion. However, four companies out of the 13 respondents say they are also only hiring for critical positions at present. A proportionally bigger number of outsourcing companies among the respondents are also giving lower salary increases this year, compared to 2008 (6 out of the 13).

Fifty-two percent of respondents say projected salary increases for this year is 6-10 percent. This proportion of respondents is lower than the 64 percent last year who reported giving actual increases of 6-10 percent. About 30 percent say that they are currently giving lower salary rate increases to respond to more difficult times. Employees in about 25 percent of respondent companies in manufacturing, 30 percent in outsourcing and 17 percent in services are also not being asked to render overtime work. Less than 10 percent of respondent companies (8 percent in manufacturing and 6 percent in services) have resorted to shortened work hours.

To sum up, there a number of companies directly affected by the global recession but this is a minority – more of an exception at this point rather than the trend. Second, majority of business organizations in this country are on an expansion mode due to business growth and aggressive business strategies. However, and this is the sad thing, most companies are being cautious and are deliberately holding off their expansion programs and consequently, their hiring programs, thanks to the prophets of doom in this country.

But then, what is the official response? Something that can be boiled down into a slogan: “Let us intensify overseas deployment!”

Take a look at this lavish two full-page ad spread, in today’s newspaper, courtesy of the Technical Skills Development Authority (TESDA).

Besides the doom and gloom Austero objects to:

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There ought to be some sort way to keep government ads from being exercises in amateurishness. Including official sloganeering:

IMG_0367.JPG

“Filipinos are the Wonder Workers of the World (Wow-Wows)” says Secretary Tito Boboy Syjuco.

“Wow-Wows”!?

Blogger Smoke does a fine job shredding this ad.

TESDA is, ideally, a very important government agency; in visionary hands, it could help jump-start competitiveness and be a force for social mobility.

But instead, it’s turning into a patronage vehicle for “titoboboy.com.ph” and whatever campaign he has in mind for 2010.

But then TESDA isn’t alone in merely politicking instead of problem-solving; or put another way, the only problem it’s trying to fix is whether or not Syjuco can win election in 2010.

I do believe that we’re pretty much adrift, because our whole system of keeping track of economic activity in any but the haziest of ways, has broken down. So everyone’s a blind man describing the elephant. The merry-go-round whirs around, but it’s all a blur.

Observers on the outside, though, seem to think it’s all lunacy.

Nick Nichols (who recently penned a fascinating look at the potential pros and cons of electricity generation policies in the Visayas) pointed out this graph:

Originally found here, the graph includes the Philippines, in yellow, with its steep climb. A discussion of what this means can be found in The Unlawyer.

35 comments

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  1. Dominique

    Quoting Commander Adama: “It’s not enough to survive. One has to be worthy of survival.”

  2. cocoy

    Such waste. a nation’s energy all for nothing. what a waste. Such is the Fate of Power for Power’s sake.

  3. Madonna

    Nice equation: seek + find + train = match

    Bobo-graphy at its finest.

    And what’s with the cheesy presidential fashion in an ad about scholarships? And lookit, the head looks pasted over the unano figure.

    After humiliating herself and the country with her by stalking Obama — what’s next for GMA? Even Hillary Clinton maybe sensing the stalkerish and desperate vibe. Be wary of desperate people, they will offer anything. And the US has always been pragmatic.

  4. The EQualizer

    Re:Convicted Soldiers in Ninoy Assassination

    Objectively speaking,the imprisoned soldiers who were convicted for the Aquino assassination were minor “pawns” in this crime of the century in Philippine history.

    Why don’t they call a spade a spade? Both the Marcos and Aquino clans know who the real masterminds are!

    Is it easier to blame these lowly soldiers than name the real masterminds who might be related to the Marcoses and/or Aquinos?

    The rest of the nation want to know the TRUTH!

  5. UP n grad

    to the Equalizer: If Ding Gagelonia were to provide a blogpost on THE REAL MASTERMINDS, how would you know if Ding reports the truth?

    If the administration-after-Arroyo provides a FINAL REPORT and the report named Ver and absolved Danding, how would you know if the “Final Report” is the truth?

    [ I am sure Abe Margallo had thought of it already —– doing a USA Freedom-of-Information-Act request for the CIA report on the Aquino assasination — but would you believe the CIA? ]

  6. Paul Farol

    The job losses are nowhere near that of US and China. Since the government is awash in cash from the VAT tax, it can project a caring government by its poor program and selective bailouts. The administration controls the center and a lucky photo with Pres Obama can clinch the big picture for the 2010 presidential election.

  7. supremo

    No one can handle the TRUTH Equalizer. Not even Cory.

  8. supremo

    This is the Philippines’ chance to catch up with the rest of the world in industrial output. Companies in industrialized countries are cutting back in capacity. Second hand industrial machinery are probably cheap now.

  9. Carl

    To be fair, and to put things in their proper perspective, the Philippines has been bumbling around in circles for at least the past 50 years.

    What’s amazing is that we still haven’t fallen off the cliff or crashed into a ditch. God wasn’t kind in giving us leaders but, so far, God’s been kind in allowing us to just stumble along without a major catastrophe. For some, this may still be the definition for temporal punishment.

  10. J_AG

    Most important figure in the Meralco data is the free float level. It looks to read 26%. It is a small enough level to influence for someone who has access to funding and the post itself will help.

    Get the small herd going…..

  11. UP n grad

    Market-timing says definitely not the time to add to Meralco long-position (and may even lighten up (not sell all, just lighten up, then buy again anywhere below 62)) as stock-price is pressed against the upper Bollinger band and stochastics signal overbought.

  12. Paul Farol

    Not that fast to catch up with industrial world, Supremo. US is going America First. For example, the world largest chip maker Intel closed its manufacturing plant in the Philippines but invested $7 billion over the next 2 yrs in its US plants. Intel despite reduction of sales by 23 percent, announced it will invest in America to keep the nation as well the company at forefront in innovation.

  13. supremo

    Paul Farol,

    Intel also closed 1 plant each in Oregon and California. Not all Intel plants are created equal. Intel is closing older technology plants and replacing them with more sophisticated ones. Take note also that the latest chip making technology are always use first in US plants. The new plant in CA will produce advanced logic chips on eight-inch diameter wafers, making it the first Intel factory to use this larger wafer. The Intel plant in Cavite could have produce wafers (and probably stayed in the Philippines) if only former Trade Secretary and now Senator Roxas gave in to Intel’s demand for clean water to make those wafers.

  14. Paul Farol

    Not being able to provide clean water is competitiveness weakness, another lost opportunity in a tight market situation.

  15. Carl

    Economists like Paul Krugman and Nouriel Roubini think that there is a detachment from pressing realities when stock market analysts are still sifting through the shit pile, trying to find nuggets of gold.

    Wall Street types and their emulators, who are looking at a bottoming out of the crisis and riding on a wave of recovery in the not too distant future, may be in for some serious disappointment and losses. Economists like Krugman foresee more pain ahead. No quick fix.

    So it’s interesting to see that some people are still looking for ways to make money out of Meralco and other issues.

    Krugman makes this humorous point to illustrate the huge disconnect between Wall Street types and economists like himself and Roubini:

    http://krugman.blogs.nytimes.com/2009/02/10/nouriel-roubini-and-nassim-taleb-on-cnbc/

  16. J_AG

    MLQ3 should ask the PMAP of the Philippines who represent HRM managers in the country to state what percentage of total revenues of their companies they represent in the country. Their total revenues will actually be their nominal share in the country’s income based GDP.

    It would be interesting to see exactly who they represent.

  17. mlq3

    I wonder if Bong Austero would answer that.

  18. BrianB

    “No one can handle the TRUTH Equalizer. Not even Cory.”

    Someone should’ve told Cory without justice, democracy (rule of the people) is a sham. And it was and it is.

  19. BrianB

    “To be fair, and to put things in their proper perspective, the Philippines has been bumbling around in circles for at least the past 50 years.”

    …run by an elite still living in the Spanish past and fantasizing about a Hollywood-Manhattan future.

  20. supremo

    I read somewhere that UPS will follow FEDEX in China. That only means that even the infrastructure at Clark AB is not good enough for them.

  21. UP n grad

    Supremo: I think FedEx and UPS have concluded that Pinas is a point of inefficiency in regards airfreight to/from China (and points north). The cost-savings comes from streamlining the supply chain (which lowers the importance of the length of Clark runways, the reliability of Clark electricity grid, or security and pilferage at airports).

    Clark runways are extra-ordinarily capable and was actually designed to be an emergency-landing site for the Shuttle.

  22. Carl

    Here’s what Thomas Friedman of the New York Times wrote recently:

    “Leave it to a brainy Indian to come up with the cheapest and surest way to stimulate our economy: immigration.

    “All you need to do is grant visas to two million Indians, Chinese and Koreans,” said Shekhar Gupta, editor of The Indian Express newspaper. “We will buy up all the subprime homes. We will work 18 hours a day to pay for them. We will immediately improve your savings rate — no Indian bank today has more than 2 percent nonperforming loans because not paying your mortgage is considered shameful here. And we will start new companies to create our own jobs and jobs for more Americans.”

    Hey! Why are Filipinos left out? Filipinos are all that – and more! And they make for better entertainers – that’s a bonus. Anyway, I mean Filipinos who leave their country. Because when they’re in the Philippines, they don’t have as sterling a record for paying loans.

  23. J_AG

    Where would you go if you have a potential internal market of 1.3 billion or one that has 90 million.

    Why quibble when factor based services (Transportation) will always be well situated to be close to the physical markets in goods that need to be transported.

    The entire S.E. Asian region combined is still only one third the size of the Chinese economy.

  24. J_AG

    The clan based business enterprise is still the domestic political economy in the Philippines. The fight for control for Meralco between the Arroyos, Cojuangcos and Lopez family, the ongoing PR campaign of Mark Cojuangco for reopening of the BNPP is all part and parcel of this.

    So far Juan de la Cruz will have spent $4 billion for that non performing asset that will go for peanuts to someone who will take it off the state’s hands.

    The landlord/trader/banker model.

    http://www.philstar.com/ArticlePrinterFriendly.aspx?articleId=439431

    “Last week, the Concepcion Clan, composed of about 60 of us from the second to the fourth generation, had our annual shareholders’ meeting in Macau. Normally, we reach about a hundred, but many of the fourth generation had exams. It is a practice to get all generations involved. We do not only discuss issues about Concepcion Industries (Carrier, Condura and Kelvinator brands of air-conditioner and refrigerators), we also talk about family legacy, values and advocacies. Concepcions, being so argumentative, takes so much time in discussions, so we brought in strong moderators who can control the discussion flow.”

    “Imagine 60 Concepcions checking in and out of the airport and the hotel. You can only picture the confusion of those people in the counters, as most of us bear not only the same surname but also first names. My cousins’ names from one branch all start with Raul.” Joey Concepcion

  25. Carl

    Filipino businessmen and politicians are feeling self-congratulatory these days, aren’t they? I looked up the Joey Concepcion piece cited above. There’s a certain smugness that’s consistent with what many businessmen and government officials are currently rapturing about:

    _______________________________________________________________

    “Looking at all these, the Philippines is still lucky, or shall we say, blessed. I am starting to see a number of columnists who write positive points about the Philippines’ future. Some are even saying that small is beautiful. What do they mean? Well, the Philippines has a relatively small economy compared to economies in the world. The Asian financial crisis affected us quite severely early on, as shown in the disappearance and merging of many banks like Far East, PCI, Urban, Citytrust, among others. It led to more stringent banking standards, requiring collaterals on most loans and being very conservative on values placed on collaterals. The Philippines was even the last to come out of the Asian crisis. And this has somehow left a great deal of discipline to many financial institutions and companies. Passing through that crisis was like graduating with a doctorate degree on crisis management.”
    ________________________________________________________________

    So our businessmen and politicians feel they all have Phd.’s in crisis management?

    Nothing wrong with our political and business leaders trying to feel good about themselves. But what’s wrong with that kind of conceit is that it negates what, to my mind, are the actual shortcomings of our banking system: the pawnshop mentality, lack of funds to loan to small and medium-sized enterprises, the obvious partiality towards short-term lending, no credit for agriculture (except for large established enterprises and multinationals), lack of creativity and initiative, etc., etc.

    This pawnshop mentality may help our banking system become more stable, but can it take our economy to a higher level?

  26. Carlito

    There’s a bit of intellectual deceit by Bong Austero when he implies that lay-offs are limited to 10% of the respondents ergo not a lot of people are being laid off. To illustrate, if you got 10 companies, then 1 would have answered yes to laying-off workers if the survey result is to be believed. But what if that company employs a bigger proportion of workers than the rest of the other 9 companies? Simply put, the 10% number has little meaning if at all.

    I really hate nitpicking survey results, but it just flies in the face of anecdotal evidence that friends, friends of friends, relatives and what not are losing their jobs.

  27. Carl

    Nitpicking over unemployment figures doesn’t diminish the reality of severe underemployment.

    Just as blowing our horn over the stability of our banking system doesn’t make our banking system less remiss in efficiently facilitating credit to a wider sector of our economy.

  28. supremo

    ‘Where would you go if you have a potential internal market of 1.3 billion or one that has 90 million.’

    If market size is the determining factor then why didn’t they go to China in the first place. As far as I know the Philippines’ population has always been smaller than China’s population.

  29. UP n grad

    Side-topic: DUBAI — the sky is falling, the sky is falling.
    More than a thousand-a-day of work-visas are getting cancelled.
    ——————-
    My colleague (currently in Dubai) wants to pass on the info that Dubai is experiencing troubled times (but she can go to jail for such actions).

    New York Times also reports:
    Instead of moving toward greater transparency, the emirates seem to be moving in the other direction. A new draft media law would make it a crime to damage the country’s reputation or economy, punishable by fines of up to 1 million dirhams (about $272,000). Some say it is already having a chilling effect on reporting about the crisis.

    Last month, local newspapers reported that Dubai was canceling 1,500 work visas every day, citing unnamed government officials. Asked about the number, Humaid bin Dimas, a spokesman for Dubai’s Labor Ministry, said he would not confirm or deny it and refused to comment further. Some say the true figure is much higher.

    “At the moment there is a readiness to believe the worst,” said Simon Williams, HSBC bank’s chief economist in Dubai. “And the limits on data make it difficult to counter the rumors.”

    ——
    You need a cheap car, go to Dubai.

  30. mlq3

    I do know of a Filipina due to take on a job there, who was suddenly told the government raised the age they permit single Filipinas to work there.

  31. mlq3

    J_AG, not just the Philippines but all Asia, yes? There’s that guy in DLSU who has been studying the clan-based business phenomenon and trying to come up with management straegies more relevant than what’s taught at Wharton. Among his findings is that the succesful clans have family constitutions that are in place long before crises erupt that present challenges to family corporations.

  32. J_AG

    In most of the world. Think Bismark and the French Revolution.

    Except for the U.S. that is how the process of economic evolution started. Family based hunting and gathering to family clans in organized agriculture to the industrial process. Only in Europe and Asia do you still have royals.

    The Filipino clan system has stagnated. In most of S.E. Asia the predominant families are the Chinese. Except for North Asia and S. Asia the Chinese served as the intermediaries who handled the trade with natives for the colonizers.

    Dengs model for China was based on this phenomena. China needed the foreign technology and foreign exchange to develop internally to catch up. Mao destroyed the system.

    The descendants of the Spanish stagnated. In other Asian countries where the British and Dutch ruled they left the indigenous clans alone. The local culture was left intact.

    The Asian countries that were never colonized by the WEST evolved in their own way. Japan, S. Korea…and Thailand

    Our family clan systems here stagnated and are primitive and backward in outlook except for those with more Chinese background. Those that have deeper roots to the Spaniards will eventually die out. The Ortigas clan is one such example. They survived solely based on their relationships with your late grandfather and the land they appropriated for themselves.

    The Concepcion clan is another example. Joe Con and his brother took advantage of their close relationships with Cory to support their own enterprises. They pretty well closed off the means for other companies to compete with them in the air conditioning business.

    They are predominantly still tied to land and trade and continue to be happy to act as selling agents for the more advanced economies.

    Danding Cojuangco is the most ruthless and brilliant amongst them who learned the ups and down of making government his executive department.

    Apart from these old families the new clans have now come on the scene. The trapo landlord clan.

    The competition can be seen in the next election. Mar Roxas the petty boy will represent the old established clans.

    The rest are all from the new trapo clans and products of the old clans. Danding will field his horses. The Lopez clan will have theirs in Mar and De castro.

  33. UP n grad

    On that guy in DLSU doing his study — has he published his findings? What are the cases when having a family constitution becomes a positive and what are the cases when a constitution is a triviality and the better response to a crisis is a “surge-the-gates” putsch? Maybe “surge-the-gates” is better for family corporations that are founded by the Spain-rooted DNA that Ja_g alludes to and constitution/procedural is better for Anglos or Aryans only.

  34. mlq3

    UP n the guy is Elfren Cruz, former head of the Presidential Management Staff. From what I’ve heard, the best example he’s found of a family Constitution that works is the one that the Zobels have had in place for 130+ years.
    http://www.sunstar.com.ph/static/ceb/2006/02/17/bus/family.businesses.drive.economy.but.many.die..html

    here’s his book:

    http://www.anvilpublishing.com/bookdetails.php?id=2005000049

  35. cvj

    Dengs model for China was based on this phenomena. China needed the foreign technology and foreign exchange to develop internally to catch up. Mao destroyed the system. – J_ag

    Without Mao’s revolution, Deng’s reforms would not have been possible because China would still have Oligarchs in the way. Without the Oligarchs, Deng only had to implement the right policy.

    Over here, we haven’t succeeded in purging ourselves of our Oligarchs which is why whatever ‘reforms’ we try does not succeed. Let’s address inequality first, then introduce market reforms.

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