SYNOPSIS:

A memory came drifting up today as I read the news of the California circus. It's really apropos of nothing, but it might be of some interest.

Back in 1990 I briefly played Indiana Jones/ Jeff Sachs in the Philippines, leading a small United Nations Development Project team to do a report on the economy. My little team included Eli Remolona, a U.S.-based Filipino economist now at the Fed, and Susan Collins, who is now at Georgetown/Brookings. Basically I was a front man for the good people at the Philippine School of Economics, who knew the answers but needed someone with an international rep to present them.

It was really interesting: as a country where English is the working language of the elite, the Philippines is relatively accessible, yet beneath a thin veneer of Americanization, it's utterly alien. I should write more about the experience someday. But anyway, one thing was for sure: we were dealing with an oligarchic, very corrupt system, where almost every government official came from a wealthy family with a big stake in government decisions, and crony capitalism - the phrase comes from the Marcos era - was rampant. (Marcos's biggest crony was Corazon Aquino's uncle - that's how tight it all was.)

So at one point the team was interviewing the Secretary of Trade and Industry. He was a character right out of central casting: 3 or 4 chins, pear-shaped, harrumphing from behind his desk. But his position was very, very important: in a system where you needed licenses for lots of imports, he was the man who handed them out. And guess what: he was the twin brother of the head of a major industry association. Truth is, I don't actually know that he was corrupt, but his position was inherently suspect. If you want an American counterpart, imagine what people would say if the Bush administration were handing out huge, no-bid contracts to the company that had made the vice president a wealthy man ...

We were all tired that day, and getting a bit giddy. The Department of Trade and Industry's slogan at the time was "Yes, the Filipino can!" And sure enough, the Secretary began a long spiel about rural industry, talking at length about small-scale rural canning factories. "Yes, the Filipino can!" I said. Luckily, he didn't notice.

But the best moment came when were discussing the Philippine auto industry - a classic case of inefficiency. At that point it consisted of two assembly plants, with combined production (this is all from memory, so don't hold me to the number) of 11,000 units per year. I suggested that perhaps this wasn't a venture going very well, and he began talking about how they would expand, moving beyond assembly: "We're going to get into body-building!" he insisted.

Somehow everyone kept a straight face, but as soon as we were out of earshot, Susan began calling him the Minister of Body-Building; and the Minister of BB became a staple of our informal discussions.

And now you see where this all comes from. Will California soon have the Governor of Body-Building?

Originally published on the Official Paul Krugman Site, 8.9.03