Political Economy by Calixto V. Chikiamco

Where Erap left off

2003-12-17T22:54:00.000+08:00

I was asked recently what the elected president should do in his or her first 100 days in office.
My answer is: take up where Erap left off, i.e. call for a Constituent Assembly and push for changes in the economic provisions of the Constitution.

Former President Joseph Estrada had the right idea at that time, which was to reform the Philippine economy by changing the restrictive and anti-growth provisions in the Constitution. He formed a distinguished panel to make recommendations. Included in the panel were economic luminaries Cayetano Paderanga Jr, former NEDA Secretary-General and now present president of the Philippine Stock Exchange, and Atty. Maria Lourdes Sereno, an expert in international trade law.

Unfortunately, former President Estrada lacked the political capital to pursue his bold initiative. Anti-Constitutional Change forces led by former President Corazon Aquino suspected that the Constituent Assembly was going to be used by Estrada to extend his term and therefore led a campaign to stop Constitutional change.

Actually, the oligarchy was threatened by the Constitutional change initiative because it would remove their privileged and protected provisions in the economy. Foreigners would be allowed to own mass media, public utilities, educational institutions, and even land 100 percent. It would have increased competition in areas that the 1987 Constitution had reserved exclusively to Filipinos.
It would be good for our elected leader in 2004 to pick up where former President Estrada left off.

However, a Constitutional Convention or a Constituent Assembly to change the form of government may be too risky, too distracting, and too controversial to undertake early in the term of the elected president in 2004. Not everybody is sold that a parliamentary system would be good for us or that federalism is the answer to the country’s woes.

Any attempt to reform the country’s political institutions through Constitutional change, no matter how well-intentioned, may exacerbate the country’s disunity and divisiveness.

On the other hand, liberalizing the economic provisions in the Constitution may be less controversial (although the country’s scelerotic left, ever protective of the country’s rent-seeking elite, is expected to oppose it). There’s consensus building in the business community that the economic provisions barring foreign ownership in mass media, telecommunications, public utilities, and land need to be changed.
Even the so-called oligarchy may come on board. The financial woes of Maynilad Water could be solved if the creditors converted their exposure to equity but that’s now not allowed presently because of the Constitutional restriction on foreigners owning public utilities.
The Piatco fiasco wouldn’t have happened had foreigners not been barred from owning public utilities and infrastructure outright. Thus, there are charges that Fraport, a German company, used dummies to build Naia 3.

It may also take another foreign firm to rescue and operate Naia 3 but that option can’t be considered unless the Constitution is changed.

Technology has already rendered the Constitutional limitation on foreign ownership of mass media moot and academic. Foreign mass media companies like CNN are broadcasting to Filipino homes with the help of satellite technology. Pretty soon, mobile phones will be converted into portable mass media entertainment units. Restriction or no restriction, foreign mass media companies will be able to offer their content direct to Filipino mobile phone users.

Furthermore, Filipino mass media companies like ABS-CBN and GMA 7 have ambitions to go global. They will need more capital, probably from foreign sources, if they are to go head to head with foreign producers of Chinese and Mexican telenovelas.
Domestic savings are just too paltry to finance needed higher investment in telecommunications and utilities that will generate jobs and improve infrastructure.

Japan is said to be interested in a free trade, economic cooperation agreement with the Philippines if the Constitutional provisions on foreign ownership of land is removed.

Thus, one of the first things that the elected President in 2004 should do in his first one hundred days is to call for a Constituent Assembly to reform the economic provisions in the 1987 Constitution.

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2003-11-29T12:43:00.000+08:00

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The wrong proponent

2003-11-20T08:56:00.000+08:00

It seems I’m not the only one who believes that the deep fracture in our political establishment is the biggest problem of the country and that we are on the edge of open civil war.

Acting on a paper of Fr. Romeo Integan SJ, the head of the Jesuits, who said in a paper presented to the Palace that “we are on a revolutionary situation,” the Arroyo government is seeking a total reconciliation with the forces of the opposition. These forces include the Marcos family, Eduardo “Danding” Cojuangco Jr., former President Joseph Estrada, the NPA and the MILF, putschist elements in the military, and other oppositionist groups.

In his paper, Integan said that a revolutionary situation now exists in the Philippines, where “there is widespread desire for radical socio-political change among the people, groups could emerge that could lead or effect change and the prevailing system is under serious attack, the holders of state power are hard put to maintain the system or change in the direction they want, societal institutions are under serious challenge and there are real prospects of seizure of power by forces other than the present besieged wielders of state power.”

I’ve said as much before. The situation reminds me very much of the pre-martial law period, when there was a similar deep fracture in the Philippine political establishment. Then, the fracture was caused by former President Marcos upsetting the normal system of factions alternating in power. He became the first Philippine president to be re-elected in the country’s postwar history by staging the dirtiest election in Philippine history in 1969.

Today, this fracture was caused by Edsa 2, which similarly upset the normal pattern of factions alternating in power. The politicization of institutions, particularly the judiciary, is forcing opposition groups to think they can get justice only outside the present system. Hence, as in the period before martial law, a “revolutionary situation” now exists.

However, unlike in 1972, the ruling faction isn’t strong enough to eliminate the other. A pre-emptive strike against all opposition forces, as Marcos did with the declaration of martial law, is not in the cards. It faces the prospect of a third force – the military perhaps – intervening and displacing both factions.

Thus, President Arroyo is forced to reach out with a program of “total reconciliation,” although that is anathema to her hard-core supporters. She’s acting out of an instinct of self-preservation. Although she may win power back in May 2004, the threats against her may instead escalate.

There’s nothing wrong with trying to seek “total reconciliation.” In fact, it’s right that the leader of the nation is trying to forge political unity because without political unity, the principal problems of this nation cannot be addressed.
The problem is the proponent. President Arroyo is the wrong party to lead the efforts in national reconciliation. Aside from the fact that she was the beneficiary of Edsa 2 that caused the rupture, by going back on her word and running, she has little credibility with the opposition.

Had she remained true to her promise not to run, President Arroyo would have the moral capital to bring the warring factions together.

But now, her gestures toward reconciliation are perceived as being political gimmicks and her promises can’t be trusted.

The facilitators that she chose, like Fr. Romeo Integan, cannot be said to be impartial and enjoy a high trust rating with the opposition. Fr. Integan is the provincial superior of the Jesuits, one of the groups which plotted the ouster of former President Joseph Estrada.

Perhaps a genuine effort at reconciliation cannot be started until after the elections in 2004, if a leader with a large mandate is elected. On the other hand, the election, instead of facilitating reconciliation, may provoke a “revolutionary crisis” and all talks about national reconciliation will go out the window.

As for a facilitator, perhaps the US should play that role. For the sake of fighting terrorism, the US has a self-interest in preserving Philippine political unity and preventing Philippine society from imploding. The US would have the muscle to bring opposing parties together. It’s also independent of the contending parties, unlike say, the Catholic Church or the Iglesia ni Kristo.

But the US can only be effective if it performs its facilitator role covertly. US meddling still rouses anti-US nationalist sentiments, although the fact is that our irresponsible elite cannot fix problems by themselves.

Overtly, the US should also refrain from taking sides. The US must be seen as a guarantor of the democratic process (for example, clean elections in 2004) or reformed institutions rather than be perceived as backing a particular candidate.
The reconciliation effort of the Arroyo government is the right initiative, but it has the wrong proponent. National reconciliation will have to wait, if it comes at all.

A Pyrrhic Victory

2003-11-15T08:50:00.000+08:00

Shades of the second envelope!

By a near unanimous decision, the Supreme Court stopped Congress from proceeding with the transmittal of the impeachment resolution to the Senate. The SC declared the impeachment resolution unconstitutional, citing a provision in the Constitution that no two impeachment resolutions can be filed within a year.
It was a TKO (technical knockout) decision. The SC vote stopped an open impeachment trial and public airing of the facts on its interpretation of a technicality: both filed and initiated mean the same thing. By not allowing the impeachment trial to proceed to discover the facts, the SC effectively did a replay of the Estrada trial second envelope: stopping the truth from getting out.

It’s a Pyrrhic victory.

The vote did nothing to enhance the credibility and reputation of the SC in the eyes of the public or the complaining court employees. The rumors – about the relatives of SC Chief Justice Hilario Davide Jr. controlling key purchase decisions – remain unaddressed.

The SC vote just gave the Edsa 3 forces another reason to demonstrate and thrash in Ayala Avenue.

Had the impeachment trial proceeded and SC Chief Justice Hilario Davide Jr. been exonerated, it would have left the Supreme Court standing tall. The young Congressmen led by Congressman Felix William Fuentebella would have been shown to be nothing more than impulsive, vengeful politicians.

We won’t know – for now - courtesy of the Supreme Court’s TKO.

But just like the vote on the second envelope in the Estrada impeachment trial, it could be a tactical victory, but a strategic blunder.

The SC stopped the impeachment resolution from reaching the Senate on the grounds that no two impeachment resolutions can be filed or initiated within a year. This means that the impeachment resolution can be refilled after one year.
If I were Davide, I would have taken my chances with the present Senate. The Senate is presently (although tenuously) controlled by the Arroyo administration. Senate President Franklin Drilon, although not a Lakas party member, is allied with the administration and close to former President Cory Aquino, who’s staunchly pro-Davide.

Davide can’t be sure what the political environment would be next year. It’s possible that neither President Arroyo nor Raul Roco (who demonstrated for Davide) will get elected. It’s possible that more NPC congressmen will get elected next year, swelling the ranks of those who signed the impeachment resolution. It’s possible that Speaker Jose de Venecia, the civil society socialites’ current darling, may lose his position after the May elections.

What’s even more probable is that the control of the Senate will pass on to the opposition. Current surveys show that not a single Arroyo cabinet member has a chance of landing in the senate next year. Trade Secretary Mar Roxas and former Defense Secretary Angelo Reyes are way down the survey ratings.

Perhaps the only good bet of the administration is former Cavite Governor Ramon “Bong” Revilla Jr. But Bong Revilla is an actor who has ties with Fernando Poe Jr. and Jinggoy Estrada and is the son of party-switching Senator Ramon Revilla. In other words, the Edsa 2 forces can’t count on Bong Revilla, if he’s elected, in a crunch.

Surveys indicate that the leading candidates to the Senate come from the opposition. The likes of former Senator Juan Ponce Enrile, Miriam Defensor Santiago, and Ernesto “Manong” Maceda are scoring high in the surveys. Even the civil society matrons’ hate object, re-electionist Senator Tessie Oreta, looks likely to be re-elected, judging from present surveys.

An impeachment trial where the likes of Enrile, Santiago, and Maceda would be participating would be a nightmare for Davide and the Supreme Court. Enrile, for example, is a master trial lawyer and interrogator. The circumstances under which Davide was appointed by Estrada may be brought out, embarrassing Davide and the High Court.

Thus, the stopping of the impeachment trial now on technical grounds was a tactical victory, but a strategic blunder.

The civil society pro-Davide matrons did their little jig after Congress voted to abide by the High Court’s decision. However, nothing has been achieved that burnishes the reputation of the Court and promotes political reconciliation. It’s probable – and the recent unruly Ayala demonstration has shown this - that by blocking the Constitutional process of impeachment, aggrieved parties will seek a resolution in the streets, just as the Edsa 2 forces did. ]

The Philippines seems destined to replay a bad dream and the Supreme Court, with its TKO ruling, may be responsible for it.

A Giant Step Backward

2003-11-11T10:13:00.000+08:00

Backsliding
By Calixto V. Chikiamco

The Arroyo government has just taken a giant step backward – no, make that two steps backward - in reforming the economy.

Two weeks ago, it issued, without much public consultation and debate, Executive Order 241 raising tariffs on finished goods back to the 1998 level.

The EO reverses two decades work on economic reform and tariff reduction. It violates the philosophy on which President Arroyo, a doctorate in economics, shepherded the GATT treaty when she was a senator.

Economists are aghast at this backsliding of the Arroyo government toward freer trade and a more competitive economy. They didn’t expect this backward movement in economic reform from President Arroyo.

The movement toward tariff reduction in this country started nearly twenty years ago out of a recognition that the protectionist economic model the Philippines adopted had brought the country into economic stagnation. Exports were confined to agricultural commodities, most domestic industries suffered from low productivity and high inefficiency, the economy was prone to cycles of booms and busts, and consumers suffered from structurally high inflation. The economic rent-seekers (or, oligarchs if you will) foisted on Philippine consumers shoddy goods while pocketing enormous profits.

Tariff reform has changed the Philippine economy for the better. Exports, as a percentage of GDP, has ballooned. Due to wider imported competition, domestically-produced goods have improved in quality while consumers are experiencing historically low inflation. The small and medium-scale industries have increased access to a wider variety of inputs goods at lower prices.

EO 241 seeks to reverse the gains achieved from tariff reduction. It cannot even be said to be philosophically consistent with economic protectionism. Why? Because it didn’t hike tariffs in all levels for all industries. It gave selected protection to selected industries. It’s a blatant concession to narrow vested interests.

For example, it increases the tariff on trucks and motorcycles to thirty percent, while leaving the tariff in inputs to the truck and motorcycle assembly untouched. Furthermore, the downstream industries that use trucks and motorcycles in their operations weren’t given increased tariff protection. Overall, the manufacturing industry and the consumer sector will suffer from the increased tariffs to certain favored industries.

EO is nothing more than an act to bestow “economic rent” or unearned profit to certain favored, and politically powerful businessmen. It is highly likely that the response of these favored, protected industries is to increase prices, fattening their bottom line without adding any value to the consumer.

It seems that the Arroyo “strong republic” is weak-kneed when it comes to the ministrations of certain industry lobbyists. Ironically, former President Estrada, for all his alleged wrongdoing, never touched the economic fundamentals relating to tariff reform. The former town mayor tried getting money from the jueteng operators (which to his mind isn’t public money) but never did he reverse tariff reform. However, the Arroyo “strong republic” has done so.

The US government should rue the lavish praise of US President George W. Bush for President Arroyo during his latter’s visit. Under the cover of being a staunch ally of the US government in its war against terror, President Arroyo is reversing the US-led movement toward freer trade.

In its “National Security Strategy,” the Bush government is ostensibly committed to promote the doctrines of free trade, free markets, and democracy around the world to counter the xenophobic views of global terrorism. However, it is finding that its allies in the war against terror are leveraging the alliance by reversing the gains toward free markets, free trade, and democracy.

In Russia, Russian President Vladimir Putin, confident of its new status as US ally in the war against terror, has jailed his political rivals in the business community. Here, the Arroyo government not only participated in the collapse of the WTO talks in Cancun, Mexico, but it is now backsliding on the movement toward free trade and free markets.
The word is that industry lobbyists are pushing for another round of protectionist favors and another EO, to be passed when Congress adjourns its current session, is being cooked up.

That would be tragic if it happens because these protectionist moves only enrich the pockets of certain businessmen, penalize consumers, and worsen inflation and poverty.

The politics of hatred

2003-11-07T12:03:00.000+08:00

Published in the Manila Times
November 8, 2003

In one of the forums on the Davide impeachment case I attended recently as a guest speaker, I was appalled when one of the reactors blamed the whole thing on Eduardo “Danding” Cojuangco Jr. He effectively said that Cojuangco maneuvered the whole thing to avenge an adverse ruling from the Supreme Court on the coco levy case. Ergo, the Davide impeachment is a Cojuangco plot, Davide should not be impeached.

Sadly, this reactor is merely mouthing a conspiracy theory propagated by some sections of the media and the elite. Even supposedly knowledgeable political commentators cannot infer anything from the controversy except the Danding conspiracy theory.

What I found so appalling in these conspiracy theories was not only a refusal to discuss the facts, but what I thought to be a sinister campaign to stir political hatred.

However, even granting that these conspiracy theories deserve to be discussed, is there a basis for them? Is SMC Chairman Danding Cojuangco really behind it all?

If Danding did indeed give the marching orders to his NPC partymates, how come not all NPC congressmen signed the impeachment resolution? Would Congressmen Agapito Aquino and Carlos Padilla, both of whom suffered under Marcos’s martial law and who are among the pro-impeachment congressmen, allow themselves to be stooges of Cojuangco? Has Congressman Mike Zubiri, a “Spice Boy,” sold himself to Cojuangco because he signed the resolution?

The fact is that many congressmen crossed party lines to sign the resolution. Lakas Congressman Joey Salceda, a well-known investment analyst before he entered politics, signed the resolution and went before television cameras to say he found merit in the resolution. He only withdrew his signature after intense pressure from Malacanang.

What about the pro-impeachment Alliance of Court Employees Associations of the Philippines – are all their members under the payroll of San Miguel?

That Cojuangco did this to avenge an adverse ruling from the Davide court doesn’t make sense. Cojuangco still has more cases pending before the High Court or to be appealed to it, so what does he gain by antagonizing the whole Court at this stage?
I could think of more people than Cojuangco who deserve to become a hate object. At least since Marcos fell, Cojuangco hasn’t occupied a public position or abused a public office. Instead, he has multiplied the value of the stock of San Miguel several fold, benefiting both government and coconut farmers. On the contrary, government appointed officials have run the United Coconut Planters Bank to the ground, costing the public billions.

This conspiracy peddling is really an attempt to deflect a public airing of the facts. The situation did not grow out of a conspiracy but from the complaints of a democratic constituency. Congressman Felix William “Wimpy” Fuentebella Jr. acted, not due to any marching order from Cojuangco, but from complaining court employees, who said that they weren’t receiving the allowances that they were entitled to receive from the Judiciary Development Fund .When Fuentebella sought answers from the Supreme Court, all he got was stonewalling from Chief Justice Davide.

Unable to get answers to give to the court employees due to the defiance of the High Court, what did Fuentebella do? Encouraged a military cabal to stage a coup and unseat the whole High Court? No, he went through the democratic process of convincing his fellow congressmen to file an impeachment complaint.

Instead of thanking him for adhering to the Constitutional process, the hatemongers from the pulpit, academe, media, and civil society are demonizing Fuentebella and his fellow congressmen with conspiracy theories and threatening them with “people power.” With them making all those threats of “people power,” who are the real democrats now?

These hatemongers are practicing a politics of hatred that could lead the country down the road of civil war. Instead of a public airing of the facts, which would happen in an impeachment trial, they would rather muzzle the congressmen and the complaining court employees and peddle conspiracy theories. It’s not democracy or judicial independence they are out to defend, but their privileged positions where they consider themselves above the law.

If former President Estrada fomented class hatred, these groups are also practicing the politics of hatred. But be warned: the politics of hatred is a like a fire and the perpetuator can also be burned by it.

This politics of hatred is hateful. It has no place in a civilized, democratic society. Unfortunately, the public discourse is being seized by the hatemongers. But as the late Inday Badiday would say, “Careful, careful.”

Our extortion culture

2003-11-03T10:43:00.000+08:00

When news broke out that the German firm Fraport complained to the World Bank that it was being allegedly shaken down by no less than the personal lawyer of President Arroyo, it wasn’t at all surprising to jaded observers of the Philippine political scene. The fact is that it fits into a pattern of extortion to Philippine political culture.

Mind you, this extortion culture extends from the low to the high levels of government. The term “kotong cops” accurately reflects the public perception of our beloved members of the police force. Instead of “to serve and protect,” which is the slogan of the police force, it’s more like “to extort and collect.” Even our firemen are known to ask for a “fee” before they will direct their hoses in a particular direction.

Extortion culture is accepted by the public as being the norm in Philippine politics. Indeed, we can be pretty inventive in describing the extortion prevalent in our political culture. For example, the term “AC/DC” does not mean alternating current or direct current to most Filipinos, but “attack, collect; defend, collect,” which is a sophisticated way of saying some politicians know how to make a living by attacking and defending.

So prevalent is the extortion culture in our politics that it’s not only those rightist, high government officials who exhibit it, but the Philippine leftist rebels too. Under the guise of collecting “revolutionary taxes,” leftist rebels are also into extortion activities. Don’t pay “revolutionary taxes” and either they burn your equipment or threaten your life.

Pity then the poor businessman trying to make an honest living in the country. He is hemmed in on all sides from extortionary demands, from the lowly cop in his beat to the BIR examiner, from the likes of “Ka Roger” to educated lawyers.

Our extortion political culture is really a reflection of two things: one is the prevalence of “rent-seeking” in our society; and the other is the weakness of the state.
Rent-seeking is the non-market extraction of surplus. True capitalists make their profit from the market. They create value whether in manufacturing, trading and distribution and then extract profit from the value they created in the marketplace.

Rent-seeking capitalists, on the other hand, like the AC/DC politicians, kotong cops, and leftist rebels, don’t create value at all, but extract a profit nonetheless from the existing wealth in society.
The weakness of the state, however, exacerbates the problem. The state has been so captured by the rent-seekers that there’s nobody in government that a business could turn to for help. Extortion exists in all societies, but when government itself becomes the problem – as it was the problem for Fraport – then extortion in the political culture becomes severely dysfunctional. Take note that Fraport didn’t even bother to seek redress in Philippine courts (who would, when the lawyer could purportedly predict the High Court’s future resolutions?). but instead ran to the World Bank.

This phenomenon of a weak state being used and trampled on by powerful rent-seekers to accumulate profits for private ends the political scientist Paul Hutchcroft calls “booty capitalism.” I have a simpler term for it: Mafia-style capitalism.

There’s not much difference really between a Sicilian gang’s asking protection money from small businessmen and a Hugo Boss-suited official or his lawyer asking for his share of the loot in a BOT contract. Only a Mafiosi would be so crude as to threaten businessmen with just guns, but Mafia-like Philippine rent-seekers can threaten businessmen with all sorts of decrees and rulings.

The Mafia-like character of Philippine capitalism can help explain the ferociousness by which the different factions are contending for control of the state. As Mafia groups defend their territories, sometimes going to “war” to do so, so do the different factions of the Philippine rent-seeking elite.

It has been said that the “war” between the factions in the Philippines has been bloodless, unlike in other countries where assassination, terrorism, and violence are common in their political history. Even the Oakwood rebellion was bloodless.

But let us remember that Ninoy Aquino was assassinated, although that occurred in the dying days of the Marcos regime. Also, conflict between factions has been bloody and violent at the local level.
Moreover, conflict between Mafia-like gangs tends to erupt in violence. Violence goes hand in hand with an extortion culture. The same logic could prevail over the existing conflict between factions of our rent-seeking elite, particularly when the last bastion of peaceful resolution, the Supreme Court, is perceived to be politicized and captured by one faction.

Those who seek salvation from our extortion culture cannot take comfort in Hutchcroft’s observation that a booty capitalist state is the most difficult to reform.

This extortion culture is the bane of Philippine society and helps explain the violence, disorder, and instability in our political life.

Disdain for democracy

2003-11-01T00:21:00.000+08:00

I’m amused that the people who are spilling out into the streets defending Chief Justice Hilario Davide Jr. in the name of democracy do not practice it.

Proof? They helped oust former President Estrada not through elections (which is the essence of democracy) but through people power revolt. Those who now say that the democratic process is sacred were the same ones who didn’t give the constitutional, democratic process of impeachment a chance.

It’s interesting that in the Davide affair, the non-elected are pitted against the elected (the congressmen). Whatever one can say of the congressmen (and you can say many bad things about them), they have at least some measure of political accountability: they have to face the voters and can be thrown out.

Not so with those people who like to preach to us about democracy from their pulpits, their ivory towers, and their civil society thrones.

The fact is these people really disdain democracy. Democracy is, after all, the rule of the majority. But the majority are poor and they don’t trust the poor to make good judgments. This is behind their bias against politicians like Estrada or elected congressmen.

How much disdain they have for democracy can be seen in how they selectively interpret the law. I remember that during the impeachment trial of former President Estrada, they said legal technicalities don’t matter, truth does. Thus, irrespective of how the senate voted, it’s important that the second envelope be opened. Why should the transparency and the search for truth be impaired by legal technicalities?

Now, it seems that this argument doesn’t apply when it’s one of their own that is being called to bar. We are now being treated to hair-splitting about the filing of two impeachment complaints in a year. They now want to stop the process because of legal technicalities.

Chief Justice Hilario Davide Jr. may in all probability be innocent (I personally think he’s decent and honest) but that’s not the point. The point is whether he, as a representative of the faction that backs him, is above the law or not.

What’s really tearing this nation apart is the growing perception of the asymmetric application of the law. It’s okay for former President Estrada to face impeachment and stand trial, but not Davide. It’s okay to be legalistic and technical when it’s Davide, but not okay when it’s former President Estrada.
It’s okay to violate the bank secrecy law and look into the accounts of Jose Velarde, but not okay to do so with Jose Pidal.

It’s okay for Eduardo Cojuangco Jr. to submit to the findings of the court, but not okay for Davide to submit to an impeachment court.

It’s okay for a minority of congressmen to file impeachment raps against Estrada, but not okay when more congressmen cross party lines to sign the impeachment complaint against Davide.
It’s okay for Panfilo Lacson to face trial for human rights violations, but not okay for former Justice Secretary Hernando Perez to answer charges of money laundering.

It’s not only in the law, but also in value judgments, that this dualism applies. It’s okay for an inexperienced housewife to become president, but not okay for a multi-awarded movie actor and successful businessman to become one.

Perhaps it’s not so wise for Chief Justice Davide to be so defiant. Let him submit himself to a trial for the sake of political stability. I’m afraid that “people power” or “mob rule” or whatever you want to call it, is again being stirred in his favor and going to be used for the wrong ends. Those who have never been elected dogcatcher are trying to use “people power” against elected congressmen and if they succeed, they may push the country over the edge.

This inherent disdain for democracy while singing its praises may establish the justification for widespread cheating in next year’s elections. After all, the people can’t be trusted to elect the “right” congressman and the “right” president, why not ensure the results in “our” favor by rigging the election?

The indignation that accompanies Davide’s impeachment appears conspicuously absent at the shoddy preparations and suspicious selected computerization of elections by the Commission on Elections. That’s civil society for you. Dirty elections in 2004 can do more harm to our democracy than letting Davide go to the senate to answer the charges.

This country is cascading down the path of open civil war. God help us.

Pandora’s box and civil war

2003-10-27T10:56:00.000+08:00

By Calixto V. Chikiamco

When former President Joseph Estrada was deposed by “people power” cum military coup in 2001, former Chief Justice Andres Narvasa, one of Estrada’s counsels, warned that Edsa 2 would open a Pandora’s box.

He was referring to Greek mythology wherein Zeus gave a box to Pandora with instructions not to open it, but she disobeyed and thereafter all the evils and afflictions flew out of the box to scourge mankind.

No matter how one may think of former Chief Justice Narvasa, especially in comparison to the highly revered, but presently beleaguered Chief Justice Hilario Davide, he has turned out to be right.

The war of annihilation between political factions we see today and the present Congress versus Supreme Court spectacle may be traced to that event called Edsa 2.
Edsa 2 was essentially a breaking of the rules. It upset the accepted pattern of factions alternating at power through elections. It meant that agreed rules don’t matter. The Pandora’s box meant that everything has become political.

Edsa 2 opened up all the country’s institutions, particularly the Supreme Court and the military, to politicization by the different factions. All the country’s institutions have become fair game.

Indeed, we see this now and it’s not as if only one side is guilty of politicizing institutions. While the Estrada camp has been accused of politicizing the young officer corps for its own ends, President Arroyo continues to entrust positions of authority to her highly political generals, former Defense Secretary Angelo Reyes and Brig. General Victor Corpus. Despite being despised by the Oakwood mutineers, Reyes recently got a promotion as anti-terrorism and anti-kidnapping chief.

In the light of Edsa 2, the impeachment of Davide can be understood. The argument of the Davide defenders is that the impeachment is political and has no basis in fact. But all impeachment is political. In fact, Estrada was convicted politically and not legally since the Senate still had to rule on the impeachment.

The impeachment of Davide may not so much be targeting Davide himself but the growing perception of politicization of the Supreme Court. The Arroyo appointments to the Supreme Court, many of them coming outside the career justice system, are perceived to be highly political. The appointments of these justices and the coddling of Reyes and Corpus have raised alarm bells in the opposition because the Supreme Court and the military played pivotal roles in Edsa 2. The opposition probably feels threatened by the growing politicization of these two powerful institutions.

Davide may just be the unfortunate victim of the war between the factions. Having signed the ruling which legitimized the ouster of former President Estrada, Davide is now finding himself, like Estrada, a political target.

The problem now is this: if Estrada, the highest official of the land, allowed himself to stand trial and face the impeachment court, why shouldn’t the Chief Justice also obey the rules and stand trial? If Davide isn’t allowed to face impeachment, then the opposition can argue that there is one law for one faction and another law for the other faction.

The situation is dangerous because if there’s widespread belief that the law is being asymmetrically applied, all hell can break loose.
In fact, what we have is an undeclared civil war presently. So far, it’s been bloodless Luckily, the Oakwood rebellion was bloodless. Instead of guns, what’s being used are senate investigations, impeachment, criminal indictments, etc. But there’s no telling what would happen if the impeachment of Chief Justice Davide and elections in 2004 are mishandled and blow up.

I have been repeating and repeating that there is a deep fracture in our political establishment, caused by Edsa 2. The impeachment of Davide is but one manifestation of this fracture. It’s the central problem of Philippine society today. A civil war of sorts is erupting and destroying society.

More than the fragile economy, the healing of this fracture requires urgent attention. For sure, however, being one of the protagonists, President Arroyo cannot heal the fracture and end the civil war.

Perhaps the United States should broker a ceasefire among the warring factions and force the antagonists to a solution. However, US President George W. Bush’s lavish praise for President Arroyo during his visit didn’t help the situation any and the US’s record in forcing a settlement among antagonists, such as in the Middle East, has been one of failure.

The sad fact is that Edsa 2 opened a Pandora’s box. We need a savior, armed with impartial justice, who can put the evil spirits back into the box.

A Destabilizing Visit

2003-10-22T04:38:00.000+08:00

US President George W. Bush came here to shore up the Philippines by bringing military and economic aid in their common fight against terrorism. Ironically, however, his visit may have contributed to destabilizing Philippine society and setting back the war against terrorism.

His visit may be said to be destabilizing not because of what he said, but more importantly, what he didn’t say during his visit. His effusive praises for President Arroyo may be understandable because she was a staunch ally in the war against Iraq. Consequently, the administration is going to town with what it says is an implied endorsement by Dubya, the son of a president, of the candidacy of President Arroyo, the daughter of one.

Malacanang is now trumpeting that the US President’s remarks of his friend having “a strong agenda to run on” was a virtual endorsement for President Arroyo. Lakas Party spokesman Heherson Alvarez went so far to say that because US President Bush committed to help in the armed forces modernization and since modernization will take at least five years, Bush effectively wants his “friend” for another six years.
Malacanang can be forgiven for being ecstatic over the Bush visit and milking the visit for political capital. What can’t be forgiven is that US President Bush played into Malacanang’s hands.

What Bush didn’t say in his speech is that the US wants to see clean, peaceful and orderly elections in 2004. While he rebuked the military rebels, he didn’t say the US is committed to strengthening the country’s democratic institutions, like the judiciary, to strengthen the country’s democracy.

Bush’s omission is very significant in the light of the conclusions of the Feliciano commission, which looked into the roots and circumstances of the Oakwood rebellion. The Feliciano commission said that the grievances of the rebels are rooted in the widespread corruption in the military. It warned of an impending “implosion” of the Philippine military unless these grievances are addressed.
US President George W. Bush said nothing about these systemic roots of corruption in our military. By merely rebuking the Oakwood rebels without harping on the need to root out corruption and build institutions, the US President was effectively endorsing the status quo. Indeed, in equating the Armed Forces modernization with acquisition of more arms and supplies, the US President would seem to encourage the corrupt generals in siphoning off more US aid into their private pockets.

The Feliciano commission also stated that the politicization of the Armed Forces was behind the Oakwood rebellion. It concluded that the Oakwood rebellion had a political component. But what the Feliciano commission didn’t say is that the politicization is being caused by both sides. Officers like Brig. General Victor Corpus, who are favorites of Malacanang, are given strategic appointments. Furthermore, despite Malacanang’s much ballyhooed lifestyle check campaign, not a single general has been investigated for corruption.

When US president George W. Bush failed to say that the US is committed to helping develop a professional Armed Forces imbued with the values of democracy, honesty, and public service. In not saying this, Bush seemed to be tolerating the politicization and corruption in the AFP.

With what they believe is the US’s endorsement for the status quo and the candidacy of President Arroyo, Malacanang will likely be emboldened to do a repeat of the 1969 elections.

It must be remembered that the 1969 elections was the dirtiest in Philippine history. Determined to be the first ever president to be reelected to another term, former President Ferdinand Marcos shamelessly used all the resources of government to be elected again. Marcos basked in the knowledge that he was a strong ally of the US in the war in Vietnam.

It’s not illogical to say that history will repeat itself. The internal logic of Philippine rent-seeking is the perpetuation and monopolization of political power. It is thus likely that the 2004 elections will not be credible and will aggravate, rather than reduce, the country’s political instability.

When Bush the elder visited the country during Marcos’s waning years, he toasted the dictator for his “adherence to democratic principles.” Bush the elder only helped prolong the bankrupt Marcos dictatorship and strengthened the communist insurgents.
Now, Bush the younger may also be repeating the mistake of his father. In failing to ally the US with the Filipino people’s yearnings for honest elections and strong institutions and in projecting an implied endorsement of President Arroyo’s candidacy, Bush the younger may be helping set the stage for an implosion of Philippine society.

This, ironically, would be a victory for terrorism in the country.

Thanks for the visit, Mr. Bush, but no thanks.

California dreaming

2003-10-14T02:39:00.000+08:00

By Calixto V. Chikiamco

Will the Philippines do a California?

Recently, in California, a film actor who made his name in the Terminator series, Arnold Schwarzenegger, defeated the incumbent Governor, Gary Davis, in a recall election. Schwarzenegger, an Austrian immigrant and former champion bodybuilder, ran as an outsider against Gary Davis, a professional politician who rose through the ranks from state assemblyman to governor.

Schwarzenegger exploited his celebrity status but he was evidently helped by an electorate angry over the incumbent’s handling of the economy. Gary Davis was presiding over the highest budget deficit in California’s history. High unemployment and mismanagement of the state’s energy problem also stoked the electorate’s unhappiness with the incumbent governor.

California may be the fifth largest economy in the world and the Philippines a poor developing country, but political analysts are wondering whether California may be a harbinger for the Philippines.
It’s not as if the Philippines did not elect a film actor as chief executive before. In 1998, former President Estrada did a Ronald Reagan and won the presidency with a large plurality. Although he didn’t run against an incumbent – former President Fidel Ramos was limited to a single term – he ran against the former incumbent’s anointed successor, Speaker Jose de Venecia, who ran with the baggage of the Asian financial crisis having just happened.

The question of a film actor running against an incumbent chief executive has become relevant once again because President Gloria Arroyo has declared her intention to run in 2004 and Fernando Poe Jr. is being touted as a likely challenger.

It wouldn’t be difficult for FPJ to claim for himself the outsider status as Schwarzenegger did, if he did run against President Arroyo. It would be the ultimate non-politician running against a professional politician who’s the daughter of a politician.

It also wouldn’t be difficult for FPJ to find issues to run against the ruling chief executive. Unlike the California race where voter unhappiness was confined to the state’s high budget deficits, here voter unhappiness could extend to the worsening peace and order problem, rampant corruption, high unemployment, and looming energy crisis.

Just this week, two international bodies validated the slipping state of Philippine society. The World Competitiveness Yearbook, a compilation of the Swiss-based Institute for Management Development, ranked the Philippines number 22 in competitiveness this year, down four notches from its number 18 ranking last year.

The Swiss-based institution gave the country poor marks in infrastructure and productivity. The Philippines slid in the areas of economic performance, government efficiency, business efficiency, and infrastructure.

Almost simultaneously, Transparency International released a report showing that corruption in the country is at its worst in eight years. Among all countries polled, the Philippines ranked number 92, down from number 77 last year. The survey showed the respondents’ increasing perception of corruption in the country. The report lumps the country together with other countries like Zambia in terms of degree of corruption. Countries like Finland and Singapore scored near the perfect rating of 10, or least corrupt, while the Philippines wasn’t far from the bottom rating of zero, or most corrupt. The country registered 2.5 in the Transparency International scale, not far from the bottom occupied by Bangladesh.

FPJ, therefore, will not want for issues to run against the incumbent administration – if he runs. But that’s a big if, because “da King” is reportedly crowd adverse and doesn’t want to go into politics. However, with President Arroyo running, it’s unlikely that former Ambassador Eduardo “Danding” Cojuangco Jr., whose National People’s Coaltion has an alliance with the ruling Lakas, will run against her.

The pressure, therefore, will be intense for FPJ to run as the opposition candidate. The pressures will be particularly intense coming from former President Estrada, FPJ’s best friend and jailed comrade. With Senator Panfilo Lacson being hounded by government prosecutors over the “Kuratong Baleleng” case, FPJ appears to be the front running opposition candidate.
Unlike Lacson, who carries a lot of political baggage, FPJ doesn’t carry any, except for the fact that he is totally inexperienced in government and politics. But that fact may not hinder his running in the eyes of the electorate and even help him with an “outsider” status, as Arnold Schwarzenegger has shown in California.

However, unlike FPJ, Schwarzenegger made no secret of the fact that he had ambitions other than being the “Terminator.” He was a registered Republican and campaigned for Bush in the presidential elections. He is married to the American political aristocracy since Maria Shriver, a Kennedy, is his wife. On the other hand, other than his friendship to former President Estrada, FPJ doesn’t have any political ties at all.

Still and all, it’s California dreaming for the opposition. The opposition is hoping they can get FPJ to do a Schwarzenegger. Will “Da King” become a “Terminator”?

PS Check out Mark Twain in the 21st Century

Threats to democracy

2003-10-09T01:43:00.000+08:00

When I'm asked to peer into my crystal ball, I'm not encouraged by what I see. I see Philippine democracy on a track, going downhill, on wheels speeding toward the precipice.

One wheel may be a changing attitude of the Philippine elite. I believe the Erap presidency was an eye-opener to the elite. It showed that it was possible for someone outside its control to capture the presidency. As the senate vote on the impeachment trial also showed, even the country's other institutions are escaping its grasp.

This wasn't meant to be so. If money determined the outcome of elections, whoever captured the presidency and other high national posts must, of necessity, be beholden to the elite, which finances the candidates.

But Erap proved otherwise. Wealth being generated from illegal activities (jueteng, narcotics, kidnapping, etc.) has gotten so big that it's possible for somebody who's isn't beholden to the traditional elite to be elected to the highest post in the land and other highly influential posts for that matter.

Because of globalization too, the elite's interests have become more fragmented. It's not possible for the elite to unite behind one or two candidates, thereby allowing somebody outside its control to win.

Worse, Erap waged a class war against the elite. Not only did Erap put the elite's property rights in jeopardy, but he also threatened its elimination by using his masa followers.

Money can no longer insulate the elite from the country's problems. In fact, the elite's families have been the targets of kidnappings and drugs, which in turn finance threats to their rule.

Democracy and elections then serve the interests of the elite only when they allow for peaceful competition among different factions of the elite and a more predictable environment for property rights. But after Erap and the rise of "dark" forces, this may no longer be true.

The second wheel may be the military's growing frustration about the ability of our institutions to deal with the threats to the country, both criminal and socio-economic. Colonel Victor Corpus' views, moderate by some standards I'm told, about corruption in the senate, the judiciary, and some sections of the media, are reflective of the military.

What will happen if, despite all their efforts, somebody whom they believe to have ties with the criminal underground becomes president or vice-president? Will the military stand idly by? Not likely, especially with the military's newfound alliance with the Church and civil society groups.

The third wheel is the country's deteriorating social and economic condition. It's no exaggeration to say that the country is a social volcano. Poverty incidence as a percentage of the population rose from 36.8 percent in 1997 to 40 percent in 2000. In other words, 2 out of every 5 Filipinos remain poor. In the rural areas, 1 out of 2 families are living in poverty.
Income inequality hasn't improved from 1997 to 2000. In fact, it worsened from 1994 to 1997. The top ten percent of income earners still earn about 24 times more than the lowest ten percent.

On top of our acute income inequality and growing poverty incidence, former Socio-economic Planning Secretary Cayetano Paderanga Jr. has noted a growing trend of "jobless growth" in the past several quarters. Growth in GDP isn't being matched by a corresponding increase in employment. This doesn't bode well for a third of our workforce who are either unemployed or underemployed.

The fourth wheel is the continued failure of our institutions in the eyes of our people. The senate, which disgraced itself during the impeachment trials, has further lost credibility during the hearings investigating charges against one of its members. The highest court lost luster too when it was revealed that an alleged drug lord was able to socialize among its members.

In my view, reforms for economic growth and good governance are being checkmated, either by the narrow interests who were anti-Erap but not pro-reform, or by the courts. We have a society that's not moving forward in the face of growing external and internal threats, paralyzed by the checks and balance inherent in democracy.

There are two other ominous developments: One is that the region's democracies are failing to substantially address their economic problems. Japan has stagnated and will continue its decline as its population ages. Even now democratic Taiwan is faltering. So are democratic Thailand and Indonesia.

The one economy that continues to grow vigorously and bucking the trend is authoritarian China. It is growing bigger and faster than anybody else. It is sucking up investments more than twice the rest of the region combined. The Chinese juggernaut is sure to trample many traditional manufacturing industries in the region.

Either China becomes democratic or the rest of the region may have to revert to an authoritarian model to cope with China.

The other ominous development is the clamor for charter change. It's an indicator that the country is in deep crisis. The last time we had a constitutional convention was in 1971, when the country similarly faced grave political and economic crises. We all know what happened next, with Marcos declaring his "new society" and imposing one man rule.

Something's got to give. The stresses on the country's fragile democracy are building up. Let's pray to God there's a happy ending for the Filipino people.

But Check out today's entry at Philippine Commentary...

In praise of private education

2003-10-07T19:36:00.000+08:00

Manila Standard
by Calixto V. Chikiamco

The Philippines is ranked No. 1 worldwide as a source of skills in information technology, according to The Meta Group, a US-based research organization.

The Philippines ranked ahead of other countries like India and Malaysia in terms of supply of knowledge jobs and workers.
President Estrada bared this piece of good news in the opening ceremonies of the Global Information Infrastructure Commission-Asian Regional Conference last Thursday.

But to what do we owe this piece of good news?

This developing country would not have been able to churn out an increasing supply of knowledge workers if it were not for the commercialized education sector.

The fact is that had not a number of for-profit schools, like AMA, STI, and other commercialized tertiary institutions sprouted and expanded in the past decade to fill in the demand for IT (information technology) workers, the Philippines would not have attained its No. 1 ranking.

State tertiary institutions such as the University of the Philippines and PUP and elite Catholic universities such as Ateneo and La Salle simply do not produce enough IT graduates. Not only do they lack the facilities to accommodate more students, but that their tuition fees or entrance requirements are out of reach for the children of the vast lower middle class.

Sure, computer schools like AMA and STI do not have the sports teams, gym facilities, or even liberal arts courses that Ateneo, La Salle, and UP computer students enjoy. But they do the job. They supply the skills to students at a fraction of the tuition of the top schools. Many children of lower middle class and working class families, who otherwise would not have been able to afford to send their children to La Salle or UST, are still able to get tickets to the booming IT sector, thanks to commercialized private education.

(Onel de Guzman, the alleged ILOVE YOU virus author and dropout from AMA Computer College, has reportedly been hired by a multinational company.)

Different schools have been established to cater to the different needs and capacities of customers, which is what one would expect to happen in a free market for education. They range from universities to specialized computer schools and institutes with various fees, facilities and programs. The end result has been a rich and varied supply of IT knowledge workers in demand by the rest of the world.

If government deserves any credit, it is for deregulating education and removing tuition fee caps after the Marcos regime. The statist Marcos regime regulated and capped tuition fee increases as a sop to the restive student population. The unintended result was deteriorating school facilities, poor teacher salaries (leading many to work as household help or contract workers abroad), and poor quality of graduates. Deregulation of education allowed the establishment of many schools at different price points.

So, our commercialized tertiary educational school system is a hero, and not a villain as portrayed by leftists. Our for-profit tertiary educational system is satisfying customer needs. Nobody is being forced to enroll in them. In fact, because there are many types of schools at different price points, a student can move to a different school if his present school increases tuition not to his liking.

The for-profit private sector must also be credited for innovations in the supply of IT education even in the primary and secondary levels. A number of private sector suppliers are entrepreneur-operators who enter into BOO (build-own-operate) and BOT (build-own-transfer) arrangements with private schools who don't have their own computer facilities or faculty. Such BOT arrangements must also be encouraged in our public school system.

One problem, however, in the commercialized education market is the existence of diploma mills. These are schools who
don't even have computer labs or qualified faculty but hand out IT degree diplomas.

Government has every right to close them down, or prescribed minimum standards for schools to qualify as a diploma-granting institution. Many unsuspecting parents, who don't have the time or resources to investigate these diploma mills, are their victims.

However, the best solution to this problem is for government to rate the schools and to publish these ratings. What is government good for, if not to reduce the search and investigation costs of poor parents by rating these schools and producing a public good which is information? In other words, since private rating agencies are not yet in existence, government should do a service to its citizens by continually investigating and rating schools, publishing the results as widely as possible, and letting its citizen-customers make the choice.

The Internet could also be a powerful medium to winnow out diploma mills. Government or a foundation could sponsor an electronic bulletin board on the Net and let students and parents post their comments about the school. This is how eBay and other electronic exchanges efficiently function - letting customers themselves say how satisfied or dissatisfied they are about a particular service or seller. In this way, sellers or suppliers adapt quickly and become better, or risk being boycotted in the marketplace.

The government must learn from the success of the commercialized tertiary education market and seriously consider abolishing the public primary and secondary school system and converting to a system of school vouchers. Government is also better off abolishing most state universities and colleges, which are nothing more than glorified high schools, and budgeting the money for a voucher system. As in the IT sector, the private market would be more efficient at producing the graduates.

Profit is normally considered a dirty word. But there is no better testament to the social returns of profit than the fact that the Philippines is now No. 1 in the supply of skilled IT workers.

Poverty and terrorism

2003-10-06T13:50:00.000+08:00

By Calixto V. Chikiamco
Does poverty breed terrorism?

The kind view is that it does. Young men, who might otherwise not turn to terrorism as a career, are forced by material poverty to become terrorists. The strategy, therefore, under this view, is to combat terrorism by improving living conditions and widening the opportunities for the youth. “Drain the swamp” so to speak by focusing on economic development.

The September 11 terrorist attacks against the United States should put this view to rest. More important, the recent discovery of an Al Qaeda terrorist network in prosperous Singapore should be a shock to those who see poverty breeding terrorism.

To recall, 15 members of a suspected Al Qaeda terrorist cell planning attacks on foreign embassies, US troops, and multinational corporations in Singapore were recently arrested by Singaporean authorities. The discovery of a video clip in Afghanistan showing terrorists how to hide bombs in bicycles provided the intelligence that led to the existence of the Islamic terrorist network in tightly controlled Singapore.

Two of the arrested suspects had even served in the Singaporean armed forces. One was a technician working for the government.

Clearly, the Singaporean terrorists weren’t illiterate, impoverished peasants who had no choice but to embrace terrorism. Indeed, history tells us that poverty doesn’t breed terrorism; an ideology that justifies the slaughter of the innocents does.
The most wanted terrorist of them all - Osama bin Ladin - is a Saudi multimillionaire born to a billionaire construction magnate. The head of the group that executed the World Trade Center and Pentagon attacks is Muhammad Atta, the son of a prosperous lawyer in Cairo. Some of his cohorts were graduates of a technical university in West Germany.

If poverty breeds terrorism, then Africa, with many of the poorest countries on earth, should be a hotbed of terrorism. But it’s not.
The fact is that even prosperous countries breed terrorists. The US produced a Timothy McVeigh, a former soldier executed for his principal role in the Oklahoma bombings. Japan has the Aum Shin Rikyo cult, which engineered the sarin gas attack in a Tokyo subway in 1995. The cult’s members are young, educated professionals who revere Chizuo Matsumoto, the cult’s charismatic leader.

Many of the September 11 terrorists came, not from impoverished Yemen or Sudan, but prosperous oil-rich Saudi Arabia.
It would therefore be naïve to believe that a strategy of economic development alone would stamp out terrorism. We should bear this in mind as we fight terrorism at home. While it’s true that the Abu Sayyaf operates in a region that’s been badly neglected economically, it won’t be enough to pour development aid to combat terrorism. A Marshall Plan for Mindanao may be justified for other reasons, but it isn’t the cure.

What we do know is that ideology plays a big part in breeding terrorists. A worldview that rationalizes the sacrifice of innocent lives produces terrorists. Timothy McVeigh believed that government was so evil that bombing a government complex with innocent people as victims was justified. To Osama bin Ladin, the Islamic faith justifies jihad against the US.
A distorted sense of values plus access to weapons of terror - bombs, anthrax, missiles - produces terrorists capable of real harm.
Education, therefore, should play a big part in the country’s war on terrorism. The propagation of moderate, peaceful Islam to combat the extremist views of the faith by bin Ladin’s followers should be as much a component of the war against terrorism as combat troops.

However, there will always be people who will fall outside the mainstream. Society is just too large and complex so that deviant groups flourish even under the most watchful government eyes. Singapore, a tiny, tightly controlled island of million people, hosted homegrown terrorists to that nation’s surprise.

The existence of a terrorist network in Singapore seems to suggest that governments in the region can’t underestimate Al Qaeda and other terrorists. There’s a real need to heighten anti-terrorist intelligence and security measures. Had the terrorists succeeded in their plans in Singapore, it would have threatened the security of this tiny island and caused shock waves in the region.

Economic growth then won’t be enough to fight terrorism. In the long term, the solution would be education; but in the short term, the fight against terrorism requires a police-military approach. A police-military approach imposes on society significant costs, particularly to civil liberties, but given the determination and ideology of terrorists, it would seem that Asian societies have no choice.

Malthusian nostrums

2003-10-04T13:46:00.000+08:00

by Calixto V. Chikiamco

I can't get over the fact that the Reverend Thomas Malthus seems to very much alive in the ideas of some ostensibly intelligent men. Often, I encounter people who seem to think, like the 18th century English economist Thomas Malthus, that high population growth depresses a country's standard of living. They spew out vitroil at Cardinal Sin and others who oppose population control, painting them as enemies of economic development.

A few months ago, a respected business leader and Ramon Magsaysay awardee suggested that unchecked population growth was a major hindrance to the country's growth.

I thought all along that these neo-Malthusian beliefs were dead and buried long ago - a victim of the progress and improved standard of living humankind has experienced since the death of Rev. Malthus. The Malthusian nightmare of unchecked population growth dividing dwindling resources has never materialized.

On the contrary, population growth not only leveled off and turned negative in developed countries, but also global resources have become more abundant. Especially in the information economy, the supply of digital products, consisting mainly of bits of ones and zeros, multiply like loaves of bread and this has enabled mankind to become more productive.

No, I haven't been converted by my former economics professor, Dr. Bernie Villegas, to the ultraconservative Roman Catholic Opus Dei sect. I am, in fact, a liberal, believing that Filipino families should be given information and choice about family planning. But I think the idea that population growth affects the country's economic development negatively is pure bunk.

I suspect that these neo-Malthusian nostrums are fed by elitists who see poor people having large families and immediately conclude that population control is the answer to the problem of poverty. In the seventies and eighties, the Rockefeller Foundation fed this "overpopulation" myth to the developing world. It was meant to counter the communists who were saying that class oppression was preventing Third World countries from developing.

The Rev. Malthus saw unbridled lust as promoting population growth. Only famine and war could check population.
But he failed to see that having children could be a rational economic decision for poor families. For poor farming families, children are often cheap, unpaid labor and a source of social security in old age. As urbanization and incomes improve, the demand for children wanes. The supply of children also diminishes as the opportunity cost of fertile working women rises. Population growth naturally declines with development, urbanization, and institutional forms of social security.

But the most telling arguments against the neo-Malthusians have been delivered, not by ultraconservative Catholics, but by a Jewish intellectual - the late Julian Simon.

Simon was an economist whose most famous book was The Ultimate Resource. For Simon, the ultimate resource was people. Stuff like oil, coal, and wind wasn't a resource unless combined with the human intellect. Since the amount of the human intellect was increasing, both through population growth and education, then the amount of resources would grow, supplying the world with enough to keep the standard of living rising.

History has proven Simon right. In the sixties, while the doomsayers and neo-Malthusians were saying that the world would soon run out of resources, Simon bet that the prices of commodities would fall and that global standards of living would rise. With many people living longer and better and energy cost per unit of output far lower in the nineties than in the sixties, Simon easily collected on that bet.

Simon was a man who celebrated human beings. His disciple, Stephen Moore, said that Simon would wonder why when a cow is born, per capita GDP of a nation rises, but when a human baby is born, per capita GDP decreases!

Reading his essays, one would think that they were written by a popish Catholic rather than by a Jewish intellectual. For example, in his essay "Population Growth is our Greatest Triumph," he says: "The increase in the world' population represents victory over death. In the 19th century, the earth could sustain only one billion people. Ten thousand years ago, only one million people could keep themselves alive. Now, five billion people are living longer and more healthy than ever before, on average. You'd expect lovers of humanity to jump with joy at this triumph of human mind and organization over the raw force of nature. Instead, they lament that there are so many to enjoy the gift of life."

But Simon, the "doomslayer," was no preacher relying on faith. Instead, he backed up his arguments with facts, figures, and logic. He marshaled indisputable evidence that population growth doesn't hinder economic development.

Simon lamented the pessimistic and simplistic views of environmentalists and neo-Malthusians. He said that not population growth, but lack of economic and political freedom is the cause of underdevelopment and the degradation of the environment. He noted, quite correctly, that in the last century, it was only in the former totalitarian states, the Soviet Union and Eastern European countries, where life expectancy fell and the quality of the environment deteriorated.

Here, we should be careful about our rent-seeking elite using Malthusian arguments to deflect attention from the real causes of poverty: protectionism, poor governance, uncertainty of property rights, and the absence of the rule of law.

As Simon wrote: "The world's problem is not too many people, but lack of political and economic freedom. Blaming population for poor countries' problems is a tragic intellectual error."

PATH DEPENDENCE

2003-10-03T21:45:00.000+08:00

Whenever friends ask me why I'm so pessimistic about the Philippine economy, I, trying to sound erudite, would answer: "path dependence."

Of course, the remark always throws them off. I'd feel like the person in the dining table who says, "please pass the sodium chloride" when I mean "table salt." Or, I'd feel like the guy who announces that he's going to exercise in the natatorium when he means the swimming pool.

In simplest terms, path dependence means "history matters." An economist put it this way: path dependence means "that what happened at an earlier point in time will affect the possible outcomes of a sequence of events occurring at a later point in time."
This reminds me of the times after the First Quarter Storm when we used to visit the renowned nationalist historian, Renato Constantino, who would lecture to us: "The present is the product of the past. If we see the present as past, we can glimpse the future."

Path dependence, however, is a concept that grew out of economics, not history. The concept was formulated by economists Paul David and Brian Arthur, who studied the history of technology.

Both economists wondered about the persistence, if not victory, of "inferior technologies" in the marketplace. To name a few: The Dos and Windows operating system over the Macintosh, VHS over Beta, alternating current vs. direct current, etc.

Paul David's pathbreaking work on the history of the QWERTY keyboard first illustrated the mechanism of path dependence. According to David, Qwerty is a clumsy arrangement for a keyboard. It was developed in the 19th century for typewriters when mechanical keys tended to jam.

However, the Qwerty arrangement has persisted through the years, even when computers replaced clunky typewriters. Some supposedly superior ways of arranging the keys never took hold in the market.
For economists, the Qwerty lesson was disturbing: it meant that markets can fail and "inefficient" or "inferior" solutions can prevail. Because of some historical accident, one technology can gain a marginal advantage over another technology. Over time, this lead becomes insurmountable. The cost of switching from one technology - say, a Qwerty keyboard or a Windows operating system - to another becomes so prohibitive that the market is "locked in" to a particular path.

Why does this happen? According to Arthur, the key mechanism of path dependence and lock in is "increasing returns."
Increasing returns describe self-reinforcing processes. I will choose Windows over Mac because others are using Windows. My choosing Windows further enhances its value and attractiveness to others, thereby enticing others to use it and increasing its value and attractiveness even more. I will also be loath to switch to Mac because I have invested so much learning Windows.

Finally, the high fixed costs of developing Windows and the small marginal costs mean that the more Bill Gates can sell, the lower his average cost will be. Bill Gates, therefore, has a strong incentive to increase market share. A large market share tends to be self-reinforcing because as we have seen, there are strong incentives for people like me to stick to a particular technology.

Some economic historians and political scientists have used the concepts of "path dependence," "lock-in" and "increasing returns" to explain why inefficient institutions persist.
Economic and evolutionary theory would suggest that inefficient institutions should die out in competition with efficient institutions. However, that's not what we observe in the real world, where there are many inefficient institutions, particularly in poor, developing countries.

Here's where the theory of path dependence comes in. More than economic goods and technology, political goods are subject to increasing returns. Political institutions have high start up costs. Once established, however, there are strong incentives to keep an institution in place. There will arise many political actors who would have "invested" in a particular institution.

Moreover, in politics, picking the wrong horse generates high costs. There will be a strong tendency to be identified with the winner, just like a computer user who doesn't want to end up with a Commodore or Macintosh computer.
Unlike in economic markets, setting up rival or alternative institutions isn't easy to do in politics. The product of politics is public goods. But the benefit of public goods can't be limited to those who produce them. There's strong incentive for individuals to "free ride." Therefore, public goods tend to be underproduced by private markets.
Path dependence is my long convoluted way of saying that the Philippines is very much a product of its past. Historical accidents - import controls, the Laurel-Langley Agreement, the US Sugar Quota, martial law, etc. - have made rent-seeking such a strong feature of Philippine economy and politics. The track or path the country has descended is that of rent-seeking, or using the state to generate profits. It won't be easy getting off that track.

Thus, for example, a weak judiciary and bureaucracy serve the interests of the Philippine elite, or those who have grown from the weakness of the state. It won't be easy to reverse this process because a weak judiciary and bureaucracy strengthen those very actors whose interests lie in weak governmental institutions.

The country has not had the kind of social catastrophe - revolution, invasion, race riots, etc. - which its other more dynamic Asian neighbors experienced and which can make possible a divergence from its present path. Its only hope is that globalization will increase the costs of continuing its present path and force much needed changes. But given the path-dependent nature of Philippine politics and economics, Edsa 2 notwithstanding, I'm not holding my breath.

The calculus of GMA's decision

2003-10-02T21:22:00.000+08:00

Quick, which is the most talked about political topic today?

a) Will Paranaque Mayor Joey Marquez run for congressman under the Lakas banner?
b) Will Kris Aquino run for political office, just to spite her former lover?
c) Will President Arroyo run in 2004?

If your answer was a or b, you will get a Kalabasa award. If your answer to the most talked about question was c, congratulations, you will get a gold medal for being an acute political observer. The fact is with election season coming, the question of whether President Arroyo will run is the political topic of the day, and not whether Lakas will drop beleaguered Paranaque Mayor Joey Marquez from its ticket.

However, if your answer to the question as to whether President Arroyo will run is no, you are definitely in the minority. The overall consensus is that God and US President George Bush will whisper to President Arroyo to “please run in 2004.”

I’ve said before that I don’t believe President Arroyo will break her word and seek an electoral mandate. I’ve taken a few bets on this and I’m definitely dejado, with the odds heavily running in favor of those saying she will be a candidate. As Senator John Osmena says, “she swims like a duck, she quacks like a duck, she must be a duck.”
President Arroyo may claim that spiritual guidance is the source of her decisions, but it’s the economist in her that will determine the outcome of the question whether to run or not.

This means that she will calculate her personal costs versus the personal benefits of running or not running, and multiply that decision by the probability of the outcome.
In other words, if running is on the net, good for her and she has a good chance of winning, she will run. However, even if she concludes that running is good for her but there’s a fair chance she will lose, she isn’t going to run.
The results of the recent Pulse Asia survey may not be God’s voice, but it’s a fair indication that she will face pretty high hurdles.

The campaign season hasn’t formally opened yet, so the opposition still hasn’t laid out all the dirt it can show, yet she’s already hurting with the lowest approval ratings since she assumed power.
A keen political observer told me that an analysis of President Arroyo’s political history will show her to be risk-averse when it comes to running for political office. “She’s not going to make the leap, unless she’s assured that she will land safely on the other side,” he said.

She could have run for president in 1998 because her popularity ratings were very high. She could have given former President Estrada a stiff fight. But she took the safer route, running for vice-president under the Lakas banner with Speaker Jose de Venecia. In the process, she abandoned Kampi, which former Congressman Jose “Peping” Cojuangco Jr. helped her form (and this could have started the friction between her and Cojuangco).

At the start of her political career in 1992, she could have run for senator under the Liberal Party with former Senator Jovito Salonga running for president. After all, the Liberal Party was her father’s party. But in 1992 and again in 1995, she run under the more powerful LDP, which could guarantee her a good shot at winning.

President Arroyo must also weigh her chances of winning in 2004 against the costs and benefits of getting a six year term. The costs will surely escalate. The Jose Pidal controversy has not been good for her family or her marriage. If Senator Panfilo Lacson and the opposition make good on their threats to expose more scandals in her administration, there are sure high costs to her, whether these accusations are true or not.

There are indications that the benefits of winning may not be enough to offset the costs of running. Even if she wins, governing the country for the next six years would be rough. The Pulse Asia survey shows that the public believes that the Oakwood mutineers had legitimate reasons for staging their mutiny. This will only embolden the putschists and the coup plotters. Her getting an electoral mandate will not stop the coup plotting and the destabilization efforts because the coup plotters could always say she cheated or bought her electoral victory.

The deteriorating fiscal situation would also make her government in the next six years very fragile. Her government will be vulnerable to “event risk” – a negative political event that could plunge it into fiscal and economic crisis. Should she renege on her promise not to run, it’s unlikely she’s going to get any cooperation from the opposition with regards to raising tax revenues.

Moreover, preliminary surveys show that not a single Cabinet member is likely to make it to the senate, while opposition candidates like former Senator Juan Ponce Enrile, Ernesto Maceda, and Francisco Tatad are within the magic circle. It’s probable that the opposition will control the senate in 2004 and make it very difficult for her to govern. President Arroyo may be playing coy because it’s politically beneficial to her. But when it comes time for her to decide, she will do decide, not on the basis of what God tells her, but on the cold calculus of costs, benefits, and probability.

No reason for joy

2003-09-28T23:13:00.000+08:00

The trade talks in Cancun, which was supposed to move into the next phase of global trade liberalization, collapsed last week.

A huge bloc of developing countries, joined by the Philippines, opposed further liberalization in agricultural products and insisted on the removal of agricultural subsidies by rich nations. With the trade talks over agriculture deadlocked, developing countries refused to move to a new agenda intended to remove bureaucratic layers hindering trade.
The anti-globalization activists were predictably elated. Professional anti-globalization activist Walden Bello was shown in pictures jumping with joy over the collapse of the trade talks.

Unfortunately, our government officials were similarly overjoyed at the outcome of the Cancun round. “(We are) elated that our voice has now been heard,” said Trade and Industry Secretary Manual Roxas III.

This joyous celebration over the failure of the Cancun talks is premature and wrongly predicated. The Philippines could end up being a loser.

Firstly, the Cancun talks weren’t just aimed at improving trade in agriculture, but also at reducing the bureaucratic red tape that hinders global trade. The Cancun talks were supposed to come up with new and simplified rules that would reduce corruption and facilitate trade, so when the trade talks stalled over agriculture, the developing countries lost an opportunity to tackle bureaucratic corruption and waste in their own economies.

Secondly, the collapse of the multilateral process of securing access to the rich markets would mean everybody for itself. In this process, preferential access to the rich markets of the United States and the EU would have to be done on an individual country basis. Individual developing countries, however, have less leverage in extracting trade concessions from the rich nations.

What’s likely to happen is that the “hares” like Singapore and Chile would likely forge their own bilateral free trade deals, leaving the “turtles” like the Philippines behind. For example, Singapore recently signed a free trade agreement with the United States, joining a few select countries like Jordan and Mexico that have done so. What this means is that if you are an investor who wants to sell goods to the United States, you would most likely locate in Singapore because the latter’s goods can now enter the United States duty free.

Singapore would now be sucking up the investments that would have stayed in countries like the Philippines had multilateral negotiations like the one in Cancun resulted in the general lowering of trade barriers.

China, a supposed ally of the Philippines, in the stalled trade talks, doesn’t have much to lose. Because of its cheap costs and geopolitical importance, China will have leverage in its bilateral dealings with rich nations. For example, the overvalued yuan is disrupting the global balance in trade and leading to undesirable large trade surpluses for China. But it’s unlikely that the United States would press China too hard to revalue the yuan for fear that it would alienate an important ally in the global war against terrorism. Besides, many American companies have relocated their factories to China and will lobby their government to go easy on China.

It’s therefore puzzling why our government officials are jumping with joy over the collapse of the trade talks because we will be the ones who will be left behind.

Lastly, the collapse in the Cancun trade talks will not solve the problems in Philippine agriculture. As former Agricultural undersecretary and economist Arsenio Balisacan commented, “The root of our problems is not the WTO or free trade. Many Asian countries have been able to develop their agricultural sector despite the WTO.”

“Our problems in agriculture stem from the government’s lack of support for the sector as well as the lack of good policies that would encourage its development. Long before the Philippines joined the WTO, our agricultural sector was the most pathetic in Asia and it had continued to be like that even with our joining the WTO,” said Balisacan.

Our farmers cannot even be said to be victims of globalization because they haven’t been able to participate. With lack of farm to market roads and other infrastructure support, our farmers have no physical access to the global markets that are supposedly victimizing them.

Our agricultural sector suffers, not from the effects of globalization, but from lack of budgetary support, spending on subsidies for the National Food Authority, lack of research and development, overprotection for the low-valued added grains sector, and uncertainty over the property rights environment caused by the agrarian reform law. It would be well for the government to address these problems rather than high-fiving over the collapse of the Cancun talks.

Unlike in the fable where the turtle wins the race in the end, the Philippines could end up being “kulelat” or dead last again.

Bleeding heart arguments

2003-09-18T23:16:00.000+08:00

A group of alleged farmer organizations came out with a full page advertisement earlier this month in a newspaper denouncing Senate Bill 2553, or the Farmland as Collateral Bill, and asking President Arroyo to scrap or veto the bill.

The group claims the bill will lead to the death of agrarian reform and to the reconsolidation of ownership of land by a few.

Nowhere is there a solid argument in that advertisement or in the hearings held by Congress that the bill will lead to the loss of farmers’ welfare or a loss in productivity. Instead, the group and its supporters advance what are essentially “bleeding heart” arguments. “Kawawa naman ang mga farmers” is essentially the gist of their arguments, although the scientific research and the economic logic show otherwise.

The fact is that the farmers are to be pitied now because under the present law, farmer beneficiaries aren’t allowed to mortgage their Certificate of Land Ownership Awards. They therefore have to resort to the underground, illegal credit markets and pay usurious rates.

Worse, because their CLOAs lack collateral values due to their non-mortgageability under the present law, farmers resort to “pawning” their land, according to a study by the Philippine Institute of Development Studies. This means that the farmers yield to the creditors the right to farm the land or part of it.

This is the status quo that the opponents of SB 2553 want to keep: farmer beneficiaries cut off from the formal credit markets and under the mercy of usurers.

The opponents of SB 2553 are also objecting to a provision in the bill that would allow farmer beneficiaries to sell their land. They prefer the status quo wherein ownership rights of the farmer beneficiaries are limited. Farmer beneficiaries aren’t allowed to sell their land except to the government or to other beneficiaries, effectively limiting the market, and hence, the value of their land.

These bleeding heart opponents of the Farmland as Collateral Bill don’t want to give the farmer beneficiaries the freedom to do what they want with the land. They want the farmer beneficiaries to be chained and tyrannized by government or unable to freely choose and get the highest value for his land. In other words, they want the beneficiaries to be poor farmers forever.

These bleeding heart opponents also oppose the bill because they say it would lead to the reconsolidation of land ownership by former landowners. They point to a provision lifting the limitation in the ownership of farm land to five hectares.

The PIDS study doesn’t show that former landlords are reacquiring the land that was taken from them by the government through foreclosures on unpaid loans to the farmer beneficiaries. The farmer beneficiaries are more likely to borrow or pawn their land to relatives or neighbors.

Besides, even assuming, without conceding, that former landlords are reacquiring their former lands through legitimate foreclosures or purchases, so what? The bill’s opponents have never been able to refute the Coase theorem (named after Ronald Coase, the Nobel laureate for economic science): he who values the land most will prevail.

This means that efficient farmers will always buy out the inefficient ones, which will lead to an increase in agricultural efficiency and overall increase in welfare. A farmer who can only make 10,000 pesos from his land is much better off selling his land and working for another farmer who can make 100,000 pesos from that same land. Society benefits; individual farmers benefit. Restricting the market in farm land will ensure that all farmers are condemned to perpetual poverty and inefficiency.

A progressive land tax may be desirable from a social policy point of view but it’s not an argument for not passing the bill. The bill aims to improve farmer beneficiaries’ access to the formal credit markets, to widen the market for their land, and to permit the process by which efficient farmers can buy out inefficient ones. None of these objectives can be attained by a progressive land tax.

A progressive land tax is desirable only if society believes that concentration of land ownership isn’t a desirable thing. In fact, there may be no need for a progressive land tax if protection for agricultural products is lowered. The unearned “rent” of landlords is reduced by the importation of competing agricultural goods. In reality, because of smuggling, this is happening now.

Instead of a progressive land tax, what should be passed is the removal of the restriction in foreign ownership of agricultural land. Allowing foreigners to buy agricultural land increases the universe of buyers. This will not only improve the marketability of farm lands, but also ensure that the most efficient farmers, be they native or foreign, will end up owning farm lands.

The opponents of the bill are essentially for the status quo. And what is the status quo? Small landlords, most of them middle class professionals, get targeted by CARP while the big, politically powerful landlords get away with a stock ownership scheme. Farmer beneficiaries have to borrow from the usurers. Farmer beneficiaries also can’t sell their land to anybody they want and for the highest price. Efficient farmers can’t expand.
President Arroyo, who pushed for the Farmland as Collateral bill in her State of the Nation speech, should not be swayed by the bleeding heart arguments of the status quo adherents. She should instead ensure that the bill is passed into law in the current session.

Septembers Past

2003-09-15T10:28:00.000+08:00

Ferdinand Marcos and Martial Law

Lessons for Today

One of the reasons Navy Lt. Antonio Trillanes gave for staging the Oakwood incident was the purported plan of the Arroyo government to declare martial law.

It was an incredible charge and was accepted with much skepticism and disbelief. What did happen was the declaration of a state of rebellion in response to the Oakwood incident, which was eventually lifted after opposition from the business community.

However, one of my politically astute friends said that all this talk from high government officials about continuing plots to destabilize the administration and linking criminal incidents like kidnappings and the Citibank robbery to these plots is pretty ominous. It would seem as if they are preparing the justification for a declaration of martial law.

I assured my friend that in the unlikely event that it does happen, it’s not going to last. However, I will concede that the situation today reminds me is of the situation prior to Marcos’ declaration of martial law in 1972.

Prior to 1972, the split between the factions in the political establishment became irreconcilable. Perhaps it was because of Marcos’ stealing of the election in 1969 to become the first ever Philippine president to be re-elected. Marcos stole the election through unabashed use of the Central Bank to print money and through the more than usual guns, goons, and gold. But by stealing the election in 1969 to become the first president to be re-elected, he upset the usual pattern in which alternating factions controlled Malacanang.

Marcos decided to eliminate the other faction permanently by declaring martial law in 1972. The economic crisis that he himself was responsible for, by printing money during the 1969 elections, brought the students and leftists out into the streets. He suspected that his political opponents like Aquino would connive with the leftists to drive him out of Malacañang.

Marcos then used the military to eliminate what he called the “oligarchy” and communist insurgency. Actually, he used the military to eliminate the opposing faction and he monopolized rent-seeking political power.

That same situation - factions in the political establishment in an irreconcilable course - prevails today. What’s also clear is that like in 1972, what tips the balance in the struggle of the two factions is the role of the military. It was really the decision of former Defense Secretary Angelo Reyes to change his allegiance that sealed the fate of former President Estrada. People power was a component but the most important variable was the political role played by the military. The military controls the “tipping point.”

This lesson wasn’t lost on the Estrada camp, which may have played a role in the Oakwood mutiny. This lesson isn’t lost to Malacañang either.

The irreconcilability of the factions in our political establishment and the decisive role played by the military in the struggle between those factions don’t augur well for the future of this country. What this means is that both factions will try to politicize the military for their own ends. This is why the declaration of martial law isn’t as improbable as it may sound: the faction in power may decide to eliminate the other faction permanently, as in 1972, by using the military ostensibly to defend the republic.

It’s also possible that the military brass may decide that it has had enough of being used by either faction and take power themselves.

The 2004 elections may reduce or heighten the risk of a military takeover. If elections are clean and credible, it’s likely that the struggle between the factions will stay in the legal arena. If not, it could set the stage for a heightened role for the military.

Despite conditions eerily similar prior to 1972, President Arroyo lacks the capability and wherewithal to declare and sustain martial law.

Despite claims of being a “strong republic,” the Arroyo government is a very soft one, judging from the state of its finances. It’s surviving purely by borrowing. It’s therefore very vulnerable to the harsh judgments in the debt market. If the Arroyo government decides to declare martial law, a refusal of creditors to renew bank lines or buy Philippine bonds will quickly bring the government to its knees.

In contrast, the Marcos government prior to 1972 wasn’t as similarly indebted. Furthermore, the Marcos government got a lucky break when the Yom Kippor war broke out in 1973. That war between Israel and the Arab world resulted in the tripling of oil prices and the resulting petrodollars became available to debt-hungry governments like the Philippines under Marcos. The recycling of oil money to finance developing countries enabled the Marcos dictatorship to last as long as it did.

The moral authority of the Arroyo government to declare martial law may also have been compromised by the Jose Pidal revelations. Civil liberties are usually exchanged for better governance. But it would not be possible for President Arroyo to conduct lifestyle checks on lowly Customs officials when her own brother-in-law admitted owning a building in San Francisco while paying a paltry sum in income taxes. She would not be able to ask businessmen not to hoard dollars if martial law is declared when her brother-in-law admitted to having huge dollar accounts in Morgan Stanley.

It’s likely that a member of her faction may push her aside (Vice-president Teofisto Guingona is already trying) should she display weakness in the struggle against the opposition.

While there are strong similarities between the period prior to the declaration of martial law in 1972 and today, it is by no means inevitable that history will be repeated. Nonetheless, the escalation of the struggle between factions of our rent-seeking elite would suggest that the politicization of our armed forces and police agencies will intensify. It’s a rocky road ahead.

The Jose Pidal Controversy

2003-09-12T00:01:00.000+08:00

Uncanny parallels, dangerous implications

(Also Published in the Manila Times)

The Arroyo camp must be pretty dense if it doesn’t see what the opposition is up to in the Jose Pidal controversy.

The opposition is trying to draw a parallel between the cases of corruption against former President Estrada, which eventually led to his ouster, and that of the cases of corruption now hounding the Arroyo administration. The parallelisms drawn are uncanny: a Jose Velarde against a Jose Pidal; a Chavit Singson against an Edgardo Mahusay, whistleblowers both who knew everything inside; the mistresses of Erap against a Victoria Toh; a PCI-Equitable Bank against Union Bank and BPI; a Philippine Muslim Youth Foundation against a Lualahati Foundation.

The opposition, however, isn’t trying to exploit the parallelisms to force the situation to its logical conclusion: another impeachment and a people power revolt. It’s smart enough to know that these would be improbable, with elections coming, and not very wise.
What it’s trying to do is to show the hypocrisy of the people who supported Edsa 2 and the ouster of former President Estrada. The opposition has laid the bait and the enemy is biting.

The NGOs, who were so vociferous in expressing their moral outrage against former President Estrada’s corruption, has been extraordinarily silent on the Jose Pidal controversy (perhaps silenced by a billion worth of bonds?). Others, like Bill Luz of the Makati Business Club, want the investigation of the Senate on the Jose Vidal controversy to be stopped, a tune so different when it was the Jose Velarde account that was being investigated. The bankers and the business figures who weren’t alarmed when PCI-Bank volunteered to disclose the confidential information about Jose Velarde are now invoking the stability of the banking system to suppress the release of information that may be related to a criminal matter.

Department of Local Government’s Secretary Jose Lina has gone one step further by accusing groups like the Council on Philippine Affairs of trying to destabalize the government, something that not even former President Estrada did when COPA was active in the anti-Estrada demonstrations.

The Arroyo camp is falling into the same trap when it resorts to legalistic maneuvers to try to thwart the Senate investigation. The people know that “let him bring his charges in court” wasn’t the same tune they were singing when it was Luis “Chavit” Singson who was exposing the jueteng payola. In fact, Singson brought his charges to media because he knew that he couldn’t get the truth out in court.
What the Arroyo camp doesn’t realize is that the opposition doesn’t need to show legalistic proof of guilt beyond reasonable doubt to win. It just needs to show the hypocrisy of the other side and the moral hollowness of the strong republic.
It would be fine if the opposition would just ride on the issue to score popularity points for the next election. But there’s a danger that it could lead to something else - growing instability and class conflict.

The danger is this: the poor people know that justice is compartamentalized in this country. They know this from experience. There’s one justice for the rich and another justice for the poor.

What if former President Estrada or a naughty political figure in the opposition points this out: the reason why former President Estrada was treated differently when he was accused of high level corruption and lack of morals was because he was pro-poor?
It would not be hard for a demagogue to point the difference because he would be tapping into the poor’s intuitive sense of compartamentalized justice in this country. There’s one justice if you are an Ateneo graduate and another one if you are a dropout; one justice if your friends are bankers and businessmen, another if they are actors or actresses; one justice if you are close to Cardinal Sin and another if you are close to Iglesia ni Kristo; one justice if your office is in Legaspi Village, and another one if it’s in Tondo.

The Arroyo camp should not let just lawyers and politicians manage the Jose Pidal controversy. The opposition is in a no lose situation. It’s the country that could lose.

A shot across the bow

2003-09-05T00:01:00.000+08:00

It was a failed coup attempt. The Oakwood incident wasn’t merely a demonstration of military grievances over administrative, internal matters. It was a grab for power.

The rebel leaders said so on the morning of the Oakwood takeover. They demanded a change in the political leadership. They had an alternative program of government, the so-called National Recovery Program of Senator Gringo Honasan, which they wanted to impose.

Another evidence of the political component of the rebellion was the feeble attempt to simulate an Edsa-type civilian-military uprising. Early in the morning, a group of civilian marchers, armed with banners touting the National Recovery Program, attempted to march near Oakwood to support the rebels. The civilian marchers were prepared and had obvious foreknowledge of the Oakwood takeover.

Whoever plotted the failed coup took from the playbook of the Edsa People Power revolt that deposed former President Marcos. At that time, a military breakaway group, led by former Defense Secretary Juan Ponce Enrile and Philippine Constabulary General Fidel Ramos, broke from the chain of command, renounced their allegiance to the Marcos dictatorship, and holed up in Camps Crame and Aguinaldo. Civilians or “people power” surrounded the rebels in support.

The Oakwood plotters had the 1986 People Power revolt in mind but grossly overestimated their ability to rouse popular support. It didn’t help the plotters’ cause that they were mouthing motherhood slogans that left people clueless as to what they were really fighting for. Even after their extended exposure on television, the rebels failed to inform the public what the components of their national recovery program are.

What made the rebels yield?

I don’t believe for a moment that the pleas of their “mistahs” or PMA classmates changed the rebels’ minds. Instead, to my mind, the following forced the leaders to reconsider:

First, civilians didn’t mass near Oakwood to support them as they had hoped. There wasn’t even a sprinkling of the masa crowd similar to Edsa 2.

The failure of civilians to rally for them wasn’t simply the result of the police stopping marching supporters. It was that their plan was poorly conceived and executed. While the public probably saw merit in their cause of graft and corruption against the military establishment, it wasn’t enough to prompt ordinary citizens to rush to Oakwood and express political support.

Second, mass defections from other military units didn’t occur. Their covert supporters in the military sat on the fence, rather than defected. When the civilian component of the rebellion failed to occur, other units chose prudently to stay on the sidelines.

Last, the governments of the United States, Australia, and Singapore expressed unequivocal support for the Arroyo administration. It’s worth noting that soon after US Ambassador Francis Ricciardone went on television reading a statement of support for the Arroyo government at about 3 p.m. Sunday, the first surrenders took place.

It doesn’t mean that Ricciardone’s statement was enough to scare the rebels. It was just the last nail in the coffin, after their scenario of civilian support and more military defections didn’t play out. The rebels had meant to present the US with a fait accompli but they never got around to that.

However, the Arroyo administration shouldn’t be strutting around, proclaiming its victory over the rebels. First, there was a massive failure of intelligence. Everybody knew that a coup plot was afoot. The newspapers had started reporting it a week earlier. I myself was told two weeks before that naval officers were plotting a coup.

The fact is that the government’s “intelligence” officials (would that be an oxymoron?) failed to surveille the rebel officers, whom they knew all along. It’s simply amazing that a band of disgruntled officers could meet in staging houses in Mandaluyong and Dasmarinas Village without the government detecting and stopping them.

Second, the Arroyo government and its civil society supporters failed to generate enthusiastic public support against the coup either. Civil society called for massive vigils and demonstrations in front of the Edsa Shrine as early as Saturday when rumors of the coup mounted. But only scant hundreds showed up. It wasn’t enough to convince the rebel leaders that their power grab was doomed from the start.

Third, the rebellion showed the hollowness of the strong republic. The military, “strong arm” of the strong republic, was exposed as riddled with graft and corruption and dissension. With the escape of self-confessed bomber Al Ghouzi and now, Sunday’s rebellion, the government’s claims of improving peace and order have suffered a setback. The Arroyo government’s credibility with investors has clearly suffered.

Giddy at the success in quashing the rebellion, President Arroyo is papering over the structural problems that gave rise to the rebellion and encouraging talk of her running in 2004. Except for setting up commissions to investigate the rebels’ grievances, there are few initiatives to address the root causes of the country’s malaise, from a weak, politicized, and corrupt bureaucracy to weak finances. On Constitutional change, the President has chosen to fence sit, instead encouraging her sycophants’ call for another six-year term, which effectively means she’s for the status quo.

Instead of seeing the tactical victory over the Oakwood rebellion as a sign of her omnipotence, President Arroyo should see it as a shot across the bow. She can’t hope to renege on her promise not to run and then be able to preside over a stable nation for six more years.

Nobody came out of the Oakwood misadventure smelling like roses - not the idealistic but misguided young officers, not civil society, not Secretary Angel Reyes, and not President Arroyo.

THE FRACTURE

2003-08-25T02:02:00.000+08:00

The most pressing, visible, and crucial political problem today is the deep fracture in the country’s politics.

This fracture is not driven by ideology, but by a life and death struggle between factions of our political elite. The struggle is troubling because it has escalated into the extra-Constitutional arena - people power, coups, rebellion, etc.

EDSA 2 has indeed opened a Pandora’s box. The rules of engagement have changed. The fight between the “ins” and “outs,” between the opposition and ruling power has degenerated into a no-holds barred, winner-take all one. It can be said that we have a civil war in our political establishment.

Collateral damage in this war has been the destruction in the credibility and standing of our institutions: the Supreme Court, the Armed Forces, the Philippine National Police, the entire judiciary, the Senate and Congress, the bureaucracy, the Catholic Church, media, and even the office of the president.

The atmosphere has become so bad that reports of Malacañang desiring to replace BSP Governor Rafael Buenaventura, an appointee of former President Estrada, in order to control the Anti-Money Laundering Council, are given credence.

A victim of this civil war is the economy, particularly in this country where economic matters can’t be divorced from politics. The politicization of the courts (or even the mere appearance that they are being manipulated as in the case of the arrest of journalist Ninez Cacho Olivarez) has further reinforced the perception that no contracts are safe from the volatility of Philippine politics.

Another victim is the war against terrorism. The Oakwood rebellion is the most visible manifestation that the fight against terrorism and criminality is being sidelined by the political civil war within the establishment.

What we are seeing, says De La Salle Professor and political scientist, Julio Teehankee, is a breakdown of the national consensus. Without a national consensus and an underlying social compact, the government cannot do nation building. There will be no unity in how to gain from and reduce the risks in globalization, for example, or to fight poverty. The political “noise” arising out of this civil war will drown out any national dialogue.

The country’s problem is that a national consensus is best achieved through political parties. Political parties are the instruments by which a national consensus can be forged. However, the country lacks a genuine political party system. Accordingly, the political agenda of the warring parties are increasingly set by extremists on both sides - by rebels, coup plotters, NGO activists, the Church, dealmakers, etc. - people, in general, who have no sense of political accountability.

How to heal this fracture is the biggest problem that the country faces today.

It’s far too easy to say that that this fracture is the cost of enforcing the rule of law. The problem with this argument is that the enforcement of the law must be seen as symmetrical. There can’t be one law for Edsa 2, but another law for Edsa 3 and Oakwood; one law for the young captains and lieutenants, and another law for the generals; one law for Jose Velarde and another law for Jose Pidal.

Will a lifestyle check on the generals be made, for example, or will the threat of a coup coming from them ensure that only the prosecution of the junior officers is pursued?

In this light, resolution of this civil war and reconciliation between the warring parties seem impossible.
Conventional wisdom states that elections in 2004 would help heal this nation. Everything would be fine as soon as we elect a president with an electoral mandate.

Would it?

With many of our institutions having such low credibility and under attack, would the institutions presiding over our elections, like the Comelec, the PNP, and the Department of Education be able to measure up? Will the president in 2004 be elected with a firm majority or a mere plurality? It’s also possible that the president elected in 2004 will increase rather than decrease the divisiveness. Given the politics of this civil war, there could be vendetta and vindictiveness after the elections, not healing or reconciliation.

The country faces a long period of political instability unless this fracture is healed and institutions are strengthened.
Unless the problems of politics and state are addressed, the economy will remain in a low growth path, propelled more by OFW remittances than anything else.

I asked Dr. Teehankee if he had any solution to heal this political fracture. He just shook his head.
If the brightest minds in the academe are despondent of a solution, is there any hope of finding one?

2003-08-21T04:41:00.000+08:00

Humpty Dumpty

by Calixto V. Chikiamco

A dagger in the heart of the presidency - that’s what I would describe the expose of Senator Lacson about the alleged exploits of First Gentleman Jose Miguel Arroyo.

Between the Oakwood rebellion and Ping’s exposé, the latter is a more serious challenge to the presidency of President Gloria Macapagal-Arroyo.

While the rebellion merely challenged President Arroyo’s political authority, Senator Lacson’s bombshell challenges her moral authority. Her political authority emanates from her moral authority. How could President Arroyo, for example, clean the Armed Forces of the Philippines of graft and corruption if there’s even bit of truth in Senator Lacson’s charges? On what moral plane can she now lecture the young rebel soldiers about adherence to the Constitution if she broke her oath of office?

Senator Lacson must still prove his charges, but the burden of proof is on the other side to show otherwise. Firstly, Senator Lacson’s evidence so far is reminiscent of the checks that were used to pin down former President Estrada. Senator Lacson has yet to trot out his Chavit Singson, a whistle-blower who was intimately familiar with the deals, but that may yet be forthcoming.

Secondly, given what people tend to believe about their politicians in the Philippines and given President Arroyo’s program of a “strong republic,” the burden of proof is for President Arroyo and her husband to show beyond reasonable doubt that Senator Lacson is lying through his teeth.

The First Family is being tried in the court of public opinion. A “let Ping file his charges in court” defense isn’t going to absolve President Arroyo or her husband of any culpability politically. Anything short of indisputable proof of the First Gentleman’s innocence is going to damage the office of the president, perhaps irreparably.

Indeed, what’s at stake here is not only the office of the presidency but also the entire range of organizations and institutions in society. The Catholic Church, the NGO community, and the leftists who rushed to judgment on former President Estrada will be called upon to exhibit the same moral outrage against corruption in high places in this administration. If they fail to do so, then the Erap camp can raise the class issue: he was deposed by rich people power and only because he was pro-poor.

The Lacson expose is ominous because it could set the stage for more coup attempts and “people power” revolts. The damage to our institutions could reach breaking point. The prestige and credibility of the Supreme Court, the Philippine National Police, the Armed Forces of the Philippines, the Catholic Church, the Senate and Congress have all suffered blows lately. The credibility and moral authority of the office of the presidency, already tenuous since the Estrada presidency, could be shattered completely if events triggered by the Lacson expose run their course.

Will Humpty Dumpty ever be put back together again?

In a way, President Arroyo courted the Lacson expose because she tacitly encouraged talk of her going back on her word not to run for president next year. Instead of admonishing the sycophants in her administration to stop talking about her political plans, she teased and tantalized. Instead of declaring unequivocally that she was giving her valedictory in last month’s State of the Nation address, she offered hints of changing her mind.

President Arroyo should have realized that the successes she enjoyed in the past six months was due to her wise decision in December last year to take herself out of the political fray in 2004. She enjoyed a measure of political honeymoon with the opposition. When talks grew stronger of her running, first, the Oakwood rebellion erupted. Now, this expose by Senator Lacson. She should not be dense enough not to notice that these are shots across the bow.

This isn’t to say that President Arroyo should retreat in the face of challenges from the opposition. But whether she likes it or not, she’s seen as part of the problem, not part of the solution. The fact is there’s a deep fracture in Philippine politics and she can never be the instrument for healing that fracture. She’s a creature of “original sin” - a president by virtue of people power, not electoral mandate.

This is why President Arroyo’s decision to sacrifice herself and declare in December last year that she wasn’t running was historic and monumental. It started the healing process. But she - or at least, her supporters - blew it. Perhaps the thought that there will be no more Diosdado Macapagal Blvds, no more NGO bonds, no more deals negotiated by the firm, no more directorships in UCPB made them goad her to take back her word.

The very least President Arroyo can do now is to push hard for the passage of the Party Development and Campaign Finance Reform Act. It’s one of the few bills she urged Congress to pass in her State of the Nation address. It’s designed to cure the very evil that Senator Lacson exposed in his privilege speech - misdirected campaign contributions. With the campaign finance reform act, parties and politicians will receive a direct subsidy from taxpapers and the state, rather than from political investors.

This bill will help, not cure, what ails Philippine society: damaged institutions and a deeply divided political establishment. The question is: can all the king’s horses and all the king’s men put Humpty Dumpty back together again?