The Philippines: Advancing Social Justice in an Elite Democracy

THE PHILIPPINES: ADVANCING SOCIAL JUSTICE IN AN ELITE DEMOCRACY

Philippines’ elite swallow country’s new wealth

Agence France-Presse / 01:02 PM March 03, 2013

MANILA – Optimism is soaring that the Philippines is finally becoming an Asian tiger economy, but critics caution a tiny elite that has long dominated is amassing most of the new wealth while the poor miss out.

President Benigno Aquino has overseen some of the highest growth rates in the region since he took office in 2010, while the stock market has hovered in record territory, credit ratings have improved and debt ratios have dropped.

“The Philippines is no longer the sick man of East Asia, but the rising tiger,” World Bank country director Motoo Konishi told a forum attended by many of Aquino’s economic planning chiefs recently.

However economists say that, despite genuine efforts from Aquino’s team to create inclusive growth, little progress has been made in changing a structure that for decades has allowed one of Asia’s worst rich-poor divides to develop.

“I think it’s obvious to everyone that something is structurally wrong. The oligarchy has too much control of the country’s resources,” Cielito Habito, a respected former economic planning minister, told AFP.

He presented data to the same economic forum at which Konishi spoke, showing that in 2011 the 40 richest families on the Forbes wealth list accounted for 76 percent of the country’s gross domestic product (GDP) growth.

This was the highest in Asia, compared with Thailand where the top 40 accounted for 33.7 percent of wealth growth, 5.6 percent for Malaysia and just 2.8 percent for Japan, according to Habito.

According to the Forbes 2012 annual rich list, the two wealthiest people in the Philippines, ethnic Chinese magnates Henry Sy and Lucio Tan, were worth a combined $13.6 billion.

This equated to six percent of the entire Philippine economy.

In contrast, about 25 million people, or one quarter of the population, lived on $1 a day or less in 2009, which was little changed from a decade earlier, according to the government’s most recent data.

Some of the elite families have dominated since the Spanish colonial era that ended in the late 1800s.

Prominent Spanish names, such as Ayala and Aboitiz, continue to control large chunks of the economy and members of the families are consistent high placers on Forbes’ annual top-40 wealth list.

Their business interests range from utilities to property development to banking, telecommunications and the booming business process outsourcing industry.

Many of the ethnic Chinese tycoons, such as Sy and Tan, got their start soon after the country gained post-World War II independence from the United States.

The tendency for the same names to dominate major industries can be partly attributed to government regulations that continue to allow near monopolies and protections for key players.

For decades after independence from the United States in 1946, important sectors such as air transport and telecommunications were under monopoly control, according to a Philippine Institute for Development Studies paper.

Despite wide-ranging reforms since 1981, big chunks of the market remain effective oligopolies or cartels, it said.

Habito said the path to riches for the few is also helped by a political culture that allows personal connections to easily open doors.

The Aquino government’s mantra since succeeding graft-tainted Gloria Arroyo’s administration has been good governance and inclusive growth, and their efforts have been applauded by the international community.

The government is spending more than $1 billion this year on one of its signature programmes to bridge the rich-poor divide.

The conditional cash transfers programme will see 15 million of the nation’s poorest people receive money directly in exchange for going to school and getting proper health care.

However, Louie Montemar, a political science professor at Manila’s De La Salle University, said little had been done at the top end to impact on the dominance of the elite.

“There’s some sense to the argument that we’ve never had a real democracy because only a few have controlled economic power,” Montemar told AFP.

“The country dances to the tune of the tiny elite.”

Nevertheless, the government and economists say there are many other reforms that can be taken to bring about inclusive growth.

Analysts said the most direct path out of poverty was improving worker skills, using higher tax revenues to boost spending on infrastructure, and rebuilding the country’s manufacturing sector.

To this end, many economists endorse the Aquino government’s cash transfer programme as well as reforms to the education system, which include extending the primary and high school system from 10 to 13 years.

But for people such as mother-of-five Remy del Rosario, who earns about 1,500 pesos ($36) a week selling cigarettes on a Manila roadside, talk of structural reform and inclusive growth mean little.

With her bus driver husband out of work, the family has no savings and her income is barely enough to cover food, bus fare, and prescription medicines.

“Other people may be better off now, but we see no improvement in our lives,” she said.

Link: https://business.inquirer.net/110413/philippines-elite-swallow-countrys-new-wealth#ixzz5FlPpO2GX

Do dynasties deter development?

By: Cielito F. Habito - @inquirerdotnet

Philippine Daily Inquirer / 12:58 AM August 11, 2015

HAVE POLITICAL dynasties impeded inclusive growth and sustainable development in our country? Evidence points to a direct association between the presence of political dynasties, on the one hand, and higher levels of poverty and deprivation in the Philippine context, on the other. The implication is that either poverty paves the way for political dynasties, or political dynasties fail to reduce, if not actually worsen, poverty.

Whichever way the causality runs, the observed correlation between the two provokes serious doubts about the compatibility between dynasties and development. This is especially so in a country where (1) political dynasties are particularly more prevalent, (2) economic development has historically been stunted at both national and local levels, in an otherwise economically dynamic region of the world, (3) poverty has been so prevalent and persistent, much more so than in comparable neighbors, and (4) inequality has been stark and has shown little improvement, and even worsened, over past decades.

In his last State of the Nation Address, President Aquino opened the way for renewed public discussion on this issue that the Philippine Constitution, in Article II Section 26, expressly admonishes against: “The State shall guarantee equal access to opportunities for public service and prohibit political dynasties (underscoring supplied) as may be defined by law.” The Constitution further mandates Congress to give highest priority to the enactment of measures that “reduce political inequalities” and “diffuse political power for the common good,” among other things (Article XIII, Section 1). The framers of the Charter must have expected that the new Congress, elected after the 1986 Edsa uprising, would promptly enact the requisite enabling law while a revolutionary mood still prevailed. Otherwise, they would have realized that such law was unlikely to be passed by a legislature where membership in political dynasties is in fact prominent, even dominant.

Are political dynasties more prevalent and prominent in the Philippines? Studies indicate so. The Asian Institute of Management (AIM) Policy Center tracked 6 percent of legislators in the United States to belong to dynasties; the rates are 10 percent in Argentina, 22 percent in Ireland, 33 percent in Japan, 40 percent in Mexico, and 70 percent in the Philippines—yet another instance, sadly, of the Philippines excelling in the wrong things.

Over time, the United States saw a decline in the proportion of dynastic legislators. A 2009 study found that 11 percent of US legislators between 1789 and 1858 were dynastic, but the proportion went down to only 7 percent after 1966 and, more recently, to 6 percent. The reverse happened in the Philippines in the past three decades. In the Eighth Congress (1987-1992), 62 percent of our legislators had relatives in elective positions. This rose to 66 percent by the 12th Congress (1998-2001), netting out party-list representatives that were introduced in the 11th Congress. The same proportion went up to 75 percent in the 14th Congress, half-jokingly described at the time as a “Montessori Congress” for the unusually large number of legislators who were offspring of their predecessors. Interestingly, one in every four sectoral representatives (14 of the 56 incumbent) is also dynastic, undermining the professed objective of party-list representation, which is to broaden representation in Congress and make it more inclusive.

That the Philippine record in poverty reduction and human development lags behind in the region is well known. Asia has generally been more successful than the rest of the world in translating economic growth into reduced poverty. The Asian Development Bank found that developing countries worldwide saw poverty decline by an average of 1.5 percent for every 1-percent growth in gross domestic product in the past years. Within Asia, the corresponding average poverty reduction was actually faster, at 2.0 percent. Strangely, the Philippines has a perverse experience, especially in the past decade: Poverty incidence actually went up, even in years when the economy’s growth speeded up. As such, we will not achieve key poverty reduction targets under the United Nations’ Millennium Development Goals (MDGs) that were set for this year.

Do political dynasties have something to do with all this? Arsenio Balisacan and Nobohiko Fuwa, in a 2003 study, explored the linkage between dynastic concentration and the standard of living in Philippine provinces between 1988 and 1997. They found dynastic concentration to have a significantly negative effect on the upliftment of local living standards, noting that lack of real political competition had led to flawed policies.

A 2004 study by University of the Philippines economists on provincial MDG performance found that highly dynastic provinces lagged in MDG targets relative to others. The authors saw dynastic politics to have damaged the quality and provision of public services, and the proper functioning of local markets. An AIM study on the 15th Congress found that dynastic jurisdictions are associated with lower standards of living, lower human development, and higher levels of deprivation.

Democracy, international research upholds, helps improve the prospects for inclusive economic growth by fostering better education and provision of other public services, broadening access to opportunities, and creating disincentives for corruption. Factors that weaken democracies and restrict political participation can thus be expected to impede broad-based economic development. Dynastic Philippines could well be Exhibit Number One.

E-mail: cielito.habito@gmail.com

Link: http://opinion.inquirer.net/87517/do-dynasties-deter-development#ixzz5FlTDGWLd

Although we agree with the description of the Philippines as an “elite democracy,” we also assert the following points:

- All societies, whatever their political system, whether fascist, Communist, democratic, or some hybrid, are ruled by socioeconomic elites, which are inevitable and necessary, because the distinction between the rulers and the ruled naturally creates elites. Therefore, our objective should not be to eliminate elites but rather to make society more equitable.

- Strongman or authoritarian rule is not the solution to inequity in an elite democracy, especially in the Philippines, wherein the strongman merely breeds another coterie of the corrupt commingling around the dictator.

- Solution to the inequity of elite democracy in the Philippines is to deepen democracy.

We should take a closer look at Chile, which, while it is an elite democracy, it is also a developed country with a Latin American heritage, just like the Philippines. Post-Pinochet Chile vigorously and substantially addressed the socioeconomic disparities in their society through social welfare programs. Chile shows a way forward for the Philippines.

Our historical understanding of both Pinochet and Marcos regimes shows that authoritarian governance combined with massive corruption destines neo-liberalism to economic and political disaster.

On the other hand, a type of regulatory liberalism that is economically productive while presenting opportunities to implement social reforms is, in my opinion, the most salutary approach. In this respect, the post-Pinochet system would work best for the Philippines, in this imperfect world.

In response to those who invoke historical Philippine political systems as workable templates, we say that the datu tribal and kinship system and the predatory Spanish colonial system present formulas for massive corruption. A more professional democratic political system along the lines of the developed Western democracies is the best political formula for the Philippines, all things considered in this imperfect world.

While we observe that practice is very far from perfect, politico-economic liberalism presents ideals of egalitarianism and humaneness that competing ideologies, fascism and Communism, in particular, do not. Those ideals present salutary opportunities that do not exist in the competing politico-economic systems. Consider, for example, that the success of the U.S. civil rights movement derives from constitutional ideals that had been abrogated by social practice.

Democracy, that is, a working democracy, not a nominal democracy, is the best political system around. It is best in terms of combining economic development with political freedoms in the most optimal way possible.

“It has been said that democracy is the worst form of government,” Winston Churchill famously said, “except for all those other forms that have been tried from time to time.”

The best formula for good governance in the Philippines is democracy and politico-economic liberalism, well-regulated, and the competition, productivity, egalitarianism, and humaneness it entails.

Today, one of the most essential good governance elements required to promote working democracy in the Philippines has yet to be accomplished: PASS a robust ANTI-DYNASTY LAW, emphasis mine.

Duterte, who flourished by maintaining his own corrupt political dynasty in Davao City, naturally refuses to push this transformative, liberating agenda.

- Although the 1986 EDSA Revolution which restored democracy went very far in addressing Philippine socioeconomic problems, it did not, admittedly, go far enough.

However, we have to compare it with what went before the 1986 EDSA Revolution in order to appreciate the dramatic political and economic progress since the Marcos regime. We indeed have come “very far,” which is a very different assessment from evaluating where we are now.

Drawing upon this lurid contrast between the past and the present, the enduring lesson we should derive from our historical understanding of the Marcos regime is, please, NO MORE DICTATORS, emphasis mine.

For the purposes of illustration, observe the steady downhill trajectory of the economy under the dictatorial Duterte, readily perceptible to the keenly analytical but cunningly obscured through massive borrowing and ill-considered spending, just like during the Marcos regime. Contrast with the gradual and very significant improvement under the pro-democracy Aquino administration.