• Econ blueprint is Aquinomics 2, a horror replay

    Marlen V. Ronquillo

    Marlen V. Ronquillo

    The main draw of Mr. Duterte’s campaign was this: his promise to serve and protect the vulnerable. Those rendered invisible by the Aquino government. His toughness was seen by the voters as the pathway for their inclusion, to finally belong after years in the wilderness, to be attended to by the powerful reach of the state.

    They knew he was tough on criminals but their inclusion, not exclusion, was the primary reason they gave Mr. Duterte the clear majority.

    It was that personal feeling of deep alienation that drove millions to drop their reservations about Mr. Duterte’s favorite verb – which is “to kill” – and vote for him. And reject Mr. Aquino and the policies he represented.

    Right now, if we were to judge DU30’s economic blueprint, the conclusion is nothing has changed. What is being touted by his economic managers as the sum and details of our economic policies can fit comfortably within the governing context of Mr. Aquino’s.

    Mr. Duterte’s people always speak of a “reboot.” Indeed, a reboot is urgent and it should be done in the most critical area of policy-making, the economic side.

    What have we seen so far from his economic managers?

    The debate on our fiscal policies is an eye opener. The levy on diesel, whether it were the proposed P6 per liter or the P3 “compromise,” would raise transport fares, the cost of goods needed for basic survival and each and every item that matter to ordinary and wretched lives.

    The offered sweetener, the reduction of the personal income tax on ordinary wage earners, would not make up for the brutal impact of the diesel tax. At a time of a Putin-OPEC move to cut back on global crude production to raise oil prices, the diesel levy proposed is also untimely. If they said that the diesel tax would be levied only on BK Pajeros and Land Cruisers and other huge SUVs, fine. But it is clear that the main targets are PUVs.

    The Duterte economic managers also want a cutback on the meager discounts given to senior citizens. Most of the country’s seniors buy generic angina and diabetic medicines due to lack of money. The discounts are not generous as imagined. And the senior citizens are people impaired by major illnesses. Are they crazy?

    Who does not want a tax reform? But a tax reform package that would be signed by Mr. Aquino without missing a beat should not be the tax reform package of Dutertismo.

    The tax reform package contains the status quo provisions for the rich on the corporate tax and the unexplainable leniency on the estate tax provisions. The original Dutertismo would have simply said “Soak the rich” and made specific policy from there. Just impose a “Wealth Tax.”

    The fact that most of the previous economic managers signed on to the proposed tax reform package all the more validates that the DU30 package is as orthodox and standard-issue as can be. There is nothing bold, radical and pro-poor in the package. Not one of the previous economic managers really cared about the people mentioned in The Sermon on the Mount. Their imprimatur, 19 of them who all framed policies from La La Land, merely sealed the anti-people and pro-rich bias of the proposed reform package.

    The original Dutertismo, something akin to Bolivarismo, cannot be found in the current economic blueprint.
    We now go to the really tragic part.

    The revenues that the government will raise from the tax package will go to a massive infrastructure program and that is laudable. But then, here is the rub. The multi-trillion investment program was done by Mr. Aquino under his preferred PPP. The DU30 will do the same.

    There are two main descriptions of the PPP. It is a scam. It is a potent tool for upward redistribution. In short, it is a major giveaway to the rich. As if the rich need more ayuda/pampering from the State.

    The PPP stands for public-private partnership. In reality, it is a one-sided deal. Only the private partner reaps the rewards at the expense of the general public. This is based on the experiences of many developed democracies that first practiced the scheme only to find it too skewed toward the private parties. The PPP has been junked in many of these developed economies. (Mr. Trump wants to use a version of the PPP for his infra programs.)

    To private parties that will undertake the infra buildup under PPP, the government is offering an array of incentives. After the completion, the government cedes ownership of the operations and management of the finished projects to the private party, which then charges tools and fees. Not only that. The private party signs a contract with government that allows the private party to regularly increase the toll fees and charges.

    The PPP is exclusively for the conglomerates, which are in turn owned or controlled by the country’s dollar billionaires. The terms and conditions of the PPP do not allow the arrivistes to prequalify in the bids and awards process.

    Just Google the names of those awarded PPP contracts under Mr. Aquino and you will confirm this exclusive giveaway to the very rich.

    Finally, below was lifted from a recent speech Lawrence Summers, former US treasury secretary, former Harvard president and grandson of Paul Samuelson (yes, the father of modern econ) delivered at the Brookings Institute on his reservations about the PPP:

    “The private sector often demands rates of return far greater than public sector borrowing costs, especially in the current low interest environment. Insisting on private participation could well substantially raise costs without addressing major problems.” This is a kinder way of saying the PPP is a dubious proposition. Beware.
    The original spirit of Dutertismo is anathema to both the proposed tax reform package and the PPP. Mr. Duterte should shift gears and do a cambio.


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    1 Comment

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