Leaders with authoritarian predispositions cannot but strangle growth. That is true universally. The diktat of an authoritarian leader cover economic pronouncements – not only political and military – and these economic orders often involve crony capitalism. At its extreme, crony capitalism is the outright grab of thriving corporate entities for disposition to cronies.
Men of a certain age saw these things happen before, unravel before our very eyes. I will not elaborate (right now I am cowering in fear, ha ha). The cyber trolls will bombard me with the predictable reactions: Marcos was great, Marcos was a hero. No, man. In 1986, the external debt was $26 billion and we imported goods in cash as our letters of credit were deemed worthless. We were Asia’s basket case.
Right now, Russia is the Exhibit A of crony capitalism. That is why Russia, despite its size and its human capital, is about half of the economy of France and Britain, relatively small countries which could easily disappear within the Russian land mass. It is a failed petrostate. The talented young people driven away by Putin from Russia have helped in building the world’s second most impressive IT hub after Silicon Valley and that is in Tel Aviv. Hackers are the IT guys who thrive in Putin’s Russia.
To the amazement of the outside world, the Philippine economy is thriving. I share the optimism that Mr. Duterte will surpass the growth charts of Mr. Aquino despite his lack of patience for diving into the intricacies and nuances of economic policies. A seven percent growth for this year is very possible despite quakes, killer flash floods and the growing international uproar over the EJKs.
Outsiders are asking this question: How is that possible?
The answer? Only in the Philippines can EJKs coexist with free market policies, business optimism and sustained growth. And Mr. Duterte has shown the world just that.
Another question. Why is Mr. Duterte improving, not wrecking, the Philippine economy? His favorite verb is “ kill” and he has cussed many a global leader and multilateral institutions. A Pulitzer prize winner this year, the category is breaking photography, won it on a photo essay on the dead bodies from the war on drugs. Mr. Duterte has not only defied the dire predictions of economic doom. He is poised to get better growth charts than Mr. Aquino, whose mantra was “GDP, GDP.”
It is easy to explain.
Mr. Duterte did this in his native Davao City. As Davao City mayor, his main preoccupation was law and order and the body count said so. Whether his war on criminals was built on a legal infrastructure or was built on the back of the DDS we do not know. Mr. Duterte even had a modus vivendi with the Left during his term as city mayor, a necessary complement to his law and order plank.
The other main plank of Mr. Duterte was his support for investments. Davao City now has its version of Big Business and, from that sector, came many of Mr. Duterte’s chief aides, Mr. Dominguez in particular. Business took care of itself. Mr. Duterte made sure investors were protected from shakedowns and racketeers.
Did Mr. Duterte personally profit from those business-friendly policies? I do not know.
While Mr. Duterte, as president of the realm, often inveighs against “oligarchs,” his fulminations are more verbal outbursts than actual actions against his targets. We have yet to see Mr. Duterte practice crony capitalism. In fact, the main actors in the trillion peso infrastructure fund of Mr. Duterte were the same Big Business people who thrived during Mr. Aquino’s term. No more, no less. The powerful men with famous acronyms.
Even the multi-billion peso unsolicited proposals to build this and that infra project come from the same people, the same conglomerates that thrived under Mr. Aquino.
Is Mr. Duterte profiting from this? I do not know.
The imperiousness of Mr. Duterte on law and order issues does not show up on his economic policies. The adherence to free market and the freedom of capital to seek its rewards are unhampered under Mr. Duterte. The strong nationalist sentiments of Mr. Duterte are not reflected in his economic policies and it is business-as-usual for those whose intention is to make money.
In fact, the actual policies enacted, such as the decision to end the QR on rice imports, is a globalist, free-market policy more than anything else. As I stated before, the NEDA director-general of Mr. Duterte, Mr. Pernia, is more orthodox than Arcy Balisacan, the NEDA chief of Mr. Aquino.
The Suggested Retail Price or SRP may make an exit during Mr. Duterte’s term, just like the QR. This is something that would immensely benefit Big Business and prejudice the consumers. The proposal to scrap the SRP can only take place in an environment favorable to business, which is precisely what the DU30 is all about.
As I said before, the key is compartmentalization. Mr. Duterte takes care of the law-and-order issues and policy concerns and leaves the economic issues to his economic managers. So, we have a context of EJKs coexisting seamlessly with growth, business optimism and free market policies.