• We need to bite the bullet of reform


    Only a stronger state can carry out a measure of redistributive justice
    Most urgently, we need to bite the bullet of civil-service reform. And it should start with the President’s giving up his power to appoint civil servants down to assistant-bureau-director level. Most everywhere, appointments below undersecretary rank are left to a hierarchical bureaucracy.

    Our economic problems have political origins and require political solutions—so that the quality of government must be our key concern.

    In recent months, Filipinos have been dismayed by discovering industrial-scale corruption in the “pork barrel” funds lawmakers use to finance their pet projects.

    Professionalizing bureaucrats’ salaries—they’re as much as 74 percent below comparable private-sector jobs—should easily pay for itself in a more efficient state.

    To modernize our country, we will need a stronger state
    If we are to modernize our country, we will need a stronger and more coherent state. “Late industrialization” needs direction from an intelligent government working with entrepreneurs able to think long-term.

    We must also shore up the checks and balances between the executive, the legislature and the judiciary. The constitutional crisis over PDAF and DAP funds reflects the constant tension in the new countries between the executive’s drive for control and the legislature’s effort to assert its representative character.

    Given our severe factionalism, a constitutionally powerful presidency has come to dominate government. Its de facto power of the purse has made Congress and the judiciary, no less than LGUs, its virtual clients.

    We also need a more determined tax effort. Historically, our efforts to enforce tax laws have been so lackadaisical that tax cheats have grown incredibly brazen.

    Yet, we need to raise revenues if we are to invest more deeply in overhead capital, primary health care and basic education.

    Last year Mr Aquino had occasion to tell the Federation of Filipino-Chinese Chambers that, of its 207 member companies, half did not file tax returns; and 23 percent did not even have tax identification numbers.

    Even tax prosecution needs a new impetus. The Administration has filed more than 200 cases, but it has yet to win a single conviction.
    State should ease inequality that free enterprise generates
    Competition in market systems creates insecurity and inequality as the price of its entrepreneurial vigor. Left to itself, winner-take-all capitalism erodes social order and generates a populist backlash, as it has done in Thailand—which has just reverted to yet another episode of authoritarian rule.

    Though unavoidable, inequality can be mitigated by government activity. The global effort to balance growth with a degree of compassion for the poor and the unlucky has created the “welfare state”—most successfully in the Scandinavian states.

    Social progress is best measured by the spread of “distributive justice”—which a society achieves when everyone in it possesses the critical minimum of material means the society as a whole accepts as fair and just.

    If we are to approximate this ideal, we must invest much more in basic education, health care and social infrastructure.

    The effort will be long and difficult. But we must somehow temper the scale of our income inequality, if we are to preserve social stability.

    Growth by itself is never enough
    In recent years, GDP growth has been both robust and continuous. But our poor have continued to increase in both their numbers and their existential hardships—because growth by itself is never enough.

    Our lack of social “safety nets” restricts the poverty-reducing and equalizing effects that growth has had in our neighbor states. Only development that lifts up the lives of everyday people can sustain itself.

    Income inequality among us is so severe because growth is so narrowly based. In effect, we still have a colonial “dual economy.”

    Metropolitan Manila and its satellite regions—Central Luzon and Southern Tagalog—produce 65-70 percent of output and income. The economy’s fastest-growing sectors—OFW work and BPO outsourcing—are “enclave economies,” only tenuously linked to the domestic economy.

    So, the big-city economy could grow substantially without benefiting the masses of rural people outside it. And—in the simplest terms—that is what has been happening. Philippine poverty has been increasing even while the economy as a whole has been growing.

    Most urgently, we need to create manufacturing jobs that have wider spread effects. The upsurge in this sector we apparently owe to factories relocating from China, where labor scarcity is driving up urban wages.

    Pathetic that our economy should benefit from rising wages in China; but our neighbors no longer compete at the bottom of the market.

    Positive discrimination
    State intervention has traditionally favored the well-endowed regions. Government must also begin to practice “positive discrimination” on behalf of ethnic minorities and the poorest regions.

    Regional inequalities are stark and sharp. When the Makati PBSP surveyed the country’s social progress in 1997, it found ARMM people were living 13.5 years less than the national average.

    Over these next 10-15 years, we should increase social spending disproportionately—in favor of our poorest regions—until their health, education and infrastructure levels approximate those of the average political unit.

    The region we live in has become more dangerous.
    For a hundred years, our relative isolation from the tumults of the Asian mainland—and the US umbrella—have indulged our factional politics and our “bahala na” culture.

    But no longer. Tensions are rising all around the West Pacific, as China transforms itself into a first-rank power; Japan sheds its “no war” culture; and globalization puts down the small and the weak. Hedging against America’s staying power in East Asia is becoming fashionable. And we’ve just realized Asean’s moral support is of limited value.

    The region we live in has become more dangerous for the unthinking and the irresponsible: Time to put our childish ways behind us.


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    1. arthur keefe on

      An excellent resume of what is needed in the RP.
      The problem is I see no way this move to a more equal welfare society could ever be achieved. I think the American devised system of capitalism in place here is a legacy it is hard to move on from. It’s not just the presidents (past and present) who are the block to progress. It’s a well entrenched middle and upper class of wealthy rentiers who control the economy, and they have no intention of losing their privileges. A small example is the scandalous refusal of the wealthiest retailers to give most of their staff heir staff contracts which give them employment protection. (ie more than 6 months).
      The issue of the appointment of staff is huge throughout the country. Jobs are given as political paybacks, Council workforces are heavily padded with casuals who have nothing to do, but may be employed for years on this basis. A root and branch change to a system based on efficiency and open equal opportunity recruitment is badly needed.

    2. Claro Apolinar on

      As expected from Mr. Gatbonton, this very well-written essay and the previous one yesterday should be the introductory section of every NEDA paper and socio-economic development bill (including the GAA),