energy policy

In defence of P-Noy

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He became a noun (“Aquinomics”), he became an -ism (“noynoyism”), but now he has become a verb (“noynoying”), and it is pretty, well how shall we say it? “An-noying.”

Just like the president’s love life, which he says he would like to keep off limits to the media, but which he himself cannot stop talking about, the phenomenon known as “noynoying” he says is not worth our attention, and yet the very act of saying so draws our focus to it.

Militant groups that hopped on to the “planking” phenomenon to paralyse traffic in the streets have shown just how savy they are propaganda-wise by adapting this into a new posture, that of noynoying, which is a form of idling, pensively sitting around doing nothing while propping one’s chin with one arm as a mutant strain of the “occupy” protest movement. This they say symbolizes the president’s passivity in the wake of repeated oil price hikes.

The palace’s ill-advised release of photos showing the president behind his desk working in earnest only seemed to fan the flames and breathe life into the story. This played into the hands of the left-leaning propagandists who took to social media decrying the government’s response as all spin and no substance.

Wittingly or unwittingly, this seems to dovetail nicely with the narrative coming from the Arroyo camp that the president dropped the ball last year on the economy allowing it to slip into a slower growth rate while sitting idly by. Similarly, in the case of Hacienda Luisita, the impeached Chief Justice wants to make it all about the Hacienda Luisita estate owned by the president’s relatives rather than himself and has garnered support from the representatives of farmers and progressive groups like Bayan Muna.

I find it rather amusing that anyone with a gripe or an axe to grind often falls into the trap of jumping on the bandwagon when a popular phenomenon sprouts up, just as in the case of noynoying. Those frustrated with the delayed passage of the reproductive health or freedom of information bills for instance, have flirted if not readily embraced this form of protest without distinguishing the issues involved.

It is so easy to mindlessly follow social networking trends these days without taking a considered view in my opinion. It is at this point that I would like to say a few things in defence of the president. Some might think this is “out of character” on my part, since lately I have been accused of being an Arroyo sympathizer and branded a Corona acolyte for my criticisms of the way President Aquino has handled many things in office: from his unintended fiscal austerity program to his overzealous pursuit “in the hunt” for Mrs Arroyo and her proxies.

So now that I am about to say something in defence of Mr Aquino, I expect to be labelled something else. Perhaps a flip-flop, or a “balimbing”. What my critics fail to appreciate is that I simply call things the way I see them regardless of which side of politics I offend. As a policy analyst, it is my duty I believe to speak the truth to power, to advise without fear or favour. So this is how I see this issue…

First of all, PNoy is not the only head of state who has had to grapple with this issue and responded to it in the way that he has. President Obama has also said that there is very little his government could do to affect oil prices. Now, the difference of course between the Philippines and the United States is that the latter at least has massive oil reserves and untapped resources. But, as President Obama has shown, even if he were to authorize drilling to occur even in the national reserves to go full steam ahead, the effect on the price of oil would be quite minuscule (about one percent).

Ironically, it has been conservatives on the right like Rush Limbaugh (not leftists) who have faulted President Obama for taking a laissez-faire approach. Republican Mitt Romney has recently called on Obama’s energy team to resign over their inability to influence gas prices. The public for their part do not seem to be swayed by such populist rhetoric. They seem to accept Obama’s premise that there is little he can do. For his part, Obama has faulted speculators for manipulating futures prices of oil for profit.

My point here is that if the leader of the free world, the most powerful man on the planet says there is nothing much even he can do, then what more can the leader of a developing economy like the Philippines do?

Secondly, just as in the case of the oil price stabilisation fund before it, the fuel subsidy to transport operators was in fact applied, but as we can see, there is really so much that government can afford to do. Unlike the situation in the 90s when gas prices spiked then returned to their normal levels, high oil prices today will become the “new normal”. This may be because we have reached “peak oil“, or it may be due to the rising demand from emerging economies thirsty for fuel and energy resources. Either way, we simply have to adapt to this new reality rather than try to artificially recreate the old one.

There is no such thing as an entitlement to cheap oil. It is not embedded in the Constitution as one of our human rights. Yet,  militant groups would have you believe that it is the role of the state–to guarantee the affordability of crude oil. That simply is a myth.

Thirdly, what the government ought to do in easing us into a new state of affairs, it is already doing with its energy policies focused on encouraging renewable sources of power and fuel. The distribution of electric public utility vehicles along with the auctioning of rights to build power plants which harness wind, natural gas, solar and wave technology is already progressing.

So as far as this goes, the government is not standing “idly by”. It has a considered program in place that seeks to guide our economy to a smaller carbon footprint and less dependency on oil. If anything, it is even being pro-active in pushing this agenda forward.

Of course the objection from transport groups will be that these programs don’t address their problems. Their position is understandable. They are indeed caught between a rock and a hard place, with the fares they charge to commuters regulated, while the cost of fuel is liberalized. This I think is the crux of the matter. At some point, their requests for rate increases need to be heard by an impartial body. The problem will be to contain the flow on effect this will have on wages.

But the thing is, regional wage boards will deal with that issue when the time comes. Their role is similar to that of transport regulators in that they have to weigh the interests of various stakeholders and temper the impact of any adjustment to society at large. The mechanisms for dealing with oil prices and wages are there and have been in place for quite some time.

Whenever the country is caught in the currents of global events, it sometimes takes all the energy of the man in charge  to maintain a level head and not directly intervene. There is in fact a time when “doing nothing” is the appropriate response, when the alternatives which may make him popular would be even more damaging.

That time I believe is now. In defence of the president, I believe he has seized it.

The 800-Pound Gorilla

What are the blind-spots that the administration is ignoring?

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Those who chide us for telling the President not to lose sight of the economy in the hunt for Mrs Arroyo might remember the experiment conducted by Daniel Simon and Christopher Chabris.

In this famous study looking into visual perception and selective attention, participants were told to view a short video clip depicting two groups passing balls around, one group wearing black shirts and the other wearing white. They were told to count the number of times a ball was passed between those in white. Here is the video for those unfamiliar with it.

At the end, most participants were able to provide the correct number of passes made between white shirted people. But then, when asked if they had noticed the gorilla in the room, about half said they did not. As it turns out, the act of focusing too much attention on the ball prevented many from even noticing something as glaringly out of place as a person in a gorilla suit walking right into the middle of the set and thumping his chest, even when it was staring them in the face!

To those supportive of the president’s actions against his predecessor, Mrs Gloria Arroyo, she represents the eight hundred pound gorilla in the room. Any other concern such as the economy even during a deteriorating global economic crisis is a mere distraction to the task of bringing her to justice. They would rather have the president focus his energy and attention on the task of ending her ‘monkey business’ than worry about sustaining the growth of the Philippines and along with that the job security of present and future workers.

Of course in an ideal world, the president and his cabinet would be able to do more than one thing at a time, but that is not what the evidence suggests. Witness the latest downgrade by the ADB of the Philippines’ growth prospects. It demonstrates how the government has not kept its ‘eye on the ball’, so to speak by failing to prime the economy with public capital expenditures.

Ok, some would say. So, perhaps aside from keeping track of the ball, the president could also monitor the gorilla, but then as this next study shows, something else could be happening. When respondents were told about the gorilla after viewing the first clip, they were then asked to view a second one, which is shown below.

This time around, everyone noticed the movement of the gorilla, since they had by this time been primed for it. However, not everyone noticed the color of the curtain changing or that one of the players in a black shirt exited the frame. This again should be of concern to those who feel confident of the government’s cognitive abilities.

Even if say next year, P-Noy’s team were to start putting a greater emphasis on ensuring that his government did its job to prop up demand in the economy by spending its budget for public construction (a task it performed miserably this year), while prosecuting the Arroyos, what other crisis could catch it off guard? A power crisis for instance is already looming on the horizon. Presumably a temporary downturn will reduce demand for power, but decisions with regard to its future supply have to be taken years in advance. Remember how the Cory government failed to address this issue?

It was former president Fidel Ramos who likened the presidency to a juggling act which is performed by someone on a unicycle on a high tension wire several hundred feet off the ground wearing a blind-fold with one hand tied behind the back and no safety net. A simple distraction or loss of concentration could spell disaster. It appears that the president is already too emotionally involved not only with Mrs Arroyo’s case but with delegitimizing the Chief Justice as well. The rage he expressed recently could blind him and his administration from pursuing important reforms.

Already several balls seemed to have fallen to the ground (or slipped off the radar) such as the RH bill and revising the EPIRA law (only 3.25 of the 33 priority measures have been passed so far, which at that rate will take ten years for all of them to succeed), such as appointing competent ambassadors (yes, I am referring to that confirmation hearing of Domingo Lee which was lampooned here), and the like.

Personally, my take on this is that the ball represents the president’s poll numbers. His handlers are so keen on tracking them and on focusing on what would drive them up or down (prosecuting the Arroyos for instance and railing against the Chief Justice) that they have perhaps lost sight of their own short-comings and failings which they dare not speak to the president about lest he get upset with them for ‘distracting’ him.

Witness the justice department’s conduct in investigating the former president, now congresswoman Arroyo which did not square with the norms and institutions of the judicial system making it appear more like a witch hunt than a proper legal proceeding. The president’s transference of blame to the Chief Justice and the Supreme Court does not excuse the shameless way he went about seeking to detain Mrs Arroyo which was reminiscent of her own extra-constitutional and extra-legal antics. This dangerous precedent of the executive undermining the judiciary is something more hazardous to the survival of our fragile democracy than just this case alone can pose.

But the president seems dead-set on playing the biggest trump card up his sleeve, his massive popularity, in order to impose his will on the high court. These ‘animal spirits’ once unleashed could lead to disastrous consequences. The country now sits on the precipice of further decay. Waiting for just a slight nudge from the president which could plunge it into a downward spiral of political instability and risk uncertainty in the coming years which will dissipate any investor confidence that had been returning.

Many will balk at this characterization of the situation saying that what is going on is nothing out of the ordinary for the Philippines. But that is exactly my point–the country was well-poised to become a more mature, more stable democracy. Apparently not now by the looks of it. Was it too much to ask for the elite to rise above their familial squabbling? They seem so focused on who gets the ball and how it changes hands, keeping track and keeping score of each player that they ignore the wider context and how their actions affect the country’s progress. Ignoring in the process, the 800 lb gorilla in the room.