Is President Aquino to blame for provoking China? Read more
I am visiting a friend at the Senate today, and have decided to take the opportunity to blog about the impeachment trial of Chief Justice Renato Corona.
It’s only been five minutes and already I’ve encountered a number of political creatures like Adel Tamano and former Akbayan Citizen’s Action Party representative Risa Hontiveros. I also caught a glimpse of Juana Change leading a rally of sorts outside the GSIS building.
The multitudes who have taken time off work to rally against Corona here, and those who support him at the Supreme Court demonstrates how people can take a political issue personally. My own appreciation of the issue is that it is putting every foundation of our democracy through the acid test not merely of public opinion, but of integrity and accountability.
Today’s impeachment trial is remarkable not only because it supposedly tries an Arroyo ally, but also because this is the first time that a Supreme Court chief justice is actually being put through an accountability process. Elected officials endure impeachments and elections, which is also a test of one’s trustworthiness. Cabinet secretaries are always tested by senate investigations. However, for the longest time it seemed as if the Supreme Court is invincible to any process that would ensure its probity.
That, if proven guilty, even the highest judicial officer of the Philippines can still be made to answer for transgressions is the most encouraging sign.
But Corona is not the only one being tested today. The Senate will also be tested as to how it will decide based on the evidences presented. The House of Representatives will have to prove the merit of its impeachment complaint. And the Executive will have to show restraint and respect for the other branches of government, and let the impeachment run its natural course.
I see this also as an acid test for online reportage. The Corona trial have opened other discussions, and one that I am keenly looking at is the perception of University of Santo Tomas (UST) professors—and journalists from traditional media—that online reportage is reckless and inept in meeting the standards of journalism. One of my UST professors presented some valid questions on Facebook. “Is online journalism really the future of journalism?,” he asked. “What are its rules? What is it needed?”
His inquiry and ideas carry weight, but we also cannot deny that professionals in traditional media have likewise failed in upholding their lofty journalism standards. A number of people actually believe that Rappler is more credible and less vulnerable to sensationalism and politicking than TV Patrol. But of course we cannot only give readers a choice between Korina Sanchez and Maritess Vitug, and say that’s the best we can provide. Online needs to step up. We are not only in the hot seat because of that UST statement, but because we really are the future of news reportage.
The emergence of the Internet practically forces every journalist to go online or face the consequences of having your story read only 24 hours after people have read about it on Facebook. Simply put, you either go online or become irrelevant.
I feel also that online reportage is not yet as corrupted and subservient to political and capitalist interest as television, the broadsheets, and the radio. Majority of online writers have managed to maintain their impartiality, and this is something we must continue and even improve upon. Online communicators will also be called to be anointers of Truth in this momentous trial that carries inconceivable political and legal repercussions. It is an opportunity for us to prove that we can provide relevant and unprejudiced reportage on this trial because every word we write means the difference between a reader who is misinformed or one who has been provided sufficient knowledge and insights to make one’s own opinion on Corona and the impeachment. Twenty minutes before the trial, and it’s time for us to step up. Time for us to blog.
The Corona Impeachment trial is a on our democracy. A test to prove if this system does work. Read more
What’s clear is this. First, media doesn’t seem to clearly capture public sentiment. And second, Public sentiment is on the side of government. Read more
“May you live in interesting times.” – Chinese curse
As the cab my family and I had booked sped from the Changi airport where we had landed from Australia towards our resort at Sentosa Island for a couple of days of R and R, before heading to Manila, he commented on the politics of the Philippines by asking us, “So how is Noynoy, oh I am sorry, Pee-Noy? Is he really not that smart?”
Intrigued by his question, I began to engage him in conversation.
It is rather uncharacteristic of Singaporeans to talk about politics, especially to strangers. Seeking to show deference to our host, I responded by saying that P-Noy was smart, but compared to their Prime Minister Lee Hsien Loong, the Cambridge educated mathematician son of Lee Kwan Yew, he may not be quite as sharp.
He reciprocated in kind by saying that as far as excitement goes, Singapore was not as interesting as the Philippines. I sensed a hidden envy on his part for the rambunctious nature of our politics with the rough and tumble colorful world of constitutional brinkmanship that began with Erap Estrada and Gloria Arroyo that has continued under the presidency of Noynoy Aquino.
I began to chide him a little at this point by saying, “no, no, boring is good.” It was preferable to have a state with a long period of unremarkable quiet governance than to have one that was constantly giving bloggers like me reasons to write. And this past year, there certainly has been no shortage of controversies to write about.
I began to recount my experience as a civil servant where I often hear my fellow policy officers complain that they have to constantly update the minister with briefings, rather than get on with their day job of running the government. Ministers have an insatiable desire (at least it seems to us) to be briefed on a wide range of issues concerning their portfolio in anticipation of any curve balls thrown them by the opposition during question time in parliament.
The volume of requests is seen as a proxy for the vulnerabilities and insecurities of any government averse to losing legitimacy in the eyes of the people. That is why the mandarins who run the government often say that boring is good because it not only creates less work for them, it also means they can concentrate on the business of governing. And it was this sentiment that I left with our curious cab driver as we alighted from his vehicle.
The following day, as I took my kids down for a stroll on the white sandy beach of Sentosa, a mere thirty minute drive from the airport, which is a minor miracle in itself considering Singapore is one of the busiest ports in the world to have such a safe and relatively secluded island getaway nearby, I began to agree with myself. “Yes,” I thought, “boring is better.”
As the Chinese proverb goes, “It’s better to be a dog in a peaceful time than be a man in a chaotic period.” To everyone who reads and follows this column, have a “quiet” and peaceful holiday season!
Malou Jacob disputed the explanation of the National Commission for Culture and the Arts regarding her removal from office. Read more
Just then they came in sight of thirty or forty windmills that rise from that plain. And no sooner did Don Quixote see them that he said to his squire, “Fortune is guiding our affairs better than we ourselves could have wished. Do you see over yonder, friend Sancho, thirty or forty hulking giants? I intend to do battle with them and slay them. With their spoils we shall begin to be rich for this is a righteous war and the removal of so foul a brood from off the face of the earth is a service God will bless.”
“What giants?” asked Sancho Panza.
“Those you see over there,” replied his master, “with their long arms. Some of them have arms well nigh two leagues in length.”
“Take care, sir,” cried Sancho. “Those over there are not giants but windmills. Those things that seem to be their arms are sails which, when they are whirled around by the wind, turn the millstone.”
[Excerpt from The Ingenious Knight Don Quixote of La Mancha by Miguel de Cervantes, 1604]
This week, the president’s allies in the House of Representatives numbering 188 voted to impeach Chief Justice Renato Corona. This came after a flurry of attacks against the high court launched by the president himself on numerous occasions. The ‘rap sheet’ or articles of impeachment contains allegations previously laid by him before the chief justice in a legal forum where both were present.
They include his voting record as a member of the Supreme Court that seems to favour the former president and now congresswoman Gloria Arroyo which was claimed to have been responsible for the loss of public trust in the institution he leads as shown by its extremely low rating in the SWS public opinion polls. The prefatory statement issues the charge that
Never has the position of Chief Justice, or the standing of the Supreme Court, as an institution, been so tainted with the perception of bias and partiality, as it is now.
It then proceeds to build a narrative to support its case. Beginning with his close association with the former president prior to his appointment to the Supreme Court, his voting record as member thereof before assuming his present role, followed by his acceptance of Mrs Arroyo’s ‘midnight appointment’ to be its chief, and the numerous incidents in which the court displayed its ‘bias’ towards the Arroyos. It is peppered here and there with allegations of improper use of public funds and nepotism.
On the face of it, there seems to be a strong case to be made against the Chief Justice, but whether it can be proven in such a way that would lead to a conviction is another matter altogether. The articles certainly tell a coherent story, but as any legal expert will tell you, in most matters that involve the high court, there are legal merits on both sides. In defending himself, Corona will simply have to recite the legal underpinnings of the high court’s decisions.
It will then appear that Congress (and the president) can impeach any member of a co-equal branch of government simply for making decisions that they find disagreeable. This means war between the executive and judiciary with each side claiming the other overstepping their boundaries and seeking to establish a dictatorship by one branch.
At the moment, the palace has the moral ascendancy. The high court is already viewed with suspicion by the public. Pursuing this case against Corona and by implication the rest of the court that he leads however could place suspicion on the president’s motives because of the Hacienda Luisita ruling which disadvantaged his clan. P-Noy by taking this bold step has highly discounted the risk of losing the moral high ground.
Secondly, most of the accusations save for the one involving Corona’s failure to file a statement of assets, liabilities and net worth (which might not be an impeachable offense based on previous court resolutions) involve decisions made by the entire bench not the chief justice alone.
The high court’s decision to exempt itself from midnight appointments, the creation of a new congressional district that became the seat for Mrs Arroyo’s son, the injunction against the lower house of Congress in hearing an impeachment complaint (its sole prerogative) against the ombudsman appointed by her, the exoneration of one of the justices for plagiarism by a committee comprised of magistrates, the injunction it issued against the secretary of justice’s hold departure order on Mrs Arroyo which it said was in effect despite the non-fulfilment of certain conditionalities were all made by a majority of the court.
Given the collegial nature of this body, the prosecution will have to prove that Corona exerted some kind of influence akin to a Jedi mind trick that forced other justices to side with him against their free will. Either that or Congress will have to impeach all the members of the majority who voted with him for showing bias. That will take some doing. Even if they (by ‘they’ I not only mean the prosecution, but the president) succeed in this (and there are already plans afoot to impeach two other justices), their side could suffer from what economists call the winner’s curse.
Having spent so much time and effort in this game to the detriment of all else (with the economy sputtering to a halt, which is what a 3.2% GDP growth figure represents), there will be hardly enough space for the government to move on policy matters as the legislative process gets tied up with the trial/s. Investor confidence could dissipate (adopting a wait and see attitude) as the country becomes wrapped up in the unfolding political saga. It seems that winning legitimately as in the case of this lawful and constitutional exercise could come at a heavy economic price for the republic.
Thirdly, while the public mood towards the Corona court is certainly non-supportive, it is quite spurious to lay the grounds for an impeachment complaint based on the fact that the accused garners very low esteem from the respondents to a survey no matter how representative it is. To begin with, let us assume for a moment that this low rating is due to the poor quality of decisions rendered by the court.
The articles of impeachment claim that this is because the court is biased in favour of Mrs Arroyo. An alternative explanation is that the justices sitting on the bench are simply not up to scratch and that their legal credentials were not properly screened. This too was asserted in the complaint. But whose job was it to screen presidential nominees to the high court anyway? Shouldn’t they bear responsibility for this outcome, not the appointees?
Also, the fact that the ‘bias’ explanation fits the narrative that the palace weaves makes it credible in the minds of the public in search of meaning behind events, but it does not necessarily make it true. Impeaching the Chief Justice based on his voting record on cases that affected Mrs Arroyo suffers from the law of small numbers. ‘How many cases does it take to prove that someone is biased?’ you might ask. Well that is precisely the problem. We cannot really use statistics to prove it one way or another. Of course an impeachment trial is more political than legal, which will make the outcome a product of naked power rather than a triumph for the rule of law.
The foregoing analysis lays down the reasons why I believe the impeachment of Renato Corona is more about the administration tilting at windmills than pursuing what it calls ‘reform’. The meaning of that word has become so mangled in its usage by the government that it has been equated to sending Mrs Arroyo to jail.
In the narrative of the palace, the president is the chivalrous knight who has come to rescue the nation, which is the helpless damsel in distress, from the villains of the republic, Mrs Arroyo and her ilk. It makes for wonderful imagery and rhetorical flourishes, and anyone or any institution that strikes a discordant note upsets the psychological balance derived from this plot and deserves to be called an Arroyo sypathiser.
Yesterday, the Chief Justice began to weave a narrative of his own. He spun it as I said above an encroachment by the executive on an independent judiciary, a creeping dictatorship through legal and constitutional means (alluding to the method used by Ferdinand Marcos). It is quite ironic that the son of the twin icons of democracy should be accused of making such an audacious attempt at witling it down.
Our minds naturally seek coherence. This makes us susceptible to several cognitive biases. This is often achieved by creating causal relationships. The entry of P-Noy into the 2010 presidential race after the death of his mother—it was all pre-ordained (based on hindsight bias). His elevation to the highest post in the land was to serve one purpose, and that is to send the villainous Mrs Arroyo to the dungeon beneath his palace (based on confirmation bias). From there, the nation will achieve its destiny of greatness (halo effect).
Unfortunately, reality is not quite as neat. The real world is much more complex and random as our minds would wish it to be. The successful prosecution of Mrs Arroyo and her minions by itself will not move us any closer to the rule of law or to economic deliverance. These things are achieved through actual hard work and good fortune. In fact, the real reforms that could move the country closer to these ideals can be achieved in spite of Mrs Arroyo and the high court.
The fact that many of them will now be delayed due to the impeachment trial means that we are actually farther away from achieving our potential than we were before. The words ‘downgrade’ and ‘catch-up’ are once again on the lips of credit rating agencies. As it turns out, the very windmills that the government seeks to joust with in its anti-corruption drive are the very mechanics of government that help deliver bounty to the nation.
Unfortunately, P-Noy and his allies have made up their minds. This court which has upset them once too often in their ‘quest’ can do no right, just as the knight leading the charge against it can do no wrong. The same goes for Renato Corona and his sympathisers. They believe the president is out to get them, and that this impeachment trial is a vendetta masquerading as a crusade against injustice by the high court.
How much longer will the nation be captivated and spellbound by the romance of these cognitive illusions? How much longer will people ‘dream the impossible dream’ as the country languishes at the bottom of the heap? Someone has to play the role of Sancho Panza and unmask the romanticism woven by both sides for what it really is: a farce.
Many talk about the culture of corruption. It has been called a cancer that eats away at the fabric of society by the religious and the secular alike. I have likened it to the multi-headed hydra in Greek mythology, irrepressible. Read more
Former Executive Director of the National Commission for Culture and the Arts (NCCA) Malou Jacob is said to have known that her removal from her post was imminent, in view of the decision of the Civil Service Commission (CSC) to disapprove the renewal of her temporary appointment. Jacob, who lacks civil service eligibility, was notified by the NCCA that she had to clear out at once while she was out of the country, representing the Philippines at the 5th World Summit on Arts and Culture.
In an e-mail interview, Adelina Suemith, whom the agency designated as Officer-in-Charge (OIC) for the position of Executive Director, said, “[Jacob was aware] of the disapproval [of the CSC] and was verbally cautioned that her trip abroad might no longer be ‘official’. She herself said before she left for Australia that she will abide by the Board’s decision.”
Regarding the timing of Jacob’s removal, Suemith said, “It may appear that there was not enough time given to her since she was abroad, but she was aware of what could possibly happen after the CSC letter.” Based on her understanding, the disapproval of Jacob’s renewed appointment, as well as Jacob’s removal, would take effect 15 days after September 22, the date on which the NCCA received the letter. According to Suemith, “This [meant] the position and its responsibilities should be assumed by a qualified officer by October 5. On October 6, [Jacob] was officially cut off.” The Commissioners then had to fill the vacuum so that the agency could continue its operations.
Jacob has stated that while she respects the decision of the Commissioners, she has “no idea” why they acted the way they did. She said she was informed of her removal on October 4. A document obtained by The Pro Pinoy Project shows that Suemith was made OIC on the same date, after a special meeting of the Board.
‘Caught in technicalities’
The Commission had appointed Jacob, a multi-awarded writer and director and veteran administrator, as Executive Director on March 12, 2010 for the period of one year, and had initially sought the renewal of her appointment for another year in spite of her ineligibility.
“[Jacob] is a very kind and peaceful person. I don’t think there is anyone who cannot work with her. The fact that the Board endorsed her second appointment and was even willing to extend her [term] until her retirement in 2012, is clear indication that she was acceptable to the NCCA,” Suemith said. The issue, she added, was not so much Jacob’s performance as it was accountability over government resources, and the NCCA was just “caught in technicalities”.
Suemith cited some of the consequences of Jacob’s lack of civil service eligibility: “The resident auditor would no longer honor or recognize her authority to disburse agency funds. She could not be bonded (a requirement for disbursement purposes), since the bond requires a CSC-approved appointment. She could not also appoint another officer to do this function since her authority [was] in question. Because of [these], the Board had to decide immediately on the matter.”
Suemith, who is identified in the NCCA web site as the Chief of the Program Monitoring and Evaluation Division, said she did not apply to be OIC, and does not receive additional remuneration from acting in this capacity. A Certified Public Accountant (CPA) and a holder of a master’s degree in sociology, Suemith is eligible for civil service and has served the cultural agency for 16 years.
The process of choosing an Executive Director would seem to be deeply fraught one for the NCCA, as revealed in the minutes of the regular commission meeting held on March 30 this year.
Even if it is the Board of Commissioners that appoints the Executive Director, it has apparently become customary for the President to send the Board a desire letter indicating his or her favored candidate. During the March 30 meeting, Deputy Executive Director Marlene Ruth Sanchez recalled that this has been the practice from 1992 to 2010, implying that the Board tended to accede to this expression of presidential desire. This goes against the grain of Republic Act No. 7356, the law that established the NCCA, which provides, in part, that Filipino national culture should be “independent, free of political and economic structures which inhibit cultural sovereignty”.
Moreover, two unresolved issues surfaced at that meeting: first, whether the position of Executive Director is classified as part of the Career Executive Service (CES); and second, whether the Executive Director has a fixed term of office or serves at the pleasure of the Board of Commissioners.
The term of office was not discussed in detail, but with regard to the classification of the position, Suemith at the time stated that the CES Board (CESB) had declared the position of Executive Director as falling under the CES. The CSC, on the other hand, did not give a response specific to the NCCA as an institution, and instead provided copies of circulars and resolutions of court cases related to eligibility.
The CESB later adopted Resolution No. 945 on June 14. Hewing to the Supreme Court decision in the case of Civil Service Commission v. Court of Appeals and Philippine Charity Sweepstakes Office, the resolution stated that CES coverage would be limited to positions requiring presidential appointments. This means that the NCCA Executive Director is not covered by the CESB.
In the case of Jacob, Suemith asserted that “the normal selection process was not followed”, as the NCCA had received a desire letter from former President Gloria Macapagal-Arroyo. Precisely what this normal selection process entails is now under review, Suemith acknowledged.
“The criteria and process are being finalized,” she said. “Hopefully, the new [Executive Director] will be announced in January or February of 2012.”
When asked if the NCCA was considering proposing a set of equivalency criteria, a move suggested by Jacob in a statement that she circulated online, Suemith said the CSC had told the NCCA to submit its position for study. “Perhaps in the near future, when the new [Executive Director] is in place, we can begin to attend to [this]. Certainly, this is not something that can be resolved in a short period considering the huge bureaucracy. But Ms. Jacob’s case can be used to convince the CSC to review its policies.”
Career or non-career?
At present, it seems that the NCCA considers the Executive Director position as falling under the career service, which in Executive Order No. 292, also known as the Administrative Code of 1987, is characterized by the following: “(1) entrance based on merit and fitness to be determined as far as practicable by competitive examination, or based on highly technical qualifications; (2) opportunity for advancement to higher career positions; and (3) security of tenure.” This means, among others, that the holder of the position can stay until retirement, unless removed for just cause.
Why this is so cannot be determined at the moment, especially given that the NCCA charter provides that each non-ex-officio member of the Commission has a three-year term of office, and may not serve more than two consecutive terms.
The Supreme Court has defined the meaning of “ex-officio” in the 1991 case Civil Liberties Union v. Executive Secretary: “The term ex-officio means ‘from office; by virtue of office.’ It refers to an ‘authority derived from official character merely, not expressly conferred upon the individual character, but rather annexed to the official position.’ Ex-officio likewise denotes an ‘act done in an official character, or as a consequence of office, and without any other appointment or authority than that conferred by the office.’ An ex-officio member of a board is one who is a member by virtue of his title to a certain office, and without further warrant or appointment.”
The confusion may stem from two possibly conflicting sections of the Implementing Rules and Regulations (IRR) of Republic Act No. 7356. Per Section 38, the position of Executive Director seems to be a career service position, as qualifications are supposed to be set in conjunction with existing civil service regulations. Section 36, however, provides that the Executive Director is appointed by the Board of Commissioners based on open nominations, which would make it a non-career service position, because it has a fixed term.
The position would also be non-career if considered a primarily confidential one, in light of the proximity rule applied by the Supreme Court in Civil Service Commission v. Nita P. Javier.
A bill now pending in the Senate could prove useful to the NCCA and other national cultural institutions in the event that it is passed into law.
Authored by Sen. Manny Villar, Senate Bill No. 1265 seeks to encourage artists to pursue civil service careers by recognizing, in law, that their talents should be the principal bases for their selection, appointment, and promotion, and by establishing an Artists Career Service (ACS), a closed career system tailored to the special characteristics of the artistic profession. Records indicate that Villar has been filing this bill at least as far back as the 13th Congress, when he first became Senator.
The ACS would cover personnel who have been recognized as having talent in at least one cultural or artistic field, and who occupy government positions directly involved with the creation, performance, presentation, and development of work in music, literature, visual arts, film and media arts, theater, and dance. Among the employees that would be brought into its embrace are those belonging to the NCCA and the Cultural Center of the Philippines (CCP).
Incidentally, Presidential Decree No. 15, which created the CCP, specifically exempts officials and employees of the institution from coverage of civil service rules. Inquiries sent to the CCP and to the CSC regarding how this provision is observed in the current regulatory climate, if at all, have so far met with no response.
Jacob had served in government with the Cultural Center of the Philippines (CCP) for nine years, starting in 1987, as the head of its Visual, Literary, and Media Arts Department, before she joined the NCCA as Deputy Executive Director in 2008.
Information from the Senate web site shows that Villar’s bill was read and referred to the Committee on Civil Service and Government Reorganization, the Committee on Finance, and the Committee on Education, Arts, and Culture on August 31, 2010. The last Committee is headed by Sen. Edgardo J. Angara, one of the authors of the NCCA charter and a member of the NCCA Board of Commissioners.
Neither Villar nor Angara could be reached for comment for this article.
*Editor’s note (December 9, 2011; 9:12 AM GMT +8): This article has been slightly modified to reflect the fact that Adelina Suemith did not apply to be OIC Executive Director.
With the release of third quarter GDP figures upsetting all but the most ardent economic apologists for this administration, the time has come for it to re-think its priorities.
The situation is nearing a critical level. As the whole of Europe is placed on credit watch and as recovery in the US struggles for momentum, the vibrancy in the domestic economy is being sucked out by government’s poor infrastructure spending rate just at a time when it is needed. Cabinet officials throughout the year have been promising a more rapid deployment, but this has so far not materialized.
The incorrigible ‘prophet of boom’ from the Ateneo Graduate School of Business Cielito Habito despite his best efforts at painting a rosy picture for the government has himself acknowledged the third quarter results to be disappointing. Here is how this professor of ‘Aquinomics’ concludes his most recent column for the Inquirer entitled, Is confidence dissipating?
(W)hat worries me most is the possible dissipation of the initial confidence surge that greeted the new administration and led to brisk private domestic investment growth over the past year. With these private domestic investment numbers now apparently slowing down while price increases have been speeding up, the President and his men on top of the economy should keep a close eye on the ball—or risk losing steam altogether (emphasis added).
That’s it—the penny has finally dropped. Only a delusional person would keep insisting that the government is headed in the right direction when it comes to managing the economy. Will this lead to a teachable moment, or will the administration remain antagonized by criticism seeing sinister plots behind them, spooked by shadows and haunted by the spectre of its immediate predecessor?
Throughout the year, the government has continued to fall back on its good poll figures to demonstrate that it has been performing to the satisfaction of the people. Poll figures however may not be a good barometer of the government’s competence in economic affairs given the ‘halo effect’ that has made the administration appear more creditable than it should.
Market analysts have already pointed out and the Bangko Sentral agrees that stimulating greater demand to address the slowdown in growth lies not in the hands of monetary authorities at this point but with fiscal managers. What this means is that the government has to spend more and talk less. Or in the words of Jerry Maguire, it has to “show me the money!”
All talk, no action
The government talks profusely about the need to ramp up infrastructure spending in its Philippine Development Plan released early this year (see page 17). “An inefficient transport network and unreliable power supply” is what has created a poor investment climate according to the Plan. Solving this meant greater spending, but when it comes to actually delivering on this, the government fell short of its rhetoric. Next year’s appropriations will hit a mere 2.5%, when the benchmark for a middle income country such as ours is 5% of GDP.
P-Noy in his first SONA said that the infrastructure build-up would be achieved through public-private partnerships, but nearly eighteen months on and counting, the fulfillment of the now diminished scope of this program remains to be seen. The confidence of the business community will eventually wear thin as Habito suggests if delays persist.
When the president addressed a meeting of the Makati Business Club, a community highly supportive of his candidacy, there was some disappointment over his over-emphasis on the case against former president Gloria Arroyo and his squabble with the Supreme Court. As these businessmen suggest, the risk is for P-Noy to get so focused on prosecuting Mrs Arroyo that he fails to keep his ‘eye on the ball’.
And it requires some doing. To ramp up spending by 2.5% of GDP will require as much concentration as he can muster. In a ten trillion peso economy, this will mean doubling the present effort of 250 billion pesos a year. This will dwarf the growth of the CCT or conditional cash transfers which cost about thirty billion.
Because the president closed off the avenue of raising revenues through new taxes, he found himself left with no other option but to fund his development plan through private financing. That has proven tricky as well, which is why he now needs to consider a third option.
That third option which I had first written about late last year which then got echoed by no less than the BSP Governor a few months back is for the government to issue infrastructure bonds to the BSP which is at present earning negative returns on its foreign currency reserves.
By offering the Bank a better yield, the government would be doing it a favour. Raul Fabella a former dean of the UP School of Economics has lent this proposal his seal of approval. He believes the risk from runaway inflation to be negligible under the proven monetary stewardship of the BSP.
The continued growth of foreign remittances from OFWs makes this option feasible, but if the government needed further convincing, then the following points should help build the case for it:
- Infrastructure spending is needed as we face a slowdown of demand from Western economies for our goods and services.
- It is the best vehicle for avoiding the ‘Dutch disease’ that afflicts countries experiencing windfall profits from resource booms (in our case, this stems from human not natural resources).
- Unlike increased social entitlement spending during a boom which becomes painful to retract at the end of the cycle, infrastructure spending leaves a tangible legacy and productivity dividend.
- It will help our exporters remain competitive because the increased spending will lead to a modest rise in inflation which will stem the appreciation of the peso against the greenback.
- It will unlock complementary investments by the private sector which is being deterred by poor public infrastructure.
- Government failure will be minimized as most transport and power projects can be turned over to the private sector under a PPP arrangement once completed. Revenue earned from transport and power projects would settle the interest and debt owed to the BSP.
- It will help prop up employment and growth which will spur increased tax collection.
- It will reduce the cost of doing business for most firms, not just exporters.
- It will help achieve the government’s growth target of 5-7% in the medium term.
- It will fulfill the government’s own development plan and set us on a higher growth plane.
Greater public infrastructure spending not by new taxes, nor by increased external or internal borrowing (as per Mrs Arroyo’s stimulus program in 2008/09), but by tapping our excess foreign currency reserves is not only appropriate, it would be the most effective and innovative way for this government to sustain economic growth through the turbulence in the global economy and beyond.
But we have to get real now. When faced with a possible course of action that is within the feasible set as defined by technocrats, what often prevents governments from acting is not the lack of rational arguments but the incentive problem. What led to this whole debacle in the first place was the administration’s fear of spending that would benefit internal patron-client networks left behind by its predecessor. In other words, politics rather than economics has been driving its decisions.
Making daang matuwid work
In the past we have seen how corruption and rent-seeking have reduced the amount of money available for developmental spending, but now we see how the opposite has reduced that amount even more. In the words of Samuel Huntington, “In terms of economic growth, the only thing worse than a society with a rigid overcentralized, dishonest bureaucracy is one with a rigid, overcentralized honest bureaucracy.”
The challenge for P-Noy is to make his mantra of daang matuwid work for the country rather than against it. Through the discipline and hard work of Filipinos working overseas, the country has a rather unique opportunity to make up for the shortfall in taxes generated internally. The current situation reminds me of the parable of the talents where the honest, but slothful servant dug a hole in the ground to store the talent that was entrusted to him by his master for safekeeping.
The Aquino government is like that servant. It was entrusted with a small but buoyant economy at the beginning of its term. So far, it has managed to keep it afloat, running while standing still, growing on aggregate but shrinking in real per capita terms. At the end of the story, the master reprimands the servant by saying, “To everyone who has will be given, and he will have abundance, but from him who doesn’t have, even that which he has will be taken away.”
That sound a lot like where the economy is heading under the president’s watch. The little that the Philippines had at the start could be taken away from it, while the plenty that our ASEAN neighbours have keeps on growing. It is time this government put its money where its fiscal mouth has been and start showing us the money. From another biblical parable comes the saying, “to whom much is given, much is required.” P-Noy was given a huge electoral mandate back in 2010. It is time he used it.