Populism and the fiscal crisis

Populism and the fiscal crisis

Updated 10:00pm (Mla time) Sept 25, 2004
By Randy David
Inquirer News Service



Editor's Note: Published on page A15 of the September 26, 2004 issue of the Philippine Daily Inquirer


ONE interesting observation that Rep. Joey Salceda makes in his recent dissection of the country's fiscal crisis takes the form of a question: "But, why is it that the power sector invites much of our major fiscal follies, from Marcos' nuke plant (one for the price of two) pushing Aquino to mothball it which then triggers the power crisis that justified Ramos' lopsided IPPs that then force Arroyo to cap the PPA?" His answer: "The moral of the PPA cap story is: the people eventually pay for such populist decisions of the government."

The key word is "populist." It is a term that has been used repeatedly in many analyses that try to explain the political roots of our economic problems. Its connotation is negative, which is ironic since the root word is people. One wonders what its opposite is. Anti-people?

In the context in which Salceda uses it, "populist" refers to something that aims to please the people in the short term in order to gain political points, but whose long-term effects may be injurious to their interests. A populist decision therefore is one that is made out of political opportunism, and without regard for its economic and other costs. This seems like an accurate description of the kind of politics we have had in this country. Is another kind possible given the nation's political history and socio-economic situation?

The desired alternative to populist politics, of course, is modern democratic politics where the contest for power takes place within institutional channels and under legitimized and accepted rules. The Philippines had this system in a formal sense until 1972, even if the vast majority of our people participated in it only in a marginal way. Marcos exploited the people's resentments against the oligarchy and aspirations to modernity to justify his own version of populist authoritarianism. His experiment is a replica of many failed initiatives in the Third World, notably in Latin America.

When Cory Aquino took the presidency in 1986 on the wings of a people power uprising, she could not ignore the diverse popular movements that brought her to power. This was a constituency that was deeply suspicious of politicians. Even if the wisdom of a nuclear power plant was arguable on technical grounds, the Bataan Nuclear Power Plant itself was seen as the epitome of all the sins of the Marcos regime. The new government had little choice but to abandon it. The only forces more powerful than the popular movements were the international creditor banks that demanded to be paid. And so we continue to pay them.

Recoiling from the controversies that attended big public projects like the nuclear plant, and having little money left to spend, the Aquino government shied away from infrastructure investments. The result was the power crisis that Cory's successor, Fidel Ramos, tried to fix through the instant but expensive cure of the "lopsided" independent power producers (IPPs). The heavy costs of these IPPs began to be felt only after the end of Ramos' term. Neither Joseph Estrada, who succeeded him, nor Gloria Macapagal-Arroyo, who took over from Estrada, was prepared to do anything about these obligations beyond re-financing them with more borrowings.

The desire to be popular was particularly strongest with Gloria. She was insecure about the presidency. From day one, she sought validation of her entitlement to the position by being elected to her own six-year term. She became extremely vulnerable to populist decision-making.

Political instability heightens populist pressure. The May presidential election could have ushered in another phase of uncertainty in our political life. The scandalous way in which the winners were proclaimed was a provocation to disorder. Ms Arroyo can thank the opposition for its decision to shift its protest from the streets to the Presidential Electoral Tribunal. The recent move of the Magdalo mutineers to come forward to apologize for their July 2003 takeover of the Oakwood Apartments in Makati also comes at a right time, as it will have a calming effect on the political scene.

The political scientist Gino Germani explains populism as the result of the uneven integration of the masses into a country's political life. The masses are activated by the mass media through the spread of modern lifestyles and attitudes and yet could not find adequate self-expression in the available political structures. The cities, where the resentments and unleashed energies of the economic underclasses are strongest, tend to be the epicenters of populist pressure.

In countries like ours marked by stark inequalities in life chances, populist ideology can oscillate between traditional electoral politics and authoritarianism. Those who ride upon it constitute an amazing variety of characters, says Germani. "Quite different political groups ... and the most diverse sectors-intellectuals, modernized workers, professionals and politicians of petty-bourgeois origin, military men, sectors of the old landowning oligarchy in economic and political decline, no less than the most bizarre combinations between them, have tried (sometimes successfully) to base themselves upon this human support in order to achieve their political aims."

We may rid ourselves of the curse of populism only when the entitlements of the poor to a decent existence are understood and honored by the government as rights rather than as personal favors dispensed by politicians.

Decency in public life

Decency in public life

Updated 10:03pm (Mla time) Sept 18, 2004
By Randy David
Inquirer News Service



Editor's Note: Published on page A15 of the September 19, 2004 issue of the Philippine Daily Inquirer


IT took a fiscal crisis to force the government to take a hard look at the outrageous salaries that a few public officials are getting for the privilege of serving the nation. If the crisis had not been recognized, if the habit of taking out loans to cover recurrent deficits had not been criticized, the virus of unequal pay for equal work would have quickly overrun the system.

What is particularly galling is that the nation’s top officials feign shock over these salaries as if they were learning of them for the first time. These juicy positions are so well-known to politicians who regard them as sinecures reserved to a favored few. Not only that, the laws that exclude them from the scope of the Salary Standardization Law were passed by Congress and approved by the President. The Commission on Audit, moreover, is supposed to submit to the President and Congress an annual report that describes the financial condition of the government and all its instrumentalities “and recommend measures necessary to improve their effectiveness and efficiency.”

If there were more integrity and less hypocrisy in government, our basic laws would suffice.

The basic law governing compensations in public service is found in Art. IX-B, Sec. 5 of the 1987 Constitution: “The Congress shall provide for the standardization of compensation of government officials and employees, including those in government-owned or -controlled corporations with original charters, taking into account the nature of the responsibilities pertaining to, and the qualifications required for their positions.”

On July 1, 1989, Congress passed RA 6758 or the Compensation and Position Act, which prescribes a revised compensation and classification system for the government. This is the system that is now followed in all the offices and agencies of government, except in those agencies that were later exempted by law or were organized as subsidiaries of GOCCs under the general corporation law. Budget Secretary Emilia Boncodin was thus correct when she said that the incredible salaries assigned to certain positions in some GOCCs and GFIs were allowed by law. But, of course, not everything that is allowed by law makes good moral or managerial sense. The responsibility for ensuring that the law is not abused rests ultimately with the President. Though long overdue, President Macapagal-Arroyo’s recent order to reduce these atrocious salaries is a step in the right direction. But it is not enough.

When private corporations or enterprises run into trouble, their managers are held accountable by their boards and ultimately by their owners and stockholders. But when public firms are mismanaged or go bankrupt, who will make them answer for their deeds? To whom are the National Power Corp., Government Service Insurance System, Social Security System, Development Bank of the Philippines, Philippine Charity Sweepstakes Office, Pagcor, PhilHealth, and the Philippine National Oil Co. accountable if not to the President? The mechanisms to monitor their performance are all in place. Unless the Office of the President does its work, keeping in mind the basic principles of good housekeeping, it will not take long before the government breaks down.

The basic principles governing just compensation in the public service are clearly defined by the law. These are: (1) equal pay for substantially equal work, (2) differences in pay must be based on differences in duties and responsibilities and qualification requirements, and (3) government compensation must be competitive with prevailing rates in the private sector, taking into account budget constraints.

In accordance with these principles, Congress created 33 salary grades under RA 6758. The highest, SG 33, is assigned to the President of the Republic. No other position is comparable. SG 32 is assigned to the Vice President, to the Senate president, the Speaker of the House, and the Chief Justice of the Supreme Court. SG 31 is assigned to senators, congressmen, associate justices of the Supreme Court, chairmen of constitutional commissions, Cabinet members, and the president of the University of the Philippines. It is worth noting that none of these salary grades today pays more than P80,000 per month in basic compensation. This makes the position of President of the Philippines roughly the equivalent of a junior executive position in a top multinational company.

The president, the senators, and the congressmen -- with the generous perks and pork barrel at their disposal -- may have no need for adjustment in their basic pay. But if their compensation is not adjusted, compensation at the lower levels of the bureaucracy remains frozen. Professors in state universities and surgeons in public hospitals receive fixed salaries equal to the pay of new graduates working at call centers. Until a few months ago, the basic pay of the civilian faculty at the Philippine Military Academy was lower than the salary of the cadets.

The situation was so absurd even then that when the salary standardization law was passed, Congress was swamped with bills seeking exemption from its coverage. The first to be exempted were precisely the GOCCs and GFIs that claimed to have enough incomes that permitted them to pay private sector rates. The result of this is that the despair of all the other government agencies grew in proportion to the benefits enjoyed by those who were exempted.

No matter how good a nation’s laws are, if its officials are ruled by cynicism and opportunism, it will have no future. The first rule of public life is basic decency.

Crisis Psychology

Crisis psychology

Updated 00:52am (Mla time) Sept 12, 2004
By Randy David
Inquirer News Service



Editor's Note: Published on page A15 of the September 12, 2004 issue of the Philippine Daily Inquirer


PRESIDENT Macapagal-Arroyo's dilemma was whether to acknowledge the full magnitude of the country's fiscal and debt crisis, or to continue her pre-election policy of finessing it by reducing the problem to a simple budget deficit.

Confronted by a paper from University of the Philippines economists, which showed that the country faced a serious fiscal and debt crisis in the next three years if nothing decisive was done, the President responded that we were already in the midst of the crisis. This admission puzzled even Ms Arroyo's own economic managers.

But it allowed her to do several things. Despite the risks of frightening investors and creditors, the acknowledgment of the crisis gave her the right to demand that Congress now focus on the urgent task of adopting the solutions she has proposed rather than on debating the causes of the crisis. But more than this, she saw in the crisis the opportunity to consolidate her hold on the presidency by dismissing lingering doubts about her electoral mandate as trivial distractions in a time that commands national unity.

When a family is hit by a crisis, its members feel morally obliged to set aside their bickerings so they may face their collective problems squarely. They rally around the head of the family, take orders without question, and agree to put the interests of the whole family ahead of their own. Ms Arroyo assumed the stance of a strong moral matriarch at her appearance before the Manila Overseas Press Club recently. She issued a stern warning: "If these vested interests believe they can destabilize or sabotage our efforts, they better think twice. Our people are behind me. I have their mandate, and I am here to serve that mandate for our nation's best interests."

The reference to "mandate" is interesting. I am sure she meant to say that, with the elections behind us, she was now ready to be a tough "non-political president." But ironically, the word "mandate" also instantly reactivated images of the dubious manner in which she was proclaimed winner in the last elections. This explains Sen. Nene Pimentel's caustic remark the other day: "The President's declaration that the country was in a fiscal crisis was nothing but a ploy to cover up her lack of mandate, as well as the illegal use of public funds for her election campaign and the massive electoral fraud committed by the administration."

Faced with a fiscal crisis, the nation now seems so far away from the defective electoral process that gave Ms Arroyo a new six-year mandate. The parallelism between the Philippine president and the US president is uncanny. The "crisis" is to Ms Arroyo what the "war" is to George W. Bush Jr.-a warrant to close ranks behind a strong president and a reason to be grateful that we have this president and not the other. This line makes people forget that this is the same president that brought them to where they are today-in our case, the very same one who, says Sen. Joker Arroyo, caused the government to lose money in order to be popular and incurred more debt for the country in three years than in all the preceding years under Ramos and Estrada.

It is not to say the fiscal crisis that the country faces today is not real. It is as real as the war that America has brought upon Iraq, upon the Islamic world, and upon itself. There is no question that national unity is important during such times. But it would be a tragedy to suspend one's critical faculties at a time when what is needed most is judgment. The war against the fiscal and debt crisis, like America's "war against terror," is being used to discredit all criticism and to secure a quick consensus around certain measures that will make the general public absorb all the burden created by the irresponsibility, corruption, and greed of a few. This kind of mass psychology exploits communal solidarity and feeds on public insecurity.

I have heard many middle class Filipinos say, "Thank God that at a time of economic hardship like this, we have a doctor of economics rather than an ignoramus at the nation's helm." The equivalent of this illusion in America today is "Thank God that at a time of war like this, we have a decisive president rather than a wimp at the nation's helm." The basis for such tacit faith is more imaginary than real. Both presidents are nothing but skillful role-players without any real experience. You feel like crying when you see how desperately people want to believe in their leaders.

That the country is in a serious fiscal and debt crisis can no longer be denied. Ms Arroyo and her allies tried to conceal this in the months before the elections. Now that the extent of this mess is slowly becoming clear, Ms Arroyo wants to end the debate and, in the name of communal patriotism, focus instead on the quick-fixes she is offering.

It's funny how Bush and Ms Arroyo are so alike. Bush wants to end the Iraq war by spending more for the war. Ms Arroyo wants to end the debt problem by borrowing more. Buried in the business pages the other day was the news that the Philippines has successfully raised another $1 billion to finance Napocor's debts by issuing sovereign bonds in the world market. The new IOUs consist of $300 million worth of bonds maturing in 2015, and another $700 million payable in 2025. My granddaughter Julia, who will be 25 years old by then, will be starting her own family saddled by this new debt, in addition to the old ones unpaid from the past. That's not funny.

Dealing With State Failure

Dealing with state failure

Updated 09:36pm (Mla time) Sept 04, 2004
By Randy David
Inquirer News Service



Editor's Note: Published on page A15 of the September 5, 2004 issue of the Philippine Daily Inquirer


NEXT to banks, telecommunication companies, and shopping malls, the most profitable business in the country today is the private security agency. No other country in the world, except maybe unstable Iraq, hires so many private security personnel.

“Blue guards,” as we call them, are everywhere, providing countless homes and neighborhoods, firms and offices that singular service that is supposedly the state’s primordial function -- personal security. Their number is twice the size of the country’s standing army and police. Their existence and the rising demand for their services, are the clearest proof of a failed state.

The privatization of security -- alongside the privatization of basic education and basic health services, in a society sharply divided by extremes in wealth and poverty -- poses the question: What for do we need a state? It is a question that has acquired even more saliency in the context of the government’s worsening fiscal and debt situation.

Should the public, which theoretically owns the state, do something to save it from its present woes? Should citizens dig into their private savings, offer their jewelry, or give up their incomes so that the state would be able to pay its debts? Or, feeling so alienated from the state and having no care for what happens to it, should it allow it to sink in its present problems and prepare the way for its reconstitution?

The answer depends on our individual and collective experience with the state. I think a lot of Filipinos today would be inclined to think that the present state has either betrayed or abandoned them. They see it not as the agent of their collective will, the protector of their interests or guarantor of their children’s future, but merely the milking cow of a privileged few.

The poor think the state has not done enough to secure their basic needs and redress the basic inequalities of our society. The middle class and the rich think that, because of corruption and incompetence, the state is not doing enough to protect their homes and property. No matter how one looks at it, this state of affairs is not conducive to the discharge of the obligations of citizenship.

The informed among us may see the urgency for a collective approach to the nation’s financial problems. But, aware that these problems will not go away unless they are attacked at their roots, they are also wary of trusting the present officials of the state to do the right thing. This is ironic because we have just been through a national election.

It is not to say we are not already paying for the state’s incompetence and corruption in the form of a devalued currency and scant public services. But no thoughtful citizen, not even one who loves the country deeply, would offer to pay the government’s debts without a corresponding resolve on the state’s part to address the main sources of the problem. The first is the government’s failure to collect the right taxes from those who must pay taxes. The second is the mindless absorption by government of obligations incurred by unaccountable government financial institutions and public corporations. Almost 40 percent of the national government debt today, says the UP School of Economics report, consists of these assumed liabilities and loans of state corporations.

When we consider how these liabilities were incurred, who profited from them, and which interest groups evaded payment of the appropriate taxes, it is not easy to summon love of country. When we see government officials speeding through the city traffic in their large tinted vehicles with blaring sirens and motorcycle escorts, or when we learn that the President has brought almost her entire clan on her state visit to China, we start to wonder if state officials are there to serve or to be served.

State formation is an experimental process, says John Dewey. There is no sure-fire formula for creating a good state. “The only statement which can be made is a purely formal one: the state is the organization of the public effected through officials for the protection of the interests shared by its members. But what the public may be, what the officials are, how adequately they perform their function, these are things we have to go to history to discover.” In theory, we know what a good state is, Dewey says. We know it by the degree to which the public is organized, and by the extent to which public officials “are so constituted as to perform their function of caring for public interests.”

When we speak of the deficiencies of governance, we refer to the flaws in our institutions and the shortcomings of public officials. But that is only half the picture. The other half is us, the public -- to the extent we can imagine ourselves as a collectivity capable of deliberate and conscious action. If we are organized, we should be able to invent and reinvent the state in accordance with the demands of our time, guided by the tools of knowledge available to us.

It may be inspiring to see the public move as one, bayanihan-style, to patch up those problems that are not being attended to by the state. But the value of an organized public does not lie in an auxiliary function like this, but in its capacity to reform the state and hold it accountable for its performance. A fragmented public will find itself saddled by an incompetent or irresponsible state. But a unified and intelligent public will know how to deal with a wayward state -- it will tame its excesses and reorient its policies. It will not blindly come to its rescue in a moment of fear or sentimentality, or offer to bankroll its vices.

The Magsaysay Awards

The Magsaysay Awards

Updated 07:42am (Mla time) Aug 29, 2004
By Randy David
Inquirer News Service



Editor's Note: Published on page A15 of the August 29, 2004 issue of the Philippine Daily Inquirer


SOCIETIES reaffirm their values in two ways: first, by punishing crime, and second, by recognizing good deed. The moral crises of today's societies arise from the fact that they now tend to do less of the latter. Not so much for a lack of willingness to reward the good, but from a growing inability to identify what is good.

When norms get blurred, indifference finds refuge in a crippling moral relativism. Our capacity for revulsion is weakened. We learn to negotiate duty. We are no longer awed by moral beauty.

This situation is not helped by the proliferation of award-giving bodies that, at the toss of a coin, give out medals or trophies for the most banal achievements. Neither is it relieved by the proliferation of "who's who" publications offering instant fame for the price of a subscription.

By cheapening achievement, they make recognition a worthless event. By trivializing virtue, they rob it of its power to inspire. When cynicism reigns, we begin to doubt our own spontaneous admiration for many acts of goodness in everyday life.

Some values must be protected from erosion. In the last 47 years, the Ramon Magsaysay Award Foundation has tried to be a responsible trustee of one particular value-"greatness of spirit shown in service to the peoples of Asia." The key phrase is "greatness of spirit." The founders of this award believed this was the most striking trait of the late president, whose legacy we call to mind every year by the awards named after him.

What can this value possibly mean in our time?

Haydee Yorac helped restore the dignity of the civil service at a time when government evokes only images of corruption and incompetence. Undaunted and always willing to serve, Haydee showed that government work can indeed be the highest vocation of a citizen. She is this year's recipient of the Award for Government Service.
Jiang Yanyong of China is both a soldier and a doctor. When the mysterious SARS ailment began to spread in his country, he worried that the official policy of concealing the true extent of the epidemic could result in the loss of more lives. His sense of duty as a doctor prevailed over the imperatives of military discipline. Dr. Jiang spoke out and called attention to the urgent need to inform and protect the population. He is the recipient of the Award for Public Service.

Prayong Ronnarong is a rubber farmer from Thailand who refused to bow to the whims of the world market when the price of raw rubber dropped suddenly. Why not process the rubber ourselves, he asked his fellow farmers. A genius at community organizing, Prayong defied conventional thinking by building community-based rural industries. The model of rural industrialization he pioneered is now being replicated all over Thailand. He is the awardee for Community Leadership.

Abdullah Abu Sayeed of Bangladesh taught literature in Dhaka for many years. He refused to think that his country's economic poverty should also mean poverty of the mind. He formed "reading circles" that got young people to study great works of literature. He acquired old buses, filled them with books, and launched them as mobile public-lending libraries. Sayeed is the 2004 awardee for Journalism, Literature, and Communicative Communication Arts.

Laxminarayan Ramdas used to be the chief of the Indian Navy. Today he is a staunch advocate of the de-militarization of the Indian sub-continent. He and the Pakistani human rights advocate Ibn Abdur Rehman shared the leadership of the Pakistan-India People's Forum for Peace and Democracy for many years, tirelessly organizing people-to-people dialogues across this troubled continent and speaking out against prejudice and war. The Foundation confers on them the joint Award for Peace and International Understanding.

And finally, Benjamin Abadiano, the epitome of the young volunteer who, searching for personal meaning, finds it in being a person for others. The Foundation honors him for his work among the Mangyans of Oriental Mindoro, for whom he started a comprehensive school now mostly staffed by Mangyan teachers. He is also being recognized for his work with thousands of families in Mindanao displaced by war, particularly among the lumad or indigenous tribes, for whom he established the same culture-based training program he pioneered in Mindoro. Abadiano is the recipient of the Award for Emergent Leadership.

A careful examination of the life and work of Magsaysay awardees reveals two outstanding traits. The first is courage, the second is generosity. They are the same virtues that Ralph Waldo Emerson associates with heroism.
Of courage, Emerson writes: "It is a self-trust which slights the restraints of prudence, in the plenitude of its energy and power to repair the harms it may suffer....It is the state of the soul at war, and its ultimate objects are the last defiance of falsehood and wrong, and the power to bear all that can be inflicted by evil agents....It persists, it is of an undaunted boldness and of a fortitude not to be wearied out."

But courage is what it is because its wellspring is a generous heart.

"The brave soul," wrote Emerson, "rates itself too high to value itself by the splendor of its table and draperies. It gives what it hath, and all it hath.... The magnanimous know very well that they who give time, or money, or shelter to the stranger -- so it be done for love and not for ostentation -- do, as it were, put God under obligation to them, so perfect are the compensations of the universe."