Di lumingon: The economics of the next administration

April 26, 2016

by IBON Foundation


By Sonny Africa
IBON executive director

#BeyondElections2016 | The leading candidates for the presidency project vastly different images: plain but competent technocrat, earnest would-be mother of the nation, beleaguered man of the masses, and of course the coarse yet effective strongman. Filipino voters seem to have a variety of choices in the May 9 general elections.

Yet as the campaign enters its final stretch it’s become clear that the candidates are actually not that different from each other in what really matters the most. Their personalities vary widely but their plans for the economy are strikingly interchangeable. Without exception, they all embrace and uphold neoliberal economic policies that enrich a few but keep the national economy backward and tens of millions of Filipinos in poverty — a shared default economic platform, as it were.

Learning from the past

This year is the 120th anniversary of the martyrdom of Jose Rizal. All the candidates communicate in Filipino and have avoided being worse than beasts or slimy fish, as the country’s national hero purportedly put it. But in matters concerning the people’s welfare, Rizal’s advice to look at the past as a guide for the future is far more important: “Ang di lumingon sa pinanggalingan, hindi makararating sa paroroonan.” (Those who don’t look back to where they came from, will never get to where they are going.)

The Philippines seems to be a vibrant economy that is the emergent star of Southeast Asia. There is economic growth, growing corporate profits, rising oligarch wealth, investor confidence, and international media hype. These are all true. Yet there is also a profound deterioration across a huge swathe of the economy and in its most important fundamentals.

The economy is creating less new jobs per year where the average of just 692,000 new jobs annually in 2011-2015 is much less than the 858,000 annually in 2001-2010. This has resulted in the most unemployed, underemployed, discouraged job-seekers, and overseas Filipino workers in the country’s history.

The quality of employment is dismal. Some 24.4 million working Filipinos or nearly three-fifths (63%) of total employed are non-regular, agency-hired, informal sector, or unpaid family workers. Among wage and salary workers, over two-fifths (44%) are non-regular workers. Labor productivity is increasing but the mandated minimum wage and actual daily basic pay received barely keep up with the rising prices of goods and services. Even then, nearly half (46%) of workers receive less than the minimum wage and one-fourth (25%) receive just exactly the low minimum wage.

Despite Php295 billion spent on the Pantawid Pamilyang Pilipino Program (4Ps) conditional cash transfer (CCT) program in the period 2011-2015, the number of Filipinos in extreme poverty is unchanged at some 27 million in the first half of 2015. Anywhere between 56-66 million Filipinos should be considered poor by a reasonable standard of decent living. The number of underweight children even increased by some 203,000 and the number of fully immunized children decreased by 692,000 in 2015 from the year before.

The Philippines is rich in natural resources and raw materials. Yet agriculture and industry remain in decline. The country’s production sectors — agriculture, manufacturing, construction and mining — accounted for over 60% of the national economy, services for some 30%, and utilities for 10% until the late 1970s. Production started to collapse upon the onset of the globalization era during the Marcos regime. At some point in the mid-1990s, the economy became a service and trading economy more than a producing economy. Near the end of the outgoing Aquino administration, production was down to 39% of the economy while low-productivity services rose to over 49% in 2015.

This worsening joblessness, poverty, and economic backwardness — and ever more concentrated wealth and economic power in a few corporations and a handful of oligarchs — are the inevitable result of over 35 years of neoliberal “free market” economics. The state has been oriented to support the private profit-seeking of a few more than socioeconomic development for the majority. The economy was opened up to foreign capital, goods and services. This devastated Filipino producers and reduced domestic enterprises to subordinate, albeit profitable, partners and subcontractors. Education, health, housing, water and electricity became commodities to profit from rather than services every Filipino is entitled to.

Neoliberal insanity

“Insanity,” Albert Einstein wittily quipped, is “doing the same thing over and over again and expecting different results.” The decades of market-led underdevelopment are self-evident and mirror the experience in other countries. The problems faced by the majority of Filipinos are also well-known to the presidential candidates who, exploiting the yearning for change, all make sweeping promises of poverty reduction and job creation.

Leading candidates Secretary Mar Roxas, Senator Grace Poe, Vice-president Jojo Binay, and Mayor Rodrigo Duterte have all had a chance to articulate their respective economic platforms. None of them really offer anything different from the outgoing Aquino administration or from those that came before it. (The performance of the Aquino administration is assessed in more detail in IBON’s 2015 Yearend Birdtalk, “End of the Road, and a New Beginning?”)

The neoliberal emphasis on promoting private profit — even in public utilities and social services — and unqualifiedly welcoming foreign investment is largely intact. Government resources and regulatory authority are geared to supporting corporate profits rather than ensuring national development and attending to the people’s welfare. Real asset reforms and redistributive measures that challenge elite power are avoided.

All the candidates are pro-business with Roxas, Poe and Binay the most systematic in articulating this. Big corporations are assured consistency in contracts, ease of doing business, and an efficient bureaucracy. A more sustained pro-people position articulating a bias for the country’s marginalized versus entrenched elites would have been much more welcome.

None of the candidates have been vocal in their support for public-private partnerships (PPP) but this is likely only because its flaws are well-known by the public. Still, it is reasonable to interpret the conspicuous non-repudiation of PPPs as an affirmation given the candidates’ consistent infrastructure focus and their respective oligarch backers. Expanding transport infrastructure for instance gives lucrative contracts to build and operate as well as eventually makes doing business easier. Roxas and Binay said they will amend the build-operate-transfer (BOT) law doubtless to make this even more profit- and PPP-friendly.

All the candidates appear to favor, or are at least open to, lowering corporate income tax rates with Poe and Binay the most explicit in reducing this to just 25 percent. A reduction in taxes among lower personal income tax brackets is also proposed to make reducing tax burdens on the rich more palatable. Yet none of the candidates are bold enough to pursue the more rational option of a progressive tax system that increases direct taxes on the rich and relieves the poor of regressive indirect taxes. This would increase government revenues for national development, if it were so inclined, as well as erode the economic base and power of elites.

Roxas, Poe and Binay have been the most active in courting foreign investors. Poe and Binay will immediately push to remove the nationalist economic provisions of the 1987 Constitution that foreign capital complains about. Poe also said that she will push for more free trade agreements (FTAs), presumably including the United States (US)-centered Trans-Pacific Partnership (TPP) agreement that the Aquino administration is already seeking to join.

All proclaim support for manufacturing. However no one has said that manufacturing means Filipino-driven industrialization and Roxas even explicitly said that this would be foreign investment-led. Duterte did say he would strengthen basic industries and gave the steel industry as an example. Pseudo-industries are also supported: tourism by Roxas, Poe and Binay; and business process outsourcing (BPOs) by Roxas and Binay.

Virtually every presidential candidate the country has ever had proclaims support for agriculture to court the vast rural poor. The present batch all promise to prioritize, strengthen or revitalize the sector. All say they will provide irrigation. Poe, Binay and Duterte pledge to improve agricultural credit and finance. Roxas, Poe and Duterte commit to mechanize, add roads, or expand post-harvest facilities.

However the historical record of candidates’ keeping such promises is not reassuring. The agricultural sector has for decades taken up barely 5% of the national budget, on average, and this is even down to just 4% under Aquino in 2016. On the other hand promises to promote agri-business and corporate farming, such as by Poe and Binay, or to let foreigners own or lease land longer, such as by Duterte, are more likely to materialize. Despite widespread landlessness, none of the candidates are bold enough to distribute land to farmers for free.

All the candidates declare support for education and the shift to K to 12. While Binay and Duterte said that K to 12 implementation has to be improved, no one addresses its retrogressive orientation of merely producing a cheap and docile labor force for corporations in the country or for export. Similarly, all the candidates declare support for health care and in particular for expanding PhilHealth coverage and benefits. Yet no one addresses the underlying privatization of health and hospitals that drives up the cost of medical care and makes this inaccessible to begin with.

Finally, all the candidates make grand promises to expand the conditional cash transfer program. In the absence of a real long-term program to create jobs and develop the economy, the promise of cash dole-outs for tens of millions of poor and undoubtedly needy Filipinos borders on post-paid vote buying using government funds. In contrast, none of the candidates commit to distribute land for free to landless farmers of the rural poor. Nor do any give convincing guarantees of meaningfully higher wages or ending contractualization that assert workers’ rights over capitalist profits.

People elect, elites choose

But then attributing the candidates’ old, failed and stale neoliberal economic policies merely to failing to learn from the past may actually be too generous. More fundamentally, their policies reflect the deeply undemocratic imbalance of power in the country.

Even with supposedly free elections, the majority of poor Filipinos are systematically marginalized from political power — often violently. The general population elects its leaders in periodic elections but they do not actually choose or, at best, only choose from the restricted choices the political system allows. The real choices are made by the concentrated core of elite families that has dominated Philippine economic and political life throughout its modern history. This core is hardly changed by how some enter or exit as new fortunes are built or old ones lost.

But, powerful as it is, even this domestic elite is constrained in its behavior. Global monopoly capital has asserted its ultimate control over the country since the US colonial period, despite formal independence in 1946, and throughout the neocolonial era until today. The US has the longest record of self-serving imperialist intervention using scores of direct, indirect, formal and informal levers — treaties, trade and investment agreements, international financial institutions, so-called development aid, policy conditionalities, diplomatic pressure, lobbying, back-room manipulation, and even military interference.

The candidates’ personal, professional and class backgrounds certainly predispose them to neoliberal policies. But, more to the point, they are leading candidates because their upholding neoliberal policies makes them acceptable to domestic elites and foreign monopoly capital. In practical terms this means campaign funding and political support. The in-fighting, personality differences, or variations in style can get colorful but do not really mean any substantive policy divergence among them.

Unfortunately the marginalized majority remain unable to challenge elite capture of the electoral system and, indeed, are even cynically manipulated into supporting this. Just weeks before the elections and barely two months before the next administration, neoliberal socioeconomic outcomes are already preordained.

Fortunately the efforts to increase the people’s influence on governance goes far beyond the moment of seemingly active citizenship the elections provide. As ever, the daily organized struggles of the country’s farmers, fisherfolk, workers, informal sectors, indigenous peoples, women, youth, and others in the mass movement remain the most potent forces for real democracy and radical development in the country. ###