Expand the economy, make politics useless
COMMENTARY
By DAVE L. LLORITO
TODAY Research Head
The long and torturous canvassing the country had just endured highlighted one big mission that Filipinos need to accomplish quickly in order to strengthen the economy in the next six years: make politicians of all stripes irrelevant.
In United States and Europe, only about a third of the electorate goes out and vote. For them, politicians are superfluous. Whoever sits as president or prime minister doesn’t matter; the government will go on working smoothly as it has always been. George W. Bush won the presidency through the “electoral college” despite losing the popular vote to Al Gore. In the Philippines, that would have ignited another revolution. In the US, most Americans yawned because -- Bush or Gore -- life goes on. In the Philippines, the stock market moves and investment decisions are made or foregone for every utterance that politicians make, a privilege that in the U.S. is reserved only for Federal Reserve Board chairman Alan Greenspan.
How could we make politicians irrelevant?
Maybe, the a priori question is: Why are politicians so crazy about political office to the extent that they would cheat, bribe, kill, stall, deceive, and filibuster to capture or prevent others from capturing it? And why are their supporters -- with just a hundred pesos or free tuna sandwiches as incentives -- easily turned on to do “people power”?
Political power is an end in itself but in the Philippines, economic factors seem to provide the greater attraction. This has something to do with the nature of the state governing (or misgoverning) our lives. In advanced democracies, the state emerged from popular will, a “social contract” of sorts relatively free of influences from vested interests. Its institutions are mature and stable. In the Philippines, on the other hand, the state emerged as a predatory entity designed by colonizers for political control and the extraction of economic surplus. When the colonizers left, the “rent-seeking class,” political entrepreneurs who amassed wealth and influences through the right connections and lobbying, simply took over.
The state has become the dispenser of timber licenses, mining concessions, land leases for agribusiness plantations, fat infrastructure contracts, import licenses, foreign-exchange allocations, and fiscal incentives (e.g. tax exemptions, duty-free importation of machines), among others. Congress, supposedly a policymaking institution, reserves the right to grant business franchises.
“Nationalism” has become a reason to grant monopolies to the local elite by regulating foreign ownership and shielding these companies through high tariff walls and quantitative restrictions on imports. Almost all formal economic activities are heavily regulated such that it takes several dozens of signatures from bureaucrats before one can set up a small business. That explains why the primary means to become a “business tycoon” in the Philippines has been through “extra-economic means” (e.g. political connections, manipulation of public policy to serve private interests, etc) not through competition and innovation.
Democracy has become periodic contests among the elite. During elections, politicians would shamelessly fight tooth and nail because the control of the state and its institutions would mean access to political power and wealth-making opportunities. Their supporters would die, kill, cheat, and endure cracked heads from police batons because there are huge economic gains from doing so -- from government contracts to jobs, and, yes, tuna sandwiches.
Most well-meaning citizen votes -- and fight to get their votes counted -- because they thought, rightly or wrongly, whoever sits on the throne in Malacañang spells the difference between survival and more misery. That is why, come election time, most Filipinos are passionately polarized by the stark moral choice between the Greater and the Lesser Evil.
Expanding the economic sphere
Perhaps, Filipinos can never make politicians totally irrelevant. But we could make their presence less intrusive so that whatever games they play, ordinary citizens could go on with their lives and entrepreneurs could go on creating more jobs in an atmosphere of greater certainty.
The best way to do that is by enlarging the sphere of economy or business and cutting short the dead fingers of the state. By reducing incentives for political entrepreneurship, the state would not attract all sorts of shady characters and rent-seekers who keep the devil’s bag of tricks for political manipulation. It can be done in several ways.
In the economic sphere, we should make it easier for entrepreneurs to do business in this country. Bureaucrats and politicians, from national to local levels, should not have a say in the approval or disapproval of business permits to remove opportunities for corruption. The granting of business permits should only be ministerial and proposed businesses could only be turned down for environmental and national security considerations. Congress should not have the power to grant franchises for utilities and telecommunications facilities. Entry and exit for these investments should be made as simple as getting a business permit for taxation purposes, zoning, and environmental regulations.
We should remove all barriers to entry by foreign investments. All businesses that are open to Filipinos should also be open 100 percent to foreigners such as media, shipping, finance, insurance, and other services. The financial and banking system should be totally open to foreign investment with no limit to bank branching. Shipping and port operations should be completely opened to foreign participation to introduce more competition in this sector. Much of the factors underlying the difficulties of some sectors in agriculture to compete with imports stems from inefficient shipping and transport infrastructure. We should also implement “open skies” policy to boost tourism.
In these days of 24-hour CNN and BBC coverage, it would make sense to completely open media ownership so we could attract businessmen like Rupert Murdoch to help modernize the local media (and probably raise media people’s salary).
How could the state countercheck the market power of business? Simple: the government should not. It should instead let the market do the checking through trade liberalization. Lower tariffs bring forth competitive pressures that would force business to be efficient. Smuggling and corruption at the Bureau of Customs would be drastically reduced because importers would find that with lower tariffs and the removal of the remaining quantitative import restrictions, it would be cheaper to pay the legal fees than to bribe government employees at the ports.
But what’s the guarantee that politicians, pressured by lobbyists and leftists, would not backslide on these reforms?
The best way is for the Philippines to bind the country’s tariff commitments with the World Trade Organization and strengthen our participation with the Asean Free Trade Area and the Asia-Pacific Economic Cooperation. In the long run, the Philippines may have to hitch with an international framework in investments, trade facilitation, transparency and government procurement to lessen political interferences in these areas. The Philippines has lost several big-ticket investments such as the Hutchison port project in Subic, because of a politicized bidding process. Through these measures, international commitments would prevent politicians from getting back to the old dirigiste policies that sheltered vested interests and hobbled the economy.
With these policies, the government will not wither away. Its job will just be focused on things that it can really do better such as collecting taxes, providing social services, providing protection and security, improving economic infrastructure, environmental protection, ensuring macroeconomic stability, maintaining good international relations, among others.
Clipping politicians’ wings
Perhaps a shift to a parliamentary form of government should be considered. This way, political contests are localized or regionalized. Campaigning for the top post would be cheaper. All the party needs to do is capture the highest number of seats in the parliament, make alliances among the other winning parties, and chose the prime minister. There would be no bitter and prolonged on-one-one contests, and no shameful and highly partisan system of canvass. Under a computerized voting system, the winning party and the prime minister will be known in three hours after the poll, as in the case of India.
Why do the Brits always have brilliant and articulate prime ministers like Tony Blair and not a stuttering cowboy like George W. Bush? It’s because getting to the top requires brains and political savvy. Celebrity drop-outs could be members of the parliament but -- lacking the neurons and the political sophistication of the pros -- they would never make it to the top.
We will still have the Lito Lapid types, but only the ones like Edgardo Angara, Aquilino Pimentel, Franklin Drilon, Jose de Venecia and Mar Roxas will become prime minister. These guys would no longer need to put up a dummy and become the power behind; they will become the power themselves. And if we take away the pork barrel -- it’s possible, just ask Sen. Panfilo Lacson -- this would further ensure that the parliament will attract a lesser number of questionable characters. With less opportunity for rent-seeking behavior, politics could hopefully attract more statesmen. With the state focused solely on doing things that it can really do better, investors would find political contests less distracting.
All these economic and political reforms will require amending the Constitution. Leftists and habitual protesters will raise hell but there seems to be a political consensus for it. All the presidential candidates in the last election, except Raul Roco, favored constitutional amendments and a shift to the parliamentary system.
If we fail to do these economic and political reforms now, another nasty political deadlock in the future might just tempt some restless soldiers to try another coup. As usual, these power grabbers -- being lousy coup plotters that they are all the way from Gringo Honasan down to Antonio Trillanes -- will bungle the job. But that will sink the economy further down, forcing Filipinos to breathe in dirt from the exhausts of the booming economies of the Asia-Pacific region.