Politics for Breakfast

Arroyo's Gangster Regime (just so we won't forget) - Feb. '08

james.miraflor@gmail.com (James Miraflor) — Tue, 29 Dec 2009 06:40:00 +0000

Greed is defined as an excessive or uncontrolled desire for or pursuit of money, wealth, food, or other possessions especially when this denies the same goods to others. It is reprehensible acquisitiveness, an insatiable longing for power, and supremacy in order to advance individual interests at the cost of other’s well being.

Arroyo’s Greed has a Name: ILLEGITIMATE DEBT

February 2008

But greed is not just about Mrs. Gloria Macapagal-Arroyo, the First Gentleman and other greedy officials.

If the Filipino public ought to be learning something from the recent revelation of whistle-blower Rodolfo “Jun” Lozada Jr. over the aborted $329-million ZTE National Broadband Network (NBN) project, it is that our flawed political and economic system perpetuates this greed and makes wealth accumulation and concentration at the expense of the people not only possible but a persistent and dominant feature of the political landscape.

Indeed, Lozada’s testimony is an astounding tale of greed and corruption. But we should not just focus on the staggering amount of $130 million that was to be the “commission” of Abalos, not just the brazen power and influence of “FG,” nor just the complicity of many other officials.

In truth, the ZTE-NBN deal reveals the deeply imbedded flaws of the system that has led to the accumulation of ILLEGITIMATE DEBT such as what we would have contracted had the ZTE-NBN Project pushed through. And what is this system?

Government projects are not primarily determined by our people’s needs and national priorities, but are corrupted by profit-making agenda of public officials, foreign lenders and private multinational and even big local corporations. A government that places highest priority on DEBT SERVICE and fully dependent on heavy borrowings is even more vulnerable to wrong priorities, fixated with chasing after “foreign-assisted” projects, and driven by external funding.
The bidding process is more dysfunctional than all the players care to admit. Many public officials and their close relatives get involved in vying for government contracts.
The President’s powers to approve contract and implement projects and loans are non-transparent and unregulated. We all know that the ZTE-NBN deal is neither the first nor the last. These powers must be curtailed, redefined and subject to rigorous checks.
The practice of giving and receiving“commissions” is widespread, well entrenched, and involve several layers for every project.
Lenders are driven by their own agenda often at the expense of our national interest. Many loans come with conditionalities. In the ZTE-NBN case – it was tied to the purchase of services and technology from the same country, and even from specific companies. Lenders promote and perpetuate corruption by practicing bribery and including the cost of the so-called commissions into the project cost. In many cases, lenders pass on overpriced, unnecessary and/or flawed products.

Truly, the government is highly vulnerable to plunderers who see the system as a lucrative source of business opportunities and huge kickbacks, precisely because it is a government dominated by rent-seeking elites, colluding with rapacious foreign big business, financial institutions and their governments.

Without doubt, greed has a new name: ILLEGITIMATE DEBT.

We say, enough is enough! We call on the people to come out and end the debt addiction of Mrs. Arroyo’s gangster regime. The best way to honor and give meaning to the courage and selflessness of Rodolfo “Jun” Lozada Jr. is not by merely extolling his good deeds, but by replicating it with the same act of daring.

Now is the time!

Comprehensive audit of all public debt now!
Repeal the Automatic Debt payment provisions of the Revised Administrative Code of 1987!
Stop payment of all Illegitimate Debts!
End the debt addiction of Arroyo’s Gangster Regime!

Freedom from Debt Coalition (FDC), People Against Illegitimate Debt (PAID!), Assembly of Faith-based Organizations Against Immoral Debts (now FCAID), Youth Against Debt (YAD)

For more information, please contact us at:
9246399 or 9211895

Transforming the Tide for Transformation

james.miraflor@gmail.com (James Miraflor) — Fri, 28 Aug 2009 04:24:00 +0000

Yesterday, I was asked to give a talk on the City of Malabon University (CMU) for AB Political Science Students on a Lecture-Forum entitled "Political Science and its Place in the Society" as partial fulfillment of the requirements of PolSci 402 (Planning Method). Not being a polsci major, I considered talking about my "political" experiences as a development activist. But gauging that they need something more, I resorted to Saul Alinsky, the legendary community organizer.

Here is the presentation.

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Most of the points I raised here were derived from this very important book by Alinsky, "Rules for Radicals". To understand the importance of this book, we have to quote from the author himself:

"What follows is for those who want to change the world from what it is to what they believe it should be. The Prince was written by Machiavelli for the Haves on how to hold power. Rules for Radicals is written for the Have-Nots on how to take it away,"

Saul Alinsky's "Rules for Radicals": For the Have Nots

Niccolo Machiavelli's "The Prince": For the Haves

To quote wikipedia on Alinsky: "Saul David Alinsky (January 30, 1909, Chicago, Illinois – June 12, 1972, Carmel, California) was a community organizer and writer. He is generally considered to be the founder of modern community organizing in America. His ideas were adapted by some American college students and other young organizers in the late 1960s and formed part of their strategies for organizing on campus and beyond."

"Saul Alinsky died of a heart attack at the age of 63 in 1972."

Even Obama learned quite a few things from Alinsky.

It's fortunate that some students of CMU, as assisted by Samahang Demokratiko ng Kabataan (SDK) already had some experience in militant tactics as they campaigned against the assumption of the notorious Dr. Benjamin Tayabas as CMU president. I hope the presentation will be able to help them refine their tactics further.

Reinventing Cory and the Dream of Democratic Nationhood

james.miraflor@gmail.com (James Miraflor) — Sun, 09 Aug 2009 10:41:00 +0000

by James Miraflor

When Corazon Cojuangco Aquino died on the first day of August 2009, she as the Philippine symbol of liberal democracy did not die. Rather, she was sealed forever; and as things sealed forever, she was sealed with utmost and absolute purity of image.

This, for things sealed forever are either sealed with utmost adulation or absolute hate. For Cory, it was the former: at the day she died, everything people hated about her died with her; everything they loved about her was forever imprinted in the mantle of national memory that clothes the next generation.

Just as Ninoy’s flaws had been forgotten, so will hers be. People forgot Ninoy the cunning political demagogue; the youth remembers Ninoy now as the selfless national martyr. In the same way, people may eventually forget the bloody Mendiola massacre which happened during Cory’s term; but now the youth will always remember 1986 when Cory took the cudgels of power away from the strongman who denied their parents political rights.

In fact, there was already a precedent. Even Marcos’ brutal rule itself was partly diluted from the minds of many Filipinos, ironically by the brutality of the post-EDSA economic situation. Now, some Filipinos dreamily stare into the Marcosian past of state-afforded economic security, for no matter how meager it had been, and in spite of the fact that it came from a dictatorship, it was a hell lot better than today’s perpetual fear of poverty which hangs above their heads like a Damocles sword.

And so, what happened in the past few weeks, or even what will happen for the next few weeks, is necessarily a reinvention of Cory – for forgetting is necessarily a reinvention, and forgetting is to be done if Corazon Aquino is to forever be an immaculate symbol of a liberal democratic nation.

And this is for a very good reason. More than any other time since EDSA I, our notions of liberal democracy and even nationhood itself are threatened by predatory forces from within. We have seen how our democracy, if it can even pass as one, decayed into a rule by arbitrary power. We have seen how our economic status, then mired into debt and poverty just after Marcos, wound up two decades after into more debts and misery. We have seen Filipino nationhood, assaulted as it was by decades of exposure to Western ideals, now freely and willingly exchanged for better lives abroad.

The youth looks to our current leaders for hope; they didn’t see it in them, they saw it in Cory. And thus, while her revolution happened before they were born, they flocked her internment as those who have witnessed people power did. She was the memory of hope, and hope is what we needed right now.

Now more than ever, Cory serves as a reminder of a distant but concrete dream of democratic and equitable nation, the belief of which had failed the people in their travails with the Ramos, Estrada, Arroyo, and yes, even with her own administration. They had wanted Cory to fulfill for them that dream, and inevitably she failed: she failed to complete the agrarian reform project by not being strong enough against landlord interests, she failed to break the back of the wielders of elite power by not using her revolutionary powers towards social justice ends, and she failed to free us from foreign economic bondage because she honored the illegitimate debts of Marcos regime.

But while she had failed, many Filipinos believe that she was most sincere in working for the nation, presumably stripped as she is of malicious, corrupting compulsions we commonly attribute to those in power today. And now that she died, they were reminded of what she had worked for, amid today’s reality of democratic deficit, public apathy, and economic misery.

Cory Aquino had become a symbol, but not because of what she is or what she has done, but what had people wanted her to be, what people wanted her to do. The forgetting and reinvention was for a purpose, and it was for a purpose made urgent by the speed with which our concept of democratic nationhood is decaying right now. She has to be made an icon, for today is when we need icons to remind us of what we are currently losing, if we haven’t completely lost it yet.

Had she died in less troubled times, I think people would have still called her name and declared her a hero, but when I saw on TV how people flocked to her funeral march in Ayala and Manila, I was informed of something more. People are crying her name in desperate desire for change, and people are declaring her a popular hero under the rule of an unpopular villain. People are ascribing meaning to her existence more than the meaning she determined by her own heroism, as if the people fear that democracy, which they have seen recently assaulted and corrupted, may die with her.

I realize then, that the best way to pay respect to the real Cory is not just to celebrate her achievements, but also to give meaning to the symbol the people ascribed to her name. The best way to immortalize Cory is to insist on a concept of democracy that is not just an amalgamation of institutions governed by rules, but an emancipatory expression of popular power.

We can begin to do so by expressing our dissent to illegitimate rules and authorities, and just like Cory, fight for the ideals of democratic nationhood. Let us complete the unfinished people power project by taking up her role as a freedom fighter in these tumultuous times.

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Scenarios on ConAss Resolution

james.miraflor@gmail.com (James Miraflor) — Tue, 23 Jun 2009 11:21:00 +0000

Arroyo is Paranoid Android. Threatened by the prospects of post-presidency blues (read: legal cases), Mrs. Gloria Macapagal-Arroyo is on a grand plan to rock Philippine politics by becoming its first female Prime Minister.

I have received this email last week:

---------- Forwarded message ----------

From: Corazon Juliano-Soliman 〈dinky@incitegov.org〉

Date: Wed, Jun 3, 2009 at 6:29 PM

Subject: [changepolitics] express outrage over illegal and arrogant politics of CONASS

To: change politics

Greetings colleagues and comrades!

In the stillness of night the allies of the administration in Congress pierced and stabbed our backs by betraying public trust (the little that we had on them). They passed a resolution to convene aconstituent assembly! They will convene it with out the Senate...at least this is one option that they have, to move the process forward.

The irony of it is Speaker Nograles admitted publicly that it was pressure from Malacañang that made them do it; he does not have any plan regarding the next steps.

This is brazen disregard of the constitution and of their duty to represent the people's interest and will.The scenarios that have been discussed in a broad meeting this morning are as follows:

Scenario 1: House of Representative (HOR) will set the rules and procedures and proceed to amend the constitution acting now as a Constituent Assembly. After a period of time they bring the amended constitution to COMELEC to request for a plebiscite. A case is brought to the Supreme Court and the Supreme Court decides that a Senate less CONASS is valid.Plebiscite continues, it is a yes victory and the election ofMay 10, 2010 is an election for a parliamentary form of government. GMA runs on a district in Pampanga. She wins and becomes eventually the Prime Minister.This scenario assumes that the outraged and protest from the citizenry is weak.

Scenario 2: HOR convenes as a constituent assembly; a case is filed in the Supreme Court and SC declares that Congress is a bicameral body therefore the Senate is needed. Election fever catches up.A presidential election is held in May 10, 2010.This scenario assumes that there is significant citizen's lobby to stop CONASS and chahcha. The citizen's actions is a major influence in the assessment and judgement of the justices in the Supreme Court.

Scenario 3: HOR convenes as a constituent assembly, there is building outrage from the citizens and more street actions are undertaken. Malacañang rides on the anger of the people and organizes violent incidents that will then be the basis for emergency rule. This scenario assumes that citizen's actions are not organized and disciplined which creates the conditions for infiltration and manipulated violence from the enemies of democracy.

Scenario 4: HOR convenes as a constituent assembly; a case is filed in the Supreme Court, the debate and deliberation in the Supreme Court takes a long time and it gets overtaken by election on May 10, 2010. GMA runs for Congress in Pampanga she wins, the administration candidates win too. They get the Supreme Court go ahead and convenes a Constituent Assembly, converts Congress into a parliament and GMA is elected as Prime Minister. This scenario assumes that the 2010 election is dominated by the allies of GMA and her candidates wins. This scenario assumes that transactional politics was the dominant practice and cheating, vote buying and killing will be the norm in the election of 2010. This means the citizen's action was weak and we failed to educate and mobilize active citizenship.

These were some of the scenarios that can happen given the brazeness and arrogance of the allies of Malacanang in Congress.

It is therefore important that we express outrage! Call a press conference, write a letter to the editor, blog or start a spit campaign ---in a public place put a big pail with some sand and put up a sign - spit on the traitors of the constitution if you know that your Congressman supported the CONASS put his name on it....like Speaker Nograles, Ortega, Barsaga, Del Mar -to name a few...

Let us tell each other what we have done regarding this issue.

We have agreed to have a noise barrage every 5:00 p.m. whereever we are to make noise for at least 15 minutes!!!

Padayon sa Paglihuk! Baguhin ang Pulitika tungo sa pulitika ng Pagbabago!

sunflower wishes,

dinky

Corazon Juliano-Soliman (dinky)

INCITEGov

Unit 1110, 11th Floor, Prestige Tower

F. Ortigas Jr. Road, Ortigas Center

Pasig City, Metro Manila

Philippines

Telefax No: (632) 634 13 34

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Be a Hero! Defeat Con-Ass!

james.miraflor@gmail.com (James Miraflor) — Fri, 19 Jun 2009 03:17:00 +0000

Migrants, Remittance-dependence, and the Philippine Economy

james.miraflor@gmail.com (James Miraflor) — Sun, 31 May 2009 13:13:00 +0000

As our contribution for the Philippine process of the Peoples’ Global Action on Migration, Development and Human Rights to prepare for the 2nd Global Forum on Migration and Development (GFMD) which was hosted by the Philippines on October 27–30, I was tasked to present for the Freedom from Debt Coalition on the effects of migrants remittances on the Philippine economy.

What I did was to look on important macroeconomic indicators, specifically employment, fiscal indicators, and monetary indicators (many of which were made available by the Philippine government for the public on the NSCB website). This was my presentation:

FDC presentation for Migrants

View more OpenOffice presentations from jmmiraflor.

There were subsequent mass actions on the Migrants issue, which was captured by GMANews.tv and YouTube:

For the latest Philippine news stories and videos, visit GMANews.TV

The 2nd GFMD was held in the Philippines for very good reasons - we were one of the top labor-exporting countries in the world. Here is a GMAnews.tv videoclip on the issue.

For the latest Philippine news stories and videos, visit GMANews.TV

Surely, it is time to revisit the role of migrant labor in keeping the economy afloat. Even in a time of economic crisis, NSCB reports: "Notwithstanding the difficulties faced by the global economy, the demand for the services of our OFWs continued to heighten as their increased deployment contributed to the hefty growth of Net Factor Income from Abroad (NFIA) of 40.8 percent from 36.2 percent last year, pushing GNP to grow by 4.4 percent from 6.4 percent the previous year."

This is compared to Capital Formation and Exports, which are going down. Note that PCE is up - and this because remittances fuel consumption despite historically low wages and high domestic unemployment. As for the GCE, it is debt-driven, but that is another matter.

TYPE OF EXPENDITURE	Q1 2008	Q1 2009	Growth Rate (%)
1. Personal Consumption Expenditure	1,164,463	1,268,233	8.9
2. Government Consumption	157,232	167,093	6.3
3. Capital Formation	253,172	252,561	-0.2
4. Exports	648,252	528,623	-18.5
5. Less : Imports	676,591	530,951	-21.5
6. Statistical Discrepancy	113,806	54,364

GROSS DOMESTIC PRODUCT	1,660,335	1,739,924	4.8
Net factor income from the rest of the world	168,092	258,363
GROSS NATIONAL PRODUCT	1,828,427	1,998,287	9.3

Proposals to Resolve the Recurring Oil Crisis in the Philippines

james.miraflor@gmail.com (James Miraflor) — Mon, 06 Apr 2009 02:11:00 +0000

I have written a piece, originally for Palag Na! but later for Pagkakaisa ng Manggagawa sa Transportasyon (PMT), that is meant to consolidate and give a framework for proposals, both popularly demanded and what we managed to come up with, to resolve the recurring oil crisis in the Philippines. This is in the context of the oil price crisis of mid-2008. But the proposals, I think, remain valid even if the financial crisis and the global recession eroded the price of petroleum recently.

As with any alternative, the long-term and strategic changes needed is inevitably tied with the short-term and the mid-term - so the short-term measure of regulating the domestic downstream oil industry is inevitably related to the mid-term measure of supply-side management and industrial structure and the long-term vision of demand-side management towards oil independence, assuming oil to be a finite resource. Realizing these proposals, of course, must be accompanied with better service standards from the end of the transportation industry (and workers) themselves, something which can be developed later on.

-----------------------------

Short-Term
Regulation of the Domestic Downstream Oil Industry

1. Abolishing E-VAT on Oil – Any taxation on oil, an important production input, will naturally lead to propagated and cumulative effects on prices of other commodities, leading to cost-push type inflation. Moreover, we all know that a flat-rate indirect consumption tax on oil enables the government to make windfall revenues out of the increasing oil prices. The government, in this case, is put in an awkward and ironic position of gaining more when oil prices increases, its revenues being proportional to such increases. In effect, E-VAT incentivizes laxity and dependence on the part of the government. Instead of plugging tax leakage and tax evasion on the foreign corporations’ income on oil, it chooses to take the easy way out and levy the consumers instead.

Thus, instead of E-VAT, a more efficient corporate taxation measure of the Oil Industry must be established and implemented. Leakage and tax evasion, not tax structure or regime, is the fundamental cause of tax collection inefficiency. A strengthened corporate tax system on the downstream oil industry would not necessarily discourage investment on oil retail, because the main basis of investments is the existence of a market for consumer petroleum, and there is an existing and thriving domestic market.

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2. Regaining control over Petron, reforming it as an industry pacesetter, and rebuilding the State Oil Complex with which it will engage the market. Private companies, whether domestic or foreign, is driven by profit-making as any other business. In this case, a State Operated Enterprise (SOE), which operates on the basis of social welfare maximization and not profit-motivation, is needed in order to tame the oil market. For this to happen, PNOC must buyback Petron, now in the hands of San Miguel (who happens to have been wrestling its way for control over MERALCO, and was scantily outbidded in TransCo, PNOC-EDC, and geothermals) and Ashmore.

Following this, Petron must be made to assume the lead in the oil industry, whether in terms of pricing by offering the most reasonable price to the consumers or in supplying high-quality and environmentally-sound petroleum products. This is with the end of disciplining other oil companies in the aspects of pricing and quality control.

3. Abolish the Oil Deregulation Law – The Republic Act No. 8479, which outlines the current policy environment of deregulation and liberalization of the downstream oil industry, only resulted to staggeringly high price hikes on end-consumer prices. The law is actually a result of an International monetary Fund (IMF) conditionality for its 1994 Extended Arrangement with the Philippine government.

Oil Regulatory Commission (ORC) must be established so as to monitor the true costs of landed oil of oil companies, and it must be accorded with quasi-judicial powers in order to make binding decisions on price controls and prosecutory powers in cases of violations.

4. Re-institution of Oil Price Stabilization Fund (OPSF) according to its original concept of equalization – The original OPSF, as established by Presidential Decree (PD) 1956 “for the purpose of minimizing frequent price changes”, is not meant as a buffer fund for consumers. Instead, the energy ministry monitors the landed cost of crude oil being brought by oil companies and gets the average. Those with true costs lower than the average would have to pay for the fund. Those with higher true costs can withdraw from it. Thus, in order to reflect its true nature, the Marcos administration even found it fit to rename it as Oil Industry Equalization Fund (OIEF).

As Equalization fund against the Ill-Effects of Laws against “Predatory Pricing” – Originally conceptualize as an antitrust instrument, the provision against predatory pricing is to ensure that firms that are large and capitalized enough to temporarily operate at a lost will not artificially lower down prices in order to steal markets or prevent entries of new players. What happened was, it compels players to raise their prices to the level of the player with highest price in the market, so as not to be accused of predatory pricing.

What the equalization fund does is that it eliminates the excuse to artificially inflate prices with the expectation that others will follow suit, since those with higher costs will be subsidized by those with lower costs.

As Equalization fund to encourage small players – Small domestic players must be encouraged by the government to engage in the oil industry, so as to realize the anti-cartel promise of liberalization of entry.

5. Establishing a new, separate buffer fund for consumers – A form of socialized price subsidy and price relief, the government must establish a Consumer Prices Buffer Fund, being financed not by VAT, as other subsidy programs of the administration are, but by windfall profits of oil companies and regulatory taxes on its profit expatriation.

With the assumption that on Oil SOE will be operating in the market so as to assure the most reasonable cost to the consumers and will prevent any artificially inflated price, the consumer buffer fund will make sure that consumers can afford petroleum products without compromising the production of SOE or the other companies.

-----------------------------

Medium-Term
Supply-side Management

1. On Oil Exploration – Optimum Linking, with the end goal of Strategic Vertical Integration, of the Domestic Upstream and Downstream Oil Industry. We recognize that while indigenous sources of oil cannot be enough to supply for current domestic demand and that there is a continuing need for oil importation, it is in the national interest to place into state-regulation the upstream industry and re-channel it for sole domestic use. The Service Contract System and production-sharing mechanisms under Presidential Decree (PD) 87 must be reformed to as to ensure greater gains for the government, the local government and the community involved, and so as to favor domestic capital over foreign capital.

2. On the Oil Importation Industry – The government, acting through the PNOC, should directly participate in the procurement of imported crude oil and other refined petroleum products, taking advantage the possibility of:

a. Bilateral Arrangements with Oil Exporting Countries – Government-to-government negotiations for oil are more stable, and oil that can be procured using such mechanism may even be cheaper than the oil brought by the oil TNCs in the Philippines, which is subject to transfer pricing and padding, or oil brought at the international futures market, which is subject to speculation.

b. Diversification of Oil Sources – The Philippine government must begin to diversify away from Saudi Arabia (ARAMCO) and Iranian (NIOC, INOC) oil, and must begin to negotiate with other oil exporters, such as Venezula’s PDVSA.

c. Maximization of Non-traditional Trade Arrangements such as Oil to Commodity Swaps. This may involve procurement of imported oil in local currency from an oil exporting country, which the oil exporter may use to buy imported commodities from the Philippines.

Why not Centralized Procurement? One of the strengths of the market is the ability to source supplies for its production and distribution needs. In a time when sources of oil are becoming scarcer and scarcer, the oil importation market acts as a support system if and when the government fails to source the needed crude oil. Centralized importation would burden the government with the tremendous responsibility of solely assuring a continuous supply. Government intervention is necessary, most likely through an SOE engaged in the market, but it should share the burden of supplying the consumers with the private sector.

3. On the Oil Refinery Industry – Diversify the oil refinery industry through encouraging, via bilateral negotiations, investments from other countries.

Why do we still need foreign investments in oil refining? Oil Refining is a technology-intensive industry, and it needs research inputs in order for it to become more productive and efficient. Of course, this is on top of encouraging domestic investment, private and public (government), on the industry 1) to ensure that the interests of Filipino consumers are protected, and 2) to maximize technology transfer from foreign companies.

4. On the Oil Marketing Industry – Promotion, through government investments and credit, of participation of domestic players in the oil marketing industry, with the end goal of reducing the influence of foreign oil players in oil marketing and limiting them to the refinery industry.

-----------------------------

Long-Term
Demand-side Management

1. Eliminate energy dependence on oil through continuing and strengthening the policy of developing indigenous sources of energy, with preference on renewable energy, and mobilizing domestic investments for that purpose. Fortunately, the government is on the right track at this, having set up a state energy complex during the Marcos era that is prepared to tap geothermal, hydro-thermal, and other non-conventional energy sources. However, the current track of privatization is putting energy-dependence back into the hands of the speculative foreign market, which is more interested in short-term gains than strategic concerns.

This also involves decoupling energy concerns with oil concerns. Incidentally, the privatization of PNOC-EDC achieves this, although through a wrong means. PNOC-EDC should be brought back at the hands of the government, but must be operated as a separate SOE altogether.

2. Implement a Long-term Strategic Framework for the Transportation Industry, with the end goal of rationalizing oil consumption. The framework should include:

a. Streamlining and Regulation of the Road-based Transportation Industry

i. Regulation of the volume of new motor vehicle production and procurement – The ever increasing volume of new motor vehicles is straining and congesting our traffic management and urban environmental management systems.

ii. Gradual phase-out of certain segments of the road-based transportation industry and implementation of a social restructuring plan for affected sectors such as the labor sector within the Public Utility Vehicle (PUV) industry and informal transport industry.

b. Facilitation of non-oil-based technology for newly manufactured cars. Better yet, the government can develop its own home-grown car manufacturing industry, such as the Proton of Malaysia, but at the same time incorporating non-oil-based, alternative propulsion technology.

This would, of course, require an industry that would be able to supply non-oil substitutes. The Philippines is, in fact, not an amateur at this. The PNOC, more than two decades ago, already experimented with alternative fuels for transport, what it dubbed as non-conventional fuel such as the alcogas and the cocodiesel. In 1980, PNOC even created the PNOC-Alocohol Corporation to support the Alcogas Program. The model had been Brazil’s alcogas strategy, which had been very much successful.

c. Promotion of a Modernized and Efficient Centralized Intra-urban and Rural-to-Urban Mass Transit Systems - The current administration's Strong Republic Transport System (SRTS) is a way to go, but it needs to be fast-tracked. While Public-Private-Partnership (PPP) can be plausible mode of investment in such a system, given its huge capital requirements, it must be rid first of dependence on anomalous loans (as much as possible, there should be domestic financing) such as those involving the Chinese EXIM Bank, and onerous government guarantees (like Take-or-pay, fuel cost, currency exchange cost, sovereign guarantees on loans etc.) so as to force the private sector to take a share of risk and the burden.

Why is a centralized mass transit system needed? For one, mass transit systems enjoy the economies of scale – more people and goods are transported with the same fuel consumption than with a decentralized transportation system (more likely than not, motor vehicle based). Also, if we are going to streamline the transportation demand, we must be able to provide would-be motor vehicle users an alternative means of commuting.

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Extra: I have prepared a presentation (in Filipino) for the PMT on a discussion on oil deregulation law, which can give us some sort of a context on the proposals. Here it is:

Pmt Krudo

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A Tribute to a Patriot

james.miraflor@gmail.com (James Miraflor) — Sat, 07 Mar 2009 12:05:00 +0000

Francis Magalona (1964-2009)

Man from Manila

3 Stars & A Sun - Francis Magalona

Soldiers Unite with Brig. Gen. Danny Lim

james.miraflor@gmail.com (James Miraflor) — Sun, 22 Feb 2009 04:21:00 +0000

Experiences of the South in Chinese Lending

james.miraflor@gmail.com (James Miraflor) — Thu, 29 Jan 2009 22:46:00 +0000

At the height of ZTE-NBN scandal, we are forced to review the extent of People's Republic of China's (PRC) influence in the affairs of the nation and of the economy. The big picture tells us that we are not the only one, that we are but a piece

Here is the presentation I used in the Debt and International Financial Institutions (IFIs) cluster in the 7th Asia-Europe People’s Forum (AEPF 7) held from 13-15 October, 2008 in Beijing, China. I attempted to give to preview of the link between China's geopolitical strategy, lending (particularly of CEXIM), and domestic elite politics.

Experiences of the South in Chinese Lending

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Tagged!: The State, Technology, and Intelligence Gathering

james.miraflor@gmail.com (James Miraflor) — Mon, 01 Dec 2008 02:36:00 +0000

Here is the presentation I prepared supposedly for an RTD with the Foundation for Media Alternatives. Unfortunately for me, it turned out to be a more informal talk than a series of presentations from invited attendees.

Tagged!

View SlideShare presentation or Upload your own. (tags: security state)

I used wikipedia and about.com extensively in researching some details on SIGINT. Hope this will be useful to all.

Comments on the G20 Summit on Financial Markets and the World Economy

james.miraflor@gmail.com (James Miraflor) — Mon, 24 Nov 2008 11:50:00 +0000

I was interviewed by Judith Prescott of Radio France Internationale regarding the social movements' reaction on the G20 summit, particularly on the Philippines. It was on the context of the Freedom from Debt Coalition (FDC) mobilization on the US embassy (see details here, and RFI's article here) in response to the global call to action against the summit.

Here is the interview:

Comment: James Miraflor of Freedom from Debt Coalition in Manila
15/11/2008 by Judith Prescott

Prime Minister Stephen Harper, right, chats with his Finance Minister Jim Flaherty as Britain's Prime Minister Gordon Brown chats with aides prior to Saturday's start of the G-20 summit on the world economy in Washington. (Tom Hanson/Canadian Press)

Here is the article:

World financial crisis
Finance summit to discuss boosting world economy
http://www.radiofranceinternationale.fr/actuen/articles/107/article_2147.asp

Article published on the 2008-11-15
Latest update 2008-11-15 15:24 TU

Sarkozy (L) Bush (C) and Barroso at the White House
(Photo: Reuters)

Leaders of the G20 group of the world's dominant economies meet in Washington on Saturday to discuss how to tackle the world economic crisis. They are expected to commit themselves to stimulate their economies and tighten up financial regulation but discussions are expected to continue for several months.

Sources close to French President Nicolas Sarkozy told the AFP news agency that the summit is expected to draw up an action plan with deadlines which will culminate on 31 March.

The G20 countries, which represent 85 per cent of the world economy, are expected to agree to co-ordinate stimulus plans, reform financial regulation and change global governance. But not many specific details are expected to be agreed Saturday.

The Washington Post reports that the meeting will discuss proposals to create a "college of supervisors" to oversee the world's 30 largest international institutions and an alert mechanism to be run by the International Monetary Fund (IMF).

Emerging economies, Brazil, Russia, India and China are expected to demand more weight in the IMF.

At a sumptuous welcoming dinner at the White House on Friday, outgoing US President George Bush declared that reform is necessary.

But he defended free market capitalism as "an engine of prosperity, progress, and social mobility in economies all over the globe" and insisted that "all our nations must reject calls for protectionism, collectivism, and defeatism in the face of our current challenge".

"We should establish more clear rules for the way global finance works and I think there is a great consensus for this," European Commission chief José Manuel Barroso said Friday.

Before leaving for Washington, French President Nicolas Sarkozy said that he would "explain that the dollar, which at the end of World War II was the only world currency, can no longer claim to be the sole world currency" and declared that "laissez-faire capitalism is over".

US President-elect Barack Obama will not attend the meeting but former Secretary of State Madeleine Albright and ex-Republican lawmaker Jim Leach will meet foreign leaders on his behalf.

In a radio broadcast Obama called for swift action inside the US, saying that Congress should pass "at least a down-payment on a rescue plan" to create jobs and help the unemployed.

Anti-poverty campaigners demonstrated in the Philippines ahead of the summit. They expect job losses in companies set up to outsource for firms in richer countries, as well as shrinking exports to hit agriculture.

And they expect less money to come in from millions of Filipinos working overseas.

"We expect that with the coming recession in developed countries, which employ most of our migrant workers, we expect them to come back and we will lose much of our input into our domestic economy," James Miraflor of the Freedom from Debt coalition told RFI.

Venezuelan President Hugo Chavez on Friday announced that he will host a meeting of "small countries", including Bolivia, Nicaragua and Cuba, to "take decisions about the crisis" at the end of November.

Chavez was sceptical about the Washington meeting.

"I doubt they will reach any decisions in Washington to solve this crisis," he said. "The hurricane that triggered this crisis came from Washington."

Back to the Nation-State

james.miraflor@gmail.com (James Miraflor) — Wed, 05 Nov 2008 01:54:00 +0000

Excerpted from the first draft of Fight Back: Reclaim and Expand the Lost Social and Economic Gains, Surge Forward Towards a New Economic Platform, a Freedom from Debt Coalition analysis paper written by the Debt and Public Finance Team (James Miraflor and Emman Hizon).

Directions for the System

Now that the neoliberal system is going haywire, two directions are being presented in the status quo. The first direction, reasoning that it is not the direction but the intensity of pushing forward that is the problem, pushes us towards further market fundamentalism and advances the neoliberal project towards its completion – the total global economic integration and the absolute dismantling of the remaining free trade barriers. We are now seeing how this paradigm works on how the rice crisis managed to do what trade talks failed to do – a unilateral reduction of crop tariffs of several countries – a solution forwarded by IMF-WB. Neoliberalism is still being presented as a solution, and in fact the problem is being portrayed as the half-hearted effort in implementing this philosophy of governance. This portrayal may not seem so obvious now, but it had been obvious before the collapse of main US investment and insurance houses.

This direction rests on a premise: the alleged irreversibility of the “reforms” and political-economic restructurings made during the Washington Consensus period. This world economies are so supposedly linked-up already, the global trade too much facilitated by transnational and multinational corporations (some even proposed the rise of the “Transnational Capitalist Class” vis-à-vis the globalization process), that solution can only arise from a strong global market and private sector that is free from “distortionary” interventions from governments.

The second direction brings us back to another alternative, a revival of regulatory capitalism – akin to that of the post-World War II original Bretton Woods and Keynesianism era. During that time, strict capital controls were institutionalize in order to foster strategic investments, and massive government spending and wage increases contributed to push consumption by the middle class. In effect, it was characterized by a strong and big government which intervenes, and an organized labor force which fiscalizes.

This paradigm has certain requirements.

If neoliberalism is biased towards more globalization, regulatory capitalism is biased to where regulation can best be done: the nation-state. In fact, the alternative models of development that are being sought are forwarded not by multilaterals but by nation-states themselves struggling to survive in the increasingly predatory global environment. Now that the credibility of the dominant global neoliberal ideology is at its lowest, the general discourse may evolve into a discourse favoring the protectionist and developmentalist model which brings back the responsibility and the locus of power back to the nation-state.

This resurgence of nation-state protectionism is rested on several contexts:

Global Context: US-centric Globalization in Crisis

First, the global economic integration project, as facilitated by multilateral and international institutions such as the IMF, WB, and the WTO, is in crisis. This was partly a crisis of confidence and legitimacy: confidence because of globalization’s failure to fundamentally resolve humanity’s enduring problems such as poverty and it’s role in exacerbating the ramifications of the neoliberal framework; legitimacy because of the widely perceived play of the US in this project, making nation-states such as some of the developing nations look at the multilaterals with suspicion, now that their ineptness are showing. Other intergovernmental projects, such as the United Nations (UN), are emasculated to have lasting impact beyond mitigation of symptoms of chronic problems. They serve at best as merely temporary palliatives to recurring crises of the global system.

Second, the uni-polar geopolitical environment is slowly being transformed, with the hegemonic presence of the United States as the lone superpower economically and politically challenged, if not undermined. This was partly because of its own internal difficulties. Of course, we have the financial crisis leading to a deterioration of its economic strength. But we also have see that the subprime mortgage crisis, the prime originator of the collapse of the housing bubble, is also bound to have social effects especially in the urban areas.

We also have the ever-rising US public debt due to years of deficit-spending, with debt per capita pegged at more than $34,000. This can be traced to the decades of huge military spending, as a consequence of its imperialist intervention in Afghanistan and Iraq, and maintenance of a mobile defense and intelligence forces around the world. Again, this brings the US another problem – a military fatigue that eroded the popularity of the Bush administration.

Given these problems and more, some are proposing a new era of US isolationism – an era of lessened international intervention and more internal intervention. Whether or not this will play out in the policy of the next US administration is yet to be seen, as candidates put forward platforms for US energy independence and other inward-looking concerns.

But a large part of the reconfiguration of the geo-political environment was brought by the rise of other economies, in particular the BRIC – Brazil, Russia, India, and China. In China, for example, since the opening-up project of Deng Xiaoping, GDP grew an average 9.9 percent a year, with per capita income growing at an average annual rate of more than 8% over the last three decades. Its position in world trade is more and more hegemonic, as it continues to broaden its manufacturing and industrial base.

We also see the return of the Russian Federation as a force in Eastern Europe, threatening the former Soviet bloc and putting a brake on the expansion of the North Atlantic Treaty Organization (NATO). We already saw Russia’s military actions in South Ossetia, a territory claimed by US-friendly Georgia (a preemption of a probable US move). Also, Russia’s Gazprom strategically controls oil supply in key European areas, serving as an important geopolitical and foreign policy instrument of the Kremlin.

Global Context: The Nation-state as the Locus

Third, regional integration projects remains to be nation-state-centric. This is the reason why some attempts at regional integration, which has its end the re-organization of production and trade towards a “region-state”, has been so far stalled in many parts of the world, particularly because nation-states had opposed. In the case of the European Union (EU), the people of France and the Netherlands rejected the proposed EU constitution in a referendum, despite the prodding of their governments, with Spain and Luxemburg acquiescing only with disappointingly low margins.

And even with regions which seem to have a mutual consensus towards a regional project, we observe that the nations of specific regions merely orbit on strong core nation-states. As such other nations perceive regional projects as often merely projects to extend the ambits of influence of particularly powerful nation-states. Or, the success of regionalization projects is seen to rest on the presence of strong nation-states.

A good case to look at is the case of the Asian Region. The Association of South East Asian Nations (ASEAN) was formed in 1967 originally as a cooperative defense of nation-states, then mostly ruled by autocratic heads of state, from the swelling tide of communism worldwide slowly affecting countries within the region such as Vietnam and Cambodia. While it began evolving into a trading bloc as early as the 4th ASEAN summit, the process had been laggard at best. Thus, the need to create an entity called ASEAN+3, which sucks Japan and China in the integration process – economies which are already lording the South East Asian economies, albeit bilaterally.

This is also true in the case of North American Free Trade Agreement (NAFTA), a project started by the US and Canada, is perceived as dominated by the US, as Germany is also seen to exert a great influence on the EU. Meanwhile, the creation of African Union (AU) is seen as a product of power assertion from both South Africa and Libya, with South Africa inevitably gaining the founding leadership.

Even the Latin American regional project follows a model centered on a powerful nation-state, which is Venezuela – a consequent of its strategic control over the oil reserves. Venezuela had actually been the leading force towards the creation of progressive Latin American regional projects such as the Mercado Comun del Sur (or MERCOSUR - Southern Common Market), an regional trade agreement which serves as an alternative to WTO-type trade mechanism, Banco del Sur (Bank of the South), which is intended to displace IMF-WB as a hegemony in South American lending, and Alternativa Bolivariana para los Pueblos de Nuestra América (ALBA - Bolivarian Alternative for the People of Our America), which is an international cooperation organization supposed to be an alternative to Central America Free Trade Agreement (CAFTA).

Fourth, the failure of integration at both the global and regional level as facilitated by neoliberalism led strong nation-states and their corporate players to explore other means of increasing trade activity. They saw the need to bypass current global and regional structures in order to get their capital to its intended markets – the developing nations. This explains the increasing bilateral and plurilateral negotiations, especially trade agreements (e.g. JPEPA) as boosted by aid for trade initiatives.

An important indicator of the shift to the bilateral is that the infusion of capital to developing countries is increasingly being coursed through Export Credit Agencies (ECAs) rather that the traditional IFIs. We see Chinese capital flowing in Southeast Asia and Africa through mega-loans from the Chinese Export-Import Bank, an ECA. These loans go to strategic industries such as transmission (TransCo), transportation (North Rail, Tanzania-Zambia railways), energy, broadband systems (think NBN-ZTE scandal), and mining (Chambisi Copper Mine), or to forward strategic Chinese interests on key geological assets, such as the oil-rich Spratlys islands.

The shifting of Official Development Assistance (ODA) framework away from international humanitarian concerns towards that which explicitly asserts the national interests of donor countries is another indicator. This shift was spearheaded by Japan’s Revised ODA Charter which states that Japan ODA will be used to meet the country’s external need for resources and energy to be sourced from ODA recipients.

Fifth, the rise of the Latin American progressive movement capturing state power, presents an empirical evidence of the viability of utilizing the nation-state as a jumping board towards an international solidarity projects. Preceded by the victory of progressive forces in Cuba, Venezuela, Argentina, Brazil, Paraguay, Bolivia, Nicaragua and others, the coalescence of progressive Latin American states into a “Southern” haven centered on a left-wing programme, albeit loosely, is a manifestation of this.

The Return of the Nation-State?

It is with these contexts that certain sectors proclaim the return of the nation-state, the prodigal son that was banished and almost forgotten in exchange for the esoteric values of the then new child wonder—neoliberalism. Renewed faith for state intervention and regulation was so strong that it even became one of the major points of debate during the Obama-vs.-McCain bid for the US presidency. It was widely believed that market fundamentalism and “small governments” are considered the fundamental characteristics of the neoliberal orthodoxy.

However, the million-dollar question is: is this really a nation-state resurgence?

We are of the idea that while there is a realistic diminution of government’s role, nation-states, its power and influence did not wither away under the neoliberal order. Even globalization, as explained in the contexts above, is mainly powered by multilateral agencies revolving around the US. It is not surprising that neoliberalism is equated with an unfortunately undiplomatic term “Washington Consensus”, which already explicitly identifies the force behind its creation.

In fact, we go as far as to assert that the nation-state is an integral part of the neoliberal paradigm and any anti-neoliberal analysis that puts premium to the proposition that neoliberalism simply equates to “less government” is a distraction as it treats the neoliberal paradigm as a mere thought devoid from the essential capitalist sectors. More importantly, it limits our options and our search for alternatives between a regulated and a deregulated form of capitalism.

Even Milton Friedman, the acknowledged guru of neoliberalism agrees stating that “government is essential both as a forum for determining the rules” and to “to enforce compliance.” Without doubt, nation-states are far from being a diminutive figure in the current neoliberal order. It plays the important role of an adjudicator to amend the needs of the market and capital as seen in the functions of the Word Trade Organization (WTO), the G8 and the Washington Consensus. It also plays the role of an “intimidating bouncer”, the strikebreaker, the coercive instrument tasked to impose obedience and discipline to those who would otherwise resist the framework set before them. In the final analysis, when things turn for the worst, it is still governments which reign over “free market economies” and seemingly “untouchable” financial banks.

Nonetheless, there is a real and palpable relapse to what is tantamount to “nation-state centrism”, as the thin veil globalization and regionalization is being stripped out and shredded to pieces by the forces of the neoliberal crisis.

The Relapse on Nation-State Centrism: Dangers and Opportunities

The danger of relapsing into the nation-state centrism is that as much as it can favor progressive alternatives in lieu neoliberal globalization, it could also easily favor fascistic and nationalist sentiments. Right-wing ideologues will be expected to discredit the progressive paradigm as they prop-up their conservative outlooks. We can already see the parliamentary victories and gains of conservatives and “nationalists” in European parliaments, formerly dominated by social democrats. If we are to imagine a little bit more, this is akin to what happened prior to World War II, when forces of the radical right began capturing state power in Germany and Italy.

This possible resurgence of right-wing politics may lead to another thing: increasing state terror as economic malaise translates to heightened political activity, and in some areas, political upheaval. The most developed nations which already made technological advances may transform themselves into “surveillance states” or “police states”, still using the context of anti-terrorism. In United States and United Kingdom, the two staunch advocates of War against Terror, national and homeland security acts were already passed and are being implemented. In other nations, anti-terror laws are still being peddled to those who haven’t passed them yet.

We may observe that the discrediting of the neoliberal may not necessarily lead to a victory to the progressive. Neo-conservatism is still a potent force, and should they be able to capture power, we are in danger of seeing a fallback on Bush-led 21st century imperialism –“shock/disaster capitalism” with military spending as the new economic bubble. We have already seen the hawkish Republican presidential candidate John McCain still proposing a continuation of war on Iraq, and if he had won, possibly a waging of war on Iran and Pakistan.

But we should remain watchful and hopeful, of course, for opportunities. The re-clarification of the important role of nation-states in shaping the collective global destiny paved the way for the creation of “new states” – progressive states which implement radical, pro-people reforms and govern via models of deliberative democracy and participation. The Latin American experience in governance and alternative economic systems provide us with directions as the sentiment shifts back to state intervention and regulation.

Clearly, the history of the Latin American movement tells us that the best refuge and weapon of the progressive movements in countering the transnational movement towards neoliberal globalization is the domestic state, the locus of immediate power.

Fiscal Dictatorship

james.miraflor@gmail.com (James Miraflor) — Sun, 07 Sep 2008 03:39:00 +0000

The Scarcity of Financial Democracy in Post-EDSA Philippines

By James Matthew Miraflor

Researcher, Debt and Public Finance Campaign

Freedom from Debt Coalition

End Arroyo's Fiscal Dictatorship - FDC

The Post-EDSA regimes are usually contrasted with the undemocratic rule of late strongman Ferdinand Marcos. An important testament to this claim of post-EDSA democracy is the so-called “power of the purse” – the power to allocate national resources – granted to the legitimate proxies of the people, the elected members of House of Representatives. This is supposed to be a marked divergence from the Marcosian authoritarian power over the budget, a power that was eventually wielded for crony-patronage and dreams of grandeur.

The governance style of the current regime, however, seems to discredit this claim of fiscal democracy. Gloria Macapagal-Arroyo’s current practice of line-vetoing budgets, realigning approved budgets, impounding her opposition’s pork, and heavy borrowing and taxation, seem go against the congressional prerogative. Instead, the way she manages the country’s coffers is instructive of how our democratic budget process can be abused and mutated into a virtual financial tyranny of one person. But is Arroyo the only one guilty?

This paper argues that while the current administration had been the most brazen in doing so, the roots of this fiscal autocracy are structural rather than conjunctural. In fact, the past three presidents could have done the same and gotten away with it – all because of how the public finance system had been designed on the onset. Thus, it is necessary to study the nature of the budget process itself, which in itself is placed in a context of a society of actors operating on a predefined set of power relations – something which also needs to be considered.

But ultimately, the question can be phrased as a question of who controls what and how much. We can begin answering this by considering one of the most fundamental and perennial problem of public finance – the problem of scarcity.

Scarcity of Democracy, not Resources

The problem of budget had always been framed by social movements as the scarcity of resources on education and other social services. The response of the government on this had thus been consistent throughout the years: the scarcity of resources in general. They claim that they want to impose fiscal discipline, and it is inevitable to under-spend on other social and economic sectors simply because the revenues generated are not enough to cover all obligations.

The classic rebuttal of debt and development advocates to this reply is the debt servicing problem. A huge chunk of the budget, these advocates say, is eaten up by the servicing of interest payments and principal amortization of loans incurred in the past, some of which under questionable circumstances. The government has an equally classic defense when this issue is raised – that debt service is, by law, automatically appropriated. They elaborate on the underlying logic behind the law, that automatic appropriations is “necessary” if we are to maintain the country’s access to credit.

This brings us to the question, who decides what is “necessary”, and how to do the necessary things. This is a question of resource management and allocation, taking us closer to the fundamental refutation of the resource-scarcity argument by the government.

The fact is, while scarce resources remain to be a true problem of public finance, it is not its main predicament. In fact, last year (2007), we had generated the highest levels of revenue from 1983 to 2007, even in real terms or 1985 prices. Revenue and tax effort had been gradually getting closer to the relatively high levels of the Ramos administration.

The main problem remains to be how resources are managed. In its twenty years of existence, the Freedom of Debt Coalition (FDC) has been continuously exposing the financial and economic hemorrhage the Filipino people is experiencing due to massive debt service requirements. The taxes collected from the Philippine economy end up not being re-channeled back as social or economic services, but go out of the country as payments for government’s debts.

But the external outflow is not the only problem. An equally important issue is the issue of internal flow. Excluding external expenses, how does the government decide on how much to spend for what? Is the process democratic, transparent, and participatory? Are decisions made by legitimate actors reflected in the real spending of the resources?

Resource Management and the Locus of Power

The single issue that cuts across both external and internal issue of resource allocation is the issue of who controls the funds. Where does the resources raised by the State go? How does it decide its priorities? This necessarily takes us into the assessment of the national government budget as an institution, its processes and values evaluated using certain standards and parameters.

On this, we believe that the usual parameters of Public Expenditure Management (PEM) – aggregate fiscal discipline, allocative efficiency, technical efficiency [Oliveros (DBM), 2006] – are no longer adequate to measure the efficacy of a budget system. It is at least as important to also determine the locus of power in budgetary institutions. In fact, some literature already put forward the notion of hierarchical or collegial budgeting [IMF, 2006], in order to describe the effects of power distribution in resource management of governments.

Constitutionally, the power distribution as far as fiscal institutions are concerned is biased for the Congress, following the maxim that “the Congress shall have the power of the purse.” Thus, the legislative branch has well-defined powers regarding debt, budget, and appropriations, as stipulated in Article VI, Section 24 which states, ” All appropriation, revenue or tariff bill, bills authorizing increase of public debt… shall originate exclusively in the House of Representatives, but the Senate may propose or concur amendments.”

There is logic to this. First, the framers of the Constitution may have thought that the Congress, in principle, is the institutional representation of the electorate itself. Naturally, power is supposed to emanate from bottom up, especially for a law of national importance such as that of resource allocation. Second, it will be the constituencies themselves of these representatives who will later bear the cost of revenue-generation through taxes and debt-creation, with debt essentially and effectively being a future tax on future constituencies. Third, it is to serve as the second line of check on an executive which is given leeway in implementing the laws formulated by the legislative, apart from the judiciary’s power to declare the unconstitutionality of policies.

In reality, however, the locus of public finance power is not with the Congress. Governance experts and activists already engaged in the budget process came to a conclusion that the Philippine budget is an “executive budget”. As it stands now, the national government budget is subject not to the representative wills of the people but to the political interests of a very powerful President and the ideological tendencies of the regime’s largely neoclassical technocracy.

Inheriting from Marcos: The Legacy of Fiscal Dictatorship

So why would a budget that places the “power of the purse” on the Congress end up as an “executive budget”? The answer can be found from the legal impediments that prevent the Philippine Congress from effectively exercising their power, thereby emasculating it from providing checks and balances in the public finance process.

Most of these restrictions are inherited from a Marcosian statute, which emphasized an “executive-biased” budget process. Presidential Decree 1177, or the “Budget Reform Decree of 1977” was decreed by Marcos during the time of Martial Law supposedly because "national interest calls for the institutionalization of budgetary innovation realized during the New Society and developed within the context of the Constitution of 1973", claiming that "the budget process as implemented prior to September 21, 1972 was not able to fully support national objectives and plans".

The fall of the dictatorship showed a glimmer of hope that the process of liberal democratization would also touch on the aspect of public finance. This hope, however, was quashed when President Corazon Aquino resurrected the public finance infrastructure created by the dictatorship, and inherited the same undemocratic system of budgeting from Marcos. Some of the provisions of the Revised Administrative Code of 1987, as originally instituted by Executive Order (EO) 292, were copied directly from PD1177.

The presidential powers of the budget, which we have seen to usurp the legislative power of appropriation and served as legal restrictions towards financial democracy, is mainly contained in the provisions below:

1. The Power of Impoundment – Contained in Section 38, Book VI of the 1987 Revised Administrative Code as derived from Section 43 of Presidential Decree 1177, this provision ensures that the President can refuse to allocate the money that had been appropriated by Congress.

2. The Power to Reallocate “Savings” – Contained in Section 39, Book VI of the 1987 Revised Administrative Code as derived from Sections 44 and 45 of Presidential Decree 1177, this provision empowers the President to channel savings to cover deficits of other items in the budget.

When the powers to impound and to reallocate savings are combined, it is tantamount to a power to realign appropriations itself.

3. The Power to Line-Veto – Contained in Article VI, Section 27(2) of the 1987 Constitution, which is similar to Article VIII, Section 20(2) of the 1973 Philippine Constitution, this provision above guarantees the power of the executive to veto specific items of the budget while retaining the others, thereby avoiding the possible political impasse that can happen on absolute veto of the budget bill. Thus, since it is the executive which proposes the budget via the Department of Budget and Management (DBM), only to be sponsored by the Committee on Appropriations of the House of Representatives, the executive can simply veto changes that had been made by Congress (both Senate and HoR) on the budget proposed by itself.

4. The Power to Reenact Budgets – Contained in Article VI, Section 25(7) of the 1987 Constitution, which is similar to Article VIII, Section 16(6) of the 1973 Philippine Constitution, this provision effectively shields the executive from exhaustion of funds should the Congress fail to come up with the budget.

5. The Power to Unilaterally Contract Loans – Contained in Article VII, Section 20 of the 1987 Constitution, which is Article IX, Section 15 of the 1973 Philippine Constitution, rhe power to unilaterally contract loans allows the presidency to raise as much money as (s)he can, using future revenue-generation capacity as collateral.

6. The Automatic Debt Servicing Provision – Contained in Section 26(B), Book VI of the 1987 Revised Administrative Code, as copied en toto from Section 31(B) of Presidential Decree 1177, this provision is responsible for the fact that for all post-EDSA governments, from 1986 to 2008, debt service for interest payments alone already averaged around 25.72% of the national government budget. This does not include yet the principal amortization, which eats up even more share of the annual national expenditures.

Thus, automatic appropriation for debt, on top of other automatic appropriations, severely compromise the Congressional “power of the purse“ since only a little amount of the budget is left for Congressional reallocation as Congress cannot increase the budgetary ceiling (Article VI, Section 25(1)). The level of borrowings too, is effectively set by the amount of principal amortization to debts which are to be “rolled over”, since they are not part of the budget but instead deducted to new “financing” of the government.

Consequences of an Executive-biased Budget

Philippine Senate, during Budget Briefing, grilling the DBCC

These provisions combine to create an executive-biased budget which concentrates all fiscal powers in the hands of the president. The congress is denied any real power of the purse, and management of the country’s resources is delegated into the hands of the budget bureaucracy.

What are the consequences of an executive-biased budget? First, in principle, it directly impedes on the democratic dictum of separation of powers. It compromises checks and balances and thus, allows for more discretion on the part of the executive. As we all know, discretion lays the conditions for corruption and abuse, and while corruption and abuse may not actually happen, the suspicion alone that it can wither away the confidence of many on the integrity of the budget process.

Second, it will be more difficult to orient institutional responses to legitimate social interests. While centralization can afford technocratic rationality that cannot usually be generated in more collegial setups, centralization also limits forward and bottom-up transmission of what social needs are and how they can be addressed. When you try to dissociate people from the processes of the government, the more the government will be ignorant of the nature and roots of social predicaments, and the less accurately it will be able to respond to these predicaments.

Manolo Quezon [2007] presents an interesting insight on this particularly in the localities. He said that especially during the elections, “it makes no sense for local leaders — and that includes candidates for the House — to inform the source of their patronage, the Palace, of the feelings of people on the ground. It would simply tempt the Palace to divert its resources to a more obliging candidate. And so local candidates took Palace resources, promising, of course, to deliver, but carefully avoided the temptation to use up their own political capital giving instructions that would be ignored anyway”.

The same is true in the national perspective. The government, pushed by its own technocracy-imposed administrative constraints towards a contractionary economic policy and a conservative fiscal policy, can only see as a solution to deficits an austere spending program which cuts on social spending [FDC, 2007] and pushes for the implementation-easy indirect consumption taxes, never mind the political and social issues. It is predisposed to ignore or pay little attention to options that run counter to its “macroeconomic projections” such as adjustment of interest payments based on more realistic projections of foreign exchange rate (which is determined by an irrational foreign exchange market), or actions that are more political in nature, such as more stringent cases against corporate tax evaders, a certain degree of property expropriation, and/or debt renegotiation.

Third, an executive-biased budgeting process under a government of a weak state with weak institutions can also result into an arbitrary wielding of tremendous power that can be used for rent-seeking. Without getting into the discourse of the nature of the PDAF, the fact that the executive can impound PDAF and/or Internal Revenue Allotment (IRA) of opposition-aligned solons and Local Government Unity (LGU) officials is a testament to the rent-seeking power a president can use to stabilize its rule.

Thus, it is no surprise that in the Philippines, politicians gain most by aligning themselves with the incumbent President, and they did so. Manolo Quezon [2007] wrote that “from 1941 to 1969 and beyond, to the Batasang Pambansa and to the present, is that House elections have always resulted in an overwhelming administration victory. Without any exceptions. Even if the president running for reelection lost, his party would still win the House; and in cases where presidents were elected from the opposition, they would swiftly ensure that by the next poll, their minority would be an overwhelming House majority. In a sense, the House is so adaptable, so pliable, so dependent on the presidency’s patronage powers that it ends up supporting whoever occupies the Palace — until, that is, the presidency passes on to someone else.” Political analyst Joel Rocamora [2007] agrees and states that this is also true for local candidates, especially in mid-term elections.

Fiscal Dictatorship = Weak State

It is not just the case that concentrated fiscal powers in a state with weak institutions is bad for a society trying to mend the ills of rent-seeking and abuse; concentrated fiscal power may also be bad for the state itself. To elaborate on this, we must take note that the fact that patronage which is strong under an “executive budget” has important implications on our political institutions.

University of the Philippines Professor Alex Magno [2006] believes that the control of resources inevitably has impact to the development of political institutions, particularly political parties. He observed that “the decline of the plantation-based economic sectors have made local politicians more dependent on the IRA (more precisely, on leakages from that)” and “because the Chief Executive can cause the immediate release of internal revenue allocations or delay the same (or distribute infrastructure investments to supportive localities), the local elected officials more blatantly switch parties after each presidential election. This produces highly personalized allegiances that further undermine the development of the party system.” Magno noted the fact that “so-called political parties now accredited are (merely) shells of previous presidential candidacies”, like LDP of Aquino, Lakas-CMD of Ramos, PMP of Estrada, and just recently, KAMPI of Arroyo.

What is the effect of such on the Philippine state? Herbert Docena [Bello et al., 2004] explains that in this kind of situation, “the state” becomes “but a prize for a momentarily winning chronic inter-elite rivalry”. David Kang of Dartmouth College elaborates this by comparing South Korea and the Philippines: “Corruption in Korea, although endemic, was constrained by the collusion of a powerful business class and a coherent state. Each major group was able to benefit from its close relationship with the other but neither could ever gain the upper hand… In contrast, corruption in the Philippines swung like a pendulum. As one group or the other gained predominant power, it would busily set about lining its own pockets, aware that in the next round its fortunes might well be reversed” [Kang, as cited in Bello et al., 2004].

Thus, ironically, we have a case of a concentrated fiscal power contributing to make the Philippine state weak and vulnerable to the particularistic whims and rent-seeking designs of the ruling faction of the elite. A powerful executive doesn’t necessary translate to a strong state– in fact, we have a case of a powerful chief executive exercising budgetary powers for patronage, thereby corroding further democratic institutions on public finance.

This fact translates to several implications. First, the relative autonomy of the government, which is necessary for the financing of strategic and developmental policies, is compromised by the multiplicity of the elite’s parochial interests, all of which need state resources. Rocamora suggests that “competing demands on government have made it impossible to formulate and implement a coherent economic development policy or to develop political institutions capable of providing a reliable regulatory framework for the economy” [Rocamora, as cited from Bello et al., 2004].

Second, the development of an autonomous, independent, and impartial public finance institution is compromised. Our primary bureaucratic agency is rendered highly vulnerable to politicization and executive control, because it is in the political interest of a rent-seeking executive to politicize the agency. The appointment of a Bicolano politician and former administration Congressman Rolando Andaya Jr. as Department of Budget and Management (DBM) Secretary underscores this fact, and is a divergence from the practice of appointing technocrats, such as former DBM Secretary and UP Professor Emilia Boncodin, for the position.

Third, if public finance institutions are weak, then progressive voices from the civil society can easily be muted, their hard-earned reforms conveniently reversed, by a swift action of an unwilling executive. Arroyo’s line-veto of debt service reduction and the non-payment for questionable loans is a proof of this, together with her line-veto in the 2007 budget of the non-allocation of funds for the controversial North Luzon Railways Project.

Theoretically, this can work the other way, if the progressive voices can somehow influence the motives of the chief executive. In practice, however, there is a strong grip of the neo-liberal and neoclassical ideas inside the technocracy of the administration resisting the waves of progressive reform. It is easier for the social movement to register its advocacies in a less monolithic House of Representatives and the Senate.

Fourth, a weak state is more vulnerable to external pressures and foreign dictates. Consider, for example, the conditionalities attached by lending institutions to their loans. The International Monetary Fund (IMF), for example, uses its lending facility meant to rescue governments from fiscal quagmires to take advantage of balance of payments and fiscal crises to impose painful, industry-wide “reforms” acquiescent with the paradigm of neo-liberal globalization – that of liberalization, deregulation, and privatization [FDC, 2008].

Fiscal Dictatorship and the Politics of Opportunity

Why do a disempowered Congress continue to perpetuate this kind of fiscal dictatorship? One of the reasons might be that in any given fiscal year, the President retains its patronage power, which can actually be wielded against any initiative to reform the status quo. This is actually a reiteration of our argument earlier that public finance power translates to political power which can be used for rent-seeking.

This explanation, however, fails to explain why Congress sometimes act and decide against an incumbent president, as in the case during the impeachment proceedings of former President Joseph Estrada. Patronage may fail, and it will fail in instances when a rational congressperson realizes that voting against rather than voting for the incumbent increases his chance of reelection and/or election to a higher office.

A better explanation would be taking into account the features of our democracy and the politics of opportunity. With power contested among rent-seeking factions of the elite, most of the factions are actually entertaining the possibility of their group ending up as the ruling one. In this case, no one would want to genuinely dilute the fiscal powers of the presidency – the ultimate holy grail that affords great powers to, and thus maximizes rent-seeking potentials of, the relatively weaker sections of the elite, i.e. weaker compared to other entrenched political-economic clans such as the Lopez patriarchy.

During the pre-martial law period (1935-1971), the budget process is an American-style “democratic” fiscal process, wherein “the ultimate power over public finance belonged to Congress” and budget “decision was a result of accommodation of competing interests” [Montes, 1991]. This intense contestation of power among the elite might have even been the impetus for Marcos to declaration Martial law in 1972 and to subsequently establish a continuing fiscal authoritarianism. This was followed by the reengineering the fiscal process into a more “corporate” one committed to a development program, “with all conflicts internalized in the executive branch”.

Marcos centralization of powers, fiscal power included, may have aimed to dismantling of the pre-Martial Law basis of political power and the establishing of a different permanent basis for the government. But Marcos ultimately failed to do this because it failed to deliver a genuine agrarian reform program [Montes, 1991]. On the other hand, the Congress (where other sections of the elite thrive) was never able to recover its pre-Martial law powers in appropriation because the 1987 constitution effectively codifed Marcosian powers. Instead, powers are transferred to a bureaucracy managed by technocrats with neo-liberal and neoclassical background.

Thus, Marcos was able to build the scaffolding for a strong state edifice – which is the relatively autonomous and monolithic bureaucracy – but failed to break the back of the original wielders of particularistic power. The first Post-EDSA government then began as a mutated mix of this remnant of the Marcos dictatorship and the resurgent power of competing elitist factions. Add to the mix the constitutional powers granted to the presidency, the partly independent fiscal apparatus is effectively transformed into a coveted instrument of the ruling class which factions take turns in using for rent-seeking purposes.

Our case is different from Thailand, political scientist Paul Hutchcroft elaborates, where “we find an elite traditionally based in the bureaucracy… In the Philippines we find a bureaucracy long subordinated to particularistic elite interests” which have “a firm independent economic base … yet rely heavily upon their access to the political machinery in order to promote private accumulation” [Hutchcroft, as cited in Bello et al., 2004]. In a case of a highly executive-biased public finance process, access to the machinery means ultimate power, which can be used to neutralize (at least for the duration of the presidential term), but not necessarily eradicate, the power base of other elite factions.

Conclusion

Democratizing and Strengthening the Public Finance Institution

Concentration of public finance powers to a president, arguably, may be good in some instances in the hands of a modernizing and progressive leader. Given the elite, rent-seeking nature of post-EDSA regimes, however, we are predisposed instead to minimize any one elite group’s control over the budget process. At this time when the locus of political power still resides in an anarchy of political clans and political celebrities, the best way to develop the public finance agency as an institution that can strategically address the problems of the nation is to institutionally disperse sources of financial power so as to dilute effects of particularistic rent-seeking.

We cannot, however, go back to the more collegial, pre-Martial Law days of budgeting where decisions were reached “as a result of the accommodation of interests, which… tended to prevent the system from addressing urgent development matters” as “congressmen concentrated their interest on particular items of the budget and lost sight of the total or the trade offs between items”. During that period, the absolute power of Congress over appropriations “superseded all the staff work that had taken place before the budget was submitted” resulting to unnecessary increases on projects or cuts that would make them unviable [Montes, 1999].

While the dilution of the power of the presidency over the budget must be endeavored, the integrity and rationality of the budget agency mustn’t be compromised. Whatever level of sophistication the public finance bureaucracy achieved by the centralization efforts during Martial Law, including the methodical linking with economic analysis and the elaborate system of internal consultations, must be protected from the self-benefiting designs of some parochial legislators.

But this is not to say that the “power of the purse” should be removed from Congress. Whether Congress effectively fulfills its role or not is another matter, but as it now stands, the Congress is the closest thing our current democratic system has to a semblance of institutional representation of the people. In principle, the solution would be to make sure that parliament is genuinely representing the people, not emasculating it because it doesn’t.

Moreover, without Congressional scrutiny, we are faced with the possible repercussion of a well-developed budget agency that is not subordinated to any political institution – bureaucratic inertia and technocratic myopia. Political dissociation may result to ineffective institutional responses, as the statistical inequities that can be detected by technocratic instruments doesn’t necessary reflect the structural inequalities that can only be known through direct political processes.

This presents us the dialectical task of de-linking the public finance institution both from elite politics and at the same time, from political indifference. We argue that the best way to do this is by shifting the locus of fiscal power closer to the people themselves. The budget agency must be reoriented from an agency that simply calculates on its own the solutions for the needs of the bureaucracy, the society, and the economy, to a one that effectively facilitates people’s direct participation in coming up with these solutions. After all, it’s the people’s money that the budget agency is managing.

In the end of the day, we cannot afford minimum public involvement in a budget process governed by institutions vulnerable to abuse and dereliction – we must instead maximize involvement of the people in order to strengthen these institutions. Only through directly and democratically reflecting the collective will of the people shall the budget genuinely be an instrument of progress and development.

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Ending the Fiscal Dictatorship

Towards an Alternative Public Finance System

The Dilemma: Who’s best to decide?

A common critique of the strong Congressional powers on the budget, as in the case from 1935 up to declaration of Martial Law, is that the Congressional powers “superseded all the staff work that had taken place before the budget was submitted” resulting to unnecessary increases on projects or cuts that would make them unviable [Montes, 1999]. Ironically, the tendency of the Congressional intervention on the budget to be particularistic and “ad hoc” is only tempered, by the absolute powers of the president, who can unilaterally reverse the changes made by the Congress on the budget formulated by its technocracy.

We argue, however, that Congressional intervention can be made to meet with the rational objectives and national development strategies, only if the public finance system supports so. The institutional dispersion of sources of financial power and the preservation of the budget agency’s integrity and rationality are not mutually exclusive objectives. The alternative to bringing back the powers of appropriation to the Congress would be a budget agency impervious to political opinion and social signals, and thus is unresponsive to structural and more political and social causes of the problems of the nation.

We believe that concurrent with the empowering Congress, we should work towards the shifting of the locus of fiscal power closer to the people themselves. The budget agency must be reoriented from an agency that simply calculates on its own the solutions for the needs of the bureaucracy, the society, and the economy, to a one that effectively facilitates people’s direct participation in coming up with these solutions. After all, it’s the people’s money that the budget agency is managing.

Recommendations: Towards an Alternative Public Finance System

Therefore, the following medium and long-term measures are recommended to be implemented, with the end view of democratizing the budget process and strengthening the budget institutions:

1. Clipping of Presidential Powers. The first step towards the democratization of the budget, is for legal impediments for the exercise of the Congressional “power of the purse” to be removed. This can be done by:

a. Overhauling the Revised Administrative Code of 1987 as instituted by Executive Order 292, which includes the removal of the automatic appropriations for debt service (Section 31.B.) and the presidential powers of impoundment (Section 38) and realignment of savings (Section 39).

b. Amending the Foreign Borrowings Act of 1966 (as amended by PD 1939) and the Official Development Act of 1996 to place more Congressional limits and parameters on the unilateral contracting of loans, pending a more favorable condition for a constitutional amendment modifying this presidential power (Article VII, Section 20).

c. Legislating parameters for the line-veto and reenactment, pending a more favorable condition for a constitutional amendment striking out these two presidential powers (Article VI, Section 27.2 and Section 25.7, respectively).

2. The spatial dimension of the National Budget Preparation must be enhanced by a Revitalized Regional Budget Allocation Scheme (RBAS) project.

The Ramos administration, continuing with the decentralized budgeting approach developed in the Aquino’s term (codified also in the Book VI of the 1987 Revised Administrative Code), pushed for a regional block fund through the RBAS. This is a step higher from the Agency-RDC (Regional Development Council) consultations for agency budget, as instead of just reviewing the allocations determined by the agencies’ central office, RDCs will have the “authority to determine what programs and projects are to be funded and implemented in the region consistent with and in support of the region’s development plan and investment program” [Mercado, 1999]. For all its possible merits, the project was stopped due to a perception by legislators that it is an electioneering activity by the executive.

We believe that the RBAS must be continued, but it should be improved so as to assuage the fears of the legislators of encroachment of powers and so as to make the processes more inclusive and democratic. Thus, the revitalized RBAS, while taking into account pressures for greater fiscal decentralization and autonomy, puts greater emphasis on people’s direct participation, including all the stakeholders.

As such, the revitalized RBAS must include the following features:

a. Representatives are required to be involved in the final decision making process on the programming and planning stage in the RBAS consultations, so as to extend the Congressional “power of the purse” from merely legislation to that which encompasses budget development itself, minimizing the impetus for “ad hoc” Congressional insertions and realignments.

This is to address the critique that Congressional participation in the budget process is compromising the work the methodological rigor and rationality with which the budget and planning departments developed the national budget. As it stands, the budget development process involves not only macro-, microeconomic and social planning, but also systematic consultations with stakeholders, decision-makers, and implementers. Individual and “ad hoc” Congressional realignments and insertions threaten to spoil the linking of national development strategy and public finance strategy.

This is a valid claim, as the system does not provide venue for a more rational intervention on the part of the legislator. The “power of the purse”, if exercised fully in the current public finance system, will only bring us back to the pre-Martial Law system of irrational budgeting – something which we cannot afford in the modern era of international challenges and opportunities. We need to reform further the public finance system beyond just the dilution of presidential powers. On this, we argue that the “power of the purse” need not be compartmentalized to the “budget legislation” phase alone. In fact, the “power of the purse” can be more effectively and rationally exercised during the budget planning stage.

It is thus suggested that representatives of a particular region must directly participate in the RBAS deliberations, with them having the power of final decision and approval. Congressional intervention can happen in the start, rather than in the end, of the process – allowing for more strategic and “big picture” adjustments by the executive without necessarily encroaching on the Congressional “power of the purse”.

b. Citizen’s participation and involvement. The RBAS must also institutionalize a way by which the public, acting through Local Government Units, can register its approval or disapproval of a particular proposed regional budget. The result of the RBAS deliberations must be put into consultations up to municipal-level.

c. Open to public and stakeholders, civil society organizations are involved. The RBAS deliberations must not only be among government officials, bureaucrats and technocrats – civil society and the social movement must be allowed to participate and register their critique if necessary.

3. Institutionalize grassroots people’s participation and involvement in all stages (proposal, legislation, authorization, evaluation) and levels (agency-level, region-level, etc.) of budget development by decentralizing budget decision-making using LGU-level mechanisms.

So as to allow the government to know the exact needs of the people from the people themselves, we have to institutionalize the participation in the budget process not just of civil society organizations and people’s organizations, but more importantly, of the people themselves, at least with regards to the budget which directly affects them. Existing local government consultation and grassroots participation structures must be utilized in this endeaveor.

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The proposals below are more strategic and may require more comprehensive structural changes, but may contribute in the development of public finance as an institution. It is thus suggested that these proposals be considered:

4. Budget-cycle must be increased from one year to a regular Congressional term (currently three years). This will allow for a more long-term budget formulation tied to national development strategies, as outlined in Medium-Term Philippine Development Plan (MTPDP) formulated by the executive and approved by the Congress.

5. Integration of the Department of Budget and Management (DBM), the Department of Finance (DoF), and the National Economic Development Authority into a singular, Constitutional commission-level, Public Finance Commission independent from the executive branch.

Why a Constitutional Commission instead of an Executive Agency? The main problem with a budget agency under a president is, as outlined earlier, its vulnerability to rent-seeking politicization. Therefore, the best way to divorce public finance from patronage would be to establish a semblance of independence from the public finance agency. Instead, the executive branch can submit proposed budgets of agencies to the Public Finance Commission, which it will evaluate and compile and later submit to Congress. The alternative would be to bring the “initiative of the budget” to the Congress, though it wouldn’t have the sufficient information necessary to be able to decide as effectively as the agencies themselves.

Why integrate DBM, DOF, and NEDA? The functions of the three agencies outline the different aspects of public finance. DOF raises revenues, DBM manages expenditures, and NEDA mobilizes foreign financing and crafts developmental strategies. Integrating the three agencies would do well in streamlining the bureaucracy, synchronizing national development policies, reducing complexity, and strengthening accountability measures.

In fact, together with Bangko Sentral ng Pilipinas (BSP, the country’s Central Bank), these departments already convene as Development Budget Coordinating Council (DBCC) which presents to the Committee on Appropriations the current fiscal position and the macroeconomic assumptions on the start of budget deliberations. Institutionalizing this integration would facilitate better alignment of objectives which are actually not separate in the first place.

Sources:

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Freedom from Debt Coalition (2007, November). Breaking the Momentum of Debt. Presented in a meeting of the Committee of Appropriation on the Deliberation of the House Bill 2454, the General Appropriations Act of 2008.
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Macapagal-Arroyo, Gloria (2007, August). Sustaining the Momentum of Growth: The President’s Budget Message, Fiscal Year 2008. Department of Budget and Management.
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Wat’tup Cuba: Thoughts on the Cuba, Revolutionary Socialism, and the Filipino Youth

james.miraflor@gmail.com (James Miraflor) — Mon, 11 Aug 2008 08:45:00 +0000

By James Matthew Miraflor

Note: These are only a few chapters of an unfinished paper based on my presentation (of the same title) during the Philippines-Cuba Cultural and Friendship Association (PHILCUBA) of the Moncada Attack last July 26, 2008 in the University of the Philippines Manila, Little Theater.

…

“A revolution is a struggle to the death between the future and the past.”
- Fidel Castro

…

Cuba is important for the international left movement, as it is given the historic role in establishing credibility for the revolutionary socialist ideology. Cuba has a responsibility to promote socialism not only to the socialists, but to the rest of the world. Thus, the Cuban model must be able to inspire other good-willed people searching for viable and more humane alternatives to the Western liberal democratic model and the capitalist economic model.
…

Building a ‘democratic’ rapport: Cuba and the Shedding of the Stigma-tainted Skin

(However,) For some of the more sophisticated non-left students, there is a stigma for countries which are following the soviet models of governance. The popular notion has been that Cuba is a wretched underworld of destitution and totalitarianism, to be aligned with “rogue states” such as Zimbabwe, North Korea, Iran, and Libya.

This virulent anti-red propaganda might have been embedded, I would quip, even in seemingly harmless consumer goods like video games. It would help the relatively young to remember our favorite Street Fighter games, in which Col. Guile of the United States is presented as good, with the imposing, all-brawn, Soviet-raised Zangief is depicted as evil.

In addition, the familiarity with “democratic” institutions like multi-party elections, with bias for the liberal democratic model, makes the Cuban model an alien culture for most. But aside from the external reasons, there are also other reasons, mostly intricately linked with how the Cuban state is operated, why the anti-Cuban stigma had been able to perpetuate itself.

The first reason is the presence of Castro. For most, the five decades of Castro serves as a huge “turn-off” for socialism. Naturally, people would ask, “Why is Castro Cuba’s president for so long, if they really are a democracy?” Of course, we can always correct them by saying that there are indeed democratic elections, and that it just happens that Castro is always winning. We can and should tell them that his rule is genuinely governed by the Cuban people mandate, as it is really the case.

However, for most of those who had been under good models of liberal democracy, that a person always winning elections is characteristic of a personality-based politics, and personality-based politics is anathema to their model of democracy. The “transfer” of leadership to his brother Raul makes it even worse, since it calcifies fears that a North Korea-style monarchic dynasty, rather than real socialism, is actually in place in Cuba. This line of thinking is mechanistic and reductionist, but there are grains of genuine concerns here that should be considered.

Socialists, of course, are not always to please a liberal democrat by acquiescing to their limited conceptions of political democracy (which is actually a dictatorship of bourgeoisie capital, as we Marxists know it). However, socialists should have a responsibility to present their model as an improvement of the liberal democratic model, and personalistic and dynastic politics are basically perceived as feudalistic atavism – a “throwback” and a regression – from what democracy as a model of governance has achieved so far.

Second, there had already been countless criticisms of human rights violations and other excesses on the part of the state, most of which had already been conceded and rectified by the Cuban government. Nevertheless, Cuba must display more commitment to enshrine human rights, especially those when it comes to political rights.

I am specifically pointing out to the 75 Cuban dissidents, which was promptly branded as “prisoners of conscience” by the Amnesty International. While the imperialist propaganda machine might have used this opportunity to bash the Cuban government, there is a degree of legitimacy to the call to free the Cuban dissidents. It sends a signal that there had been excesses still that had not yet been rectified, and it should be rectified if only to satisfy the world which watches upon the Cuban example. But of course, the reasons do not end there.

Third is actually linked with the second, which is the virtual discouragement of the pluralism of progressivism within Cuba. A clear manifestation of other left phenomena, strands, and currents occurring inside Cuba but outside the auspices of the Cuban Communist Party are the presence of other “illegal” left-wing parties, like the Cuban Socialist Democratic Current, the Democratic Social-Revolutionary Party of Cuba, the Democratic Solidarity Party, the Social Democratic Co-ordination of Cuba. The only legal party in Cuba, the Communist Party of Cuba (PCC), appears to prescribe a certain degree of socialist homogeneity.

This brings us to the fourth, which is the entrenchment of the PCC as the only legal party in Cuba. On one sense, this gives Cuba the appearance of a one-party state for most, and one-party states, in general, are a huge “turn off” for liberal democrats, where a large pool of the idealistic youth belong. As I would later clarify, PCC is not an electoral party as it stands, but then again, that idea is not as popular yet as we wanted it to be. After all, it is very difficult to convince a liberal democrat of the beauty of a socialist model in which one party, incidentally the ruling one, is only legal.

I understand that there already are multiple tendencies inside the PCC. There are both Trotskyist and the Stalinist tendencies inside the party, and there may even have been other tendencies as well. This makes it a healthy and vibrant party on its own, and on its own, it might already be representing a wide spectrum of the left as it stands now. Nevertheless, it is clear that other strands had not been fully represented, so much so that they needed to organize themselves into parties.

On this, I argue that parties other than the PCC should be allowed to operate legally, as long as they do not receive foreign funding and logistical support from imperialists and destabilizers. I would contend that democracy, to be dynamic and to remain a democracy, should always be contested. Lenin himself understood the benefits of a multi-party system, and after the October revolution even invited the Mensheviks and Social Revolutionary parties in a coalition government. Only when they went underground and sought the assistance of foreign imperialists that Lenin was compelled by necessity to ban them.

The argument for a multi-party democracy in Cuba is intricately linked with the argument for pluralism, which I would be tackling at length later. But first, I would just want to elaborate some of my personal reflections and thoughts on the democratic and electoral institutions on Cuba.

On Political Parties, and Electoral and Democratic Institutions

The Cuban government saw the necessity of establishing intricate democratic institutions that govern elections in Cuba, with the Committees for the Defense of the Revolution (CDR) serving as the basic unit of the system. Municipal assemblies are elected every two and a half years. Municipal elections are officially non-partisan, as with National Assembly elections. The PCC is not allowed to field or endorse candidates to the elections, as people directly select from the allowed nominees and elect them to office.

For some political scientists, this kind of democracy can actually be considered as a modified model of a nonpartisan democracy, in order to nuance it to more explicit one-party states as the imperialist US brands Cuba as (and they had done so successfully, as far as discourse in the international media is concerned).

I concede that these formal processes are indeed democratic. However, as with any democratic process, they should be checked to the rigorous standards of objectiveness and relative imperviousness against the possibility of rent-seeking influence and control. This is because we know that an appearance of democracy doesn’t necessarily establish the existence of democracy, whether a liberal or socialist democracy. I think that even the electoral institutions of socialist democracies like Cuba shouldn’t be exempt from these standards.

On this, even if excluding the argument on the illegality of other parties, I am still made to think how candidates are actually nominated, and this should be scrutinized. National Assembly candidates (one for each electoral district) are recommended by Candidacy Commissions which are chaired by local trade union officials, with the rest of the commission is composed of elected representatives of sectoral mass organizations. The candidates are subjected to a vote, on which they need to get 50% support of the voters, failing which they would be recalled and another round of nomination shall be conducted.

Given this system, the only with which any organized group can dominate the nomination process is to secure representation and/or influence in the sectoral mass organizations. And in fact, the Cuban Communist Party logically did so, via the Young Communists (UJC), the Federation of Cuban Women (FMC), and other formations. How the party’s influence is exercised inside these formations is another matter, but the important thing is, any group dominant in these formations can dominate the selection process, and the fulcrum of the electoral process is in the selection of nominees. It is a system that is biased towards the nomination of PCC.

Now, some socialists may have no problems on the virtual domination of the PCC, as they already developed into a strong, dynamic, and sophisticated party composed of genuine revolutionaries. Nonetheless, I say that the best way to measure their strength is if they are to be openly contested by other parties operating legally.

Moreover, even a relatively advanced and sophisticated party which entertains internal democracy and dynamism can degenerate into a moribund party without external checks from other parties. A party of revolutionaries, even if debating amongst themselves internally, can suffer from a disconnect with other currents and discourses happening outside the party, and even with the issues and legitimate concerns of the masses themselves.

Of course, we need to understand the presence of black-ops apparatuses of the imperialist US government, often implemented through agencies which are experts in political operations and in using democratic institutions to subvert democratic will. And there had been no lack of such in Cuba, given the Miami-based infiltration units of the Central Intelligence Agency (CIA), usually acting through non-governmental organizations and other political movements which are mushrooming within the country.

Another condition might be the emerging reactionary, Stalinist, or restorationist ideas within the country itself. For the sake of unity, these tendencies are disciplined, or they are left-wing tendencies, be subsumed and diluted in the internal party discourses. Indeed, under crisis and siege, unified Cuban nation may have actually necessitated only one party in order to maintain its cohesion.

It may have been for this reason that the PCC decided to consolidate as broad as possible a spectrum of tendencies within the party, which, as any Marxist-Leninist party, is governed by the important precept of democratic centralism. The alternative is to have the left compete with each other openly through elections and through differing parties, which imperialists and bourgeois forces might take advantage.

In principle, I personally feel that other left tendencies should not be forced to subject themselves to internal party discourse. Some tendencies would argue of their vulnerability to be subsumed in dominant ideologies during their formative stages, and thus the need for a period of incubatory isolation for its own ideological development. Some tendencies would simply be incompatible with the party in terms of ideological, political, and organizational (IPO) orientation. On this, I say, agreement on fundamental societal values, with which the state and the people should acquiesce to, should not pre-empt differences over organizational and political ends.

Moreover, the objective conditions present there does not preclude the responsibility of Cuba to establish credibility and acceptability. Cuba has to make its democratic institutions be more understandable, if not acceptable, to foreign observers who may actually be looking onto socialism as a viable alternative. People hold on to freedom of pluralism, of organized dissent, and of political affiliation – I wouldn’t think this is something that should be compromised as we go forward towards a higher form of socialist democracy, nor do I think that compromising these freedoms would advance the cause of promoting a socialist democracy.

In the process, allowing for a certain degree of pluralism even effectively dilutes the ultimate imperialist argument against it – that socialism is necessarily authoritarian, and that socialism is not democratic, even to the minimum standards of liberal democracy.

Rule via Coercion vs. Rule via Consensus

The idea of pluralism is an anathema to most revolutionaries, and with good reasons. The experience of revolutionaries with reactionary forces organizing themselves towards the overthrow of the socialist state may have been a constant reminder to them of the danger in granting the freedom of organized dissent. Cuba itself had been facing a constant pressure from the imperialist US to loosen their hold to power via these organized groups masquerading as legitimate social movements.

Thus, for the longest time, the Cuban government heavily used what French Marxist thinker Louis Althusser characterized as the Repressive State Apparatuses (RSA) in suppressing the waves of reactionary ideologies. Inclusive of the RSAs are the systems of law and courts where public contractual language is invoked in order to govern individual and collective behavior, and the “monopoly of violence” invoked by the state, usually implemented through police and military force, in order to discourage non-conformity.

The use of RSAs is not limited to sheer application of force to genuine dissidents and reactionary elements, but to other restrictions as well, both institutional-legal and informal. The use of CDR in discouraging, or screening out candidates that do not suit well to the standards of the Communist Party, or, I would dare to imagine, not members of the Communist Party itself, is a form of using RSA to protect the state and the government from imperialist aggressors, who are, as I said, experts at using democratic institutions to subvert democracy.

Of course, this allows the revolutionary state to continue with its socialist project and implement fundamental socialist reforms with minimal threats for the reactionary saboteurs. However, the use of RSAs can at best, only mechanistically establish a socialist state, but not necessarily socialism. The dialectical process of social transformation must occur through other means.

For one, changes imposed via RSAs may have been artificial, making the restoration of capitalist-type democracy a possibility should the use of RSAs be relaxed, which is what happened in Russia and the rest of the territories under the Union of Soviet Socialist Republics (USSR). Should that happen, it will only mean that the Cuban socialists failed to take away from capitalism what Italian socialist Antonio Gramsci described as “hegemony”.

According to Gramsci, capitalism maintained control not just through violence and political and economic coercion, but also ideologically, through a "hegemony" in which the values of the bourgeoisie became the ruling logic, or the "common sense" values of all. For Gramsci, capitalism exists not just because of the guns and its laws, but also via consensus.

Similarly, a true socialist nation must also be able to rule not just because of coercion, institutional or informal. It must establish ideological and cultural hegemony, a “socialist consensus” which will make it rule via the voluntary willingness of the working class. In fact, this is the only with which we can conduct what Che Guevarra, the pop culture-famous revolutionary who helped Fidel and Raul establish socialism in Cuba, described as a revolution that would produce a “New Man” – a revolution that transforms not just the political-economic underpinnings of a society, but the moral-ethical fiber of the individual person itself.

Pluralism as Barometer of Socialist Hegemony

On this, I will begin to argue that the only way Cuba can genuinely test if it had indeed established hegemony is in the presence of pluralism, and one of the better expressions of such is the multi-party democracy. Only through political diversity that genuine political consensus is achieved.

The argument is this. The only way to know if the people genuinely chose socialism as a model of political and economic governance is on the presence of other modalities – other ideologies outlining other ways of organizing societies. If socialists are indeed confident of the superiority of their socialist model, as all socialists should be, and if they are confident that the masses also believe so, then they need not be afraid of contesting the democratic space from those with other ideologies, as organized through other parties.

The PCC cannot simply declare that they represent the multitude of interests of the working class – that they are indeed the eternal vanguard party to guide the development of Cuba in the road towards a communist future. This should be left to the Cuban people, most especially the Cuban proletariat, to decide continuously via regular multi-party elections.

As introducing pluralism would entail relaxing the PCC’s grip on the RSAs, I believe that doing such would even compel the revolutionary forces in Cuba to tighten its grip on what Althusser described as Ideological State Apparatuses (ISA), which is a more sustainable way of ingraining socialism. Encompassing institutions such as the family, the media, and, he emphasizes, the education system, Althusser identified ISAs as means by which organizations propagate ideology. In contrast with the RSAs, which operates in what Gramsci described to be the “political society” – the arena of state and of political force, ISAs operates on the sphere of the “civil society” – the arena of hegemonic consensus that is outside of the state.

However, there are those who question the distinction of the “political” and the “civil society” in Cuba. The American political scientist Peter Roman believes that the unique historical conditions predisposed the Cuban society into a rejection of this distinction. This argument has many implications. First, it would mean that indeed, the “Poder Popular” model, People’s Power Democracy, where the PCC is itself entrenched on the state and “reflects” the interest of the people directly, is the applicable model of governance for Cubans, given the centrality of unity in the Cuban culture. Secondly, this would mean that no organized opposition must indeed be formed, since it is assumed that the Cuban establishment subsumes all of the aspects of the Cuban political life (which is strangely similar to that of “Low-Intensity Democracies” as elaborated by political and social analyst Joel Rocamora). Thirdly, this would blur the distinction between the RSAs and the ISAs within Cuba, which has real implications on the strategy of the communist transformation.

This is an entirely debatable point, which can be discussed at length at other forums. For now, it suffices to say that I disagree with it on the empirical fact that one, social movements are vibrant within Cuba, and two, new parties struggle to organize themselves despite the price of illegality. In principle, I believe that the absolute overlap of the “political” and the “civil society”, if actually possible, can only occur in extremely backward and mal-developed nations, which Cuba certainly is not. Gramsci himself calls such blurring as “state-worship” – similar to what some socialists would characterize as state socialism.

Socialists around the world, especially those who came to face advanced bourgeoisie democracies, understand the distinction between the “political” and “civil society”, between RSAs and ISAs, and thus always struggled to organize among schools and exerted effort to refine their means of engaging the mass media. Cuban revolutionaries know this by heart, which is why they struggled to make sure that Cuban education had been designed to have a strong political and ideological emphasis, teaching students to develop a commitment towards socialism, even after they seized the State.

Socialist hegemony is necessary to establish the true dictatorship of the proletariat, and socialist hegemony can only be tested in a pluralist democracy. The freedom of organized opposition is indispensable as a feedback mechanism with which PCC, or any socialist party, will be able to assess itself whether or not it still fulfills its historic role as vanguard of the proletariat.

…

Group wants debt moratorium, 6% GNP education spending

james.miraflor@gmail.com (James Miraflor) — Mon, 02 Jun 2008 07:57:00 +0000

06/02/2008 | 10:56 AM

http://www.gmanews.tv/story/98619/Group-wants-debt-moratorium-6-GNP-education-spending

MANILA, Philippines - With one week to go before classes start, militant anti-debt youths demanded that President Gloria Macapagal Arroyo follow the United Nations' benchmark to spend six percent of gross national product on education.

The Youth Against Debt (YAD) also reiterated the call for a moratorium on paying "illegitimate" debts, instead of having President Arroyo calling for a freeze in tuition hikes.

"We want Mrs. Arroyo to put money where her mouth is. Her moratorium on tuition hikes is too little and too late. Instead, we demand a moratorium in the payments of all illegitimate debts," the group said in a statement posted on the website of the Freedom from Debt Coalition.

YAD claimed government's neglect to spend six percent of GNP for education in the last 12 years had robbed the youth and students of some P1.66 trillion.

It said that from 1996 to 2008, the administrations of Fidel Ramos, Joseph Estrada and Gloria Arroyo "unashamedly disregarded a widely accepted and recognized international benchmark on education spending as provided by the 1996 International Commission on Education for the
21st Century of the United Nations Educational, Scientific and Cultural Organization (UNESCO) headed by Jacques Delors."

The youth group stressed that complying with the UNESCO Delors Benchmark may be the key to perennial problems besetting the education sector and to "give back what was lost from education."

On Monday, it also launched its "Six Will Fix" campaign to demand the government to immediately implement the international benchmark by pegging our education budget 6 percent of the GNP.

"We will lobby our legislators to institutionalize the standard by passing a law giving automatic appropriations on education, not debt servicing," YAD said.

YAD also lamented new and old students will again be subjected to the same old list of problems besetting the ever-dismal state of Philippine education.

"Amid the political rhetoric and empty populism of our national leaders, little if none is said about the blatant non-compliance to international standards on education spending by the government," it said.

The UNESCO Delors Benchmark set the education expenditure of developing countries at six percent of GNP.

More than a hundred countries recognize this as the accepted standard on education financing, setting the demarcating contour by establishing the minimum level below which government subsidy on education cannot be neglected without causing serious consequences to our education's quality, accessibility and sustainability.

For its part, the Freedom from Debt Coalition stressed that for almost 12 years, the Philippines is nowhere near achieving the 6 percent of GNP target.

"Education spending in our country as percentage of the GNP hovered no more than 3.8 percent. This wouldn't be much of a dilemma if the trend of our government's spending on education is nearing towards the fulfillment of the standard like that of other developing countries. But sad to say, the trend is anything but positive," said James Miraflor, FDC public finance campaigner.

In their joint analysis, FDC and YAD revealed that the country's education spending as proportion of the GNP never reached 4 percent.

From 3.8 percent in 1998 under Mr Estrada, education expenditure as proportion of the total national income drastically dipped to 2.26 percent in 2007 under Mrs Arroyo.

"In actual terms, as of 2007, the total loss or deficit in our education spending is a shocking P1.66 trillion! This is enough money to wipe out classroom shortages, augment diminishing state subsidy to public higher education institutions, and hire more teachers. The amount lost is so big that it can fund more than 100 Comelec-supervised national and local elections and yes, run the operation of the entire government for a year," said Miraflor.

The two groups said that While succeeding governments are equally accountable for this mess, Mrs Arroyo's term is the "most horrible" for education.

"Not even her newfound penchant for freezing tuition hikes of state colleges and universities or her flimsy appeal to private schools to have a heart will hide the fact that education suffered worst under her rule," YAD said.

Miraflor said that of the total P1.66 trillion losses from education, the Arroyo administration contributed a deficit of P1.3 trillion in education spending making her the least spender on education.

"Not satisfied in being the biggest borrower and largest payer of debt, Mrs Arroyo broke another record this time in being the most indifferent in not only complying with the international standard but also in increasing education expenditure," he added.

FDC said that from 1996 to 2007, total interest payments amounted to P2.2 trillion compared to the total gap or losses our education suffered through the years which totaled P1.66 trillion.

"We believe this is institutional robbery. Resources supposedly for increased social spending are being siphoned away by automatic debt servicing," Miraflor said.

YAD disagreed with the argument that there is a scarcity of resources.

It said what is in place is a scarcity of democracy concerning budget planning brought about by institutional mechanisms that not only undermine international benchmarks on specific social services but also gives utmost priority to the religious payment of debts.

FDC and YAD reiterated their call on the legislative branch to repeal Sec. 31B of Presidential Decree 1177, which ensures the automatic appropriation of payments for principal and interest on public debt. - GMANews.TV

10 Reasons Why Electricity Bills Are High

james.miraflor@gmail.com (James Miraflor) — Tue, 13 May 2008 07:14:00 +0000

By the Freedom from Debt Coalition
Sunday, 11 May 2008 12:05

A position paper submitted to the:
Joint Congressional Power Committee (JCPC)

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May 12, 2008

After MERALCO, the country’s largest electricity distributor and supplier, announced last April an increase in its generation charges by 51.88 centavos per kilowatt hour (kWh), rumors of a brewing government takeover began spreading like wildfire. Signals are there, experts say, as shares of both the government and the Lopezes each jumped to more than 30%, with the Lopezes having a slight fractional advantage.

The recent government actions to pin down MERALCO and target the Lopezes, however, only serve to narrow the discourse to a simplistic formula: Electricity rates are high; for which MERALCO and the Lopezes are to blame. Meralco is no doubt an easy and guilty target. But there are more reasons for electricity rates in the Philippines being among the highest in Asia. And the Arroyo government is equally to blame, if not more.

The Freedom from Debt Coalition (FDC) believes that the issue of high electricity prices is a result of a confluence of factors, from bad governance to corruption to mismanagement to rent-seeking to framework concerns. It is also more complex than what media portrays or what some politicians would want us to believe. We attempt to identify these factors as our contribution to gaining a fuller understanding of the problem of unabated expensive electricity.

FDC argues that the skyrocketing price of electricity emanates from structural, management, policy, governance and paradigmatic causes. FDC believes that these problems cannot be resolved fully without transforming the electricity industry into one that is more responsive and accountable to the people, and more environmentally sustainable. Meanwhile, it would greatly help the consumer for the government to target specific rate-hiking factors and introduce immediate reforms, with the end-in-view of course, of more comprehensive changes sooner rather than later.

We believe electricity is expensive because of the following:

1. The Energy Regulatory Commission (ERC) allows MERALCO, other distribution utilities (DUs) and the National Transmission Commission (Transco) to earn over and above what used to be the statutory return on rate base of 8-12%. The Electric Power Industry Reform Act (EPIRA) allowed ERC to change the system of tariff setting, and it did. But the systems it now follows allows both transmission and distribution companies to earn far more than what they were allowed to earn in the past. And as far as generation and supply companies are concerned, the ERC has little if any say in the prices they charge because generation and supply are deregulated under EPIRA.

2. The Arroyo government wants to attract private investors to purchase NPC’s assets, and for the assets to become attractive, electricity rates have to be high. The higher the winning bidder bids, the higher the electricity price we have to pay in the future so the winning bidder can recover its investment.

This can be observed with the nature of recent electricity rate hikes. Following the suggestion of the Asian Development Bank (ADB), the National Power Corporation (NPC) petitioned rate hikes in order to attract investors since no investor would invest without proof of financial viability. Out of the PhP1.98/kWh NPC petitioned in 2004, PhP1.03/kWh was approved by ERC in 2005 – the highest rate hike in the history of the ERC. Transmission charges also increased from PhP0.7716/kWh in May 2006 to PhP0.9163/kWh in July 2006 (which is contrasted with almost flat prices from November 2005 up to May 2006) as the privatization and the bidding process is about to start.

3. The Arroyo government did not renegotiate the contracts with NPC’s independent power producers or IPPs. These contracts require NPC to purchase electricity whether or not these are actually generated or dispatched, and to supply fuel to IPPs that are in operation. The price NPC agreed to pay for this electricity was overstated to begin with, and many of these contracts have clauses that allow the IPP to raise rates over time. NPC also bears the risk of peso devaluation and the risk of the cost of fuel, such as oil and coal, going up.

We have been paying for these contracts in our electric bills for over a decade, and we continue to pay for these today, although this is less transparent, thanks to unbundling. With world oil and coal prices hitting all time highs, with the peso now at PhP40 to the dollar compared with PhP26:$1 when these contracts were signed, the cost of these contracts are an excessive burden on ordinary Filipino electricity consumers. Even consumers that do not have electricity at home are also made to pay for these contracts because the government guarantees all of NPC’s obligations to the IPPs.

4. EPIRA allows MERALCO to purchase at most half of its electricity requirements from its sister companies or IPPs. Besides the problem of NPC with the IPPs, we have the problem of MERALCO’s contracts directly with its own IPPs. EPIRA also allows cross ownership between generation and distribution. A closer look at the ownership of most of MERALCO’s IPPs will show that they are owned by the Lopezes. Examples include the Santa Rita, the San Lorenzo Natural Gas, and the Quezon Coal-fired Power Plants. Whatever guarantees the government gives to its IPPs, MERALCO also gives to its IPPs. MERALCO has always claimed that it doesn’t earn from the high generation charges of its IPPs, and that it is merely passing on to its IPPs whatever it charges its customers for generation. MERALCO is telling the truth. But that is not the entire picture. For while MERALCO doesn’t itself earn from the high generation charges of its IPPs, the Lopezes do. A simple review of the financial statements of the Lopez holding company and its generation companies will show this.

This results to a clear case of double-whammy for the consumers. At one end, NPC must still pay for the unsold electricity it gets from IPPs because of the take-or-pay provision – an undue costs which will later be part of NPC’s stranded cost to be passed on later to the consumers.

At the other end, MERALCO pays its IPPs more than what it would have paid NPC, if it bought the electricity from NPC during the same hours that MERALCO was buying from its IPPs. As NPC rates vary from hour to hour, becoming more expensive when demand for electricity peaks, we must compare on an hourly basis what MERALCO pays its IPPs with what it would have paid NPC if it bought electricity from NPC instead of its IPPs.

Fortunately during the May 6, 2008 dialogue at the ERC, members of FDC and EmPower Consumers were able to obtain a copy of Meralco’s electricity suppliers and their respective cost and share for the months of March and April. Data shows that the cost of power from Meralco’s IPPs is higher than that of NPC’s.

Supplier	March 2008	April 2008	Increase / Decrease
Supplier	Feb ’08 cost	Mar ’08 cost	Cost
NPC and WESM	4.8673	5.3692	0.5020
NPC	4.5231	4.0173	(0.5058)
WESM	5.9356	10.6822	4.7466
Major IPPs	4.0588	4.5496	0.4908
QPPL	3.7253	6.4340	2.7088
Sta. Rita	4.1659	4.2749	0.1090
San Lorenzo	4.1165	4.2888	0.1723
Philpodeco	5.7245	3.9352	(1.7893)
Total	4.3998	4.9192	0.5194

(Source: Meralco)

NPC generated electricity is cheaper, also because there is a PhP0.30/kWh mandated reduction required by EPIRA for electricity generated by NPC or its IPPs. The electricity MERALCO buys from its IPPs are not subjected to this 30 centavo mandated reduction.

5. High electricity prices breed inefficiencies, which further raise the cost of electricity. The power sector is inherently inefficient. Average capacity utilization of Transco’s transmission lines, according to an ADB report, is only at 12%. We are paying for the investment and loans incurred to set up a transmission grid and on the average, only 12% of the capacity is being utilized. With regard to generation, dependable capacity in the Philippines amounted to 13,639MW at the end of 2006, but that same year, peak demand for electricity was only 8,760MW. We pay for capacity we don’t use, and this is such a heavy burden on consumers that we economize on our use of electricity even further. However, the less we consume of electricity, the more we have to pay of unused capacity. This is a vicious cycle similar to a debt trap. Industries cannot survive such a set-up. Poor consumers, even less so.

This is manifested in electricity consumption data obtained from the Department of Energy: Electricity consumption grew by 10.6% in 2003, then by a lower 3.2% in 2004, then by an even lower 2.5% in 2005. In 2006 electricity consumption grew by only 1.1%. Today it is residential and commercial users who hold a bigger share of total consumption. The thing is, residential and commercial consumers have peak hours when their demand for electricity is strong. Beyond that, demand is very low. This leaves the power sector with a huge inefficient setup: Base load demand is weak but you have to have extra capacity for use during the peak hours. This also means that you have to spend on additional capacity that will most likely get used only during peak hours. This is clearly wasteful and inefficient.

6. Other ERC decisions have rendered the cost of electricity high. One such decision is the ERC's dismissal of the Power Sector Assets and Liabilities Management Corporation (PSALM) market abuse case alleged by the Philippine Electricity Market Corporation (PEMC), the operator of the Wholesale Electricity Spot Market (WESM). The ERC dismissed this for lack of sufficient evidence, despite the detailed market data submitted by PEMC clearly showing that PSALM exercised its market power to raise the WESM spot price. The dismissal by ERC will cost consumers an additional PhP14B.

7. EPIRA-mandated removal of subsidies. Following the logic of privatization and market-reforms, EPIRA states that instruments such as cross-subsidies which distort the “real” price of electricity should be removed. This is in keeping with the transformation of electricity industry from a public service industry to a commodity market. The prices should be subjected to market rules alone – and considerations such as equity and justice in the provision of electricity should be abolished. Households no longer enjoy subsidies from the industrial and commercial sectors, and households in Mindanao and Visayas are no longer being subsidized by households in Luzon. These households that no longer enjoy the subsidies of the pre-EPIRA days have experienced a hike in rates as a result of the removal of these subsidies.

Even the lifeline rate today is not what it used to be. In the logic of subsidy, better off consumers subsidize the more disadvantaged ones. This may work in cities like Manila but in areas that are by and large poor, the lifeline rate is symbolic more than real and it is actually the less poor who are subsidizing the poorer.

8. Unfair and unjust practices of industry players that the ERC is ineffectual to regulate, or may even condone. ERC is known to have been powerless in providing more substantial solutions to recurrent abuse (overcharging and corporate malpractice) of DUs such as MERALCO. There had already been a number of times when MERALCO was proven to have engaged in such unscrupulous practice, yet MERALCO can and will probably engage in such practice because of the lack of fundamental action on the part of the ERC. For example:

• In 2002, ERC discovered PhP0.50/kWh unjustified over-recoveries of MERALCO from the PPA. It reached PhP12.3 billion as based in December 2001 computations. MERALCO was asked to refund it to the consumers.

In 2003, the Commission on Audit discovered that MERALCO overcharged its customers by PhP0.017/kWh through inclusion of income tax as operation expense which it passed on to consumers from 1994 to 2002. The Supreme Court subsequently ordered MERALCO to stop this practice and to refund the consumers by as much as PhP30 billion.

Also in 2003, FDC questioned ERC’s giving of provisional authority to MERALCO to raise their rates by as much as PhP0.12/kWh. Fortunately for the consumers, the Supreme Court junked the ERC decision in January 2004 because it violated certain rules during its own hearings.

In June 2004, MERALCO again applied for PhP0.1327/kWh increase through Generation Rate Adjustment Mechanism (GRAM). The Supreme Court again junked the petition in February 2006 as MERALCO did not follow the prescribed process (lack of hearing and publication).

But MERALCO is not the only one engaged in abusing and deceiving the consumers. The Panay Electric Company (PECO), also known to be owned by the Lopez family, had also been asked by the ERC to refund the consumers PhP2/kWh it earned due to overcharging.

9. Value Added Tax (VAT). Because of the ballooning fiscal deficit of the government, which is in part caused by guaranteed obligations of Government-Owned and -Controlled Corporations (GOCCs) like NPC, the 12% VAT now includes oil and electricity which was exempted before (zero-rated) in the previous consumption tax regime because it was categorized as “socially-sensitive” – raising its prices will translate to rising prices of other commodities. According to some studies, VAT raises electricity prices by PhP0.60/kWh to PhP0.90/kWh. It is estimated that the government earned at least PhP7.668 billion from VAT in the electricity industry in 2005.

One of the more controversial applications of VAT in electricity is the imposition of VAT to system loss, electricity which had been generated but not used. It is unjust to impose consumption tax on goods and services not actually consumed.

10. Corruption and Mismanagement

In NPC. Corruption in National Power Corporation (NPC) artificially inflates generation charges. This includes allegations of “overpricing” in the process of buying coal and oil supply for NPC-owned power plants and NPC-IPP’s.

In PSALM. The privatization of NPC plants is anomaly-ridden, the most outstanding proof of which is the halted sale of the Masinloc Power Plant to the winning bidder – the YNN. Aside from the fact that YNN capacity is questionable (it failed to pay down payment despite three extensions), sale of Masinloc to YNN will only raise electricity prices form PhP2.80 to PhP4.80/kWh. What is more revolting is this case is that, according to a COA report, PSALM officials gave themselves PhP10-million bonus because of the “successful” closing of the failed transaction with YNN.

In the Shadow of Debt

james.miraflor@gmail.com (James Miraflor) — Fri, 25 Apr 2008 04:19:00 +0000

by Walden Bello

By Walden Bello*

Assaulted on all sides owing to its entanglement in the ZTE-NBN corruption scandal, the administration has confronted its critics with the image of an economy that is purring along, that is doing just fine except for the rise in the price of rice, for which it says it is blameless.

Deconstructing "Growth" in 2007

But the state of the economy, even some of the administration's friends have pointed out, is a thin reed on which to rest. In a recent article, Peter Wallace, an influential consultant, deconstructed the 7.3 per cent growth rate recorded for the Philippines in 2007, showing that the figure is actually a statistical fluke that stems from the way the measure Gross Domestic Product (GDP) is computed. The figure actually masks something negative: the fall of imports by 5.4 per cent. "So because we had less imports, GDP looked good," Wallace says. "From where I sit, that does not indicate a strong, growing economy, the best in 31 years."i With no less irony, the World Bank agrees: "Remarkably, weaker import growth made the largest arithmetical contribution to the growth acceleration in 2000-07 compared to 1990-99." It added that this was not "consistent with sustained fast growth in the longer term."ii

The reality, Wallace points out, is indicated by the same brutal numbers: more poor people in 2007 than in 2000, more people without jobs, a real decline in average family income, the shrinking of the middle class as more people jump ship and swim to other shores. "Notwithstanding higher growth," the World Bank chimes in, "the latest official poverty estimates show that between 2003 and 2006, when GDP growth averaged 5.4 per cent, poverty incidence increased from 30.0 to 32.9 per cent. This level of poverty incidence is almost as high as it was in 2000 (33 per cent). Indeed the magnitude of poor Filipinos rose to its highest level in 2006: of a population of 84 million in 2006, 27.6 million Filipinos fell below the national poverty threshold of P15, 057."iii

If you pop the famous "Ronald Reagan" question to most Filipinos-"Do you feel better off now than four years ago"-there is no doubt about how they would answer.

For many people, the main problem confronting the economy is spelled G-M-A. But for those who have spent time studying the Philippine economy, Arroyo is not the problem, but part of a bigger problem that extends far into the recent past. The collective responsibility of the last five administrations for our economic malfunctioning becomes stark when viewed in a comparative context. According to the latest Human Development Report of the United Nations Development Program (UNDP), with the growth in GDP per capita averaging 1.6 per cent per annum in the period 1990 to 2005, the Philippines' economic growth record was the worst in Southeast Asia, with even all the so-called lower-tier ASEAN countries significantly outstripping it.iv Say that again? OK. Now, Vietnam (5.9 per cent) is not a surprise. But, for Christ's sake, Laos (3.8 per cent), Cambodia (5.5 per cent), and Myanmar (6.6 per cent)?

So what are the real causes of this state of stagnation that has now lasted for over 25 years?

There is, of course, the old overpopulation-causes-poverty school. The weight of decades of research, however, is that it is economic growth that causes a significant decline in population growth-the so-called "demographic transition-instead of reduced population serving as the trigger for economic dynamism. This is not to say that a slowing of the population growth rate does not make the burden of development lighter. It does, and fertility control also contributes positively to women's empowerment, which is why contraceptive programs continue to be critical.

It is, however, the other, seemingly more solid explanations for the Philippines' failure to launch that interest us here. There are three that are particularly popular with the establishment: corruption, protectionism, and high wages. Let's look at these closely.

Is it Corruption?

Undoubtedly, the most popular is Peter Wallace and the World Bank's favored answer--that is, that cronyism and corruption are holding the Philippines back. This view is reinforced by the news that, for two years in a row, the Philippines has been designated the "most corrupt economy" in Asia by the influential Political and Economic Risk Consultancy (PERC).

Now, there is no doubt that corruption erodes governance, subverts democracy, and is morally corrosive. And there is no doubt in this writer's mind that the illegitimate occupant of Malacanang deserves to be hung, drawn, and quartered-legally, that is, not physically-for presiding over one of the most corrupt regimes in the history of the republic. However, it is another thing to say that corruption and cronyism are mainly responsible for the Philippines' failure to get out of the stagnation in which it is mired. The reason one must be skeptical of this explanation is that in many other societies, periods of rapid growth have also been periods of endemic corruption in politics, and this observation includes England in the 18th century, the US in the nineteenth and early 20th centuries, and Korea in the late sixties to the eighties.

Closer to home, corruption pervaded the politics of our Southeast Asian neighbors, such as Thailand, Malaysia, and Indonesia during their period of rapid industrialization from the mid-eighties to the mid-nineties, when they experienced 6 to 10 per cent growth rates. Indonesia under Suharto, for instance, occupied the position the Philippines is now in, being regularly rated as the most corrupt government in Asia. Double-entry book-keeping, tax evasion, bribing of politicians and bureaucrats, and massive fraud were legendary in Thailand in its boom decade.

Observations casting doubt on the correlation between stagnation and corruption have received confirmation from more systematic studies. Focusing on Southeast Asia, Mustaq Khan and Jomo K.S. found no simple correlation between the extent of rent-seeking and long-run economic performance and found the thesis that crony capitalism caused the Asian financial crisis of 1997 a rather dubious one.v Working with a bigger global sample, I.A. Brunetti, G. Kisunku, and B.Weder's research found that, if at all, the impact of corruption on GDP growth was not significant.vi Other studies have found that, as in the case with population growth and poverty, the direction of causation is more likely to be from poverty to corruption rather than the other way around. vii

Summing up the conclusion of a slew of studies on growth and corruption, Herbert Docena says, "Too many empirical anomalies undermine the conclusion" that corruption is a significant explanation for economic backwardness. viii What research has done is simply to confirm the intuitive sense that the customs agent that builds a house with ill-gotten wealth stimulates the economy as much as the middle manager who builds one with her legitimate savings. The difference between them lies not in their economic effects but in what their ethical and legal destinies should be: the former deserves to go to jail while the other deserves to enjoy the fruits of her labor.

There is an added problem with the corruption explanation for stagnation, Docena argues. The popular discourse that attributes economic backwardness to corruption and cronyism plays into the dynamics of elite politics and that of multilateral institutions like the World Bank. "Corruption discourse" is the preferred weapon in the political competition among the different factions of the elite. It is discourse that performs the function of allowing elites to compete and succeed one another in office without fatally destabilizing a social structure that is shot through with inequity.ix

The Neoliberal Explanation

Another favorite explanation is that stagnation stems from the "strong" protection offered to domestic industry. The Philippines, it is said, has not been exposed enough to market forces that would have shaken it out of its "inefficiency."

The problem with this analysis is that, in fact, the Philippines was subjected to radical tariff liberalization in the 1980's and 1990's. Under programs imposed by the World Bank and International Monetary Fund (IMF) in the 1980's, the average tariff rate was brought down from 43 per cent in 1980 to 28 per cent in 1985 while quantitative restrictions were removed on more 900 items between 1981 and 1985.x This process of liberalization was accelerated in the mid-1990's under the Ramos administration's Executive Order 264, which sought to drive down tariffs on all but a few sensitive products to between 1 and 5 per cent in 2004.

Moreover, the liberalization program in the Philippines was often more profound than those of our neighbors, which were growing by leaps and bounds while we stagnated. For instance, by the end of the eighties, the average tariff rates in Indonesia and the Philippines were just about equal while Indonesia had a greater proportion of goods subjected to non-tariff barriers than the Philippines.xi Compared to Thailand, which was, in many ways, the best performer among the Southeast Asian "newly industrializing countries" (NICs) in the 1985-1995 period, the Philippines was much farther along the liberalization road: by the end of the eighties, the effective rate of protection for manufacturing in Thailand was 52 per cent, compared to 23 per cent for the Philippines.xii

In fact, in the 1980's and 1980's, the strategy of our neighbors was not one of indiscriminate liberalization such as that pursued by Philippine technocrats but one of strategic protectionism cum selective liberalization that was designed to deepen their industrial structures. As one wag who was trying to drive home the contrasting outcomes in the Philippines and our neighbors put it, the crucial difference was that our technocrats preached free trade and practiced it, while our neighbors boasted of their free trade credentials while practicing protectionism. In other words, in world ruled by economic realpolitik, it is often not a virtue to practice what you preach.

Management's Story

A third explanation favored by the establishment is that too much legal protection of labor has made wages rigid and non-competitive with other Asian countries, thus making the Philippines an unattractive investment site.

Though it has been successfully used by management to dampen wage demands, this argument has been seriously undermined by the facts. The real wage in 2003 was only 80 per cent of what it was in 1980 and labor's share in GDP has dropped from 75 to 65 per cent. xiii In contrast, capital's share of GDP has increased by 10 per cent and the profit rate has shown an upward trend, from 8 per cent in 1985 to nearly 13 per cent in 2002.xiv The Spanish economist Jesus Felipe and his Filipino colleague Leonardo Lanzona, Jr., argue in a study for the Asian Development Bank that except in some areas, Philippine labor market policies cannot be seen as the main culprit for the economy's failure to lift off.. Indeed, they do not see an increase in current wages as a problem since, seen from a neo-Keynesian perspective, the Philippines falls into the category of being a "wage-led economic regime," where, owing to persistently low levels of investment by capital, an increase in wages will lead to a higher level of aggregate demand that will result in a utilization of current excess capacity in industry, leading to faster growth and more employment. xv

So why is the Philippines stuck in what is effectively a low-growth path, where unemployment and underemployment constinue to rise even when the economy is growing by 5-6 per cent? The culprit, Felipe and Lanzona strongly suggest, is low capital accumulation or investment: "In the Philippines...the lack of investment is a well known problem....It is possible that the Philippines' low capital stock per worker, due to lack of investment, has led to higher markups and unemployment. Thus, the policy prescriptions to reduce unemployment would be investment and not labor market reforms."xvi

The Investment Conundrum

One cannot then understand Philippine underdevelopment without reference to the crisis of investment. From nearly 30 per cent in the early eighties, the ratio of investment to GDP plunged to 17 per cent in the mid-eighties and never really recovered, staying at 20-22 per cent in the early part of this decade. The same pattern of collapse and very weak recovery is also seen in the growth of capital stock, which fell from an index of nearly 0.07 in 1983 to nearly zero in 1985 and leveled off at below 0.03 in the early part of this decade.xvii

To understand the dismal performance of investment over the last two decades, one must situate these figures in their historical politico-economic context.

While the Marcos regime is often pinpointed as the culprit behind Philippine underdevelopment, an equally decisive part has been played by the post-Marcos administrations. The private sector unraveled in the early 1980's owing to the effects of a structural adjustment program---trade liberalization cum monetary and fiscal tightening--imposed by the World Bank and IMF at a time of international recession. Describing the fatal conjunction of local adjustment and international downturn, the late economist Charles Lindsay said, "Whatever the merits of the SAL [structural adjustment loan], its timing was deplorable."xviii The collapse of industry, it must also be noted, took place amidst a political crisis that marked the transition from the dictatorship to the presidency of Corazon Aquino.

Why Government Spending was Gutted

The downward spiral of private investment was not met by a countercyclical effort of government to shore up the economy, as would be expected under orthodox macroeconomic management. This was a catastrophic failure, and the cause of it was external. Owing to pressure from international creditors, the fledgling democratic government of President Corazon Aquino adopted the so-called "model debtor strategy" in the hope of continuing to have access to international capital markets. This approach was cast in iron by Executive Order 292, which affirmed the "automatic appropriation" from the annual government budget of the full amount needed to service the foreign debt.

What this meant is that instead of picking up the investment slack, government resources flowed out in debt service payments. In the critical period 1986-1993, an amount coming to some 8 to 10 per cent of GDP left the Philippines yearly in debt service payments, with the total amount coming to nearly $30 billion.xix This figure was nearly $8.5 billion more than the $21.5 billion Philippines total external debt in 1986. What is even more appalling is that owing to the onerous terms of repaying debts that were subject to variable interest rates and the practice of incurring new debt to pay off the old, instead of showing a reduction, the foreign debt in 1993 had gone up to $29 billion!xx

What this translated into was that interest payments as a percentage of total government expenditure went from 7 per cent in 1980 to 28 per cent in 1994. Capital expenditures, on the other hand, plunged from 26 to 16 per cent. Debt servicing, in short, became, alongside wages and salaries, the no. 1 priority of the national budget, with capital expenditures being starved of outlays.xxi Since government is the biggest investor in the country--indeed, in any country--the radical stripping away of capital expenditures represented by these figures goes a long way towards explaining the stagnant 1.0 per cent average yearly GDP growth rate in the 1980's and the 2.3 per cent rate in the first half of the 1990's.xxii

The anti-growth implications of the state's being deprived of resources for investment were very clear to Filipino economists during the mid-eighties. As the University of the Philippines professors who authored the famous 1985 "White Paper" warned: "The search for a recovery program that is consistent with a debt repayment schedule determined by our creditors is a futile one and should therefore be abandoned."xxiii

Government and Investment: Contrasts with out Neighbors

Why do we focus on key policy decisions made in the period 1985 to 1995? The reason is that these decisions-in particular the fateful decision to channel government financial resources to debt repayment instead of capital expenditures-go a long way towards explaining why our neighbors leaped forward as we stagnated. Contrary to doctrinaire free-market economics, institutional economists argue that government financial resources devoted to building physical or social infrastructure or shoring up domestic demand "crowd in" rather than "crowd out" private investment, including foreign investment. For instance, one key study of a panel of developing economies from1980 to 1997 found that public investment complemented private investment, and that, on average, a 10 percent increase in public investment was associated with a 2 percent increase in private investment.xxiv

Now the key explanation for why our neighbors flourished in the period 1985-95 is that they were deluged with Japanese investment that was relocating from Japan to make up for the loss of competitiveness of Japan-based production owing to the drastic revaluation of the Japanese yen relative to the dollar under the famous Plaza Accord in 1985. This flow of Japanese investment to our neighbors was not accidental. Nor was it accidental that the Japanese bypassed the Philippines. For while our external creditors were busy stripping our government of resources for investment in infrastructure, our neighbors were frantically devoting resources to financing infrastructure to attract or crowd in Japanese direct investment.

Indonesia, for instance, attracted $3.7 billion worth of Japanese direct investment between 1985 and 1990 A key reason was the high level of government capital expenditures, which came to 47 per cent of total expenditures in 1980, 43 per cent in 1990 and 47 per cent in 1994.xxv Or take Thailand. It pushed down interest payments from 8 per cent of government expenditure in 1980 to 2 per cent in 1995 and raised capital expenditures from 23 per cent to 33 per cent. xxvi In the late eighties and early nineties, Thailand received $24 billion in foreign direct investment from Japan, Korea, and Taiwan, or 15 times the amount invested by the three countries in the Philippines, which came to a paltry $1.6 billion. There is no doubt that government capital spending crowded in foreign investment in Thailand and the lack out it crowded out foreign investment in the Philippines. And there is no doubt that, as KunioYoshihara asserted, "This difference in the flow of foreign investment from [Japan, Korea, and Taiwan] produced a significant disparity in growth performance of the two countries during this period."xxvii

Like all clear-thinking investors, the Japanese were not going en masse to a place where infrastructure was decaying and where the market was depressed and poverty was increasing owing to a political economy shackled by structural adjustment and battered by the priority given to repaying the foreign debt. They were, in short, not stupid.

This trend of continuing outflow of government resources in the form of payments to creditors and the shrinking of capital expenditures continued into the first years of this decade. In 2005, according to the World Bank, 29 per cent of the government expenditures was devoted to interest payments to both foreign and domestic creditors and 12 per cent to capital expenditures.xxviii Calculations by James Miraflor of the Freedom from Debt Coalition put servicing of the foreign and domestic debt (most of which is said to be owed to locally based foreign entities) at 51 per cent in 2005, 54 per cent in 2006, and 41 per cent in 2007. This configuration of government spending prompted the UP School of Economics faculty to complain once again that the budget left "little room for infrastructure spending and other development needs," though they did not follow through on the policy consequences of their analysis.xxix They were joined, in an extraordinary example of hypocrisy, given its historical role in foisting the debt service at the head of the trough of government spending, by the World Bank, which complained in a 2007 policy brief:

The Global Competitiveness Index ranks the Philippines at only 71 out of 131 countries, rating the country particularly poorly on a majority of the infrastructure indicators. The quality of transport infrastructure (which includes roads, railways, ports, airports, and logistics) is a particularly serious concern, with consequences for trade-related transaction costs and overall competitiveness. Recent assessments indicate that transport infrastructure is poorly maintained and badly managed, with years of underinvestment, especially in maintenance." xxx

Not surprisingly, with government capital expenditures remaining low, total fixed investment has remained anemic, indeed running at only 14 per cent of GDP, which the World Bank notes is "substantially lower even than during the deep recession in the first half of the 1980's and substantially lower than in most other larger East Asian economies."xxxi Durable equipment investment, it added, reached a historic low in 2007.xxxii The problem, as usual, is not the Bank's description of developments but its refusal to see their origins in policies in the formulation of which the Bank was deeply implicated.

The Other Shoe Drops: Trade Liberalization and the Fiscal Crisis

The explanation for our national stagnation is not exhausted by the priority our leaders accorded to repaying the foreign debt. Activists governments, we have seen, have been key players in development in Southeast Asia. But the Philippine government was incapacitated from playing this activist role by a one-two punch delivered by external forces. If the hemorrhage of payments on the debt hit it on the expenditure side, trade liberalization, by drastically reducing a very critical source of government revenues, clobbered it on the revenue side. But before we detail this second blow, the fiscal impact of trade liberalization, it is important to place the latter in the context of the comprehensive structural adjustment cum trade liberalization program which chokedthe country in the eighties and nineties.

It is fashionable these days to decry the weakness of the Philippine manufacturing sector, which was supposed to play the role of absorbing a greater and greater portion of the labor force into high-value-added jobs. Trade liberalization was, in theory, supposed to reinvigorate Philippine industry by, among other things, ending monopolization. Instead, what happened was monopolization increased as trade liberalization intensified.xxxiii Why? It is very likely that monopolization rose because weaker firms were driven out of business by trade liberalization--an understandable outcome but one that did not fit the neoliberal paradigm.

As noted earlier when we discussed and dismissed protectionism as a possible explanation for the Philippines' economic stagnation, trade liberalization in this country was no joke. The effective rate of protection for manufacturing was pushed down from 44 to 20 per cent. That was achieved at the cost of multiple bankruptcies and massive job losses-in short, de-industrialization. The list of industrial casualties included paper products, textiles, ceramics, rubber products, furniture and fixtures, petrochemicals, beverage, wood, shoes, petroleum oils, clothing accessories, and leather goods. The textile industry was practically rendered extinct by the combination of tariff cuts and the abuse of duty-free privileges, with the number of forms shrinking from 200 firms in 1970 to less than 10 by the end of the century. As former Finance Secretary Isidro Camacho, Jr., admitted, "There's an uneven implementation of trade liberalization, which was to our disadvantage." While consumers may have benefited from tariff cuts, he said, liberalization "has killed so many local industries."xxxiv

Yet the negative effects of trade liberalization were not limited to the erosion of the country's industrial base. Trade liberalization had fiscal effects. If the hemorrhage of payments on the foreign debt blew a hole on the expenditure side, trade liberalization, by reducing a very critical source of government revenues blew a hole on the revenue side. The trade liberalization that started with Executive Order 264-which phased in, beginning 1994, a radical program to unilaterally reduce all tariffs to 0 to 5 per cent by 2004-resulted in radically decreased customs collections in a very short period of time. In the period 1995-2003, while the value of imports grew by 40 per cent, customs collections of import duties declined by 35 per cent; imports rose from US$25.5 billion in 1995 to $37.4 billion in 2003, but import duties fell from P64.4 billion to P41.4 billion.xxxv As a percentage of GDP, total customs collections fell from 5.6 per cent of GDP in 1993 to 2.8 per cent in 2002. As a percentage of government revenues, customs duties and taxes from international trade fell from 29 per cent in 1995 to 19 per cent in 2000 at a time that hardly any new revenue sources had come onstream.xxxvi

Combined with the outflow of debt service payments, the collapse in customs revenues precipitated the fiscal implosion, which made it even more difficult for government to finance the capital expenditures that were necessary to crowd in both domestic and foreign investment in order to decisively lift the country from the stagnation of the eighties and nineties. Former Finance Secretary Camacho could not but admit the obvious-that it was not so much failure to increase taxation but the drive to decrease import taxation that mainly accounted for the crisis in government revenue: "The severe deterioration of fiscal performance from the mid-1990's could be attributed to aggressive tariff reduction."xxxvii

To say this is not to excuse the current administration and its predecessors from not making a greater effort at tax collection, especially from their private sector cronies, just as our earlier remarks were not meant to excuse corruption. It is mainly to achieve a clearer understanding of the key structural factors and dynamics that have condemned the Philippines to almost permanent stagnation. One can agree with Peter Wallace that the Philippines needs a much bigger effort to enforce taxation and punish tax evaders without having to say that this failure is what precipitated the crisis on the revenue side. Trade liberalization precipitated that crisis, which resulted in, among other things, a further crippling of the capacity of the Philippine state to play a positive role in development.

When Paradigms Blind

In conclusion, the dominant explanations for the continuing stagnation that has caused so many Filipinos to abandon ship are deeply flawed. Why they continue to be popular is due to their being easy to grasp (corruption) or ideologically correct (lack of market freedom). Alternative explanations are screened out because they are not ideologically correct or because they are, like the burden of debt thesis, simply unacceptable as explanations and options for action to the establishment. Yet it requires no special intelligence to realize that the massive amounts of money that have gone to paying our creditors to service our constantly mounting external debt was money that could not go to development. It cannot be otherwise given that resources are finite. Sometimes such truths can only be grudgingly accepted when events occur that force their acceptance. For instance, it can no longer be denied that Argentina's five-year string of 10 per cent annual GDP growth is due principally to President Nestor Kirchner's courageous act of unilaterally writing down-that is, paying about 25 cents of every dollar owed to bondholders--on most of that country's foreign debt and channeling the money saved to domestic investment.

With the failure of doctrinaire neoliberalism to both explain and move countries out of underdevelopment, we are beginning once more to appreciate the positive role of the state in development, in its triple role of assisting the market, disciplining the market, and leading the market. What we have tried to do here is to position the incapacitation of the Philippine state as the central factor in explaining the stagnation of the Philippine economy. The priority accorded to repaying the foreign debt in the context of an economy in crisis deprived the state of financial resources to play its role as the economy's biggest investor, thus crowding out private investment. This emasculation on the expenditure side was paralleled by a crippling on the revenue side by the collapse of customs revenues owing to aggressive trade liberalization. This double punch amplified the depressive effects of the policy framework of structural adjustment cum trade liberalization that was imposed on the country in the eighties and nineties with the acquiescence of our leaders. This suffocating policy framework unfortunately lives on, with minor adjustments, and as long as it remains this country's basic paradigm, it is difficult to see the Philippines emerging from its long night of stagnation.

-----------

*President of Freedom from Debt Coalition, senior analyst at Focus on the Global South, and professor of sociology at the University of the Philippines. The author would like to thank James Matthew Miraflor and Bobby Diciembre of the Freedom from Debt Coalition for their assistance.

-----------

i Peter Wallace, Manila Standard, Feb. 29, 2008.

ii World Bank, Accelerating Inclusive Growth and Deepening Fiscal Stability (Manila: World Bank, March 2008), p. 26.

iii Ibid., p. 67

iv United Nations Development Program, Human Development Report 2007/ 2008 (New York:: United Nations Development Program, 2008), pp. 277-280.

v Mushtaq H. Khan and Jomo Kwame Sundaram, eds., Rents, Rent-Seeking, and Economic Development (Cambridge: Cambridge University Press, 2000), p. 4.

vi A.Brunetti, G. Kisunku, and B. Weder, "Credibility of Rules and Economic Growth-Evidence from a Worldwide Private Sector Survey," Background paper for the World Development Report 1997, cited in Jens Chr. Andvig and Odd-Helge Fjelstad, Corruption: a Review of Contemporary Research (Bergen, Norway: Chr. Michelsen Institute, 2001), p. 74.

vii Research cited in Andvig and Fjelstad, p. 64.

viii Herbert Docena, "Corruption and Poverty: Barking up the Wrong Tree?," in Walden Bello, Herbert Docena, Marissa de Guzman, and Marylou Malig, The Anti-Development State: The Political Economy of Permanent Crisis in the Philippines (London: Zed Press, 1995), p. 281.

ix Ibid., pp. 288-289.

x Charles Lindsay, "The Political Economy of Economic Policy Reform in the Philippines: Continuity and Restoration," in Andrew MacIntyre and Kanishka Jayasuriya, eds., The Dynamics of Economic Polity Reform in the Philippines (Singapore: Oxford University Press, 1992).

xi See Kunio Yoshihara, The Nation and Economic Growth (Kuala Lumpur: Oxford University Press, 1994), p. 108; and Amar Bhattacharya and Mari Pangestu, "Indonesia: Development Transformation and the Role of Public Policy," in Danny Leipziger, ed., Lessons from East Asia (Ann Arbor: University of Michigan Press, 1995), p. 408.

xii Scott Christensen et al., "Thailand: The Institutional and Political Underpinnings of Growth," in Leipziger, ed., p. 354.

xiii Jesus Felipe and Leonardo Lanzona, Jr., "Unemployment, Labor Laws, and Economic Policies in the Philippines," in Jesus Felipe and Rana Hasan, Labor Markets in Asia: Issues and Perspectives (Houndmills, Basingstoke, Hampshire: Palgrave Macmillan, 2006), pp. 394, 441

xiv Ibid. p. 441

xv Jesus Felipe and Rana Hasan, "Labor Markets in a Globalizing World," in Felipe and Hasan, eds., Labor Markets in Asia: Issues and Perspectivesp. 117.

xvi Felipe and Lanzona, p. 460.

xvii Felipe and Lanzona, p. 447.

xviii Lindsay.

xix World Bank, World Bank Debt Tables, Vol. 2 (Washington, DC: World Bank, 1994), p. 378.

xx Ibid., p. 379.

xxi World Bank, World Development Indicators 1998 (Washington, DC: World Bank, 1997), p. 199.

xxii Ibid, p. 131.

xxiii Florian Alburo, et al., "Towards Recovery and Sustainable Growth," School of Economics, University of the Philippines, Diliman, Quezon City, September 1985.

xxiv See, for instance, Lufti Erden and Randall Holcombe, "The Effects of Public Investment on Private Investment in Developing Economies," Public Finance Review, Vol. 33, No. 5 (2005), pp. 575-602.

xxv World Development Indicators 1997, p. 199; World Development Indicators 2000, p. 233; World Development Indicators 2003, p. 231.

xxvi World Development Indicators 1998, p. 224.

xxvii Yoshihara, p. 52

xxviii Calculated from figures provided in World Bank, Accelerating Inclusive Growth and Deepening Fiscal Stability.

xxix Emmanuel de Dios et al., "The Deepening Crisis: The Real Score on Deficits and the Public Debt," Faculty of Economics, University of the Philippines, August 2004.

xxx World Bank, Accelerating Inclusive Growth..., p. 5

xxxi Ibid, p. 27

xxxii Ibid.

xxxiii Felipe and Lanzona, p. 441

xxxiv Eric Boras, "Government Loses P120 Billion to Tariff Cuts," Business World, Oct. 20, 2003.

xxxv Figiues from Bureau of Customs and National Statistical Coordination Board.

xxxvi Figures from World Development Indicators 1998, p. 227 and World Development Indicators 2003 , p. 235

xxxvii Cited in Boras.

ZTEwwww!

james.miraflor@gmail.com (James Miraflor) — Sun, 06 Apr 2008 09:07:00 +0000

A Primer on the Anomalous National Broadband Network Project and other Disgusting Illegitimate Deals and Debts of the Philippines

by the Freedom from Debt Coalition

What is the ZTE NBN deal?

It is a $ 329 million loan from the China Export and Import Bank to finance the infrastructure project between the Philippine Government and the China-based Zhong XingTelecommunication Equipment Company Limited (ZTE). The said project aims to develop a telecommunications infrastructure that will deliver voice, data, and internet services to all government offices and municipalities nationwide.

However, the said project encountered serious accusations of fraud, bribery and other anomalies forcing the Arroyo Government to suspend it “indefinitely” last September 22, 2007. But due to the public's continued and strong outcry over the project, Mrs. Arroyo was forced to cancel the ZTE deal last October 2, 2007.

Why is it Illegitimate?

All the necessary elements to make this deal illegitimate are present.

For one, there is no existing financial analysis and plan for the said project. The implementing agency is blind to any feasibility studies and has not initiated any detailed engineering studies, plans, specifications and design for the said broadband project. This entire aspect was tasked to ZTE alone.

Secondly, it suffers from a crisis of transparency. It is alleged that there is a lack of competitive bidding which led to the overpricing of the project so as to include the cost of the so-called commissions into the project cost.

Thirdly, the loan project comes with one-sided conditionalities. The loan granted by the China Export Import Bank was tied to the purchase of services and technology also from China (read: ZTE).

Lastly, it suffers from a crisis of relevance. The question is, do we really need it in the first place?

The government already owns two broadband networks—the Philippine
Administrative Network Project (PANP) supposedly to modernize our government's news and information network and the Philippine Research, Education and Government Information Network (PREGINET) tasked to interconnect academic institutions, government offices and research and development centers in the country.

Again we ask: do the already debt-burdened people really need to take another unnecessary if not illegitimate debt for a project we do not need in the first place?
As of the moment, the National Government debt is P 3.7 trillion wherein every
Filipino is shouldering P 42,819 each for debts that are widely perceived to be
illegitimate.

Illegitimate debts are those that involve any or a combination of the following:

Fraud and deception
Lack of compliance with democratic processes or legal requirements
Grossly disadvantageous terms and/or onerous and harmful conditions
Financing of failed projects, or projects with damaging effects on people, on the environment, or on the economy
Purchasing overpriced, unnecessary goods or services
Support of policies that result in the violation of human rights,
Accumulation due to unjust economic relations
Aggressive and unscrupulous pushing by lenders to promote their vested interests at the expense of the borrowers or the people who will pay the debts
Transactions by illegitimate regimes

We believe the majority of the public debts we are paying for are illegitimate. Examples of illegitimate deals and debts are:

$ 406 million Cyber Education Project
P 503.65 million Austrian Medical Waste Project
$ 100 million World Bank Textbook Loan Project
$ 503 million North Luzon Railways Project
$ 884 million South Luzon Railways Project
$ 165 million Telepono sa Barangay Project
P 858 million Philippine Merchant Marine Academy Modernization Program
$ 121.8 million World Bank Small Coconut Farmers Development Program

What are illegitimate debts? What makes these illegitimate deals and debts possible? In truth, the ZTE-NBN deal reveals the deeply imbedded flaws of the system that has led to the accumulation of illegitimate debt such as what we would have contracted had the ZTE-NBN Project pushed through.

Government projects are not primarily determined by our people's needs and national priorities, but are corrupted by the profit-making agenda of government officials, foreign lenders and private multinationals and, even big local corporations.

The Executive powers to approve, contract and implement projects and loans are non-transparent and unregulated. We all know that the ZTENBN deal is neither the first nor the last. These powers, beginning with the Office of the President, must be curtailed, redefined and subject to rigorous checks.

The bidding process is more dysfunctional than all the players care to admit. Many government officials and their close relatives get involved in vying for government contracts. This must be stopped. The practice of "commissions" is widespread, well entrenched, and involves several layers for every project.

Lenders are driven by their own agenda often at the expense of our national interest and the welfare of our people. Many loans come with conditionalities. In the ZTE-NBN case – it was tied to the purchase of services and technology from the same country, and even from specific companies. Lenders promote and perpetuate corruption by practicing bribery and integrating the cost of the so-called commissions into the project cost. In many cases, lenders pass on overpriced, unnecessary and/or flawed products.

Who pays?

Without doubt, there are more ZTE-type deals which continue to evade public scrutiny. These corrupt deals which eventually become illegitimate debts drain our national coffers and rob us of our rightful resources to fund much needed social services like education, health and housing.

Proof of this is the dismal state of our educational system due to lack of government-funding. As of now:

1 in 10 Filipinos has never gone to school (6.8 million)
1 in 6 Filipinos is not functionally literate (9.6 million)
4.1 million are illiterate
11.6 million youth are out-of-school
More than half (51 percent) of Filipinos had at most elementary education
Out of 1000 Grade 1 pupils, only 688 will finish their elementary education
and only 7 will acquire the required competency skills.

(source: Department of Education 2006)

Kung mayroong bumubukol, hindi lamang ang mga komisyon at kickback ng ating mga tiwaling opisyales at gobyerno, kundi ang mas malaki, malala at patuloy na sumsidhing krisis ng kahirapan dulot ng ilehitimong utang ng bayan.

What is the participation of the Arroyo Government in this controversy?

It was alleged that powerful people close to Mrs. Arroyo brokered the deal in
favor of the ZTE Corp. Original whistle-blower Jose "Joey" De Venecia III, son of Rep. Jose De Venecia Jr. exposed the huge overpricing and kickbacks involved in the deal in a Senate inquiry which started last year. Joey De Venecia is the owner of Amsterdam Holdings, Inc. (AHI), which lost the bid for the NBN project to ZTE.

“Back off!”

First Gentleman Jose Miguel Arroyo was named by the young De Venecia as the individual who personally bullied the latter and his company into abandoning their proposal for the national broadband network project in order to give way to China's ZTE Corp. It was alleged that FG Mike Arroyo pointed a finger at Joey De Venecia and told him to “back off” from the deal.

FG Mike Arroyo immediately went abroad at the height of the controversy, raising suspicion that he is consciously avoiding the scandal.

“May 200 ka dito.”

Former Commission on Election Chairman Benjamin Abalos, a close ally and friend of Mrs. Arroyo was said to have brokered the deal in favor of ZTE. Abalos reportedly went to China several times in 2007, allegedly enjoying “sexcapades” in plush hotels hosted by ZTE officials. Abalos admitted going to China last
year—during the height of the electoral campaign. He also admitted his close association with some ZTE officials.

In a Senate inquiry last year, former National Economic and Development Authority Director General Romulo Neri, accused Abalos of offering him a P 200 million bribe just to endorse the ZTE contract. Neri purportedly refused the offer and laughed off the bribe. However, he reversed his earlier recommendations questioning the deal.

“Bubukol po ito.”

Former Philippine Forest CEO Rodolfo “Jun” Lozada, the second whistle-blower who was reportedly abducted by Malacañang's security group accused Abalos of “protecting” his $130 million kickback. The money was reportedly given by ZTE officials to Abalos in order to secure the NBN deal with the Philippine Government. It was alleged that the ZTE-NBN deal was Malacañang's “gift” to Abalos because of the “important role” he played during the highly questionable 2004 Presidential elections.

What can you do?

The first step is to understand. The next step is to take action. Join the campaign for truth and accountability and our fight against illegitimate debt!

Reproduce this primer so others will understand the ZTE-NBN deal and the debt
problem;
Organize forums, debates, round-table discussions and assemblies that will promote critical discourse and understanding on the ZTE and debt issue;
Organize cultural activities (pocket concerts, bar/school tours, rave parties etc.) for truth, justice and an end to illegitimate debt;
Set-up a petition signing initiative to register your voice; Support the creation of an Independent Citizens' Debt Audit Commission composed of members from the academe, progressive economists, accountants, lawyers, environmentalists, and sectoral leaders that will independently audit all debts coming from the people's perspectives; and
Write your Congressional Representatives and demand the following: 1. A Congressional Audit of all public debt and contingent liabilities; and 2. Repeal of the automatic debt payment provisions of the Revised Administrative Code of 1987.

Do your part. Mr. Rodolfo “Jun” Lozada already did his. The best way to honor his bravery and selflessness is by replicating it with the same act of daring. Dare to demand the truth. Dare to demand justice. Dare to end illegitimate debt!

- FREEDOM FROM DEBT COALITION-

Download this primer.

An Empowered Argument for a People Power

james.miraflor@gmail.com (James Miraflor) — Sat, 15 Mar 2008 11:02:00 +0000

by Joy Aceron

On an “Alternative” to People Power Proposal

There is an alternative to people power which is being proposed: “have Gloria Macapagal-Arroyo as the president for the remainder of her term,” for her staying there “presents our nation with a golden opportunity to change in a deeper, more meaningful and more lasting manner.”

Let me say at the onset that at this point of the political crisis, this proposal is not anymore an alternative, a new or a middle proposal. The progression of the on-going debates and dynamics points to fact that this is the same solution being offered by Malacañang obviously to be able to survive yet again a formidable challenge to its authority. As stated rather eloquently by a pro-Gloria protester covered by the media (who was basically echoing the administration’ s line), the country should just wait for the 2010 elections since that is only about one year and eight months away. “Bring the case to the courts and let all those who are responsible be punished.”

For us reform-minded, we need to ask ourselves: Do we seriously believe that honest and clean elections under this administration are possible? Do we really think that the Ombudsman and the NBI will allow the truth to be ferreted out and hold those responsible for the NBN deal and the Lozada abduction accountable? Do we honestly believe we can bring about genuine long-lasting reforms if we again let another serious “mistake” by the President (which she yet AGAIN apologized for) to go unpunished?

She called a COMELEC official during the 2004 elections. She apologized for it. We let it pass.

The Macapagal Boulevard was overpriced big time. We let it pass.

She passed measures such as the Calibrated Pre-Emptive Response (CPR), E.O. 464 and the Declaration of Emergency Powers that curtailed human rights. We let it pass.

She was linked with extra-judicial killings, and even hailed as human rights protector in her SONA the very person who the UN considered as directly responsible for extra-judicial killings. We let it pass.

For the sake of “stability” and “constitutionality” , we stayed quiet and let all of these pass.

But power that is unchecked will naturally wield more power. Abuse that is not made accountable will result in greater abuses. If they can get away with murder, why would they not be able to get away with 130 million dollars?

The GMA’s camp formula of survival is simple and we are more than willing to take in all the bullshit that they are peddling: Let the “mistakes” in the exercise of power pass for the sake of democracy, for the sake of economy, for the sake of stability and long-term reform processes.

Bottomline, There are Two Options

The bottomline at this point is that we ultimately face two options. On the one hand, we stick with the status quo; keep GMA as President; and work for whatever reform we can get, and avoid any call for her resignation. That’s the administration line.

On the other hand, we join the call of several social forces (factions of the church, academe, progressive/ activist groups, civil society groups, etc.) to hold the administration, particularly GMA to account (with resignation or ouster as one of the accountability calls) and try to be vigilant about the changes that the call for resignation could bring about.

What are the possible outcomes of a call for resignation?

A military take-over is the worst possibility, which I agree we should definitely fight against. However I do not agree that the military take-over threat is only present in a people power scenario. On the contrary, if the present democratic system (which include people power uprising) would not correct itself or would not result in credible measures to correct itself, the argument that military rule is superior than civilian authority could be strengthened. The threat of a military take-over therefore will not be brought about by an EDSA uprising scenario, but by the continued and unabated corruption in the government where both the state mechanism for accountability and societal/ social accountability (which include EDSA uprising) fail to perform their check and balance functions.

The most likely possibility that could result in another people uprising is the conservative option of constitutional succession (I heard the United States has already talked to Noli). In this scenario, the uncertainty of winning reforms is just as much in a status quo scenario. Is this going back to zero? Most probably. But at least, it isn’t working again on a negative mark with the baggage of restrained moral conviction.

So we have two options which both require a risk. If you ask me, between the administration who obviously has been abusing and misusing its authority and the social forces calling for resignation, I will take side with the latter anytime.

A Moral Stand for People Power is a Political Stand

This is the reason I consider people power as a political call whether the grounds for calling such is moral, political, economic, social, cultural, or religious/ spiritual. A people power call has several implications, which make it a political course of action.

When you take a position on this issue given the current context, you are actually choosing a particular side; you are choosing one political dispensation over another. It will ultimately result in changes in the balance or imbalance of power. With the recent developments, the call of the time is to take side.

Is there a middle position/ call as of now? Maybe. But in the dynamics of the state and society and the inter-society interactions in this conjuncture, the middle position might not be as strong, hence could be co-opted by any of the prevailing dominant discourses or could be totally overshadowed, in which case the likely beneficiary is the status quo.

People Power is an Ultimate Societal Accountability Tool

One of the relatives of GMA said in the news, “we do not want chaos.” GMA said several times: “The world celebrated EDSA 1. It tolerated EDSA 2. It cannot forgive an EDSA 3.”

The elites of this country have the temerity to implicitly blame people power for their mess. The people on the other hand allow them to do so, playing within the frame of their silly argument.

The abuse and misuse of power, the pervasive exercise of illegitimate authority and the use of state power and resources for particularistic interest weaken democratic institutions. It is not the EDSA uprising. In fact, there have been EDSAs and the threat of another people uprising because of failing state democratic institutions. Society’s response in favor of people power, what other refers to as “an extra-judicial means”, is valid and logical given the extent of abuse and misuse of state authority which cannot be checked and corrected by the state accountability mechanisms that are weakened by the former’s use of constitutionally/ legally questionable tools (e.g. E.O. 464) and the obviously partisan and patronage-based appointments to accountability institutions.

Let it be made clear that an EDSA uprising is in fact within the legal framework or is perfectly in accordance to the constitutionally- defined nature of the Philippine state as a democratic and republican state. People power as they say is institutionalized in the Constitution. Let us not be deceived by what we see at the surface level. Just because an EDSA uprising prevents you to watch a movie in the Galleria or causes heavy traffic, you would consider it undemocratic, threatening to democratic institutions or not within the legal/ constitutional framework. Just because people who investigate in the Ombudsman wear a Barong or Americana and you can easily watch their investigation on TV in the comfort of your home or not be bothered by it at all, we would consider the process they undertake as democratic or that which will lead in the strengthening of democracy. Last time I check processes with the characteristics of the latter have very bad records in the country, especially if the discussions continue in golf courses and coffee shops, which what usually happens.

Modern democracies probably do not have EDSA uprisings, but modern democracies have functioning and credible democratic institutions, including political parties, which we ultimately do not have. Can the Philippine society wait while democratic institutions developed? With how the state mechanisms and processes are performing so far and with the kind of leaders we have compounded by significant sections of the society expressing in different ways their anger and impatience for what is happening, having faith in the state alone to strengthen its democratic institutions is unforgivable.

We cannot limit the ways society act on abuses and misuses of state authority, precisely for the reason that unlike the state where power is concentrated, the society’s strength and I dare say beauty is its limitless means and ends. “…At its utmost range, it [society/ community] is pedagogic rather than legal; it is a school rather than a state. It is a free partnership of minds, for the exploration of all the fields of the mind; and it always retains the note of freedom, initiative and experimentation.” As Michael Curtis very well said, society is the “ many splendored thing.”

But then we say, “Isn’t it dangerous not to limit what society can do according to what is allowed by the given legal-constitutiona l framework?” But then again, isn’t it also as equally dangerous to concentrate power (in a government) and not to have any other means outside the control of this concentrated power that can serve as a countervailing force? Besides, society checks and balances itself through the dynamics of the many actors and forces that interact and interface as they engage in public affairs. Society in a democratic country naturally produces pluralist discourses. It is unstructured, hence it is characterized by decentralized and dispersed exercise power or influence, where there is no group having the monopoly of coercion.

With Great Power Comes Great Demands for Accountability

In one very rare occasion, I agreed with GMA, “The presidency is as powerful as she wants it to be.”

What we have now is a very powerful Presidency. The President is the Commander-in- Chief, hence she controls the military and the police. The President appoints people in the bureaucracy down to the director level. The President through the DBM holds the power of the purse. The President through the NEDA decides on policies, investments and loans. The President vetoes bills passed by both chambers of Congress. The President passes Implementing Rules and Regulations, which sometimes go beyond what its corresponding Law dictates (the recently released IRR of NAPC as a case in point).

These are just some of the powers of the Presidency and with a Machiavellian disposition of the one occupying the post, the extent of the power of the presidency in the hands of GMA and her political strategists is unimaginable.

Let’s take a closer look at how extensive and creative the exercise of power of the current administration. They would threaten to file or actually file legal cases to local chief executives, to civil society leaders or to business establishments who would dare oppose them. They would abduct you and tell the public you in fact requested for security. They would do the most horrible things, say sorry and are able to sway public opinion that they are the victims in all of these using their children and relatives’ probably genuine emotions towards what is happening.

In a democratic country (supposedly like the Philippines) , the exercise of power must be coupled with accountability. Power and accountability in a democracy are like two sides of the same coin. Accountability mechanisms are in fact integrated within the institutional arrangement of the state. The separation of powers, laws on accountability, integrity and ethics and state accountability institutions such as the Ombudsman, Sandiganbayan, etc. are the state’s accountability mechanisms. In a democracy, you expect that abuse of power or illegitimate authority is avoided and if it is not, it will be punished.

Emerging now is societal or social accountability— accountability measures that are demand-driven and initiated by social forces. These ranges from protest actions to critical collaboration with the government, to partnership with business and the government in governance. It can be argued that the prevalence of societal accountability measures is an indication that state accountability mechanisms are failing or are limited. These mechanisms are unable to check the exercise of power; hence societal mechanisms come in. There will always be the tendency for society to complement what is lacking in the state.

Since democracy balances and checks power, a strong presidency will be balanced and checked by an ultimate accountability measure such as the President’s removal from office. If state processes such as impeachment fail, societal action such as calls for resignation through people power are likely to happen. In other words, the call for resignation from societal forces is inevitable in a democratic state where you have a very strong presidency and weak state accountability mechanisms.

The argument is rather simple. If GMA is as powerful as she wants herself to be, and this is true in paper and in practice, then if things under her command messes up despite having immense power, she should be made ultimately accountable, just as how she gets credit for everything good that happens in the country including the winning of Pacquiao.

But Who are the People in People Power?

Is the call for the resignation of GMA the call of “the people?” Since we conservatively interpret democracy as majority rules, we understand the people as the majority. Is majority of the people calling for GMA to resign?

If you consider the SWS and Pulse Asia surveys as societal mechanisms to know the sentiment of the people, then the consistently very low approval rating of the President (even lower than that of Marcos) fairly answers the question of what is the will of the majority on the call for her resignation.

The other approach to answer this question is by using the “corporatist” view of democracy or a permutation of it, which says that what counts in democratic processes are the actors, groups and institutions that have economic and political power. They say for an EDSA uprising to be successful in terms of effecting change in leadership, the “critical mass,” which will get the support of the military and will signal the sinking of the ship that will lead to the resignation of the cabinet members, is 300,000 key actors, groups and institutions: leaders of the Catholic Church and other religious groups, students, faculty and leaders of universities (especially the four major universities) , progressive political groups, mass movements, middle class/ civil society groups, opposition leaders (unfortunately) , media and unorganized professionals.

The more important argument (which I personally subscribe to) that will answer this issue or an alternative approach to answering this issue of whether people power embodies the will of the “people” lies again on the understanding that a call for resignation is a societal accountability mechanism.

Unlike state accountability mechanisms such as elections where there are structures and processes to systematically determine the will of the people, societal action, by its nature, does not have the structure and systems for general/ national collective decision-making. The sheer size of the population and the geographical factor would make this impossible without centralized power, which society do not and cannot have, unless it becomes a parallel state. It has, however, many and varied collectives/ groups making independent and varied discussions and deliberations on issues. This results in many and varied discourses, which produces many and varied arguments and “rationalities.”

Though not centrally-structured, we however cannot say that the calls or actions of the social forces are unacceptable inputs to political processes. If we say this then we ultimately question the right and capacity of the social forces such as the academe, civil society groups, mass movements, etc. (our right and capacity as an academic institution included) to engage government in the different policy processes. We basically question people’s participation. Does the majority of the Filipino support the social reform agenda that the social forces pushed for? Does the majority of the Filipino support the Indigenous Peoples Rights Act? Does majority of the Filipino agree that their children should be tapped to monitor textbook delivery?

Social forces will end up immobilized and disempowered if their calls and actions will be subject to the criteria of whether it is the will of the majority.

The power and authority of calls and actions of the social forces to influence the outcome of political processes come from the many and varied arguments or rationalities created by its dynamic discourses. These rationalities constantly interact and interface to create stronger and formidable rationalities until a dominant reason will emerge that will post a challenge in the prevailing rationality of the status quo. The more key players and actors within and outside the State are convinced with the dominant argument or rationality of the society, the more likely the course of action being proposed will prevail.

Fundamentally, democracy is founded on reason, as John Locke would argue. The society shares with the state that search for collective or general rationality. The state has institutional mechanisms such as elections, the courts and the executive and legislative policy-making to determine the collective/ legitimate reason. The society has the more fluid and unstructured means of discourses, dialogues and interactions.

So is people power, the power of the “people”? The answer is a resounding yes, especially if you and me will be in the streets, forums and the different venues now explaining and proving why a call for resignation should be the best course of action given the prevailing situation. It is ultimately up to each one of us to make this happen.

The first step is to recognize that our reasons and collective actions are formidable power to determine the outcome of political processes. The second step is to recognize the prevailing dominant arguments and ultimately take side. Only when we are empowered as a society to take a decisive collective action that we can start working towards real changes in the country’s politics and governance without the baggage of unaccounted abuse of power and authority, which can do this country no good in the short or long run. And as we go through this process of exacting ultimate accountability from the presidency yet again, let us learn from the lessons of the past. Our vigilance, discourses and collective actions as a society, ensuring accountability in the exercise of power and addressing fundamental institutional flaw such as a very strong presidency, should continue more vigorously when the inevitable happens—when the president steps down.

Class Struggle and the Radicalizing “Middle Class”

james.miraflor@gmail.com (James Miraflor) — Sat, 15 Mar 2008 10:55:00 +0000

Working class in a changing landscape [1]

By James Matthew Miraflor and Emmanuel M. Hizon

“When political analysts ask, ‘Where are the middle forces, they who triumphed at the two Edsas [people power uprisings]?’ I am tempted to answer: At Starbucks, drinking an iced venti latte."

-Raul Pangalangan, Starbucks and
the Class Struggle

Rationale

Now that another political uprising, on the tradition of EDSA, is slowly gaining ground, brought about by the aborted ZTE NBN deal implicating once more Mrs. Arroyo, the role of what had been dubbed as the “middle class” or the more politically correct term “middle force” in such an upheaval is again slowly entering social discourses. Regardless of how we define the nature and composition of such middle class, its potent capacity to introduce change is already assumed in many progressive and reform-oriented circles, so much so that formations such as the Black and White movement (B&W) explicitly labels itself as a group which has its purpose to organize the disgruntled members of the middle class in its effort to oust the “evil” Arroyo regime.

But how do we characterize the middle class and its members?

Usually, they are described as the relatively well-off, well-dressed, wielding relative economic independence and the highly educated segment of society – in short, what the masa is necessarily not. As such, as if a distinct social specie in itself, the middle class as a political force is often contrasted to the more traditional proletarian and peasant class, or, with the worsening of economic destitution and unemployment, the urban poor.

How the forces of the democratic left should treat the middle class had long been subject of theoretical and strategy discourses since the NDF boycott of the 1984 snap elections, which paved the way for the 1986 EDSA people power revolution. Is the move of the left to tap into the potent force of the middle class in recent Philippine political uprisings a return to the pre-Leninist strategy of a bourgeoisie-led democratic revolution? Or is this recent “epiphany of the middle class” (to borrow from Mon Casiple) merely an over determination in the Althusserian sense, with a relatively autonomous and pent-up middle class temporarily taking the revolutionary role of a mal-developed working class, with the working class remaining to be the vanguard force of change in the end?

This brings us to a more urgent question: What is our exact definition and understanding of this particular group?

Defining the “MF”

As members of the democratic left, we hold Marxism not only as tool for social change but also equally, as a tool for social and political analysis. Our Marxist definition of social class is not based on lifestyle, money earned or simple social psychology, but rather on the relation of a specific social class on the means of production of a certain social structure.

It is not true that the left movement out rightly dismisses this group nor is its discourse gravely or consciously avoiding any debate, discussion on the role of the specific social grouping.

In fact, leftists of all shades and students of Marxism vigorously debate the exact composition of the middle class under contemporary capitalism.

Some sections calling themselves as “council communists” say this group is in fact a social class composed of intellectuals, technocrats, bureaucrats, and managers with its own “seizure of power” agenda. Others describe it as a "harmonizing class", a class that is part of the “executive committee for the common affairs of the ruling class” composed of the petit bourgeoisie, professionals and managers. On the other hand, some say, this group refers to the comfortable section of the broad working class population often branded as the affluent white-collar workers.

However, simply put, based on our perspectives coming from the Marxist tradition, the bourgeoisie/capitalists are those who own the means of production, who control economic production and promote wage labor. On the other hand, the working class is the social class that do not own the means of production, and earn their living by offering their bodies, services for the capitalists to extract surplus value in exchange for inadequate wages. The middle class is defined by exception as an intermediate social class between the two, or what we usually call as the petty bourgeoisie.

The petty bourgeoisie is defined as small propertied groups of individuals, which, while contrasted with the proletarian class in as much as they do not entirely rely on the sale of their labor-power, are also differentiated from the bourgeoisie or the capitalist class who own the means of production and buy the labor-power of others to earn profit. Mostly, this includes corporate managers, small property owners and small-scale entrepreneurs, who, while having a degree of control on their income by the virtue of their role in the process of production, are still entirely vulnerable to the dictates of the capitalist controllers of the forces of production.

Therefore, being branded as a member of the middle class is a matter of relation of the individual to commodity, a matter of social relations and a matter of the person’s position in the overall mode of production. You do not classify a person as middle class, for example, just because she or he is usually seen in plush coffee shops, at the Embassy Club or because she or he speaks coňo English. You do not de-class yourself from your true class origins and interests by simply speaking good English, by sheer lifestyle or chić fashion sense.

But unfortunately, the brand “middle class” became a colloquial term which seems to encompass exactly such, the (eloquent, straight) English-speaking minority in contrast with the majority capable at most only of crooked English. In that case, the term middle class is used as a substitute for middle-income – a very wrong substitution indeed.

So how do we characterize the “real Filipino middle class”? The Philippine petit-bourgeoisie in the traditional sense is not even that developed. Mostly coming from the displaced old elite, the real middle class is but a small sub-section of the perceived to be the middle class.

Why didn’t our real middle class grow in the first place? The reason can be traced to the failure of our redistribution strategy. Our agrarian reform program, for example, which is supposed to break feudalism and promote a new and strong middle class through establishing “owner-cultivatorship of economic-sized farms” instead, converted the feudal elite into a nascent capitalist elite, with land and agricultural labor as their base.

So was EDSA I and EDSA II people power uprising really led by the middle class? In practice, neither EDSA I nor EDSA II are middle class events. They were both powered by the working class, only that factions of the ruling class was able to hijack both: on the first instance because the progressive forces by-and-large boycotted it, with the leadership being stolen by the liberal-democratic faction of the elite; on the second instance because the progressive forces are not strong enough to maintain leadership up to the end.

Can it then be perhaps, in our particular case, there is really no third way, no specific middle strata, only an illusory social stratification imposed to us to keep the working class divided, to de-class them and in the end muddle their true class interests? With the “real” middle class defined, where do we fit in this particular group of people who are not necessarily corporate managers, small property owners and small-scale entrepreneurs but are labeled as middle class or middle force?

If we follow this line of thought, what is therefore presented to us is a social grouping wrongly called “middle class” that can either be seen as lesser than the average capitalists or better off than the average worker.

In this case, we go with the latter proposition.

Worker of a New-Type

In actuality, the slow yet determined radicalization of the “middle class” we are witnessing in this particular juncture is in fact the radicalization and participation of an important section of the working class itself. As a consequence of the growing services sector and gradual de-industrialization of the Philippine economy, we are, in fact, witnessing the rise of a new working class whose social definition is not limited to the industrial-factory characterization we in the progressive movement often romanticize.

What we are witnessing is the growing political action of Makati employees, public servants, call center agents, doctors and university professors and teachers agitated by an equally agitated student body. These people are often described as middle class but are in fact so politically and economically ingrained with the system’s means of production. Their actions are in fact the actions of the working class.

However, unlike their industrial counterparts, on their own, they wield substantial, albeit latent, political power. There are many reasons for this, but revealing only two will suffice.

First, it is perceived that a large chunk of our country’s revenue comes from such “middle-income” (which is, by and large, above average) “middle class” members, and ever increasingly so. Just look at the taxes levied against professionals, or the high income taxes burdening the highly paid skilled workers. They have the “right of claim” of the government, since they are responsible for a large part of its financing.

Consequently, it is for this reason that they are mostly latent at best as a political force partly because their social mobility aspiration is in loggerhead with their patriotic and progressive values. They are the most reluctant to decide between change and the status quo because they perceived themselves losing their current social status, of being proletarianized in the eventuality of joining a political upheaval. Nonetheless, with proper persuasion, they can become a formidable force for progress, political modernity or of conservatism.

The second source of their political power is their high degree of credibility and objectivity, which stems mainly because of their long exposure in the universities, academic circles and different layers of the government.

In a stratified society such as ours, the ruling class, which in this case is the capitalist class, is the natural subject of criticism. Thus, the rhetoric coming from the ruling capitalist class is received with little appreciation from the working class whose traditional base are the industrial workers. Their class interests are necessarily in contradiction with each other.

Thus, more often than not, this specific layer of the working class often described as middle force serves as the objective fulcrum of change or conservation – the determinant of political direction – because their rhetoric are not perceived as necessarily representative of either the ruling or oppressed class. This is the reason why “middle class support” is highly coveted by both opposing camps, for different purposes. Either for the purpose of demobilizing their ranks, bending them to conservatism or radicalizing them.

Revolution of a New-Type

Truly, the middle force is proletariat. They may be wielding P180 worth of Starbucks coffee instead of the usual hammer which so symbolized the working class in all recorded history, but nonetheless, they are workers in their own right and are legitimate members of the proletarian movement.

With their entry also comes a plethora of new protest strategies they are introducing, owing much to their exposure to different and often non-traditional faces of production. In the time when the political struggle is more and more becoming a Gramscian battle for position, political blogging, cyber-activism, and other forms of anti-establishment communication which heavily utilize Third Wave technologies (Toffler) are gradually becoming indispensable as tools of mass propaganda to convince and organize.

These new forms of struggle must complement and even amplify existing efforts by the traditional industrial working class to undermine the capitalist state which foundations are anchored not only on political-economic apparatuses of repression but also on the ruling liberal-democratic consensus. The political struggle for democratic space must be complemented with a perception struggle for moral ascendancy, an arena where our “middle force proletariat” thrives.

At the end of the day, the struggle remains to be “proletariat” in its deepest sense – with the real forces behind of the societal system capturing control of the system itself. The traditional base of the working class that is the trade unions must welcome them not with doubt or hesitation but with pride and recognition. Ώ

[1] With apologies to Randy David’s article “Greed in a Changing Landscape."

Bring us back to the barracks - Soldiers

james.miraflor@gmail.com (James Miraflor) — Tue, 26 Feb 2008 11:28:00 +0000

From Danny Lim and company, as excerpted from http://www.sundalo.bravehost.com/Index.htm.

-----------------------------

GMA MUST GO!

Please bring us back to the barracks

We are soldiers. We are also citizens. We, together with our families, are so much a part of the community more than our beloved organization. We are not faceless automatons incapable of thinking, feeling and discernment. We feel the pain of our neighbors as much as their anger. We see their oppression and sense their hopelessness. Of course, their happiness is ours too. But they are not!

We, too, can distinguish good from evil, a truth from a lie, an honest one from a cheat and a thief. But it would be our most grievous sin if we tolerate and do nothing about it.

In the 2004 elections, a misguided and partisan few from among our ranks went out of our barracks not with a noble intent….but to commit a crime against the people. The rest of us stayed behind and watched as it happened. These criminals in uniform strayed away from barracks not to protect the people, but rather to subvert the will of the people. They are still out of barracks trying to cover up for the crimes they committed while suppressing the truth. Sadly, more are being lured out of barracks to partake of the loot.

EDSA 1 and today are no more different. In fact, today is worse than the conditions that prevailed before. There are more compelling reasons for the soldiers to go outside of its barracks. The mess that was created in 2004 either by direct participation and/or by silent complicity needs to be cleaned. It would be the height of insensitivity and callousness to let alone the people do the cleaning when we, ourselves, were so much a part of it. Going out of barracks to join the people in communal action to rid the ills that befell our nation is a Constitutional duty. In fact, it is demanded of us, as soldiers, by the very people whom we failed. Let us not, this time, fail them. Let our voices be heard from the barracks. Let our sense of community be felt from the barracks. And let our actions be seen in and out of the barracks.

After everything has been said and done…. We appeal to the Filipino people to bring us back to barracks and keep us there. Keep us forever in barracks by electing responsible public officials and holding them accountable, by being ever vigilant and by strengthening your sense of community. We, your soldiers, will then march back to barracks to settle to the task of keeping your worthy trust and respect. Let that be our covenant.

Keep the spirit burning and MABUHAY KAYONG LAHAT!

Maj. Gen. Renato Miranda and Brig. Gen. Danilo Lim, Marines and Scout Rangers
incarcerated for allegedly planning to withdraw support from Gloria Arroyo two years ago.
February 25, 2008

"Dissent without action is consent." - Gen. Danilo Lim

james.miraflor@gmail.com (James Miraflor) — Sat, 01 Dec 2007 05:59:00 +0000

Today, we address all and decent Filipinos, to announce that NOW is the time to end the sufferings and miseries inflicted upon us by the illegitimate Gloria Macapagal-Arroyo Government and start a new life and a new Philippines.

The die is cast.

Pursuant to our constitutional mandate as “protector of the people and the State,” and by this act, the patriotic officers and men of the Armed Forces of the Philippines and the Philippine National Police, supported by the masses of our people and the various political forces, give substance to the constitutional provision which says, “The Philippines is a democratic and republican state. Sovereignty resides in the people, and all government authority emanates from them.” Thus, we take the fateful step of removing Mrs. Gloria Macapagal-Arroyo from the Presidency and undertake the formation of a new government.

Mrs Arroyo had occupied the Presidency under a questionable mandate, publicly disputed by the vast majority of Filipinos. She stole the Presidency from President Joseph Ejercito Estrada through unconstitutional and deceitful means, and later, manipulated the results of the 2004 elections to perpetuate herself in power.

We have individually and collectively tried all means to resolve this legitimacy issue through the normal electoral, judicial and congressional processes. But Mrs Arroyo used naked power through the issuance of EO 464 and other executive proclamations, and the sheer weight of numbers to paralyze the impeachment process—procured at the people’s great expense – to frustrate us at every turn.

After all these had failed, our people tried to air their grievances in peaceful street assemblies. They thought they were exercising a combination of constitutional rights, which no official or agency of government may legally abridge. But they were stopped and dispersed violently with water cannons from firemen and truncheons from the police.

The abuses of her government continue. The deliberate refusal or failure of the dubious leaders to investigate and prosecute the people responsible for the scandalous “Hello Garci” electoral cheating, the Jocjoc Bolante multi million peso fertilizer scam, the IMPSA bribery scandal, the “Jose Pidal” and the jueteng scandals involving billions of public funds, the Northrail Project scandal, the Venable contract scandal, the NBN scandal, wholesale bribery of congressmen and governors in Malacanang, as well as the unabated and resolved extrajudicial killings of citizens, particularly journalists and members of the judiciary, and the use of military and police officers for some unlawful missions, among others, are clear proof her failure of good and decent governance. There are numerous illegal and immoral activities and transactions conducted by this government with impunity that betray the citizens and the State of their pristine right to exist as a people with decency, dignity and integrity.

With all the avenues closed by the use of naked force, no other means remain but for the officers and men of the Armed Forces of the Philippines and the Philippine National Police to exercise their constitutional mandate take the side of the sovereign Filipino people against the illegitimate ‘president’.

We beg your indulgence and apologize for any temporary disruptions attendant to fighting this righteous cause. We are confident that the will of the sovereign people will prevail. The end of the corrupt and vicious government and its bogus leaders is long overdue.

We support the political and economic reforms that will be initiated by the new government, regardless of the personal cost it may impose upon each one of us.

We, therefore, call on all our people and all the governments around the world to give the constitutional rescue initiated by our patriotic brothers in the Armed Forces of the Philippines and the Philippine National Police a chance to work.

To the task of organizing a new government, and pursuing a program of total and no-nonsense reform we commit our full support.

We shall do whatever we can do to prevent any backsliding to the corruption and abuse of power of the immediate past, and advance the cause of truth, freedom, justice, peace and progress for all Filipinos.

God bless the Filipino people, Mabuhay ang Pilipinas!

"Dissent without action is consent." - General Danilo Lim

Let a Hundred EDSAs Bloom

james.miraflor@gmail.com (James Miraflor) — Fri, 26 Oct 2007 09:11:00 +0000

By Emmanuel M. Hizon and James Matthew B. Miraflor

Illustration by Banksy

We are glad Mr. Joseph Estrada was pardoned. We are glad Erap entered into a compromise with Mrs. Arroyo, in effect absolving him of any wrongdoing he bestowed in a country so wronged and offended. Thank you for sparing us the effort to remind everyone that justice here in our society is a plaything of the rich and powerful, that the search for truth within the comforts of legalism, of our ‘beloved constitution’ and jurisprudence, is nothing but a blind alley.

We are also glad Mrs. Arroyo is capable of feelings, however twisted the brand of empathy and compassion she usually evokes whenever her throat and her ‘presidency’ is on the line. We are glad Mrs. Arroyo once again spat on the spirit and ethos of Edsa 2, reminding everybody especially the middle class that it takes more than a restrained remonstration to bring forward a better future free from elite exploitation and domination.

We are equally glad Erap puked on the masses who stormed the gates of Malacanang in Edsa 3, all for the comfort of his mansion in San Juan which none but the few like him enjoy. We are glad he swindled those who believed in him, those who sacrificed and died all in his name. We are glad the self-styled champion of the poor accepted a cowardly, pathetic and unsacrificing settlement with the same faction of the elite he regularly lambasted as the ‘real enemy.’ We are glad he finally went back to the fold of his true class roots. We are happy that with his newly found freedom he denied satisfaction to a people longing for truth, justice and accountability.

We are glad they did it. We are happy they finally shed any form of pretension and illusion. We are relieved they finally erased any memento that their was an indeed an “Erap-Gloria war”, that our society is stupidly divided between their interests, that our struggle is a fight between the camps of Estrada and Arroyo and that we are compelled to decide if we are for “Erap for the masses”, for “Gloria’s Economic paradise” or national suicide.

Now, it’s just between them and us, between the haves and have-nots, between the different factions of the elite pursuing the same elite interests and the poor who for the longest time have been sidelined, used and abused.

Now, let us march in the streets not in their name, not with their plundered resources, not with their prodding. Let us pour in the streets without them, without their plastic smiles, without their fake patriotism, without their unsolicited leadership, without their phony loyalty to the people—the same people they unhesitatingly rob and oppress whenever they are in power. We must hit the streets because we are sick and tired of them all. Let us tell them that we are tired of elitist reruns, of same conjured dreams, of the same trapo governance.

We must muster our strength because we believe that a better world is not only possible but is currently under construction. We should not limit ourselves in outlining an alternative society; we must begin building the edifice of a humane and egalitarian future now. For pete’s sake, let us spare the next generation of this system.

Instead of getting frustrated and disappointed, instead of running away to some first world country, instead of being paralyzed by apathy and indifference, let us have the resolve to have another Edsa. Let us reclaim it from the elite who bastardized it.

Let a hundred Edsas bloom. Edsa uprisings that are radical, mass-oriented and explicitly anti-elite rule.

When Absolute Conformity si Fun

james.miraflor@gmail.com (James Miraflor) — Sun, 05 Aug 2007 06:34:00 +0000

Forget about those "who follow a different drummer". This is the era of absolute conformity, and I never imagined absolute conformity could be this fun. Asians have much to say share to the west regarding unity of command, be it done in a capitalist, communist, or hooligan-ist way.

As a starter (and this is the most boring), see a Chinese Military Parade.

The Koreans have their own version, of, wow! A digital display? Check this out.

And our very own. A Filipino prison in Cebu dancing in the tune of Thriller. This ought to be presented in one of those global conference on correctional methods.