Politics for Breakfast

The State Aquino III left Duterte

noreply@blogger.com (James Matthew) — Mon, 25 Jul 2016 03:10:00 +0000

President Rodrigo Roa Duterte is coming in at the best and the worst of times. The administration of President Benigno Simeon Aquino III has left the Duterte a well-oiled and full-tanked government machine – but one besieged with sclerosis, incapable of solving the congestion problem, and has grown too big to feel its extremities - a "manhid" government as one would say.

The contradictions of Aquinomics has produced a government that already surpassed the size of Marcos’ in terms of consumption per capita[i] but is still afflicted with underspending[ii], not to mention a declining growth in tax effort[iii]. Aquinomics ushered the return of big government[iv] – but one that is so dependent on the private sector for service delivery and capital outlay[v] that when big investors played hard ball[vi], infrastructure development and maintenance suffered[vii], leading to congestion[viii] and public misery[ix].

Duterte's Straitjacket

This is the government Duterte is inheriting – one that is awash with cash but held hostage by the dictates of the global market and the whims of local capitalists. Half a decade ago, a popular leader – armed with political capital – might use this money to procure shares of industrial champions and ultimately steer the economy towards its national plan[x]. Today, haunted by Marcosian “crony capitalism”, such a move would be frowned upon by most technocrats, if not explicitly opposed by existing policies and legislation these technocrats championed.

Neoliberal “reforms”, such as the GOCC Act of 2011, largely limited next administrations’ power to create new parastatals, or procuring shares from existing ones. Assuming an administration gets controlling share of a national champion, its power to pace and discipline the market will be restricted by the Philippine Competition Act of 2015. Straitjacketed[xi] by credit rating agencies into maintaining stable “macroeconomic fundamentals”, the government will likely meet the ire of the investors should it stray the path of low deficit, “don’t touch the market” regime.

Structural Inertia

For the first six months to one year, we can expect that the Duterte administration will be moved by sheer inertia. The 2016 budget prepared by the Aquino administration is still in effect, while the 2017 budget has been already prepared by the Department of Budget and Management (DBM), with policy directions set by National Budget Memorandum no.126 (the Budget Priorities Framework). A huge bulk of Duterte’s investments program, at least before the 2019 mid-term elections, is already fixed by the PPP contracts set during the Aquino years.

In the medium term, Duterte is restricted by the bureaucracy he is inheriting. The rationalization plan of a number of major agencies secured the tenure of Undersecretaries, Assistant Secretaries, Directors, and other rank-and-file civil servants from Aquino. The International Financial Institutions (IFI) and the Chambers of Commerce continue to hold sway over the technocrats, and thus will have strong influence at least in the first two to three years. Duterte is only set to appoint three judges this 2016, so we can expect a more or less stable judicial-economic regime that will have say on pending PPP contracts.

End-year growth of the gross domestic product (GDP) is already half-determined by the time Duterte comes in – and will likely meet expectations due to high electoral spending. If nothing drastic happens by the first six months, then we can expect cheers from both the domestic and international markets, cheers that will likely be taken by Duterte’s cabinet as cue on which policy directions to continue from the Aquino administration.

Click here to view full image.

Momentum of the Elite

But a closer look at growth figures reveals that it is highly correlated to the average revenues of the country’s seven largest conglomerates – Aboitiz Group, Alliance Global Group, Ayala Corp., DMCI Holdings, JG Summit Holdings, San Miguel Corp. and SM Investments[xiv]. One can see one index as indicative of the other – a change in the pace or direction of one may possibly predict the other.

While we are perpetually warned that correlation does not equal causation[xv], we know from former NEDA Chief Cielito Habito that the country’s top 40 families capture around 75% of GDP growth. This can only point to the fact that our economic growth – the magic number we are all looking at to judge whether an administration is performing well – is, at least in the first few years of Duterte, a function of the conglomerates, their current profitability, and their business and expansion plans.

Neoliberal by Default?

One more thing about inertia: a Philippine leader can be anti-neoliberal, yet the government will still be. In this case, one can say that Duterte is neoliberal by default – unless he keeps his promise of leading a revolutionary government – one that can summarily reversed all the privatization, liberalization, deregulation, commodification, and contractualization initiatives implemented by the past five administrations combined.

Running the Philippine state apparatus within its parameters and as it is currently defined by thousands of laws, policy pronouncements, executive orders, development plans – most developed via the financing of the purveyor of neoliberal thinking – constraints Duterte to be a neoliberal, even if his rhetoric isn’t.

Room for Transformation

In any case, the government Aquino left is a much more effective tool for transformative politics than what Arroyo left Aquino, what Arroyo inherited from Estrada, or even what Ramos left Estrada. Arroyo left Aquino with a bureaucracy that is ridden with corruption and strangled by micromanagement – a by-product of an unpopular administration which has to rely on patronage to counter destabilization threats. Ousted Estrada gave Arroyo a gangster government [xii] that is ill-equipped to face the real-economy effects of the 1997 Asian Financial Crisis and El Niño. Neoliberal pioneer Ramos, anxious to reduce government accountability after the bungling Cory years, gave Estrada a dismantled state stripped of its defenses against exogenous shocks and robbed of its instruments to steer the economy into modernity.

In contrast, Aquino’s relative popularity allowed him to pursue good governance goals which redounded to increased credit and capital market confidence and eventually, to an unparalleled fiscal space. Meticulous preparations for Private Public Partnerships (PPP) starved the Aquino administration of big-ticket, popularity-raising infrastructure projects, but these preparations gave Duterte anomaly-free projects that will be implemented smoothly in his first and second years.

Moreover, while Aquino helped calcify neoliberal hegemony inside his government, he started projects that can trigger a drift towards a more progressive economic agenda. For instance, a unit in the Department of Trade and Industry (DTI) under Undersecretary Adrian Cristobal and Assistant Secretary Rafaelita Aldaba started the creation of an industrial roadmap [xiii] – a big turn-around from “no industrial intervention” mantra of trade liberalization hawks. The expanded Conditional Cash Transfer (CCT) program can be modified into a Basic Minimum Income (BMI) for the marginal poor and pave the way towards a modern welfare state. Major experiments in participatory democracy (Kalahi-CIDDS, Bottom Up Budgeting) can serve as a vehicle towards deepening citizens participation in government.

Akbayan's partnership with Aquino III produced a government, which, while neoliberal, has had pratice implementing elements of transformative reform. Duterte's partnership with the National Democratic Front (NDF) will hopefully channel his populist tendencies into maximizing and expanding these elements towards a deeper progressive agenda - one that ends the neoliberal state and replaces it with a developmental one.

"Murmurings of the People"

In his inaugural address, President Duterte emphasized to need to listen to the "murmurings of the people". This is a good start towards ending the state of insensitivity in the government. One concrete way this can be implemented would be to transform DSWD's Family Development Sessions (FDS) of 4Ps from a one-way street to a feedback session. The Duterte administration, via the progressive leadership of incoming Sec. Judy Taguiwalo, can use the FDS to get people's opinion on burning national issues, as well as on their local needs.

Bottom-Up Budgeting (BuB) should be institutionalized and expanded, and not rolled-back. BuB is a step towards meaningful devolution - a step towards ensuring that federalism that the next PDP-Laban leadership will build will not be feudal. BuB is our indigenous experiment on participatory budgeting. In fact, its practices should be used in the programming of IRA, and eventually, the GAB. We can understand where DBM Sec. Ben Diokno is coming from, for there had been instances of undue politicization of the funds. The best way this would never happen again is via legal institutionalization - like IRA was institutionalized by the LGU code.

DBM Sec. Diokno should reconsider his opinion.

Fulfilling the Promise of National Industrialization

Finally, Duterte and the NDF has emphasized the need for "national industrialization". There is no better time to start than now, especially with our fiscal space and good macroeconomic fundamentals. it is a good thing that Duterte is not starting from scratch - he will be inheriting the Comprehensive National Industrial Strategy (CNIS) developed by Aquino's DTI under USec. Cristobal and ASec. Aldaba. DTI's approach was to identify the already existing sectors, then craft separate plans to develop each. The CNIS then attempts to merge these separate industry plans.

The problem with this however, was too dependent on the inputs of the private sector, the bickering between competitors delayed the project so much. Case in point was the automotive industry strategy, which has an arena between local manufacturers and importers.

The thing is, unlike in social development interventions, you cannot be bottom-up for industrial development strategies. Some plans have to be developed top-down, especially when you are dealing with the anarchy of the market. The proper method would be to fix a development strategy first, then commandeer the rest of the sectors towards the fulfillment of that strategy - either via force, incentive, or simply buying them out.

We can understand where the technocrats are coming from: the rise of crony capitalism under Marcos' 11 Major Industrial Projects (MIP) during the late 70s. Some economists, sympathetic they may be to state intervention, no longer trusts the state's corporate government sector to properly control the market.

The new industrial plan should thus also invest on a professional corporate government sector. Good thing we already passed GOCC Governance Act of 2011 - but it has to be amended, since with its current form, it actually makes our parastatals ineffective instruments for industrialization. There is also a need to study the implications of PH Competitive Act, which, while a good way to regulate Philippine oligopolies, may also constrain efforts by the corporate government sector to dominate and pace markets.-30-

The author, James Matthew Miraflor, is a graduate student currently finishing his MA Economics from the UP School of Economics and MS Computer Science from the UP College of Engineering.

[i] Government expenditures per capita hovers around P6,400.00 per capita in 2000 prices from 1975 to 1982, the highest since 1967. This record will only be broken by Aquino III in 2012, when it posted government consumption per capita at P6,964.77. The figure even increased to P7,198.56 by 2014.

[ii] Data from the Department of Budget and Management (DBM) point to P103.70 billion of its budget unspent for 2013. By 2014, we saw this figure triple to a whopping P302.68 billion.

[iii] The National Budget Memorandum no. 126, or the Budget Priorities Framework for the 2017 budget, admits a slowdown in revenue generation – from 12.9% annual growth in 2012 to only 10.5% in 2015. The NBM says that “existing revenue measures only provide the country with a narrow revenue base that is not enough to support the country’s growing development.” But the Department of Finance (DoF) under Aquino III is not actually that outstanding with respect to revenue effort. While improving, DoF’s 15.1% revenue effort in 2014 still fell short of Arroyo’s peak at 16.49%. In fact, there is a current trend of deceleration (the increases, starting from 2010-2011 up to 2013-2014, are: 0.59%, 0.53%, 0.33%, and 0.23%). Despite aggressive tax policies of the Bureau of Internal Revenue (BIR), tax revenues fell short of target in 2014 (short by 159.78 billion) and 2013 (72.2 billion). This is despite the imposition of revised sin taxes, which contribution turned out to be measly 0.4% of GDP.

[iv] Looking at historical values of the share of government expenditures with total expenditures in the economy, we come at an interesting observation: Aquino III’s ratio of 10.84% in 2013 and 2014 already surpassed 10.36% in 1976 – the height of Marcos’s Martial Law rule.

[v] We know that the primary mode of service delivery by the Philippine government is through procurement of services of the private sector. So government consumption directly leads to private sector activity. But there is a more interesting phenomenon – that even for financing, the state has come to rely on the market. In the recent years, the Philippine government has moved away from direct infrastructure expenditure financed by Official Development Assistance (ODA) to Build Operate Transfer (BOT) to Public-Private Partnerships (PPP). Why the government is not inclined to directly spend on infrastructure is explained well by UPSE Prof. Raul Fabella and Prof. Emmanuel De Dios: “Congress seems incapable of approving infrastructure budgets of any sizeable amount and with any gestation periods longer than the period between two elections. The most that lawmakers seem capable of mustering are local projects of limited significance (local roads, local school buildings, etc.), designed primarily for maximum electoral impact on the ‘folks back home’. We like to call this the ‘divide-by-N imperative’. As a result, most projects of a sizeable character or of national significance have always relied on either of two modes: (a) foreign financing such as for the North Rail Project and MRT Line 2 (Santolan-Dasmariñas); (b) various build-operate- and-transfer schemes, such as the NAIA Terminal 3 and the North Luzon Expressway improvement… In both cases, since no budgetary allocation is required, the executive branch is able to give fuller scope to its vision, thus evading the parochialism of congressional priorities – but also eluding congressional scrutiny, except for the odd ex post congressional investigation or so.” (from Lacking a backbone: Thecontroversy over the “National Broadband Network” and Cyber-education projects).

[vi] This is true in the case of 1) creation of new infrastructure and 2) improvement of existing ones. For 1), only 5 Public-Private Partnership (PPP) are targeted for completion by mid-2016 – the largest of which is DepEd’s P16.43 billion Phase 1 PPP school construction which included Megawide Construction Corporation in the list of its partners, even as Megawide is embroiled in a conflict-of-interest complaint against Filinvest for the Mactan airport PPP. Another 5 PPPs had been awarded (the largest of which is the P64.9 billion LRT1 Cavite expansion), but none has seen completion. For 2), we know that when the Department of Transportation and Communication (DOTC) attempted early 2014 to acquire 48 light rail vehicles (LRVs), the MRTC and MRTH petitioned and won a “temporary order of protection” against DOTC at the Makati City Regional Trial Court Branch 66. The RTC ruled that under the BLT contract, MRTC will only lose its preferential right to supply LRV if a) MRTC is in breach of its obligation under the BLT; or b) MRTC consents to DOTC’s use of LRVs not provided by MRTC.

[vii] MRTH’s refusal to allow DOTC’s purchase of LRVs led to persisting congestion and eventual decay of the railways. The lackadaisical PPP program was believed to have contributed to an infrastructure underspending, which eventually took a toll in the form of slowing GDP growth.

[viii] Former NEDA Secretary Arsenio Balisacan himself revealed in 2012 that 2.4 billion pesos ($51 million) a day, or 3 billion pesos ($64 billion) a year (0.8% of GDP), is lost due to the traffic in Metro Manila and surrounding areas.

[ix] At the peak of MRT congestion problems in 2015, the MRT3 and LRTA Operations Director Renato San Jose hilself admitted during a Senate hearing that MRT commuters endure 30 to 45 minutes of queuing from the ground level up to the boarding platform. MRT3 authorities also reported an increase of average service interruptions per month from 1.83/month in 2008 to 2.42/month in 2011 to 4 a month during the first 7 months of 2014. This was when even the DOTC Secretary himself reveals that the MRT carries 600,000 passengers a day, beyond its design capacity of 350,000 and “crush capacity” of 500,000.

[x] This is true in the case of Lee Kwan Yew’s Temasek – a Sovereign Wealth Fund (SWF) that has been used by the Singaporean government as an instrument of its industrial policy.

[xi] Thomas Friedman coined the term the “golden straitjacket” to pertain to the phenomenon where countries have to sacrifice its economic sovereignty to global institutions and the global capital market in order to achieve prosperity. Friedman said that the straitjacket ‘shrinks’ politics while growing the economy. Directly quoting him: “Governments – be they led by Democrats or Republicans, Conservatives or Laborites, Gaullists or Socialists, Christian Democrats or Social Democrats – which deviate too far from the core rules will see their investors stampede away, interest rates rise and market valuations fall. The only way to get more room to manoeuvre in the Golden Straitjacket is by growing it, and the only way to grow it is by keeping it on tight. That’s its one virtue: the tighter you wear it, the more gold it produces and the more padding you can then put into it for your society.” Of course, this prescription had disastrous results in the case of the global financial crisis in 2009 and the Asian financial crisis in 1997.

[xii] Ironically, the deals surrounding the controversial NationalBroadband Network (NBN) deal in 2007, as revealed by a series of Senate hearings, seems to exemplify all the elements of a “gangster government” – illicit deals, threats to competitor and demands for them to “back off”, technocrats forced to “moderate the greed”, Beijing connection, bribes involving sexual services, among many other things.

[xiii] DTI-BOI has since called the initiative the “Comprehensive National Industrial Strategy (CNIS)”. More information can be found here: http://industry.gov.ph/comprehensive-national-industrial-strategy/.

[xiv] The study was conducted by Christopher Mills, as mentioned in an article by Richard Mills (Asia CEO Chairperson) in a Business Mirror article “ThePhilippine economy may have overshot its largest companies” last May 13, 2016. Christopher Mills computed the correlation at 0.95 (1.0 points to perfect correlation). Mills, however, reported an increasing divergence in the past few years – with the pace of economic growth outpacing conglomerate revenues. He concluded that economic growth is largely supported by electoral spending, and we can expect it to show decreasing trends in the next few months, since it is expected to follow closely the decreasing trends in conglomerate revenues.

[xv] We can see at least three possible scenarios: 1) GDP growth in general helps these conglomerates grow (in terms of affecting product or service demand), 2) growth of these conglomerates dictate the pace of the GDP (since these conglomerates are responsible for the huge bulk of production and consumption in the country), 3) a third factor – it can be institutional, exogenous, technological, etc. – is affecting the growth of both.

#TheCabinetIWant

noreply@blogger.com (James Matthew) — Thu, 21 Apr 2016 02:25:00 +0000

Since Presidential candidates are beginning to reveal their preferences for some Cabinet members, citizens might as well reveal their own wish lists. Here is my list (in no particular order):

ES/PMS/OCS: Gov. Joey Salceda [why]

DILG: Former Sen. Richard "Dick" Gordon [why]

DND: Clarita Carlos [why]

DBM: Former Rep. Edcel Lagman [why]

DoF: BSP Gov. Amado Tetangco [why]

DFA: Former DND Sec. Gilbert Teodoro [why]

DSWD: Rep. Leni Robredo [why]

DPWH: Sec. Rogelio Singson [why]

NEDA: Manuel F. Montes [why]

DTI: Manuel V. Pangilinan [why]

DOLE: Former Rep. Walden Bello [why]
DOT (Transportation): USec. Teodoro Encarnacion [why]
DICT: Diosdado Banatao [why]

DoE: Rowaldo Del Mundo [why]

DA: Former Sec. Cielito Habito [why]
DAR: Rep. Neri Colmenares [why]

DENR: Antonio Oposa, Jr. [why]
DOH: Former USec. Madeleine Valera [why]

PCOO: Glenda Gloria [why]

PCDSPO: USec. Manuel "Manolo" Quezon III [why]

Deputy Presidential Spokesperson: Karen Jimeno [why]

DoJ: Solicitor-General Florin Hilbay [why]

DOST: Alfredo Mahar Lagmay [why]

DepEd: Randy David [why]

CHED: Former UPSE Dean Emmanuel De Dios [why]

DoT (Tourism): Yolanda Ong [why]

I have also in mind other individuals for major government posts which are not necessarily Cabinet rank, but deeply impacts the delivery of government services.

HUDCC: Felino A. Palafox, Jr. [why]

BSP: BSP Dep. Gov. Diwa Guinigundo [why]

NAPC: Former NAPC VC Ana Maria Nemenzo [why]
PhilHealth: UPSE Dean Orville Solon [why]

MMDA: Benjamin Dela Peña [why]

SSS: HDMF President and CEO Darlene Berberabe [why]

Note that I have not consulted these people when I made this list, though I sure hope they would agree to accept the Cabinet post if they are offered. I also have many people in mind as Undersecretaries or Deputy Director Generals or Vice Presidents, etc. of these institutions. Unfortunately, one blog post won't be enough.

Profiles:

Joey Salceda
Executive Secretary
Presidential Management Staff
Office of the Cabinet Secretary

Duterte offered Joey Salceda the post of NEDA Chief should he win, but it would be a disservice to the Filipino people if the vast array of competencies the Governor has - from economic, technical, political, local, etc. - will only be deployed in one specific aspect of government. Gov. Salceda can deliver more for the people as concurrent Executive Secretary, Chief of the Presidential Management Staff (the clearing house for all policy decisions of the President), and the Cabinet Secretary. These three positions are better lodged under one office, the OES, with undersecretaries manning the two major functions (PMS, OCS) and assistant secretaries manning the sub-functions.

Prior to his stint as Government of Albay, he was a three-term Representative, serving as Chair of the Committee on Trade and Industry and Vice Chair of the Committees on Ways and Means and Economic Affairs. In 2007, he became President Arroyo' Presidential Chief of Staff, and was often name-dropped as a member of President Arroyo's unofficial braintrust. Before he became a politician, the management engineering graduate from Ateneo was Research Director of UBS Warburg - a division of Swiss Bank Corporation, and was voted as one of the top five analysts in a 1996 survey of Philippine fund managers. [go back to top]

Richard "Dick" Gordon (running for Senator)
Department of Interior and Local Government (DILG)

The former Senator, former Tourism Secretary, and current Chair of the Philippine Red Cross is now a household name, and likely to win a Senate seat this 2016 elections. One must ask, however, if it would be better for the Philippines if he is appointed instead as the next Interior Secretary, given that no other person seems better qualified for the task. In fact, before the names of Robredo, Binay, and Duterte became associated with LGU reform - there was already a Gordon. So why not Gordon as DILG chief?

The history of his local and national success is already well-documented. He was well known to have transformed Olongapo City in early 1980s from a "sin city" to a "model city" (a highly urbanized city by 1983) by modernizing the town's police systems and implementing highly effective urban development strategies - focusing on sanitation and waste management, traffic regulations, I.D. systems, among other reforms. To counteract the economic repercussions of the removal of U.S. bases, he pushed for implementation of the free port concept and the conversion of U.S. bases into development zones. He subsequently took over the Subic Bay Metropolitan Authority which administered the Subic Bay Freeport Zone - which, by 1996, had grown into an investment hub thanks to the 1996 APEC summit, with bluechip companies like FedEx Express, Enron, Coastal Petroleum now El Paso Corporation, Taiwan computer giant Acer and France telecoms company Thomson SA investing in the freeport zone.

Gordon utilized his competencies as a former brand manager of Procter and Gamble Philippines in the Department of Tourism, eventually leading to the success of the Wow Philippines branding by early 2000s and demonstrating his competency in handling a Cabinet portfolio. [go back to top]

Clarita Carlos
Department of National Defense (DND)

Given the emerging complexities of our defense modernization objectives, we need someone who not only understands the technical components of running the Philippine military, but also gets the political context through which it operates. We need a political-military expert for the job, and the right person for the job is Prof. Clarita Carlos, President of the National Defense College of the Philippines (NDCP) from 1998 to October 2001, the first lady civilian to head the college. Surely, another first for Carlos - as first woman Defense Secretary who is not a sitting President of the Republic - will no longer be surprising.

Carlos is President of the Center for Asia Pacific Studies Inc. and a full-time professor at UP Diliman. She has lectured at the National Defense University in the United States, and also at the Council of Asian Liberals and Democrats (CALD). She worked as a consultant for the Philippine Senate from 1988 to 1998, and a consultant of the Local Government Development Foundation since 1993. She received Bachelor of Science in Foreign Service and Master’s and Doctorate degrees in Political Science at UP Diliman. She later pursued post-doctoral degrees in Political psychology and Comparative Foreign Policy Analysis at Cornell University and University of California at Los Angeles respectively. [go back to top]

Edcel Lagman (running for Representative of 1st District of Albay)
Department of Budget and Management

Government budgeting is as much a political task as it is technical. Technical reforms via IT-supported budgeting and performance-based monitoring can be undertaken by DBM Undersecretaries, but for DBM Chief, we need someone with political gravitas and vast experience in dealing with the House Appropriations and Senate Finance Committees. This is especially true at the wake of judicial de-legitimization of executive fiscal powers, including but not limited to PDAF, DAP, and limitations on impoundment and savings. The next executive can face an intransigent Congress which can now compete with Malacañang over budget priorities.

So who else should we put in DBM but a former House Appropriations Chief and former DBM Undersecretary like Edcel Lagman? A five-term Congressman, he has served as Minority Floor Leader and Chair of the Appropriations Committee. He is known to have championed progressive legislation, such as the Reproductive Health Bill. A superb human rights lawyer, Lagman has served as legal officer for the Office of the President and chief legal counsel for the Philippine Senate.

Under the tumultuous reign of Arroyo, he has managed to sway Congress to enact progressive reforms in the Philippine budget. His political and technical acumen is sorely needed in an emerging era of Executive-Legislative fiscal confrontation. [go back to top]

Amado Tetangco, Jr. (to retire as BSP Governor)
Department of Finance (DoF)

Binay recently announced that he is considering inviting current BSP Governor Amado Tetangco, Jr. to his cabinet. If I have it my way, I will make sure that Tetangco lands becomes our next Finance Secretary. Named as the Central Banker of the Year in 2013 by The Banker, and one of the world's six best central bankers for 2012, 2011, 2007, and 2006 by Global Finance magazine, Tetangco is set to retire from BSP as the only Governor to serve two terms. It would be such a waste of talent if we just allowed him to go gently into the good night.

Tetangco as DoF chief is not really unexpected. In most countries, the Central Bank and the Finance Ministry often work hand in hand, even with the presumed independence of the former, often to set interest rates that support the triple purpose of inflation, exchange rate stability, and economic growth. In the Philippines, DoF and BSP work together with NEDA, DBM and OP to set budget levels (see DBCC). Tetangco as DoF chief will bring in the perspective of a Central Banker in ensuring that the country's revenue-generation policy is not only enough to finance the fiscal needs set by DBM, but also does not siphon too much resources the private sector can use for production and employment-generation. [go back to top]

Gilbert Teodoro
Department of Foreign Affairs (DFA)

Former Department of National Defense (DND) Secretary and three-term Congressman Gilbert Teodoro, Jr. was seen as a brilliant debater and competent decision maker in the 2010 national elections, but was unfortunately handicapped by his association with unpopular President Arroyo. His chance for redemption would be as the country's chief diplomat.

Articulate, intelligent, and charismatic, Teodoro will become the champion of an assertive foreign policy with a national defense perspective - something we need right now as we strategically navigate our way between expansionism of China on the one hand and the machinations of the United States on the other. Teodoro will be a symbol of independent but pragmatic brand of Philippine diplomacy in a period of several security threats - from terrorism, climate change, trade and currency conflict, to changing epidemiologic landscapes.

Only those as versatile as Teodoro can deliver the diverse tasks required of a 21st century diplomat. A bar topnotcher, Teodoro obtained his Master of Laws degree from Harvard Law School and was admitted to the State Bar of New York. He assumed the position of Assistant Majority Leader in the 11th Congress and was appointed as a contingent contingent to the Legislative-Executive Development Advisory Council. [go back to top]

Leni Robredo (running for Vice President)
Department of Social Welfare and Development (DSWD)

Liberal Party Vice Presidential Candidate Rep. Leni Robredo recently revealed that she prefers, if given a cabinet post, to be in charge with streamlining government services against poverty. The agency that comes to mind would be the National Anti-Poverty Commission (NAPC), which would have been perfect given her long history of working with the basic sectors, currently unified under the commission. At its current legal status, however, we have seen how a competent NAPC Secretary like Joel Rocamora can be clipped by bureaucratic forces that favor large agencies such as DILG and DSWD.

DSWD, in any case, is the Vice Chair of the Government Sector of NAPC. DSWD also handles the National Household Targeting System - the primary database for targeting customized interventions for poor households. DSWD also manages the plethora of anti-poverty instruments by the government, including the popular Pantawid Pamilyang Pilipino Program (4Ps), the Sustainable Livelihood Program (SLP), and the community-driven development (CDD) initiatives KALAHI-CIDSS.

Robredo as concurrent Vice President and DSWD Chair is the best thing we'll have for mobilizing all of government's social welfare and human development programs for uplifting those in the margins and finally eradicating poverty in the Philippines. Robredo is poised to be one of the most competent and popular social welfare secretaries in Philippine history. [go back to top]

Rogelio Singson
Department of Public Works and Highways (DPWH)

There is no doubt that Sec. Rogelio Singson steered DPWH well. Not only is he credited with having improved the image of the most consistently voted most corrupt agency (reminiscent of how former Sen. Raul Roco did the same for DECS), he also made sure that the infrastructure agency is a buoyant ship of efficient expenditure in a sea of underspending agencies. Under his leadership, DPWH gained ISO 9001:2008 Certificate for Quality Management System. We still need Singson's steady hand in continuing the various infrastructure projects still in pipeline, especially the Public Private Partnerships (PPP) started during Aquino's term.

An industrial engineer, Singson served in various senior positions in the private sector and the government such as Senior Vice President for Business Development, Citadel Holdings, Inc. from July 2002 to May 2007, Chairman and President of Bases Conversion and Development Authority (BCDA) from July 1998-February 2002; and concurrent Chairman of the Board of John Hay Poro Point Development Corporation, BCDA Management Holdings Inc., and North Luzon Railways Corporation (NLRC) from July 1998 to February 2002. He was also a past president and Chief Executive Officer of Maynilad. [go back to top]

Manuel F. Montes
National Economic and Development Authority (NEDA)

Manuel F. Montes is a home-coming economist - a product of UP School of Economics and Stanford University. Montes is currently Senior Advisor on Finance and Development at the South Centre in Geneva, but he was, just a few years ago, the Chief of Development Strategies, United Nations Department of Economic and Social Affairs (UNDESA) where he led the team that produced the 2011 World Economic and Social Survey (WESS).

In the 2011 WESS, Montes' team outlined a Green National Innovation Strategy (G-NIS) - a new industrialization strategy for developing nations at a time of climate change and peak oil. One can only imagine what he can do in designing the Philippine Development Plan for 2016-2022. He might just be the one to continue Balisacan and Esguerra's work in pulling the country to upper middle income country by 2020.

His past appointments include: Chief of Policy Analysis and Development in the UN’s Financing for Development Office, where he also served as Secretary of the UN Committee of Experts on International Cooperation in Tax Matters; UNDP Regional Programme Coordinator, Asia Pacific Trade and Investment Initiative based at the Regional Centre in Colombo, Sri Lanka, among many others. That was excluding his teaching stints in various universities around the globe. [go back to top]

Manuel V. Pangilinan
Department of Trade and Industry (DTI)

All modern industrialized countries were built in the backs of strong, professional, and expansionist trade ministries. Japan, Malaysia (see MIDA and MITI), South Korea, and Singapore (see MTI and Temasek) have all been reliant on their respective trade and industry departments to navigate the complexities of the global market while building their nation's own strategic competitive advantages.

Unfortunately, our current DTI has been transformed into a low-key cabinet post which can only deliver small projects like One Town One Product or NICCEP. Even the SLP is managed by the DSWD and not by DTI. The current trade department is merely a shadow of its former self. Marcos' Ministry of Trade and Industry which can marshal as high as 10% of GDP for industrial development (see page 117 of this document), including the so-called 11 Major Industrial Projects (MIP) guided by Minister Roberto Ongpin.

We need to be ambitious, and therefore we need someone audacious, competent, and successful enough like tycoon Manuel V. Pangilinan at the helm of DTI. As he had done as corporate "Pac-Man" - slowly expanding his empire by eating defunct utilities and pulling them into corporate modernity - he can do as trade and industry chief. He is simply the best man for the job of expanding our parastatals and pushing us towards an expansionary industrial policy. Instead of managing and expanding value only for his shareholders, MVP can now do the same for the rest of the Filipino people. He will become a modernizing, corruption-free Ongpin that we need right now.

Who will replace MVP? If Sec. Mar Roxas won't make it to the Presidency, then the Filipino people will be better served by placing him somewhere where his business acumen can serve greater means - in reorienting privatized utilities controlled by MVP including PLDT, Manila Water, Meralco, Smart, NLEX-SLEX connector, MRT (via proxy in MRTH) towards more socially-oriented goals. We already have to accept that these are essential services, and running them is essentially public service. So short of nationalizing or cooperativizing these utilities (something we should already be planning anyway), someone like Mar Roxas should take over MVP's empire. I'm just hoping that Araneta's assets are enough to convince the boards of companies to let Mar take on MVP's mantle. [go back to top]

Walden Bello (running for Senator)
Department of Labor and Employment (DOLE)

Former Akbayan Rep. Walden Bello, a recognized global expert on development policy and globalization studies and a product of Ateneo and Princeton, is best appointed as the country's job-generation czar. His sociological approach in deconstructing economic phenomena is perfect fit for such a complex task as providing employment for millions of unemployed Filipinos while increasing wages to combat underemployment, all while reversing contractualization.

Bello has spent a long career battling trade agreements and trade institutions like the World Trade Organization (TWO) that threatened employment and working class interests not just in the Philippines but around the world. His progressive praxis throughout the years has already endeared him to the country's working class. His achievements in the House of Representatives includes protecting OFWs, providing them credit assistance, exposing the sex-for-flight scheme by nefarious elements within POEA, and investigating weak links in DOLE's regulatory mechanism in light of the Kentex disaster.

Right now, he is endorsed by NAGKAISA - the largest agglomeration of labor centers in the country including TUCP, Sentro-APL, PM, BMP, MAKABAYAN, PS-LINK, among others - as independent Senatorial candidate. [go back to top]

Teodoro Encarnacion (former DPWH USec.)
Department of Transportation (DOT)

Note: Assuming that the DICT bill (HB 6198) will be signed by the President in June, then we will end up with a Department of Information and Communication Technology (DICT) and a separate Department of Transportation (DOT).

The task of fixing the country's transportation system requires someone with long experience and proven competence. None can question the reputation and contributions made by former Department of Public Works and Highways (DPWH) USec. Teodoro Encarnacion, Civil Engineering Board topnotcher and a product of UP College of Engineering and School of Urban and Regional Planning. Encarnacion has spent more than 40 years of his life in Department of Public Works, Transportation and Communications (DPWTC, eventually as assistant secretary) and DPWH.

His task is primarily to jump-start all pending big-ticket infrastructure projects, as well as negotiate the consolidation of FMRs and other minor roads into a consolidated multi-nodal transportation network. Encarnacion can be aided by several undersecretaries who we can pull away from the privat sector, like transportation expert Rene Santiago . These undersecretaries can also serve as good candidates to replace Encarnacion once the primary mission of putting the house in order is finished. [go back to top]

Diosdado P. Banatao
Department of Information and Communication Technology (DICT)

Note: Assuming that the DICT bill (HB 6198) will be signed by the President in June, then we will end up with a Department of Information and Communication Technology (DICT) and a separate Department of Transportation (DOT).

Who else should lead the cutting-edge Department other than Diosdado Banatao, the so-called "father of the semiconductor", a pioneer in the field of micro-electronics, and an immensely successful Silicon Valley serial technopreneur? Banatao co-founded Mostron, Chips and Technologies, and S3 Graphics. In 2010, Banatao became Ikanos Communications' CEO. He is a start-up veteran - the perfect leader for a start-up Department. He is founder and currently managing Tallwood Venture Capital, which invests in the further development of the semiconductor industry.

Some may say that we need a regulator more than an innovator for DICT, given the oligopolistic behavior of our local telecoms industry. I disagree. What we need is someone who can be in charge of building big-ticket, innovative, government-led ICT projects like a national broadband network, so it can actively set the pace for the private sector. Regulatory concerns are best handled by the Philippine Competition Commission, now headed by Arsenio Balisacan. [go back to top]

Rowaldo Del Mundo
Department of Energy (DoE)

What DoE needs is not a politician, but an engineer. One that understands the complexities of conventional power systems, and is also aware of the global transition to renewable energy technologies. The best energy secretary for now would be one who intimately understands the flaws and limitations of the current Electric Power Industry Reform Act (EPIRA), and can also serve as the country's chief lobbyist to reform the failed law which created the power sector oligopoly that we have right now.

Only Engineer Rowaldo Del Mundo is fit for this task. A power systems expert and currently Associate Professor of Power Systems Simulation Laboratory, UP Electrical & Electronics Engineering Institute, Del Mundo was recently appointed by the Supreme Court as amicus curiae for his expertise in energy and power systems engineering to provide independent and technical assistance to the Court. Del Mundo was also known to have authored the Philippine Grid Code and the Philippine Distribution Code, which were both promulgated by the Energy Regulatory Commission as part of the technical implementing rules and regulations for EPIRA. Del Mundo worked with small power industry players and electric cooperatives on demand aggregation and helped civil society organizations such as the Freedom From Debt Coalition (FDC) in building critiques and alternatives against EPIRA and WESM. [go back to top]

Cielito Habito
Department of Agriculture (DA)

Agriculture is the most important cornerstone of Philippine development. Agriculture only contributes 12% of GDP, yet employs 47% of our people, while being the most investment-starved among the economic sectors. This means that developing Philippine agriculture is not just the key for ensuring food security and triggering manufacturing growth, but also the best strategy for eliminating poverty in the country. We thus need a no-nonsense DA Secretary that will use a scientific-based approach in addressing the ills of agricultural production. We need a DA Secretary can repair the damage wrought by the last one, who ruled incompetently via corruption-tainted patronage and ad hoc approaches.

We specifically need a former NEDA Director-General for the job, Cielito Flores Habito. Habito is not just an excellent economic planner under Ramos (the youngest member of his Cabinet), he is also one of the country's experts in agricultural economics. He is a product of UP Los Baños, Summa cum Laude in agricultural economics, eventually earning his masters and Ph.D. in University of England and Harvard University respectively. In 1991, Habito was one of the Ten Outstanding Young Men Awardees for Economics. [go back to top]

Neri Colmenares (running for Senator)
Department of Agrarian Reform (DAR)

Rep. Neri Colmenares is already a known champion of the peasant movement in the Philippines. The three-term Congressman has long been an advocate of House Bill 252 or Genuine Agrarian Reform Bill (GARB) - a far stronger bill than the current CARPER law. Colmenares is a co-author of a bill seeking to abolish irrigation service fees. He was backed by a major farmer's group in the country - the Kilusang Magbubukid ng Pilipinas (KMP). He also supported several peasant-led struggles, including the one in Hacienda Luisita and in Kidapawan, North Cotabato.

It is time to put into the helm of DAR someone who is politically biased towards true land reform - one who cannot be bought and manipulated by landlords actively trying to sabotage government's redistribution program. It would also put the radical movement behind Colmenares in a political position to push for and support the concrete distribution of land, to prove once and for all that their struggle is not just for political propaganda.

Colmenares' legal skills (Colmenares was Associate of the Asian Law Centre at Melbourne Law School and also lectured at the University of Melbourne on International Human Rights Law and the Rome Statute of the International Criminal Court) can be used to navigate the complexities of our agrarian reform laws to the advantage of the impoverished farmer. [go back to top]

Antonio A. Oposa, Jr.
Department of Environment and Natural Resources (DENR)

The 2009 Ramon Magsaysay Awardee and pioneer of environmental law practice in the country - Atty. Antonio "Tony" Oposa, Jr. - is the DENR Secretary that we need right now. The stringent application of progressive environmental policies, and continuous lobbying against regressive ones, requires someone who has deep understanding of the plethora of legal tools the executive can use. Miners, polluters, illegal loggers, etc. are all out there to subvert our policies and destroy our environment. Oposa can stop them - for this generation and the next ones.

Oposa's name made headlines in 1993 when he in a landmark case, Oposa v. Factoran, the Supreme Court ruled that a group of minors has the right to sue on behalf of succeeding generations in light of environmental abuse - ruling that has since been known as "Oposa Doctrine". He also campaigned against over-fishing and dynamite fishing in the Visayan see, launching the Visayan Sea Squadron in 2004 together with the Integrated Bar of the Philippines-Network Environmental Action Team, the Network of Legal Experts of the Law of Nature Foundation and many others. He also helped organize a legal strike force, composed of the National Bureau of Investigation (NBI), DoJ, and DENR against illegal logging. In cooperation of Philippine Judicial Academy, he designed a curriculum for training judges, prosecutors, and law enforcement agents on handling illegal logging violations. [go back to top]

Madeleine De Rosas-Valera
Department of Health (DoH)

For the Department of Health (DoH), we need an expert-insider - someone who has spent a long time navigating the country's health bureaucracy and have successfully seen through and implemented reforms. Most of the issues the DoH is facing now are technical and operational, not political. For instance, the 4Ps and PhilHealth reforms have generated huge demand for health services, but it seems that we are facing supply-side problems in Health Facilities Enhancement Program (HFEP). PhilHealth has slowly been increasing coverage, but are besieged by competing interests - financial and sectoral - at the country's social health insurance body, the PhilHealth. DoH's bold decision to spend P3.5 billion for dengue vaccines and conduct nation-wide vaccination in major public schools will require intensive monitoring and documentation amid continuing clinical trials - something that political appointees might not be able to able to handle.

For this reason, the next administration might consider promoting one of DoH's own as Secretary. Dr. Madeleine de Rosas-Valera, MD, MScIH, was DoH Undersecretary handling the Cluster on Health Policy, Financing, Research, International Health and National Center for Pharmaceutical Management. She was also the Chairperson for the Formulary Executive Committee and Co-Chair for the DOH Research Hub. She was also Vice President for Finance of PhilHealth, and was also in charge of developing various heath care benefits for TB, Maternity Care, and Non-communicable diseases. Our huge task for monitoring our ambitious dengue vaccination plan is also something that Dr. Valera can expertly handle, having been Patient Safety Technical Officer for WHO Western Pacific Regional Office and an advocate for rational drug use and cost-effectiveness analysis of drugs. [go back to top]

Glenda Gloria

Presidential Communications Operations Office (PCOO)

A veteran of Martial Law-era journalism, Glenda Gloria is currently the Managing Editor of innovative online news network Rappler.com - a powerful new medium that managed to blend social media and traditional news reporting. Gloria's journalistic work and managing experience in mainstream media - from the Philippine Daily Inquirer, The Manila Times, the Philippine Center for Investigative Journalism, Newsbreak, which she co-founded before Estrada was ousted, the ANC, the ABS-CBN News Channel (as Chief Operating Officer), is testament to her deep knowledge of Philippine media and how it works, making her the perfect candidate for managing the government's communication operations.

Gloria earned her journalism degree in 1985 at the University of Santo Tomas. She pursued her Masters in political sociology from the London School of Economics and Political Science (1999) as British Chevening scholar. In 2014, she was named one of 8 UK Education Ambassadors by the British Embassy, chosen for their excellence in their chosen fields of endeavor. She won the National Book Award with the book "Under the Crescent Moon: Rebellion in Mindanao", co-written with Marites Dañguilan-Vitug. [go back to top]

Manuel "Manolo" Quezon III
Presidential Communications Development and Strategic Planning Office (PCDSPO)

The grandson of President Manuel L. Quezon, also known as "The Explainer", is the keeper of the country's institutional memory. As head of the PCDSPO, Manolo Quezon tapped into the modern age of social networks and connected it to the rich history of the Philippine Republic. More than that, the administration's communication strategy which the PCDSPO helped design (including but not limited to the President himself speaking in colloquial Filipino) ensured the continuing popularity of President Aquino - the highest in post-EDSA history.

Clearly, we still need "The Explainer". We still need him to guide the continuing image-creation for the Office of the President, independent from and developing separately from the persona of the incumbent. Quezon's contribution is crucial. He should be allowed to do his good work. Better yet, we should ensure career continuity for office holders of the PCDSPO.

Manolo Quezon, who studied political science at the University of the Philippines, started out as a columnist for the Philippine Daily Inquirer and the host and writer of The Explainer on the cable ABS-CBN News Channel. He joined the government in 2003 as Presidential Assistant for Historical Affairs in 2003, but left to become Ayala Museum's history curator from March 2004 to March 2005. He will go back to join the son of an EDSA hero, first as a spokesman for the committee in charge of the Inauguration of President Benigno S. Aquino III, and then as Undersecretary of the PCDSPO. [go back to top]

Karen Jimeno

Deputy Presidential Spokesperson

Note: I have not included a Press Secretary / Presidential Spokesperson because that is supposed to follow the image and branding of the next President. For instance, if Roxas wins, then Rep. Barry Gutierrez can be a good candidate. If Duterte wins, then Sen. Alan Peter Cayetano would make a great spokesman. For Binay, either Gov. Jonvic Remulla or Atty. Rico Quicho will do. For Poe, we have former Rep. Ace Durano.

The media savvy Atty. Karen Olivia V. Jimeno was first known for her staunch legal and media defense of an embattled chief magistrate accused of failing to disclose his statement of assets, liabilities, and network (SALN). Even as her client took the ax, her talent didn't go unnoticed, as she was eventually appointed by Sec. Panfilo Lacson as communications director of the Office of the Presidential Adviser for Rehabilitation and Recovery (OPARR) under the Office of the President.

Jimeno is a product of UP College of Law, where she graduated cum laude in 2005 and was awarded the Dean’s Medal for Academic Excellence. She then took her Master of Laws from Harvard Law School in 2011. She was an editor at the Harvard International Law Journal. She also worked at Quisumbing and Torres, the same law firm where current Presidential Spokesperson Edwin Lacierda started out. [go back to top]

Florin Hilbay (currently Solicitor-General)
Department of Justice (DoJ)

Solicitor-General Florin Hilbay, the 1999 Bar topnotcher, is a walking Constitution and a gifted litigation lawyer. Hilbay led the government's defense of the Reproductive Health law, and took the cudgels for the administration even for unpopular measures such as the Disbursement Acceleration Program (DAP) and the Enhanced Defense Cooperation Agreement (EDCA).

Hilbay stint at the Office of the Solicitor General (OSG) actually started more than a decade ago, as associate solicitor in 2002. Hilbay, however, is also known as an excellent academic and advocate, serving as Director of the Institute of Government and Law Reform of the UP Law Center; as COMELEC consultant, and as vice-chair of Bantay Katarungan (Sentinels of Justice), a civic organization formed by former Sen. Jovito Salonga to promote the rule of law.

After topping the Philippine bar, Hilbay went to Boston College as Fullbright Visiting Scholar in 2001, and eventually obtained his Masters of Law degree from Yale Law School in 2005. He held fellowships at the Max Planck Institute for Comparative Public Law & International Law in Heidelberg, Germany, and the Asian Law Institute for Comparative Public Law in the National University of Singapore. [go back to top]

Alfredo Mahar Lagmay
Department of Science and Technology (DOST)

Superb scientist, project manager, and science communicator - these are just few words to describe Dr. Alfredo Mahar Lagmay, executive director of the immensely successful Project NOAH, or the Nationwide Operational Assessment of Hazards. Launched by the DOST in 2012, NOAH has since been a continuing symbol of science's triumph over un-readiness in the face of disasters. DOST needs whatever Lagmay has offered to Project NOAH - a relentless drive to deploy the fruits of technology in a way that is readily accessible to the general public.

Dr. Lagmay, also a professor at the National Institute of Geological Sciences (NIGS) at UP Diliman, was awarded the Outstanding Filipino for Geology and Earth Science in 2013, as "WikiPinoy of the Year" by WikiPilipinas in 2014 for “empowering the public with open information and insight into the significant issues affecting the country today.” A year later, Lagmay was awarded the Plinius Medal by the European Geosciences Union on 15 April 2015, in Vienna, Austria for his "outstanding interdisciplinary natural-hazard research and natural-disaster engagement in the Philippines, particularly with respect to volcanic hazards, earthquakes, typhoons, landslides and floods." - the first Asian to receive the award.

His radio talk show "RED Alert on DZMM" was recognized in the 9th Hildegarde Awards of St. Scholastica College in 2015,[10] the Communication Management Award of Merit for the Multi-Audience Communication category by the Philippine Quill Awards for 2014 and the 2014 Catholic Mass Media Award (CMMA) for best educational radio program. [go back to top]

Randy David
Department of Education (DepEd)

Media personality, sociologist, educator, public intellectual, and purveyor of political modernity, Randy David has already made his mark and legacy in Philippine society. Perhaps few would demand more from him; his ideas already shaping the way we do our politics as a nation. But I would go so far as to ask him to become the country's next Education Secretary, in order to face the emergent issues in Philippine education - exposure of the youth to social media-driven historical revisionism, DepEd's lack of institutional capacity to absorb more funds, increasing demand for quality education after K-12 implementation, contentions on medium of instruction, among many other things. The complexity of these problems require someone with a mind as complex and sharp as Prof. David. Technical details of implementing programs can be handled by DepEd secretaries. For the person at the top though, we need someone with a clear grasp of a modern philosophy of education.

Prof. David obtained his sociology degree from the University of the Philippines, and subsequently pursued doctoral studies at the University of Manchester. Like many intellectuals of his time, he decided to discontinue and remain in the country to fight Marcos' martial rule. Two decades after the EDSA revolution that toppled Marcos, David finds himself arrested while protesting corruption under President Arroyo. He wrote “Reflections on Sociology and Philippine Society” in 2001 and “Nation, Self, and Citizenship: An Invitation to Philippine Sociology” in 2002; both won the National Book Award. [go back to top]

Emmanuel De Dios
Commission on Higher Education (CHED)

For handling CHED, perhaps none is more qualified than Dr. Emmanuel S. de Dios, former Dean of the UP School of Economics, former head of the subcommittee for economics of the technical panel on humanities, social sciences and communications of CHED, former director of European Studies Programme (Eurosup), UP Centre for Integrative and Development Studies (UP-CIDS), former Assistant Secretary under the Office of Executive Secretary, and member of the drafting committee of the 2010-2016 Philippine Development Plan (see page 13).

De Dios is also the current President of the Human Development Network, member of CHED's Task Force on Graduate Education Review, and fellow of Philippine Center for Policy Studies (PCPS). In 2007 and 2011, he won the National Academy of Science and Technology (NAST)'s Outstanding Book Award for his work on the Philippine Human Development Report. An exceptional educator, he won the UP Chancellor's Award for Outstanding Teacher in 2007.

His wide and multidisciplinary erudition will ensure that higher education curricula in the Philippines reflects well the diversity of our needs to fulfill our human development goals. His economics background is crucial in establishing academe-industry linkages - aligning the quality and volume of college graduates to the needs of enterprises. [go back to top]

Yolanda Ong
Department of Tourism (DoT)

Tourism is a battle of global brands. President Aquino already recognized this when he appointed a marketing guru - - as Tourism Secretary. It is time to continue this tradition by appointing someone who can match if not exceed the achievements of "It's More Fun in the Philippines". This is why we need advertising veteran Yolanda Ong to take charge of the DoT and propel the country as top destination for new and unexplored demographics.

Ma. Yolanda V. Ong is co-founder and current chief of Campaigns and Grey, as well as six other affiliate companies. A UP graduate with a degree in AB Journalism, she later pursued her degree in Masters in Public Administration (major in Leadership) from the Kennedy School of Government, Harvard University. She is an award-studded marketer and PR expert, and has gained reputation as a master in image building and media campaigning. She recently battled with former Senate President Juan Ponce Enrile on a P31.5 million libel suit, effectively turning the tables against the recently jailed Senator by filing a counterclaim and asking Enrile to pay her P88 million in damages instead. [go back to top]

Felino A. Palafox, Jr.
Housing and Urban Development Coordinating Council (HUDCC)

There is no better person for the job of ensuring a strategic urban development for Philippine megacities other than Architect Felino Palafox, himself. Founder of Palafox Associates, Palafox was also the first architect-urban planner president of the Management Association of the Philippines (MAP) in 2011 and president of the Philippine Institute of Environmental Planners (PIEP) for 2013 and 2014. He is also a Fellow of the United Architects of the Philippines (UAP). Palafox is the only Southeast Asian to make it to the list of the top 200 architectural firms compiled by the London-based Architecture magazine.

Palafox's Manila Megalopolis 2020 vision he put forward as Harvard term paper back in 2003 is proof that his visionary leadership is what we need in ensuring that Mega Manila and other emerging urban agglomerations like Metro Cebu and Metro Davao are ready for the challenges of the 21st century - booming population requiring new settlement sites, emergence of formal and informal transport nodes, unregulated expansion and establishment of Central Business Districts (CBDs), among others. Palafox's experience in disaster-proof architecture and engineering is what we need in preparing climate change-ready urban masterplans. [go back to top]

Diwa Guinigundo (currently BSP Deputy Governor)
Bangko Sentral ng Pilipinas (BSP)

Diwa C. Guinigundo is currently Deputy Governor for the Monetary Stability Sector of the BSP, an institution he served for almost four decades. Guinigundo, like Tetangco, has also earned a reputation in international leadership in the central banking community. For instance, Guinigundo co-chared the ASEAN Senior Level Committee on Financial Integration in 2010-2013. He also chaired the Executive Meeting of East Asia and the Pacific (EMEAP) Monetary and Financial Stability Committee of EMEAP central bank tasked to conduct regional and global surveillance, from 2009 to 2012. Guinigundo is the best candidate to continue the successful monetary policy pursued by BSP - monetary policy that has earned international accolades and high business approval.

Guinigundo topped his class to earn AB Economics at the University of the Philippines (UP) School of Economics. He was subsequently sent b y the Central Ban as scholar to the London School of Economics, where he earned his M.Sc. degree in Economics. [go back to top]

Ana Maria Nemenzo (former NAPC Vice-Chairperson for the Basic Sectors)
National Anti-Poverty Commission (NAPC)

NAPC, despite its limitations as an institution, plays an important role in bridging the basic sectors and the government in ensuring that anti-poverty strategies, programs, projects, and policies are aligned with the interests and analysis of the grassroots. Under the competent leadership of Sec. Joel Rocamora, we saw NAPC's role expanding beyond its traditional borders, and eventually producing innovations like Bottom Up Budgeting (BuB). In the future, we would like to see a more empowered NAPC by transferring to it some of the functions of other agencies, in particular, the National Household Targeting Office (NHTO) currently under DSWD and the NEDA Social Development Cluster, and by appointing it as member to the Development Budget Coordinating Committee (DBCC).

NAPC's role is best delivered for the next administration by ensuring that Rocamora's replacement will also be someone from the progressive movement - Ana Maria R. Nemenzo, who was also NAPC's first Vice-Chairperson for the Basic Sector when the office was created in 1999. Currently, she is part of a group trailblazing the movement for Transformative Social Protection (TSP) through movement DIGNIDAD - promoting a radical reconceptualization of social welfare system. A civil society veteran, Nemenzo will bring a fresh radical look at anti-poverty programs that already has mass base and political support from the grassroots.

Nemenzo is a pioneer advocate of Reproductive Health (RH) and women's rights, and is one of the pillars of civil society movement in the Philippines. After working with NAPC, she led several mass movement organizations, becoming President of the Freedom from Debt Coalition (FDC), International Convenor of the NGO Forum on ADB, founder and National Coordinator of WomanHealth Philippines (in this capacity, she was also part of the Health Partners Group of the Department of Health and in the Coordinating Committee of the Global Call to Action Against Poverty [GCAP]- Philippines), and member of the Philippine Rural Reconstruction Movement (PRRM) Board of Trustees. [go back to top]

Orville Solon
Philippine Health Insurance Corporation

The Philippine Health Insurance Corporation (PHIC, or PhilHealth) has recently made strides in increasing both coverage and improving benefit delivery. 14.7 million of the poorest Filipinos were enrolled via the indigent program. We saw the expansion of the hemodialysis and peritoneal-dialysis packages and the enhancement of the outpatient HIV/AIDS treatment package, among many other things. Persistent problems continue to hound PhilHealth, however, as reports of irregularities in bonuses and reimbursement continue to bleed the country's social health security arm. We need someone who can address the financial problems of PhilHealth while mobilizing its scarce resources to fulfill the dream of Kalusugang Pangkalahatan. The best person would be someone who understands both healthcare and economics.

Dr. Orville Jose C. Solon, the current Dean of the UP School of Economics and Chair of the UPEcon Foundation, is the optimal choice for a data-driven, evidence-based approach in health insurance policy. The country's foremost expert in health economics, he was Chief of Party of the Health Policy Development Program, a USAID-supported program that helps the Department of Health develop a sustainable and effective policy and financing environment for family Health. Solon was a consultant to the SoH on F1 (FOURmula One for Health).

Solon also acted as team leader of DoH-World Bank National Sector Support for the Health Reform Project Preparation phase, and for the Mid-Project Evaluation of the Management Sciences for Health/Local Enhancement and Development for Health Project. He is co-principal investigator for a USNIH-supported evaluation study of Philippine health sector reforms and a consultant the Vietnam National Health Support Project. [go back to top]

Benjamin Dela Peña
Metro Manila Development Authority (MMDA)

For handling the country's largest metropolis - the center of Philippine economic, political, and cultural life - we need someone with a clear grasp of cutting-edge technologies and practices in urban development and management. Global cities expert Benjamin de la Peña is such a guy. Reading through his work as a regular columnist for Interaksyon (chech this, this, this, and this out), I am convinced that he is what we need to finally make sense of Metro Manila.

De la Peña is currently Director of Community and National Strategy of the Knight Foundation, having previously served as Associate Director for urban development at the Rockefeller Foundation. At the Rockefeller Foundation, de la Peña initiated and managed more than $35 million in grants over five years, including grants in Africa, Asia, South America and the United States to implement programs on urbanization, the emerging science of cities, role of informality, the bus rapid transit, and transportation policy. He also conceived the Informal City Dialogues and helped initiate the highly innovative Open Cities Conference, CityCamp and TransportationCamp, bridging new media, urban policy, and technology.

A UP communications graduate, dela Peña pursued a masters degree from the Harvard University School of Design. He was associate director for implementation at the Smart Growth Leadership Institute, a consultant on geographic information systems, a youth development and leadership programs manager for Ayala Corporation, and a community relations manager for the Manila Water Company. [go back to top]

Darlene Marie B. Berberabe
Social Security System (SSS)

SSS needs to be in safe hands, and we can't think of a person better for the handling the institution than Atty. Darlene Marie B. Berberabe,currently the Chief Executive Officer (CEO) and President of the Home Development Mutual Fund. Also known as Pag-IBIG, the country's national savings and shelter financing program is now worth P350 billion in assets, servicing 13.8 million members. Her competence in handling this gigantic amount is precisely what we need for addressing increasing concerns on fund sustainability, as well as demands for benefits and premium increases.

As Pag-IBIG CEO, she received several awards, including Asia CEO of the Year Award for Public Sector Leadership (2013), The Outstanding Women in the Nation’s Service (TOWNS) Award for Government Service (2013), Outstanding CEO of the Year in the Asia and the Pacific given by the Association of Development Financing Institutions in Asia and the Pacific (ADFIAP) (2012), and the Communication Excellence in Organizations (CEO) Excel Awardee given by International Association of Business Communicators (IABC) Philippines (2012). She was also nominated and voted 3rd for Pipol of the Year in 2012 (Sec. Jesse Robredo came in first and Pres. Noynoy Aquino was second).

Despite her association with Vice President Jejomar Binay (Binay offered her the DepEd post and to be his running mate) who was implicated in several corruption cases, Berberabe remains to be a face of integrity, someone who says no to lobbyists and tainted dealings, and someone who can survive an intense Senate Blue Ribbon investigation. [go back to top]

#NoyBi Failed Us, Blame the King Makers

noreply@blogger.com (James Matthew) — Mon, 03 Aug 2015 14:22:00 +0000

Vice President Jejomar Binay's True State of the Nation Address (TSONA) earlier marks a new low for the #NoyBi tandem that has dominated Philippine politics for the last five years. Much of what Binay has said is true: the woes of the MRT, the failure of crisis management in Zamboanga, the lethal ineptitude in the face of Yolanda, the breakdown of protocol in Mamasapano, the amateur handling of Luneta hostage crisis, and the return of fiscal dictatorship and discretionary spending via Disbursement Acceleration Program (DAP). And the truth - especially from a friend turned foe - will hurt.

But whatever little moral high ground Binay has is effectively obliterated by a single fact: he is part of the administration for the past five years, and he said nothing. His tarnished reputation is another thing, of course (Friendship Suites Hotel, Makati Homeville, Hacienda Binay, overpriced Makati City Hall parking building among other infra, the AMLC report; for others, check out former Sec. Rafael Alunan's long list). That he has the gall to speak against abuse of power when he won't even face his accusers in the Senate only demonstrates his cynical appreciation of corruption allegations as mere political spectacle, something one would throw when convenient, and something one should ignore as much as he can whenever possible.

Binay's Makati = PNoy's Philippines

In any case, Binay's statement lacks element of surprise. We already know the sorry state of our dear nation. It is true that the Philippines under President Benigno Aquino III remains to spectacularly fail in attracting foreign investments compared to our ASEAN neighbors, but we know that much of the lack of trust is due to a failure of good governance, of which Binay is a living and breathing symbol. We know the raging inequality amid Aquino III's "inclusive growth" - inequality and poverty showcased by the booming financial City of Makati which the Binay dynasty had led the entirety of post-EDSA period. We are all aware of the growing number of poor households coinciding with the highest average economic growth in the last 40 years, just as Binay's assets suspiciously grew from P2.5 million to P60 million (stored in more than 200 bank accounts) as he kicked away the poor from Makati City during his stint as Mayor.

From an article daring Binay to show the real Makati.

For truth is, Makati City is under Binay is the ultimate microcosm of the Philippines under Aquino III - services-driven with little to show for regular and consistent employment, scandalous inequality both in geography and in income, growth driven by financial and property speculation of nascent transnational oligarchs, led by political dynasty in a systematically patrimonial fashion via a discretionary fiscal system which maintains a stable amount of desperate poor as voter base, among many other things.

#NoyBi Failed Us, Blame the King Makers

Conclusion: #NoyBi has failed the Filipino people. The love child of "daang matuwid ni Noy" and "kay Binay, gaganda ang buhay" is a nation with a struggling 97% ruled by more or less 300 families. Aquino has nothing to show but an exclusive growth managed by an ineffectual bureaucracy. Binay has 242 bank accounts. Whoever concocted the #NoyBi campaign has done the nation wrong, and should be shamed.

We have particularly in mind the sly Sen. Fransisco "Chiz" Escudero, who is now positioning himself as the running mate of hyper-popular Sen. Grace Poe. His tactic then: neutralize Mar Roxas' momentum in 2010 so as to make possible a bid for the Presidency or Vice Presidency in 2016 (as his own campaign fizzled due to arrogance), is as clear as his tactic now: prop Grace Poe to make an attempt for the Vice Presidency in 2016 possible, with a possible consolation price of Executive Secretary perhaps under the Poe administration. Positioning himself as a "king-maker", he gave us a bad administration in the last half a decade. Will he give us a bad one for the next? No thanks Chiz.

We also have to blame self-styled strategist and Council of Philippine Affairs secretary-general Pastor "Boy" Saycon who has made a career in propping up and destabilizing all sitting administrations since Ramos - not for any lasting reform but for fleeting political advantage (and likely, financial gains). And of course there is Peping Cojuangco, who later turned his back on his nephew for failing to protect his particularistic haciendero interests.

P.S. Reject King Makers, Has beens

In a truly functioning democracy, the electorate's voice is genuinely sovereign and dominating. Unfortunately, "king makers" - un-electable has beens or party rejects, lobby for power by manipulating people's perception of who is winnable or not, thereby undermining informed and educated choice of the Philippine electorate.

True reformers should stay away from them. Nothing sucks a transformational agenda more than a political leech who is only there for personal gain.

As for the electorate, we should always be wary of candidates who allow themselves to be campaigned by and surrounded by these people.-30-

Aquino’s Legacy: Exclusive Growth, Ineffectual Bureaucracy

noreply@blogger.com (James Matthew) — Sun, 26 Jul 2015 13:05:00 +0000

An Assessment of the Aquino III government (2010-2016)

James Matthew Miraflor

Vice President, Freedom from Debt Coalition

The verdict is in.

If there is one catch-phrase that can summarize the legacy of President Benigno Simeon Aquino III in his half-a-decade rule, it is this: “exclusive growth via an ineffectual bureaucracy”. A growth dictated by the moods of global market amid worsening poverty and stagnating inequality levels, and the failure of the bureaucracy to even spend the money it was able to collect to arrest poverty – these cap the legacy of who was once touted as a savior of Philippine democracy and commonweal from the dark years of President Gloria Macapagal-Arroyo.

Did Aquino III measure up?

We argue that this is not just an accident of history that Aquino III failed to fulfill his mantra of “kung walang korap, walang mahirap”. Granting that we have made strides in the fight against corruption – a statement that is made with some reservation given the proliferation of patrimonialism in Congress and the national government agencies – it would have been simply illogical to assume that those strides alone will translate to better welfare for the rest of the Filipino people. Rather, we insist that the failures of Aquino III are deeply rooted to its philosophy of government – the vision it constructed when it translated its “social contract” into the 2010-2016 Philippine Development Plan (PDP).

Progressive groups such as the Freedom from Debt Coalition (FDC) already criticized the 2010-2016 PDP from its inception, saying that it is weak on asset reform and fails to construct the economic underpinnings of a true “straight path” and “inclusive growth”. NEDA, under the neoliberal Director-General Cayetano Paderanga, basically ripped-off the agenda of Arangkada Philippines, a document prepared by the Joint Foreign Chambers of the Philippines (see letter from JFC to Paderanga here). This meant that the resulting PDP basically champions the interest of big capital over the interest of the Filipino masses. That the Aquino administration would end its term with increasing number of poor citizens in a growing economy demonstrates the bias it has set for itself when it began.

Consider the National Economic and Development Authority (NEDA). We know that NEDA recently fell flat on its face after its much touted economic miracle of 7.8% growth – exceeding that of China in the 1^st quarter of 2013 – has been reduced to uninspiring 5.2% growth last quarter, dragged by lackluster government consumption, infrastructure underspending, and declining export earnings. It seems that our model of “development” cannot withstand the changing mood of the global markets, much less deliver a robust domestic market that can grow at a consistent pace – a key feature of the South East Asian miracle economies we are trying to emulate. So much for “rebalancing”.

Growth slows down. From here.

But even if we grant that it was NEDA who has been able to set a regime of stable growth as Aquino spokespersons imply, for the majority of the Filipino people, there is not much to celebrate. Poverty incidence rose to 25.8% in 2014 from 24.6% in 2013[1]. This quashes any dream that the Aquino administration will still be able to reach its target of 18%[2]. That poverty increases in a period of consistent growth should not surprise us – the Philippines leads Southeast Asia in inequality, with our country’s Gini coefficient of 44% trumping Thailand’s 42.5%, Indonesia’s 39.4%, Malaysia’s 37.9% and Vietnam’s 37.8% (see this article too).

In short, the growth NEDA was working on was growth of, by, and for the elite.

But even as policy is biased for the elite, the bureaucracy may have been able to counteract the impoverishing force of oligopolistic markets in the Philippines had it been more effective in fulfilling its mandate to deliver basic services, provide adequate social protection, and facilitate asset reform. Sadly, it was bogged down by its own sclerosis, its own leaders implicated in corrupt practices and/or immersed in politicking. The result is a mismanaged Philippine state that failed in most of its targets, so much so that it lost all claim even to half a decade of consistent growth that transpired in Aquino’s rule.

Let us begin with Department of Budget and Management (DBM).

Fiscal Policy

Whatever early credibility DBM gained on its push for transparency and systems improvement in the country’s fiscal system, its lasting legacy would be the sinister Disbursement Acceleration Program (DAP) which inverted the logic of its reforms and ensured the continuity of “fiscal dictatorship” practiced under Arroyo. It also ensured the perpetuity of patronage that serves as a nexus linking a politicking executive punishing its political opponents and a sycophantic Congress committed to secure funds after the Supreme Court abolished the Priority Development Assistance Fund (PDAF).

From PCIJ, as of June 2014.

DAP has also exposed the unsustainability of DBM's technical reforms. Without DAP’s shortcut, for instance, we are now facing the huge problem of under-spending due to the executive’s deep distrust of its own implementing agencies coupled with bureaucratic sclerosis. While the causes are primarily structural – the “absorptive capacity” issue merely reflecting how ill-equipped our state apparatus has become after decades of exposure to the neoliberal mantra of shrinking government (see counterpoint here) – the Aquino admin cannot wash its hands entirely: the failure of Aquino to fire ineffectual Cabinet officials forced DBM to impose heavy technical requirements in the special provisions to prevent budgetary abuse. Since the leadership of the agencies are ineffectual to begin with, of course these requirements won’t be met and the budget won’t be released. But for programs with budgets released, there is the Commission on Audit (CoA) breathing down on the neck of the middle management and rank-and-file. Thus the “chilling effect”: for fear of misinterpreting CoA rules, government officials used to a culture of bureaucratic adhocracy would rather underspend than risk going to jail.

The result is staggering: DBM’s own data alone point to P302.68 billion of its budget unspent for 2014 (the figure is P103.70 billion for 2013) – which would have been a huge help in rehabilitating Yolanda-ruined Tacloban City. For the first quarter of 2015, the budget deficit fell below 66% of the target (P33.5 billion actual versus P98.1 billion target). This uneven pace of reform amid weak, post-DAP fiscal leadership of Aquino wreaked havoc on the economy – 2014’s public spending for infrastructure fell 24.4% short of theprogram. Consequently, government consumption on that year went down 2.6% while public administration services fell 2.9%. We already mentioned the final result: GDP growth shrank from 7.1% in 2013 to 5.2% in 2014.

Computations by the Active Citizenship Foundation (ACF)

One thing that the Aquino administration probably likes about under-spending is that it hides the failure of the Department of Finance (DoF) with respect to revenue effort. While improving, DoF’s 15.1% revenue effort still fell short of Arroyo’s peak at 16.49%. With its current trend of deceleration[3], DoF may be hard-pressed to reach the administration’s target of 16.5% in 2016. Despite repressive tax policies of the Bureau of Internal Revenue (BIR), tax revenues fell short of target in 2014 (short by 159.78 billion) and 2013 (72.2 billion). This is despite the imposition of revised sin taxes, which contribution turned out to be measly 0.4% of GDP.

Development and Investment

The industrial policy that was touted by Department of Trade and Industry (DTI) as early as 2011 has proven to be nothing but huff and puff. That it is not yet completed is not surprising – the “industrial roadmap” is at the onset dependent on submissions by big businesses and industry players torn between the camps of local producers and importers. DTI has nothing to show despite half a decade of “drafting” the manufacturing development plan, nor did it have consequential impact on the “missing middle” of Philippine industry – the Medium, Small and Micro Enterprises (MSME) which comprise 99.58% of our businesses but contribute only 35.7% of value-added as of 2012.

Meager attempts of DTI to tap into this huge reservoir of potential are relegated to toothless One-Town-One-Product (OTOP) and National Industry Cluster Capacity Enhancement Project (NICCEP). At its current state, it can’t. The size of the DTI – a mere shadow of its former self, the Ministry of Trade and Industry, which can marshal state resources for industrial protection (to the tune of 10% of GDP, see page 117) – pales in comparison to its counterparts in Southeast Asia. Aquino’s decision to lodge an important project which should have been under DTI – the Sustainable Livelihood Program (SLP) – to its favorite agency, the DSWD, only demonstrates the administration's commitment to clip DTI’s wings, and its contentment with our import-dependent, low-value added exporter status [4].

Philippine Exports in 2013

Philippine imports in 2013. Notice that our primary export is import-dependent.

Even with the World Bank-financed, debt-creating[5] Philippine Rural Development Project (PRDP), Department of Agriculture never achieved its irrigation and FMR (Farm-to-Market Road) construction targets. CoA itself reports that of the P7.8 billion allocated for 1,070.2 kilometers of FMR in 2013, DA only completed 270.4 kilometers worth P1.7 billion. Irrigation projects remained stalled because of anomalies. Northern Samar Rep. Emil L. Ong, for instance, revealed that P140 million funds earmarked for irrigation projects by NIA was used instead to pay for projects linked to the controversial Help Catubig Agricultural Project (HCAP).

DA’s rice self-sufficiency policy, because it was not augmented by an effective effort to stem smuggling, break up rice cartels, or improve farmer’s productivity – only led to food inflation that wiped out whatever meager income gains the impoverished experienced (see DA's opinion here). Moreover, Secretary Prosy Alcala’s irrational, patron-like management of DA led its lack of clear direction, incompetency, and proliferation of internal corruption (also here), so much so that the President (who is a dear friend of Alcala and thus unwilling to fire him) split the agency into two, with the Office of the Presidential Assistant for Food Security and Agriculture Modernization (OPAFSAM) tasked to clean and rationalize the National Food Authority (NFA), the National Irrigation Authority (NIA), the Philippine Coconut Authority (PCA), among other sub-agencies. This was at a cost of policy and jurisdiction confusion, even among the cabinet-at-large. Ironically, Aquino appointed not a trained technocrat to OPAFSAM but a Liberal party loyalist and politician former Senator Francis Pangilinan, who is gunning for Senate in 2016.

We did not expect much from the Bangko Sentral ng Pilipinas (BSP), as it was long divorced from the country’s development apparatus due to the New Central Bank Act of 1993 (RA 7653). The ugly face of BSP’s autonomy, however, reared itself under Aquino, when it decided to lend a sum of $1 billion (P50 billion) to the International Monetary Fund’s Financial Transaction Plan (IMF-FTP) from our international reserves to supposedly help European nations struggling against the debt crisis. This move not only legitimizes the IMF, which in fact responsible for earlier crisis that hit Asia in the late 1990s, but also contributes to the bailing-out the irresponsible European bankers and financial marketers which brought the European nations to itscurrent crisis state in the first place. But BSP’s friendly gesture to the global 1% would not have been possible without Aquino. Aquino used DAP money to “pay” our supposed “capitalization” debt to the BSP to the tune of P50 billion, exactly the same amount BSP lent to the IMF. This is P50 billion that BSP could have lent to struggling but deserving MSMEs.

FDC hits BSP for being a "show-off".

Energy and Infrastructure

The Department of Energy (DoE) has nothing to show in improving the country’s energy situation, crippled as it is by the Electric Power Industry Reform Act (EPIRA) under the leadership of a campaign-money-chaser Ikot Petilla who coddled with the power lobby (though there were reports that Petilla was actually guarding against PNoy's appointment of an Aboitiz man). Under Petilla’s watch, oligopolists manipulated the WESM and jacked up the price so much that even PEMC, the manager of WESM itself, can no longer rationalize it. The continuing regime of high power prices (still among the highest in Asia) has been an important constraint for other development initiatives; even DTI admits that it is a strategic constraint to investment in the industrial sector (see slide 9 of this). Unaffordable power ensures that 15 million Filipinos remain literally “powerless”. Finally, Petilla has led our transition away from renewable energy and towards coal dependence, in effect reversing the half of century drive towards energy sovereignty started by Energy Minister Geronimo Velasco. Now, our country is setting an atavistic example to a world already transitioning to photovoltaic technologies to respond to dangers of climate change and rising hydrocarbon costs.

The much touted Public-Private Partnership (PPP) has been, at most, lackadaisical. Half a decade since it was launched, only 5 PPPs are targeted for completion by mid-2016 – the largest of which is DepEd’s P16.43 billion Phase 1 PPP school construction which included Megawide Construction Corporation in the list of its partners, even as Megawide is embroiled in a conflict-of-interest complaint against Filinvest for the Mactan airport PPP. Another 5 PPPs had been awarded (the largest of which is the P64.9 billion LRT1 Cavite expansion), but none has seen completion. These 10 PPP projects did not make much of a dent compared to the 60 PPP deals that remain in the pipeline.Right-of-way problems and delays in tariff adjustments are among the chief complaints of big capital players involved, despite the concession given to them by the government in the form of regulatory guarantees.

There isn’t just a lack in new infrastructures – even the existing ones severely deteriorated under the Aquino administration. Nobody living in Metro Manila should be unaware of what is happening with its main transport backbone – the MRT3. The two years from 2014 at the helm of Department of Transportation and Communication (DOTC) Secretary Jun Abaya, grandson of Emilio Aguinaldo, we saw a rapid decline in the quality of MRT3 services due to sheer incompetence[6] and skimping of parts necessary to maintain the decade-old tracks, even as we paid for 1.2 billion for maintenance contractors. As a result, only 50 out of73 original Light Rail Vehicles (LRV) were left running, with the contractors cannibalizing the decommissioned ones for spare parts.

The picture speaks for itself.

With failing transportation infrastructure, commuters are exposed to peril, inconvenience, and indignity. On August 13, 2014, one of the defective trains overshot the platform at the Taft Station, injuring 36 passengers. MRT3 and LRTA Operations Director Renato San Jose admitted during a recent Senate hearing that MRT commuters endure 30 to 45 minutes of queuing from the ground level up to the boarding platform. Abaya revealed that MRT carry 600,000 passengers a day, beyond its design capacity of 350,000 and its“crush capacity” of 500,000.

Social Welfare and Inequality

The Pantawid Pamilyang Pilipino Program (4Ps) of the Department of Social Welfare and Development (DSWD) – spearheaded by its flagship Pantawid Pamilyang Pilipino Program (4Ps) program and its primary instrument, the Conditional Cash Transfer (CCT) – did have some impact on poverty alleviation and food consumption. This impact, however, was reversed by poor disaster readiness – as exemplified by Yolanda and Pablo’s aftermath – and lack of regulatory teeth in the food sector, which suffered from high price spikes due to rampant smuggling [7]. It did not help that DSWD itself failed in its disaster response mandate, with multiple anomalies in disbursement and procurement. CoA itself revealed in 2014 that DSWD failed to build 30,438 housing units for tens of thousands of storm victims, despite receiving P2.57 billion for that purpose. The same CoA report mentioned DSWD also used a portion of Sendong cash assistance in 2013 for other purposes not directly related to the disaster.

The Department of Agrarian Reform (DAR), led by weak-willed Virgilio Delos Reyes, floundered under the Haciendero president. When the Comprehensive Agrarian Reform Program Extension with Reforms (CARPER) expired June last year, DAR had a balance of 41,583 hectares or 4,665 landholdings still not under the agrarian reform program, with 726,421 hectares of agricultural land yet to beawarded to farmer-beneficiaries. And even with the 1 million to 1.5 million hectares DAR claimed to have distributed, several peasant groups and church activists insisted that they are not actually in the hands of farmer-beneficiaries. What is Delos Reyes’ plan to address this? DAR released a memorandum that it will ease requirements for land use conversion from rural to industrial,in order to accommodate new power plants. In effect, land stolen from farmers will house the coal plants built by DoE.

As for the Department of Labor and Employment (DOLE), the Kentex tragedy is merely a proverbial cherry on top of a cake of disappointments. In 2012, Asian Development Bank (ADB) Senior Economist Norio Usui reported that the Philippines had the worst underemployment rate since 2006, at 22.7%. This was followed by an International Labor Organization (ILO) report in 2014 that the Philippines’ unemployment rate of 7.3% as of 2013 is the worst in the ASEAN. Then the International Trade Union Confederation (ITUC) chimed in, saying that the country is among the worst in the world foremployees. These reports are not surprising as the situation of labor on the Philippines remain as stark as it was decades ago: 70% of workers are non-regulars and contractual according to NAGKAISA, over 80 Filipinos facing death penalty abroad, and 5.5 million children engaged in child labor (according to EU Ambassador Guy Ledoux). Moreover, with DOLE Secretary Rosalinda Baldoz’s behavior during the PALEA-PAL dispute, threatening PALEA strikers and attempting to stop them from conducting a nationwide strike, we might as well rename DOLE as the Department of Capital and Management.

The Kentex Tragedy.

A Big, Fumbling, Cacique Government

At this point, one may get the idea that our hard working bureaucrats and technocrats are at fault. Indeed, there are some bad apples we already exposed earlier, and most of them are in the leadership. The problem though is more complicated than that. The cause of our woes is not just one individual within the cabinet or within the government’s rank and file. It traces back to Aquino III himself.

To understand why, let us observe an important structural change under Aquino III’s term, a change that has certainly been a factor for its failure to disburse P302.68 billion from its budget. Looking at historical values of the share of government expenditures with total expenditures in the economy[8], we come at an interesting observation: Aquino III’s ratio of 10.84% in 2013 and 2014 already surpassed 10.36% in 1976 – the height of Marcos’s Martial Law rule. Government expenditures per capita will give us the same picture: The value hovers around P6,400.00 per capita in 2000 prices from 1975 to 1982[9], the highest since 1967. This record will only be broken by Aquino III in 2012, when it posted government consumption per capita at P6,964.77. The figure even increased to P7,198.56 by 2014.

We used to think that during the dictatorship, the government is omnipresent. The Marcos dictatorship is everywhere; its decisions are felt and influence all domestic markets simultaneously, especially as its foreign loan-funded, crony-controlled conglomerates dominate the economy in an oligarchic fashion. It turns out that after a long post-EDSA I lull, big government is back. The Aquino III’s administration has surpassed Marcos in terms of influence in the economy. The dynamics of its politics now strongly determines the dynamics of the markets. In fact, its bureaucratic underspending booboo was enough to pull back economic growth by 2.6% of GDP – a feat simply impossible if the government is small. It appears that underspending is simply a manifestation that the growth in the size of the state has outstripped the capacity of Aquino’s leadership to govern that state.

For truth is, Aquino’s personalistic brand of leadership he inherited from his cacique lineage is simply unfit for steering a growing state with increasing complexity. This type of leadership – branded by some as KKK (Kaklase, Kabarilan, Kabarkada), “student council” government (by former Sen. Joker Arroyo), Noynoying, etc. – is incompatible with political modernity. This is obvious when he bypassed all bureaucratic protocols in the handling of the Mamasapano operations, keeping in the dark his interior secretary and chief peacenegotiator in the most sensitive counterterrorism initiative of his presidency, and asking his corruption-implicated, suspended police chief Alan Purisima (who happens to be a highly trusted buddy) to commandeer an excursion into the heart of a rebel area to snatch a person of interest when he was at the brink of sealing the most successful peace deal with those rebels.

It is also obvious when he refused to fire Abad, Abaya, Alcala, Purisina, Delos Reyes, Baldoz and all of his people whose heads the people have long demanded[10], even if by doing so he can defuse public anger over the incompetence and corruption of these officials and gain a more solid political footing for his other reform agenda. It demonstrated political immaturity. Unfortunately, our large, complex state cannot operate much less endure with such immaturity and unprofessionalism.

Former Akbayan Rep. Walden Bello asks for the head of Alcala, Delos Reyes, Purisima and Abad.

A number of public servants and officials (some of which appointed by Aquino) are not only righteous but also highly competent managers exercising scientific and evidence-based methods. The morale and logic of professionalism, however, necessarily emanates from the leadership. In more ways than one, Aquino III is an archaic remnant of old, feudal politics, good-intentioned as he was. This is very unfortunate since the bureaucratic ship[11] that the Aquino III is steering has to be modernized as well. Our elite democracy simply failed to produce modern leadership even under the presence of the modern (albeit maldeveloped) institution of elections.

Uneven Infusion of Participatory Politics

Another danger with a big government, highly competent and professional it may be, is that it may be too big to sense its extremities. People’s real needs maybe lost in the hierarchy or intricate inter-webbing of agency chatter and paper-pushing. Consider the budget process. Without deliberative mechanisms that allow for people to directly report their social woes, we are faced with a well-developed budget agency that is susceptible to bureaucratic inertia and technocratic myopia. Eventually, political dissociation of budget mechanisms may result in 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.

On this we come on the positive side of Aquino III’s legacy – the experiment on participatory budgeting (PB)[12] via Bottom-Up Budgeting (BuB) and the continuation and expansion of Community Driven Development (CDD) via the the Kapit-Bisig Laban sa Kahirapan (Linking Arms against Poverty)–Comprehensive and Integrated Delivery of Social Services (KALAHI-CIDDS). Together with the educational Family Development Sessions (FDS) of the 4Ps, “people empowerment” objectives had been intricately linked with poverty reduction objectives. Aquino III’s administration saw a glimpse of deliberative and participatory democracy.

This legacy did not spring from the bowels of the elite cabal in the Liberal Party. It has to be imported from its allies. The ascension of Jesse Robredo to the DILG allowed the proliferation of his progressive theory and praxis he developed when he was the Mayor of Naga, praxis that include direct people’s participation on government programs and precise measures of good governance. The National Anti-Poverty Commission (NAPC) which proposed and championed the BuB had been steered by the leadership of the activist Institute for Popular Democracy (IPD), including Joel Rocamora and Jude Esguerra which are both linked to socialist Akbayan. 4Ps and the KALAHI-CIDDS are basically the handiwork of DSWD Secretary Dinky Soliman who, while controversial to a fault and legitimately accused of politicking, came from the sector of Non-Government Organizations (NGO) directly working in the grassroots.

This brings us back to our problematique. If Aquino III ushered experiments on participation via BuB and KALAHI-CIDDS, what explains the relative exclusivity of his growth? We trace it back to our earlier analysis on the bauplan of Aquino III’s regime – the 2010-2016 PDP. Remember that the PDP was drafted not by the President’s more progressive allies but by the technocratic elite in NEDA, translating and encoding the interest of the business elite which they have been trained to understand and protect. But the most important fault is that the PDP itself was written by an elite minority; save for a few consultations with NGOs in a posh hotel near Robinsons, Ortigas, the people have not been directly asked on the blueprint of “daang matuwid”.

In a sense, Aquino III’s big government is out of touch of the people it serves. Most of its actuations can only be considered manhid. Consider Abaya’s handling of MRT woes – letting commuters suffer peril and indignity while he tackles the more technical problem of a ticketing system and sealing PPPs. Consider that the solution of MMDA for traffic has a bias towards private vehicle owners rather than the vast majority of public transport users and commuters. Observe the demolition of pockets of informal settlement in Quezon City to pave the way for the creation of a Central Business, the bias of DOLE for PAL, Petilla’s acquiescence to WESM manipulators even as the public suffers from price hikes – all of these point to the utter lack of democracy within the operations of the Aquino III government, even as we have the BuB and KALAHI-CIDDS.

The Liberal Party of Aquino III, while taking its roots from the plantation-based rural elite, had its time with the people. At the height of the martial law, the LP and the Left stood side-by-side to challenge the dictatorship, with Aquino III’s father, former Senator Benigno Aquino, Jr., waging hunger strikes in jail and collaborating with democratic forces to facilitate the overthrow of Marcos. But it turns out that the Liberal Party via Aquino III has ushered another form of dictatorship, albeit a less lethal type: an insidious dictatorship of the business elite garbed by populist rhetoric and token participatory politics. Sans the latter and the blatant corruption, Aquino III will be hard to distinguish from her jailed predecessor (ironically also his economics professor).

Challenge to the Next Administration: Democratic Modernity

Both Arroyo and the Aquino III administration can be said to be at the crossroads of a historical drama. Under Arroyo, we witnessed the transformation of corruption from that controlled by feudal sensibilities (represented by the likes of former Speaker Jose De Venecia) to one that blatantly promotes winner-take-all primitive capital accumulation – wherein it is already impossible to “moderate their greed”, to borrow from ZTE-NBN Whistleblower Jun Lozada. The reaction under Aquino III was to reconsolidate elite consensus under the mantle of “good governance” while cracking down on corruption. The irony is that the forces of reform right now are commandeered by a member of the class of politicians – dynastic ones with a feudal past – that has not imbibed the spirit of reform in their cultural DNA. The result is Mamasapano-style, barkadahan decision-making.

On the one hand, Aquino’s barkadahan governance is unfit for political modernity; but on the other, the force backing the reforms of political modernity are undemocratic ones – the business elite backed by a neoliberal technocracy. The result is lack of professionalism and lack of democratic participation in the management of growing government – a recipe that can only lead to a crooked path.

The challenge to the next administration is thus to continue the professionalization of civil service and establishment of modern political institutions, all while promoting deeper and more meaningful people’s participation in the running of the state machinery. We simply cannot return to the rapacious, albeit cutting-edge corruption of Arroyo, or the relatively clean but fumbling cacique democracy under Cory Aquino, or the Almonte-engineered technocracy of Ramos, or the cosa nostra governance of Estrada. All of these features persisted to some extent under the Aquino III’s administration, no matter how hard it was resisted by the reform-oriented side of Aquino III and his progressive allies.

The challenge is a baby step towards full transformation in the next six years, paving the way for superior forms of democracy and governance – a more democratic form of political modernity. We can start with the following proposals:

Encourage participation in the drafting of the 2016-2022 Philippine Development Plan (PDP). The plan should be deliberated via municipal assemblies, using the methods of BuB.
Encourage participation in the drafting of the proposed National Expenditure Plan (NEP), again using the mechanisms of the BuB. Instead of the people merely proposing local budgets, they should be made to deliberate the budget levels on major socio-economic expenditures. Budget experts should be deployed on the ground to inform the people of the budget process and generate fiscal legitimacy from below, not just impose it by fiat from above.
Use FDS to get a “pulse” of the people on major national decisions.
End the corporate capture of our regulatory bodies such as the Energy Regulatory Commission (ERC) by including a substantial number of consumer representatives in their respective bodies. Regulatory Impact Assessment (RIA) has to be a key feature in all regulatory policies, considering all socio-economic effects of imposing rules and policies.
The autonomy of the BSP should be changed via legislation. Government’s role has to be strengthened, especially that of the trade secretary. The presence of capital via members from the banking sector should be matched by representatives from the labor sector and consumers, which are also affected by monetary policy.
BuB and KALAHI-CIDDS should be expanded and institutionalized.
Incorporate CCT as a regular feature of the budget for the next six years, and fixing the amount as a percentage of GDP (say 2%) or until appropriate poverty targets are met (say poverty incidence not exceeding 10% of population, and other poverty severity and gap measures).
DTI’s national industrial roadmap should be determined not just by industrial representatives, but labor representatives too of the respective industries.
In cases of property disputes, such as that in rural land occupation or informal urban settlements, police forces must be reoriented towards protecting individual people from danger (some of which may opt to protest), rather than solely enforcing property rights.

The Logic of Reform

The question is whether the candidates from the same elite class will be able to deliver these changes. Answering this is a bit complicated, as it would force us to consider to if candidates from another class can be elected in the 2016 elections. If they can’t, then the question becomes – how urgent are the reforms are, or who are the persons/parties in the best position to accomplish such?

The urgency is almost out of the question. There is always a continuing need to raise the political maturity of the masses, and one of the more effective and feasible means is participation in public affairs. The completion of the project of political democracy has to be completed as early as possible, for any form of delay can only amplify the difficulties of a reform project that is to begin with already dependent on the political maturity of an active citizenry. It is a self-amplifying cycle – demobilization begets more demobilization, politicization begets more politicization.

As for the person/party in the best strategic position, we can take a look at how reforms had been delivered in the current administration. The ascension of Aquino III did produce limited reforms in terms of legislating key laws such as those in reproductive health, sin tax reform, and fair competition. But the probability of those reforms happening would have been less without a strong push of progressive allies within the ruling party. Those reforms may have happened anyway, but regressive political forces (such us, arguably, the Catholic Church in the Philippines, in the case of RH) remain to have bargaining chips that can compel the ruling party to trade away those reforms for short-term gains, especially capitalizing on the fact that Aquino IIII is of the same cut as other traditional politicians. The reforms could have been bargained away without the threat of internal instability in the ruling coalition, something which even the business elite, with its reforms tucked in the PDP and dependent on the President’s capacity to see through the changes they want, cannot tolerate.

In the case that the next set of elite rulers are incapable of pushing for the aforementioned reforms – either because of the configuration of interests surrounding them or because of the distinct trait of the elected President – then the challenge is how to ideologically and politically attack the next administration but still be able to influence its agencies. Again, allies within the administration itself have to be won even if progressive forces will align themselves in the opposition. The challenge here is how to keep reformers within the government in the government, even after a period of expected bureaucratic and technocratic purge, and how to organize within the government from without.

The current administration can also get the upper hand in dictating the logic of reform by laying the groundwork for PDP 2017-2022. It can start the process and make sure that the next development blueprint went through not just scientific rigor but meaningful participation of sectors and the grassroots. Instead of being the vanguard of the business elite, NEDA can instead opt to partner with NAPC sectors and the civil society at large, including people’s organizations and even known critiques of Aquino’s development policy. The resulting blueprint can also be further screened through province-wide consultations – in effect setting both the national discourse and the provincial development discourse in time for 2016 elections.-30-

[1] SWS surveys show starker figures – 51% of Filipinos identify themselves aspoor, while 36% identify as food-poor.

[2] This is in fact higher than the target set by the Millenium Development Goals (MDGs) of 16.6%.

[3] The increases, starting from 2010-2011 up to 2013-2014, are: 0.59%, 0.53%, 0.33%, 0.23%.

[4] Consider that in 2012, Electronic Integrated Circuits corner 23.43% of our exports (the largest in the pie), 31.57% of which went to China. But looking at our imports, electronic ICs corner 12.88%, 30.49% of which came from the United States. In short, our primary export is electronics imported from the US exported to China. See more data here.

[5] PRDP costs P27.5 billion, consisting of a P20.5-billion ($500 million) loan from the World Bank, P3.58-billion counterpart funding from the national government, P3.112-billion equity of local government units, and P287-million ($7 million) grant from WB’s Global Environment Facility (GEF). Alcala indicated that they may request for funds from the World Bank to the tune of $500 million, as P5.3 billion worth of projects was already approved.

[6] MRT3 authorities reported an increase of average service interruptions per month from 1.83/month in 2008 to 2.42/month in 2011 to 4 a month during the first 7 months of 2014. By May 2015, there are days when the number of operational trains drops to 8, even during rush hours. In a report to Congress on the state of MRT-1, LRTA administrator Honorito Chaneco reported that the station computer system was available only 53% of the time. The escalators, already obsolete (with spare parts needed for its repair no longer available), malfunctioned an average of 204 times a month. The elevators were available for use only 66% of the time because it was defective for an average of 342 times in a month. Ticket issuing/dispenser machines were hardly used at all since 2011, with its availability going down from 5% in 2013 to 0% in 2014.

[7] This is despite the administration’s claim of low and stable inflation under its rule.

[8] If we divide the Government Consumption Expenditure (GCE) – the total portion of the economy that has been “consumed” by the government, bought by the state from the rest of the economy – with the Gross Domestic Product (GDP), we get an idea of the size of the government. If the share of government expenditure over the total expenditure (total expenditure = total income) is high, it is likely that the government is big.

[9] This was to be followed by a precipitous drop after Marcos faced the biggest fiscal crisis of his presidency in 1983 onwards. At that time, we were forced to default on some of our debts.

[10] It may have been a reaction to Arroyo’s “revolving door policy”, wherein cabinet officials sometimes stay as brief as three months. It appears that positions are not just hold-overs, but political favours given to loyalists (just as well, her Congress had not been confirming her officials anyway). This may have demonstrated Arroyo’s political savvy, but it severely compromised the integrity of the bureaucratic institutions and held hostage strategic programs and reform agenda to political considerations.

[11] There are several things that keep our bureaucracy pre-modern: inefficiency in processes, incompetence of some appointed officials, general lack of skills in the rank and file, general lack of motivation and morale due to failed incentive structures, low investment in innovative and efficiency-increasing reforms at the bottom, patrimonialism and transactional corruption, among other things.

[12] The coming to power in 1988 of a left-wing coalition led the Workers’ Party (Partidos los Trabajores) in Porto Alegre, Brazil marked an important development in the theory and practice of budgeting and public finance. They invented what is to be known as “Participatory Budgeting (PB)” – a system wherein “citizens present their demands and priorities for civic improvement, and influence through discussions and negotiations the budget allocations made by their municipalities”.

Nash, Lichauco, and Steering a Post-EDSA Economy

noreply@blogger.com (James Matthew) — Thu, 28 May 2015 16:56:00 +0000

by James Matthew Miraflor

Deaths of great intellectuals diminish us all, but more so the scholars who are the main conduits of their work. In a span of a few days, students of the Philippine economy are shocked by the demise of two important paragons of the field – first, nationalist economist Alejandro Lichauco, and then game theory pioneer John Nash. The loss is simply incalculable.

Separated by miles and interests, the two celebrated economists used their Ivy League training to interpret and shape a world in conflict. Both are products of the Cold War, yet their ideas have persisted in a modern age of computer-driven, high-volume stock trading and post-WTO regional trade partnerships. While Nash is known mostly in microeconomics textbooks and Lichauco via word-of-mouth stories of Marcos dictatorship survivors, both have made their in impact in the minds of the Filipinos who keenly follow the country’s economic development.

Anyone interested in Philippine’s escape from the so-called “Middle Income trap” cannot afford to ignore the lives and contributions of these two illustrious economists. It is now more than ever – in a world of uncertainty, hegemonic overtures, and political machinations – that we should review the lessons of Nash and Lichauco. Game theory and nationalist economics are indispensable items in our toolbox as we chart the Philippine’s economic future amid multidimensional issues of China’s territorial expansionism, the Mindanao conflict amid ASEAN geopolitics (read this, and this), and America’s seductive offer for trans-Pacific trade.

Competitive Games and Rational Agents

John Forbes Nash, Jr. is an economist in the sense that John Maynard Keynes is an economist. Both men have other endeavors (Nash is principally a mathematician and Keynes is a probability theorist), yet their respective contributions to the science of economics are much more than most economists can ever dream of. Incidentally, Nash’s principal contribution in the field is one of his earliest outputs – his 1950 PhD thesis at the Princeton University. He proposed that in any game with a finite number of “strategies” or “actions”, what is called as a “mixed strategy” equilibrium exists. For this work, he won the Nobel Memorial Prize in Economic Sciences four decades later, in 1994.

Understanding Nash’s intuition is not easy, but it is immensely satisfying. Consider a rock-paper-scissors game. How does one maximize her expected victories, if there is a chance to play the game over and over? Clearly, committing to choose one action (say rock), would compel the competitor to commit to a single action to defeat it (paper).

What the player can do is to be unpredictable – to commit instead to randomize her actions, putting a probability of choosing each of the actions (say rock 2/3 of the time and 1/6 each for papers and scissors), instead of choosing a single one. Nash’s argument is that there exists a way for all players in the game to simultaneously randomize their actions and lead to an equilibrium, i.e. no player can profit from unilaterally changing her randomization strategy.

Nash effectively laid out a theory of conflict of rational agents; his calculations eventually led to the growth of a subfield of mathematics called game theory. Game theory posited that smart players, armed with full information of pay-offs and can marshal enough computational power to calculate probability distributions, can eventually lead to a détente (for more information on Game theory, I have an earlier blog post here: Games, Politics and Society).

Nash’s ideas eventually guided superpowers like United States and the Soviet Union as they simultaneously attempt to overpower the other – short of commencing a thermonuclear war that can end the human civilization. Nash’s equilibrium laid the edifice for a mutual, albeit uneasy, stability in a post-WWII, conflict-ridden world.

Proxy Wars and Strategic States

Alejandro “Ding” Lichauco’s study of inter-nation conflict is less abstract and more in-your-face. At the fringes of Unites States-Soviet Union détente are multiple proxy wars, one of which is staged in the Philippines. Eager to contain the communist threat, the Americans built a machinery to effectively influence the political and economic policy of post-WWII Philippine administrations. The country just became a theater to a new global conflict.

From here.

It is with this backdrop that Lichauco pursued his Bachelor of Arts in economics from Harvard College, and a Bachelor of Laws from Harvard Law School. He shared the same school with Filipino technocrats and scions – Armand Fabella who later became Secretary of Education of President Ramos, and Oscar Lopez, who now leads the Lopez conglomerate of public utilities, media, real estate, and manufacturing.

Lichauco then returned to the Philippines armed with an insight: what the country need is a state that can strategically chart its future in a scientific manner, free from foreign influence. Lichauco saw American hegemony as a stumbling block in the development of the Philippines as an industrialized and independent nation.

This belief guided his subsequent political actions. He supported a fellow nationalist, Claro M. Recto, in his bid for the presidency in 1957 under the Nationalist Citizens’ Party (Lapiang Makabansa). Lichauco – garbed with sterling credentials as former policy director of the Philippine Chamber of Industries (the original half of the PCCI), research department chief of the National Economic Council (the predecessor of NEDA), and senior consultant to the Congressional Economic Planning Office (now CPBD) – tirelessly polemicized against US’ role in promoting monopoly capitalism and sabotaging national initiatives to industrialize.

By 1960s, Lichauco joined nationalist icons Sen. Lorenzo Tañada, historian Renato Constantino, future University of the Philippines President Francisco Nemenzo, Jr., and Jose Maria Sison (who would later form the Communist Party of the Philippines and the National Democratic Front in 1968) in starting the Movement for the Advancement of Nationalism (MAN). When President Ferdinand Marcos pushed for a Constitutional Convention in 1971, Lichauco – then representative of the 1st district of Rizal – refused to cooperate. Lichauco insisted that Marcos is cozying up with the Americans in a game of political opportunism. He paid dearly for his ideas when the dictatorship ordered his arrest along with 11 others who refused to sign the draft constitution.

A Schizophrenic World

Nash would also be prevented to work, but for a very different reason. At the peak of his productive mathematical career, he succumbed to the hallucinations and delusions brought by his schizophrenia – a story brought to life by the 2001 movie “A Beautiful Mind”. In the movie (spoiler alert), we got a glimpse of Nash’s imaginary friends and illusory conversations that are actually internal monologues of paranoia and desire.

Nash would eventually fight his way out of this debilitating condition, but not until he has strained most his relationships and tarnished his otherwise superb reputation. Nash will eventually be vindicated by his 1994 Nobel prize, when the world began to recognize his immense impact on trade agreements, military strategy, diplomatic negotiations, evolutionary biology, and of course, on competitive games.

At that time, the post-Berlin Wall world is in a new manic state. Empowered by the collapse of Soviet satellites, the US facilitated the world’s maddening rush to a new economic era – what eventually came to be called as neoliberal globalization. Deluded by the promise of market dynamism via policies of liberalization, privatization, and deregulation, countries from Latin America to Europe to Southeast Asia acquiesced and dismantled their own state apparatuses, and then sold the prized parts to emergent oligarchies. This is definitely Lichauco’s nightmare.

From here.

In the Philippines, post-EDSA sentiment garbed the neoliberal schizophrenia with political democratization and anti-monopoly sentiments. Lichauco’s arguments, while commemorated by activists and militant movements, will largely be shunned by the neoclassical mainstream at the UP School of Economics and University of Asia and the Pacific (UA&P). Lichauco’s vision of nationalist economics will have to be put in the back burner just before the twin crisis of 1997 in Asia and 2008 in the world, which eventually forced countries to revisit their protectionist past.

Towards a Philippine Political-Economic Strategy

What lessons can we learn as a nation from Nash and Lichauco? From Nash, we can glean the importance of a randomization strategy – one that prevents any opponent from predicting and eventually subverting our national intent. We also learned that there is a best case pay-off for any conflict given that all players are expected to be rational – an important consideration on whether we should enter any given conflict (see SPNE). From Lichauco, we learn that in any conflict involving nations and corporations, a strong state is our best mechanism for national survival and progress (check this out too).

For instance, Nash provided us the means of interpreting what has emerged to be an equilibrium of costly conflict given the current strategies of the Philippine government and the Moro Islamic Liberation Front (MILF), and why both parties should simultaneously deviate from this destructive détente via political negotiations. Lichauco’s polemic teaches us to conduct such negotiations vigilant of other nation-states like the United States or Malaysia who may be trying to gain by influencing the outcome. Lichauco would have suggested a negotiation strategy guided by a strong, independent foreign policy.

We need to put this in mind as we begin drafting the new Philippine Development Plan (PDP), which will be our country’s roadmap for the next six years. Consider the problem of Micro, Small, and Medium Enterprises (MSMEs), which comprise 99.58% of Philippine enterprises. Suppose foreign markets have shifted and now have growing demand for specific products which Filipino MSMEs can clearly provide if they can expand their production. But they cannot do so without capital. Local banks would not provide capitalization on MSMEs with small production capacity or huge potential market. Exporters would be reluctant to connect undercapitalized MSMEs with foreign markets. Foreign markets are fickle and players from other countries can enter.

Clearly, this is a suboptimal Nash equilibrium – which no player will attempt to unilaterally deviate. What is needed is a simultaneous strategy change facilitated by a strong third party, in this case, the government. The actual policy is something Lichauco would approve of: 1) production and R&D support to MSMEs while protecting them from volatile foreign demands, 2) marshaling government financial institutions to provide risk capital to protected MSMEs, a 3) state-facilitated search for foreign markets to penetrate, and a 4) state-sponsored strategy to gather competitive intelligence from competitors (likely sponsored by their own nation-states) for updating pricing and quality strategies.

Our PDP should no longer be blind to the forces of political-economy that governs the market. Firms do not only produce for their customers, they make or buy at the behest of their home country’s political policies. Even with the WTO, nations sought to be unpredictable in their fulfillment of their commitments to harmonize tariff regimes. Meanwhile, our own trade and industrialization strategies are developed at the behest of foreign consultants, especially those deployed by International Financial Institutions (IFI). How could we afford to develop a strategy that cannot be subverted if it is already revealed and even developed by agents of possible competitors?

World Bank transfers prediction model to DOF. See story here.

In this confusing world, Nash and Lichauco offer us methods to power through the complexity and understand the dynamics of hidden games and conflicts as we steer our fragile, post-EDSA economy into the future. The best way to pay respect to these eminent economists is to actually deploy tools from the intellectual arsenal they have offered their lives to develop.

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

*The author is currently working on his MS Computer Science at the UP College of Engineering after finishing his MA Economics coursework at the UP School of Economics (UPSE). His primary research is on computational complexity of game theoretic problems, under the auspices of the Scientific Computing Laboratory (SCL) of the University’s computer science department.

The author is one with the country in mourning the passing of another great Filipino economist –Dr. Fidelina “Baby” Natividad-Carlos of the UPSE.

Towards Fiscal Democracy

noreply@blogger.com (James Matthew) — Thu, 11 Sep 2014 08:02:00 +0000

Freedom from Debt Coalition (FDC) Statement on 2015 Budget Deliberations

The Freedom from Debt Coalition (FDC) appeals to the 16th House of Representatives to push for crucial budget reforms in the last two years of the Aquino administration. Doing so will bring us closer to fiscal democracy and add credence to the administration’s maxim of “Tuwid na Daan”. Congress must assert its “power of the purse”, produce regular and transparent budgetary allocations, and work toward ending discretionary measures in the budget.

1. Repeal of the Automatic Appropriations Act

Photo by Rapha-el Olegario PhilRights. Check out the original post here.

Section 26(B), Book VI of the 1987 Revised Administrative Code as instituted by Executive Order (EO) 292 says that: “all expenditures for ... (b) principal and interest on public debt, ... are automatically appropriated.”

Automatic appropriation for debt severely compromises the legislative’s “power of the purse”. Since Congress cannot increase the budgetary ceiling (Article VI, Section 25-1 of the 1987 Constitution, as affirmed by Sec. 24, Book VI of EO292) only a little amount of the budget is left for Congressional reallocation. Moreover, since the executive can unilaterally contract loans (Article VII, Section 20 of the 1987 Constitution), the executive retains the option of further constraining whatever future limited fiscal space Congress may have by increasing the deficit today.

It was during the Martial Law in the Philippines that automatic appropriation for debt service was first codified, in Section 31(B) of Presidential Decree 1177 (Budget Reform Decree of 1977). In consonance with her “honor-all-debts” policy, President Corazon Aquino signed into law the Administrative Code of 1987, copying en toto Section 31(B) of PD1177 into Section 26(B) of the code. Section 31(B) of PD1177 also serves as its legal basis.

FDC enjoins Congress to reclaim its power to set budget levels by repealing this archaic provision in the budget law. The 16th Congress must take a second look at the following bills:

House Bill 3302 [An Act Restoring To Congress The Power To Appropriate Payments On Debt Service, Reviving For The Purpose Section 6 Of Republic Act No. 4860 (Foreign Borrowing Act), And Repealing Section 7 Of Presidential Decree No. 81, Section 31 Of Presidential Decree No. 1177 And Sections 1, 2 And 3 Of Presidential Decree No. 1967] filed by Rep. Rufus B. Rodriguez
House Bill 3460 [An Act Repealing The Automatic Appropriation For Debt Service By Amending Section 31 Of Presidential Decree No. 1177 And Section 26, Chapter 4, Book Vi Of Executive Order No. 292, Otherwise Known As The 'Administrative Code Of 1987' Which Reiterates In Toto Section 31 Of Presidential Decree No. 1177] filed by Rep. Neri Colmenares

2. Budget Reforms to End Fiscal Dictatorship

The vast fiscal powers of the President have recently been tested by the decision of the Supreme Court on the Disbursement Acceleration Program (DAP). These powers have been exercised not only by the current administration but also by its predecessors. FDC insists that the roots of what we called as “fiscal dictatorship” are structural rather than conjunctural. As early as 2008, during the 2009 budget deliberations, FDC already informed the House of Representatives of the following key enablers of fiscal autocracy:

Impoundment. Section 38, Book VI of the 1987 RAC / EO292
Reallocation of Savings. Section 39, Book VI of the 1987 RAC / EO292. Combined with Section 38, and depending on the interpretation of “savings”, the executive may interpret this as a power to realign allocations.
Line-Veto. Article VI, Section 27(2) of the 1987 Constitution allows the executive to simply revert to the budget DBM endorsed to the House Committee on Appropriations and Senate Finance Committee
Reenacting Budgets. Article VI, Section 25(7) of the 1987 Constitution renders us vulnerable to misuse of lump-sum budgets from “savings” generated by finished programs and projects which would be receiving fresh funds from a reenacted budget.

It is high time to finally clarify the ambiguous provisions of our budget law that enable fiscal dictatorship. Specifically, we must prevent the abuse of “savings”, “deficit”, “augment”, “impoundment”, “reenacted budgets”, and other budgetary terms that only serve to clip the Congressional power of the purse. Thus, FDC lends its support to the following bills filed by Rep. Ibarra M. Gutierrez and former FDC President, Rep. Walden Bello:

House Bill 2256 [An Act Defining The Concept Of Savings And Regulating The Process Of Augmentation By The President In Implementation Of Article Vi, Section 25(5) Of The Philippine Constitution]
House Bill 2257 [An Act Regulating The Power Of The President To Defer, Rescind, Or Reserve Expenditure Of Appropriations Authorized By Congress]
House Bill 3128 [An Act Prescribing Reforms In National Government Budgeting To Conform With Article Vi, Sections 24, 25 And 29 Of The 1987 Constitution, Amending For This Purpose Pertinent Provisions Of Book Vi Of Executive Order No. 292, Otherwise Known As The Revised Administrative Code Of 1987, And For Other Purposes]

3. Congressional Audit of Public Funds

From Rappler.

Finally, FDC enjoins the 16th Congress to conduct a Congressional Audit of Public Funds, including the projects financed by the DAP, Congress’ own Priority Development Assistance Fund (PDAF), the Judiciary Development Fund (JDF) and other spending mechanisms that are not itemized in the General Appropriations Act (GAA). Moreover, there is a need to know whether irregular programs and projects had been financed through loans, and whether the creditors are complicit to the irregularities.

Towards Fiscal Democracy

Kristel, Suicide, and History

noreply@blogger.com (James Matthew) — Thu, 21 Mar 2013 02:34:00 +0000

There may be a myriad of reasons why she took her life. As with the deaths of Kurt Cobain or Lee Kyung Hae or Aaron Swartz, we are left to our second guesses and interpretations of Kristel Tejada's motives, except perhaps that it was triggered by UP Manila's No Late Payment policy. This is discomforting for many, especially those who truly love her. But alas, we will never know what really happened. We will never know the exact array of private reasons that caused to emerge the thoughts of suicide in her head. History will never capture the exact truth. History will never give us the exact description of the complex psychology of Kristel's final escape.

Since we are nearing Holy Week. Another brilliant piece from the Pixel Offensive.

Are we then left perpetually blind by the fuzziness of history? Far from it.

Instead of letting us grope in the dark of the past, history gives us, more often than not, a bright vision - a vision of what is to be done given our defective hindsight. For history is as defined by our knowledge of the past as it is by the needs of our present. We replace the lack of facts with our overflowing imagination of what we wanted history to be so it can suit our objective to change the present and determine the future.

Our lack of understanding is transformed into (though never vindicated by) the clarity of our will. Our inability to deconstruct the complex tangle of causal relations behind Kristel's suicide allowed us to uni-dimensionally select a particular reason, address it, and contribute more to making the world better (and possibly preventing more suicides) than if we focused on understanding the minutiae of details of her death, either for the purpose of holding people accountable or bringing specific institutions to justice (or for others, simply to quench scholastic predispositions).

Does it matter if Kristel's suicide had other reasons beside being denied of UP education? Of course it does, but to individuals. For the vast historical drama of our struggle to transform the Philippine education system, it does not matter as much. As Sylvia Plath's handshake with carbon monoxide (to borrow a line from Radiohead) is now a beautiful and poetic exploration of death, Aaron Swartz's is a desperate escape and protest versus the intellectual property rights regime backed by state violence - despite all the proposed complex reasons (Plath's suicide, for one, may have been accidental and Swartz may have been killed), Kristel's suicide is now a silent indignation against the barriers to tertiary education.

Of course, there remains the need to address the important matter of individual justice. By all means, let us move onward to pursue it. But for those who wish to and will lead the way on this effort, let us not derail the movement towards a more universal and lasting justice by calling it a distraction to the "real pursuit" of truth behind Kristel's suicide. They should not be counter-posed. After all, it is the same inhumane system that is insensitive to the needs and aspirations of persons that drove Kristel to suicide, whether the academic reason had been the primary or not.

Whether Kristel would have wanted the attention or not, no one can tell. But she has no choice, and for those who love her and care for her, they might just have to accept that. For now, Kristel is a symbol of a greater struggle that she may not have wanted to lead, but is now leading - by history. Kristel is now every iskolar ng bayan, every parent, every single one of the impoverished millions who had been refused of the benefits of education because of the staggering inequality we now face despite the 6.6% economic growth.

You now live forever, Kristel.

All of us are now, by history, Kristels. EXTRA: Congratulations to my friends Aaron Pedrosa (Secretary-General of Sanlakas and Secretary-General of Freedom from Debt Coalition - Cebu Chapter), Dianne Roa-Oarde (the brains behind stopping the controversial Angat Dam sale), and Christopher Louie Ocampo (semifinalist at the 2012 Jessup International Law Moot Court) for recently passing the bar.

Bangsamoro, the Devolution Failure, and India-style Federalism: A Case for Asymmetric Autonomy and Strategic Reapportionment

noreply@blogger.com (James Matthew) — Tue, 08 Jan 2013 03:30:00 +0000

by James Matthew Miraflor*

The process is moving. Before 2012 ended, Philippine President Benigno Aquino III signed Executive Order No. 120 creating a Transition Commission (TC). The TC will supposedly draft the proposed Bangsamoro Basic Law stipulated in the Framework Agreement between the Government of the Republic of the Philippines and Moro Islamic Liberation Front (MILF).

This is indeed a breath of fresh air to a land scented by the smell of blood and war. GPH Negotiator and now Supreme Court Justice Marvic Leonen, a former Dean of the UP College of Law, was able to garb the whole process with political legitimacy and language of legality. If we are to accept a legal realist position, it is expected that the Supreme Court will decide in favor of ending the conflict and allow the evolution of a legal narrative for self-determination. Insisting on a constitutional change as a requisite to actualizing the agreement may end up compromising the gains for peace.

The Proposed Bangsamoro Core Territory based on the GHP-MILF Framework of Agreement.
Mindanews Graphics by Keith Bacongco. From here.

But no doubt, the implementation of the Framework Agreement will raise questions on constitutionality and the framework's compatibility with our existing unitary system. No doubt, proposals for converting our current form of governance from unitary to federal will once again fill the pages of our dailies. It is inevitable then that we ask: would a shift to a federal system really be better for the Philippines? And if we do decide to shift, what model of federalism should we adopt?

These questions are asked in a context of a widely perceived failure in devolution and trends of increasing recentralization in health, social welfare, and local governance after the landmark Local Government Code of 1991. This essay argues that while federalism can be a plausible model for the country, it should be asymmetrically implemented (giving some territories more liberties than others) - following India's model. A strategic mix of recentralization and devolution, following some principles from the concept of Optimal Currency Areas (OCA) and urban agglomeration, is thus proposed as a way forward in implementing a reapportionment of political boundaries under asymmetric federalism.

Framework Agreement and Charter Change

There is a real political context behind asking whether federalism is suited for our country. Important questions on the validity of the whole setup have been raised and there is a real sentiment that the Framework Agreement will only be realized under a new charter:

Atty. Harry Roque for instance, raises questions on expansion of the Bangsamoro territory, the issue of Bangsamoro having maritime territories that UNCLOS reserves only for states, and the incompatibility of "asymmetrical relations" with the unitary form of government.
Veteran lawyer Estelito Mendoza points out that like the MOA-AD, Part VII(4)(b) of the agreement leads to the question if the government becomes bound to amend the Constitution to accommodate the parties should the agreement be executed.
Former UP Law Dean Raul Pangalangan also has issues with the ambiguity of terms used, as well as exempting Bangsamoro from COA's auditing processes.
Former PMS Chief Rigoberto Tiglao sees the agreement as "dismemberment" because the it concedes that Bangsamoro has all the elements of a nation-state; in fact, the term "asymmetrical" assumes the existence of states.
Sen. Miriam Defensor-Santiago pointed out that the parliamentary form of Bangsamoro governance cannot exist side-by-side with the current presidential form.

Sen Pimentel’s speech outlining key points
of federalism proposal.

It is clear that the underlying current behind all of these is the unitary form of government enshrined in the 1987 constitution. It presupposes that while central government can choose to delegate its powers to Local Government Units (LGU) - as in the case of the breakthrough Local Government Code of 1991 authored by Sen. Aquilino Pimentel - the central government can choose to revoke it as it wishes. Any autonomy granted to indigenous peoples movements (such as the CPLA) and separatist movements (such as Moro Liberation movements) is subject to the decision of the central government, as represented by its institutions.

The call to transform the unitary state into a federal one runs deep in Philippine history and politics. But it came at its strongest in recent history during the "Hello Garci" political crisis in 2005 that hounded the fledgling presidency of Gloria Macapagal-Arroyo. As a tit-for-tat for his support to defuse the crisis, former President Fidel V. Ramos called for an immediate charter change to trasform the current unitary-presidential form of government to federal-parliamentary. Being the cunning politician that she is, Arroyo did convene a consultative commission for charter change headed by former UP President Jose Abueva, but ended up lingering until the end of her term 2010. [See my 2005 blog post: "Changing Gears: Issues on Charter Change" for more details.]

Sen. Pimentel's proposal for a Federal Republic of the Philippines.

Extra: There is also a more recent clamor from the Senate. Read Senate Joint Resolution 10, filed on April 23, 2008 by 16 of the 24 Senators here. Then Sen. Aquino III was part of the sponsors. This was after GMA resurrected calls for Charter Change after surviving the NBN-ZTE deal scandal.

Federalism and the Failure of Devolution

The basis for the call for Federalism is simple: the current unitary system has been ineffective in providing an environment for economic development and political sophistication. A Spanish colonization legacy of the "Imperial Manila", the unitary form of government supposedly stifles local initiatives and developmental tendencies. It is argued that too much centralization of resources through taxes did not result into local agricultural and industrial development. Moreover, it has stifled movements for self-determination in Mindanao and in the Cordillera

Language groups in the Philippines. From here.

One of its primary champions, former UP President Jose Abueva, said in his briefer on the federal system that federalism "will build a just and enduring framework for peace through unity in our ethnic, religious, and cultural diversity, especially in relation to Bangsa Moro and our lumad/ indigenous peoples everywhere." It will aslo release local governments "from the costly, time-consuming, stifling, and demoralizing effects of excessive central government controls and regulation in our traditional unitary system."

Federalism champions have harped on one thing: the unitary system remains to fail in addressing the issue of inefficiency, lack of participation and representation, and weak central government. This underpins the libertarian complaint of the champions of federalism: you can't govern us well, so why should you? Cebu's Lito Osmeña's 1998 Presidential run under the party PROMDI (Progressive Movement for the Devolution of Initiatives) is meant to rouse up the libertarian character of the devolution movement, following Cebu government's successful repackaging of Cebu as economically independent of the Philippines in order to survive the 1997 Asian Financial Crisis.

The assumption behind this is that if we let principalities - in our cases regions or provinces, rule themselves more and make the central administration rule them less, the more developed they become. This echoes the long-running Jeffersonian precept that has ruled agricultural America during from the time of President Thomas Jefferson to President Andrew Jackson - that a government that governs the least is the government that governs the best. But are autonomous principalities really more inclined to develop?

Poll failure a fixture in 5 Lanao del Sur towns,
in ARMM. From here.

Not everyone is convinced. Another former UP President and political scientist Francisco Nemenzo remains skeptical of federalism, arguing that it will not work "with a government that operates within the context of elite rule. And not when political parties are mere temporary alliances that do not have long-term plans for the country (UP Newsletter, August 2005 p.7)." In a speech, Nemenzo qualifies that he can support federalism "if the aim is to grant autonomy to areas inhabited by integrated and defiant ethnic groups who are used to governing themselves according to their own laws", but he has "little sympathy for granting the same to provinces or regions dominated by political dynasties, whose overlords see in federalism the prospect of carving out independent fiefdoms. That is a formula for weakening an already weak nation-state."

That the Local Government Code of 1991 resulted in the strengthening of political dynasties - the existence of which compromised the central state's monopoly of arms through extensive use of private armies (read: Ampatuan) - speaks a lot about the applicability (or lack thereof) of federalist governance methods in the Philippines. The experience with the Autonomous Region for Muslim Mindanao (ARMM) is perhaps the most telling: even as it is one of the poorest regions in the Philippines, it remains to have very high inequality, evident with the lavish lifestyle of political clans. [For more detail specifically on Maguindanao, check this out: "The Structure of Crisis, The Crisis of Structure"]

Former DBM Secretary and UP School of Economics Prof. Benjamin Diokno also said that the local government code in fact increased the fiscal burden of the government - with LGUs racing to attain the status of a city in order to get a higher share of Internal Revenue Allotment (IRA). It also fostered dependence as IRA became substitute to local taxation - with IRA's share of total revenues in 2010 pegged 79 percent, 75%, and 50% for municipalities, provinces and cities, respectively.

There are other problems Diokno mentioned:

Health, nutrition, and population accounted for less than 10% of total local spending. Spending for social securities, services and welfare is slightly less than 2.5%. More were spent for salaries for officials and employees, and in running the offices. Diokno traces this to the the loose assignment of functions and the propensity of the central government to spend for activities already devolved to LGUs, creating a perverse incentive structure. Diokno asked: "why would the provincial government or city government appropriate money for a local project if senators or congressmen were willing to finance it through their pork barrel allocation?"
Diokno argued that devolution has not improved service delivery. A World Bank study on decentralization in 1990 reported that Of the 74 provinces analyzed only eight managed to improve their Human Development Index (HDI) enough to move up to the next higher cohort while three provinces actually registered lower HDI scores.
Diokno also concluded that decentralization did not conclusively improve governance. Another World Bank study of the Philippines and Indonesia "in neither country has decentralization fulfilled the governance goal predicted by the most optimistic theories" of decentralization. It also reported that "the link between these outcomes and improvements in the accountability of local politicians is weak.”

Reversing Devolution, Creeping Recentralization

With the failure of devolution to address the problems of service delivery and governance, how would we fair under federalism? We don't know yet, but we do know that the government has steadily moved to further strengthen the unitary system. In fact, the response to the failure of decentralized modalities of governance has been to 1) for the national government, expand central control and/or initiate top-down coordination, and 2) for the local government, engage in bottom-up recentralization.

Governance expert and NCPAG Prof. Alex Brillantes notes that local agglomeration has largely followed devolution, which had been a response to avert fragmentation. Island Garden City of Samal, for instance, grouped five municipalities on the island, while city of Sorsogon and municipality of Bakon in Sorsogon province politically merged into Sorsogon-Bakon. Interlocal partnership has emerged in the cases of Metro Naga, Baguio, La Trinidad, Itogon, Sablan and Tuba in the Cordilleras, the Cagayan de Oro-Iligan Corridor, Camanava (Caloocan-Malabon-Navotas-Valenzuela), Cala (Calamba, Laguna), and various provincial and intermunicipal agroindustrial initiative of municipalities in Davao. These emergent partnerships has been proven to be effective, said Brillantes.

Philippine Super-regions

The reversal of devolution is also happening at the national level. Ironically the most wide-scale approach to regional central planning was implemented by no less than President Arroyo - supposedly a champion of federalism. Arroyo implemented a "super-regions" development strategy conceptualized by former NEDA Sec. Romulo Neri. It divides the Philippines into four super-regions, which would have agglomerated the12 regions in the process:

North Luzon Agribusiness Quadrangle - composed of Ilocos Region (I), Cagayan Valley (II), Northern portion of northern provinces of Central Luzon (III), Aurora (north of Baler), Nueva Ecija (north of Cabanatuan City), Tarlac (north of Tarlac City) and Zambales (north of Subic)
Metro Luzon Urban Beltway - Southern portion of the northern provinces and the rest of Central Luzon (III), National Capital Region or (NCR), CALABARZON (IV-A) MIMAROPA (IV-B) (excluding the provinces of Palawan and Romblon). This super-region is designed to become a globally competitive industrial and service center.
Central Philippines Tourism Super Region - MIMAROPA (IV-B) (excluding the provinces of Marinduque, Occidental and Oriental Mindoro), Romblon, Palawan, Bicol Region (V), Western Visayas (VI), Central Visayas (VII), Eastern Visayas (VIII), Camiguin of Northern Mindanao (X), Siargao Island of Caraga (XIII)
"Agribusiness Mindanao" Super Region - Zamboanga Peninsula (IX), Northern Mindanao (X), except Camiguin, Davao Region (XI), SOCCSKSARGEN (XII), Caraga (XIII), except Island of Siargao, Autonomous Region in Muslim Mindanao or (ARMM)

These attempts to reverse the devolution process is happening simultaenously with what Prof. Diokno calls as "creeping reverse centralization". Diokno reported that many devolved hospitals were re-nationalized, with regional and lower level hospitals transferred to LGUs during the early phase of decentralization taken back by the Department of Health. The government also invested heavily in strengthening and expanding a centralized social health insurance - the PhilHealth. This resulted to growth of the budget of the DoH despite a standing policy of devolving healthcare. Moreover, there has also been a push for Inter-local Health Zones (ILHZ) to address the dis-coordination resulting from devolution of administrative functions to LGUs.

The same is happening with the Department of Social Welfare and Development (DSWD) which has seen an exponential rise in the budget in order to implement the Controversial Conditional Cash Transfer (CCT). Diokno reported that its 2012 budget of P48.6 billion is thrice of its 2010 budget, and nearly five times of its 2008 budget. A large part of the CCT budget was supposedly earmarked for the administration of the program, whereas going by the spirit of the LGC, it would have been coordinated with social welfare staffs of LGUs.

With the apparent failure of decentralization and the rational response of reversing devolution, federalism needs some rethinking. On the one hand, the experience of successful local governments like Naga, Cebu, and Davao cannot be discounted, as well as their call for more autonomy. You also have the persistent demand from Bangsamoro and the people of Cordillera - backed by armed struggle - to move closer to self-determination through more autonomy, autonomy that would be provided for by federalism. On the other, you have LGUs like Ampatuan, Maguindanao which for a time has been subjected to Martial Law by the Philippine government to neutralize its battalion of private army thugs. You also have corrupt, patronage-driven LGUs that has grown dependent to the national government.

Would there be a system that incorporates the best features of a developmentalist, unitary government and a dynamic federal system that allows for self-determination?

Middle-way: India-style Federalism and Asymmetric Autonomy

For models, we can take a look at India. As defined by Part XI of the Indian constitution , India's federalism model very is different to that of the United States. In India, residual powers remain with the central government. This means that all state functions not explicitly devolved to the 28 states and 7 union territories are retained by the "Government of India" which is established as the governing authority of the federal union. So far, this is not off-the-chart - Canada has a similar power-sharing modality in its federal system.

But what distinguishes Indian federalism is its asymmetric nature. Before we see how this works at India, let us let Wikipedia define Asymmetric Federalism first:

Asymmetric federalism or asymmetrical federalism is found in a federation or confederation in which different constituent states possess different powers: one or more of the states has considerably more autonomy than the other substates, although they have the same constitutional status. The division of powers between substates is not symmetric. This is in contrast to a symmetric federation, where no distinction is made between constituent states. As a result, it is frequently proposed as a solution to the dissatisfactions that arise when one or two constituent units feel significantly different needs from the others, as the result of an ethnic, linguistic or cultural difference.

An asymmetric federation is similar to a federacy where one of the substates enjoys considerably more independence than the others. The difference between an asymmetric federation and federacy is indistinct; a federacy is essentially an extreme case of an asymmetric federation, either due to large differences in the level of autonomy, or the rigidity of the constitutional arrangements. An asymmetric federation however has to have a federal constitution and all states in federation have the same formal status ("state"), while in a federacy independent substate has a different status ("autonomous region").

One can view asymmetric federalism as a limited-type federalism, wherein the center decides to devolve differential powers to states. How does this work in India? Consider Article 370 of the Indian Constitution. Article 370 makes special provisions for the state of Jammu and Kashmir - which includes territory disputed among China, Pakistan and India. This provision institutionalizes Jammu and Kashmir's Instrument of Accession - a legal document in 1947 executed by Maharajah Hari Singh, ruler of the princely state of Jammu and Kashmir acceding to the Dominion of India under the Indian Independence Act of 1947.

Location of Jammu and Kashmir in India

Notwithstanding the actual policies of the Indian central government, Article 370 limits the power of the Indian parliament to make laws for the state. This is affirmed by Article 5 of the Jammu and Kashmir's State Constitution, enacted on 1956, declaring that that the executive and legislative power of the State does not extend to matters to those under the jurisdiction of the Indian Parliament. Article 5 cannot be amended.

What does this imply? It implies that the Indian central state remains to be the "grantor" of state powers rather than merely a "guarantor". In fact, the Indian constitution is more explicit in this, because under the controversial Article 356 of the constitution, also known as the "President's Rule", the central government can dismiss a state government and place the state under direct federal rule, or "Bhart's Rule (or central rule)". This is done if there is a failure of the constitutional machinery in that state, such as when the state legislature is unable to elect a Chief Minister, breakdown of law and order, rebellion or insurgency, or postponed elections. During President's Rule, a the President of India appoints a Governor on the advice of the central government (which is effectively the party in power). The Governor then appoints advisors, usually retired civil servants, to act in lieu of state ministers.

Would this be applicable in the Philippines? We need to take note that when the Philippines was established, we are actually a melting pot of already semi-autonomous peoples. In fact, we have the Cantonal Republic of Negros (República Cantonal de Negros) declaring independence simultaneously with the Philippine republic. It does not need a stretch of imagination to see that this not unlike the case of India in 1956. But without formal "accession" arrangements, we laid the ground for the emergence of separatist insurgencies launched by movements such as the MNLF, MILF and the Cordillera People's Liberation Army (CPLA). Peace since then has been elusive.

Can the Indian model of asymmetric autonomy be applied retroactively? Bangsamoro would be a good test case, if the constitutional issues will be resolved and political legitimacy will be established. It is effectively, notwithstanding how the Supreme Court, Congress, and the executive will recognize it, an asymmetric federal system, with Bangsamoro being "granted" certain liberties by the Philippine central state, including the liberty to exercise a parliamentary form of government rather than subject itself to the straight-jacket of the 1991 LGC.

But why not total federalism? In an ideal scenario, allowing local governments determine the development policies and political process of their own territories is a sound and just strategy for national development. But unless we fix these LGUs, build strong and participatory institutions and future-oriented local planning apparatuses, and mobilize and empower the grassroots towards a more vigilant stance on political dynasties and patronage politics - in other words, bring them closer to Robredo's "Naga-model" - the symptomatic tendencies towards recentralization will always be there. Any autonomous governing body derives its legitimacy from desirable social and economic outcomes. Autonomy is not for all.

So for LGUs which will not be covered by our "historical struggle for self-determination" criterion (e.g. Bangsamoro, Cordillera) following the accession models in India, we can add another one - capacity for "sustainable and effective autonomy". Using this criterion, urban conurbation such as Mega Manila, Metro Cebu, Metro Davao, Naga, etc. can be considered as viable candidates as recipients of more autonomy, having performed well in the past.

A good transitional model of asymmetric autonomy for unitary systems that the Philippines can use is the Special Administrative Regions (SAR) of China (which set up Hong Kong and Macau as SAR). While China is not a federal system, it has given special economic and political powers to Hong Kong and Macau. The Philippines can do the same for metropolitan agglomerations (to be discussed later) like Metro Cebu and Metro Davao.

Strategic Reapportionment: Re-parceling the Philippines

This brings us to another problem - how do we parcel the Philippines into candidates for autonomous regions? For now, what we have is the "regions" system established by Presidential Decree No. 1 on September 24, 1972 as part of President Ferdinand Marcos' Integrated Reorganization Plan of 1972. The Philippines was parceled into 11 regions. Since then, various executive orders as well as laws creating the ARMM and the CAR were implemented, and we end up with 17 regions in total.

Because of the country's unitary system, these are merely administrative regions, and do not have their own governments. Instead, what we have are Regional Development Councils (RDC) first established by Letter of Implementation No. 22 issued on December 31, 1972 still pursuant of Marcos' integrated reorganization plan (later reestablished by Article X, Section 14 of the 1987 Philippine Constitution). RDCs coordinate and set the direction of all economic and social development efforts in the region, and harmonizes local development efforts with the national plan by NEDA.

For "special regions", there are other governing bodies. For CAR, what we have is the "Cordillera Executive Board" (established by EO 220 series of 1997) later replaced by "Regional Development Council in the Cordilleras" (EO 30). For ARMM, we have the the "Regional Planning and Development Board" (established by RA 6734). For the National Capital region, we have the "Metropolitan Manila Development Authority" (created under RA 7924).

Is the system working? Earlier, we already found out that decentralization resulted had a differential effect - a high-income Cebu on one hand and an economically-devastated ARMM on the other. Given that the way the country had been divided into regions did not seem to give us a satisfying result, it will not serve us good to use the existing regional system as a basis for parceling the Philippines into different autonomous (or semi-autonomous) territories.

Thus, there is a need to find out optimal political-economic subdivision before planning a transition to an asymmetric federal system. One must consider how existing political units connect with each other in terms of demographics, migration traffic, trade, and various socio-economic activities, in consideration of dispersion and location of existing government structures.

Map of Philippine Language Relations. From here.

How do we determine the optimal reapportionment? We can gain insights from a field of study called Optimal Currency Areas (OCA). With the emergence of regional economic integration projects such as the European Union (EU), African Union, and ASEAN, one of the questions that preoccupy macroeconomists today is how to determine the geographical region in which it would maximize economic efficiency to have the entire region share a single currency. As it turned out, this is a difficult problem, with various proposals, mostly in the context of stability of the aggregate region if subjected to external shocks:

Labor Mobility. Mundell (1961) asserted that the higher the labor mobility of a region, the less permanent shock-induced unemployment will be, making the region stable for a common currency.
Trade. McKinnon (1963) suggested that we use as criterion the openness of an economy as measured by the ratio of tradable to non-tradable goods because the more open the prospective members are to each other, the more incentive they had to merge in a common currency.
Product Diversification. Kenen (1969) asserts that fixed rates are best for well-diversified economies. An aggregate economy with a high degree of diversification is less vulnerable to shock because as diversification increases, affected products will make up a smaller share of total exports.
Inflation Rate Similarity. Ishiyama (1975) argues that similar inflation rates would also be a criterion because divergent inflation rates will cause purchasing powers of two countries to diverge, which will have to be corrected by a change in the exchange rate.

Redefining the country's political boundaries can proceed in a similar manner. In the context of our proposal for asymmetric federalism, replace "common currency" with "common regional development authority" or "common state government" and one will quickly notice that labor mobility (we can take road connectivity or migration as a proxy), intra-trading, product diversification, and similarity in inflation rates are all valid criteria for merging cities and municipalities into new, redefined "economic regions" as basis for political partitioning. After all, economic stability (which is a offshoot of the OCA criteria) is a logical factor in effective local governance.

Economic regions of Russia.

Urban Agglomeration as Political-economic Centroids

Proposed split of Nueva Camarines
from Camarines Sur. From here.

The first step is to know where people are, where people go, and what they do together. This will be a more natural and logical way to group them. As we will elaborate later, these "conurbations" may not necessarily follow political boundaries, and this necessitate reapportionment - a valid one, unlike one that is perceived as gerrymandering as in the case of the proposal for a Nueva Camarines which was heavily opposed (but there are positive views, like the one here).

This is where the urban agglomerations come in. The theory is simple - people naturally gravitate to cities due to opportunities of higher income, either due to available employment opportunities or higher wages. A famous economic model by Nobel laureate William Arthur Lewis called the dual-sector economy predicts that this is due to availability of large surplus labor in the agricultural sector, driving agricultural wages down relative to that of the manufacturing/service sector in the cities. All you need to have an initial urban area, and it will siphon off population of adjacent rural areas.

Why do cities earn more income than rural areas? Increasing density of available labor force, establishment, and knowledge allows for increasing returns to scale and network effects. The Wikipedia page on economies of agglomeration succinctly puts it:

"As more firms in related industries cluster together, costs of production may decline significantly (firms have competing multiple suppliers, greater specialization and division of labor result). Even when multiple firms in the same sector (competitors) cluster, there may be advantages because that cluster attracts more suppliers and customers than a single firm could alone. Cities form and grow to exploit economies of agglomeration."

Shenyang-Fushun urban agglomeration. Large pic here.

In the Philippines, this is partly true, but there is another factor involved. Due to the perverse "cityhood" incentive of increased internal revenue allotment, LGUs scramble to convert agricultural land to commercial areas - facilitating a physical retreat of the agricultural sector (in other developed countries, you have "greenbelts" to limit urban size). Also, due to lack of cheap housing, urban workers (as well as the unemployed) are forced to reside to peri-urban areas in the boundaries of the cities - "urbanizing" those areas and resulting to city expansion. These two factors lead to creation of Philippine megacities - metropolitan behemoths with either extremely high population density or extremely fast growing population.

The Philippine Institute for Development Studies (PIDS), in a policy note "Metropolitan Arrangements in the Philippines: A New Urban Development Challenge" issued on December 1998 (derived from a paper by Ruben G. Mercado and Rosario G. Manasan), identified several of these emerging "metropolitan arrangements" or conglomeration of a highly urbanized city and and LGUs contiguous to it - a phenomenon seen by some as a threat to decentralization:

Metro BLIST (formerly Metro Baguio) stands for Baguio, La Trinidad, Itogon, Sablan and Tuba. The area has also been identified as a major component of the North West Luzon Growth Quadrangle.
Metro Manila came about as a conscious policy decision at the national level. A referendum paved the way for Presidential Decree 824 in 1975 which gave Metro Manila its present jurisdiction and created the Metro Manila Commission (MMC).
Metro Naga. Naga City spearheaded the conceptualization of a Metropolitan Naga Development Program (MNDP) which provided the framework for the development of the area composing Metro Naga and the required organizational machinery to orchestrate the development activities identified.
Metro Cebu. Many infrastructure projects in Metro Cebu were carried out under the Central Visayas Regional Program. In 1997, the Regional Development Council for Central Visayas passed a resolution creating the Metro Cebu Development Council (MCDC).
Metro Iloilo-Guimaras (MIG) / Iloilo-Guimaras Metropolitan Area is a metropolitan area encompassing the highly urbanized city of Iloilo City, the Regional Agro-Industrial Center of Pavia, the towns of Oton, Leganes, Santa Barbara, San Miguel and the neighboring island of Guimaras.
Metro Cagayan de Oro is a product of the integrated area development (IAD) approach. Metro CDO was packaged as an SDP of which the Cagayan de Oro-Iligan Corridor (CIC) Project is a major component.
Metro Davao refers to Davao City and the three provinces surrounding it: Davao del Norte, Davao del Sur and Davao Oriental. The Regional Development Council of Southern Mindanao proposed a development project encompassing all the Davao provinces calling it the Davao Integrated Development Program (DIDP).

These metropolitan arrangements - largely a product of informal urban conurbation due to agglomeration - can serve as political-economic centroids of future autonomous regions. Imagine, for instance, the entire Central Visayas acting as an autonomous region with Metro Cebu as the political and economic center, or the Metro Luzon Urban Beltway super-region with Metro Manila as its capital. It might be a more logical way to reorganize the Philippines.

There is another reason why urban agglomeration can be a useful guide for reapportionment. Consider for instance the tight supply chain network of Metro Manila and Bulacan and Laguna in the fast-food franchise business. Or Baguio's position as a commercial hub for Benguet - with many of many of the agricultural and mining goods produced in Benguet passing through Baguio for processing, sale or further distribution down south. Or the Cebu-Bohol trading facilitated by Roll-on/Roll-off ferry services.

These and many more are examples of conurbations scattered across the Philippines, tightly linked by intra-area trading (whether for consumption or as part of a supply chain) and usually characterized by product diversity. They are no different from, say San Diego–Tijuana conurbation (which does not follow national boundaries) as well as Taiheiyō Belt in Japan.

San Diego-Tijuana Conurbation

To know these conurbations, we can check on statistics on commodity flows and domestic trade and see adjacent regions with high trading (although as we said trade may not follow political boundaries). Successful OTOP (one town - one product) LGUs can also serve also serve as a possible sign of emerging Philippines conurbations.

These conurbations (which naturally follows urban agglomeration) can be a basis for reapportioning the Philippines into a new set of competitive and dynamic regions. Of course, there is also a danger of being overtly competitive to the point that it compromises national interest. Consider for instance, Cebu's branding itself as a separate economy amid the 1997 Asian Financial Crisis. Taking it to extreme, we may see the worsening of regional turfing in the Philippines, similar to the the emerge of regional protectionism among provinces of China which derailed some economic policies of the Communist Party.

Summary, and Moving Forward

The Bangsamoro discussion will probably rage on after the 2013 elections, and with it will emerge proposals to begin our transition to federalism. There will be a lot of political noise, but we should not be blind-sided by these. We should focus on the important discourse points - 1) is federalism a better system for us, 2) if yes, what type of federalism should we implement, and 3) how should federalism be implemented i.e. what should be the "federal units".

The point of the article is simple - if we are going to "federalize" our structure and replace our current unitary system, a plausible model is that of asymmetrical federalism similar to India's in which different levels of autonomy are granted to different areas based on the prerogative of the central government. The level of autonomy can then be granted based on two criteria: 1) historical struggle for autonomy (e.g. Bangsamoro, Cordillera) and 2) capacity for sustainable autonomy. The latter is determined by strategic reapportionment, informed by insights from OCAs and urban agglomeration

So how do we proceed? We can think of at least three ways. First is to finalize the Bangsamoro Framework Agreement to create the Bangsamoro Basic Law. Once this is finalized, then this can serve as a pilot for future autonomous regions. On this note, it is crucial to make sure that the Bangsamoro region will indeed be an economic success, and for that to happen, the central government must fulfill the requisites.

Second, we can implement a limited and transitional version of asymmetric autonomy, and this can be done through asymmetric devolution i.e. devolving more powers to LGUs depending on its performance.

We can explore a Regional Budget Allocation Scheme (RBAS) similar to that developed by the Ramos administration which pushed for regional block funds in 1995. Ruben Mercado of PIDS wrote in a paper "Regional Budget Determination and Allocation: A Policy Revisit" of the RBAS experience. During that time, RDCs complain that "actual budget allocations for regional office of government agencies are not consistent with the annual investment program of their regions and the regional budgets they have endorsed". To address this, Ramos launched the RBAS wherein the Development Budget Coordination Committee (DBCC) shall set aside a Regional Allocable Fund (RAF) - allocated to the 15 regions - to fund programs and projects deemed by the RDCs as priority in their respective regions. These programs cover "priority inter-provincial and inter-regional projects which are not usually picked up for funding by the local government and/or national line departments".

Regional Budget Allocation. From Budget ng Bayan.

RBAS is a step higher from the RDC consultations for budget of national government agencies, which is just limited to reviewing the allocations determined by the agencies’ central office. It had a good run, until it was stopped due to a perception by legislators that it is an electioneering strategy. There are also other problems. RAF was allocated based perceived need (the formula is as follows: 50 % - poverty incidence, 25 % - population, 25 % - equal sharing), and not on performance.

Why not have a "Performance-based Regional Budget Allocation Scheme" (PB-RBAS)? The government can choose to implement the RBAS in areas which had good social and economic indicators. We can start with those which had been able to obtain DILG's seal of good housekeeping.

[Right now, there is a "participatory budgeting" scheme called "Bottom Up Budgeting" implemented by DBM (DSWD has also been implementing earlier a similar scheme under the KALAHI-CIDSS project, which allows citizen groups to determine where a certain sum of government subsidy is to be spent. We can start with this.]

Third, we have to revive the clustered development strategy which has not been reflected in NEDA's Philippine Development Plan (PDP) under Director General Cayetano Paderanga. DG Neri's super-region strategy must be restudied, with elements incorporated in a revised PDP under Balisacan. Unfortunately, the Aquino administration seem to be hesitant (understandably) in continuing the controversial programs of the Arroyo administration, regardless of its merit.

We can start with some of things the Aquino administration is doing, and integrate a "clustered development" approach in them. For instance, the Palace has pushed for a National Land Use law (a beginning of a "zoning" effort) which was recently passed by the House of Representatives. NAPC has also currently been doing some "economic geography" work. We can also maximize the ongoing discussion on Nueva Camarines as a cue to widen the discourse on reapportionment. These initiatives, when combined with a currently a popular wave of urban planning advocacy by the likes of Paul Alcazaren and Felino Palafox, will push for a national sense of developmental geography.-30-

* The author is currently finishing his MA in Economics and MS in Computer Science at the University of the Philippines Diliman. He previously served as coordinator of the National Economic Program (NEP) project of the Freedom from Debt Coalition (FDC). The assertions and proposals above do not necessarily reflect the position of any of the non-government and political organizations the author belong to.

The World according to Friedman: 2012 Geopolitical Analysis on US, China, Germany, and Japan

noreply@blogger.com (James Matthew) — Fri, 28 Dec 2012 06:54:00 +0000

Clearly, for geopolitics, 2012 did not signal the world's end, but only its tumultuous continuity. Major economies of the world had seen their governments either replaced or reestablished - Barack Obama in the United States, Xi Jinping in People's Republic of China, and Shinzō Abe in Japan. Newsweek issued its last print issue, with the iconic hashtag sounding the death knell to non-online publishing. European Union remains to be stuck in a debilitating debt crisis. The UN General Assembly approves a motion granting Palestine non-member observer state status.

From here.

As we close this year, it is but fitting to listen to one of the world's best geopolitical minds as he speaks on the state of the world, as well as the history and future of US, China, Germany and Japan. Let us all take a peek at the important insights George Friedman of Stratfor shared to us in 2012:

The State of the World: A Framework
By George Friedman | February 21, 2012

Editor's Note: This is the first installment of a new series on the national strategies of today's global power and other regional powers. This installment establishes a framework for understating the current state of the world.

The evolution of geopolitics is cyclical. Powers rise, fall and shift. Changes occur in every generation in an unending ballet. However, the period between 1989 and 1991 was unique in that a long cycle of human history spanning hundreds of years ended, and with it a shorter cycle also came to a close. The world is still reverberating from the events of that period.

On Dec. 25, 1991, an epoch ended. On that day the Soviet Union collapsed, and for the first time in almost 500 years no European power was a global power, meaning no European state integrated economic, military and political power on a global scale. What began in 1492 with Europe smashing its way into the world and creating a global imperial system had ended. For five centuries, one European power or another had dominated the world, whether Portugal, Spain, France, England or the Soviet Union. Even the lesser European powers at the time had some degree of global influence.

After 1991 the only global power left was the United States, which produced about 25 percent of the world's gross domestic product (GDP) each year and dominated the oceans. Never before had the United States been the dominant global power. Prior to World War II, American power had been growing from its place at the margins of the international system, but it was emerging on a multipolar stage. After World War II, it found itself in a bipolar world, facing off with the Soviet Union in a struggle in which American victory was hardly a foregone conclusion.


American and Soviet troops meet east of the Elbe River (Photo credit: Wikipedia)

The United States has been the unchallenged global power for 20 years, but its ascendancy has left it off-balance for most of this time, and imbalance has been the fundamental characteristic of the global system in the past generation. Unprepared institutionally or psychologically for its position, the United States has swung from an excessive optimism in the 1990s that held that significant conflict was at an end to the wars against militant Islam after 9/11, wars that the United States could not avoid but also could not integrate into a multilayered global strategy. When the only global power becomes obsessed with a single region, the entire world is unbalanced. Imbalance remains the defining characteristic of the global system today.

While the collapse of the Soviet Union ended the European epoch, it also was the end of the era that began in 1945, and it was accompanied by a cluster of events that tend to accompany generational shifts. The 1989-1991 period marked the end of the Japanese economic miracle, the first time the world had marveled at an Asian power's sustained growth rate as the same power's financial system crumbled. The end of the Japanese miracle and the economic problem of integrating East and West Germany both changed the way the global economy worked. The 1991 Maastricht Treaty set the stage for Europe's attempt at integration and was the framework for Europe in the post-Cold War world. Tiananmen Square set the course for China in the next 20 years and was the Chinese answer to a collapsing Soviet empire. It created a structure that allowed for economic development but assured the dominance of the Communist Party. Saddam Hussein's invasion of Kuwait was designed to change the balance of power in the Persian Gulf after the Iraq-Iran war and tested the United States' willingness to go to war after the Cold War.

In 1989-1991 the world changed the way it worked, whether measured in centuries or generations. It was an extraordinary period whose significance is only now emerging. It locked into place a long-term changing of the guard, where North America replaced Europe as the center of the international system. But generations come and go, and we are now in the middle of the first generational shift since the collapse of the European powers, a shift that began in 2008 but is only now working itself out in detail.

What happened in 2008 was one of the financial panics that the global capitalist system periodically suffers. As is frequently the case, these panics first generate political crises within nations, followed by changes in the relations among nations. Of these changes, three in particular are of importance, two of which are directly linked to the 2008 crisis. The first is the European financial crisis and its transformation into a political crisis. The second is the Chinese export crisis and its consequences. The third, indirectly linked to 2008, is the shift in the balance of power in the Middle East in favor of Iran.

The European Crisis

The European crisis represents the single most significant event that followed from the financial collapse of 2008. The vision of the European Union was that an institution that would bind France and Germany together would make the wars that had raged in Europe since 1871 impossible. The vision also assumed that economic integration would both join France and Germany together and create the foundations of a prosperous Europe. Within the context of Maastricht as it evolved, the European vision assumed that the European Union would become a way to democratize and integrate the former Communist countries of Eastern Europe into a single framework.

However, embedded in the idea of the European Union was the idea that Europe could at some point transcend nationalism and emerge as a United States of Europe, a single political federation with a constitution and a unified foreign and domestic policy. It would move from a free trade zone to a unified economic system to a single currency and then to further political integration built around the European Parliament, allowing Europe to emerge as a single country.

Long before this happened, of course, people began to speak of Europe as if it were a single entity. Regardless of the modesty of formal proposals, there was a powerful vision of an integrated European polity. There were two foundations for it. One was the apparent economic and social benefits of a united Europe. The other was that this was the only way that Europe could make its influence felt in the international system. Individually, the European states were not global players, but collectively they had the ability to become just that. In the post-Cold War world, where the United States was the sole and unfettered global power, this was an attractive opportunity.

The European vision was smashed in the aftermath of 2008, when the fundamental instability of the European experiment revealed itself. That vision was built around Germany, the world's second-largest exporter, but Europe's periphery remained too weak to weather the crisis. It was not so much this particular crisis; Europe was not built to withstand any financial crisis. Sooner or later one would come and the unity of Europe would be severely strained as each nation, driven by different economic and social realities, maneuvered in its own interest rather than in the interest of Europe.

There is no question that the Europe of 2012 operates in a very different way than it did in 2007. There is an expectation in some parts that Europe will, in due course, return to its old post-Cold War state, but that is unlikely. The underlying contradictions of the European enterprise are now revealed, and while some European entity will likely survive, it probably will not resemble the Europe envisioned by Maastricht, let alone the grander visions of a United States of Europe. Thus, the only potential counterweight to the United States will not emerge in this generation.

China and the Asian Model

China was similarly struck by the 2008 crisis. Apart from the inevitably cyclical nature of all economies, the Asian model, as seen in Japan and then in 1997 in East and Southeast Asia, provides for prolonged growth followed by profound financial dislocation. Indeed, growth rates do not indicate economic health. Just as it was for Europe, the 2008 financial crisis was the trigger for China.

China's core problem is that more than a billion people live in households earning less than $6 a day, and the majority of those earn less than $3 a day. Social tensions aside, the economic consequence is that China's large industrial plant outstrips Chinese consumer demand. As a result, China must export. However, the recessions after 2008 cut heavily into China's exports, severely affecting GDP growth and threatening the stability of the political system. China confronted the problem with a massive surge in bank lending, driving new investment and supporting GDP growth but also fueling rampant inflation. Inflation created upward pressure on labor costs until China began to lose its main competitive advantage over other countries.

The China Syndrome. From here.

For a generation, Chinese growth has been the engine of the global economic system, just as Japan was in the previous generation. China is not collapsing any more than Japan did. However, it is changing its behavior, and with it the behavior of the international system.

Looking Ahead

If we look at the international system as having three major economic engines, two of them -- Europe and China -- are changing their behavior to be less assertive and less influential in the international system. The events of 2008 did not create these changes; they merely triggered processes that revealed the underlying weaknesses of these two entities.

Somewhat outside the main processes of the international system, the Middle East is undergoing a fundamental shift in its balance of power. The driver in this is not the crisis of 2008 but the consequences of the U.S. was in the region and their termination. With the U.S. withdrawal from Iraq, Iran has emerged as the major conventional power in the Persian Gulf and the major influence over Iraq. In addition, with the continued survival of the al Assad regime in Syria through the support of Iran, there is the potential for Iranian influence to stretch from western Afghanistan to the Mediterranean Sea. Even if the al Assad regime fell, Iran would still be well-positioned to assert its claims for primacy in the Persian Gulf.

Just as the processes unleashed in 1989-1991 defined the next 20 years, so, too, will the processes that are being generated now dominate the next generation. Still powerful but acutely off-balance in its domestic and foreign policies, the United States is confronting a changing world without yet having a clear understanding of how to deal with this world or, for that matter, how the shifts in the global system will affect it. For the United States strategically, the fragmentation of Europe, the transformation of global production in the wake of the Chinese economy's climax, and the dramatically increased power of Iran appear as abstract events not directly affecting the United States.

Each of these events will create dangers and opportunities for the United States that it is unprepared to manage. The fragmentation of Europe raises the question of the future of Germany and its relationship with Russia. The movement of production to low-wage countries will create booms in countries hitherto regarded as beyond help (as China was in 1980) and potential zones of instability created by rapid and uneven growth. And, of course, the idea that the Iranian issue can be managed through sanctions is a form of denial rather than a strategy.

Three major areas of the world are in flux: Europe, China and the Persian Gulf. Every country in the world will have to devise a strategy to deal with the new reality, just as 1989-1991 required new strategies. The most important country, the United States, had no strategy after 1991 and has no strategy today. This is the single most important reality of the world. Like the Spaniards, who, in the generation after Columbus' voyage, lacked a clear sense of the reality they had created, Americans have no clear sense of the world they find themselves in. This fact continues to define how the world works.

Therefore, we next turn to American strategy in the next 20 years and consider how it will reshape itself.

The State of the World: Explaining U.S. Strategy
February 28, 2012 | 1033 GMT
By George Friedman

The fall of the Soviet Union ended the European epoch, the period in which European power dominated the world. It left the United States as the only global power, something for which it was culturally and institutionally unprepared. Since the end of World War II, the United States had defined its foreign policy in terms of its confrontation with the Soviet Union. Virtually everything it did around the world in some fashion related to this confrontation. The fall of the Soviet Union simultaneously freed the United States from a dangerous confrontation and eliminated the focus of its foreign policy.

In the course of a century, the United States had gone from marginal to world power. It had waged war or Cold War from 1917 until 1991, with roughly 20 years of peace between the two wars dominated by the Great Depression and numerous interventions in Latin America. Accordingly, the 20th century was a time of conflict and crisis for the United States. It entered the century without well-developed governmental institutions for managing its foreign policy. It built its foreign policy apparatus to deal with war and the threat of war; the sudden absence of an adversary inevitably left the United States off-balance.

After the Cold War

The post-Cold War period can be divided into three parts. A simultaneous optimism and uncertainty marked the first, which lasted from 1992 until 2001. On one hand, the fall of the Soviet Union promised a period in which economic development supplanted war. On the other, American institutions were born in battle, so to speak, so transforming them for a time of apparently extended peace was not easy. Presidents George HW Bush and Bill Clinton both pursued a policy built around economic growth, with periodic and not fully predictable military interventions in places such as Panama, Somalia, Haiti and Kosovo.

These interventions were not seen as critical to U.S. national security. In some cases, they were seen as solving a marginal problem, such as Panamanian dictator Manuel Noriega's drug trafficking. Alternatively, they were explained as primarily humanitarian missions. Some have sought a pattern or logic to these varied interventions; in fact, they were as random as they appeared, driven more by domestic politics and alliance pressures than any clear national purpose. U.S. power was so overwhelming that these interventions cost relatively little and risked even less.

The period where indulgences could be tolerated ended on Sept. 11, 2001. At that point, the United States faced a situation congruent with its strategic culture. It had a real, if unconventional, enemy that posed a genuine threat to the homeland. The institutions built up during and after World War II could function again effectively. In an odd and tragic way, the United States was back in its comfort zone, fighting a war it saw as imposed on it.

The period from 2001 until about 2007 consisted of a series of wars in the Islamic world. Like all wars, they involved brilliant successes and abject failures. They can be judged one of two ways. First, if the wars were intended to prevent al Qaeda from ever attacking the United States again in the fashion of 9/11, they succeeded. Even if it is difficult to see how the war in Iraq meshes with this goal, all wars involve dubious operations; the measure of war is success. If, however, the purpose of these wars was to create a sphere of pro-U.S. regimes, stable and emulating American values, they clearly failed.

By 2007 and the surge in Iraq, U.S. foreign policy moved into its present phase. No longer was the primary goal to dominate the region. Rather, it was to withdraw from the region while attempting to sustain regimes able to defend themselves and not hostile to the United States. The withdrawal from Iraq did not achieve this goal; the withdrawal from Afghanistan probably will not either. Having withdrawn from Iraq, the United States will withdraw from Afghanistan regardless of the aftermath. The United States will not end its involvement in the region, and the primary goal of defeating al Qaeda will no longer be the centerpiece.

President Barack Obama continued the strategy his predecessor, George W. Bush, set in Iraq after 2007. While Obama increased forces beyond what Bush did in Afghanistan, he nevertheless accepted the concept of a surge -- the increase of forces designed to facilitate withdrawal. For Obama, the core strategic problem was not the wars but rather the problem of the 1990s -- namely, how to accommodate the United States and its institutions to a world without major enemies.

The Failure of Reset

The reset button Hillary Clinton gave to the Russians symbolized Obama's strategy. Obama wanted to reset U.S. foreign policy to the period before 9/11, a period when U.S. interventions, although frequent, were minor and could be justified as humanitarian. Economic issues dominated the period, and the primary issue was managing prosperity. It also was a period in which U.S.-European and U.S.-Chinese relations fell into alignment, and when U.S.-Russian relations were stable. Obama thus sought a return to a period when the international system was stable, pro-American and prosperous. While understandable from an American point of view, Russia, for example, considers the 1990s an unmitigated disaster to which it must never return.

The problem in this strategy was that it was impossible to reset the international system. The prosperity of the 1990s had turned into the difficulties of the post-2008 financial crisis. This obviously created preoccupations with managing the domestic economy, but as we saw in our first installment, the financial crisis redefined the way the rest of the world operated. The Europe, China and Russia of the 1990s no longer existed, and the Middle East had been transformed as well.

During the 1990s, it was possible to speak of Europe as a single entity with the expectation that European unity would intensify. That was no longer the case by 2010. The European financial crisis had torn apart the unity that had existed in the 1990s, putting European institutions under intense pressure along with trans-Atlantic institutions such as NATO. In many ways, the United States was irrelevant to the issues the European Union faced. The Europeans might have wanted money from the Americans, but they did not want 1990s-style leadership.

China had also changed. Unease about the state of its economy had replaced the self-confidence of the elite that had dominated during the 1990s in China. Its exports were under heavy pressure, and concerns about social stability had increased. China also had become increasingly repressive and hostile, at least rhetorically, in its foreign policy.

In the Middle East, there was little receptivity to Obama's public diplomacy. In practical terms, the expansion of Iranian power was substantial. Given Israeli fears over Iranian nuclear weapons, Obama found himself walking a fine line between possible conflict with Iran and allowing events to take their own course.

Limiting Intervention

This emerged as the foundation of U.S. foreign policy. Where previously the United States saw itself as having an imperative to try to manage events, Obama clearly saw that as a problem. As seen in this strategy, the United States has limited resources that have been overly strained during the wars. Rather than attempting to manage foreign events, Obama is shifting U.S. strategy toward limiting intervention and allowing events to proceed on their own.

Strategy in Europe clearly reflects this. Washington has avoided any attempt to lead the Europeans to a solution even though the United States has provided massive assistance via the Federal Reserve. This strategy is designed to stabilize rather than to manage. With the Russians, who clearly have reached a point of self-confidence, the failure of an attempt to reset relations resulted in a withdrawal of U.S. focus and attention in the Russian periphery and a willingness by Washington to stand by and allow the Russians to evolve as they will. Similarly, whatever the rhetoric of China and U.S. discussions of redeployment to deal with the Chinese threat, U.S. policy remains passive and accepting.

It is in Iran that we see this most clearly. Apart from nuclear weapons, Iran is becoming a major regional power with a substantial sphere of influence. Rather than attempt to block the Iranians directly, the United States has chosen to stand by and allow the game to play out, making it clear to the Israelis that it prefers diplomacy over military action, which in practical terms means allowing events to take their own course.

This is not necessarily a foolish policy. The entire notion of the balance of power is built on the assumption that regional challengers confront regional opponents who will counterbalance them. Balance-of-power theory assumes the leading power intervenes only when an imbalance occurs. Since no intervention is practical in China, Europe or Russia, a degree of passivity makes sense. In the case of Iran, where military action against its conventional forces is difficult and against its nuclear facilities risky, the same logic applies.

In this strategy, Obama has not returned to the 1990s. Rather, he is attempting to stake out new ground. It is not isolationism in its classic sense, as the United States is now the only global power. He appears to be engineering a new strategy, acknowledging that many outcomes in most of the world are acceptable to the United States and that no one outcome is inherently superior or possible to achieve. The U.S. interest lies in resuming its own prosperity; the arrangements the rest of the world makes are, within very broad limits, acceptable.

Put differently, unable to return U.S. foreign policy to the 1990s and unwilling and unable to continue the post-9/11 strategy, Obama is pursuing a policy of acquiescence. He is decreasing the use of military force and, having limited economic leverage, allowing the system to evolve on its own.

Implicit in this strategy is the existence of overwhelming military force, particularly naval power.

Europe is not manageable through military force, and it poses the most serious long-term threat. As Europe frays, Germany's interests may be better served in a relationship with Russia. Germany needs Russian energy, and Russia needs German technology. Neither is happy with American power, and together they may limit it. Indeed, an entente between Germany and Russia was a founding fear of U.S. foreign policy from World War I until the Cold War. This is the only combination that could conceivably threaten the United States. The American counter here is to support Poland, which physically divides the two, along with other key allies in Europe, and the United States is doing this with a high degree of caution.

China is highly vulnerable to naval force because of the configuration of its coastal waters, which provides choke points for access to its shores. The ultimate Chinese fear is an American blockade, which the weak Chinese navy would be unable to counter, but this is a distant fear. Still, it is the ultimate American advantage.

Russia's vulnerability lies in the ability of its former fellow members of the Soviet Union, which it is trying to organize into a Eurasian Union, to undermine its post-Soviet agenda. The United States has not interfered in this process significantly, but it has economic incentives and covert influence it could use to undermine or at least challenge Russia. Russia is aware of these capabilities and that the United States has not yet used them.

The same strategy is in place with Iran. Sanctions on Iran are unlikely to work because they are too porous and China and Russia will not honor them. Still, the United States pursues them not for what they will achieve but for what they will avoid -- namely, direct action. Rhetoric aside, the assumption underlying U.S. quiescence is that regional forces, the Turks in particular, will be forced to deal with the Iranians themselves, and that patience will allow a balance of power to emerge.

The Risks of Inaction

U.S. strategy under Obama is classic in the sense that it allows the system to evolve as it will, thereby allowing the United States to reduce its efforts. On the other hand, U.S. military power is sufficient that should the situation evolve unsatisfactorily, intervention and reversal is still possible. Obama has to fight the foreign policy establishment, particularly the U.S. Defense Department and intelligence community, to resist older temptations. He is trying to rebuild the foreign policy architecture away from the World War II-Cold War model, and that takes time.

The weakness in Obama's strategy is that the situation in many regions could suddenly and unexpectedly move in undesirable directions. Unlike the Cold War system, which tended to react too soon to problems, it is not clear that the current system won't take too long to react. Strategies create psychological frameworks that in turn shape decisions, and Obama has created a situation wherein the United States may not react quickly enough if the passive approach were to collapse suddenly.

It is difficult to see the current strategy as a permanent model. Before balances of power are created, great powers must ensure that a balance is possible. In Europe, within China, against Russia and in the Persian Gulf, it is not clear what the balance consists of. It is not obvious that the regional balance will contain emerging powers. Therefore, this is not a classic balance-of-power strategy. Rather it is an ad hoc strategy imposed by the financial crisis and its impact on psychology and by war-weariness. These issues cannot be ignored, but they do not provide a stable foundation for a long-term policy, which will likely replace the one Obama is pursuing now.

The State of the World: Assessing China's Strategy
March 6, 2012 | 0016 GMT
By George Friedman

Simply put, China has three core strategic interests.

Paramount among them is the maintenance of domestic security. Historically, when China involves itself in global trade, as it did in the 19th and early 20th centuries, the coastal region prospers, while the interior of China -- which begins about 160 kilometers (100 miles) from the coast and runs about 1,600 kilometers to the west -- languishes. Roughly two-thirds of all Chinese citizens currently have household incomes lower than the average household income in Bolivia. Most of China's poor are located west of the richer coastal region. This disparity of wealth time and again has exposed tensions between the interests of the coast and those of the interior. After a failed rising in Shanghai in 1927, Mao Zedong exploited these tensions by undertaking the Long March into the interior, raising a peasant army and ultimately conquering the coastal region. He shut China off from the international trading system, leaving China more united and equal, but extremely poor.

The current government has sought a more wealth-friendly means of achieving stability: buying popular loyalty with mass employment. Plans for industrial expansion are implemented with little thought to markets or margins; instead, maximum employment is the driving goal. Private savings are harnessed to finance the industrial effort, leaving little domestic capital to purchase the output. China must export accordingly.

China's second strategic concern derives from the first. China's industrial base by design produces more than its domestic economy can consume, so China must export goods to the rest of the world while importing raw materials. The Chinese therefore must do everything possible to ensure international demand for their exports. This includes a range of activities, from investing money in the economies of consumer countries to establishing unfettered access to global sea-lanes.

The third strategic interest is in maintaining control over buffer states. The population of the historical Han Chinese heartland is clustered in the eastern third of the country, where ample precipitation distinguishes it from the much more dry and arid central and western thirds. China's physical security therefore depends on controlling the four non-Han Chinese buffer states that surround it: Manchuria, Inner Mongolia, Xinjiang and Tibet. Securing these regions means China can insulate itself from Russia to the north, any attack from the western steppes, and any attack from India or Southeast Asia.

Controlling the buffer states provides China geographical barriers -- jungles, mountains, steppes and the Siberian wasteland -- that are difficult to surmount and creates a defense in depth that puts any attacker at a grave disadvantage.

Challenged Interests

Today, China faces challenges to all three of these interests.

The economic downturn in Europe and the United States, China's two main customers, has exposed Chinese exports to increased competition and decreased appetite. Meanwhile, China has been unable to appropriately increase domestic demand and guarantee access to global sea-lanes independent of what the U.S. Navy is willing to allow.

Those same economic stresses also challenge China domestically. The wealthier coast depends on trade that is now faltering, and the impoverished interior requires subsidies that are difficult to provide when economic growth is slowing substantially.

In addition, two of China's buffer regions are in flux. Elements within Tibet and Xinjiang adamantly resist Han Chinese occupation. China understands that the loss of these regions could pose severe threats to China's security, particularly if such losses would draw India north of the Himalayas or create a radical Islamic regime in Xinjiang.

The situation in Tibet is potentially the most troubling. Outright war between India and China -- anything beyond minor skirmishes -- is impossible so long as both are separated by the Himalayas. Neither side could logistically sustain large-scale multi-divisional warfare in that terrain. But China and India could threaten one another if they were to cross the Himalayas and establish a military presence on the either side of the mountain chain. For India, the threat would emerge if Chinese forces entered Pakistan in large numbers. For China, the threat would occur if large numbers of Indian troops entered Tibet.

China therefore constantly postures as if it were going to send large numbers of forces into Pakistan, but in the end, the Pakistanis have no interest in de facto Chinese occupation -- even if the occupation were directed against India. Likewise, the Chinese are not interested in undertaking security operations in Pakistan. The Indians have little interest in sending forces into Tibet in the event of a Tibetan revolution. For India, an independent Tibet without Chinese forces would be interesting, but a Tibet where the Indians would have to commit significant forces would not be. As much as the Tibetans represent a problem for China, the problem is manageable. Tibetan insurgents might receive some minimal encouragement and support from India, but not to a degree that would threaten Chinese control.

So long as the internal problems in Han China are manageable, so is Chinese domination of the buffer states, albeit with some effort and some damage to China's reputation abroad.

The key for China is maintaining interior stability. If this portion of Han China destabilizes, control of the buffers becomes impossible. Maintaining interior stability requires the transfer of resources, which in turn requires the continued robust growth of the Chinese coastal economy to generate the capital to transfer inland. Should exports stop flowing out and raw materials in, incomes in the interior would quickly fall to politically explosive levels. (China today is far from revolution, but social tensions are increasing, and China must use its security apparatus and the People's Liberation Army to control these tensions.)

Maintaining those flows is a considerable challenge. The very model of employment and market share over profitability misallocates scores of resources and breaks the normally self-regulating link between supply and demand. One of the more disruptive results is inflation, which alternatively raises the costs of subsidizing the interior while eroding China's competitiveness with other low-cost global exporters.

For the Chinese, this represents a strategic challenge, a challenge that can only be countered by increasing the profitability on Chinese economic activity. This is nearly impossible for low value-added producers. The solution is to begin manufacturing higher value-added products (fewer shoes, more cars), but this necessitates a different sort of work force, one with years more education and training than the average Chinese coastal inhabitant, much less someone from the interior. It also requires direct competition with the well-established economies of Japan, Germany and the United States. This is the strategic battleground that China must attack if it is to maintain its stability.

A Military Component

Besides the issues with its economic model, China also faces a primarily military problem. China depends on the high seas to survive. The configuration of the South China Sea and the East China Sea render China relatively easy to blockade. The East China Sea is enclosed on a line from Korea to Japan to Taiwan, with a string of islands between Japan and Taiwan. The South China Sea is even more enclosed on a line from Taiwan to the Philippines, and from Indonesia to Singapore. Beijing's single greatest strategic concern is that the United States would impose a blockade on China, not by positioning its 7th Fleet inside the two island barriers but outside them. From there, the United States could compel China to send its naval forces far away from the mainland to force an opening -- and encounter U.S. warships -- and still be able to close off China's exits.

That China does not have a navy capable of challenging the United States compounds the problem. China is still in the process of completing its first aircraft carrier; indeed, its navy is insufficient in size and quality to challenge the United States. But naval hardware is not China's greatest challenge. The United States commissioned its first aircraft carrier in 1922 and has been refining both carrier aviation and battle group tactics ever since. Developing admirals and staffs capable of commanding carrier battle groups takes generations. Since the Chinese have never had a carrier battle group in the first place, they have never had an admiral commanding a carrier battle group.

China understands this problem and has chosen a different strategy to deter a U.S. naval blockade: anti-ship missiles capable of engaging and perhaps penetrating U.S. carrier defensive systems, along with a substantial submarine presence. The United States has no desire to engage the Chinese at all, but were this to change, the Chinese response would be fraught with difficulty.

While China has a robust land-based missile system, a land-based missile system is inherently vulnerable to strikes by cruise missiles, aircraft, unmanned aerial vehicles currently in development and other types of attack. China's ability to fight a sustained battle is limited. Moreover, a missile strategy works only with an effective reconnaissance capability. You cannot destroy a ship if you do not know where it is. This in turn necessitates space-based systems able to identify U.S. ships and a tightly integrated fire-control system. That raises the question of whether the United States has an anti-satellite capability. We would assume that it does, and if the United States used it, it would leave China blind.

China is therefore supplementing this strategy by acquiring port access in countries in the Indian Ocean and outside the South China Sea box. Beijing has plans to build ports in Myanmar, which is flirting with ending its international isolation, and Pakistan. Beijing already has financed and developed port access to Gwadar in Pakistan, Colombo and Hambantota in Sri Lanka, Chittagong in Bangladesh, and it has hopes for a deepwater port at Sittwe, Myanmar. In order for this strategy to work, China needs transportation infrastructure linking China to the ports. This means extensive rail and road systems. The difficulty of building this in Myanmar, for example, should not be underestimated.

But more important, China needs to maintain political relationships that will allow it to access the ports. Pakistan and Myanmar, for example, have a degree of instability, and China cannot assume that cooperative governments will always be in place in such countries. In Myanmar's case, recent political openings could result in Naypyidaw's falling out of China's sphere of influence. Building a port and roads and finding that a coup or an election has created an anti-Chinese government is a possibility. Given that this is one of China's fundamental strategic interests, Beijing cannot simply assume that building a port will give it unrestricted access to the port. Add to this that roads and rail lines are easily sabotaged by guerrilla forces or destroyed by air or missile attacks.

In order for the ports on the Indian Ocean to prove useful, Beijing must be confident in its ability to control the political situation in the host country for a long time. That sort of extended control can only be guaranteed by having overwhelming power available to force access to the ports and the transportation system. It is important to bear in mind that since the Communists took power, China has undertaken offensive military operations infrequently -- and to undesirable results. Its invasion of Tibet was successful, but it was met with minimal effective resistance. Its intervention in Korea did achieve a stalemate but at horrendous cost to the Chinese, who endured the losses but became very cautious in the future. In 1979, China attacked Vietnam but suffered a significant defeat. China has managed to project an image of itself as a competent military force, but in reality it has had little experience in force projection, and that experience has not been pleasant.

Internal Security vs. Power Projection

The reason for this inexperience stems from internal security. The People's Liberation Army (PLA) is primarily configured as a domestic security force -- a necessity because of China's history of internal tensions. It is not a question of whether China is currently experiencing such tensions; it is a question of possibility. Prudent strategic planning requires building forces to deal with worst-case situations. Having been designed for internal security, the PLA is doctrinally and logistically disinclined toward offensive operations. Using a force trained for security as a force for offensive operations leads either to defeat or very painful stalemates. And given the size of China's potential internal issues and the challenge of occupying a country like Myanmar, let alone Pakistan, building a secondary force of sufficient capability might not outstrip China's available manpower but would certainly outstrip its command and logistical capabilities. The PLA was built to control China, not to project power outward, and strategies built around the potential need for power projection are risky at best.

It should be noted that since the 1980s the Chinese have been attempting to transfer internal security responsibilities to the People's Armed Police, the border forces and other internal security forces that have been expanded and trained to deal with social instability. But despite this restructuring, there remain enormous limitations on China's ability to project military power on a scale sufficient to challenge the United States directly.

There is a disjuncture between the perception of China as a regional power and the reality. China can control its interior, but its ability to control its neighbors through military force is limited. Indeed, the fear of a Chinese invasion of Taiwan is unfounded. It cannot mount an amphibious assault at that distance, let alone sustain extended combat logistically. One option China does have is surrogate guerrilla warfare in places like the Philippines or Indonesia. The problem with such warfare is that China needs to open sea-lanes, and guerrillas -- even guerrillas armed with anti-ship missiles or mines -- can at best close them.

Political Solution

China therefore faces a significant strategic problem. China must base its national security strategy on what the United States is capable of doing, not on what Beijing seems to want at the moment. China cannot counter the United States at sea, and its strategy of building ports in the Indian Ocean suffers from the fact that its costs are huge and the political conditions for access uncertain. The demands of creating a force capable of guaranteeing access runs counter to the security requirements inside China itself.

As long as the United States is the world's dominant naval power, China's strategy must be the political neutralization of the United States. But Beijing must make certain that Washington does not feel so pressured that it chooses blockade as an option. Therefore, China must present itself as an essential part of U.S. economic life. But the United States does not necessarily see China's economic activity as beneficial, and it is unclear whether China can maintain its unique position with the United States indefinitely. Other, cheaper alternatives are available. China's official rhetoric and hard-line stances, designed to generate nationalist support inside the country, might be useful politically, but they strain relations with the United States. They do not strain relations to the point of risking military conflict, but given China's weakness, any strain is dangerous. The Chinese feel they know how to walk the line between rhetoric and real danger with the United States. It is still a delicate balance.

There is a perception that China is a rising regional and even global power. It may be rising, but it is still far from solving its fundamental strategic problems and further yet from challenging the United States. The tensions within China's strategy are certainly debilitating, if not fatal. All of its options have serious weaknesses. China's real strategy must be to avoid having to make risky strategic choices. China has been fortunate for the past 30 years being able to avoid such decisions, but Beijing utterly lacks the tools required to reshape that environment. Considering how much of China's world is in play right now -- Sudanese energy disputes and Myanmar's political experimentation leap to mind -- this is essentially a policy of blind hope.

The State of the World: Germany's Strategy
March 12, 2012 | 2217 GMT
By George Friedman

The idea of Germany having an independent national strategy runs counter to everything that Germany has wanted to be since World War II and everything the world has wanted from Germany. In a way, the entire structure of modern Europe was created to take advantage of Germany's economic dynamism while avoiding the threat of German domination. In writing about German strategy, I am raising the possibility that the basic structure of Western Europe since World War II and of Europe as a whole since 1991 is coming to a close.

If so, then the question is whether historical patterns of German strategy will emerge or something new is coming. It is, of course, always possible that the old post-war model can be preserved. Whichever it is, the future of German strategy is certainly the most important question in Europe and quite possibly in the world.

Origins of Germany's Strategy

Before 1871, when Germany was fragmented into a large number of small states, it did not pose a challenge to Europe. Rather, it served as a buffer between France on one side and Russia and Austria on the other. Napoleon and his campaign to dominate Europe first changed the status of Germany, both overcoming the barrier and provoking the rise of Prussia, a powerful German entity. Prussia became instrumental in creating a united Germany in 1871, and with that, the geopolitics of Europe changed.

What had been a morass of states became not only a unified country but also the most economically dynamic country in Europe -- and the one with the most substantial ground forces. Germany was also inherently insecure. Lacking any real strategic depth, Germany could not survive a simultaneous attack by France and Russia. Therefore, Germany's core strategy was to prevent the emergence of an alliance between France and Russia. However, in the event that there was no alliance between France and Russia, Germany was always tempted to solve the problem in a more controlled and secure way, by defeating France and ending the threat of an alliance. This is the strategy Germany has chosen for most of its existence.

The dynamism of Germany did not create the effect that Germany wanted. Rather than split France and Russia, the threat of a united Germany drew them together. It was clear to France and Russia that without an alliance, Germany would pick them off individually. In many ways, France and Russia benefited from an economically dynamic Germany. It not only stimulated their own economies but also provided an alternative to British goods and capital. Nevertheless, the economic benefits of relations with Germany did not eliminate the fear of Germany. The idea that economics rule the decisions of nations is insufficient for explaining their behavior.

Prime Minister Winston Churchill gives the "Victory" sign
to crowds in London on Victory in Europe Day.
(Photo credit: Wikipedia)

Germany was confronted with a strategic problem. By the early 20th century the Triple Entente, signed in 1907, had allied Russia, France and the United Kingdom. If they attacked simultaneously at a time of their choosing, these countries could destroy Germany. Therefore, Germany's only defense was to launch a war at a time of its choosing, defeat one of these countries and deal with the others at its leisure. During both World War I and World War II, Germany first struck at France and then turned to deal with Russia while keeping the United Kingdom at bay. In both wars, the strategy failed. In World War I, Germany failed to defeat France and found itself in an extended war on two fronts. In World War II, it defeated France but failed to defeat Russia, allowing time for an Anglo-American counterattack in the west.

Binding Germany to Europe

Germany was divided after World War II. Whatever the first inclinations of the victors, it became clear that a rearmed West Germany was essential if the Soviet Union was going to be contained. If Germany was to be rearmed, its economy had to be encouraged to grow, and what followed was the German economic miracle. Germany again became the most dynamic part of Europe.

The issue was to prevent Germany from returning to the pursuit of an autonomous national strategy, both because it could not resist the Soviet forces to the east by itself and, more important, because the West could not tolerate the re-emergence of divisive and dangerous power politics in Europe. The key was binding Germany to the rest of Europe militarily and economically. Put another way, the key was to make certain that German and French interests coincided, since tension between France and Germany had been one of the triggers of prior wars since 1871. Obviously, this also included other Western European countries, but it was Germany's relationship with France that was most important.

Militarily, German and French interests were tied together under the NATO alliance even after France withdrew from the NATO Military Committee under Charles de Gaulle. Economically, Germany was bound with Europe through the emergence of more sophisticated multilateral economic organizations that ultimately evolved into the European Union.

After World War II, West Germany's strategy was threefold. First, it had to defend itself against the Soviet Union in concert with an alliance that would effectively command its military through NATO. This would limit German sovereignty but eliminate the perception of Germany as a threat. Second, it would align its economy with that of the rest of Europe, pursuing prosperity without undermining the prosperity of other countries. Third, it would exercise internal political sovereignty, reclaiming its rights as a nation without posing a geopolitical threat to Western Europe. After the fall of the Soviet Union, this was extended to include Eastern European states.

The strategy worked well. There was no war with the Soviets. There was no fundamental conflict in Western Europe and certainly none that was military in nature. The European economy in general, and the German economy in particular, surged once East Germany had been reintegrated with West Germany. With reintegration, German internal sovereignty was insured. Most important, France remained linked to Germany via the European Union and NATO. Russia, or what was left after the collapse of the Soviet Union, was relatively secure so long as Germany remained part of European structures. The historical strategic problem Germany had faced appeared solved.

Europe's Economic Crisis

The situation became more complex after 2008. Germany's formal relationship with NATO remained intact, but without the common threat of the Soviet Union, the alliance was fracturing over the divergent national interests of its members. The European Union had become Germany's focus, and the bloc had come under intense pressure that made the prior alignment of all European countries more dubious. Germany needed the European Union. It needed it for the reasons that have existed since World War II: as a foundation of its relationship with France and as a means to ensure that national interest would not generate the kinds of conflicts that had existed in the past.

It needed the European Union for another reason as well. Germany is the second-largest exporter in the world. It exports to many countries, but Europe is a critical customer. The free-trade zone that was the foundation of the European Union was also one of the foundations of the German economy. Protectionism in general, but certainly protectionism in Europe, threatened Germany, whose industrial plant substantially outstripped its domestic consumption. The pricing of the euro aided German exports, and regulations in Brussels gave Germany other advantages. The European Union, as it existed between 1991 and 2008, was critical to Germany.

However, the European Union no longer functions as it once did. The economic dynamics of Europe have placed many countries at a substantial disadvantage, and the economic crisis of 2008 triggered a sovereign debt crisis and banking crisis in Europe.

There were two possible solutions in the broadest sense. One was that the countries in crisis impose austerity in order to find the resources to solve their problem. The other was that the prosperous part of Europe underwrites the debts, sparing these countries the burden of austerity. The solution that has been chosen is obviously a combination of the two, but the precise makeup of that combination was and remains a complex matter for negotiation.

Germany needs the European Union to survive for both political and economic reasons. The problem is that it is not clear that a stable economic solution can emerge that will be supported by the political systems in Europe.

Germany is prepared to bail out other European countries if they impose austerity and then take steps to make sure that the austerity is actually implemented to the degree necessary and that the crisis is not repeated. From Germany's point of view, the roots of the crisis lie in the fiscal policies of the troubled countries. Therefore, the German price for underwriting part of the debt is that European bureaucrats, heavily oriented toward German policies, be effectively put in charge of the finances of countries receiving aid against default.

This would mean that these countries would not control either taxes or budgets through their political system. It would be an assault on democracy and national sovereignty. Obviously, there has been a great deal of opposition from potential recipients of aid, but it is also opposed by some countries that see it as something that would vastly increase the power of Germany. If you accept the German view, which is that the debt crisis was the result of reckless spending, then Germany's proposal is reasonable. If you accept the view of southern Europe, which is that the crisis was the result of the European Union's design, then what Germany is proposing is the imposition of German power via economics.

It is difficult to imagine a vast surrender of sovereignty to a German-dominated EU bureaucracy, whatever the economic cost. It is also difficult to imagine Germany underwriting the debt without some controls beyond promises; even if the European Union is vitally important to the Germans, German public opinion will not permit it. Finally, it is difficult to see how, in the long term, the Europeans can reconcile their differences on this issue. The issue must come to a head, if not in this financial crisis then in the next -- and there is always a next crisis.

An Alternative Strategy

In the meantime, the basic framework of Europe has changed since 1991. Russia remains a shadow of the Soviet Union, but it has become a major exporter of natural gas. Germany depends on that natural gas even as it searches for alternatives. Russia is badly in need of technology, which Germany has in abundance. Germany does not want to invite in any more immigrants out of fear of instability. However, with a declining population, Germany must do something.

Russia also has a declining population, but even so, it has a surplus of workers, both unemployed and underemployed. If the workers cannot be brought to the factories, the factories can be brought to the workers. In short, there is substantial synergy between the Russian and German economies. Add to this that the Germans feel under heavy pressure from the United States to engage in actions the Germans want to be left out of, while the Russians see the Americans as a threat to their interests, and there are politico-military interests that Germany and Russia have in common.

NATO is badly frayed. The European Union is under tremendous pressure and national interests are now dominating European interests. Germany's ability to use the European Union for economic ends has not dissipated but can no longer be relied on over the long term. Therefore, it follows that Germany must be considering an alternative strategy. Its relationship with Russia is such a strategy.

Germany is not an aggressive power. The foundation of its current strategy is its relationship with France in the context of the European Union. The current French government under President Nicolas Sarkozy is certainly committed to this relationship, but the French political system, like those of other European countries, is under intense pressure. The coming elections in France are uncertain, and the ones after that are even less predictable. The willingness of France to engage with Germany, which has a massive trade imbalance with France, is an unknown.

However, Germany's strategic interest is not necessarily a relationship with France but a relationship with either France or Russia to avoid being surrounded by hostile powers. For Germany, a relationship with Russia does as well as one with France. An ideal situation for Germany would be a Franco-German-Russian entente. Such an alliance has been tried in the past, but its weakness is that it would provide too much security to Germany, allowing it to be more assertive. Normally, France and Russia have opposed Germany, but in this case, it is certainly possible to have a continuation of the Franco-German alliance or a Russo-French alliance. Indeed, a three-way alliance might be possible as well.

Germany's current strategy is to preserve the European Union and its relationship with France while drawing Russia closer into Europe. The difficulty of this strategy is that Germany's trade policies are difficult for other European countries to manage, including France. If Germany faces an impossible situation with the European Union, the second strategic option would be a three-way alliance, with a modified European Union or perhaps outside of the EU structure. If France decides it has other interests, such as its idea of a Mediterranean Union, then a German-Russian relationship becomes a real possibility.

A German-Russian relationship would have the potential to tilt the balance of power in the world. The United States is currently the dominant power, but the combination of German technology and Russian resources -- an idea dreamt of by many in the past -- would become a challenge on a global basis. Of course, there are bad memories on both sides, and trust in the deepest sense would be hard to come by. But although alliances rely on trust, it does not necessarily have to be deep-seated trust.

Germany's strategy, therefore, is still locked in the EU paradigm. However, if the EU paradigm becomes unsupportable, then other strategies will have to be found. The Russo-German relationship already exists and is deepening. Germany thinks of it in the context of the European Union, but if the European Union weakens, Russia becomes Germany's natural alternative.

Additional Article of Interest:

The Rise of Regionalism in Japan
March 26, 2012 | 1323 GMT
By Stratfor

The Japanese political system may be on the verge of a radical shift. The popularity of the country’s established national political parties, the ruling Democratic Party of Japan (DPJ) and opposition Liberal Democratic Party (LDP), is at a historic low, coinciding with record numbers of voters identifying themselves as independents.

At the same time, regional parties campaigning against entrenched Japanese bureaucratic interests are making gains and readying themselves for national elections. If they find success there, it could signify the first major change in the country’s political system since World War II, which in turn would have a significant effect on regional dynamics.

Analysis

According to a late February poll by Fuji TV, only 32 percent of Japanese voters support the Cabinet of Prime Minister Yoshihiko Noda, and only 16.6 percent say they would vote for the DPJ in the next round of parliamentary elections. The LDP is faring little better, with the support of only 21.4 percent of voters.

Meanwhile, regional political parties have begun to win elections. In late 2010, Genzei Nippon (“tax reduction Japan”) won Aichi prefecture’s governorship as well as the mayorship in Nagoya and a majority in its city assembly. Then in 2011, Osaka Ishin no Kai (“Osaka Restoration Association”) won Osaka prefecture’s governorship, Osaka city’s mayorship and majorities in both the prefectural and city assemblies.

Since these elections, the parties’ popularity has dramatically increased, particularly that of Osaka Ishin no Kai and its leader, Osaka mayor Toru Hashimoto, who is seeing a 60 percent approval rating in national polls. These parties are now readying themselves for the next round of lower-house parliamentary elections, set to occur before Aug. 30, 2013. Some have started “politics schools” — seminars where they prepare future candidates to run for parliament — and they have drawn important numbers of aspiring students, some of them lawmakers from the major national parties. Several mainstream political figures also have shown willingness to join Hashimoto should he enter national politics, most notably popular Tokyo Gov. Shintaro Ishihara.

Hashimoto and Ishihara’s prominent positions in regions that have served as historical Japanese power centers have given rise to expectations that they will unite to form a coalition or even a national party. However, their potential for national electoral success is uncertain, as is their ability to execute an agenda of reform in the midst of a Japanese bureaucracy that has been able to resist such efforts for the past two decades.

Past Reform Movements

Reform efforts have been gradually gaining popularity over the past 20 years. These movements have had varied goals, ranging from calls for a federal Japan, economic liberalization, cutting down the bureaucracy, educational reform, and releasing the country from its dependence on the United States for defense.

These also have come in many forms. The first was in 1993 when the LDP was ousted by a broad, anti-status quo coalition of seven minority parties. The coalition came together specifically to eject the LDP, without a clear consensus for what to do after it achieved that goal. Rifts among coalition members eventually began to show, and it stayed in power for only eight months.

Then in 2001, LDP member Junichiro Koizumi rose to the premiership on a platform of “restructuring without sanctuary,” meaning breaking the control over the country by the entrenched bureaucracy by reducing the size of government and instituting a reorganization of the administrative apparatus, including increasing regional governance. Koizumi campaigned as a reform-minded outsider who would battle the entrenched interests of the bureaucratic apparatus. His tenure represented the first real attempt at reform and regionalization. Along with privatization efforts, several proposals for a federal Japan surfaced during this period, and laws designed to further the regionalization project were passed. The bureaucracy, and those with interests in the bureaucracy, proved too strong, and Koizumi’s efforts ultimately had little effect in the short term. But his policies and his popularity paved the way for the rise of the current wave of regionalism.

The Geography of Regionalism

The dynamics behind both Japan’s entrenched bureaucracy and the increasingly popular regional forces are rooted in the country’s mountainous geography. Geography divides Japan into several distinct regions, engendering recurrent center-periphery political tensions and inter-regional conflicts. This has given rise to a historical pattern wherein power in the country is regionalized or centralized, generally through a chaotic process, followed by a long period of relative stability.

The most notable iteration of this pattern was the end of the Tokugawa shogunate, which ruled Japan from the early 1600s to the 1860s. Under the shogunate, the military held the highest authority, but political and economic administration of most domains was left to individual lords. The central government tightly controlled international affairs and trade, greatly restricting the inflow of international goods and information. This system ended with the Meiji Restoration of 1868, which once again centralized control of Japan under the emperor through the intervention of regional forces disaffected with the Tokugawa regime and emboldened by its weakness. The Meiji Restoration also gave rise to an aggressive, expansionist foreign policy.

This centralization continued for the next 50 years and intensified in the late 1920s, when Japan was stricken with economic downturn, international trade disturbances, such as increased protectionist sentiment, and the threat of communist revolt. The central government increased its power over the following period, and its foreign policy became more aggressive. Japan’s defeat in World War II put a relatively quick end to the military aspect of this policy, but it continued its economic expansion, growing to become the world’s second-largest economy in the 1980s.

However, Japan’s economic model was not without faults. The government effectively controlled the economy and international trade, protected domestic agriculture and industry from international competition and aligned itself closely with these industries and banks. Its economic bubble burst in 1989, and the ensuing economic stagnation has continued until the present, made worse by an entrenched bureaucracy reluctant to allow needed reforms that would strip those in power of their status and benefits. Public frustration with this stagnation and perceived bureaucratic corruption has fueled the current rise of regional parties.

Constraints and Potential

These parties have several obstacles to overcome before becoming a true national political force, foremost among them being the established political parties. The DPJ and LDP are reacting to the regionalists by co-opting parts of their platforms, such as electoral reform, chastisement, reform of utilities and most prominently, the passing of legislation that would allow unified regional governments to be created. Also, it is unclear whether a majority of Japanese voters is in favor of radical reform or simply against the current status quo.

Even if these parties do well in national elections, it does not guarantee that they will be able to effect real change in the face of entrenched bureaucratic interests. Though a regionalist third party would go a long way in changing the political makeup of Japan’s parliament, most of the reforms sought by the reformists require either large majorities in parliament or outright constitutional change. This threatens to slow down the pace of reform, making the bureaucracy more likely to absorb this wave of reformers as it has done in the past.

However, these changes could have tremendous regional implications. If the regionalists’ economic project succeeds, it could lead to a resurgence of Japanese economic dynamism that will have effects throughout East Asia. An internally strengthened, economically revitalized and externally emboldened Japan would raise concern in China, which would find itself compelled to counter Japan both diplomatically and militarily, and in South Korea, which would feel threatened between an increasingly competitive Tokyo and Beijing. Japan likely would increase its involvement in maritime issues in the East China Sea and South China Sea, and even farther abroad in the Indian Ocean and Persian Gulf. Japan’s involvement may not necessarily be of an overt military nature, but China will feel pressured in these areas even if Japan simply increases its economic influence. Moreover, a Japanese rise would make it less dependent on the United States and thus less deferential to Washington’s policies, while South Korea may become increasingly dependent on U.S. involvement in the region in the face of two powerful neighbors. Other Southeast Asian states, such as the Philippines or Vietnam, would find a convenient ally in its disputes with China over sea rights.

A situation when both Japan and China are strong and externally active has not been seen in the region for a few generations, and the regionalist movement may just make that happen. If these reforms give rise to nationalist sentiment in Japan, tensions are sure to increase in a region with a history of resentment and mutual fear.

Responding to a Planetary Emergency: Global Partnerships and Global Struggles

noreply@blogger.com (James Matthew) — Sun, 11 Nov 2012 19:22:00 +0000

It is not just because it is 2012. The threat of radical climactic change is now not just a mere scientific proposition. The world's worst polluter, the United States, was the last victim of a severe weather disturbance - hurricane Sandy a.ka. the "Frankenstorm" - which battered New Jersey and several other states in the East Coast. Ironically, it came just weeks after defeated Republic presidential candidate Mitt Romney mocked President-elect Barack Obama for promising "to begin to slow the rise of the oceans and to heal the planet".

The UNFCCC Conference of Parties (COP) 18 in Doha, Qatar on the last week of November to the first week of December this year is seen by some as our final hope to save world - our final hope to deeply cut global greenhouse gas emissions to prevent catastrophic global warming. As such, movements around the world prepared as coordinated "Global Week of Action" this week to reiterate its message to the governments of the world - in particular, to the recalcitrant governments of the North.

It is thus fortunate that I was invited to speak on "MDG 8- Global Partnership" for the “MDG Youth Training Program” being organized by MDG Achievement Fund in partnership with UP-NCPAG Student Government. The training seeks to educate university students on the MDGs and provide them an opportunity to draft an action plan for the MDGs. This is a good opportunity to encourage our students to join the Global Week of Action and champion an effective global partnership to stop climate change.

Here is my presentation:

Responding to Planetary Emergencies through Global Partnership, Global Struggles: Climate Justice and MDG 8 on Prezi

You may also click here to download. The presentation is derived from the materials of Jubilee South - Asia Pacific Movement on Debt and Development.

The 15th Petition for a TRO - Netizens vs. the Cybercrime Prevention Act

noreply@blogger.com (James Matthew) — Mon, 08 Oct 2012 09:48:00 +0000

Today, the Philippine Internet Freedom Alliance (PIFA.ph) filed a petition at the Supreme Court (SC) for a Temporary Restraining Order (TRO) on Republic Act 10175 or the Cybercrime Prevention Act of 2012. Below is an outline of the substantive arguments in the Petition:

I. RA 10175 violates the right to privacy and due process (Sec 16, 19).
II. RA 10175 violates the right to equal protection (Sec 6, Sec 19).
III. RA 10175 violates the right to free speech (Sec 19, Sec 4(c)).
IV. RA 10175 violates jus cogens norms of international law (Sec 4(c)).
V. RA 10175 is an ex post facto law.
VI. RA 10175 imposes cruel and unusual punishment.

See the full petition below:

Petitioners are : PHILIPPINE INTERNET FREEDOM ALLIANCE, composed of DAKILA-PHILIPPINE COLLECTIVE FOR MODERN HEROISM, represented by Leni Velasco, PARTIDO LAKAS NG MASA, represented by Cesar S. Melencio, FRANCIS EUSTON R. ACERO, MARLON ANTHONY ROMASANTA TONSON, TEODORO A. CASIÑO, NOEMI LARDIZABAL-DADO, IMELDA MORALES, JAMES MATTHEW B. MIRAFLOR, JUAN G.M. RAGRAGIO, MARIA FATIMA A. VILLENA, MEDARDO M. MANRIQUE, JR., LAUREN DADO, MARCO VITTORIA TOBIAS SUMAYAO, IRENE CHIA, ERASTUS NOEL T. DELIZO, CRISTINA SARAH E. OSORIO, ROMEO FACTOLERIN, NAOMI L. TUPAS, KENNETH KENG, ANA ALEXANDRA C. CASTRO

Petition

In the Philippines, the primacy and high esteem accorded freedom of expression is a fundamental postulate of our constitutional system. This right was elevated to constitutional status in the 1935, the 1973 and the 1987 Constitutions, reflecting our own lesson of history, both political and legal, that freedom of speech is an indispensable condition for nearly every other form of freedom. Moreover, our history shows that the struggle to protect the freedom of speech, expression and the press was, at bottom, the struggle for the indispensable preconditions for the exercise of other freedoms. For it is only when the people have unbridled access to information and the press that they will be capable of rendering enlightened judgments. In the oft-quoted words of Thomas Jefferson, we cannot both be free and ignorant.

- Mr. Chief Justice Reynato S. Puno, speaking for the Court en banc, in Chavez v. Gonzales and National Telecommunications Commission, G.R. No. 168338, February 15, 2008.

Nature of the Petition

1. This is a petition for Certiorari and Prohibition under Rule 65 of the 1997 Rules of Civil Procedure which seeks to assail for being patently unconstitutional R.A. 10175, also known as the Cybercrime Prevention Act of 2012.

2. Due to the infringement and violation of the Petitioners’ constitutional rights of privacy, freedom of expression, speech, and due process by the Respondents – who have acted with grave abuse of discretion amounting to lack or excess of jurisdiction – through the enactment and im-plementation of the Cybercrime Prevention Act of 2012, Petitioners have no other plain, speedy or adequate remedy in the ordinary course of law.

3. Thus, Petitioners are constrained, in order to protect their constitutional rights, to seek relief with the Honorable Court by filing the instant petition under Rule 65 of the 1997 Rules of Civil Procedure.

Certiorari and Prohibition and:Or Injunction With Prayer for Issuance of Status Quo Ante Order by PIFA

Log-out. Hit the Streets. Fight for Internet Freedom.

noreply@blogger.com (James Matthew) — Mon, 01 Oct 2012 08:53:00 +0000

The Cybercrime Prevention Act of 2012 or Republic Act No. 10175 threatens our basic rights and freedoms. This law works against ordinary netizens -- bloggers, freelance writers, website owners, social network users. etc. -- and disregards, among other things, our right to privacy and freedom of expression.

To safeguard these rights and freedoms, we, the members of the Philippine Internet Freedom Alliance (PIFA), ask you to leave the virtual world for a while, and join BLACK TUESDAY, a SILENT and PEACEFUL PROTEST against CYBER MARTIAL LAW.

At 10 am, we assemble at the Padre Faura entrance of Robinsons Manila.
At 10:30 am, with our central banner saying STOP CYBER MARTIAL LAW and our mouths covered with black tape (to be provided by PIFA), we march to the Supreme Court. Everyone is encouraged (but not required) to bring black cartolina or placards/signs that are all black, symbolizing the silencing of free speech.
At 11 am, we read our Unity Statement in front of the Supreme Court to let the three branches of our government and the Filipino nation know why this law should be stopped.

Join us netizens, and STOP CYBER MARTIAL LAW !!!

For those who cannot join the demonstration on Tuesday, you can show your solidarity by taking part in the online BLACKOUT -- you can either take your site offline or display on your web sites and social media accounts the BLACK 'STOP CYBER MARTIAL LAW' digital banners / images found at the PIFA Facebook Group Album: https://www.facebook.com/media/set/?set=oa.320745244691388&type=1

For inquiries, please text Kenneth Keng at 0915 790 00 18, or send him a Facebook private message at https://www.facebook.com/kenneth.keng.3 .

You don't believe us? Check this out:

Related links:
PIFA Facebook Group: https://www.facebook.com/groups/PIFA.ph/
PIFA web site: http://pifa.ph/
Text of the Cybercrime Prevention Act of 2012 or Republic Act No. 10175: http://www.gov.ph/2012/09/12/republic-act-no-10175/

Lean Alejandro (1960-87)

noreply@blogger.com (James Matthew) — Wed, 19 Sep 2012 08:19:00 +0000

"The socialist man must know how to compute the distance of the stars, how to differentiate a fish from a shark, a mammal from a reptile. He must know how to distill wine into liquor and how to arrive at e=mc^2. He must know how to cook bacon, butcher a pig and roast a lamb. He must be capable of leading armies into battle. He must know how to follow orders, give orders and he must know when to disobey them. He must be able at debate, at lobbying, at open struggle. He must know how to analyze difficult political situations, how to get out of one and how to convince others that they must do the same. He must know how to sail a ship, dig a latrine, construct a pigsty, wash clothes, wash dishes, plan an offensive, plan a retreat, mix martinis, drink martinis, differentiate brandy from whisky, keep quiet, participate, take care of babies, manage a state bureaucracy, soothe pain, comfort the sorrowful, maintain his composure in hot water, when to watch, when to participate, repair appliances, maintain a car, purge revisionists, ride a horse, run from a bull, swim, play tennis, drown gracefully, sink with his ship with honor along with the mice, discuss Mao, debunk Zinoviev, ridicule Stalin, appreciate a beehive, raise chickens, cook chickens, play boogle (respectably), correctly read Mabini, recruit members into the movement, motivate members to struggle, host a party, play at least one musical instrument, be critical, self-critical, honest... The socialist man is the total man. Specialization is for ants." - Lean Alejandro (July 10, 1960 - September 19, 1987)

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

Remembering Lean
Antoinette R. Raquiza
19 September 2012
Club Filipino

It is a pleasure to be with old friends and was a real pleasure to read through many of the essays that the Foundation has compiled for the anthology. A few of the tributes were written fairly recently—but the vast majority of the 36 short pieces were written almost 25 years ago, when some of Lean’s good friends, still mourning his death, were moved to set pen to paper and commemorate their fallen comrade.

The anthology, which we hope to publish next year, is a long overdue synthesis of such works. Many were published in newspapers now defunct; almost all, therefore, surely fated to be lost had they not been tucked away, and safeguarded for years. It is appropriate that these writings be preserved in a book, in the same way that Lidy and some of Lean’s closest friends and colleagues thought it was appropriate, all those years ago, to establish a foundation in Lean’s name, dedicated to preserving his memory, advancing his work, and cherishing the flame of freedom and justice that he tried to keep lit.

But this collection will be more than a commemoration. It will also be a bit of a time capsule, memorializing the thoughts and predications of so many young activists, so long ago. Who were the people who wrote down these tributes and what was the relationship between their lives, Lean’s and the time they lived in? I thought it would be appropriate to reflect on these matters as a way of introducing this book project—and a good way to begin is by recalling where we stood at the time when Lean was gunned down and assessing where we now stand.

We are, today, marking the 40th year anniversary of the declaration of martial law, an event that long served as a benchmark on the chronology of the Marcos dictatorship—a chronology by which so many of us measured our lives. We know, of course, of the First Quarter Storm, and the generation it spawned: young women and men who began the fight against Marcos: a cadre of activists that Lean and his generation—my generation—grew up admiring, emulating, and sometimes challenging.

We of course—and Lean maybe most of all—came from a different activist generation. By the late 1970s, the movement had begun to experiment with political struggles and united fronts. The universities, long a recruitment ground for what we then called higher forms of struggle, began to serve more as stable sites of struggle, and to recruit activists who were better positioned to negotiate the broader spans of the united front as well as of the urban mass protest.

Lean was perhaps the definitive figure in that generation—a compelling speaker, a committed activist—but also someone who grasped the urbane and increasingly cosmopolitan place that Manila was becoming. He found hundreds of ways to say that revolution should be compatible with a good life—with art, with culture, with accomplishment. And in this way, he was different from the First Quarter storm-ers, the generation of activists who pursued revolution by going to the countryside, attempting to live like peasants, and in many cases, turning their backs on the urban milieu that Lean thrived in and in which so many of us have thrived. Lean was made for the united front, for the television interview, for the necessary task of moving mainstream society toward progressive politics and activism, and toward a better world.

But what about the generation from which many of the writers in this book came? What did we think, 25 years ago? We were – remember - less than a year into the post-Marcos period: something we hoped for and probably feared a little bit. In 1987, we were still on the cusp of things—the first post-Marcos presidential election was still before us. Many of us felt that, with critical rethinking, we would improve on and consolidate a revolutionary strategy for the new dispensation. and that things would be better. We were, in an important sense, politically young—or maybe felt young again.

Lean, when he was killed, was—like the movement he rose from--both young and old. He had experience, had established his capacity to lead and inspire, had made choices—but he was also impossibly, tragically young. Going over the articles for this book, one is powerfully struck, again and again, by the sense of loss and anger, of the huge waste in his potential. Writer after writer describe as well their unshakable conviction that Lean’s death would not be in vain, that he would inspire others to become relevant, that the movement would redeem his sacrifice.

Those are haunting words to read twenty five years later. Lean, on these pages, remains the young activist and idealist, a leader in a time that needed leaders, and found them. A young man with a future before him and work to do, killed--this collection reminds us--in a movement with a future before it, and work to do. And the movement has progressed, and tackled issues, and drawn in new activists, and made some more progress. But it is an older movement than the movement that Lean helped built—a movement with stretch marks, a bald patch or two, a movement that sometimes tells the same stories, and every now and then, after a big meal, falls asleep at the table.

The beauty of a hero who dies young—and this is cold comfort to those who loved him, and wish that he too could fall asleep at the table—is that he will always be, in our mind’s eye, fresh, and new, and leaning into a future full of promise. The tragedy of that promise when it is cut short has a mirror image: the gift of a youth preserved.

This anthology will do us the great favor of reminding a new generation—and those of us who have been around for a while—what Lean was like, and how deeply he inspired people. But it also provides a chance to measure our politics against the politics of a young martyr, a rising mass movement, and the optimistic activists who, shouldering the burden of their grief at the time of Lean’s death, were sure that hundreds would rise to take his place.

The world, and our politics, are more complicated than that, of course. Those of us who stuck around learned hard lessons, suffered setbacks and half victories, and watched a tarnish creep across the once bright vision of our future.

This collection will open a window that we all would do well to look through. It seeks to provide a window that certainly opens onto Lean and his life. But it also opens onto our younger, perhaps braver selves, and reminds us of a time when we thought anything was possible, and in so thinking, made it so. And that may be enough to encourage us to look, as we did all those years ago, for our next Lean, and to fan the embers he once set aglow in the hearts of those who loved him.

Why Change the World?

noreply@blogger.com (James Matthew) — Tue, 29 May 2012 06:01:00 +0000

"In the end, the primary source of this deep anthropological crisis is the thinking that human beings, at their very core, are disconnected from amongst themselves and the rest of its reality."

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

Purpose

Don Quixote. Pablo Picasso. 1955

Since humanity appeared in the face of the earth, the earth underwent a massive transformation like any other that happened to it for over four billion years. Humanity’s curiosity transformed rocks to highways, wood to intricate sculptures, minerals to trains, ships, computers and power grids. The emergent order originally imposed by billions of years of natural selection has been replaced by an artificial, intelligent order imposed by the human mind.

A human being’s instinct is to know, to test, to explore. Whether exploring the seas and under it, or staring at the skies and beyond it into space, or traveling deep into tropical forests in order to retrieve an herb (which chemical components one can later discover by observing its cells in a microscope), or detailing the anatomical features of our bodies, or testing the limits of artistic expressions – humanity’s impulse is always to increase its understanding and discover the profundity of the universe, the human psyche, and the subconscious.

For this purpose, we develop tools to one, increase our time spent learning and exploring by efficiently producing what we need for convenient survival (e.g. food, shelter, and leisure); and two, increase our capacity to learn by developing instrumentation and computational tools to aid our process of learning (e.g. microscope, personal computers, the paintbrush). Even as we are connected to the universe, we inevitably transform it in our search for meaning and knowledge. Whether our actuations destroy or preserve the earth, for instance, is subordinated to our unquenchable thirst for understanding and its prerequisite – convenient and harmonious survival. We developed genetic engineering to mass manufacture food; upon learning that it may have adverse effects on health, we also further developed past knowledge on organic agriculture to produce healthy food. We developed hydrocarbons that fuel our four-stroke engines; we also developed ecological restoration techniques to mitigate effects of global warming.

The dynamics of society is always towards further technological development for the purpose of discovering ourselves and the universe. It is an inexorable march towards increasing our understanding of our purpose, our meaning and the meaning of everything else. In the process of technological development and evolution, it is inevitable that the society which supports us all should evolve as well – and with it the value systems, beliefs, ideologies, and social structures. Our tools give us the form with which we interact. As we develop our technology, technology changes us. To paraphrase philosopher of technology Karl Marx – the windmill gave us a feudal lord; the steam-mill, a capitalist.

Obsolescence

Cover of Giles Slade’s book Made to Break: Technology and Obsolescence in America.

As we develop our technology further, we come closer and closer to a point when a social system can no longer harness the technology effectively in order to provide the maximum welfare for human beings. Poverty and misery persists amid the availability of technology to ensure abundance of food and energy, yet those who can produce have sought to produce more for profit and those who can consume are consuming even more to satisfy false notions of happiness – all to the detriment of our environment and its capacity to act both as a source (with which we produce) and a sink (which absorb our by-products).

Our economic and social systems, as well as its manifestations – our monetary system, political organization, and cultural institutions – are already obsolete. Our scientists are becoming bankers: engineers of financial products that don’t represent anything. Our artists are becoming advertisers: they package and sell us goods that we don’t need. Our story-tellers who would have weaved for humanity a grand story of its meaning are becoming propagandists for few and narrow interests. Such a waste of human talent not directed to the increasing sophistication of knowledge and understanding of our meaning has been the primary phenotype of a species whose social organization is at the throes of extinction.

The immediate face of dysfunctional society which we confront today is a fundamentally unhealthy individual, community, nation, and global society. Alienation, disconnect, apathy has been the characteristic of those whose lives and destinies had been dictated by the need to have more money. The abundance that can already be provided by our existing technology is not being used to allow people to self-actualize and to pursue their instinct of learning and experience-accumulation. Instead, we have at one end a segment of impoverished people who can barely afford their needs (or most of times, cannot) and consigned to cynicism, ignorance, and dependence, at the middle an overworked and psychologically-abused segment addicted to the inanities of contemporary media and entertainment, and at the other end a decadent elite class whose notion of fulfillment is defined by continuous accumulation of wealth and power – a display of primitive desire for “conspicuous consumption” to borrow from Thorstein Veblen. Thus, very few human beings are able to self-actualize by the very design of the system, defined as we are of social rules permeating almost all aspects of our lives.

Disconnect

Isolation. Justine Beckett, Middlesex university.

In the end, the primary source of this deep anthropological crisis is the thinking that human beings, at their very core, are disconnected from amongst themselves and the rest of its reality. For instance, it has been quite appalling that some kids, when asked where common fruits and vegetables came from, would unhesitatingly point to the grocery store where those are sold as commodities. The origins of what we eat, use, and enjoy are continuously being blurred away by the exigencies of the market, consigned to anonymity. The farm and the farmer, the artisan and the workshop, the scientist and the laboratory are no longer source of things, but the increasingly huge supermarket of the likes of Walmart and McDonald's, SM and Jollibee.

Thus, we consume without thinking that with our consumption, we encourage production cycles that necessarily destroy our environment and human beings. We tune in on prime-time TV to watch American Idol, when the only way that power is supplied for peak time use would be through oil barges that further pollute our air and build up greenhouse gases in the atmosphere. We no longer care that we when buy our IPads and IPhones, we encourage Foxconn’s company in China to perpetuate its inhuman abuse of Chinese workers whose only respite is suicide. We indulge in profligate purchasing of products which will end up in waste, even if the number of places where we can conveniently dispose is becoming smaller and smaller.

This thinking that we are fundamentally disconnected from one another has also permeated our political institutions. Here and in many places around the world, we saw the emergence of states which powers are reified and thought to be independent of human consensus. Its ugliest incarnation is the totalitarianism exemplified by fascism in Italy and perversions of communist thought in USSR and China. The state was seen (or was made to be seen) as a separate, absolute power apart from people’s political agency. As a consequence, like one would not attempt to stop the impersonal force of a storm, it was allowed to conduct horrible abuses to citizens - as if its power is not derived from its citizen's consent. A milder but no less troubling manifestation would be the patron-client states in the Third World. There, governments are controlled by corrupt and rent-seeking political elites, with some sections of the populace collaborating because they no longer see that their government’s legitimacy is hinged on their compliance.

Fragmentation

From directorymanila.net

The disconnectedness that is the cause of our social ills has deeply been embedded in the way our nation, the Philippines, evolved and emerged out of the formal colonization and the World War II. Years under imperialism produced a people who can almost no longer see themselves as a collective. On the one hand, Spain’s divide-and-rule tactic rewired the Filipino DNA towards regional factionalism – a characteristic that is carried over even by Filipinos outside the country who, unlike other migrant workers, prefer to associate as regional “tongue” groups rather than as Filipinos. On the other, American neo-colonial rule ingrained to us the superiority of Western culture over our own, and made us betray our origins in exchange for hamburgers and call centers.

For our masses, whatever connectedness that is left has mostly been eliminated by the gruelling experience of poverty, for if there is anything that is anything that hunger and want taught the Filipino masses, it is that “kanya kanya”, to-each-his-own mentality is the best bet one has in surviving the dog-eat-dog world. Collective action does not work, people power doesn’t pay. Labor unions are crushed every day, and there is no lack of self-interested politicians who will hijack collective actions by the masses. One must care only for himself or his family, as nobody else will. With healthcare and education privatized, no one else will pay for your family’s cost if one member gets ill; no one else will pay for your children’s learning. But even the family is not safe: labor migration has been relentless in breaking familial ties, separating parents from their children and lovers from one another – tearing up our social fabric in the process. The social costs have been unprecedented.

For an elite, what we have is a socially disinterested traitor class who, for the most part of our history, collaborated with foreign powers for their own parochial and particularistic interests. They are a class that has not demonstrated the united vision and action characterizing the leadership of countries which successfully leapfrogged from poverty to modernity. This resulted to a backward system with feudal vestiges, compromised liberal democratic institutions, distorted markets amid lack of state economic planning and regulation, warring families controlling land or other low-productivity, technologically-challenged business conglomerates throughout generations, deeply conflicted political dynasties maintaining private armies and stranglehold in national and local apparatuses of power. They cannot even get their acts together in the face of the dangers they face as a class in the globalized world of free market competition. It is no wonder that liberalization during the Ramos period decimated our fragmented industrial and manufacturing sectors, controlled as they are by our fragmented elite.

For the state, ours have been characterized by an utter lack of a unifying vision and strategic action. Our governments cannot even think beyond the six-year term of the Philippine Development Plan (PDP), whereas other states invest in 25 to 50 year planning cycles. For all his horrendous abuses, the long-range thinking exemplified by former President Ferdinand Marcos has remained unparalleled by his more democratic counterparts. Unfortunately for us, this kind of nationalist, strategic thinking is a prerequisite for almost all nation’s transition from backwardness to modernity. Singapore’s insecurity has propelled its journey from third to first world. South Korea’s crushing poverty was ended by government’s heavy-handed intervention in industrial development. India’s Nehru prepared the country towards full independence by reducing the West’s economic influence. Even the United States birth was characterized by a painful struggle against the colonists of the British Empire. For these nations and many others, national liberation gives the energy with which to build developmental force and economic strength.

Thus the need to end our fragmentation as a nation. We must see ourselves as connected to one another and bound to one another by common interests and a common destiny. Part of seeing ourselves as human beings connected with the rest of humanity and the world, we must set ourselves to thinking as a community and as a nation. Binding ourselves to one another as a people is a concrete step towards ending the disconnectedness that is the cause of our social dysfunction.

Systems

The Vitruvian Man, Leonardo Da Vinci. 1487.

Where do we begin? We take heed from a quote from economist John Maynard Keynes. He said, that “sooner or later, it is ideas, not vested interests, which are dangerous for good or evil.” In the end, it our ideas, our way of seeing the world, that brings forth our disconnectedness, our alienation, and our misery. How then should we think? How then should we see the world?

The answer is thinking in terms of systems. While it has been with humanity since civilizations emerged, “systems thinking” as a cognitive methodology was further refined and developed since when MIT Prof. Jay Forrester developed the field of systems dynamics in 1956. Simply put, systems thinking is an approach to problem solving that views problems holistically as a function of systems, instead of looking at and reacting to specific parts, outcomes or events. It recognizes the intrinsic interconnectedness of everything that is part of our reality, and orients our interventions according to this interconnectedness.

In explicit rejection of Rene Descartes's legacy of “scientific” reductionism, systems thinking is believing that 1) components of a system are best captured in the context of relationships, linkages, and interactions rather than in isolation, and 2) in understanding that change is cyclical and simultaneous rather than linear. Thus, what we do now will always have unintended consequences, and what we did was not done in a vacuum.

“Systems thinking” is our best weapon to end individualist thought that has caused our disconnectedness and fragmentation. Understanding that nature, human beings, communities, and nations are part of systems allows us to do things that take into account our impact on everyone and everything else. We also begin to understand why we do what we do – the influences of everything and everyone else on our own thinking and biases.

In one sense, “systems thinking” is not something that has been “constructed”. It emerged out of and as a reaction to the predominant individualist and reductionist philosophy of the 19th century. The fact that it has now found its way to our sciences, our arts, and our methodologies is a signal that the underlying society behind reductionism is now gradually being replaced by a new society with its own logos and ethos. It is the coming generation, our generation, that will facilitate the coming to hegemony of a new philosophy that will guide us towards a more connected and caring world.

Agency

Premonition of Civil War. Salvador Dali. 1936. Oil on canvas

Our generation comes from the ranks of what is dubbed as the "Generation Y" - the generation who grew up under the promises of prosperity and mass consumption only to finish school in a period of record-breaking unemployment, massive poverty, and worsening inequality, amid millions of migrant workers abroad. This contradiction compels the new generation towards a re-examination of the fundamentals, infused with a general optimism for a better future under a new order of things. This, among other things, makes the Generation Y the carrier of ideals that will end the scourge of individualist and reductionist thought.

Generation Y stands as the most interconnected generation in history - aided as it is by mobile technologies and social networking tools (Facebook itself was created by a member of Generation Y). Never before in history that it is possible for an individual to organize and keep track the volume of social contacts that we have now, and to communicate with them with speed, convenience, and interactivity never before possible. The rabid individualism bred by one-way mass media in the past generations is paving the way to a more interdependent culture, ripe for socially-embedded thinking that is needed to forward a new social ethos.

It is in the era of Generation Y that the internet began challenging the concept of private, intellectual property through the proliferation of open technologies, peer-to-peer sharing tools for music and other artistic creations, mass production of cheap pirated products. This makes Generation Y as potentially more open to the concept of decommodification than any other previous generations, and the most willing to embrace the concept of shared resources, community-driven progress, and an “open source” culture.

It is the Generation Y that is the first to face the threat of climate change, potentially with the entirety of their adult lives. This makes them naturally predisposed to understand better the indisputable fact that it is the system itself that induces climate change, that it is ultimately incompatible with sustainable development. Their minds and experiences are fertile ground with which to sprout and cultivate ideas towards an ecological framework.

It is the Generation Y that spawned the Occupy Wall Street and the Arab Spring which revived the political power of collective protest and mass action, again aided by the emergence of new technologies that allowed people to organize themselves. Moreover, Generation Y was raised on a period of social disaffection for the elites: from the emergence of Red Shirts in Thailand to food riots in Africa to the rise of progressive parties amid riots and disorder at the wake of the European debt crisis. Generation X had Latin America and the Bolivarian revolution; Generation Y have US and Europe and the global Occupy movement.

Finally, it is the Generation Y that was born in a country that was known to decline from being second in Asia to the backwaters of development. It is our generation has witnessed how Philippines had sunk so low as to be a victim of China’s expansionism amid continuing US machinations. It is our generation whose families had been victimized by the heart-wrenching labor migration forced upon our parents.

Clearly, if there will be those who can be the harbingers of change, it is we, the Generation Y. It is we who question the assumptions; it is we who can later sweep the old order out and replace it with a new system founded on a renewed sense of humanity and interconnectedness. It is we who can end the disunity that has characterized our nation and unite it towards a vision to end poverty and establish the conditions towards prosperity and modernity. It is we who can break the limits old ways of thinking imposed on the rest of humanity.

Listen

by Bansky

People may not comprehend the coming social order, but it is coming nonetheless. We, in our young age and limited capacities, may not see ourselves as playing a crucial part on this, but none can be further from the truth. Look around government departments – from the Presidential Management Staff to the Department of Health to the Senate and House of Representatives, and check out who draft and make the policies and decisions mouthed and ordered by authorities. Check out the most dynamic political parties and movements, and ask who are those driving the organization and its development. Take a look at the business conglomerates, and the scions who are gradually taking responsibilities away from the senior management.

All of this reminds us of a quote from Arundhati Roy: “Another world is not only possible, she is on her way. On a quiet day, I can hear her breathing.” The world is now slowly coming to grips with the force of change our generation is bringing it. The past generations, while reluctant, are now gradually beginning to accept its own obsolescence and recognize our generation’s vitality and force. The only question is whether we will have the courage and wisdom to understand our potential and push things forward.

In the end, we are all part of the continuing history of human evolution: empires have fallen and revolutions take over, ideologies have been quashed and new narratives become hegemonic, theories have been debunked and new paradigms are calcified. In humanity’s inexorable march towards development and understanding, it has always been guided by new forces with new ideas.

Now is our time. No one else will seize the world but us.

by James Miraflor

Why Higher Wages Make Economic Sense

noreply@blogger.com (James Matthew) — Tue, 15 May 2012 04:15:00 +0000

Last May 1, the usual arguments of the business sector were unleashed with its central theme: No, business cannot afford wage hike. Beset with high cost and poor business climate, business simply cannot survive added cost of labor. How do we attract investments if we increase wages? Look at China and Vietnam. Didn’t they have a cheap labor policy? Aren’t they getting much more investments than us due to lower minimum wages?

As if the anti-wage-hike position isn’t entrenched enough, an army of economists follows with a recital of the dogma of “labor flexibility”. They say, wage level should be equal to the so-called “marginal productivity of labor” – which is economese for whatever the employer wants to pay them. Labor is supposedly not exempt from the law of supply and demand. Raising minimum wage will only increase unemployment, as it supposedly disallows all voluntary labor wage contracts that pay below the minimum wage. It will also introduce inefficiency in the labor markets, now faced with a "deadweight loss" due to the intervention of the government who will always fail to set prices right.

But why, if they are right, aren’t we attracting investments still? What explains Philippine firms’ low level of competitiveness? Why does unemployment remain high? The response has always been, never mind the workers, that it is not enough. Lower wages a bit more, then we’ll get the investments that would have gone to China. Lax regulations a bit more, and we’ll have more productive factories and viable businesses. Dismantle a little bit more unions, and businesses will be more efficient and will eventually increase their wages in the long-run.

This essay says enough. It is high time that the government replace the failed “cheap labor policy” with a policy that increases wage income. In a time when self-rated poverty is worsening, prices of petroleum products remain high if not rising, and wages are not enough to even sustain a decent life for a family of five, no other proposal would be more just and fair than a proposal that increases the share labor gets from the economic pie.

The roadmap towards prosperity through increasing labor income is simple: Increasing wages will induce demand and increase labor productivity. Ensuring that workers are paid well, free to spend on non-basic commodities, and save for their future will facilitate the creation of a strong domestic market and large savings base which domestic banks can capitalize. Higher wages will increase capital-intensiveness of firms, increasing their productivity in the process. Rising corporate income will mean larger revenues for the government, which will pummel it back as welfare and unemployment support.

Let us elaborate.

Pro-Labor Policy and the Road to Prosperity

Great economic booms are usually associated with the industrial peace created by huge concessions to the working class. This, because a nation needs to position a strong, well-paid domestic market as the crucial driver of productivity gains. For instance, the United States (US) after the Great Depression sought to increase workers wages in order to establish a Fordist regime. It is called Fordist following Henry Ford’s decision to increase by leaps and bounds his workers salaries so that they can afford to buy their own cars, from him. Eventually, everyone else followed, and New Deal concessions with the working class plus increasing purchasing power created for the US a robust domestic market that later became the most powerful consuming block in the world. It is every bit as economist Michael Kalecki said: “Workers spend what they get. Capitalists get what they spend.”

Literary Digest interview with Henry Ford (Photo credit: Wikipedia)

Let us take Japan. After WWII, the Diet of Japan passed a very liberal labor law – the Trade Union Act of 1949 which allowed workers to organize, strike, and bargain collectively. Because of intensive labor struggles, Japanese workers experienced rising incomes, creating a huge worker-middle class that served as the avant-garde home demand for Japanese manufacturing industries. In fact, it is the Japanese markets' tightly-constrained demand for kei-haku-tan-sho (light-thin-short-small) products that compelled Japanese firms to innovate, and create never-before-seen products that invaded the global market. Home demand conditions are important, and thus the necessary domestic market through a high wage regime.

This might sound like a chicken-and-egg proposal, for how would capitalists be able to afford higher wages? Aren’t we putting the cart before the horse? In fact, there wouldn’t be a few who would cite China – the master of low wage policy who managed to suck in investments due to cheap labor. They would say that a laissez-faire market and liberal labor policy would be enough to eventually raise the living standards and wages of workers; they may point out that in fact, China’s wages are already on the rise, with Shanghai’s decision to increase 13% per annum its minimum wage until 2015. Never mind the fact that the cost of living in China is pushed down by the social welfare system built by the communist party, which, while challenged, still survives until now: low wage would supposedly translate to higher investments, then higher jobs, then higher worker income.

The contrapositive of this is summed up by President Benigno Aquino’s rhetoric when he disapproved workers’ call for P125 wage hike – saying that businesses cannot afford as much as P194.9 billion additional cost. Setting aside the wrong computation (he used 40 million figure for the workforce which is wrong given that almost a fourth of that number are unpaid family workers, and a huge segment was in the informal sector which doesn’t receive minimum pay anyway), he fails to note that business would also be facing as much as P194.9 billion additional demand. Sure, some of it might go to savings or to taxes – but savings provide capital for business anyway, and increased revenues would go a long way by providing for much needed infrastructure spending.

Practically, in our age now, it is far better to rely on your own domestic market rather than the global market, especially if you are on the process of incubating your industries – as ADB, in a rather crude reversal of its decades old dogma (without apologies for prescribing the failed dogma in the first place), suggested Philippines to do. This is only possible if you develop your domestic market to begin with by ensuring that your buyers are not reduced to slaves – that they can buy for leisure and save for better life, that they have enough wages to do just that.

Higher Wages and Workers’ Productivity

There are arguments that higher wages without corresponding increase in productivity would result to a disaster. One cannot simply do the other way around, they say. Increasing wages beyond its current levels may force firms to face loses and even close – as it is assumed that it is already the maximum of what employers would have offered anyway. This argument ignores the fact that in the US for instance, workers have tripled their productivity in over 30 years while the richest 1% tripled their share of income – with the top 10% absorbing all productivity gains since 1980. Same thing is happening all over the world. Labor is getting more efficient as it gains more skills, yet firms absorb all the windfall. It seems that increasing productivity follows from increasing workers’ upkeep.

In 1892, economist Jacob Schoenhof showed that in the last quarter century (from 1892), England, France, Germany and the United States experienced decreasing cost of production hand in hand with increased earnings of labors. He then presented, vis-a-vis “the iron law of wages”, the “true law of wages”: high wages translate to high productivity, low production cost and low prices. He recommended the following: abolish duty on raw materials, keep on high skill manufactures enough tax to raise revenue, establish technical and art schools to allow laborers to learn better to compete with more artistic foreign rivals, give each free choice to pursue individual interests [1].

Where will workers invest their higher wages? The obsolete neoclassical model would presume that they would substitute work for more leisure, i.e. they will all become “lazy” if you reach a certain point. But this is a static model, and an unsophisticated one at that. We know that a person, after achieving a certain point of wage, would invest in his or her own self-development (through education for its own sake, or for increasing its skills), and what would this effort redound to? Wouldn't it increase productivity? [2]

Workers will invest in education, as long as there are incentives and institutions are in place. And increasing education of our workforce is necessary if we are to transition from labor-intensive production (which pays cheaply) to a capital-intensive one (which yields more value). Eventually, as long as there is a strong regulatory and welfare function of the state, this will redound not to increase in unemployment, but a decrease in labor-hours for all and more social services (due to increased revenue yields as productivity increases).

But a number would indeed, substitute labor to leisure as income rises. Is this necessarily bad? I don't think so. More than the fact that leisure is necessary for the reproduction of labor capacity (wouldn't a good spa now and then refresh your capacity to work?), more demand for leisure would end up creating new industries, generating more employment.

Higher Wages and Capital Productivity

There is another reason why society would benefit from higher wages. Remember that a capitalist decides whether to use labor or equipment in producing a particular commodity. Labor is cheaper in the short-run as it does not require any or huge upfront costs, while investing on capital equipment or technology is expensive in the short-run but cheaper in the long-run as processes become automated and firms save on labor. The decision whether to choose labor or capital depends on the price of the two. Increasing labor price would increase the probability of the firm choosing capital, while decreasing wages would increase demand for labor. Thus, higher wage will simply force employers to shift from labor-intensive to capital-intensive production. China, in fact, is already doing the transition.

Why is this good? Capital-intensive production results in a more efficient production and less waste, and frees up the labor force from processes that are too tedious, dangerous, or boring for human labor. On a firm level, why should an employer pay for three persons to do a task that a single machine can do more reliably and efficiently? On the employee level, why should a person undertake the dangerous task of labor-intensive construction for infrastructure (which, by the way, remains to be one of the most perilous industries for workers) if it can be done by machine, or at least, be done with the aid of a machine? Automation and mechanization minimizes exposure of people to dehumanizing and routine jobs, freeing their intelligence and skill for more advanced types of work.

Sounds familiar? In fact, restated another way, this reminds us of the main argument of advocates “against” wage hikes. They say that the transition to capital-intensive production would decrease the demand for labor – leading to higher unemployment or pressure to lower wages. How can then the shift to capital-intensive production be positive for labor?

There is an analogous case. Centuries ago, it was argued by many political-economists that industry is bad for agriculture because it will attract farmers to become laborers. Higher incomes, far better working conditions, and way higher consistency in income would starve agriculture of personnel. Who would then feed us? People asked this until they found out that industrialization increases agricultural productivity. True, there were fewer peasants, but they are working in a sector that has been made far more efficient by industry-supported mechanization. Such has been the evolution of agriculture that even as the United States has less than 5% of its economy on the agricultural sector, it is a net food exporter. The agricultural sector “suffered” in terms of starved supply of personnel, but society gained as a whole.

Would shifting to capital-intensive production starve the labor market of potential employers? Yes it may, but it will not necessarily be bad if the gains of the industry are felt by the entire society – more so the displaced workers. Instead of retrenchment, why not require industries to retrain its personnel as a force for industrial expansion or deepening? Instead of letting the retrenched and the jobless to wallow into the depths of poverty, why not translate increased revenues due to improving productivity to increased social welfare? Instead of looking at unemployment spending as a burden, why not see it as a necessary incentive for capital-intensiveness in industry? It is the same as Australia subsidizing its industry to prevent its people into shifting to more lucrative but less value added agricultural investment. In the end, it will lead to a more efficient economy, improving productivity, higher incomes, and better working standards for all. [3]

Where will we get the money? I have already hinted at this, but let me restate it: capital-intensive production offers more chance to accumulate profits for firms, translating to higher corporate base that the government can tap. Higher firm productivity can deepen the tax pool of the government if the government will have the political will to capture the windfall. This tax pool will finance social welfare and unemployment benefits. More than that, it can also finance education and human capital formation so that the unemployed can be put back to the labor force again – with better skills and higher productivity.

Russia's technology industry. Picture from telegraph.co.uk.

But how about the employed? Higher wages will largely redound to increased consumption or increased savings, which are both stimulus for increased investments: the former putting upward pressure on supply and the later providing the financing for improving production and expanding to create economies of scale. Moreover, capital-intensiveness raises the “marginal productivity” of labor. The less labor is utilized, the more valuable labor becomes, the higher the required pay for labor becomes. This is the paradox: if we increase wages via government, market is reconfigured such that those who are receiving high wages will continue to do so.

Why does a barber in the US earn ten times as much as the same barber doing the same job in the Philippines? Because their market can afford to pay more, since the wages of consumers are higher. And since higher wages will not just be an output of increased firm productivity (as the instinct is to hold costs down), it has to be extracted from the firms as government policy. Firms are simply not in an informed position to determine wages because they are not concerned with the aggregate demand. Ford was able to do that because of its size. On other cases, it can only be the government [4].

Are Higher Wages Inflationary?

Sure. Higher wages may lead to increase consumption, which would redound to higher investments, which may result to higher productivity. But won’t gains be erased by spiraling inflation? Won’t higher wages lead to firms demanding higher prices for their products? And won’t increased consumption signal higher demand which will bring further upward pressure on prices?

Let us approach the problem on the monetary level. Where will the money for increased wages come from? Of course, from the existing money supply. The demand for money in the aggregate does not increase or decrease - there will be the same number of goods around, and same amount of money supply. What happened merely is a redistribution of wealth from the capitalists to the workers.

If anything, inflation can only come from increased demand of commodities. Let’s assume that inflation will be caused due to aggregate demand increases because of increase in purchasing power of workers. The usual answer is that inflation will erode purchasing power increases –inflation primarily driven by producers increasing their prices in order to reduce demand and prevent exhaustion of its inventory. But what is more realistic – an entrepreneur increasing its price due to increased demand, or him increasing production to increase gross income? Wouldn't capitalists be induced to produce more rather than increase price? This is on top of the fact that there are associated “menu costs” involved - changing menu prices disrupt demand and even supply regularity.

This is also the reason why entrepreneurs will not be inclined to pass the added cost of labor to the price of their products. They would rather expand and increase production, and seek new markets. Expansion rather than tightening has always been the reaction of business to exogenous shocks. If they cannot do so, they will fail anyway. Once volume of sales dips, their net income might not suffice to cover for the interest of their loans to the banks (as we know, it is through banks that firms usually generate their seed capital).

Would their expansion be a success? I think yes, and this is because of increased purchasing power of workers. And we know that as business expands, the more it invests on product development, further decreasing prices and increasing quality. Again, a glorious cycle of increasing wealth [5].

Would there really be inflation to begin with? That has to be empirically established via testing and econometric analysis. Hess and Schweitzer (2000) as well as Jonsson and Palmqvist (2004) have econometrically proven that the link between inflation and wage increases is weak. But even without their studies, there are serious reasons to doubt that real inflation would be significant, or if it is, that its impact wouldn’t be manageable.

Anyway, much of our inflation is “cost-pushed” rather than “demand-pulled” i.e. it is not because of high demand, but because the cost of necessary inputs are high. Over-dependence on imported crude oil and imported foodstuff (from Vietnam) is the culprit for jacking up prices in 2008-2009. This will not be addressed by holding wages down. It can only be addressed by strategic planning to shift to self-sufficiency in renewable energy and food production.

And oh, we forgot to include that in the Philippines, there are other determinants of high production costs. We are for the longest time haunted by high power prices due to a flawed electric power industry and high transportation costs due to low infrastructure spending and failure to share the cost of financing equitably. Our firms, both in the industrial and agricultural sector, face insurmountable barriers to entry to due to presence of stiff foreign competition under the trade liberalization regime. Our MSMEs are burdened with high transactions costs due to red tape in business registration and redundant, inefficient taxations. Why blame labor cost alone?

Labor Protection and Development

We have already established our position for a higher wage on economic grounds. But even if we assume the claim of the anti-wage-hike militants – that economic growth can only occur by dismantling protection on labor – no one of us wants an economically robust country built at the foundation of blood due to wage slavery and labor abuse. We certainly do not want to see Filipino workers committing suicide because their powerhouse industries are giving them subhuman treatment, like the ones producing Blackberries and IPad now in China, or the despicable experience of British workers (as depicted by Oliver Twist) that compelled Marx to write his Communist Manifesto.

We don't want Filipino workers to receive below minimum wage salaries when even minimum wage salary, pegged at P426 per day, is bare 45% of the daily cost of living for a family of five. No morally sound Filipino would want that, even if eventually (as propounded) we will be prosperous because of economic growth. But even in that, there is no guarantee. What if the Filipino capitalists who earned their billions through wage repression suddenly decide to reside in another country (and Filipino aristocrats had a history of doing so), and sell their cheap goods elsewhere? What will happen to the vast majority of Filipinos who were their workers?

There is another way. Prosperity can be achieved, and is not mutually exclusive to that of ensuring welfare for your citizens. When China, as late as the late 1990s, came out to join WTO as a manufacturing giant, it wasn't considered a prosperous country - it was seen as a corrupt oligarchy, where a handful of extremely rich elite feeds from the cheap labor of the rest. Sure it is an economic powerhouse, but it wasn't prosperous. Only under Hu Jintao which focused on wealth redistribution and wage increases that the middle class emerged and China, truly, can be considered wealthy.

The question then becomes, does having accumulated huge capital a necessary condition for prosperity and good life for citizens? I don't think so. Maybe decades ago, it was still necessary, but now, with the level of technology-induced productivity, we no longer have to undergo a social fabric-wrenching experience in labor slavery in order to accumulate capital. We can simultaneously develop industrial capacity through direct government intervention while making sure that productivity increases are shared to workers in the form of wage increases.-30-

Notes:

[1] See Economic and Industrial Delusions by Arthur B. Farquhar; Henry Farquhar. Review of "The Economy of High Wages" by J. Schoenhof by Lindley Miller Keasbey (page 547-548). Available here.

[2] An interesting technical note: this has already been described more abstractly by economist Robert Lucas, Jr. in his human capital accumulation model (1988) of explaining economic growth that does not make an appeal on the neoclassical sense of diminishing returns.

[3] In fact, in the long run, the correct response to automation is not to lay-off people, it would be to shorten working time, as less labor time is required for all individuals to produce the same number and same quality of goods. This is what happened to France, and on a little less scale, the rest of Europe. Instead of automation causing an unemployment crisis, it translated to a five hour work day and a “slow Europe” – as they did not need to work as fast to support their consumption.

[4] If one fears that productivity increases will not meet wage increases, we stop increases until real purchasing power of both firms and employees are no longer increasing. That is the scientific way of doing it. Playing prophet of “a priori” doom will not generate prosperity nor information on how our economy works.

[5] However, this is until such time that real inflation begins to settle in, and this is the period when we have to slow the economy down before unemployment kicks in. China made a brilliant example of this as they shifted to increased taxes after 2005 economic overheating. It only stopped this trend only because of the global economic crisis in 2008, when they again expanded monetary supply through stimulus.

Interesting Readings:

Buchanan, Daniel Houston (1934). The Development of Capitalistic Enterprise in India. Frank Cass & Co. London.

Jonsson, Magnus and Stefan Palmqvist (2004, April). Do Higher Wages Cause Inflation? Sveriges Riksbank Working Paper Series 159.

Hess, Gregory D. and Mark E. Schweitzer (2000 April). Does Wage Inflation Cause Price Inflation? FRB of Cleveland Policy Discussion Paper No. 1.

Schoenhof, Jacob (1892). The Economy of High Wages. An Inquiry into the Cause of High Wages and their Effect on Methods and Cost of Production. G.P. Putnam's Sons.

Some Sources:

http://www.china-briefing.com/news/2012/02/22/minimum-wage-levels-across-china.html

http://www.nationofchange.org/five-reasons-why-very-rich-have-not-earned-their-money-1334670549
http://bulatlat.com/main/2012/05/04/aquino-urged-to-stop-introducing-another-wage-freeze-scheme/

Download article here.

Transforming the 'Southeast Asian Sea' into a 'Shared Regional Area of Essential Commons' by Rasti Delizo

noreply@blogger.com (James Matthew) — Sun, 06 May 2012 04:07:00 +0000

TRANSFORMING THE ‘SOUTHEAST ASIAN SEA’ INTO A
‘SHARED REGIONAL AREA OF ESSENTIAL COMMONS’

RASTI DELIZO*
12 April 2012

The regionally contentious body of water predominantly known throughout Asia as the South China Sea can yet be transformed into a more mutually beneficial regional asset. Geographically located in Southeastern Asia, this vastly huge oceanic area is a historically recognized maritime route which expediently acts as a gateway between the Indian Ocean and the Pacific Ocean. Many governments currently acknowledge its vital importance due to a vast abundance of natural undersea resources with potential wells of alternative energy supplies. And for obvious strategic reasons, this prime bio-diversity spot has long become a regional magnet of attraction to various littoral states and major powers surrounding the area.

As such, China, Taiwan and four ASEAN (Association of Southeast Asian Nations) member-countries are now contesting certain sections of the South China Sea for these same reasons. These territorial claims have characteristically alerted other powerful states and multilateral organizations to the pending disputes as they certainly have the potential to spark off a future military conflict. Since such a war could further conflagrate the entire Asia-Pacific region and inevitably become a dangerous global threat, this overarching regional issue continues to remain a top priority question begging for an immediate solution.

Fundamentally, such an answer must be part of any longer term comprehensive resolution that aims for a more people-centered developmental agenda rather than a purely state-driven one. This is because the latter is usually focused on the interests of the ruling elites while the former is premised on the social-economic needs and aspirations of the region’s peoples who comprise the social majority. In other words, it is the overall common interests of the area’s collective citizenry that must prevail over any short-sighted and narrow aims of the presently ruling regimes.

This ultimately remains both a crux and a dilemma underlying a strategic regional question confounding the East Asian region today. With China now playing a very influential and critical role as the region’s preeminent power, most countries of Southeast Asia are in a quandary as to how to balance their individual and joint relations with Beijing without sacrificing any sovereign interests or attracting the latter’s ire. On the other hand, the United States as a global hegemonic power has recently reinserted its geostrategic weight into the regional equation. More than two decades after the Cold War ended in December 1991, and nearly twenty years after US military forces were ousted from their longtime military bases in the Philippines in November 1992 America is once again re-pivoting its might all around Asia in an apparent encircling-containment of China.

At present, the regional environmental situation contains a wide range of economic-political-security issues, concerns and challenges. This broad mix of overlapping interests and multi-pressure points continue to affect the nature and character of the external policy responses of the East Asian countries concerned. Nevertheless, it is the relative positioning of some of the area’s key power centers, specifically China, the US and the ASEAN that tend to influence major events for now.

Hence, any fundamental changes in East Asia’s future regional strategic architecture will have to take into full consideration the directional thrusts of these regional power centers. While both China and the US can be expected to maintain and pursue their respective counter-positional moves against each other for obvious reasons, it is the ASEAN that will have to be the one to initiate and push for an alternative balance in the region. As a regional association whose member-states are all located in Southeast Asia, ASEAN has to strike an independent path from that of Beijing and Washington. And for it to do so, ASEAN will have to secure a more regionally focused position that is fully centered on the genuine aspirations of the peoples of Southeast Asia and not on the tactical and strategic objectives of the Chinese or the Americans.

A ‘SHARED REGIONAL AREA OF ESSENTIAL COMMONS’

Toward this directional setting, the ASEAN should now rethink and reinvent its currently accepted view of, and attitude to, the South China Sea. This has now become fundamentally imperative after no regional unity was reached in terms of a so-called ‘Code of Conduct’ on this question after the recently concluded 20th ASEAN Summit in Phnom Penh last April 2-4, 2012. This latest regional setback is definitely a communal problem which the ASEAN has yet to overcome and soon.

(Photo: ASSOCIATED PRESS). ASEAN delegation members attend the concluding session at the 20th ASEAN Summit at the Peace Palace in Phnom Penh, Cambodia, Wednesday, April 4, 2012. (AP Photo/Heng Sinith). From here.

And yet, with the currently brewing confrontation between China and the Philippines over the Scarborough Shoal, this has once again created a new tension point unsettling the area. The present situation is a pressing matter which demands for a positively united response from various parties involved. Given this developing context, a new regional framework has to urgently be asserted by the Southeast Asian organization to push for the area’s peacefully cooperative stability.

For a start, the ASEAN must immediately propose that the area already be declared a ‘Shared Regional Area of Essential Commons’ or SRAEC. In the same manner, this SRAEC entity must also be outlined according to its factually precise and geographic location on the global map. Because it is essentially and practically located within an area bounded by at least seven littoral Southeast Asian states, and all belonging to the ASEAN, it should therefore be renamed as the ‘Southeast Asian Sea’ instead. Only China and Taiwan are the remaining states bordering the Southeast Asian Sea that do not belong to the ASEAN.

In broad strokes, the SRAEC has to be recognized and upheld by all the common stakeholders presently involved in the region’s long term future. These will have to include state and non-state entities, together with various regional organizations and even global institutions. Its basic premise and thrust must be to ensure that all the commonly essential natural maritime resources that are now presently found (and have yet to be discovered) within the parameters of the Southeast Asian Sea have to be collectively shared by all stakeholders, especially the region’s vast humanity and not merely a handful of states and their ruling leaders.

(Photo: Reuters) Tanker Yuri Senkevich sails near the Lufeng oil field, 250 kilometers south-east of
[Hong Kong] in the South China Sea. Photo from here.

Hence, the Southeast Asian Sea’s strategic mineral and aquatic resources cannot be claimed by just a few and in the name of ancient empires that have long ago disappeared into the library of world history. In the context of today’s global environmental realities, the Southeast Asian Sea must by now be claimed by the many and in the name of a 21st Century world order shared by all of humankind.

AN INDEPENDENTLY NEUTRAL SRAEC

In pursuing the conceptual framework of a Shared Regional Area of Essential Commons, the ASEAN and proponents of a Southeast Asian Sea-based SRAEC will also have to principally ensure its independence and neutrality. That means, the SRAEC should assert from its declared onset that it cannot be absolutely claimed (wholly or partially) by any one state or regional entity, such as China or the ASEAN. And even more so, the SRAEC must not become a conflict zone under the geopolitical maneuverings of any global superpower, specifically the imperialist thrusts of the US.

No to US imperialism, Chinese expansionism! Photo from here.

The greater challenge in this regard remains the need to break free from the reactionary mindset of realpolitik still guiding the key players on the Southeast Asian Sea question. It will certainly not be very easy to change the counter-posed views of both Beijing and Washington in relation to their respective hegemonic agendas over the broader Asia-Pacific region. At the same time, ASEAN is not collectively united in taking a more independently neutral stance toward both China and the US. This is because it is primarily the Philippines, Vietnam, Singapore, Indonesia, Malaysia and Brunei Darussalam that are highly prone to lean on to the US as a counterforce to China and as such, this imbalance inside the ASEAN is now being exploited by Beijing.

In this regard, China continues to strongly push its demands for a more bilateral and regionally-focused solution to the current regional dilemma affecting the Southeast Asian Sea area. In contrast to this, the US is pushing for a more multilateral approach to solve the regional contradiction. In effect, the Chinese want to ensure their clear dominance over their Southeast Asian neighbors without any interference from another superpower rival across the Pacific Ocean. And in an almost similar manner, the Americans also aim to once more intervene within the area by realigning pro-US countries from Southeast Asia behind its imperialist dictation through a geostrategic coalition to contain the Chinese expansionist actions and aimed at enhancing American control over the Southeast Asian region.

A Caring and Sharing ASEAN. See Cebu declaration here.

At the end of the day, only a progressive direction and an openly participative process within the framework of a Shared Regional Area of Essential Commons for the peoples living around the Southeast Asian Sea can radically alter the balance of power in this highly contentious but vital corner of the world. And maybe perhaps this could become a critically necessary step toward genuinely building a more ‘caring and sharing’ ASEAN common area for all. RTD

*Rasti Delizo is a former head of the Political/Security Affairs Staff of the Macroeconomy and Political Affairs Office (MPO) of the Presidential Management Staff - Office of the President (PMS-OP). He used to teach international politics and Philippine foreign policy.

Uganda be kiddin' me*: Kony 2012, Ugandan Oil Boom, and America's Next Bin Laden

noreply@blogger.com (James Matthew) — Wed, 14 Mar 2012 08:15:00 +0000

A parody pic by a hadtodoittoo posted here.

Kony 2012 has been perceived by many as one of the most effective advocacy strategies in the recent age of viral memes and social networks. Created and launched by the non-government organization Invisible Children, it has a simple objective: to stop and arrest international criminal Josephy Kony of the Lord's Resistance Army in any way possible. It's strategy is simple as well: get as much international support to push the United States (and possibly other states - they are very ambiguous on this) to do its usual thing of saving the world. But an originally all-American movement, the mobilization of support will naturally target the US populace. It's tactic: a year long spectacle of raising awareness, selling campaign paraphernalia, lobbying and leveraging important personalities, and finally, direct action on April - seemingly riding the fad of creative protest actions sparked by of Occupy Wall Street and the Tea Party.

Unfortunately for them, Kony 2012, which gained considerable success in its air war - million hits for its videos, #stopkony trending globally, and sparking a global discourse on Africa and the existence of Christian fundamentalist militias (not unlike that created by the joint US and Philippines forces during the late 1980s, but more on this later) - backfired. Various criticisms had been hurled, from the mild accusation of oversimplification and misplaced attention, to moderate criticism on its failure to highlight and expose Uganda's poor human rights record - in effect condoning or even supporting it, to a vicious assault on Invisible Children itself - exposing the fact that very little actually goes to Uganda and African nations. Then there is also its push for US intervention, which flies in the face of sovereignty issues and the reputation itself of the US military. There are more comprehensive criticisms here, here, and here. (All of these prompted Invisible Children to issue a reply here).

Invisible children graphic. Click image to see it.
Picture from the Guardian.

But, as we know, the issues can can still go deeper. For instance, we can think about how the Kony 2012 phenomenon is placed in the current political milieu. After all, Joseph Kony, the repressive Ugandan state, as well as "US-as-the-policeman-of-the-world" concept didn't emerge in a vacuum. There is always a historical and political context behind any phenomenon.

One of my most insightful friends Primo Morillo had this hypothesis about Kony 2012 and Uganda, a hypothesis I want to share with you. He proposed that Kony 2012's timing is impeccable - in fact, it coincides with the fact that there is recently discovered oil in Uganda. Verifying this assertion, I found out that there are indeed recent interests on a "Ugandan oil boom". This is what prompted me to write this post - which would center on Kony 2012 and the probable US interest on Ugandan oil amid rising oil prices, and its more important implication - that the US establishment is to create pretext for its petro-imperialism, similar to the demonization of Muammar Gaddafi. But I go further and propose that Kony is America's new Osama Bin Laden, meant to justify military intervention in resource-rich Africa.

Oil Prices, the Ugandan Oil Boom, and America's Next Gaddafi

Rising world oil prices at the wake of the seeming recovery of consumer demand after the 2008 global financial crisis has been a critical issue for developing and developed nations alike. An important economic input, volatility in oil prices can destabilize value chains and price expectations. As such, countries have always sought to secure continuous access to oil, either tapping indigenous sources, earning enough currency to buy from the oil market or sealing bilateral deals with oil exports, or securing new resources offshore - using military and diplomatic means.

The United States is no stranger to the third. In fact, the world has seen US's diplomatic schemes, geopolitical machinations, and even outright military interventions in the process of securing its access to oil and other hydrocarbons. American intervention in the Middle East geopolitics is centered on its access for petroleum, but it is not limited in that region. From Iran (1953) to Iraq (2003, also see this) to Afghanistan to even Somalia (1991) [and there are others], the US army tried to vigorously seal its oil access by toppling governments, invasion, searching for terrorists, etc. - masking it's intervention by a host of incredibly unbelievable and far-fetched excuses, from anti-terrorism to humanitarian acts. Recently, the 2011 Libyan "civil war" is also seen as a move to secure oil interest in a time of volatile oil prices (with France and UK taking their share of the pie). To quote Noam Chomsy:

"The oil companies are the major international corporations. Since oil has become important, they have virtually owned the State Department. They are the corporations within the American imperialist system that have the greatest concern for American foreign policy. Because they have the largest overseas investments, their influence over foreign policy has always been extremely strong.”

So what does this have to do with Kony 2012 and Invisible Children's call for another round of US military intervention in Uganda (with the help of similarly brutal Ugandan government, and even if Kony is no longer at Uganda)? Five years ago, about two billion barrels worth of oil were discovered in the landlocked nation, the culmination of years of search which cost at least US$70 million - starting with the oil blocks of Waranga 1, Waranga 2 and Mputa in 1989. Unfortunately for the Ugandan people, which has one of the most corrupt governments in the world, the oil exploration is yet to translate to less poverty and increasing incomes. In fact, 40% on Uganda earns less than $1.25 a day, in a country where inflation is around 30%. Corruption and regulatory flaws in the oil sector are seen as major stumbling blocks.

Of course, the United States quickly denied any interest on Ugandan oil, but we know better. In fact, it's initial move against the LRA in 2011 (something that in the Kony 2012 video Invisible Children claimed was due to its campaigning) was seen by many as a move to secure footing in the region. Of course, it would help a lot that a brutal and corrupt ruling class who would sell out Ugandan national interest at the blink of an eye would be very helpful for this purpose. The timing, as I said, is impeccable. Just this end of February, UK-based Tullow Oil PLC invested at least $1 billion in the exploration of oil and gas in Uganda, leading to the discovery of over a billion barrels of recoverable oil reserves, with an estimated 1.5 billion barrels expected to be found in three exploration blocks - a level of resource that could "place Uganda in the top 50 oil producers in the world." Will the US pass on such an opportunity?

It won't, just as it didn't in Libya. Immediately after the collapse of dictator Muammar Gaddafi, who used oil earnings to provide a semi-welfare state for Libyans (just like the similarly demonized Hugo Chavez of another oil producer Venezuela), the US wasted no time making sure that the rebel groups (some sections of which are suspected to have received support from the US other than the explicit ones) supply them oil. Coincidentally, the 2011 Libyan coup happened with Gaddafi's impeding US oil interest in Libya.

Fishermen near an oil rig on the edge of Lake Albert.
Photograph: Xan Rice. From here.

What the US then need is a new Gaddafi, a new excuse for a new round of African petro-imperialism. Joseph Kony, with all his atrocious crimes against children and the African people, is a perfect one. Having roused up the sentiment of the world against a brutal, sinister figure (unfortunately, he really is evil), all they have to do is to exercise its "white man's burden" and "manifest destiny" and kick out the villain. What happens next, of course, goes under the radar. Invisible Children's Kony 2012 implicitly plays out the intended script - whether or not their purpose is genuine.

The Search for the New Bin Laden: US Hegemony and Religious Extremism

This brings us to another hypothesis. It may be that all US in interested at is oil in Uganda (having a similar foothold at Nigeria). We can, however, extend our suspicion further: just as it intervened in the Middle East politics in the past half century, it may be aiming now to do the same for the African region. And before we dismiss it as mere speculation, we have to ground it first at the fact and context that African economies are recently emerging as "lions on the move" (maybe a play of the "Asian Tiger Economies" of the late 20th century). The growth prospects are so good that the IMF even predicted that Africa will grab seven of the top ten fast growing economies of the world over the next five years. Uganda, actually, was already an early started on this - having made it to the top ten during the two decades to 2000, the only African economy to do so.

A Lion Economy, but who is riding it? It turns out that Beijing has already established an overwhelming presence in African economy - establishing six overseas economic and trade cooperation zones in five African countries (Zambia, Nigeria and Mauritius, Egypt and Ethiopia) and unleashing $328 million US dollars on African infrastructure by the end of 2010. By the end of 2011, 137 Chinese enterprises invested a total of $1.08 billion, with business volume estimated at $3.5 billion and tax contribution reaching $ 119 million.

With this massive money-mongering, US establishment simply cannot let the lion flirt with the dragon - geopolitics dictates that it has to intervene, and intervene fast. Africa may yet evolve into another theater of confrontation between the two giants. In fact, even oil is involved in this battle, with an expanding deal between energy-hungry China and hydrocarbon-rich Africa. Beijing is clearly a huge stumbling block for the US machinations to establish political dominance in Africa for oil security. (And this is not just in Africa. We know that US and China recently locked horns over the control of the oil-rich South China Sea - with the Philippine government as Washington's proxy).

Liberian children hold Chinese flags before the arrival of China's President Hu Jintao.
Photograph: Christopher Herwig/Reuters. From here.

And what is in Africa that the US detest enough to fight? The image of Africa in the US national psyche has always been that of immense poverty amid warring tribes and brutal Christian militias. Kony 2012 cannot paint the picture better. And the Obama administration, scouring the earth for oil amid rocky world petroleum prices and a reelection, can use that. It is foreseeable thus, that we see the war versus Kony turning into a war against all African Christian militias. In the evolving war against brutal religious fundamentalists, Kony will also be the new Bin Laden, and LRA - the new Al Qaeda.

Kony as the next Bin Laden, 21st century's Hitler. Of course, they were all bad men.
But remember how GM supported Hitler's war machine? And when CIA built Osama's Taliban
to fight the Soviets? The play goes on.

Of course, these militias, fostered by religious frenzy and supplied with cheap guns and abducted child soldiers, should be crushed. But with the US in, it may all just be a facade - an illegitimate motive wrapped by a legitimate issue. For as it may intervene to save thousands of lives from barbaric violence, it is maneuvering to subject the entire continent and consigning them to economic slavery. Moreover, it is ironic that while it the move will be against religious fundamentalists (Islamic terrorists then, Christian militias now), it has been expert at using religious militants as war instruments. We only have to remember CIA's creation of the Taliban to ward off the Soviet in Afghan soil, with Osama Bin Laden as its most famous member. Hated terrorist group Abu Sayaff in the Philippines was actually recruited by CIA as mujahideens. CIA, in collaboration with the Philippine army, supported violent Christian vigilantes during its war with the communists in the 1980s (which is the theme of the suppressed movie "Orapronobis").

But, before we even dismiss this as another "conspiracy theory", former European MP Richard Cottrell, a conservative, long exposed that US is actively supporting Kony and the LRA. Kony was the "bad cop" - destabilizing the region to justify humanitarian intervention, and Uganda's dictator Yoweri Museveni the "good cop". The tactic is the same for Congo and other nations within the region.

Towards Sovereign African Peace

Picture from here.

The only way to push for genuine peace in Africa is through sovereign economic development - a kind of development only possible without the imperial motives of US. The likes of Kony will only be truly stopped if we aim to stop first the very force behind their emergence - the perpetuation of colonial and neocolonial relations between the West and Africa, driven by oil and exports and backed by US's powerful military-industrial complex.

In the end, Kony 2012, with all its call for US intervention, will only facilitate the emergence of new Konys in poverty-infested Africa. Whether intentionally or unwittingly, Invisible Children seems to play its part in an old script that aims to subvert sovereign nations and perpetuate an oil-hungry, market-gobbling hegemon.

* coined by Primo Morillo.

Santiago's Bar Exam Result, UP Law Education, and the "Top Ten" Fetish

noreply@blogger.com (James Matthew) — Fri, 09 Mar 2012 03:13:00 +0000

Recently, Sen. Miriam Defensor-Santiago was target of various attacks on her supposedly arrogance towards Atty. Vitaliano Aguirre of the prosecution team during the Corona impeachment trial. If we have been monitoring news, we may have already heard that Aguirre was cited in contempt after covering his ears during a tirade by Sen. Santiago, which included calling the prosecution team "gago" (stupid) for withdrawing the five of the eight articles of impeachment. While criticized for its perceived non-stellar performance, the "gago" (stupid) comment hurled to the prosecution was deemed by many as uncalled for, which may seemed to have given Aguirre the moral reason to reciprocate. Knowing Filipino's behavior towards perceived arrogance, Santiago must have already expected to be admonished publicly, even if she is simply acting out her extreme intolerance to what she perceives as incompetence.

But what troubled me is the propaganda pic below circulating in Facebook, apparently designed as an offshoot of the release of the 2011 Bar Exam results. It capitalizes on the fact that Aguirre got a higher score than Santiago:

An attack against Sen. Santiago circulating in Facebook. The one above is
circulated by a certain Ma. Stella A. Vizmanos

The argument of the propaganda pic suffers from many loopholes. For one, difficulty in bar exams varies across the years. Compare, for instance, the 2001 and 2002 bar exams passing rate: 32.89% and 19.68% respectively. But let us leave it at that and focus on the essence: I don't think we should be equating achievement with grades, in law and in any other field. It gives a false impression to lawyers (as well as other students) that getting a high mark in the bar (or in any other exam) makes you a good lawyer (or professional). For all that people rant on her bar grades, Miriam is a recognized international and constitutional law expert. Prior to becoming elected in the International Court of Justice (ICJ), she was in fact a legal officer of the United Nations High Commission on Refugees.

This fetish on Bar Exam results as a barometer for a lawyer puts into light another issue, that no student from the University of the Philippines College of Law was able to make it to top ten in the recent Bar Examinations Result.

No UP in Top Ten?

That UP, the country's premier university, failed to have one of its students reach the top ten in the bar surprised many, including UP itself (compelling them to have a meeting on the matter). This is when passing rate (31.9% of 5,990 examinees) is the 2nd highest this millennium (after 2001's 32.89%), supposedly due to reforms initiated by Corona. And this is when UP Law graduates consistently made it to the top ten: 4 in 2010, 2 in 2009 and 2008, 3 in 2007 and 2006. In 2005, UP law graduate Joan A. De Venecia even topped the bar.

UP College of Law Centennial Commemorative Stamp

Ironically, the release of the bar exam results facilitated by Corona himself coincided with UP students releasing a survey saying that Corona was no longer trusted by 74% of UP Diliman students. The survey irked Miriam, while Senate President Juan Ponce Enrile (who placed #11 in the 1953 bar exams and got a perfect score in mercantile law) wasted no time to twit UP students, telling them to spend their time studying, rather than surveying. This "suggestion" flies in the face of the fact that the passing rate of UP students in the in the notoriously difficult exam actually improved from 79% in 2010, to 94%.

UP Law may not have anyone in the top 10, but then again, UP students, from UP Law and elsewhere, are not trained to memorize stuff and ace exams reflecting other people's thinking. UP students are trained to think differently, critique, argue, and invent. UP law students in particular are more trained to be practice-oriented rather than bar-oriented, to be litigators and not just attorneys-at-law, and as such are required to spend time as interns at the UP's Office of Legal Aid (see "From Classroom to Courtroom: OLA bridges gap between theory and practice of law").

In fact, as testament to hands-on and litigation-oriented rather than exam-based training in UP, UP Law's applicant team defeated Ateneo's (which bagged this year's top spot) respondent team in the national rounds of the prestigious Philip C. Jessup International Law Moot Court Competition at the Supreme Court, giving them the opportunity to represent the country in the Washington DC International Rounds from March 25 to 31, 2012.

Proposal to Eliminate Ranking in Bar Exams

Some may ask then, what's the point of exams to begin with? Am I for the abolition of the bar exams? Of course not!

Before one becomes a lawyer, we have to require mastery of some of basic aspects of the law, enough to enable you to make valid legal arguments and to engage in legal reasoning. And this is what is measured by the exam - the mastery of the basic stuff. It does not measure if you will actually be able to make sophisticated (and competitive) legal arguments, or if you have a firm grasp of the political/economic context within which these legal arguments are made (and this requires exposure, experience). In this sense, whether you are a topnotcher or got a barely passing mark - if you have passed the bar, then it only means you learned enough to pass for a lawyer. Your grade doesn't automatically indicate future legal acumen. However, it doesn't stop you from learning more. It is possible for a "class goat" to know more about he law than the topnotcher through continuous study.

From Hope for the Flowers. Caterpillars pointlessly climb the "caterpillar pillar" which
emerged from the act of climbing itself.

Ultimately, being a good lawyer is a different thing. In fact, more than passing the bar, having the legal intuition is more important - and this is a function of IQ, wit, and experience. More so, law in itself is an evolving document which interpretation is subject to the prevailing political economic context. Not only are laws repealed or amended or appended all the time, even its interpretation is fluid. Just look at how Estrada's "constructive resignation" came out of nowhere - pushing lawyers such as Alan Paguia to openly disagree (the reason why he was not able to practice law for almost a decade). What lawyers might have answered in their bar exams might be incompatible to future interpretations. This legal realist view is espoused by former UP Law Dean Marvic Leonen himself, advancing the view that the even the constitution is a legal metanarrative that can have no permanent reading.

So what do we do? What we can do is to stop ranking bar exam passers. SC will still maintain its highly competitive passing rates, but should no longer announce the top 10 bar examinees. The examinees will receive letters in private containing their scores in each of the subjects and suggestions on how to improve. Together with reforms pushed by UP Law Dean Danilo Concepcion (specialized courses should no longer be included, the focus should be on the basic and litigation skill), other reforms that will engender new methods of pedagogy, and an increasing emphasis on legal philosophy, the nature of the exams should gradually move from being competitive and doctrinal to collegial, collaborative, open, and scientific.

Eliminating ranking in the bar exams may contribute to producing more creative lawyers: lawyers who have not memorized and overstudied the current logic and letter of the law in order to pass an exam, but rather aimed to have a grasp of its essence in order to creatively interpret it according to her own principles. Lawyers will be licensed on the basis of their skill on argumentation and comprehension of the norms of society.

On Ranking and Education

Ranking has a certain effect on one's psyche - not only does it impose hierarchy and imposes differences in relative confidence (people who are at the lower ranks may be persuaded that they will always perform less, and thus they do), it stifles paradigm-changing ideas from surfacing. For instance, the less legal education focus on bar exams which focuses on mainstream law, the more room we give to say, alternative law or development law.

The elimination of ranking in legal education goes against tradition and practice, but it is the way to the future - the 21st century post-enlightenment, post-factory-based education system.Our current system, designed to address to needs of mechanized industrialization, replicates all the elements of a factory system: testing and rejection criterion, ranking (through grades) and batching (year of graduation) for quality control, compartmentalizing for efficiency (dividing education in fields and disciplines), mass production (through huge tertiary schools), etc. In our post-industrial society that dismantles divisions between disciplines and recognizes the innate capacity of humans to learn and intuit, our method of legal education are slowly becoming obsolete.

Eliminating ranking in the education system may be too avant-garde for some, but more and more schools are doing so. Besides, more likely than not, it is the colleges and universities and not the students themselves which obsess over rankings, externalizing their obsessions to students through academic pressure and conforming their lessons to maximize passing rate.

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In this sense, Miriam, judged by some as obnoxious, arrogant, and incredible, is still a brilliant lawyer, in terms of her grasp of the law and the norms and behavior of the Filipino society (maybe including how to navigate and survive while going against it). Whether she is a moral or patriotic or pro-people lawyer is another thing, and let that be a subject of a different debate.

Let us attack her politics, her attitude, her temperament. But let us not discount her intelligence and her ability by a mere score in an exam. It will be an insult to the concept of intelligence itself to do so. It will be an insult to those who did poorly in formal exams but excellently in life. It will also serve to calcify old and obsolete notions of learning, intelligence, and ability.

Another attack pic circulated by a certain Reyna Elena

Corona and the Numbers Game (by Emmanuel Hizon)

noreply@blogger.com (James Matthew) — Fri, 02 Mar 2012 04:15:00 +0000

Photo by Matikas Santos/INQUIRER.net photo.

Apologists of impeached Chief Justice Renato Corona asserted that they are not only winning the battle in the impeachment court but also the one that is being waged in the streets. This assertion stemmed from an alleged 7,000-strong pro-Corona mobilization that was held not long ago in front of the Supreme Court, and of late, a mammoth evangelical rally held at Luneta, which they said outnumbered all previous anti-Corona mobilizations organized by the different anti-corruption groups.

Minority action, one-dimensional

At first glance, the “big” pro-Corona rally held last February 8, 2012 in Padre Faura, which defenders of the chief justice boast and brand as the "true voice" of the public is somewhat impressive. But in retrospect, one can see that the said event is the action of a minority. Of course, the action of a minority is not necessarily wrong, that is not the intention of this piece. Rather, it wants to deconstruct the perception that is being peddled by Corona's spin masters that they are winning the numbers game in the streets.

Truth is, it was a minority action because many of the participants reportedly came from a single group--the Iglesia ni Cristo (INC)--a politically influential religious organization renowned for its bloc voting during elections. Although the group categorically stated that it was not behind the pro-Corona rally in front of the high court, different media people who covered the event attested that majority of those that participated were indeed members of the religious group.

As a result, the thousands-strong rally in support of Corona was exposed as politically one-dimensional. At a time when Corona desperately needed political support that is dynamic and diverse, the solidarity action lacked the multisectoral character present in many of our popular actions such as those that were mounted against the previous Arroyo administration.

It was also desperate in character as the mass action rendered support to a very unpopular chief justice who once said that the masses who participated in EDSA 3 in support of deposed President Ejercito Estrada were “walang mga ngipin,” “walang salawal” and “mababaho” in his defense of his political patron, Gloria Macapagal Arroyo. Ironically, majority of those that participated in the pro-Corona rally in Manila were also participants of EDSA 3.

In fact, according to the Philippine Center for Investigative Journalism (PCIJ), three of the four protesters killed in the Edsa 3 siege of Malacanang on May Day eve of 2001 were members of the INC. For the chief justice to acquire the support of the very people he once mocked and despised is not only the height of hypocrisy, it also concretely demonstrated the depths of his desperation.

Broad and Popular

The same cannot be said of those who are asking for the removal of Corona. The series of protest actions organized against Corona were more multisectoral and national in character. The strong presence of groups such as Akbayan Party, Citizens’s Battle Against Corruption (CIBAC), Anak Mindanao (AMIN), Reform ARMM Now (RAN), Black and White Movement, People Power Volunteers for Reform (PPVR), the Flight Attendants and Stewards Association of the Philippines (FASAP), Student Council Alliance of the Philippines (SCAP), among others showed that workers, farmers, informal settlers, Muslim communities, sections of the middle class, political parties and social movements support the call for the removal of Corona from office.

An anti-Marcos, anti-Corona pic circulating in Facebook

The public statements issued by the Association of Major Religious Superiors in the Philippines (AMRSP), Catholic Educators’ Association of the Philippines (CEAP) and the Simbahang Lingkod ng Bayan (SLB-Ateneo) all demanding the opening of Corona’s dollar accounts further advanced the proposition that the anti-Corona call is relatively more popular and broad.

Bongbong Marcos and Corona (by Raissa Robles).

The latest SWS survey also supports this claim. The survey, conducted last December 3-7, 2011, showed that net satisfaction for Corona has dipped from 0 in the past 2 quarterly surveys to -14 in the past month. The result prompted the survey outfit to say that Corona is the most unpopular of all Philippine Chief Justices of the past 25 years.

Likewise, a study made by pollster Pedro “Junie” Laylo Jr. echoed a similar sentiment from the public. While the report said that 57% of the people are undecided because they do not yet know enough about the trial, it also said that 17% want Corona removed, while only 5% think he should be absolved and 2% “definitely want him absolved.”

Recently, a February survey conducted at the University of the Philippines in Diliman, Quezon City showed that 74 percent of students surveyed said Corona no longer enjoys their trust and is unfit to remain on the high court.

Clearly, those that have a clear opinion on the matter are against Corona.

Impeachment process as a tool to seek the truth

But the question remains, if the call to remove Corona from office is more popular and has a broader mandate, then why is this not manifested in the streets?

I offer some possible answers. First, the public, despite the opinions already formulated and floated by different pundits and by media, is giving Corona the right to due process. It is very supportive of the impeachment trial proceedings and wants a clear conviction resulting from functional democratic institutions.

Second, the people are also using the impeachment proceedings as a tool to know the entire truth behind the numerous and colossal transgressions committed by the Arroyo regime. The truth that was denied to them with the resignation of former Ombudsman Merciditas Gutierrez, they are now demanding from the impeachment trial. Thus, despite the attempts of Corona’s legal defense to obstruct the presentation of evidence that will point Corona and Arroyo to their crimes, the impeachment court remains a good venue to seek the truth.

Functional institutions, street parliamentarism

But having said that, it doesn’t mean that the people should abandon its right to organize, assemble and express their opinion in the streets as advocated by dogmatic adherents of the "rule of law." The right to have functional and democratic institutions tasked to exact justice in behalf of the people doesn’t mean the people should surrender their vigilance and activism to the “cold neutrality” of our institutions.

From Inquirer file photo.

On the contrary, for institutions to function effectively, they must be buttressed by the vigilance of an active citizenry. Street parliamentarianism doesn’t undermine the rule of law and our institutions; rather, it strengthens and further democratizes it. Institutions functioning without the people are like judgments made exclusively in ivory towers. At the outset, the view from the tower might be better than that from the base, but nothing beats having your ears on the ground.

As such, as the impeachment trial proceedings continue, let the people freely organize and express themselves using all available platforms including the “parliament of the streets" whether they are for or against Corona. But as the Corona impeachment trial spills over and rages in the streets, let us practice discernment. We have the responsibility of distinguishing what is right from wrong. It does not suffice that the public see and hear the widest spectrum of opinions, they deserve the truth. We may argue that our views are shared by the majority but it does not necessarily guarantee that they are the truth.

Democratic and popular action vs. mob rule

And so Corona and his defenders justify the righteousness of their position on the assumption that “many” is synonymous with “moral”. They argue that the "huge crowds" they can summon vindicate Corona. But there is a difference between a multitude of people taking a stand and a mob of kibitzers.

Although we cannot appraise the morality of our views based on the number of people who share it, it is still the task of a responsible public to determine which side enjoys the support of the majority. It is the duty of every discerning individual to know which political actions are popular and broad and which are superficial and merely the expression of a minority. A thousand-strong rally in support of Corona coming exclusively from a single group is definitely not equal to a thousand-strong rally composed of different sectors, social forces and peoples’ organizations calling for his conviction.

This is the fine line that separated the first people power uprising from the motley group of Marcos loyalists who cheered as their dictator idol appeared in the Malacanang balcony during the last days of his dictatorship, an event mimicked by Corona and his wife as they waved to their "supporters" from the Supreme Court balcony. This is also what separated the broad and massive anti-Arroyo rally that was brutally dispersed in February 2006 when the government declared a national state of emergency from the pro-Arroyo "hakot crowd" mobilized by the now defunct Office of External Affairs. This is what distinguishes democratic and popular political action from mob rule.

Unfortunately, the current mass actions in support of Corona fall under the latter category. ###

Corona and the Numbers Game
By Emmanuel Hizon

Games, Politics, and Society

noreply@blogger.com (James Matthew) — Sun, 19 Feb 2012 08:05:00 +0000

Should Syria continue its costly war against terrorism? Did Myanmar's junta make a good choice in letting Aung San Suu Kyi campaign for a parliament seat? Why did Ahmadinejad decide to disclose new nuclear projects amid apparent opposition of the US and NATO countries on its nuclear program? How will the Philippine Senate vote on the impeachment case of the Supreme Court Justice given the President's obvious preference?

The political arena is defined by such decisions on conflict and cooperation involving civilians, political parties, religious groups, social movements, corporations, and even revolutionary groups. The process with which one can arrive at a rational, well-thought-of decision in politics seems to be overwhelming, given the complexity of individual and social behavior. Several variables have to analyzed, and possible scenarios have to be completely scanned. To make things worse, the cost of wrong decisions can take a toll on lives, properties, and positioning. With all the complexity involved, is there a tool one can actually use to make political decision making easier?

Here comes "Game Theory" - a subfield in applied mathematics that deals with modelling "strategic situations" i.e. situations wherein an individual's success in making choices depends on the choices of others (Myerson, 1991). Emerging from the field of economics, game theory has been increasingly applied to analysis of political situations - gaining prominence during the Cold War between the United States and Soviet Union.

But game theory's application is not just limited in political science or economics. In fact, social morality and ethics may have evolved from social conventions that are, as will be explained later, "Nash equilibrium". For starters, check out the Saturday Morning Breakfast Cereal (SMBC) comic below:

The question then becomes, what would people decide to do eventually? Can we really predict what they would decide to do given the respective payoffs of their decisions? These questions are those that are answered in the field of game theory. At its very core, game theory assumes that people are "rational", and so they would consistently select strategy that will optimize their benefits. From this assumption, we can now set up a "game" based on what we know about people's respective benefits as assigned to their respective choices relative to the choices of others. From there, we can then predict players' best strategies and assume that, since they are rational, this will be their probable behavior in the real world.

The Nash Equilibrium and Social Convention

John Forbes Nash, Jr.

Before we go on and elaborate, just a bit on some concepts which we have to clarify to expand our understanding of game theory. Let's take a look first at the Nash Equilibrium - the concept that earned John Forbes Nash, Jr. (the protagonist in the movie "A Beautiful Mind") his Nobel Prize in Economics.

Imagine that in the game, everyone knows what's the "best" strategies of each other players are. We can take "best" to mean that it is the strategy with the best possible outcome given all response or moves of any other players. These best strategies are called "Nash strategies". Now, if none of the player has anything to gain by changing his own strategy unilaterally (and others stick to their respective strategies), then the game is said to be in "Nash equilibrium". This means that no one has any interest in changing any of the move because they will become worse off by doing so.

Let us take a look at the SMBC comic. Consider a situation wherein Prisoners 1 and 2 are in the fourth quadrant i.e. they both decide to pick the strategy of remaining silent. Each then will have 6 months. However, if one decides to rat out on the other, he has something to gain. There is an incentive for one to change strategies; actually both of them have an incentive to do so. Thus, quadrant four (D) is not a Nash equilibrium. Checking out each quadrant we'll discover that only quadrant one (A) is a Nash equilibrium - no one of them stands to gain by changing strategies i.e. by remaining silent.

Only the Nash equilibrium is a "stable" result of a game - that is, once players converge to their Nash equilibrium, we can expect them to stay there. In fact, in most social situations, "social convention" can actually be seen as the Nash equilibrium of that particular social game. Norms, practices, traditions are created to preserve the equilibrium, and thus, social stability. Incentives and disincentives, like social acclaim or censure, make it costly for any individual to deviate from the convention. You decided to skip a reunion to watch a movie? You'll likely be ostracized in the next. The United States skipped on giving "aid" to North Korea? Whoa, another nuclear crisis. A Philippine President attempts charter change near the end of her term? She'll have to face a united wall of opposition from all other former Presidents.

Sheldon Cooper from the Big Bang Theory. Picture from here.

Deviations and Mixed Strategies

But how do we explain the persistence of stability with periodic or even random deviations? Here, we introduce two more concepts: mixed strategies and repeated games. Let's deal with mixed strategies first.

Figure 1. Payoff matrix for Rock Paper Scissors

Imagine a game of rock-paper-scissors between two people. As shown by the game diagram on Figure 1., there can simply be no Nash strategy for any of the two players (as we have defined Nash strategy previously). If player 1 plays rocks, player 2 plays paper. If player 2 plays paper, player 1 plays scissors, and so on, and so forth. Strategies won't converge to an equilibrium. There seems to be no best, or Nash, strategies. Thus, it will seem that there is no Nash equilibrium, no meeting of minds and no stability.

But what is a players' best strategy? The point of a best strategy actually is to achieve the best result possible rather than the best possible result. In the rock-paper-scissors, for instance, the aim is to out-score your opponent, not to win at every turn. With this notion, a player may then begin mixing his strategies so as to maximize the probability of him winning. How will he then do that?

Well, the objective of a player is to be able to predict what the other player's strategy is, and the best way to do that is to make sure that other player indifferent to any of the possible strategies at his disposal. How to do it? Randomly mix up your strategies. But you do not simply randomly mix up - you assign more chances to strategies which, if successful, will give you better payoff. In technical terms, you assign a "probability distribution" to your strategies.

This element is simply not present in a rock-paper-scissors game as presented above because the payoff for any victory is equal as the chances of your opponent to pick any of the three alternatives are equal. But consider the 1998 findings by Japanese mathematician Mitsui Yoshizawa that in a study involving, 725 people, rocks were thrown 35% of the time, paper 33%, and scissors 31%. In this case, a player playing mixed strategy would go papers 35%, scissors 33%, and rocks 31%. This is his "mixed Nash strategy". If all the players play their mixed Nash strategies, then we have mixed Nash equilibrium.

To learn more about Mixed Nash equilibrium, one can visit gametheory101.com. It contains instructional videos on game theory. The one specifically on mixed strategy is shown below:

So how are mixed Nash strategies and equilibrium relevant to our notion of "social convention"? It actually explains a lot. With individuals knowing the cost and benefits of deviation and non-deviation can then mix his or he strategy. With all of the people doing so, we can then scan society and pick a person in random, the probability that he is pursuing a particular type of strategy is related to the payoff of that strategy. We then have a stable, Nash equilibrium, society amid the persistence of the deviants.

In politics, this means a lot (you may want to check out this link). Being unpredictable is one the most useful traits a politician can have - the element of surprise is as important a trait in politics as in war. Almost all great political leaders have been unreadable in their intentions, which remaining rational and committed to a goal. But there are contemporary examples, like in the rise of Juniricho Koizumi.

Permanent link to this comic: http://xkcd.com/661/

Pareto Optimality and Risk Dominance

It seems that Nash equilibrium, mixed or perfect is enough to create stability of choices among players in a game. But is stability good in itself? Consider, for instance the "Do unto others" game above. "Like-Like" is the Nash equilibrium, it is the most stable outcome. However, it is hardly desirable. The most desirable outcome is actually not a Nash equilibrium: quadrant D with "would have them do unto you-would have them do unto you".

Here is where we introduce to concept of Pareto Optimality. We use the definition from GameTheory.net:

Named after Vilfredo Pareto, Pareto optimality is a measure of efficiency. An outcome of a game is Pareto optimal if there is no other outcome that makes every player at least as well off and at least one player strictly better off. That is, a Pareto Optimal outcome cannot be improved upon without hurting at least one player. Often, a Nash Equilibrium is not Pareto Optimal implying that the players' payoffs can all be increased.

On the Prisoners' Dilemma game, the Nash Equilibrium "Rat Out-Rat Out" can actually be improved upon i.e. we can increase the payoff of one player without hurting the other (in fact, we will notice that the other player's payoff will improve). On this game, "Remain Silent-Remain Silent" is in fact the Pareto Optimal, even if it is not a Nash Equilibrium.

What is the importance of Pareto Optimality? Actually, it can serve as a guide for us in choosing among multiple Nash equilibria (in both mixed and perfect case). Let us then consider another game - the "Stag Hunt" game which was based on Jean-Jacques Rousseau's thoughts on social cooperation. Imagine two players going out on a hunting trip, and each has an option of pursuing a stag - a more satisfying catch that can only be caught by two men, or a rabbit - a smaller catch but can be captured by only one person. Thus, if one decides to hunt for a stag, and the other a rabbit, then the one who went stag hunting will eat nothing, and the one who hunted rabbit will be able to eat a rabbit. Stag hunting is a risky enterprise at this note.

Figure 2. Payoff Matrix for the Stag Hunt Game

Now assume that rabbit gives a payoff of 3, stag a payoff of 5, and capturing nothing (at the event that one hunts for stag but the other for a rabbit) as 0. If one pursues a rabbit, he'll surely get 3. [See payoff matrix below].What are the Nash strategies? Clearly rabbit is the best response to rabbit and stag is the best response to stag. We now have two pure Nash equilibria: "rabbit-rabbit", "stag-stag". But in this case, it is clear that Stag-Stag is the Pareto Optimal among the two Nash equilibria.

However, even if one knows that Stag-Stag is both a Pareto Optimal and a Nash equilibria, there is a chance that the other may pursue the other Nash equilibria, Rabbit-Rabbit. After all, by choosing rabbit, you are guaranteed a payoff of 3, whether the other pursues a rabbit or a stag. For this reason, the rabbit equilibrium is a risk dominant one - which is similar to saying that it is the "safe option". The stag equilibrium is the payoff dominant one, because it is Pareto optimal. Cooperation between members two players gives a good chance of success in a risky venture, but an individual can win a guaranteed but lower reward by breaking the cooperation and going it alone.

What did we learn here? First, Nash equilibria are not necessarily Pareto optimal - thus stable social conventions are not necessarily the most efficient for all. Real life politics and economics are abound by examples of this. The recent debt deal in the US, the collapse of the six-party talks in North Korea, the failure to realize a two-state solution for the Israel-Palestine conflict, among many other instances of compromising too much.

Social Dilemmas

The Stag Hunt game and the Prisoners' Dilemma are just two of the social games one may find itself into. Actually, there are many others. An excellent book on elaborating on this this is "Game Theory in Everyday Life" by Len Fisher, a physicist (there is a nice interview of him here). In Chapter 3 of his book, Fisher sketches some of the social dilemmas one may face, and interpreting it using the lens of game theory.

The other social dilemmas are (directly lifting from Fisher, italicized text, links mine):

The Tragedy of the Commons, which is logically equivalent to a series of Prisoner’s Dilemmas played out between different pairs of people in a group.

(There is an opposite phenomena. The tragedy of the anticommons occurs when the existence of numerous rightsholders frustrates socially desirable outcome. As such, too many property rights could lead to less innovation. It mirrors the older tragedy of the commons used to describe problems arising from insufficient rightsholders. )

The Free Rider problem (a variant of the Tragedy of the Commons), which arises when people take advantage of a community resource without contributing to it.
Chicken (also known as Brinkmanship), in which each side tries to push the other as close to the edge as they can, with each hoping that the other will back down first. It can arise in situations ranging from someone trying to push into a line of traffic to confrontations between nations that could lead to war, and that sometimes do.
The Volunteer’s Dilemma, in which someone must make a sacrifice on behalf of the group, but if no one does, then everyone loses out. Each person hopes that someone else will be the one to make the sacrifice, which could be as trivial as making the effort to put the garbage out or as dramatic as one person sacrificing his or her life to save others.
The Battle of the Sexes, in which two people have different preferences, such as a husband who wants to go to a ball game while his wife would prefer to go to a movie. The catch is that each would rather share the other’s company than pursue their own preference alone.

Emerging from Economics

Originating from economics, game theory has been reinventing economics itself. In one of the lectures in our microeconomics class, our professor Dr. Michael Alba said that in the next decade or so, economists will be investing less on classical theory of demand (and its underpinning "theory of convexity" to guide its drive for "optimal solutions") and more and more on Game Theory. And this is understandable, given that in mainstream economics, competition and cooperation (in consumption and production) are the primary determinants of welfare, and the choice of whether to compete and cooperate and with whom often entails thinking of what will other people's behavior be, and how will that affect the outcome of your decision.

This means that even the mainstream believes now that it is not enough anymore to assume Adam Smith's "invisible hand" will put us all in good shape as long as we pursue our own economic interests. In fact, there is a set of social choices which, while individually optimal - will result to less than socially optimal results. Game theory - as a powerful tool for modeling social choice - is used to depict and explain such situations. Moreover, since social choices are not just economic in nature (we can have political, cultural, personal decisions), game theory is a powerful tool that can be used to explain phenomenon such as morality and ethics.

But just a caveat. There are other tools and framework other than game theory that can be used to depict social choices. Game theory has its limitation - in particular, its adherence to methodological individualism that uses as a primitive construct a "rational" man that selfishly and atomistically pursues his interest, reducing (in technical terms) cooperative solutions as merely non-cooperative Nash equilibria. An extension of the positivist and reductionist approach, it ignores or inadequately model important structures, forces, and identities that mediate social decisions. With that said, it remains to be a powerful tool in analyzing short-term decisions, and some elements of other schools of thought are trying to be incorporated with the rise of institutions as a mainstream concept and "bounded rationality".

To follow: Credibility in Repeated Games

That DVD Incident, Intellectual Property, and Innovation

noreply@blogger.com (James Matthew) — Fri, 03 Feb 2012 10:59:00 +0000

This photo is being circulated in Facebook
by a certain Jerry Ocampo. It may be part of
the systematic demolition job vs. Llamas.

This is related to an earlier article: http://bitly.com/plagiarismculture.

We all know that Presidential Political Adviser and known socialist Ronald Llamas is again the subject of another controversy – that of being caught buying “pirated” DVDs. We all know that he apologized (for putting the government in an awkward position) and that President Aquino announced that he will stay in office despite the protestations of the noisier members of the chattering class. But amid the brouhaha, the question of substance remains unasked: what should be our government’s policy on intellectual property?

Here is an unsolicited advice: the government can continue with the rhetoric against intellectual property “theft”, but it should be lax in its implementation. It’s simple: placate the international community by token efforts to address “piracy” (and even this can be staged – just set up a DVD booth and pretend to smash it in front of international TV) while letting the underground economy persist, providing millions of unemployed Filipinos a lifeline while keeping digital entertainment cheap.

Copying your Way to Modernity

Lest one should accuse me of being insane (or worse, a scoundrel), we have to remember that this is the same policy employed by China for the longest time, and they have been doing well these days. And unless one may forget, it is the same track followed by South Korea when Samsung was busy ripping parts of Sanyo collections and copying them one by one, and even Japan when it first launched poorly copied versions of American automobiles (earning “Made in Japan” a derogatory connotation not unlike “Made in China” now, but what the heck – they’re rich now).

Also, never mind the fact that the United “IPR” States stole many ideas from the British Empire during its industrialization period. Until now, instinctive copying – legally or illegally – practically remains in their genes. Consider, for instance, the plan to blatantly copy Sherlock.

"Piracy, my dear Watson."

But in fact, almost all nations which successfully leapfrogged from poverty to modernity did not respect intellectual property until after they can produce intellectual stuff that can already be propertied. Cambridge economist Ha Joon Chang made a very good point on this:

The historical record reveals that industrialised countries did not recognise or enforce patents until after the process of industrialisation was complete. Switzerland introduced a patent law that protected mechanical inventions in 1888, but a comprehensive patent law was introduced only in 1907 (Schiff 1971). The Netherlands first introduced a patent law in 1817, but then abolished it in 1869 because patents were seen to create a monopoly that was inconsistent with the country’s commitment to free trade and free markets (Schiff 1971). Patent law was reintroduced in the Netherlands only in 1912. Interestingly, the 19th-century economists that were most committed to free trade and free markets rejected patents because of the monopoly argument (Machlup and Penrose 1951).

The lesson? Respect for intellectual property is an outcome, not a requisite, of economic development. One should not put the cart before the horse. But of course, we can understand where the developed nations like the United States and those in the European Union are coming from - they don't want their hegemony in technology, arts, and entertainment challenged. And since we live in an international community in which they set the standards - the best way is to pay token respect to the standards and pretend to respect Intellectual Property Rights (IPR) while doing otherwise.

Actual Determinants of Innovation

But what are they actually saying on IPR? Their strongest argument is that by granting innovators and artists the commercial right on their creation, we allow them to benefit economically from the fruits of their ideas and labor. Thus, we promote further generation of ideas. Moreover, proponents of IPR protection argue that commercial protection offered to the innovators and artists actually incentivizes the disclosure of the details of the innovation or creation – and thus, paves way to the public’s eventual access to it (once protection is there) for the furtherance of knowledge or the arts. Without IPR protection, it may never have been disclosed to begin with.

But economic incentive is not that strong determinant of innovation and art or its disclosure. For one, the primary incentive of an innovator or an artist is largely psychological - the joy of contributing, or of creating, is usually enough. Financial reward (due to a period of IPR-driven monopoly) may in fact only be a far second. I guess the important thing is that we make sure that our thinkers are (1) publicly recognized for what they did, (2) they live relatively good lives (and not on subsistence jobs, like Filipino inventors forced to sell rights to countries like Japan as an important industrial inputs, or award-winning independent movie makers forced to create mainstream junk), and (3) our education system allows for emergence, nourishment, and development of science and the arts.

Dr. Jonas Salk, the inventor of the first polio vaccine, was asked if he would patent the vaccine (and thereby earning him millions, more likely than not). Salk replied: “There is no patent. Could you patent the sun?” Regardless of the legalese involving intellectual property (and property as defined by law), the point here is simple: ideas are as natural for humans as the sun is. Why should anyone own ideas when all we add to knowledge are a product of what we have learned from others?

Another argument is that you are not violating IPR if you are only using it for non-commercial purposes. You can, for instance, reverse-engineer an invention as long as you don’t use the knowledge you gained from the product for commercial purposes (as per R.A 8293, Section 72.2). This is another issue altogether, one that deserves more explanation because it is actually how IPR becomes an obstacle to economic development. Let us then tackle innovations that have economic value.

Innovative Firms and IPR

To explain this better, we have to separate first the innovator from the manufacturer. As I argued, the primary incentive for the innovator is the act of innovation itself. However, the primary incentive of the manufacturer is profit. By preventing the commercial use of an innovation by other firms even if they can replicate the product more cheaply or are willing to sell them at a less price, what IPR does is to stifle the efficient manufacturing and dissemination of the innovation while doing very little to incentivize innovators.

The developmental consequences are staggering. Even if the knowledge had become known to the public because of disclosure polices, products based on those knowledge cannot be mass manufactured except by the source of innovation – which usually rakes in exorbitant profits and rents because of its monopolistic position. Because of these firms' ability to impose artificial scarcity (to maximize profits), people are denied access to some of life-improving innovations, in medicine for instance. This lead to outright opposition, with Thailand producing some generic antiviral drugs in 2002 (prompting US to put it in the list of copy right violators) and Brazil declaring efavirenz (of Merck) a public interest medicine. Opposition to TRIPS also emerged in India in the 1990s.

Even if there are those who may eventually waive their IPR for the sake of collective good, there are thousands more – usually companies – who are willing to stop the production of a product based on a good idea if it harms their economic interests. Just consider the killing of electric car in the US, or the failure of solar energy to take-off because of exorbitant cause of royalties. Moreover, there are "patent trolls" (among those accused are Intellectual Ventures and even Thomas Edison himself) who will opportunistically register a lot of patents with the intention of reselling them.

It would have been justifiable if the actual innovators (the people) are the ones who usually benefit financially. But the real world points all too clearly at the real beneficiaries – the majority shareholders of transnational and multinational corporations (the 1%, in "Occupy Wall Street" parlance) which have the actual innovators – the scientists and artists – in their payrolls. The real innovators then receive compensations that are usually far less than the profit-taken by their employers. This is true from the entertainment (we know how much really goes to the artist after studios get their chunk) to the pharmaceutical (leading India to oppose the TRIPS agreementon medicine products) to the ICT industry.

Not surprisingly, developing economies dedicated to a modernization project usually ignore IPR restrictions when manufacturing products for exports (and fortunately for these economies, with a majority of consumers usually ignoring this fact as well). This is true in the case of Japan, South Korea, and in the recent decades, China (now known as the hotbed of piracy). Looking at it at a global perspective, ignoring IPR has the effect of accelerating global technological development, because firms retain their competitive position by innovating more and keeping them on their toes.

Government intervention

This effectively debunks the argument that IPR is an effective way to induce firms to invest on research. In fact, all evidence points at the opposite. But even assuming (without conceding) that it is, should innovations emerge only out of private investment of firms? Why not from the public as a whole through direct government support for innovators?

This is where we argue again for government intervention. It ensures that innovations remain in the public domain and there is no limitation to its commercial use by firms (which then subjects it to competition, driving down costs). As for the innovator, public and peer recognition for her or his historical contribution is usually enough, on top of the government assuring them of good and respectable life through welfare and other incentives.

US Defense Advanced Research Projects Agency (DARPA) was responsible for
creating the basis for Global Positioning System (GPS) and Internet technologies.

Come to think of it, if the innovators still innovate despite their meager compensation (relative to their shareholders of the firms which employ them), imagine how cheaply we can actually manufacture innovations if they receive support and compensation from another entity, like the government for instance.

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To summarize, not only is partial excludability of innovation through IPR a weak incentive for innovators, it is in fact a huge obstacle for overall technological development. It keeps costs high, it delays the progress of innovations, and together with weak government investment for research, makes innovators dependent on the financier.

Persisting Problems on the link between Macroeconomics and Microeconomics

noreply@blogger.com (James Matthew) — Mon, 30 Jan 2012 07:42:00 +0000

Permanent link: http://bit.ly/microfoundations
As a requirement for our macroeconomics class, Dr. Dante Canlas asked us to submit a survey paper on a macroeconomic issue of our choice. I especially took interest on the approach of modern macroeconomics based on so-called "microfoundations" - microeconomic assumptions used to explain aggregate phenomenon. New classical economists see this as the final bridging of macroeconomics and microeconomics, spurring hopes of a single economic theory that would explain both the individual and aggregate economic phenomena. (note how this parallels physicists' dream of uniting large-scale relativistic physics with quantum mechanics). This spurred an orientation in economic research and pedagogy characterized by complex mathematical models capturing "deep" parameters in taste, technology, and expectations.

Recently, the microfoundations approach came under attack after models with "deep" microeconomic parameters supposedly failed to predict and recommend effective policy recommendations to mitigate the current global economic crisis. Even recent Nobel Laureate Thomas Sargent - one of the pioneers of modern macro - is under fire. Why this is so - as well as earlier, almost forgotten challenges to the microfoundations approach - is the subject of the survey paper I submitted. Read the abstract and full text below:

Abstract

The history of economics, for the most part, has been bifurcated between the study of individual economic decisions (microeconomics) and the aggregate economic phenomena (macroeconomics). The attempt to marry the two, via incorporating “microeconomic foundations” or “microfoundations” to explanations for macroeconomic observations and predictions, has so far taken sway a majority of mainstream economists with the failure of Keynesian models to accurately predict aggregate behavior in the presence of government policy. Robert Lucas Jr. posited that people form “rational expectations” of government policy and act so as to render forecasts unstable.

However, there are some persisting theoretical and empirical challenges on this research direction – the empirical instability of macro-models which incorporated microfoundations, the Sonnenschein–Mantel–Debreu result which may spell the theoretical dead end to economic aggregation, the still unresolved Cambridge capital controversies started by the reswitching argument by Italian economist Pierro Sraffa and American economist Joan Robinson in the 1960s, and the missing “representative consumer or firm” that can take into account the behavior of the aggregate. These challenges give the idea that aggregate economic behavior is almost impossible to deduce from microeconomic behavior of agents. Post-Keynesianism – which asserts that long-term expectations are largely determined by non-economic, psychological processes exogenous to the model – is posited as a possible way forward.

To read full text, click:
Persisting Problems on the link between Macroeconomics and Microeconomics

Some notes:

There are other interesting discourses that the paper has not covered. For one, recent advances in behavioral and "neuroeconomics" may in fact convince us that it is not macroeconomics, but rather microeconomics, which lacks and needs foundations. The rationalizing agent which neoclassical microeconomics thought to be the analytic primitive may prove to be non-existent at all, which means that explaining macro phenomenon through rational representative agent is the wrong way to continue.
Post-Keynesianism is not the sole counter-framework to microfoundations. Evolutionary economics, which relies on technological explanations more than information on actual aggregate demand, may also prove to be a good starting point. At this point though, evolutionary economics retains the agentic approach in many of its models, which may prove to be limiting.
Advances in "crowd psychology" and sociology may be helpful. The debate between "contagion theory", which states that crowd acts on the individual, and "convergence theory", which holds that crowd behavior is a product of certain individuals carried into the crowd, is a good starting point. Thus, the question is best dealt through a multidisciplinary approach rather than a purely economic one.

The Legacy of Dennis Ritchie

noreply@blogger.com (James Matthew) — Fri, 14 Oct 2011 01:31:00 +0000

This has escaped my attention. Dennis Ritchie, the creator of C and Unix, died on October 8 - his death overshadowed by the death of another pioneer Steve Jobs. Much of our modern information technology backbone - from web servers to operating systems to network software - had been developed using the C programming language. To quote a google Engineer, the internet "is basically a C shop". His legacy, indeed, is incalculable.

main() { printf("Thank you Dennis Ritchie!"); }

No to World Bank in Green Climate Fund!

noreply@blogger.com (James Matthew) — Wed, 21 Sep 2011 13:44:00 +0000

October 7, 2011

Blog Action Day for Climate Justice

No to World Bank in Green Climate Fund!

The World Bank is recognized as one of the main drivers of the current unsustainable economic and development model that have brought the planet at the edge of collapse. Its internal governance is undemocratic and not representing the voices of the poor countries, which suffer most of the impacts of climate change. Its policies and programs are part of the problem and cannot become today the needed solution. We must make our voices heard and get the WORLD BANK OUT OF CLIMATE FINANCE!

You too can register your opposition against World Bank's intervention on climate change financing. Just follow the four simple steps below:

Click here.
Look for the 'Sign the Email'-box.
Put your name, email, and organization (or country, if signing as individual)
Click send.

You may wish to visit the World Bank Out of Climate Finance! website here for campaign details and updates. Please see below a statement of some groups on the matter:

14 September 2011

No to World Bank in Green Climate Fund, No to direct funding of Private Sector, UNFCCC Transitional Committee urged

Press Statement: Jubilee South - Asia Pacific Movement on Debt & Development (JS-APMDD) and the Freedom from Debt Coalition (FDC)

MANILA, Philippines – The Transitional Committee of the United Nations Framework Convention on Climate Change (UNFCCC) held its third meeting this week, in Geneva Switzerland. Two key concerns raised by civil society observers who were given a chance to take the floor and deliver statements were on the role of the World Bank in the Green Climate Fund (GCF) and the GCF’s engagement with the private sector.

One of the major decisions of the Cancun meeting of the Conference on Parties (COP) of the UNFCCC last December 2010 was to establish the GCF. Hundreds of billions of dollars in climate finance are needed by developing countries annually to cover the cost of climate adaptation and mitigation programs. The Climate Convention points to the obligation of developed countries to provide this finance because of their historical responsibility for causing the climate crisis. The GCF is the international institutions that will be responsible for the management and disbursement of this climate finance. The Transitional Committee was formed to prepare the proposed design of the GCF, to be approved in the next COP which will be held in Durban, South Africa in December 2011.

Picture taken here.

The role of the World Bank in the GCF has been a contentious issue in the Transitional Committee. Many developing countries are against giving the World Bank a role in its regular structure and operations. This is a position that is strongly echoed by climate campaigners from all over the world. In a statement distributed to members of the Transitional Committee, civil society groups decry the long track record of aggressively promoting fossil fuel projects and other programs that “exacerbate climate change and harm the environment.” They assert that “an institution that actively promotes the causes of global warming should not be given a role in global climate finance.”

“The World Bank’s undemocratic structures and lack of full transparency and accountability is opposite to how we expect the Green Climate Fund to be governed and managed. Its operations as a lending institutions stand in contradiction to what should be the principles of fair and effective climate finance. Climate finance must not come in the form of loans or other debt-creating instruments,” the groups further add.

The GCF’s relationship with the private sector is another controversial issue in the Transitional Committee negotiations. Several members of the Transitional Committee from developed countries that GCF funds have been insisting that funds from the GCF be used to “leverage” private investments in climate finance and that the GCF should have a special window or facility for the private sector.

Addressing the Transitional Committee at the first day of its meeting, Lidy Nacpil, Vice President of the Freedom from Debt Coalition and speaking in behalf of the Climate Justice Now network, urged the Transitional Committee to exercise great caution on the question of engagement with the private sector.

“Private sector participation is best decided, managed, regulated and incentivized at the national level, according to national strategies that were identified through the participation of people who are most impacted by climate change” Nacpil said. “We urge the Transitional Committee not to establish a stand-alone private sector window, nor to provide finance or incentives directly to the private sector. The establishment of a private sector window would most certainly be a boon for rich country-based multinational corporations, but it would most certainly circumvent the interests of developing countries.”

Nacpil, also the Coordinator of Jubilee South – Asia Pacific Movement on Debt and Development, pointed out that the proposal for a private sector window in the GCF is worryingly reminiscent of the World Bank Group’s International Finance Corporation (IFC), which performs poorly in relation to the Bank’s stated mission of alleviating poverty and promoting sustainable development in developing countries. According to a study conducted by the Friends of the Earth International, almost two-thirds of IFC investments in low-income countries go to companies based in the richest countries

Nacpil reiterated one of the calls of an online petition addressed to the Transitional Committee and signed by hundreds of climate justice advocates from various countries – that the GCF “not use speculative and other instruments to raise capital on financial markets.”

According to the petition, “the parceling of bonds into derivatives, and investments in carbon markets, are excessively risky from a financial and environmental perspective. The current volatility of the world’s stock exchanges provides a clear reminder that such tools are hardly the basis for the kind of stable, sustainable approach to financing that the GCF requires if it is to meet its aims.”

On the role of the private sector as source of climate finance, Nacpil added that for the GCF to truly serve its purpose in accordance with the principles of historical responsibility, equity and justice, the core contributions to the GCF should be “predictable, additional and public.”

“We welcome private donations, but the corporate private sector should not expect a return on investments because this is contrary to the principles and purposes of climate finance,” said Nacpil.

The Transitional Committee comprises 40 members, with 15 members from developed country Parties and 25 members from developing country Parties, with members having the necessary experience and skills, notably in the area of finance and climate change.

Of the 25 members from developing country Parties:
• Seven (7) are from Africa: Gabon, Egypt, Morocco, Ethiopia, South Africa, Democratic Republic of the Congo and Burkina Faso;
• Seven (7) from Asia: Saudi Arabia, Singapore, Republic of Korea, Pakistan, Philippines, India and China;
• Seven (7) from Latin America: El Salvador, Mexico, Argentina, Peru, Belize, Nicaragua and Brazil;
• Two (2) Least Developed Countries: Zambia and Bangladesh; and,
• Two (2) Small Island Developing States: Samoa, Barbados.

The 15 members from developed country Parties are Japan, Russian Federation, United States of America, Norway, Australia, Switzerland, Canada, Denmark, Sweden, Poland, United Kingdom of Great Britain and Northern Ireland, Germany, Italy, Spain and France. (30)

Climate Change, Reverse Dutch Disease, and Third World Industrialization

noreply@blogger.com (James Matthew) — Mon, 15 Aug 2011 03:50:00 +0000

Climate change is one of the "great pessimisms" of the 21st century, to quote Matt Ridley - author of the "The Rational Optimist: How Prosperity Evolves (2010). Indeed, it is the primary threat to humanity's vision of a bright future of technological prosperity. And for very good reasons. According to the Intergovernmental Panel on Climate Change (IPCC), a global average temperature increase of 1–4°C (relative to 1990–2000) may result to partial de-glaciation of the Greenland ice sheet. Add to this the possible contribution of partial de-glaciation of the West Antarctic Ice Sheet, sea level may rise by 4 to 6 meters (13 to 20 ft) or more, with disastrous consequences to small island states and coastal settlements.

A farmer takes water form a dried-up pond to water his vegetable field on the outskirts of Yingtan, Jiangxi province. Photograph: Stringer Shanghai/Reuters. From here.

Moreover, weather patterns across the globe will be disturbed, radically changing livelihoods and economic activities. A particular climate-induced economic change we ought to be watching is the transition of some developed countries from having a humid continental or tundra climate to tropical or rain-forest, simultaneous with desertification in agriculturally-rich developing countries. This is already happening now, as climate change render previously agriculturally-viable lands to lands not fit for horticulture.

This gave me an insight. While it is true that this will have debilitating effects on the economies of the South, I can also see an economic opportunity which we developing countries can maximize - at least in the medium-run.

Reverse Dutch Disease

This opportunity is the fact that countries of the North, previously compelled to develop an industrial and manufacturing base due to lack of natural resources and arable lands, will now see an increase in relative profitability of agriculture in their countries. Although some other factors must come into play, this may cause a shift of economic activity of the North to agriculture, as they become afflicted by the so-called "Dutch disease" - the relationship between the increased economic activity dependent on natural resources (such as arable land) with the decline of the manufacturing sector.

At this point, there is favorable global economic environment for Southern countries to transition from export-led agricultural sector to an agricultural sector attached to a domestic industrial base - a local market-oriented industrial economy (which will be developed through various mechanisms of state intervention, e.g. import substitution, protectionist trade policy, etc.) that can more efficiently feed our population. In fact, we may be forced to, because of possible drastic decrease in agricultural yield due to climate change.

For instance, even as merely 1.2% of the US economy is engaged in agriculture, it is in fact a net food exporter because of its manufacturing base which invests its surplus in technologically advanced agribusiness. Not that we want US as a model (there are other models to follow on top of other indigenous models in the Philippines, like the Organopónicos system of urban organic gardens in Havana, Cuba and the periurban agriculture development in China - located at the Modern Agricultural Science Demonstration Park in Xiaotangshan), this is just to illustrate that we need not have a large agricultural sector to be food self-sufficient. In fact, food self-sufficiency is often a factor of a robust post-harvest industry and service economy that is much larger than the agricultural sector.

But more than being forced to become food self-sufficient, this is an opportunity to transition towards a an industrial (not in the smokestack, 20th century meaning of the term, but one that is more technologically advanced and incorporating our knowledge of the ecosystem) economy as previously advanced economies experience "re-agriculturalization" and possible decline in industrial and service activities. Hopefully, the accumulated surplus of their previous industrialization process will be transferred to us through trade as we trump them in manufacturing.

Development Space and First World's Climate Debt

But won't engaging in industrialization worsen climate change? Shouldn't the South be joining the global effort towards climate change mitigation by reducing their carbon emissions - which means foregoing carbon-based energy production and manufacturing?

On this, I say that it is but fair for developing nations to engage still in carbon-based industrialization because in the first place, they weren't the ones which were responsible for climate change to begin with. According to the Third World Network (TWN) - a non-profit international network of groups involved in development issues, Third World and North-South affairs - with less than 20% of the population, developed countries have produced more than 70% of historical emissions since 1850, far more than their fair share based on equal per-person emissions.

Thus, if there are the ones who have to engage in massive mitigation, it is the so-called Annex I countries to begin with - rich and industrialized nations made prosperous by emission-intensive industrialization process. In fact, developing countries reserve the right for "development space" since we haven't maximized yet our claim for the "atmospheric space". We can, and should, transition from export-oriented agriculture to domestic market-based manufacturing. And climate change will provide an impetus for that through the reverse dutch disease.

A Caveat: We still need to mitigate

This pragmatic contingency approach does not preclude, of course, our aim to stop climate change from happening in the first place - we have to, but even assuming that we will be able to, climate change at its present state may be hard to reverse and will take time, and we have to see this largely as an adaptation measure (it is still a matter of policy after all, not a spontaneous transition from agricultural to industrial) while the impact of climate change is being felt.

What type of industries? There are many that already take advantage of the recent increase in interest on ecologically-sound activities that addresses concrete needs - like investing in an industrial base that manufactures renewable energy technology and organic agriculture for the middle class market - both of which Taiwan is concentrating on now. We may be a little too late on this global market-wise, but we can always search for different niches on the same industry.

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