Category: poverty

Paths to change

By Calixto V. Chikiamco

OUR CURRENT situation seems hopeless. Our economic oligarchy is powerful, rich beyond imagination. It controls conglomerates that reach into almost every aspect of Filipinos’ lives, its unassailable position protected by law or other barriers to entry. More importantly, its rent-seeking power provides self-reinforcing means for enrichment and impregnable authority: it can penetrate, influence, and manipulate the weak state and its institutions almost at will. In other words, it can buy off or influence politicians, judges, bureaucrats, and media organizations to thwart change, prevent competition, and extract more economic favors or rent through the weak state.

The state of our politics also provides reasons for hopelessness. Whereas the political class is supposed to be distinct from the economic oligarchy in that the former must at least answer to the people through democratic elections, that has not been so. Cheating, vote buying, and voter intimidation through private armies have undermined the true expression of the people’s will. Also, an almost non-existent party system with politicians changing parties and positions at the drop of a hat undermines democratic accountability.

Moreover, with the amount of money needed now to run for elections, running for office is a rich man’s (or woman’s) game or a corrupt man’s game. Therefore, either the politician must be rich himself and is part of the economic oligarchy or has sold himself to vested interests. Politics has also become a family business. Dynasties rule our political landscape. The interests of the state are subsumed to the interests of the family.

Much hope had been placed that President Aquino’s Daang Matuwid will bring about change. While his moral style has been a marked contrast to the blatant corruption under former President Arroyo, President Aquino has proven himself to be a reactionary, unable and unwilling to make changes to the system of which he’s a product. He was, after all, a congressman then a senator, before becoming president. Political reforms are absent from his agenda. There’s no talk of campaign finance reform, dismantling private armies, eradicating jueteng, banning party turncoatism, or reducing the role of political dynasties.

Forget about revolution. The Left already missed its opportunity with its disastrous boycott of the 1986 elections. Furthermore, the Philippine Left has proven to be a tool of the Right, equating nationalism to keeping out foreign competition and promoting laws like CARP that only enrich the rent seekers in the government.

So, how will change happen then? Is the Philippines doomed to a thousand-year rule by an irresponsible political and economic oligarchy which will resist any reform of its privileges and rent-seeking power?

Change can still happen, although very slowly. Change can happen under the following scenarios.

The threat to the state. This is the circumstance by which almost all countries in Asia got its act together and started their remarkable rise. External and internal threats often spur the state to positive change: South Korea with the threat of invasion from the North, Taiwan from the threat of invasion by communist China, Singapore vulnerable as a tiny nation surrounded by big countries and formerly threatened internally by Communist subversion (read Lee Kwan Yew’s biography), Indonesia threatened by the Communist coup de e’tat in 1965 and where a million people died in the aftermath. Japan, as a thousand year old civilization, embarked on the Meiji Restoration, a revolution that modernized Japan after its feudal backwardness and vulnerability was exposed by US Commodore Perry’s black ships in 1853.

Therefore, the threat of China bullying the country may similarly spur changes internally as well. Narrow vested interests may have to be subsumed as the state tries to strengthen itself in a possible confrontation. For example, the country may be forced to finally amend the Constitution to lift the restrictions on foreign ownership if it’s to join the US-sponsored Transpacific Partnership (TPP). Joining the TPP and moving closer to the US may be needed to get the US as counterweight to China. Japan is already doing so, and has indicated its willingness to sacrifice its powerful rice farmers and automotive lobby in order to join the US-sponsored TPP.

Tail wagging the dog. This is the Shenzhen scenario. Deng, faced with powerful opposition from conservative interests in Beijing, created a capitalist experiment in Shenzhen, then a tiny, undeveloped fishing outpost in the far south. The experiment proved so successful that the rest of the country had no choice but to follow, and opposition melted away.

Can the country have its own Shenzhen? That was supposed to have been Subic with its free port status, but Subic and other free port zones just became havens for smuggling. The ARMM with its economic and political autonomy, could have been a Shenzhen but it failed because Misuari built it on the same corrupt political patronage system as the rest of the country. Will the new Bangsamoro Region be our Shenzhen or will it be another failed experiment? It remains to be seen whether the MILF leadership can use its autonomy to build a region with a political and economic model different from the rest of the country.

A change in political economy. The political economy may change if the local oligarchy or at least parts of it, is forced to become more outward-looking. Why? Because the need to compete in the world market would temper its abuses and the elite would see the need to have a strong bureaucracy, efficient infrastructure, and vibrant domestic industries to compete in the global markets.

For the economic oligarchy to become more outward-looking, it would have to find exporting more profitable than extracting rent from regulated, non-tradable industries (power, telecommunications, ports, shipping, banking, etc.). The key to this is to undervalue the exchange rate, as it had been in other countries like Taiwan, China, and South Korea and to open up protected service sectors to foreign competition.

Change from below. It’s still possible to defeat powerful vested interests in a democracy. Coalition-building, voting, organizing, and protesting through social media or in the streets, legal challenges, and other forms of democratic collective action, given the right historical moment, can force positive change even if these are opposed by powerful vested interests.

Social security, the Sherman Anti-Trust Act, civil rights legislation, the Glass-Steagal Act and other progressive legislation got passed in the United States despite opposition from powerful vested interests. Recently, the sin tax got passed because a broad coalition pushed for it and won despite the power of the tobacco monopolist. Therefore, the way forward is not, as some suggest, to revert to a dictatorship, but to strengthen democracy. Change in the Philippines will be forced from below and not initiated by an enlightened leadership.

Will change happen? If we don’t hope, we die.

that rating upgrade

… is good news only for the minority rich, not for the majority poor.

check out cielito habito’s An early Easter gift

So what’s in the credit rating upgrade for the ordinary Filipino? It’s actually a mix of good news and bad news. The positive side is that more investments—both of the job creating (FDI) and the “hot money” kind—should be drawn into the country by this new vote of confidence; let’s hope there will be much more of the former. Government and firms could borrow funds more easily and more cheaply. Lower interest rates would mean lower costs for government debt, freeing up more funds for health, education, infrastructure and other public investments to uplift people’s lives.

But the negative side is that a major segment of our population faces the very real prospect of lower incomes. Families relying on remittances from abroad, or from earnings in import-substituting or export-oriented industries (including tourism) will be hurt by a rising peso induced by the surge in foreign inflows. Pensioners, retirees and other savers relying on interest earnings from fixed-income placements will also see their incomes drop further. A retiree recently wrote me complaining that his interest income had dropped 40 percent in the past year alone because of falling interest rates, and laments that he now faces a serious problem with making ends meet.

and ben kritz’s Curb the ratings upgrade euphoria

President Aquino’s statement described the positive outcomes of the ratings upgrade as lower interest costs on government debt, making Philippine securities more attractive to investors, and “fiscal space” from the savings on debt costs, savings that can be used “to sustain and further improve on social protection, defense, and economic stimulus, among others.” The only part of that statement that is completely accurate is the first part. The specific meaning of the rating is a judgment of the country’s ability to pay foreign-denominated debt on time and in full, and because the Philippines is now judged to be at lower risk of default by one agency, the government will not have to pay so much to incur debt; interest on direct loans will be a bit lower, as will yields on government bonds.

As for the “savings” that can be applied to other activities, that presumes the government will incur new foreign debt, which most would consider a rather novel conception of “savings.” Furthermore, in a memo released on March 17, Treasurer Rosalia de Leon informed bond dealers that the Treasury will be increasing its monthly auction of 3-, 5- and seven-year bonds and treasury bills from P120 billion to P150 billion through the second quarter, as part of an effort by the government to source all its debt locally for 2013. In other words, the government has no plans for now to access the foreign credit market where the impact of the ratings upgrade would be felt the most.

and gary olivar’s Early Easter gifts

Perhaps the most important thing to remember about this credit rating upgrade is this: At the end of the day, it really matters only to professional portfolio managers who may be restricted from putting their money in non-investment-grade credits. Even with its shiny new investment grade, the Philippines will still have to compete with its new peer group for portfolio attention. And direct foreign investors—the ones who really bring in the jobs—will be totally unimpressed since they’re concerned with an entirely different set of issues altogether.

The new rating—like any other credit rating—speaks only to the country’s ability to repay its foreign-denominated debt, nothing more. It says less about whether or not equity investors can expect to earn the right returns on bricks and mortar on a level playing field. And it says nothing about whether we are investing properly for future growth, or creating more jobs through the right kind of growth, or improving our productivity as the only way to sustain long-term growth.

Unfortunately, like most early gifts, the packaging may be nice and glitzy—as the Palace will try to hype it up—but what’s inside is not what we really need.

read, too, atty. dodo dulay’s What PNoy isn’t saying about PH’s rating upgrade

Wisdom from the grassroots

By Cielito F. Habito

As we commemorate Christ’s suffering this Holy Week, I am led to revisit anecdotes I have written in past articles on the wisdom one can find by talking to those who suffer the most from our society’s inequities. Through the years, I have found some of the richest insights in conversations with common folk expressing their aspirations in ways that made me see their plight more clearly, and rethink old preconceived notions and ideas shaped by ivory-tower analysis.

Read on

 

 

Rage

By Katrina Stuart Santiago

When I entered the State University as a freshman in 1995, I was part of an English block that was diverse by virtue of class. It didn’t take long to find that while some of us were from well-off families (I had a Romualdez in my class for example, and there were children of lawyers), and there were some of us who were versions of middle class; many of my blockmates came from poorer families, many from the provinces. Many of them, I later found, were dependent on scholarships, mostly from elsewhere other than the State U.

I only knew one blockmate who was dependent on the socialized pricing scheme that was the Socialized Tuition Fee Assistance Program (STFAP) then. She later dropped out.

I had another classmate who was pretending to be poor, and using the STFAP to pay a smidgen of the P5,000-per sem we all needed to pay. She spoke about it with pride in our third year, when I chanced upon her during enrollment. There were rumors then of UP finding out about someone who had succeeded at duping the University for four years, submitting papers that apparently proved he deserved to be a full scholar, only for the University to find after an inspection that he was actually a rich kid, with a provincial address yes, but of a hacienda. He went through college as a full scholar, haciendero as he was.

From junior year onwards, I had a boyfriend who was by all counts poor. But only once, if I remember correctly, did he get an STFAP bracket lower than mine. Even then I had wondered about why it was so difficult to prove his impoverished state; neither could I understand why he was required to apply again and again, every school year, as if his lot in life was going to change from one year to the next. I thought it absurd too, that even then, he would be asked to prove the state of his family’s income by submitting papers that they just didn’t have, i.e., income tax returns and land titles, and notarized checklists and papers proving their “assets” that included everything and their kitchen sink.

As it was, money needed to be put out to prove one’s poverty. What of those who enter that STFAP office with nothing in their pockets?

Sixteen years later, and the STFAP is no better. Revised in 2006 alongside the 300% tuition fee increase that brought the basic full tuition fee to P1,500 / unit (from P300) or P22,500 pesos per semester (from P4,500), the current alphabetical bracketing system bears little difference to the old STFAP. A look at the process outlined online, including the long list of requirements and papers to be fulfilled – that now asks if an applicant has a toilet at home, and if it is equipped with a flush? – reminds not so much of easier times, but really of how much worse things have become.

And while the UP Administration and the Commission on Higher Education seem to think that all it takes is revision upon revision of the STFAP, while it is easy to think that all it takes is to streamline this process and make sure that deserving students are given an easier time, what was always fundamentally wrong about the STFAP is not being addressed here.

Because what is fundamentally wrong about the STFAP is what it presumes about every student who enters the State University. That is, it puts every student under Bracket A, and presumes that every enrollee has P22,500 each semester, that’s at least P45,000 a year, to pay up.

Imagine how daunting that amount is. And then imagine how urgent and critical it becomes that students apply for the STFAP and get to a bracket lower than the letter A. Imagine how much pressure a poor student suffers through, seeing an amount that they cannot even imagine in their hands, an amount they know their parents cannot earn. Imagine what it is like to find that the burden of proving poverty is yours, when you know it is precisely the fact that you have nothing that is proof of your poverty?

What is wrong with the STFAP has always been that it will presume you can afford full tuition fees unless you prove otherwise. Pre-2006, this wasn’t so bad – P5,300 or so is not an amount that’s daunting, and is undoubtedly easier to raise than P10k, or P15k, or just P24,000. The last is nowhere near easy to raise.

In fact, the STFAP bracketing scheme proves it, too: this amount is for students with annual family incomes of P1M pesos or more.

One million pesos or more.

Which is to say that every enrollee to the University of the Philippines, every student of the State University, is presumed a millionaire until they prove otherwise.

It then becomes clear how, while the STFAP process is a long one and it will cost a student to actually apply for brackets lower than that one for millionaires, the STFAP is in fact an institution riddled with problems that no amount of revisions will change.

Say, its premise that the burden of proof lies in the student, who thinks twice about using her last P10 on the STFAP application forms, but then finds that she has no choice. Who sits and ticks off a long, long list that asks about her family’s living conditions (What kind of cooking range do you have? How many computers do you have? Do you have an electric heater?), her current lot in life.

Who wonders about being asked of her parents’ educational attainment, which to her doesn’t mean much because they are both working odd jobs, their college degrees in the maritime institute practically useless. Who thinks, where do I get a camera to take photos of my home, to prove how small it is for a family of six, my parents and I, and my three other siblings. Who thinks, how will they assess my poverty based on my father’s earnings as taxi driver, when that is unstable at best?

Say, the insecurity that the STFAP creates in poorer students of the State University, who are faced with a disparity in social classes unlike any they’ve had to live with before. Yes, they know of the rich, but to be within the same space as them? To be on a list that stratifies the studentry from the millionaires down? And to find that one is at that lowest bracket, and even then have such difficulty paying?

What the UP Administration and the governments who have supported that 300% tuition fee increase have created here are the conditions for the poor’s discomfort and embarrassment, in a space that should be the bastion of equality and sameness.

In the 90’s, paying at most a P5,400 tuition fee, one of us was not better than another, and in fact, discomfiture was for the rich who were even there at all. In the 90’s, the best and the brightest from the public schools and provinces outdid all of us middle class and rich in the classroom: they were in the State U for reasons that had everything to do with their skills and intelligence. The rest of us were statistics, the smaller number of students who paid full tuition, because we could.

In 2013, you can only imagine the kind of stigma attached to a student being told by a teacher that she has to step out of the classroom because she has yet to pay her tuition fees or student loans.

Imagine what goes through a student’s head, faced with the fact of unpaid fees, but wanting to learn and thinking the world still of education, and of the State University in particular. Imagine what it is like to go to school for five months, with only the desire to learn fueling you, the empty stomach and pocket things you can ignore.

Imagine a context within which you are the strange one having a difficult time, if not the one who has nowhere to run. Imagine a University whose bureaucracy is most unkind, and which instead of being source of comfort and identity, becomes stark reminder of how hopeless one’s poverty is.

This is the systemic dysfunction that is in the STFAP, that is in the State University’s P1,500 per unit tuition fee, that is in this task of creating the conditions for making sure that all State colleges and universities become self-sufficient. This is what the poorer students among us suffer through, because government decides that it will cease to provide education, that it is not the priority here.

This is what killed Kristel Tejada. This is what pushed her against a wall, and made her believe there was no other way to ease her emotional pains and face her family’s financial woes.
This is why UP has blood on its hands.

We rage.