i’ve been fretting over, and collecting columns about, the yawning gap between the few filipino rich and the manymanymany filipino poor for some time now, wondering why other southeast asian countries are able to bridge lessen / shrink the gap, but not the philippines. here are three online essays that explain why, the latest by business world‘s jemy gatdula, which he writes in relation to the 2010 elections. the two others are by editorial consultant juan c. gatbonton and political economist calixto v. chikiamco, both of the manila times.
… the statistic that around 10% of the population owns around 80% of the nation’s wealth remains roughly true. What is even more disturbing, save for the huge immigration influx that was done during the Marcos years (particularly in the 1970s), the families that make up that wealthy 10% have not changed through the years. This accounts for a profoundly stagnant social mobility, thus making it more bizarre for our voting population to actually be giving somebody, who has nothing to credit him but his parents’ names, an indecent shot at the presidency. By adding to this the fact that somewhere around 30-40% of the country’s 80 million citizens are under the poverty line, then one can see how obscene a 10% wealthy figure is. Indeed, the attitude of the elite seems to be: it’s all right to help the poor so long as they know their place — and stay there.
Joe Studwell, in his Asian Godfathers, made an analysis on the Philippines that is particularly relevant:
“The old political elite, restored by godfather progeny Corazon Aquino after Marcos’ departure in 1986, appears as entrenched as ever. The current president, Gloria Macapagal-Arroyo — herself the daughter of a former president — spends much of her time fending off congressional attempts to impeach her because of the possibly unconstitutional manner in which she ousted her predecessor, Joseph Estrada, 2001, and allegations of vote-rigging in her own election victory in 2004. x x x Faith in the political process is falling, communist insurgency is present in most provinces, and the local elite remains the most selfish and self-serving in the region. The Philippines’ best known living author, Francisco Sionil Jose, lamented in the Far Eastern Economic Review in December 2004: ’We are poor because our elites have no sense of nation. They collaborate with whoever rules — the Spaniards, the Japanese, the Americans and, in recent times, Marcos. Our elites imbibed the values of the colonizer.’ The Philippines, in short, has never moved on from the colonial era and the patterns of amoral elite dominance that it created.” (Asian Godfathers, 2007, pp.180-181)
A reading of Sandra Burton’s Impossible Dream shows how those in power are so related or linked to each other that our history is seemingly like one long sequence political rigodon. If Burton’s account is accurate: it was a Laurel who acquitted Ferdinand Marcos of murder, a Roxas who liberated him from a US army brig, a Quezon who urged him to be in public life, a Macapagal who awarded him half of his war medals, and a Magsaysay who served as godfather to his wedding. Marcos had Ninoy Aquino as a fraternity brother. And before Aquino married Cory, he was actually dating, guess who? Imelda Romualdez.
Obviously, every country has an elite. Nevertheless, developed countries’ healthy economy and social conditions would indicate a more fluid social mobility rate than that being demonstrated by the Philippines. A cursory look at our history would show the same families, the same surnames, continuously lording it over Philippine affairs. History would also show, however, that they consistently failed the country. In the end, while a country indeed gets the leaders it deserves, it must also be considered that in our case the electorate has had a history of poor quality to choose from. This, then, in sum is our nation’s problem: the monopolization of political and economic power by a narrow minded and incompetent oligarchy.
Interestingly, most of the political class (which, it must be remembered, also constitutes the wealthy end of our social spectrum) would point to corruption as the problem. No, it’s not. It’s the elite who are the problem. Commentators from apparently different ends of the globalization debate converge on this point: from Walden Bello (in his The Anti-development State) to Federico Macaranas and Scott Thompson (in their great Democracy and Discipline), to other books by different authors (The Rulemakers, Booty Capitalism, Sugar and the Origins of Modern Philippine Society, Malolos: The Crisis of the Republic, and Anarchy of Families).
Let us encourage the Filipino voter to not vote for anybody coming from the old political families, no matter how good their branding or packaging may be. They’re all part of the group that created the problems of our country. They’ve had their chance. And they sucked big time.
Tama na, sobra na, palitan na iyang mga lumang pamilya.
Our elite of power and wealth are extremely diverse. Their members range from the genteel remnants of the colonial hacendero families to the grossest political-warlord clans such as the Ampatuans of Maguindanao, who are accused of slaughtering 57 people in just one morning.
In between are the political kingmakers who “bet” on a likely candidate and then collect on their investment in business favors once the candidate wins an influential office. Their paragon is the Chinese-Filipino entrepreneur Lucio Tan, who apparently put up 70 percent of presidential candidate Joseph Estrada’s campaign funds in 1998.
The only thing our elite families have in common is that they still get the most of what there is to get. The Ampatuan godfather is reputed to have kept a nest egg of P400 million in an industrial-strength vault in one of his mansions.
The time is long gone when the rich and powerful took fatherly care of their serfs and tenants, in return for their submission and respect. And the decay of this traditional consensus has made the lives of our poorest families less and less secure.
The social contract that had morally obliged the rich to protect the poor’s right to subsistence has been repealed. Whenever this right to live was threatened, as in Central Luzon beginning in the 1930s, the peasants took up arms, but “less often to destroy elites than to compel them to meet their moral obligations.”
Such unrest has widened, as the spread of the cash economy compelled patrons to turn their backs on their customary rights and duties. Besides, people no longer believe inequality to be divinely ordained, or that power is put to the service of society and its values.
Even the usual markers of elite status have been erased, among them the inferred responsibility of privileged people to act with generosity and nobility toward those less privileged.
Landowning, or “not having to buy the rice you eat,” no longer brings social prestige. In Central Luzon, two successive insurgencies have driven away the sugar and rice hacenderos.
Meanwhile, many of the landowning families who have switched to manufacturing have lost out to Filipino-Chinese arrivistes. Having lost their power to monopolize markets, they proved too greedy, too nepotistic, too authoritarian, to survive global competition.
Rich and poor are separating, as in Disraeli’s England in the 1850s, into “two nations, between whom there is no intercourse and no sympathy . . . ”
The Jesuit sociologist John J. Carroll believes that coercion has become the “operating theory” of our social relationships. Naked power has become the main mediator between rich and poor and power is used heedlessly to accumulate wealth and prestige for the power holders.
One result is that income inequality has been rising, and at the expense of the lower-income groups. The historian Carlos Quirino estimated that in the 1970s, the country was “in the grip of about 50 leading families.” Even now, family ownership of the Philippine corporate sector is the most highly concentrated in East Asia.
The economist Arsenio Balisacan, whose field is poverty studies, notes that things have got really worse in the last six to seven years.
Academics from the University of the Philippines estimate that 35 percent of Filipinos live below the official poverty line. Our middle class has been shrinking. In 2006, the National Statistics Office placed it at 19.1 percent of all our people, down from 22.7 percent in 2000.
Gross inequality seems to be distorting even the conventional economic outcomes. In East Asia, because of egalitarian public policies, a percentage increase in GDP growth typically reduces poverty incidence by 2 percent. (Globally, a percentage increase in GDP reduces poverty by 1.6 percent.) GDP is the total value of goods and services produced in a country in a year.
But in the Philippines, a 1-percent increase in economic growth may in fact be accompanied by a 0.3-percent increase in the number of the poor. This is because economic growth is so highly concentrated: 65 percent of GDP is generated in Metro Manila and its satellite regions, Central Luzon and Southern Tagalog.
Power to the excluded
Inequality is notable not only in people’s incomes and status. What is worse, inequality is built into social and political structures that, in Father Carroll’s view, enable “certain groups or classes of people systematically [to] enjoy more than others the benefits which society can provide.”
Unequal institutions and legal systems affect the entire structure of national society and the way it apportions wealth and power. Systematic inequality pervades public policy, starting from a tax structure that falls on the poor more heavily than on the rich; to regulatory agencies unable to protect people against monopolies and cartels; through the steady decline in the budget share of social services; and public investments that favor the rich regions against the poor ones.
In the end, these elitist social structures can be moved only by some exertion of power from those excluded from them. Hence, the easing of inequality must await the time the Filipino poor are able to develop forms of autonomous organizations that will give them some leverage in dealing with people in authority.
I think it was Gen. (ret) Jose Almonte, former national security chief during the presidency of former President Fidel Ramos, who said that the Philippines had the most irresponsible elite in Asia.
Indeed, “Jo-al” has not been the first and only one who has made this observation. American political scientist Paul Hutchcroft calls the Philippine elite as “booty capitalists” who prey on the weak state for its rent-extraction.
The sorry history of the Philippines since independence is a reflection of the record of our irresponsible political and economic elite.
Compared to its neighbors, the Philippines is still mired in a
“development bog” and unable to reduce its widespread poverty. The Philippines has earned the moniker of “sick man of Asia”-thanks to its irresponsible elite.
And it’s not the Marcos dictatorship alone that’s to blame. Nearly 20 years after Marcos fell, the elite cannot show substantial progress:the country’s institutions are weak, if not weaker; the foreign debt is ballooning and the country is falling into another debt trap;unemployment and poverty rates remain high; and the country is still racked with rebellion with one of the world’s longest-running communist insurgencies.
Why is the Philippine elite so irresponsible?
Well, compared to its Asian neighbors, the Philippine elite never felt really threatened by communism. South Korea, Taiwan, Japan, Malaysia, Singapore, Thailand and Indonesia at one time or another faced “life and death” crisis fostered by the communist threat.
South Korea, which started out more backward than the industrialized North Korea, had no choice. Its military essentially told the business elite to behave, or else all of them would be overrun by the North Korean communists.
Fleeing the communists, the Kuomintang-led Chinese government settled in Taiwan. As outsiders to the island, the Kuomintang-led government could institute land reform and the ever-present threat of a Communist invasion forced its elite to become responsible.
Singapore was a tiny island with few resources and which faced a communist insurgency. Lee Kwan Yew and Singapore’s political elite battled back by building a strong bureaucracy and adopting many socialist elements (state ownership of key enterprises, socialized housing, etc.) while embracing foreign investments and free markets.
The same story was replicated in other countries like Malaysia,
Thailand and Indonesia. Their respective elites rose to the occasion and led their respective countries to wipe out poverty, strengthen public institutions and develop economically.
On the other hand, the Philippine elite became an anomaly and seemed to follow the Latin American model, unable and unwilling to lift the country out of its quagmire. Rather than acting as leaders, the Philippine elite, true to the rules of booty capitalism, acts more like pirates, preying on the state and the people.
One reason for this is that the Philippine elite felt secure under the protective umbrella of the United States. With the US bases, the Philippine elite could always count on the US military, or so it thought, to rescue it from the communist marauders.
The Laurel-Langley Agreement, which allowed US citizens to operate businesses in the Philippines as a foreign monopoly under high tariff walls, further cemented the symbiotic relationship between the US business elite and the local rent-seeking elite. The US and the Philippines became joined at the hip in weakening the state and promoting “booty capitalism.”
The need for the US to maintain its vital bases here during the Cold War made it also imperative that the Philippine elite be kept divided and unable to assert itself.
Why is it that years after the removal of the US bases and the end of the Cold War, the Philippine elite has retained its irresponsible ways? In fact, the Philippines seems to be replaying its history, with 2004 substituting for 1969. Like in 1969, right after the presidential election, the country is sitting on the edge of civil war, its public institutions are politicized, and its treasury nearly bankrupt.
One reason is what economists call the “economics of increasing returns.” Once a country is on a given path, positive feedback and increasing returns keep a country on the same path. If it’s necessary, for example, for an oligarch to bribe justices, it would be also necessary for the other oligarchs to engage in the same practice to compete, and a sort of an arms race to corrupt institutions develops.
As Hutchcroft puts it, “There has been little incentive for oligarchs themselves to press for a more predictable political order, because their major preoccupation is the need to gain or maintain favorable proximity to the political machinery. Even those oligarchs temporarily on the outs with of the regime exert far more effort in trying to get back into favor than in demanding profound structural change.”
Another reason why our elite is so irresponsible is that many of them shifted to regulated, service industries-banking, telecommunications, power, shipping, airline, etc.-in reaction to globalization. Thus, there was great incentive to the further weakening of the state and for “regulatory capture.”
The archipelagic nature of the country further insulates its elite and makes it oblivious of external threats. The communist threat from the North and competition with its old arch-rival, Japan, tempers the possible misbehavior and abuses of the South Korean elite. As for India, competition and rivalry with its neighbor Pakistan represents a motive force to develop the country.
No such rivalry or threat moderates the Philippine elite’s behavior.
Is there any hope then for the Philippines? Will the Philippine elite ever shape up?