Back in the saddle again

The subject of income inequality brings out animated debates among my students in Public Finance. I have always believed that social anger can trigger people into action. My hope is that my students can formulate policies and programs in their own sphere of influence to help correct the concentration of wealth on the top 20 percent of our population.

But the problem of unequal opportunities is getting worse. From being No. 9 in the 2007 Crony Capitalism Index, the Philippines now ranks No. 3 among 22 economies where crony sectors account for the bulk of the country’s economic output. We are only topped by Russia and Malaysia in this regard. The Economist estimated that 11.3 percent of our GDP in 2014 came from casinos, infrastructure, utilities, telecommunications and real estate that are owned by cronies. These are firms or individuals who have maintained cozy relationships with those in power. They have been favored with sweetheart deals such as tax breaks, and have been awarded franchises, and contracts in government projects. These were won not solely through competition but from relationships they have built with government. Cronies are relatives, friends, supporters of campaigns, and provider of gifts who obtain rents or unearned income for favors they have dispensed.

I have always thought that crony capitalism reached its height during the martial law regime. When the Aquino government came into power in 1986, attempts were made to open up the economy through tariff liberalization and privatization. However, these initiatives were watered down by private capture. The Ramos administration was obsessed with the goal of levelling the playing field through the breaking up of oligopolies in oil, telecommunications, banking, utilities, insurance, and air and sea transport. But with the passage of time and with changes in power, oligarchs are back with a vengeance. General Jose Almonte describes oligarchy as a "rule by the few." They succeed in shaping policies in taxation, investments, land reform, and public expenditures to protect their own interests.

The popular election of Mayor Duterte is said to be a result of the broad clamor of voters for a rapid change in our systems. But he sets his own limitations by narrowing his choices of cabinet members among his friends and supporters. While we understand that these are positions of trust, this constricts competition and the provision of equal opportunities for those who are capable and competent.

The members of the Lower House are more disappointing. By jumping ships and changing their alliances, we have lost once more the opportunity to strengthen our party system. This could have been an opportunity for legislators to fiscalize and provide oversight to the Duterte administration. Alas, we are back once more to the need for civil society to be vigilant because the politicians have given up this role in pursuit of chairmanship and membership to powerful committees and obtaining favors from those in power. It seems that the role of civil society in the conduct of objective research and in advocacy is never ending. Their work is becoming harder not only because they have to finance their own activities but more importantly, their leaders are growing older and tired.

Our younger colleagues like Darwin, Ching, and Quintin reassure us that there is hope. Prof. Winnie Monsod reminded us yesterday of the success of the conditional cash transfer in getting more children to school and in helping poor families obtain better health care. Local leaders excitedly talk about how bottom-up budgeting strengthens community participation in decision making. Hopefully, the incoming administration will look at these initiatives with favor and go beyond. A good start is to let the public know of the major contributors to the Duterte campaign to as guidepost in evaluating affiliations of appointees to government.

Hopefully too, the millennials who used social media with great fervor can translate their energy to demand transparency, performance and accountability from the incoming government .It is time for them to be a little less pre-occupied with themselves and to co-share the responsibility of helping the poor. Otherwise, the cronies and the oligarchs will forever remain on the saddle.