What the Marcos victory heralds

Image courtesy of PNA, June 2022.

The New Society under Pres. Ferdinand E. Marcos sought to break with the Commonwealth era, by dispossessing the old aristocracy who were in charge of that order and replacing them with his own cronies and political acolytes. State-led development using financial leverage supplied by the West was its economic growth model. This was made possible by various policy settings prevalent at the time.

The Marcos regime operated state owned enterprises in nearly every sector of the economy. It had a fixed exchange rate with the peso pegged to the US dollar. It sought to develop industries behind protectionist trade walls. It had a central wage fixing system that was politically manipulable. Foreign investment was confined to a short positive list, set by his government. The tax regime was highly irrational and regressive.

This was reformed by the EDSA regime, which subscribed to Washington’s neoliberal agenda. State-led development gave way to market-centrism. State-owned enterprises were privatised. Crony capitalists were left to fend for themselves. A flexible foreign exchange rate regime was introduced. Quantitative trade restrictions were converted into tariffs, which were then lowered at an accelerated pace. Foreign investment was restricted by an ever dwindling negative list. The tax regime was gradually made more progressive and rational. 

In the political arena, regular “free” elections were restored. This led to the revival of the old Commonwealth political clans that went into hiatus under Marcos. The regime increasingly tolerated many of Marcos’ political allies, at first in local bailiwicks, then eventually at the national stage. This included the Marcoses and Romualdezes themselves who were allowed to return from exile, after Marcos, Sr. passed away in Hawaii.

Some of the EDSA stalwarts who had fought the dictator survived, for a time. But in the end, they either lost to more traditional political clans, former Marcos loyalists and new dynasties, or got compromised by the system, so much so that the distinction between them and their former opponents was difficult to perceive.

Was it any wonder that after restoring the pre-Martial Law system of politics, the result would be the same old patrimonialism that thrived under that old order? Allegiances were feigned towards whoever was the occupant of Malacanang by members of congress and local governments, to gain maximum advantage. No permanent alliances, only permanent interests.

The political class realised that it was better to collude by forging “unity” - the path of least resistance - to remain in power. Ferdinand Marcos, Jr. despite claiming that the post-EDSA regime had disrupted his father’s grand plan for first world status, had in fact accepted the tenets of its economic philosophy as the basis for his administration.

Having subscribed to it, he saw no need to debate policy with his opponents during his presidential campaign. They were advocating mostly the same things, anyway. His rivals would only use the debate stage as an opportunity to raise the issue of his father’s dark past, which he needed to avoid at all cost. 

At his first address to the joint-sitting of Congress, he surprised many by simply sticking to the policy line of his economic managers. The same high priests who had advised his father, but whose prescriptions went unheeded. Marcos, Jr., for fear of upsetting markets at a precarious post-pandemic period, towed their line.

Neither did he signal any structural break with the past by way of revising the 1987 charter. This was despite hinting that he was for amending it, up until he got elected. Then, he suddenly switched gears and said it was not a priority, dousing the fervour of those who were expecting something more radical from him.

Unlike 1986 when the difference between the Marcos and EDSA regimes were as stark as light and darkness, good and evil, the main differences now had to do with the extent to which three lettered acronyms like PPP ought to be relied on to boost infrastructure spending. They were  marginal, because both sides had actually gravitated towards the middle.

In the end all that Bongbong Marcos could offer was more of the same, only better. In truth, this was all the Filipino public had bargained for. They simply wanted more effective governance than what they had been shown in the past. Better conditions on the ground, rather than lofty ideals based on such abstractions as “democracy” or “people empowerment”. The EDSA regime had offered these in spades, but seemed inept, unable to translate them into reality. 

The Aquinos, having fallen from political grace, were now seen as the enemy. And so as the logic goes, the enemy of my enemy becomes my friend. These were the Marcoses who were able to spin the yarn that things had been better under their watch. Substituting “unity” for “discipline” the mantra of his father, Marcos Jr., was able to provide an antidote to the perennially argumentative, critically divisive and deconstructive attitude of the EDSA forces. Unity required discipline after all.

And in so doing, he was able to foist his own counter-narrative that would explain the past. It was all a lie, the attacks on our family. We hold these hidden truths that the EDSA forces don’t want you to hear. And yet, despite the success of his propaganda, and his victory at the polls, what did the second coming of Marcos herald? Not a break with the previous dispensation.

Though the rejuvenation of the Marcos dynasty signalled a rejection of the formerly ascendant Aquinos and their allies, it didn’t represent a repudiation of the constitutional, political and economic norms they had put in place. Quite the opposite. 

Imitation is the sincerest form of flattery that mediocrity can pay to greatness, so Oscar Wilde said. Maggie Thatcher when asked what her single, greatest achievement was, replied, “Tony Blair and New Labour. We forced our opponents to change their minds.”. So it became with the EDSA regime. Its crowning glory, its finest hour, came not at the apotheosis of the Aquinos, but with the measured return of another Marcos into Malacanang.

Can the Opposition win in 2022?

 

The EDSA narrative provides its adherents a meaningful way of making sense of the world based on a valorizing worldview. In this narrative, the Philippines is like the chosen people of Israel who were delivered from the bondage of dictatorship and ushered into the promised land of freedom.

The past five years under Duterte, would have felt like an exile to Babylon for the opposition. Their defeat in the midterm election of 2019 signaled the prolonging of this exile from power. The recent death of Noynoy Aquino has been used to revive their fortunes in time for next year’s polls. So, can they return to power in 2022?

In opposition, the Liberals and their allies have had time to reflect. Why have they fallen so out of favor with voters? Just like the exilic Jews who pondered their fate in Babylon and the meaning of it. The temptation, and in fact the norm would be to adopt the gods of their conquerors and lose their religion. Should the political opposition do the same and bow to their fate?

Of course, for the faithful the answer to that would be ‘no’. If so, then a plausible, credible explanation would have to be found for why they have fallen so far from political grace.

The worshipping of false gods by the Israelites was the reason given by the Jews to explain why the Lord had allowed them to be conquered. This historical narrative allowed them to hold on to their cultural and religious beliefs despite being in a strange land. And by remaining true to their religion, they found a way back from exile with their identity intact. So, is there a parallel here for the children of EDSA, and if so, then what? How can they credibly explain their fall from power and find their way back from political oblivion?

Ninoy had espoused a belief in Christian Socialism, which traced its roots to the attempts of an enlightened monarch in Denmark to liberate his people from serfdom through mass education. It was a human centered form of capitalism aimed at affording the full blossoming of ordinary citizens to reach their fullest potential. The success of this model is demonstrated today by Scandinavia being one of the wealthiest, least corrupt, and happiest places on earth.

The adoption of a neoliberal worldview by the EDSA regime with its idolatry of the Market, espoused by Washington and mediated through market-enhancing institutions of governance promoted by the WB and IMF, was in effect what had caused the children of EDSA to go astray. This is what invited populist backlashes from the left, in the form of Erap Estrada in 1998, from within, with the apostasy of Gloria Arroyo in 2004, and from the right, with the ascendancy of Rody Duterte in 2016.

Vice Pres. Robredo for her part has emphasized the dynamism of the private sector for collective action by brokering donations between corporate foundations and needy communities. She has not lasted long in any of the public roles assigned to her, first as housing czar then as co-chair of the Inter-agency Committee on Anti-Illegal Drugs, preferring instead to become a maverick policy entrepreneur.

Her support for marginalized communities through her ‘Angat Buhay program’ is still consistent with a neoliberal view that public investment merely crowds out charitable spending. It is consistent with a minimalist role for the state, relying on the magic of markets to broker the needs of society through voluntary, altruistic donations by moneyed elite: trickle-down economics, in effect. Government by NGO.

Duterte didn’t mind breaking with this tradition. He didn’t kowtow to the international rules-based order when dealing with the West Philippine Sea or human rights issue. He in effect defiled the sacred cows before which the EDSA forces fall prostrate.

He offered instead a kind of tough love for the development of the Filipino by focusing on the social ills that have come about because of the aimless accumulation of wealth in the pursuit of materialist, consumerist culture. This tyranny of freedom, of unconstrained choice fostered by free markets, has only led to alienation, apathy and addictive forms of behavior.

Duterte, in acting like a strict father establishing boundaries and disciplining his children has stepped into the breach because while the EDSA narrative structured our political and economic ways of life, it had nothing to offer us from a social standpoint. Neither did the post-EDSA regime engage in the necessary work of political and electoral reforms needed to truly democratize participation in our society.

With the recent passing of Noynoy Aquino, his former confidante Rep. Joey Salceda offered an assessment of his legacy. He praised him for accomplishing many noble things, but also said that PNoy suffered from a lack of ambition due to his ‘worldview’. He had the most favorable macroeconomic conditions, but failed to seize the opportunities these presented. This lack of ambition was his cardinal policy failing.

This is what obscured the original agapic vision of Noynoy’s father for a human centered form of development. This idolatry of the market is the folly that has led to their political exile, so it behooves the children of EDSA to return to The Source for inspiration.

If Duterte represents a consumptive love of country - a form of governance that destroys human life to preserve it, that breaks the law to uphold it; and, if the EDSA regime represents a reciprocal kind of love - a form of governance that relies on transactional markets and padrino-based politics, then the agapic love of country, of actualizing individuals by investing in their human capacities is what the successor to the EDSA regime must work towards.

Only by rediscovering this forgotten vision can the children of EDSA rescue themselves from irrelevance. Acknowledging where they went wrong would go a long way towards healing the partisan divide with those who were once in their broad coalition but no longer see themselves as part of it.

The question is, who among their leaders today would be so humble as to do that? Dare I say none;  and so, for the true believers in Ninoy’s Impossible Dream, they may have to go outside the fold to find a leader who can re-imagine the promise of EDSA and bring its children back from exile into the Promised Land.

Dilawan: Rise and Fall of the EDSA Regime - Another Aquino

“I have fought the good fight, I have finished the race, I have kept the faith.”

Those were the words of Pres. Noynoy Aquino at his valedictory State of the Nation Address to Congress in July of 2015 where he summed up his administration’s achievements and looked forward to “a new dawn of justice and opportunity” forged by “freedom from corruption” as he claimed, and I quote

My one and only interest is the well-being of my Bosses. I did all I could to forge a nation that is more just and more progressive—one that enjoys the fruits of meaningful change. I will let history decide.

And within 12 months of uttering those words, the era of the EDSA regime would draw to a close, with the rejection of Aquino’s hand-picked successor and the election of Rodrigo Duterte, whose approach to criminal justice was anathema to what the regime had stood for.

In this fourth part to the Rise and Fall of the EDSA Regime, we will look at the second Aquino presidency, its ambition, achievements and follies, and while five years is too short a time frame to have gained enough “distance” from those events, we will try to explain what led to the collapse in confidence in the yellow movement, which triggered their losses at the ballot in 2016 and since, and as to why it is unlikely that it will return any time soon. 

Dilawan: Rise and Fall of the EDSA Regime - Uno, Dos Tres

"I am the Market and thou shalt have no other models before me."

That is the first commandment of neoliberalism, an ideology that took root in the Philippines after the February 1986 people power revolt at EDSA.

In this series on the Rise and Fall of the EDSA Regime, we’ve been looking at the origins of the yellow movement and its impact on Philippine society. 

Dilawan: Rise and Fall of the EDSA Regime - Vision vs Reality

In this episode we are going to dissect the vision that Ninoy had offered for the Philippines, and delve more  deeply into the early days of the post-EDSA regime to see how this vision was corrupted by the yellow forces.

Dilawan: Rise and Fall of the EDSA Regime - Part 1

PART 1: ORIGIN STORY

From 1986 to 2016, the worldview of the yellow forces in our country dominated the thinking and actions of most Filipinos.

Yellowism or dilawan ideology is a system of moral, political and economic beliefs with normative prescriptions and modalities for regulating and regenerating Philippine society.

It provided a narrative, around which the life of the nation was structured. 

A whole new generation of young Filipinos has been brought up with this belief system.

In 2016, an epoch-making shift took place with the election of Pres. Rody Duterte. To many, this marked the end of the yellow orthodoxy.

In this episode of The Cusp, I’m gonna try to explain what happened. What led to the rise and collapse of the yellow doctrine and the ongoing search for something to replace it.

Videos referred to on the pitfalls of Marcos:
1. Lust for power https://www.youtube.com/watch?v=uW4vigtWp08
2-3 Greed and hubris https://www.youtube.com/watch?v=WxdvmHDV9cA
4. Might makes right https://www.youtube.com/watch?v=XwHLWWGGry8
5. Debt-driven growth strategy https://www.youtube.com/watch?v=IbB3DyfFOVg&t=22s

Episode 26: Yellow Alert! How do you address populism?

In the first part of this series, we showed how the weakening of democratic institutions in the country can be traced to the establishment of neoliberal economic policies, which have given rise to a populist backlash. 

The Philippine debt driven, crony capitalist growth of the 1970s under Pres. Marcos led to the IMF prescribed austerity measures of the 1980s under Pres. Cory Aquino and the globalist trend of the 1990s under Pres. Fidel Ramos. The Philippine state and its economy was too weak for the state to say no to the imposition of policies from external lenders.

This led to a populist backlash from the left in 1998, in the wake of the Asian financial crisis. The election of Pres. Joseph Erap Estrada was a response to the austerity under which  the government had to spend more on debt service than education contrary to our constitutional provisions. It was also based on Erap’s charisma and cult of personality.

Episode 24: Yellow Alert: Why democratic forces have fallen out of favour in the Philippines (and how they can win it back)

It’s important at the start of the program to define key terms. I’d like to do this, by way of question and answer, so...

The Big Swindle

The collapse of the Berlin wall in 1989 attested to the untenability of socialism as a way of organising productive forces in society. In the West, a similar decline in Keynesian economics had been taking place. The emergent paradigm came to be known as the Washington Consensus (WC), a term coined by John Williamson referring to the ten universal principles for encouraging growth and prosperity.

These principles were anchored on a faith in unfettered markets and a reduced role for government through liberalisation, privatisation and macro-stability. While they were intended to form the lowest common denominator for policy prescriptions, as Williamson later observed, they became a panacea, sufficient in and of themselves to cause economic transformation.

As it later became evident from the experiences of Russia, Sub-Saharan Africa and Latin America which had experimented with "market fundamentalism" or neoliberalism in the 1990s, the link between these reforms and economic growth seemed to be weak or untenable at best.

Meanwhile, economies like China and India which had used a hybrid approach involving private joint ventures with town and village enterprises (in the case of the former) or had engaged in selective deregulation (in the case of the latter) did extremely well. Decades earlier, Japan, Korea and Taiwan had engaged in industrial policy and currency devaluation, clearly distorting product and money markets, and saw their populations rise out of poverty within a generation.

What is worse, capital market liberalisation, an important WC tenet, apparently made Southeast Asian economies vulnerable to speculative attacks as demonstrated in 1997 with the Asian financial meltdown. In order to rescue the reputation of the economic doctrine, a renewed focus was placed on the role of governance, institutions and corruption something that the WC had hitherto ignored.

Ten additional principles covering these areas rounded out what was termed the Washington Consensus Plus. Never mind that an earlier financial crisis had erupted in Scandinavia where countries have an unrivalled reputation for transparency in government or that bureaucratic corruption had not prevented Korea or China from developing quite rapidly.

If the thesis had previously hinged on "getting the price right", it now depended on "getting institutions right" to deal with "noise" in the form of non-productive transactions costs that prevent markets from functioning properly. Institutional determinants (property rights, contract law, juducial capacity) were given the same level of concern that political considerations had earlier occupied (democracy v authoritarianism). It was observed however that no matter what developing countries did, the list of reforms and explanations for why they did not subsequently grow just kept getting longer and longer*.

The one democratic country that had comprehensively applied the principles of the Washington Consensus Plus and had developed from it was Australia. Since the 1980s, successive governments instituted reforms in the economy and governance. When the dot com crash of 2001 and global financial crisis of 2008 hit, local banks were innoculated from it through prudential regulation and supervision. By adapting the book title of one famous Peruvian author, this episode could be called, "Why the Washington Consensus works in Australia and fails everywhere else" for even America had resisted the need for transparency in exotic derivatives markets or prudential regulation over its banks.

When the bubble that was the US realty-derivative market burst, weaknesses were exposed in its political economy. As Simon Johnson noted (Johnson being part of the trio including Acemoglu and Robinson or "AJR" that first highlighted the importance of institutional determinants), Washington had become captive to Wall Street in a manner that was characteristic of many developing countries. This would suggest that the US ought not grow as fast into the future, something that recent developments seem to confirm.

It is interesting to note that from Australia, the jurisdiction that provides the ultimate case for the successful and bi-partisan application of neoliberalism its leader should have screamed the loudest for an alternative social democratic paradigm with protestations that "the Emperor has no clothes". In practice it has meant adopting a kind of Millenium Challenge approach through its domestic social and labour market policies enforced through a "cooperative Federalism".

One could challenge this approach as an alternative to the Washington Consensus, but the problem is what else would one then substitute it with? Development economists are in a state of confusion about the way forward. There are it would seem many paths to prosperity, not just one. But for countries already on that road, a key question is how to build on it.

An important study that illuminates this question was performed by Gustav Ranis in 2000. He showed that countries pursuing economic growth as their paramount objective may wind up in a development rut, but for those countries that pursued human capital development, a virtuous cycle that involved both growth and improved human well-being ultimately occurred.

Although it would seem straight-forward and self-evident to take the conclusions of the study and recommend investing a greater share of GDP to human services as what Jeffrey Sachs and the UN Millenium Challenge Project would prefer, the same old questions crop up. Namely, would not improvements in governance be more helpful? How would local institutions, cultural and social norms interact with the resulting programs? Should governments or private markets take the lead?

Just as the "death" of god led to his resurrection in the form of "structure", the decline of neoliberalism is bringing about its rebirth in other deterministic forms.

* Perhaps instituting structural reforms is not the answer if it eventually weakens the legitimacy and capacity of governments to function especially if local conditions prevent reforms from producing material differences in outcomes.

Preaching to the Choir

This week saw Joe Hockey the Federal Opposition’s treasury spokesman present his views on god and politics before the Sydney Institute. The talk entitled “In Defense of God” was a discussion of religion’s place within a secular society. Mr Hockey argues in favour of a pluralist society that maintains the free and open competition for adherents of different religious faiths (in keeping with the Liberal Party’s own tradition of unfettered markets no doubt).

This was touted in the media as his first outing as an aspiring leader of the Federal Liberal Party. As the clouds of economic crisis began to recede into the distance and with it the dour predictions regarding the Government’s fiscal position, this was seen as the treasury spokesman’s way of canvassing a wider policy arena, and what better way of doing this than to discuss his own personal history as an Australian of mixed ancestry and cultural heritage?

The actual text of the speech is quite lucid and credible, but when asked regarding his motivation for giving it, Joe could not provide a credible response. Neither could he prevent speculation regarding his higher ambitions from occurring, his smiley face betraying his inner most thoughts (as if he got a warm fuzzy feeling from the mere notion that he might wrest the Liberal Party’s helm from its currently unpopular leader Malcom Turnbull).

Had he intended to showcase his command of matters pertaining to his treasury portfolio, he could have offered to speak on a topic made popular by the GFC, that of religion and economics. After all, his party adheres most closely to the orthodoxy of neoliberalism. This tradition has taken the outer trappings of a religion according to one author and advocates for the total separation of Markets and State. It is this belief system that Kevin Rudd’s “heretical” teachings on social democracy seek to overturn.

Given the unpopularity in recent years of this view among voters and policymakers alike, it is not difficult to see why he opted not to be the apologist for it in this occasion. But to see what shape and form a speech on this topic might have looked like, check out the beautifully written essay by a theologian posted this week and found here.

(Image taken from the Sydney Institute podcast)

Smart Intervention

With the conclusion of the American electoral cycle conducted amidst one of the most severe economic storms the globe has seen since the Great Depression, many are suggesting that the repudiation of the GOP at the polls in both the presidential and congressional races means that the era of bigger government intervention is back.

It was a combination of imprudent deregulation of financial markets on the one hand coupled with unwarranted government intervention in the housing market on the other that led to the collapse of such Wall Street icons as Lehman Brothers placing great clouds of uncertainty over the major economies of the world.

The most tired bit of analysis floating around with the ascension of the Democrats in Washington is that a new dawn has come heralding the end of economic fundamentalism (a term used by Warren Buffet), the neoliberal agenda with the ‘magic of the markets’ at its core. The economic philosophy espoused by Reagan and Thatcher has been the cornerstone of fiscal and economic policies of both Conservative and New Democrat/New Labor governments over the last thirty odd years. It is time to dust up John Maynard Keynes and consign Milton Friedman back into storage, so they say.

Joseph Stiglitz, a Nobel Prize recipient in economics for his work on the 'economics of information', former Chief Economist of the World Bank and former Chairman of the Council of Economic Advisors under Pres. Bill Clinton, has rightly pointed to the laxity of financial regulation in credit and derivatives markets under the Bush White House, coupled with monetary easing by the Federal Reserve in response to the post-911 and dot com collapse in the early part of the decade as foundations for the present sub-prime mortgage crisis.

This is only half the picture, which deflects a fair share of the blame that should be laid at the feet of the Democrats. The other half comes from the unintended consequences of well-meaning government policies in the housing market ratcheted up significantly by the Clinton administration but initiated as far back in Carter’s to promote greater home ownership by mandating the Federally-supported Fannie Mae and Freddie Mac to allocate a greater share of their lending to lower income groups, the so-called ninjas (no income, no job, and no assets).

The home mortgage meltdown was made up of two failures: a false-negative on the one hand (government failing to act when it should have) and a false-positive on the other (government acting when it should not have). This was a calamity caused not for a lack of public intervention, but by the inappropriate (non-)use of it.


Of course, in the heat of the campaign, a smart candidate like Barack Obama who has reportedly read his fellow University of Chicago professors’, Thaler and Sunstein’s book, Nudge (Yale, April 2008- see left) on this very issue (just as British Opposition Leader, David Cameron has) probably believes that government’s role is not necessarily to mandate things to individuals, but to ensure that they are primed to make intelligent choices, knew that to pose such a nuanced stance would only be self-defeating.

Yet, in his advocacy of tort reform as well as in his healthcare policy which had been opposed by constituents of his own party, trial lawyers in the case of the former, and rival Hillary Clinton in the case of the latter (for being too libertarian) he demonstrated the essence of what is being termed the ‘real third way’, paternal libertarianism: not quite the Keynesian model; one might think of it as the Chicago School of Law and Economics. This new school of thought is in essence a heterodox economic paradigm sprouting from the discoveries made in the budding fields of behavioral and neural economics.

By conducting experiments and studying the mental processes involved in decision-making, this new branch of economics has demonstrated how even highly rational individuals make foolish moves when facing complex, unfamiliar terrain. It demonstrates how our minds often get tricked by the manner in which problems are presented to us.

In order to optimize social benefits in these circumstances, it is not sufficient for policies to merely maximize choice by increasing competition through deregulation. Governments also need to ensure that choices made by consumers are more likely to serve their interests by creating regular feedback mechanisms with which they can evaluate their choices vis-à-vis other options in a timely fashion. This would counteract the inertia of sticking to a current yet less beneficial position or being swayed unnecessarily by the mentality of the herd into making a foolish one.

When laid out in plain English, as Obama did by calling it a policy based on common sense, he contrasted it with the prevailing dogma of neoliberalism. This presented a perfect counterfoil to the seeming blind adherence of the incumbent party to unbridled free markets as a way to allocate resources optimally in society. This soothed the wounded psyche suffered by the American electorate under the current adverse economic climate and appealed to their characteristic sense of pragmatism.

In contrast to the prognostics of most analysts appearing in the news media, the new dispensation is not necessarily going to mean greater intervention by the collective in the sphere of the individual, but smarter intervention. These sorts of intervention do not set out to limit choice, but are designed with better “choice architecture” in which options can be posed in a manner that intelligently spots and corrects for natural, irrational biases present in most humans (read: homo sapiens, not homo economicus).

Of course it remains to be seen whether this new principle can be put into practice by the incoming administration amid the euphoria and stratospheric expectations raised by ambivalent promises made during the campaign, but the kernel of a new idea has been planted, and given time its diffusion is going to be inevitable.