Social insurance as anti-corruption

In Philippine law, we have embraced the welfare state in rhetoric but betrayed it in practice. Yet there is one lesson we can learn from abroad: social safety nets reduce the incentive for corruption among the rank-and-file. Corruption thrives on the need to cushion one’s family from life’s uncertainties: accidents, disease, unemployment, the vagaries of old age. A strong social insurance system and a bankable pension system “actuarialize” those risks.

Concededly it won’t stop the truly greedy; for them, more money merely whets and does not suppress the craving for even more money. It won’t matter to the big fish either; for them, the ordinary employees’ petty graft is merely loose change. Why even bother? But it will halt corruption’s corrosive effects on our moral fabric. As graft spreads to every level of society, social insurance will stop it at the lower levels to which the mass of Filipinos are exposed, and contain the social cancer within the highest levels where the new Ombudsman will now focus on the big fish.

I am in Xi’an, China as I write, attending an international gathering of constitutional law scholars discussing “social rights,” more familiar to us Filipinos in the language of social justice and the welfare state. There is a global trend to constitutionalize these non-traditional rights. Our country has jumped on the bandwagon, but we should be warned. It’s been controversial at best.

To start with, the welfare state—in which we expect the government to support many of our basic needs —has had a spotty track record hereabouts. We are a poor country, and we simply do not have enough resources to help everyone in need. There are wonderful sounding clauses in the constitution, exemplified by the all-time classic: the “right of the people to a balanced and healthful ecology in accord with the rhythm and harmony of nature.” (I wonder what the drafters were smoking when they wrote that.)

There are many other guarantees to a right to education, a right to health, etc. But increasingly they seem to be more like hollow promises that serve no practical purpose. Abroad there abound judicial decisions purporting to enforce these social claims, but they too have been widely criticized. It installs judges as administrative overseers, a managerial task for which they lack both the expertise and mandate. It strains their legitimacy and places them on the same footing as politicians eternally playing to the gallery. A Singaporean scholar has remarked: in places like the Philippines, we take pride in the right to housing, but in other countries, people actually have houses.

Moreover, insurance and pension plans are typically contributory, which assume that the beneficiary has a job. In our country, that will exclude millions in the informal sector, the micro-level entrepreneurs. While we are taking strides toward universal health care through PhilHealth, for instance, it is certainly difficult to aim for universal coverage for the whole range of other social rights.

And then there is the chicken-and-egg dilemma: the welfare state expands the bureaucracy, and the more goodies they are in a position to give away, the more temptations to pocket some. Every new benefit is a new rent-seeking moment. Remember President Gloria Macapagal-Arroyo’s presidential bid in 2004: health coverage was distributed as campaign largesse and health funds were redirected toward the campaign itself.

Social insurance was never intended as an anti-corruption measure. As a tool for social engineering, it was designed to insulate the workingman from the harshness market. It wasn’t designed to eliminate the market of bribe-givers and -takers.

But we must recognize corruption as the first problem of governance in the Philippines. It distorts democratic elections by giving candidates perverse incentives to run and voters perverse motives to vote. It distorts decision-making when rules are custom-tailored to ensure a winning bidder. It distorts the delivery of government services when lofty goals embraced by higher-ups are twisted into the agenda of the mafiosos in the local bureaucracies.

If we recognize corruption as a separate problem, then we should take social insurance as an imperfect but welcome anti-corruption measure. For instance, being contributory cuts both ways. It may be confined to job-holders but that ensures that it has self-sustaining and not dependent on taxpayer subsidies. It may be politically manipulable by petty gods and a profitable racket for clerks, but even if that pollutes 50 percent of all transactions, think of the unpolluted 50 percent. Half-full, half-empty. Take your pick.

For too long, we have taken a purely punitive approach to anti-corruption. We began with the Revised Penal Code rules on bribery and malversation. Then we refined it with the Anti-Graft and Corrupt Practices Act. We created the Sandiganbayan and the Ombudsman. We enacted into law the Code of Ethics for Public Officers.

It’s time we took a preventive approach and seek the “pull” factors that draw otherwise decent human beings into taking shortcuts. One legitimate source of pressure is the need of parents as breadwinners to protect their families from catastrophic health costs now and aging-related infirmities in the future. Even with a living wage—and that itself is already the first hurdle—the workingman still needs the security available only from social insurance and pension funds. At its core, social rights are about peace of mind.

Corruption has spread too widely. It has become the norm rather than the exception among public officers. We must start saving their souls before petty bribes become just a regular part of their family budget.

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