Cracks in the mirror | Inquirer Opinion

Cracks in the mirror

The historian William Henry Scott writes about a parchment curtain consisting of official colonial documents that prevent readers from forming a clear picture of our ancestors. He says there are cracks in this curtain through which we can get truer glimpses of them. Similarly, we should look at the weaknesses of repeated official announcements of the Aquino administration to get at a truer state of our country today. Let us refer to them as cracks in the mirror.

The biggest crack is in its claim that it has presided over higher growth in our GDP compared to past years. While this may be true, it is a terribly incomplete picture. The GDP is only an average figure. It does not say anything about how the national income is distributed, and the administration is silent on the point. There is a statistical formula, the Gini coefficient, which tells us how the income is distributed, and it does not look good. The Asian Development Bank says in a report that the Gini coefficient has increased. This can only mean that the GDP is growing for the benefit of a few people. In 2011, for instance, the increase in wealth of the 40 richest Filipino families accounted for an incredible 76.5 percent of the overall increase in GDP.


This sorry situation is best reflected in the employment rate. Quite nonchalantly, the administration reports that the employment rate has risen to 94 percent as of October 2014, implying that unemployment is down to 6 percent. How this came about is a mystery when no less than the moderate Trade Union Congress of the Philippines stated that as of January 2014, the unemployment rate stood at 7.5 percent, a figure that the Philippine Statistics Authority also reported in March 2014. Even at 6 percent, it was still higher than the rate in other Asean countries.

But more problematic is the definition of unemployment adopted by the administration. If this was meant to cover people who were completely without work, then those who, say, were able to work one day in a week were no longer considered unemployed, as if they were expected not to eat during days when they had no work. The SWS formula is more realistic. It is called the “joblessness rate,” and again, the figure is not good. It shows that, as of 2013, 27.5 percent or an estimated 12.6 million


Filipinos had no jobs. This is comparable to the jobless rate in America during the darkest days of the Great Depression in the 1930s.

The creation of employment is, in fact, one of the reasons the administration is so proud that foreign investments increased under its watch. They have allegedly brought in more jobs. This is a tricky argument, for as the data we have just cited indicate, the open-door policy is not working. The government has become more and more liberal to foreign investments since the time of Marcos, and yet the problem of mass unemployment persists. This only goes to show that the contribution to employment by foreign investments is not as great as claimed.

Why? For one thing, a large portion of the components of the products of foreign firms, like electronic goods, are imported instead of being made locally, so that ancillary industries are not stimulated, and what jobs are created by foreign investment are offset by jobs lost when local entrepreneurs are deprived of their home market by foreign investors.

It has been argued that we need to encourage more foreign investments in order to increase employment. But there is a negative side to foreign investments that the administration keeps under the rug. This is the dollar drain. If the foreign firms bring in dollars, they also bring these out, and the more they bring in, the more they can bring out. A study by the UP Law Center showed that for every dollar invested by US companies in the Philippines from 1946 to 1976, a net profit of $3.58 was generated, and of this, $2 was repatriated to the home country, thus decapitalizing our country by $398 million during a 30-year period. We are not aware of any analysis for the figures since then, but the net outflow must be larger now. This represents so much of the wealth created by our workers that is lost to the country.

If anything, the situation proves that we need other strategies than overdependence on foreign investments for our economic progress. The Recto principle of nationalist

industrialization, or industrialization by and for Filipinos, is valid to this day. Two of the most important sectors in our society—industry and agriculture—have suffered near-total neglect by the administration, and yet it cannot be ignored that they have the greatest multiplier effect on production. We can hope to solve the unemployment problem only by providing the right opportunities to our local entrepreneurs and improving the livelihood of our farmers and fishermen. Our ultimate goal should be full employment. Every Filipino who can work and wants work must have work.

One final crack in the mirror is a problem for the “daang matuwid.” The Bureau of Internal Revenue may have made some improvement in the tax effort. The bigger question is how the people’s money is spent. The administration touts the increase in the number of beneficiaries under its centerpiece conditional cash transfer program against poverty, but lately, the Commission on Audit has raised red flags regarding the proper distribution of its funds.


We think what is happening in the Department of Social Welfare and Development is symptomatic of a greater malaise in government. The misuse of public funds is becoming rampant, and the administration does not seem to know what to do about it anymore. This problem started early in the term of President Aquino, when he could not let go of officials who failed to measure up to the declared standards of his “daang matuwid.”

We dream of the day when a president can stand before the people and give the true state of the nation instead of engaging in propaganda. For then, we can have the collective will to do better, and will love our president more—for his honesty and valor.

Mario Guariña III is a former associate justice of the Court of Appeals.

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TAGS: Aquino administration, Asian Development Bank, economy, GDP, news, William Henry Scott
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