Thrust of anti-trust

About a month ago, Forbes magazine, in its annual listing of the world’s billionaires, indicated that the Philippines reached a milestone in 2011: doubling its number of billionaires from 5 in 2010 to 11 in 2011. Their combined wealth was a whopping $24.4 billion or an average of about $2.2 billion each. The magazine further disclosed that “the combined fortunes of the country’s 40 richest reached an all-time high of $34 billion, up from 2010’s $22 billion” (a 33 percent increase).

Shall we break the champagne? Is this grounds for a national celebration? You bet—for those in the magic circle of fortune, I suppose. After all, isn’t this evidence of the vibrancy of our democratic capitalist economic system? Isn’t this the epitome of entrepreneurial endeavor? Doesn’t this place our country above the ranks of the also-rans?

Maybe so, or maybe not quite. Most likely, the sense of jubilation amongst the rest of the 90 million or so of our people would be far more muted, to say the least. Consider for instance that the total wealth of the 11 billionaires is equivalent to about 13 percent of the Philippine GDP and that of the 40 richest nearly 20 percent. Consider also that the combined wealth of the 40 richest is equivalent to that of the combined wealth of about 20 million Filipinos or about 22 percent of the total population. Consider further that the average wealth of our billionaires, at $2.2 billion (P95 billion) is more than four  times the total budget in 2011 for the Conditional Cash Transfer Program of P21 billion.

All this is mind-boggling of course. But this is not intended to be a rant against the super-rich. To some extent it is another way to present the ages old mantra about the Philippines: that a minuscule percentage of our people own and control more than the lion’s share of the nation’s wealth. Therein lies a major cause of why in spite of being the only Christian democracy in Asia, in spite of successive poverty-alleviation programs, in spite of breast-beating from time to time about increasing growth rates and improving credit ratings, the Holy Grail of inclusive growth remains elusive and the majority’s response to announcements of government after government of economic progress is usually, “Hindi namin ma-feel.”

There is no single magic bullet to redress this situation. The fact is that our socio-economic structure is severely lopsided, thus constituting the basic challenge of social transformation. A national vision of social transformation must start with the realization that the problem is a structural one. Solutions therefore require major structural change, not an upgrade of interior design or a repainting, as it were, of the economy’s façade.

Education is the usual antidote offered for this but there are some others that I believe worthy of equally serious consideration, which may have been either overlooked or whose impact toward social transformation may not seem apparent. One of them is the principle of leveling the playing field.

At a recent symposium on competitive policy organized by former President Fidel V. Ramos’ foundation, it was observed that our economy is “hampered by vested interests and inconsistent state policies. Competition is weak and weakening still. Monopolies and cartels dominate many sectors. Regulatory capture keeps down key services and even the World Bank describes the state as not effectively in the hands of the people since state policies and their implementation have tended to serve special interests more than the common good.” In short, our economy is anything but a level playing field. It is not enough for us to simply tout privatization and private sector led economy as elixirs to our economic woes in the face of a consistently weak public sector without putting firmly into place the basic operating principle underlying a truly democratic business environment, namely, competition. This could assume further strategic importance as the economy moves toward greater reliance on Public Private Partnership since without an effective competition policy in place, the already perceived ownership by a handful of an ever increasing number of vital industries and infrastructure may result in an even more lopsided socio-economic structure.

Attempts to level the playing field and bring about competition were successfully done in the past, notably in the breakup of monopolies in the telecommunication and inter-island shipping sectors. But the time has come to institutionalize a competitive framework rather than relying on sporadic exercises in enforcing competition. Such is the thrust of anti-trust legislation which is usually the centerpiece of competition policy in progressive states. Such is the thrust of anti-trust legislation (Senate Bill No. 1) filed by Senate President Juan Ponce Enrile.

It deserves prioritization by the administration and support by the business community. At this stage, business support would best come in the form of constructive scrutiny of the draft bill’s provisions as it makes its way to passage. This will help to ensure a balanced outcome for a landmark piece of legislation that moves the country toward true inclusive democracy characterized by greater business, entrepreneurial and job opportunity, the narrowing of the chasm between the rich and poor, and the rise of a far broader middle class, without casting bigness in business as bad and monopolistic by definition.

Roberto F. de Ocampo is a former finance secretary and was Finance Minister of the Year in 1995, 1996 and 1997.