The ‘mother of all our problems’

Professor Cielito Habito, in “Pathetic laggard” (No Free Lunch, 9/14/2021), attributes the Philippines’ laggardness to a whole bit, from “our pathetic export performance,” which in turn reflects our falling foreign as well as domestic investments and stunted agriculture, to a “bad state of governance” beginning “from the top leadership down to local governments.” He deflects attention from the “moneyed Filipino investors” whose pathetic laggardness, in terms of producing stuff for exports, he is quite oblivious to. To Habito, these “Filipinos” are rather on the receiving end and hence blameless for the country’s laggard state, for being in fact deterred from “putting their stakes in the Philippine economy.”

“Next time we vote for change, it better be change for the better,” counseled Habito. But if a seasoned bureaucrat and economist like him becomes, wittingly or unwittingly, accessorial to such a narrative, I fear the Philippines will continue to slide to the bottom of the pack.

Filipinos are conditioned into thinking that the government is both the problem and the solution, and the people deserve only the government they create. What’s excluded from this equation of blame is the immense and intricate involvement of the economic elite in governance. Former president Fidel Ramos, speaking in 2003, clarified this thinking by citing the “unholy alliance” and “perverse symbiosis” between politicians and a few powerful, wealthy, and “greedy rent-seeking,” families, to whom many of the former are beholden.

This alliance is the “mother of all our problems” throughout history, said Ramos. Romulo Neri, then the government’s chief economist, described the relationship as “booty capitalism,” practiced by a well-entrenched oligarchy that invests in politicians to curry policy favors and “capture economic power.” If Filipino politicians as well as government bureaucrats are mere errand boys of the economic elite, shouldn’t the inquiry and criticism be centered more on the conduct of the latter?

The competitiveness of a nation’s economy largely depends on the competitiveness of the businesses that operate within and export from the country. Therefore, if our economic elite is inept in the way it invests and innovates, or to make use of the technology developed elsewhere, could it remain blameless by simply putting the blame on corrupt politicians, bungling bureaucrats, and the ignorant masses?

It takes more than a level playing field to build and compete. It requires a sense of country, and the will to develop in the first place. The ruling elite of the infant American republic readily responded to the call of Alexander Hamilton to lend their prestige and risk to manufacturing in the early phase of the American economy. The Japanese samurai who laid down the foundation of Japan’s industrial economy, drawing on their strong sense of social obligation, put the development of the nation ahead of short-term gains. During the Asian financial crisis, South Koreans lined up for miles to give their jewelry to boost the country’s dwindling foreign exchange reserves. The Americans, the Japanese, and the South Koreans did what they had to do in the name of national pride.

Crucial to the nation’s economic take-off is patriotic elitism, not necessarily on the part of hopeless politicians (“trapos”) but of the entrepreneurial class—to bear risks and to accumulate not only for their family’s empire but for the empire of the nation, through innovation and experimentation and the pursuit of vigorous “product” entrepreneurship.

Dependency on “paper” entrepreneurship, overseas Filipino workers’ remittances, and infrastructure programs infected with bribes and kickbacks is a recipe for persisting laggardness.

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Abe N. Margallo is a published author and a former constitutional law professor.