Only a revolutionary government can overthrow the Philippine oligarchy

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TO be frank, I’m still not quite sure whether a revolutionary government will solve our deep problems as a nation. The big risk is whether or not the oligarchy, uniting with anti-Duterte forces and the stragglers of the Yellow Cult, will be able to resist and fight such a revolutionary government, and consequently plunge the country into prolonged strife.

The crucial question is whether President Duterte, with his enormous political support and determination will be able to even just weaken the oligarchy, or the most reactionary section of it, with only the authority he has under the 1987 Constitution and his moral suasion. If he can, there is no need for taking time off from the Constitution.

Sadly, Malacañang after a year in office, does not appear to be the kind of a tightly organized army, using all the overt and covert tools available to it, that is required to fight an entrenched oligarchy. It is almost solely through Duterte’s charisma and political will that reforms are being undertaken.

Our system is so broken. The executive branch in 2006 moved to create a National Competition Council to prevent monopolies. The legislative branch refused to give it the necessary powers. The judicial branch recently, in a case involving the duopoly, PLDT and Globe Telecoms, together with San Miguel Corp., declared that it was not the NCC’s business to meddle in a private transaction. Such is our quagmire.

But that is just one recent illustration of the big hole we are in.

I am yielding the rest of this column’s space to a paper (which I have edited for brevity) by economist Romulo Neri on the urgent need for a revolutionary government. Neri had spent a good part of his life in Congress (as chief of the once-powerful Congressional Planning and Budget Office) and in Malacañang (as socio-economic planning secretary). studying and trying to pursue economic reforms. Neri says he wrote the paper a year ago for a Duterte Cabinet official who requested it.

I hope it sparks discussions on why a revolutionary government is urgently needed and what it can do – or not do – and to debunk the inane claim of a Yellow columnist that the notion of such a revolution is mere romanticism.

The Neri paper follows:

An oligarchic state
President Duterte has come to power on the surge of high popular expectations. Unfortunately, formidable and systemic obstacles stand in the way of achieving these great expectations.

The Philippines is an oligarchic state dominated by powerful business interests who finance elections. These business oligarchs make and break politicians, and overawe a weak, politicized bureaucracy. They dictate and distort public policies to enrich themselves at the expense of the public good through legislative and regulatory capture.

This has resulted in what is described by political economists as a booty capitalistic state, where the political winners and their financial backers help themselves to political rewards and economic rents, which in turn allow them to perpetuate their stranglehold on the State and the economy.

Political economists, both local and international, have blamed our lack of economic and social progress on the economic elite that fostered economic policies that have enriched those in power while impoverishing the rest of the country.

Policy distortions and weak institutions in an oligarchic state discourage job-creating local and foreign investments by making rules unpredictable and unfair since these rules were created to conform to oligarchic interests. They also raise the costs of doing business, such as the costs of power, telecommunications, transport and cargo handling. They have also limited foreign investments and stifled competition, which would have lowered the costs of products and services for both local consumers and enterprises.

Investments can only thrive where rules are fair and predictable and costs of doing business are not prohibitive.

This condition of an oligarchic state is worsened with the tradition of political dynasties and the recent entry of narco-politics. The choice of political leaders is no longer determined by the Filipino people. This undermines the very democracy the Philippine Constitution stands for.

The whole economic structure is also inequitable and needs drastic transformation. Our economic system now has a surplus of funds with the banking system, highly liquid with international reserves greatly exceeding recommended levels, thanks to the remittances of OFWs and the revenues of BPOs and call centers.

However, our international reserves are mostly invested in US Treasury bills, making a poor country like the Philippines lend to a rich country like the US. At the same time, badly needed infrastructure is sorely lacking and the physical environment is severely degraded. The portfolio of national assets clearly needs rebalancing by transforming the excess financial liquidity into more badly needed assets like infrastructure and a safer, more wholesome physical environment.

Only the very rich have benefited from this financial liquidity through low interest rates to large corporate entities which borrow by the hundreds of billions, which further allow them to multiply their accumulated wealth.

On the ownership and entitlements side of the national balance sheet, the very rich dominate the national claims on resources, while the vast majority own little with the poor having minimal assets. The general public has little access to common entitlements, such as good education, health services, safe streets, clean air and public parks, and are highly vulnerable to environmental disasters.

The President has little time to deliver on his promises. The challenges are formidable, and constitutional, legal and institutional obstacles stand in the way. Extraordinary measures are clearly needed.

Infrastructure projects need to be implemented fast. The economic costs of Metro Manila traffic alone is P2.6 billion a day, to increase to P6 billion by 2030. A year’s delay in infrastructure to relieve Metro Manila traffic means economic costs exceeding P1 trillion.

However, following standard procurement regulations and bureaucratic risk aversion– particularly the fear of being charged by the Ombudsman, and expenditures that will only be disallowed by Commission on Audit–discourage swift and decisive implementation of badly needed projects by well-meaning bureaucrats. In the meantime we have overly relied on foreign and donor funds for vital projects when local funds and contractors are readily available.

To enhance our ability to finance infrastructure and other development projects, we can transfer a substantial portion of our excess international reserves into a sovereign wealth fund to be invested in sound Philippine development projects with high economic and preferably high financial returns. We will need to overcome Bangko Sentral ng Pilipinas regulations for this to happen.

Building new urban centers
We will need to build new city centers and urban corridors to decongest our overcrowded urban areas, especially Metro Manila. This may entail developing the less flood-prone upland areas into environmentally sound human settlements areas and for ecotourism, while building urban and industrial corridors in Luzon towards the Pacific coast.

It will require extraordinary presidential powers to proclaim upland areas as alienable and disposable for habitation purposes, but within strict environmental guidelines, with at least 5 percent of the uplands reserved for forests and nature reserves.

Healing our people
Extraordinary social mobilization is also needed to resolve the problem of drug addiction running to millions of Filipino victims. The problem cannot be addressed through standard rehabilitation measures alone. Mobilizing drug addicts into rehabilitation camps to replant forests and regenerate severely damaged coastal environments will address the problem at the scale needed to make any significant impact. The military will have to be mobilized for this rehabilitation program.

The drug rehabilitation program will dovetail and synergize into the reforestation and environmental regeneration program since both require mobilization of human resources, and in the case of drug addicts, for their betterment while they work on improving the natural environment.

This could be patterned after President Franklin Roosevelt’s highly successful (and highly popular) Citizens Conservation Corps where 6 million poor young Americans were mobilized to plant 3 billion trees all over the United States during the Great Depression era.

The key to removing the oligarchic capture of our political system is public financing for electoral exercise to remove the dependence of national candidates on big business contributors.

Ordinary taxpayers should be allowed to contribute a small portion, say 2 percent of their tax payments to a political party of their choice. This can also be matched by State funds to wean away political parties from big election contributors while allowing political parties to choose candidates on the basis of merit. This will also strengthen the Philippine middle class which religiously pay their taxes as employees or small entrepreneurs and professionals.

The middle class is a base support for any functioning democracy and good governance based on sound institutions. While the poor will seek favor and protection through dole-outs and patronage and the oligarchs through their control and distortion of rules, the middle class can only seek refuge in the uniform application of rules by sound institutions. Strengthening the middle class will set the foundation for our sound democracy with properly functioning institutions.

Constitutional reforms
The constitutional reform process should be started and directed towards a unicameral parliamentary and federal system of government. Parliamentary government systems are more supportive of a strong and professional bureaucracy and more responsive to public sentiment.

A revolutionary government will be declared to overcome the constitutional, legal and institutional obstacles to the President’s ability to deliver on his election promises and the high public expectations within his term of office.

The main rationale for these measures is to minimize implementation delays which are severely costly. An advisory and consultative council with representatives from each province will be convened to replace the existing legislative bodies as a transition measure.

A grassroots-based political party system with clear development agenda will have to be formed. Political parties will be united by common development goals and projects, both local and national, that will develop local communities and support poverty alleviation and job creation while improving the business and investment environment at the national level.

Certain regulatory agencies such as the Commission on Elections, the Ombudsman, Commission on Audit, Energy Regulatory Commission, and the National Telecommunications Commission either have stood in the way of effective and timely project implementation, or have been captured by oligarchic interests. Their interventions and decisions therefore tend to be contrary to the best interest of our country and people.