Good governance defeats poverty (Last of two parts)

Empowering the Filipino People

MANILA, Philippines – We cannot overemphasize the importance of good governance and good government in defeating mass poverty – particularly now that financial crises, as in mid-1997, have dampened optimistic expectations about globalization and growth in the face of economic recession, calamities/ climate change, and violent uprisings in the Middle East and North Africa (MENA).

The damage to East Asia’s economies by crony capitalism, inadequate financial systems, and mistaken economic policies has impressed upon us how vitally important the quality of government and leadership can be for achieving sustainable development.

We now know globalization and interdependence can sharpen social inequity and hurt poor-country economies.

Regulatory capture

The global economy right now is not delivering enough benefits to enough people.

International policy-makers have yet to find ways to make free markets work for everybody.

Even public policy can unwittingly become anti-poor.

For example, policy bias for capital-intensive industrialization can jeopardize workers’ welfare and the viability of SMEs. During the Marcos period, the availability of relatively cheap capital induced landlords to mechanize prematurely many sectors of agriculture.

The regulatory capture of public services by relatively better-off classes is also a common occurrence in poor countries.

In the Philippines, too high a proportion of our education budget goes to tertiary education – and too much of our health budget goes to tertiary hospitals. These social services are obviously more used by the middle class than by the truly poor.

By contrast, Taiwan, South Korea, and Singapore have emphasized raising the education standards of the whole population, rather than just the middle crust. Statistics show that those developing countries that invest heavily in basic education do much better than those that concentrate on higher education.

Workers and poverty issues

We need to focus the attention of anti-poverty campaigns on the potential of SMEs for generating jobs. Altogether, highly visible (and often pampered) capital-intensive investments generate relatively fewer jobs.

Ultimately, every poor country must depend on its own people’s effort – and on the determination and self-sacrificing spirit of its leaders – to deal with its poverty problems.

Comparatively, we Filipinos have done demonstrably less than our vigorous neighbors in East Asia.

So, what are we to do?

We should free the economy as far as possible – allowing the competitive market to make the decisions our all-too-fallible politicians and bureaucrats shouldn’t do.

Until the State is strong enough to do more, it must focus on its basic duty: to create the conditions that will enable free markets to flourish – and to assure our people equality of opportunity, if not of outcome.

The 1987 Constitution weakened our already-multiple political parties – by abolishing (in effect) the two-party system.

We need to organize new political institutions and arrangements. For this reason, among others, I support the proposal that we amend the 1987 Charter.

Rebuilding our imperfect democracy

Our task as a people is no less than to rebuild our imperfect democracy.

Right now, we constitute no more than an “electoral democracy” – in that we can change our rulers thru elections. We must aspire to become a full-fledged “liberal democracy,” where individual enterprise is nurtured with government support.

Building government effectiveness requires limiting its areas of authority and changing the electorate’s expectations thereof. Let us give to the private sector what it can do better than government.

We need to focus government’s activities to match its capabilities. Many states try to do too much – with too few resources and too many mouths to feed.

We must get government focused on the core public activities crucial to sustainable development.

We cannot overestimate the importance of stable political institutions – and sensible public policies – in improving the lot of poor nations like ours – many of which suffer from the depredations of self-serving and entrenched governing classes.

Guaranteed property rights, security of contracts, proactive economic policies – all these can make the difference between wealth and poverty.

Our lack of these sensible policies explains why the Filipino workers’ productivity rises astonishingly when they migrate to another country that is more bountiful.

The danger of “democratic exhaustion”

Our own historical experience tells us that parasitic public institutions – and selfish ruling classes – can perpetuate themselves indefinitely.

Nor should we take for granted the irreversible nature of the democratic process. Throughout recent history, democracies have reverted to authoritarianism; states have failed; and the realms of liberty have diminished for ordinary people.

An additional problem is the danger of “democratic exhaustion.”

History teaches that citizens can easily tire of “electoral democracy” that brings no relief for mass poverty and social inequality.

This erosion of confidence in elected government is due to slow economic growth, corruption, injustice, and ineffective social services for the disadvantaged.

Let us not underestimate the ripple effects of even simple micro-economic reform.

Recall, as example, the Ramos administration’s program to deregulate the telecommunications monopoly – which has now made the Philippines a mobile telephone capital and made the telecom monopoly and its successors earn even bigger bucks than before.

In the effort to open the economy, we must overcome our tendency to be suspicious of foreign investment. This flaw arises from our inward-looking, and defensive kind of nationalism.

Measuring ourselves by world standards

In the 1950s, economic nationalism had been promoted by politically-powerful industrial classes that emerged under the stimulus of the state policy of import-substituting industrialization.

Its basic objective was “Filipinization.”

Economic nationalists argued it was “useless to amass wealth which is not ours to dispose of.” They did not hesitate to seek economic control even at the expense of economic growth.

That kind of nationalism does not work anymore – if it ever did.

Now we need a self-confident, outward-looking kind of nationalism that is unafraid to be measured by world standards.

To our mind, the key question is: Can we resolve our problems democratically?

Yes, we can!!!

Our democracy may be far from perfect, but it seems to work well enough for us to improve incrementally – without a desperate resort to the trauma of violent revolution.

We can do it democratically if our national leadership continues to accept that consensus and compromise – not confrontation and hardlining – are democracy’s ways.

Not stubborn courage but an excess of patience is the democratic reformer’s greatest virtue. It is the willingness to settle for limited political goals temporarily – while sticking to a national vision.

The other essential in modernizing as a democracy is a citizenry prepared to account for itself – a people prepared to take up its share of civic duty, to stand up to its civil rights, and be worthy of its entitlements.

Defeating poverty

Poverty is the crucial challenge to governments of developing countries, the Philippines included.

So formidable is this challenge that trying to defeat it may seem a lost cause, principally due to: (a) expanding populations in the face of limited earth resources and climate change, and (b) the repression, greed and corruption prevalent in poorly governed countries.

But, some battles have actually been won in this twilight struggle. We now know how the war against poverty can be won step-by-step.

Indeed, the basic lesson of this past generation is that growth defeats poverty – if it includes poor people empowered to help themselves and others.

Over the period of high growth in East Asia in the late 1960s and until the 1997 financial crisis, some notable victories were won against mass poverty.

According to World Bank estimates, overall absolute poverty declined dramatically in East Asia – from 35% in 1970 to 10% in 1990 – despite a 40% increase in regional population over those 20 years.

Populous China and Indonesia accomplished the most in poverty reduction.

China’s mass-poverty declined from 33% to 10%; Indonesia’s from 60% to 15%.

Even in the Philippines, between 1994 and 1997, national poverty declined from 32% to 25%. Urban poverty declined from 19% to 12%; while rural poverty eased from 45% to 37%.

Rural poverty responded strongly and positively to overall income growth, according to the World Bank.

Civic responsibility

Historically, the Philippine state has asked little of its citizens; and we Filipinos acknowledge few obligations to the national community. This mutual indifference between State and citizen cannot continue.

Too long have we worked for social goals no larger than those set by our families and family corporations.

Now we must expand our idea of brotherhood and prosperity beyond the family and the faction.

We must all begin to have a thought for the good of the national community. For, only with civic commitment does sustained development happen in democratic societies.

As Jose Rizal, foresaw more than 100 years ago, the time has come to tell ourselves that if we Filipinos wish to be saved, we must redeem ourselves.

TRULY, ETERNAL VIGILANCE IS THE PRICE OF LIBERTY!

KAYA BA NATIN ITO? (CAN WE DO THIS?) –Former Philippine President Fidel V. Ramos

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