vonjobi: wow, congratulations! kelan ang trip? i hope i'll be around when you come. had a good time with diosa last...
Keith Bacongco: Knowing Nograles and his Big Boss...garapalan na lang talaga.
Vinia Datinguinoo Mukherjee: Congratulations, PCIJ! Mabuhay kayo!
Lead Philippines: But without credible mass media there, what is left to protect the people..?
vonjobi: it's juned sOniDo.

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hopeless_race : Lets not just focus sa mga malversation of funds, sa mga overpricing..ating pagtuunan ng atensyon ang diskarte ng mga politiko na umuutang ng bilyon bilyon sa gobyerno."Small time" ang ibang pamamaraan ng pangungurakot kumpara sa pag-utang sa gobyerno ng bilyon na tunay ngang masasabing "pinaka big-time" at wala pang sabit.
hopeless_race : Mukhang tikom ang bibig ng lahat pagdating sa diskarte ng mga politiko sa pagutang ng mga bilyon bilyon sa gobyerno na tinatakbuhan. Itong pamamaraan na ito ang tunay na kumakain ng malaking porsyento ng ating national budget batay na din sa sinasabi ng world bank.
hopeless_race : Pakisilip naman po ang mga utang ni Villar sa BSP, ang mga utang nila RAMON JACINTO, RONNIE ZAMORA, JOE DE VENECIA at madami pang ibang mga pulitiko. Iilan lamang yan sa mga nababanggit sa balita na may mga malalaking utang sa gobyerno.
hopeless_race : Nagmimistulang "small time" lamang ang malversation of funds kumpara sa laki ng kinakamal ng mga umuutang sa gobyerno. At ito ay malinaw na natatakbuhan dahil hindi nga naman pwede makulong ang may-ari ng kumpanya sa pagkaka-utang lamang. Tunay na mga tuso at magagaling sa batas itong mga politiko natin. Masasabi ko na malamang lahat ng mga politiko ganito ang diskarte...wala pang kulong.
hopeless_race : PCIJ pkitingnan naman po ang mga gaya ni Villar na my malaking utang sa Gobyerno pero tinatakbuhan. Magtatayo ng kumpanya at uutang ng bilyon bilyon sa gobyerno ng walang balak bayaran. Tunay ngang walang nakukulong sa utang...ito ang prinsipyo ginagamit ng mga politiko ntin kaya nakakapagtaka kung san napupunta ang daang bilyong pera ng gobyerno.
hopeless_race : Sana itreat naman po ng media ang hacienda luisita at mendiola massacre na parang MAGUINADANAO MASSACRE. Ipublicized ang mga katotohanan at ipakita sa tao ang karumaldumal na pinaggagawa sa mga farmers dun. Untouchable po ba sila cory at danding at hindi magawang batikusin ng media about these two massacres?
hopeless_race : Kapag napaguusapan ang mendiola at hacienda luisita massacre ay parang walang nangyari at parang hindi big deal. Anu po ba ang pinagkaiba ng dalawang nabanggit na massacre sa maguindanao massacre?
hopeless_race : Its sad that we pinoys are blind to the fact of what had happened in mendiola and hacienda luisita. Ang tanong..bakit ang media ay hindi manlang matackle ang ganitong usapin? Takot ba sila kay cory at danding?
hopeless_race : Wilkins" brand, for P1.4 billion.-1999 Sugarland Multi-Food Corp. for P2.9 billion 2001- Purefoods Corp P7 billion P60 billion Coca-Cola ... See More 2002- Cosmos Bottling Corp. from RFM Corp. for P14.1 billion October 2008- GSIS' shares in Meralco worth PHP30 Billion. December 2008- country's biggest oil refiner, Petron Corporation. international company shopping spree: Australian boutique brewer J. Boag and Son for A$96 million in 2000. $97 million for Thai Amarit Brewery Ltd $35.5 mi
hopeless_race : Gud am..glad to be back.
jr_lad : rip mr. alecks pabico. you'll be greatly missed!
sevens21 : Dati input mo lng name at SSS ID makukuha mo agad STATIC INFO...
sevens21 : tawag ka sa HOTLINE nila walang ANSWER grrr we need pa namn ng static info SSS Gising!!!
sevens21 : Gawa naman po kayo ng article about SSS. Pangit ng site nila dali ma blocked ng account
guest_899 : we must check the background of each potential candidates to avoid having another big mistake like GMA
guest_899 : congratulations to PCIJ, more power and God Bless !
jazzymuver : how did Arroyo swallow that kind of things!! how come that she just spend the money our countrymen for her own sake!!
guest_3664 : i would be glad if u can include the investigation of the manner public officials announce infra projects as per COA regulation. It is frustrating to see their faces on the tarpaulin instead of the prescribed information like name of project, date of implementation,amount of contract, source/s of fund, among other things. This is very rampant here in Marikina. Thanks and more power on your noble endeavors. We need people like you to have make our country great again.
jhanz_08 : im making research on R.A 9136...with rgards to the privatization of NPC..could someone out there can let me understand more bout this matter?why was monopoly dismantled?email me..jhanycem@yahoo.com...thanks much
erika marie : P.S.:) my paper is due next week and i do hope someone could provide me these reports coming from reliable resources thank you ulit.
erika marie : P.S.
guest_4275 : i am currently doing a study regarding political killings in the philippines. could someone out there please send me human rights reports under Aquino and Ramos administration. you could send it at my email: erikamariet@yahoo.com your response would surely be very much appreciated. thank you everyone. god bless.
guest_4275 : i am currently doing a study for my paper regarding political killings in the philippines. i noted that there are no human rights reports during the Aquino and Ramos administration. could someone out there please send me reports regarding these matter? i do hope these reports came from reliable resources you could send it in my email; erikamariet@yahoo.comyour response would surely be appreciated. thanks everyone. god bless.
jayson bourne : gusto ko po maging member ng PCIJ, panu po ba? may application po ba? sana mapadalhan nyo ako ng info sa email ko... www.jboxpenshoppe@yahoo.com
jayson bourne : cory is OK, but kris & Noynoy sensationalize masyado...
guest_9891 : LABAN pa rin!
meow : boycotts worked during marcos years. how about doing it now against the businesses of the con-ass congressmen?
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Reforming the political economy, according to Neri

Posted by: Alecks P. Pabico | February 19, 2008 at 4:50 pm
Filed under: Governance, In the News, The Economy

CALL it pragmatism, plain naïveté or a total cop-out, but former socioeconomic and planning secretary Romulo Neri thinks the reforms in the country’s political economy that he has been advocating since he joined government service in 1990 would be better led by no less than Gloria Macapagal-Arroyo herself.

CHED Chair Romulo Neri [photo courtesy of the Senate] “The reason I have stuck it out with the Cabinet is because I feel there is hope within the Executive,” declared Neri at a hastily organized press conference in Malacañang yesterday. “I cannot see hope coming from a coup d’état. I cannot see hope from any Church-led type of movement…I cannot see it coming from Senate investigations alone. I cannot see it coming from the Black and White [Movement] and civil society alone.”

“To me, the President will have to lead in this whole reform process,” he stressed.

Neri was at the press conference, along with Executive Secretary Eduardo Ermita, to deny what his friend and the Senate’s key witness in its ongoing investigation on the scrapped national broadband network (NBN) deal, Rodolfo Noel ‘Jun’ Lozada Jr., reluctantly revealed to senators yesterday — that he had referred to Arroyo as “evil” during a supposedly confidential meeting he had with opposition legislators Panfilo Lacson and Jamby Madrigal in December last year.

That meeting, claimed Neri, had little to do with the $329-million NBN project with the Chinese firm, ZTE Corporation, as it was more a discussion on the nature of the political economy and the whole oligarchic structure of the Philippine state.

“I gave my usual lecture on political economy and, to shorten it, I just put one brief framework. And I think we all agreed that this is the nature of the Philippine state and the oligarchic state,” he explained. Neri added that it was similar to the lectures he used to give to legislators and Cabinet officials when he was still head of the Congressional Planning and Budget Office of the House of Representatives.

In such lectures, Neri often referred to the Philippine state as a “booty capitalist state,” a term derived from “booty capitalism” which was popularized by American scholar, Dr. Paul Hutchcroft. Such a state, Neri said, is dominated by powerful business groups who finance electoral exercises and use politicians and the machinery of government to further their economic interests. In effect, they “use the powers of the State to enrich themselves at the expense of everybody.”

Describing the vicious cycle of booty capitalism, Neri wrote: “When their candidates win, the vested interest groups are able to add political power to their already vast economic power. This oligarchic elite is able to influence policies to the point of distorting them. And their very ability to distort policies allows them to capture economic rent, economic rent being extraordinary profits which make them extraordinarily rich. This gives them greater economic power which in turn allows them to finance our election.”

For the political economy to be reformed, Neri advocated no less than a change in the system characterized by the “domination by the oligarchic state (influencing policy and political appointments), which results in policy distortions and weak institutions.”

“Unless the system is changed, it will continue to have negative impact on the poor,” he said, as evidenced by a “weak state, poverty and social chaos, giving birth to high unemployment, low income, poor education, poor health, and low respect for law.”

But judging from his pronouncements yesterday, critics are saying that the reformist in Neri may have already been compromised, as he now prefers to “sleep with the enemy.”

For Tet Gambito of Maritime Watchkeeper, Neri’s apparent change of heart was already evident in his Senate testimony on the NBN deal last year, after he acknowledged his “hidden agenda” in going along with the project despite being contrary to conditions set out by Arroyo in a board meeting of the National Economic and Development Authority in November 2006 — that it be a “pay for use” facility undertaken via a build-operate-transfer (BOT) mode, and with no government subsidies.

This, Gambito said, has shown that Neri has been “merely and simply mouthing some academic mumbo jumbo, or cowed out of his professed stand that booty capitalism is doing the country much harm. Faced with a situation where he could have brought down the whole cabal of ‘booty capitalists’, he turned his tail and ran!”

Below are excerpts from his lecture on the political economy in 2004 (click here for the slide presentation):

REFORMING THE POLITICAL ECONOMY

According to Dr. Paul Hutchcroft, a scholar from Yale University who wrote his doctoral thesis on the political economy of the Philippines, “Booty Capitalism” exists where the state is dominated by powerful business groups who finance electoral exercises and use politicians and the machinery of government to further their economic interests. The vicious cycle of booty capitalism starts when vested interests including powerful business groups, finance their own candidates during elections. When their candidates win, the vested interest groups are able to add political power to their already vast economic power. This oligarchic elite is able to influence policies to the point of distorting them. And their very ability to distort policies allows them to capture economic rent, economic rent being extraordinary profits which make them extraordinarily rich. This gives them greater economic power which in turn allows them to finance our election.

The impact of policy distortions and having weak state institutions make it very risky for investors to come and invest in the country. And if you have low investments, you have low economic growth. The impact on the poor is high unemployment, poor income, poor education, poor health, and low respect for law. On the State side, if there is a corrupt bureaucracy because of weak state institutions, the sale of rules occurs as well as the diversion of expenditures to graft and corruption. Social services are therefore limited and the bribery tax to the poor is very high. The cost of doing business here also becomes very high.

Political economists, both local and international, have blamed our lack of economic and social progress on the Philippine political and economic elite that fostered restrictive trade, fiscal and exchange rate policies. These policies entrenched oligarchic families while impoverishing the rest of the country. These policies favored capital over labor and import-substituting industries over agriculture, and led to underinvestment in the human capital of the poor.

Vicious Cycle of Booty Capitalism

Dr. Paul Hutchcroft’s Matrix

Dr. Paul Hutchcroft said that a state is either a rational-legal state or a predatory state. A rational-legal state makes rules for the good of everybody, while in a predatory state, those in power make rules to enrich themselves.

We have a rational-legal state, as in the case of a Laissez Faire Regulatory State (Quadrant 1). Supposedly, the best condition is the laissez-faire regulatory state where business is greater than the state but where rules and regulations are enacted and enforced for the good of everyone. Laissez faire means to let business do its thing, but with very good regulations.

Another rational-legal state is the Developmental State (Quadrant II) where, on the other hand, the state is greater than business. An example of this is Singapore where the government is involved in a lot of activities, and also Japan, Korea and Taiwan in their early stages.

Among the Predatory States, one can have a Bureaucratic Capitalist State (Quadrant III) where bureaucrats are very powerful and enrich themselves at the expense of everybody. Or one can have the Philippines — an Oligarchic or Booty Capitalist State (Quadrant IV) where it is the oligarchs who determine policies — who in effect use the powers of the State to enrich themselves at the expense of everybody.

Now investors would like to invest in a Bureaucratic Capitalist State rather than a Booty Capitalist State because the former at least would be able to deliver and has enough powers to do so. In the latter, even if you bribed a bureaucrat, it would be very, very costly to do so, and you may still not get what you want if there was someone you had forgotten to deal with, or if an oligarch decides to get involved and so on.

Dr. Paul Hutchcroft's Matrix

Countries with good economic policies

A World Bank study shows that in countries with weak state capability and poor economic policies, income per capita grew by only 0.4 percent. In contrast, income per capita in countries with high state capability and good economic policies grew by 3.0 percent. These differences in income growth have made a huge difference to the quality of people’s lives.

Index of Bureaucratic Capability

The effectiveness of a state is in part dependent on the capability of its bureaucracy. Good policies will go to naught if the institutions that will implement them have very low capabilities. A highly capable bureaucracy can contribute so much in policy formulation and can promote growth and poverty reduction through efficient delivery of services.

A World Bank study has determined that the Philippine government has become the largest employer in the country. In terms of bureaucratic capability, however, the Philippines lags behind its Asian neighbors. While the average index of bureaucratic capability in East Asia is 0.6, the country’s index is at 0.2.

Depth of Political Appointments

Political intervention in the recruitment process, which is based mainly on connections rather then on merit, has further aggravated the situation. This is visible in a review of the depth of political appointments where the Philippines has more political appointees in its bureaucracy compared to other East Asian nations.

Depth of Political Appointments

High and unpredictable corruption

Another study has showed that it is both the risk and high level of corruption that really deters investors. When corruption levels are low and predictability of payments and outcomes is high, there results a high liquidity ratio of gross investments to GDP — but if the level of corruption is high, the predictability is low even if you paid — then the ratio is significantly lower. This explains the Philippines’ low ratio.

High and unpredictable corruption hurts investments

Good government helps explain the income gap

The importance of having strong and capable state institutions can not be ignored in promoting economic development. It can be clearly seen in the experience of countries in Sub-Saharan Africa and East Asia as reported by the World Bank. In the 1960s, personal incomes in East Asia were only slightly higher compared to those in Sub-Saharan Africa.

In the mid-1990s, however, the difference in incomes between the two regions had increased.

The World Bank report pointed out that the difference could be explained by the good economic policies adopted by the East Asian states and the effectiveness in the implementation of these policies. Another reason is that government consumption in the Sub-Saharan states grew to one-and-a-half times compared to East Asia. This experience shows that good policies and strong and capable state institutions to implement them produce much faster economic development.

Strengthening State Institutions

Strengthening our state institutions is necessary for greater economic development. Discouraging TROs and judicial intervention in business decisions is important because investors will shy away from countries where the judiciary system is unpredictable. Moreover, a sound judiciary is essential to a properly functioning market economy. Meanwhile, giving a higher pay to judges will help reduce the risk of corruption.

Strengthening the political party system entails, among others, allowing for State financing for political parties. This will help ease “money politics” and minimize the influence of interest groups — and increasingly, of drug gambling syndicates — on public policy.

The limiting of political appointments and the establishment of a credible merit system for appointments and promotions are requirements for a strong bureaucracy. We urgently need to insulate the administrative service from political influence and to enhance its accountability, transparency and efficiency.

This entry was posted on Tuesday, February 19th, 2008 and is filed under Governance, In the News, The Economy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

4 people have left comments

JJ;

You hit the jackpot, to use Rye’s expression. The three paragraphs after the heading “Strengthening State Instituions” is what we need really.

Please ask Devenecia and the other anti-Gloria group if they are willing to undertake and implement this policies if they become the holders of power. I think they will know right from the very start that this is “political suicidal”.

Big words… hooohuuumm, nakaantok.

jcc wrote on February 19, 2008 - 9:10 pm | Visit Link

I mean “political suicide”.

I do not want to sound so pessimistic, but this I heard this from a political pundit doubling as a “soothsayer”. According to him, the talents and charisma of Mr. Marcos and Ninoy Aquino come only once in a century.

Both were gifted orators and possessed extraordinary charisma. They can mesmerized you, make you laugh or cry through their speeches. Words came out of their mouth like a country ballad songs that you can forget that the country was such in a dismal state. Ninoy can inspire you with his data at his fingertips, Marcos can excite you with his baritone voice and handsome face. These two politicians have the capacity to inspire the nation but everyone knows what happened.

Marcos got sidetracked of his corruption and had forgotten about the nation. A fitting testimony yet that absolute power corrupts absolutely. Ninoy was murdered and everyone of us had romanticized about his death having brought back democracy to the country. I believe though, that he could have been more useful had he lived much longer and inspired the nation to move forward from antiquity to greatness.

I see no one from the present crop of our politicians who possess the charisma and talents Ninoy and Marcos had possessed, because according to this pundit, they will come back to us in about 80 years more.

Meantime, the nation shall be governed and run by mediocre politicians.

My transitory hope for the nation are Senators Rodolfo Biazon and Miriam Santiago. I hope they rise above mediocrity and inspire the nation.

Otherwise, the country is on for a long long haul and for these long years, we remain a Banana Republic, meaning the country is good only for the monkeys, and maybe, that’s what we really are, monkeys.

jcc wrote on February 19, 2008 - 10:41 pm | Visit Link

I am taking this paragraph from this post to start my views

…But judging from his pronouncements yesterday, critics are saying that the reformist in Neri may have already been compromised, as he now prefers to “sleep with the enemy.”

Some ancient questions about “things going wrong” in our lives have surprisingly simple answers in modern basic Science (even things happening to us which cause that painful cry of “Why me?”)

Still more important to one’s philosophy about life, these chemical ideas can startle us into seeing how fortunate we all are: that things don’t go wrong more often!

We’ll talk mainly about down-to-earth things — common solid objects of wood, metal,and bone, not about complex computer chips or programs going wrong (nor about personal relations that fall apart. Even Science has limits.) Simple things often are involved in annoying or deadly happenings to us: breaking a surfboard (that then hits us), having a tire blow out, being in a fire in Malibu, flying the X-1 (as Chuck Yeager had to) with a corroded battery cable or riding a horse and being thrown — ending up with a broken neck.

Why? Why do we get harassed or even have our lives ruined by events like these?

Life is hard. But it’s harder if you don’t know how the material world works!

Strengthening Institutions…this can be the ultimate results of the process…but before we reach the 1st grade level…it should scratch a bit or a tumor might grow even deeper..a struggle…a painful process.

Looking back to the paragraph I choose…Neri has the ideal mind…but it was corroded like the rust from the iron steel bar when it will be dipped to a polluted water and air for long without maintenance…considering that this ideal iron with a perfect specifications will be only withered by the existing system that he wanted to cleanse. The rust in the top surface of that iron should not be removed for it may break into pieces and is now subjected for replacement with a different specs of iron steel. Alecks…please ask all the die hard PRO-GMA if these dynamics of ideal policies will be implemented if they still want to hold in power. NEWTON’s third law of motion…is a democratic views only… no strings attached.

ge-em-ei wrote on February 20, 2008 - 9:10 am | Visit Link

I believe on Neri’s point that coup d’etat is not a good solution to the government’s problem today.

But I do not believe that it would be our President Gloria Arroyo that would lead in this whole reform process.

It should be everybody! All branches and the civil society should be involved and the people should lead. People should have the greatest power because we are a Republican government.

A good president can lead.. We need a good leader. That is honest, patriotic, listens, leads and follows.

But sorry to say but for me that is not Pres. Gloria Macapagal.

Just my insight.

philippinecountry wrote on February 22, 2008 - 4:49 am | Visit Link