ANYONE who wishes to drown in a sea of young, bright, beaming and hopeful faces only has to go to a graduation ceremony. Attending one has never failed to raise my optimism about the future of this country. And so when I spoke at the commencement exercises of the University of the Philippines School of Economics yesterday, my hopes were once again reaffirmed.
There were many outstanding students, including the valedictorian of the class of 2006, Donald K. Ngwe, who not only graduated summa cum laude but also received the Jose Encarnacion Jr. award for best in economics (for getting the highest average for economics subjects) and the Gerardo P. Sicat award for best thesis.
Ngwe is also speaking for the students at the UP Diliman commencement exercises today. Last year he was named one of the top three students at UP Diliman and finished with a jaw-dropping average of 1.104. He is one of 12 students graduating with a summa this year. Two molecular biology and biotechnology majors top the honors list.
I was truly impressed by the graduates and wish them all the best as they follow the school’s motto and “plunge into the deep.”
Below is my speech:
Let me start by congratulating the Class of 2006 of the UP School of Economics. Congratulations to the parents as well. I am sure you are all very proud and very pleased. Economics is one of the most prestigious degrees given by this great university. A diploma from the UP School of Economics is something that you should justifiably be proud of and it deserves a place of honor on your wall. Economics, they say, is the queen of the social sciences. It certainly is not a subject for the faint-hearted student. I was a political science major here at UP many years ago, and I can tell you that many of my classmates — some of whom are now topnotch lawyers, government officials and diplomats — could barely pass Econ 101.
Being only a journalist, I am very honored to have been asked to speak to such an esteemed group. I am also pleased that journalists and lawyers are no longer alone. It used to be that law and journalism were the most reviled and joked about professions on this planet — until economists came along. While doing deep research for this piece, I went into Google and typed the phrase “economists jokes.” There were 387,000 links! I am sure you all know the various versions of the “how many economists are needed to change a light bulb?” joke.
But seriously, if you ask me who has done more damage to this country – is it lawyers, journalists, or economists — I think I’d have a difficult time choosing. Not that my own profession is blameless, but I think it’s a toss up between lawyers and economists. The disastrous economic policies of the Marcos era, after all, were the handiwork of some of the brightest economists this country has ever produced – some of them, by the way, products of the UP School of Economics. Marcos, another UP product, was a brilliant lawyer, but he didn’t bring the country to the brink of economic ruin all by himself — he had the benefit of professional advice from topnotch economists.
But let me also say that in 1984, it was also the best minds of the UP School of Economics that produced the most incisive and devastating critique of the economic crisis. That “white paper” on the Philippine economy was widely read by the business community, academe, and by civil society and helped forge a consensus on how the Marcos regime had plundered the economy and impoverished the people. It also presented an alternative agenda for recovery. Uncharacteristically for economists, at the heart of this alternative agenda to halt what it called “the downward drift in the economy” was a call for democratic politics and greater public participation in decision making. It said that the authoritarian system under Marcos, which did not have effective checks and balances and accountability, “facilitated the economic excesses and mistakes of the past.” It added, “the waste and inefficiency entailed by economic concentration in both the private and public sectors have been abetted by the concentration of political power.”
This paper is so refreshingly uneconomistic. It doesn’t talk of economics as a rarefied field but links it to the greater political and social world out there. Let me confess that I had forgotten about this paper and read it again thoroughly only recently, when I bought a copy that was on sale at the UP Press bookstore two weeks ago. At only P15, it’s one of the few bargains left in this country. Its also as good an indicator as any of how the peso has depreciated in the last 20 years.
In many respects the white paper was ahead of its time. Much of it also rings true, even today. For instance, its observations on social inequality and the great disparities in wealth — are still valid. One of the greatest — and most tragic — failures of 20 years of democracy has been its inability to bridge the yawning gap between rich and poor. The Philippines remains one of the most unequal societies in the world, on a par with Brazil, and less egalitarian than neighboring Indonesia, Cambodia and Vietnam. Sadly, Marcos’s failure to address inequity is also democracy’s failure.
The paper also had this to say about democracy. It would be naïve, it said, to assume that the existence of democratic processes or institutions such as elections, a free press, etc. would automatically bring about the desired economic consequences. Citizens have to be offered real choices during elections, it said. In addition, they had to be informed if they are to choose well.
“The success of democracy rests, to a large extent, on information availability,” said the paper. “The quality of people’s participation in decision making and their perception of their interests is greatly affected by the amount and quality of information they have.”
This is a very prescient statement. A decade later, the economist and Nobel laureate Amartya Sen would publish his influential book on the link between information, public participation, democracy and economic development. By the late 1990s, Sen’s work would influence such mainstream development institutions as the World Bank.
The basic insight dates back to Adam Smith. More than 200 years ago, the founding father of modern economics wrote that information is the great leveler. A free market, he thought, is unable to function if information is withheld or limited to a few. Inadequate information distorts competition and gives undue advantage to vested interests. In analyzing the East Asian crisis of the late 1990s, latter-day economists have echoed Smith, tracing the roots of the malaise to bad information and prescribing more transparency in business and government.
You cannot imagine how happy I am to see that economists now realize what journalists have known for centuries: that societies function well only if citizens are well informed and that a free press is crucial not just for a functioning democracy but a healthy economy.
In the world of business — whether in the Philippines or elsewhere in Asia — transparency means information about who is doing what, who owns what, who is borrowing, from where, how much, for what, and how well everyone is doing, and who is being bailed out, protected, subsidized and at whose expense. These are questions that strike at the heart of power. Information can chip away at the heart of power. This is why journalists like myself are concerned about threats of increasing restrictions on the press and on the freedom to speak out. If our democracy is damaged and dysfunctional now, it will be a disaster if our freedoms are curtailed.
You don’t have to take this journalist’s word for this. This was what the sharp minds of this School said 22 years ago. This is also what the Nobel laureate Amartya Sen wrote: “We have to look at the connection between political and civil rights, on the one hand, and the prevention of major economic disasters, on the other. Political and civil rights give people the opportunity to draw attention forcefully to general needs and to demand appropriate public action. The response of a government to the acute suffering of its people often depends on the pressure that is put on it.
LET me take a break from all these economists talking and let me tell you about the face that haunts me when I cannot sleep at night. It is the face of Christian Alvarez, a frisky five-year old I met on the streets. Christian lives in Plaza Miranda. He and his family sleep on milk cartons near the Mercury Drugstore in Quiapo. Plaza Miranda is his playground. That is also where he and his family eat breakfast everyday: a bowl of lugaw given free by the feeding center run by a Catholic charity in Quiapo church.
Christian’s parents, Rowena and Lawrence Alvarez, are street vendors who make P150 to P200 a day. They have eight children, three of whom — all boys — live on the plaza. Three others are in the care of relatives and friends because their parents do not earn enough to feed and house them. Another was entrusted to the care of an orphanage. The last one, a girl, then aged two, disappeared on the plaza one night when Lawrence left her to fetch water from the Jolibee outlet near Quiapo church.
Christian is at the Quiapo church feeding center with his entire family three times a day. The day I went there, after the noon feeding, the boy shared with his parents and brothers their only real meal that day: three cups of rice bought for P5 each and pinakbet sold for P10 at the Quiapo market. So at 6 pm, Christian lined up again at the Quiapo church, for another bowl of steaming hot lugaw that will at least ensure that he will not go to sleep on an empty stomach.
Unless the situation of the Alvarez family is much improved, the future that awaits Christian is a life on the streets. Like his two other brothers, he will most likely go through two or three years of schooling at the elementary school nearby. He will likely drop out before the third or fourth grade — in fact, nearly 30 percent of all Filipino school children drop out before finishing sixth grade. After that, Christian will scrounge for a living on the streets — scavenging for recyclables, perhaps, or selling cigarettes and candies like his father, perhaps the occasional petty crime.
I wish I could say that the Alvarez family is a particularly special case. But it is not. In 2000, the proportion of the population not reaching the food threshold was 21 percent. One in every five Filipinos cannot afford to meet his minimum food needs. In current numbers, that’s 16 million people.
The numbers, if we look at them, are dismal. Over 30 million Filipinos live below poverty, earning less than the estimated P200 a day needed to keep a family of six clothed, fed, and housed. That is why many families now eat only one full meal — meaning rice and cooked food — a day. As marketing expert Ned Roberto found out in his study on the consumption patterns of the poor, ulam for many families in the lowest income strata these days are: patis, soy sauce, pork oil, sugar and even Pepsi. Many of these families can eat real food only once a week.
Let me give you more numbers. In the 1990s, we wrote about the PEA-Amari case, billed as the “grandmother of all scams,” where close to P3 billion were paid in bribes and commissions to businessmen and officials — including, it was alleged at that time, the Speaker of the House and the Senate President.
In 2001, the Office of the Ombudsman alleged that Joseph Estrada accumulated up to P20 billion in cash and real estate in two-and-half years in Malacañang. Ferdinand and Imelda Marcos were believed to have amassed up to $10 billion in the 20 years they were in power. Recently, it has been alleged that P1 billion recovered from the Marcos wealth by the Arroyo government was used to bankroll the president’s 2004 election campaign.
To me, the scandal lies not so much in the scale of the thievery. The real scandal is that while all these officials were helping themselves to the national treasury, the country was going to ruin and families like those of Christian Alvarez’s were going homeless and hungry.
When hunger stalks millions not because there is a lack of food, but because the social system impoverishes the multitudes while enriching a privileged few, then there is something that is terribly wrong. We are not the Sudan, where millions go hungry in deserts ravaged by war and disease. We are a middle-income country rich in natural resources.
The reason for hunger is the Philippines’ skewed income-distribution pattern: The richest 20 percent of the population account for nearly 55 percent of the national income, while the poorest 20 percent have less than 5 percent. At the same time, political power is monopolized by the wealthy and the privileged. This is particularly true of the House of Representatives, where two of every legislators belong to political families who have been in power for two or more generations.
That such inequity has existed for so long is a testament not so much to the talents of the privileged elite but to the resilience of the ordinary Filipino, a resilience that comes from the strength of our social institutions, particularly the family. Where state and society have failed, the family has filled the slack. For Filipinos, the family is the ultimate social safety net. We found in our research on hunger that one of the coping mechanisms for dealing with lack of food is sending children to the care of other family members. The other is stretching meager budgets and lowering eating and living standards. In the last few years, surveys have shown that more Filipinos are spending less on food. Family members are eating less so that all of them can survive.
In the past, periods of economic boom and the resilience of Filipinos have allowed us to postpone undertaking key reforms and lulled our elites into thinking that they can do politics and business as usual.
Even now, despite the urgency of the current crisis, our political leaders believe they can rule in the old way: that the corruption and ineptness can continue, that the low level of spending on social services will not fray the social fabric beyond repair, that the poor, though hungry, will find ways to cope and not mass up on the streets. Maybe they are right.
BUT WHAT if they are wrong? In 1971, then Senator Benigno S. Aquino famously said, “The Philippines is a social volcano.” Thirty-five years later, the volcano has not exploded — there were eruptions but they were not quite Pinatubo in scale. But how long can we postpone the social reckoning? Already the signs of exploding discontent are upon us: we saw it in the failed people power in February. We see it in the rising criminality brought about by increasing poverty. We saw it in the sporadic outbursts of peasant and urban poor resistance, as in Hacienda Luisita in Tarlac and other haciendas in Negros, but also in 2001, in the spontaneous uprising that was later called Edsa 3.
Our political leaders, however, seem impervious to the signs of the times. They cannot see because they are blinded by their own interests. We have to force them to open their eyes. Our tragedy is that the horizons of our political class are narrow; their interests, short-term; and their attention spans, even shorter. They cannot even see that the system that has nurtured them is failing.
The organizing principle of our political life is the division of spoils. Those in power struggle for a share of the largesse from the national treasury and use this to keep themselves in office, mainly by dispensing patronage to allies and constituents. Patronage is the glue that keeps our unjust and unproductive political system together. Politicians use their powers to bring benefits to their constituents and supporters and to amass funds for their reelection. Constituents, in turn, make continued demands — for jobs, money, basketball courts, etc. — knowing that politicians will use their office to deliver. Governance is distorted to meet these demands. Broader development and reform goals are forgotten. In the end, a system that mires the people in poverty is further entrenched and officials are stuck in the role of fighting for spoils so they could deliver the proceeds to demanding constituents. No matter how oppressive and disempowering this system is, it is resilient.
But this system can be sustained only for so long as the national treasury has enough funds to oil the patronage machine and keep it running. This is why our congressmen are so vehement about keeping their pork barrel funds despite a fiscal crisis and a ballooning budget deficit. Their political survival depends on their ability to deliver the bacon; or in this case, the pork.
The implicit social contract on which our political system has so long been anchored is this: politicians can steal but they have to share the loot with their constituents. But with the government in the red and constituent demands increasing with a fast-growing population and rising poverty, the system could unravel. The tragedy of our politics is that our politicians cannot even muster the will to save the system that has served them so well. Despite the urgency of the crisis, they have enacted at best half-hearted measures that only postpone the day of reckoning.
This is why I believe that the key reforms for moving forward have to do not so much with changing our form of government but with overhauling our political and electoral system. Electoral politics in the Philippines has reached the limits of its usefulness. Our politics is regressive. It hardly matters whether we stick to a presidential or shift to a parliamentary form of government. What we need is a system that will distribute power — and the benefits of power — more equitably.
We need a more even electoral field, and an election commission that will ensure that the rules are followed. We need to build political parties that articulate the interests of the poor, not just of the wealthy. We need measures that would impose party discipline and ensure accountability and transparency in campaign contributions.
Our political system since 1986 is becoming more and more elitist and exclusivist. Less than 200 families have monopolized Congress seats in the last 100 years. In 1962, only 27 percent of representatives were classified as upper class. Forty years later, in 1992, it was 44 percent. Over time, the assets of legislators have grown. In 1992, the average net worth of congressmen was P8 million, today it is P28 million. In the Senate, the average net worth increased from P33 million in 1998 to P59 million in 2001. A quarter of all senators today have a net worth of above P100 million. One should consider that many legislators underdeclare what they own.
The question is: Why should politicians want to overhaul a system that has been so good to them? The answer simply is this: Given current realities, that system cannot hold.
In other words, our fates are entwined. Our country will prosper only if everyone is looked after. There can be sustained prosperity only if such prosperity is shared by all. Our economy cannot expand if the benefits of growth are enjoyed by only a privileged and powerful few. We will not develop if a big segment of our population is poor, hungry, uneducated and uncared for. Even the World Bank, inspired by Amartya Sen’s work on economic development, says this.
In short, inequity is unsustainable. If we look all over the world, we will find that the only prosperous societies, the only secure states, and the only stable economies are those where citizens share wealth and power.
ULTIMATELY, democracy is sustainable only with stable institutions responsive to the needs of the majority: among them, a truly representative legislature, a competent and accountable executive, and a bureaucracy that delivers essential social services — education, health care, among others — especially those who need them the most.
A patronage-based political system does not build institutions: It corrupts and weakens them. Twenty years after the restoration of democracy, our institutions remain feeble, unable to stand on their own and to keep their autonomy and independence from partisan politics. These institutions are also wracked by corruption. We all know about the problems with the Bureau of Customs and the BIR. But equally alarming is how corruption has seeped into the marrow of the military, the police and the courts — which are the backbone institutions for ensuring public safety and the rule of law.
Most important of all, if our country will have a place in the future, the privileged classes must give up some of their power and wealth. We must find a way to funnel resources from the wealthy — by streamlining our tax system, for example — so that we can spend more on education, health care and livelihood projects for the poor. Government must stop its waste and profligacy to provide more social services for the people. Public spending has to address basic needs rather than greasing the patronage machine.
Ultimately, this means forging a new social compact, one built no longer on the mutual, if unevenly distributed, benefits of a system based on patronage and spoils. We need a social contract that is premised on the right of every citizen to the fundamentals of a decent life and on a more equitable sharing of the wealth our country produces.
This is your task now. The generations before you — including mine, which reached adulthood in the 1980s, at the dawn of people power — have failed. I am probably the same generation as your parents. Now in the throes of middle age, my generation has realized that many of our great hopes about this country have been frustrated, our big dreams of reform have turned to dust. While Edsa 1 is the defining experience of our lives and we will always be proud that we took part in restoring freedom, we have also failed to build a just and equitable society. That undertaking is yours. And as economists trained in the country’s premier university you are uniquely placed to play a reforming and nation building role. The UP School of Economics has a tradition for critical and innovative thought. For the past 20 years, it has upset presidents with its uncompromising analyses of our country’s economic problems. You are the bearers of this tradition.
Do not be daunted by the fact that the changes we need cannot be done overnight. They may not take effect soon enough to save Christian Alvarez from a life on the streets or prevent him from dropping out of school. But it is imperative we sow the seeds now so that if not Christian, then his children, your children, will be ensured not just of an education but also of a secure and comfortable life.
I have confidence in you, the Class of 2006. It is my hope you will have far greater clarity than we have had. The generations before you are jaded and worn out. They may no longer be capable of creativity; their energies are spent. They are stuck with old templates — imposing old solutions to new problems. We need to break out of the mold. We need your youth, your imagination, and your energy to do this.
Congratulations to all of you. I am certain that this university, this school has trained you well. The future of this country is in your capable hands.