Philippines: More pain, no gain
In a statement printed in the Philippine Star newspaper on September 21, Philippine President Gloria Macapagal-Arroyo urged her fellow citizens to "suffer the pain now and experience the gains two years hence [rather] than postpone the pain and die a painful economic death two years from now".
The pain hapless, ordinary Filipinos are told to suffer comes in the form of new tax measures to the tune of P80 billion (about US$1.43 billion) a year Arroyo has asked Congress to enact posthaste. The sum amounts to 1.8% of the country's 2003 gross domestic product (GDP). The promised gain is uncertain at best: passage of the measures might forestall a threatened sovereign credit downgrade from the country's present rating, already two notches below investment grade.
Big bloody deal, say a large majority of Filipinos. A mid-September survey by the Manila-based Pulse Asia polling organization found that 78% of respondents "see no need to impose new taxes as long as the government strengthens its tax-collection efforts".
It's time to bell the cat. Who's to blame for running up the country's massive public debt to more than 70% of GDP, in spite of which abject poverty continues to increase; in spite of which some 27 million Filipinos (one-third of the population) have to subsist on less than a dollar a day; in spite of which Filipinos in ever-larger numbers are forced to leave the country to make a living and support the relatives they leave behind?
In an upcoming five-part series, Asia Times Online's Pepe Escobar explores both the makings and the makers behind the social catastrophe a once rich and promising nation (called "the next Japan" 40 years ago) has become. We won't preempt his findings but will note some equally astonishing and disturbing, but incontrovertible, facts.
• Unsustainable demographics. The total population of the Philippines will reach nearly 84 million by the end of 2004. After slowing somewhat in the 1980s and '90s, the population growth rate has once again accelerated to 2.36% per annum, or a doubling rate of just 30 years. The total population could exceed 200 million well before 2050. However, the Catholic Church, to which the great majority of Filipinos belong, continues to prohibit contraception.
• Declining per capita income. High population and mediocre GDP growth make for a noxious mix. In real (inflation-adjusted) peso terms, GDP per capita has remained virtually unchanged since 1980 (P12,619 vs P13,139 in 2003). In US dollar terms, it peaked at $1,180 in 1996, and in 2003 had declined to $953.
• Growing poverty. Incidence of poverty - the inability to provide for basic food (adequate caloric intake) and shelter - increased from 36.8% of the population in 1997 to more than 40% in 2002. Thirty-eight percent of families do not have solid-structure shelter. Access to safe drinking water declined from 81.4% of families in 1999 to 80% in 2002. Twenty-one percent of all families and 44% of families in the lower 40% income group have no electricity.
• Super-rich in undiminished control. The Philippines boasts an unenviable Asian, perhaps global, record among major nations. One family, the Ayalas, controls 18% of total stock-market-listed corporate assets. Moreover, the country's top 10 most powerful families control 56.2% of such assets. Just over 50% of total GDP is controlled by the top 15 families. In sharp contrast, only 2.8% of listed corporate assets are owned by the 15 top families in Japan.
These facts in combination define socially, economically and politically unsustainable circumstances and go a long way in explaining the persistent political turbulence of the past two decades. Time and again since the first so-called People Power revolt of 1986 that swept away the Ferdinand Marcos regime, the hopes and aspirations of the large majority of impoverished Filipinos have been thwarted. Neither Cory Aquino nor Fidel Ramos, who lifted Aquino into the presidency before becoming president himself, carried out the land-reform measures they had promised. What land reform was enacted was largely a sham. Aquino, who talked about it incessantly, still owns the huge hacienda that should have been one of the first reform targets. Most senators and congressmen are rich landowners and members of or hangers-on of the elite families that control the bulk of the nation's wealth. No one else can afford to run for office.
When the poor thought they had elected a president who would champion their cause, he was promptly overthrown by another People Power revolt organized by the elite families and the Church on charges of corruption, real or contrived. The person who was installed as president, Arroyo, now has won an election in her own right. A captive of the de facto feudal powers that be, she'll prove every bit as unwilling and unable to bring basic social and economic change as Aquino.
The Filipinos are a capable, well-educated, joyful people. Most who have settled abroad, escaped the misery of semi-feudal rule, and been given the opportunity to prosper have done so. But, of course, they can't all emigrate or become overseas workers. Ultimately, they will need to find the political means to rid themselves of the oppressive medieval structures that make their lives on Earth the equivalent of purgatory.
MANILA - Smoky Mountain, in the Tondo neighborhood across Manila harbor, is a Dantesque vision from hell turned postcard of global poverty. Smoky Mountain is a 40-year-old mountain of garbage. The locals literally live off it - they search it, burn it, separate it in plastic bags, recycle it, sell it to junk shops, even eat some of the remains.
It didn't have to be this way. Filipinos, rich and poor alike, often look in awe at the so-called newly industrialized countries (NICs) of Northeast Asia and ask themselves: Why haven't we accomplished anything similar? The main reason may be the absence of a real agrarian reform (see Part 2 of this series) - an absolute precondition for the economic miracle in Taiwan and South Korea. Land reform created an egalitarian distribution of income, ignited domestic demand, and the whole thing drove an industrialization drive in the 1950s and '60s.
Meanwhile, in the Philippines, few were paying attention: after all, the country was growing at rates from 6-10% a year, fueled by its own brand of import-substitution industrialization. But in the late 1960s, the turbo-jeepney came to a halt, because of a structural problem still not solved in 2004: the Philippines was and remains a small market, chiefly because of its tremendous income inequality.
For Filipinos, the conclusions of The Anti-Development State represent a rude blow: "The country has failed to develop and so many of its people are mired in poverty because the state, strangled as it is by competing factions' demands, has been rendered too powerless to even chart the country's direction, much less subordinate ruling elites under its control. Further sapping the state's potential to act according to democratic and developmental lines have been external interests constraining its range of allowable actions in the larger context of the North's persistent and often successful efforts to subordinate the South."