30 November 2010

White Paper on the Oligarchy

ELITE TRIAD BLOCKING REFORM

Introduction

At the turn of the twentieth century, our country gleamed of promise. Having established the first albeit short-lived republic in Asia, the country attained unprecedented human development during the years leading to the Commonwealth era.

Now at the turn of the twenty-first century, the promise remains unfulfilled. There are even those who warn us that we are regressing to a failed state.

Having survived a world war, faced off unending communist and separatist rebellions, embraced democracy, experienced dictatorship, and born of two people's power revolutions, we would have learned the lessons necessary to succeed as a nation. Sadly, we have not. By imagining what we could have become, and looking at what we are now, we have indeed failed to fulfill the promise.

How and why did we fail as a nation? What are the causes of our failure?

Some say the causes are cultural. Others say the causes are structural. In a sense, they are both correct. These causes are interdependent, rather than independent. Everything is integrated, and nothing isolated.i To see one but not the other is like a man with one leg. He can stand and hop, but he cannot walk nor run.

Due to various limitations however, I will write about the structural causes only. Let others more knowledgeable on these matters write about the cultural causes, as well as the interplay between them.

Status Quo Ante

When our forefathers established Asia's first republic, they adopted the unicameral parliamentary system.ii They chose this model free from any pressure from the first colonizer Spain.

When their successors established the Philippine Commonwealth, they adopted the bicameral presidential system.iii They evidently chose this model under the guidance of the second colonizer the US.

Ostensibly, the Philippine bicameral presidential system copied the American model, laden with repetitive check and balance provisions. On closer scrutiny however, it was worse.

Firstly, the president was elected directly at large (PH), and not indirectly by an electoral college of local representatives (US). Secondly, the senators were elected in similar manner (PH), and not from the localities (US). Thirdly, the commonwealth constitution imposed nationality requirements on strategic economic activities (PH), while the mother constitution carried no economic restrictions whatsoever (US).

The presidential and senatorial elections were skewed in favor of the elite few. They were obviously the only citizens anywhere capable of conducting or financing nationwide electoral campaigns.

The economic restrictions appeared ironic. I thought the great strides in human development then were due largely to massive foreign (American) investments in infrastructure and education.

Notably, during the past 75 years, national elections at large had been dominated by rich and famous candidates. Rich candidates are those who could afford to spend millions (now billions) to make themselves known to the voters. Famous candidates are the entertainment, sports and media celebrities who are already known to the voters. Thus, election to public office was based on pure popularity without regard to actual performance.

In this milieu, the oligarchy - comprised of a few closely knit and immensely affluent families - managed to exert strong influence over our national politics and economy.

During the last 25 years, an Elite Triad has emerged to preserve and protect the status quo of unjust social structures. In their present form, they have evolved to become the new enemies of genuine reform.

Elite Triad

What and who is the Elite Triad?

The Elite Triad is a union of local and foreign vested interests. It is comprised of the Kamag-anak, Inc. (KG), the Kapamilya, Inc. (KP) and The Company, Inc. (CI).

KG and KP are large enterprises with holdings in mass media, public utilities and agriculture. As their names imply, they are family based.

The CI is a foreign government institution with a global network. Created for licit intelligence gathering, it is widely known to engage in illicit foreign intervention.iv

The Elite Triad successfully blocked constitutional reform during the FVR, Erap and GMA administrations. The strategy was simple and effective. On one hand, they demonized the main proponents by portraying the move as a power grab or a sell-out. On the other hand, they pacified the advocates with false sympathy by pretending that their opposition was only about timing.

In hindsight, the Elite Triad opposed all constitutional reform, whether limited to certain sections (i.e. term limits under FVR) or articles (i.e. economic provisions under Erap; sub-state for Muslims under GMAv), or encompassing the entire constitution (i.e. Con-Comm under GMA). The mode was not important, whether by people's initiative (under FVRvi and GMAvii), constituent assembly (under Erap and GMA), or constitutional convention (under GMA). What was important was to ensure that no proposed amendment whatsoever was put to a vote by the people.

The Elite Triad also played a key role in the election of Noynoy as president,viii courtesy of Smartmatic's PCOS technology. Why did it support Noynoy? It's obviously because Noynoy, being a clone of his mother Cory, has always opposed constitutional reform in whatever form.

What is the agenda of the Elite Triad?

It is both economic and political, local and regional.

Elite Triad's Economic agenda

Local agenda

The economic agenda of KG and KP is to ensure that local consumers remain the captive market of local monopolists. This is done by protecting Filipino business interests against potential foreign competitors in strategic industries. The protectionist measures ordinarily come in the form of constitutional or statutory prohibitions against the entry of competing foreign investors. For example, the 1987 Constitution requires a minimum 60% Filipino equity requirement for public utilitiesix and agricultural land,x and a full 100% Filipino equity for mass media.xi

With these protectionist clauses in mind, did you ever ask yourself how many among the 90 million Filipinos are financially capable of owning 60% of a public utility (like Meralco, PLDT and Globe), or 100% of a television and radio network or broadsheet (like ABS-CBN, DZMM, PDI and Philstar)?

Incidentally, the 1987 Constitution also requires a minimum 70% Filipino equity for advertising companies.xii I could not understand then why the so-called Cory-Bernas Constitution would digress from previous constitutions and henceforth treat advertising as a strategic industry. I always thought advertising was mainly for commercial and non-political purposes. It would be totally different however if what the framers had in mind was advertising for political and non-commercial purposes. Ad agencies here can work to mold public opinion for or against elective candidates, destabilize government administrations, influence government policies and muddle national issues.

In passing, they probably forgot to impose Filipino equity requirements on survey firms (like SWS and Pulse Asia). As we now know, survey firms are also powerful tools in molding public opinion, when used in conjunction with mass media, under the over-all direction of an ad agency.

In both state and private universities, professors (who do not know any better) implant in the minds of their students the concept that Filipino business interest is synonymous with national interest. This is of course foolish.

In reality the opposite is true. By preventing the entry of foreign investors into the local economy, you actually prevent the creation of jobs, as well as the supply of competing goods. These protectionist measures ironically deprive Filipino workers and consumers, of alternative job opportunities and of lower priced or better quality goods.

In post-graduate schools on business administration, students are taught that there is a divergence between the economic interests of the enterprise owners vis-a-vis the enterprise managers.xiii By analogy, there is a similar divergence between the economic interests of the enterprise owners and the enterprise workers.xiv By further correlation, there is obviously a great divergence between the economic interests of the enterprise owners and the buyers of their goods and services.

The conclusion is inescapable – Filipino business interest is NOT synonymous with Filipino national interest.

Is it not better for a Filipino bread winner to simply work for a foreign company in the country, than to work overseas also under a foreign employer but in a foreign land and under a foreign government? This way the bread winner does not have to leave his or her family for long periods of time.

Does not the principle of social justice say that those who have less in life should have more in law?xv Why does constitution give more protection to the Filipino businessmen, at the expense of the Filipino workers and consumers who have less in life? In many cases (such as public utilities, mass media, plantation farms and universities), the protected class are billionaire businessmen.

Another perplexing rule is the restriction of foreign investments in education.xvi Is state regulation of educational institutions not sufficient to safeguard the national interest?xvii Are not all educational institutions required to adopt the standard government approved curriculum anyway regardless of ownership? Why prevent foreign investors from investing in new classrooms and introducing modern teaching methods? Do not Filipinos themselves seek higher education abroad to improve their educational attainment? Why not invite these foreign schools instead to teach students here in the country? I thought that the perennial shortage of classrooms was conclusive proof that we have an extreme shortage of investments in the education sector.

Still another mind boggling rule is the bar against foreign investors from exploiting oil and other natural resources in the Philippines, unless they first enter into a joint venture with Filipino businessmen.xviii Does not the state own all natural resources under the doctrine of jura regalia?xix Does the state really need the inter-mediation of a Filipino businessman, who is practically just a middleman, before it can enter into a contract with a foreign company? Cannot the state just dispense with the Filipino middleman, who in most if not all cases anyway has neither the technology nor capital to undertake this type of activity?

Foreign agenda

The economic agenda of the CI is more nebulous. Some say it simply wants to defer the commercial exploitation of natural resources throughout the archipelago until 2020, because that is when their current production will start to fall.

How I wish I could validate this disturbing theory, but unfortunately I could not.

I recall however the media instigated controversy about a projected oil venture in the Spratleys involving the Philippines, Vietnam and China. The venture provoked loud expressions of displeasure by the US, and awakened its sleeper agents both inside and outside of the Philippine government.xx

I also recall that the US reaction perplexed the chief executive of PNOC-EDC. I believe he said that they offered the project first to the US. However, they were not interested. Curiously, when he turned to the Chinese and Vietnamese, the US protested.

Do we really have to wait for the US until 2020 before we can start to explore and exploit our oil resources in the Spratleys?

Elite Triad's Political agenda

The political agenda of the Elite Triad is two-fold. The first is to ensure control or strong influence over the selection process for key national government officials. The second is to keep government weak and incapable of introducing changes to the status quo of unjust social structures.

Control or strong influence in the selection of key national government officials is done through the adoption and continuance of nationwide elections at large as the preferred mode of selecting the president and the senators.xxi These officials represent control of the entire executive branch and half of the legislative branch.

The chosen electoral process is combined with ownership and control of national mass media.xxii Recently, the control of mass media has been complemented by ownership, control or influence over the leading survey firms.

All these factors together complete the apparatus of control over the national agenda. The Elite Triad decides what issues are discussed and what are not. Of course, the Elite Triad also decides who is good and who is evil.

Keeping government weak and incapable of challenging the present social order is done in two measures. The first is to separate the executive branch from the legislative branch.xxiii This measure makes for institutional gridlocks between the separated political branches and turns them against each other. The second is to divide the legislative branch into two separate chambers.xxiv This measure also makes for institutional gridlocks between the separated chambers and likewise turns them against each other.

In contrast, under a unicameral parliamentary system, the executive and legislative branches are combined under the parliament, and the parliament in turn is comprised of only one chamber.xxv This is definitely a much stronger government system, capable of putting in check the all powerful Elite Triad itself.

Only a monarchy or a military dictatorship would be stronger than a unicameral parliament. Neither system however is acceptable to the people today.

Perpetuation of Status Quo

To ensure the perpetuation of the unjust social structures, the highest law of the land adopted the most restrictive sovereignty provisions for amending the constitution.

Thus, the 1987 Constitution requires the affirmative vote of three-fourths of all its members to directly propose amendments,xxvi two-thirds of all the members of Congress to call a constitution convention,xxvii and the petition of at least twelve percent (12%) of the total number of registered voters, of which every legislative district must be represented by at least three percent (3%) of the registered voters therein, to likewise directly propose amendments through initiative.xxviii

Considering the prevailing government structures where the political branches are separatedxxix and bifurcatedxxx thereby turning them against each other, the manner of selecting the president and the senators skewed in favor of the elite few, taken in relation to the country's fairly large voter base of more than 50 millionxxxi out of a citizen population of more than 90 million,xxxii the mere act of proposing amendments to the constitution has become virtually impossible.

This is apparently the best way to undermine the people's sovereignty and subvert democracy.xxxiii You prevent the conduct of any plebiscite on proposed changes to the constitution, by simply preventing anyone from proposing changes. We can debate all we want provided we cannot vote on it. That is democracy as far as the Elite Triad is concerned.

By comparison, the mother constitution of the US requires only a two-thirds vote by both Houses to directly propose amendments.xxxiv

IEC social tool

For this writing, we may define the concept of Information, Education and Communications (IEC) as a process of engaging people, using various modes of communication, to disseminate information and impart knowledge, for the purpose of changing their behavior.

As a social tool, IEC may be used to promote the general welfare of the people (i.e. health, poverty alleviation, environmental protection, etc.). At the other end however, it may also be used to manipulate the minds of the people, subvert their democracy and violate their sovereignty.

Where the IEC is used in a negative way, the preferred method of manipulation is to “poison the channels of public information.”xxxv

In pursuit of a specific regime change objective, IEC may be directed to vilify the incumbent administration, erode the people's trust and confidence in government, and mobilize support for its ouster and replacement by a friendly regime.

The vilification generally consists of charges of corruption and human rights violations. The evidence or truthfulness of the charges are immaterial. The only thing material is that the charges stick in the minds of the people.

During the recent regime change operation of the Elite Triad against the GMA administration, the IEC focused on questioning the legitimacy of her government by alleging massive cheating during the 2004 elections.xxxvi Foreign intervention became so blatant in that US Embassy ChargĂ© d’Affaires Joseph Mussomeli openly praised to high heavens the mutinous Hyatt 10 while being interviewed by ANC 21 of ABS-CBN at the height of the crisis.xxxvii This is what we now know as the Garci tape scandal.xxxviii

Looking back, this IEC operation largely succeeded in vilifying GMA before the local and overseas populace, eroding the people's support for her government. However, it failed to produce the desired regime change to oust her from office.

A source from media opined that this IEC campaign against GMA cost the Elite Triad at least 10 billion pesos during the period of 2005-2010. I thought the actual figure was much higher. The estimate given sounds more like the high end cost of a presidential campaign. The IEC for regime change extended for a period much longer than the usual presidential campaign.

I presume the Elite Triad also poured funds and resources to instigate and finance the various coup attempts against GMA, none of which however came close to the intensity of the December 1989 coup against Cory Aquino.

IEC for constitutional reform

In a positive way, the IEC may also be used to pursue constitutional reform.

Based however on the frustrating experience of the advocates during the last 25 years, it is clear that the IEC cannot be limited to the mere communication of the merits of constitutional reform.

Why?

It is because the Elite Triad does not play fair. It plays dirty.

Apart from the basic IEC focusing on the merits of shifting to a unicameral parliamentary system and lifting restrictions on foreign investments in strategic industries, the advocates will also need to counter the dirty tricks of the Elite Triad.

As a citizen advocate for reform, I am not saying that we need to activate our own dirty tricks department. What I am saying is that we also need to exert a major major effort to counter the lies of the Elite Triad with the truth, the whole truth and nothing but the truth.

With this in mind, I offer another meaning for IEC:

Iidentify the key players and affiliated groups of the Elite Triad, particularly those in media and the academe, so the people may recognize the false prophets in their midst.

Eexpose the vested interests and anomalous transactions of the Elite Triad, particularly the affiliate transactions of plunder proportions during the first Aquino administration,xxxix so the people may be cautious of the wolves in sheep's clothing.

Ccall on the people to unite and reject the lies and pretenses of the Elite Triad, because no one else will protect the people's interests except the people themselves.

I am not saying that we do an Osama Bin Laden. What I am saying is that we do a Mahatma Gandhi. We must take peaceful, non-violent and concerted action to resist and reject the Elite Triad.

The ultimate objective will be to degrade the capability of the Elite Triad to dominate our politics and economy. At that point, they may continue to engage our people and the state, but no longer from a dominant position of control and influence.

Mabuhay,

Dodong aka Ka Kiko
30 November 2010

i See Orion Perez Dumdum, Philippine Progress: Shift in Sports, Shift in System, 07 July 2010, http://antipinoy.com/philippineprogress.

ii Demosthenes B. Donato, Proposed Amendments to the 1987 Constitution and the Malolos Constitution of 1899, http://www.deszr.com/download/ideszr.proposed_amendments_to_the_1987_constitution_and_the_malolos_constitution_of_1899.pdf.

iii 1935 Constitution of the Republic of the Philippines, Articles VI-VIII.

iv Carmen N. Pedrosa, The story within the story, Philippine Star, 07 September 2008, http://dodongakakakiko.blogspot.com/2009/07/story-within-story.html.

v Demosthenes B. Donato, Comments on the GRP-MILF Peace Process, Rev. 11 March 2010, http://www.deszr.com/download/ideszr.comments_on_the_grp-milf_peace_process.01_december_2008.rev11_march_2010.pdf.

vi Santiago v. Comelec, G.R. No. 127325, 19 March 1997, http://sc.judiciary.gov.ph/jurisprudence/1997/mar1997/127325.htm.

vii Lambino v. Comelec, G.R. Nos. 174153 and 174299, Decision, 25 October 2006, available at http://www.deszr.com/download/ideszr.lambino_v_comelec.decision.25_october_2006.pdf. Lambino v. Comelec, G.R. Nos. 174153 and 174299, Resolution, 21 November 2006, available at http://www.deszr.com/download/ideszr.lambino_v_comelec.resolution.21_november_2006.pdf. Lambino v. Comelec, G.R. Nos. 174153 and 174299, Resolution, 16 January 2007, available at http://www.deszr.com/download/ideszr.lambino_v_comelec.resolution.16_january_2007.pdf. Lambino v. Comelec, G.R. Nos. 174153 and 174299, Letter, 05 February 2007, available at http://www.deszr.com/download/ideszr.lambino_v_comelec.letter.05_february_2007.pdf.

viii Carmen N. Pedrosa, Pieces of a Puzzle, Philippine Star, 12 September 2009, http://dodongakakakiko.blogspot.com/2009/09/yellow-revolution-in-2010.html.

ix 1987 Constitution, Article XII National Economy and Patrimony, Sec. 11.

x See 1987 Constitution, Article XII National Economy and Patrimony, Secs. 2, 3, and 7.

xi 1987 Constitution, Article XVI General Provisions, Sec. 11(1).

xii 1987 Constitution, Article XVI General Provisions, Sec. 11(2).

xiii Meckling, William H. and Jensen, Michael C., Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure (July 1, 1976).

xiv Demosthenes B. Donato, Draft Bill – Profit Sharing and Stock Options, Rev. 2008,
http://www.deszr.com/download/ideszr.draft_bill.profit_sharing_&_stock_options.2001.pdf. Explanatory Note –
Profit Sharing and Stock Options, Rev. 2008,
http://www.deszr.com/download/ideszr.draft_bill.profit_sharing_&_stock_options.2001.explanatory_note.pdf.

xv 1987 Constitution, Article II Declaration of Principles and State Policies, Sec. 10.

xvi 1987 Constitution, Article XIV, Education, Science and Technology, Arts, Culture, and Sports, Sec. 4(2).

xvii 1987 Constitution, Article XIV, Education, Science and Technology, Arts, Culture, and Sports, Sec. 4(1).

xviii 1987 Constitution, Article XII National Economy and Patrimony, Sec. 2.

xix 1987 Constitution, Article XII National Economy and Patrimony, Sec. 2.

xx Tarra Quismundo, US seeks peaceful, transparent resolution of Spratlys issue, Philippine Daily Inquirer, 03/09/2008, http://newsinfo.inquirer.net/breakingnews/nation/view/20080309-123734/US-seeks-peaceful-transparent-resolution-of-Spratlys-issue.

xxi Demosthenes B. Donato, Indirect Elections for President is the Better Method of Representative Democracy, 14 November 2010, http://www.deszr.com/download/ideszr.indirect_elections.14_november_2010.pdf.

xxii Carmen N. Pedrosa, The Kris and Noynoy Show on ABS-CBN, Philippine Star, 07 November 2009, http://www.philstar.com/Article.aspx?articleId=521031.

xxiii Demosthenes B. Donato, American Presidentialism not Applicable to the Philippines, 14 November 2010, http://www.deszr.com/download/ideszr.presidentialism.14_november_2010.pdf.

xxiv Demosthenes B. Donato, American Bicameralism not Applicable to the Philippines, 14 November 2010, http://www.deszr.com/download/ideszr.bicameralism.14_november_2010.pdf.

xxv Demosthenes B. Donato, Three (3) Basic Advantages of the Unicameral Parliamentary System, 14
November 2010, http://www.deszr.com/download/ideszr.unicameral_parliamentarism.14_november_2010.pdf.

xxvi 1987 Constitution, Article XVII, Sec. 1(1).

xxvii 1987 Constitution, Article XVII, Sec. 3.

xxviii 1987 Constitution, Article XVII, Sec. 2.

xxix Supra Donato, Presidentialism.

xxx Supra Donato, Bicameralism.

xxxi Voters of 2010 Philippines presidential elections exceed 50-million, Xinhua, Manila Bulletin, 09 January
2010, http://www.mb.com.ph/node/237631/voter.

xxxii Summary of Project Population, National Statistics Office, 2006,
http://www.census.gov.ph/data/sectordata/popproj_tab1r.html.

xxxiii 1987 Constitution, Article II Declaration of Principles and State Policies, Sec. 1.

xxxiv Constitution of the United States of America, Article V.

xxxv Carmen Pedrosa, Fascism in the Streets, Philippine Star, 02 March 2008,
http://dodongakakakiko.blogspot.com/2009/07/biggest-political-lie.html.

xxxvi Supra Pedrosa, The story.

xxxvii Transcript of ChargĂ© d’Affaires Joseph Mussomeli’s interview on ANC 21’s “Dateline Philippines,”
with Ricky Carandang, 08 July 2005. Previously available at the US Embassy – Manila website at
http://manila.usembassy.gov/.
Excerpt of ANC 21 interview:
Ricky: Can you categorically tell us right now, sir, that the United States Government supports the administration of Gloria Macapagal-Arroyo?
CDA: I could categorically tell you that we support the rule of law. Within that context, we believe that the President is still the President, obviously. That it is within her legal rights to remove her cabinet; her Cabinet is hers to do with as she pleases, but that doesn’t mean we’re not disappointed in that. It doesn’t mean that we’re not worried; this is something that distracts from the reforms that she was committed to and we hope is still committed to. You know, I know many of he Cabinet members who have resigned now, and the ones that I know are all very decent, and good people, patriots -- people who are concerned for the welfare of the Filipino people. So, it is a worrisome thing, but it is certainly within her rights. (emphasis supplied)
Ricky: Do you agree with the characterization of some of the President’s allies that these cabinet members who spoke this morning are “adventurous?”
CDA: No, I couldn’t agree with that. I know some of them very well, and the ones I know, frankly, have accepted these posts as an act of patriotism and are concerned for the welfare of the people. They could make a lot more money and have a lot more prestigious roles in the private sector, but they have chosen to be in the Cabinet... (emphasis supplied)
Ricky: …that pertain to reports, widespread speculation that the United States may have had some involvement on this. If you recall when the tapes first came out, Secretary Bunye himself said that there were reports that the Americans had something to do with it, and of course you said that you had nothing do with it.
CDA: Right, and that was actually proven true.

xxxviii Gonzalo M. Jurado, Ph.D, The Present as History: A Narration and Interpretation of Events, 31 December 2009, http://dodongakakakiko.blogspot.com/2010/01/hello-garci-and-aragoncillo-project_12.html.

xxxix Efren L. Danao, Government still owns Meralco, Manila Times, 14 May 2008. Stephanie Dychiu, Cory's land
reform to test Noynoy's political will, GMA News,
http://www.gmanews.tv/story/182195/corys-land-reform-legacy-to-test-noynoys-political-will. Emil Jurado,
Distorting History, 23 February 2010, Manila Standard Today,
http://www.manilastandardtoday.com/insideOpinion.htm?f=2010/february/23/emiljurado.isx&d=2010/february/23.
Bobby M. Reyes, Not Getting Mad at, But Getting Even with Tita Cory, 07 September 2007,
http://www.mabuhayradio.com/philippine-presidency/not-getting-mad-at-but-getting-even-with-tita-cory.





7 comments:

  1. Hi Dindo, may I question this specific assertion of yours:

    In reality the opposite is true. By preventing the entry of foreign investors into the local economy, you actually prevent the creation of jobs, as well as the supply of competing goods. These protectionist measures ironically deprive Filipino workers and consumers, of alternative job opportunities and of lower priced or better quality goods.

    But isn't the deeper issue here about the ability of Filipino to produce what they consume and capitalize what they inherently know in order to produce what they need to live?

    So going further along those lines, why then did we allow ourselves to reach a level of demand for livelihood that cannot be met first by our indigenous capacity to produce, and instead engaged in a growth strategy under the assumption that this will be fueled primarily by foreign capital.

    To me, our demanding access to foreign capital is being pitched to the public like it is an entitlement rather than the bonus and augmentation to existing indigenous production capacity that it should be regarded more as.

    ReplyDelete
  2. change through peaceful means,get real..... as the saying goes, the strong survive the weak perish, those in the bottom are condemned to fight for equality, and those at the top will try to find the means necessary to stay where they are.......

    ReplyDelete
  3. Hi BenignO,

    Sorry but I failed to notice earlier that there were comments. I'm not sure if I understood your questions correctly, but let me try to answer them and just say if my answer is not responsive.

    I'm not a practising economist, but my understanding about best practices in production is to focus only on products where you are competitive. Thus, you need not really produce all the goods you consume. Hence, your consumption can be sourced from a mixture of what you produce, and what you import from the neighboring town or country.

    Trying to produce everything you consume was I believe the "import substitution strategy" during the 1970s which is no longer followed. I believe it was found to be inefficient. What followed was the concept of "one product one town" where each area was supposed to concentrate on its strength product, and just import the rest. I understand this is followed now with some success by the Phil government, and is practised by other governments with similar success.

    In any case, the advocacy for the liberalization of foreign investments is not about the choice of whether to produce all goods (even those where you are not competitive), or to produce only selected goods (where you are competitive). It is about something else.

    ReplyDelete
  4. Continuation...

    For example, let's say that in the mountainous area of Davao province there is a gold mine. The area is not suitable for agriculture, or industry because of topography. It is suitable only for mining and maybe some forestry. Under the program of "one product one town", this mountainous area should focus only in gold mining. It will be very costly to insist on going into agricultural cultivation here.

    The issue on the liberalization advocacy now comes in. Should we insist that gold mining companies be 60% owned by Filipinos? Or do we open it to foreigners? The liberalization advocacy goes for the latter. Why? This is so in order that the government can have a wider choice of gold miners to choose from. You may note that under the law, the State owns all minerals, including this gold mine.

    The moment we insist on a protectionist clause in favor of Filipino nationals, we necessarily limit the number of parties that the State can deal with. Sadly, the experience in mining is that Filipino companies neither have capital nor technology to undertake the activity properly. Thus, environmental compliance suffers with this all Filipino players set-up.

    Another negative implication here is that Filipino companies simply file mining claims, and sell them later to real miners. So what happens is that the cost of mining increases because of the brokers or the middlemen. Alternatively, the brokers' fees are charged against the share of the government, otherwise the foreign miner will just go to another country, and so government income is lessened.

    ReplyDelete
  5. Continuation...

    Thus, the advocacy of liberalization of foreign investments is about providing more choices to the government, to the workers and to the consumers. It is not really about making a decision which product or products to produce. That decision is another process.

    Yes, I go agree with you that foreign investment is intended to augment local investment, and not intended to be omnipotent answer to all our economic ills. This is so stated in the Foreign Investments Act.

    The reason why we believe it is urgent is because we have very high rates of unemployment and underemployment. For decades we can no longer count, this has been the case. We take this to mean that either local investors have long saturated their investment capacity, or they are unwilling to invest further here. (Personally though, I think it is the former rather than the latter.)

    Thus, to solve the existing huge unemployment and underemployment problem, we look to foreign investments because they are actually available in the international capital market. We cannot look at the Philippine government to make the necessary investments, because it has no money to do so, and it would be inefficient in running a business if it did so.

    I guess the impression that the discussion on the liberalization is focused on "entitlement" is probably because it involves calls for amendments to specific constitutional provisions. At the moment, in certain areas of economic activity, foreign investors are actually barred from entry. In fact, there is a law that criminalizes their investments, if they do so contrary to the existing constitution. The advocacy is merely about removing legal restrictions on their entry.

    ReplyDelete
  6. hi daniel, peaceful means here include anything and everything short of an armed rebellion, or unlawful coup, or other illegal actions. I cannot, and will not, advocate armed rebellion to pursue constitutional reform.

    I believe there are instances where rebellion is justified, and they call it the people's "right to revolt". I think it's in one of the separate opinions of a Philippine Supreme Court decision somewhere. These instances however are not contemplated here.

    In any case, we may also note that that Edsa I and II are not considered illegal rebellions. Why? Because they succeeded.

    ReplyDelete
  7. Continuation for daniel...

    Maybe we can consider that there have been insteances in the past where peaceful action has been successful, i.e. the UK civil rights advocacy to abolish slavery; Gandhi's advocacy for independence; and US civil rights advocacy to advance the rights of the African-Americans.

    ReplyDelete