Breaking the unholy alliance between business and politics

Businessman and entrepreneur Manuel V. Pangilinan should be congratulated for opening a debate on the role of business in nation building.

He said “the government should allow the private sector to take an active role in ensuring that economic growth was shared and enjoyed by all classes.” Pangilinan was reacting to the report of the National Statistical Coordination Board (NSCB) that the numbers of the country’s poor were unchanged since 2006 despite high economic growth.

But it is not quite how MVP puts it. He asks if it might work better for the Philippines if the government allowed the private sector to take an active role in pushing for economic growth.

I can understand where he is coming from, feeling frustrated that so much could be done if only the government were to welcome private initiative. Being an entrepreneur he wants to take on agriculture in a massive way since the majority of our poor are farmers. He says the private sector can help the industry with a greater infusion of technical know-how and capital.

“The imperative is inclusive, not exclusionary, growth. Business and government need to work together to identify areas that offer the higher levels of employment and income to our people — agriculture and tourism, for instance,” Pangilinan said.

Malacañang’s reply to the MVP initiative is disappointing. The president’s spokesman said “eradicating poverty in the country was not an overnight thing.”

Edwin Lacierda blames “the high level of poverty incidence on the lackluster performance of the agricultural-fishery sector.

Someone should tell him not to make it a chicken and egg problem. Agriculture and fishery are “lackluster” because it does not have the means to perform better and not the other way around.

He then gives an ominous warning that defeating poverty cannot be done overnight. Maybe. But we can at least begin and that is where the MVP suggestion can be put to good use.

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Historically, the private sector or more accurately family owned companies control government in the Philippines.

Well, MVP does not need to go very far. Rentier politics thrives in the Philippines. Media is used as the rent to acquire benefits and contracts from a government that owes its election victory to media. No wonder, private groups are all eager to own media that they can use for the benefit of candidates during election campaigns.

It is well known that the Lopez empire was built using this formula. One member of the family was in charge of media and finance and another in politics.

So MVP should address his call for more private sector initiatives differently. He should call for a level playing field based on meritocracy. If this is the case then private sector should indeed be given a more active role but please it should not be exclusively for ‘cronies’.

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The unholy alliance between business and government in the Philippines was best described in “An Anarchy of Families” by Alfred McCoy. In his book he points to the closeness of business interests to government in our political structure as the reason for a weak Philippine state.

“From provincial warlords to modern managers, prominent Filipino leaders have fused family, politics, and business to compromise public institutions and amass private wealth — a historic pattern that persists to the present day.” McCoy writes.

He cites how the Osmeñas and Lopezes, elite Filipino families formed a powerful oligarchy — controlling capital, dominating national politics, and often owning media. He also takes on provincial warlords like Ramon Durano, Ali Dimaporo, and Justiniano Montano who have used “guns, goons, and gold” to accumulate wealth and power in far-flung islands and provinces. He shows how this collusion between government and private interests has continued into the 21st century, despite dramatic socio-economic change that has supplanted the classic “three G’s” of Philippine politics with the contemporary “four C’s” — continuity, Chinese, criminality, and celebrity. (We must add “PCOS” elections.)

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This column welcomes the opening of new routes for Philippine Airlines (PAL) in Australia, China, Malaysia and Middle East and flights to beautiful Batanes.

The new destinations will open on the following dates — Kuala Lumpur (Malaysia), May 2; Darwin, Brisbane and Perth (Australia), June 1; Guangzhou (China), June 2; Abu Dhabi (United Arab Emirates), October 1; Doha (Qatar) November 1; Riyadh, Jeddah and Dammam (Saudi Arabia), December 1; Dubai (United Arab Emirates), November 1 and Basco, Batanes on May 1 (the last two to be operated by PAL Express).

As a long-time Filipino resident abroad, I know that going home using PAL was preferred to other airlines by Filipinos.

Ramon Ang said “PAL’s route expansion, particularly in the Middle East, will open strategic gateways and allow greater connectivity to more destinations in the region through PAL’s interline partners.”

It is well known that more than a million Filipinos now work in this part of the world.

Here is a private sector initiative that has done better than when it was government controlled.

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Any discussion on how to combat poverty must include conditional cash transfer that seems to be the government’s main program for the poor. Stories abound on whether it is going to the right people and helping to lift them out of poverty.

Jayathi Goshi in his article on the “Siren Song of cash transfers” says it is the latest fad of the international development industry on how to reduce poverty.

So how does CCT work for the poor? By governments transferring money to people rather than providing goods and services.

Goshi say it is not a new idea. “Islamic rulers in the Middle Ages had zakat, using state revenues to provide income transfers for the poor, the elderly, orphans, widows and the disabled.“      

Its implementation becomes sticky with the questions: “Who gets the transfers? How much do they get? If they are universal, that usually spreads the money around rather thinly, so they account for very little. But if they are targeted, then the familiar problems of targeting (unfair exclusion, unjustified inclusion, large administration costs, possibilities of leakage) all become significant.”

He says if they are to be effective “cash transfers have to be assured, relatively easy to deliver and monitor, and large enough to affect household income. But that also means that they have to be reasonably significant chunks of public spending. And this begs the question of what expenditures they are replacing.”

“So the question then is not whether or not to oppose cash transfers in general, but rather what specific importance to give them in an overall strategy of development and poverty reduction.”