Flagging

Growth in the third quarter dropped to 5.3%, much lower than anyone expected. By every reasonable forecast, we are not going to meet the lower-end GDP target of 6.5% for 2014.

Instinctively, the Aquino administration looked for a scapegoat to blame. It found the wrong one.

Palace spokesmen tried to pin the blame for the drastic drop in the growth rate on the Supreme Court ruling the “disbursement allocation program” (DAP) unconstitutional. During oral arguments before the Court, however, government lawyers argued that the DAP was completed in the first half of 2013. Either government was lying before the Court or the spokesmen are now lying about our economy.

When pinning the blame on the Supreme Court began backfiring, the Palace tried another tack. They tried blaming the flagging third quarter 2014 numbers on a typhoon that happened a year before. They must be double counting agricultural losses attributable to the calamity.

If Aquino’s spokesmen were a little smarter, they should have tried blaming China for our miserable third quarter economic performance. The slowdown in China’s economic growth pulled down economic numbers across the region.  This spin might have gained them a little more traction.

A close examination of the economic figures, however, demonstrates the drop in our economic growth performance is self-inflicted.

Perhaps, “self-inflicted” is not the right phrase to use. More precisely, the drop in the growth rate was inflicted on the people, especially the poor, by a diffident and incompetent government.

Two factors most explain the drop in our growth rate: a 2.3% drop in our agricultural output and a 2.3% drop in public spending.

Our agricultural department, if you haven’t noticed, is a two-headed hydra. Proceso Alcala, the glib Secretary of Agriculture who somehow managed to convince his unsophisticated president that the country would be rice self-sufficient by 2013, is apparently busy collecting plunder cases. Francis Pangilinan, a.k.a. Presidential Adviser on Agricultural Modernization, controls the large public corporations dealing with farming and commodity trading.

After the latest GDP growth figures were released, neither of the two stepped forward to explain why our agricultural sector was contracting so dramatically. It seems, in fact, the two have conspired to disappear.

On the matter of government underspending, Budget Secretary Butch Abad offered some lame explanation that goes something like this: the allotments were released by his office but apparently not spent by the agencies.

That lame explanation does not tell us why, when public money is channeled through something indecent such as the DAP, it disappears as fast as fecal matter when the toilet is flushed. When properly budgeted and allocated, the process somehow jams.

Why is it that when DAP funds are given to build something like the Iloilo Convention Center, it is spent promptly? When money is allocated to add road space or improve health services or build new infra, nothing happens.

I served the Cory presidency. I served the Ramos presidency. I cooperated with the Estrada presidency. I worked for the Arroyo presidency. The most important lesson I learned through all these is that the bureaucracy is pretty much like a nail: if it is not hammered, it does not sink.

If the President does not impose deadlines, constantly check on programs and follow up on the agencies, nothing happens. We have a bureaucratic culture where no one goes to jail for doing nothing. Trying to do too much could invite a case at the Ombudsman.

The chronic bureaucratic inertia is overcome only by constant presidential monitoring. Our bureaucratic culture is hard on the chief executive. If the president does nothing, nothing happens.

President Aquino has been accused of many things, but never of working too hard. Reports awaiting urgent presidential decision sit at the Office of the President for months without action.

Meanwhile, Aquino constantly whines about how hard his job is.

How long, for instance, did it take the President to decide on what to do with the Calax bidding? The investment priorities for 2014 were finally approved by the Office of the President only in late November. By this time, we should be drawing up the investment priorities for 2015.

How long, for instance, did it take Aquino to fire Ruffy Biazon as Customs Commissioner? For many months, we saw dreadful numbers suggesting smuggling was the fastest growing section of our economy.

What exactly is our economic strategy? What key sectors will be given priority and what inter-agency plan is there to support those priorities?

In every other speech, Aquino speaks vaguely about “reforms” pursued by his administration. To this day, on the twilight of the this presidential term, we still do not know exactly what those “reforms” are.

The Trade Secretary is laid back. The Transport Secretary and the Energy Secretary seem constantly befuddled. The Interior Secretary seems busy working on his name recall.

Meanwhile, port congestion takes out hundreds of millions in lost business opportunities. The peril of power shortages led to the postponement of investment decisions. The yawning infra gap that hampers economic growth remains unaddressed.   

Modern economies, while they are largely driven by market forces, rely heavily on the ability of government to catalyze development, enable market to perform better, remove hindrances to expansion.

This might sound paradoxical: modern market economies perform at their best only if government is adept. Red tape stifles growth. Timely policy responses accelerate it.

The latest UN study shows the Philippines to be the most corrupt democratic country in the world. The other more corrupt countries than ours are tyrannies.

When our economic performance begins to flag, government has to take all the blame —  the better to make the corrections.