Aquino’s Legacy: Exclusive Growth, Ineffectual Bureaucracy

An Assessment of the Aquino III government (2010-2016)

James Matthew Miraflor

Vice President, Freedom from Debt Coalition

The verdict is in.

If there is one catch-phrase that can summarize the legacy of President Benigno Simeon Aquino III in his half-a-decade rule, it is this: “exclusive growth via an ineffectual bureaucracy”. A growth dictated by the moods of global market amid worsening poverty and stagnating inequality levels, and the failure of the bureaucracy to even spend the money it was able to collect to arrest poverty – these cap the legacy of who was once touted as a savior of Philippine democracy and commonweal from the dark years of President Gloria Macapagal-Arroyo.

Did Aquino III measure up?

We argue that this is not just an accident of history that Aquino III failed to fulfill his mantra of “kung walang korap, walang mahirap”. Granting that we have made strides in the fight against corruption – a statement that is made with some reservation given the proliferation of patrimonialism in Congress and the national government agencies – it would have been simply illogical to assume that those strides alone will translate to better welfare for the rest of the Filipino people. Rather, we insist that the failures of Aquino III are deeply rooted to its philosophy of government – the vision it constructed when it translated its “social contract” into the 2010-2016 Philippine Development Plan (PDP).

Progressive groups such as the Freedom from Debt Coalition (FDC) already criticized the 2010-2016 PDP from its inception, saying that it is weak on asset reform and fails to construct the economic underpinnings of a true “straight path” and “inclusive growth”. NEDA, under the neoliberal Director-General Cayetano Paderanga, basically ripped-off the agenda of Arangkada Philippines, a document prepared by the Joint Foreign Chambers of the Philippines (see letter from JFC to Paderanga here). This meant that the resulting PDP basically champions the interest of big capital over the interest of the Filipino masses. That the Aquino administration would end its term with increasing number of poor citizens in a growing economy demonstrates the bias it has set for itself when it began.

Nash, Lichauco, and Steering a Post-EDSA Economy

by James Matthew Miraflor

Deaths of great intellectuals diminish us all, but more so the scholars who are the main conduits of their work. In a span of a few days, students of the Philippine economy are shocked by the demise of two important paragons of the field – first, nationalist economist Alejandro Lichauco, and then game theory pioneer John Nash. The loss is simply incalculable.

Separated by miles and interests, the two celebrated economists used their Ivy League training to interpret and shape a world in conflict. Both are products of the Cold War, yet their ideas have persisted in a modern age of computer-driven, high-volume stock trading and post-WTO regional trade partnerships. While Nash is known mostly in microeconomics textbooks and Lichauco via word-of-mouth stories of Marcos dictatorship survivors, both have made their in impact in the minds of the Filipinos who keenly follow the country’s economic development.

Anyone interested in Philippine’s escape from the so-called “Middle Income trap” cannot afford to ignore the lives and contributions of these two illustrious economists. It is now more than ever – in a world of uncertainty, hegemonic overtures, and political machinations – that we should review the lessons of Nash and Lichauco. Game theory and nationalist economics are indispensable items in our toolbox as we chart the Philippine’s economic future amid multidimensional issues of China’s territorial expansionism, the Mindanao conflict amid ASEAN geopolitics (read this, and this), and America’s seductive offer for trans-Pacific trade.

Conversations on the Economy

Through Facebook, three of my good friends, Bonn Juego, Marvin Beduya (please visit http://synthesistblog.com), and Michael Ocampo, and I have been discussing interesting issues on the economic profession, the economic schools of thought, the status of mainstream economics, and other thoughts on heterodox evolutionary economics (Nelson and Winter had been mentioned several times in the course of the discussions). Looking at heterodox economics is important specially in the light of its failure to aid development of Southern countries and explain the current economic ailments of the Northern developed countries.

What is considered mainstream economics? What schools of thoughts constitute the mainstream? It is instructive that mainstream economics is sometimes called as the neoclassical synthesis (the term was supposedly developed by John Hicks and popularized by Paul Samuelson), being largely Keynesian on macroeconomics and neoclassical on microeconomics. But the mainstream is still evolving, incorporating elements of Milton Friedman's Monetarism (as practiced by Paul Volcker),  new classical economics by Robert Lucas (Chicago), Thomas Sargent (Stanford), and Robert Barro (Harvard), and supply side economics promoted by the likes of Arthur Laffer and manifesting in Reaganomics and Thatcherism of the 80s.

I hope this conversation will contribute in promoting interest on the history of economic thought and starting  debates and discourses amongst Filipino economists, political-economists, and students of development on the current status of mainstream economics and alternative schools. It is now more than ever that we should discuss what constitutes an effective economic development strategy for the Philippines, and this begins with the discussion on the warring schools of economic thought.

Nowhere to Hide

Dr. Michael Lim Mah-Hui, an internationally-known expert and speaker on international finance, has recently come to the Philippines to talk about his latest book, "Nowhere to Hide: The Great Financial Crisis and Challenges for Asia" which combines the disciplines of economics, finance, sociology and politics to analyze the consequences and challenges of the crisis and propose that its causes be understood at three inter-related levels - the level of theory and ideology, the level of financial  industry practices and malpractices; and finally the level of  structural imbalances in the international economy.

I met and conversed with Dr. Lim during the “Understanding the Financial Markets” forum by Jubilee South - Asia Pacific Movement on Debt and Development (JS-APMDD) in cooperation with South Asia Alliance for Poverty Eradication (SAAPE) and hosted by Monitoring Sustainability of Globalization (MSN) Malaysia. This was held from April 14 to 17, 2009 at the NUBE Training Centre, Port Dickson, Malaysia. We later corresponded through email on statistical distributions and that how financial analysts and statisticians in the US blindly follow the normal (or the Gaussian) distribution curve in the computation of financial risk when they actually can test - using "goodness of fit" tests such as the Pearson's chi-square test or the Kolmogorov-Smirnov non-parametric test- the probability distribution curves of historical data.

I highly recommend that you buy this book. The financial crisis is still as relevant as ever with the collapse of Greece and possible fallout for Asian markets.