The State Aquino III left Duterte

President Rodrigo Roa Duterte is coming in at the best and the worst of times. The administration of President Benigno Simeon Aquino III has left the Duterte a well-oiled and full-tanked government machine – but one besieged with sclerosis, incapable of solving the congestion problem, and has grown too big to feel its extremities - a "manhid" government as one would say. 

The contradictions of Aquinomics has produced a government that already surpassed the size of Marcos’ in terms of consumption per capita[i] but is still afflicted with underspending[ii], not to mention a declining growth in tax effort[iii]. Aquinomics ushered the return of big government[iv] – but one that is so dependent on the private sector for service delivery and capital outlay[v] that when big investors played hard ball[vi], infrastructure development and maintenance suffered[vii], leading to congestion[viii] and public misery[ix].

#TheCabinetIWant

Since Presidential candidates are beginning to reveal their preferences for some Cabinet members, citizens might as well reveal their own wish lists. Here is my list (in no particular order):

ES/PMS/OCS: Gov. Joey Salceda [why]

DILG: Former Sen. Richard "Dick" Gordon [why]

DND: Clarita Carlos [why]

DBM: Former Rep. Edcel Lagman [why]

DoF: BSP Gov. Amado Tetangco [why]

DFA: Former DND Sec. Gilbert Teodoro [why]

DSWD: Rep. Leni Robredo [why]

DPWH: Sec. Rogelio Singson [why]

NEDA: Manuel F. Montes [why]

DTI: Manuel V. Pangilinan [why]

DOLE: Former Rep. Walden Bello [why]
DOT (Transportation): USec. Teodoro Encarnacion [why]
DICT: Diosdado Banatao [why]

DoE: Rowaldo Del Mundo [why]

DA: Former Sec. Cielito Habito [why]
DAR: Rep. Neri Colmenares [why]

DENR: Antonio Oposa, Jr. [why]
DOH: Former USec. Madeleine Valera [why]

PCOO: Glenda Gloria [why]

PCDSPO: USec. Manuel "Manolo" Quezon III [why]

Deputy Presidential Spokesperson: Karen Jimeno [why]

DoJ: Solicitor-General Florin Hilbay [why]

DOST: Alfredo Mahar Lagmay [why]

DepEd: Randy David [why]

CHED: Former UPSE Dean Emmanuel De Dios [why]

DoT (Tourism): Yolanda Ong [why]

I have also in mind other individuals for major government posts which are not necessarily Cabinet rank, but deeply impacts the delivery of government services.

HUDCC: Felino A. Palafox, Jr. [why]

BSP: BSP Dep. Gov. Diwa Guinigundo [why]

NAPC: Former NAPC VC Ana Maria Nemenzo [why]
PhilHealth: UPSE Dean Orville Solon [why]

MMDA: Benjamin Dela Peña [why]

SSS: HDMF President and CEO Darlene Berberabe [why]

Note that I have not consulted these people when I made this list, though I sure hope they would agree to accept the Cabinet post if they are offered. I also have many people in mind as Undersecretaries or Deputy Director Generals or Vice Presidents, etc. of these institutions. Unfortunately, one blog post won't be enough.

Profiles:

Joey Salceda
Executive Secretary
Presidential Management Staff
Office of the Cabinet Secretary



Duterte offered Joey Salceda the post of NEDA Chief should he win, but it would be a disservice to the Filipino people if the vast array of competencies the Governor has - from economic, technical, political, local, etc. - will only be deployed in one specific aspect of government. Gov. Salceda can deliver more for the people as concurrent Executive Secretary, Chief of the Presidential Management Staff (the clearing house for all policy decisions of the President), and the Cabinet Secretary. These three positions are better lodged under one office, the OES, with undersecretaries manning the two major functions (PMS, OCS) and assistant secretaries manning the sub-functions.

Prior to his stint as Government of Albay, he was a three-term Representative, serving as Chair of the Committee on Trade and Industry and Vice Chair of the Committees on Ways and Means and Economic Affairs. In 2007, he became President Arroyo' Presidential Chief of Staff, and was often name-dropped as a member of President Arroyo's unofficial braintrust. Before he became a politician, the management engineering graduate from Ateneo was Research Director of UBS Warburg - a division of Swiss Bank Corporation, and was voted as one of the top five analysts in a 1996 survey of Philippine fund managers. [go back to top]

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.

The World according to Friedman: 2012 Geopolitical Analysis on US, China, Germany, and Japan

Clearly, for geopolitics, 2012 did not signal the world's end, but only its tumultuous continuity. Major economies of the world had seen their governments either replaced or reestablished - Barack Obama in the United States, Xi Jinping in People's Republic of China, and Shinzō Abe in Japan. Newsweek issued its last print issue, with the iconic hashtag sounding the death knell to non-online publishing. European Union remains to be stuck in a debilitating debt crisis. The UN General Assembly approves a motion granting Palestine non-member observer state status.

From here.

As we close this year, it is but fitting to listen to one of the world's best geopolitical minds  as he speaks on the state of the world, as well as the history and future of US, China, Germany and Japan. Let us all take a peek at the important insights George Friedman of Stratfor shared to us in 2012: 

The State of the World: A Framework 
By George Friedman | February 21, 2012

Editor's Note: This is the first installment of a new series on the national strategies of today's global power and other regional powers. This installment establishes a framework for understating the current state of the world. 

The evolution of geopolitics is cyclical. Powers rise, fall and shift. Changes occur in every generation in an unending ballet. However, the period between 1989 and 1991 was unique in that a long cycle of human history spanning hundreds of years ended, and with it a shorter cycle also came to a close. The world is still reverberating from the events of that period.

On Dec. 25, 1991, an epoch ended. On that day the Soviet Union collapsed, and for the first time in almost 500 years no European power was a global power, meaning no European state integrated economic, military and political power on a global scale. What began in 1492 with Europe smashing its way into the world and creating a global imperial system had ended. For five centuries, one European power or another had dominated the world, whether Portugal, Spain, France, England or the Soviet Union. Even the lesser European powers at the time had some degree of global influence.

Responding to a Planetary Emergency: Global Partnerships and Global Struggles

It is not just because it is 2012. The threat of radical climactic change is now not just a mere scientific proposition. The world's worst polluter, the United States, was the last victim of a severe weather disturbance - hurricane Sandy a.ka. the "Frankenstorm" - which battered New Jersey and several other states in the East Coast. Ironically, it came just weeks after defeated Republic presidential candidate Mitt Romney mocked President-elect Barack Obama for promising "to begin to slow the rise of the oceans and to heal the planet".

The UNFCCC Conference of Parties (COP) 18 in Doha, Qatar on the last week of November to the first week of December this year is seen by some as our final hope to save world - our final hope to deeply cut global greenhouse gas emissions to prevent catastrophic global warming. As such, movements around the world prepared as coordinated "Global Week of Action" this week to reiterate its message to the governments of the world - in particular, to the recalcitrant governments of the North.

It is thus fortunate that I was invited to speak on "MDG 8- Global Partnership" for the “MDG Youth Training Program” being organized by MDG Achievement Fund in partnership with UP-NCPAG Student Government. The training seeks to educate university students on the MDGs and provide them an opportunity to draft an action plan for the MDGs. This is a good opportunity to encourage our students to join the Global Week of Action and champion an effective global partnership to stop climate change.

Here is my presentation:

Responding to Planetary Emergencies through Global Partnership, Global Struggles: Climate Justice and MDG 8 on Prezi

You may also click here to download. The presentation is derived from the materials of Jubilee South - Asia Pacific Movement on Debt and Development.

Why Higher Wages Make Economic Sense

Last May 1, the usual arguments of the business sector were unleashed with its central theme: No, business cannot afford wage hike. Beset with high cost and poor business climate, business simply cannot survive added cost of labor. How do we attract investments if we increase wages? Look at China and Vietnam. Didn’t they have a cheap labor policy? Aren’t they getting much more investments than us due to lower minimum wages?

As if the anti-wage-hike position isn’t entrenched enough, an army of economists follows with a recital of the dogma of “labor flexibility”. They say, wage level should be equal to the so-called “marginal productivity of labor” – which is economese for whatever the employer wants to pay them. Labor is supposedly not exempt from the law of supply and demand. Raising minimum wage will only increase unemployment, as it supposedly disallows all voluntary labor wage contracts that pay below the minimum wage. It will also introduce inefficiency in the labor markets, now faced with a "deadweight loss" due to the intervention of the government who will always fail to set prices right.

But why, if they are right, aren’t we attracting investments still? What explains Philippine firms’ low level of competitiveness? Why does unemployment remain high? The response has always been, never mind the workers, that it is not enough. Lower wages a bit more, then we’ll get the investments that would have gone to China. Lax regulations a bit more, and we’ll have more productive factories and viable businesses. Dismantle a little bit more unions, and businesses will be more efficient and will eventually increase their wages in the long-run.

This essay says enough.  It is high time that the government replace the failed “cheap labor policy” with a policy that increases wage income. In a time when self-rated poverty is worsening, prices of petroleum products remain high if not rising, and wages are not enough to even sustain a decent life for a family of five, no other proposal would be more just and fair than a proposal that increases the share labor gets from the economic pie.

The roadmap towards prosperity through increasing labor income is simple: Increasing wages will induce demand and increase labor productivity. Ensuring that workers are paid well, free to spend on non-basic commodities, and save for their future will facilitate the creation of a strong domestic market and large savings base which domestic banks can capitalize. Higher wages will increase capital-intensiveness of firms, increasing their productivity in the process. Rising corporate income will mean larger revenues for the government, which will pummel it back as welfare and unemployment support.

Let us elaborate.

Persisting Problems on the link between Macroeconomics and Microeconomics

Permanent link: http://bit.ly/microfoundations
As a requirement for our macroeconomics class, Dr. Dante Canlas asked us to submit a survey paper on a macroeconomic issue of our choice. I especially took interest on the approach of modern macroeconomics based on so-called "microfoundations" - microeconomic assumptions used to explain aggregate phenomenon. New classical economists see this as the final bridging of macroeconomics and microeconomics, spurring hopes of a single economic theory that would explain both the individual and aggregate economic phenomena. (note how this parallels physicists' dream of uniting large-scale relativistic physics with quantum mechanics). This spurred an orientation in economic research and pedagogy characterized by complex mathematical models capturing "deep" parameters in taste, technology, and expectations.

Recently, the microfoundations approach came under attack after models with "deep" microeconomic parameters supposedly failed to predict and recommend effective policy recommendations to mitigate the current global economic crisis. Even recent Nobel Laureate Thomas Sargent - one of the pioneers of modern macro - is under fire. Why this is so - as well as earlier, almost forgotten challenges to the microfoundations approach - is the subject of the survey paper I submitted. Read the abstract and full text below:

Abstract

The history of economics, for the most part, has been bifurcated between the study of individual economic decisions (microeconomics) and the aggregate economic phenomena (macroeconomics). The attempt to marry the two, via incorporating “microeconomic foundations” or “microfoundations” to explanations for macroeconomic observations and predictions, has so far taken sway a majority of mainstream economists with the failure of Keynesian models to accurately predict aggregate behavior in the presence of government policy. Robert Lucas Jr. posited that people form “rational expectations” of government policy and act so as to render forecasts unstable.

However, there are some persisting theoretical and empirical challenges on this research direction – the empirical instability of macro-models which incorporated microfoundations, the Sonnenschein–Mantel–Debreu result which may spell the theoretical dead end to economic aggregation, the still unresolved Cambridge capital controversies started by the reswitching argument by Italian economist Pierro Sraffa and American economist Joan Robinson in the 1960s, and the missing “representative consumer or firm” that can take into account the behavior of the aggregate. These challenges give the idea that aggregate economic behavior is almost impossible to deduce from microeconomic behavior of agents. Post-Keynesianism – which asserts that long-term expectations are largely determined by non-economic, psychological processes exogenous to the model – is posited as a possible way forward.

To read full text, click:

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.

The Structure of Crisis, the Crisis of Structure

Last year, I was invited as one of the speakers during the "Waging Peace in the Philippines Conference of 2009 - Advancing a Citizen’s Peace Agenda in 2010 and Beyond" held at the Social Development Complex Audio Visual Conference Center, Ateneo de Manila University on December 7-8, 2009. I specifically attended and participated on the plenary on Significant Issues for Peace in 2010, with Atty. Marvic Leonen, Dean of the UP College of Law, as my co-speaker.

The organization I was representing, Freedom from Debt Coalition (FDC), was supposed to present on Climate Change, Global and National Crisis. Using existing data we culled from several government sources and presentations, this is the presentation I used. It begins with the then hot issue of Maguindanao massacre and then proceeds to discuss the structural causes of the confluence of crises we are facing. Check this out as a break from the optimism of the incoming Noynoy era:

The Structure Of Crisis, The Crisis of Structure

View more presentations from jmmiraflor.

This is also to serve as a counterpoint on the 7.3% growth pronouncement earlier by the Palace, which has largely been criticized as merely base effect of the manufacturing drop at the peak of the global crisis. But just some facts and observations to add to the point:

• It is an election year, one of the most expensive in fact in the history of the Philippines. While consumption indeed has been high, the net transfer will largely been from politicians (which means from the government, for how they became ultra-rich is already, a little too obvious) to the TV networks, or more likely, to Chinese companies which produced all those ground-war stuff (campaign paraphernalia, posters, etc.). The amount of redistribution (via vote-buying, etc.) has largely been limited by the phenomenon of a mass media-driven campaign. So while GDP may indeed have been boosted by transfers of wealth, it is merely one class taking money away from one pocket and putting it to another.
• This is not a new pronouncement. Curiously, the 7.3-percent figure already came up two years ago. But if this quarters growth is largely base effect, the growth then was largely spending-led, with National Statistical Coordination Board (NSCB) stating that among the components of the GDP by expenditure share, it is Government Expenditure Consumption (GCE) which grew the highest, by 10.0% from 2006-2007 - reflective of substantial increase in the proposed national budget from P1.045 trillion in 2006 to P1.126 trillion in 2007, an increase of P81.31 billion or 7.8%.