The debate over Cha-cha (constitutional change) has opened in the pages of the Inquirer.
The University of Asia and the Pacific’s Bernardo Villegas (“Let’s talk about economic patriotism,” June 15) feels that the provisions restricting foreign ownership since 1935 have “just worsened the feudal and monopolistic character or our society,” handing “control of the national economy to an elite in whose hands the wealth is concentrated.” There is, he says, no evidence that the restrictions have released the masses from poverty or that the Filipinos controlling the economy have a greater interest in the common good than have foreigners.
Well, he’s correct in that second assertion, because what concerns most investors, be they Filipino or foreign, is not the common good but the bottom line. Lamentably few have the breadth of vision or farsightedness to set their sights on a Philippines where the whole society is transformed by that little thing called “development.” The same can be said, unfortunately, of many university professors. Villegas has in earlier pieces dismissed the possibility of industrialization and, indeed, in his recent column he reverts to the long-discredited “trickle-down” theory. Even Robert McNamara when, decades ago, became World Bank president, he debunked this.
Villegas further argues that the restrictions on foreign ownership were justified in the 1935 Constitution due to fears of continued US control after independence in 1946, but that such justification is no longer possible, because with “a just state, both Filipino citizens and foreigners can equally contribute to the common good of society.”
The good professor seems to have a strange take on the last 66 years of Filipino history, because if this demonstrates anything, it is surely that with foreign control of the economy there can be no such thing as a “just state.” But Villegas, of course, will deny that the economy has been and is controlled by foreign interests.
The fact of the matter, however, is that the USA did indeed control the Philippine economy after independence. What were those US “advisers” that Claro M. Recto complained of doing as they sat in practically every government department if not controlling? What was the purpose of the Bell Trade Act, the Laurel-Langley Agreement and the Quirino-Foster Agreement?
If Washington did not think it had the right to control of the Philippine economy, how could its National Security Council complain in 1957 that the Philippines was “increasingly utilizing exchange controls for protection of local manufacturers” and that the “obligation” to “consult the US prior to the institution of trade restrictions has so far been disregarded?” It continued: “The US is concerned at what appears to be a trend toward preference for complete protection which seriously affects our export trade...”
Then in 1962, direct US control was effectively outsourced to the IMF-World Bank as a condition of the first IMF (International Monetary Fund) loan. It may be argued that the Philippines is now free of its obligations to the IMF and that the recent loan of $1 billion this country has made to that institution demonstrates the country’s economic independence. Not even close. Over the decades of IMF tutelage, scores of Philippine “technocrats” have been trained at the IMF and World Bank institutes in Washington, and when they returned home they brought with them the ideology that is now accepted as practically God-given by virtually everyone in government, past and present: low tariffs, low wages, tax-breaks for foreign companies, deregulation, privatization, etc. This, not the restrictions on foreign ownership, is why the Philippines has not developed.
And the $1-billion loan? If anything, that proves my point, given that the cash is intended to bail out European banks on condition that their economies are subjected to “austerity.” If the current government had freed itself of the destructive IMF ideology, that loan would never have been made. It strikes one as almost obscene that the Philippines, for many of whose people austerity would represent an improvement on their current dire poverty, should participate in such a scheme.
Solita Collas-Monsod (“It is not necessary to Cha-cha,” Inquirer, July 13) argues that there has never been any evidence that the economic restrictions have led to “lost employment and growth opportunities.” She then puts forward her own arguments against reform of the current Constitution.
It is simply unknown, says Monsod, whether foreign direct investment (FDI) causes higher levels of income or whether the latter attracts the former (surely a shaky argument, as we all know that much FDI exists simply because it is seeking low wages). Then again, some foreign projects have a negative effect on national income. Thirdly, FDI played a minor role in the growth of some fast-growing economies. FDI is not deterred by the fact that land cannot be owned, as it can be leased for 75 years, but it certainly is deterred by poor infrastructure, lack of skills, the absence of clear and honestly-administered regulations, etc.
Monsod basically argues, therefore, for the status quo. She even talks, apparently approvingly, of ways to circumvent the current ownership restrictions and, like Villegas, makes no mention of development.
Surely, development is the subject that needs to be debated and popularized if the Philippines is ever to graduate from its current status as a sub-contractor — and a fairly minor one at that — to transnational corporations. Government needs to discard the failed IMF ideology and drive the development engine, creating modern industries with well-paid jobs for Filipinos. The process of capital accumulation needs to be continued and, indeed, accelerated, and that is something that foreign corporations cannot do for the country, as many tend to borrow on the local market and then “repatriate” their profits.
The problem with the constitutional provision that Villegas cites (“The State shall develop a self-reliant and independent national economy effectively controlled by Filipinos”) is not that it has deterred investment but that it has never been implemented.
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