Thursday, October 11, 2007

The Nation’s Trillion Peso Debt

Mindanao Post October 2003
In a statement, Mrs. Arroyo sought to allay fears and apprehensions over the country’s worsening indebtedness primarily blamed on the government’s financing its budgetary deficit through heavy borrowing from domestic and foreign sources. Borrowing from domestic sources accounted for 52 percent of total debts while the rest were foreign loans
The government "has the will and the means" to repay its P3.158-trillion debts as long the economy grows amid the latest political turmoil rocking the country, President Arroyo said recently. Mrs. Arroyo gave the reassurances after the Department of Finance (DOF) reported out the total debt stocks of the government have ballooned by as much as 17.2 percent as of August this year from the P2.7 trillion level a year ago.
Assuming Mrs Arroyo is re-elected in 2004, at the rate of 17% increase of indebtedness annually, simple arithmetic indicates that by the end of her term in 2010 (6 years multiplied by 17% equals 102%) the state would double its current debt. We would be allocating 80%, twice the 40% of the national budget we now pay yearly. That leaves 20% to run the government. Now with that scenario, what kind of idiot would want to be her presidential successor? That would be slim pickings indeed.
Perhaps I’m too dense to comprehend the contemporary economics paradigm. The state is comprised of the family as its basic unit. If a family’s spending exceeds its income, it would have to fill the deficiency by borrowing. But as Ben Franklin said, “ If you want to know the value of money, go and try borrowing some.” The family would have to stop borrowing after running out of things to hock. The government has no such restraints. It can, and does, borrow and borrow from local and global pawnshops, until lenders slam the door in its face, as in the case of Argentina. Inflation then soars like a balloon until one deflated pandesal costs hundreds of pesos each.
So, why doesn’t the government just renege on a payment or two of outstanding debt or repudiate it altogether? That would be unthinkable to finance officialdom the nation would be treated as a pariah or like a SARS carrier in the global financial and commercial community.
The family who runs out of resources to pawn or borrow from will figuratively, even literally, tighten its belt by reducing consumption of essentials and cutting off non-essentials. Can government leaders visualize a similar approach? Sure they can, if accompanied by resolve, sincerity and imagination. To mention a few of the ways:
Eliminate waste corruption and inefficiency are estimated to zap 20% of the budget. Lifestyle checks is a modest start. More vigorous methods must be applied: pruning the bloated bureaucracy, eliminating redundant agencies and duplication of functions (example, the superfluous DPWH since private contractors do the work); phase out (gradually, to ease the pain) of the Countryside Development Fund (CDF, a euphemism for pork barrel) and transform this into a comprehensive equitable national infrastructure program, or alternatively, to increase the Internal Revenue Allotment (IRA) of each City, municipality and Province to 80% (a way of obviating cha-cha for federalist form of government).and decentralize and devolve the functions of Departments to the Regional branches (except Foreign Affairs and Defense). Revise populist policies that promote the concept of a socialist welfare state that encourages indolence and mendicancy in the community.
One impediment to the creation of more revenues is pseudo-nationalism that stems from xenophobia. The policy limiting entry of foreigners into commerce and owning real estate discourages the investment climate and potential jobs from foreign investors. The policy plan of job creation through the agricultural sector is myopic. In less than half a generation, the rural birth rate will force a search for employment away from farming. We need to loosen the reins and allow more foreign investors, not just in confined places like economic zones and industrial farms, but even in such hazardous places like Bangsa Moro and Sayaff territory . Commerce and trade in these areas could succeed where guns failed. Speculatively, Robot’s citrus farm with a foreign partner or principal would have by now pioneered development in Tawi Tawi, instead of more forays and marauding into neighbor Malaysia.
Meanwhile, Foreign Affairs Secretary Blas Ople, presiding over a U.N. General Assembly roundtable on financing for development, said debt swap for anti-poverty programs will help poor countries realize the U.N. millennium goal of reducing the incidence by half by the year 2015. Under the debt/swap scheme, debts would be forgiven provided the savings are allocated entirely to anti-poverty programs, including micro financing for small enterprises, especially in the countryside.
As if on cue and superb timing, Governor of Banko Sentral Rafael Buenaventura called on banks to support its micro-finance program, which he said is a viable financial undertaking, citing extremely high repayment rates for credit extended to the poor. This assertion is credible, given the success of the thriving”5/6” underground lending system, and the Bangladesh Grameen bank experience.
The seed funds provided by the government savings under the debt/swap scheme would then be supplemented by finds generated by a putative savings mobilization program started during of National Treasurer Leonor M. Briones which allowed retail investors to buy Treasury bills for as low as 5,000 from accredited banks through an electronic platform.
If you can count your money you don’t have a billion dollars” --- Paul Getty billionaire
Running into debt doesn’t bother me it’s running into my creditors that’s upsetting. ─ Gus Edson New York Daily News
Poverty is hard but debt is horrible. Spurgeon

Ignorance and Trust

Executive seminars are common practices of large companies to ensure their managers gather no moss. Although a number of these seminars are of the “meatloaf” variety ─ half of the time you meet, the rest of the time you loaf ─ sort of like a paid vacation on company time, they are believed to produce better managers.
In one such executive seminar session, the moderator who was a management consultant posed some questions to the participants. Asked what is the most important resource of an organization, the group almost in unison answered, “its people”. The next question that challenged the group, “What is the most precious thing in the world?” , took a little bit more pondering and elicited a wide range of responses. But eventually a consensus emerged: Trust.
A third question was then asked, “What would you say is the most expensive thing in the world?” After many moments of reflection, many answers were offered ─ platinum, plutonium, uranium for atomic fuel, and even gold and oil were mentioned. The consultant then cut in with the answer that stunned many. “The most expensive thing in the world is ignorance. He then cited examples of actual events where firms came to grief because of ignorance of an employee who makes decisions with incomplete or wrong facts.
In one newspaper report, a senator flayed a top customs official for ignorance when the official allowed realistic toy guns to be imported in violation of a presidential decree banning such importation. Of course, we can expect that there would be bureaucratic decisions based on ignorance, but the dirt would be swept under the rug.
Returning to the topic of trust, the Americans, just like us Filipinos who demonetized the sentimo, made their cent a museum piece. Embossed on the coins were the words In God We Trust. The pennies are gone but the words linger. Pinoys are aware of the motto that adorns many sari-sari stores, but with a slight twist: In God We Trust, All Others Pay Cash.
Trust is the essence of good business. Consumers trust the quality and safety of the goods they buy. Depositors entrust their money in banks (who reciprocate by offering sign pens with a string attached); commuters trust the carriers, planes, buses, and ferries to take them safely to their destination. Buyers and sellers rely on mutual trustworthiness in their deals.
In the context of Philippine economy, foreign investments are eagerly sought that would provide jobs and boost a sluggish economy. But we would be sending the wrong message to potential investors if we amend the Constitution as is being proposed. They would likely ask what protection their investments will have if Philippine laws, even the Constitution, are unstable and whimsically changed. The Base Law remains the only institution where trust still has sheen. Much of the branches of government ─ the judicial, the legislative, and above all, the executive ─ have been tarnished by corrosive elements. Implied in the question, is the doubt on the stability of the bedrock where they can repose their trust, in the fair play they rely on.
If the Constitution were not amended, how then would Federalism be effected? Simple, my dear Watson; increase the Internal Revenue Allotment to 80%. After all, power and autonomy is synonymous to who controls the funds.
When no one trusts, does it matter that everyone lies?

Rewrites of Jottings: The Great Dictator

Whenever the name of Ferdinand Edralin Marcos is brought up in media he is usually derided as a despicable dictator, so much so that it is becoming a trite expression. Everything he did were misdeeds, terrible ones, not a single kind word said, the personification of absolute evil. This is a bit puzzling to me. No man could be that bad.
Mulling the thought further, I searched for something positive about him. If the man was so vicious and vile, and his countrymen ashamed and disgusted that he ever existed within our midst, why haven’t four succeeding administrations expunged the memory of his name and his dictatorial edicts, the Presidential Decrees? Worse, why are these decrees still carried in the statute books and our Judicial System to punish Filipinos?
In late October1989, a columnist of a leading Manila paper wrote in opposing Marcos’ cadaver to return to the country:

Strange People

We are a strange people. We get rid of a dictator and now there are those in our midst who want him back. Anyway, they say, he’s dead. What harm can he do? …
That’s it precisely. Ferdinand Marcos had done harm. He ha d done his worst. He deserves to rest where he is. … As a people we are practicing Christians. We mourn Ferdinand Marcos, pray for him and forgive his trespasses though we never heard him ask for forgiveness from his victims. But surely, he is unforgettable.
Not to forget the tyranny of his rule. Not to forget his monumental plunder. Not to forget how we, only three years ago, raged against the ceaseless excesses of Marcos, his family and favorites.
… We are a strange people. We are free and don’t seem to know it. Those of us who agitate to return the Marcoses have tied up ourselves in knots to the Constitution and the law. Just like Marcos, the brilliant lawyer. Everything he did was according to the Constitution and the law, including his powers to make laws. No one could be more majestic than Ferdinand Marcos in his regard for the law. No one invoked the law more than he who suppressed the freedoms of his people.
(the column goes on denigrating in heavy sarcasm).
A reader responded:
… no, we are not a strange people. Please do not impose your alienation from self, people and truth on the Filipinos with your literary fiat. No, we are not practicing Christianity. It is a universal principle to assume a man’s innocence until proven guilty. … as for forgiveness, that implies judgment. Have you brought him to any legitimate court with criminal charges? You were afraid that bringing him back to face Filipino Courts might lead to civil unrest. Wasn’t EDSA civil unrest? Besides, why talk of justice and fear its consequences?
How dare you speak of justice when you cannot understand its first principle: presumption of innocence, presumption of innocence! How many times will we have to repeat it to your (unflattering) mind? And will you dictate to history that it should judge while you yourself have already judged?
So, shall we leave it to history to judge Marcos? Who will write the history books that future generations will read? the bumbling authors that riddle textbooks with silly errors? (but that’s another story). He is already remembered as the 14th President of the Republic, with no pejorative title appended.
As my views run against the grain of prevailing mood, I offer this quote: The clash of ideas is the sound of freedom.
The Supreme Court of the Philippines recently ruled (although not yet final and executory) that the Marcos assets held in escrow by the Philippine National Bank is ill gotten. The loot ordered forfeited to the government, rightfully belongs to the entire Filipino people and should be utilized to benefit the general welfare, not just a special segment of society, not just human rights victims of martial rule as ordered by U.S. Judge Real (they can claim from the Marcos Estate), not just agrarian reform beneficiaries as required by law, and certainly not just to subsidize socialized housing as proposed by a Congressman. I believe that the applying the money to pay a portion of our huge national debt will benefit every citizen including unborn generations who are now heavily hocked by government borrowings that started with Marcos.

Rewrite of Jottings: Constitutional Change: Are We Ready For It?

Mindanao Post
The clamor for Constitutional amendments is rising in intensity. Lawyers, legal minds and intelligentia are joining the voices. But the motives that drive the demand for change are as varied as the tribes and vernacular dialects of the 7,000 islands of the archipelago. These motives are packaged into political jargon Parliamentary or Federal form of government, term limits of elected officials, Constutional Convention or Constituent Assembly being among the foremost. The imminent 2004 elections is the adrenalin stimulating the clamor.
In all honesty, has our society matured sufficiently to make such a change? Consider this. In the economic sense, we are a developing nation barely able to grow our own food to feed the population, where the poor are proud of their status and mendicancy has attained a level of respectability in society. Poverty has seen to that. In the International arena, we are puny, unable to fend off military intruders, even those in the guise and garb of fishermen. In the civil order domain, the established order is a regime under challenge by several groups that are separatist or communist and is under siege by kidnappers, bank robbers and money launderers, the government manned by corrupt bureaucrats and bumbling police, a government that sells or gives away the national patrimony to a select few so that those that hold the reins of power can advance their own interests, and a bureaucracy that repudiates the principle of command responsibility and ethics, blind to padded payrolls and subordinate misdeeds. Most worrisome of all is the general public feeling that government neglect is to blame for their personal problems has transformed into bitterness and cynicism about all authority and agencies of government. This state of affairs may be the precursor to civil disobedience and disorder.
Our written history clearly shows the domination of foreign powers Spanish, Japanese and finally American who shaped our system of government. American democracy strongly influenced our current system and Filipino ingenuity crafted statutes to suit local conditions, at times even beneficial to the general welfare. Although our system of governance had American underpinnings, it lacked some of the essentials of American democracy and constitutional order, of debate, elections and representative political institutions, ingenuous traditions and the paramount concept that the American tradition abhors the notion of rulers and the ruled, that they do not live under a government, never mind under a regime; that the people are the government.
The three branches of our Government are mutually independent and exercise checks and balance on each other. That’s the theory. Yet, it seems that while unconstitutional exercise of power by the legislative or executive branches of the Government is subject to judicial restraint, the only check upon the judicial exercise of power is its own sense of restraint.
In all honesty, can any Filipino deny and dissemble the truth that this nation is “run like hell by Filipinos”, a deluded preference of a past President? Has our society gained enough sense of respect for the rights of others to the extent of reviewing the mollycoddling of squatters? Even so, are we ready for charter change? Can change make a difference? Can we expect a beneficial change in such short order when the legislative process has not passed legislation that would replace the enduring Presidential Decrees, edicts of a despised dictator, 16 years after he was deposed? Will amendment establish finally the principle of a government that governs by the consent of the governed?
I must follow the people. Am I not their leader? ~ Benjamin Disraeli
A leader is best when people barely know he exists, not so good when people obey and acclaim him, worse when they despise him. But of a good leader who talks little when his work is done, his aim fulfilled, they will say: We did it ourselves. ~ Lao-Tzu

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