Democracy, Legitimacy and U.S. Global Hegemony

It is an accepted convention in international relations that there is no central authority that is above sovereign states—at least formally. Hegemonic stability theory holds that a superpower state that has the capacity, will and legitimacy can and will act as the global leader for other states to follow, creating a semblance of a world government. Undoubtedly, the United States is today’s global hegemon. Although challenged, it is still the leading military, economic and ideological power. Many observers, however, argue that the hegemonic position of the United States is on a decline; focusing on both domestic and international failures of the United States while taking notice of the rise of the possible replacement in China and Russia. I argue that while U.S. hegemony is indeed on decline, it is in no way reasonably threatened to be replaced simply because no other state has risen to the occasion to legitimately challenge it and more crucially, the rest of the world has not conferred legitimacy upon any viable replacement.

Taking over from Britain after the country’s massive losses in World War II, the United States stood unchallenged as the global hegemon for decades. It had the capacity, being the largest economy in the world in terms of market exchange rates. It possessed the will, displayed through leading peace efforts, economic conventions and multilateral institutions worldwide. It controlled legitimacy, no other state in the world could be perceived as a wanted replacement for the U.S; viable, maybe, but not wanted. However, domestic and international failures is eroding its hegemonic position. The U.S. economic decline now places its economy second to China in terms of purchasing power parity. The will of the United States increasingly becomes invisible, refusing to act on major global security issues like the invasion in Ukraine. Its legitimacy as well is weakening with its failed democratization projects and the unsuccessful ‘war on terror.’

The rising global powers smell blood. Russia is increasingly pursuing more aggressive foreign policy, hoping to make its mark on global politics. China continues to grow economically and improve its military capacity. But the world has seen that Russia cannot keep up with the U.S. in economic terms with its dependence on oil; and China who can, simply is not globally aggressive in foreign policy, albeit it is regionally. However, even if these two states combine both their capacity and will, it will be very difficult to replace the U.S. as the global hegemon—their lack of legitimacy kills any Chinese or Russian hegemonic ambition.

Legitimacy is a constructed notion and the U.S. expertly crafted and marked its legitimacy in every strategic sphere possible. Culturally, American pop culture is unrivaled and has continuously depicted the U.S. as the good guy and every challenger as the bad guy. The media is critical of a U.S.-led world, but it has not done China or Russia any favours as well. In scholarship, the moral appeal of U.S. democracy and the ethical criticisms against authoritarian-like regimes of Russia and China creates the notion of the U.S. being the only moral superpower. It is the strong moral appeal of democracy that makes U.S. hegemony unthreatened; non-democratic regimes simply cannot lead an increasingly democratic world.

While Russia and China are in no doubt rising superpowers, the threat they pose to the hegemonic position of the United States is exaggerated. The U.S. is still the global leader in both economic and military terms and still has the most aggressive and wide-reach foreign policy to date. Despite being relatively outplayed from time to time, it is still the absolute standard and leader in global politics.  What locks the position of the U.S. as the global hegemon for the foreseeable future is its legitimacy. The constructed moral dimension of the legitimacy debate is the deciding factor as to why the world cannot anoint a replacement just yet. The world is coming for it, no doubt, but the U.S. is here to stay.

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Why the United Nations Security Council Fails

The United Nations is often celebrated as a global institution that is the ideal problem-solver of the world’s many and diverse problems; none arguably more crucial than the sphere of global security. The UN Security Council, the chief decision maker in matters of security, is the one and only global police and army. Many criticize the UN Security Council for its failures to efficiently and effectively act in the face global security issues; may it be in terrorism, mass killings or genocide. These criticisms are legitimate, but they are founded on a romanticised perception of the UN Security Council as a mere functional institution devoid of political interests of the superpower states that comprise it. Decision making in issues of security is highly centralized in the veto five of the UN Security Council, all of which pursue national interests that are often outside the global interest of security. The Rwandan Genocide of 1994 is the most devastating case of realist politics above the liberal interest of global security. The United States, comprising the largest of the UN military arm, ignored calls for action on the basis of their national interest after losing much resources in the intervention in Somalia of 1993. When global interests and the national interest of the veto five do not align, the world must take a back seat and passively witness acts of aggression. Perceptions must change; the ordering principle of global institutions like the UN are not ideal notions of justice and peace, but the interests of superpower states that lead it. The ineffectivity of the UN Security Council is essentially rooted in its centralization of decision making to the few superpowers. To combat this, the UN must develop a more democratized mechanism of decision making where smaller states are given as much influence as the bigger ones. Also, to ensure the compliance of the military arm, significant sanctions must be instituted against its component states who refuse to act in accordance to popularly ratified decisions. Global institutions will never simply be institutions acting based on their assigned function; real politik always triumphs over idealist notions of global justice. Consequently, solutions are not found in technical and functional aspects of the UN Security Council; it lies in the politics and power play of central decision makers. A democratic UN Security Council where every state regardless of size and power is given influence in decision making is the only way that global interests will triumph over selfish national interests. The world simply cannot sit and merely watch another genocide like in Rwanda happen. 

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The Hypocrisy of International Financial Market Regulation

Photo from standwithoccupy.org

Money and financial instruments are increasingly being the most mobile aspects of the international economy with the unending breakthroughs in information technology. The transfer of capital from one country to another could be done seamlessly with a simple click of the mouse. Unlike that of international trade of goods which still largely face barriers of tariffs and quotas, the international financial market is marked by almost absolute immunity from domestic efforts of control. As savings of countries continue to outgrow their opportunities for investments, international financial markets will grow at the same pace. States, whether they like it or not, are integrated into one another through capital. While the transfer of capital from savings-rich developed economies into promising emerging markets provide mutual benefit, this is not without its consequences. In fact, critics point out that the benefits of the international financial system will not make up for the global pains it creates. These pains are in the form of speculative bubbles. When exogenous factors hype up an investment opportunity, capital is logically directed towards it in the hopes for big profits. Everyone eventually joins in on the mania. However, the sudden and dramatic upsurge in credit and value of that investment creates insecurity. The big investors then are the first to lock in profits and go, creating a downward frenzy, and thus the bursting of the bubble. Speculative bubbles have been the sources of financial crises that have a dire global reach. Countries, led by the United States, seek to check this tendency through using global functional institutions like the International Monetary Fund to inject capital into struggling economies in exchange for more sound domestic economic policies to prevent a global domino effect of the domestic crisis. However, the assurance given by the IMF to bail countries out in times of crisis create a moral hazard, and thus counter-productively encourage reckless behavior.

Some economists have argued to abolish the IMF to avoid moral hazard inducement while others have pushed for the strengthening of the institution. These solutions, while valid, are largely politically insensitive. Economists have the tendency to view institutions, more so global ones, merely in functional terms. But fact is, global institutions operate hardly on functional terms; they are largely politically motivated and instruments of the international regime dominant states have big stakes in. Economists, dominantly Western ones, insist that unregulated movement of capital is still what is best for everyone, even after a number of financial crises! Why? Simply because it is profitable for the states they represent. When states put up capital controls, this raises the costs of transactions and thus reduce profit. It is a crime for economists to even consider domestic capital controls as a solution! Instead, they seek to use the IMF to allow them to pursue their greed freely, and then save them when problems start to arise. It is easy to be mislead that because most of the countries that are bailed out are the developing ones, developed countries are but victims. However, the reason for these crises is the unregulated influx of foreign capital that overheats the domestic economy eventually leading it to burst. Rich states make problems in other states and bail them out so they could continue their greed! It may as well be that the solution to this global problem is not global regulation, but domestic regulation. States must be allowed to impose strategic capital controls without sanction so as to be able to direct investment away from speculative, short-term ones into more stable quality investments. Why should foreign capital determine how much and the direction of investments when domestic governments and economic managers know more about their economy? Much of global problems and crises, whether in the economy or in security, are caused by hegemonic states acting in their interests without regard for others. The problem, as it becomes apparent, is the constraining of smaller states to domestically determine and globally pursue their interests; and thus consequently check hegemonic powers. The world, in fact, may only be saved by the little guys.

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Hugo Chavez and Venezuela: the Democratic Model for Young Democracies

Photo from telegraph.co.uk

By strict Western standards and conventions, Hugo Chavez was a dictator. He violated innumerable human rights, crushed democratic institutions and imprisoned a free market economy; the caveat—by strict Western standards. It is easy to forget that definitions and information are functions of power; in this case, the power of a global hegemon like the United States sets the discourse on the undemocratic political character of Venezuela’s charismatic leader. But Chavez has never been one to bow down to great powers and conventions; and he makes no exemption in challenging the dominant idea of what makes for a good leader for a democratic regime.

A good leader for a democratic regime knows when to accept defeat. Democracy entails a competition for power; what makes it work is when losers do not resort to extreme measures to overthrow clear winners and wait until the next opportunity. Hugo Chavez first burst into the political scene as a military coup leader against a corrupt President Carlos Andrés Peréz that tolerated no popular dissent on the streets, even to the extent of critically harming over 3, 000 people. Unfortunately, it was an abortive coup. But Chavez accepted defeat gracefully; through a televised speech, Chavez willingly surrendered, but he swore to come back strong; and indeed, he did. Chavez rose from incarceration to win the 1998 presidential elections by a wide majority.  A good leader for a democratic regime knows when to accept defeat, but they never quit on their principles and beliefs.

A good leader for a democratic regime hides no intentions and acts on his promises. Democracy is built on trust; it only works when those who are entrusted with power are open with their intentions. Chavez ran on an extreme platform with socialist policies such as nationalizing the oil industry and fundamental ones such as constitutional change. He expressed his intentions at the beginning, not misleading the electorate with centrist promises only to act radically once placed in power. More importantly, however, Chavez fulfilled these promises. On his first year of office, he immediately changed the constitution and dismantled the uneven power structure that plagued Venezuelan democracy. He nationalized the oil industry and brought back its revenues to the people. A good leader hides no intentions; and he acts on those intentions fast and without excuses.

A good leader speaks truth and stands up to power; and he does so with vigor. Democracy is not only confined in domestic politics; it often is in deficit dangerously under the radar in the international order where a global power dominates. Chavez’s popular appeal, especially to the global South, largely rests on his unashamed, uncompromising and unfearful challenge to the global hegemony of the United States. He not only rejects neoliberal policies that continue to shackle his country in structural poverty, he does so sending a strong message; condemning President Bush of the United States as “the devil” to an audience of all other states of the world in the United Nations must challenge the beliefs of benevolence in the hegemon. He not only exposes the undemocratic foreign policy of the world’s leading power, he set the path for the rest of the states south of the border to stand up against it. A good leader does not only stand up to power; he inspires others to do the same.

A good leader, however, ultimately bows down to real power—the people. Democracy is rule of, for and by the people; more important than adherence to democratic processes are the production of democratic results of poverty reduction and social justice.  Chavez respected the democratic mechanisms to gauge the public pulse, submitting plans, intentions and himself to referendums and elections. When the popular will went against his, such as the referendum results against his attempt to abolish term limits for the presidency, he respected the desire of the people. Although immensely popular, he still submitted himself to elections every year and winning them by an overwhelming majority each time. He was a man of the people; refusing to sit on his ivory presidential tower, but always driving around in his jeep to see his people first hand. More substantially, Hugo Chavez was a man who could boast of results; reducing poverty, unemployment and mortality rates in his country. A good leader bows down to his people whether they are for or against him, and ensures he helps them regardless.

The Philippine case is not so different from pre-Chavez Venezuela; high rates of poverty, large and growing gap between the rich and poor yet natural resource-gifted, and exclusionary and elite-dominated institutions. Both countries have a common colonial experience and legacy from the Spanish. Both also have been victims of imperialist IMF-imposed structural adjustment programs. It is not difficult to see the parallels between the Philippines and Venezuela—it becomes inevitable for any observer to ask why are the trajectory of both states different?

 Much of the difference could be accounted for the difference in leadership. Indeed, Hugo Chavez is a once in a lifetime political leader who cannot be replicated; however, the principles of equality and social justice can be embodied by any political leader willing to adopt them. The question is not simply why Philippine leaders are unlike Hugo Chavez but why Philippine political dynamics and institutions prevent left-leaning leaders from taking power.

It is easy to forget that what sparked the revolution in Venezuela was not the military and its famed leader, but the explosion of discontent and disgust by the entire civil society. This burst of public anger was immediately capitalized by the organized left to take the reins of government, which in this case was Chavez. What triggered and sustained the revolution was not Chavez alone, but civil society who grew uncompromising and deeply disgusted with the current system and its pool of elites. It is difficult to say the same for the Philippines; the closest the country came to an explosion of public disgust was in the People power revolution, but even that was not enough to refuse elites of the same pool and interests to replace the dictator. Credit may be given to Philippine elites and their cunning and effective tactics to capture the state; but greater pressure must be placed on civil society, if not to organize and challenge for political power, then vehemently reject the dismal reality of poverty and inequality which they live in and the elites who predatorily rule over them. It is in times of great crises when civil society possess the leverage and actual power to overhaul the system. The Philippines now is in a series of crises where government officials are exposed of predatory and large-scale corruption and the President is exuding signs of authoritarian tendencies. The spotlight must not be on those in power, but those under power and what they do to change the system. 

Upon Chavez’s overwhelming mandate to the presidency, he rallied the public to change the constitution, the fundamental institution of the state, which reflected the exclusionary structure and the elite interests that dominated Venezuelan society. Constitutional change set the precedence to a more widespread revamp of institutions.  Any revolution is only genuine and sustainable when elite-dominated institutions are destroyed and replaced by popular ones. In the Philippines, it is difficult to further any institutional change even if the constitution provisions are in place because the elite-dominated legislature refuses to pass any enabling law detrimental to their interest. The role of civil society in this regard again is in focus; without a civil society that rejects elite dominated institutions and leaders, the Philippines will only continue on the endless cycle of inequality, poverty and exclusion.

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On the Fiscal Autonomy and Responsibility of Local Government Units

Recently, a Rappler news article reported of the Bureau of Internal Revenue's (BIR) shaming of provinces being too dependent on national government allocation without developing their own local revenue generation sources.

"In its latest Tax Watch ad released Wednesday, June 18, BIR said that locally sourced income (LSI) of 56 of 80 provinces accounted for less than 15% of their regular income in 2013," the article reads.

It has been 20 years since the enactment of the Local Government Code (LGC) of 1991. The code primarily sought to institutionalise genuine and meaningful autonomy for local government units (LGUs) after problematic years of politico-administrative centralization in the nation’s capital of Manila. It transferred to LGUs significant responsibilities and powers of service delivery, regulatory enforcement and fiscal policy. The ultimate rationale of the LGC of 1991 being as LGUs are the government institutions that are spatially and knowledgeably closest to the people, they are the most efficient and democratic mechanism of governance at the grassroots.

The code however, as the news report proves, has largely failed in its purpose. Over twenty years into decentralization in the Philippines, the promises of the LGC and decentralisation have been hampered by numerous problems and drawbacks. At large, the problems have been on the fiscal side; fiscal decentralisation in the Philippines for the past twenty years has not produced capable and genuinely autonomous LGUs. Despite the significant resources given through the Internal Revenue Allotment (IRA) and taxing powers, evidence suggests the lack of sharp improvements in service delivery, decreasing local budget shares of devolved functions such as in health and social welfare and de-incentivised local revenue generation.

Much of the failures of decentralisation in achieving genuine autonomy, efficiency and effectiveness at the local level have been caused by the unforeseen and unintended consequences of the Internal Revenue Allotment (IRA).  As the IRA’s share in the total LGU income increased through the years, local tax revenue and nontax revenue shares have decreased. There are simple political and economic explanations for such a trend. Politically, it is only logical for local politicians to rely on the IRA instead of taxing his constituents which might cause unpopularity. Economically, the dependence on IRA is a result of the absence of a tax base for local revenue generation in most LGUs.

The local fiscal capacity of LGUs is grossly lacking. Most LGUs simply do not have wide enough of a tax base to generate revenue. According to World Bank data, LGUs with relatively more narrow tax bases such as provinces and municipalities, when compared to cities, receive 46 percent and 47 percent of the cost of devolved functions, respectively. Further, they divide the pie of the IRA with more players when compared to cities. An anecdotal account of the Mayor of Valenzuela City Sherwin Gatchalian the problems with the technicalities of the tax system. He explains that San Miguel Corporations largest brewery is located in his city while the head office is in Pasig City. The only tax revenues Valenzuela City gets from the corporation are real property taxes. The huge sales of the corporation that can amount to billions of pesos are taxed in Pasig City because the corporation is registered there. Mayor Gatchalian justifiably complains “San Miguel uses Valenzuela roads; San Miguel uses the groundwater of Valenzuela; its employees, a thousand of them, attend our schools, use our health centers, but we do not get anything from its sales.”

A reformulation of the IRA, however, cannot solve the problem of local misallocation of funds. The problem moves beyond technicalities to now become a politico-governance issue. The already limited resources of LGUs are often easily misspent; resources are often spent on projects that provide the most visible impact such as basketball courts with backboards declaring the politicians name or the welcome signs found at boundaries. The allocation of resources are “likely to be based more on electoral considerations than technical assessments” (Hutchroft, 2012). Further, local executives are “budget dictators” who hold the power of the purse over councilors. He further notes that coupled with high proportion of local spending in personnel, mayors utilise a spoils system where patronage is the basis of who he hires within the city hall, with complete disregard for civil service laws. With national political figures as the patrons of local executives, the fiscal problems of LGUs are ultimately a problem of national patronage.

So how do we begin to address such problems?

Book IV, Title II, Section 521 of the Local Government Code provides:

“SECTION 521. Mandatory Review Every Five Years. - Congress shall undertake a mandatory review of this Code at least once every five (5) years and as often as it may deem necessary, with the primary objective of providing a more responsive and accountable local government structure.”

Two decades and three administrations have passed yet no comprehensive review and amendments have been made on the LGC of 1991. Fortunately, in another Rappler news report, a $250-million loan approved by the Asian Development Bank on February 13, 2014 will make a review of the 20 year old LGC finally possible. Any review and corresponding amendments to the LGC of 1991 must take into account not only the efficiency and economic aspect of the code, but especially its political outcomes and consequences. The problems of efficiency in the IRA must be placed in context of a larger patronage structure.

First, the IRA must be reformulated to be performance-based and with respect to resources-to-functions ratio; LGUs with the least local resources such as tax bases and greater share of functions and constituent needs must be given a higher share in the IRA. Such a measure will, at best, solve the problems of dependence, local revenue generation lag, deterioration of public services delivery and gerrymandering. As for the governance aspect, stricter transparency and accountability measures that look beyond just mid-term elections must be set in place to counter the authoritarian-like rule of the local politician. Institutions outside the state apparatus such as media must be strengthened at the local level to provide a feasible challenger to the monopoly of power local executives. Policy makers must be careful not to focus too much on the economic and efficiency issue of the LGC; a politically insensitive reform will not yield any desired economic outcome. In the final analysis, while these practical measures may curb unwanted tendencies and patterns at the local level, only a national-level political reform that destroys the systematic patronage structure of the Philippine state can any decentralisation framework genuinely achieve its purpose.

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The Political Economy of Inclusive Growth

Image from theatlantic.com Just days ago, the Social Weather Stations (SWS) survey found out that the number of unemployed Filipinos increased in the last quarter of 2013 to a dismaying 12.1 million. The unemployment rate rose to 27.5 percent as 2.5 million Filipinos joined the ranks of the unemployed between September and December of last year. Coupled with a poverty rate of 25.2 percent, these dismal statistics does not coincide with the country’s second-highest growth rate of 7.2 percent in Asia, only after economic giant China. Malacanang was quick to respond and reframed the issue as a consequence of the havoc that Typhoon Yolanda wrecked in key regions of the country. The Aquino administration simply cannot spin its way to escape the fact that consistent relatively high growth in the past four years has not been ‘inclusive’ or felt by the majority of Filipinos. It must be noted, however, that the lag in poverty reduction in the Philippines cannot be blamed in the current administration alone; the global political economy has played the most significant role in shaping the structure of the Philippine state and economy today. In the face of high growth and wide-scale poverty and unemployment, an understanding of both the present and the past is crucial if solutions will ever be found. This essay explores the past and present political economy of development in the Philippines, arguing that the resilient continuity of past foreign policy has hampered development in the country today. The first part of the essay will examine the service-led growth of the Philippines and its implications for inclusive growth. The second part will situate the Philippines in the larger political economy of Southeast Asia as shaped by U.S. strategic and economic interest. The goal of this essay is not to propose solutions to achieve the ever-elusive inclusive growth, but to give a better understanding of the present and past factors that continue to hamper inclusive growth and development in the Philippines.

Deconstructing the 7.2 percent growth

            In a press conference announcing the annual performance of the Philippine economy in 2013, National Economic and Development Authority (NEDA) secretary-general Arsenio Balisacan reported that the driver of economic growth from the supply side has been the services sector, contributing 3.6 percentage points to the real Gross Domestic Product (GDP). He adds, “The 6.5 percent expansion of the services sector was driven largely by the strong demand for communications, land and air transportation, and storage and services incidental to transport.” Data shows that from 1980-2009, the services sector has contributed an enormous 66.6 percent to GDP growth while industry contributes only 26.3 percent. In other Southeast Asian countries, there has been more or less equal contributions from both industry and services. Is there something dangerously wrong with the Philippines’ disproportionately service-led growth?

            In a paper published in 2012 entitled Taking the Right Road to Inclusive Growth, the Asian Development Bank provides the answer. Traditionally, industrialisation has been considered as the main driver in economic growth at the early stages of development. In a nutshell, such a development structure provides a high labour engagement and productivity in the economy. A robust and productive manufacturing sector is able to absorb labor from low productive sectors like agriculture. This increases job opportunities available to numerous workers, giving them adequate incomes enough to lift themselves out of poverty.  Successful Asian countries have followed the industrialization growth pattern, giving rise to what is admired all around the world today as the Asian Tigers.

            A service-led growth model is unconventional. The consumption of services is only possible when people reach a certain level of income that is way above the subsistence level. A service-oriented economic structure can thus be achieved in advanced stages of development. The Philippines, as the statistics aforementioned prove, has bypassed manufacturing for services as the main driver of economic growth in the past thirty years. Such a development strategy, however, has impactful implications on inclusive growth.

            The services sector of the Philippines has been primarily steered by the rapidly growing business process outsourcing (BPO). Growing at double-digit rates, the Philippines is now the third largest BPO destination after India and Canada. The continuously increasing export of services has led to 34.5 percent employment in the BPO industry. On the surface, the BPO industry may appear to be highly beneficial. However, a second look will show that it actually only employs about 1.2 percent of the total labour force in the country. This is largely due to the high qualification standards of BPO labour demand. In a country where the poorest labourers received only have primary or secondary education, a minimum qualification of a college degree will simply not match. A service-led growth that is dependent on global demands and standards cannot reduce poverty in a country where the necessary labour skills are not present.

             To exacerbate the situation, the labour productivity growth within the service industry in the Philippines has been underperforming. Inclusive growth requires not only high employment, but mainly productive employment. Further, the services sector has the lowest intersectoral link; it cannot induce higher growth in other sectors. Comparatively, India is also a service structured economy. The service sector contributes to about 61 percent of its GDP growth in the past 30 years, highly similar to the Philippines. What sets India apart from the Philippines is that it coupled its service-led growth with an increase in productivity. However, even in India, slow poverty reduction is still evident. The high-skilled labour demand of the service sector will simply not provide enough job opportunities for a large number of Filipino labourers with little to no skills.

The current service-led growth model of the Philippines begets an important question—what hampered the country’s industrialization phase?

The Political Economy of Development in the Philippines

             The development pattern in Asia differs largely from that of the west. For one, Asia never saw an independent capitalist class separating itself from the state to lead economic development. The presence of strong colonial powers stunted the rise of the western-like bourgeoisie; for hundreds of years, most of the economic activity of countries in Asia, including the Philippines, remained to be centered on agriculture. Bringing it closer to home, development in the Southeast Asian region only began recently while already in the face of the global economic order that western states were not in context of. Further, development in the region was mainly brought about by United States’ strategic military interests against communism at the height of the Cold War.

            During that time, the U.S. needed to assert its presence in the Asian region because the close proximity threat that communist states China and the Soviet Union posed. If communism will prevail in the entire Asian region, the liberal world order of the U.S. would have been in serious jeopardy. As a solution, the U.S. strategy was to ensure the economic development of Asian states as a counter attack to the pro-poor appeal of communism; the less poor people are, the less the appeal of communism.  The U.S. allied with its then recently-independent former colony of Japan. To raise Japan to a viable superpower ally, it needed to be economically rebuilt. Losing the communist state of China as a trade partner for Japan, the U.S. triangulated trade instead with the Southeast Asian region. Southeast Asian states were made to play the role of a subsistence market; Japan imported raw materials from Southeast Asia and exported manufactured goods back to them for consumption.

           From a purely economic perspective, the injection of Japanese capital or foreign direct investments (FDI) into Southeast Asia provided the necessary boost that pushed most of Southeast Asian countries' industrialisation phase. The Philippines, however, had an overvalued currency at this crucial point in time; thus being unattractive for Japanese capital to be invested in the country. This lag in FDI still continues to be a crucial factor today as to why the Philippines is constantly behind its neighbours. The Philippines is actually being surpassed by communist states like Vietnam five-folds in attracting FDI. Because of such low investment to GDP ratio, industrialisation and manufacturing in the Philippines never really took root and continues to be a lag in inclusive growth today.

From a wider perspective of political economy, of all Southeast Asian states, it was the Philippines that had a strong Spanish-American colonial legacy. During the Spanish colonial period, families who cooperated with the Spanish colonisers in their divide and rule strategy lorded over fellow Filipinos with vast amounts of land or haciendas granted to them. These haciendas were incomparable in terms of size to that of any other Southeast Asian country. American colonial policy further exacerbated this by giving the landed oligarchs institutional access to the state apparatus. Colonial policies are the origins of the Philippines’ unique case of political dynastic rule today. As previously mentioned, an independent capitalist class never emerged in Asia. In Taiwan, South Korea, and Hong Kong, for example, it was a development from above model wherein the state fostered capitalism from above. The communist threats these states were in close proximity to, namely China and North Korea, forced the U.S. to adopt policies that were suitable to economic development—manufacturing-led growth. In contrast to the Philippines, the relatively weak communist threat never induced U.S. policy to push for development in the country. Instead, it was of the American interest to keep the Philippines centered on agriculture to supply the American agricultural needs. Further, given that the agricultural sector is controlled by landed oligarchs who were also politicians and statesmen, it was but logical for them to keep an economic structure where they benefited from; thus, they resisted any form of industrialisation from above that was characteristic of successfully-developed Asian states.

Conclusion

In conclusion, I am convinced that the value of the social sciences is not in its ability to offer practical solutions to problems, but in providing the very explanatory frameworks in which we problematise the world. The practical solutions are already obvious; improve manufacturing, provide better technical education, enact genuine land reform, etc. However, taking a step back to view the problem from a larger political economy perspective will show the key roles of international actors and their policies in hampering growth, more so an inclusive growth, in the Philippines. While practical solutions may be enough at the national level, a stronger form of accountability against the exploitative powers of advanced states must be institutionalised in the global political order. It is the only way that growth, in the global scale, will ever be inclusive.

Bibliography

Abrami, Regina, and Richard F. Doner. 2008. "Southeast Asia and the political economy of development." In Southeast Asia in political science, by Erik Martinez Kuhonta, Dan Slater and Tuong Vu, 227-251. Stanford: Stanford University Press.

Bello, Walden. 2009. The Anti-Development State. Pasig City: Anvil Publishing, Inc.

McCoy, Alfred W. 2009. An Anarchy of Families: State and Family in the Philippines. Madison City: University of Wisconsin Press.

Usui, Norio. 2012. Taking the right road to inclusive growth: industrial upgrading and diversification in the Philippines. Ortigas City: Asian Development Bank.

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Deconstructing Duterte

The DDS and Duterte Violence: An Effect of Institutions

          The new institutional perspective is aptly used in analyzing political leadership at the local government level. It deviates from traditional institutionalism in considering not only formal rules (as expressed in laws), organizations and structures of government; but more influentially powerful, informal rules (as expressed in norms and collective identities) and broader institutional constraints (Lowndes, 2010). In summary, institutions are framed through rules that are, in effect, lived out by the actors.

Formal Rules

In light of the formal rules, the Human Rights Watch asserts that “Duterte’s rise as a prominent political figure coincided with a significant change in the dynamics between local officials and the police in the Philippines” (2009). Republic Act 6975, known as the “Department of Interior and Local Government Act of 1990”, as amended by Republic Act 8551, provides that the National Police Commission (NAPOLCOM) shall exercise administrative control and operational supervision over the Philippine National Police. Moreover, the Local Government code of 1991, under section 455 (b)(2)(v), provides that the city mayor shall:

“Act as the deputized representative of the National Police Commission, formulate the peace and order plan of the city and upon its approval, implement the same; and as such exercise general and operational control and supervision over the local police forces in the city, in accordance with R.A. No. 6975.”

According to insiders, there are no risks in the operations of the DDS because these are coordinated with the police, who intentionally leave or come late to the area of the planned assassination. Further, the police are underperforming or not performing at all in the investigation of these killings. Some policemen are also hit men themselves. It is alleged that mayor Duterte, as vocal as he is in support of the DDS, is the mastermind behind the operations. Given his socialized and socially constructed violent self, as even more strengthened through the Local Government Code of 1991 by giving the power to exercise operational control over the local police, it is a highly substantial allegation.

However, not all hit men are police officers. More often, they are hired shooters. They are also provided with .45 caliber pistols and other necessities for the operations. The funding of the DDS now comes to inquiry. According to insiders, it is alleged that the funding comes from the city government’s Peace and Order fund, which is allocated by the president to spend in their discretion for counter-insurgency and anti-crime programs (Human Rights Watch, 2009). In Davao’s proposed 2009 budget, it accounts for 450 million pesos of the 3.2 billion pesos budget (Philippine News Agency, 2008). Being matters of security, the Peace and Order fund is not accounted for or subjected to audit.

These formal rules, to an extent, define the parameters of Duterte’s behaviour. It can be said particularly of the R.A. 6975, the Local Government Code of 1991 and the Peace and Order fund are rules that provide a wide range of autonomy and discretion for the mayor. Coupled with the primary argument of the socially constructed violent self of Duterte, these loose formal rules allow and encourage the further development and proliferation of such behaviour.

Informal Rules

          Informal rules are largely based on the norms and traditions that results from the interaction of actors. In this case, there are two interactions of actors that contribute to the creation of such informal rules in Davao—the weak state vis-à-vis Duterte and that of Duterte vis-à-vis his constituents.

As argued by Migdal and Abinales, the Philippines has not been successfully transformed by the wave of modernization. Societies are unaffected by attempts at rationalizing its structures; it remains to be largely built kinship, traditions and customs. This is largely due to the peculiar and long colonial history of the Philippines, which alienated Filipinos from a subjugating foreign government that left them to fend for themselves and rely on their kins. The superimposition of the nation-state on these primordial societies resulted into a constant struggle between the state and the local strongman. Being incapacitated by the power of the local strongman, the weak state therefore resorts to compromise and accommodation for stability, consolidation, and access to the local population.

Such power relations between the weak state and the strong society have created certain informal rules and norms. As Huntington (1968) asserted, the issue is not modernization but that of governance. Weak states govern through compromise and accommodation, not of imposition or hegemony. This creates an informal rule that for the state to effectively govern and ensure stability, it must not limit the powers and disrespect the authority of the local strongman in his domain to an extent not of his liking. As proved by the Marcos' move to centralization during Martial Law, doing so would result to political turmoil and instability.

In that sense, it is an informal rule, as much as it is a formal one enshrined in the Local Government Code of 1991, and an imperative that national government must not meddle with the affairs of Duterte in Davao. This would explain why administration after administration, Duterte remains unsanctioned despite the years of alleged human rights violations. Also, from the new institutional perspective, this informal rule further proliferates the violent character of Duterte.

For six terms as mayor, Duterte and his constituents in Davao have had a long period of constant interaction. In the beginning of Duterte’s political career as an appointed OIC vice mayor, the call of Dabawenyos was that of peace and order, having been threatened by insurgency attacks. Duterte delivered on the call for peace and order, which made him highly popular amongst Dabawenyos. In each term for the next six, Duterte ran on his perennial platform of bringing and maintaining peace and order in Davao. The electorate have swept him to power every time despite, or even because of, their belief of his involvement in the extra judicial killings; thus, Duterte considers this as his mandate. The existence of such a culture and collective identity can be proved by the dissatisfaction of Dabawenyos of Benjamin Guzman, who served as mayor due to Duterte's term limit, because of his failure to embody a tough persona and inability to maintain peace and order. Moreover, it is more evident in the overwhelming support of the people for Duterte every election time. The continuous and stable interaction between Duterte, who embodied the tough guy every criminal is afraid of, and his constituents, whose call and mandate for any mayor has always been based on peace and order, has created a collective identity and political culture founded on the values of toughness, action and peace and order.

Informal rules are also expressed, and possibly none more binding, in the collective identity and political culture of a people in a given place. Unlike public opinion which is simply people's reaction to specific policies and problems, these are long term values that are entrenched in institutions and lived out its actors (Heywood, 2007). From an institutional perspective, the collective identity and political culture of Davao plays a big, if not the biggest, role in defining and maintaining the tough and violent character of Duterte.

Duterte Dynamics

            The Marxist tradition asserts a different view on political culture. Rather than rising from the grassroots, it is a top-down induced phenomenon. Political culture is actually nothing more but elite ideology (Heywood, 2007). It becomes a non-coercive power, called hegemony, by which the people are dominated by the ruling class through the dissemination of what Engel’s calls “false consciousness.”

            How Duterte is able to dictate the dynamics within Davao and circumscribe efforts of political opponents and other groups of civil society groups can be framed through the Marxist lens. As mentioned before, Duterte is both a created by and creator of the political culture in Davao. Beginning with success in responding to calls for peace amidst NPA-dominance, Duterte sustained the popularity through continuous peace and order efforts. Through years of continuous interaction with his constituents, such a political culture and identity has been created and reinforced.

            Duterte has used the political culture he created in Davao to defeat political opponents and instill fear among those in civil society. To do this, Duterte allegedly employs a dissemination of false consciousness based on fabricated incidents of crime. This was evident most especially during the 2010 local elections, when Representative and former House Speaker Propsero “Boy” Nograles challenged Duterte’s daughter, Sarah Duterte, for the seat of Mayor. When reports of the increased popularity of Nograles through surveys came out, isolated cases of crimes suddenly threatened the city. It was alleged that Duterte was behind these petty crimes to stimulate the culture of peace and order in the city that only the Dutertes successfully embodied and ensured. This strategy lead to a victory margin of more than 220, 000 votes for the younger Duterte. 

In consideration of the presence of such dynamics and the identified institutionalised rules, strengthening transparency and accountability measures, both horizontal and vertical, will be able regulate Duterte’s behaviour without radically altering his powers to maintain stability in the local level. For one, the Peace and Order fund must be audited and accounted for by an independent special committee sworn to confidentiality rather than being loose discretionary funds. If the use of funds is found suspicious, it must be investigated upon and made transparent to the people. Further, the police force will remain under the control of the mayor but orders and activities must be recorded, investigated if found suspicious and made transparent if proven. These mechanisms would provide evidence, which has been lacking to back up allegations against Duterte. With evidence, the state will be able to sanction Duterte accordingly. Also, such mechanisms will be able to affect, if not totally reverse, the political culture and collective identity of Davao. Transparency and accountability measures will provide the state with evidence to sanction Duterte, and the people of Davao with information that could question his legitimacy. Local strongmen are most concerned with looking legitimate, which the state can provide. With such mechanisms in place demystifying his behaviour, Duterte must think twice before he employs violence.

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What is wrong with Philippine public administration?

“Poor countries are poor not because they lack resources, but because they lack effective political institutions." -Francis Fukuyama

In a recent survey, The Political and Economic Risk Consultancy (PERC), a survey of expatriate businessmen, rated the Philippines an 7.57 out of a worst possible score of 10 as among the worst and most frustrating bureaucracies in Asia; coming only fourth to Indonesia (8.37), Vietnam (8.54) and India (9.11) (PERC, 2012). Public administration in the Philippines have always been focused on three concerns—reorganisation, decentralisation and corruption.

Reorganisation of the bureaucracy has always been an initiative of any Philippine president throughout the years. Reorganisation programs have been mainly concerned with ensuring the effectiveness, efficiency, affordability and accountability of government; that is, government effort must be focused on its core functions, rationalisation of service delivery support systems and right staffing, rationalise government funds and ensuring transparency, respectively.

To achieve a government that works better but costs less, the government must streamline and reengineer the redundant and bloated Philippine bureaucracy. As per the latest 2008 Inventory of Government Personnel Data, the Philippine bureaucracy has a total of 1,313,538 government personnel. National Government Agencies (NGA) staff the most number with 832,676 (63.39%) while Local Government Units (LGU) have 381,502 (29.04%) and Government Owned and Controlled Corporations (GOCC) have 99,360 (7.56%). Compared to the last inventory conducted by the Civil Service in 2004, the number of government personnel decreased by 11%, from 1,475,699 in 2004 to 1,313,538 in 2008.

The decrease in government personnel prove to be a step forward in reducing the bloated size of the Philippine bureaucracy. However, the regional distribution of government personnel continues to be misplaced. Staff in the National Capital Region (NCR) increased from 437, 243 (29.63%) in 2004 to 506,103 (38.53%) in 2008, a percentage increase of 8.9%. Comparatively, the Autonomous Region of Muslim Mindanao (ARMM), which is perennially among the poorest regions in the Philippines, only has 50, 676 (3.86%) of the total number of government personnel. As it was in 2004, the Philippine bureaucracy continues to be maldistributed, “areas which need the services more have only a few number of public servants” (Brillantes, 2008).

            Brillantes adequately pointed out the numbers and statistics of the sizes which continue to plague Philippine public administration. However, what numbers cannot explain is the aspect of professionalization and degree of autonomy of the bureaucracy. One of the core functions of public administration is regulation. “To ensure their regulatory independence, agencies are typically staffed by experts, lawyers, and accountants who have neither run for political office nor previously worked for any player in the industry they are regulating” (David, 2013). The degree of professionalization and autonomy of the Philippine state apparatus can be examined in the recent issue of the Manila Electric Company (MERALCO) increase rate in electricity. In his Philippine Daily Inquirer article, Randy David (2013) examines the case of the current chair of the Energy Regulatory Commission (ERC), Zenaida Cruz-Ducut. She is ill-suited for the position, as her background suggests. Ducut was a member of Congress for nine years where she was a loyalist of then President Gloria Macapagal Arroyo. Upon the end of GMA’s presidency, she started giving out positions to her loyalists. Ducut was a political appointee of GMA to the ERC. She was a lawyer; she had no idea about the functions and how to run the ERC. Recently, whistle blower Benhur Luy said that Ducut was involved in the pork barrel scam where she acted as an intermediary between lawmakers and Janet-Lim Napoles. The inability of the Philippine public administration to be insulated from the collusion between state actors and rent-seeking oligarchs is what hinders development in the Philippines, contributing to the overall cycle of booty capitalism (Hutchcroft, 1998).

            Aside from reorganisation, decentralisation has been a mechanism adopted by governments all over the world to design a public administration that is not only more efficient but also more responsive (Brillantes, 2008). To further understand the concept, decentralisation could be operationalised in three ways: deconcentration, devolution and debureucratisation.

            Deconcentration is a form of decentralisation that limits lower levels of government to mere transmitting of orders and implementing decisions that are decided centrally. Devolution, on the other hand, is the most extensive form of decentralisation where powers and responsibilities are transferred from national government to local governments. These responsibilities and powers include the delivery of basic services and fiscal powers, respectively. Finally, debureaucratisation involves moving beyond government into co-opting the private sector and non-governmental organisations in the delivery of services.

In the Philippines, decentralisation culminated with the Local Government Code (LGC) of 1991, which provided for the most sweeping devolution of powers and responsibilities in the entire Philippine history. Devolution is based upon the principle of proximity; the local government unit (LGU) is the nearest to the people, therefore it is in the best position to serve them. One of the major features of the LGC is the increase responsibility for the delivery of various aspects of basic services such as in health, public works and education. Another is the responsibility of enforcement of certain regulatory powers such as the enforcement of environmental law. Financial resources and powers are also decentralised by broadening their taxing powers and an increased share from the national taxes through the institutionalisation of the Internal Revenue Allotment (IRA). Finally, the LGC of 1991 “increased the democratic space of civil society and embraced them in participating in local governance” (Brillantes, 2008), as evident in the increase in the number and participation of non-governmental organisations (NGOs) over the years.

However, despite the promises of decentralisation, a recent World Bank Public Expenditure Review (WB-PER) argues that “decentralization in the Philippines has not played an important role in reducing geographic disparities and instead may be exacerbating them” (World Bank, 2011). This is largely due to a number of problems the last 20 years of decentralisation have experienced—lack of fiscal capacity and autonomy of LGUs and misplaced and unaccountable spending

“If you ask any LGU in the Philippines if their funding is enough for their constituency, they would always say it is not enough—parating kulang. We need more money; we need more funds to serve our constituency much better,” Mayor Sherwin Gatchalian said in a 2012 forum on fiscal decentralisation. The weak fiscal capacity of LGUs has restricted them from performing the devolved responsibilities. This is largely due to an increased dependence on an IRA that is not, in the first place, equalising. Eighty nine percent of LGU financial resources come from the IRA whereas only 11% come from Non-IRA resources (Llanto, 2012). Although they are given extensive taxation powers to generate their own revenue, the poorest provinces simply do not have a large enough of a tax base. To further exacerbate the geographical inequality, on a per capita basis, more allotments go to LGUS with higher per capita local revenues (Guevera et al, 1994). Also, LGUs receive mandates from national government without a clear source for funding.  For example, the Magna Carta for Public Health Workers mandates LGUs to pay for subsistence allowance, laundry allowance, hazard pay, etc. without a legislated source of funding. IRA dependence and its non-equalising formulation have not only incapacitated the LGU, it has also compromised the LGU’s genuine autonomy.

An examination of the expenditure pattern of LGUs suggests misplaced priorities. From 2001 to 2008, expenditure on social services was on a steady incremental decrease from 26.1% to 20.3%; this is despite the general rise in population (Diokno, 2012). While expenditure on social services continued to fall, budget shares of general public services and other purposes, which can be considered as administrative overhead, rose from 40.5% to 44.1% and 12.4% to 17.2%. Further, local governments commonly charge payment of contractual workers to maintenance and other operating expenditure or against development projects, which are supposed to be charged as overhead (Llanto, 2012). Also, LGUs commonly supplement costs that are supposed to be funded by national government. In effect, spending for social services and capital goods are drowned out. The absence of a performance monitoring system of local service delivery makes it difficult to examine and oversee local service delivery (Diokno, 2012).

Finally, public administration in the Philippines is plagued by the perennial, pervasive and pathological issue of corruption. The misuse of public power for private profit hinders growth and development by deterring trade and investment and inefficient spending (Brillantes, 2008). National government agencies have always been at the centre of corruption scandals. Just recently, corruption in the Bureau of Customs even pushed Commissioner Rodolfo Biazon to call for its dissolution and eventually, his resignation. Anecdotal evidences point out to corruption in the Bureau of Internal Revenue and constant harassment of businessmen. Aside from national state actors, operating under the radar of accountability and commonly viewed through rose-coloured lenses are local politicians who often escape with corruption.

Consider the IRA, at one level, it is an inter-governmental transfer to further capacitate LGUs in local service delivery; at another level, chunks of the IRA are controlled with personal discretion by local politicians like governors, mayors, municipal mayors and barangay captains. Further, development decision making is not based on technical assessment but rather in constantly shifting power relations and electoral considerations (Hutchcroft, 2012). The IRA, being a source of patronage, places “money politics” above policies and programs. This effectively builds authoritarian-like structures in the locale and encourages warlord-like behaviour of local politicians. At the national level, this further de-incentivises the formation of ideology-based and programmatic political parties. To exacerbate the problem, the only institutional check on local politicians is mid-term elections. The lack of accountability mechanisms in both behaviour and expenditure has bred difficult problems in governance.

After discussing these issues and problems, it is imperative that the question posed by Brillantes at the beginning of his article be answered—is there a Philippine public administration? Or better still, for whom is Philippine public administration?

Resonating his initial answer, indeed, there is a Philippine public administration in terms of administrative structures and processes. National bureaucratic agencies like the aforementioned Bureau of Customs and Bureau of Internal Revenue have respective organisational features, functions and procedures as much as sub-national administrative arms like local government units possess their own. However, its mere existence matters less than for whom it actually exists—does Philippine public administration exist for the general public?

The situational examples that were previously given in this review provide empirical evidence to how many scholars brand the Philippine state as patrimonial (Hutchroft, 1998; McCoy, 1993). According to Paul Hurtchroft (1991), “the state apparatus is chocked continually by an anarchy of particularistic demands from, and particularistic actions on behalf of, those oligarchs and cronies who are currently most favoured by its top officials.” For modern capitalism to work and fulfil its promises of general prosperity, the bureaucracy must function along impersonal and rational lines of service and regulation. However, in the Philippines, oligarchic interests and rent-seeking behaviour totally captures the bureaucracy and manipulates it according to their purposes. Not only that, state actors, who commonly come from oligarchic families, also use the state apparatus to accumulate personal wealth at the expense of the general public. The most recent issue of alleged collusion between a local politician and contractors, who will receive 30% to 35% kickback, in the sub-par bunkhouses built for Yolanda victims can attest to such claims.  This co-optation between the social oligarchic elites and political state actors in capturing a highly weak and incoherent bureaucracy has created patterns of political continuity in what can be classified as a patrimonial, anti-development and predatory Philippine state.

Is there a Philippine public administration? Of course, there is. Better still, for whom is Philippine public administration? Unfortunately, it has and continues to exist for the powers that be.

Bibliography

Bibliography

Bello, Walden. "The Political Economy of Permanent Crisis." In The Anti-Development State: The Political Economy of Permanent Crisis in the Philippines, by Walden Bello. Pasig City: Anvil Publishing, Inc., 2009.

Brillantes, Alex B. Is there a Philippine Public Administration? Or Better Still, For Whom is Philippine Public Administration? Quezon City: University of the Philippines National College of Public Administration, 2008.

Commission, Philippine Civil Service. Inventory of Government Personnel Data. Quezozn City: Philippine Civil Service Commission, 2008.

David, Randolf. "Who will regulate the regulators?" Philippine Daily Inquirer, December 21, 2013.

Diokno, Benjamin. "Decentralization in the Philippines After 20 Years: What Have We Learned? Where do we go from here?" In The Philippine Review of Economics, by Ramon Clarete. Quezon City: University of the Philipines School of Economics, 2012.

Fukuyama, Francis. The Origins of Political Order. London: Profile Books LTD, 2011.

Hutchcroft, Paul. Booty Capitalism: the politics of banking in the Philippines. Quezon City: Ateneo de Manila University Press, 1998.

Hutchroft, Paul. "Re-slicing the pie of patronage: the politics of the internal revenue allotment in the Philippines, 1991-2010." In The Philippine Review of Economics, by Ramon Clarete. Quezon City: University of the Philippines School of Economics, 2012.

Llanto, Gilbert. "The assignment of functions and intergovernmental fiscal relations in the Philippines: 20 years after decentralization." In The Philippine Review of Economics, by Ramon Clarete. Quezon City: University of the Philippines School of Economics, 2012.

McCoy, Alfred. Anarchy of Families. Quezon City: Ateneo de Manila University Press, 1994.

The Local Government Code of the Phillippines. 1991.

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