Stuck in the Transition: The Filipino Family in Dominance

Structural functionalism is a broad perspective from the disciplines of sociology and anthropology that interprets society as a complex system that is beyond the human beings which comprise it. Its focal point of analysis are social structures and institutions within society, how they interact with each other and with individuals within the social system (Ritzer and Goodman, 2004). Tracing its origins, August Comte (1798-1857) introduced structural functionalism as a theory of society that emanates from biology. He finds the organism as a natural model for society; arguing that the way how an organism relates with its environment, how its parts interrelate within its overall system, and how it maintains balance is similar to the operation of a social system (Harper, 2011). Emile Durkheim, in his classic work Division of Labor (1893), expands structural functionalism in asking how exactly society is able to maintain a level of integration similar to those of organisms. He argues that through interdependency and interaction of individuals with more specialized roles, or mechanical solidarity, social ‘facts’ or institutions emerge which are beyond the individual and has a life on its own. For both theorists, the individual or human agency is downplayed as less deterministic and independent; individuals only act the roles or functions required of them by the social system.

Modern theorists develop a more sophisticated structural functionalist perspective. The German sociologist, Niklas Luhmann (1997), furthers the deconstruction of an anthropocentric view of society and argues that individuals are not integral parts of society; society is a system of communication. It is further divided into autopoeitic communicative spheres—the economy, politics, family, religion and etc.—that operate according to their respective functions based on their own medium and codes. Individuals do not so much act independently but rather participate in the function of a specific communicative sphere by using its medium (Moeller, 2006). That is, the individual merely traverses the different communicative spheres; he does not exist in himself, he exists as part of a social sphere.  The inter-relations of these communicative spheres make up the entire social system. Luhmann, however, emphasizes that in a highly modern society, no communicative sphere will dominate or be the overarching steerer of society unlike the dominance of religion and the family of traditional societies.

            The Philippines is caught in the transition between tradition and modernity. Such transitional societies are characterised by the dominance of a single sphere, invading other spheres and taking over their functions using its own terms. In the Philippines, the dominant institution is the family. Instead of functioning within its own terms of love, the family becomes a better vehicle for the functions of the economy and politics.

Businesses and capital in the country are often concentrated in the hands of a few families. Economic mobility and success then becomes divorced from economic merit; it becomes a function of familial relations and connections. As noted before, the cultural tradition of the extended family reinforces the dominance of the family in the economy. Big capital and businesses of families are further consolidated and strengthened through marriage or extended kinship. This is evident in the big business conglomerates and even in the small to medium industries in the country. The language of the economy is no longer that of merit and skill, but that of personal affection and preferences.

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In politics, instead of political parties, families become the main vehicle to access the state apparatus. Political power rotates around political dynasties, made larger in terms of network through marriage and extended kinship. As a consequence, policies are no longer made on the basis of the public good; but on the interests of these families. This is most evident in the issue of agrarian reform. The rational policy is to pursue agrarian reform; but because the sphere of politics is dominated by the family who are landlords, agrarian reform never materialized in the Philippines.

The consequences of the family dominating these spheres of society are tremendous. It concentrates power in the hands of the few, disregards merit for personal connections and preferences, and leaves the majority of the public in worse conditions. Unless the less personalistic mediums of spheres of the state and the economy, for example, become better articulators of their respective functions, the family will continue to be the dominant institution in Philippine society.

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Money or Spending? Why Increased Finances Do Not Lead to Better Social Outcomes

Public expenditures are powerful tools of government to stimulate, direct and most crucially, democratize development; ensuring that the least of society does not get left behind. When allocated properly, public expenditures provide for the poor what markets easily overlook, such as education, health and other social services (Keefer and Khemani 2003). In 1991, the 8^th Congress of the Philippines enacted the Local Government Code (LGC) that devolved significant powers and responsibilities to local government units, or LGUs (Atienza 2006). None of these powers and responsibilities were arguably more crucial than the increased autonomy in fiscal policy—both in the source of finances and decision making in public spending (Hutchcroft 2012). The logic being that as LGUs are both spatially and knowledgeably closer to the people, they are the most efficient and effective institutions of governance to ensure development reaches the grassroots (Asian Development Bank 2005).

            However, what if public expenditures are not spent prudently and are largely misplaced?  Indeed, in the Philippines, this has been the case. Increased finances and decision making powers provided by the LGC does not translate to any significant increase in social services spending, even when poverty and population continues to increase (Diokno 2012). The failure of LGUs to fulfill the promises of decentralization have real and terrible impacts on the people at the ground. Instead of ensuring equitable development, these failed institutions merely exacerbate the vicious cycle of poverty.

The study provides counterfactual evidence to the common hypothesis that increased local finances and autonomy in public expenditure decision making does lead to better social outcomes in the form of increased social services spending. Whereas previous studies merely analyze statistics through convenient comparison at face value, the study contributes by employing a regression analysis of collated data of 80 Philippine provinces from 2009-2013. It finds that social services spending is either unaffected, barely increased, or even decreased by an increase in the internal revenue allotment, local revenues, presence of civil society organisations, poverty and population when increases in all are expected to follow an increase social services spending (Capuno 2005; Diokno 2012; Llanto 2012; Yilmaz et al 2008). Ultimately, the study finds that it is the absence of effective social accountability mechanisms and failed institutional design that are largely unable to check patronage and corruption; which, in turn, incentives the bad spending behaviour of LGUs in the Philippines. Further studies might want to explore other proxies for accountability and develop the accuracy of the dataset.

Review of Related Literature

Local Government Finances—The IRA and Local Revenues

            The intergovernmental transfer system in the LGC of 1991 (Title III, Chapter One), the Internal Revenue Allotment (IRA), provided for significantly higher, predictable and automatically-released funds for LGUs (Diokno 2012). It increased the share of LGUs from 20% of all internal taxes to 40% and was now mandatory rather than under the discretion of the national executive. The amount of the allocation followed a formula; provinces and cities received a share of 23% each, municipalities received 34% while barangays received 20%. These were all formulated with respect to population (50% weight), land area (25%) and equal sharing (20%). The IRA remained to be the central transfer scheme, but local government units also received shares from national wealth derived within their respective areas and wider tax powers (Llanto 2012).  Yilmaz et al. (2008, p. 22) argues that “the design of intergovernmental transfer systems has implications for accountability because it affects the fiscal dependency on central government and local revenue-raising ability.” Indeed, the IRA, as the chief intergovernmental transfer system, has unexpectedly had negative outcomes and influences on LGUs’ behaviour.

            The higher, predictable and formula-based grant system has resulted in greater dependence of LGUs on the IRA. Instead of being stimulative or motivating LGUs to supplement the IRA with local revenues for a more complete fiscal capacity, the IRA has increasingly become a substitute for local revenue generation (Diokno 2012; Llanto 2012). According to the 2008 data of the Bureau of Local Government Finance, the IRA accounted for 78.5 percent of total revenues for municipalities, 43.3 percent for cities and 73.6 percent for provinces. As the IRA’s share in the total LGU income increased through the years, tax revenue and nontax revenue shares have decreased (Llanto, 2012). There are political and economic explanations for such a trend. Politically, it is only rational for local politicians to rely on the IRA instead of taxing his constituents which might breed unpopularity and have electoral consequences (Hutchroft, 2012). Economically, the dependence on IRA is a result of the absence of a tax base for local revenue generation in most LGUs (Medella, 2012).

            Aside from LGU dependence and lag in local revenue generation, the local fiscal capacity of LGUs is also lacking. As mentioned before, most LGUs simply do not have wide enough of a tax base to generate revenue. According to World Bank data in 1994, 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 (Llanto, 2012).

            Exacerbating the problem of their lack in resources, LGUs have also displayed patterns of spending that indicate misplaced priorities. According to data from the Bureau of Local Government Finance in Table 1, the percentage of general public services in the local budget rose from 40.5 percent in 2001 to 44.1 percent in 2008; this portion of the budget is used for general administrative expenses, which are often subverted for patronage uses (Hutchcroft 2012; Llanto 2012). The budget share of that under other purposes also increased from 12.4 in 2001 to 17.2 in 2008, suggesting an overall opaqueness to the budget process as contrary to transparency. Surprisingly, the budget share of social services fell from 26.2 percent in 2001 to 20.3 percent in 2008. Economic services also fell from 18.6 percent to 15.1 percent, in 2001 and 2008 respectively. According to former budget secretary and economist Benjamin Diokno (2012), “these expenditure categories are expected to grow with population growth. The fact that their budget shares fell in the face of rising population (and poverty incidence) suggests deterioration in the provision of social services at local levels.”

Decentralization and the Accountability Deficit

            The consequence of the failure fiscal decentralization to ensure both capacity and effective spending is the imbalance of development across and within regions. According to Capuno (2005), what is more critical to regional growth is not increased finances and devolved functions of LGUs but the prudent exercise of such powers and responsibilities. Decentralization reforms have often been introduced without consideration of the implications of accountability; it places emphasis on increasing discretionary powers of LGUs on the logic of efficiency and effectivity (Yilmaz et al. 2008). Indeed, in the Philippines, both scholars and government officials have took notice of the wide discretionary space local chief executives exercise, often misused, powers in. Secretary Jude Esguerra (2001) of the National Anti-Poverty Commission observe that mayors are “budget dictators” who holds the power of the purse over councilors. He further notes that coupled with high proportion of local spending in personnel, mayors utilize a spoils system where patronage is the basis of who he hires within the city hall, with complete disregard for civil service laws. Paul Hutchcroft (2012) notes that 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” (Hutchcroft 2012). Benjamin Diokno (2012) provides empirical evidence that LGUs spend more on patronage-rich and opaque items of the budget, which are general public services and other purposes respectively. Finally, Joseph Capuno (2005) argues that the low quality of governance, local public services and uneven regional development is because of the poor compliance of LGUs to local consultative bodies and other governance features of the LGC. Patronage, also, is largely expected and demanded of local chief executives. He argues, “where there is wide people’s participation and competent leadership, the levels and quality of local public services have been noted to improve” (Capuno 2005, p. 3).

            These different observations on the wide discretionary space of LGUs are paralleled with a diverse set of proposed solutions. The existing literature generally agrees that elections cannot be relied upon as effective mechanisms to sanction misbehaving local chief executives (Capuno 2005; Diokno 2012; Hutchcroft 2012; Keefer and Khemani 2003; Yilmaz et al. 2008). Keefer and Khemani (2003) particularly single out on the imperfections of the political market that disrupts the translation of popular preferences into government policy; particularly in the lack of information. They in turn advocate for more transparency, availability and the expanded reach of information to bridge this gap. Capuno (2005) argues that because existing electoral laws and procedures are weak in the Philippines, the participation of the people through civil society organizations are better able to exact welfare benefits and increase the quality of social services. Yilmaz el al. (2008) agrees with Capuno that because the internal control environment and internal audits are non-existent in the Philippines, accountability exacted from civil society organizations are the last and best line of defense against misbehaviour. In particular, the authors argue these citizen organizations must participate in both the budgeting and expenditure process. Finally, Hutchcroft (2012) dismisses the misplaced hope placed on local reform strategies. He argues that the pervasive patronage structure in the Philippines operates throughout local-national dynamics that any hope of change should be directed at changing the institutional design of elections to be more proportional to successfully curb patronage in the country.

       
     The paper takes off from the ideas and observations made by these scholars and attempts to empirically and quantitatively test the validity of their arguments. Because the existing literature is largely in narratives and small-n cases, they necessarily sacrifice accuracy for depth. The value of this study lies in its ability to provide more comprehensive and accurate evidence to fill the gap of existing qualitative studies. By providing a statistical and large-n evidence, the study lays a stronger foundation for the existing hypothesis and proposed solutions.

Methodology and Operational Definitions

            Using a Philippine provincial level dataset recorded across the years 2009-2013, the study employs a panel-data estimation technique. We assume that the dependent variable Y, which indicates social services spending is linked to the amount of internal revenue allotment and a host of other possibly explanatory variables as follows:

            The model is in a log-level functional form as it is best able to capture the findings of the research in interpretation and generates the highest explanatory value. The absence of any interaction of variables and quadratic variables are consistent with both theory, empirical observations, tests against different models (See Table 2).

            The dependent variable of social services spending is used as a metric for social outcomes and welfare. Public expenditure on social services have the most direct impact on the welfare of the poor as they provide a steady and reliable stream of goods that are directly consumed, protecting the poor from adverse market effects (Snyder and Yackovlev 2000).

            The independent variable of the IRA is used as both a metric for LGU finances and patronage, representing the lack of accountability in public finances. Hutchcroft (2012, 113) argues that “for all the celebrated talk of promoting local autonomy and instituting fiscal decentralization, the IRA is also very much a story about the enhanced access of local politicians to patronage resources.” The hypothesis is that an increase in finances, in the form of the IRA, translates to more social services spending, but only to a marginal level as it is still largely misused for patronage purposes.

            The other independent variable of local revenues is used both as a metric for LGU finances and degree of autonomy. Whereas the LGC of 1991 provides LGUs with a more expansive power of taxation and collection of other fees to generate revenue, the share of local revenue from the total revenues of LGUs have been on a decline (Diokno 2012; Llanto 2012). This suggests that far from the goal of autonomy, LGUs are still largely dependent on national government for its resources. The hypothesis is that an increase in finances, in the form of local revenues, increases social services spending but less than the increasing effect of the IRA. This hypothesis reflects the small share of local revenues on total revenues and the dependency on the IRA.

            Another independent variable are civil society organizations, used as a metric for accountability. Different scholars have noted of the failure of formal legal-institutional accountability mechanisms and look to societal accountability as alternatives to check on government (Arugay 2005; Capuno 2005; Yilmaz et al. 2008). More than legal-institutional mechanisms, the role of civil society organizations as watchdogs are more political in nature and thus, a variable to the equation. The hypothesis is that an increase in the number of civil society organizations translates to more social services spending as LGUs are checked to spend more prudently.

            The final two independent variables are poverty, as measured by poverty incidence or the number of households under the poverty line, and population. It is well established that the logic of public expenditures, on social services most especially, is to provide for the poor what markets fail to (Keefer and Khemani 2003; Snyder and Yackovlev 2000). It is therefore expected that as poverty incidence increases, there ought to be more social services spending. Also, population growth is support to coincide with increased spending on social services for the quality to not degrade (Diokno 2012).

 Data

To find the effect of the IRA on social services spending, the study employs a collated a provincial-level dataset obtained from the Bureau of Local Government Finance, Local Government Academy, Caucus of Development NGO Networks (CODE-NGO), and the National Coordinating Statistical Board. Specifically, the dataset constitutes a panel of 80 provinces from 2009 to 2013. However, data for the variables poverty and population are taken from the years 2011 and 2010, respectively, as these years are the latest of censuses that are conducted in intervals and are assumed to be constant. The data for NGOs from 2011 are also assumed to be constant due to the difficulty of obtaining yearly data. The list of provinces excludes Dinagat Islands due to the absence of significant data throughout the period covered. Table 2 shows the descriptive statistics of the regression variables used.

         
   The variables of social services spending, IRA, and local revenues were made uniform to be measured in millions. The variables of NGO and population are to be taken as nominal. Finally, the variable of poverty is to be taken in percentages. Under the minimum columns of social services, NGO and poverty, there are noticeable zeroes. First, Sulu in 2011 lacked official data on social services spending. Second, there were unavailability of NGO data in the provinces of Basilan, Sulu and Tawi-Tawi. Finally, Batanes posted zero percent poverty incidence in the year 2011.

Results

            Table 3 presents the regression table of the effect of the IRA and other important control variables on social services spending. The estimates clearly suggest evidence in favour of the first hypothesis. It shows for every one million peso increase in IRA, social services spending increases by only 0.0182% or 182 pesos. The very minimal increase of social services spending confirm that a large chunk of the IRA is spent on other items. Further data from Diokno (2012) in Table 1 provide evidence for another assertion of the first hypothesis, that large parts of the IRA and LGU finances in general are misused for patronage and not transparent purposes.

            The second hypothesis, however, must be completely rejected. The regression results show that local revenues have no statistically significant effect in terms of increasing spending on social services. But instead of completely disposing of the logic of the hypothesis, the results merely validates the argument on a higher level. Whereas the hypothesis expected a positive but less effect than the IRA to signify dependence, the insignificance of the variable strengthens the assertion that LGUs are extremely dependent on the IRA in terms of financing. The evidence shows that the goal of the LGC of 1991 to provide LGUs “genuine and meaningful local autonomy” has failed.

             The results on NGOs is an interesting case. Whereas most if not all literature argue that increased people’s participation in the form of NGOs increases both the level and quality of social services (Bräutigam 2004; Capuno 2005; Krafchik 1996; Yilmaz et al. 2008), the estimation shows otherwise: for every increase in the number of NGOs, social services spending decreases by 1.23% or 12, 300 pesos. It is important to note that the literatures noted above were qualitative studies that did not employ statistical analysis, thus may explain the difference in outcomes. It is also possible that the dataset employed in this study is inaccurate as it is but the number of surveyed NGOs for the profiling purposes of the Local Government Academy and may not reflect the actual number of NGOs in the province. These considerations aside, the negative effect of NGOs on social services can be explained through a pluralist model of democracy. NGOs can be likened to interest groups that pressure the state for different policies and allocation preferences. It is important to understand that NGOs do not have common agendas and may be interested in allocations outside of social services spending. NGOs, therefore, may be rechanneling public expenditure away from social services and into their respective preferences.

Conclusion

Governments are powerful actors with the necessary tools in public expenditures to combat market failures that often hit the poor the hardest. The Local Government Code of 1991 sought to make public expenditures more efficient and effective by providing local government units with extensive autonomous powers and capacities. The logic being that as LGUs are both knowledgeably and spatially closer to the people, they are most effective in not only achieving development but more importantly, an equitable one. To achieve this, public expenditures made by LGUs must be based on the standpoint of what is optimal for development. The empirical evidence, however, points otherwise.

 The significant increase in resources provided by the IRA does not translate to significant increases in social services spending, even when the average poverty incidence in all provinces is at 26 percent. The same logic follows as poverty and population are deemed to be statistically insignificant in determining the level of social services spending. Further, local revenues, made higher by the IRA’s provision of more expansive taxing powers, is also statistically insignificant, suggesting that LGUs are still largely dependent on national government for resources. Finally, the decreasing effect of NGOs suggests that government may be privileging certain interests at the expense of development. NGOs, in effect, are failed experiments of social accountability.

To further the research, scholars may seek to include other variables for both internal and social mechanisms of accountability. A more accurate dataset on NGOs is also warranted and may change the outcome of this study.

Despite all considerations, the evidence leads the study to conclude that the current project of decentralization in the Philippines has failed. Despite the significant transfer of resources, responsibilities and powers to LGUs, the absence of effective accountability mechanisms allow local chief executives to exercise powers imprudently and thus fail to ensure both economic and human development. Codified rules and legislated frameworks rarely literally translate as intended into the social reality. For this reason, Book IV, Title II, Section 521 of the Local Government Code provides a mandatory review of the code every five years. Two decades and three administrations have passed yet no comprehensive review and amendments have been made on the LGC of 1991. Fortunately, a $250-million loan initiated 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 technical 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.

Policy makers must be careful not to focus too much on the economic and technical issues 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 decentralization framework genuinely achieve its purpose.

References

Arugay, Aries. 2005. "Accountability Deficit in the Philippines: Implications and Prospects for Democratic Consolidation." Philippine Political Science Journal 44 (9) 63-88.

Asian Development Bank. 2005. Country Governance Assesment: Philippines. Manila: Asian Development Bank.

—. 2007. Overview of NGOs and Civil Society: Philippines. Manila: Asian Development Bank.

Atienza, Maria Ela L. 2006. "Local Governments and Devolution in the Philippines." In Philippine Politics and Governance: An Introduction, by Noel Morada and Teresa Encarnacion Tadem, 414-440. Quezon City : University of the Philippines Press.

Bräutigam, Deborah. 2004. The People’s Budget? Politics, Participation and Pro-poor Policy. New York: The United Nations.

Bureau of Local Government Finance. 2001-2009. Statement of Receipts and Expenditures. Quezon City: Bureau of Local Government Finance.

Capuno, Joseph. 2005. The quality of local governance and development under decentralization in the Philippines . Quezon City: University of the Philippines School of Economics.

Diokno, Benjamin E. 2012. "Fiscal decentralization after 20 years: What have we learned? Where do we go from here?" In The Philippine Review of Economics, by Ramon L. Clarete, 9-26. Quezon City: University of the Philippines School of Economics.

Hutchroft, Paul D. 2012. "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 L. Clarete, 109-135. Quezon City: University of the Philippines School of Economics.

Hutchroft, Paul. 2010. "Dreams of redemption: Localist strategies of Reform in the Philippines." In Politics of Change, by Nathan Gilbert Quimpo Yuko Kasuya, 418-454. Pasig: Anvil Publishing, Inc.

Keefer, Philip, and Stuti Khemani. 2003. Democracy, Public Expenditures and the Poor. Washington: The World Bank.

Krafchik, Warren. 2005. Can civil society add value to budget decision-making? A description of civil society budget work. New York: International Budget Project.

Llanto, Gilbert M. 2012. "The assignment of functions and intergovernmental fiscal relations in the Philippines: 20 years after decentralization." In The Philippine Review of Economics, by Ramon L. Clarete, 37-81. Quezon City: University of the Philippines School of Economics.

Monsod, Toby Melissa C., and Emmanuel S. de Dios. 2013. "Scrap pork, empower provinces." Philippine Daily Inquirer, 8 September.

National Statistics Coordination Board. 2012. Annual Per Capita Poverty Threshold, Poverty Incidence and Magnitude of Poor Families, by Region and Province: 1991, 2006, 2009 and 2012. National Statistics Coordination Board.

Snyder, James, and Irene Yackovlev. 2002. Political and Economic Determinants of Government Spending on Social Protection Programs. Cambridge: Massachusets Institute of Technology.

The 8th Congress of the Philippines. 1991. The Local Government Code. Metro Manila: The Republic of the Philippines.

The Lewin Group. 2004. Spending on Social Welfare in Rich and Poor States. Washington: United States Department of Health.

Tidemand, Per. 2010. Political Economy and Governance Analyses of Decentralisation. Denmark: Ministry of Foreign Affairs.

Yilmaz, Serdar, Yakup Beris, and Rodrigo Serrano-Berthet. 2008. Local Government Discretion and Accountability: A Diagnostic Framework for Local Governance. Washington: The World Bank.

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Mamasapano and the State of Our Democracy

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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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