Why are the Monsods so anti-Constitutional Reform?

monsodscrazy

Winnie Monsod was being preposterous when she chided those individuals who rejected posts in Duterte’s cabinet because of the paltry pay.

To paraphrase her, she said that they should not even be thinking about their salaries because it’s a great time to participate in the country’s strong economic growth.

Which probably means, Monsod is an out-of-touch romantic, or worse, a scholar who has lost all credibility by engaging in motherhood statements and vacuous platitudes rather than sober arguments supported by a solid framework of data as befitting an economist of her renown.

It’s no different from saying that OFWs should not have just sought their fortunes abroad and just meekly accepted measly salaries which can barely support their families because doing so would be “unpatriotic.”

This attitude is unfortunately prevalent among Filipinos whether highly educated or ignorant, where emotional arguments prevail over pragmatic and realistic ones. Given the broken and ubernationalistic educational system that we have, it’s natural for many uninformed Filipinos to spout garbage such as “protectionism protects Filipino enterprises but only temporarily so they can compete later” or that “without 60/40 our country will be bought by foreigners” or “the Philippines belong only to Filipinos” when prodded about this topic.

Compare that to what practical Singapore did when it pegged its ministers and bureaucrats’ salaries to the private sector’s rates to ensure that the best minds would join the Singaporean government (and unsurprisingly SG’s government tops almost all international metrics). More importantly, Singapore has had zero qualms at all in allowing FDIs to arrive in the tiny island country in droves because it wanted jobs for its people.

This poor reasoning probably also accounts for her and her spouse’s excuses not to support lifting the protectionist restrictions in the 1987 Constitution, citing among many things that Japan and South Korea didn’t need FDIs (while ignoring that these countries are special cases, or how FDIs transformed Hong Kong and Singapore, or how British investments laid the ground for later American economic dominance) and that human capital, lack of infrastructure, transparency, a good regulatory framework, etc., are more important. [1]

No one’s arguing against these factors, but opening barriers on FDIs will actually give more incentives for government to address these issues since it will be pressured by foreign investors who will be trying to come in once these restrictions are gone.

Foreign investors themselves are saying that the main problem of the Philippines in attracting investments lies with the protectionist clauses in the Constitution. Sir Richard Branson, the multibillionaire founder of the Virgin group of companies, has said that the Philippines must open up so more investors can come, and that protectionism does not benefit consumers but only the businesses insulated from competition. [2]

And what’s even more curious is that many of the Monsods’ colleagues in the UP Department of Economics do not agree with their conclusions. Gerardo Sicat, another UP economist and former head of NEDA, argues rightly that foreign restrictions have to go, while not forgetting to mention that infrastructure (among other things) has to be improved as well. [3]

But some of the excuses from Christian Monsod are: FDIs help, but not too much, or many industries are virtually allowed anyway, or that quality of the investment, not quantity, must be the focus.

Now, even if these conditions were true, then why oppose the proposed lifting of the restrictions anyway? Why do a lot of foreign investors specifically state that the ownership caps dissuaded them from setting up shop in the country? And most importantly, why not allow foreign businesses to come here with full ownership of their interests, and let the jungle rule of competition weed out the bad from the good?

Is this even an argument coming from an economist? This is basic economics! There is no need for an intellectual of equal or greater caliber like Prof. Sicat to elucidate the obvious! Now this is what you call “palusot”!

And what about quality? How would it be measured? Heck, even LKY proudly stated that he and his team warmly welcomed a mothball factory to be built in Singapore!

[1] Charter Change: the 2014 Version

[2] Virgin Group’s Branson says Philippines should relax foreign ownership caps

[3] Foreign ownership limits hinder Philippine growth potential

* * *

About the Author

louis gerardLouis Gerard Del Rosario is an avid reader. He is also an active Constitutional Reform advocate within the CoRRECT™ Movement, becoming even more active after a pro-Constitutional Reform candidate won in the recent election. (This article started off as a status update on FB.)

He studied literature at the University of Santo Tomas.

What if we were Parliamentary back in 2009?

Thousands watch the cortege of former President Cory Aquino along Sucat road in Paranaque City.   MANNY MARCELO/PHOTO

Thousands watch the cortege of former President Cory Aquino along Sucat road in Parañaque City. MANNY MARCELO/PHOTO

An insightful CoRRECTor, Louis Gerard del Rosario wrote a very good status update:

Yes, a parliamentary system is a hard sell to many Filipinos, because it does not allow direct election of the head of government (the prime minister or PM).

But I think there is a space for the Filipinos’ insistence of a directly elected chief executive in a future parliamentary system by allowing direct elections for a ceremonial president, who would simply become the head of state (in the current system, the president is both head of state and government). This way, even if the Filipino obsession with personalities was not suppressed immediately, it would instead be diverted into another purpose, and thus, far from being a liability for its caprice, would become a positive contribution to political stability.

To understand the merits of this suggestion, look at this hypothetical reimagining of the 2010 elections, which takes place in a unicameral parliamentary Philippines:

It is 2009, GMA is the PM and will lead her party, Lakas, in elections next year. The LP under Mar Roxas will contest the elections, hoping to beat Lakas, which is unpopular, and form the next government. Presidential elections are also scheduled next year for the next ceremonial leader of the country. (Note: parliamentary republics often separate their presidential elections from the parliamentary ones, so the former would not distract voters from the latter. This scenario is simply for the purpose of argument.)

Cory Aquino dies, a much respected icon of democracy and freedom. A strong movement formed by multiple sectors begins to convince Noynoy Aquino to run for president. Aquino, being a member of LP, has to sever his ties from the party to qualify for the presidency, as presidents are expected to be impartial and transcend politics. The LP unofficially and quietly supports their former party member.

Noynoy wins the 2010 presidency, while Mar Roxas who remains the leader of the LP wins the elections for his party, and later forms the government as the PM. GMA resigns the Lakas leadership.

A closer analysis of this hypothetical scenario reveals that it’s basically a win-win situation for everyone:

1. Filipinos would be able to express their People Power nostalgia and personality worship by voting for Noynoy in a non-political position.

2. Noynoy, being above politics and not really expected to govern the country, would never have the chance to be incompetent and divisive. More importantly, the Aquino reputation that he embodied would not be tainted and thus not become a cause for division and alienation among Filipinos. This also means that the majority would not rethink Martial Law.

3. Mar Roxas would remain the leader of the LP and have the chance to lead the Philippines as PM. He would not need to sacrifice his political ambitions for the sake of nostalgia, because that sentiment was channeled in the presidential elections instead.

4. Everything ceteris paribus, that would mean less chance of things such as the HK Tourist Bus hostage tragedy happening.

5. GMA, an unpopular leader, would be peacefully removed from power. Since the same happened in actual history anyway, the importance of this point is appreciated in the years before the election, when there would have been hardly any calls for a revolution or an impeachment (impossible), because she could have easily been removed either through a no confidence motion in parliament or a coup by her own party.

From our assessment of how things may have turned out, who knows, maybe under a Parliamentary System, former President Gloria Macapagal-Arroyo might not have been as villified and demonized the same way she was had she been a Prime Minister, because ultimately, in a Parliamentary System, most of the focus would have been on her Government’s policies, programs, and her party’s platforms, not on her person.

If we are to actually look at it objectively, many of the legislators who joined the Liberal Party to cause it to have its majority were actually originally members of GMA’s Lakas-CMD-Kampi party/coalition bloc. Under a Parliamentary System, they wouldn’t have jumped over to the LP and it may very well have meant that GMA might have actually remained on as Prime Minister and wouldn’t have been unfairly villified. Mar might have become the Leader of the Opposition, and had Noynoy won as ceremonial figurehead president as a result of Tita Cory’s death in 2009, Noynoy wouldn’t have been able to wrongly influence or block all kinds of other reforms that we so desperately need to put in place. There wouldn’t have also been a PDAF or such a scandal in the first place.

Things would have really turned out differently.

A Head of State and A Head of Government

Why Both Roles Should Be Separate, Especially in the Philippine Setting

2000px-Seal_of_the_President_of_the_Philippines.svg

I am no political scientist and I don’t claim to be one now in writing this. I am writing this based on my understanding of governance in the global and Philippine setting. An understanding that some may consider naive, to which I would not protest. Nevertheless, I felt the urge to write this in light of the recent and upcoming events in the country to express some thoughts that have been brewing in my mind for a long while trying to find a venue to express them. (thank you Medium!) I hope you get to find a few nuggets of wisdom or ideas in this piece, even though I’m no political pundit.

First of all, for a long while I have always believed in the superiority of the American style of government. Maybe it’s the influence of America that is embedded in the consciousness of many Filipinos such as myself. After all, the Philippines was a US colony once. But I guess it can also be out this naive thinking that the American style of governance is simple and effective, especially the concept of having one person in charge, the president, representing the people as head of state and overseeing all aspects of running the country as head of government.

Photo of the 2013 inaugural of US President Barack Obama, a spectacle of the prestige and glamor of the US Presidency (photo courtesy of Reuters/Scott Andrews via Latitude)

Certainly, the American style of governance has its merits and it works in some cases, at least at this moment. In the Philippine setting though, that style of governance is no longer working for us. Some may blame it on the people elected to be president becoming “ineffective” for one reason or another. Others may blame it on the electorate for being “dumb” in their voting. While there may be a justification on laying blame on the two, I believe the greater blame lies deep within.

To figure out the root cause, we have to go back to the basic definition of the roles of head of state and head of government. The head of state’s role is defined as being the chief representative of the state and the people of the state. As such, the head of state is considered as a unifying figure, not identified with any political affiliation whatsoever.

Then, there is the head of government, whose role is defined as being the country’s chief executive who executes laws and formulates policies for the state’s well-being. At times, these laws and policies are subject to opposition. Factoring as well the fact that the head of government position is more political in nature, the head tends to be a divisive figure, especially among those who oppose his/her policies or his/her political affiliation, though by default the opposition tends to be in the minority.

I suppose you can see what will go wrong if you have a head of state and head of government in one person. Once a controversial issue pops up, the unifying figure becomes a divisive one in an instant, adding another level of instability to the state already rocked by that controversy in the first place.

Sadly, this scenario is something we are all too familiar with for years now. What’s even sadder is that many do not recognize this scenario as an effect of the screwed up system that we have right now, taking for granted the distinct roles of the head of state and head of government in the country’s dynamic.

This dynamic factors in more during elections. Whether we realize it or not, our choices for president are factored by a mentality defined by a “head of state mentality” is or a “head of government mentality.” Some would vote a person for president because he/she is “our country’s hope” and “advocate our welfare” which is a head of state mentality. Others may vote for a president based on a belief that the person gets the job done, which is more of a head of government mentality. Don’t get me wrong, both mentalities are valid. But the idea of someone being voted for being seen as either a unifying or a potentially divisive figure in a position that expects him/her to play both roles is a potent, volatile mix that tends to screw things in our country’s dynamic.

Philippine President Corazon Aquino, who served as both head of state and government, with not so impressive results (photo courtesy of Philippine Pride)

Our history has examples of leaders whose leadership fell in either head of state or head of government type and the shortcomings they had that are brought about by having to play both parts. Corazon Aquino is a notable example of someone who fit more in the head of state role as she was elected by a popular sentiment against a dictatorship that long ruled the country. But once she did her role as head of government, she alienated many people who once supported her. Her playing the role as a head of government diminished her importance as a unifying figure in those times, triggering effects that are still being felt today.

Understanding the difference between being a head of state and head of government would make us better see the roles our leaders or those vying to be leaders would fit in. Controversies aside, it can be argued that the type of leadership displayed by former President Joseph Estrada and our current President Noynoy Aquino falling into “head of state” category while the likes of former presidents Fidel Ramos and Gloria Arroyo fall in the “head of government” category. Looking at the possible candidates for the 2016 elections, I can see Grace Poe fitting the bill of “head of state” while Jejomar Binay, Rodrigo Duterte, and Mar Roxas fall into the “head of government” type. Again, all issues and controversies surrounding these people aside.

Other countries have the roles of head of state and head of government kept separate like in the United Kingdom, Japan, Israel, India, and Singapore. While their governments have their imperfections, there is a sense of stability in them not found in ours. That stability lies in their heads of state, be it a monarch who came into power through lineage (as in the case of UK and Japan) or a president elected by the people. (as it is in Israel, India, and Singapore) If you look at these heads of state, you will realize they are not affiliated with any political party and remain largely apolitical, not intervening in the day to day affairs of the government.

Queen Elizabeth II, the head of state of the United Kingdom and David Cameron, the head of government of the United Kingdom (photo courtesy of The Mirror)

Weird as it may be to some, it makes a lot of sense once we understand the dynamics of being a head of state. As I mentioned earlier, the head of state represents the state and the people of the state. As such, he/she should be a figure of unity and stability to portray an image of stability of the state to others, especially outside the state. In contrast, the head of government tends to sow some level of divisiveness, and that is a given in the nature of the role he/she performs in implementing laws and policies. If both roles are performed by one person, there is no image of stability to portray, and others would cast doubt on the state in the process.

The wisdom in having the roles of head of state and head of government is that it creates a sort of balance in governance of the state. True, the role of head of state is largely ceremonial in nature, but it serves as a yin to balance the dynamic yang that the role of the head of government brings, providing a clear and better separation of functions and a sense of harmony and stability in the state being portrayed. More importantly, we get to have better leaders who would be able to discern their leadership being fit for either head of state or head of government, no longer burdened by the baggage of having to do both functions that might possibly jeopardize the state’s stability in the process.

It does not hurt that at this point in time to perhaps reconsider the type of governance that we have. Our country’s stability and future is at stake and if the current system does not work for us, it does not hurt for us to ask for something else, something better hopefully so we can have a better Philippines that we deserve.

***

About the Author

Karl Aguilar - about the author photo

Karl Aguilar is a self-confessed urban roamer, freelancing as a writer and photographer, who has once participated in a national game show and dabbles into heady stuff from time to time.

He has a blog that deals with the sights, sounds, and stories of the urban landscape, Metro Manila in particular, called, of course, The Urban Roamer, which you can check out at www.theurbanroamer.com.

No Parliamentary System, No LKY & No Mahathir

LKYMahathir

This old article from 27 April 2006 by Alex Magno emphasizes that Mahathir bin Mohamad of Malaysia and the late Lee Kuan Yew of Singapore could only emerge from the electoral mechanisms of a Parliamentary System and succeed in transforming their respective countries into the economic powerhouses that both are within the world (Singapore) and within the region (Malaysia) because of the operational features and improved efficiency of said system. Under the Philippine Presidential System the two giants would either never have won – due to their straight-talking abrasively honest style of speaking which would not allow them to win in the popularity-centric system of the Presidential System – or had they won, they would not have succeeded in transforming their societies for the better.

No wonder the Philippines continues to be such a “hopeless” basketcase. We have a system that does not allow such intellectual giants and tireless reformers such as Mahathir bin Mohamad of Malaysia as well as the late Lee Kuan Yew of Singapore to win. Ours is a flawed system that easily allows famous actors, celebrities, and sons-and-daughters of famous people who are not chosen based on competence to win. Had Malaysia and Singapore had the exact same flawed, problematic, and fouled up presidential system that the Philippines currently has, quite obviously, both societies would have ended up becoming miserably pathetic failures just like the Philippines.

****

Scrutiny

by Alex Magno

Our neighbors in the region are closely scrutinizing the crazy twists and turns of our politics – sometimes with awe and not always with admiration.

We sometimes forget we live in a fishbowl, with all the world watching the odd things we do. The most parochial among us think we have the sea to ourselves, a sea whose murky waters escape the scrutiny of our friends.

One keen observer of the sometimes bizarre conduct of our national affairs is former Malaysian prime minister Mahathir Mohamad.

Although retired from government, Mahathir keeps tabs with unfolding events in the region. Revered by his countrymen for the great economic achievements of his period of rule, he keeps office at the penthouse of the Petronas Towers, the highest edifice in the region and probably the world. From there, he observes his bustling capital and contemplates regional developments.

Last week, House Speaker Jose de Venecia called on Mahathir in the course of a five-day visit to Malaysia, swinging across from Kuala Lumpur, Sarawak and Sabah. The visit was primarily intended to conduct consultations with Malaysian foreign minister Syed Hamid Albar on the future of the envisioned ASEAN Community and on de Venecia’s proposal to create an ASEAN Parliamentary Council.

Always forthright in his views, Mahathir was not shy about his opinions on the Philippines, even as he qualified those views with a polite disclaimer about non-interference in our internal affairs.

He bluntly told de Venecia that the “Filipino people need a break.”

In the context of their conversation, that “break” is understood as a respite from the hyper-politicking that has plagued our country of late. That hyper-politicking has gotten in the way of our efforts to improve our economy, raise productivity and build a better future for our people.

Hyper-politicking has produced gridlock, endless bickering and neglect of urgent policy actions. It has undermined investor confidence in our economy and prevented willful leadership from being exercised – the same sort of leadership that Mahathir himself deployed in bringing Malaysia up from backwater economy status to that of an “Asian tiger.”

Mahathir agreed with de Venecia that a parliamentary system of government could work better in the Philippines because it ensures “continuity in policy and the faster pace of approvals of development programs.”

A major factor explaining Malaysia’s success story under Mahathir’s leadership is a responsive government enabled by the fusion of legislative and executive powers in a parliamentary system of government. The dominant role played by the major party UMNO ensured continuity of policy perspectives independent of the fates of individual power-wielders.

When Mahathir retired from politics, there was no uncertainty about the policy architecture that brought Malaysia to tiger-economy status. That policy architecture is not a personal legacy of Mahathir. It is the fighting faith of his party, UMNO, which continues to command the support of the Malaysian people.

If Malaysia had a presidential system of government, Mahathir might have never become its leader. Tough-talking, brutally frank and often abrasive, this man could not win a popularity contest.

Even if, hypothetically, Mahathir was elected president of a Malaysia under a presidential system, the man might not have accomplished what he did in a parliamentary setting. The legislature would have obstructed his most dramatic innovations. His team might have spent precious time and energy attending endless congressional investigations. Other aspirants to the top-post might have constantly conspired to cause his failure or smear him in the public eye as a means to undercut his base of public support.

The phenomenon of a Mahathir and/or a Lee Kuan Yew, for that matter, would be difficult to imagine outside the framework of a parliamentary system of government. That system of government encouraged the full development of political parties that, in turn, built public support for innovative policies. The parliamentary form, along with the strong party system it fosters, ensure the cultivation of an ample supply of prospective leaders ready to take over and provide a consistent and reliable quality of leadership.

After all, the emergence of strong nations and strong economies is a process that requires generations of leaders. It is a process that takes longer than a single political lifetime.

It is, likewise, a process that requires the reliable institutionalization of political commitment to a strategy for progress. A national project of achieving a modern economy is, after all, a task that is too large even for the greatest of leaders to undertake singularly. It is a task that requires the sustained effort that only a committed party can ensure.

Without diminishing the personal qualities of great Asian leaders such as Mahathir or Lee Kuan Yew, it remains that their feats of statesmanship could not have been done without the strong network that only a stable political party could provide. The parliamentary form of government ensures superior conditions for evolving that stable network.

When Lee Kuan Yew, and later, Mahathir Mohamad, reached the point when it was best to withdraw from their leadership roles, the transition was never traumatic. The process was never uncertain. The continuity of the policy architecture was never in doubt.

When Mahathir endorses the parliamentary form for us, he is not offering an opinion from the ivory tower. He is speaking from the vantage point of a successful leadership episode. He is speaking with the richness of experience of what this form of government has made possible for him to accomplish despite the adversities his people had to face.

Great leaders do not fall from the heavens and perform overnight miracles of national development without a stable governmental platform.

At the risk of sounding tautological: great leaders can only emerge from political and institutional conditions that make great leadership possible. The most important characteristic of those conditions is that they do not rely on the mysticism of leadership and do not fall prey to the destructive tide of personal ambitions as well as personal jealousies – both of which are in abundance in our politics today.”

Foreigner: Pinoy Inability to Improve is due to Escapism

dysfunctional philippines
*This was taken from a status update of a foreigner. Names withheld and disguised to protect their privacy.

So, tonight after some grocery shopping, my personal assistant named Pilar asked me if I could stop by Cebuana for her so she could send money home for her brother’s wedding. This is to buy some Lechon as her contribution to the wedding.

After parking my car and paying the “Man with the whistle” (some random guy who has staked out a public parking area with a whistle, who demands you pay him 20 pesos to park or he will damage your car), running the gauntlet of baklas, hookers and lady boys on the corner, and then crossing the street whilst being accosted by beggars and street kids (mostly abandoned orphans working for syndicates), and having pushy street vendors try to sell me Chinese Viagra and cigarettes, along with their sisters, I started to think that there is something, very, very wrong with Philippine Culture.

If people have no money to get married, why are they getting married? If people have no money to support themselves, why have children they can’t afford to feed? If there are no jobs for so many people, why put up road blocks to foreign investment? Why block investment if it means better lives and opportunities for the citizens of this country? I cannot understand Filipino Nationalism when all it does is protect the ultra wealthy and promote this sort of tragic human theater of the absurd…. to take things to the extreme, today is “Ash Wednesday” and when you see hookers with the mark of the cross, written in ash on their foreheads, whilst selling their bodies on the streets…it says something about how far off the rails this place has gone. Most of these girls are single mothers, with a host of parasitic relatives feeding off their illicit toils.

The Government and its many bureaucratic arms are simply a huge tribe of inefficient trolls, finding ways to charge the poor downtrodden Filipino needless clearance “fees” for services they don’t need. When a religious procession for a black block of wood, wearing a dress, can drag hundreds of thousands of “devotees” into the streets in a frenzy of religious rapture, but a march organized to protest the theft of tens of Billions of Pesos by Congressmen and Senators can barely raise the interests of more than a few thousand, there is something very, very wrong with the priorities of the average Filipino. Has the Oligarchy, the Church and the Political Elite managed to make the Filipino so accepting of their lot in life that they simply cannot reason anymore, are they so used to the abnormal being normal that they have become completely apathetic and indifferent to the pathetic situation they find themselves in?

Like Martin Luther King Jr., I have a dream….but…since I’m not a Filipino…it doesn’t really matter what I dream of, or hope, for the Philippines. What matters is what the Filipino dreams about his/her own country, and what action he or she takes to fix the situation. The Civil Rights Movement in the US was a watershed event for that nation, as was the EDSA 1 “People Power” Revolution here. The oppressed rose up to say “enough is enough”, unfortunately, I don’t see that happening here again.

What I see is indifference, tolerance and acceptance by the oppressed, who, it would appear, are far more interested in watching telenovelas and Vice Ganda on “Showtime”, than marching in the streets to demand accountability. It seems the Philippines and the poor Filipino, is destined to spend eternity lurching from one crisis to the next, being led by one useless administration after another. What a tragedy… a horrible tragedy… and most of them are such nice people too…


Editor’s note:

This “indifference, tolerance, acceptance by the oppressed” (words of the foreigner) and by those who are in a position to change things is a result of the Filipino tendency towards Escapism. Like the kid in the photo (Source: Paula Bronstein/Getty Images AsiaPac) who is sniffing glue with nail polish in a plastic bag in order to forget his troubles, Filipinos are generally predisposed to “sweep problems under the rug” and pretend they do not exist. Underneath the positive stereotype that “Filipinos are a happy people” is the ugly and painful Truth that Filipinos are an Escapist People who pretend that their problems do not exist by distracting themselves with different things (sometimes combining two or more of them): religious fanaticism, entertainment, alcohol, or vices.

Even the Wealthy Elites who are supposed to be in a position to actually do something about the problem just prefer to retreat into their posh enclaves, pretending that the poverty, misery, and suffering around them is just a figment of their imagination. In some cases, there are sinister ones among these elites, the Kakistocratic selfish oligarchs, who want to keep the situation the way it is because they are at least happy to be at the top, fearing that reforms would cause them to lose whatever advantages they currently enjoy. This again reveals a dearth of analytical abilities among even the most educated and supposed advantaged Filipinos because they fail to see that the much needed reforms that would create inclusive growth are actually to their advantage in the bigger scheme of things.

The small mindedness of these oligarchs is such that they see only the short term “small picture” advantages they think they have as the 1987 Constitution and the laws of the Philippines continue to favor and protect them through all sorts of protectionist clauses designed to keep the Philippine Economy their own private turf and keep out honest and competent foreign direct investors who could have provided more jobs for ordinary people.

The oligarchs only see the small picture. They fail to see that the poverty around them is caused by the massive unemployment that these protectionist clauses spawned. They fail to see that this massive poverty actually poses a threat against the lavish lifestyles most of them enjoy. After all, despite the walls around their posh neighborhoods, do they really think that the poor squatters cannot breach those walls? Do they not realize that their maids, security guards, cooks, gardeners, and other workers come from the ranks of the poor? Do they not see that if the dire situation continues, they might actually lose it all?

Filipinos may seem to be a tolerant and indifferent people, but there are limits to this tolerance. Escapism can’t always keep their anger at bay. Like the Malays and Indonesians, Filipinos may be slow to anger, but when things get so bad, something can snap and the release of anger can and will lead people to “run amok” (aka “amuck”), a result of the Pinoy, Malay, and Indonesian tendency to want to “keep cool” and thus suppress whatever negativity they may feel. That they may not express such anger so easily and keep smiling on the outside doesn’t at all mean that the anger is not there or that the anger has dissipated. Not at all. The tendency towards anger has just been suppressed and placed in the deep recesses of their psyche, waiting and waiting and waiting until a certain limit is breached. There wouldn’t be a transition. It would simply be a sudden release of massive anger. And that’s when all hell breaks lose when one runs amok.

The walls that currently protect Forbes Park, Dasmariñas Village, and Bel Air, will never be high or strong enough to keep poor people who are running amok out. As mentioned, people from among the poor live and work among them inside their cute little enclaves as maids, drivers, gardners, etc. Where will their sympathies lie if their own relatives are among those who suffer the lousiness of massive unemployment that are ultimately caused by the inability of foreign direct investors to come in, create jobs, and ease the massive poverty that has forced more than 10 million Filipinos to find jobs abroad?

See, it’s not just the poor who are escapist… The Filipino Oligarchs are unrepentant escapists as well. They often pretend to themselves that they do not see the poverty and suffering around them. They desperately try to pretend that they live in the First World. They pretend that the 60/40 and other anti-FDI restrictions that they and those who came before them put up are serving them well. They forget to see that these restrictions simply widen the gulf between them and the extremely impoverished Filipinos whom they pretend are not people.

They also pretend not to see that FDI-induced inclusive growth, one which creates enough decent-paying jobs to allow the poor to rise up to become members of a new middle class and new rich in great numbers, is actually to their advantage. Filipino Oligarchs currently do enjoy a monopoly and an advantage. When the restrictions are removed and the foreign direct investors come in, don’t they realize that their companies are already well-positioned to be the suppliers that the MNCs and foreign direct investors will buy goods and services from when they start coming in and setting up?

Don’t these oligarchs see that when the foreign direct investors and MNCs start coming in en masse to build factories, it is the oligarch-owned construction companies who will be among the first to be contracted?

Don’t these oligarchs see that when the foreign direct investors and MNCs start coming in en masse and creating lots and lots of jobs for ordinary Filipinos, these Filipinos will now have incomes that will allow them to spend more on the products and services that oligarchs’ companies sell?

Don’t these oligarchs see that when the foreign direct investors and MNCs start coming in en masse and creating lots and lots of jobs for millions of poor Filipinos, these poor Filipinos will eventually cease to be poor, become new members of the middle class and nouveau riche and whatever resentment towards wealth and the oligarchs they once had will cease to exist?

Don’t these oligarchs see that when restrictions against FDI are removed and foreign direct investors and MNCs start coming in en masse and creating lots and lots of jobs for millions of poor Filipinos, crime will go down, security will improve, and the oligarchs will now be more able to enjoy living their lives the way rich and sophisticated people are supposed to live — able to freely dress up, ride fancy cars around town, and take leisurely strolls out in the open — without fearing for their lives or loss of property? (In places like Singapore, this is the case: the richest people can live the way rich people are supposed to live: driving fancy cars, taking leisurely strolls in public places without fear)

Escapism, narrow-mindedness, and short-term thinking aren’t limited only to the poor in the Philippines. At least in the Philippines, poor Filipinos have an excuse: they are way too focused on the short term to think of anything else.

For the Wealthy Filipino Oligarchs, what is their excuse for escapism, narrow-mindedness, and the kind of short-term thinking that is evidenced by many among them like Jose Ma. Montelibano, Winnie Monsod, Noynoy Aquino and others to keep fighting against Constitutional Reform and economic liberalization?

The Oligarchs have no excuse. Small-minded Selfishness can be overcome by simply taking a step back, looking at the bigger picture, and learning about what the fastest-growing economies of the world have done and are currently doing in order to promote inclusive job-creating economic growth that helps everyone: both the poor and the rich oligarchs alike.

CoRRECT™ the Constitution!

Should the Philippines Turn Parliamentary?

By Rep. Florencio B. Abad

It is unfortunate that enlightened debate about the proposed shift in the form of government has been hampered by allegations of hidden motives by Senate leaders and by a public suspicious of an unspoken agenda of certain politicians. The senators fear that the proposal is a means to cut short their political careers. The public, in turn, suspects that the plan has been advanced to secure the political futures of those who hold higher political ambitions, as well as to prolong the careers of those affected by the term limits set by the Constitution.

These reservations are not baseless nor unfair, given the embarrassing way patronage, narrow and self-interested politics have dominated the political way of life of the country. And while President Ramos has openly declared that any consideration of a change in government should not result in an extension of his term of office, his assurances have not prevented influential sectors of society,prominently the media and the business sectors, from calling for the abandonment of the effort.They instead urge more attention to the critical task of economic recovery and development. For a populace tired of the wrangling and positioning of politicians, the call to focus on pressing economic problems is widespread. Unfortunately, the appeal is premised on the erroneous assumption that rebuilding the economy can proceed without reforming political institutions and political markets.

The premise here is that the genuine democracy is founded not only on social and economic conditions, but also on the design of political institutions. The Philippines, or any other country similarly going through a difficult phase of transition, will be unable to cope without effective political institutions.

Strong political institutions make for effective governance. They do not guarantee the best policies,but they do ensure that the government will be able to make policies of some kind and that it will not be mired in endless standoffs. Research on the relationship between economic reform and democracy has shown that the strong political institutions are vital to accomplishing economic reform. While the socio-cultural and economic policy challenges faced by new democracies are important, these challenges cannot be met without strong political institutions.For these reasons, informed debate and research on constitutional reforms is important.The principal question that will be addressed is this: “Why is a parliamentary system a more appropriate framework of government, compared to a presidential system, in improving the capacity of government to function more effectively and in facilitating the consolidation of democracy in the Philippines?”

Three important assumptions in this question ought to be clarified:

First, despite the proliferation of non-governmental development institutions and the insistence of the business sector on a market-determined growth strategy, government will continue to play a central and dominant role in the development of the country.With an underdeveloped legislature, the initiative for policy making will have to emanate from the executive. With a limited manufacturing and industrial base, government will have to provide the infrastructure, the environment, and the push for economic recovery and growth.In our fractured and divided society, government must play a delicate mediating role in forging compromise and peace in the country.

Second, the government will have to function effectively to carry out these crucial roles. In the past,successive governments have been criticized — with good reason-for inefficiency, for lacking both economic an political competency, and, more importantly, for being unable to govern outside narrow political and economic interests.

Effectiveness can refer to a range of competencies. These capabilities will be defined and limited in the context of institutional reforms necessary to strengthen and consolidate our fragile democracy.

Consolidation refers to the process by which democracy becomes so broadly and profoundly legitimate among its citizens that it is unlikely to break down. It involves behavioral and institutional changes that normalize democratic politics and narrow its uncertainty (even to the point of rendering it rather boring). Consolidation involves the development of appropriate institutions so that democratic norms and practices take hold in the country.

Other questions also come to mind about the relationship between government structure and effective governance: Will the change in the system of government instantly bring about the capabilities that will enhance government effectiveness? If not, what other factors or influences will have to be considered?

This chapter has benefited immensely from a growing literature on the impact of institutions on promoting democratic consolidation and in enhancing effective governance. Interest has been focused particularly on the growing debate about the appropriateness of a presidential or a parliamentary system — or a hybrid of either – in new democracies. The writer has studied the experience of Latin American presidential democracies to prove a hypothesis: that the basic deficiencies of the presidential system that are not culture-bound and peculiar to the Philippines are, in fact, inherent in the system of government itself.

These are three reasons for focusing on Latin America first, countries in that region have had a long experience with democratic presidential systems. This is particularly true for those, which obtained their independence from Spain and Portugal early in the nineteenth century. In fact, in Latin America one finds the greatest concentration of US-style presidential democracies.

Finally, and most important, there has been a similar process of debate has taken place in the region about the wisdom of shifting to a parliamentary system or adopting applicable features of it within a semi-presidential framework.

The writer has also looked into the performance of democratic parliamentary regimes in Western Europe, particularly Britain, France, and Germany, where the parliamentary tradition is deeply rooted. To eliminate the possibility that economic growth and development would independently influence political stability, the writer has also looked into the experience of parliamentary systems in certain developing countries in the Caribbean and in Africa.

Before proceeding further, there is a need to briefly establish the debate in the context of the history of constitutional reform in the Philippines.

I. Historical Context of the Debate

Many of the proponents of the presidential system argue as if the system of parliamentary government is totally alien to the process of constitutional formation and the reform in the Philippines. Far from it.

In fact, in past exercises in constitution making — the Constitution of Biak-na-Bato of 1897, the Constitution of Makabulos, the Malolos Constitution, the Commonwealth Constitution of 1935 and the martial law-disrupted Constitutional Convention of 1971 — the issue of a parliamentary versus presidential structure of government has been at the heart of the deliberations.

THE 1898 PHILIPPINE REVOLUTION

At the turn of the century, Filipino revolutionaries were at the point of driving the Spanish colonizers out of the islands and establishing an independent republic. At that stage, the revolutionaries were contemplating the adoption of a constitution that had the main features of a parliamentary form of government. They drew their ideas of government from English and European sources, the Malolos Constitution, the Constitutions of Biak-na-bato and Makabulos, as well as the constitutional plans prepared by Apolinario Mabini and Mariano Ponce. The Revolutionaries envisioned a constitution that made the legislature the dominant department of government, with the executive powers vested in a President elected by a majority of the assembly of representatives.

Along with the revolutionaries’ struggle for genuine independence, this desire for a parliamentary structure of government ended in December 1898 when the Philippines was formally ceded by Spain to the United States. To justify its colonization of the islands, the US government issued the”Proclamation of Benevolent Assimilation” after a bloody “pacification” campaign. This began the process of implanting American political institutions in its new colony.

THE 1935 CONSTITUTION

Even then, until the adoption of the 1935 Constitution, features of parliamentary system were incorporated into a civil government, called the Philippine Commission, which had been established by the US. The Commission exercised both legislative and executive functions, as a result, were also legislators in a unicameral law-making assembly.After the passage of the Philippine Bill of 1902, however, a bicameral legislature was created, with the Commission as the upper chamber and a newly-instituted Philippine Assembly as the lower chamber. The Jones Law of 1916 put an end to this arrangement and vested legislative power in an all-Filipino bicameral legislature with the Senate as the upper chamber and the House of Representatives as the lower chamber. But the members of the legislature continued to be appointed as heads of executive departments and sat in the Cabinet.

The semi-parliamentary features of government persisted until 1935, when, by virtue of the Tydings-McDuffie Law, also called the Philippine Independence Act, a new constitution was adopted. The 1935 Constitution was patterned after the US system and created a powerful executive, the presidency, in which executive power was solely vested. The President served for a fixed term of four years with only one reelection.

THE 1971 CONSTITUTIONAL CONVENTION

The presidential system characterized the system of government until 1972. A year later earlier, in1971, amidst a climate of protest and political instability, an elected Constitutional Convention convened to draw up a new constitution. Once again, a re-examination of governmental structure was in the agenda of the Convention.

On September 21, 1972, however, before the Convention could complete its task, President Ferdinand Marcos declared martial law, assumed extraordinary powers and began 14 years of profligate and repressive dictatorial rule. Despite the tense atmosphere and volatile political situation, the Convention continued with its deliberations.

To circumvent a constitutional ban on a second reelection, Marcos and his followers — employing a combination of bribes, intimidation and arrests – manipulated the Convention to scrap presidential system and replace it with a French-inspired semi-parliamentary government. But it was only in1978 when Marcos was finally able to convene an interim Batasang Pambansa(National Assembly). After the 1984 legislative elections, the Assembly attained regular status. The Assembly was generally perceived as a rubberstamp and a farce, as Marcos continued to exercise legislative powers under Amendment No. 6 of the 1973 Constitution. In fact, during martial rule, Marcos issued more decrees that the Assembly passed laws. Proponents of presidentialism who refer to this anomalous and undemocratic period of governance “as our bad experience in parliamentary government” to discredit the parliamentary system are grossly mistaken.

After a decade-and-a-half of forced rule, Filipinos finally mustered enough collective courage to shout, “Tama Na! Sobra Na!” (“Stop! Enough”) and marched in the millions in a non-violent show of defiance against the Marcos regime.

The People Power Revolution of 1986

The unprecedented People Power Revolution in February 1986 ousted Marcos and installed Corazon C. Aquino in power, it also created another opportunity for constitutional innovations and reforms. On May 1987, President Corazon Aquino convened an appointed Constitutional Commission to draft a new constitution to replace her “Freedom Constitution” under which she ruled with an extraordinary powers.

But as the eminent constitutionalist and Commissioner member, Rev. Fr. Joaquin Bernas, S.J.,observed. “The year 1986, when emotions were high and a major preoccupation was how to ensure in the speediest way possible the restoration of the democratic processes, was not the best time to engage in protracted debates, especially about fundamental government structure.”Seven years after the 1987 Constitution was ratified, formal structures of democracy have been restored and the highly unstable political situation has settled down considerably.

Filipinos have had enough experience with, and learned enough lessons from, the new constitution. For many, it is time to take a second look at the fundamental law of the land. The initiation of debates on the appropriate governmental structure is an important phase of this process.Before comparing the two systems according to their capacity To promote effective governance and to facilitate the consolidation of democracy, a review of the basic characteristics of the two systems is in order.

II. Presidential vs. Parliamentary: Essential Differences

The central difference between a parliamentary and a presidential system lies in the relationship between the executive and legislative branches.

Principal Difference

In a presidential or separation of powers system, the chief executive, or the president, is elected fora fixed, constitutionally prescribed term. He or she cannot be forced by the legislature to resign,except for cause through the highly unusual and exceptional process of impeachment.Being directly elected by the people, the president has full claim to democratic legitimacy. The legislature is an assembly of elected representatives similarly enjoying fixed and constitutionally prescribed terms. As such, it cannot be dissolved by the president and possesses as much democratic legitimacy as the executive. Because of this essential characteristics, Linz has described the presidential regime as a system of”Dual democratic legitimacy” to emphasize the autonomy and co -equal position of the executive and legislative branches of government. Similarly, Stepan and Skach have called the presidential regime a system of “mutual independence”.

In a parliamentary system, the head of government, the prime minister, is chosen from within the ranks of the legislature. He or she must, therefore, be supported by, and is dependent upon, the confidence of the legislature. The prime minister can fall and be dismissed from office by the legislature’s vote of no-confidence. On the other hand, he or she (normally in conjunction with the head of state) has the power to dissolve the legislature and call for new elections.Because of the need for close collaboration between the executive and the legislature for their mutual survival, Stepan and Skach have referred to parliamentary democracy as a system of “mutual dependence”.

Other Basic Differences

Apart from this basic difference in the relationship between the executive and the legislature, there are other important differences:

1. In a parliamentary system, the executive is divided into a prime minister, who is the head of government, and a monarch or president , who acts as head of state. Unlike a prime minister, a president or monarch has fewer powers and plays an important role as an “above-politics” leader. He or she also plays a stabilizing and mediating role,especially in times of crisis. In a presidential system, on the other hand, the executive is undivided: the head of the government is also the head of the state.

2. In a parliamentary government, the prime minister appoints the ministers, but because the government is a collegial body, he or she is merely primus inter pares or is regarded as a “first among equals.” In a presidential government, on the other hand, the president is one-person executive. He or she also appoints the heads of departments, but they are his or her subordinates or alter egos.

3. While ministers are drawn from the elected members of the legislature in a parliamentary system, department heads in a presidential system are constitutionally banned from becoming members of the legislature and vice versa.

4. The president, unlike a prime minister, is not responsible to the assembly; instead, he is ultimately responsible to the constitution by the process of impeachment.

5. The legislature, in a presidential government, is ultimately supreme over the other branches of government. It approves the appropriation of government, may impeach the president if the latter behaves unconstitutionally and, in the event of conflict with the judiciary, may assert its will since it has the right to amend the constitution.In a parliamentary system, the government and the assembly cannot dominate each other. The government depends upon the support of the assembly to stay in power,but if the government chooses, it may dissolve the parliament.

6. The presidential executive, being directly elected by the whole body of electors, is directly responsible to the electorate. The parliamentary government, while being directly responsible to the assembly, is only indirectly responsible to the electorate.

7. Finally in a parliamentary system, the focus of power in the political system is the parliament. In a presidential government, there is no focus of power since power is diffused in the three co-equal and coordinate branches of government: the executive,the legislative and the judiciary.

It is important to remember that these basic features are more than categories. They are also defining and constraining conditions within which the vast majority of developing democracies must somehow work out substantial socio-economic reforms and develop their democratic institutions.

Parliamentary vs. Presidential: Comparative Analysis

In attempting to answer the question, “Why is a parliamentary system a more appropriate framework of government, compared to a presidential system, in improving the capacity of government to function more effectively and in facilitating the consolidation of democracy?” As bases for comparison, five capacities that are necessary for effective governance in the Philippines will be used.

These are the capacities to:

(1) prevent gridlock and promote consensus in governance,

(2) ensure stability and continuity in governance,

(3) strengthen accountability in governance,

(4) promote cohesive and disciplined political parties, and

(5) promote a broader based and inclusive politics through a multi-party system.

For sure, this is not an exhaustive list of capabilities. Limitations of time and space only permit a selection from a broad range of possible capabilities, which are critical at this stage of the country’s development. Considerable weight is placed on the values and capabilities that Filipinos would like to see characterize their government and which lie at the heart of their dissatisfaction with the presidential system. The most bewailed feature of the presidential system is a good starting point.

1. Capacity to Prevent Gridlock and Promote Consensus

The chronic problem of gridlock that has afflicted the Philippine presidential system with its cumbersome process of checks and balances has earned a bad name for politicians and political institutions. Evidence of this poor credibility is the consistently low ratings that political personalities and institutions, like Congress and political parties, register in surveys. Respondents invariably point to their frustration over the seemingly endless political squabbling among legislators and between government and Congress on almost any major policy issue that comes up for deliberation.

Proponents of the shift to a parliamentary system have repeatedly hammered on this problem of”wasteful and time consuming” stalemates to justify the change. Validly they point out that these crippling standoffs have prevented the country from responding in an efficient and timely manner to the many challenges and opportunities it faces as it struggles to catch up with the rest of the advancing economies in Southeast Asia. The criticism hits an issue that fundamentally distinguishes the parliamentary and the presidential systems: the relationship between the executive and the legislature.

Linz attributes this problem to an inherent structural weakness in a presidential system: the tenure of the president is fixed independent of the legislature and the legislature can survive without fear of the dissolution by the executive. This feature derives from the separate but co-existing democratic legitimacy enjoyed by the executive and the legislative branches, being both directly and popularly elected.

Lijphart goes along with this view, but at the same time holds that this is only part of the explanation. For him, “the real problem is … that everyone — including the president, the public at large, and even political scientists – feels that the president’s claim (to legitimacy) is much stronger than the legislature’s. Consequently, the feeling of superior democratic legitimacy may make the president righteously unwilling and psychologically unable to compromise.”

This problem is aggravated by the inability of presidential democracies to obtain strong congressional cooperation through majority control of the legislature. As a result, the legislature rests in the control of politicians who represent a constituency with a different political choice from rests in the control of politicians who represent a constituency with a different political choice from that of the constituency that supports the president.

Stepan and Skach confirm this propensity of presidential governments to rule with legislative minorities in a study of all non-Organization of Economic Cooperation and development (OECD)countries that qualified as democracies for at least one year during the 1973 -1987 period.

The OECD countries were excluded to neutralize the effect of economic development as an intervening variable that might independently influence political stability. The findings show that in presidential democracies, the executive’s party enjoyed a legislative majority less than half of the time (48% of the democratic years), while in parliamentary democracies – in sharp contrast – the government was in control of the legislature at 83% of the time.” (See Table 1)

The inability of the executive, in a presidential system, to gain congressional control has often led to basic differences in policy positions. These conflicts then degenerate into a prolonged and unproductive impasse. In such a situation, the inevitable question arises: Who, on the basis of democratic principle to resolve this question.

Repeatedly faced with these stalemates and the expectation of their inevitability, presidents have learned to cope with them and have accepted that it is to their interest – and perhaps survival – to adopt “anti-party” practices to secure approval of their policies. In the Philippines, this practice has institutionalized the much detested, yet enduring practice of “pork barrel” politics and the ritual of party-raiding and party-switching that predictably follows every presidential elections.

David Wurfel blames this habitual practice of “turncoatism” to the primary preoccupation of legislators with their re-election. Recognizing the president’s almost absolute discretion in the release and transfer of funds to build schools, bridges, roads and other infrastructures, legislators find various ways – including changing party loyalties – to endear themselves to the president.The case of the 1992 Philippine Congress is no exception. At the time of the proclamation of congressional winners in 1992, the party of the administration, Lakas-NUCD, was a minority in the House of Representatives with only 39 out of 200 seats, or around 20%. The rest of the seats were spread out to seven other parties, with the Laban ng Demokratikong Pilipino (LDP), the National People’s Coalition (NPC) and the Liberal Party controlling the majority of the seats with 87, 39 and 13 members respectively.

After a year of intensive recruitment by the administration, Lakas-NUCD gained 69 more seats to control the lower house with 108 seats, while the LDP was reduced to less than a third with only 25 seats. The ordinary voter has come to accept the proliferation of “political butterflies” as a justifiable act of political survival in a system that rewards, not party loyalty, but a politician’s ability to ingratiate himself to an all-powerful, spoils-dispensing president.

In a number of developing countries, when the legislature is intransigent and refuses to compromise or bow down to political pressure and a serious crisis threatens to embroil the country,the administration – stalemated, powerless and deeply frustrated – is often left with no other choice but to resort to extra-constitutional measures. Martial law, or rule by decree, becomes an option.The case of Alberto Fujimori in Peru comes to mind. Fujimori, to justify martial rule and ruling by decree on April 1992, blamed the lack of progress in Peru squarely on uncooperative congress. In1972, Marcos used the same excuse for closing down Congress and imposing “constitutional authoritarianism” in the Philippines.

The reverse may also be the case. When an unpopular and discredited president refuses to resign and civilian authorities are unable to resolve the standoff, the military exploits the situation and takes over from the civilian authorities. The two coup attempts in 1992 that ultimately led to the ouster of President Carlos Andrés Váldez of Venezuela prove this point.

In the same manner, in 1986, the attempted coup by the Reform the Armed Forces Movement(RAM) ignited the popular uprising that eventually ousted Marcos. But perhaps nowhere was this more flagrant than in the case of Ecuador. In the period 1931-1988, 13 presidential governments were forced to resign, seven were overthrown, one was impeached, while only 12 completed their terms.

Under the parliamentary system, the powerlessness and deep frustration that generally characterize presidential government is more exception than the rule. The difference lies in the ability of the parliamentary government to muster a majority in the legislature and command support and cooperation from it. More important, the mutual dependency relation in parliamentarism creates effective constitutional devices to break deadlocks or remove inefficient governments. Frustrating, unproductive and long impasses are thus avoided. Thus, as a system that can better avoid deadlocks, discourage coup attempts and promote better cooperation in policymaking, a parliamentary democracy is superior and should be preferred over a presidential system.

2. Capacity to Ensure Stability and Continuity in Governance

In arguing for the stability of the presidential system, critics of parliamentary democracy point tothe frequent crises and changes in the prime ministers in parliamentary democracies, such as the French Third and Fourth Republic, the frequent government turnovers in Italy and India today, and more recently, in Portugal.

While accepting the rigidity that presidentialism introduces into the political process, its proponents view this more as an advantage than a liability. This feature, they contend, reduces the uncertainties inherent in parliamentary democracies, where multiple political players can, at anytime between elections, effect basic changes, bring about realignment of forces and, above all,change the executive, the prime minister. Thus, in the critics’ view, the pinning for stability and predictability that normally accompany periods of transition and uncertainty seem to favor a presidential system.

But again it must be emphasized that presidents are elected for a period of time that, under normal circumstances cannot be modified: not shortened and sometimes, due to ban on reelections, not prolonged. The political process then becomes broken into discontinuous, rigidly determined periods without the possibility of continuous readjustments as political, social and economic events may require.

Thus, unexpected events may intervene, like fundamental flaws in judgment or political process. Does the system adjust better to crises? Most likely not, especially when the president is unyielding.There is the option of voluntary resignation through pressure from party leaders, the media and public opinion. But given the psychology of politicians, resignation is highly unlikely to happen.Moreover, the move will encounter opposition from the constituency that brought the discredited president to power.

Then there is the extreme measure of impeachment, which is difficult and complicated to execute successfully. Apart from the heavy burden of establishing sufficient evidence of misconduct, it also seems implausible that a legislative majority will support these proceedings, since members of the president’s party would have to go along with the impeachment process. Thus, it is almost impracticable to remove even the most corrupt and inefficient president from office.

The cases of Brazilian President Collor’s impeachment in 1992 on charges of widespread corruption in his government of the late U.S. President Richard Nixon’s resignation under threat of impeachment in 1973 in connection with the infamous Watergate wiretapping may defy this assertion, but these are clearly more the exception than the rule.

In sharp contrast, a parliamentary government – because of the mutual dependency between the executive and the legislature inherent in the system – permits flexibility in responding to changing situations and unexpected events. Proponents of presidentialism, in their critique of parliamentarism, overlook the “continuity of parties in power, the reshuffling of cabinet members,the continuation of a coalition under the same premier, and the frequent continuity of ministers in key ministries in spite of cabinet crises.

Moreover, it is also forgotten that the parliamentary system permits the removal of a prime minister who has lost party support or has been discredited and whose continuance in office may lead to serious political conflicts. Without engendering a serious constitutional crisis, the prime minister can be replaced in a variety of ways – by his or her party, by the formation of a new coalition, or by coalition partners withdrawing support of parties tolerating the minority government. Through these means, a new prime minister is bound to surface, perhaps with some difficulty and delay, but definitely with much greater certainty than had the crises taken place in a presidential democracy.

Thus, the problem that arises as a result of the so-called instability of parliamentary democracies are simply “crises of government, not regime.” The availability of deadlock-breaking devices anddecision mechanisms in a parliamentary regime help ensure that issues of government do not deteriorate into crises of the regime.

The absence of these self-correcting devices in the presidential regime leads to a paralyzing stalemate that ensures that nothing substantial gets done until new government is elected to replace the previous one, that is, if the people are patient enough to wait until the next election cycle. In many instances, most notably in Latin America, either the president bypasses the legislature and the rules by decree or a military coup overthrows the government. In both situations, the institutional framework collapses and those who take power rule extraconstitutionally.

The Stepan and Skach study covering 53 non-OECD countries, which they had classified as having been democracies for at least a year between 1973 and 1989, confirm these tendencies. Of the 53countries, 28 were pure parliamentary, 25 were pure presidential and none, surprisingly, were either semi-presidential or mixed. Only five of the 25 presidential democracies, or 20% were democratic for any 10 consecutive years in the 1973-1989 period, but 17 of the 28 parliamentary democracies, or 61% were democratic for a consecutive 10-year span in the same period. (See Table 2)

Clearly, parliamentary democracies, with a rate of survival more than three times higher thanpresidential democracies, demonstrate greater capacity for ensuring continuous democraticgovernance. in the same study, presidential democracies were twice as prone to breaking downthrough military takeover than parliamentary democracies. (See T able 3) This difference points to a greater ability of parliamentary regimes to accommodate conflicts and crises in government without leading to a rejection of the regime.

The same study presents further evidence of the durability of the parliamentary system in a survey of 93 countries that became independent between 1945 and 1979 and that were continuous democracies from 1980 to 1989. Forty-one countries functioned as parliamentary systems in their first year of independence, 36 were presidential systems, three semi-presidential systems and 13 ruling monarchies. During the 10-year period between 1980 and 1989, only 15 countries were able to develop as continuous democracies and all of them were countries that functioned as parliamentary systems in their first year of independence. Not one of the 52 countries that was not a parliamentary government evolved into a continuous democracy. (See Table 4)

Stepan and Skach examined all ministerial appointments during the years of democratic rule in Latin America, Western Europe and the United States between 1950 and 1980. The result was two major findings.

First, the percentage of ministers who serve more than once in their careers, or what they term the “return ratio” of ministers, is almost three times higher in parliamentary than in presidential democracies. The case of the U.S. is most striking, although probably not exceptional in presidential systems. Since 1945 – except in the case of Johnson’s retention of the cabinet after the assassination of Kennedy – only two cabinet members served under different presidents. This results from the almost total revamping of the bureaucracy that normally follows when a new presidential administration takes over.

Second, the average length of service of a minister in any one appointment is almost twice as long in parliamentary systems. The findings hold even if the study was limited to countries with more than 25 years experience in uninterrupted democracy. (See Table 5)

The evident conclusion is that ministers in presidential democracies have far less experience than their counterparts in parliamentary democracies. As a result, every presidential administration brings with it a contingent of “amateurs” with little experience in managing the bureaucracy and in dealing with politicians. This inadequacy is felt most in areas such as foreign policy and macroeconomic policy management, as well as in every weak ties to the legislature, whose support they cannot do without. In addition, the valuable wisdom that the new acquire on the job is not available to their successors.

Such is not the case in a parliamentary system, where a large pool of potential leaders is available. The reasonable chance of becoming prime minister or a key cabinet official among leaders of all major parties, particularly in a multi-party setting, encourages a greater number of aspirants for leadership positions to enter parliament. Moreover, even between elections, unless the government has a tight hold on the media, the parliamentary process – such as debates, motions of censorship, votes of no confidence, and other public actions – provides potential leaders with numerous opportunities to gain visibility and practice.

a. Switzerland and Finland are mixed systems. (Editor’s Note: Finland is now a full-parliamentary system, while Switzerland’s system is a “Council Parliamentary” or “Directorate” system which is still collegial like a parliamentary system)

b. According to Stepan and Skach, Austria, Ireland and Iceland are parliamentary rather than presidential regimes because parliamentary is the political practice. (Editor’s Note: Austria, Ireland, and Iceland are pure Parliamentary Systems as their presidents are purely ceremonial)

c. Traditionally in Kiribati, all candidates for the unicameral legislature – the Maneaba – have fought as independents. In 1985, various Maneaba members who were dissatisfied with the government policies formed a Christian Democratic opposition grouping. The government grouping then is generally known as the National Party although it does not constitute a formal political party.

Even leaders who have lost power do not end up with nothing, unlike in a presidential system. They are practically always assigned seats in the legislature and sometimes have the status of “leader of the loyal opposition.” In presidential elections, defeated candidates, regardless of the number of votes they garnered, are likely to be considered unattractive candidates for the next election and thereby lose their leadership position in the party. If they desire to continue with their political career, they will have to wait for the next cycle of election without any access to executive power and to patronage.

3. Capacity to Strengthen Accountability in Governance

In calling for the retention of the presidential system, respected constitutionalist and Senator Arturo M. T olentino argues that, in a presidential system, accountability is easier to locate. The chief executive, the president, is directly elected by the people and singularly represents the government. The voter is thus in a position to know whom he is voting for and who will govern in case his candidate wins. Moreover, the functions of the government are neatly divided among its three branches: the legislature sets down policy, the executive implements it and the judiciary interprets it. So responsibility is easier to pinpoint.

By implication, in a parliamentary system, presumably the voter electing representatives of a party will, in no way, know who the party will select as prime minister. And in a multi-party system, where the party is not expected to obtain a clear majority, the voter is not in a position to determine which parties will ultimately coalesce to choose the prime minister and to govern the country. Furthermore, since the executive and the legislature are fused in the parliament, the lines of responsibility are blurred and accountability for performance is difficult to locate. While these arguments may, in theory, be correct, reality negates most, if not all, of them. In presidential elections, the candidates do not need and often do not have any prior record as political leaders. This has given rise to the phenomenon of “presidential outsiders,” defined by Linz as candidates not identified with or supported by any political party, sometimes without any governmental or even political experience, and who ran for office simply on the basis of a populist appeal.

To a great extent, former Presidents Aquino and Ramos fall in this category, not having been members of any political party before running for office. Similarly, the two presidential aspirants who figured in a tight race with Ramos, Miriam Santiago, and Eduardo Cojuangco, were, in this sense, also “outsiders”.

Often, presidential candidates are elected on the basis of opinion about them or their promises or about the image that they project. The latter is increasingly true in the age of what Sartori calls the “new politics” of “videoploitics” as a result of which a presidential election is reduced to a video match eminently decided by good looks and “soundbytes” lasting a few seconds. “Outsiders” Fujimori of Peru and Collor of Brazil benefited immensely from the use of video technology in their political campaigns.

The problem with such candidates, according to Linz, is that they have “no support in the congress and no permanent institutionalized continuity (due to the principle of no re-election) and therefore find it difficult to create a party organization. They tend to organize their party around themselves such that when they leave the political scene, so does the party.

On the other hand, leaders in parliamentary democracies have to struggle to take hold of, and retain over many years, leadership over their parties. They, therefore, truly represent Not just themselves but, more importantly, their parties, which precede and survive them, also, the voters in a parliamentary election are well aware that eventual winners will be drawn from the party. Usually, the cabinet members are already established leaders of the party with vast experience in politics and government.

The contention that the voter in a parliamentary election will be hard put to determine who will eventually govern is contradicted by the fact that parties are usually identified with highly visible political leaders. Elections are increasingly focused on the leader aspiring to be prime minister. So a vote for British Conservatives is a vote for Mrs. Thatcher, SAP for Willy Brandt of Germany, PSOE for Felipe Gonzales of Spain, or Labor Party for Gro Brundtland of Norway.

While in this sense, personalization of leadership is not exclusive to presidential politics, the big difference is that leaders of parliamentary governments have to be loyal party members in good standing. It may be argued that such choice may be ignored by the party choosing another leader. This may happen but normally the party will not invest so much to build up the stature of a party leader only to replace him or her subsequently unless the leader has proven ineffective. And even then, the party and its leaders can be ultimately held accountable to the voters for such action.

As to the difficulty in parliamentary systems of determining who will govern in the coalition, again this contention is not generally true. Before the election, parties commit themselves to a coalition and the voter of the parties knows who the chancellor will be. The voter is also aware that unless a party establishes an absolute majority, all the parties in the alliance will have representatives in the government.

In a parliamentary system, government formation takes a short time because of the presence of a well-known shadow cabinet. In a presidential system, the organization of a new government takes longer as the president-elect begins his or her search for, and formation of, a cabinet and key officials only after the elections. And add to this delay the confirmation hearings – which can be protected and humiliating – that all major appointments go through.

Linz summaries the above points aptly: “The identifiability in presidentialism is of one person; in parliamentary government, most of the time it is of a pool of people and often a number of well-known sub-leaders.”

Finally, presidentialists argue that accountability in a presidential system is greatly enhanced by the fact that a president – not the cabinet, not a coalition, and not the leaders of the party – is directly and solely responsible for governance during his tenure in office.

In response, a president who cannot run for reelection will be difficult to hold accountable.

(Generally, in presidential democracies, including the Philippines, presidents cannot run for reelection. He or she no longer fears punishment by election defeat nor looks forward to the reward of reelection for good performance. And because the executive branch is intimately identified with the person of the president, even the party’s new presidential candidate or the party that supported the incumbent cannot be called to account. Even when reelection is allowed, the incumbent can always conveniently pass the blame to congress – regardless as to whether congress is dominated by his or her party or by an opposition majority.)

In a parliamentary democracy, because of strong party discipline and clear lines of responsibility, passing the blame somewhere else or avoiding accountability cannot be done. While accountability is hard to pinpoint in case of unstable governments or frequently shifting alliances, and no party is clearly on top of the coalition formation process, this situation is more the exception than the rule. Even if presidents are not barred from reelection, voters can only wait until his or her term ends before they could demand for an accounting, unlike a prime minister, who at any time, can be made accountable to his or her own party and the parliament by the vote of no confidence.

Finally, the separation of powers among the three branches of government in a presidential system is also the very cause of diffusion of responsibilities that makes it often difficult for voters to identify whom to hold accountable for particular decision or actions. This process has led one political scientist to refer to it as the “institutionalization of buck -passing.”

4. Capacity to Promote Cohesive and Discipline Parties.

Philippine scholar Carl Lande, commenting on the immature state of the Philippine party system, wrote: “The absence of a strong, responsive and responsible party system is o ne of the major flaws of the Philippine democracy.” Indeed, what dominates in the country is a system of loose, fractious, clientelistic or personalistic parties. These formations are in reality political clans, factions, cliques and alliances that are distinguished not by any coherent ideology and program of government, but by political personalities who lead them.

Political representatives often behave not on the basis of any issue-oriented platform but in pursuit of parochial and self-interested objectives. The history of democratization has shown that the development of political parties and their legitimation are necessary for democracy to take root. For in stable democracies, political parties are the viable and meaningful channels that closely link the state and society. This is certainly not the direction to which Philippine political parties are headed.

Those who oppose the shift to a parliamentary system have invariably pointed to this condition as justifiable reason to insist on the status quo. Correctly, they have pointed out that the strength and viability of a parliamentary regime rests on mature and disciplined political parties. Without genuine parties, the parliamentary system will be a sham and will only lead to greater concentration of political power in the hands of the already too powerful political elite, they would add. The logical prescription then is for institutional reformers to postpone any change and to concentrate instead on political and institutional reforms to strengthen the party system. The assumption of this proposition, of course, is that a mature party system can be nurtured within a presidential system of government. But is this possible? Does the framework of government have an important bearing on the quality of the party system?

Linz asserts that more disciplined and cohesive political parties are structurally compatible with the parliamentary systems, but would be in conflict with presidentialism. They are essential in the formation and maintenance of a syetm of independence and cooperation that is the hallmark of parliamentarism. Without this condition, the executive constantly faces a threat from being removed from office.

In Satori’s words: what a parliamentary democracy needs is to be serve by “parliamentary fit parties, that is to say, parties that have been socialized (by failure, duration and appropriate incentives) into being relatively cohesive or disciplined, into behaving, in opposition, as responsible opposition, and into playing, to some extent, a rule-guided fair game.

According to Weaver and Rockman, “party cohesion in parliamentary systems is no happy accident.” These they attribute to greater mechanisms of control over legislators. In proportional systems, for example, legislators are usually chosen from a party list generated by the central party organizations. T hose who did not tow the party line in crucial votes in the legislature may find themselves removed from the party line-up in the next elections.

In the case of single-member constituency system, legislators usually rely extensive on the central party organization for the ratification and financing of their campaigns. In practically all parliamentary systems, a legislator cannot advance in his political career without the support of his party leaders. So for both his survival and advancement in his career, a legislator depends heavily on his party, in the same manner that his party cannot govern or perform its role in government without his cooperation and support.

In a presidential system, or the system of separation of powers, it is not necessary for the president to prevail in Congress on all critical votes to be able to stay in power. Consequently, control over individual legislators is not as critical, and legislators have more leeway to vote for their own benefits or the interest of their own constituencies.

In addition, Weaver and Rockman found that central party organizations in presidential systems play a weaker role in the recruitment of candidates and in financing their campaigns. Legislators, therefore, have much more leeway to build a “personal vote” for themselves through constituency service and by voting the interest of their district or their economic class over that of the party. The job security and career advancement of legislators (both within the legislature and outside in seeking other offices) also depend much less on cooperation with party leaders. As a result, incentives to cooperate are much less.

As a consequence, even in a situation where the president’s party or coalition has majority control over the legislature, this advantage is no guarantee that the legislature will automatically cooperate to pass administration measures.

In the Philippines, nowhere was this more pronounced than during the term of President Aquino. In 1987, an overwhelming majority of legislators from both chambers of congress ran and won under President Aquino’s coalition, Lakas ng Bayanor Laban! ; in fact, a significant number of them could not have won without Aquino’s personal endorsement. But despite this enormous edge, Aquino drew more opposition than support for her measures in Congress.

Many of her major policy proposals, like the comprehensive agrarian reform; economic liberalization; recognition of and support for NGOs; and the ratification of the Philippines-Us bases treaty, never got past the legislature, and even if some did, they were severely watered down. Frustrated but determined to asserTher leadership, in early 1990, she brought together key leaders from the bureaucracy, local governments, NGOs, churches and business community and organized a political movement called Kabisig as counterforce against Congress.

But before Kabisig could even take off, the more politically sophisticated legislators scuttled it by subtle warnings to Aquino’s advisers that the move would be counter-productive and would only aggravate the already sour relationship between the president and Congress.

The situation is worse when the president has to govern with a legislative minority, As earlier pointed out, this is, in fact, the situation in minority of the times: that presidents usually have to face an opposition legislature. Confronted with an adversarial congress, presidents would see it to their interest to have to deal with weak parties.

And if the parties are stubborn and refuse to cooperate, it is not uncommon for presidents to employ “anti-party” tactics to bend their will. The tactics include distributing or withholding “pork barrel” funds, dispensing political appointments, provoking schisms and factions within parties, or doing openly hostile acts such as outright raiding of party membership. For this reason, Linz has concluded that: “The weakness of parties in many Latin American democracies, therefore, is not unrelated to the presidential regime but, rather, a consequence of the system. In so concluding, he may well have spoken of the party system, too.

Presidentialist asserts that the Philippine political terrain is not totally bereft of relatively more disciplined and cohesive parties, as evidenced by the emergence of parties like the revitalized Liberal Party (LP), the Partido Demokratiko ng Pilipinas-Laban (PDP-Laban) and the Partido ng Bayan (PnB). These parties posses defined ideological and political programs and positions on social, economic and political issues.

Rejecting the traditional brand of “guns-goons-and gold” politics, they have been key in promoting a “new kind of politics,” one that elevates the level of political debate beyond Vague, populist rhetoric and political praxis away from patronage and opportunism. Unfortunately, the prevailing political culture and institutional environment have worked against their transformative style of politics. As a result, except for the LP, these “alternative” parties have been relegated to the periphery of the political arena.

Beyond a change in political personalities and political thinking, it will take institutional reforms to enable emerging parties to play more substantial roles in Philippine politics. As pointed out, the constraining structures of a presidential system may not provide the environment for this necessary change. The parliamentary system of government has more promise in bringing this about.

5. Capacity to Promote a Multi-party System.

Political stability is key to democratic consolidation. The ability of a political society to achieve this condition rest on the existence of political vehicles that enable significant political forces to be represented in the mainstream of political and economic decision-making. In the formal democratic arena, this means the presence of vibrant political parties. It is difficult to govern democratically unless these forces are recognized and meaningfully represented in the party system.

Peace and stability has eluded the Philippines for close to half a century already because of an exclusionary brand of politics that few elite families fight to maintain. This has effectively shut off the greater part of the population from the political process. With no stake in the system, disenfranchised groups have turned to armed struggle as a means of getting heard and of achieving justice. T hus from the 50′s to the present, a Maoist-inspired communist insurgency movement – the only surviving one is Southeast Asia – has thrived in the countryside.

In the late 60′s, the much neglected and exploited Muslims in southern Philippines, in Mindanao island, also turned to armed confrontation to press for secession. Since formal independence in 1946, the elite controlled and dominated two-party system has effectively closed the door to other social classes in the country. Elections have been reduced to intra-elite competitions. The framers of the 1978 Constitution tried to address this problem by providing, among others, for multipartism within a presidential system. This arrangement similarly exist in most presidential democracies in Latin America. From a cursory observation, it would seem that, based on the outcome of the 1978 congressional and 1992 presidential elections, that multipartism has been successfully instituted in the country.

But a closer look reveals that the change has been more a quantitative increase in the number of parties than a development of real, multi-dimensional and ideologically distinct parties. T rue, more program-oriented and ideologically cohesive parties have emerge in the political arena. But they represent more the exception than the rule. In fact, the Liberal Party, since independence, had been one of two premier parties in the country. But when its party leaders begun to practice seriously its call fro alternative ways of doing politic – principled position on issues and rejection of the politics of “guns-goons-and-gold” – it begun ironically to lose considerable support.

In addition, as has been observed in Latin American presidential democracies, a minority government tends to be the inevitable result of a situation characterized by the presence of weak and undisciplined parties in a multi-party setting within a presidential system.

The case of 1992 presidential elections in the Philippines is a case in point: President Ramos, running against five other major presidential aspirants, won with only 24% of actual votes cast. This means his constituency in the electorate was much less at the time of his victory. Conscious of his narrow political base, he had to devote practically his first year in office to expand his political base of support.

So a question arises: Is a presidential system of government compatible with a multi-party system?

Can it create a political atmosphere conductive to the growth of distinct and genuine political parties?

Studies indicate that the two-party system is congruent with a presidential government, while a multi-party system is more associated with a parliamentary government. This is borne out again in the Stepan and Skach on the relationship of party systems and consolidated democracies. The study covered consolidated democracies in the world between 1979 and 1989, of which there were 34 parliamentary democracies, five presidential and two semi-presidential. The study found that of the 34 parliamentary democracies, 11 has between three and seven effective political parties. None of the presidential democracies had more than 2.6 effective political parties, while both the semi-presidential system had between three and four effective political parties. The absence of any long-standing presidential democracy with three or more effective political parties may explain why continuous presidential democracies are so few. This empirical study confirms the earlier finding that parliamentary democracies are more associated with a large number of parties than presidential democracies.

According to Lijphart, this tendency is due to the “zero-sum, winner-take-all” nature of presidential elections where the presidency is the biggest political prize to be won. Only the largest parties have a chance to win it. This creates an impulse towards a two-party system and away from a multi-party system.

This evidence is not conclusive though. The case of Finland and Chile prove otherwise. But then in both countries, the party system is well-structured and institutionalized. This cannot be said of most Latin American countries and the Philippines where the party system is loose and weak.

III. Conclusion

Political institutions are critical in strengthening governmental effectiveness, particularly in developing countries like the Philippines. For this reason political institutional reforms cannot be, and should not be taken for granted, but must be made part and parcel of a comprehensive set of social, economic and political reform program.

A strong case can be made that a parliamentary form of government is a more supportive evolutionary framework for developing effectiveness in governance and for consolidating democracy. From both the standpoints of theoretical predictability and empirical evidence, the parliamentary form of government has shown:

(1) Better ability to prevent gridlock and promote a cooperative relationship between the executive and legislature in policy-making

(2) greater capacity to ensure stability and continuity in governance and prevent military coups and extra constitutional action by the executive.

(3) better capacity to ensure accountability in governance;

(4) greater propensity to create a political environment conductive to the growth of coherent, disciplined and strong political parties, and

(5) greater ability to encourage a multi-party setting and promote a more open and plural politics.

While the distinct advantages of the parliamentary over the presidential system have been presented, the writer is inclined to look beyond a pure model of the parliamentary towards what Maurice Duvergere calls “a new political system model: semi-presidential system government.” According to Duvergere, a political regime may be dominated as such if the constitution which establishes it combines three elements: “(1) the president of the republic is popularly and directly elected by the people, (2) he wields substantial power, and (3) there is instituted a dual executive system, where opposite the president there is a prime minister and ministers who exercise executive and government powers and remain in office only with the continuing approval of the parliament.”

The most prominent representative of this model, of course, is France, although the historical precursor of the French system was Germany under the Weimar Republic. Other outstanding examples of this model are Finland, Austria, Iceland and Ireland. (Correction: Austria, Iceland, and Ireland are strictly parliamentary republics with ceremonial, powerless presidents.) More recently, Portugal, inspired by the French model, adopted this system.

In Latin America, while variances of this system have figured seriously in discussions about constitutional reform, no country has so far adopted the model. Should shifts in government structure take place in Latin American presidential democracies. The movement would not be towards a pure parliamentary form but, most likely, towards a semi-presidential model, with a dual executive system.

And the reason will be mainly pragmatic: the long tradition and intense desire of the ordinary voter to elect personally and directly his or her president. Peruvians expressed it best when they called “the principle of popular election of the president… sacred” and the sine qua non of the presidentialist system and the basis for governmental authority… election by the congress (of the president) would divert from the people what they consider their principal form of political participation.

Until the recent 1993 plebiscite in Brazil where people were asked to choose from a presidential, parliamentary or monarchial system, the Brazilian elite did not fully appreciate the importance of this sentiment. In surveys conducted over a three-year period from 1989 to 1991, Brazilian businessmen, labor leaders, journalist, intellectuals, public sector managers, politicians, navy and air force officers voted overwhelmingly (more than 3 to 1) for parliamentarism over presidentialism. Yet in the 1993 national plebiscite, the result was completely the opposite: 55% chose presidentialism while only 23% went for parliamentarism. Analysts widely attribute this result to a perception by the voters. – depicted and encourage aggressively by the presidentialist – that the parliamentary proposal was an attempt to deprive them their basic right to vote directly for the head of state.

Similarly in the Philippines, without the benefit of a survey, a similar preference by the social, economic, and political elites for the parliamentary system is apparent, for the same bases argued in this paper. But for reasons akin to the Brazilian plebiscite experience, the average Filipino voter will most likely opt for the retention of the presidential system.

Another important point to consider is that this chapter focused mainly on the issue of governmental structure, that is presidential versus parliamentary debate. Being the focus of the debate on institutional reform in the Philippines, this issue is a good starting point for further inquiry into more complex, but clearly related influences on governmental performance. For this reason, weaver and Rockman have called the presidential vs. parliamentary debate the “first tier” of the inquiry about the nature and effect of institutions and their impact on effective governance. But Weaver and Rockman also refer to second and third levels or tiers of influence that also impact on governmental capabilities. The second tier refers to variations within parliamentary and presidential systems. They are different ways in the modal pattern of government formation, or regime type, which tends to be durable over time, but is not unchangeable.

A parliamentary regime, for example, may come about through a multi-party coalition, party government or a single-party dominant government. Within each regime, there may be alternation over time among several government types, by which government is formed. This may be through two or more parties governing in minimum winning coalitions (e.g., Germany), or two major parties alternating majority control of government. (e.g.,Britain or the Philippines during the glory days of the Liberal Party and Nacionalista Party), or a dominant party rulling alone or as a dominant coalition partner For prolonged periods (e.g., PRI in Mexico, or the LPD in Japan before its recent breakup) correspondingly. The important point to remember is that both modal regime type and parliamentary type prevailing at any particular period may have substantial influences on a country’s decision-making structures, processes and capabilities.

The third tier or level of influences refers to broader institutional and non-institutional factors. The former pertains to broad framework institutions, such as judicial review, federalism, unicameralism and similar institutions, while the latter relates to factors such as political context and policymaker’s goals, socio-economic and demographic conditions, and past policy choices.

What these three-tiered influences on government capacity imply is that effective institutional reform requires a more comprehensive and complex approach. It necessarily involves a careful matching of a particular country’s priorities, policy problems and the societal conditions that influence how institutions will function, and the institutions themselves.

In this light, the two-step process adopted by the proponents of a French-style parliamentary system(technically, it is called “French-Style Semi-Presidential System”) in the House of Representatives-first, from bicameral, then, from presidential to parliamentary – may be too simplistic a response to a complex situation. That is why the campaign for parliamentarism has been more notable for exposing the deficiencies of the presidential system than for presenting a well-designed and clearly focused parliamentary alternative.

A final point: the route to reform. Constitutional change, in any setting and however beneficial, always invites controversy and enormous problems. Reformers need a strong case to justify any alteration to the fundamental law of the land.

For example, the 1986 People Power Revolution, because of massive failure in the government, enable President Aquino to discard Marcos’ 1973 Constitution and rule under a decreed “Freedom Constitution.” The latter was subsequently replaced by the 1987 Constitution drafted by a Commission of appointed delegates.

The euphoria and sense of urgency that surrounded these exercises in constitutional reform and formation no longer exist. A strong case for a new round of constitutional amendments needs to be presented. Whether the current situation in the Philippines presents such a case is debatable. But proponents of either a parliamentary or semi-presidential system do not have to wait for such a situation to ripen, if, indeed, it does not exist yet. They can begin the process of institutional reforms through legislative initiatives, such as reform of the campaign finance rules, simplification of the election process, institutionalization of the party list system, amendments of party formation and affiliation rules, among other enactments.

Apart from living the institutional foundation for amendments in the constitution, legislative reforms will also address the reservations of those suspicious of the changes. Most important, the reform will demonstrate the will, commitment and sincerity of the reformers.

* * *

Click here to go to the PDF Version

References:

Bernas, Joaquin, S.J. “To Amend Or Not To Amend, But How?” Manila Chronicle (May 19, 19 93).

Cones, Irene and Haydee Yorac. Final Report of Committee V. Constitutional Revision Project. Quezon City: UP Law Center

De Guzman, Raul P. and Mila A. Reforma, eds. Government and Politics of the Philippines. Singapore: Oxford University Press, 1988.

Diamond, Larry. “Civil Society and The Constitution of Democracy.” CFIA Conference, Center for International Affairs, Kennedy School of Government, Harvard University, December 7, 1993

Hofileña, Chay. “Arguments for the Presidential system.” The Sunday Chronicle (September 19,  1993).

Lande, Carl H. Leaders, factions, Parties: The Structure of the Philippine Politics. New Haven: Yale University Press, 1965.

Linz, Juan J. “The perils of Presidentialism.”journal Democracy , 1 (Winter, 1990).

Linz, juan and Arturo Valenzuela, eds. The Failure of presidential Democracy: Comparative Prespectives, Vol. 1 Baltimore and London: The Johns Hopkins University Press, 1992.

____________eds. Comparative Perspectives and the Failure of Presidential Democracy: The case Of  Latin America, Vol. 2. Baltimore and London: The Johns Hopkins University Press, 1992.

Lijphart, Arend, ed. Parliamentary Versus Presidential Government. New York: Oxford UniversityPress, 1992

____________ “Constitutional Choices for New Democracies.” Journal of Democracy, 2 (Winter,1991).

Stepan, Alfred and Cindy Skach. “Constitutional Frameworks and Democratic Consolidation:

Parliamentarism versus Presidentialism.” World Politics,  46 (Octiber, 1993).

The 1987 Constitution of the republic of the Philippines

Timberman, David G. A Changeless Land: Continuity and Change in Philippines. Manila: Bookmark Inc., 1991.

Valenzuela, Arturo. “Latin America: Presidentialism in Crisis,”Journal of Democracy , 4(Fall, 1993).

Weaver, Kent P. and Ben A Rockman, eds. Do Institutions Matter? Government Capabilities in the United States and Abroad. Washington, D.C.: Brookings Institution, 1993.

Wurfel, David. Filipino Politics: Development and Decay. Quezon City: Ateneo de Manila University Press, 1988.

Constitutional Change Now

 

(originally published in the Philippine Daily Inquirer, 21st November 2012)

by Peter Wallace

Let me give you a few points to ponder when considering whether or not we need to open up the economy by amending the Constitution. Because now is the time to discuss it. If we do, we can vote upon it in 2013.

In 1935, there was rudimentary AM radio, negligible commercial air travel, cars that could reach 100 kph if they struggled hard enough. TV was unheard of. The only household appliances were a simple refrigerator and toaster.

Fifteen years ago, we didn’t have cell phones; today, we can’t leave the house without them. Imagine if the Constitution had banned mobile communications in the name of protecting national security. Today, I can turn on the TV and CNN is right there in my living room. It doesn’t need a transmitter here, or even an office, so why not let it have one if it wants?

Technology has removed borders. Satellite communications, fiber optic cables, digital technology were all unheard of in 1935 and perhaps a rarity in 1987. They are a part of our lives today, so we may as well let the foreigners in as they’re already in.

The dream of many Filipinos is to gain a foreign education to add to what they’ve learnt here. They dream of going to Harvard, but the cost is prohibitive. Why not bring Harvard here? What it will have to charge will, alone, be enough to make it no threat to local colleges. Anyway, do we want to protect colleges or open up opportunities for students? Foreign colleges can bring research and new technologies to the Philippines, too, an area where we have been weak. Indonesia recently passed a law (it does not need constitutional change) to allow foreign ownership of educational establishments.

Maybe a 75-year lease on land seems enough, but would you want to be able to only lease the land for your house? No, you’d want to own it, passionately so. Well, foreigners don’t think in some strange foreign way; they want to own, too. Filipinos can, and do, own land in America and almost everywhere else, so why not here, at the very least on a reciprocal basis? For “own use” would be fair enough. The agrarian reform law has destroyed the ability to own agricultural land, so farmers are under no “threat.” And if limited to own use for house or factory, the amount of land taken would be infinitesimal.

I’m willing to bet many of those who are against foreign ownership of land have relatives who own land in other countries. So, apart from anything else, it would be only fair to have reciprocity. But that’s not so much the point. What is the point is that if we want to achieve more rapid growth, allowing foreigners to own land at least for their own house or factory will help achieve that. As it is now, that inability to own land is seen as a major deterrent to attracting investment.

The ideal way to review the Constitution is through a constitutional convention. The argument that it costs more and takes more time is true, but we are talking about the Constitution, the fundamental document of the nation. You don’t consider the cost, which is small on the national scale of things, anyway.

But the more practical way, given political realities, is for Congress as a constituent assembly to do the review, with both chambers voting separately before it goes to a plebiscite of the people. There’s also concern that the review would not be restricted to the economic provisions but would shift to the political arena as well, and end up extending the terms of politicians. Maybe, but it may also lead to a serious re-think of the whole system—something that I think is needed. For instance, a parliamentary system would better suit Philippine culture. Having come from one, I think it’s a better system, anyway. I don’t like the dictatorial power a president holds even in a democratic system, particularly in a country where hierarchy is a given. You don’t question, or disagree with, the boss, just because he’s the boss. Well, I disagree with that. Rising to the top through a political process does not make you a greater expert than everyone else. The fact that you need the president’s support if constitutional change is to be effected is a perfect example of this fundamental weakness in a presidential system, Philippine-style. Think about it: Why should you need (as in this system you do) the President’s—one man’s—support for something to succeed?

The problem with the presidential system is that it panders to the hierarchical nature of the Philippines. There’s a reverence for the boss (I like that) at a level not common elsewhere. A Philippine president is almost royalty. A parliamentary system somewhat levels the field. A prime minister is a first amongst equals, and may be taken out by a simple vote of confidence if he doesn’t perform.

In a parliamentary system, the majority decides, the prime minister can’t override it. That’s as it should be. So I wouldn’t object if the style of government were included in the review.

Everyone says, “Not now,” it’s too open to risk of political machination (to just extend terms, for example). But if not now, when? With a President disinterested in a continuance in power—something that’s unlikely to be ever repeated—this seems an ideal time. If a full review were to be agreed to, then a constitutional convention is the only way.

Whichever is agreed to—a full review, or just the economic sections—let’s do it now.

We’ll never have  a more favorable time.

* * *

Peter Wallace has been described as the most prominent foreign businessman in the Philippines, and an important voice for business within government. Peter has been conducting political, economic and business analysis for over two decades, advising multinationals, major Filipino companies, embassies and international agencies. Having covered 4 presidencies, 2 revolutions and some 8 attempted coups d ‘etats, Peter provides a balanced assessment of conditions and forecasts of what can be expected. Peter’s links into government, senior business groups, the academe and various political factions ensure some of the best insights available.

A Tale of Two Countries

(Borrowed from the Far Eastern Economic Review)

by William McGurn (June 1994)

Editor’s note: While it is true that this is an old article from June 1994, the author William McGurn’s analysis is so spot-on and remains extremely relevant today such that this article seems as if it was written just yesterday. If anything, it is worth noting that the Philippine situation is even far worse now (some 20 years after this article was written) so that whatever the author wrote in 1994 has become even worse in terms of degree. That this article was written in 1994 does not diminish the Truth that this article speaks.

The human costs of protectionism 

Teresa Concepcion had high hopes for her future.

Although her father was only a farmer with a grade-school education, things were looking bright for the new generation of Filipinos. By the time Teresa (not her real name) was born, the country had risen from the ashes of World War II to achieve not only independence and a working democracy but the second-highest standard of living in the Far East after Japan’s. In 1970 she entered a local university. Four years later, degree in hand, she took a job as a social worker supervising day-care centers. That’s when her dreams began to dissolve.

Teresa had expected only a modest salary. Upon entering the working world, however, she was stunned to find out exactly how low wages were, not only in her profession but throughout the Philippines. Her paycheck brought in barely $40 a month. By now she was married and had given birth to the first of three sons. Her husband, a surveyor’s assistant with the Bureau of Land and Natural Resources, made no more than she did. Even such basics as clothing and baby food became more than they could afford. And so, after eight years of incessant financial struggling, Teresa and her husband made a critical decision.

In the summer of 1983, she hugged her husband and three boys–ages 7, 5, and 3–and, with money borrowed from her in-laws, boarded a plane bound for Hong Kong at Manila Airport. At age 33, she was leaving her family behind to begin a completely new career: as a maid

Teresa was not alone. Some 105,000 Filipinas labor in Hong Kong as amahs, or maids. Almost a decade after the People’s Power revolution that toppled Ferdinand Marcos, the plight of these women remains a standing indictment of the Philippine government’s staunchly protectionist economic policies. Like Teresa, the amahs are for the most part smart, relatively well-educated women who found the door of opportunity slammed shut at home. They have college degrees in disciplines ranging from accounting to education, yet they find themselves cooking meals and scrubbing floors for Hong Kong shop clerks and secretaries. Like Teresa, many of them are mothers who are now raising other people’s children while their own grow up without them. Underscoring their predicament is a cruel irony: A generation ago, Filipino families imported Chinese maids.

Today the situation has reached crisis proportions. Within East Asia, disparities in prosperity have led to huge labor outflows, mostly from poorer countries such as the Philippines to richer ones such as Hong Kong, Singapore, and Korea. The maids are only the legal tip of a Filipino iceberg that includes such diverse occupations as nightclub dancers, construction workers, shop clerks, and mechanics. Their growing numbers and negative image have become sensitive issues both at home and abroad. When Teresa first arrived in Hong Kong 10 years ago, there were only 24,800 Filipina amahs at work; now there are more than four times that many, and locals complain that the women occupy the city center on Sundays, their one day off.

In the Philippines, the debased condition of these women has led to legislation calling for an end to the Overseas Worker Program. In 1993, Philippine public opinion was outraged by the death of a Filipina nightclub hostess in Japan whom Japanese authorities said died from hepatitis but whose family claimed she had been beaten. Filipinos are also upset by the virtual identification of domestic with Filipina throughout the region.

The current president, Fidel Ramos, has vowed to reverse some of the longstanding policies that have sent so many Filipinos abroad–a promise that the Philippine people have heard many times before. Ramos’s biggest obstacle is a reluctance among the Philippine establishment to admit that its self-perpetuating economic policies are largely responsible for the country’s descent into poverty.

Over the years, Philippine leaders have ascribed their abysmal economic failure to any number of root causes, including their colonial heritage, Marcos-era greed, and a series of natural disasters. The truth, however, is that the country’s poverty is no accident and the quandary in which Filipina maids find themselves owes itself almost directly to the most pernicious of economic sins: protectionism. For the past 40 years, under the guise of ensuring the country’s economic sovereignty, successive Philippine governments have enacted laws that have discouraged foreign investment, concentrated wealth in fewer and fewer hands, and diminished the standard of living for the average Filipino to the point where less than 50 percent of the country earns a subsistence wage. 

Nowhere is this clearer than in a comparison between the Philippines and Hong Kong, just a two-hour flight from Manila and the destination of so many Filipino laborers desperate for work. Just as the Philippines owes its current status as “the sick man of Asia” to longstanding protectionist policies, Hong Kong owes its stupendous wealth today to an ongoing commitment to open markets and a hands-off approach to business. For the past decade, Hong Kong has boasted an unemployment rate of under 2 percent, and its residents purchase more each year than the Japanese, other Asians, or Europeans. In 1993, Hong Kong’s per-capita income even surpassed that of its colonial protector, Great Britain.

But Hong Kong was no more destined to be wealthy than the Philippines was destined to be poor. If anything, it was a prime candidate for the sort of economic anemia that afflicts the Philippines. Lord Palmerston’s remark about Hong Kong upon its 1842 acquisition by the British–he called it “a barren island with hardly a house upon it”–was a fair description of its seeming promise, and even today its crowded population is spread over an inhospitable terrain that makes it utterly dependent on its neighbors even for basic resources such as water.

If Hong Kong’s natural obstacles to wealth were considerable, the man-made ones were downright staggering. No sooner had the colony begun to recover from the Japanese occupation of World War II than the Communist takeover of the mainland sent hundreds of thousands of desperate refugees to its shores. A few years later, a United Nations-imposed boycott of China saw Hong Kong lose its largest market overnight. Back in the 1950s and ’60s, the experts were not talking about the “Hong Kong miracle.” Back then, they were wondering if Hong Kong would survive.

Hong Kong withstood these pressures primarily by remaining open to foreign investment. While the Philippines and other East Asian nations chose to coddle their industries and put their faith in central planning, Hong Kong forced all its industries to compete with the rest of the world on their own merits and on a completely equal basis. And now, when countries such as South Korea are busy trying to pare down huge bureaucracies spawned by protectionism, Hong Kong is free to do productive business. There are no foreign exchange controls, and foreign companies are free to take their profits out if they choose. Taxes are stable and minimal, with none on capital gains and a flat tax on corporate profits. As Milton Friedman once quipped, “To see how the free market really works, Hong Kong is the place to go.”

This prosperity and freedom are largely the legacy of Hong Kong’s legendary financial secretary, John James Cowperthwaite. During the 1960s, Hong Kong was said to be governed “by the gospel of Adam Smith as expounded by his disciple John James Cowperthwaite.” Arriving in the colony as acadet officer in the civil service just three months after the Japanese surrender and charged with getting the economy back on its feet, Cowperthwaite immediately noted the degree to which Hong Kong’s resilient economy had already recovered without any government help. Cowperthwaite’s strength was that, more than most, he understood that even the most brilliant planner was no match for the collective genius of the market.

Whether it was water–which in those days was always in short supply–or food or energy, Cowperthwaite insisted that the best way around the problem was to allow free pricing among suppliers and to keep the doors open to anyone who wanted to enter. He did his part by keeping taxes low and refusing to spend more than he took in. “I see no reason,” he once said to a request for government to finance lower water rates, “why someone who is content with a cold shower should subsidize someone who is able to luxuriate in a deep hot bath.” Cowperthwaite, in fact, was so distrustful of intervention in the economy that he refused to allow the government to keep statistics on gross national product–on the grounds that if the government kept the statistics they would only misuse them.

This strategy was not simply do-nothingism. At the same time the government was keeping taxes low and spending under control, it embarked on a public housing scheme that would eventually shelter more than half the population. The difference was that Cowperthwaite could afford to do this since he maintained fiscal restraint and resisted calls to subsidize Hong Kong industry or give them any protection.

“Had Cowperthwaite taken the advice or yielded to all those who wanted more government intervention,” says Richard Wong of the Hong Kong Center for Economic Research, “Hong Kong would not have prospered. By keeping Hong Kong open he ensured that it would remain competitive.”

Certainly history has vindicated Cowperthwaite’s judgment. During the 10 years between 1961 and 1971 that Cowperthwaite was Hong Kong’s financial secretary, income grew faster there than anywhere else in Asia. The policy of keeping the door open to imports also fueled an export boom–at a phenomenal average annual rate of 13.8 percent over these years. Real wages increased by more than 50 percent over this period and remain roughly twice those of both Korea and Taiwan.

Hong Kong’s disavowal of protectionism extends to the lack of anti-dumping laws that are used even in the United States to keep competitors out. “Any economist will tell you that when you keep foreign business out you simply hurt your own people,” says Hong Kong treasury secretary and former trade negotiator, Donald Tsang. “All you are doing is cutting your nose off to spite your face. We keep our economy open because it is in our self-interest.”

(Note: Sir Donald “Bow-tie” Tsang went on to be Hong Kong Chief Executive at the time when Noynoy Aquino committed terrible embarrassing diplomatic blunders during the HK Tourist Bus Hostage Crisis.)

If Hong Kong owes its impressive wealth to a conscious political decision not to micro-manage the economy, the Philippines’ pervasive poverty represents the negative version of the same argument. There, a series of conscious economic choices made over the past four decades–especially a hostile attitude toward foreign investors–has allowed local monopolies to flourish at the expense of both workers and consumers.

Some have called it “crony capitalism.” But the preferences enjoyed under this arrangement have little in common with capitalism, and the cronies would lose their protected empires tomorrow if the state weren’t propping them up. The ruling elite in the Philippines has taken a country with a well-educated English-speaking work force and an enviable location smack dab in the midst of the world’s fastest growing market and turned it into an economic basket case.

This took some doing. Providence had bequeathed the Philippines many advantages, including an almost inexhaustible supply of natural resources: gold, iron ore, copper, cement, salt, granite, marble. Its soil was rich and its produce bountiful, including rice, sugar, coconuts, tobacco, bananas, and avocados. In the late 1950s and early ’60s, it was second in Asia only to Japan, and everyone assumed that its future would be as bountiful as its present.

As the World Bank put it in an upbeat report, “By comparison with most underdeveloped countries, the basic economic position of the Philippines is favorable…. |Apart from its~ generous endowment of material resources and high level of literacy, other favorable factors are the growth of the labor force, the availability of managerial and technical skills, the high level of savings and investment, rather good prospects for most of the Philippines exports, and considerable possibilities for import substitution.” The Philippines was considered so successful, in fact, that in the ’60s Manila was sending specialists to Korea to advise them on their development.

But the Philippines never realized its potential. Instead opening the door to foreign investors with the money and the wherewithal to make something of its resources, the Philippines wrapped itself in the cloak of protectionism. Under the guise of nationalism–the country had achieved independence in 1946–the Philippines passed a series of laws limiting what they called “alien” (foreign) involvement in the economy. It started with a limit imposed on alien-owned market stalls in Manila and soon covered everything from access to credit to quotas on imports. By the end of the ’50s, this had evolved into a full-fledged ideology called “Filipino First” that would figure prominently in the presidential elections for years to come.

In 1960, Philippine President Garcia summed up the Filipino First policy as merely “an honest-to-goodness effort of the Filipino people to be master of their own economic household.” His secretary for commerce and industry, Manuel Lim, likewise described the policy as simply an effort to ensure that Filipinos get some share of the benefits flowing to foreign investors. Of course, it was slightly more than this. Although both Garcia and Lim went out of their way to say the Filipino First policy would be fair to outsiders, they both saw foreign involvement in the economy as a “threat” and a cause for alarm. Although the policy was later relaxed somewhat, the emphasis remained on ensuring Philippine “supremacy.”

“It’s the classic mistake for developing countries,” says Richard Wong. “Despite all the populist rhetoric, whenever you make it more difficult for foreigners, all you are doing is taking money from the public and putting it into the hands of the vested interests.”

In the Philippines, protectionism was intertwined with racism. Many of the local entrepreneurs belonged to the country’s sizable Chinese minority, and many of the government regulations attempted to force them from their economic niches. Two of the most infamous regulated participation in retail selling and the corn and rice industries. In June 1954, President Ramon Magsaysay signed “An Act to Regulate the Retal Business,” which was followed by a 1964 measure that tightened the screws even more. The gist of the regulations was that no industry or store could sell directly to the public unless it was Filipino owned; otherwise the business had to sell to a Filipino first. The object was to make sure that Filipinos got a piece of the action on every sale. But in practice, the regulations simply created a middleman who raised the final cost to the consumer. The almost-immediate effects included a precipitous drop in the number of newly registered retail businesses and a sharp rise in general prices.

Much the same thing happened in 1961, when the Philippines passed another protectionist act, this one “Limiting the Right to Engage in the Rice and Corn Industry to Citizens of the Philippines.” Like the retail business law, this one took aim at the Chinese merchant population by decreeing that only Filipinos would be allowed to participate in rice and corn production. This was a big decision, because at the time rice was both the chief staple of Filipinos’ diet and a significant commercial export. In 1960 there had been 6,100 foreigners registered in the rice and corn business, but by the summer of 1962 the executive director of the Rice and Corn Board, E. V. Mendoza, reported that the program had “worked” in running foreigners out.

“Success,” however, was curiously defined. Apart from encouraging fraud–some foreigners simply put their companies in the names of their Philippine wives or friends–it had a disastrous effect on production and prices. Mendoza was correct in noting that by year’s end most of the rice and corn business was forced out of foreign hands. But the price paid by the population for that change was a severe rice shortage. The Philippines went from a country that exported rice to one that imported it, a situation that did not change until much later in the decade when scientific advances introduced a new, “miracle” rice capable of tremendous new yields.

The government’s continuing support of protectionist policies in the face of such abject failures is the reason why Max Soliven, editor of The Philippine Star and the country’s most popular columnist, blasts the Filipino First philosophy as “the pirate flag of convenience for vested interests.”

“Every big foreign investment project,” says Soliven, “is slandered as ‘a scam’ or labeled ‘imperialist exploitation,’ and thus those two cabals of conspiracy, the Old Rich and the nouveau riche, manage to fight off and repel ‘the enemy.'” Filipino First, says Soliven, should really be called “Filipino Last and Always.”

As far back as the early 1960s there were voices raised in warning. In 1962 the president of the Philippine Chamber of Commerce, Alfonso Catalang, went on television to say that Filipino First was shooting the country in the foot. My magazine, the Far Eastern Economic Review, warned that “Filipino politicians seem to favor securing foreign loans instead of inviting foreign capital to come in.” The direct result of such choices were the bloated Philippine monopolies that still stand before us today, protected from foreign competition and unresponsive to the needs of the country.

Although myriad regulations restrict foreigners doing business in the Philippines–foreign banks, for example, have not been permitted to open new branches since 1948–the most effective way of keeping them out has been a law limiting the amount any foreigner can own in a business to 40 percent. At the start of his reign, President Marcos made some moves to open up the economy, but instead of busting the monopolies he merely put his own buddies in charge of them. Nor did things improve with the People Power revolution of Cory Aquino. By 1991 foreign investment in the Philippines totaled only $783 million–compared to about $5 billion for Thailand and almost $9 billion for Indonesia, which is just about as poor as the Philippines.

In many ways, in fact, Aquino only made the situation worse. The constitution drafted by her associates specifically blocks or severely limits access to vast segments of the economy by outside developers, especially in the area of natural resources. Section 12, for example, requires that the “State shall promote the preferential use of Filipino labor, domestic materials and locally produced goods.” In effect, the revised constitution applies the 40-percent limit to all but a few areas. Filipino First is back with a vengeance.

The reason the 40-percent limit is so debilitating is that as long as votes in a company are pegged to the owner’s share, no foreign investor will have control over his money. This is particularly distressing in a developing country such as the Philippines, where the economic climate is uncertain and the risks are already high. Foreigners are unlikely to invest millions of dollars if they don’t have a say over how the money will be spent.

“If I had to name one thing that has hurt the Philippines more than anything else, it’s this 40-percent limit,” says Peter Wallace, an international business consultant and economist who has lived in Manila for many years. “We had a similar problem in Australia years ago–we were resource rich but cash poor. Much of Australia’s development came about because it opened the door to those who had the money to develop, especially in the mining industry.” In testimony before the Philippine Congress, Wallace pointed out that if the Philippines followed Australia’s lead, the country’s abundant resources would finally start paying some dividends.

The development of natural resources is hardly the only area of the Philippines’ economy affected by the lack of foreign capital. The nation’s infrastructure, for example, remains one of the worst in Asia. President Ramos has recently eased the ongoing power shortage that just last summer was responsible for blackouts of 10 to 12 hours a day. But the shortage never would have occurred had the country opened energy development to foreigners. “Making yourself open to foreign investment does much more than bring in money,” says Wallace. “It brings in badly needed technology. It grows your exports. It creates jobs, and it generally also develops a host of industries that pop up to serve the new investors.”

The Philippines’ nationalism has, in fact, managed to strangle every aspect of economic development. Foreign goods remain a luxury that only the protected rich can hope to afford. Recently Philippine Sen. Blas Ople pointed to a study by the government’s own assistant secretary for trade documenting that no less than 167 signatures were necessary to release an imported car from the Bureau of Customs. Ople had a field day when the customs commissioner proudly announced he had greatly reduced the number of necessary signatures: to 50.

The regulatory choke hold is also responsible for a phone system so abysmal that it is an international embarrassment. In a November 1992 visit to Manila, Singapore’s senior minister, Lee Kuan Yew, publicly spoke out against the Philippine telephone company as “an example of a powerful vested interest … which has had a monopoly for 64 years.” He also cited a standing joke that “98 percent of Filipinos are waiting for a phone and the other 2 percent are waiting for a dial tone.” In fact, fewer than 2 out of 100 Filipinos have phones in this nation of 61 million people, and the Philippine Long Distance Telephone Company controls more than 90 percent of the existing 600,000 lines. Their monopoly has been helped along by Supreme Court decisions that shut Eastern Telecommunications out of the market and awarded a contract to PLDT even though its foreign-backed competitor had outbid it by a factor of six.

Comparing the Philippines’ phone system to Hong Kong’s actually provides a thumbnail sketch of how two economic systems produce hugely different results. While the Philippines stagnates with one of the worst phone systems in the world, Hong Kong boasts one of the best: fully digitalized with about 63 phones per 100 population, about double the number of another East Asian powerhouse, South Korea. It is so easy to get a phone in Hong Kong that almost all the colony’s shops have a phone sitting out front that customers can use free. And with new developments in related technology (such as cellular phones) now becoming popular, the government reviewed its telecommunications policy and decided to open up additional networks to increase competition.

Beyond all the theoretical and statistical explanations, however, the painful human costs of the different economic strategies pursued by Hong Kong and the Philippines are dramatically illustrated by the booming growth of domestic helpers in Hong Kong. A generation ago, middle and upper-class Filipinos were likely to have poor Chinese as amahs. Today the situation has flip-flopped. Thousands of desperate Philippine women just like Teresa Concepcion–college educated and with children of their own–are forced by circumstances beyond their control to go abroad and work as domestics. The ones who are lucky go to Hong Kong. Many go to the Middle East or other parts of Asia, where the work is even more demanding and the environment even more difficult.

Despite their relative good fortune, their life in Hong Kong is not an easy one. According to a survey by Asian Labor Update Research, some 40 percent of these maids work 14 to 15 hours a day and 30 percent work 16 to 17 hours a day for a standard monthly wage of $415, much of which is sent back home. If they are “lucky,” as is Teresa, they have an “amah’s room” off the kitchen–a non-air-conditioned eight-foot-by-six-foot cell barely big enough for a twin bed. Less fortunate amahs sleep on a couch or share a room with the younger children of their employers.

Life on the bottom rung of society has its other problems as well. Filipinas often report that the Chinese look down on them and treat them harshly. Indeed, one of the colony’s biggest companies, Hong Kong Land, recently tried to bar them from sitting on its grounds on weekends when they congregate with their friends in the center of town.

Occasionally, their work may even prove fatal. One Filipina, Pascuela Destas, gave her life for her 5-year-old charge by pushing him out of the way of an out-of-control bus. But saving the life of her employers’ son meant that Destas left her own three boys back in the Philippines without abreadwinner.

Although life in Hong Kong may be difficult, the maids agree on one thing: It is better than being in the Philippines. Thirty-eight-year-old Eppie Cruz is typical. Ten years ago she received her B.S. in accounting from the Philippines’ University of the East. After her graduation, she came to Hong Kong to work as a domestic to support her sisters back home. “Of course we would like to stay in the Philippines if the opportunity was there,” says Eppie. “But the jobs are here.”

Eppie is wearing a Giordano blouse, a popular brand in Hong Kong roughly equivalent to the Gap in America. In the Philippines, she says, it would cost three times as much as it does in Hong Kong. The same goes for her Sony Walkman. Back in her tiny room, she has a telephone, an air conditioner, a JVC television, and a host of minor appliances that are standard in Hong Kong but would be regarded as luxuries in the Philippines.

Or consider 49-year-old Cora Alanunay. Cora is the mother of six children–two of whom are with her in Hong Kong, also working as domestics. One son, Ramon, is working in a hospital in Saudi Arabia. She came to Hong Kong shortly after she was widowed and needed work, and like her friends she is impressed by Hong Kong’s commercial openness and the opportunity it breeds. Although Cora makes only a minimal wage in Hong Kong, it’s far more than what another son makes back in the Philippines as a bank executive.

The incentives are as clear as they are heartbreaking. Today Teresa Concepcion’s children are 16, 14, and 12. Since leaving the Philippines nine years ago, she has seen her boys and her husband just once each year for a few weeks’ holiday. Yet she has little choice. Her salary of $520 per month is 13 times what she could hope to make in the Philippines, and each month she mails half of it back home. Like other Filipina exiles in Hong Kong, Teresa stoically accepts the trade-offs: “I constantly remind myself how important it is to send back the money to them. Otherwise I would get depressed thinking about the kind of work I’m forced to do.”

These amahs are not alone. Ever since the Philippines started its Overseas Employment Program in the mid-1970s, hundreds of thousands of Filipinos who would otherwise have stayed at home have gone into exile to provide for their families. They have also provided for their country. Last year, the 4.5 million Filipinos working abroad helped bail out their country’s cash shortages by sending home an estimated $2.5 billion in foreign exchange-more than the revenue from a number of important Philippine industries, including tourism.

Having inherited an economy that so demeans productive workers, President Ramos has moved to open up the banking system and, most recently, has vowed to fulfill promises to sell off state enterprises. But the problems remain formidable–particularly the protectionist constitution that walls off investment in any number of areas and a Filipino First legacy that endures. Perversely enough, at a time when the Philippines ought to be out begging for multinational investment, a major argument in the national legislature against the privatization of firms such as Petron Oil is that they may be bought by foreigners.

Ramos, too, for all his stated intentions to the contrary, is not above playing the old games. Back in 1975, Imelda Marcos erected pretty white fences so that the delegates to the annual IMF/World Bank meeting would not have to be offended by the sight of the very poor they were supposed to serve. Last year on May Day, President Ramos announced plans to close the Smoky Mountain garbage dump–long a favorite of foreign reporters looking for a symbol of the Philippines’ crushing poverty. The thousands of scavengers who eke out an average $3.00 per day picking through Smoky Mountain’s waste for anything they can sell, use, or eat are upset that the government is once again taking away what little livelihood they have. The Philippine poor will be forced to move out of sight, if not out of poverty.

And in Hong Kong, Filipina mothers and daughters continue to pay a devastating social and economic price for the protectionist schemes of their government. Most of these women started out with big dreams; Teresa Concepcion thought that with her college degree she’d have a fulfilling career in the Philippines, not a job scrubbing floors in Hong Kong. Today she just wants to go home. “I’d like to return to the Philippines in two or three years,” she says, “maybe to farm with my husband.” Even if she is lucky enough to do so, it will mean her children will have grown up without her. What kind of protection is that?

William McGurn is a senior editor at the Far Eastern Economic Review.

Here's how bad the level of FDI has been in the Philippines when compared to the rest of ASEAN.

Here’s how bad the level of FDI has been in the Philippines when compared to the rest of ASEAN.

Tale of Two Countries

Making the economic comeback w/ higher private FDI

Dr. Gerardo Sicat

(taken from the Philippine Star – originally published: 13 June 2012)

by Dr. Gerardo Sicat

As economic opportunity knocks on the country, the question is how to maximize the gains for the social and economic good.

“Two needed market reforms.”

There are two market reforms that can bring us to the front ranks of high growth countries. These reforms concern, first, the attraction of private foreign capital in critical sectors of the economy and, second, the improvement of flexibility of the labor market to create greater employment.

I have written extensively on these topics on previous occasions. I will try to introduce new arguments in support of these reforms as much as practicable. (Today, I discuss FDI policy.)

“Broadening the capital base of the economy.”

The improvement of the flow of private foreign capital has to do with the liberalization of the constitutional restrictions on foreign capital.

These restrictions deal with provisions of the constitution with respect to special sectors of the economy: land, natural resources and public utilities. In terms of the corporate framework, the restrictions are summed up in the “60-40” equity rule favoring Filipino over foreign capital participation.

The policy as it stands permits all foreign investments to come to the country except those that are specified in Foreign Investments Negative list. This list enumerates specific economic activities where foreign equity is either limited or banned. But direct incentives to promote specific investments rest mainly with the BOI, further constrained by the restrictive economic policies pertaining to foreign capital.

“President Aquino’s position on the ‘60-40’ rule?”

It is unfortunate that when asked pointedly during the talk that he gave before the alumni group of US business schools recently, President Aquino replied that he felt more “nationalistic” on this issue, implying that he does not intend to work to amend this provision.

The President can speed up economic growth by directing more foreign direct investments to the country through the liberalization of these provisions. The question cannot be put aside. New investors will always ask the same fundamental questions, and they compare our answers with what other countries do. Why not simply do away with the issue?

Nationalism has been used as main cover of the standard argument in support of these restrictions. While indeed the economy has grown, because of the limitations imposed by this policy, the nation’seconomic growth has been limited and less inclusive.

The benefits of development have been confined to a smaller segment of the population. In this respect, the policies have hampered growth, thereby reducing employment and productivity at home.

“Wide gaps in investment needs.”

Today, the big gaps in services exist in public utilities, transportation, and infrastructure. Despite our good natural endowments, there is also under-investment in the natural resources industries and in agriculture.

These are sectors in which the involvement of private foreign capital leaves much to be desired. Energizing private foreign capital to invest in these sectors would imply providing greater leeway to allow foreign capital to move into these sectors.

“PPP participation is narrow.” 

A most noticeable aspect of the PPP (public-private partnership) projects is that there is limited participation of private foreign capital in them.

Many of the infrastructure projects require huge financing and also a high level of technical capacity of the main contractors. And private foreign capital is in search of good investment projects because of low world demand.

A liberalization of the rules regarding the constitutional restrictions – which could only be amended by a concerted effort to deal with the issue through constitutional amendment – would line up more players to the PPP infrastructure projects pipeline of the government.

A consequence of this provision is that foreign capital will seek Filipino partners to do their job well. In their homeland, Filipino enterprise can leverage their contributions to the projects even if in the process they allow a larger proportional inflow of foreign capital and foreign expertise to get the job done.

Solving the infrastructure problems of the country has a sizable impact on raising the country’s economic productivity, thus accelerating the growth of the whole economy. The sooner the better.

“Raising Philippine international competitiveness.”

A perverse outcome of the “60-40” investment rules in the availment of BOIinvestment incentives is that we have promoted relatively weak national firms in the domestic economic sector. This is a setback since we are entering a new stage of competition within the larger free trade ASEAN market.

The best evidence of this can be found in our department stores, grocery shops, and in the hardware and construction supermarkets of the country. Goods that are made in other ASEAN countries can be found that give us tough competition. Our locally made products tend to be more expensive in these stores and sometimes suffer from comparison.

These are products produced for home consumption and for the domestic market. Sometimes we find products that they produce which we do not make at home. The countries that have welcomed foreign direct investments with less restrictive conditions compared to us.

The joint venture enterprises and FDI owned companies in these other countries have managed to encourage firms that produce goods that are of high quality under competitive international pricing. These products could have been produced in the Philippines but the foreign investors had moved to the other countries where they located their factories.

“Integrating the industrial export sector with the domestic economy.”

Another perverse consequence of the “60-40” is the disconnect that exists between the domestic industrial sector and the export sector. The export sector imports raw materials to process them for export.

Our record in industrial export has been reasonably successful. However, we have not developed greater depth in domestic industrial sector because of restrictive policies on joint ventures. The result is that there is very low domestic procurement ratio for industrial export firms.

There are not enough world class FDIs and domestic firms that produce for the local market. The foreign investment promotion laws have segregated domestic enterprises with the enterprises that produce for exports.

This is unlike in Thailand, Malaysia, and now, also in Indonesia and in Vietnam! PEZA-located firms prefer to buy their inputs from world supplies rather than from domestic firms because the latter do not have competitive sources of supply if they exist at all in the domestic economy.

Of course, the evidence for this is simply that PEZA has succeeded more in inviting foreign direct investments compared to the BOI. And PEZA has only a more recent history compared to that of the BOI which dates back to 1967.

* * *

* * *

The author’s email is: gpsicat@gmail.com. Visit this site for more information, feedback and commentary: http://econ.upd.edu.ph/gpsicat/

Dr. Gerardo Sicat is an economist who advocates bringing in more FDI and MNC’s as a means of increasing the number of jobs in the Philippines by removing the anti-FDI provisions in the economy that have caused the Philippines to remain poor and unable to provide jobs to its people.

 

The Parliamentary System: Would it produce better leaders?

[by Arnel B. Endrinal]

I am not a die-hard advocate of Constitutional Reform but I generally support the idea. However, while others support it primarily for the economic agenda, I on the other hand do so for my search-for-leaders agenda. I think that by getting the right leaders, we also solve the problem of our bad economy. Actually, to be more accurate, by getting the right (or at least better) leaders in control of government, it follows that those right (or at least better) leaders (not us directly) will also do the right (or at least better) things to improve the economy.

So to me, the prospect of Constitutional Reform is attractive primarily on the chance to reform the way we elect our leaders. It is for this reason that I am closely looking at the Parliamentary System for which, at this point, I still have not encountered any solid argument against. But the main question is: How was I able to say that we could have right (or at least better) leaders under a Parliamentary System?

In order to answer this question, let us see the differences on how we elect our leaders now and in a Parliamentary system. In our Presidential system, the people choose a President by direct vote. In a Parliamentary system, the people choose their representatives for the parliament who then choose among themselves the prime minister.

Under our present system therefore, a person who would like to be President would need to campaign in every corner of the country. He will need to visit all districts or at least have his posters all around everywhere. He will need to have advertisements in all possible mass media outlets, TV, radio, print and the internet. He will need to build his machinery, those who would campaign for him everywhere and those who would guard his votes. In short, he needs several billions of Pesos that he either has (he’s filthy rich, eg. Villar) or given to him (someone else controls him, eg. you-know-who). But Billions of pesos would not necessarily assure him of winning (eg. Villar again). He also needs mass media supporting him widely (translation, he needs Billions more or the prospects for mass media of Billions more).

Now if I am really a good person with good leadership and good policies in mind, suffice it to say that under the present system I wouldn’t be President. No, not in 6 years, not in 12, not in my lifetime.

On the other hand, in a parliamentary system, the potential Prime Minister or PM would need first to win in his district where he needs to spend perhaps only a few million pesos (P10M the most by some estimates). Then, when in parliament, he would need to convince his colleagues. If there are say 300 representatives, he would need to convince just 151 of them.

This brings us to the tricky part. If that were you, how can you convince 151 representatives to make you PM? Do you need money or talent? Do you need money, the ability to buy off your colleagues? Or do you need talent, the ability to show the stuff you are made of and convince your colleagues that it’ll bring them longer tenure if they are on your side?

In order to answer this second set of questions, we need to review further how the system works. In the present system, once budget is approved (and there will be budget whether congress likes it or not), the President holds the pot (the money). That is why the President holds more power than congress and the latter tends to follow wherever the former goes. Meanwhile, in a parliamentary system, it is parliament who holds the pot. To be more precise, it is the majority of people in parliament who holds the pot.

This means if a would-be PM plans to buy off the majority of his colleagues to make him their leader, he needs to have a bigger pot than what the parliament already has. By the way, the pot we are talking about here is in the Trillions, the entire Philippine budget plus more. So I am sure whoever has trillions can indeed become prime minister, that is until the next budget where he needs to spend another set of trillions more. So, I really doubt anyone would spend trillions to become PM. And that is where the opportunity for talent comes in. It is obvious that, in a Parliamentary System, a person with real talent has good if not better chances of winning than one who relies only on money.

So if I am a really talented person, I can say that I have better chances of being prime minister in a Parliamentary than in our present system. But of course, I cannot really be sure. I am saying I have talents, but that is according to myself. There could actually be more people more talented than I am, perhaps an older person who has more experience politically, perhaps a richer dude who has more business background and who knows finance better than I do, perhaps a better speaker who easily convinces more people than I can, or perhaps a party leader who started earlier than I did. You see, people with various talents would be encouraged by the system that more and more people who are better than I am could be competing. But if I am really good, that wouldn’t stop me from trying, nor would it stop me from learning and eventually be like or be even better than the best of my colleagues, and perhaps in the end be PM.

Hey, don’t get me wrong. I do not plan nor want to be Prime Minister. The search for leaders is my first agenda, and I think the parliamentary system given the above considerations simply and naturally produces better leaders than our present system, which consistently shows enough proof of producing mediocre ones.

* * *

This article was originally written by Arnel B. Endrinal in one of his blogs, “The Pinoy Solutions.”

Arnel B. Endrinal was the founder and main anchor of Sentro ng Katotohanan, which previously aired from 8:30pm to 9:30pm every Tuesdays and Thursdays at 1242 kHz – DWBL.

He is a co-founder of the CoRRECT™ Movement and has been active in helping organize several Round Table Discussions in connection with the University of Asia and the Pacific.