Friday, October 9, 2009

Rising from the mud and muck - Part 2




The response was instantaneous. As if on cue, the global Filipino community responded with determination and zeal, with the mantra of self-sacrifice and the truly magical Filipino tradition of the bayanihan. If only Filipinos would have the same passion to change their world, nothing would be impossible for this Pearl of the Orient Sea.

Unfortunately, unless there is a calamity the magnitude of Ondoy and the resultant flooding of the heart of their country, Filipinos do not react well to the stresses of their everyday lives. They in fact do not react at all. They pretty much leave everything in the hands of God. They pray that their God would have pity on them, but if He doesn't, Filipinos would understand and simply submit to the "will of the Lord."


That is why when everything is said and done, you can bet your last nickel that Filipinos will go back to their lives - what's left of it - and become willing actors in a stage play that is being billed by their neighbors as "The Sick Man of Asia."


I hope I'm wrong. Besides, it would be a cop-out to terminate this analysis at this point. Let us dig deeper. Why do Filipinos prefer the annual ritual of making donations not only in cash and necessities, such as clothes and foodstuffs, but also of their time and their heroism? Why not spend a year, two years, ten years, to making sacrifices so that the infrastructure would function properly?


Let me explain this. Everyone knows that the esteros and rivers must be dredged. Everyone knows that the sewage systems must not be clogged up with garbage because when the rains come, deadly floods are sure to follow. Everyone also knows that whatever needs to be done will not be done.


Why are such life-saving infrastructure maintenance tasks not done? Why doesn't the government do a better job at it?


First on the government: Filipinos do not think that their government has the competence or the resources to do the right things. And it's OK with them. They know instinctively that they are electing incompetents (some are not only incompetent -shades of "Heckuva job, Brownie" - some are allegedly hopelessly corrupt) so Filipinos do not expect much from their government when it comes to building and maintaining infrastructure.


They know of the unwritten rule that if government is seen and used as a dispenser of political favors, an institution that creates make-work projects, a milking cow for powerful politicians and bosses, an enabler of tax cheats and jueteng lords, a see-no-evil-hear-no-evil-say-no-evil security guard, who in their right mind would expect that government would be there to take care of people's needs?


Second on the people: Filipinos know that they will be called on time and again to conduct food, cash and clothing drives every time a typhoon hits, or the earth shakes, or mud flows and covers whole villages. And it's OK by them: it gives them a chance to display their heroism and their charity. For politicians, it is an opportunity to stamp foodstuffs with their names - even foodstuffs that they did not personally donate - so that the people would remember them in the next election cycle.


Fine. We have an understanding of the roles of government and people in the Philippines. Or do we?


Having lived in the U.S. for many years, I also happen to know that there is a great divide here between liberals and conservatives, which divide probably explains further why Filipinos prefer private charity and heroism to government competence and relevance.


We Filipinos, because of our deep religiousness, are genetically conservative. Like conservatives in America, we believe that helping the poor, the dispossessed, those displaced by floods, earthquakes and typhoons is a great and noble private virtue. We do not believe that helping people in need is the job of government. Conservatives believe that the proper role of government is as a night watchman and enforcer of law and order, and only those. But only in theory, because in practice they know that even on that score, government is sadly lacking.
The conservatives' modern hero, Ronald Reagan, after all said that government is not the solution. Government is the problem.

Liberals, on the other hand, believe that government is an instrument of social change and social justice. Or should be. Because most of the jobs are too big in our modern world, only the government is in a position to undertake projects that would minimize the need on the public's part to do charity work, so the liberals believe.
That is why the anguished cries you are hearing about the government's unpreparedness and total lack of competence during and in the aftermath of Ondoy have generally come from the liberal media and those who want to reform the government. The conservatives are too busy packing foodstuffs, clothes and shoes.


FLOOD-PREVENTION INFRASTRUCTURE IN METRO MANILA


Because of Ondoy and predictions that there are many more Ondoys that will form in southeastern Pacific Ocean that will make a bee-line for Luzon, there is a headwind that is carrying the notion that once and for all, the infrastructure in Metro Manila must be updated to give Metro Manilans a better chance at survival should the typhoons that are sure to hit Manila and environs intensify and become more numerous in the future. Increasingly, even some conservatives have joined in the chorus.


The headwind is making Filipinos more liberal, if only in the sense that they are becoming more appreciative and more demanding of their government.

FINANCING

How the devil do we finance the massive projects that must be undertaken? In 2005, I wrote in my blog, lanzones.com, that the Philippines must consider a ten-year moratorium on interest payments on all sovereign debt. At the time, only the leftists shared that idea but now such an idea or variations have become more mainstream.

No less than one of the leading presidential candidates, Senate President Manny Villar, has recommended that the country look seriously at the Argentine blueprint for defaulting on the Philippines' sovereign debts.


One of the most respected thinkers in the Philippines, Walden Bello, makes a brilliant case for national debt default in his article published by Focus on the Global South, an NGO. Mr. Bello and others, such as Senators Manny Villar and Panfilo Lacson (I can't believe I would be citing Lacson), estimate that the total national debt is 3.8 trillion pesos and on its way to close to 7 trillion pesos within the forseeable future. At 3.8 trillion, national debt is more than 125% of GDP. AT 7 trillion, it will be in excess of 200% of GDP.


Clearly, the Philippines is in a silent fiscal crisis that puts the country in bankruptcy territory. "Debt servicing rose from 48% of national government expenditure in 2002 to 81% in 2004 and is expected to hit 89% in 2005," according to Mr. Bello.


A lot of countries, including Brazil, have had to restructure their debts and gotten discounts of 70-75% on their national debts as settlement.


Why the Philippines continues to insist on being an ideal debtor nation is beyond comprehension.

A ten-year moratorium on debt service payments on the Philippines' national debt will free up more than 300 billion pesos a year, or 3 trillion pesos in total that the country can use to dredge esteros, streams and rivers, cover the esteros with concrete, build levees and floodgates, relocate squatters, provide lifeboats and other rescue vehicles to low-lying communities.

There's the added bonus that the Philippines will have enough left-over money to build new schools, hire new teachers and improve educational standards in the public schools.


There is much that the Philippines can do with the money that will no longer be devoted to the mistaken notion that a good credit standing for the Philippines is of paramount importance, more important than the security of its people.


The Philippines is deathly afraid of being shut out of the world's credit markets should it default on its sovereign debts. Yet the experience of Argentina, Brazil and other countries suggests that the world cannot successfully take reprisal measures that will stick, especially when the debtor nations eventually end up righting their ships of state as the direct result of their loan defaults.


Besides, the winds of change are blowing across our ever-shrinking world. Many third world countries holding odious debts have been forgiven those debts by the advanced countries. At least $25 billion of the country's $70 billion in debt are odious debts, taken out during the Marcos years without the consent of the people. The classic definition of odious debts is debts taken out by a government without the consent of the people.


One may argue that because of government corruption, a good percentage of the loans taken out by the government ended up in the pockets of corrupt politicians. The $45 billion balance of the debts taken out by administrations succeeding the Marcos era, one may argue, is made up of odious debts and legitimate debts.


If the country defaults on its sovereign debts through a ten-year moratorium on interest payments, we may in fact generate more respect from the world's financial community. It will be a signal to the world that the Philippines can chart its own course, be the captain of its ship, and be perfectly willing to live without foreign loans in the future. Subject only to the caveat that the government shall work for the welfare of the Filipino people and the politicians who run the government shall not continue to line their pockets at the expense of the people's safety.
Besides, without foreign loans, the Filipino politicians will lose what has been alleged as a source of "commission" payments for securing such loans.


The way to go in the future, in that scenario of a brave new Philippine world is BOT - build operate and transfer. Foreign countries and organizations shall be invited to build infrastructure, operate the same, and transfer the infrastructure to the Philippine government after the foreign operators shall have made sufficient profits from its ownership and operation.
No monies are disbursed to the Philippine government which corrupt politicians could allegedly proceed to shave to pay themselves and their cronies "commissions."