Freer trade, freer Philippines

“The man who has control over another man’s subsistence
also exercises control over his will.” (Alexander Hamilton)

By the foregoing definition by Hamilton, the Philippines is not a democracy. A democracy exists whereby authority is “in the hands not of the few but of the many”. However, in a country where a man cannot truly voice out his fears for the fact that he may not be able to have his family fed the next day is not truly free. One policy maker made a declaration that “we cannot live with 5 percent of the people enjoying the luxuries in this country of ours, and 75 to 80 percent living in [despondency and misery]”. That observation may be common enough for many but what is truly poignant is the fact that such observation was made thirty years ago and the numbers cited therein have not much changed.

As cited through the years by so many commentators, the problem with the Philippines is not corruption, not security risks, and not lack of abilities. The problem is and has always been the oligarchic system prevailing in this country. A system whereby a select few are allowed to selfishly exploit this country’s resources and opportunities, all the while corrupting the political process and the media, heaping poverty on the greater majority, and ignoring national interest. As one observer once put it: “The oligarchic elite manipulate the political authority and intimidate political leaders”, with the people in turn seduced into a populist type of politics. Note that not all rich are oligarchs. It is however that portion of that “5 percent” that selfishly promote their interests at the expense of the Filipino ever since (and even before) this country declared independence.

Symptom of the oligarchic system is most depressingly (but admirably) described in the book The Rulemakers. Its introductory words say it all: “Philippine legislators constitute a select and exclusive segment of society. x x x The great majority of them are also part of families whose members have been in public office for two or more generations. Those who make laws for the country are therefore hardly representative of its citizens. This book also shows how lawmakers have employed their powers to further enrich themselves and entrench their families in power.”

The foregoing brings us to the value of freer trade. If there is one thing that the oligarchs do not want it is that. Freer and fairer trade brings democratization of wealth, leading to a democratic ideal of self-reliant individuals and of a meritocratic society that the Philippines should provide its young. As the book Naked Economics put it: “trade paves the way for poor countries to get richer. x x x Is there an example in modern history of a single country successfully developing without trading and integrating with the global economy? No, there is not. Which is why Tom Friedman has suggested that the antiglobalization coalition ought to be known as ‘The Coalition to Keep the World’s Poor People Poor.”

Also, the benefits of freer trade are enjoyed not only on a macroeconomic level but directly by the poor (and not merely through the trickle down effect). Thus, in one study by experts from the World Bank poring over data from 80 countries over a span of forty years, it was found that the income of the poor generally rise as fast as overall growth. To this must be added the benefits of greater choice, better quality, transparency, and freedom.

If anyone needs a local example of how liberalization policies result in profound beneficial effect for Filipinos, one need only look back at President Ramos’ liberalization of telecommunications and banking. What we need now are similar policies for that agricultural product and that manufactured good. As Open World would put it, such “do not deserve our sympathy at all. They are … the fat cats that have gorged themselves at our expense … hopeless nationalized industries, favored companies run by cronies that have politicians’ ears (and pad out their bank accounts). By all means, help the people who work for these companies.” But not the oligarchs. We have to say enough sometime and now is as good a time as any.