It's the inequality, stupid!

. . . is the topic of my latest Trade Tripper column in this Friday-Saturday issue of BusinessWorld:

The poet Charles Baudelaire once wrote: "The greatest trick the devil ever pulled was convincing mankind he didn’t exist." A lie worthy of the devil is that currently being peddled — that corruption (and not the existence of our incompetent elite) is to blame for this country’s problems.

Indeed, corruption is a problem. But it’s not the cause of our nation’s ills. It is a symptom. To focus our measures to address a symptom won’t result in a proper cure. The cause of our problems is our antiquated, incompetent, malevolent, and maladroit elite that is hell-bent on keeping their status at the expense of the country.

As we repeatedly keep saying, around 10% of the population owns around 80% of the nation’s wealth and this has remained true through the decades. By adding to this the fact that somewhere around 30-40% of the country’s 80 million citizens are under the poverty line, then one can see how obscene a 10% wealthy figure is. So, does an oligarchy exist here in the Philippines? Yes. And any economist or policymaker worth his salt knows what it is and who they are, although these oligarchs have diversified such that it becomes more difficult to pinpoint the base of their power. As John J. Caroll, S.J. pointed out: "Philippine society is one in which wealth and other forms of power are concentrated in the hands of a relatively small number of individuals and families. x x x Philippine democracy has continued to be elite democracy."

In any event, a mere cursory reading of our history would show that the same names in government and business appear over and over and over and over again. Thus, you have the same names, the same families, that would side with the Spanish against the Katipunan, whisper to Aguinaldo against Mabini, collaborate with the Americans against the First Republic, collaborate with the Japanese, then see their kind give pardon to the collaborators, preside over ever increasing corruption and stagnation in the Third Republic, and then exploit (either in government or in opposition) the Marcos era, People Power, and Edsa Dos.

Joe Studwell, in his Asian Godfathers, made an analysis on the Philippines that is particularly relevant: "The old political elite, restored by godfather progeny Corazon Aquino after Marcos’ departure in 1986, appears as entrenched as ever. x x x Faith in the political process is falling, communist insurgency is present in most provinces, and the local elite remains the most selfish and self-serving in the region. The Philippines’ best known living author, Francisco Sionil Jose, lamented in the Far Eastern Economic Review in December 2004: ‘We are poor because our elites have no sense of nation. They collaborate with whoever rules — the Spaniards, the Japanese, the Americans.’" (emphasis supplied)

That is why the idea being peddled by most of the political class (which, it must be remembered, also constitutes the wealthy end of our social spectrum) pointing to corruption as the problem is misleading at best. It’s the elite who are the problem. Commentators from apparently different ends of the globalization debate converge on this point: from Walden Bello (The Anti-development State) to Federico Macaranas and Scott Thompson (Democracy and Discipline), other books by different authors (The Rulemakers, Booty Capitalism, Sugar and the Origins of Modern Philippine Society, Malolos: The Crisis of the Republic, and Anarchy of Families), to ADB and World Bank studies.

In Why Globalization Works, Martin Wolf, a commentator at the Financial Times, posits:

"A significant subset of such corruption is state capture by private interests. x x x Where the economic elite is competing for favors, the impact will be to corrupt policy-makers and bureaucracy. x x x The economic effects of such capture are powerfully negative, since this elite is interested in favors for itself and not in an impartial rule of law. Only a wide business community of competing producers has an interest in the rule of law."

Corruption, by itself, is not the fundamental problem. Again, it is merely a symptom but not the cause. And we are not definitely a damaged culture. The cause of our problems is the oligarchy. They are the cancer, the rot that is causing the decline in our country’s life. It is the removal of their continuing bungling hold on power, not charter change or people power, that will bring on a better Philippines.

We therefore need to focus on developing a society possessed of greater social mobility and equal access to opportunities. If our electorate has not matured, it’s precisely because the economic circumstances of our citizens did not allow such maturity to happen and the elite, by maintaining protectionist attitudes and patronage system in business and politics, ensures that such maturity did not happen.

So, to that presidential candidate we say: it’s the inequality, stupid! And that is why: Tama na, sobra na, palitan na iyang mga lumang pamilya.