Let’s say at the outset, we are no fans of communism. As an ideology, whether in theory or in practice – though it works far better in theory – like the vast majority of the Philippine population we know it would be a disaster for the country. Its remote, wasteful, inefficient command-system economics would not just wreck any hope of realising the country’s vast economic potential, it would sound the death knell for progress already made.
Anti-free market, out of touch with market forces, it would stifle entrepreneurship, increase the cost burden by oxygenating the bureaucracy and the state-owned sector and plunge the economy into isolation as the rest of the region operates on a globalised system. It’s hard to imagine a worse nightmare.
That said, we applaud a number of suggestions made by the three communist members of President Rodrigo Duterte’s Cabinet – department secretaries Judy Taguiwalo, Social Welfare and Development, Rafael Mariano, Agrarian Reform and Liza Maza, National Anti-Poverty Commission – to tighten the efficiency and the governance of the Social Security System (SSS) which managed to lose placements of PHP24.5 billion last year.
According to a recent Commission of Audit report, delinquent premium contributions amount to PHP4.85 billion and SSS investments in closed, non-existing or unlisted companies topped PHP832 million. As of 2014, there is a net understatement of assets, PHP9.94 billion worth, while reserves in 2015 had been understated by PHP11.34 billion. Furthermore, idle assets, the report states, amount to PHP17.9 billion with lost revenue of PHP198 million.
Citing these anomalies, the triumvirate pressed Duterte to order an assessment of SSS loans, assets and investments and put in place effective asset-recovery measures. “Inappropriately created loans should be paid by those who benefited from them and criminal charges should be filed and earnestly pursued,” they said in a position paper which they presented at a Cabinet meeting on Monday. He should instruct the SSS to “immediately undertake a program that will address collection efficiency,” it said, as well as setting in place a “prudent but optimal fund investment program”.
We couldn’t agree more.
But the main issue of that meeting was a proposal to raise SSS pensions by PHP1,000, paid for by a 1.5% increase – from 11% to 12.5% – of the 34 million members’ monthly contributions. This change, approved by Duterte and effective as of May, will benefit 2 million Filipino retirees. The President also approved a further PHP1,000 raise by the end of his term in 2022.
That, however, was a bridge too near for Taguiwalo, Mariano and Maza. They wanted pensions hiked by PHP2,000 – immediately. After all, they argued, the president had promised as much during his campaign. He needed to deliver. “A change in perspective is a prerequisite to fulfill President Duterte’s promise to SSS pensioners,” they argued.
This demand from this trio has echoes of the fatuous remarks made by Phil-Am millionaire socialite and Duterte-savager, Loida Nicolas-Lewis, in calling for the president’s resignation because he’d failed to solve the country’s illegal-drugs problems within six months as he’d promised during his campaign. Her solution is for him to hand the reins of government to the constantly vanishing vice president, Leni Robredo.
But promises made on the campaign trail rarely take into account the realities which emerge once in office. That’s a fact of life. Candidates, whoever they are, will be confronted with data they had previously had no access to or were unaware of – the Commission of Audit report into the social-security system is a case in point; the true staggering scale of the crystal-meth trade and drug addiction throughout the archipelago is another.
Effective administrators need to balance their goals through compromise where needed, not crassly push ahead with scant regard for the consequences. And an immediate PHP2,000 hike would have a major negative impact on the present system’s resources. It could cripple them. Imposing Robredo on the nation would be cataclysmic.
“SSS fund managers over the years have demonstrated consistently their readiness to losing billions of pesos in taking bets on how their asset placements would perform, but express extreme pessimism whenever initiatives to improve the lot of the pensioners are considered,” the three said in their position paper.
That’s also true. But SSS President and CEO, Emmanuel Dooc, in putting the proposals before Cabinet wasn’t expressing pessimism, he was expressing caution; urging prudence. He’s committed to implementing Duterte’s wishes for the PHP2,000 pensions raise. And it will happen. But according to a workable timetable.
Given everything the Cabinet knows about its cash resources and the government’s massive plans for infrastructure spending – PHP8 trillion worth over the next six years – not to mention the money that needs to be ploughed into the industrial, agricultural and tourism sectors, the immediate PHP1,000 pensions hike should have be applauded by everyone round the table.
But this is the other problem we have with communism; it’s unbending (that’s largely why it’s unworkable in the first place). Which brings us to another point that needs clearing up – the notion, regularly expressed by Duterte’s detractors, that he is taking the country along a communist path. In fact, that he’s a communist. They offer as evidence for this, the three Cabinet appointments mentioned above, his switch in foreign policy from the capitalist US to communist China and, equally bogusly, his clenched-fist salute.
Let’s try and deal with this simply and peel back the myth. On the first point, Duterte wanted to establish a broad church – one that would reflect diverse views; to get away from the exclusion practices of the past by building an inclusive administration where all voices can be heard. That we call democracy. It was also politically beneficial in resuming peace talks with communist insurgents who’ve been engaged in a 47-year-old rebellion against the government.
On the second point, China is a mixed economy. After spending half a century of isolation floundering in a self-imposed Marxist-Leninist backwater, it opened its doors to capitalism, embraced it and ran with it. It went from something approaching a failed state to the world’s second largest economy in a period in just 30 years, roughly from 1978 to 2010. Old-style communism didn’t work for the Middle Kingdom and Duterte knows it won’t work for the Philippines. Rest assured, he won’t be replacing the golden star on the Philippine flag with a hammer and sickle. Deng Xiaoping’s pragmatism – Dengism, a repudiation of Marxist-Leninist-Maoist ideology – is what launched China’s star and Duterte has that quality in spades.
Thirdly, communism doesn’t have any exclusive claim to the clenched-fist salute, a symbol that dates back more than three millennia BC to a Mesopotamian goddess named Ishtar. Politically, it’s been used as a symbol of solidarity, unity, resistance and defiance by everyone from the far right to the far left. Certainly, communist movements have used it, but so have librarians, feminist groups and sports clubs. When Duterte makes that salute before a crowd, what he’s expressing is he’s with them. And when they salute him back in similar fashion, what they’re saying is they’re with him. They’re not saying they’re communists.
But anyway, Duterte’s a federalist; far from wanting more central control – communism’s drug of choice – he wants to minimise it by making the regions self-ruling, autonomous of central government. Masters of their own ships. For communists that’s a horror show – it destroys any ability for central planning. The party loses control; they’re out of business; gone.
The Volatilian™ can assure its followers that if President Duterte was taking the Philippines along the communist road to ruin, we would certainly not be supportive of his administration. We would be strongly opposing it. But he’s not. His commitment is to pragmatism not dogmatism, and that’s why we like him. He’s about compromise and seeking workable solutions, not imposing inflexible demands on his people and the economy in the name of some flawed political doctrine whose only benefit as far as we can see is to keep eccentric and deluded Oxford professors warm at night.
What Duterte’s socio-economic agenda is seeking to achieve is a hybrid – something approaching present-day China with the structures and underpinnings of Singapore. It’s ambitious, challenging – certainly; but if he gets it right it could finally lift the Philippines out of its decades-long socio-economic confusion and distress and make it the economic powerhouse of Southeast Asia. And we wish him well.
Economies are fluid things; they take on a life of their own; they can’t be put in restraints – that’s the whole point of the free market. Duterte knows that – that’s how he ticks. And investors who miss that miss what’s going on here. He’s a free-marketeer. We’ll say that again: he’s a free-marketeer.
Ignore the psycho-babbling and name-calling of Duterte’s critics – they want nothing more than for him to fail, even though by succeeding the nation would gain. Duterte’s sometimes less that erudite, seemingly inappropriate off-the-cuff remarks – the alpha and the omega of all he represents as far as his opponents are concerned – are not what matter. It’s the substance of the man, what he stands for and what he’s achieving that truly matter; not the fleeting form.
As far as the Philippine economy is concerned – building it to create work and lift his people from the shadows – Duterte is 1,000% committed. And to reach that goal foreign investors are being encouraged to play a major part; one for which they will gain good returns while their assets remain protected. Plans and efforts are underway to further ease doing business in the Philippines; reforms are soon to be set before Congress that will remove restrictions on foreign businesses wanting to operate there.
All that’s a far cry from communism. It’s also a far cry from the protectionist policies of the past; the closed-shop mindset of the domestic oligarchs and the system that succeeded in failing the people and hamstringing the economy for virtually as long as most people can remember.
The fact is it’s impossible to put Duterte into a political pigeonhole – in some ways he’s a classic old-school socialist, in others he’s a free spirit seeking innovative flexible solutions that defy any political definition. All that’s constant is his passion, and what drives that passion is the love he has for his people and his country and the tiredness he feels from the decades of neglect.