Celebrating EDSA 1986 While Defending Filipino First Policy is NONSENSE

I really feel that some people celebrate something but never understand it. I feel the EDSA Revolution of 1986 is just one of them. It's often written in history books that the late Ferdinand E. Marcos Sr. is written as a dictator. Reading through From Third World to First did give the late Lee Kuan Yew's insights on the Marcos Sr. regime. The way Lee Kuan Yew described Cesar Virata showed that claims of a Marcos "parliament" were moot. The late Benigno Simeon A. Aquino Jr.'s humorous speech nailed it right. Aquino Jr. even mentioned every bit of inconsistency. The book is often used by critics to lambast Ferdinand R. Marcos Jr., but have they really read the rest of the context? I'm afraid not and some people on Facebook probably still have not even a faint clue why the Marcos Sr. administration weren't the golden years. Once again, I want these people to read Lee Kuan Yew's entire book rather than just cherry-pick from it!

Revisiting the Marcos Sr. regime's economic policies

I really can't take IBON Foundation seriously. (read here) I can talk about all their obsession with cash handouts (read here). I even want to laugh at IBON's claim that the Marcos Sr. regime was open to free trade while the rest of Asia was "developing through protectionism", unsound. People who agree with IBON Foundation tend to say Singapore is only open to FDI because the island doesn't have many natural resources. I wonder if IBON Foundation is mistaking FDIs for foreign debt (read rebuttal here). With their obsession with cash handouts (referred to as ayuda, a Spanish word for help) and their "Filipino First" obsession--I really can't take them seriously.

Instead, another source called Per Se (from the University of the Philippines) reveals this picture of the Marcos Sr. regime's protectionist policies:

The economy’s record under Marcos is identical to that of a person who lives it up on credit briefly, becomes bankrupt, and then descends into extreme hardship indefinitely. It would then be foolish to say that person managed his affairs marvelously, citing as evidence the opulent lifestyle he enjoyed before the bankruptcy. But that is exactly what admirers of the Marcos regime are wont to do.

It is instructive that neither Thailand, Indonesia, Malaysia, nor any major Asian country catastrophically experienced negative growth in the early 1980s. The Philippines was the exception, following instead the example of protectionist and over-borrowed Latin American countries. This suggests that there was nothing unavoidable about the crisis the Philippines suffered, and that it was the result instead of failed policies. In 1977 the Philippines’ total debt was all of $8.2 billion. Only five years later, in 1982, this had risen to $24.4 billion. Thailand’s debt in 1982 was still only half that amount. Thailand and other countries of the region thus avoided a debt crisis and ultimately went on to attract foreign direct investments in export-oriented industries in the now-familiar East Asian pattern. But no such thing happened under Ferdinand E. Marcos, notwithstanding the arguments and exhortations of people like Gerardo P. Sicat (who would cease to be active in the regime by 1980). By the early 1980s, the pattern would be set where foreign direct investments in neighboring countries regularly outstripped those in the Philippines. (The intermittent coups d’etat post-Marcos did us no favors either.)

All this should correct the common misconception that the country’s troubles stemmed entirely from conjunctural “political factors,” notably that it was caused by ex-Senator Benigno “Ninoy” S. Aquino, Jr.’s assassination. One might not even entirely blame the mere fact of authoritarianism itself — after all Thailand, Indonesia, and Malaysia at the time were also ruled by despots of some sort or other, yet suffered no crisis. Rather the Philippine debacle was linked to the misguided policies that were structurally linked and specific to Marcos-style authoritarianism. For all its technocratic rhetoric and rationale, the Marcos regime never took economic reform, liberalization, and export-oriented industrialization seriously; it remained a heavily protectionist and preferential regime (think the cronies and the failed major industrial projects). The availability of easy loans was well suited to the priorities of a regime that thought it could stoke growth without deep reform and slake the greed of Marcos and his cronies at the same time. In the end a corrupt regime fell victim to its own hubris.

I want to talk about the growth of two dictatorial countries. During the 1970s to 1980s, both China and Vietnam two Communist countries progressed in spite of their status as authoritarian countries. The late Deng Xiaoping and the late Nguyen Duy Cong aka Do Muoi. Both China and Vietnam were once poorer than the Philippines. Deng started to invite more FDIs and wasn't "developing China through protectionism". The same can be said of Do Muoi's economic policy "Doi Moi" which can be coined as the Vietnamese economic miracle. Lee Kuan Yew mentioned in From Third World to First when he met both Communist leaders. The two Communist leaders did their economic reforms--something that Marcos Sr. failed to do during his long regime. Lee Kuan Yew ruled Singapore for 31 years. Now, his son, Lee Hsien Loong (part of a political dynasty), has ruled Singapore for several years now as its prime minister.

More nonsense from IBON Foundation 

What I find funnier is how IBON Foundation could even bother to write this during EDSA's 37th anniversary:

Today, 37 years later and under his son, corruption remains endemic and gross human rights violations persist even without the outward form of dictatorship. Oblivious to the neoliberal economic decline started by the Marcos dictatorship and continuing under subsequent regimes, the Marcos Jr administration relentlessly insists on obsolete free market globalization policies.

Like its predecessors, this government zealously protects over 40 years of globalization policies. It is pushing even more trade and investment liberalization, privatization, and deregulation at the expense of the Filipino people, local producers, and the environment. These policies mainly benefit domestic oligarchs and large foreign transnational corporations.

Some of these measures include the recent ratification of the Regional Comprehensive Economic Partnership (RCEP), renewed moves to change the 1987 Constitution with a constitutional convention, and worsening infrastructure privatization through public-private partnerships (PPP). The country’s mineral and other resources are being opened up to foreign plunder.

I wonder if IBON Foundation believes what they keep writing or do they have a selfish agenda on hand? I'm amazed at how people tend to share their posts. For example, the prices of gasoline during former Philippine president Rodrigo R. Duterte's term is a world market problem. These people are so obsessed with cash handouts, taxing the rich, and any other plan that are too short-term to alleviate the sufferings of Filipinos. I wonder what do the people of IBON want anyway? A nation of beggars and a welfare state? Well, sad to say but a welfare state is no feasible solution. If they want the government to provide for their needs then can they provide better services themselves? 

They say that trade and investment liberalization, privatization, and deregulation will supposedly harm Filipinos. A good question to ask them is did decades of Filipino First Policy well, help, Filipinos? The statement they made can easily be disproven by what the late Lee Kuan Yew wrote in his book From Third World to First. These words by Lee would easily demolish IBON's rather outrageous claims:

Pages 57-58

After several years of disheartening trial and error, we concluded that Singapore's best hope lay with the American multinational corporations (MNCs). When the Taiwanese and Hong Kong entrepreneurs came in the 1960s, they brought low technology such as textile and toy manufacturing, labor-intensive but not large-scale. American MNCs brought higher technology in large-scale operations, creating many jobs. They had weight and confidence. They believed that their government was going to stay in Southeast Asia and their businesses were safe from confiscation or war loss.

I gradually crystallized my thoughts and settled on a two-pronged strategy to overcome our disadvantages. The first was to leapfrog the region, as the Israelis had done. This idea sprang from a discussion I had with a UNDP expert who visited Singapore in 1962. In 1964, while on a tour of Africa, I met him again in Malawi. He described to me how the Israelis, faced with a more hostile environment than ours, had found a way around their difficulties by leaping over their Arab neighbors who boycotted them, to trade with Europe and America. Since our neighbors were out to reduce their ties with us, we had to link up with the developed world-America, Europe, and Japan-and attract their manufacturers to produce in Singapore and export their products to the developed countries.

The accepted wisdom of development economists at the time was that MNCs were exploiters of cheap land, labor, and raw materials. This "dependency school" of economists argued that MNCs continued the colonial pattern of exploitation that left the developing countries selling raw materials to and buying consumer goods from the advanced countries. MNCs controlled technology and consumer preferences and formed alliances with their host governments to exploit the people and keep them down. Third World leaders believed this theory of neocolonialist exploitation, but Keng Swee and I were not impressed. We had a real-life problem to solve and could not afford to be conscribed by any theory or dogma. Anyway, Singapore had no natural resources for MNCs to exploit. All it had were hard-working people, good basic infrastructure, and a government that was determined to be honest and competent. Our duty was to create a livelihood for 2 million Singaporeans. If MNCs could give our workers employment and teach them technical and engineering skills and management know-how, we should bring in the MNCs.

Page 66

Our job was to plan the broad economic objectives and the target periods within which to achieve them. We reviewed these plans regularly and adjusted them as new realities changed the outlook. Infrastructure and the training and education of workers to meet the needs of employers had to be planned years in advance. We did not have a group of readymade entrepreneurs such as Hong Kong gained in the Chinese industrialists and bankers who came fleeing from Shanghai, Canton, and other cities when the communists took over. Had we waited for our traders to learn to be industrialists we would have starved. It is absurd for critics to suggest in the 1990s that had we grown our own entrepreneurs, we would have been less at the mercy of the rootless MNCs. Even with the experienced talent Hong Kong received in Chinese refugees, its manufacturing technology level is not in the same class as that of the MNCs in Singapore. 

IBON Foundation, by the standards of Lee, would fit into a third-world mentality. IBON might say, "Well Singapore never had natural resources." They are already wrong in more than one area. The first area is claiming Marcos Sr. was not a protectionist when he was. Protectionism is what gave the oligarchs the power to do what they did. Second, they still stand by third-world leaders in the theory of neocolonialist exploitation. Lee wasn't impressed by such ideas. Neither am I impressed with this continued claim by IBON for several decades. Vietnam and China are countries that are both rich in natural resources yet they opened up to FDI. 

The idea that FDI always equals environmental degradation is stupid (read rebuttal here). A really good example is how The Diplomat states that North Korea is actually anything but environmentally friendly. I wonder if IBON Foundation is aware that protectionist North Korea is really a big problem:

According to the WHO, 89 North Koreans in every 100,000 died from ambient air pollution in 2016. China’s rapid industrialization and North Korea’s aging domestic thermoelectric power plants are mainly responsible for this health threat. Forest degradation is another contributing factor. In Asia, North Korea has become the country with the third fastest rate of degradation. From 1990 to 2015, North Korea lost the highest percentage of its forest in East Asia.

North Korea has taken very few steps to mitigate this issue despite its vulnerability. This vacuum of effective countermeasures exposes the North Korean population to the serious dangers of fine dust.

In short, most of South Korea's air pollution problems can't be blamed on trade liberalization. Instead, we can talk more about how North Korea's effects can easily spread to South Korea (which is very near). Pretty much, one can't say that North Korea is poor because of South Korea. However, one can say that South Korea is suffering from air pollution do to how bad pollution is in the neighboring country. It's like if a well-to-do person does get infected (to a certain extent) by squatter neighbors. The squatter neighbors can't blame the well-to-do person for their poverty. However, the well-to-do person can blame the squatters for certain things. The well-to-do person can blame the squatters for the canal clogging or increase in pests if the latter kept throwing their garbage improperly. That's exactly what North Korea is right now!

After EDSA, did the Filipino First Policy really help it recover?

After the downfall, I'm afraid that people still think that the Filipino First Policy (of the late Carlos P. Garcia) is the best. There was the Foreign Direct Investment Act of 1991 (R.A. 7042) which limited the equity of certain sectors to only 40% for foreigners. I'm amazed some people say, "It should be that way! Filipinos should own the majority of the economy!" Did they even not see that another real problem of the Marcos Sr. regime was rampant protectionism? No, foreign debts are not investments as some people feel that foreign investment equals foreign debt. Do I need to be a broken read and say the differences? Again, FDI means letting foreign businesses invest in the Philippines where they generate taxes for the Philippines. Foreign debt is when a country borrows money from another country. The Philippines didn't borrow money from the USA to establish McDonald's or from South Korea to establish Samsung Philippines. It's McDonald's and Samsung invest their money doing business in the Philippines. 

The "gains" after EDSA didn't include catching up with the other ASEAN countries. Sure, freedom of expression is back. Unfortunately, Garcia's rather stupid policy ended up being taught as a virtue in the Values Education subject (read here). I was a 1990s kid who grew up during the regimes of both the late Maria Corazon Aquino-Cojuangco and the late Fidel Valdez Ramos. I could still remember that unreliable diskette and how the Internet made you unable to use the phone. Now, I'd like to stress how Garcia even said it in his January 25, 1960, SONA:

The ”Filipino First” policy of this administration re­ceived a resounding popular indorsement in the last election. Politically we became independent since 1946, but econom­ically we are still semi-colonial. This is especially true in our foreign trade. This policy is therefore designed to regain economic independence. It is a national effort to the end that Filipinos obtain major and dominant participa­tion in their own national economy. This we will achieve with malice towards none and with fairness to all. We will accomplish this with full understanding of our inter­national obligations towards our friends of the Free World. We will carry this out within the framework of our special relations with the United States to whose citizens we granted until 1974, by Constitutional provision, equal rights as Filipinos in the exploitation of our natural resources and public utilities, and to whom we also granted trading parity rights under the Laurel-Langley Agreement. Under this policy we will welcome friendly and understanding foreign capital willing to collaborate with us in the exploitation of our vast natural resources preferably on joint venture basis.

Pretty much, the Philippines ended up having a lot of sectors still dominated by the idiotic 60-40 policy. I dare to call it nothing more than overpriced rent (read here). Let's say that one day you found a good place to rent. However, the lessor demands that he or she should own at least 60% of the business in the area. That means you, as the tenant or lessee, should give 60% of your net income to your lessor. It would be a very unfair practice. I was even wondering if people defending the 60-40 equity policy may also include lessors who keep increasing rental rates too much? I even feel they want to get rich quick fast with the 60-40 scheme. However, such an arrangement kills future investors because it's practically overpriced rent. Sure, it's not right to sell at a loss. However, selling at excessively high prices can also sooner or later bankrupt anybody. 

The outcome of still practicing the Filipino First Policy (and I never understood the causes) would be visible. You don't need a master's degree or a Ph.D. in economics or business administration to understand them! We can start by talking about high utility rate fees. There's slow expensive Internet. There's high electricity rates. There are high rates of water. Even worse, the fees are so high yet the services are so expensive. What's the real answer to the problem? It all lies in basic economics. We need to talk about supply and demand. How can you expect a duopoly to provide a good Internet connection for an entire archipelago of 7,107 islands? How can you expect so few providers of utilities to provide for the huge supply gap? 

Even worse, I would say, "That's why we need to open up to FDI." The comments I get on Facebook can be very stupid. I ran into a person on Facebook who assumed that I voted for Atty. Maria Leonor Gerona-Robredo for president when I said, "Competition is good. It brings better services." I talk about how it would benefit to have FDI provide utilities. Instead, I get the usual comments like it will cause a breach of security (as if there's no data privacy act), destruction of natural resources (which will happen if we don't follow environmentally friendly business practices like Singapore), that FDIs will only benefit themselves and leave the Philippines with nothing (read rebuttal here), and so on. Some even have their "brilliant solution" to nationalize utilities and let the government provide for all of it (read why I don't recommend it here). If only these people could experience the pains in countries like North Korea and Venezuela first-hand. If protectionism was so good then why am I reading of North Koreans and Venezuelans defecting away from the land of their birth? Only a real fool would migrate to either which country. 

That's why we really need not just to amend but an entire overhaul of economic policies. One can argue that the late Benigno Simeon Cojuangco Aquino III did some economic improvements. I agree but I still feel that the presidential system held Aquino III back. Some of the infrastructures done during the regime of former president Rodrigo Roa Duterte were from Aquino III's later transactions Do you think Aquino III's administration could complete them given the short amount of time left between the transaction up to the end of his term? Sure, we have the Public Services Act of 2022 signed by Duterte. I believe that having an amendment to remove the negative list entirely will be better.

That's why I'm laughing at what Hilario Gelbolingo Davide Jr. said about FDIs. I'm even laughing that Davide Jr. called the 1987 Constitution of the Philippines "the best in the world". That's why I even wrote a post comparing Davide Jr. to another UN diplomat, Kishore Mahbubani (read here). Mahbubani ended up saying, "But no Singapore will be different." The evidence is in the rise of two countries Singapore ended up defeating the bigger Philippines. I believe that the Philippines can economically defeat China if it changes its attitude towards FDIs. What evidence does Davide Jr. have any way to his claims? Mahbubani did more than talk. The fact that Mahbubani is the former dean and founder of the Lee Kuan Yew School of Public Policy of the National Unversity of Singapore speaks numbers. Both old grandfathers know the law. However, only one of the two laws from the two countries developed a country from third world to first. 

Sure, I'm not promoting FDIs as a cure-all for the economic woes. Instead, it's all about developing the national economy by allowing FDIs to participate. Local businesses will have the chance to grow through competition, new customers, new suppliers, and new service providers. One could think that Filipino restaurants are benefiting from Foodpanda (Germany) and Grab (Singapore). Filipino businesses may now be supplying raw materials to FDI manufacturers. Jobs are now provided for Filipinos. It's because it's impractical for an FDI not to take advantage of direct resources. Why would Foodpanda import labor from Germany or Grab from Singapore for the drivers? They need more locals than foreign employees to keep the local branch running. Milk tea stations in the Philippines are employing mostly Filipinos.

As the Asian century arises, we need to think about why the Filipino First Policy has no place in it (read here). It's not enough to keep commemorating EDSA 1986. Lee Kuan Yew sadly spoke about how joblessness was a real problem. The real problem, again, is the Filipino First Policy. That policy needs to be overthrown as well.