MANILA - Smoky Mountain, in the Tondo neighborhood across Manila harbor, is a
Dantesque vision from hell turned postcard of global poverty. Smoky Mountain is
a 40-year-old mountain of garbage. The locals literally live off it - they
search it, burn it, separate it in plastic bags, recycle it, sell it to junk
shops, even eat some of the remains.
Eighty percent of the children of the estimated 30,000 people living in the
area don't go to school - although there are a kindergarten and an elementary
school in the surroundings. Some of the locals set up food stalls at the
harbor, some are cargadores (porters), some are pedicab drivers, but
most live off the garbage. Under a bridge by the Pasig River rattled by the
non-stop traffic of container trucks, stuck under the pollution, haze and that
unbearable smell, a teenager beams: "It's good to make money here. Three
hundred pesos a day [a little more than US$5] if you work hard." In the May
presidential election, he voted for action star Fernando Poe Jr, a close friend
of ousted-in-disgrace former president Joseph Estrada (Poe won in Manila but
lost overall to incumbent Gloria Macapagal-Arroyo). He believes the elections
were stolen, as do 55% of Filipinos. And he wouldn't leave Smoky Mountain for
anything. "There are no jobs out there," he says, pointing toward Metro Manila.
The notoriously corrupt Metro Manila Development Authority (MMDA) - which also
indulges in a quirky form of performance art, tagging colored walls around town
with its acronym - keeps a sinister top-10 list of the dirtiest barangays
(districts) in town. Just for the record, Smoky Mountain is not even close to
No 1; that honor belongs to Barangay 145, Zone 16 in Pasay City - notified 225
times (and counting) as having mountains of uncollected garbage.
Why us?
It didn't have to be this way. Filipinos, rich and poor alike, often look in
awe at the so-called newly industrialized countries (NICs) ofNortheast
Asia and ask themselves: Why haven't we accomplished anything similar? The main
reason may be the absence of a real agrarian reform (see
Part 2 of this series) - an absolute precondition for the economic
miracle in Taiwan and South Korea. Land reform created an egalitarian
distribution of income, ignited domestic demand, and the whole thing drove an
industrialization drive in the 1950s and '60s.
Meanwhile, in the Philippines, few were paying attention: after all, the
country was growing at rates from 6-10% a year, fueled by its own brand of
import-substitution industrialization. But in the late 1960s, the turbo-jeepney
came to a halt, because of a structural problem still not solved in 2004: the
Philippines was and remains a small market, chiefly because of its tremendous
income inequality.
With no land reform and anemic exports, the dictatorship of Ferdinand Marcos
came up with what might have been a great coup: exporting the country's labor
force. Economists in Manila say this was supposed to be a temporary measure. It
turned out to be the ultimate lifeline to the Philippine economy - with
remittances even helping to prevent the peso from spiraling into total disaster
after the 1997 Asian financial crisis. No wonder: when the internal market
remains small and jobs are scarce, the only way, if you don't want to recycle
garbage, is out - often by a one-way ticket departing from the ghastly Ninoy
Aquino International Airport in Manila. According to labor-export specialist
Jorge Tigno, almost 10% of the country's population are now OFWs (Overseas
Filipino Workers). In Metro Manila, at least one in every three households has
a member who was or still is an OFW.
Where is our sushi? The Anti-Development State: The Political Economy of Permanent Crisis in the
Philippines, a recent joint publication by the Universityof
the Philippines and the non-governmental organization (NGO) Focus on the Global
South, written by respected activist Walden Bello and co-authored by Herbert
Docena, Marissa de Guzman and Marylou Malig, spells out a devastating case on
all the reasons for a crisis that's been going on for four decades. It's
unlikely to find readers in Malacanang, the presidential palace. Absence of
meaningful land reform certainly is one of the reasons for the crisis. But
another, almost as compelling, has been the absence of Japanese capital.
"In the period 1985-93, some $51 billion worth of Japanese investment swirled
though the Asia-Pacific in one of the most rapid and massive outflows of
foreign capital toward the developing world in recent history," the publication
states. Thailand, Malaysia and Indonesia could not but grow at dizzying rates -
while the Philippines was almost totally bypassed. According to Japanese
figures, from 1987-91 Thailand benefited from $24 billion in Japanese, Hong
Kong and Taiwanese investments. The Philippines, on the other hand, got only
$1.6 billion.
The authors speculate: were the Japanese put off by Philippine corruption? Not
really, because South Korea was as corrupt, and Indonesia under Suharto
infinitely more corrupt. The answer, once again, refers to the anemic size of
the Philippine market. "Japaneseinvestors
are strategic investors - that is, they invest if there is the prospect of a
growing market ... In the late 1980s, the Philippines was simply not attractive
since development, expansion of the market, reducing poverty to create more
purchasing power were all being sacrificed to the national priority of repaying
the foreign debt - a goal forced on the country by the IMF [International
Monetary Fund] and the World Bank acting on behalf of the country's foreign
lenders."
So the Philippines under president Cory Aquino was basically servicing the huge
debt incurred by the Marcos dictatorship. The country's physical, technical and
educational infrastructure was left to rot - as it is still. Aquino sank the
country further into debt - to pay for the past pile of debt. When Japanese
executives examined this situation, they identified nothing else than a
strategically depressed market.
As for the poor Filipino taxpayer, he will keep paying for Marcos' debts until
at least 2025, according to a recent report by the Ibon Foundation. The
foundation reminds everyone that "before Marcos became president in 1966, the
country's foreign debt was only $599 million. When he fled Malacanang 20 years
later, the foreign debt had already ballooned to $28 billion. Most of the debts
were incurred during martial law, when foreign debt grew by 27% per year from
1973 to 1982."
In his monumental Crime of Empire, Filipino economist Ricco Alejandro
Santos estimates that the Marcoses, Ferdinand and Imelda, "have looted $10
billion in the course of 20 years". As for his American business and government
patrons, they certainly were not innocent bystanders: "They were the first to
know about this, before most Filipinos would." The US Central Intelligence
Agency knew about it as early as 1969. "And yet American foreign investors and
government, then under presidents [Richard] Nixon, [Jimmy] Carter and [Ronald]
Reagan, would be Marcos' prime backers and patrons until his ouster and exile."
Arroyo inherited this giant bitter pineapple from Marcos and subsequently
Aquino, Fidel Ramos and Estrada in early 2001. But according to many a Manila
businessman, she came up with no development strategy whatsoever. Not that
Estrada, her predecessor, had any. The authors of The Anti-Development State
ram the point home: the only "strategy" by Arroyo was to attach the Philippine
jeepney to Washington's B-52s after the attacks on the United States on
September 11, 2001. "Massive economic aid and investment from US business was
at the top of President Arroyo's concerns when she reversed 10 years of an
increasingly independent foreign policy followed by the country since the
expulsion of the US bases in 1992. 'It's $4.2 billion and counting,' she gushed
during her state visit to Washington in October 2001, calculating the sums of
aid and capital promised by President George W Bush."
The problem is that most of the money - like the billions promised to
Afghanistan - never materialized. And it won't: Washington is still obsessed
with Iraq. So throughout 2002 and 2003 the Philippine fiscal crisis spiraled
out of control, leading to the current climate of panic and hastily arranged
austerity measures in Malacanang (see
Part 1 of this series).
Ruling elites in perpetual war
The greatest merit of The Anti-Development State is the powerful case it
makes in puncturing a pervasive myth not only in the Philippines but found with
minute variations all over the developing world: the myth that a country is
poor because its leaders are corrupt. The authors of the book get very close to
the heart of thematter
when they write, about the Filipino case: "A more adequate explanation lies in
the state being subjugated by a succession of ruling elite factions to serve
narrow interests instead of the larger goals of sustainable development and
social justice."
Most Filipinos have no reason to doubt that sleazy Estrada and his cronies
"represent what is so wrong with the Philippines and so many other poor
countries - the rampant bribery and fraud, the unbridled rent-seeking, the
brazen patronage politics, the flagrant abuse of public resources for private
gain, and the widespread clientelism".
A Coalition Against Corruption led by business groups, NGOs and the Catholic
Church has just been launched in Manila. Former president Cory Aquino,
delivering the keynote address, said that everyone had to pay his due taxes and
so exercise his moral right to "demand from government transparency,
accountability and the political will to prosecute tax evaders, smugglers and
those who disgrace public service". Lofty rhetoric apart, the results remain to
be seen.
Corruption, embodied in "crony capitalism" - as ATol readers will remember -
also was pinpointed by the US establishment, from treasury secretaries Robert
Rubin and Lawrence Summers on down, as the main reason for the 1997 Asian
financial crisis, implying it was all Asian governments' fault. But then the
assumption can be turned on its head: "If corruption is the reason the
Philippines is poor, why are so many rich countries also corrupt?"
The definitive comparison is between the Philippines and South Korea, as argued
by the authors of The Anti-Development State with substantial help from Crony
Capitalism: Corruption and Development in South Korea and the Philippines,
by David Kang of Dartmouth College in the United States. Kang poses the
million-dollar question: "If both Korea and the Philippines experienced
extensive corruption, why did Korea grow much faster than the Philippines?"
Filipinos watch while Koreans act
These are the main points. Both countries started at the same level; the
average Filipino even earned slightly more than a South Korean in the
mid-1950s. In 50 years, the South Korean economy has grown by more than 10
times, while the Philippines' has only doubled. South Korea is a more
egalitarian society: the richest 20% are only five times as wealthy as the
poorest 20% (in the Philippines they are 13 times as wealthy); and only 7% of
South Koreans are poor, while two in five Filipinos live below the poverty
line.
Then there's the United States, considered by Blowback author Chalmers
Johnson as "the most legally corrupt political system in the world today". The
Enron debacle and the Halliburton and Bechtel bonanza in Iraq dwarf anything
perpetrated by Estrada or his cronies Lucio Tan and Danding Cojuangco.
Economist Paul Krugman was once hired as a consultant by the Philippines, and
often joked while comparing George W Bush to Ferdinand Marcos in the cronyism
stakes. Economist Jeffrey Sachs insists, "America has shown itself to be second
to none in practicing cronyism, first with its rotten corporate scandals of
recent years, and now in Iraq."
The authors of The Anti-Development State stress instead how the
Philippine state has been "successfully taken over by one faction [of the
ruling elite] in order to dominate the other factions". So the big difference,
compared with South Korea - or Thailand, Indonesia and Malaysia, for that
matter - lies "not in the extent of corruption but the balance of power among
ruling elites as well as the balance of power between these elites and the
state".
In South Korea the elites were balanced, and disciplined by a very strict
central state. In the Philippines, on the other hand, it has always been open
war, with the state as the ultimate prize. So corruption, as Kang puts it,
"swung like a pendulum. As one group or the other gained predominant power, it
would busily set about lining its own pockets, aware that in the next round its
fortunes might well be reversed." The crucial point, then, is that in the
Philippines "the state has traditionally been hijacked at all levels by private
interests, making it an ineffective instrument of national development".
The reasons, of course, are steeped in Philippine history. For 330 years,
Spanish colonizers never bothered to establish an effective, competent state
administration machine. And during the 50-yearPentagon/Hollywood
phase, US colonialism only cared about oligarchy-building, not state-building.
In Thailand, by comparison, a great deal of the elite come from the
state-administration machine. Today, while the Philippines is a disaster area,
Thai officials talk of their country rising to the rank of a developed nation
by 2010, while they frantically sell Thailand as the perfect investor
destination if one wants to diversify from China and India: "Lower costs than
Singapore yet a larger market than Malaysia."
For Filipinos, the conclusions of The Anti-Development State represent a
rude blow: "The country has failed to develop and so many of its people are
mired in poverty because the state, strangled as it is by competing factions'
demands, has been rendered too powerless to even chart the country's direction,
much less subordinate ruling elites under its control. Further sapping the
state's potential to act according to democratic and developmental lines have
been external interests constraining its range of allowable actions in the
larger context of the North's persistent and often successful efforts to
subordinate the South."
Now tell that to the people of Smoky Mountain - not to mention the absolute
majority of 84 million Filipinos.
Tomorrow - Part 4: The last one leaving please turn off the lights
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Oct 5, 2004
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