Monthly Archives: February 2014


What went wrong?

By Manuel Almario
Philippine Daily Inquirer

12:53 am | Saturday, February 22nd, 2014

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Last week the Inquirer headlined its main story as follows: “P-Noy: What went wrong?” The headline depicted the President’s exasperation and puzzlement, if not shock, over a survey conducted by the Social Weather Stations showing that the unemployment rate among Filipino adults soared to 27.5 percent in 2013.


The figure is much higher than the 16-percent unemployment rate found by SWS when it started the survey in 1993, and definitely much higher than the official 7.1 percent unemployment figure claimed by the National Statistical and Coordination Board.


The bafflement over the unemployment rate is understandable considering that only days earlier, the National Economic and Development Authority announced that the Philippines had achieved an unprecedented 7.2 percent GDP growth, second only to China’s 7.7 percent. If the Philippines’ employment rate had declined steeply, where then did its economic growth come from?


According to Robert Solow, who won the Nobel Prize for Economics in 1987, the three main drivers of economic growth are capital, labor and technology. If one of them, like labor, is wanting, then the potential for high economic growth is inadequate.


During the Great Depression in the United States, unemployment went as high as 25 percent of the labor force, and when it attained its highest prosperity after World War II, there was full employment. There was full employment in our country in the 1950s when it was considered “next to Japan” due to our government’s industrialization policies.  Unemployment in China, which has consistently enjoyed near double digit GDP growth for the past 30 years, is just 4 percent despite its population of 1.3 billion.


What then went wrong? A clue to what went wrong is to be found in the statistics of average economic growth in the Philippines in the past 50 years—not just two years—which were supplied by the economist Solita Monsod in her column titled “Read and weep” (Opinion, 2/1/14). Monsod wrote:


“For the period 1960-2009 [50 years], the Philippines’ per capita GDP (measured in 2005 PPP) grew by an average of 1.58 percent annually, which means that its 2009 per capita GDP was 2.18 times what it was in 1960.


“How did Indonesia fare? Its per capita income GDP growth rate was 3.69 percent, which means that by 2009, its per capita GDP was 5.88 times what it was in 1960. The statistics for Malaysia were 4.25 percent and 7.68 times. For Thailand it was 4.36 percent and 8.11 times. For South

Korea it was 5.54 percent and 14.05 times. And for China it was 6.185 percent and 18.94 times.


“Studies show that it is government policy and institutions that exert the most influence in explaining the difference in growth rates between countries.”




Indeed, it is true that it is government policy that determines economic development. And it is not only for a few years, but for decades. What were the policies that our government followed during these past five decades? What happened in 1960 that took us on the wrong path? There was an election and Diosdado Macapagal was elected president. In his inaugural address on Dec. 30, 1961, he proclaimed:



“I strongly believe in placing the burden of economic development in the hands of private enterprise with the least government interference while making the government assume the full responsibility for implementing the social and public welfare program.”


Forthwith, Macapagal scrapped the economic controls imposed by the government in the 1950s. These government interventions, composed primarily of exchange and import controls to promote industrialization, had pushed us second to Japan in economic growth. These also encouraged full employment and higher wages.

Ferdinand Marcos and succeeding presidents followed the principal policy adopted by Macapagal, encouraged and supported by foreign institutions like the US Agency for International Development, International Monetary Fund, World Bank and Asian Development Bank. Controls were scrapped, tariffs that protected local industries were zero-downgraded, agricultural subsidies were eliminated, and economic activity made more dependent on foreign investments.


We have seen, through the statistics supplied by Ms Monsod, that as a result of these policies, the Philippines has been left far behind by its neighbors. According to a wise saying, “Insanity is doing the same thing, over and over again, but expecting different results.” Our policymakers must do something different then if they are to be considered sane.


So what did the other countries—that were once poor—do that resulted differently from that which was experienced by the Philippines in the past half-century? A new book by noted author Joe Studwell, titled “How Asia Works, Success and Failure in the World’s Most Dynamic Region,” provides an answer.


The book relates how Japan, South Korea and Taiwan have been more successful than other countries in their economic development. It “argues that the answer comes down to three sets of policy choices: land tenure policies that support smallholder farmers, manufacturing policies that subsidize domestic industries yet demand internationally competitive results, and financial policies that support the above by resisting deregulation until it can be done safely” (from a review by Brendan Driscoll). Deregulating our economy after the 1950s was thus harmfully premature.



In implementing the budgetary Disbursement Acceleration Program in October 2011, President Aquino intervened to stimulate economic growth. It consisted simply of accelerating public spending on government projects already approved by Congress and the executive branch.


This modest intervention most probably was responsible for the unprecedented GDP growth of 7.1 percent in 2012 and 7.2 percent in 2013, surpassing those of our Asian neighbors. If such a small stimulus in such a short period could produce unprecedented positive results, what could a bigger and longer term intervention do?


This is not to argue that the role of “private enterprise” in economic development is of slight significance. Even China, whose economy is mainly state-driven, has acknowledged the important role that the “market” and private enterprises play in economic growth.


But to ignore the decisive role that the state plays in economic development is equally disastrous, as shown by our GDP experience for the past 50 years. At least after half a century of failed policies, Mr. Aquino’s administration is seeing the light glimmer for a new path, and not just a straight path.


Manuel F. Almario ( is a semi-retired veteran journalist and spokesperson of the Movement for Truth in History, Rizal’s MOTH.


Whenever I think about why we have not prospered as a nation and as a people, I could hear my high school social studies teacher’s voice. Having asked the question herself rhetorically in our class, she answered it herself: “A farmer who does not own his land does not have the incentive to be as productive as he could.” And continuing: “To create wealth we need to produce a surplus so we can invest this surplus for more productive endeavors.” To segue her answer, she asked: “How can we produce a surplus when we have a population explosion?”

I can now attest that my social studies teacher is indeed better than our US-educated economists who shaped our policies that you eloquently explained in a historical perspective on “What went wrong?” Their belief in a “free market” economy, which is a myth even in the US, lead us astray as a developing country.

What is more interesting to me is that Joe Studwell, in his latest book, confirmed unequivocally that my teacher was correct: The first of his three sets of policy choices – land tenure policies that support smallholder farmers – was what my teacher was alluding to when she admonished “A farmer who does not own his land does not have the incentive to be as productive as he could.” That true land reform is the first government intervention that must be done in order to maximize agricultural output. (By the way, in his book “How Asia Works, Success and Failure in the World’s Most Dynamic Region”, Studwell criticized the Philippine land reform program as a farce, which is quite obvious to any sane person.)

On my teacher’s comment : “To create wealth we need to produce a surplus so we can invest this surplus for more productive endeavors. How can we produce a surplus when we have a population explosion?” alludes to Studwell’s second and third prescribed interventions. That is, “to direct investment and entrepreneurs toward manufacturing” is similar to my teacher’s “more productive endeavors”. And on his 3rd prescription on focusing capital, she mentioned surplus as a means to produce capital.

Well, at least some of our best and brightest are studying economics or political economy in Europe and the UK so I hope we would not be tied too much to the misguided concept of a “free market” economy.

Thank you for your profound article on what truly went wrong. Now that we know better, we can start rectifying decades of mistakes or at least walk on the correct path to our prosperity. The prosperity we need to alleviate the abject poverty of a large number of our countrymen.

I would further suggest that Joe Studwell’s latest book should be required reading for our students and leaders or those aspiring to be.


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February 22, 2014 · 8:15 am


Why PH lags behind

Philippine Daily Inquirer

10:09 pm | Friday, January 31st, 2014


As the Philippines is increasingly being viewed as a failed state—world center of online child pornography, human and drug trafficking, international criminal syndicates, testing ground for unlicensed medicines and genetic engineering, international refuge for fugitives from justice, major source of labor migrants, and host to two festering insurgencies—it is imperative that concerned citizens and responsible leaders reexamine why we have come to this sorry pass.


Scott Ryan Charney, who holds a master’s degree in US foreign policy from American University, has written an essay in Asia Times in the Internet (Jan. 20) titled “Why Taiwan has Outpaced the Philippines.”  While the article focuses on a single example, it opens a window for understanding the cause or causes of our lingering malaise.

Both Taiwan and the Philippines are allies of the United States, and both obtained their independence within years of each other, the Philippines in 1946 and Taiwan in 1949. The island was occupied and renamed the Republic of China by President Chiang Kai-Shek after he was ousted from mainland China by his nemesis, Mao Zedong, following a lethal civil war.


After about a decade of receiving hundreds of millions of dollars in rehabilitation aid from the United States, and war reparations from Japan, the Philippines was clearly ahead of its Asian neighbors in economic development—including China and Taiwan—in the early post-World War II period.  But beginning in the 1960s, after abandoning the government protectionist strategy followed by the Magsaysay-Garcia administrations, the Philippines rapidly fell behind to become the fabled “sick man” of Asia.


Different story

“What a different story in nearby Taiwan!” Charney writes. “…Taiwan is far wealthier and fairly economically egalitarian, with most of its infrastructure much more capable of withstanding and responding to typhoons and other natural disasters.”

From the moment “Chiang and his successors guided Taiwan’s path to prosperity, conspicuously beginning with a highly successful land reform program, Taiwan’s government gradually evolved into a developmental state that played an active role in marshaling the island’s natural and human resources towards a more prosperous future. This same chain of events played out successfully in all of the ‘Asian Tigers,’” Charney declares.


Nigel Harris, a professor at University College London, writes about one of these Asian tigers, notably Singapore, in his 1986 book, “The End of the Third World, Newly Industrializing Countries and the Decline of an Ideology,” as follows:

“The [Singapore] government is active in all the same activities as other [Tiger] governments, as well as owning strategic sectors of all the main industries—trading, airlines, shipping, shipbuilding, radio and television, electronics and engineering, munitions and aircraft, steel and petrochemicals. Through its holdings, it has guided the economy through successive transformations.”


Asks Charney: “How did Taiwan et al. [including Singapore]… avoid the miserable fate” of the Philippines?



“[T]his path to prosperity was only possible because nobody forcibly stopped it from happening. In other words, land reform, resource-financed social spending, and other deviations from neoliberal orthodoxy (or even the potential thereof) usually elicited an aggressive response, covertly or overtly, from the United States, European countries, and their local satraps (like those who ruled the Philippines),” says this US foreign policy expert.


In effect, according to Charney, the United States stopped the Philippines from following the same path taken by Taiwan—that of an active state development role—all in the name of anticommunism. Because of their having fiercely fought Mao Zedong’s communists, Chiang and his cohorts could not be suspected of being “soft” on communism and therefore were allowed to deviate from the path of neoliberalism or the “Washington consensus” preached by the West for former colonies and developing countries under its control and influence.


Charney compares Chiang to then US President Richard Nixon who was able to travel to China at the height of the Cold War to forge formal diplomatic relations with the communist behemoth because of his unquestioned anticommunist credentials. “Similarly, it was impossible to credibly Red-bait anti-Communist warriors like Chiang and the leaders of the other Tigers-to-be, even when they did things that, when they happened in other countries, set off alarms in Washington.”


He adds: “The Cold Warriors of yesteryear might have argued that the interventions that plagued the Philippines and so much of the developing world—but from which Taiwan was mercifully spared—were justified as a means to check the Soviet Union. But that raises the question for Cold War hawks—and advocates of the Obama administration today—which country makes a better ally? The prosperous, well-armed Taiwan … or the militarily weak Philippines, beset by poverty and insurgencies fueled by the country’s perennial inequality?”


Learning from experience

After being ousted from mainland China because of incompetence and corruption, Chiang and his officials learned quickly from experience, and reversed and reformed the neocolonial policies they once imposed in China. Their legacy in Taiwan is now a prosperous, dynamic and technologically savvy society that can stand up independently to China, now the world’s second biggest economy.


We must apply the dictum of our national hero, Jose Rizal, who in his novel “El Filibusterismo” advised through its principal character, the revolutionary Simoun, that to prosper a poor country must study what the successful nations have done, and follow them.


The doctrine of “Salus populi suprema lex esto” (the welfare of the people shall be the supreme law) has been the fundamental objective of democratic government since it was founded by the Greek states. The neoconservative theory that government should stay out of business and economics goes against the letter and spirit of this underlying democratic precept.


The public-private-partnership economic strategy is perhaps an ideal program. But it is still struggling to make a significant impact on the Philippine economy. Despite several years of the program, a recent poll shows that 55 percent of our people feel that their lives deteriorated in the past year.


Certainly, the program should not relieve our government of primary responsibility for the economic and social wellbeing of the people as a whole. This is a responsibility shouldered by the Asian tigers. We can learn from them.


Manuel F. Almario ( is a veteran, semiretired journalist. He is also spokesperson of the Movement for Truth in History, Rizal’s Moth.




SQUEEZING A SQUARE peg in a round container is what’s democracy that has been rammed down the Pilipinos’ by the pakintod-kintod na mga kano. PH is not yet meant for a governance like the one in USA. It has idiosyncrasies that need to be addressed first before introducing something new that works in another country with different settings and environment.


We never had responsible leaders as far as I can remember. Those so-called leaders just went with the flow and never changed anything and just made matters worst. They existed just for themselves and their ilk, nothing more. Look how some of them are so obsessed with phallic’ symbols. The Filipino people, whom they were supposed to serve existed to give them positions or status symbols. The people are just a license to bleed this country dry.

It’s no wonder we are very much lagging behind in all aspects. It’s no wonder we are the laughingstock not just of Asia but of the whole world. It’s no wonder we may never get out of this hole we dug ourselves into.



• 13 hours ago

My teacher, a UN expert, on production management when I was just starting my career in 1971 related this story comparing the behavior of different Asian nations he had visited: When you criticize a Japanese because of unacceptable work or product, he will just bow and come back to you with a better work or product. But when you tell a Filipino about his unacceptable work, he will immediately leave and come back with a knife.

Although there is some exaggeration in it, for emphasis I think, but the impression my teacher had about us is not too farfetched. That basically we do not want to accept criticisms, even how well meaning they are. And with this attitude, we do not want to acknowledge our deficiencies, hence we are not able to improve ourselves. And more than 40 years, two generations ago, since he related that story, have we changed our attitudes – for the better?

If we compare ourselves to the so-called Asian tigers, we invariably understand why we are lagging behind: The Asian tigers have higher and increasing literacy, better access to higher education, lower – much lower – population growth rate, more job creation, better governance, solid and established institutions, less and decreasing graft and corruption, and the ability and process to improve themselves. And with us, just the opposite.

The Martial Law years was a big set back for us. All our institutions and our moral fiber as a nation and people were damaged. Instead of uniting the country, the dictator played on our regional biases and antagonism. There was an exodus of highly educated and skilled people out of the country. The intelligentsia and those opposed or critical of the dictator languished in prisons. The economy was governed by the dictator’s cronies and relatives. Even after the Martial Law years, the abuses of the military, the culture of corruption and impunity, and our longing for an authoritarian, rather than democratic, rule still persist.

At least we don’t have a corrupt President now – and that means a lot. And if we just care about our future as a nation and people, we will have the sense, attitude and work ethic to do what is right. But it will take time.


Boy_Adolf • 

lack of some pinoys…vhong navaro & denise et al.stupidity story are more important than progress..


Efren Supanga 

After the WWII, we can no longer blame our impoverishment and our being the continuing “very sick man of Asia” due to outside forces, be it from the U. S. A. or any European countries. We only have our own selves to blame. We were unwise in the use of the rehabilitation aids and the war reparations poured in by both the U. S. and Japan governments. Having suffered and learned very well from all the ways of Damaso and his idolatrous church and corrupt government for more than 400 years, elected and/or appointed people in our government were just so happy to copy them and took the advantage at first opportunity to lord it over their people, in church or state. Thus, continued the tradition of lording it over our people right to the present days and it is being perfected as others follow in the train.


aldren85  Efren Supanga 

Efren, we were not “unwise in the use of rehab and war reparations…”. Those in charge of the Reparations Commissions diverted the money somewhere, but definitely not for the original purpose. The commission was headed by a certain Balao.




Just like a Filipino blaming everyone but self. I have not heard or read where American politician has stole from Philippines since 1946. It was the corrupt elite politicians who sold out the people to fast tract independence so they could rape the country knowing that a lot of money will be flowing in for rebuilding and if not under control of US will not have to account for use.



Sorry Sir – We did not copy the Democracy American Style. Had we copied it Corrupt Govt officials together with their oligarch/monopolist patrons will go to jail within a year as being done in the US. Taxes goes back to the people thru working public transport system, feeding programs, health care, increasing pensions even without asking, generally responsible citizen and a very strong Police and Armed Forces that are not corrupt. Bottom line was that Taiwan and China were administered by the very leaders who fought the deadly civil war like Mao and Chiang. In the Phil those who became steward of our republic were the ilustrado collaborators and compradors abetted by US govt officials and Damasos of that era hence the continuing perdition. All real heroes except for the transactional Aguinaldo were killed or imprisoned.


aldren85  eirons1043 

They were known as the carpetbaggers.


From your opening paragraph, it shows that our sad state of affairs is primarily due to the failure of POLICE and JUSTICE system. Why? It is corruption that muddle.

Failure in policy matters is due to our politically oriented system in any aspect of government. Why? Corruption and greed play a lot.

Our country has no united vision. We must acknowledge that American-style democracy and system of government did not work in our case. Self interest in the political arena is the common dictum.

In my humble idea our justice system must be given the priority for reform from slow and corrupt-ridden to sharp, prompt, forceful and effective in the real since of justice. Whatever policy matter we made if our justice system does not work we would only be sunken again and again to failure and ineffectiveness/



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February 3, 2014 · 1:50 am